DILLARDS INC

For compensation earned by or paid to our named executive officers during fiscal years 2023, 2022 and 2021 under the following compensation programs, refer to the Summary Compensation Table on page 27 of this proxy statement.

Base Salary

Base salaries are provided to our named executive officers at levels established by the Compensation Committee on an annual basis. Base salaries are set at the discretion of the Compensation Committee and, unlike the annual cash performance bonuses and equity-based compensation awards, are not specifically related to any Company performance criteria. Each year, the Compensation Committee reviews a competitive market analysis of salaries paid by companies in the peer group to ensure that base salaries paid to our named executive officers are competitive. The committee also considers:

The Compensation Committee set each named executive officer’s base salary as follows:

The Compensation Committee assigned higher base salary amounts to Messrs. William Dillard, II and Alex Dillard to reflect their level of responsibility and experience, the importance of their respective positions within the Company and their ability to affect stockholder value relative to other NEOs. Pursuant to the peer group analysis provided by the independent compensation consultant, the Compensation Committee awarded compensation increases to all NEOs as they deemed appropriate. The base salaries of all NEOs are below the median base salaries of the corresponding executive officers for the peer group of retailers listed above.

Annual Cash Performance Bonuses

Our compensation program includes annual performance bonuses payable under our stockholder-approved Senior Management Cash Bonus Plan (the “Cash Bonus Plan”). Annual cash bonuses are designed to reward executive officers based on the Company’s performance and the individual executive’s contribution to that performance. Under the terms of the Cash Bonus Plan, performance bonuses may be paid only if the Company realizes positive income before federal and state income taxes for the fiscal year, which we refer to as pre-tax income. The Compensation Committee believes that pre-tax income is a meaningful measure of financial and operational performance and that requiring a particular level of financial and operational performance before cash bonuses are earned by executive officers furthers the Company’s goal of linking pay to performance. No individual’s bonus under the Cash Bonus Plan can exceed 1% of the Company’s pre-tax income.

Under the Company’s Cash Bonus Plan, persons who occupy the following positions are eligible to receive bonuses:

From this group of persons, the Compensation Committee, in its sole discretion, designates those individuals eligible to receive a performance bonus under the Cash Bonus Plan. In making its determinations, the Compensation Committee considers recommendations of senior management and the contribution of each executive officer to the Company’s performance.

When the Compensation Committee designates the individuals eligible to participate in the Cash Bonus Plan, it also designates the maximum percentage of the bonus pool each individual will be entitled to receive. The Compensation Committee assigns a percentage of the bonus pool to each participant, taking into consideration the individual’s level of responsibility for both operating results and management of the organization. The assigned percentage can vary from year to year. The year-end amount of an individual’s bonus is mathematically determined by applying this percentage to the bonus pool.

Bonuses are paid under the Cash Bonus Plan at the conclusion of the fiscal year from a bonus pool, which is equal to the sum of (x) 11∕2% of the Company’s pre-tax income for the fiscal year, plus (y) 31∕2% of the increase in pre-tax income over the prior fiscal year. Our pre-tax income was $916,617,000 in fiscal 2023 and $1,109,466,900 in fiscal 2022 for a decrease in pre-tax income of $192,849,900. This resulted in a total available bonus pool of $13,749,200 for fiscal 2023 (11∕2% of pre-tax income in fiscal 2023).

The following table sets forth for each named executive officer such officer’s: (1) assigned percent allocation of the fiscal 2023 bonus pool and (2) actual bonus to be paid under the Cash Bonus Plan for fiscal 2023:

The Compensation Committee retains the discretion to reduce or eliminate any bonuses that might otherwise be due under the terms of the Cash Bonus Plan. In making this determination, the Compensation Committee may consider factors which are more individualized to specific circumstances that were unforeseen at the time the original allocations were made. The Compensation Committee also reserves the right to award smaller or no bonuses in order to conserve cash for operations or for other business opportunities that could either preserve or enhance stockholder value. The Compensation Committee cannot, however, increase the amounts payable under the Cash Bonus Plan. The Compensation Committee made no adjustments to the bonuses to be paid under the Cash Bonus Plan for fiscal 2023.

Equity-Based Compensation

We believe equity ownership is essential in linking an executive officer’s compensation to the performance of our Common Stock and total stockholder return. We also believe equity ownership is an important tool in creating incentive for sustained growth. As such, in fiscal 2023 our named executive officers received equity-based compensation through each of the following plans (each of which is discussed below): the Dillard’s, Inc. Stock Bonus Plan (the “Stock Bonus Plan”), a qualified defined contribution retirement plan (the “Retirement Plan”) and the Dillard’s, Inc. Stock Purchase Plan (the “Stock Purchase Plan”). Equity-based compensation awarded under these plans is generally established by a predetermined formula set forth in each plan that is tied directly to the aggregate amount of cash compensation (salary and cash bonus) paid to an individual. Equity-based compensation awards comprise a smaller portion of our named executive officers’ total compensation because the Compensation Committee considers the existing significant stock ownership of our named executive officers to already align with shareholders’ interests.

Pension Plan

We maintain a non-qualified defined benefit pension plan (the “Pension Plan”) for our named executive officers. The Pension Plan provides an annual award following retirement based upon the level of each officer’s salary and cash bonus during the officer’s tenure, as well as the total years of service provided to the Company. Specifically, the award is calculated by multiplying each officer’s years of service by 11∕2% and multiplying the result by the average of the highest three years of each officer’s “pension earnings”. Pension earnings are defined as total salary plus cash bonus paid during the fiscal year minus the maximum Social Security wage base in that year. Retirement is considered Normal Retirement if the individual has met the service requirements and has reached 65 years of age. Persons are eligible for Early Retirement if the individual has met the service requirements and has reached 55 years of age.

For persons eligible for Early Retirement, but not yet eligible for Normal Retirement, there is a 21∕2% reduction in the amount of annual pension benefit for each year or partial year between the person’s 65 th birthday and the person’s attained age on the date of retirement. During fiscal 2023, Phillip Watts was the only NEO that met the requirements for Early Retirement and had not reached the age for Normal Retirement as defined by the Pension Plan.

The Pension Plan provides that, in the event of a change in control of the Company (as defined in the Pension Plan), the present value of the annual pension benefit determined as of the date of the change in control will be paid in a lump sum within 60 days. All associates with a benefit accrued under the Pension Plan up to the date of the change in control are eligible for a lump sum payment and no further benefits would be paid from the Pension Plan. The Company believes this feature is important in recruiting and retaining qualified executive management personnel because:

Additional information about such lump sum payments, including how the present value would be determined and the estimated lump sum pension benefits that each named executive officer would have received if a change in control were to have occurred on the last business day of fiscal 2023 is provided below under “Potential Payments Upon Termination or Change in Control.”

Other Benefits

Health Insurance. We provide an enhanced health insurance plan to our named executive officers. This plan assists our named executive officers in maintaining their physical well-being so that they are able to devote their energies to the management of the Company.

Company Aircraft. Our named executive officers are allowed access to Company-owned aircraft for personal use as well as business flights. This benefit increases the level of safety and security for the named executive officers and allows them to make better use of their time by being able to travel more efficiently. The Company reports imputed income to an executive officer for income tax purposes for the value of any personal use based upon the Standard Industry Fare Level (SIFL) in accordance with the Internal Revenue Code and Treasury Regulations. For purposes of the Summary Compensation Table below, the Company reports compensation for the NEOs based on the incremental cost for flights constituting personal use. As disclosed in the Summary Compensation Table in this proxy statement, only Messrs. William Dillard, II and Alex Dillard incurred incremental costs for the personal use of Company aircraft for fiscal year 2023.