While Dillard’s is being blasted for its poor performance and sagging shares, some critics also are questioning the independence of the department store’s board.
The Little Rock, Ark.-based retailer – whose stock has plunged nearly 80 percent this year – fended off a proxy battle in May by seating four new board members.
But corporate-governance experts say questions still remain about some of Dillard’s directors – chief among them Warren Stephens, the millionaire CEO of Stephens Inc.
In April, Dillard’s hired Stephens’ Little Rock-based investment bank to advise on its 50 percent stake in CDI Contractors, a thriving construction firm whose projects have included the Bill Clinton presidential library.
CDI’s CFO, John Glasgow, mysteriously disappeared in January following a dispute with Dillard’s executives.
Dillard’s bought the other half of CDI in August, and with Stephens’ investment firm having reaped fees on the transaction, “that leaves good reason to doubt he can continue to serve on Dillard’s board,” says John Coffee, a professor at Columbia Law School.
“You can’t be independent of the CEO of Dillard’s if you’re trying to get his business,” Coffee said.
Stephens Inc. and Dillard’s declined to comment.
But Stephens also has gained local attention for hiring CDI to build a clubhouse for an exclusive golf course outside Little Rock called the Alotian Club, of which Dillard’s CEO Bill Dillard Jr. is said to be a member.
Dillard’s also disclosed this year that it has advertised in local newspapers owned by Stephens. The retailer said it saw no conflict because the payments accounted for less than 5 percent of the revenue of Stephens Media Group, the unit that owns the papers.
But “5 percent is a big number,” said Charles Elson, a University of Delaware governance expert who notes that many companies put the ceiling closer to 1 percent.
Noting that Dillard’s has been taking heat lately, Elson added that “companies in similar situations have strenuously sought to avoid the kinds of conflicts that raise these sorts of questions.”
Yesterday, the hedge funds Barington Capital and Clinton Group, who hold stakes in Dillard’s, demanded copies of board-meeting minutes involving business with CDI Contractors, in addition to records on executive perks including vacation homes, boats, concert and sports tickets and corporate aircraft.
Meanwhile, Dillard’s director Peter Johnson owns a credit-card management firm, Karum, whose Web site has listed Dillard’s prominently as a customer. “It’s a very good historical reference,” Johnson told The Post when contacted last week.
Since then, Karum has updated its site to clarify that Dillard’s ended its business relationship with Karum in 2004.