UPDATE 1-Dillard's shareholders demand access to records
NEW YORK, Dec 8 (Reuters) - Two activist hedge funds of Dillard's Inc (DDS.N) are demanding access to inspect the retailer's books and records, seeking greater transparency from the department store chain's executives and family members.
Dillard's shares jumped 18 percent in Monday morning trading.
Barington Capital has been calling on the Little Rock, Arkansas retailer to take steps to improve financial results and governance practices since at least June 2007.
The hedge funds own around 5 percent of Dillard's class A stock. The Dillard family own most of the company's class B stock, which allows them to nominate eight of the company's 12 directors.
Neither Dillard's nor Barington immediately responded to a request for comment.
In a Dec. 8 letter to the U.S. Securities and Exchange Commission, hedge funds Barington Capital Group LP and Clinton Group Inc demand Dillard's provide them copies of board of director and committee meeting minutes.
"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," the letter states.
Those interests include "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," as well as board decisions and corporate governance issues, the letter said.
The hedge funds have complained in the past that Dillard's executives are overpaid and demanded the company loosen its grip on its Class B shares.
The dual-share structure creates a strong defense against a Dillard's takeover, but also keeps its stock from being widely traded.
Dillard's has said its management team has an appropriate strategy for dealing with a challenging retail environment and objected to the claim its executives are paid more than comparable peers.
Shares of Dillard's were up 18 percent to $4.79 Monday on the New York Stock Exchange. The stock is down 77 percent since the beginning of the year. (Reporting by Sarah Coffey; Editing by Derek Caney)
