SENIOR MANAGEMENT CASH BONUS PLAN
       WHEREAS, the Executive Compensation Committee of the
Board of Directors of the Company deems it in the best
interest of the Company that certain members of senior
management be rewarded for positive performance of the Company
and be provided an incentive to give maximum effort for and to
maintain continued association and employment with the
Company; and
       WHEREAS, the Executive Compensation Committee of the
Board of Directors believes that the Company can best attain
these and other benefits by paying cash bonuses to such
members of senior management for their services;
       That the Dillard Department Stores, Inc. Senior
Management Cash Bonus Plan be adopted on March 31, 1994, and
that it be effective for the Company's fiscal year commencing
on January 30, 1994, subject to approval by stockholders at
the annual meeting of the Company to be held May 21, 1994.
       1.     Definitions.
       (a)    "Pre-tax Income" shall mean for a fiscal year the
Company's income before federal and state income taxes.
       (b)    "Bonus Pool" shall mean for a fiscal year the amount
equal to one and one-half percent (1-1/2%) of any Pre-tax
Income for the Company for that fiscal year plus three and
one-half percent (3-1/2%) of the increase in Pre-tax Income
over the prior fiscal year.
       2.     Administration of the Plan.
       (a)    Composition of the Compensation Committee.  The Plan
shall be administered by a committee (the "Committee")
consisting of at least two directors of the Company appointed
by the Board.  All persons designated as members of the
Committee shall be "outside directors" within the meaning of
Proposed Treasury Regulation Section 1.162-27(e)(3), or any
successor to such regulation, promulgated pursuant to Section
162(m) of the Internal Revenue Code.
       (b)    Powers of the Compensation Committee.  The Committee
is authorized to interpret the Plan, to prescribe, amend, and
rescind rules and regulations relating to the Plan, and to
make such other determinations as necessary or advisable for
the administration of the Plan.  The Committee may also amend,
modify or terminate the Plan; provided, however, the Committee
may not, without shareholder approval, amend the Plan to
change the calculations used to determine the amount of the
bonus pool.  Such restriction shall not, however, prevent the
Committee from reducing or eliminating any compensation that
might be paid from the bonus pool.  A majority of the entire
Committee shall constitute a quorum, and the action of a
majority of the members present at any meeting at which a
quorum is present shall be deemed the action of the Committee.
       (c)    Designation of Participants and Allocation Amounts. 
The members of senior management eligible to participate in
the Plan are (i) the Chief Executive Officer, (ii) the
President, (iii) the Executive Vice Presidents, and (iv) the
Senior Vice Presidents.  The Committee shall designate, prior
to commencement of the fiscal year to which such compensation
relates, or such later date as may be permitted under
applicable tax laws, those individuals who will participate in
the Plan for that fiscal year.  At that same time, the
Committee also shall designate for such individuals the pro
rata percent of the Bonus Pool, to the extent one exists, to
which each individual shall be entitled at the end of the
fiscal year.  The pro rata percent of the Bonus Pool allocated
to any one individual shall not exceed 1% of Pre-tax Income. 
Such designations shall be in writing and shall be attached to
the minutes of the Committee's meeting.
       The Committee shall at all times retain the right to
reduce or eliminate any compensation that might be due upon
the Company's attainment of Pre-tax Income for a fiscal year,
but under no circumstances shall the Committee increase the
amount of compensation payable upon the Company's attainment
of Pre-tax Income for a fiscal year.
       (d)    Effect of Compensation Committee's Decision.  All
decisions, determinations, and interpretations of the
Committee shall be final and conclusive on all persons
affected thereby.
       3.     Certification of Creation of Bonus Pool and Payments
Therefrom.  Following the conclusion of a fiscal year, and
prior to any payments under the Plan, the Committee shall
certify, which certification may be in the form of approved
minutes of the Committee meeting in which such certification
is made, that the Company did achieve a Pre-tax Income for the
fiscal year in question, and further shall certify as to the

amount of such Pre-tax Income.