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Top Dillard’s Executives See Compensation Rise

Multimillion-dollar upswing in pension values accounts for most of increases for William Dillard 2nd, ceo, and Alex Dillard, president.

Dillard’s Inc.’s two top officers logged large increases in their reported compensation last year as the value of their pensions increased and the cash portions of their pay packages grew more than 18 percent.

William Dillard 2nd, chief executive officer of the Little Rock, Ark.-based department store chain, had reported income of $11.8 million last year, compared with the $4.1 million he earned in 2010. His salary rose 5.8 percent to $900,000 and his cash bonus, termed “nonequity incentive plan compensation,” was up 23 percent to $3.3 million, for a total cash payout of $4.1 million, up 19.9 percent from the prior year.

Although Dillard’s doesn’t issue option awards, the ceo’s stock awards grew 32.6 percent to $602,000 and the company reported that the increase in the value of his pension and nonqualified deferred compensation was more than $6.8 million, after decreasing in 2010. Because of vesting schedules and fluctuating stock prices, stock awards aren’t necessarily realized by the executives for whom they are recorded, but the Securities and Exchange Commission requires that they be reported at fair market value for the periods for which they were granted. Similarly, the change in pension value is an actuarial tabulation and doesn’t reflect Dillard’s cash payments for the year.

According to these accounting standards, Alex Dillard, president of the company and William’s brother, was the firm’s biggest earner last year, taking in $12.7 million, compared with his 2010 compensation of $4.8 million. His salary rose 8.8 percent to $870,000 and his cash bonus, identical to the ceo’s in both years, rose 23 percent to $3.3 million, putting the cash portion of his earnings at $4.1 million, 19.7 percent ahead of the 2010 figure. His stock awards increased one third to $6 million and a $7.8 million change in pension value was entered for him, versus an $816,000 increase in 2010.

Under Dillard’s compensation guidelines, a pool of bonus money is created based on a portion of both the company’s pretax income and the change in that figure for the year. Last year, pretax income was $401.4 million, up $137.3 million. This resulted in a bonus pool of $10.8 million, to which each of the brothers was entitled to 30 percent.

Mike Dillard, executive vice president, earned $6.1 million, 1.4 times his 2010 compensation, with the cash portion of his pay rising 4.1 percent to $2.1 million. He was entitled to 13 percent of the bonus pool.

William, Alex and Mike Dillard own 27.4, 27.9 and 26.3 percent, respectively, of W.D. Co. Inc., which owns 0.1 percent of the company’s class A common stock but 99.4 percent of its class B voting stock.

Dillard’s definitive proxy was released to the SEC Monday.