In New Letter, Barington Asks Dillard's for Records, Meeting Minutes

by Lance Turner  on Tuesday, Mar. 25, 2008 10:20 am  

Barington Capital Group CEO James Mitarotonda, seen here in a screenshot of an online profile of him.

In a new letter disclosed on Tuesday, Barington Capital Group requested copies of Dillard's Inc.'s books and records so its can talk to Dillard's shareholders about use of corporate assets, compensation and perquisites for executives and other matters.

Click here to see the letter.

The move is the latest by the investor firm, which, along with Clinton Group Inc. and certain of its affiliates, represents about 5.6 percent of the department store chain's outstanding Class A common stock of Dillard's.

Barington has been gearing up for a proxy fight. Earlier this month, it asked Dillard's for a detailed list of its shareholders. And it has since nominated four of its representatives to Dillard's board of directors.

Previously, Barington made several overtures to Dillard's seeking a meeting with executives to discuss ways to increase shareholder value. Dillard's has so far refused to meet with the group. Barington has criticized both Dillard's management and its board of directors, saying both have mismanaged the company.

The latest letter, which was dated March 20 but made public in Dillard's filing with the U.S. Securities and Exchange Commission here on Tuesday, outlined the purpose of its request:

"The purpose of this demand is to enable Barington and Clinton to investigate and communicate with the company's stockholders regarding matters relating to their mutual interests as stockholders, including, without limitation, the use of corporate assets, the levels and types of compensation, perquisites and benefits provided to directors and executive officers of the company or related parties, the nature of any family, business or personal relationships between the company's executive officers and directors, board oversight and certain decisions by the board or its committees regarding the foregoing matters or otherwise affecting the board, the management or corporate governance of the company or other interests of stockholders."

Among the specific documents Barington wants to receive are those about the board's decsions to "employ, or continue to employ, William Dillard II, Alex Dillard, Mike Dillard and Drue Corbusier as the top executive officers of the company;" documents about services "performed or proposed to be performed by CDI Contractors, Construction Developers Inc. or any other entity affiliated" with Dillard's engaged in the construction business "for or on behalf of any director, executive officer or member of the Dillard family."

William Dillard II, Alex Dillard, Mike Dillard and Drue Corbusier are among the children of Dillard's founder William Dillard, who died in 2002. They all hold executive management positions at the retailer.

CDI Contractors of Little Rock is a construction firm half-owned by Dillard's. The firm built the Clinton Presidential Library, but it also handles construction projects for Dillard's, including building Dillard's stores.

Dillard's connection to CDI has been under scrunity since CDI's chief financial officer, John Glasgow, went missing in January. Last week, Dillard's had to restate some earnings pretaining to CDI.

Quest for Value



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