July 24, 2025

Dillard’s Inc. Announces Move to Texas

News Summary

Dillard’s Inc. plans to reincorporate from Delaware to Texas, pending shareholder approval. This decision is driven by an unfavorable legal climate in Delaware. Dillard’s aims to preserve shareholder rights and reduce litigation. With 55 stores in Texas, this move seems poised to strengthen their presence in the state. The trend among companies moving away from Delaware, known as the ‘Dexit’ movement, reflects growing corporate frustrations with Delaware’s legal environment.

Austin, Texas – Dillard’s Inc. has announced plans to reincorporate from Delaware to Texas, a decision that awaits shareholder approval. The move follows a series of unfavorable court rulings in Delaware, particularly those affecting controlling stockholders, and is part of a broader trend of companies reevaluating their corporate domiciles due to the perceived hostile legal environment in the state.

Dillard’s has been incorporated in Delaware since 1964, a common practice for many retail companies due to the state’s business-friendly reputation. However, recent shifts in Delaware’s legal landscape have raised concerns among major shareholders and corporate directors. These changes have been highlighted by high-profile cases, including litigation surrounding Elon Musk’s compensation package at Tesla, which have further fueled the decision to move.

The company indicated that factors such as rising tax liabilities and the costs associated with maintaining its incorporation in Delaware influenced the decision to shift to Texas. As a significant state for Dillard’s, where the company operates 55 stores, the move is expected to offer financial relief and a more favorable legal framework.

Earlier this year, Dillard’s formed a special committee tasked with evaluating its corporate domicile, a process described as extensive and thorough. The committee enlisted the expertise of legal firms Vinson & Elkins and Young Conaway Stargatt & Taylor to assess the implications of the potential move. Through this evaluation, the committee concluded that Texas offers statutory environments that provide more predictability compared to Delaware’s common law approach.

One of the primary goals of this reincorporation is to enhance shareholder economic and voting rights. Dillard’s aims to reduce frivolous litigation that often plagues companies incorporated in Delaware, allowing for more focused management time and significant cost savings associated with franchise taxes and legal fees. Notably, Dillard’s currently has no pending legal matters being litigated in Delaware.

The stock ownership by the Dillard family remains heavily concentrated, with William Dillard II holding 27.4% of shares, Alex Dillard at 27.9%, and Mike Dillard possessing 26.3%. This concentrated ownership structure aligns with the company’s goal of protecting the interests of its controlling shareholders amidst the changing legal dynamics.

Dillard’s decision is in line with a growing trend of companies moving away from Delaware, referred to as the “Dexit” movement. This shift is characterized by an increasing number of businesses seeking friendlier legal environments and better jurisdictions for corporate governance. Similar moves have recently been observed from firms such as Simon Property Group and Trump Media & Technology Group, which have chosen to reincorporate in states like Indiana and Florida.

The current environment in Delaware has provoked criticism and concern among corporate leaders, prompting discussions about the balance between legal regulation and support for business growth. The high-profile litigations, particularly those that garner media attention, further amplify these concerns, leading many to reassess the advantages of Delaware incorporation.

As Dillard’s moves forward with its reincorporation plan, the company’s management remains focused on securing shareholder approval and navigating the changes required to establish a corporate presence in Texas. The anticipated transition reflects broader trends in corporate governance and highlights the evolving landscape of legal environments across states.

The outcome of this planned reincorporation could have significant implications for Dillard’s operational strategies, financial planning, and long-term business prospects as it adapts to a new legal framework aimed at fostering better conditions for growth and shareholder rights.

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