Barington Capital Asks Dillard's for Shareholders List

by Arkansas Business Staff  on Wednesday, Mar. 5, 2008 7:19 am  

Barington Capital Group LP of New York and another firm representing a group of Dillard's Inc. shareholders have asked the Little Rock-based retailer to provide them with a list of Dillard's shareholders, according to a filing Friday with the Securities & Exchange Commission.

The move suggests that Barington and its lead partner, James A. Mitarotonda, chairman and CEO, are gearing up for a proxy fight to force change at the department store chain. In a cover story published Monday, analysts told Arkansas Business that Barington's history suggests that such a fight was coming.

Monday's story went to press a day before the Barington filing, which is available here.

In it, Barington Companies Equity Partners and Clinton Multistrategy Master Fund of the Cayman Islands, which together represent about 5.2 percent of Dillard's shareholders, requested a "complete list of stockholders of record," including names, addresses and number of shares registered by each.

"The purpose of this demand is to enable Barington and Clinton to communicate with the company's stockholders regarding matters relating to their interests as stockholders, including, without limitation, in connection with the election of directors at the company's next annual meeting of stockholders and any other matters that may properly come before such meeting in the event that Barington and Clinton elect to solicit proxies to elect directors at such meeting," the filing said.

Dillard's has a shareholders meeting scheduled for May.

On Wednesday, Credit Suisse Group upgraded shares of Dillard's based in part on news for Barington's move.

"We estimate that as of [Dec. 31, 12 percent] of Dillard's shares outstanding were held by institutions that could be classified as potential activists. With Dillard's proxy statement to be filed in late April and annual shareholders meeting usually scheduled for mid-May, we believe there is likely to be an attempt from activist holders to acquire at least one independent directors' seat," the report said. "While company insiders control [two-thirds] of the voting stake, the reminder that there exists a vocal minority could attract some attention to these shares."

Dillard's has a dual-class stock structure that gives most of the voting power to company insiders, including members of the Dillard family, which controls the company. As Arkansas Business has reported, the structure makes it difficult for outsiders to influence the firm.

Barington isn't the only firm that has tried to force change at Dillard's. At last year's shareholders meeting, Christian Brothers Investment Services placed a nonbinding resolution on the ballot that urged Dillard's to prepare a sustainability report on its environmental and social policies. The resolution, unanimously opposed by the board of directors, failed.

Barington began buying stock in Dillard's in the second quarter of 2007, and has since criticized Dillard's management for what it sees as poor performance. Mitarotonda has repeatedly requested meetings with Dillard's management, which has not granted a sit-down.


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