UNITED STATES


SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)


of the Securities Exchange Act of 1934
(Amendment No.      )
Filed by the Registrant ý                             Filed by a Party other than the Registrant ¨

Filed by the Registrant☒Filed by a Party other than the Registrant☐
Check the appropriate box:
¨ 
☒Preliminary Proxy Statement
        
¨☐Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
 
ý☐Definitive Proxy Statement
 
¨☐Definitive Additional Materials
 
¨☒Soliciting Material Under Rule 14a-12

Aaron’s, Inc.


(Name of Registrant as Specified in Its Charter)

N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
ý☐       No fee required
¨☐Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1(1))Title of each class of securities to which transaction applies:
  (2) 
(2)Aggregate number of securities to which transaction applies:
  (3)
(3)     Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
  (4) 
(4)Proposed maximum aggregate value of transaction:
  (5) 
(5)Total fee paid:
¨ 
☐Fee paid previously with preliminary materials.
¨☒Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1(1))Amount previously paid:
$214,027.88
(2(2))Form, Schedule or Registration Statement No.:
333-237657
(3(3))Filing Party:
Aaron’s Holdings Company, Inc.
(4(4))Date Filed:
April 13, 2020


The information in this preliminary joint proxy statement/prospectus is not complete and may be changed. We may not sell the securities described herein until the registration statement filed with the Securities and Exchange Commission is declared effective. This joint proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION DATED APRIL 13, 2020





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400 Galleria Parkway, S.E., Suite 300

Atlanta, Georgia 30339


March 28, 2019JOINT PROXY STATEMENT/PROSPECTUS


[●], 2020

To Our Fellow Shareholders:


It is our pleasure to invite you to attend the 20192020 Annual Meeting of Shareholders of Aaron’s, Inc. to be held on Wednesday, May 8, 2019,[●], 2020, at 9:00[●] a.m., local time, at the Georgian Club located at 100 Galleria Parkway SE, 17th Floor, Atlanta, Georgia 30339. Although it is our current intention to allow shareholders to participate in the Annual Meeting in-person, we are monitoring developments relating to the novel coronavirus, or COVID-19, outbreak. We are sensitive to the in-person meeting and travel concerns of our shareholders in these uncertain times. As a result, we may decide to allow shareholders to participate in the Annual Meeting by remote communication, or we may decide to hold the Annual Meeting entirely via remote communication. If we decide that either of these options is necessary or advisable, we will communicate this decision and related instructions in a press release and in the investor relations section of our website,www.aarons.com.

The Annual Meeting will begin with a discussion of, and voting on proposals to: (i) elect nine directors to serve for a term expiring at the matters described in the accompanying Notice of2021 Annual Meeting of Shareholders, (ii) approve Aaron’s executive compensation, (iii) ratify the appointment of Ernst & Young LLP as Aaron’s independent registered public accounting firm for 2020, (iv) implement a holding company structure, and Proxy Statement, and(v) transact such other business as may properly come before the meeting or any adjournment or postponement thereof. The Annual Meeting will be followed by a report on Aaron’s financial performance and operations.


This year, we are asking you to approve a proposal to implement a holding company structure for Aaron’s, which we believe could facilitate future corporate actions and provide us with greater operational and financing flexibility for the Progressive Leasing and Aaron’s Business segments. If the holding company formation is completed, your existing shares of Aaron’s common stock will be automatically converted, on a one-for-one basis, into shares of common stock of Aaron’s Holdings Company, Inc., which we refer to as “HoldCo”, the new holding company of Aaron’s. As a result, you will hold the same number of shares of HoldCo common stock as you held of Aaron’s common stock immediately before the holding company formation. We expect the common stock of HoldCo to trade on the New York Stock Exchange under Aaron’s current trading symbol, “AAN.” The Proxy Statementholding company formation will be tax-free for Aaron’s shareholders.

The joint proxy statement/prospectus is critical to our corporate governance process. We use this document to discuss the proposals being submitted to a vote of shareholders at the Annual Meeting, solicit your vote on those proposals, provide you with information about our Board of Directors and our executive officers, and inform you of the steps we are taking to fulfill our responsibilities to you as shareholders.


Your vote is important to us.Your broker cannot vote on certain of the proposals without your instruction. Please use your proxy card or voter instruction form to inform us, or your broker, as to how you would like to vote your shares on the proposals in the Proxy Statement.joint proxy statement/prospectus. For instructions on voting, please refer to the notice you received in the mail or, if you requested a hard copy of the Proxy Statement,joint proxy statement/prospectus, to your enclosed proxy card.card, so that your shares may be represented at the Annual Meeting


The accompanying notice of meeting and this joint proxy statement/prospectus provide specific information about the Annual Meeting and explain the various proposals.Please read these materials carefully. In particular, you should consider the discussion of risk factors beginning on page24before voting on the proposal to adopt the merger agreement pursuant to which we will implement the holding company formation.

We look forward to seeing you atyour participation in the Annual Meeting. On behalf of our management and directors, I want to thank you for your continued support of, and confidence in, Aaron’s.


Sincerely,

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johnrobinsonsignaturea02.jpg
Ray M. RobinsonJohn W. Robinson III
Chairman of the BoardPresident and Chief Executive Officer

Neither the Securities and Exchange Commission, nor any state securities regulatory agency has approved or disapproved of the securities to be issued under this joint proxy statement/prospectus or passed upon the adequacy or accuracy of the disclosure in this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The accompanying joint proxy statement/prospectus is dated [●], 2020 and is first being mailed to shareholders on or about [●], 2020.






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400 Galleria Parkway, S.E., Suite 300


Atlanta, Georgia 30339

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS


TO BE HELD MAY 8, 2019
[●], 2020

The 20192020 Annual Meeting of Shareholders of Aaron’s, Inc., which we refer to as “Aaron’s” or the “Company,” will be held on Wednesday, May 8, 2019,[●], [●], 2020, at 9:00[●] a.m., local time, and currently is scheduled to be held at the Georgian Club[●] located at 100 Galleria Parkway SE, 17th Floor, Atlanta, Georgia 30339,[●], for the purpose of considering and voting on the following items:

1.

To elect eightnine directors to serve for a term expiring at the 20202021 Annual Meeting of Shareholders.

2.

To vote on a non-binding, advisory resolution approving Aaron’s executive compensation.

3.To adopt and approve the Aaron's, Inc. Amended and Restated 2015 Equity and Incentive Plan.
4.

To ratify the appointment of Ernst & Young LLP as Aaron’s independent registered public accounting firm for 2019.2020.

4.

To effect a holding company formation and, in connection therewith, approve an Agreement and Plan of Merger, by and among Aaron’s, Inc., Aaron’s Holdings Company, Inc. and Aaron’s Merger Sub, Inc., a copy of which is attached as Appendix B.

5.

To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

Information relating to these items is provided in the accompanying Proxy Statement.

joint proxy statement/prospectus.

Although it is our current intention to allow shareholders to participate in the Annual Meeting in-person, we are monitoring developments relating to the novel coronavirus, or COVID-19, outbreak. We are sensitive to the in-person meeting and travel concerns of our shareholders in these uncertain times. As a result, we may decide to allow shareholders to participate in the Annual Meeting by remote communication, or we may decide to hold the Annual Meeting entirely via remote communication. If we decide that either of these options is necessary or advisable, we will communicate this decision and related instructions in a press release and in the investor relations section of our website,www.aarons.com.

Only shareholders of record, as shown on the stock transfer books of Aaron’s, on March 4, 2019[●], 2020 are entitled to notice of, or to vote at, the meeting. If you hold shares through a bank, broker or other nominee, more commonly known as holding shares in “street name,” you must contact the firm that holds your shares for instructions on how to vote your shares.

If you were a shareholder of record on March 4, 2019,[●], 2020, you are strongly encouraged to vote in one of the following ways whether or not you plan to attendparticipate in the Annual Meeting: (1) by telephone; (2) via the Internet; or (3) by completing, signing and dating a written proxy card and returning it promptly to the address indicated on the proxy card.

 BY ORDER OF THE BOARD OF DIRECTORS
 
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 Robert W. Kamerschen
 Executive Vice President, General Counsel,
 Chief AdministrativeCorporate Affairs Officer & Corporate Secretary
Atlanta, Georgia
March 28, 2019Secretary

Atlanta, Georgia

[●], 2020




IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING TO BE HELD ON MAY 8, 2019.


[●], 2020.

We are pleased to announce that we are delivering your proxy materials for the 2019 Annual Meeting of Shareholders via the Internet. Because we are delivering proxy materials via the Internet, the Securities and Exchange Commission requires us to mail a notice to our shareholders notifying them that these materials are available on the Internet and how these materials may be accessed. This notice, which we refer to as our “Notice of Proxy Materials,” will be mailed to our shareholders on or about March 28, 2019.


[●], 2020.

Our Notice of Proxy Materials will instruct you on how you may vote your proxy via the Internet or by telephone, or how you can request a full set of printed proxy materials, including a proxy card to return by mail. If you would like to receive printed proxy materials, you should follow the instructions contained in our Notice of Proxy Materials. Unless you request them, you will not receive printed proxy materials by mail.



The Proxy StatementADDITIONAL INFORMATION

This document constitutes a proxy statement of Aaron’s with respect to the solicitation of proxies for the Annual Meeting described within, and a prospectus of HoldCo for the shares of HoldCo common stock to be issued pursuant to the merger agreement. As permitted under the rules of the SEC, this joint proxy statement/prospectus incorporates important business and financial information about us that is contained in documents filed with the SEC that are not included in or delivered with this joint proxy statement/prospectus. You may obtain copies of these documents, without charge, from the web site maintained by the SEC at www.sec.gov, as well as other sources. See “Where You Can Find Additional Information” beginning on page 79.

You may also obtain copies of the joint proxy statement/prospectus and Annual Report, are available free of charge, on our website athttp://www.aarons.com/proxyinvestor.aarons.com/proxy-onlineand

http://www.aarons.com/annualreportinvestor.aarons.com/annual-report, respectively,
and athttp://www.envisionreports.com/AANAAN.



We have not authorized any person to provide any information or to make any representation other than the information contained or incorporated by reference in this joint proxy statement/prospectus, and if any person provides any of this information or makes any representation of this kind, that information or representation must not be relied upon as having been authorized by us. If you receive any other information, you should not rely on it.

This joint proxy statement/prospectus is dated [●], 2020. You should not assume the information contained in this joint proxy statement/prospectus is accurate as of any date other than this date, and neither the mailing of this joint proxy statement/prospectus to shareholders nor the issuance of HoldCo common stock pursuant to the merger agreement implies that information is accurate as of any other date. Our business, financial condition, results of operations and prospects may have changed since those dates.

Table of Contents

Joint Proxy Statement/Prospectus Summary1
Questions and Answers about Voting and the Annual Meeting2
Summary of the Holding Company Formation Proposal8
 
Proxy Summary
1
Matters To Be Voted On
4
10
Proposal 1: Election of Eight Directors
4
10
Proposal 2: Advisory Vote to Approveon Executive Officer Compensation
5
11
Proposal 3: Approval of the Aaron's, Inc. Amended and Restated 2015 Equity and Incentive Plan
6
Proposal 4: Ratification of the Appointment of Ernst & Young LLP as ourthe Independent Registered Public Accounting Firm
12
Proposal 4: Effect the Holding Company Formation and Approve the Agreement and Plan of Merger13
Holding Company Formation14
Description of HoldCo Capital Stock18
Questions and Answers about the Holding Company Formation Proposal22
Risk Factors24
Cautionary Note Regarding Forward Looking Statements25
Governance
15
26
Nominees to Serve as Directors
15
26
Executive Officers Who Are Not Directors
17
29
Composition, Meetings and Committees of the Board of Directors
18
30
Assessment of Director Candidates and Required Qualifications
19
31
Shareholder Recommendations and Nominations for Election to the Board
20
32
Board Leadership Structure
20
33
Board of Directors and Committee Evaluations
21
33
Board Role in Risk Oversight
21
33
Board Diversity34
Social and Responsibility35
Environmental Responsibility
21
36
BoardEnergy Management36
Cybersecurity and WorkplaceData Privacy37
Labor Practices and Human Rights38
Workforce Diversity and Inclusion and Human Capital Management
22
38
Product Sourcing, Packaging and Marketing39
Compensation Committee Interlocks and Insider Participation
22
40
Section 16(a) Beneficial Ownership Reporting Compliance
22
40
 
Non-Management Director Compensation in 20182019
22
40
Stock Ownership Guidelines
23
40
 
Compensation Discussion and Analysis
24
41
Executive Summary
24
41
Objectives of Executive Compensation
25
42
Compensation Process Summary for 20182019
26
43
Benchmarking
26
44
Components of the Executive Compensation Program
27
46


Base Salary
28
46
Annual Cash Incentive Awards
29
47
Long-Term Equity Incentive Awards
31
49
Executive Compensation Policies
34
53
Executive Benefits & Perquisites
34
54
Employment Agreements and Other Post Termination Protections
35
54
Policy on Compensation Tax Deductibility
35
55
 
Compensation Committee Report
36
56
 
Executive Compensation
37
57
Summary Compensation Table
37
57
Grants of Plan-Based Awards in 20182019
38
58
Employment Agreements with Named Executive Officers
38
58
Aaron's, Inc. Amended and Restated 2015 Equity and Incentive Plan
39
59
Amended and Restated 2001 Stock Option and Incentive Award Plan
40
60
Aaron's, Inc. Employee Stock Purchase Plan
43
61
Outstanding Equity Awards at 20182019 Fiscal Year-End
44
62
Options Exercised and Stock Vested in 2018Fiscal Year 2019
43
63
Pension Benefits
43
63
Nonqualified Deferred Compensation as of December 31, 20182019
43
63
Potential Payments Upon Termination or Change in Control
44
64
Securities Authorized for Issuance under Equity Compensation Plans
48
69
CEO Pay Ratio Disclosure
51
70
 
Audit Committee Report
50
71
 
Audit Matters
53
74
Fees Billed in the Last Two Fiscal Years
53
74
Approval of Auditor Services
55
74
 
Beneficial Ownership of Common Stock
56
75
 
Certain Relationships and Related Transactions
58
77
Policies and Procedures Dealing with the Review, Approval and Ratification of Related Party Transactions
58
77
Related Party Transactions
58
77
Questions and Answers About Voting and the Annual Meeting
59
 
Additional Information
63
78
Legal Matters78
Experts78
Shareholder Proposals for 20202021 Annual Meeting of Shareholders
63
78
Householding of Annual Meeting Materials
64
79
Communicating with the Board of Directors and Corporate Governance Documents
64
79
Where You Can Find Additional Information79
Other Action at the Meeting
64
80
 
Appendix A - Aaron's,– Use of Non-GAAP Financial InformationA-1
Appendix B – Agreement and Plan of MergerB-1
Appendix C – Form of Articles of Incorporation of Aaron’s Holdings Company, Inc. Amended and Restated 2015 Equity and Incentive Plan
65
C-1
Appendix D – Form of Bylaws of Aaron’s Holdings Company, Inc.D-1




JOINT PROXY STATEMENT/PROSPECTUS SUMMARY

This Proxy Statementjoint proxy statement/prospectus is furnished in connection with the solicitation by the Board of Directors of Aaron’s, Inc., which we refer to as “we,” “our,” “us,” “Aaron’s” or the “Company,” of proxies for use at the 20192020 Annual Meeting of Shareholders, including any adjournment or postponement thereof, which we refer to as the “Annual Meeting.” This summary highlights certain material information relating to the Annual Meeting contained elsewhere in this Proxy Statement,joint proxy statement/prospectus, but does not contain all of the information you should consider prior to casting your vote. As a result, you should read this entire Proxy Statementjoint proxy statement/prospectus carefully before voting. We anticipate that our Notice and Access Letter will first be mailed, and that this Proxy Statementjoint proxy statement/prospectus and our 20182020 Annual Report to Shareholders will first be made available to our shareholders, on or about March 28, 2019.

2019[●], 2020.

2020 Annual Meeting of Shareholders

Date and TimeMay 8, 2019,[●], 2020, at 9:00[●] a.m., local time
Place
The Georgian Club
100 Galleria Parkway SE, 17th Floor
Atlanta, Georgia 30339
Record DateMarch 4, 2019[●], 2020
VotingShareholders as of the record date are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on at the Annual Meeting.
AdmissionAttendance at the Annual Meeting will be limited to shareholders as of the record date or their authorized representatives.

Matters To Be Considered and Voting Recommendations

ProposalBoard Recommendation
ProposalBoard Recommendation
Elect eightnine directors to serve for a term expiring at the 20202021 Annual Meeting of Shareholders“FOR” each director nominee
Vote on a non-binding advisory resolution approving Aaron’s executive compensation“FOR”
Approve the Aaron's, Inc. Amended and Restated 2015 Equity and Incentive Plan“FOR”
Ratify the appointment of Ernst & Young LLP as Aaron’s independent registered public accounting firm for 20192020“FOR”
Effect a Holding Company Formation and, in connection therewith, Approve the Agreement and Plan of Merger, by and among Aaron’s, Inc., Aaron’s Holdings Company, Inc. and Aaron’s Merger Sub, Inc.“FOR”

See “Matters To Be Voted On” beginning on page 410 for more information.


QUESTIONS AND ANSWERS ABOUT VOTING AND THE ANNUAL MEETING

What is the purpose of this joint proxy statement/prospectus?

This joint proxy statement/prospectus provides information regarding matters to be voted on at the Annual Meeting. Additionally, it contains certain information that the SEC requires us to provide annually to our shareholders. This joint proxy statement/prospectus is also used by our Board of Directors, which we refer to as the “Aaron’s Board”, to solicit proxies to be used at the Annual Meeting so that all shareholders of record have an opportunity to vote on the matters to be presented at the Annual Meeting, even if they cannot attend the meeting in person. Our Board of Directors has designated John W. Robinson III, Steven A. Michaels, and Robert W. Kamerschen to vote the shares of common stock represented by proxies at the Annual Meeting.

Who is entitled to vote on the matters discussed in the joint proxy statement/prospectus?

You are entitled to vote if you were a shareholder of record of our common stock as of the close of business on [●], 2020, the “record date” for the Annual Meeting, including shares of restricted stock issued pursuant to the Aaron’s, Inc. Amended and Restated 2015 Equity and Incentive Plan, which we refer to as “A&R 2015 Plan”, that are still subject to vesting requirements. A list of all shareholders entitled to vote will be available for inspection at the Annual Meeting. Your shares can be voted at the Annual Meeting only if you are present in person or represented by a valid proxy.

What constitutes a quorum for the Annual Meeting?

The holders of a majority of the outstanding shares of our common stock as of the close of business on the record date must be present, either in person or represented by valid proxy, to constitute a quorum necessary to conduct the Annual Meeting. On the record date, [●] shares of our common stock were issued and outstanding, including shares of restricted stock still subject to vesting requirements entitled to vote at the Annual Meeting. Shares represented by valid proxies received but marked as abstentions, and shares reflecting broker non-votes, will be counted as present at the Annual Meeting for purposes of establishing a quorum.

How many votes am I entitled to for each share of common stock I hold?

Each share of our common stock represented at the Annual Meeting is entitled to one vote for each director nominee with respect to the proposal to elect directors and one vote for each of the other proposals to be voted on. You are not entitled to cumulate votes with respect to the proposal to elect directors.

What proposals will require my vote?

You are being asked to vote on the following proposals:

●To elect nine directors to serve for a term expiring at the 2021 Annual Meeting of Shareholders.
●To vote on a non-binding, advisory resolution approving Aaron’s executive compensation.
●To ratify the appointment of Ernst & Young LLP as Aaron’s independent registered public accounting firm for 2020.
●To effect a holding company formation and, in connection therewith, approve an Agreement and Plan of Merger, by and among Aaron’s, Aaron’s Holdings Company, Inc. and Aaron’s Merger Sub, Inc.

What vote is required to approve each proposal or elect directors, and how will my vote be counted?

Proposal 1-Election of Directors

Shareholders may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to each of the nominees for director being considered pursuant to Proposal 1. Assuming a quorum is present, a nominee will be elected upon the affirmative vote of a majority of the total votes cast at the Annual Meeting, which means that the number of votes cast in favor of a nominee’s election exceeds the number of votes cast against that nominee’s election. Any shares that are not voted (whether by abstention or otherwise) will have no impact on the outcome of the vote with respect to this proposal.


If an incumbent director fails to receive a majority of the votes cast, the incumbent director will promptly tender his or her resignation to our Board of Directors which can then choose to accept it, reject it, or take other action our Board of Directors deems appropriate.

Proposal 2-Advisory Vote on Executive Compensation Matters

Shareholders may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to the non-binding, advisory resolution approving our executive compensation. Assuming a quorum is present, the resolution approving our executive compensation will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the resolution exceed the votes cast against the resolution. Any shares that are not voted (whether by abstention or otherwise) will have no impact on the outcome of the vote with respect to this proposal.

Proposal 3-Ratification of the Appointment of the Independent Registered Public Accounting Firm

Shareholders may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to the proposal to appoint EY as Aaron’s independent registered public accounting firm for 2020. Assuming a quorum is present, the proposal to ratify the appointment of our independent registered public accounting firm for 2020 will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the proposal exceed the votes cast against the proposal. Any shares that are not voted (whether by abstention or otherwise) will have no impact on the outcome of the vote with respect to this proposal.

Proposal 4- Effect the Holding Company Formation and Approve the Agreement and Plan of Merger, by and among Aaron’s, Aaron’s Holdings Company, Inc. and Aaron’s Merger Sub, Inc.

Shareholders may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to the proposal to effect a holding company formation and, in connection therewith, approve an Agreement and Plan of Merger, which we refer to as the “holding company formation proposal”, by and among Aaron’s, Aaron’s Holdings Company, Inc., which we refer to as “HoldCo”, and Aaron’s Merger Sub, Inc., which we refer to as “Merger Sub.” Assuming a quorum is present, the proposal to effect a holding company formation and, in connection therewith, approve an Agreement and Plan of Merger, by and among Aaron’s, HoldCo and Merger Sub will be approved if at least a majority of all outstanding shares of Aaron’s common stock vote in favor of the proposal. If you abstain or otherwise do not vote on the proposal, or if you hold your shares in “street name” and do not provide instructions to your broker, it will have the same effect as a vote AGAINST this proposal.

How does our Board of Directors recommend that I vote?

Our Board of Directors recommends that you vote:

●“FOR” the election of each of the nine director nominees named in this joint proxy statement/prospectus to serve for a term expiring at the 2021 Annual Meeting of Shareholders (Proposal 1).
●“FOR” approval of a non-binding, advisory resolution approving Aaron’s executive compensation (Proposal 2).
●“FOR” the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2020 (Proposal 3).
●“FOR” the proposal to effect a holding company formation and, in connection therewith, approve an Agreement and Plan of Merger, by and among, Aaron’s, HoldCo and Merger Sub (Proposal 4).

How do I vote?

If you are a shareholder of record, then you have four voting options. You may vote:

●Over the Internet, at the website listed in our Notice and Access Letter.
●By telephone using the telephone number listed in our Notice and Access Letter.
●By completing, signing, dating and returning a written proxy card. To vote by using a written proxy card, mark your selections on the proxy card, date the proxy card and sign your name exactly as it appears on your proxy card, and return your proxy card by mail in the pre-addressed, postage-paid envelope which will be included with the written proxy card.
●By attending the Annual Meeting and voting in person.

We encourage you to vote your shares as soon as possible by proxy even if you plan to attend the Annual Meeting to ensure your shares are voted even if you later find you are unable to attend the Annual Meeting. Voting by telephone or over the Internet should be accomplished prior to [●], 2020 at 11:59 p.m., Eastern Time, to ensure your vote is counted. Proxy cards from shareholders who requested a written proxy card will be accepted when received up through the closing of the polls at the Annual Meeting.

If you are a registered holder and you vote your proxy by telephone or over the Internet, or if you complete, sign, date, and return a written proxy card, and no direction is specified as to any matter to be acted upon, the shares represented by your proxy will be voted “FOR” proposals 1, 2, 3 and 4 in this joint proxy statement/prospectus, and in accordance with the proxy holder’s best judgment as to any other business that may properly come before the Annual Meeting.

If you are a beneficial holder, then please refer to the instructions provided by your broker, bank, or other nominee regarding how to vote.

What is the difference between a shareholder of record and a beneficial holder of shares?

If your shares of our common stock are registered directly in your name with our transfer agent, Computershare, Inc., then you are considered a “shareholder of record” with respect to those shares. Shareholders of record will receive a copy of the Notice and Access Letter and, if requested, written copies of this joint proxy statement/prospectus, the notice of Annual Meeting and a proxy card.

If your shares are held in “street name” through a broker, bank, or other nominee, then you are considered the “beneficial holder” of the shares held for you. Beneficial holders of shares should refer to the instructions provided by their broker, bank, or other nominee regarding how to vote their shares or to revoke previous voting instructions. The availability of Internet and telephone voting depends on the voting processes of the broker, bank, or other nominee. As the beneficial holder, you have the right to direct your broker, bank, or other nominee how to vote your shares. Beneficial holders may vote in person only if they have a legal proxy to vote their shares from their broker, bank, or other nominee.

I am a beneficial holder. How are my shares voted if I do not return voting instructions?

Your shares may be voted if they are held in the name of a brokerage firm, even if you do not provide the brokerage firm with voting instructions. Under the rules of the NYSE, brokerage firms have the authority to vote shares on certain routine matters for which their customers do not provide voting instructions by the tenth day before the Annual Meeting. The proposal to ratify the appointment of EY as our independent registered public accounting firm for 2020 is considered a routine matter.

The election of directors, the non-binding, advisory resolution to approve our executive compensation and the proposal to approve the holding company formation are not considered routine matters under the rules of the NYSE. If a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial holder of the shares with respect to that proposal, then the brokerage firm cannot vote the shares on that proposal. This is called a “broker non-vote.” In tabulating the voting result for any particular proposal (other than the holding company formation proposal), shares that are subject to broker non-votes with respect to that proposal will not be considered votes either for or against the proposal, but will be counted as present for determining whether or not a quorum exists. In tabulating the voting result for the holding company formation proposal, shares that are subject to broker non-votes with respect to the holding company formation proposal will have the same effect as a vote AGAINST the holding company formation proposal. It is very important that you provide voting instructions to your brokerage firm if you want your shares to be voted at the Annual Meeting on a non-routine matter.


Can I change my mind after I vote?

If you vote by proxy, then you can revoke that proxy at any time before it is voted at the Annual Meeting by giving written notice to the Corporate Secretary of the Company or though one of the following three methods:

●Vote again using the Internet or by telephone prior to the Annual Meeting.
●Sign another proxy card with a later date and return it to us prior to the Annual Meeting.
●Attend the Annual Meeting in person and vote in person.

If you hold your shares in "street name" as a beneficial holder, your bank, broker or other nominee should provide you with instructions on how you may instruct it to vote on your behalf and how you may revoke any voting instructions given.

How will a proposal or other matter that was not included in this joint proxy statement/prospectus be handled for voting purposes if it is raised at the Annual Meeting?

If any matter that is not described in this joint proxy statement/prospectus should properly come before the Annual Meeting, then John W. Robinson III, Steven A. Michaels, and Robert W. Kamerschen, or any one of them, as proxies will vote the shares represented by valid proxies in accordance with their best judgment. For any other matter that may be properly presented at the Annual Meeting but which is not described in this joint proxy statement/prospectus, assuming a quorum is present, the matter will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the matter exceed the votes cast against the matter, unless a greater vote is required by law or by our charter. At the time this joint proxy statement/prospectus was printed, management was unaware of any other matters that might be presented for shareholder action at the Annual Meeting.

Who will tabulate and certify the vote?

Representatives of Computershare, Inc. will tabulate the vote, act as the independent inspector of elections for the Annual Meeting, and certify the final vote on all matters considered at the Annual Meeting.

What does it mean if I receive more than one copy of the Notice and Access Letter?

This means that you have multiple accounts holding shares of our common stock with brokers or our transfer agent. You will need to vote separately with respect to each proxy card that you receive. Please vote all of the shares you are entitled to vote. See “Additional Information—Householding of Annual Meeting Materials” for more information.

How can I request a written set of proxy materials, including a proxy card, or an additional set of proxy materials for the Annual Meeting?

All shareholders have the ability to access this joint proxy statement/prospectus, the accompanying Notice of Annual Meeting of Shareholders, a written proxy card and the Annual Report by (i) accessing the materials athttp://www.envisionreports.com/AANor the Investor Relations section of our website located at aarons.com or (ii) requesting a printed set of these materials from us at no charge. To request a printed copy of these materials, please write to us at our principal executive offices located at 400 Galleria Parkway, S.E., Suite 300, Atlanta, Georgia 30339, Attn. Corporate Secretary.

What happens if I abstain from voting?

Abstentions with respect to a proposal are counted for purposes of establishing a quorum. If a quorum is present, then abstentions will have no impact on the outcome of the vote with respect to any of the proposals (other than the holding company formation proposal) described in this joint proxy statement/prospectus for consideration at the Annual Meeting. If you abstain or otherwise do not vote on the holding company formation proposal, or if you hold your shares in “street name” and do not provide instructions to your broker, it will have the same effect as a vote AGAINST the holding company formation proposal.

What do I need to do if I want to attend the Annual Meeting?

Only shareholders, our Board of Directors, board nominees, management of the Company and management’s invited guests are permitted to attend the Annual Meeting. If you are a shareholder of record and wish to attend the Annual Meeting, you must provide valid picture identification, such as a driver’s license or passport, showing a name that matches a name on the Company’s list of record shareholders as of [●], 2020 to be admitted to the Annual Meeting. If you hold your shares through a bank, broker, or other nominee, more commonly known as holding shares in “street name,” and desire to vote at the Annual Meeting, you must inform your bank, broker, or other nominee and request a “legal” proxy from the bank, broker, or nominee. You will need to bring the legal proxy to the Annual Meeting along with valid picture identification. If you do not have a legal proxy, you will not be able to vote at the Annual Meeting. You are, however, still welcome to attend the Annual Meeting, but you must bring your most recent brokerage account statement showing that you owned Aaron’s common stock as of the record date along with valid picture identification to be admitted to the Annual Meeting. You are advised that if you own shares in street name and obtain a legal proxy, any proxy you have previously executed will be revoked, and your vote will not be counted unless you appear at the Annual Meeting and vote in person or legally appoint another proxy to vote on your behalf.


How are proxies solicited and what is the cost?

We bear all expenses incurred in connection with the solicitation of proxies. We have engaged [●] to assist with the solicitation of proxies for a fee estimated to be up to $[●] for the initial solicitation services, plus reimbursement of out-of-pocket expenses.

In addition to solicitation by mail and the Internet, certain officers, directors, and employees of the Company may solicit proxies by telephone, email, facsimile, or in person, although no additional compensation will be paid for such solicitation. The Company may also request banks, brokers, and other nominees to solicit their customers who have a beneficial interest in our common stock registered in their names and will reimburse such banks, brokers, and other nominees for their reasonable out-of-pocket expenses.

What are the Compensation Committee’s views on executive compensation for the year ended December 31, 2019?

The Compensation Committee of our Board of Directors designed our executive compensation program to retain key executives and motivate them to foster a culture of engagement and performance. Our executive compensation program is also structured so that a meaningful percentage of compensation is tied to the achievement of challenging levels of corporate and personal performance objectives. We believe this design will enable us to meet the operational, financial and strategic objectives established by our Board of Directors. Each of our named executive officers identified in the “Compensation“Compensation Discussion and Analysis” section of this joint proxy statement,statement/prospectus, which we refer to as our “named executive officers” or “NEOs”, generally has a greater portion of their total direct compensation that is variable and performance-based than do other employees. This is consistent with our philosophy that incentive compensation opportunities linked to performance - including-including financial, operating and stock price performance - should increase as overall responsibility increases.

Incentive compensation

We accomplished key objectives during 2019, which we believe significantly improve our long-term prospects for 2018 performance reflects solid financial results.growth. Despite some challenges we faced during the challenges faced by the traditional rent-to-own industry,year, the Compensation Committee was pleased with management’s achievements and our performance for the year ended December 31, 2018,2019, particularly the following:

●We reported record revenues of $3.9 billion in 2019 compared to $3.8 billion in 2018, compared to $3.4 billion in 2017, driven by strong growth in our Progressive Leasing segment.
●Consolidated earnings before income taxes, which we refer to as "EBIT", decreased to $92.8 million compared to $252.2 million in 2018. The decrease in earnings before income taxes is primarily due to $179.3 million in regulatory charges and legal expenses incurred related to Progressive Leasing's tentative settlement of the FTC matter discussed in Note 10 to the consolidated financial statements found in our Annual Report on Form 10-K for the year ended December 31, 2019.
●Progressive Leasing achieved record revenues of $2.1 billion in 2019, an increase of 6.5% over 2018. Calculated on a basis consistent with the January 2019 adoption of ASC 842, Leases (see the "Use of Non-GAAP Financial Information" in our Form 8-K filed with the SEC on February 20, 2020), Progressive Leasing revenues increased 20.2% over 2018. Progressive Leasing's revenue growth is due to a 22.3% increase in total invoice volume, which was generated through an increase in invoice volume per active door.


●Aaron’s Business revenue growth was nearly flat, reporting revenues of $1.8 billion in 2019 and 2018. Key factors impacting revenue trends year-over-year include the net reduction of 145 Company-operated stores during 2019 as well as the acquisitions of various franchisees in 2018. Same store revenues were flat in 2019 compared to 2018.
●We generated cash from operating activities of $317.2 million in 2019 and had $57.8 million in cash and $386.2 million available on our revolving credit facility as of December 31, 2019.
●We returned $78.7 million to our shareholders in 2019 through the repurchase of 1.2 million shares and the payment of our quarterly cash dividends, which we have paid for 32 consecutive years.
●Progressive Leasing added new national retail partner locations during 2019, which also contributed to the strong revenue growth.
●We continue to invest in various Aaron's Business transformation initiatives such as generating customer demand and driving sales conversion rates through enhanced customer insights, direct response marketing and increased investment in e-commerce. We also continue to execute on various Aaron's Business store optimization and real estate initiatives, including strategic store consolidations and the continued roll out of our next generation store concepts to adapt to our changing competitive environment.

See “Compensation Discussion and Analysis” beginning on page 41 for more information.

Based on 2019 performance, what incentive awards has the Compensation Committee approved for our Progressive Leasing segment.

Progressive Leasing achieved record revenues of nearly $2.0 billion in 2018, an increase of 27.6% over 2017. Progressive Leasing’s revenue growth is due to a 23.2% increase in total invoice volume, which was generated through an increase in invoice volume per active door.
Consolidated earnings before income taxes ("EBIT") increased to a record $252.2 million compared to $239.6 million in 2017, driven by growth at Progressive Leasing, partially offset by declines from our Aaron's Business.
During 2018, we acquired substantially all of the assets of the store operations of 152 Aaron's-branded franchised stores. We believe the acquisitions are benefiting our omnichannel platform through added scale, strengthening our presence in certain geographic markets, enhancing operational control, including compliance, and enabling us to execute our business transformation initiatives on a broader scale.
We generated cash from operating activities of $356.5 million in 2018 and had $15.3 million in cash and $373.0 million available on our revolving credit facility as of December 31, 2018.
Wenamed executive officers?returned $175.0 million to our shareholders in 2018 through the repurchase of 3.7 million shares and the payment of quarterly cash dividends. We have paid dividends for 31 consecutive years.
We continued optimizing our Aaron's store-based operations by implementing various cost efficiency and lease-margin-improvement initiatives, including optimizing merchandising and promotional strategies and continuing store consolidations.
We continued the development of management talent across our entire organization.
Our stock price increased 7% during the year, from January 2, 2018 to December 31, 2018.
We further improved the Company’s compliance programs and achieved important compliance objectives for the year, including objectives related to information security and compliance training.

Based on our 20182019 performance, the Compensation Committee approved the following incentive awards for our named executive officers:

Messrs. John W. Robinson III and Steven A. Michaels earned annual cash incentive awards of 103.6% of target based on Company-wide financial performance and the achievement of compliance-related goals. Mr. Douglas A. Lindsay earned an annual cash incentive award of 104.4% of target based on Aaron’s Business results for financial performance and compliance-related goals. Messrs. Ryan K. Woodley and Curtis L. Doman earned annual cash incentive awards of 104.9% of target, based on Progressive’s results for financial performance and compliance-related goals.


Our named executive officers also earned awards under the performance share component of our 2018 long-term incentive program. This component represents 50% of the annual grant value made under our 2018 long-term incentive program to our NEOs. Messrs. Robinson and Michaels earned awards at 99.0% of target, based on the Company’s overall performance. Mr. Lindsay earned awards at 101.0% of target, based on the financial performance of our Aaron’s Business and the Company as a whole.  Messrs. Woodley and Doman earned awards at 99.9% of target based on the financial performance of Progressive and the Company as a whole. As of the March 4, 2019 record date, the value realized from these awards was greater than the corresponding grant date target values in light of the subsequent increase in our stock price. Further, for the stock options and time-based restricted stock awards that comprise the remainder of the annual grant for our named executive officers, our stock price increase as of March 4, 2019 resulted in award values that were also greater than the grant date award values.

●Messrs. John W. Robinson III and Steven A. Michaels earned annual cash incentive awards of 96.8% of target based on Company-wide financial performance and the achievement of compliance-related goals. Mr. Douglas A. Lindsay earned an annual cash incentive award of 90.5% of target based on Aaron’s Business results for financial performance and compliance-related goals. Messrs. Ryan K. Woodley and Curtis L. Doman earned annual cash incentive awards of 97.5% of target, based on Progressive’s results for financial performance and compliance-related goals.
●Our named executive officers also earned awards under the performance share component of our 2019 long-term incentive program. This component represents 50% of the annual grant value made under our 2019 long-term incentive program to our NEOs. Messrs. Robinson and Michaels earned awards at 89.1% of target, based on the Company’s overall performance. Mr. Lindsay earned awards at 78.1% of target, based on the financial performance of our Aaron’s Business and the Company as a whole. Messrs. Woodley and Doman earned awards at 87.9% of target based on the financial performance of Progressive and the Company as a whole. As of the [●], 2020 record date, the value realized from these awards was lower than the corresponding grant date target values in light of the subsequent decline in our stock price. Further, for the stock options and time-based restricted stock awards that comprise the remainder of the annual grant for our named executive officers, our stock price decline as of [●], 2020 resulted in award values that were also lower than the grant date award values.

See “Compensation“Compensation Discussion and Analysis” beginning on page 2541 for more information.



SUMMARY OF THE HOLDING COMPANY FORMATION PROPOSAL

The following summary highlights selected information regarding the holding company formation proposal, including the merger agreement and related transactions, which are described in greater detail elsewhere in this joint proxy statement/prospectus. It may not contain all of the information that may be important to you. To better understand the holding company formation proposal, and for a more complete description of the terms of the merger agreement and the related transactions, you should read this entire document carefully, including the appendices, and the additional documents to which we refer you. You can find information with respect to these additional documents under the caption “Where You Can Find More Information.”

Aaron’s, HoldCo and Merger Sub

Aaron’s is a leading omnichannel provider of lease-purchase solutions primarily to an underserved, credit-challenged segment of the population. Through multiple business segments, the Company primarily provides consumers with lease-purchase solutions for the products they need and want including furniture, appliances, electronics, jewelry and a variety of other products. The Company provides flexible options to help customers towards ownership, including early buyout options, low up-front payments and flexible payment options. Aaron's, Inc. conducts its business through three operating segments. Progressive Leasing, a virtual lease-to-own company, provides lease-purchase solutions through approximately 25,000 retail locations, owned and operated by other companies, in 46 states and the District of Columbia, including e-commerce merchants. The Aaron's Business segment engages in the sales and lease ownership and specialty retailing of furniture, home appliances, consumer electronics and accessories through its approximately 1,500 company-operated and franchised stores in 47 states, Canada and Puerto Rico, as well as its e-commerce platform, Aarons.com. Dent-A-Med, Inc., d/b/a the HELPcard®, which we refer to as “DAMI”, provides a variety of second-look credit products that are originated through federally insured banks. As part of a rebranding effort DAMI merged into a newly created wholly-owned subsidiary of the Company, Vive Financial, LLC, which we refer to as “Vive”, and began operating under the Vive name effective January 1, 2020.

HoldCo was formed as a wholly owned subsidiary of Aaron’s in order to implement the holding company formation. Prior to the holding company formation, HoldCo will have no assets or operations other than those incident to its formation. After the holding company formation, Aaron’s will be a wholly owned subsidiary of HoldCo, and the current shareholders of Aaron’s will become shareholders of HoldCo.

Merger Sub was formed as a wholly owned subsidiary of HoldCo in order to implement the holding company formation. Prior to the holding company formation, Merger Sub will have no assets or operations other than those incident to its formation. In connection with the holding company formation, Merger Sub will merge with and into Aaron’s with Aaron’s continuing as the surviving entity.

The principal executive offices of Aaron’s, HoldCo and Merger Sub are located at 400 Galleria Parkway, Suite 300, Atlanta, Georgia 30339. Their telephone number is (678) 402-3000. The management and business of Aaron’s will not change as a result of the holding company formation.

What You Will Receive in the Holding Company Formation

In the holding company formation, each outstanding share of Aaron’s common stock will convert into one share of HoldCo common stock. In addition, the outstanding options to purchase shares of Aaron’s common stock, if not exercised before the completion of the holding company formation, will become options to acquire shares of HoldCo common stock.

Conditions to Completion of the Holding Company Formation

The completion of the holding company formation depends on the satisfaction or waiver of a number of conditions, including the following:

●approval of the holding company formation proposal by holders of at least a majority of the outstanding shares of Aaron’s common stock;
●approval for listing on the New York Stock Exchange of the shares of HoldCo common stock to be issued in the holding company formation;
●effectiveness of the registration statement relating to the shares of HoldCo common stock to be issued in the holding company formation and absence of any stop order suspending such effectiveness;
●Aaron’s shall have received an opinion from its legal counsel to the effect that (i) holders of Aaron’s Common Stock will not recognize any gain or loss for federal income tax purposes on the exchange of such Aaron’sCommon Stock for HoldCo Common Stock and (ii) the holding company formation (including the conversion) will qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as amended, which we refer to as the “Code”.


●absence of any law or order that has a material adverse effect on Aaron’s or enjoins or otherwise prohibits the completion of the holding company formation or any pending legal proceeding that seeks one of these results; and
●

receipt of necessary regulatory approvals and licenses and any required third-party consents.

Termination of the Holding Company Formation

If the Aaron’s Board determines to do so, we may not proceed with the holding company formation even if the Aaron’s shareholders approve the holding company formation proposal.

Markets and Market Prices

HoldCo common stock is not currently traded on any stock exchange. Aaron’s common stock is traded on the New York Stock Exchange under the ticker symbol “AAN.” Upon completion of the holding company formation, we expect HoldCo common stock to trade on the New York Stock Exchange under the same ticker symbol.

On [●], 2020, the last trading day before the public announcement of the holding company formation, the closing price per share of Aaron’s common stock was $[●]. On [●], 2020, the most recent trading day for which prices were available prior to the mailing of this joint proxy statement/prospectus, the closing price per share of Aaron’s common stock was $[●].

Financial Information

We have not provided financial statements of HoldCo because, prior to the holding company formation, it will have no assets, liabilities or operations other than those incident to its formation. In addition, we have not included complete pro forma financial comparative per share information concerning Aaron’s that gives effect to the holding company formation because, immediately after the completion of the holding company formation, the consolidated financial statements of HoldCo will be substantially the same as Aaron’s financial statements immediately prior to the holding company formation. For more information regarding the documents incorporated by reference into this joint proxy statement/prospectus, including financial information regarding Aaron’s, see “Where You Can Find Additional Information”.

MATTERS TO BE VOTED ON

Proposal 1-Election of Directors

Our Board of Directors recommends the election of the nominees listed below, each of whom will have a term of office expiring at our 20202021 Annual Meeting of Shareholders. Each nominee elected to serve as a director will hold office until the expiration of his or her term and until his or her successor is duly elected and qualified or until his or her earlier resignation, removal from office or death. If, at the time of the Annual Meeting, any of such nominees should be unable to serve, the persons named in the proxy will vote for such substitutes as our Board of Directors recommends. In no event will the proxy be voted for more than eightnine nominees. Our management has no reason to believe that any nominee for election at the Annual Meeting will be unable to serve if elected.

Robert Yanker will not be re-nominated to our Board of Directors so that he may pursue other business interests and personal opportunities. We thank Mr. Yanker for the care and dedication he brought to his service on our Board of Directors.

The following table provides summary information about each nominee, all of whom currently serve on our Board of Directors. All of the nominees listed below have consented to serve as directors if elected.

NomineeAgeOccupationIndependentJoined Our Board
Former Senior Vice President-Home
Services
Kelly H. Barrett55The Home DepotYesMay 2019
Former Owner and Chief Executive
Officer
Kathy T. Betty64Atlanta Dream (WNBA team)YesAugust 2012
Managing Principal
New Kent Capital LLC and
Douglas C. Curling65New Kent Consulting LLCYesJanuary 2016
President and Chief Executive Officer
Citizens Bancshares Corporation and
Cynthia N. Day54Citizens Trust BankYesOctober 2011
Chief Innovation Officer
Curtis L. Doman47Progressive LeasingNoAugust 2015
President and Chief Executive Officer
Walter G. Ehmer53Waffle House, Inc.YesMay 2016
Former Chief Executive Officer
Hubert L. Harris, Jr.76Invesco North AmericaYesAugust 2012
President and Chief Executive Officer
John W. Robinson III48Aaron’s, Inc.NoNovember 2014
NomineeAgeOccupationIndependentJoined Our Board
Kathy T. Betty63Former Owner and Chief Executive Officer
Atlanta Dream (WNBA team)		YesAugust 2012
Douglas C. Curling64
Managing Principal
New Kent Capital LLC and
New Kent Consulting LLC
YesJanuary 2016
Cynthia N. Day53President and Chief Executive Officer
Citizens Bancshares Corporation and Citizens Trust Bank		YesOctober 2011
Curtis L. Doman46Chief Product Officer ProgressiveNoAugust 2015
Walter G. Ehmer53President and Chief Executive Officer Waffle House, Inc.YesMay 2016
Hubert L. Harris, Jr.75
Former Chief Executive Officer
Invesco North America
YesAugust 2012
John W. Robinson III47President and Chief Executive Officer
Aaron’s, Inc.		NoNovember 2014
Ray M. Robinson71Former President for the Southern Region
Ray M. Robinson72AT&TYesNovember 2002

Assuming a quorum is present, a nominee will be elected upon the affirmative vote of a majority of the total votes cast at the Annual Meeting, which means that the number of votes cast in favor of a nominee’s election exceeds the number of votes cast against that nominee’s election. If an incumbent director fails to receive a majority of the votes cast, the incumbent director will promptly tender his or her resignation to our Board of Directors. Our Board of Directors can then choose to accept the resignation, reject it or take such other action that our Board of Directors deems appropriate.


Our Board of Directors recommends that you vote “FOR”

the election of each of the nominees above.



Proposal 2-Advisory Vote on Executive Compensation

We provide our shareholders with the annual opportunity to cast an advisory vote on the compensation of our named executive officers. The vote on this proposal represents an additional means by which we obtain feedback from our shareholders about executive compensation. Among other responsibilities, our Compensation Committee sets executive compensation for our named executive officers, which is designed to link pay with performance while enabling us to competitively attract, motivate and retain key executives. The overall objective of our executive compensation program is to encourage and reward the creation of sustainable, long-term shareholder value.

To meet this objective, during 2018,2019, the Compensation Committee’s deliberations regarding how much to pay our named executive officers included, among other performance metrics, (i) objective measurements of business performance, (ii) the accomplishment of strategic, financial and compliance objectives, (iii) the development of management talent, (iv) enhancement of shareholder value and (v) other matters relevant to both the short- and the long-term success of Aaron’s. Our focus on internal financial performance as measured in our annual incentive plans led to solid results for 2018,2019, and we believe has positioned our operations well for the future. Our equity program serves to align the interests of our named executive officers with those of our shareholders.

We encourage our shareholders to read the“Compensation Discussion and Analysis”section of this Proxy Statement,joint proxy statement/prospectus, which discusses how our compensation policies and programs support our compensation philosophy. Our Board of Directors and the Compensation Committee believe these policies and programs are strongly aligned with the long-term interests of our shareholders.

Accordingly, we ask for shareholder approval of the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement,joint proxy statement/prospectus, including the Compensation Discussion and Analysis, compensation tables and narrative disclosure, is hereby APPROVED.”

This vote is advisory and therefore not binding on us, our Board of Directors or the Compensation Committee. At last year’s annual meeting of shareholders, over 98%81% of votes cast were in support of the compensation paid to our named executive officers. Our Board of Directors and the Compensation Committee value the opinions of our shareholders, and the Compensation Committee takes seriously its role in the governance of compensation. The Compensation Committee will consider the result of this year’s vote, as well as other communications from shareholders relating to our compensation practices, and take them into account in future determinations concerning our executive compensation program.

Assuming a quorum is present, the resolution above approving our executive compensation will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the resolution exceed the votes cast against the resolution.


Our Board of Directors recommends that you vote “FOR”

the resolution approving our executive compensation.



Proposal 3-Approval of the Aaron’s, Inc. Amended and Restated 2015 Equity and Incentive Plan

We are asking our shareholders to approve the Aaron’s, Inc. Amended and Restated 2015 Equity and Incentive Plan (the “Amended and Restated 2015 Plan”), which amends the Aaron’s, Inc. 2015 Equity and Incentive Plan (the “Existing 2015 Plan”) initially approved by shareholders on May 6, 2015, to make the changes summarized below.
Background
The Existing 2015 Plan is an important tool that we use to promote the long-term growth and profitability of Aaron’s and its subsidiaries by providing employees, directors, consultants, advisors, and other persons who work for the Company and its subsidiaries with incentives to maximize shareholder value and otherwise contribute to the success of the Company. In addition, we believe the Existing 2015 Plan helps us attract, retain, and reward talented individuals and align their interests with shareholders. The Existing 2015 Plan is our only incentive award plan with shares available for issuance. As of March 4, 2019, only 722,323 shares remained available for future grants under the Existing 2015 Plan.
To ensure that the Company has an appropriate number of shares available for grant under the Existing 2015 Plan to properly incentivize employees, directors, consultants, advisors, and other persons who work for the Company and its subsidiaries, we are asking shareholders to approve an increase in the number of shares of common stock available for issuance under the Existing 2015 Plan by 3,000,000 shares, bringing the total remaining number of shares that may be issued under the plan to 3,722,323 shares.
The Existing 2015 Plan was also designed to allow the Company to comply with the requirements of Section 162(m) of the Internal Revenue Code governing the deductibility of performance-based compensation paid to certain “covered employees.” Since shareholders initially approved the Existing 2015 Plan on May 6, 2015, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law and generally eliminated the deductibility of performance-based compensation under Section 162(m). As a result, we are asking shareholders to approve amendments to the Existing 2015 Plan to remove references to, and provisions implemented in order to comply with, Section 162(m).
While most of these changes are administrative in nature, the changes include the elimination of individual limits contained in the Existing 2015 Plan on the number of awards that may be granted in any one fiscal year to any participant (other than the limitation on the number of options and SARs (as defined below) that can be granted in any one fiscal year). These limitations were implemented solely to comply with the requirements of Section 162(m), and the removal of these limitations in no way reflects a change in our compensation philosophy or the design of our compensation program, both of which are discussed under “Compensation Discussion and Analysis” elsewhere in this Proxy Statement. Even without these limits, the Company’s compensation practices and compensation philosophy will remain subject to oversight and input from shareholders through our regular say-on-pay proposals submitted to shareholders and our regular shareholder engagement program.
Based on these and other considerations, the Compensation Committee approved the Amended and Restated 2015 Plan and recommended the same to the Board of Directors for its approval. The Board of Directors approved the Amended and Restated 2015 Plan in March 2019, subject to shareholder approval.
If shareholders do not approve the Amended and Restated 2015 Plan, the Existing 2015 Plan will continue in effect, and we will be subject to the limitations set forth in the Existing 2015 Plan. Because certain of our directors and executive officers may be eligible to receive awards under the Existing 2015 Plan and the Amended and Restated 2015 Plan, such directors and executive officers may be considered to have an interest in this proposal.
Summary of and Rationale for the Amendments to the Existing 2015 Plan
The key provisions of the Amended and Restated 2015 Plan are substantially the same as those of the Existing 2015 Plan. We are asking our shareholders to approve the Amended and Restated 2015 Plan to make the following changes to the Existing 2015 Plan:
Increase the remaining number of shares of common stock available for issuance by 3,000,000 shares to a total of 3,722,323 shares; and

Revise the Existing 2015 Plan in light of amendments to Internal Revenue Code Section 162(m) in the Tax Act to remove references to and provisions implemented in order to comply with Internal Revenue Code Section 162(m), including the individual limits on the number of awards that may be granted in any one fiscal year to any participant (other than the limitation on the number of options and SARs (as defined below) that can be granted in any one fiscal year).


Summary of the Amended and Restated 2015 Plan
The following summary of the material terms of the Amended and Restated 2015 Plan is qualified in its entirety by reference to the full text of the Amended and Restated 2015 Plan, which is attached as Appendix A to this Proxy Statement.
Capitalized terms used in this summary, but not otherwise defined in this summary, shall have the respective meanings ascribed to them in the Amended and Restated 2015 Plan.
Administration of the Amended and Restated 2015 Plan
The Board of Directors may appoint the Compensation Committee or such other committee consisting of two or more members (in each case, the “Committee”) to administer the Amended and Restated 2015 Plan, and the Board of Directors has currently designated the Compensation Committee to serve this function. The Committee has the right to select the persons who receive awards under the Amended and Restated 2015 Plan, to set the terms and conditions of such awards (including the term, exercise price, vesting conditions, and the consequences of termination of employment), and to interpret and administer the Amended and Restated 2015 Plan. Subject to the express provisions of the Amended and Restated 2015 Plan, the Committee is authorized and empowered to do all things that the Committee in its discretion determines to be necessary or appropriate in connection with the administration and operation of the Amended and Restated 2015 Plan.
Eligible Participants
Employees of the Company or certain affiliates, non-employee members of the Board of Directors, and any other individual who provides bona fide services to the Company or certain affiliates not in connection with the offer or sale of securities in a capital raising transaction (subject to certain limitations) will be eligible for selection by the Committee for the grant of awards under the Amended and Restated 2015 Plan. As of December 31, 2018, there were approximately 475 employees and 7 non-employee members of the Board of Directors who could be eligible to receive awards under the Amended and Restated 2015 Plan. Individuals who are not employees or directors providing services to the Company or certain affiliates are not eligible to receive awards under the Amended and Restated 2015 Plan.
Types of Awards
The Amended and Restated 2015 Plan provides for the grant of non-qualified stock options (“NQSOs”), incentive stock options (“ISOs”), stock appreciation rights ("SARs"), restricted stock, RSUs, performance shares, performance units, annual incentive awards and other stock-based awards to eligible participants. ISOs may only be granted to employees of the Company or its subsidiaries.
Shares Available for Issuance
The aggregate number of shares that will be available for issuance pursuant to awards granted under the Amended and Restated 2015 Plan is 8,000,000 shares (the “Share Pool”), subject to adjustment as described in the Amended and Restated 2015 Plan, of which 3,722,323 shares remain currently available for issuance. The shares issued by the Company under the Amended and Restated 2015 Plan will be authorized but unissued shares or shares currently held (or subsequently acquired) as treasury shares, including shares purchased on the open market or in private transactions.
If shares awarded under the Amended and Restated 2015 Plan are not issued, or are reacquired by the Company, as a result of a forfeiture of restricted stock or an RSU, or the termination, expiration or cancellation of an NQSO, ISO, SAR, performance share or performance unit, or the settlement of an award in cash in lieu of shares, that number of shares will be added back to the Share Pool. If the exercise price of an option, or the purchase price and/or tax withholding obligation under any award is satisfied by the Company retaining shares or by the participant tendering shares (either by actual delivery or attestation), the number of shares so retained or tendered shall be deemed delivered for purposes of determining the Share Pool and shall not be available for further awards under the Amended and Restated 2015 Plan. To the extent a SAR is settled in shares of common stock, the gross number of shares subject to such SAR shall be deemed delivered for purposes of determining the Share Pool and shall not be available for further awards under the Amended and Restated 2015 Plan. Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of options shall not be added back to the Share Pool.
Individual Limits
Subject to adjustment as described in the Amended and Restated 2015 Plan, the maximum number of options and SARs that, in the aggregate, may be granted in any one fiscal year to any participant is 1,000,000.


Adjustments
The Committee will make equitable adjustments in the number and class of securities available for issuance under the Amended and Restated 2015 Plan (including under any awards then outstanding), the number and type of securities subject to the individual limits set forth in the Amended and Restated 2015 Plan, and the terms of any outstanding award, as it determines are necessary and appropriate, to reflect any merger, reorganization, consolidation, recapitalization, reclassification, stock split, reverse stock split, spin-off combination, or exchange of shares, distribution to shareholders (other than an ordinary cash dividend), or similar corporate transactions or events.
Stock Options
A stock option provides the participant with the right to buy a specified number of shares at a specified price (“exercise price”) after certain conditions have been met. The Committee may grant both NQSOs and ISOs under the Amended and Restated 2015 Plan. The tax treatment of NQSOs is different from the tax treatment of ISOs, as explained in the section below entitled “Federal Income Tax Consequences.” The Committee will determine and specify in the award agreement whether the option is an NQSO or ISO, the number of shares subject to the option, the exercise price of the option and the period of time during which the option may be exercised (including the impact of a termination of employment). No option can be exercisable more than ten years after the date of grant and the exercise price of a stock option must be at least equal to the fair market value of a share on the date of grant of the option. However, with respect to an ISO granted to a participant who is a shareholder holding more than 10% of the Company’s total voting stock, the ISO cannot be exercisable more than five years after the date of grant and the exercise price must be at least equal to 110% of the fair market value of a share on the date of grant.
Each option shall be counted as one share subject to an award and deducted from the Share Pool.
A participant may pay the exercise price under an option (i) in cash, by check, bank draft, money order or other cash equivalent approved by the Committee; or (ii) if approved by the Committee, by tendering previously-acquired shares having an aggregate fair market value at the time of exercise equal to the total option price (provided that the tendered shares must have been held by the participant for any period required by the Committee), pursuant to a cashless exercise procedure adopted by the Committee, by any other means which the Committee determines to be consistent with the Amended and Restated 2015 Plan’s purpose and applicable law, including net exercise, or (iii) by a combination of these payment methods. No shares will be delivered until the full option price has been paid.
 Stock Appreciation Rights
A SAR entitles the participant to receive cash, shares, or a combination thereof, in an amount equal to the excess of the fair market value of a share on the exercise date over the exercise price for the SAR, after certain conditions have been met. The Committee will determine and specify in the SAR award agreement the number of shares subject to the SAR, the SAR exercise price (which generally must be at least equal to the fair market value of a share on the date of grant of the SAR), the conditions upon which the SAR becomes vested and exercisable, and the period of time during which the SAR may be exercised (including the impact of a termination of employment). No SAR can be exercisable more than ten years after the date of grant. Each SAR that may be settled in shares of common stock shall be counted as one share subject to an award and deducted from the Share Pool. SARs that may not be settled in shares of common stock shall not result in a reduction from the Share Pool.
Restricted Stock and RSUs
The Committee will specify the terms of a restricted stock or RSU award in the award agreement, including the number of shares of restricted stock or units, the purchase price, if any, to be paid for such restricted stock/unit, any restrictions applicable to the restricted stock/unit such as continued service or achievement of performance goals, the length of the restriction period and whether any circumstances, such as death or disability, shorten or terminate the restriction period, and whether RSUs will be settled in cash, shares or a combination of both. Unless the Committee specifies otherwise, RSUs will be settled in shares of common stock.


Except as provided in the Amended and Restated 2015 Plan or in the award agreement, a participant who receives a restricted stock award will have all of the rights of a shareholder of the Company, including the right to vote the shares and the right to receive dividends; provided, however, the Committee may require that any dividends during the restriction period be subject to the same restrictions on vesting as the underlying award. A participant receiving an RSU will not have voting rights and will accrue dividend equivalents only to the extent provided in the RSU agreement and subject to the same vesting and payment restrictions as on the underlying award. Each share of restricted stock and each RSU that may be settled in shares of common stock shall be counted as one share subject to an award and deducted from the Share Pool. RSUs that may not be settled in shares of common stock will not result in a deduction from the Share Pool.
Performance Shares and Units
A performance share will have an initial value equal to the fair market value of a share on the date of grant. A performance unit will have an initial value that is established by the Committee at the time of grant. In addition to any non-performance terms applicable to the performance share or performance unit, the Committee will set performance goals which, depending on the extent to which they are met, will determine the number or value of the performance shares or units that will be paid out to the participant. The Committee may provide for payment of earned performance shares/units in cash or in shares or in the form of other awards granted under the Amended and Restated 2015 Plan which have a fair market value equal to the value of the earned performance shares/units at the close of the applicable performance period. Unless the Committee specifies otherwise, earned performance shares/units will be settled in the form of shares of common stock.
Performance shares/units will not possess voting rights and will accrue dividend equivalents only to the extent provided in the agreement relating to the award and subject to the same restrictions on vesting and payment as the underlying award.
Each performance share that may be settled in shares of common stock shall be counted as one share subject to an award, based on the number of shares that would be paid under the performance share for achievement of target performance, and deducted from the Share Pool. Each performance unit that may be settled in shares of common stock shall be counted as a number of shares subject to an award, based on the number of shares that would be paid under the performance unit for achievement of target performance, and this number shall be deducted from the Share Pool. In the event that the performance shares or performance units are later settled based on above-target performance, the additional number of shares of common stock corresponding to the above-target performance shall be deducted from the Share Pool at the time of such settlement; in the event that the award is later settled based on below-target performance, the difference between the number of shares of common stock awarded based on the below-target performance and the number previously deducted from the Share Pool based on the target performance shall be added back to the Share Pool. Performance shares and performance units that may not be settled in shares of common stock will not result in a deduction from the Share Pool.
Other Awards
The Committee will have the authority to grant other forms of equity-based or equity-related awards, not otherwise described herein, that the Committee determines consistent with the purpose of the Amended and Restated 2015 Plan and the best interests of the Company and its shareholders. These other awards may include an award of, or the right to acquire, shares of common stock that are not subject to restrictions, or provide for cash payments based in whole or in part on the value or future value of shares, for the acquisition or future acquisition of shares, or any combination thereof. Where the value of such an award is based on the difference in the value of a share at different points in time, the grant or exercise price may not be less than 100% of the fair market value of a share on the date of grant. The Committee will determine all terms and conditions of such awards, including the performance measures (as described below), the performance period, the potential amount payable, and the timing of the payment. Other awards that may be settled in shares of common stock shall be counted as a number of shares subject to an award and deducted from the Share Pool. Other awards that may not be settled in shares of common stock shall not result in a deduction from the Share Pool.
Annual Incentive Awards
The Committee may grant annual incentive awards to participants in such amounts and upon such terms as the Committee shall determine. Unless provided otherwise at the time of grant, annual incentive awards (i) shall be payable in cash, and (ii) are intended to be exempt from Section 409A as short-term deferrals, and, thus, will be payable no later than two and a half (2 1⁄2) months after the end of the Company’s fiscal year to which the award relates.
Performance Measures


The Committee may establish performance measures for awards granted to participants under the Amended and Restated 2015 Plan. The performance measure or measures may include, but are not limited to, one or more of the following performance criteria: earnings, earnings before income taxes, earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation and amortization (EBITDA), earnings before interest, taxes, depreciation, amortization and rent (EBITDAR), gross margin, operating margin, profit margin, market value added, market share, revenue, revenue growth, return measures (including but not limited to return on equity, return on shareholders’ equity, return on investment, return on assets, return on net assets, return on capital, return on sales, and return on invested capital), total shareholder return (either in absolute terms or relative to that of a peer group determined by the Committee), profit, economic profit, capitalized economic profit, operating profit, after-tax profit, net operating profit after tax (NOPAT), pretax profit, cash, cash flow measures (including but not limited to operating cash flow, free cash flow, cash flow return, cash flow per share, and free cash flow per share), earnings per share (EPS), consolidated pretax earnings, net earnings, operating earnings, segment income, economic value added, net income, net income from continuing operations available to common shareholders excluding special items, operating income, adjusted operating income, assets, sales, net sales, sales volume, sales growth, net sales growth, comparable store sales, sales per square foot, inventory turnover, inventory turnover ratio, productivity ratios, number of active stores/sites (including but not limited to Company-owned stores, franchised stores, and/or retail or merchant stores at which the Company has entered into lease-to-own arrangements during a specified time period), number of customers, invoice volume, debt/capital ratio, return on total capital, cost, unit cost, cost control, expense targets or ratios, charge-off levels, operating efficiency, operating expenses, customer satisfaction, improvement in or attainment of expense levels, working capital, working capital targets, improvement in or attainment of working capital levels, debt, debt to equity ratio, debt reduction, capital targets, capital expenditures, price/earnings growth ratio, acquisitions, dispositions, projects or other specific events, transactions or strategic milestones, the Company’s common stock price (and stock price appreciation, either in absolute terms or in relationship to the appreciation among members of a peer group determined by the Committee), and book value per share.
All criteria may be measured on a Generally Accepted Accounting Principles (“GAAP”) basis, adjusted GAAP basis, or non-GAAP basis. Any performance measure for an award may be described in terms of Company-wide objectives or objectives that are related to a specific segment, division, subsidiary, employer, department, region, or function in which the participant is employed or as some combination of these (as alternatives or otherwise). A performance objective may be measured on an absolute basis or relative to a pre-established target, results for a previous year, the performance of other corporations, or a stock market or other index. The Committee will specify the period over which the performance goals for a particular award will be measured.
The Committee may specify such other conditions and criteria as it chooses and may exercise discretion as it determines appropriate.
The Committee will determine whether the applicable performance goals have been met with respect to a particular award. In determining whether any performance objective has been satisfied, the Committee is authorized to include or exclude the effects of extraordinary items and/or other items that are unusual or nonrecurring, changes in tax laws or regulations or accounting procedures, or any other factors as the Committee may determine.
Change in Control
Unless otherwise provided in an award agreement, upon a change in control of the Company, any outstanding option, SAR, restricted stock and RSU shall vest as of or immediately prior to the change in control if such award is not assumed, continued or replaced with a “replacement award.” If the participant receives a replacement award in connection with a change in control, and the participant’s employment is terminated without cause within two years following the consummation of a change in control, outstanding options, SARs, restricted stock and RSUs held by such participant shall vest on the participant’s termination date. “Replacement award” means an award (a) of the same type (e.g., option, RSU, etc.) as the award, (b) that has a value at least equal to the value of the award, (c) that relates to publicly traded equity securities of the Company or its successor or is payable solely in cash, and (d) that has other terms and conditions of which are not less favorable to the participant than the terms and conditions of the award.
With respect to awards that are subject to performance objectives, the Committee may, in its sole discretion, provide that any such full or prorated award will be paid prior to when any or all such performance objectives are certified (or without regard to whether they are certified) or may make necessary and appropriate adjustments in the performance objectives.
Clawback and Cancellation Policies
Awards under the Amended and Restated 2015 Plan are subject to any clawback policy adopted by the Company from time to time, including clawback policies adopted to comply with Section 954 of the Dodd-Frank Wall Street Reform and


Consumer Protection Act. For information regarding the Company’s existing clawback policy, see “Compensation Discussion and Analysis-Related Policies and Considerations-Forfeiture of Awards.”
Transferability
Awards generally may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, except in the event of a participant’s death to his beneficiary, or by will or the laws of descent and distribution, and each option or SAR may be exercisable only by the participant during his or her lifetime. However, the Committee may provide in an award agreement for a NQSO that the NQSO be transferable consistent with securities law and other applicable law. NQSOs and SARs may not be transferred for value or consideration.
Amendment and Termination
The Board of Directors or the Committee may amend or terminate the Amended and Restated 2015 Plan in whole or in part at any time, but the amendment or termination cannot adversely affect any rights or obligations with respect to an award previously granted without the affected participant’s written consent. The Company must obtain the approval of the shareholders before amending the Amended and Restated 2015 Plan to the extent required by Section 422 of the Code or the rules of the NYSE or other applicable law.
The Committee may amend an outstanding award agreement in a manner not inconsistent with the terms of the Amended and Restated 2015 Plan, but the amendment will not be effective without the participant’s written consent if the amendment is materially adverse to the participant. The Committee cannot amend outstanding awards, without shareholder approval, to reduce the exercise price of outstanding awards, or cancel outstanding options or SARs in exchange for cash, another award or stock option or SAR with an option exercise price or SAR price that is less than the option exercise price or SAR price of the original stock option or SAR.
Federal Income Tax Consequences
The following is a summary of the general federal income tax consequences to our Company and to U.S. taxpayers of awards granted under the Amended and Restated 2015 Plan. Tax consequences for any particular individual or under state or non-U.S. tax laws may be different.
Incentive Stock Options. A participant does not recognize taxable income upon the grant or upon the exercise of an ISO (although the exercise of an ISO may in some cases trigger liability for the alternative minimum tax). Upon the sale of ISO shares, the participant recognizes income in an amount equal to the excess, if any, of the fair market value of those shares on the date of sale over the exercise price of the ISO shares. The income is taxed at the long-term capital gains rate if the participant has not disposed of the stock within two years after the date of the grant of the ISO and has held the shares for at least one year after the date of exercise, and we are not entitled to a federal income tax deduction. ISO holding period requirements are waived when a participant dies. If a participant sells ISO shares before having held them for at least one year after the date of exercise and two years after the date of grant, the participant recognizes ordinary income to the extent of the lesser of: (a) the gain realized upon the sale; or (b) the excess of the fair market value of the shares on the date of exercise over the exercise price. Any additional gain is treated as long-term or short-term capital gain depending upon how long the participant has held the ISO shares prior to disposition. In the year of any such disposition, we are entitled to a federal income tax deduction in an amount equal to the ordinary income that the participant recognizes, if any, as a result of the disposition.
Nonqualified Stock Options. A participant does not recognize taxable income upon the grant of an NQSO. Upon the exercise of such a stock option, the participant recognizes ordinary income to the extent the fair market value of the shares received upon exercise of the NQSO on the date of exercise exceeds the exercise price. We are entitled to an income tax deduction in an amount equal to the ordinary income that the participant recognizes upon the exercise of the stock option.
Restricted Stock. A participant who receives an award of restricted stock does not generally recognize taxable income at the time of the award. Instead, the participant recognizes ordinary income in the first taxable year in which his or her interest in the shares becomes either: (a) freely transferable or (b) no longer subject to substantial risk of forfeiture. The amount of taxable income is equal to the fair market value of the shares less the cash, if any, paid for the shares. A participant may make an election under Internal Revenue Code Section 83(b) to recognize income at the time of grant of restricted stock in an amount equal to the fair market value of the restricted stock (less any cash paid for the shares) on the date of the award. We are entitled to a deduction in an amount equal to the ordinary income recognized by the participant in the taxable year in which restrictions lapse (or in the taxable year of the award if, at that time, the participant had filed a timely election to accelerate recognition of income).


Restricted Stock Units. A participant who receives an award of RSUs will recognize ordinary income equal to the amount of any cash received and the fair market value of any shares issued and received at the time of and as a result of vesting. We are entitled to an income tax deduction in an amount equal to the ordinary income that the participant recognizes.
SARs. A participant who exercises a SAR will recognize ordinary income upon the exercise equal to the amount of any cash received and the fair market value of any shares received as a result of the exercise. We are entitled to an income tax deduction in an amount equal to the ordinary income that the participant recognizes upon the exercise of the SAR.
Performance Units, Performance Shares and Other Awards. In the case of an award of performance unit awards, performance share awards, or other stock-based awards, the participant would generally recognize ordinary income in an amount equal to any cash received and the fair market value of any shares received on the date of payment. In that taxable year, we would be entitled to a federal income tax deduction in an amount equal to the ordinary income that the participant has recognized.
Section 409A. Section 409A of the Internal Revenue Code provides special tax rules applicable to programs that provide for a deferral of compensation. Failure to comply with those requirements will result in accelerated recognition of income for tax purposes along with an additional tax equal to 20% of the amount included in income, and interest on deemed underpayments in certain circumstances. While certain awards under the Amended and Restated 2015 Plan could be subject to Section 409A, the Amended and Restated 2015 Plan has been drafted to comply with the requirements of Section 409A, where applicable.
Section 162(m). Internal Revenue Code Section 162(m) limits the deductibility of compensation paid to our Chief Executive Officer and to each of our three other most highly compensated executive officers (other than the Chief Financial Officer for years commencing before 2018) named in the summary compensation table, provided that the executive officer is employed by us as an executive officer as of the end of that year. Under Section 162(m), the annual compensation paid to each of these executives may not be deductible to the extent that it exceeds $1,000,000. However, we could previously achieve the deductibility of compensation related to the exercise of stock options or SARs or the vesting of performance-based equity awards by meeting certain conditions of Section 162(m). Section 162(m) was amended in December 2017 by the Tax Act to eliminate the exemption for performance-based compensation (other than with respect to payments made pursuant to certain “grandfathered” arrangements entered into prior to November 2, 2017) and to expand the group of current and former executive officers who may be covered by the deduction limit under Section 162(m). While our shareholder-approved Existing 2015 Plan was previously structured to provide that certain awards could be made in a manner intended to qualify for the performance-based compensation exemption, that exemption will no longer be available for future tax years (other than with respect to “grandfathered” arrangements, if any). The Committee expects in the future to authorize compensation in excess of $1,000,000 to named executive officers that will not be deductible under Section 162(m) when it believes doing so is in the best interests of the Company and its shareholders. Since the performance-based compensation exception is no longer available, the Company will no longer include specific Section 162(m)-related limitations or provisions or request shareholder approval for this purpose, and generally will not attempt to meet the requirements previously included in the Existing 2015 Plan related to the now-eliminated performance-based exception as there is no tax benefit to doing so. The Company will continue to seek shareholder approval of any changes to the Amended and Restated 2015 Plan as may be required by applicable law or regulation.
Plan Benefits
All future awards will be made at the discretion of the Compensation Committee. Therefore, we cannot determine future benefits for any other awards under the Amended and Restated 2015 Plan at this time. The table below shows awards


earned under the Existing 2015 Plan for fiscal year 2018.
Name Title 2018 Incentive Award Value on Grant Date # of Options Granted # of RSAs Granted # of RSUs Granted # of PSUs Granted
John W. Robinson III Chief Executive Officer $5,344,806 87,330 27,510 — 55,020
Steven A. Michaels Chief Financial Officer & President of Strategic Operations 1,445,849 23,640 7,440 — 14,880
Ryan K. Woodley Chief Executive Officer, Progressive 2,468,917 40,320 12,720 — 25,410
Douglas A. Lindsay President, Aaron's Business 1,390,272 22,680 7,170 — 14,310
Curtis L. Doman Chief Product Officer, Progressive 1,466,407 23,940 7,560 — 15,090
Executive Officer Group   12,912,403 210,900 66,510 — 132,900
Non-Executive Directors Group     — — 22,008 —
Non-Executive Officer Employee Group Total   15,673,433 150,150 141,588 — 138,210
Approval by Shareholders
Assuming a quorum is present, the proposal to approve the Amended and Restated 2015 Plan will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the proposal exceed the votes cast against the proposal.

Our Board of Directors unanimously recommends that you vote “FOR”
the Aaron's, Inc. Amended and Restated 2015 Equity and Incentive Plan.



Proposal 4-Ratification3-Ratification of the Appointment of the Independent Registered Public Accounting Firm

The Audit Committee of our Board of Directors has appointed Ernst & Young LLP, which we refer to as “EY,” to audit our consolidated financial statements for the year ending December 31, 2019,2020, as well as the effectiveness of our internal controls over financial reporting as of December 31, 2019.2020. A representative of EY will be present at the Annual Meeting, will have the opportunity to make a statement and will be available to respond to appropriate questions from shareholders.

We are asking our shareholders to ratify EY's appointment as our independent registered public accounting firm. Although ratification is not required by our bylaws or otherwise, our Board of Directors is submitting the selection of EY to our shareholders for ratification because we value our shareholders’ views on our independent registered public accounting firm and view the ratification vote as a matter of good corporate practice. In the event that our shareholders fail to ratify the appointment, it is anticipated that no change in our independent registered public accounting firm would be made for fiscal year 20192020 because of the difficulty and expense of making any change during the current fiscal year. However, our Board of Directors and the Audit Committee would consider the vote results in connection with the engagement of an independent registered public accounting firm for fiscal year 2020.2021. Even if EY's appointment is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of the Company and its shareholders.

Assuming a quorum is present, the proposal to ratify the appointment of our independent registered public accounting firm for 20192020 will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the proposal exceed the votes cast against the proposal.


Our Board of Directors recommends that you vote “FOR”

the ratification of
the appointment of our independent registered public accounting firm for 2019.
2020.


Proposal 4-Effect the Holding Company Formation and Approve the Agreement and Plan of Merger, by and among Aaron’s, Inc., Aaron’s Holdings Company, Inc. and Aaron’s Merger Sub, Inc.

This section of the joint proxy statement/prospectus describes the holding company formation proposal. The summary of the material provisions of the merger agreement provided below is qualified in its entirety by reference to the merger agreement, among Aaron’s, HoldCo and Merger Sub, which we have attached as Appendix B to this joint proxy statement/prospectus and which we incorporate by reference into this joint proxy statement/prospectus. You should carefully read the entire joint proxy statement/prospectus and the merger agreement for a more complete understanding of the holding company formation proposal. Your approval of the holding company formation proposal will constitute approval of the holding company formation, the merger agreement, and the articles of incorporation and bylaws of HoldCo.

Reasons for the Holding Company Formation; Recommendation of Our Board

As part of their ongoing evaluation of the Company’s business, the Company’s senior management team, together with the Aaron’s Board, regularly evaluates a range of strategic opportunities. As part of this evaluation, the Company’s senior management team and the Aaron’s Board identified the implementation of a holding company structure as a possible course of action that could facilitate future corporate actions and provide us with greater operational and financing flexibility for the Company’s Progressive Leasing and Aaron’s Business segments. During 2019 and 2020, Aaron’s periodically consulted with its legal and financial advisors to discuss the benefits and considerations associated with the potential implementation of a holding company structure. The Company’s senior management team and its legal and financial advisors also discussed the potential implementation of a holding company structure with the Aaron’s Board during this period.

After deliberation, the Company and the Aaron’s Board determined to approve the holding company formation proposal. The Aaron’s Board considered a number of factors in reaching this conclusion, including the following:

●The holding company formation will likely increase flexibility in pursuing future corporate actions for each of our Progressive Leasing and Aaron’s Business segments.
●The holding company formation will likely enhance operational flexibility by aligning distinct structures and resources for our Progressive Leasing and Aaron’s Business segments, as each focuses on serving its specific markets and channels.
●The holding company formation will likely facilitate greater financing flexibility for our Progressive Leasing and Aaron’s Business segments.

After careful consideration, the Aaron’s Board has unanimously approved the holding company formation, determined that the terms of the holding company formation and merger agreement are advisable and in the best interests of Aaron’s shareholders, and has adopted and approved the related merger agreement.

Our Board of Directors recommends that you vote “FOR”
the holding company formation proposal (including approval of the merger agreement) at the annual meeting.


Holding Company Formation

Aaron’s currently owns all of the issued and outstanding common stock of HoldCo, and HoldCo currently owns all of the common stock of Merger Sub, which newly-created subsidiaries were formed for purposes of completing the holding company formation. Following the approval of the merger agreement by the requisite Aaron’s shareholders and the satisfaction or waiver of the other conditions specified in the merger agreement (which are described below), Merger Sub will merger with and into Aaron’s with Aaron’s continuing as the surviving corporation. This merger will in large part effect the holding company formation. As a result of this merger:

●Each holder of Aaron’s common stock at the time the merger is effective will become a holder of HoldCo common stock.
●Aaron’s will become a wholly owned subsidiary of HoldCo.
●Aaron’s will be the surviving corporation in the merger with Merger Sub.

Copies of the HoldCo’s articles of incorporation and bylaws that will be in effect upon completion of the holding company formation are included as Appendix C and Appendix D, respectively, to this joint proxy statement/prospectus. For more information regarding your rights as a shareholder before and after the holding company formation, see “Description of HoldCo Capital Stock.”

In all other respects, the management and business of our company will remain the same immediately following the holding company formation and we expect that the current directors of Aaron’s will be the directors of HoldCo following the holding company formation and the current executive officers of Aaron’s will remain the same.

What Aaron’s Shareholders will Receive in the Holding Company Formation

Each share of Aaron’s common stock will convert into one share of HoldCo common stock. You will own the same percentage of shares of HoldCo common stock as you owned of Aaron’s common stock immediately prior to the completion of the holding company formation.

Exchange of Stock Certificates Not Required

Following the completion of the holding company formation, the certificates representing your shares of Aaron’s common stock will represent the same number of shares of HoldCo common stock. You will not be required to exchange your stock certificates as a result of the holding company formation.

Aaron’s Stock Plans, Employee Stock Purchase Plan and Retirement Plan

After the holding company formation, each outstanding option to acquire shares of Aaron’s common stock will become an option to acquire the same number of shares of HoldCo common stock with the same exercise price per share in effect before the holding company formation. Each outstanding restricted stock unit (“RSU”) or restricted stock award, will entitle the holder to receive a share of HoldCo common stock (or its equivalent if the RSU is settled in cash) when the restricted stock vests or the RSU is settled. In addition, each outstanding stock appreciation right, performance share, performance unit or other stock award will entitle the holder to receive a share of HoldCo common stock (or its equivalent if the award is settled in cash) when the award vests or is settled. As of the record date, there were options to purchase [•] shares of Aaron’s common stock, [•] restricted stock units, and [•] shares of restricted stock outstanding under the Aaron’s, Inc. 2001 Stock Option and Incentive Award Plan and the Aaron’s Inc. Amended and Restated 2015 Equity and Incentive Award Plan (the “Stock Plans”). Awards of Aaron’s common stock that are converted into awards of HoldCo common stock as a result of the holding company formation will have the same terms and conditions as before the holding company formation.

After the holding company formation, each participant eligible to purchase a share of Aaron’s common stock under Aaron’s, Inc. Employee Stock Purchase Plan (the “ESPP”) will be eligible to purchase one share of HoldCo common stock on the same terms and conditions as before the holding company formation.

Any shares of Aaron’s common stock that remain available for issuance under the Stock Plans or the ESPP after the holding company formation will be converted into the number of shares of HoldCo common stock equal to the number of such shares of Aaron’s common stock.

Each share of Aaron’s common stock held under the Aaron’s, Inc. Employees Retirement Plan (the “Retirement Plan”) before the holding company formation will be converted into a number of shares of HoldCo common stock equal to the number of such shares of Aaron’s common stock after the holding company formation.


In addition, HoldCo will assume and agree to perform all obligations of Aaron’s under its Stock Plans and ESPP as well as the Retirement Plan and the Aarons, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) after the holding company formation. This will allow HoldCo to grant equity awards under the Stock Plans and will permit eligible employees of HoldCo and its affiliates to participate in the ESPP, the Retirement Plan and the Deferred Compensation Plan following the holding company formation. The grants of equity awards under the Stock Plans, the stock purchases under the ESPP and the investment in company stock under the Retirement Plan that occur following the holding company formation will be denominated in HoldCo common stock but otherwise, will be on the same terms and conditions as those that applied before the holding company formation.

Conditions to Holding Company Formation

We will complete the holding company formation only if each of the following conditions is satisfied or waived:

●approval of the holding company formation proposal by holders of at least a majority of the outstanding shares of Aaron’s common stock;
●approval for listing on the New York Stock Exchange of the shares of HoldCo common stock to be issued in the holding company formation;
●effectiveness of the registration statement relating to the shares of HoldCo common stock to be issued in the holding company formation and absence of any stop order suspending such effectiveness;
●Aaron’s shall have received an opinion from its legal counsel to the effect that (i) holders of Aaron’s Common Stock will not recognize any gain or loss for federal income tax purposes on the exchange of such Aaron’s Common Stock for HoldCo Common Stock and (ii) the holding company formation (including the conversion) will qualify as a tax-free reorganization under the Code;
●absence of any law or order that has a material adverse effect on Aaron’s or enjoins or otherwise prohibits the completion of the holding company formation or any pending legal proceeding that seeks one of these results; and
●receipt of necessary regulatory approvals and licenses and any required third party consents.

The merger agreement or the completion of the merger may be deferred or terminated at any time prior to the completion of the holding company formation (even after approval by our shareholders) by the Aaron’s Board.

Completion of the Holding Company Formation

The holding company formation will be completed when we file articles of merger with the Georgia Secretary of State. We currently plan to complete the holding company formation once our shareholders approve the holding company formation and all other conditions to completion of the holding company formation have been satisfied. Nonetheless, we may delay or terminate the holding company formation, even if Aaron’s shareholders approve the holding company formation proposal.

Material U.S. Federal Income Tax Consequences

The following discussion summarizes the material U.S. federal income tax consequences of the holding company formation (which for purposes of the following discussion includes the merger and conversion). This discussion is based upon current provisions of the Code, current and proposed Treasury Regulations, and judicial and administrative decisions and rulings as of the date of this joint proxy statement/prospectus, all of which are subject to change (possibly with retroactive effect) and all of which are subject to differing interpretation. This discussion does not address all aspects of taxation that may be relevant to you in light of your personal investment or tax circumstances, and does not address persons that are subject to special treatment under the U.S. federal income tax laws. In particular, this discussion deals only with shareholders that hold Aaron’s common stock as capital assets within the meaning of the Code. In addition, this discussion does not address the tax treatment of special classes of shareholders, such as banks, insurance companies, tax-exempt organizations, financial institutions, broker-dealers, persons holding Aaron’s common stock as part of a hedging or conversion transaction or as part of a “straddle,” U.S. expatriates, persons subject to the alternative minimum tax, foreign corporations, foreign partnerships, foreign estates or trusts, and persons who are not citizens or residents of the United States. This discussion may not be applicable to holders who acquired Aaron’s common stock pursuant to the exercise of options or warrants or otherwise as compensation. Furthermore, this discussion does not address any state, local or foreign tax considerations.


We urge you to consult your own tax advisors about the application of the U.S. federal income tax laws to your particular situation as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction.

Our counsel, King & Spalding LLP, is providing an opinion to us, which we refer to as the tax opinion, in connection with the filing of this joint proxy statement/prospectus to the effect that the holding company formation will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The tax opinion will be subject to customary assumptions, qualifications and limitations, and will be based on representations made by us regarding factual matters, and covenants undertaken by Aaron’s and HoldCo. If any assumption or representation is inaccurate, or any covenant is not complied with, the tax consequences of the holding company formation could differ from those described below and in the tax opinion. The tax opinion is not binding on the IRS or the courts and there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to the conclusions set forth in the tax opinion.

As noted and subject to the qualifications above, in the opinion of King & Spalding LLP, the holding company formation will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

Accordingly, for U.S. federal income tax purposes:

●U.S. holders will not recognize any gain or loss on the receipt of HoldCo common stock in exchange for Aaron’s common stock pursuant to the holding company formation;
●the aggregate tax basis of the HoldCo common stock received in the holding company formation by a U.S. holder will be the same as such holder’s aggregate tax basis in the Aaron’s common stock surrendered in exchange therefor; and
●the holding period of the HoldCo common stock received by a U.S. holder in connection with the holding company formation will include the holding period of the Aaron’s common stock surrendered in exchange therefor.

If you own at least five percent of Aaron’s common stock (by vote or value) or your tax basis in Aaron’s common stock, immediately prior to the completion of the holding company formation, is $1,000,000 or more, you may be required to attach a statement to your federal income tax return for the taxable year in which the holding company formation is completed that contains information such as your tax basis in the Aaron’s common stock surrendered and the fair market value of such stock.

Anticipated Accounting Treatment

For accounting purposes, the holding company formation will be treated as a transaction between entities under common control, resulting in no change in the carrying amount of Aaron’s existing assets or liabilities. The accounting treatment for such events is similar to the former “pooling of interests method.” Accordingly, the financial position and results of operations of Aaron’s on the same basis as currently presented will be included in the consolidated financial statements of HoldCo.

Listing of HoldCo Common Stock on the New York Stock Exchange; Delisting and Deregistration of Aaron’s Common Stock

A condition to completion of the holding company formation is the approval for listing on the New York Stock Exchange of shares of HoldCo common stock. This includes both shares issuable in the holding company formation and any other shares to be reserved for issuance in connection with the holding company formation. We expect that the HoldCo common stock will trade under the ticker symbol “AAN.” In addition, HoldCo will become a reporting company under the Exchange Act.

Following the holding company formation, Aaron’s common stock will no longer be listed on the New York Stock Exchange and will no longer be registered under the Exchange Act. In addition, Aaron’s will cease to be a reporting company under the Exchange Act.

Interests of Directors and Executive Officers in the Holding Company Formation

Our directors and executive officers own Aaron’s common stock and stock options and/or other stock-based awards that entitle them to acquire Aaron’s common stock, and, to that extent, their interest in the holding company formation is the same as the interest in the holding company formation of our shareholders generally.


As of [●], 2020, our directors and executive officers beneficially owned shares of our common stock, representing  approximately [●]% of the issued and outstanding shares of common stock as calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934. Each director and executive officer has advised us that she or he plans to vote all of her or his shares of common stock in favor of the holding company formation.

Required Vote

In order to approve the holding company formation proposal, the vote of holders of a majority of the shares of Aaron’s common stock outstanding on the record date is required to approve the agreement and plan of merger. As a result, if a shareholder abstains or otherwise does not vote on the holding company formation proposal, or if a shareholder holds shares in “street name” and does not provide instructions to such shareholder’s broker, it has the same effect as a vote AGAINST the holding company formation proposal.

Statutory Appraisal Rights

Holders of Aaron’s common stock do not have dissenters’ rights under Georgia law as a result of the holding company formation.


DESCRIPTION OF HOLDCO CAPITAL STOCK

HoldCo is incorporated in the State of Georgia, as is Aaron’s. Upon completion of the holding company formation proposal, the rights of shareholders of HoldCo will generally be governed by Georgia law and HoldCo’s articles of incorporation and bylaws, which will be thesame in all material respects as those of Aaron’s. Therefore, your rights as a HoldCo shareholder will be substantially the same as your rights as an Aaron’s shareholder.

The following summary highlights selected information regarding HoldCo’s capital stock. It may not contain all of the information that may be important to you. This summary is qualified by reference to, Georgia law, including the Georgia Business Corporation Code, and HoldCo’s articles of incorporation and bylaws, which are attached as Appendices C and D, respectively, to this joint proxy statement/prospectus.

Capitalization

Upon completion of the holding company formation proposal, the authorized capital stock of HoldCo will consist of 225 million shares of common stock, par value $0.50 per share, and 1 million shares of preferred stock, par value $1.00 per share. All of the shares issued and outstanding upon completion of the holding company formation will be fully paid and nonassessable. Upon completion of the holding company formation, the number of shares of HoldCo common stock that will be outstanding will be the same number of shares of Aaron’s common stock outstanding immediately prior to the holding company formation.

Common Stock

Voting Rights.Holders of HoldCo common stock will be entitled to one vote per share, and, in general, a majority of issued and outstanding shares of HoldCo common stock will be sufficient to authorize action upon all matters submitted for a vote. Directors will be elected by a majority of the votes cast at the annual meeting of the shareholders, and shareholders of HoldCo will not have the right to cumulate their votes in the election of directors. This means that the holders of a majority of the votes represented by the common stock can elect all of the directors then standing for election.

Dividends.Holders of outstanding shares of HoldCo common stock will be entitled to receive dividends and other distributions legally available therefor in amounts as the HoldCo board of directors may determine from time to time, subject to preferential dividend rights of any outstanding preferred stock. Funds for HoldCo dividends generally will be provided through dividends and distributions from its subsidiaries, including Aaron’s. All shares of HoldCo common stock will be entitled to participate ratably with respect to dividends or other distributions.

Preemptive Rights.Holders of HoldCo common stock will not have any preemptive, subscription, redemption or conversion rights and are not entitled to the benefit of any sinking fund.

Liquidation.In the event of the liquidation, dissolution or winding up of HoldCo, the holders of HoldCo common stock will be entitled to receive, after payment or provision for payment of all its debts and liabilities, all of the assets of HoldCo available for distribution, subject to the prior rights of preferred stock, if any, outstanding.

Transfer Agent and Registrar.The transfer agent and registrar for the HoldCo common stock is Computershare, Inc., which is also the transfer agent for the Aaron’s common stock.

Preferred Stock

Aaron’s does not have any preferred stock outstanding and HoldCo will not issue any preferred stock in connection with the holding company formation. Nonetheless, HoldCo will be authorized to issue preferred stock in the future.

Anti-Takeover Effects of HoldCo’s Articles of Incorporation and Bylaws

Upon completion of the holding company formation proposal, HoldCo’s articles of incorporation and bylaws will contain provisions that could delay or make more difficult the acquisition of control of us through a hostile tender offer, open market purchases, proxy contest, merger or other takeover attempt that a shareholder might consider in his or her best interest, including those attempts that might result in a premium over the market price of our common stock.


Authorized but Unissued Capital. HoldCo will have an aggregate of 225 million authorized shares of common stock and 1 million authorized shares of preferred stock. One of the consequences of HoldCo’s authorized but unissued common stock and undesignated preferred stock may be to enable HoldCo’s board of directors to make more difficult or to discourage an attempt to obtain control of HoldCo. If, in the exercise of its fiduciary obligations, HoldCo’s board of directors determined that a takeover proposal was not in HoldCo best interest, HoldCo’s board of directors could authorize the issuance of those shares without shareholder approval, subject to limits imposed by the New York Stock Exchange. The shares could be issued in one or more transactions that might prevent or make the completion of a proposed change of control transaction more difficult or costly by, among other things:

●diluting the voting or other rights of the proposed acquiror or insurgent shareholder group;
●creating a substantial voting block in institutional or other hands that might undertake to support the position of the incumbent board; or
●effecting an acquisition that might complicate or preclude the takeover.

In this regard, HoldCo’s articles of incorporation will grant the board of directors broad power to establish the rights and preferences of the authorized and unissued preferred stock. HoldCo’s board of directors could therefore establish one or more series of preferred stock that entitle holders to:

●vote separately as a class on any proposed merger or consolidation;
●cast a proportionately larger vote together with our common stock on any transaction or for all purposes;
●elect directors having terms of office or voting rights greater than those of other directors;
●convert preferred stock into a greater number of shares of our common stock or other securities;
●demand redemption at a specified price under prescribed circumstances related to a change of control of us; or
●exercise other rights designed to impede a takeover.

Shareholder Action by Written Consent; Special Meetings of Shareholders. HoldCo’s bylaws will provide that any action permitted to be taken by shareholders at any annual or special meeting may be taken without a meeting by written consent if all HoldCo’s shareholders consent thereto in writing. Special meetings of HoldCo’s shareholders may only be called by the chief executive officer or secretary (i) when directed by the chairman of our board of directors or by a majority of our entire board of directors, or (ii) upon the demand of shareholders representing at least 25% of all votes entitled to be cast on each issue to be considered at the proposed special meeting of shareholders.

Election and Removal of Directors. HoldCo’s bylaws will provide that the number of directors shall be at least 3, but may be increased and fixed from time to time by resolution of the board of directors. However, no decrease in the size of the board of directors will shorten the term of any incumbent director.

HoldCo’s bylaws will also provide that a director may be removed by the shareholders only for cause and only by the affirmative vote of at least a majority of the issued and outstanding capital stock entitled to vote for the election of directors.

Finally, HoldCo’s bylaws will provide that vacancies, including vacancies resulting from an increase in the number of directors or from removal of a director, may be filled by a majority vote of the remaining directors then in office, even if less than a quorum or a sole remaining director.

Advance Notice Procedure for Director Nomination and Shareholder Proposals.HoldCo’s bylaws will provide the manner in which shareholders may give notice of director nominations and other business to be brought before an annual meeting. In general, to bring a matter before an annual meeting, other than a proposal being presented in accordance with the provisions of Rule 14a-8 under the Exchange Act, a shareholder will need to provide notice of the proposed matter in writing not less than 90 and not more than 120 days prior to the meeting and satisfy the other requirements in our bylaws. To nominate a candidate for election as a director, a shareholder will need to provide notice of the proposed nomination in writing not less than 60 or more than 120 days prior to the first anniversary of the prior year’s annual meeting. If the annual meeting is more than 30 days before or more than 70 days after the first anniversary of the prior year’s annual meeting, a shareholder will instead need to provide notice of a proposed nomination in writing no more than 120 days prior to such annual meeting and no less than 60 days prior to the annual meeting or the 10th day following the public announcement of when the meeting will be held. Any notice to nominate a candidate for election as a director will also need to satisfy all other requirements specified in our bylaws.

Amendments of HoldCo’s Articles of Incorporation and Bylaws. Amendments to HoldCo’s articles of incorporation will generally need to be approved by the board of directors and by a majority of the outstanding stock entitled to vote on the amendment, and, if applicable, by a majority of the outstanding stock of each class or series entitled to vote on the amendment as a class or series. HoldCo’s bylaws will provide that the bylaws may be amended by a majority vote of the board of directors. HoldCo’s bylaws will also provide that any bylaws adopted by the board of directors may be amended, and new bylaws may be adopted, by the HoldCo’s shareholders by majority vote of all of the shares having voting power.


Georgia Anti-Takeover Statutes

The Georgia Business Corporation Code restricts certain business combinations with “interested shareholders” and contains fair price requirements applicable to certain mergers with certain interested shareholders that are summarized below. The restrictions imposed by these statutes will not apply to a corporation unless it elects to be governed by these statutes. HoldCo will not elected to be covered by these restrictions, but, although we have no present intention to do so, we could elect to do so in the future.

The Georgia Business Corporation Code regulates business combinations such as mergers, consolidations, share exchanges and asset purchases where the acquired business has at least 100 shareholders residing in Georgia and has its principal office in Georgia, and where the acquiror became an interested shareholder of the corporation, unless either:

●the transaction resulting in such acquiror becoming an interested shareholder or the business combination received the approval of the corporation's board of directors prior to the date on which the acquiror became an interested shareholder;
●the acquiror became the owner of at least 90% of the outstanding voting stock of the corporation, excluding shares held by directors, officers and affiliates of the corporation and shares held by certain other persons, in the same transaction in which the acquiror became an interested shareholder; or
●the acquiror became the owner of at least 90% of the outstanding voting stock of the corporation, excluding shares held by directors, officers and affiliates of the corporation and shares held by certain other persons, subsequent to the transaction in which the acquiror became an interested shareholder, and the business combination is approved by a majority of the shares entitled to vote, exclusive of shares owned by the interested shareholder, directors and officers of the corporation, certain affiliates of the corporation and the interested shareholder and certain employee stock plans.

For purposes of this statute, an interested shareholder generally is any person who directly or indirectly, alone or in concert with others, beneficially owns or controls 10% or more of the voting power of the outstanding voting shares of the corporation. The statute prohibits business combinations with an unapproved interested shareholder for a period of five years after the date on which such person became an interested shareholder.

The statute restricting business combinations is broad in its scope and is designed to inhibit unfriendly acquisitions.

The Georgia Business Corporation Code also prohibits certain business combinations between a Georgia corporation and an interested shareholder unless:

●certain “fair price” criteria are satisfied;
●the business combination is unanimously approved by the continuing directors;
●the business combination is recommended by at least two-thirds of the continuing directors and approved by a majority of the votes entitled to be cast by holders of voting shares, other than voting shares beneficially owned by the interested shareholder; or
●the interested shareholder has been such for at least three years and has not increased his ownership position in such three-year period by more than one percent in any 12-month period.

The fair price statute is designed to inhibit unfriendly acquisitions that do not satisfy the specified “fair price” requirements.


Limitation of Liability of Directors

Upon completion of the holding company formation proposal, HoldCo’s articles of incorporation will provide that none of HoldCo’s directors will be personally liable to HoldCo or its shareholders for monetary damages resulting from a breach of the duty of care or any other duty owed to us as a director to the fullest extent permitted by Georgia law. HoldCo’s bylaws will require HoldCo to indemnify any person to the fullest extent permitted by law for any liability and expense resulting from any threatened, pending or completed legal action, suit or proceeding resulting from the fact that such person is or was a director or officer of HoldCo, including service at HoldCo’s request as a director, officer partner, trustee, employee, administrator or agent of another entity. HoldCo’s directors and officers will also be insured against losses arising from any claim against them in connection with their service as directors and officers for wrongful acts or omissions, subject to certain limitations.


QUESTIONS AND ANSWERS ABOUT THE HOLDING COMPANY FORMATION PROPOSAL

The following questions and answers are intended to address briefly some commonly asked questions regarding the holding company formation proposal. These questions and answers do not address all questions that may be important to you as an Aaron’s shareholder. Please refer to the “Holding Company Formation Proposal” and the more detailed information contained elsewhere in this joint proxy statement/prospectus and the documents incorporated by reference into this joint proxy statement/prospectus, which you should read carefully.

Q:

What is the holding company formation proposal?

A:

We are asking you to approve the formation of a new Georgia holding company. In the holding company formation, Aaron’s, which is a Georgia corporation, will become a wholly owned subsidiary of HoldCo, which is also a Georgia corporation. The holding company formation will be effected by merging Aaron’s with a subsidiary of HoldCo. In the merger, the current shareholders of Aaron’s will become shareholders of HoldCo, with the same number of shares of HoldCo as they held of Aaron’s prior to the holding company formation. Following the merger, in connection with the holding company formation, Aaron’s will convert to a limited liability company, which we refer to as the “conversion”. The merger agreement, which sets forth the plan of merger and conversion, is attached as Appendix B to this joint proxy statement/prospectus. You are encouraged to read the merger agreement carefully.

Q:

Why are shareholders of the Company being asked to vote on the holding company formation proposal?

A:

Aaron’s is incorporated in Georgia. Unlike the corporate law of other jurisdictions, such as Delaware, which generally do not require a vote by shareholders to implement a holding company structure, Georgia law requires Aaron’s shareholders to vote on this transaction. Under the Georgia Business Corporation Code, Aaron’s shareholders are required to vote on the holding company formation proposal, even though Aaron’s shareholders will receive an identical number of shares with the same rights in HoldCo relative to their share ownership in Aaron’s prior to completion of the holding company formation.

Q:

Why is Aaron’s proposing the holding company formation?

A:

We are proposing the holding company formation because we believe it will:

●

Increase our flexibility in pursuing future corporate actions for each of our Progressive Leasing and Aaron’s Business segments.

●

Enhance operational flexibility by aligning distinct structures and resources for our Progressive Leasing and Aaron’s Business segments, as each focuses on serving its specific markets and channels.

●

Provide greater financing flexibility for our Progressive Leasing and Aaron’s Business segments.

Q:

Will the management or the business of the company change as a result of the holding company formation?

A:

No. The management and business of our company will remain the same immediately following the holding company formation. We expect that the directors and executive officers of Aaron’s will also serve in the same capacities for HoldCo, including their capacities as members of board committees.

Q:

What will happen to my stock as a result of the holding company formation?

A:

In the holding company formation, each share of common stock of Aaron’s will convert into one share of common stock of HoldCo. As a result, you will become a shareholder of HoldCo and will own the same number and the same percentage of shares of HoldCo common stock that you now own of Aaron’s common stock. We expect that HoldCo common stock will be listed on the New York Stock Exchange under the symbol “AAN,” the same ticker symbol currently used for Aaron’s common stock.

Q:

Will my rights as a HoldCo shareholder be different from my rights as an Aaron’s shareholder?

A:

No. HoldCo is a Georgia corporation, as is Aaron’s. The articles of incorporation and bylaws of HoldCo are the same in all material respects as those for Aaron’s. For more information, see “Description of HoldCo Capital Stock.”

Q:

Will I have to turn in my stock certificates?

A:

No. We will not require you to exchange your stock certificates as a result of the holding company formation. After the holding company formation, each certificate currently representing your shares of Aaron’s common stock will be deemed for all purposes to evidence the same number of shares of HoldCo common stock.



Q:

Will the CUSIP number for my common stock change as a result of the holding company formation?

A:

Yes. Following the holding company formation, the CUSIP number for your shares of HoldCo common stock will be [●].

Q:

Does the holding company formation affect my federal income taxes?

A:

The proposed holding company formation (including the conversion) will be a tax-free transaction under federal income tax laws. We expect that you will not recognize any gain or loss for federal income tax purposes upon your receipt of HoldCo common stock in exchange for your shares of Aaron’s common stock in the holding company formation. The tax consequences to you will depend on your own situation. We urge you to consult your own tax advisors concerning the specific tax consequences of the holding company formation to you, including any foreign, state, or local tax consequences of the holding company formation. For further information, see “The Holding Company Formation Proposal—Material U.S. Federal Income Tax Consequences.”

Q:

How will the holding company formation be treated for accounting purposes?

A:

For accounting purposes, the holding company formation will be treated as a transaction between entities under common control, resulting in no change in the carrying amount of Aaron’s existing assets or liabilities. Accordingly, the financial position and results of operations of Aaron’s on the same basis as currently presented will be included in the consolidated financial statements of HoldCo.

Q:

What vote is required to approve the holding company formation proposal?

A:

In order to approve the holding company formation proposal, holders of at least a majority of all outstanding shares of Aaron’s common stock must vote in favor of the proposal. If you abstain or otherwise do not vote on the holding company formation proposal, or if you hold your shares in “street name” and do not provide instructions to your broker, it will have the same effect as a vote AGAINST the holding company formation proposal.

Q:

If the shareholders approve the holding company formation, when will it occur?

A:

The holding company formation will be completed when we file articles of merger with the Georgia Secretary of State. We currently plan to complete the holding company formation promptly following satisfaction of conditions to the holding company formation, including shareholder approval, or at such later time as Aaron’s determines. However, we may choose not to complete the holding company formation, even if Aaron’s shareholders approve the holding company formation proposal. See “Risk Factors — The holding company formation may not be completed, even with shareholder approval.”

Q:

Do I have dissenters’ (or appraisal) rights?

A:

No. Holders of Aaron’s common stock do not have dissenters’ rights under Georgia law as a result of the holding company formation.

Q:

Whom do I contact if I have questions about the holding company formation proposal?

A:

You may contact our proxy solicitor:

[●]
[●]
[●]
[●]


RISK FACTORS

In considering whether to vote in favor of the holding company formation proposal, you should consider all of the information we have included in this joint proxy statement/prospectus, including its appendices, and all of the information in the documents we have incorporated by reference, including our Annual Report for the year ended December 31, 2019. In particular, you should review the risk factors described in our Form 10-K incorporated by reference. Please see “Where You Can Find Additional Information.”

In addition, you should pay particular attention to the risks described below. If any of the risks described below or in the documents incorporated by reference develops into actual events, our business, financial condition or results of operations could be negatively affected and the market price of our common stock or other securities could decline.

We may not obtain the expected benefits of the holding company formation.

We believe the holding company formation could facilitate future corporate actions and provide us with greater operational and financing flexibility for our Progressive Leasing and Aaron’s Business segments. These expected benefits may not be obtained if market conditions or other circumstances prevent us from taking advantage of facilitating future corporate actions and the expected operational and financing flexibility for our Progressive Leasing and Aaron’s Business segments that we anticipate as a result of the holding company formation. Accordingly, we may incur the costs of the holding company formation without realizing the possible benefits.

As a holding company, HoldCo will be dependent on the operations and funds of its subsidiaries.

After the completion of the holding company formation, HoldCo will be a holding company with no business operations of its own. HoldCo’s only significant assets will be the direct or indirect ownership of the outstanding common stock and membership interests in its subsidiaries, including Aaron’s. As a result, HoldCo will rely on payments from its subsidiaries to meet its financial obligations.

We currently expect that a significant portion of the cash flows of Aaron’s, which will become a wholly owned subsidiary of HoldCo upon the completion of the holding company formation, will be retained and used by it in its operations, including to service any debt obligations Aaron’s may have. Additionally, in the future, subsidiaries may be restricted in their ability to pay cash dividends or to make other distributions to HoldCo, which may limit the payment of cash dividends or other distributions, if any, to the holders of HoldCo common stock. Future credit facilities and other debt obligations of HoldCo, as well as statutory provisions, may limit the ability of HoldCo and its subsidiaries to pay dividends.

The holding company formation may not be completed, even with shareholder approval.

The merger agreement or the completion of the holding company formation may be deferred or terminated at any time prior to its completion (even after approval by our shareholders) by the Aaron’s Board. In addition, the holding company formation will only be completed if the conditions set forth in the merger agreement are satisfied or waived. Accordingly, it is possible that, even with shareholder approval, the holding company formation will not be completed.


CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

You should carefully consider the risk factors included under the heading “Risk Factors” in this joint proxy statement/prospectus and the risk factors incorporated in this joint proxy statement/prospectus by reference. This joint proxy statement/prospectus and documents incorporated by reference in this joint proxy statement/prospectus contain forward-looking statements. You should not place undue reliance on these statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These forward-looking statements reflect the views of our senior management with respect to our financial performance and future events with respect to our business and our industry in general. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” or the negative and similar statements of a future or forward-looking nature may identify forward-looking statements. These forward-looking statements address matters that involve risks, uncertainties and assumptions that could cause our actual results and the timing of certain events to differ materially from those expressed in these statements. These factors include, among others, those set forth below in “Risk Factors,” and in the other documents that we file with the SEC. There also are other factors that we may not describe, generally because we currently do not perceive them to be material, which could cause actual results to differ materially from our expectations.

We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.


GOVERNANCE

Nominees to Serve as Directors

Kelly H. Barrett,55, has served as a director of the Company since May 2019. Prior to her retirement in 2018, Ms. Barrett was employed by The Home Depot for sixteen years, commencing in 2003 serving in various roles of increasing responsibility including most recently as Senior Vice President-Home Services where she ran the $5 billion Home Services division of The Home Depot, including in-home sales and installation, operations, customer contact centers as well as contractor sourcing, onboarding and compliance. She also held the positions of Vice President-Internal Audit and Corporate Compliance, Senior Vice President -Enterprise Program Management and Vice President-Corporate Controller. Before joining The Home Depot, Ms. Barrett served for more than 10 years in senior management positions and ultimately as Senior Vice President and Chief Financial Officer of Cousins Properties Incorporated, a publicly traded real estate investment trust. Ms. Barrett currently serves on the Board of Directors of Piedmont Office Realty Trust, a real estate investment trust, and also on the Board of Directors of Americold Realty, since May 2019. She previously served on the Board of Directors of State Bank Financial Corporation from 2011 to 2016. Her leadership positions in the Atlanta community include currently serving as Chair of the Board of the Metro Atlanta YMCA, the Georgia Tech Foundation Board of Trustees and a member of the Advisory Board of Scheller College of Business at Georgia Tech. She has previously served on the Board of the Girl Scouts of Greater Atlanta, Partnership Against Domestic Violence and the Atlanta Rotary Club.

Among other qualifications, Ms. Barrett brings significant operational management and financial experience to our Board of Directors. Her experience in multiple senior executive leadership positions and service on other boards provide her with retail operations, accounting, financial and compliance expertise which are utilized by our Board of Directors. These skills and experiences qualify her to serve on our Board of Directors.

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Kathy T. Betty, 63, 64, has served as a director of the Company since August 2012. From 2009 until 2011, Ms. Betty was the owner and Chief Executive Officer of the Atlanta Dream of the WNBA. She also founded The Tradewind Group, an incubator company, where she worked until 2007. Her other experience includes serving as Executive Vice President and Partner of ScottMadden from 1993 to 2000, where she worked on international mergers and acquisitions, and working at Ernst & Young LLP from 1989 to 1993, including serving as one of the first women admitted to the partnership.

Among other qualifications, Ms. Betty brings over 30 years of business management and consultancy experience to our Board of Directors. Her leadership positions in the Atlanta community, include serving on the boards of the Chick-fil-A Foundation, the Alexander-Tharpe Fund, Georgia Institute of Technology, and the Board of Councilors of the Carter Center as well as serving on the Board of Trustees for the Georgia Institute of Technology Athletic Association and Board of Advisors for Synergy Laboratories and Sure Med Compliance. She has also served on the boards of the Children’s Health Care of Atlanta Foundation, YMCA of Metropolitan Atlanta and Big Brothers Big Sisters of Atlanta. These positions provided her with management, entrepreneurial, financial and accounting experience, which are utilized by our Board of Directors. These skills and experience qualify her to serve on our Board of Directors.






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Douglas C. Curling, 64,65, has served as a director of the Company since January 2016. Since March 2009, Mr. Curling has been the managing principal of New Kent Capital LLC, a family-run investment business, and New Kent Consulting LLC, a privacy and mergers and acquisitions consulting business. From 1997 until September 2008, Mr. Curling held various executive positions at ChoicePoint Inc., a provider of identification and credential verification services that was sold to Reed Elsevier in 2008, including serving as President from April 2002 to September 2008, as Chief Operating Officer from 1999 to September 2008 and as Executive Vice President, Chief Financial Officer and Treasurer from 1997 to May 1999. Mr. Curling also served as a director of ChoicePoint Inc. from May 2000 to September 2008. Mr. Curling currently serves on the Board of Directors of CoreLogic, a New York Stock Exchange listed company providing global property information, analytics and data-enabled services to financial services organizations and real estate professionals.

Among other qualifications, Mr. Curling brings substantial experience in managing and operating businesses with privacy, data analytics and other data-enabled matters to our Board of Directors. His prior service as a chief financial officer provides him with valuable accounting and financial expertise, and his consulting experience provides him with significant mergers and acquisitions expertise, all of which is utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.



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Cynthia N. Day, 53,54, has served as a director of the Company since October 2011. Ms. Day is currentlyhas been the President and Chief Executive Officer of Citizens Bancshares Corporation and Citizens Trust Bank.Bank since February 2012. Citizens Bancshares Corporation was a publicly held corporation until January 2017. She served as Chief Operating Officer and Senior Executive Vice President of Citizens Trust Bank from February 2003 to January 2012 and served as its acting President and Chief Executive Officer from January 2012 to February 2012. Ms. DayShe previously served as the Executive Vice President and Chief Operating Officer and in other capacities of Citizens Federal Savings Bank of Birmingham from 1993 until its acquisition by Citizens Trust Bank in 2003 and previously2003. Before joining Citizens Trust Bank, she served as an audit manager for KPMG. She currentlyMs. Day also serves on the Boardboard of Directorsdirectors of Primerica, Inc.Primerica., Citizens Bancshares Corporationthe National and its subsidiary, Citizens Trust Bank. AsGeorgia Banker’s Associations and the Atlanta Area Council of January 2017, Citizens Bancshares Corporation's stockBoy Scouts of America. She is traded only on over-the-counter markets. Its subsidiary, Citizens Trust Bank, is not a publicly traded company. Ms. Day has also served as a member of the BoardRotary Club of Directors of the National Bankers Association,Atlanta, the Georgia Society of CPAs, the University of Alabama Continuing Education Advisory Board and the United Negro College Fund.AICPA.

Among other qualifications, Ms. Day brings significant management and financial experience to our Board of Directors. Her experience in multiple senior executive leadership positions and service on other boards, provide her with accounting and financial expertise, which are utilized by our Board of Directors. In addition, the customer base served by Citizens Bancshares Corporation is very similar to that served by the Company, giving her a great understanding of their buying habits, the products they purchase and effective marketing and communication methods. These skills and experiences qualify her to serve on our Board of Directors.



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Curtis L. Doman, 46,47, has served as a director of the Company since August 2015. Mr. Doman currently serves as the Chief ProductInnovation Officer of the Company’s Progressive Leasing segment, and is a co-founder of Progressive.Progressive Leasing. Previously, he served as Chief Technology Officer of Progressive Leasing from 1999 until December 2017.2017 and Chief Product Officer from January 2018 until December 2019. He was also President of IDS, Inc. from September 1993 until October 2015.

Among other qualifications, Mr. Doman brings significant experience in technology and data analytics matters to our Board of Directors. Mr. Doman’s intimate knowledge of our Progressive segment, including as the creator of the dynamic decision-making engine used by our Progressive segment in evaluating underwriting criteria for our lease products, is utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.





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Walter G. Ehmer, 53, has served as a director of the Company since May 2016. Mr. Ehmer is currently the President and Chief Executive Officer of Waffle House, Inc., or “Waffle House,” a position he has held since 2012. Mr. Ehmer has held various positions with Waffle House since joining the company in 1992 as a senior buyer in the purchasing department, including most recently serving as its President and Chief Operating Officer from 2006 until 2012 and as Chief Financial Officer from 1998 until 2002. Mr. Ehmer previously served as a member of the Georgia Tech Industrial Engineering Advisory Board, the Georgia Tech Alumni Association Board of Trustees and the Georgia Tech President’s Advisory Board. Mr. Ehmer is also a past chairperson of the Georgia Tech Alumni Association and currently serves as a member of the board of the Georgia Tech Foundation. Mr. Ehmer also serves on the boards of the City of Atlanta Police Foundation, the Metro Atlanta Chamber of Commerce, and Children's Healthcare of Atlanta Foundation.

Among other qualifications, Mr. Ehmer brings significant management and financial experience to our Board of Directors. His experience in multiple senior executive leadership positions, including with responsibility for accounting-related matters, provide him with managerial and financial expertise that is utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.



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Hubert L. Harris, Jr., 75,76, has served as a director of the Company since August 2012. Since 1992, Mr. Harris has owned and operated Harris Plantation, Inc., a cattle, hay and timber business. Mr. Harris has also served as a trustee for SEI mutual funds since 2008. Mr. Harris previously served as CEO of Invesco North America, CFO of Invesco PLC and Chairman of Invesco Retirement Services, and served on the Board of Directors of Invesco from 1993 to 2004. From 1988 to 2005, Mr. Harris was President and Executive Director of the International Association for Financial Planning. Mr. Harris also served as the Assistant Director of the Office of Management and Budget in Washington, D.C. from 1977 to 1980. Mr. Harris is on the Board of Councilors of the Carter Center, and he previously served as chair of the Georgia Tech Foundation and chair of the Georgia Tech Alumni Association.

Among other qualifications, Mr. Harris brings a strong financial background and extensive business experience to our Board of Directors. His service on numerous for-profit and non-profit boards and management experience provide him with governance and financial expertise, which are utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.




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John W. Robinson III, 47,48, has been a director of the Company since November 2014 when he was named the Chief Executive Officer of the Company. Mr. Robinson was also named President of the Company as of February 2016. From 2012 to November 2014, Mr. Robinson served as the Chief Executive Officer of Progressive Finance Holdings, LLC, which was acquired by Aaron’s, Inc. in April 2014. Prior to working at Progressive, he served as the President and Chief Operating Officer of TMX Finance LLC, or “TMX Finance.” He joined TMX Finance as Chief Operating Officer in 2004 and was appointed President in 2008. TMX Finance filed a voluntary Chapter 11 bankruptcy proceeding in April 2009 from which it emerged in April 2010. Prior to working at TMX Finance, he worked in the investment banking groups at Morgan Stanley, Lehman Brothers and Wheat First Butcher Singer.

Among other qualifications, Mr. Robinson brings significant operational and financial experience to our Board of Directors. His considerable experience in senior management, and his leadership and intimate knowledge of our business, including our Progressive segment in particular, provide him with strategic and operational expertise generally and for the Company specifically, which are utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.







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Ray M. Robinson, 71,72, has served as a director of the Company since November 2002 and has been our Chairman since April 2014. From November 2012 until his appointment as Chairman, Mr. Robinson was the Company’s independent lead director. Mr. Robinson started his career at AT&T in 1968, and prior to his retirement in 2003, he held several executive positions, including President of the Southern Region, its largest region, President and Chief Executive Officer of AT&T Tridom, Vice President of Operations for AT&T Business Customer Care, Vice President of AT&T Outbound Services, and Vice President of AT&T Public Relations. Mr. Robinson is also a director of Acuity Brands, Inc., a lighting solutions company, American Airlines Group Inc., a holding company operating various commercial airlines (including American Airlines and US Airways), and Fortress Transportation and Infrastructure Investors LLC, an investor in infrastructure and equipment for the transportation of goods and people, all of which are public companies. Since 2003, Mr. Robinson has also served as a director and non-executive Chairman of Citizens Bancshares Corporation and its subsidiary, Citizens Trust Bank, the largest African American-owned bank in the Southeastern United States and the nation’s second largest. As of January 2017, Citizens Bancshares Corporation's stock is traded only on over-the-counter markets. Its subsidiary, Citizens Trust Bank, is not a publicly traded company. Mr. Robinson previously served as a director of RailAmerica, Inc. from 2010 to 2012.2012 and Avnet, Inc. from 2000 -2018. Mr. Robinson has also been Vice Chairman of the East Lake Community Foundation in Atlanta, Georgia since November 2003.

Among other qualifications, Mr. Robinson brings experience in senior management and board service for numerous public companies to our Board of Directors. His service on the boards of a number of organizations of varying sizes provides him with extensive operational skills and governance expertise, which are utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.




Executive Officers Who Are Not Directors

Set forth below are the names and ages of each current executive officer of the Company who is not a director. All positions and offices with the Company held by each such person are also indicated.

Name (Age)
Position with the Company and Principal Occupation During

the Past Five Years
Robert W. Kamerschen (51)(52)Chief Corporate Affairs Officer from May 2019, Chief Administrative Officer sincefrom February 2016 through April 2019 and Executive Vice President, General Counsel and Corporate Secretary since April 2014. Previously, Mr. Kamerschen served as Senior Vice President and General Counsel from June 2013 and also as Corporate Secretary from November 2013. Before joining the Company, Mr. Kamerschen worked at information solution provider Equifax Inc. from 2008 through 2013, serving in multiple executive positions and most recently as its U.S. Chief Counsel, Senior Vice President and Chief Compliance Officer. Mr. Kamerschen began his legal career in 1994 in the Atlanta office of the international law firm Troutman Sanders LLP.
Douglas A. Lindsay (48)(49)President of Aaron’s Business since February 2016. Prior to joining the Company, Mr. Lindsay served as the Executive Vice President and Chief Operating Officer at ACE Cash Express from February 2012 to January 2016. Previously Mr. Lindsay also served as the Executive Vice President and Chief Financial Officer from June 2007 to February 2012 and the Vice President, Finance and Treasurer from February 2005 to June 2007 for ACE Cash Express.
Steven A. Michaels (47)(48)Chief Financial Officer and President of Strategic Operations since February 2016. Mr. Michaels previously served as President from April 2014 until February 2016, Vice President Strategic Planning & Business Development from 2013 until April 2014, Vice President, Finance from 2012 until April 2014 and Vice President, Finance, Aaron’s Sales & Lease Ownership Division from 2008 until 2011.
Robert P. Sinclair, Jr. (57)(58)Vice President, Corporate Controller since 1999.
Ryan K. Woodley (42)(43)Chief Executive Officer of Progressive Finance Holdings, LLC since January 2015. Mr. Woodley joined Progressive Finance Holdings, LLC as Chief Operating Officer and Chief Financial Officer in June of 2013. Prior to that, he was Chief Operating Officer and Chief Financial Officer at DigiCert, a digital security certificate provider which was sold to TA Associates in November 2012.


Composition, Meetings and Committees of the Board of Directors

Our Board of Directors is currently comprised of nine directors having terms expiring at the Annual Meeting. Each of our directors will continue to hold office until the expiration of his or her term and until his or her successor is duly elected and qualified or until his or her earlier resignation, removal from office or death.

Our Corporate Governance Guidelines include categorical standards adopted by our Board of Directors to determine director independence that meet the listing standards of the New York Stock Exchange, or “NYSE.” Our Corporate Governance Guidelines also require that at least 75% of our Board of Directors be “independent,” a requirement that is more stringent than the NYSE listing requirement that a majority of the Board of Directors be independent. Our Board of Directors has affirmatively determined that all of our directors are “independent” in accordance with NYSE listing requirements and the requirements of our Corporate Governance Guidelines, other than Mr. John Robinson, our President and Chief Executive Officer, and Mr. Doman, the Chief ProductInnovation Officer of our Progressive Leasing segment.

Our Board of Directors currently has three standing committees consisting of an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. From time to time, our Board of Directors may establish ad-hoc committees at its discretion. Our Board of Directors has adopted a charter for each of its standing committees, copies of which are available on the Investor Relations section of our website located at aarons.com. The current members of each committee are identified in the table below:

Director Audit
Committee*		 Compensation
Committee		 
Nominating and
 Corporate
Governance Committee
Kathy T. Betty   Member (Chair)
Douglas C. Curling Member (Chair)  
Cynthia N. Day (Chair) Member  
Walter G. Ehmer Member   Member
Hubert L. Harris, Jr. Member   Member
Ray M. Robinson   Member Member
Robert H. Yanker Member   Member
Number of Meetings in Fiscal Year 2018 10 6 4

Nominating and
Corporate
AuditCompensationGovernance
Director       Committee*       Committee       Committee
Kelly H. BarrettMemberMember
Kathy T. BettyMember(Chair)
Douglas C. CurlingMember(Chair)
Cynthia N. Day(Chair)Member
Walter G. EhmerMemberMember
Hubert L. Harris, Jr.MemberMember
Ray M. RobinsonMemberMember
Number of Meetings in Fiscal Year 2019972

*FourAll members of the Audit Committee have been designated as an “audit committee financial expert” as defined by Securities and Exchange Commission, or "SEC", regulations.

Meetings

Our Board of Directors held eightten meetings during 2018.2019. The number of meetings held by each of our committees in 20182019 is shown in the table above. Each of our directors attended 90%75% or more of the total of all meetings of our board and the committees on which he or she served during 2018.

2019 that occurred during the time when he or she served as a director.

It is our policy that directors are expected to attend the annual meeting of shareholders in the absence of a scheduling conflict or other valid reason. All of our directors attended the 20182019 Annual Meeting of Shareholders held on May 9, 2018.

8, 2019.

The non-management and independent members of our Board of Directors meet frequently in executive session, without management present. Mr. Ray Robinson, the Chairman of our Board of Directors, chairs these meetings.



Committees

Audit Committee.The function of the Audit Committee is to assist our Board of Directors in fulfilling its oversight responsibility relating to: (i) the integrity of the Company’s consolidated financial statements; (ii) the financial reporting process and the systems of internal accounting and financial controls; (iii) the performance of the Company’s internal audit function and independent auditors; (iv) the independent auditors’ qualifications and independence; (v) the Company’s compliance with ethics policies (including oversight and approval of related party transactions and reviewing and discussing certain calls to the Company’s ethics hotline and the Company’s investigation of and response to such calls) and legal and regulatory requirements; (vi) the adequacy of the Company’s policies and procedures to assess, monitor and manage business risks including financial, regulatory and cybersecurity risks and its corporate compliance programs, including receiving quarterly reports related to such risks and programs; and (vii) the adequacy of the Company's information security and privacy program and cybersecurity initiatives. The Audit Committee is directly responsible for the appointment, compensation, retention, and termination of our independent auditors, who report directly to the Audit Committee, and for recommending to our Board of Directors that the board recommend to our shareholders that the shareholders ratify the retention of our independent auditors. In connection with its performance of these responsibilities, the Audit Committee regularly receives reports from and holds discussions with Company management, leaders from the Company’s internal audit department, leaders from the Company’s legal department, and the independent auditors. Many of those discussions are held in executive session with the Audit Committee.

Each member of the Audit Committee satisfies the independence requirements of the NYSE and SEC rules applicable to audit committee members, and each is financially literate. Our Board of Directors has designated each member of Ms. Day and Messrs. Curling, Ehmer and Harristhe Audit Committee as an “audit committee financial expert” as defined by SEC regulations.

Compensation Committee.The purpose of the Compensation Committee is to assist our Board of Directors in fulfilling its oversight responsibilities relating to: (i) executive and director compensation; (ii) equity compensation plans and other compensation and benefit plans; and (iii) other significant associatehuman resources matters.

The Compensation Committee has the authority to review and approve performance goals and objectives for the named executive officers in connection with the Company’s compensation programs, and to evaluate the performance of the named executive officers, in light of such performance goals and objectives and other matters, for compensation purposes. Based on such evaluation and other matters, the Compensation Committee determines the compensation of the named executive officers, including our President and Chief Executive Officer. The Compensation Committee also has the authority to approve grants of equity incentives and to consider from time to time, and recommend to our Board of Directors, changes to director compensation.

Each member of the Compensation Committee satisfies the independence requirements of the NYSE applicable to compensation committee members and is a non-employee director under Rule 16b-3 of the Securities Exchange Act of 1934, or the “Exchange Act.”

Nominating and Corporate Governance Committee.The purpose of the Nominating and Corporate Governance Committee is to assist our Board of Directors in fulfilling its responsibilities relating to: (i) board and committee membership, organization, and function; (ii) director qualifications and performance; (iii) management succession; and (iv) corporate governance. The Nominating and Corporate Governance Committee from time to time identifies and recommends to our Board of Directors individuals to be nominated for election as directors and develops and recommends to our Board of Directors for adoption corporate governance principles applicable to the Company.

Each member of the Nominating and Corporate Governance Committee satisfies the independence requirements of the NYSE.

Assessment of Director Candidates and Required Qualifications

The Nominating and Corporate Governance Committee is responsible for considering and recommending to our Board of Directors nominees for election as director at our annual meeting of shareholders and nominees to fill any vacancy on our Board of Directors. Our Board of Directors, after taking into account the assessment provided by the Nominating and Corporate Governance Committee, is responsible for considering and recommending to our shareholders nominees for election as director at our annual meeting of shareholders. In accordance with our Corporate Governance Guidelines, both the Nominating and Corporate Governance Committee and our Board of Directors, in evaluating director candidates, consider the experience, talents, skills and other characteristics of each candidate and our Board of Directors as a whole in assessing potential nominees to serve as director.



We believe that, at a minimum, a director should have the highest personal and professional ethics, moral character and integrity, demonstrated accomplishment in his or her field and the ability to devote sufficient time to carry out the duties of a director. To help ensure the ability to devote sufficient time to board matters, no director may serve on the board of more than four other public companies while continuing to serve on our Board of Directors, and no director that serves as chief executive officer of another company may serve on the board of more than two other public companies while continuing to serve on our Board of Directors, unless our board determines in its business judgment that such simultaneous service will not impair the director's ability to serve on our Board of Directors, and that such simultaneous service is otherwise in the best interests of the shareholders.

In addition to these minimum qualifications, our Board of Directors may consider all information relevant in their business judgment to the decision of whether to nominate a particular candidate for a particular board seat. These factors may include a candidate’s professional and educational background, reputation, industry knowledge and business experience and the relevance of those characteristics to us and our Board of Directors. In addition, candidates will be evaluated on their ability to complement or contribute to the mix of talents, skills and other characteristics needed to maintain the effectiveness of our Board of Directors and their ability to fulfill the responsibilities of a director and of a member of one or more of the standing committees of our Board of Directors. While our Board of Directors does not have a specific policy regarding diversity among directors, diversity of race, ethnicity, gender, age, cultural background and professional experience is considered in evaluating candidates for membership on our Board of Directors.

No person may be nominated for election to our Board of Directors or appointed to fill a vacancy on the Board of Directors if he or she will be age 75 or older upon his or her election or appointment, unless a waiver is granted by our Board of Directors. Our Board has granted such a waiver with respect to our director, Hubert L. Harris, Jr., who is age 75,76, after considering a number of factors, including his experience, talents and skills, his exemplary attendance record for Board and Board committee meetings, and the valuable contributions Mr. Harris continues to make to the Board and the committees on which he serves. A director is required to offer his or her resignation immediately in the event the director, or any of his or her respective affiliates or associates, takes any action (including encouraging or supporting others) to (i) nominate, propose or vote in favor of any candidate to serve on our Board of Directors (other than the nominees proposed by our Board of Directors) or oppose for election any nominee proposed by our Board of Directors or (ii) solicit proxies with respect to any of our securities within the meaning of the Exchange Act and the rules thereunder (other than any proxy solicitation in favor of a matter approved by our Board of Directors).

In determining whether to nominate an incumbent director for re-election, the Nominating and Corporate Governance Committee and our Board of Directors evaluate each incumbent’s continued service, in light of these collective requirements. When the need for a new director arises (whether because of a newly created seat or vacancy), the Nominating and Corporate Governance Committee and our Board of Directors proceed to identify a qualified candidate or candidates and to evaluate the qualifications of each candidate identified. Final candidates are generally interviewed by one or more members of the Nominating and Corporate Governance Committee or other members of our Board of Directors before a decision is made.

Shareholder Recommendations and Nominations for Election to the Board

Our Nominating and Corporate Governance Committee will consider nominees recommended by shareholders. Any shareholder wishing to nominate a candidate for director at the next annual shareholders’ meeting must submit a proposal as described under“Additional Information—Shareholder Proposals for the 20202021 Annual Meeting of Shareholders”and otherwise comply with the advance notice provisions and information requirements contained in our bylaws. The shareholder submission should be sent to the President of Aaron’s, Inc. at 400 Galleria Parkway, S.E., Suite 300, Atlanta, Georgia 30339.

Shareholder nominees are evaluated under the same standards as other candidates for board membership described above in“Assessment of Director Candidates and Required Qualifications.”In addition, in evaluating shareholder nominees for inclusion with the board’s slate of nominees, the Nominating and Corporate Governance Committee and our Board of Directors mayDirectorsmay consider any other information they deem relevant, including (i) the factors described in“Assessment of Director Candidates and Required Qualifications,”(ii) whether there are or will be any vacancies on our Board of Directors, (iii) the size of the nominating shareholder’s holdings in the Company, (iv) the length of time such shareholder has owned such holdings and (v) any statements by the nominee or the shareholder regarding proposed changes in our operation.


Board Leadership Structure

We currently separate the roles of Chairman and Chief Executive Officer in recognition of the differences between the two roles. The Chairman is responsible for leading our Board of Directors in its duty to oversee the management of our business and affairs. The Chief Executive Officer is responsible for oversight of our day-to-day operations and business affairs, including directing the business conducted by our employees, managers and officers.

Our Chief Executive Officer serves on our Board of Directors, which we believe helps to serve as a bridge between management and our Board of Directors, ensuring that both groups act with a common purpose. We believe that Mr. John Robinson’s presence on our Board of Directors enhances his ability to provide insight and direction on important strategic initiatives to both management and the independent directors.



Our Board of Directors does not have a formal policy on whether the Chairman and Chief Executive Officer roles should be separated or combined but, instead, makes that determination from time to time employing its business judgment. Our Board of Directors, however, does believe that if the Chairman and Chief Executive Officer roles are combined, or if the Chairman is not an independent director, that our Board of Directors should appoint an independent Lead Director to serve as the leader and representative of the independent directors in interacting with the Chairman and Chief Executive Officer and, when appropriate, our shareholders and the public. Our Board of Directors has determined that Mr. Ray Robinson, who serves as our Chairman, is independent under NYSE listing requirements. As a result, our Board of Directors has not designated a Lead Director.

Board of Directors and Committee Evaluations

Our Board of Directors and each of its committees conduct an annual evaluation, which includes a qualitative assessment by each director of the performance of our Board of Directors and the committee or committees on which the director sits. In 2019,2020, our Board of Directors also engaged a third-party legal advisor to facilitate our board self-evaluation process and board and committee reviews. The results of the evaluation and any recommendations for improvement were reported to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee oversees the evaluation process.

Board Role in Risk Oversight

Senior management is responsible for day-to-day risk management, while our Board of Directors oversees planning for and responding to risks, as a whole, through its committees and independent directors. Although our Board of Directors has ultimate responsibility with respect to risk management oversight, primary responsibility for certain areas has been delegated, as appropriate, to its committees. For example, the Audit Committee is charged with, among other matters, overseeing risks attendant to (i) our system of disclosure controls and procedures, (ii) internal control over financial reporting, (iii) performance of our internal audit function and independent auditors, and (iv) the identification and mitigation of cybersecurity risks. The Audit Committee considers the steps management has taken to monitor and control such risks, including our risk assessment and risk management policies. The Audit Committee, together with our General Counsel or another representative from our legal department, also considers issues at its meetings relating to our legal and regulatory compliance obligations, including consumer protection laws in the lease-to-own industry.

Likewise, the Compensation Committee considers risks that may be implicated by our compensation programs. For 2018,2019, our Compensation Committee, aided by its independent third-party compensation consultant, reviewed our compensation policies and practices and determined that they do not encourage excessive or unnecessary risk taking, and do not otherwise create risks that are reasonably likely to have a material adverse effect on the Company.


As part of its risk oversight role, our full Board of Directors periodically receives reports from management, external professional advisors and others regarding various types of risks faced by the Company and the Company’s risk mitigation efforts related thereto, including cybersecurity risks and related mitigation efforts. For example, during 2018, our Board of Directors received presentations from external legal and other advisors regarding the board’s duties and role in overseeing cybersecurity-related risks and our efforts to mitigate those risks.  In addition, theThe board received presentations from management regarding trends in cybersecurity risks and risk mitigation initiatives and plans, including briefings on recent breaches and key takeaways and lessons learned that are applicable to our business and the role of various federal and state government agencies in helping companies prepare for and respond to cybersecurity incidents. The Board also reviewed key cybersecurity-related benchmarks for the Company. In addition, our Board of Directors reviewed our cybersecurity-related investments, initiatives, and plans with management.

Social

Board Diversity

We endeavor to have a Board representing diverse experience at policymaking levels of business, government, education and Environmental Responsibility

technology, and in other areas that are relevant to the Company’s activities. Diversity of race, ethnicity, gender and age are also important factors our Board considers when evaluating candidates for Board membership. We believe the diverse business and occupational experiences, skills, talents, expertise, educational backgrounds, and the diversity of race, ethnicity, gender, age and cultural backgrounds possessed by our Board of Directors and employees helps strengthen our businesses and drive increased shareholder value. Our Board of Directors includes individuals with diverse prior and current occupational and board experiences, areas of expertise, races, gender and age. As of March 2020, our Board included six men and three women, and two of our directors are African American.


Social Responsibility

Our Board of Directors and management team recognize that social and environmental responsibility by public companies is of increasing importance to investors and believe that being a responsible corporate citizen helps drive shareholder value. We are committed to making a positive impact on the environment and the communities where our customers and employees live and work.

Through our Aaron’s, Inc. Foundation and our Matching Gift Program, both of which are funded from the earnings of our Progressive Leasing and Aaron’s Business segments, and also through Progressive’s philanthropic program, “ProgReach” and the Aaron’s Business’s “Aaron’s Community Outreach Program,” our initiatives are helping build stronger communities where our customers and employees live and work, with a special focus on improving the lives of underserved youth. We have a goal of contributing 1% of our annual, consolidated pre-tax profits to these efforts each year. In 2018,2019, our contributions exceeded $3$2.6 million, representing approximately 1.2%1.3% of our 20182019 adjusted pre-tax profits.



Recently, our initiatives have included:

●Participating in our second three-year national partnership with the Boys and Girls Clubs of America, under which we have committed $5 million of funding and other resources;
●Committing to complete 53 Boys and Girls Clubs’ teen center makeovers by 2021, 42 of which we already have completed, including donating $20,000 of merchandise to each of those teen centers;
●Being the primary sponsor of the Boys and Girls Clubs’ National Keystone Conference, a character and leadership development event that brings together 2,500 club members and advisors from around the country;
●Providing financial support and internship programs to 20 students of Morehouse College, a historically black college, through 2021, underwritten by a gift of $1 million;
●Sponsoring Cristy Rey Atlanta Jesuit High School – which provides students of limited economic means with four years of college preparatory classes and professional work experience – and hiring eight Cristo Rey students to work at our corporate headquarters, through the school’s Corporate Work Study Program, for each of the past five years
●Donating more than $675,000 to local, regional and national charities in 2019, through Progressive’s ProgReach program, and enabling Progressive employees to assemble and donate comfort kits for patients at children’s hospitals in Salt Lake City and Phoenix, volunteer in soup kitchens, host food drives, and donate tablets and school supplies to over 250 students in the Big Brothers Big Sisters program;
●Providing community-level assistance to veterans, youth organizations and community centers through in-kind donations from our Aaron’s Community Outreach Program, which is the local, store-based giving initiative of the Aaron’s Business;
●Contributing merchandise to the Warrick Dunn Charities’ and Kurt Warner’s First Things First Foundation’s “Home for the Holidays” program, which assists single parents in becoming first-time homeowners, through a partnership with Habitat for Humanity;
●Matching employee donations to not-for profit organizations within the areas of arts and culture, health and human services, civic and community concerns, and education, on a dollar-for-dollar basis, up to $1,000 per employee; and
●Sponsoring numerous events during 2019 that allowed employees to volunteer for non-profit organizations during paid work days, including nearly 300 Progressive employees assembling over 110,000 meals for local foodbanks and hundreds of Aaron’s employees volunteering at food banks in the Atlanta area each quarter.

Entering into our second three-year national partnership with the Boys and Girls Clubs of America, under which we have committed $5 million of funding and other resources;
Committing to complete 53 Boys and Girls Clubs’ teen center makeovers by 2021, including donating $20,000 of merchandise to each of those teen centers;
Being the primary sponsor of the Boys and Girls Clubs’ National Keystone Conference, a character and leadership development event that brings together 2,500 club members and advisors from around the country;
Providing financial support and internship programs to 20 students of Morehouse College, a historically black college, through 2021, underwritten by a gift of $1 million;
Donating more than $500,000 to local, regional and national charities in 2018, through Progressive’s ProgReach program, and enabling Progressive employees to assemble and donate comfort kits for patients at children’s hospitals in Salt Lake City and Phoenix, volunteer in soup kitchens, host food drives, and donate tablets and school supplies to over 250 students in the Big Brothers Big Sisters Mentor 2.0 college readiness program;
Providing community-level assistance to veterans, youth organizations and community centers through in-kind donations from our Aaron’s Community Outreach Program, which is the local, store-based giving initiative of the Aaron’s Business; 
Contributing merchandise to the Warrick Dunn Charities’ and Kurt Warner’s First Things First Foundation’s “Home for the Holidays” program, which assists single parents in becoming first-time homeowners, through a partnership with Habitat for Humanity;
Matching employee donations to not-for profit organizations within the areas of arts and culture, health and human services, civic and community concerns, and education, on a dollar-for-dollar basis, up to $1,000 per employee; and
Sponsoring numerous events during 2018 that allowed employees to volunteer for non-profit organizations during paid work days, including more than 200 Progressive employees renovating a non-profit child care facility near Salt Lake City and hundreds of Aaron’s employees volunteering at food banks in the Atlanta area each quarter.

Environmental Responsibility

In addition to the initiatives described above, we have also undertaken steps to proactively and positively impact the environment, including programs to reduce waste and encourage recycling, reduce energy consumption, and improve the fuel efficiency of our vehicle fleet. Those steps and related accomplishments have included:

Implementing a comprehensive waste audit program at our manufacturing facilities, which covers all materials we use in our manufacturing processes;
Adopting waste-reduction programs that require the re-use or recycling of scrap material, including paper, plastic, foam, fabric, wood, metal and cardboard, resulting in the recycling of approximately 10 million pounds of materials annually;
Reducing the amount of materials our manufacturing facilities send to landfills by more than 90% since 2009;
Encouraging employees to bring certain waste to our facilities, to facilitate the recycling of those materials, resulting in the recycling of thousands of plastic bottles annually;
Using foam in the manufacturing of our bedding and furniture products, which does not contain lead, mercury, formaldehyde or CFCs, and which contains soy-based polyols, instead of those derived from fossil fuels;
Replacing metal halide lighting with more energy efficient Versabay lighting, and using skylight panels in approximately 600,000 square feet of our manufacturing space, to further reduce energy demand;
Providing recycling containers at our headquarters buildings, through which we recycle aluminum, cardboard, paper and plastic;
Locating our Progressive headquarters in a building that is LEED Silver Certified, with Daylight Harvesting and locating our Aaron's headquarters in a building that is Energy Star Certified;

●Implementing a comprehensive waste audit program at our manufacturing facilities, which covers all materials we use in our manufacturing processes;
●Adopting waste-reduction programs that require the re-use or recycling of scrap material, including paper, plastic, foam, fabric, wood, metal and cardboard, resulting in the recycling of approximately 10 million pounds of materials annually;
●Reducing the amount of materials our manufacturing facilities send to landfills by more than 90% since 2009;
●Encouraging employees to bring certain waste to our facilities, to facilitate the recycling of those materials, resulting in the recycling of thousands of plastic bottles annually;
●Using foam in the manufacturing of our bedding and furniture products, which does not contain lead, mercury, formaldehyde or CFCs, and which contains soy-based polyols, instead of those derived from fossil fuels;
●Replacing metal halide lighting with more energy efficient Versabay lighting, and using skylight panels in approximately 600,000 square feet of our manufacturing space, to further reduce energy demand;
●Providing recycling containers at our headquarters buildings, through which we recycle aluminum, cardboard, paper and plastic;
●Locating our Progressive headquarters in a building that is LEED Silver Certified, with Daylight Harvesting and locating our Aaron's headquarters in a building that is Energy Star Certified;
●Offering our customers approximately 110 energy efficient, ENERGY STAR certified, products in our Aaron’s Business stores and online, which we believe contributes to reduced energy consumption and, indirectly, to lower greenhouse gas emissions;
●Improving the average miles-per-gallon fuel efficiency of our delivery vehicles by approximately 9% over the past 5 years by removing and/or replacing approximately 35% of our delivery fleet with lighter, more fuel-efficient vehicles;
●Adopted a strict no-idling policy for our fleet drivers; and
●Regulating our delivery and service trucks to a maximum speed of 65 miles-per-hour to increase overall fuel economy.

Energy Management

Electricity is the primary form of energy used by our Aaron’s Business stores and fulfillment centers. During 2019, the Company-owned stores of our Aaron’s Business used a total of approximately 120 million kilowatt hours of electricity, and the Aaron’s Business fulfillment centers used a total of approximately 3.8 million kilowatt hours of electrical energy. According to data provided by Verantis, Inc., the firm we have engaged to assist us with measuring and reducing our energy usage: (i) on a per-store basis, our electrical energy usage decreased by approximately 9.4% for 2019, as compared to 2015, due in part to initiatives such as installing LED lighting in certain locations, accelerating the replacement of older HVAC units with newer, more energy-efficient units, and emphasizing stricter controls regarding in-store temperature/thermostat settings; and (ii) the average amount of electricity used at each of our fulfillment centers in 2019 decreased by approximately 5.7%, as compared to 2015, due in part to initiatives such as installing more energy-efficient lighting, including LED lighting, installing motion sensors to activate and deactivate lighting by zone, and converting older material handling equipment that was powered by electricity to more efficient equipment that is powered by propane.


During 2019, our fleets of delivery, long-haul, service and other trucks used a total of approximately 4.25 million gallons of fuel, as compared to a total of approximately 6 million gallons during 2015. We believe this decrease in fuel usage is due in large part to our initiatives such as removing and/or replacing our fleet with lighter, more fuel-efficient vehicles overvehicles; adopting a strict no-idling policy; regulating our trucks to a maximum speed of 65 miles-per-hour; and closing and consolidating stores to improve operating efficiencies, including reducing the past 5 years;

Improvingnumber of trucks we need to deliver products to customers. We expect to continue our efforts to improve the average miles-per-gallon fuelenergy efficiency of our delivery vehicles by approximately 9% over the past 5 years; and
Adopting a strict no-idling policyoperations because we believe it is good for our fleet drivers.

Board and Workplace Diversity
We believe the diverse business and occupational experiences, skills, talents, expertise, educational backgrounds,for the environment. We did not directly utilize any renewable energy sources in 2019, but we intend to explore the possibility of doing so in 2020 and future years, including through possibly entering into renewable power purchase agreements, that are accompanied by renewable energy certifications or guarantees of origin.

Cybersecurity and Data Privacy

We have developed a program designed to detect, identify, classify and mitigate cybersecurity and other data security threats, as part of our efforts to protect and maintain the diversityconfidentiality and security of race, ethnicity, gender, agecustomer, employee and cultural backgrounds possessedvendor information, and non-public information about our Company. That program is based in-part on, and its maturity is measured using, the U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) Cybersecurity Framework. Our program classifies potential threats by risk levels and we typically prioritize our threat mitigation efforts based on those risk classifications, while focusing on maintaining the resiliency of our systems. In recent years, we have increased our investments in our ability to detect, identify, and mitigate cybersecurity and other data privacy risks within our environment. In the event we identify a potential privacy or data security issue, we have defined procedures for responding to such issues, including procedures that address when and how to engage with Company management, our Board of Directors, other stakeholders and law enforcement, when responding to such issues. We have a dedicated team of employees overseeing our cybersecurity and data privacy initiatives, led by our Vice President of Enterprise Risk and Security, in consultation with internal and external attorneys and other professional advisors. We also have an Enterprise Information Security Committee comprised of a cross-functional group of senior executives and other employees that meets on a regular basis to provide oversight with respect to our cybersecurity and data privacy risk detection, classification and mitigation efforts. Our Vice President of Enterprise Risk and Security regularly provides updates to the Audit Committee of our Board of Directors, and employees helps strengthenperiodically to our businesses and drive increased shareholder value.  Our Board of Directors, includes individualsregarding the status and effectiveness of our cybersecurity and data privacy programs. Some of the other steps we have taken to detect, identify and attempt to mitigate data security and privacy risks include:

●Adopting and periodically reviewing and updating information security and privacy policies;
●Conducting targeted audits and penetration tests throughout the year, using both internal and external resources;
●Complying with the Payment Card Industry Data Security Standard;
●Engaging an industry-leading, nationally-known third party to independently evaluate our information security maturity on a regular basis;
●Adopting a vendor risk management program, which includes receiving the results of cybersecurity and data privacy audits conducted on those vendors, classifying vendor, service provider or business partner risk based on several factors and evaluating and monitoring related risk mitigation efforts;
●

Providing security and privacy training and awareness to all of our employees; and

●Maintaining cyber liability insurance.

We also understand the importance of collecting, storing, using, sharing and disposing of personal information in a manner that complies with all applicable laws. To facilitate compliance with those laws, we have privacy policies in place regarding our treatment of customer data in both our offline and online retail environments, as well as policies relating to the protection of employee and vendor data. Our policies provide explanations of the types of information we collect, how we use and share information, and generally describe the measures we take to protect the security of that information. Our policies also describe how customers may initiate inquiries and raise concerns regarding the collection, storage, sharing and use of their personal data. In addition, our employees also must complete mandatory training to understand the behaviors and technical requirements necessary to safeguard information resources at the Company.

We are not aware of any data breaches occurring during the Company’s 2019 fiscal year.


Labor Practices and Human Rights

All of our employees earn more than the federal minimum wage. The average hourly wage, excluding incentive compensation, of a full-time hourly employee in our Company-owned, Aaron’s Business stores and fulfillment centers as of December 31, 2019 was $13.75, with a meaningful portion of those employees earning an average hourly wage of $15 or more. The average total compensation and benefits for a full-time hourly employee in our Aaron’s Business stores and fulfillment centers is approximately $32,000 including bonuses and benefits. The average wage of a full-time hourly employee in our Progressive Leasing call centers as of December 31, 2019 was $16.50, with approximately 99% of those employees earning an average hourly wage of $15 or more. The average total compensation and benefits for a full-time hourly employee in those call centers is approximately $39,000 including wages, bonuses and benefits, such as paid time off.

We strive to help associates maintain job stability so they are encouraged to stay with the Company and positioned to grow their skills and knowledge on the job. The 2019 annualized voluntary turnover rate in our Aaron’s Business stores and fulfillment centers was approximately 44% and the 2019 annualized involuntary turnover rate in those stores and fulfillment centers was approximately 43%. The 2019 annualized voluntary turnover rate in our Progressive Leasing call centers was about 48% and the 2019 annualized involuntary turnover rate in those call centers was 6%. In an effort to reduce employee turnover, we engage in quarterly surveys with employees, conduct interviews to help identify any issues before they cause an employee to leave the Company, and review exit interview data, hotline calls and root cause analysis to help deter turnover.

Aaron’s respects the rights of workers of other companies who offer services to Aaron’s and create the products that we purchase from our suppliers. We communicate our expectations to suppliers on social conditions, worker safety and integrity in the workplace, and compliance with applicable laws through our Supplier Code of Conduct. Our Supplier Code of Conduct outlines our expectations with respect to hiring practices, forced labor, child labor, discrimination, and other labor rights. Suppliers must comply with our Supplier Code of Conduct, conduct their business with a high level of integrity, and maintain accurate records to demonstrate that compliance.

Workforce Diversity and Inclusion and Human Capital Management

We believe in being an inclusive workplace for all of our employees and are committed to having a diverse priorworkforce that is representative of the customers that choose to shop with us in-store or online, and current occupationalthe communities in which we operate our businesses. A variety of perspectives enriches our culture, leads to innovative solutions for our business and board experiences, areasenables us to better meet the needs of expertise, races, gendera diverse customer base and age.  

reflects the communities we serve. Our workplaceaim is to develop inclusive leaders and an inclusive culture, while also recruiting, developing, mentoring, training, and retaining a diverse workforce, including a diverse group of management-level employees. As of December 31, 2019, for the employees that disclosed this information, for the Aaron’s Business, 32% of our total workforce was female, 23% of management (which we define as manager level employees and higher) was female, 25% of our total Aaron’s Business workforce was comprised of people of color and 32% of management was comprised of people of color. For Progressive Leasing and Vive, on a combined basis, 48% of the total workforce is female, 32% of management (which we define as manager level employees and higher) is female, 40% of the total workforce is comprised of people of color and 27% of management is comprised of people of color. Our diversity and inclusion initiatives include providinginclude:

●Providing executive, monetary and other support to our Employee Business Resource Groups (“EBRG”) which provide educational and motivational events and mentorship experiences for our employees and support the Company’s objectives related to developing associates and creating diversity awareness, and which include the Aaron’s Women’s Leadership Network, Aaron’s Black Leadership Exchange and Pride Alliance;
●Developing unconscious bias training for employees across the Company; and
●Implementing a talent review process that designed to utilize a multi-factor approach to understanding the talents of our employees and the potential they have to be future Company leaders.

We believe in offering career opportunities, resources, programs and tools to help employees grow and develop, as well as competitive wages and benefits. Our efforts in these areas include:

●Offering platforms, including our Learning and Development portal and other on-line and in-person professional growth and development training, to help employees develop their skills and grow their careers at the Company;
●Providing management development training to all of our management-level employees in 2019, including compliance, ethics and leadership training;
●Conducting monthly feedback sessions between our employees and their supervisors on their collaboration and development;
●Providing employees with recurring training on critical issues such as safety and security, compliance, ethics and integrity and information security;
●Gathering engagement feedback from our employees on a regular basis and responding to that feedback in a variety of ways including personal, one-on-one interactions, team meetings, leadership communications, and town hall meetings with employees, led by senior executives;
●Offering a tuition reimbursement program that provides eligible employees up to $1,500 per year for courses related to current or future roles at the Company;
●Offering health benefits for all eligible employees, including our eligible hourly call-center, store-based and fulfillment center employees;
●Providing confidential counseling for employees through our Employee Assistance Program;
●Providing paid parental leave – maternity, paternity and adoption;
●Providing paid time off;
●Matching employees’ 401(k) plan contributions of up to 5% of eligible pay after one year of service; and
●Offering an employee stock purchase program for eligible employees.

From time to time, we are party to legal proceedings arising in the ordinary course of business including those alleging employment discrimination or violations of wage-and-hour laws, for example. During 2019, the total amount we paid to resolve proceedings alleging employment discrimination was immaterial to our earnings, and we did not make any payments to resolve allegations of wage-and-hour violations. In our efforts to have all of our employees comply with federal and state employment-related laws, and reduce the number of employment discrimination claims brought against us, we provide non-discrimination and anti-harassment training as part of the Company’s mandatory compliance training, including for the hourly employees in our call centers, fulfillment centers and stores.

Product Sourcing, Packaging and Marketing

We expect our suppliers to provide us with safe, energy-efficient, high quality products. We strive to set high expectations for our suppliers. Our suppliers enter into a Master Supply Agreement with us in which they represent and warrant that all products are manufactured, packaged, tagged and sold in compliance with all applicable laws and are legal for retail re-sale in each store that we operate without violation of any law. Specifically, all products must be packaged, labeled and tested in compliance with all applicable laws and the supplier must obtain and maintain all permits, licenses, certifications and registrations required by all applicable laws to provide their products.

As described in more detail in the “Environmental Responsibility” discussion set forth above, our manufacturing operations have implemented meaningful initiatives and strategies to reduce the amount of materials and packaging they use and dispose of, while significantly increasing the portion of those materials that are recycled. With respect to our Aaron’s Women’s Leadership Network, whose mission statement is "Empowering Talented Women."  This organization provides educationalBusiness, certain of those stores are already recycling paper and motivational eventspackaging materials, and mentorship experiences focused on promoting its three pillarswe have begun the process of "Leading Self," "Leading Others"discussing possible strategies for developing centralized, corporate-driven initiatives to reduce packaging and "Leading Communities." We recently introduced a similar women’s leadership initiative at Progressive.   increase recycling of those materials in our Company-owned stores.


Compensation Committee Interlocks and Insider Participation

For the year ended December 31, 2018,2019, the Compensation Committee consisted of Mses. Betty and Day and Messrs. Curling and Ray Robinson, each of whom our Board of Directors determined was independent in accordance with NYSE listing requirements.

No member of the Compensation Committee during 20182019 is or was formerly an officer or employee of the Company or any of its subsidiaries or was a related person in a related person transaction with the Company required to be disclosed under applicable SEC rules.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% of the Company’s common stock, to file with the SEC certain reports of beneficial ownership of the Company’s common stock. Based solely on a review of information furnished to us, the Company believes that its directors, officers and more than 10% shareholders complied with all applicable Section 16(a) filing requirements during the year ended December 31, 2018.

2019.

NON-MANAGEMENT DIRECTOR COMPENSATION IN 20182019

The compensation program for our non-employee directors is designed to fairly compensate them for the effort and responsibility required to serve on the board of a company of our size and scope as well as to align our directors’ interests with those of our shareholders more generally.

Effective in January 2016, as amended in May 2018 to increase the annual award of restricted stock units ("RSUs"), and based upon the recommendation of the Compensation Committee's independent third-party compensation consultant, the compensation program for our non-employee directors was revised to better align with the interests of our shareholders as well as with current market practices. Under the re-designed program, non-employee directors receive an annual cash retainer of $75,000 and an annual award of restricted stock units having a value of $125,000, which generally vests one year following the grant date. In 2019, the grant date moved from January 1 to the Annual Meeting each year. As a result, an additional grant, valued at $35,000, was made January 1, 2019 to complete the transition of grant date and grant value. Our Chairman, Mr. Ray Robinson, also received a cash retainer of $100,000, paid quarterly in $25,000 installments, in recognition of the additional duties he performs by serving as our Chairman. Non-employee directors serving as the chairperson of the Audit, Compensation, and Nominating and Corporate Governance Committees also received an additional annual retainer of $20,000, $15,000 and $10,000, respectively, for their service in these roles and the additional time commitments required.

Effective April 1, 2020, and in response to the impact of COVID-19 on the Company, our non-employee directors agreed to take a 20% reduction in their annual cash retainer for the 2020 fiscal year.

Directors who are employees of the Company receive no compensation for their service on our Board of Directors.

The following table shows compensation earned by non-employee directors during 2018.

2019.

Fees Earned orStockTotal
NamePaid in Cash ($)Awards(1)($)($)
Kelly H. Barrett(2), (3)     48,420     125,000     173,420
Kathy T. Betty(2), (4)85,000160,000245,000
Douglas C. Curling(2), (5)90,000160,000250,000
Cynthia N. Day(2), (6)95,000160,000255,000
Walter G. Ehmer(2), (7)75,000160,000235,000
Hubert L. Harris, Jr.(2), (8)75,000160,000235,000
Ray M. Robinson(2), (9)175,000160,000335,000
Robert H. Yanker(2), (10)26,58035,00061,580


Name 
Fees Earned or 
Paid in Cash ($)
 
Stock Awards(1)($)
 Total
($)
Kathy T. Betty(2), (3)
 80,000
 125,000
 205,000
Douglas C. Curling(2), (4)
 90,000
 125,000
 215,000
Cynthia N. Day(2), (5)
 95,000
 125,000
 220,000
Walter G. Ehmer(2), (6)
 75,000
 125,000
 200,000
Hubert L. Harris, Jr.(2), (7)
 80,000
 125,000
 205,000
Ray M. Robinson(2), (8)
 175,000
 125,000
 300,000
Robert H. Yanker(2), (9)
 75,000
 125,000
 200,000
(1)Represents the grant date fair value of stock awards pursuant to Financial Accounting Standards Board Codification Topic 718.
(2)As of December 31, 2018,2019, each of ourthe non-executive directors, other than Mr. Yanker, held 3,1442,144 units of restricted stock subject to vesting, which was the number of units of restricted stock granted to them in January 2018 and May 2018. As of December 31, 2018, Mr. Robinson also held 3,000 vested options, which expire in February 2020 and have an exercise price of $19.92.
2019.
(3)Includes $18,750 in fees earned for services in the fourth quarter of 2019 which will be paid in 2020.
(4)Includes $21,250 in fees earned for services in the fourth quarter of 20182019 which will be paid in 2019.
2020.
(4)(5)Includes $22,500 in fees earned for services in the fourth quarter of 20182019 which will be paid in 2019.
2020.
(5)(6)Includes $23,750 in fees earned for services in the fourth quarter of 20182019 which will be paid in 2019.
2020.
(6)(7)Includes $18,750 in fees earned for services in the fourth quarter of 20182019 which will be paid in 20192020 that Mr. Ehmer deferred under the Company's Nonqualified Deferred Compensation Plan and $56,250 in compensation Mr. Ehmer deferred under the Company's Nonqualified Deferred Compensation Plan.
(7)(8)Includes $18,750 in fees earned for services in the fourth quarter of 20182019 which will be paid in 2019.
2020.
(8)(9)Includes $43,750 in fees earned for services in the fourth quarter of 20182019 which will be paid in 2019.
2020.
(9)(10)Includes $18,750 inThe amount of fees earned for services in the fourth quarterMr. Yanker reflect that he no longer serves on our board of 2018 which will be paid in 2019 thatdirectors effective May 8, 2019. Mr. Yanker deferred under the Company's Nonqualified Deferred Compensation Plan and $56,250 in compensation Mr. Yanker deferredhis fees under the Company's Nonqualified Deferred Compensation Plan.

Stock Ownership Guidelines

Under the current stock ownership guidelines adopted by our Board of Directors in November 2015, each director is expected to own or acquire shares of our common stock and common stock equivalents (including restricted stock and restricted stock units, or "RSUs")units) having a value of at least $400,000 prior to the later of January 31, 2020 or four years from when the director first joined our Board of Directors.

As of December 31, 2019, each of our directors is currently in compliance with the requirements established in these guidelines.



COMPENSATION DISCUSSION AND ANALYSIS

The purpose of this section is to provide material information about the compensation objectives and policies for our named executive officers (“NEOs”) and to explain how the Compensation Committee of our Board of Directors made its compensation decisions for 2018.2019. For 2018,2019, our NEOs are listed below.

Named Executive Officer20182019 Position
John W. Robinson IIIPresident and Chief Executive Officer
Steven A. MichaelsChief Financial Officer and President of Strategic Operations
Ryan K. WoodleyChief Executive Officer, Progressive Leasing
Douglas A. LindsayPresident, Aaron’s Business
Curtis L. DomanChief ProductInnovation Officer, Progressive Leasing

Executive Summary

Our compensation programs are designed to attract, motivate, and retain key executives by offering market-competitive pay opportunities with an emphasis on incentive compensation to create a strong linkage between pay and performance. This linkage between pay and performance is demonstrated by the following pay and performance results for 2018:

2019:

20182019 Company Performance Results20182019 Executive Pay Results
•
●Consolidated Revenues were $3,829$3,948 million, which was an increase of 3% from 2018

●Consolidated EBIT was $93 million, which was a decrease of 63% from 2018

●Consolidated Adjusted EBITDA1 was $435 million, which was an increase of 13% from 20172018

•
Short-term incentive awards were earned at a level between 104% and 105% of Target●
•
Consolidated EBIT was $252 million, which was an increase of 5% from 2017
•
Performance Share Units (PSUs) were earned at a level between 99% and 101% of Target
•
Consolidated Adjusted EBITDA1 was $386 million, which was an increase of 7% from 2017
•
RSAs granted in 2018 and RSUs granted in prior years increased in value above their grant date value given the increase in the stock price as of the March 4, 2019 record date
•
Consolidated Return on Capital2 of 11.4%11.9%, which was an increase of 6050 bps from 20172018

•
●All compliance goals, established in the first quarter of 2019, for the Company and each of its Aaron’s Business and Progressive subsidiariessegments were fully achieved

•
●Returned approximately $175$79 million to shareholders through stock repurchases and dividends
●Short-term incentive awards were earned at a level between 91% and 98% of Target

•●Performance Share Units (PSUs) were earned at a level between 78% and 89% of Target

Increased●RSAs and PSUs granted in 2019 decreased in value below their grant date value given the decline in the stock price by 7% from $39.47 on January 2, 2018, the first trading dayas of the year, to $42.05 on December 31, 2018, the last trading day of the year[●], 2020 record date

1

Adjusted EBITDA is a measurement of our performance not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”). For a reconciliation of Adjusted EBITDA to the closest GAAP measurement, refer to the reconciliation set forth in the Company’s earnings press release furnished as an exhibit to the Current Report on Form 8-K the Company filed with the SEC on February 14, 2019.


Appendix A.

2

We define Consolidated Return on Capital as net operating profit (which we define as operating profit adjusted for certain non-recurring items) after tax divided by the sum of average net debt (which we define as debt less cash and cash equivalents) and average total shareholders' equity, with the final result being an average of quarterly calculations. For a reconciliation of Return on Capital to the closest GAAP measurement, refer to the reconciliation set forth in Appendix A.



We believe these performance and pay results for 2018 are indicative of a strong linkage between pay and performance created by our executive compensation structure and incentive plan designs.

In addition to this linkage between pay and performance, we employ sound compensation and governance principles and policies, while avoiding problematic or disfavored practices, as noted below:

What We DoWhat We Don’t Do
 ✓
What We DoWhat We Don’t Do
üIndependent Compensation Committee assisted by an independent consultant
û✕
No repricing or cash buyouts of stock options without shareholder approval
   
ü✓We annually assess the Company's compensation policies to ensure that the features of our program do not encourage undue risk

û ✕
No excise or other tax gross-ups on change-in-control payments
   
ü✓All executives are "at will" employees, with the elimination of employment agreements for all NEOs except for the CEO

û ✕
No hedging or pledging of Company stock
   
ü✓Pay mix that emphasizes performance-based compensation over fixed compensation (approximately 89% performance-based for CEO and approximately 77% for all other NEOs)
û ✕
No excessive perquisites or other benefits
  
ü ✓Pay mix that emphasizes long-term, equity-based incentives over short-term cash incentives
û ✕
No single-trigger severance benefits upon a change-in-control
  
ü ✓Incentive plans that utilize multiple measures, including growth, profitability, and returns
û ✕
No payment of dividends on unearned or unvested shares
  
ü ✓Reasonable incentive plan targets and ranges, with capped incentive payouts
û ✕
No guaranteed bonus payments
  
ü ✓Double-trigger equity vesting acceleration upon a change of control (awards granted in 2015 and later)
  
 ✓
ü Meaningful stock ownership requirements
  
 ✓
ü Formal clawback policy to recoup performance-based compensation from our senior executives, including NEOs, under certain prescribed acts of misconduct

Say on Pay Vote. Last year, our shareholders cast an advisory vote on our executive compensation practices as described in our 20182019 proxy statement, with the result that over 98%81% of the total votes cast approved the compensation of our NEOs. The Compensation Committee appreciates the shareholder support that this vote reflects, and regularly evaluates and revises the executive compensation program as it considers necessary to better reflect our evolving business circumstances.

The strong shareholder support received in 2018 was one of the many factors reviewed and considered by During 2019, the Compensation Committee when designingconducted an in-depth review of its executive compensation programs and beginning in 2020, has adopted several meaningful plan design changes intended to further strengthen the 2019 compensation program. Given this support, combined with the demonstrated linkagerelationship between pay and performanceperformance. These changes eliminate overlapping incentive metrics in the short-and long-term incentive plans. A detailed description of these changes can be found at "Annual Incentive Plan—Changes for 2018, the 2019 compensation framework remains similar to the 2018 framework, with only limited changes to the correlation of incentive payout amounts to the level of achievement of performance metrics.
2020".

Objectives of Executive Compensation

The primary objectives and priorities of our executive compensation program are to:

attract, motivate, and retain quality executive leadership;
align the incentive goals of our executive officers with the interests of our shareholders;
enhance the individual performance of each executive officer;
improve our overall performance; and
support achievement of our business plans and long-term goals.

●attract, motivate, and retain quality executive leadership;
●align the incentive goals of our executive officers with the interests of our shareholders;
●enhance the individual performance of each executive officer;
●improve our overall performance; and
●support achievement of our business plans and long-term goals.


To accomplish these objectives, the Compensation Committee considers a variety of factors when approving compensation programs, including (i) changes in our business strategy, (ii) performance expectations for the Company and, with respect to the compensation programs for certain NEOs, the performance expectations for Progressive or Aaron's Business, (iii) external market data, (iv) actual performance of the Company and, with respect to the compensation programs for certain NEOs, the actual performance of Progressive or Aaron's Business, (v) individual executive performance, and (vi) internal compensation equity with the NEOs. A more complete description of the annual process for establishing our executive compensation programs is described below and throughout this Compensation Discussion and Analysis.

Compensation Process Summary for 2018

2019

Role of the Compensation Committee. The Compensation Committee is comprised solely of directors that our board has determined to be independent under applicable SEC and NYSE listing standards. Its role is to oversee (i) executive and outside director compensation, (ii) benefit plans and policies, including equity compensation plans and other forms of compensation, and (iii) other significant associatehuman resources matters.

More specifically, the Compensation Committee reviews and discusses proposed compensation for NEOs, evaluates their performance, and sets their compensation. In addition, the Compensation Committee approves all equity awards for NEOs and other executive officers.

Role of Management. The Compensation Committee considered the input and recommendations of Mr. Robinson with respect to our executive compensation programs and decisions that impact other NEOs. Mr. Michaels also provided input with respect to financial goals and recommendations and overall program design. Although management and other invitees at Compensation Committee meetings may participate in discussions and provide input, all votes and final decision-making on NEO compensation are solely the responsibility of the Compensation Committee, and those final deliberations and votes are conducted in executive sessions in which no executive officer participates.

Role of Independent Compensation Consultants. The Compensation Committee has the authority to retain independent consultants and other advisors. During 2018,2019, the Compensation Committee retained the services of both Pearl Meyer (initially) and Exequity (subsequently). These advisorswhich reported directly to the Compensation Committee but worked with management at the direction of the Compensation Committee. The Compensation Committee assessed the independence of the advisors, including the potential for conflicts of interest as required by the SEC and NYSE listing standards, and concluded that both firms wereExequity was appropriately independent and free from potential conflicts of interest.

Although the specific services of the independent consultant vary from year to year, the following are the services generally provided by the independent consultant:

providing information on trends and related legislative, regulatory, and governance developments;
reviewing and recommending any changes to the benchmarking peer group for the consideration and approval of the Compensation Committee;
conducting competitive assessments of executive compensation levels and incentive program designs;
consulting on compensation for outside directors;
conducting a review of our compensation programs from a risk assessment perspective;
reviewing compensation tally sheets on our executive officers;
assisting with review and disclosures regarding the executive compensation programs; and
reviewing the Compensation Committee’s annual calendar and related governance matters.

●providing information on trends and related legislative, regulatory, and governance developments;
●reviewing and recommending any changes to the benchmarking peer group for the consideration and approval of the Compensation Committee;
●conducting competitive assessments of executive compensation levels and incentive program designs;
●consulting on compensation for outside directors;
●conducting a review of our compensation programs from a risk assessment perspective;
●reviewing compensation tally sheets on our executive officers;
●assisting with review and disclosures regarding the executive compensation programs; and
●reviewing the Compensation Committee’s annual calendar and related governance matters.

Representatives from the advisory firmsfirm attended a majorityall of the Compensation Committee meetings pertaining to 20182019 executive compensation decisions, and also participated in executive sessions as requested by the Compensation Committee.


Benchmarking

Benchmarking

Role of Benchmark Data. We use compensation market data as a reference for understanding the competitive positioning of each element of our compensation program and of total compensation. The Compensation Committee generally requests these market studies from its independent consultant from time to time as the Compensation Committee deems appropriate. A market study was conducted for 2018 whichMarket data informed compensation-related decisions for our NEOs.NEOs in 2019. On a go forward basis, the Committee will review market data on an annual basis to better understand current labor market trends.



In referencing these market studies, the Compensation Committee does not manage total compensation for our NEOs within a prescribed competitive position or percentile of the compensation market. Rather, the Compensation Committee reviews compensation for each NEO relative to market data and considers other internal and external factors when exercising its business judgment as to compensation decisions. Other factors material to the Compensation Committee’s deliberations include (i) objective measurements of business performance, (ii) the accomplishment of compliance, strategic, and financial objectives, (iii) the development and retention of management talent, (iv) enhancement of shareholder value, and (v) other matters the Compensation Committee deems relevant to our short-term and long-term success.

Peer Groups. As previously mentioned, withWith respect to 20182019 compensation decisions, the Compensation Committee referenced the market study that was conducted by the independent consultant for 2018. The peer group used in that study was proposed by the independent consultant and approved by the Compensation Committee, and included discrete peer groups for each of the major operating segments in addition to a corporate peer group. The peers were selected based on similarity in terms of size, complexity, and business focus at that time. The following are the specific peer companies that were used in that study:

Corporate PeersAaron's Business Unit PeersProgressive BusinessLeasing Unit Peers
Big Lots, Inc.Big Lots, Inc.Credit Acceptance Corporation
Conn's, Inc.Conn's, Inc.Enova International, Inc.
Credit Acceptance CorporationDick's Sporting Goods, Inc.ePlus inc.
Dick's Sporting Goods, Inc.DSW Inc.EZCORP, Inc.
ePlus inc.FirstCash, Inc.Fair Isaac Corporation
Green Dot CorporationHerc Holdings Inc.Green Dot Corporation
OneMain Holdings, Inc.HSN, Inc.LendingClub Corporation
Rent-A-Center, Inc.Rent-A-Center, Inc.OneMain Holdings, Inc.
Santander Consumer USA Holdings Inc.Tractor Supply CompanySantander Consumer USA Holdings Inc.
Tractor Supply CompanyWayfair, Inc.World Acceptance Corporation

Survey Data.If data from the proxy peer group is not available for all NEO positions, the Compensation Committee may also review broader survey benchmarking data from time to time, as necessary.


In 2019, at the request of the Compensation Committee, Exequity conducted a comprehensive review of potential peers taking into account revenue size, industry, and labor market. The Compensation Committee approved the peer group, which is comprised of the 25 companies listed below. The peer group was used for the 2019 benchmarking and to inform 2020 pay levels. The peer group is comprised of both retail and consumer finance companies that approximate Aaron’s, Inc. in terms of key size metrics. The composition of the group considers the major operating segments of Aaron’s, Inc. as represented by Aaron’s Business which operates in the retail space, and Progressive Leasing which operates in the consumer finance space. In addition to the peer group shown below, general industry pay survey data was also provided and considered to ensure a fulsome evaluation of the competitive pay landscape.

Company NamePrimary Industry
Ally Financial Inc.Consumer Finance
Big Lots, Inc.Multiline Retail
Burlington Stores, Inc.Specialty Retail
Conn’s, Inc.Specialty Retail
Credit Acceptance CorporationConsumer Finance
CURO Group Holdings Corp.Consumer Finance
Designer Brands Inc.Specialty Retail
DICK’S Sporting Goods, Inc.Specialty Retail
Discover Financial ServicesConsumer Finance
Encore Capital Group, Inc.Consumer Finance
Enova International, Inc.Consumer Finance
FirstCash, Inc.Consumer Finance
Foot Locker, Inc.Specialty Retail
Green Dot CorporationConsumer Finance
OneMain Holdings, Inc.Consumer Finance
Rent-A-Center, Inc.Specialty Retail
RHSpecialty Retail
Sally Beauty Holdings, Inc.Specialty Retail
Santander Consumer USA Holdings Inc.Consumer Finance
Sleep Number CorporationSpecialty Retail
SLM CorporationConsumer Finance
Synchrony FinancialConsumer Finance
Tractor Supply CompanySpecialty Retail
Wayfair Inc.Internet and Direct Marketing Retail
Williams-Sonoma, Inc.Specialty Retail

Components of the Executive Compensation Program

The three primary components of each NEO's total direct compensation for 20182019 were as follows:

Component
ComponentTerms and Objectives
Base Salary
▪
●Fixed amount of compensation for performing day-to-day job responsibilities intended to reflect the scope of an executive’s role.
▪
●Reviewed annually for potential adjustment based on factors such as market levels, individual performance, and scope of responsibility.
 
Annual Cash
Incentive Award
▪
●Variable performance-based award opportunity based on achievements with respect to the Company’s or Progressive or Aaron's Business financial and operational performance goals (Adjusted EBITDA, Adjusted Revenue, and Compliance).

 
Long-Term Equity
Incentive Award
▪
●To balance long-term performance and retention, 20182019 equity awards were made in the form of 50% performance share units, 25% stock options, and 25% time-based restricted stock awards.
▪
●Aligns executive interests with shareholders.

These components are designed to be competitive with employers with whom we compete for executive talent and to support our compensation program objectives. The Compensation Committee has not set a prescribed mix or allocation for each component, but rather focuses on total direct compensation when making compensation decisions for our executives. In making these decisions, the Compensation Committee also considers the following related factors: (i) performance against corporate and individual objectives for the fiscal year; (ii) performance of general management responsibilities; (iii) the value of any unique skills and capabilities; (iv) contributions as a member of the executive management team; and (v) competitive market considerations.



Total direct compensation for our executive officers emphasizes variable and performance-based compensation more so than for our other employees. This reflects our philosophy that performance-based compensation opportunities—linked to financial, operating, and stock price performance—should increase as overall responsibility increases.

The following graphs demonstrate this philosophy by showing the mix of target pay for 20182019 for our CEO and for our other NEOs as a group:

ceographforcomponentsofexecu.jpgothernamedexecutiveofficersg.jpg

Base Salary

The Compensation Committee views base salary as fixed compensation intended to reflect the scope of an executive’s role. It reviews base salaries annually and adjusts them as necessary to ensure that salary levels remain appropriate and competitive. Salary increases are periodic rather than annual and are made after the Compensation Committee considers relevant factors, including:

●breadth and scope of an executive’s role, including any significant change in duties;
●competitive market pay levels;

breadth and scope of an executive’s role, including any significant change in duties;
competitive market pay levels;
internal comparisons to similar roles;
individual performance throughout the year; and
overall economic climate, Company performance and, with respect to certain NEOs, the performance of Progressive or Aaron's Business.
Based on the Compensation Committee’s review of the above factors, and taking into account that
●internal comparisons to similar roles;
●individual performance throughout the year; and
●overall economic climate, Company performance and, with respect to certain NEOs, the performance of Progressive or Aaron's Business.

There were no changes were made to base salaries since 2016, base salariessalary made for the NEOs in 2019. The levels shown below were last adjusted to the following levels in 2018:

Named Executive Officer
2018
 Base Salary
John W. Robinson III$800,000
Steven A. Michaels$625,000
Ryan K. Woodley$600,000
Douglas A. Lindsay$600,000
Curtis L. Doman$475,000


2019
Named Executive Officer     Base Salary
John W. Robinson III$       800,000
Steven A. Michaels$625,000
Ryan K. Woodley$600,000
Douglas A. Lindsay$600,000
Curtis L. Doman$475,000

Annual Cash Incentive Awards

Annual cash incentive awards provide the opportunity to earn cash rewards for meeting Company, Progressive, or Aaron's Business financial and operational performance goals. Under the 20182019 program, our NEOs had the potential to earn cash incentive awards based on performance against pre-determined performance goals, with amounts that vary based on the degree to which the related goals are achieved.

Target Awards.At the beginning of the year, the Compensation Committee approves the target award opportunity for each NEO. For 2018,2019, these target award opportunities remained unchanged from 2017, with the exception of Mr. Robinson, whose target was increased from 115% to 125% of salary to better approximate market levels of bonus opportunity for CEOs.2018.

2019
Named Executive Officer     
2018
Target % of Salary
John W. Robinson III125%
Steven A. Michaels100%
Ryan K. Woodley100%
Douglas A. Lindsay100%
Curtis L. Doman100%

Performance Measures and Weights.Performance measures and weights remained relatively unchanged from 2017, with a focus on EBITDA and Revenue performance. However, in order to ensure greater consistency among our different businesses, the only change was to the weighting on Adjusted EBITDA (50%) and Adjusted Revenue (30%) to the same level for each business. The following were the performance measures and weights in the 20182019 annual cash incentive program for each NEO:

Aaron's, Inc.Progressive LeasingAaron's Business
Robinson and MichaelsWoodley and DomanLindsay
50% Adjusted EBITDA
Aaron's, Inc.
Robinson and Michaels
Progressive
Woodley and Doman
Aaron's Business
Lindsay
50% Adjusted EBITDA50% Adjusted EBITDA  50% Adjusted EBITDA
30% Adjusted Revenue30% Adjusted Revenue30% Adjusted Revenue
20% Compliance20% Compliance20% Compliance

In each case, the measures are specific to each entity, and calculated as follows:

●Revenues are measured on a GAAP basis.
●Adjusted EBITDA is based on GAAP earnings before interest expense, taxes, depreciation, and amortization, with overall Company, Aaron's Business and Progressive Adjusted EBITDA results (which, for purposes of determining Messrs. Woodley and Doman’s annual cash incentive award, is a combination of Progressive Leasing and DAMI. Adjusted EBITDA), subject to the non-GAAP adjustments described in the Company's Form 8-K filed with the SEC on February 20, 2020 and subject to further adjustments described below.

Adjusted revenues generally are measured on a GAAP basis, subject to the adjustments described below.
Adjusted EBITDA is based on GAAP earnings before interest, taxes, depreciation, and amortization, with overall Company and Progressive Adjusted EBITDA results (which, for purposes of determining Messrs. Woodley and Doman’s annual cash incentive award, is a combination of Progressive Leasing and Dent-A-Med, Inc. (“DAMI”) Adjusted EBITDA), subject to the adjustments described below.
Performance results for each measure also will exclude the effects of certain nonrecurring items of revenue or gain and expense or loss. For 2018, this included adjustments, as applicable, to remove the insurance recovery for Hurricane Harvey from Adjusted EBITDA metrics of Aaron’s Business and consolidated results, and to remove the effect of the provision for loan losses and litigation expense at DAMI.
Compliance-related goals for Progressive and our Aaron's Business for 2018 focused on several areas, including information security and related compliance training, the development and implementation of various processes to further improve compliance monitoring, and improving compliance procedures related to our Progressive business.

●Performance results for each measure also exclude the effects of certain nonrecurring items of gains and expenses or losses. For 2019, this included adjustments, as applicable, to remove the insurance recovery for the 2017 Hurricanes Harvey and Irma from Adjusted EBITDA metrics of Aaron’s Business and the overall Company results, to remove certain legal and due diligence costs from the Adjusted EBITDA metric for the Aaron's Business and the overall Company results, to adjust Progressive Leasing's Adjusted EBITDA metric for certain regulatory legal expenses incurred by Progressive Leasing and to remove the effect of the change in allowance for loan losses for Vive. Refer to Appendix A for additional information regarding these adjustments and the reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure.
●Compliance-related goals established in the first quarter of 2019 for the overall Company, Progressive Leasing and our Aaron's Business focused on several areas, including information security and related compliance training, the development and implementation of various processes to further improve compliance monitoring, and improving compliance procedures related to our Progressive business.

Performance Goals and Results.The Compensation Committee established annual goals for each of the performance measures in the annual incentive program, including a Threshold, Target, and Maximum performance goal that corresponded to a Threshold, Target, and Maximum incentive payout level. For the financial measures (Adjusted EBITDA and Adjusted revenue), the payout range was from 25% to 200% of Target and for Compliance the payout range was from 0% to 125% of Target (based on the number of compliance goals achieved).



The following tables summarize the performance goals, performance results, and related incentive payout levels as a percent of target for each NEO:

Aaron's, Inc.: Robinson and Michaels
($ Million)Plan Performance RangeActual Performance and Payout
               Year Ending      Payout
MetricWeightThresholdTarget Zone1Maximum12/31/2019% of Target Calculation
Consolidated Revenue30%$3,851$4,033 - $4,073$4,256$3,94897.4%79.5%
Consolidated Adj. EBITDA250%$405$438 - $443$476$43598.9%95.9%
Compliance320%4 Projects5 Projects5 Projects125.0%125.0%
Payout25%100%200%96.8%
  
Progressive Leasing: Woodley and Doman
($ Million)Plan Performance RangeActual Performance and Payout
Year EndingPayout
MetricWeightThresholdTarget Zone1Maximum12/31/2019% of TargetCalculation
Progressive Revenues430%$2,044$2,187 - $2,209$2,341$2,16398.4%90.4%
Progressive Adj. EBITDA550%$248$270 - $273$293$26698.2%90.9%
Compliance320%4 Projects5 Projects5 Projects125.0%125.0%
Payout25%100%200%97.5%


Aaron's Business: Lindsay
($ Million)Plan Performance RangeActual Performance and Payout
                    Year Ending        Payout
MetricWeightThresholdTarget Zone1Maximum12/31/2019% of TargetCalculation
Aaron's Business Revenue30%$1,716$1,846 - $1,865$1,995$1,78496.2%72.0%
Aaron's Business Adj.
EBITDA650%$150$168 - $170$186$16597.5%87.8%
Compliance320%4 Projects5 Projects5 Projects125.0%125.0%
Payout25%100%200%90.5%

1

If actual performance falls anywhere within this dollar range then payout is at 100% of target.

2

Further adjusted to remove insurance recoveries for the 2017 Hurricanes Harvey and Irma at the Aaron's Business, to remove certain legal and due diligence costs at the Aaron's Business and to remove the effect of the change in allowance for loan losses at Vive.

3

Maximum payout on Compliance is 125%.

4

Consolidation of Progressive and Vive.

5

Consolidation of Progressive and Vive, further adjusted to remove the effect of the change in allowance for loan losses at Vive and to adjust for certain regulatory legal expenses at Progressive Leasing.

6

Further adjusted to remove insurance recoveries for the 2017 Hurricanes Harvey and Irma and to remove certain legal and due diligencecosts.

Aaron's, Inc.: Robinson and Michaels
($ Million) Weight Plan Performance Range Actual Performance and Payout
MetricThreshold 
Target Zone1
 Maximum Year Ending 12/31/2018% of TargetPayout Calculation
Consolidated Adj. Revenue 30% $3,415 $3,757-$3,833 $4,174 $3,830100.9%100.0%
Consolidated Adj. EBITDA2
 50% $338 $395-$403 $459 $38797.2%97.2%
Compliance3
 20%   4 Projects 5 Projects 5 Projects125.0%125.0%
Payout   25% 100% 200%   103.6%
Progressive: Woodley and Doman
($ Million) Weight Plan Performance Range Actual Performance and Payout
Metric  Threshold 
Target Zone1
 Maximum Year Ending 12/31/2018% of TargetPayout Calculation
Progressive Adj. Revenues4
 30% $1,830 $2,013-$2,053 $2,236 $2,036100.1%100.0%
Progressive Adj. EBITDA5
 50% $188 $217-$226 $255 $21797.9%99.8%
Compliance3
 20%   4 Projects 5 Projects 5 Projects125.0%125.0%
Payout   25% 100% 200%   104.9%
Aaron's Business: Lindsay
($ Million) Weight Plan Performance Range Actual Performance and Payout
Metric  Threshold 
Target Zone1
 Maximum Year Ending 12/31/2018% of TargetPayout Calculation
Aaron's Business Adj. Revenue 30% $1,585 $1,744-$1,779 $1,938 $1,794101.9%104.3%
Aaron's Business Adj. EBITDA6
 50% $151 $174-$181 $204 $17196.1%96.1%
Compliance3
 20%   4 Projects 5 Projects 5 Projects125.0%125.0%
Payout   25% 100% 200%   104.4%
 
1 If actual performance falls anywhere within this dollar range then payout is at 100% of target.
2 Further adjusted to remove the effect of provision and litigation expense at DAMI and to remove insurance recoveries for Hurricane Harvey at the Aaron's Business.
3 Maximum payout on Compliance is 125%.
4 Consolidation of Progressive and DAMI.
5 Consolidation of Progressive and DAMI, further adjusted to remove the effect of provision and litigation expense at DAMI.
6 Further adjusted to remove insurance recoveries for Hurricane Harvey.

Based on the above performance results and incentive calculations, the chart below shows the final annual cash incentive awards paid to our NEOs for 20182019 performance as compared to what those payments would have been at the target level:

Named Executive Officer
Target Annual Incentive1
Award Earned under Annual Incentive Plan
John W. Robinson III$980,750$1,016,300
Steven A. Michaels$613,500$635,700
Ryan K. Woodley$574,700$602,900
Douglas A. Lindsay$584,600$610,100
Curtis L. Doman$463,500$486,200
 
1 Calculated on base salary paid in 2018.


Award Earned under
Named Executive Officer     Target Annual Incentive1     Annual Incentive Plan
John W. Robinson III$1,000,000$967,900
Steven A. Michaels$625,000$604,900
Ryan K. Woodley$600,000$585,300
Douglas A. Lindsay$600,000$542,800
Curtis L. Doman$475,000$463,300

1

Calculated on annual base salary paid for 2019.

Changes for 2020.As previously described, the Compensation Committee adopted changes to the 2020 annual cash incentive plan. These changes include eliminating the overlap with metrics in the performance share plan and a heightened focus on unit level profitability as measured through EBITDA. Beginning in 2020, officers with corporate responsibility including Messers. Robinson and Michaels will be measured 80% on performance relative to corporate EBITDA goals and 20% relative to strategic objectives. Likewise, business unit leaders will be measured on EBITDA goals for the operating unit over which they have responsibility. Mr. Woodley and Mr. Doman will be measured on Progressive EBITDA goals, which will constitute 80% of their respective incentive opportunities and will have 20% of their respective annual incentive opportunities tied to strategic objectives. Mr. Lindsay will be measured on Aaron’s Business EBITDA goals, which will constitute 80% of his incentive opportunity and will have 20% of his incentive opportunity tied to strategic objectives.

Long-Term Equity Incentive Awards

Aaron’s long-term equity incentive awards are intended to:

reward the achievement of business objectives that the Compensation Committee believes will benefit our shareholders;
align the interests of our senior management with those of our shareholders; and
assist with retaining our senior management to ensure continuity of leadership.

●

reward the achievement of business objectives that the Compensation Committee believes will benefit our shareholders;

●

align the interests of our senior management with those of our shareholders; and

●

assist with retaining our senior management to ensure continuity of leadership.

Beyond these objectives, the Compensation Committee also considers market design practices, equity dilution, accounting expense, and other internal considerations when deciding on the structure and size of equity awards.


Award Type and Mix. Each year the Compensation Committee grants equity awards to our NEOs; however, the award type and mix may change from time to time. In order to balance performance and retention incentives, the 20182019 equity awards were made in the form of performance share units, stock options, and time-based restricted stock awards.

The graphic below depicts our 20182019 equity award mix for all executives:

piechartforltequityincentive.jpg

Equity AwardObjectiveProvisions
    ObjectiveProvisions
Performance Shares
▪
■Focus participants on the fundamentals of growing our business and increasing the level of our earnings over the long term.
▪
■One-year performance period ensures greater validity in our forecasts.
▪
■Number of performance shares earned based on one-year Company performance.
▪
■Earned awards are subject to additional time-based vesting, with vesting occurring in three equal increments following the first, second, and third anniversaries of the grant.grant
Stock Options
▪
■Aligns executives with shareholders, with the value of an award realized only if the stock price appreciates following the date of grant.

▪
■Pro rata annual three-year vesting, with vesting occurring in three equal increments following the first, second, and third anniversaries of the grant.

Restricted Stock
▪
■Addresses competitive concerns with a focus on retaining our key executives needed to realize our long-term performance objectives.
▪
■Pro rata annual three-year vesting, with vesting occurring in three equal increments following the first, second, and third anniversaries of the grant.

Target Awards.Mr. Robinson’s target award is expressed as a dollar amount, with an annual grant date value that was established for 2015 at $5.2 million as per the employment agreement we entered into with him when he was promoted to serve as our Chief Executive Officer. Target awards for 20182019 for our other NEOs are expressed as a percentage of base salary, and are unchanged from 2018 levels shown below:



LTIP Target %
Named Executive OfficerLTIP Target % of Salary

Steven A. Michaels

225%
Ryan K. Woodley400%
Douglas A. Lindsay225%
Curtis L. Doman300%

These award target percentages were set by the Compensation Committee after reviewing the general award levels across our peer group and considering the responsibilities of each NEO. Prior to increases for Mr. Michaels in 2018 (formerly 200%) and Mr. Lindsay (formerly 100%), the NEOs had not had changes to their target award percentages since 2016.


Awards generally are converted to a target number of performance shares and time-based RSAs by dividing the allocable portion of the grant date award value by our closing stock price on the date of grant. To determine the number of options to grant, the allocable portion of the grant date award value was divided by the estimated fair value of an option, as determined for benchmarking purposes using the Black-Scholes valuation methodology.

The LTI target awards that were granted to our NEOs pursuant to the 20182019 program structure are set forth in the table below:

2018

2019 Equity Awards

LTI Target Value

Named Executive Officer Stock Options 25%+Restricted Stock 25%+Performance Shares 50%=2018 LTI Value Target
John W. Robinson III $1,300,000 $1,300,000 $2,600,000 $5,200,000
Steven A. Michaels $351,563 $351,563 $703,125 $1,406,250
Ryan K. Woodley $600,000 $600,000 $1,200,000 $2,400,000
Douglas A. Lindsay $337,500 $337,500 $675,000 $1,350,000
Curtis L. Doman $356,250 $356,250 $712,500 $1,425,000
Shares Awarded (at target)
Named Executive Officer Stock Options 25%+Restricted Stock 25%+Performance Shares 50%=2018 LTI Shares at Target
John W. Robinson III 87,330 27,510 55,020 169,860
Steven A. Michaels 23,640 7,440 14,880 45,960
Ryan K. Woodley 40,320 12,720 25,410 78,450
Douglas A. Lindsay 22,680 7,170 14,310 44,160
Curtis L. Doman 23,940 7,560 15,090 46,590

     Stock Options          Restricted Stock          Performance          2019 LTI Value
Named Executive Officer25%+25%+Shares 50%=Target
John W. Robinson III$1,300,000$1,300,000$2,600,000$5,200,000
Steven A. Michaels$351,563$351,563$703,125$1,406,250
Ryan K. Woodley$600,000$600,000$1,200,000$2,400,000
Douglas A. Lindsay$337,500$337,500$675,000$1,350,000
Curtis L. Doman$356,250$356,250$712,500$1,425,000
Shares Awarded (at target)
  
Stock OptionsRestricted StockPerformance2019 LTI Shares
Named Executive Officer25%+25%+Shares 50%=at Target
John W. Robinson III66,93024,00048,000138,930
Steven A. Michaels18,1206,51012,99037,620
Ryan K. Woodley30,90011,10022,17064,170
Douglas A. Lindsay17,4006,24012,48036,120
Curtis L. Doman18,3606,60013,17038,130

Performance Shares Performance Measures and Weights.The following were the performance measures and weights for the performance shares granted in 2018:2019:

Aaron's, Inc.Progressive LeasingAaron's Business
Aaron's, Inc.
Robinson and Michaels
Progressive
Woodley and Doman
Aaron's Business
Lindsay
50% Adjusted Revenue50% Revenue less Bad Debt Expense50% Adjusted Revenue50% Revenue
25% Adjusted EBITDA30% Adjusted EBITDA30% Adjusted EBITDA
25% Return on Capital20% Adjusted Revenue (Consolidated)20% Adjusted Revenue (Consolidated)

The Compensation Committee selected these measures to focus participants on growing our business and on sustaining and improving the quality of our earnings.

In each case, the measures are specific to each entity, except where noted as “consolidated,” which is referring to Aaron’s, Inc., and are calculated as follows:

Adjusted revenue

●

Revenue is based on consolidated Aaron’s, Inc., Progressive, or Aaron’s Business results for 2019, as described above in “Components of the Executive Compensation Program-Annual Cash Incentive Awards" for the Aaron's Business. Consolidated Aaron's, Inc. Adjusted Revenue and Progressive Adjusted Revenue include the consolidation with Vive and are reduced for the amount of provision expense at Vive;

●

Adjusted EBITDA is based on consolidated Aaron’s, Inc., Progressive, or Aaron's Business results for 2019, calculated as described above in “Components of the Executive Compensation Program-Annual Cash Incentive Awards"; and

●

Return on capital was measured by dividing adjusted net operating profit (which we define as operating profit adjusted for certain non-recurring items as shown in Appendix A) after tax by the sum of average net debt (which we define as debt less cash and cash equivalents) and average total shareholders’ equity, with the final result being an average of quarterly calculations.


Refer to Appendix A for 2018, as described above in “Componentsthe reconciliation of these non-GAAP measures to the Executive Compensation Program-Annual Cash Incentive Awards;”



Adjusted EBITDA is based on consolidated Aaron’s, Inc., Progressive, or Aaron's Business results for 2018, as described above in “Components of the Executive Compensation Program-Annual Cash Incentive Awards;”
Return on capital was measured by dividing adjusted net operating profit after tax by the sum of average net debt (which we define as debt less cash and cash equivalents) and average total shareholders’ equity, with the final result being an average of quarterly calculations; and
Progressive Revenue less Bad Debt Expense does not include the consolidation with DAMI.
closest GAAP measurement.

Performance Goals and Results.The Compensation Committee established goals for each of the performance measures in the performance share program, including a Threshold, Target, and Maximum performance goal that corresponded to a Threshold, Target, and Maximum number of shares that could be earned. The number of shares that could be earned ranged from 25% to 200% of Target. Payouts for results between these levels are interpolated, with scales that vary by business segment. If the results are less than threshold, then no shares would be earned.

The following tables summarize the performance goals, performance results, and related earning levels as a percent of target for each NEO:

Aaron's, Inc.: Robinson and Michaels
($ Million) Weight Plan Performance Range Actual Performance and Payout
MetricThreshold 
Target1
 Maximum Actual% of TargetPayout Calculation
Consolidated Adj. Revenue 50% $3,415 $3,757-$3,833 $4,174 $3,830100.9%100.0%
Consolidated Adj. EBITDA2
 25% $339 $395-$403 $459 $38797.2%97.2%
Consolidated ROC3
 25% 9.9% 11.5%-11.8% 13.4% 11.4%97.7%98.7%
Payout   25% 100% 200%   99.0%
 
 
Progressive: Woodley and Doman
($ Million) Weight Plan Performance Range Actual Performance and Payout
Metric  Threshold 
Target1
 Maximum Actual% of TargetPayout Calculation
Progressive Revenue less Bad Debt Expense 50% $1,591 $1,750-$1,785 $1,944 $1,771100.2%100.0%
Progressive Adj. EBITDA4
 30% $188 $217-$226 $255 $21797.9%99.8%
Consolidated Adj. Revenue 20% $3,415 $3,757-$3,833 $4,174 $3,830100.9%100.0%
Payout   25% 100% 200%   99.9%
 
 
Aaron's Business: Lindsay
($ Million) Weight Plan Performance Range Actual Performance and Payout
Metric  Threshold 
Target1
 Maximum Actual% of TargetPayout Calculation
Aaron's Business Revenue 50% $1,585 $1,744-$1,779 $1,938 $1,794101.9%104.3%
Aaron's Business Adj. EBITDA5
 30% $151 $174-$181 $204 $17096.1%96.1%
Consolidated Adj. Revenue 20% $3,415 $3,757-$3,833 $4,174 $3,830100.9%100.0%
Payout   25% 100% 200%   101.0%
 
1 If actual performance falls anywhere within this dollar range then payout is at 100% of target.
2 Further adjusted to remove the effect of provision and litigation expense at DAMI and to remove insurance recoveries for Hurricane Harvey at the Aaron's Business.
3 Return on Capital: Adjusted Net Operating Profit after Tax divided by the Sum of Average Net Debt and Average Equity. Net debt is equal to total debt less cash and cash equivalents.
4 Consolidation of Progressive and DAMI, and further adjusted to remove the effect of provision and litigation expense at DAMI.
5 Further adjusted to remove insurance recoveries for Hurricane Harvey.

Aaron's, Inc.: Robinson and Michaels
($ Million)Plan Performance RangeActual Performance and Payout
                            % of    Payout
MetricWeightThresholdTarget Zone1MaximumActualTargetCalculation
Consolidated Adjusted Revenue250%$3,831$4,012-$4,053$4,234$3,92697.4%78.7%
Consolidated Adj. EBITDA325%$405$438-$443$476$43598.9%95.9%
Consolidated ROC425%9.9%11.6%-11.8%14%11.9%101.6%103.0%
Payout25%100%200%89.1%
 
Progressive: Woodley and Doman
($ Million)Plan Performance RangeActual Performance and Payout
% ofPayout
MetricWeightThresholdTarget Zone1MaximumActualTargetCalculation
Progressive Adjusted Revenue550%$2,025$2,166-$2,188$2,318$2,14298.4%89.9%
Progressive Adj. EBITDA630%$248$270-$273$293$26698.2%90.9%
Consolidated Adjusted Revenue220%$3,831$4,012-$4,053$4,234$3,92697.4%78.7%
Payout25%100%200%87.9%
 
Aaron's Business: Lindsay
($ Million)Plan Performance RangeActual Performance and Payout
% ofPayout
MetricWeightThresholdTarget Zone1MaximumActualTargetCalculation
Aaron's Business Revenue50%$1,716$1,846-$1,865$1,995$1,78496.2%72.0%
Aaron's Business Adj. EBITDA730%$150$168-$170$186$16597.5%87.8%
Consolidated Adjusted Revenue220%$3,831$4,012-$4,053$4,234$3,92697.4%78.7%
Payout25%100%200%78.1%

1

If actual performance falls anywhere within this dollar range then payout is at 100% of target.

2

Further adjusted to remove the effect of provision expense at Vive.

3

Further adjusted to remove insurance recoveries for Hurricanes Harvey and Irma at the Aaron's Business, to remove certain due diligence costs at the Aaron's Business and to remove the effect of the change in allowance for loan losses at Vive.

4

Return on Capital: Adjusted Net Operating Profit after Tax divided by the Sum of Average Net Debt and Average Equity. Net debt is equal to total debt less cash and cash equivalents.

5

Consolidation of Progressive and Vive, further adjusted to remove the effect of provision expense at Vive.

6

Consolidation of Progressive and Vive, further adjusted to remove the effect of the change in allowance for loan losses at Vive and to adjust for certain legal expenses at Progressive Leasing.

7

Further adjusted to remove insurance recoveries for Hurricanes Harvey and Irma and to remove certain due diligence costs.

The performance shares earned by the NEOs based on 20182019 performance will vest in three annual increments on March 7, 2019, 2020, 2021, and 2021.

2022.



Changes for 2020.As discussed above, the Compensation Committee made changes to the design of the 2020 performance share program. In order to eliminate overlap between the annual cash incentive plan and the performance share plan, the metrics for long-term incentive have been changed to focus largely on revenue creation. Line-of-sight profitability continues to be emphasized and measured via adjusted pre-tax income, and metrics for corporate participants will contain a balance sheet component to encourage a holistic and balanced approach to sustained growth and value creation. The weightings of the metrics will vary by operating segment as shown in the table below:

Aaron's, Inc.Progressive LeasingAaron's Business
Robinson and MichaelsWoodley and DomanLindsay
60% Adjusted Revenue70% Adjusted Revenue70% Revenue
20% Adjusted Pre-tax Income30% Adjusted Pre-tax Income30% Adjusted Pre-tax Income
20% Return on Capital

Executive Compensation Policies

Stock Ownership Guidelines. The Compensation Committee has adopted stock ownership guidelines to further align the interests of senior executives with our shareholders. The table below summarizes the current guidelines that apply to our NEOs. As of December 31, 2018,2019, all of our executive officers satisfied these guidelines.

Feature     Provision
Required levels    
5x base salary: Chief Executive Officer
3x base salary:
▪
■CFO and President, Strategic Operations;
▪
■Chief Executive Officer, Progressive; and
▪
■Chief ProductInnovation Officer, Progressive
2x base salary: President, Aaron's Business
 
Shares counted toward guidelines
Stock owned outright
Shares held in retirement accounts
Unvested time-based RSUs and RSAs
Earned but unvested performance shares
"In the money" value of vested but unexercised stock options

Clawback Policy.The Compensation Committee has adopted a policy that provides that annual incentive and equity awards to our executive officers may be recouped if we restate our consolidated financial statements. Under this policy, covered employees including our NEOs may be required to repay to the Company the difference between the amount of incentives and awards received and the amount that would have been payable under the restated financial statements.

Securities Trading Policy.As part of our Insider Trading Policy, all of our officers and directors are prohibited from trading any interest or position relating to the future price of our securities. These prohibited transactions include trading in puts, calls, short sales, or hedging transactions, but do not generally prohibit other purchases and sales of our common stock made in compliance with the limitations contained in our Insider Trading Policy. Pledging of Company securities is prohibited under our Insider Trading Policy.

Tally Sheets.The Compensation Committee reviews tally sheets for select executives. These tally sheets provide a comprehensive view of target, actual, and contingent executive compensation payouts under a variety of termination and performance scenarios. The tally sheets allow the Compensation Committee to understand the cumulative effect of prior pay decisions and stock performance, as well as the retentive ability of existing LTIs, severance, and change-in-control arrangements. The tally sheets are intended to facilitate the Compensation Committee’s understanding of the nature and amounts of total compensation under our executive compensation program and to assist the Compensation Committee in its overall evaluation of our program.


Executive Benefits and Perquisites

Our executive compensation program also provides certain benefits and perquisites to our NEOs. The value of these benefits and perquisites represents a small portion of an NEO’s overall total compensation opportunity and does not materially influence the Compensation Committee’s decisions with respect to the salary and incentive elements of the compensation of our NEOs. The Compensation Committee periodically reviews the perquisites and other personal benefits that we provide to senior management to ensure they remain in the best interests of the Company and its shareholders.

Healthcare Benefits. Our NEOs receive a full range of standard benefits, including the medical, dental, vision, life and voluntary disability coverage available to our employees generally.

Retirement Plans. Our NEOs participate on the same basis as other employees in the 401(k) Retirement Savings Plan, which we refer to as the 401(k) Plan, for all full-time employees. Employees with at least one year of service who meet certain eligibility requirements are eligible for a Company match.

Our 401(k) Plan uses a safe harbor formula that allows employees to contribute up to 75% of their annual compensation with 100% matching by the Company on the first 3% of compensation and an additional 50% match on the next 2% of compensation. All matching by the Company is immediately vested under the new plan formula and any prior contributions will continue to vest under the preceding vesting schedule.



Under the Company’s Nonqualified Deferred Compensation Plan, which we refer to as the “Deferred“Deferred Compensation Plan,”a select group of management or highly compensated employees are eligible to elect to defer up to 75% of their base salary and up to 75% of their annual bonus on a pre-tax basis. Should they so elect, the Company will make discretionary matching contributions under the same formula that applies for our 401(k) Plan, with the benefit not exceeding the 401(k) Plan statutory limit.

Perquisites.Our NEOs may use the Company’s aircraft from time to time for non-business use. Incremental operating costs associated with such personal use is paid by the Company. The amount of income attributed to each NEO for income tax purposes from personal aircraft use is determined by the Standard Industry Fare Level method, and the executives are responsible for paying the tax on this income. The aggregate incremental cost to the Company of such use by each NEO, if any, is included under the “All Other Compensation” column of“Executive Compensation-Summary Compensation Table.”

Employment Agreements and Other Post-Termination Protections

To attract and retain talented executives, we recognize the need to provide protection to our executives in the event of certain termination situations. The highly competitive nature of the relevant market for key leadership positions means we may be at a competitive disadvantage in trying to retain our current leaders, or hire executives from outside the Company, if we are not able to offer them the type of protections typically found in the market.

Accordingly, we have entered into an employment agreement with Mr. Robinson that details the duties and related compensation for his service as our Chief Executive Officer, as well as the benefits he would receive in the event his employment is terminated under various scenarios. The employment agreement, dating from the Progressive acquisition, with Mr. Woodley expired and the Company elected to replace it with a severance and change-in-control agreement. Each of Messrs. Michaels, Woodley and Lindsay are covered by severance and change-in-control agreements we entered into with them in February 2019 and Mr. Doman is covered by the severance plan, all of which are intended to provide certain benefits in the event employment is terminated other than for cause, disability or death, or in the event termination of employment occurs by the executive officer for good reason following a change of control, with respect to Mr. Doman, and at any time with respect to Messrs. Michaels, Woodley and Lindsay. Mr. John Robinson’s employment agreement, the severance and change-in-control agreements and the severance plan aid us in retaining key leaders who are critical to the ongoing stability of our business, foster objectivity across the participants should they be asked to evaluate proposals that may result in the loss of their employment, and provide important protections to us in terms of confidential information and competitive matters that could arise after their employment is terminated.


The specific details of Mr. John Robinson’s employment agreement and our severance plan are described later in this Proxy Statement,joint proxy statement/prospectus, in the sections titled “Executive Compensation-Employment Agreements with Named Executive Officers” and “Executive Compensation-Potential Payments Upon Termination or Change in Control-Severance Plan.”

Policy on Compensation Tax Deductibility

Effective for tax years beginning after December 31, 2017, U.S. tax law changes expanded the definition of covered employees under Section 162(m) to include, among others, the Chief Financial Officer, and eliminate the performance-based compensation exception. The Tax Act of 2017 includes a transition or “grandfathering” rule under which the changes to Section 162(m) described above will not apply to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017, and is not materially modified after that date. To the extent applicable to our existing contracts and awards, the Compensation Committee may avail itself of this transition rule. However, because of uncertainties as to the application and interpretation of this “grandfathering” rule, no assurances can be given at this time that our existing contracts and awards, even if in place on November 2, 2017, will meet the requirements of the “grandfathering” rule.

The Compensation Committee views the tax deductibility of executive compensation as one factor to be considered in the context of its overall compensation philosophy. The Committee expects in the future to authorize compensation in excess of $1,000,000 to named executive officers that will not be deductible under Section 162(m) when it believes doing so is in the best interests of the Company and its shareholders.




COMPENSATION COMMITTEE REPORT

The Compensation Committee operates pursuant to a written charter adopted by the Board of Directors and available through the Company’s website,http://www.aarons.com.The Compensation Committee is composed of four independent members of the board as defined under the listing standards of the New York Stock Exchange and under the committee’s charter. The Compensation Committee is responsible for assisting the Board of Directors in fulfilling its oversight responsibilities with respect to executive and director compensation.

In keeping with its responsibilities, the Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis section included in the Proxy Statementjoint proxy statement/prospectus related to the Company's 20192020 Annual Meeting of Shareholders and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.2019. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis section be included in the Proxy Statementjoint proxy statement/prospectus and incorporated into the Annual Report on Form 10-K.

This report is respectfully submitted by the Compensation Committee of the Board of Directors.

Douglas C. Curling (Chair)
Kathy T. Betty
Cynthia N. Day
Ray M. Robinson

Douglas C. Curling (Chair)
Kathy T. Betty
Cynthia N. Day
Ray M. Robinson

EXECUTIVE COMPENSATION

The following Summary Compensation Table summarizes the total compensation earned by, or awarded to, our named executive officers in 2019, 2018 2017 and 2016,2017, as applicable.

Summary Compensation Table

Name and Principal Position Year Salary
($)		 
Bonus(1)
($)
 
Stock
Awards(2)($)
 
Option
Awards(3)($)
 
Non-Equity
Incentive Plan
Compensation(4)($)
 
All Other
Compensation(5)($)
   Total
($)
John W. Robinson III 2018 784,615 — 3,900,368 1,444,438 1,016,300 6,317   7,152,038
Chief Executive Officer 2017 700,000 — 3,900,874 1,258,389 1,156,100 3,846   7,019,209
  2016 700,000 — 3,902,004 1,297,620 781,600 5,982   6,687,206
Steven A. Michaels 2018 613,462 — 1,054,843 391,006 635,700 34,784 (6),(7) 2,729,795
Chief Financial Officer & 2017 550,000 — 826,000 266,247 789,900 19,452   2,451,599
President of Strategic 2016 531,689 — 825,228 274,476 516,200 14,142   2,161,735
Operations                  
Ryan K. Woodley 2018 574,616 — 1,802,024 666,893 602,900 11,540 (6) 3,657,973
Chief Executive Officer 2017 435,000 — 1,305,455 421,173 603,200 11,340   2,776,168
Progressive 2016 429,166 — 1,304,064 434,676 665,200 10,556   2,843,662
Douglas A. Lindsay 2018 584,615 — 1,015,145 375,127 610,100 25,418 (6),(7) 2,610,405
President, 2017 500,000 — 375,899 121,068 744,600 17,480   1,759,047
Aaron's Business 2016 458,333 180,000 801,359 115,489 341,400 175,207   2,071,788
Curtis L. Doman 2018 463,462 — 1,070,439 395,968 486,200 11,810 (6) 2,427,879
Chief Product Officer 2017 400,000 — 900,202 290,615 554,600 11,610   2,157,027
Progressive 2016 395,833 — 899,940 299,040 613,500 8,744   2,217,057

                    Non-Equity            
Incentive PlanAll Other
SalaryStockOptionCompensation(3)Compensation(4)Total
Name and Principal PositionYear($)Awards(1)($)Awards(2)($)($)($)($)
John W. Robinson III2019800,0003,900,9601,311,159967,9001,1716,981,190
Chief Executive Officer2018784,6153,900,3681,444,4381,016,3006,3177,152,038
2017700,0003,900,8741,258,3891,156,1003,8467,019,209
Steven A. Michaels2019625,0001,056,510354,971604,900         26,031(5),(6) 2,667,412
Chief Financial Officer &2018613,4621,054,843391,006635,70034,7842,729,795
President of Strategic Operations2017550,000826,000266,247789,90019,4522,451,599
Ryan K. Woodley2019600,0001,802,569605,331585,30011,740(5) 3,604,940
Chief Executive Officer2018574,6161,802,024666,893602,90011,5403,657,973
Progressive2017435,0001,305,455421,173603,20011,3402,776,168
Douglas A. Lindsay2019600,0001,014,250340,866542,80012,010(5) 2,509,926
President,2018584,6151,015,145375,127610,10025,4182,610,405
Aaron's Business2017500,000375,899121,068744,60017,4801,759,047
Curtis L. Doman2019475,0001,071,139359,672463,30012,010(5) 2,381,121
Chief Innovation Officer2018463,4621,070,439395,968486,20011,8102,427,879
Progressive2017400,000900,202290,615554,60011,6102,157,027

(1)Represents cash bonuses paid to Mr. Lindsay in recognition of the important role that he played in developing the restructuring plan for our Aaron's Business, and to reward him for the numerous operational and other business improvements he initiated during 2016, as well as the strategies he developed and implemented to improve our ongoing results. 
(2)Represents the aggregate grant date fair value of awards of time-based RSUs, RSAs, and performance shares recognized by the Company as required by Financial Accounting Standards Board Codification Topic 718. See Note 1213 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018,2019, for a discussion of the assumptions used in calculating these amounts. For the time-based RSUs and RSAs, the fair value is calculated using the closing stock price on the date of grant. For the performance shares, the fair value is also the closing stock price on the date of grant, multiplied by a number of shares that is based on the targeted attainment level, which represents the probable outcome of the performance condition on the date of grant. The amounts do not reflect the value actually realized or that may ultimately be realized by our named executive officers. Assuming the highest performance conditions for the performance share awards granted in 2018,2019, the grant date fair value would be: Mr. Robinson $5,200,490;$5,201,280; Mr. Michaels $1,406,458;$1,407,596; Mr. Woodley $2,401,753;$2,402,341; Mr. Doman $1,426,307;$1,427,101; and Mr. Lindsay $1,352,581.
$1,352,333.
(3)(2)Represents the grant date fair value of awards of stock options recognized by the Company as required by the Financial Accounting Standards Board Codification Topic 718. The Company determines the fair value of stock options on the grant date using a Black-Scholes-Merton option pricing model that incorporates expected volatility, expected option life, risk-free interest rates, and expected dividend yields. See Note 1213 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018,2019, for a discussion of the assumptions used in calculating these amounts.
(4)(3)Reflects the value of the cash bonus earned under our annual cash incentive award program.
(5)(4)We provide a limited number of perquisites to our named executive officers and value those perquisites based on their aggregate incremental cost to the Company. We calculated the incremental cost of Company aircraft use based on the average variable operating costs to the Company. Variable operating costs include fuel costs, maintenance fees, positioning costs, catering costs, landing/ramp fees, and the amount, if any, of disallowed tax deductions associated with the personal use of Company aircraft. The total annual variable operating costs are divided by the annual number of flight hours flown by the aircraft to derive an average variable cost per flight hour. This average variable cost per flight hour is then multiplied by the flight hours flown for personal use to derive the incremental cost to the Company. This method excludes fixed costs that do not change based on usage, such as pilots’ and other employees’ salaries and benefits and hangar expenses. Aggregate incremental cost, if any, of travel by the executive’s family or other guests when accompanying the executive is also included.
(6)(5)Includes matching contributions in the amount of $11,000$11,200 made by the Company to Messr. Michaels’, Woodley’s, Doman’s, or Lindsay’s account, as applicable, in the Company’s 401(k) plan.
(7)(6)Includes matching contributions in the amount of $11,000$11,200 made by the Company to Messr. Michaels' or Lindsay's account as applicable, as part of the Nonqualified Deferred Compensation plan. These amounts are also included in the Nonqualified Deferred Compensation section below.


Grants of Plan-Based Awards in 2018Fiscal Year 2019

Our Compensation Committee granted restricted stock, stock options and performance shares to our named executive officers during 2018.2019. Set forth below is information regarding awards granted in 2018.

Name
Grant
Date
 
Potential Payouts Under Non-
Equity Incentive Plan
Awards(1)
 
Estimated Future
Payouts Under Equity
Incentive Plan Awards(2)
 
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(3)
 
All
Other
Option
Awards:
Number
 of
Securities
Under-
lying
Options(4)
 
Exercise
or Base
Price of
Option
Awards
($/Sh)
 
Grant
Date
Fair
Value of
Stock
and
Option
Awards(5)
($)
Threshold
($)
 
Target
($)
 
Maximum
($)
 
Threshold
(#)
 
Target
(#)
 
Maximum
(#)
 
John W. Robinson III  245,192
 980,769
 1,814,423
              
 3/2/2018       13,755
 55,020
 110,040
       2,600,245
 3/2/2018             27,510
     1,300,123
 3/2/2018               87,330
 47.26
 1,444,438
Steven A. Michaels  153,365
 613,462
 1,134,904
              
 3/2/2018       3,720
 14,880
 29,760
       703,229
 3/2/2018             7,440
     351,614
 3/2/2018               23,640
 47.26
 391,006
Ryan K. Woodley  143,654
 574,616
 1,063,039
              
 3/2/2018       6,353
 25,410
 50,820
       1,200,877
 3/2/2018             12,720
     601,147
 3/2/2018               40,320
 47.26
 666,893
Douglas A. Lindsay  146,154
 584,615
 1,081,538
              
 3/2/2018       3,578
 14,310
 28,620
       676,291
 3/2/2018             7,170
     338,854
 3/2/2018               22,680
 47.26
 375,127
Curtis L. Doman  115,865
 463,462
 857,404
              
 3/2/2018       3,773
 15,090
 30,180
       713,153
 3/2/2018             7,560
     357,286
 3/2/2018               23,940
 47.26
 395,968
2019.

                        All    All        
Potential Payouts Under Non-Estimated FutureOtherOtherGrant
Equity Incentive PlanPayouts Under EquityStockOptionDate
Awards(1)Incentive Plan Awards(2)Awards:Awards:Fair
        NumberNumberExerciseValue of
ofofor BaseStock
SharesSecuritiesPrice ofand
ofUnder-OptionOption
GrantThresholdTargetMaximumThresholdTargetMaximumStock orlyingAwardsAwards(5)
NameDate($)($)($)(#)(#)(#)Units(3)Options(4)($/Sh)($)
John W. Robinson III250,0001,000,0001,850,000
2/21/201912,00048,00096,0002,600,640
2/21/201924,0001,300,320
2/21/201966,93054.181,311,159
Steven A. Michaels156,250625,0001,156,250
2/21/20193,24812,99025,980703,798
2/21/20196,510352,712
2/21/201918,12054.18354,971
Ryan K. Woodley150,000600,0001,110,000
2/21/20195,54322,17044,3401,201,171
2/21/201911,100601,398
2/21/201930,90054.18605,331
Douglas A. Lindsay150,000600,0001,110,000
2/21/20193,12012,48024,960676,166
2/21/20196,240338,083
2/21/201917,40054.18340,866
Curtis L. Doman118,750475,000878,750
2/21/20193,29313,17026,340713,551
2/21/20196,600357,588
2/21/201918,36054.18359,672

(1)For the named executive officers, represents the amounts that could be earned under the annual cash incentive award program based on performance against pre-determined goals for Adjusted revenue and Adjusted EBITDA, measured on a Company-wide basis or for Aaron's Business or Progressive, based on each executive’s organizational level. The amounts actually earned are included in the non-equity incentive plan compensation column of the Summary Compensation Table.
(2)Represents the performance shares granted under our 20182019 long-term equity incentive award program. Performance metrics for Messrs. Robinson and Michaels included consolidated Company Adjusted revenues, consolidated Company Adjusted EBITDA and consolidated adjusted return on capital. Performance metrics for Messrs. Woodley and Doman included Progressive Adjusted EBITDA, Progressive revenues less bad debt expense and consolidated Company total Adjusted revenues. Performance metrics for Mr. Lindsay included consolidated Company Adjusted revenues, Adjusted revenues for the Aaron's Business and Adjusted EBITDA for the Aaron's Business. For all named executive officers who received awards, the threshold number of shares represents 25% of target, and the maximum number of shares represents 200% of target. Any awards earned vest in three approximately equal increments over a three-year period on March 7, 2019, 2020, 2021 and 2021.2022. Based on our performance for the year, performance shares were earned under the 20182019 program at 99.0%89.1% of target for Messrs. Robinson and Michaels, at 99.9%87.9% of target for Messrs. Woodley and Doman, and at 101.0%78.1% of target for Mr. Lindsay.
(3)Includes the time-based RSAs granted to each of our named executive officers under our 20182019 long-term equity incentive award program, that are expected to vest in three approximately equal increments over a three-year period on each of March 7, 2019, 2020, 2021 and 2021.
2022.
(4)Includes stock options granted under our 20182019 long-term equity incentive award program that are expected to vest in three approximately equal increments over a three-year period on each of March 7, 2019, 2020, 2021 and 2021.
2022.
(5)Represents the aggregate grant date fair value of awards recognized by the Company as required by Financial Accounting Standards Board Codification Topic 718. See Note 1213 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 20182019 for a discussion of the assumptions used in calculating these amounts.

Employment Agreements with Named Executive Officers

Employment Agreement with Mr. Robinson.In connection with his appointment as Chief Executive Officer, effective November 10, 2014, we entered into a new employment agreement with Mr. Robinson that superseded our prior agreement with him that was entered into when we acquired the Progressive segment.

Mr. Robinson’s compensation as Chief Executive Officer was established by the Compensation Committee after considering the following: his compensation as Chief Executive Officer of Progressive, the significant increase in his responsibilities as a result of his appointment as Chief Executive Officer of the Company, market compensation levels generally for chief executive officers across the Company’s historical retail-oriented peer group, and the need to provide compensation opportunities to Mr. Robinson commensurate with his experience in and knowledge of the industry.




Mr. Robinson’s current agreement contains a rolling, three-year term although the Company may, upon proper notice, cease the automatic extension. The agreement provides for an initial annual base salary of $700,000, which was increased to $800,000 in 2019, for Mr. Robinson, a target annual cash incentive award of 100% of base salary, and for 2015 an annual target long-term incentive award with a value of $5,200,000. The agreement also provided for an initial equity grant of 5,000 time-based RSUs that vest on the first anniversary of the grant date.

Pursuant to this agreement, Mr. Robinson is entitled to participate in any of the Company’s present and future stock or cash bonus plans that are generally available to the Company’s executive officers. Mr. Robinson is also entitled to paid vacation, life insurance, health insurance, fringe benefits and such other employee benefits generally made available by the Company to its executive officers. Specific benefits will be provided in the event Mr. Robinson’s employment is terminated without cause by the Company or by him for good reason which are discussed in greater detail in “—Potential Payments Upon Termination or Change in Control.” Mr. Robinson’s employment agreement also contains customary confidentiality, non-competition, non-solicitation and release provisions in favor of the Company.

Employment Arrangement with Mr. Woodley. In connection with our acquisition of Progressive in 2014, we entered into an employment agreement with Mr. Woodley to serve as the Chief Operating Officer / Chief Financial Officer of Progressive at an initial annual base salary of $350,000 and a four-year term. Under the terms of his employment agreement, Mr. Woodley was eligible to participate in the Company’s annual cash and long-term incentive programs. Mr. Woodley would have received benefits under his agreement in the event of death or disability. Mr. Woodley also agreed to customary confidentiality, non-competition, non-solicitation and release provisions in favor of the Company. The Company subsequently appointed Mr. Woodley as Chief Executive Officer of Progressive in January 2015. The Company did not enter into an amended or new employment agreement with Mr. Woodley upon his appointment as CEO of Progressive. Mr. Woodley's employment agreement expired in April 2018 and no new employment agreement is in place.

Employment Arrangement with Mr. Doman. In connection with our acquisition of Progressive in 2014, we entered into an employment agreement with Mr. Doman to serve as the Chief Technology Officer of Progressive at an initial annual base salary of $350,000 and a four-year term. Under the terms of his employment agreement, Mr. Doman was eligible to participate in the Company’s annual cash and long-term incentive programs. Mr. Doman would have received benefits under his agreement in the event of death or disability. Under his employment agreement, Mr. Doman also agreed to customary confidentiality, non-competition, non-solicitation and release provisions in favor of the Company. Mr. Doman's employment agreement expired in April 2018 and no new employment agreement is in place.

Aaron’s, Inc. Amended and Restated 2015 Equity and Incentive Plan

General.The purpose of the Aaron’s, Inc. Amended and Restated 2015 Equity and Incentive Plan, or the “Existing 2015 Plan,” which was approved by our shareholders at an annual meeting on May 6, 2015,8, 2019, is to promote the long-term growth and profitability of Aaron’s and our subsidiaries by providing employees, directors, consultants, advisors and other persons who work for us and our subsidiaries with incentives to maximize shareholder value and otherwise contribute to our continued success. In addition, we believe the ExistingA&R 2015 Plan is a critical component to help us attract, retain and reward the best talent and align their interests with our shareholders. The ExistingA&R 2015 Plan amended our previous 2015 Equity and Incentive Plan to among other things:

●

Increase the remaining number of shares of common stock available for issuance by 3,000,000 shares; and

●

Revise the 2015 Equity and Incentive Plan in light of amendments to Internal Revenue Code Section 162(m) in the Tax Act to remove references to and provisions implemented in order to comply with Internal Revenue Code Section 162(m), including the individual limits on the number of awards that may be granted in any one fiscal year to any participant (other than the limitation on the number of options and SARs (as defined below) that can be granted in any one fiscal year).

Administration of the A&R 2015 Plan.The Board of Directors may be amended and terminated byappoint the Compensation Committee at any time, and no awards may be made underor such other committee consisting of two or more members (in each case, the Existing“Committee”) to administer the A&R 2015 Plan, after March 10, 2025.

Administration. Theand the Board of Directors has currently designated the Compensation Committee administers the Existing 2015 Plan andto serve this function. The Committee has the right to select the persons who receive awards under the ExistingA&R 2015 Plan. The Compensation Committee also has the authorityPlan, to set the terms and conditions of all grants andsuch awards made under the Existing 2015 Plan, including(including the term, exercise price, vesting conditions, performance measures and the consequences of termination of employmentemployment), and to interpret and administer the A&R 2015 Plan. Subject to the express provisions of any such grantsthe A&R 2015 Plan, the Committee is authorized and awards. In particular,empowered to do all things that the Compensation Committee hasin its discretion determines to be necessary or appropriate in connection with the authority to reduce any award as it determines appropriateadministration and with regard to performance criteria, to determine whetheroperation of the applicable performance criteria have been met for any awards made under the ExistingA&R 2015 Plan.


Awards Available for Grant. Types of Awards.The ExistingA&R 2015 Plan provides for the grant of non-qualified stock options (“NQSOs”), incentive stock options (“ISOs”), stock appreciation rights (“SARs”("SARs"), restricted stock, RSUs, performance shares, performance units, annual cash incentive awards and other stock-based awards to eligible participants. Incentive stock optionsISOs may only be granted to employees of the Company or its subsidiaries.

Number of Shares Authorized. Available for Issuance.The aggregate number of shares that will be available for issuance pursuant to awards granted under the ExistingA&R 2015 Plan is 5,000,0008,566,816 shares (the “Share Pool”), subject to adjustment as described in the A&R 2015 Plan, of which 2,845,024 shares remain available for issuance as of [•], 2020. The shares issued by the Company under the A&R 2015 Plan will be authorized but unissued shares or shares currently held (or subsequently acquired) as treasury shares, including shares purchased on the open market or in private transactions.

If shares awarded under the A&R 2015 Plan are not issued, or are reacquired by the Company, as a result of a forfeiture of restricted stock or an RSU, or the termination, expiration or cancellation of an NQSO, ISO, SAR, performance share or performance unit, or the settlement of an award in cash in lieu of shares, that number of shares will be added back to the Share Pool. If the exercise price of an option, or the purchase price and/or tax withholding obligation under any award is satisfied by the Company retaining shares or by the participant tendering shares (either by actual delivery or attestation), the number of shares so retained or tendered shall be deemed delivered for purposes of determining the Share Pool and shall not be available for further awards under the A&R 2015 Plan. To the extent a SAR is settled in shares of common stock, the gross number of shares subject to certain adjustments described insuch SAR shall be deemed delivered for purposes of determining the ExistingShare Pool and shall not be available for further awards under the A&R 2015 Plan. ExceptShares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of options shall not be added back to the Share Pool.

Amendment and Termination.The Board of Directors or the Committee may amend or terminate the A&R 2015 Plan in whole or in part at any time, but the amendment or termination cannot adversely affect any rights or obligations with respect to an award previously granted without the affected participant's written consent. The Company must obtain the approval of the shareholders before amending the A&R 2015 Plan to the extent required by Section 422 of the CompensationCode or the rules of the NYSE or other applicable law.

The Committee determines thatmay amend an outstanding award isagreement in a manner not intended to complyinconsistent with the performance-based compensation provisions of Section 162(m)terms of the Internal Revenue Code,A&R 2015 Plan, but the numberamendment will not be effective without the participant's written consent if the amendment is materially adverse to the participant. The Committee cannot amend outstanding awards, without shareholder approval, to reduce the exercise price of outstanding awards, or cancel outstanding options or SARs in exchange for cash, another award or stock option or SAR with an option exercise price or SAR price that inis less than the aggregate, may be granted in any one fiscal year to any participant is limited as follows:

the maximum number of options and SARs is 1,000,000;


the maximum number of shares of restricted stock and/option exercise price or RSUs is 600,000 shares and/or units;
the maximum aggregate payout with respect to performance shares and/or performance units is $5,000,000 dollars (to the extent settled in cash) or 600,000 shares (to the extent settled in shares);
the maximum number of other awards is the fair market value (determined asSAR price of the grant date) of 600,000 shares;
the maximum aggregate payout (determined as of the end of the applicable performance period) with respect to annual incentive cash awards is $5,000,000; and
the maximum aggregate number of shares under all awards granted in any one fiscal year to any non-employee director (excluding any awards made at the election of the director in lieu of alloriginal stock option or a portion of the director’s annual and committee cash retainer fees) is 20,000 shares.
The limitations on performance shares, performance units and other awards are applied based on the maximum amount that could be paid under each such award.
SAR.

Amended and Restated 2001 Stock Option and Incentive Award Plan

The Aaron Rents, Inc. 2001 Stock Option and Incentive Award Plan, as amended, or the “2001 Incentive Plan,” was terminated and replaced by the 2015 Equity and Incentive Plan which was subsequently amended by the A&R 2015 Plan. The 2001 Incentive Plan is no longer open to participation by any of our employees, officers or directors, and no further awards may be granted under the 2001 Incentive Plan. While the plan remained in effect, the Compensation Committee administered the 2001 Incentive Plan and had the exclusive right to set the terms and conditions of grants and awards, including the term, exercise price, vesting conditions (including vesting based on the Company’s performance or upon share price performance), and consequences of termination of employment. The Compensation Committee also selected the persons who receive such grants and awards and interpreted and administered the 2001 Incentive Plan. The last awards granted under the 2001 Incentive Plan vested in 2018, and the last stock options granted under that plan will expire in 2025.



Aaron’s, Inc. Employee Stock Purchase Plan

General.The purpose of the Aaron’s, Inc. Employee Stock Purchase Plan, which we refer to as the "ESPP", which was approved by our shareholders at an annual meeting on May 9, 2018, is to encourage ownership of our common stock by eligible employees of Aaron’s and certain Aaron’s subsidiaries which have been designated as eligible to participate in the ESPP. Specifically, the ESPP provides eligible employees of Aaron’s and certain Aaron’s subsidiaries an opportunity to use payroll deductions to purchase shares of our common stock on periodic purchase dates at a discount. The Compensation Committee believes that the ESPP is a valued benefit for our eligible employee base. We believe that allowing employees to purchase shares of our common stock through the ESPP motivates high levels of performance and provides an effective means of encouraging employee commitment to our success and recruiting new employees. We expect that employee participation in the ownership of the business through the ESPP will be to the mutual benefit of both our employees and Aaron’s. Our Board of Directors or the Compensation Committee may amend, suspend or terminate the ESPP at any time. However, no amendment may increase the number of shares of common stock available under the ESPP, change the employees eligible to participate, or cause the ESPP to cease to be an “employee stock purchase plan” within the meaning of Section 423 of the Code, without obtaining shareholder approval within 12 months before or after such amendment.

Administration.The ESPP is administered by the Compensation Committee, although the Compensation Committee may, where permitted by the terms of the ESPP and applicable law, delegate administrative tasks under the ESPP to the services of an agent and/or Aaron’s employees to assist with the administration of the ESPP. Subject to the provisions of the ESPP and applicable law, the Compensation Committee or its delegate will have full and exclusive authority to interpret the terms of the ESPP and determine eligibility to participate in the ESPP. In all cases, the ESPP is required to be administered in such a manner so as to comply with applicable requirements of Section 423 of the Code. All determinations of the Compensation Committee are final and binding on all persons having an interest in the ESPP.

Offering Period, Purchase of Shares.Under the ESPP, participants have the ability to purchase shares of our common stock at a discount during a series of successive offering periods, which will commence and end on such dates as determined by the Compensation Committee or its delegate. Unless otherwise determined by the Compensation Committee or its delegate, each offering period will be six months in length. However, in no event may an offering period be longer than 27 months in length.

Shares Available for Issuance.The maximum number of shares of our common stock authorized for sale under the ESPP is 200,000. The shares made available for sale under the ESPP may be authorized but unissued shares, treasury shares, reacquired shares reserved for issuance under the ESPP, or shares acquired on the open market. As of December 31, 2018,2019, the aggregate number of shares of common stock that may be issued under the ESPP is 174,761.was 128,134.




Outstanding Equity Awards at 20182019 Fiscal Year-End

The following table provides information on outstanding stock option and stock awards held by the named executive officers, including both unexercised and unvested awards, as of December 31, 2018.2019. The market value of the stock awards is based upon the closing market price for the Company’s common stock as of December 31, 2018,2019, which was$42.05.

Name of Executive Number of
Securities
Underlying
Unexercised
Options
Exercisable		 
  
 Number of
Securities
Underlying
Unexercised
Options
Unexercisable		 
  
 Option
Exercise
Price
($)		 Option
Expiration
Date		 Number of
Shares of
Stock That
Have Not
Vested		 
  
 
Market Value
of Shares
or Units
of Stock
That Have
Not Vested
($)(1)
 Equity Incentive
Plan Awards:
Number of
Unearned Shares, Units or
Other Rights
That Have Not
Vested		 
  
 
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned Shares, Units or
Other Rights
That Have Not
Vested
($)(1)
John W. Robinson III                        
  160,919
 
 —
 
 27.80
 12/5/2024            
  121,500
 
(2) 
 60,750
 
(2) 
 22.64
 2/26/2026            
  49,060
 
(3) 
 98,120
 
(3) 
 27.18
 2/24/2027            
      87,330
 
(4) 
 47.26
 3/2/2028            
              19,150
 
(5) 
 805,258
 37,534
 
 1,578,305
              31,900
 
(6) 
 1,341,395
 89,548
 
 3,765,493
              27,510
 
(7) 
 1,156,796
 55,020
 
(9) 
 2,313,591
Steven A. Michaels                        
  11,250
   —
   19.92
 2/23/2020            
  4,735
   —
   29.77
 2/18/2024            
  7,597
   —
   29.25
 4/15/2024            
  25,200
 
 —
 
 28.04
 3/10/2025            
  25,700
 
(2) 
 12,850
 
(2) 
 22.64
 2/26/2026            
  10,380
 
(3) 
 20,760
 
(3) 
 27.18
 2/24/2027            
      23,640
 
(4) 
 47.26
 3/2/2028            
              4,050
 
(5) 
 170,303
 7,938
 
 333,793
              6,760
 
(6) 
 284,258
 18,954
 
 797,016
              7,440
 
(7) 
 312,852
 14,880
 
(9) 
 625,704
Ryan K. Woodley                        
  42,600
 
 —
 
 32.20
 2/6/2025            
  40,700
 
(2) 
 20,350
 
(2) 
 22.64
 2/26/2026            
  16,420
 
(3) 
 32,840
 
(3) 
 27.18
 2/24/2027            
      40,320
 
(4) 
 47.26
 3/2/2028            
              6,400
 
(5) 
 269,120
 16,563
 
 696,474
              10,680
 
(6) 
 449,094
 35,382
 
 1,487,813
              12,720
 
(7) 
 534,876
 25,410
 
(9) 
 1,068,491
Douglas A. Lindsay                        
  12,260
 
(2) 
 6,130
 
(2) 
 22.65
 2/1/2026            
  4,720
 
(3) 
 9,440
 
(3) 
 27.18
 2/24/2027            
      22,680
 
(4) 
 47.26
 3/2/2028            
              18,765
 
(8) 
 789,068
      
              1,840
 
(5) 
 77,372
 2,745
   115,427
              3,080
 
(6) 
 129,514
 9,032
 
 379,796
              7,170
 
(7) 
 301,499
 14,310
 
(9) 
 601,736
Curtis L. Doman                        
  30,000
 
 —
 
 32.20
 2/6/2025            
  28,000
 
(2) 
 14,000
 
(2) 
 22.64
 2/26/2026            
  11,330
 
(3) 
 22,660
 
(3) 
 27.18
 2/24/2027            
      23,940
 
(4) 
 47.26
 3/2/2028            
              4,400
 
(5) 
 185,020
 11,452
 
 481,557
              7,360
 
(6) 
 309,488
 24,406
 
 1,026,272
              7,560
 
(7) 
 317,898
 15,090
 
(9) 
 634,535
$57.11.

                                Equity Incentive
Plan Awards:
Equity IncentiveMarket or
Market ValuePlan Awards:Payout Value of
Number ofNumber ofof SharesNumber ofUnearned Shares,
SecuritiesSecuritiesNumber ofor UnitsUnearned Shares,Units or
UnderlyingUnderlyingOptionShares ofof StockUnits orOther Rights
UnexercisedUnexercisedExerciseOptionStock ThatThat HaveOther RightsThat Have Not
OptionsOptionsPriceExpirationHave NotNot VestedThat Have NotVested
Name of ExecutiveExercisableUnexercisable($)DateVested($)(1) Vested($)(1) 
John W. Robinson III
160,919—27.8012/5/2024
182,250—22.642/26/2026
98,120(2) 49,060(2) 27.182/24/2027
29,110(3) 58,220(3) 47.263/2/2028
         66,930(4) 54.182/21/2029
15,950(5) 910,90544,7742,557,043
18,340(6) 1,047,39736,3142,073,893
    24,000(7) 1,370,64048,000(8) 2,741,280
Steven A. Michaels
4,735—29.772/18/2024
7,597—29.254/15/2024
      25,200—28.043/10/2025
38,550—22.642/26/2026
20,760(2) 10,380(2) 27.182/24/2027
7,880(3) 15,760(3) 47.263/2/2028
18,120(4) 54.182/21/2029
3,380(5) 193,0329,477541,231
4,960(6) 283,2669,820560,820
6,510(7) 371,78612,990(8) 741,859
Ryan K. Woodley
42,600—32.202/6/2025
61,050—22.642/26/2026
32,840(2) 16,420(2) 27.182/24/2027
13,440(3) 26,880(3) 47.263/2/2028
30,900(4) 54.182/21/2029
5,340(5) 304,96717,6911,010,333
8,480(6) 484,29316,924966,530
11,100(7) 633,921               22,170(8) 1,266,129
Douglas A. Lindsay
18,390—22.652/1/2026
9,440(2) 4,720(2) 27.182/24/2027
7,560(3) 15,120(3) 47.263/2/2028
17,400(4) 54.182/21/2029
1,540(5) 87,9494,516257,909
4,780(6) 272,9869,636550,312
6,240(7) 356,36612,480(8) 712,733
Curtis L. Doman
30,000—32.202/6/2025
42,000—22.642/26/2026
22,660(2) 11,330(2) 27.182/24/2027
7,980(3) 15,960(3) 47.263/2/2028
18,360(4) 54.182/21/2029
3,680(5) 210,16512,203696,913
5,040(6) 287,83410,050573,956
6,600(7) 376,92613,170(8) 752,139

(1)Reflects award value based on a share price of $42.05,$57.11, the closing price of our common stock on December 31, 2018.2019.


(2)These options vest in three equal increments on each of March 15, 2017, 2018 and 2019.
(3)These options vest in three equal increments on each of March 15, 2018, 2019 and 2020.
(4)(3)These options vest in three equal increments on each of March 7, 2019, 2020 and 2021.
(4)These options vest in three equal increments on each of March 7, 2020, 2021 and 2022.
(5)These RSUsRSAs vested on March 15, 2019.
2020.
(6)One half of these RSAs vested on March 15, 20197, 2020 and the remaining one-half are expected to vest on March 15, 2020.
7, 2021.
(7)These RSAs vest in three equal increments on each of March 7, 2019, 2020, 2021 and 2021.
2022.
(8)These RSUs vested on February 1, 2019.
(9)Amounts shown reflect performance shares subject to meeting specific performance goals and service periods, which, based on Company performance, are reflected at the target award level. Performance shares earned vest in three equal increments on each of March 7, 2019, 2020, 2021 and 2021.2022.

Options Exercised and Stock Vested in 2018

Fiscal Year 2019

The following table provides information for the named executive officers on (i) stock option exercises during 2018,2019, including the number of shares acquired upon exercise and the value realized and (ii) the number of shares acquired upon the vesting of stock awards, each before payment of any applicable withholding tax and broker commissions.

  Option Awards Stock Awards
Name Number of Shares
Acquired on Exercise
(#)		 
Value Realized on
Exercise
 ($)
 Number of Shares
Acquired on Vesting
(#)		 
Value Realized
on Vesting (1)
 ($)
John W. Robinson III —
 —
 202,984
 9,667,496
Steven A. Michaels —
 —
 33,331
 1,592,089
Ryan K. Woodley —
 —
 85,078
 4,028,713
Douglas A. Lindsay —
 —
 10,641
 509,172
Curtis L. Doman —
 —
 67,223
 3,174,351

Option AwardsStock Awards
Number of SharesValue Realized onNumber of SharesValue Realized
Acquired on ExerciseExercise(1)Acquired on Vestingon Vesting(2)
Name     (#)     ($)     (#)     ($)
John W. Robinson III——144,7357,535,298
Steven A. Michaels11,250350,20532,2351,680,954
Ryan K. Woodley——58,6963,059,242
Douglas A. Lindsay——36,6141,871,747
Curtis L. Doman——39,2802,045,291

(1)Reflects the value of options exercised based on the difference between the closing price of our common stock on the day of exercise and the applicable exercise price.
(1)(2)Reflects the value of shares that vested based on the closing price of our common stock on the applicable vesting date.

Pension Benefits

We do not provide defined benefit pension plans for our named executive officers.

Nonqualified Deferred Compensation as of December 31, 20182019

Effective July 1, 2009, the Company implemented the Deferred Compensation Plan, an unfunded, nonqualified deferred compensation plan open to a select group of management, highly compensated employees and non-employee directors. On a pre-tax basis, eligible employees can defer receipt of up to 75% of their base salary and up to 75% of their incentive pay compensation, and eligible non-employee directors can defer receipt of up to 100% of their cash director fees. In addition, the Company elected to make restoration matching contributions on behalf of eligible employees to compensate for certain limitations on the amount of matching contributions an employee can receive under the Company’s tax-qualified 401(k) plan.


Compensation deferred under the plan is credited to each participant’s deferral account andrecorded as a deferred compensation liability, which is recorded in accounts payable and accrued expenses in the consolidated balance sheets. The Deferred Compensation Plandeferred compensation plan liability was $10.4$11.2 millionand $12.9$10.4 million as of December 31, 20182019 and 2017,2018, respectively. Liabilities under the plan are recorded at amounts due to participants, based on the fair value of participants’ selected investments. The Company has established a rabbi trust to fund obligations under the plan with Company-owned life insurance, otherinvestments, which consist of equity and debt and equity securities, as well as money market"mirror" funds. The obligations are unsecured general obligations of the Company and the participants have no right, interest or claim in the assets of the Company, except as unsecured general creditors. The investments inCompany has established a rabbi trust to fund obligations under the plan primarily with Company-owned life insurance policies. The value of the assets within the rabbi trust, were $13.5which is primarily the cash surrender value of the Company-owned life insurance, was $14.4 million and $17.1$13.5 million as of December 31, 2019 and 2018, respectively, and 2017. The rabbi trust investments include debt and equity securities as well as money market funds and areis included in prepaid expenses and other assets in the consolidated balance sheets. The Company recorded lossesgains related primarily to changes in the cash surrender value of the Company-owned life insurance plans of $2.1 million and $1.5 million during the years ended December 31, 2019 and 2017, respectively, and recorded losses of $1.2 million during the year ended December 31, 2018, and gains of $1.5 million and $0.2 million during the years ended December 31, 2017 and 2016, respectively, which were recorded within other non-operating income (expense) income, net in the consolidated statementstatements of earnings.

Benefits of $3.0 million, $2.7 million $2.3 million and $1.4$2.3 million were paid during the years ended December 31, 2019, 2018 2017 and 2016,2017, respectively. Effective January 1, 2018 the Company implemented a discretionary match within the nonqualified Deferred Compensation Plan. The match allows eligible employees to receive 100% matching by the Company on the first 3% of contributions and 50% on the next 2% of contributions for a total of a 4% match. The annual match is not to exceed $11,000 for an individual employee for 2018 and is subject to a three yearthree-year cliff vesting schedule. Deferred compensation expense charged to operations for the Company’s restoration matching contributions was $0.4 million during the year ended December 31, 2019 and was not significant during any of the periods presented.




year ended December 31, 2018.

The following table provides information on accounts of and compensation deferred by our named executive officers pursuant to the Deferred Compensation Plan.

Name of Executive Named Executive
Officer
Contributions
in 2018		 
Company
Contributions
in 2018(2)
 Aggregate
Earnings (Loss)
in Last
Fiscal Year		 Aggregate
Withdrawals /
Distributions		 Aggregate
Balance at
December 31, 2018
John W. Robinson III(1)
 $—
 $—
 $—
 $—
 $—
Steven A. Michaels 30,673
 11,000
 (33,481) —
 534,975
Ryan K. Woodley(1)
 —
 —
 —
 —
 —
Douglas A. Lindsay 29,231
 11,000
 (2,470) —
 37,761
Curtis L. Doman (1)
 —
 —
 —
 —
 —

Named ExecutiveAggregate
OfficerCompanyEarnings (Loss)AggregateAggregate
ContributionsContributionsin LastWithdrawals /Balance at
Name of Executive     in 2019   in 2019(2)   Fiscal Year   Distributions   December 31, 2019
John W. Robinson III(1)$—$—$—$—$—
Steven A. Michaels44,28511,200156,879—747,339
Ryan K. Woodley(1)—————
Douglas A. Lindsay(2)30,505—13,100—81,366
Curtis L. Doman(1)—————

(1)Messrs. Robinson, Woodley, and Doman do not participate in the Deferred Compensation Plan.
(2)Messr. Lindsay was a participant in the Deferred Compensation Plan in prior periods but did not participate in 2019. Mr. Lindsay had contributions from 2018 bonus earnings paid into the plan during the first quarter of 2019.
(2)(3)Company discretionary match is calculated and allocated in Q1 of 20192020 based on contributions made in 2018.2019. Also included in the Other Compensation column of the Summary Compensation Table.

Potential Payments Upon Termination or Change in Control

Severance Plan. The Compensation Committee has adopted an Executive Severance Pay Plan, which we refer to as the “Severance Plan,” intended to provide senior managers certain benefits in the event their employment is terminated by us without cause or after a change in control. Messrs. Michaels, Woodley,Mr. Doman and Lindsay areis eligible for benefits under this plan which was adopted to assist us in hiring executives, in retaining key leaders who are critical to the ongoing stability of our business, and to foster objectivity across the participants should they be asked to evaluate proposals that may result in the loss of their employment. The Severance Plan also provides important protections to us in terms of confidential information and competitive matters that could arise after their employment is terminated.


In February 2019, we entered into severance and change-in-control agreements with each of Messrs. Michaels, Woodley and Lindsay which are intendedLindsay. Each of those agreements will continue for a term of three years, automatically renewing for one-year periods after the initial term unless either party gives notice not to provide certain benefitsextend the term. Under each of these agreements, if the executive's employment is terminated by the Company during the two-year period from the commencement of a change in control (as defined in the event theiragreement) other than for cause (as defined in the agreement), disability or death, or if employment is terminated by the executive for good reason (as defined in the agreement), the executive shall receive (i) severance payments in a lump sum amount equal to two times the sum of (x) the executive's annual salary plus (y) the executive's target bonus; (ii) a lump sum cash bonus payment based on the average annual bonus earned by the executive over the two years prior to the year in which the termination occurs, pro-rated based on the number of days in the year in which termination occurs that lapse prior to termination; (iii) a lump sum cash payment equal to the executive's accrued, unused vacation time; and (iv) a lump sum payment in an amount equal to two years' worth of the executive's monthly COBRA premiums for continued coverage under the Company's group health insurance plan, in each case, payable on the sixtieth day following termination. In the event of termination by the Company other than for cause, disability or death, or in the event termination of employment occurs by the executive officer for good reason.

reason, in the absence of a change in control, or more than two years following a change in control, the executive would be entitled to (i) continued salary for twenty-four months following termination plus bonus payments in an amount equal to one-twelfth of the executive's target bonus in each of the twenty-four months following termination, payable no less frequently than on a monthly basis beginning on the sixtieth day following termination; and (ii) a lump sum cash payment in an amount equal to the executive's accrued, unused vacation time, payable on the sixtieth day following termination.

John W. Robinson III. The employment agreement with Mr. Robinson specifies the payments to be provided if Mr. Robinson’s employment is terminated under various scenarios described in the agreement, including death, disability, termination with or without cause, and termination by him with or without good reason.

Other than during the two years following a change in control, if Mr. Robinson is (i) involuntarily terminated by the Company without cause (and other than due to death or disability) or (ii) he voluntarily terminates his employment for good reason, Mr. Robinson would be entitled to receive (v) continued payment of salary for a period of twenty-four months and additional cash payments during each of the twenty-four months equal to one-twelfth of his target annual incentive for the year in which his termination occurs, (w) cash in an amount equal to the pro rata portion (based on the number of days in the year occurring prior to his termination) of the average of his bonuses earned during each of the two calendar years immediately preceding the year in which his termination occurs, or, if termination occurs prior to two full years of employment, the average of the earned bonus for any completed year and his target bonus for the year of termination, (x) cash in an amount after taxes equal to twenty-four multiplied by the difference between the monthly cost of participating in the Company’s medical programs under COBRA and the monthly premium that an active employee would pay for the same coverage, as of the date of termination, (y) vesting of all outstanding equity awards that have been granted to him to the extent provided under the terms of such awards and (z) payment for all accrued paid time off through his date of termination.

During the two years following any change in control, if Mr. Robinson is (i) involuntarily terminated by the Company without cause (and other than due to death or disability) or (ii) voluntarily terminates his employment for good reason, Mr. Robinson would be entitled to receive (v) cash in an amount equal to two times his base salary plus two times his target annual incentive for the year in which his termination occurs, (w) cash in an amount equal to the pro rata portion (based on the number of days in the year occurring prior to his termination) of the average of his bonuses earned during each of the two calendar years immediately preceding the year in which his termination occurs, or, if termination occurs prior to two full years of employment, the average of the earned bonus for any completed year and his target bonus for the year of termination, (x) cash in an amount after taxes equal to twenty-four times the applicable COBRA premium to participate in the Company’s medical programs, as of the date of termination, (y) full vesting of all outstanding equity awards that have been granted to him and (z) payment for all accrued paid time off through his date of termination.



If Mr. Robinson voluntarily terminates his employment (other than for good reason or due to death or disability) or is involuntarily terminated by the Company for cause, Mr. Robinson would be entitled only to accrued but unpaid salary and earned bonus through the last day of his employment.

In the event of Mr. Robinson’s termination due to death or disability, Mr. Robinson (or his estate or beneficiary, as the case may be) would be entitled to receive any amounts accrued through his termination, including base salary and earned bonus. In addition, he would also be entitled to receive a pro rata bonus for the fiscal year in which the termination occurs equal to the bonus that would be payable under any annual bonus plan based on the Company’s performance at the end of the last completed fiscal quarter, prorated based on the number of days he worked in such year.

If any payments to be made or benefits to be provided under our employment agreement with Mr. Robinson would result in a “parachute payment” as defined in Section 280G of the Internal Revenue Code, then such payments or benefits will be reduced to the minimum extent necessary so that no such payment or benefit, as so reduced, would constitute a parachute payment, unless the net after-tax amount Mr. Robinson would receive without this reduction exceeds by at least 10% the net after-tax amount he would receive with this reduction.


Assuming Mr. Robinson’s employment terminated or there was a change in control on December 31, 2018,2019, such payments and benefits have an estimated value of:

John W. Robinson III
Termination Event Cash Severance Equity Acceleration Cash Bonus Total Value
Voluntary Resignation by Executive $—
 $—
 $1,016,300
 $1,016,300
Termination by Company for Cause $—
 $—
 $—
 $—
Termination due to Death $—
 $13,599,039
 $1,016,300
 $14,615,339
Termination due to Disability $—
 $13,599,039
 $1,016,300
 $14,615,339
Termination by Company without Cause $3,637,488
 $—
 $968,850
 $4,606,338
Termination by Executive for Good Reason $3,637,488
 $—
 $968,850
 $4,606,338
Termination by Company without Cause (following CIC) $2,686,686
 $13,599,039
 $968,850
 $17,254,575
Termination by Executive for Good Reason (following CIC) $2,686,686
 $13,599,039
 $968,850
 $17,254,575
Change in Control (CIC) $—
 $—
 $—
 $—

John W. Robinson III

Equity
Termination Event     Cash Severance     Acceleration     Cash Bonus     Total Value
Voluntary Resignation by Executive$     —$     —$     967,900$    967,900
Termination by Company for Cause$—$—$—$—
Termination due to Death$—$12,656,744$967,900$13,624,644
Termination due to Disability$—$12,656,744$967,900$13,624,644
Termination by Company without      
Cause$3,640,039$—$1,086,200$4,726,239
Termination by Executive for Good
Reason$3,640,039$—$1,086,200$4,726,239
Termination by Company without
Cause (following CIC)$3,660,116$12,640,296$1,086,200$17,386,612
Termination by Executive for Good
Reason (following CIC)$3,660,116$12,939,096$1,086,200$17,685,412
Change in Control (CIC)$—$—$—$—

Steven A. Michaels, Ryan K. Woodley, Douglas A. Lindsay and Curtis L. Doman. Each of Messrs. Michaels, Woodley and Lindsay would receive awards under our severance and change-in-control agreements upon termination of employment during the two-year period from the commencement of a change in control, other than for cause, death or disability or if employment is terminated for good reason. Mr. Doman would receive awards under our Severance Plan upon termination of employment without cause or following a change in control. Under the terms of our Executive Severance Pay Plan that applied to Messrs. Michaels, Woodley, Lindsay andMr. Doman in 2018,2019, non-equity awards would also be granted in certain instances upon termination of employment or in the event of a change in control. Under the 2015 Equity IncentiveA&R Plan, vesting is accelerated with respect to outstanding equity awards in certain instances but only upon termination of employment.



Assuming Mr. Michaels’ employment terminated or there was a change in control on December 31, 2018,2019, such payments and benefits have an estimated value of:

Steven A. Michaels

          Equity       
Termination Event     Cash Severance     Acceleration     Cash Bonus     Total Value
Voluntary Resignation by Executive$     —$     —$     —$     —
Termination by Company for Cause$—$—$—$—
Termination due to Death$—$3,134,582$604,900$3,739,482
Termination due to Disability$—$3,134,582$604,900$3,739,482
Termination by Company without      
Cause$2,520,744$—$—$2,520,744
Termination by Executive for Good
Reason$2,500,000$—$—$2,500,000
Termination by Company without
Cause (following CIC)$2,541,489$3,130,127$712,800$6,384,416
Termination by Executive for Good
Reason (following CIC)$2,541,489$3,130,127$712,800$6,384,416
Change in Control (CIC)$—$—$—$—

Steven A. Michaels
Termination Event Cash Severance Equity Acceleration Cash Bonus Total Value
Voluntary Resignation by Executive $—
 $—
 $—
 $—
Termination by Company for Cause $—
 $—
 $—
 $—
Termination due to Death $—
 $3,082,045
 $—
 $3,082,045
Termination due to Disability $—
 $3,082,045
 $—
 $3,082,045
Termination by Company without Cause $644,106
 $—
 $—
 $644,106
Termination by Executive for Good Reason $—
 $—
 $—
 $—
Termination by Company without Cause (following CIC) $1,935,789
 $3,082,045
 $625,000
 $5,642,834
Termination by Executive for Good Reason (following CIC) $1,935,789
 $3,082,045
 $625,000
 $5,642,834
Change in Control (CIC) $—
 $—
 $—
 $—

Assuming Mr. Woodley’s employment terminated or there was a change in control on December 31, 2018,2019, such payments and benefits have an estimated value of:

Ryan K. Woodley
Termination Event Cash Severance Equity Acceleration Cash Bonus Total Value
Voluntary Resignation by Executive $—
 $—
 $—
 $—
Termination by Company for Cause $—
 $—
 $—
 $—
Termination due to Death $—
 $5,389,192
 $—
 $5,389,192
Termination due to Disability $—
 $5,389,192
 $—
 $5,389,192
Termination by Company without Cause $625,045
 $—
 $—
 $625,045
Termination by Executive for Good Reason $—
 $—
 $—
 $—
Termination by Company without Cause (following CIC) $2,450,090
 $5,389,192
 $600,000
 $8,439,282
Termination by Executive for Good Reason (following CIC) $2,450,090
 $5,389,192
 $600,000
 $8,439,282
Change in Control (CIC) $—
 $—
 $—
 $—


Ryan K. Woodley

          Equity       
Termination Event     Cash Severance     Acceleration     Cash Bonus     Total Value
Voluntary Resignation by Executive$     —$     —$     —$     —
Termination by Company for Cause$—$—$—$—
Termination due to Death$—$5,311,616$585,300$5,896,916
Termination due to Disability$—$5,311,616$585,300$5,896,916
Termination by Company without
Cause$2,425,392$—$—$2,425,392
Termination by Executive for Good
Reason$2,400,000$—$—$2,400,000
Termination by Company without
Cause (following CIC)$2,450,785$5,359,759$603,050$8,413,594
Termination by Executive for Good
Reason (following CIC)$2,450,785$5,359,759$603,050$8,413,594
Change in Control (CIC)$—$—$—$—

Assuming Mr. Lindsay’s employment terminated or there was a change in control on December 31, 2018,2019, such payments and benefits have an estimated value of:

Douglas A. Lindsay

          Equity       
Termination Event     Cash Severance     Acceleration     Cash Bonus     Total Value
Voluntary Resignation by Executive$     —$     —$     —$     —
Termination by Company for Cause$—$—$—$—
Termination due to Death$—$2,431,239$542,800$2,974,039
Termination due to Disability$—$2,431,239$542,800$2,974,039
Termination by Company without
Cause$2,420,837$—$—$2,420,837
Termination by Executive for Good
Reason$2,400,000$—$—$2,400,000
Termination by Company without
Cause (following CIC)$2,441,673$2,465,031$677,350$5,584,054
Termination by Executive for Good
Reason (following CIC)$2,441,673$2,465,031$677,350$5,584,054
Change in Control (CIC)$—$—$—$—

Douglas A. Lindsay
Termination Event Cash Severance Equity Acceleration Cash Bonus Total Value
Voluntary Resignation by Executive $—
 $—
 $—
 $—
Termination by Company for Cause $—
 $—
 $—
 $—
Termination due to Death $—
 $2,653,706
 $—
 $2,653,706
Termination due to Disability $—
 $2,653,706
 $—
 $2,653,706
Termination by Company without Cause $620,657
 $—
 $—
 $620,657
Termination by Executive for Good Reason $—
 $—
 $—
 $—
Termination by Company without Cause (following CIC) $1,961,379
 $2,653,706
 $600,000
 $5,215,085
Termination by Executive for Good Reason (following CIC) $1,961,379
 $2,653,706
 $600,000
 $5,215,085
Change in Control (CIC) $—
 $—
 $—
 $—

Assuming Mr. Doman’s employment terminated or there was a change in control on December 31, 2018,2019, such payments and benefits have an estimated value of:

Curtis H. Doman
Termination Event Cash Severance Equity Acceleration Cash Bonus Total Value
Voluntary Resignation by Executive $—
 $—
 $—
 $—
Termination by Company for Cause $—
 $—
 $—
 $—
Termination due to Death $—
 $3,563,464
 $—
 $3,563,464
Termination due to Disability $—
 $3,563,464
 $—
 $3,563,464
Termination by Company without Cause $497,759
 $—
 $—
 $497,759
Termination by Executive for Good Reason $—
 $—
 $—
 $—
Termination by Company without Cause (following CIC) $1,459,138
 $3,563,464
 $475,000
 $5,497,602
Termination by Executive for Good Reason (following CIC) $1,459,138
 $3,563,464
 $475,000
 $5,497,602
Change in Control (CIC) $—
 $—
 $—
 $—

Curtis H. Doman

          Equity       
Termination Event     Cash Severance     Acceleration     Cash Bonus     Total Value
Voluntary Resignation by Executive$     —$     —$     —$     —
Termination by Company for Cause$—$—$—$—
Termination due to Death$—$3,328,452$—$3,328,452
Termination due to Disability$—$3,328,452$—$3,328,452
Termination by Company without
Cause$497,879$—$—$497,879
Termination by Executive for Good
Reason$—$—$—$—
Termination by Company without
Cause (following CIC)$1,459,319$3,391,383$485,800$5,336,502
Termination by Executive for Good
Reason (following CIC)$1,459,319$3,391,383$485,800$5,336,502
Change in Control (CIC)$—$—$—$—

Employment Agreement Definitions. For purposes of our employment agreement with Mr. Robinson, “Cause” generally means such person’s (i) material fraud, malfeasance, gross negligence, or willful misconduct with respect to business affairs of the Company which is, or is reasonably likely to be if such action were to become known by others, directly or materially harmful to the business or reputation of the Company or any subsidiary of the Company; (ii) conviction of or failure to contest prosecution for a felony or a crime involving moral turpitude; or (iii) material breach of his employment agreement. A termination of Mr. Robinson for Cause based on clause (i) or (iii) of the preceding sentence would take effect 30 days after Mr. Robinson receives from the Company written notice of intent to terminate and the Company’s description of the alleged Cause, unless Mr. Robinson shall, during such 30-day period, remedy the events or circumstances constituting Cause; provided, however, that such termination shall take effect immediately upon the giving of written notice of termination of Cause under any clause if the Company shall have determined in good faith that such events or circumstances are not remediable (which determination shall be stated in such notice).

For purposes of our employment agreement with Mr. Robinson, “Change in Control” generally means: (i) the acquisition (other than from the Company) by any person of beneficial ownership, of thirty-five percent (35%) or more of the combined voting power of then outstanding securities of the Company entitled to vote generally in the election of directors, which we refer to as the Outstanding Company Voting Securities, excluding, however, (1) any acquisition by the Company or (2) any



acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; (ii) a majority of the members of our Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of our Board of Directors before the date of the appointment or election; or (iii) consummation by the Company of a reorganization, merger, or consolidation or sale of all or substantially all of the assets of the Company; excluding, however, a transaction pursuant to which all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Company Voting Securities immediately prior to such transaction will beneficially own, directly or indirectly, more than 50 percent of the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors of the corporation resulting from such transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such transaction, of the Outstanding Company Voting Securities.

For purposes of the employment agreement with Mr. Robinson described herein, “Good Reason” generally means: (i) any material reduction in the named executive officer’s base salary; (ii) any material reduction in the named executive officer’s authority, duties or responsibilities; (iii) any significant change in the geographic location at which the named executive officer must perform his duties; or (iv) any material breach of the named executive officer’s employment agreement by the Company.


For purposes of the employment agreement with Mr. Robinson described herein, “Disability” shall mean the named executive officer’s inability, due to physical or mental injury or illness, to perform the essential functions of his position with or without reasonable accommodation for a period of 180 days, whether or not consecutive, occurring within any period of 12 consecutive months.

Severance Plan Definitions. Our Severance Plan contains definitions for the terms “Cause,” “Change in Control,” “Good Reason” and “Disability” which are substantially similar to those contained in “—Potential Payments Upon Termination or Change in Control—Employment Agreement Definitions” above.

Severance and Change-In-Control Agreement Definitions.For purposes of the Severance and Change-In-Control Agreement, "Cause" generally means (i) the commission by the executive of fraud, embezzlement, theft or proven dishonesty, or any other illegal act or practice; (ii) the willful engaging by the executive in misconduct which is deemed by the Board, in good faith, to be materially injurious to the Company or an affiliate of the Company; or (iii) the willful and continued failure or habitual neglect by the executive to perform the executive's duties with the Company or an affiliate of the Company substantially in accordance with the operating and personnel policies and procedures of the Company or an affiliate of the Company generally applicable to all of their employees.

Our Severance and Change-In-Control Agreement contains definitions for the terms "Change in Control," "Good Reason" and "Disability" which are substantially similar to those contained in “—Potential Payments Upon Termination or Change in Control—Employment Agreement Definitions” above.

Incentive Plans. Generally, under the terms of our Executive Severance Pay Plan, in the event of a change in control, the named executive officer would receive an automatic payment of target-level cash bonuses, prorated to the extent the change in control occurs during the annual performance period. The Executive Severance Pay Plan does not contain a provision accelerating or awarding payments in the event of termination.

Under the terms of the A&R 2015 Equity Incentive Plan and the related award agreements that apply to our executive officers, all outstanding unvested stock options, RSUs and earned performance shares immediately vest in the event of termination of employment due to death or disability. With respect to performance shares that have not been earned at the time of a termination of employment due to death or disability, those performance shares will not vest immediately, but rather, will vest at the earned amount that is determined at the end of the performance period applicable to those performance shares. In the event of termination for any other reason not in connection with a change in control, all unvested equity awards are forfeited. In the event of a change in control, all outstanding unvested stock options, RSUs and performance shares would vest upon a termination by the employer without Cause or by the executive officer for Good Reason during the following two years.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth aggregate information as of December 31, 20182019 about the Company’s compensation plans under which our equity securities are authorized for issuance.

Plan Category 
Number of Securities to
be Issued Upon
Exercise of Outstanding
Options, Warrants and
Rights(1), (2)
 
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants
and Rights(1),(2)
 
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans(3)
Equity Compensation Plans Approved by Shareholders 3,064,644
 $30.42
 1,441,744
Equity Compensation Plans Not Approved by Shareholders N/A
 N/A
 N/A
Total 3,064,644
 $30.42
 1,441,744
 
(1) Of the 3,064,644 securities to be issued upon exercise of the outstanding options, warrants and rights, 1,676,681 are options with a weighted average exercise price of $30.42 and the remaining 1,387,963 are RSUs, RSAs and performance shares that do not have an exercise price.
(2) As of March 4, 2019, there were 3,744,387 securities to be issued upon exercise of outstanding options, warrants and rights. Of this amount, 1,957,347 are options with a weighted average exercise price of $33.94 and a weighted average remaining life of 7.71 years. The remaining 1,787,040 are RSUs, RSAs and performance shares that do not have an exercise price.
(3) As of March 4, 2019, the aggregate number of common shares authorized and available for future issuance under the 2015 Plan is 722,323. Between March 4, 2019 and May 8, 2019, we expect to grant approximately 20,000 to 30,000 common shares under the 2015 Plan.

Number of Securities toWeighted-AverageNumber of Securities
be Issued UponExercise Price ofRemaining Available for
Exercise of OutstandingOutstanding Options,Future Issuance Under
Options, Warrants andWarrantsEquity Compensation
Plan Category     Rights(1), (2)     and Rights(1),(2)     Plans(3)
Equity Compensation Plans Approved by Shareholders2,806,166$34.713,772,517
Equity Compensation Plans Not Approved by ShareholdersN/AN/AN/A
Total2,806,166$34.713,772,517

(1)Of the 2,806,166 securities to be issued upon exercise of the outstanding options, warrants and rights, 1,729,814 are options with a weighted average exercise price of $34.71 and the remaining 1,076,352 are RSUs, RSAs and performance shares that do not have an exercise price.
(2)As of [●], 2020, there were 3,261,211 securities to be issued upon exercise of outstanding options, warrants and rights. Of this amount, 1,885,033 are options with a weighted average exercise price of $35.55 and a weighted average remaining life of 7.18 years. The remaining 1,376,178 are RSUs, RSAs and performance shares that do not have an exercise price.
(3)As of [●], 2020, the aggregate number of common shares authorized and available for future issuance under the 2015 Plan is 2,845,024. Between March 7, 2020 and May 6, 2020, we expect to grant approximately 20,000 to 30,000 common shares under the 2015 Plan.



CEO Pay Ratio Disclosure


As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of the individual identified as our “median” paid employee and the annual total compensation of John W. Robinson, III, our President and Chief Executive Officer (“CEO”).


For 2018,2019, our last completed fiscal year:


the annual total compensation of the employee identified as the median paid employee of our company (other than our CEO), was $30,904;

the annual total compensation of our CEO was $7,152,038; and

the ratio between the annual total compensation of our CEO to the annual total compensation of the individual identified at median was estimated to be 231 to 1.

●the annual total compensation of the employee identified as the median paid employee of our company (other than our CEO), was $31,325;
●the annual total compensation of our CEO was $6,981,190; and
●the ratio between the annual total compensation of our CEO to the annual total compensation of the individual identified at median was estimated to be 223 to 1.

The methodology and material assumptions, adjustments, and estimates used to identify our median employee for this purpose were as follows:


2018 Methodology to Identify2019 Median Employee:


As

In 2017, we used the methodology outlined below to identify our median employee.

In 2018, there has beenwas no significant change in our employee population or compensation arrangements in the past yearsince 2017 that we believebelieved would have significantly impactimpacted the pay ratio disclosure,disclosure. Under SEC rules, we arewere therefore permitted under SEC rules to use the procedure and mediansame employee identified in 2017,2017. However, since this employee had since left the company, the SEC rules permitted us to use as described below. Asour 2018 median employee someone who had substantially similar compensation to the employee identified as our median employee in 2017 is no longer with our company, however, the SEC further permits us to use another employee whose compensation is substantially similar to our 2017 median employee based on our analysis conducted in 2017.


Population Included

We determined that, as of December 31, 2017,

In 2019, there was no significant change in our employee population consisted of approximately 12,208 individuals globally.


Pursuant to SEC rules,or compensation arrangements since 2018 that we employedbelieved would have significantly impacted the 5% “De Minimis Exemption” adjustment. The De Minimis Exemption allowed us to exclude our Canadian population of 294 employees as this population was less than 5% of our total population. After applying this exemption,pay ratio disclosure. Therefore, we are now using the employee population used for purposes of identifying thesame median employee consisted of 11,914 employees, of whom all were locatedthat was used in the United States.

2018.

Methodology to Identify Median Employee:

Population Included

●We determined that, as of December 31, 2017, our employee population consisted of approximately 12,208 individuals globally.
●Pursuant to SEC rules, we employed the 5% “De Minimis Exemption” adjustment. The De Minimis Exemption allowed us to exclude our Canadian population of 294 employees as this population was less than 5% of our total population. After applying this exemption, the employee population used for purposes of identifying the median employee consisted of 11,914 employees, of whom all were located in the United States.

Sampling Methodology

Given the availability of payroll data we employed statistical sampling to identify the “median employee.” To identify the sample population, we used the annual rate of pay for 2017, with salaries annualized for those permanent employees who did not work for the full year. We combined each of Aaron’s, Inc.’s operating subsidiaries (Aaron’s, Progressive Finance Holdings, LLC and Dent-A-Med, Inc.)Vive) into a singular population given the similarity of operating subsidiary population median pay. From this combined population we took the natural log of the annual rate of pay and calculated the median, standard deviation and variance of this population to determine the December 31, 2017 sample size of 400 employees. A computer-generated random sampling method was employed to determine the individuals in the 400 person sample. We then obtained 2017 W-2 earnings for each of the 400 employees in the sample. From this sample, we identified the median employee in 2017. As this individual is no longer with the company, we selected the employee closest to this employee’s W-2 compensation in 2017, and then calculated this new median’s annual total compensation for 2018 and 2019 as reported above.

This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above.



AUDIT COMMITTEE REPORT

Committee Composition and Skills

The Audit Committee (“the Committee”) is comprised of five non-employee directors. The Company’s Board of Directors (the “Board”) has determined that each member of the Committee meets the independence and financial literacy requirements of the NYSE and the additional, heightened independence criteria that apply to members of the Committee under SEC and NYSE rules. The Board has also determined that Ms.Mses. Barrett and Day and Messrs. Curling, Ehmer, and Harris are “audit committee financial experts,” as defined by the SEC. All of the Committee members attended 100% of the meetings of the Committee held during our 20182019 fiscal year.year (“fiscal 2019”). See “Governance-Nominees to Serve as Director” for highlights of the experience, qualifications and skills of each Committee member.

Responsibilities of the Audit Committee, Management, and the External Auditor

The Committee is responsible for the appointment, compensation, and oversight of Ernst & Young LLP, which we refer to as “EY,” the Company’s independent registered public accounting firm. Further, the Committee is responsible for monitoring and overseeing the Company’s financial reporting, internal controls, and internal audit functions, and critical accounting policies and practices, all as set forth in the Committee’s charter, which is a written charter adopted by the Company’s Board that outlines the responsibilities and practices of the Committee. The Committee charter is available through the Company’s website, http://www.aarons.com.

Regarding its oversight of the Company’s internal audit function, the Committee reviewed the internal audit plan and staffing of the Company’s internal audit department for 2018.fiscal 2019. The Company’s Vice President of Internal Audit reports directly to the Committee, and meets with the Committee in executive session on a regularquarterly basis to discuss the progress and results of the internal audit and other matters.

The Committee also oversees the Company’s risk function, which includes oversight of management's establishment of policies and proceduresan enterprise risk program to assess, monitor and manage the Company's:

various types of risks;
compliance programs;
ethics program; and
information security and privacy program, including its cybersecurity risk mitigation initiatives.
Company's risks.

In carrying out that oversight, the Committee frequently receives quarterly reports from the Company’s most senior risk complianceofficers and information security managers on matters such as, any changes to the Company's risk profile and risks on which management has been devoting attention. The Committee meets with these managers and the Company's executive officers to discuss such matters in executive sessions periodically. In addition, the Committee conducts reviews the Company’swith management designed to ensure that management has established proper procedures relating to any complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of any concerns regarding accounting or auditing matters.

Finally, the Committee reviews and discusses the quarterly and annual earnings press releases (including any presentation of non-GAAP information being disclosed), consolidated financial statements (including any presentation of non-GAAP financial information) and disclosures contained in the Company’s Quarterly Report on Form 10-Q and Annual Report on Form 10-K, including those under the heading “Management’s Discussion and Analysis and Financial Condition and Results of Operations” with management, the Company's internal auditors and EY. During fiscal year 2018,2019, the Committee held tennine meetings.



Management has primary responsibilityis responsible for:

The presentation and integrity of the Company’s consolidated financial statements;
Implementing accounting and financial reporting principles;
Establishing and maintaining disclosure controls and procedures;
Establishing and maintaining internal controls over financial reporting;
Evaluating the effectiveness of disclosure controls and procedures;
Evaluating the effectiveness of internal controls over financial reporting;
Evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting; and
Establishing and maintaining the Company’s Enterprise Risk Management program.

●The presentation and integrity of the Company’s consolidated financial statements;
●Implementing accounting and financial reporting principles;
●Establishing and maintaining disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act);
●Establishing and maintaining internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act);
●Evaluating the effectiveness of disclosure controls and procedures;
●Evaluating the effectiveness of internal controls over financial reporting;
●Evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting; and
●Establishing and maintaining the Company’s Enterprise Risk Management program.

EY is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with auditing standards generally accepted in the United States and for expressing an opinion as to their conformity with generally accepted accounting principles. EY also is responsible for performing an audit of internal controls over financial reporting. The Committee reviewed EY’s Reports of Independent Registered Public Accounting Firm (“Audit Report”) included in the Company’s Annual Report on Form 10-K.

10-K for fiscal 2019. In 2019, EY’s Audit Report included its communication of critical audit matters for the first time and the Audit Committee discussed a draft of the Audit Report with EY prior to its finalization.

Appointment and Oversight of EY

EY has served as the Company’s independent registered public accounting firm since 1991. Prior to retaining EY for the Company’s 2018 fiscal year,2019, the Committee considered, among other things:

EY’s historical and recent performance on the Company’s audit;
EY’s capability, expertise, and relevant industry knowledge;

●EY’s historical and recent performance on the Company’s audit;
●EY’s capability, expertise, and relevant industry knowledge;
●External information on EY’s audit quality and performance, such as reports from the Public Company Accounting Oversight Board ("PCAOB");
●EY’s fees and related staffing for the Company's audit; and
●EY’s independence and tenure as our auditor, including the benefits and independence risks of having a long-tenured auditor, and the controls and processes of the Company and EY that help ensure EY’s independence.

In addition, during fiscal 2019, the Committee met with representatives of EY’s audit quality and performance, such as reports from the Public Company Accounting Oversight Board ("PCAOB");

practice, including certain members of EY’s fees and related staffing for the Company's audit; and
leadership, to discuss EY’s independence and tenure as our auditor, including the benefits and independence risks of having a long-tenured auditor,control environment and the controlsresults of its audit inspections performed by the PCAOB. The Committee will continue to have such discussions with EY in future years and processes of the Company and EY that help ensuremonitor EY’s independence.
results in these areas.

After determining to retain EY for 2018,fiscal 2019, the Committee reviewed the terms of the proposed engagement letter, which included proposed fees for 2018.fiscal 2019. Throughout 2018,fiscal 2019, the Committee, or the Chair of the Committee (pursuant to delegated authority from the Committee), reviewed engagements for additional audit or non-audit projects,services, and the related fees, that were outside the scope of the previously approved 2018fiscal 2019 EY engagement.engagement letter.


Discussions with EY

As discussed above, the

The Committee regularly meets with EY, with and without management present, to discuss, among other matters, the results of its examinations and evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.

In keeping with its responsibilities, the Committee has discussed with EY the matters required to be discussed by PCAOB Auditing Standard No. 1301, Communications with Audit Committees. The Committee has received the written disclosures and the letter from EY required by the PCAOB regarding EY’s communications with the Committee concerning independence, and has discussed with EY its independence, as well as the overall scope and plans for its audit.



Audited Consolidated Financial Statements

The Committee has reviewed and discussed the Company’s audited, consolidated financial statements for the fiscal year ended December 31, 20182019 with management and EY. Based on these discussions, reports of management and EY, and the Committee’s review of the representations of management, and subject to the limitations on the role and responsibilities of the Committee referred to above and in the Committee’s written charter, the Committee recommended to the Board that the audited, consolidated financial statements of the Company, for the fiscal year ended December 31, 2018,2019, be included in the Company’s Annual Report on Form 10-K for filing with the SEC.

Pre-Approval of Services Performed by EY

The

The Committee has adopted a policy regarding pre-approval of permitted non-audit services to be provided to the Company by its independent registered public accounting firm. Fees for any permitted non-audit services provided by the independent registered public accounting firm that exceed the pre-approval levels prescribed in the policy must be approved in advance by the Committee Chair or the Committee.


The Audit Committee


Cynthia N. Day (Chair)


Kelly H. Barrett
Douglas C. Curling

Walter G. Ehmer

Hubert L. Harris, Jr.
Robert H. Yanker



AUDIT MATTERS

Fees Billed in the Last Two Fiscal Years

EY served as our independent registered public accounting firm for the years ended December 31, 20182019 and 20172018 and has been selected by the Audit Committee to continue as our independent registered public accounting firm for the current fiscal year. The following table sets forth the fees for services provided by our independent auditors in each of the last two fiscal years.

  Year Ended December 31,
  2018 2017
Audit Fees(1)
 $2,714,075
 $2,505,250
Audit-Related Fees(2)
 108,000
 18,000
Tax Fees(3)
 1,168,269
 1,074,176
All Other Fees(4)
 7,200
 1,995
TOTAL $3,997,544
 $3,599,421

Year Ended December 31,
     2019     2018
Audit Fees(1)$2,757,013$2,719,075
Audit-Related Fees(2)584,410103,000
Tax Fees(3)972,3751,168,269
All Other Fees(4)7,2007,200
TOTAL$     4,320,998$     3,997,544

(1)
(1)

Includes fees associated with the annual audit of the consolidated financial statements (including amounts in connection with certain 2017 and 2018 audit procedures for the significant acquisitions of franchisees), internal control over financial reporting, reviews of the quarterly reports on Form 10-Q, assistance with and review of documents filed with the SEC, and accounting and financial reporting consultations and research work necessary to comply with generally accepted auditing standards.standards, debt covenant letters and the audit report in the franchise disclosure document. In addition to the fees reflected above, the Company reimbursed EY for out of pocket expenses that were incurred while performing these audit services totaling $67,437 and $49,227 in 2019 and $50,328 in 2018, and 2017, respectively.

(2)

Includes fees associated with thecertain due diligence efforts in 2019 and PerfectHome due diligence and other efforts in 2018, debt covenant letters in 2018 and 2017, the audit report in the franchise disclosure document in 2017, and agreed upon procedures report for DAMI debt compliance in 2017.

2018.

(3)

Includes fees for tax compliance, tax due diligence efforts, tax advice and tax planning services.

(4)

Includes fees associated with the Company’s online accounting research subscription.

Approval of Auditor Services

The Audit Committee is responsible for pre-approving all audit and permitted non-audit services provided to the Company by its independent auditors. To help fulfill this responsibility, the Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy, which we refer to as the “Pre-Approval Policy.” Under the Pre-Approval Policy, all auditor services must be pre-approved by the Audit Committee either (i) before the commencement of each service on a case-by-case basis (specific pre-approval) or (ii) by description in sufficient detail in the Pre-Approval Policy of particular services which the Audit Committee has generally approved, without the need for case-by-case consideration (general pre-approval).

Unless a particular service has received general pre-approval, it must receive the specific pre-approval of the Audit Committee or its Chair. The Pre-Approval Policy describes the audit, audit-related and tax services that have received general pre-approval. These general pre-approvals allow the Company to engage the independent auditors for the enumerated services for individual engagements up to the fee levels prescribed in the Pre-Approval Policy. The annual audit engagement for the Company is subject to the specific pre-approval of the Audit Committee. Any engagement of the independent auditors pursuant to a general pre-approval must be reported to the Audit Committee at its next regular meeting. The Audit Committee periodically reviews the services that have received general pre-approval and the associated fee ranges. The Pre-Approval Policy does not delegate the Audit Committee’s responsibility to pre-approve services performed by the independent auditors to management.



BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table sets forth information, as of March 4, 2019,April 10, 2020, with respect to the beneficial ownership, as defined in Section 13(d) under the Exchange Act of our outstanding common stock by (i) each person known by us to beneficially own 5% or more of the outstanding shares of our common stock, (ii) each of our directors and nominees for director, (iii) each of our named executive officers for 2018,2019, and (iv) all of our executive officers, directors and director nominees as a group. Except as otherwise indicated, all shares shown in the table below are held with sole voting and investment power.

Name and Address of Beneficial Owner(1)
 Amount and Nature
of Beneficial
Ownership		   
Percent of Class(2)
BlackRock Inc. 8,461,144
 
(3) 
 12.30%
55 East 52nd Street      
New York, NY 10055      
The Vanguard Group 6,907,766
 
(4) 
 10.07%
100 Vanguard Boulevard      
Malvern, PA 19355      
Dimensional Fund Advisors, LP. 5,685,822
 
(5) 
 8.29%
Building One      
6300 Bee Cave Road      
Austin, TX 19355      
T. Rowe Price Associates, Inc. 5,112,725
 
(6) 
 7.40%
100 E. Pratt Street      
Baltimore, MD 21202      
John W. Robinson III 813,497
 
(7) 
 1.19%
Steven A. Michaels 182,750
 
(8) 
 *
Ryan K. Woodley 272,251
 
(9) 
 *
Douglas A. Lindsay 88,455
 
(10) 
 *
Curtis L. Doman 291,585
 
(11) 
 *
Kathy T. Betty 34,206
 
(12) 
 *
Douglas C. Curling 10,188
 
(12) 
 *
Cynthia N. Day 16,676
 
(12) 
 *
Walther G. Ehmer 8,233
 
(12) 
 *
Hubert L. Harris, Jr. 18,676
 
(13) 
 *
Ray M. Robinson 26,301
 
(14) 
 *
Robert H. Yanker 8,233
 
(12) 
 *
All executive officers, directors and nominees as a group (a total of 14 persons) 1,901,167
 
(15) 
 2.78%
* Less than 1%.

Name and Address of Beneficial Owner(1)     Amount and Nature
of Beneficial
Ownership		     Percent of Class(2)
BlackRock Inc.               7,859,912(3)                      11.63%
55 East 52nd Street
New York, NY 10055
The Vanguard Group7,088,569(4)10.49%
100 Vanguard Boulevard
Malvern, PA 19355
T. Rowe Price Associates, Inc.5,709,254(5)8.45%
100 E. Pratt Street
Baltimore, MD 21202
Dimensional Fund Advisors, LP.4,297,599(6)6.36%
Building One
6300 Bee Cave Road
Austin, TX 78746
John W. Robinson III831,723(7)1.23%
Steven A. Michaels184,715(8)*
Ryan K. Woodley267,643(9)*
Douglas A. Lindsay98,507(10)*
Curtis L. Doman307,376(11)*
Kathy T. Betty37,817(12)*
Douglas C. Curling13,799(12)*
Cynthia N. Day20,287(12)*
Walther G. Ehmer11,844(12)*
Hubert L. Harris, Jr.22,287(13)*
Ray M. Robinson26,912(12)*
Kelly Barrett4,144(12)*
All executive officers, directors and nominees as a group (a total of 14 persons)1,922,080(14)2.84%

*

Less than 1%.

(1)

Unless otherwise stated, the address for each beneficial owner is c/o Aaron’s, Inc., 400 Galleria Parkway SE, Suite 300, Atlanta, Georgia 30339.

(2)

Percentages for executive officers, directors and nominees are based on (i) 67,778,066 67,565,986 shares of common stock outstanding at March 4, 2019April 10, 2020 plus (ii) for each named person or group, options exercisable by such person or group within 60 days thereafter, and any RSUs, RSAs, and PSUs, that vest for each named person within 60 days thereafter.

(3)

As of December 31, 2018,2019, based on information provided in a Schedule 13G/A filed with the SEC on January 24, 2019February 4, 2020 by BlackRock, Inc., which we refer to as “BlackRock,” in which BlackRock reported that it has sole voting power with respect to 8,161,4307,730,144 shares of our common stock and sole power to dispose of, or direct the disposition of, 8,461,1447,859,912 shares of our common stock.

(4)

As of December 31, 2018,2019, based on information provided in a Schedule 13G/A filed with the SEC on January 10, 2019February 12, 2020 by The Vanguard Group, which we refer to as “Vanguard,” in which Vanguard reported that it has sole voting power with respect to 68,091133,523 shares of our common stock, shared voting power with respect to 8,84614,174 shares of our common stock, sole power to dispose of, or direct the disposition of, 6,837,5276,949,735 shares of our common stock, and shared power to dispose of, or direct the disposition of, 70,239138,834 shares of our common stock. Based on the Schedule 13G/A, (i) the Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard, is the beneficial owner of 61,393124,660 shares as a result of its serving as investment manager of collective trust accounts and (ii) Vanguard Investments Australia, Ltd., a wholly-ownedwholly- owned subsidiary of Vanguard, is the beneficial owner of 15,54423,037 shares as a result of its serving as investment manager of Australian investment offerings.

(5)

As of December 31, 2018,2019, based on information provided in a Schedule 13G/A filed with the SEC on February 8,14, 2020 by T. Rowe Price Associates, Inc., which we refer to as “T. Rowe Price,” in which T. Rowe Price reported that it has sole voting power with respect to 1,417,409 shares of our common stock and sole power to dispose of, or direct the disposition of, 5,709,254 shares of our common stock.



(6)As of December 31, 2019, based on information provided in a Schedule 13G/A filed with the SEC on February 12, 2020 by Dimensional Fund Advisors LP, which we refer to as “Dimensional,” in which Dimensional reported that it has sole voting power with respect to 5,539,4344,187,431 shares of our common stock and sole power to dispose of, or direct the disposition of, 5,685,8224,297,599 shares of our common stock. Dimensional is an investment adviser registered under Section 203 of the Investment Advisors Act of 1940 that furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts. Dimensional or its subsidiaries may possess voting or investment power over shares of our common stock that are owned by these investment companies, trusts and accounts, and may be deemed to be the beneficial owner of the shares of our common stock held by these investment companies, trusts and accounts. Dimensional disclaims beneficial ownership of all shares of our common stock.
(7)
(6)As of December 31, 2018, based on information provided in a Schedule 13G filed with the SEC on February 14, 2019 by T. Rowe Price Associates, Inc., which we refer to as “T. Rowe Price,” in which T. Rowe Price reported that it has sole voting power with respect to 1,269,831 shares of our common stock and sole power to dispose of, or direct the disposition of, 5,112,725 shares of our common stock.


(7)
Amounts represent (i) 140,073205,224 shares of common stock held by Mr. Robinson, (ii) 160,919 shares of common stock issuable upon the exercise of options issued under the 2001 Incentive Plan that are currently exercisable, (iii) 170,560409,960 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that are currently exercisable and (iv) 29,110 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 7, 2019, (v) 109,810 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 15, 2019, (vi) 19,150 RSUs vesting on March 15, 2019, (vii) 9,170 RSAs vesting on March 7, 2019, (viii) 15,950 RSAs vesting on March 15, 2019, (ix) 58,29055,620 RSAs which are entitled to voting and dividend rights as described in the related award agreement though still subject to vesting (x) 18,157 PSUs which have met performance conditions and are scheduled to vest on March 7, 2019 and (xi) 82,308 PSUs which have met performance conditions and are scheduled to vest on March 15, 2019. Does not include (i) 174,210159,740 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that remain subject to vesting conditions or (ii) 81,08846,669 PSUs that remain subject to vesting conditions.
(8)
Amounts represent (i) 19,69339,933 shares of common stock held by Mr. Michaels, (ii) 48,78237,532 shares of common stock issuable upon the exercise of options issued under the 2001 Incentive Plan that are currently exercisable, (iii) 36,08091,490 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that are currently exercisable and (iv) 7,880 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 7, 2019, (v) 23,230 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 15, 2019, (vi) 4,050 RSUs vesting on March 15, 2019, (vii) 2,480 RSAs vesting on March 7, 2019, (viii) 3,380 RSAs vesting on March 15, 2019, (ix) 14,85015,760 RSAs which are entitled to voting and dividend rights as described in the related award agreement though still subject to vesting (x) 4,910 PSUs which have met performance conditions and are scheduled to vest on March 7, 2019 and (xi) 17,415 PSUs which have met performance conditions and are scheduled to vest on March 15, 2019. Does not include (i) 44,26045,190 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that remain subject to vesting conditions or (ii) 19,29712,626 PSUs that remain subject to vesting conditions.
(9)
Amounts represent (i) 38,70551,843 shares of common stock held by Mr. Woodley, (ii) 42,600 shares of common stock issuable upon the exercise of options issued under the 2001 Incentive Plan that are currently exercisable, (iii) 57,120147,490 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that are currently exercisable and (iv) 13,440 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 7, 2019, (v) 36,770 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 15, 2019, (vi) 6,400 RSUs vesting on March 15, 2019, (vii) 4,240 RSAs vesting on March 7, 2019, (viii) 5,340 RSAs vesting on March 15, 2019, (ix) 24,92025,710 RSAs which are entitled to voting and dividend rights as described in the related award agreement though still subject to vesting (x) 8,462 PSUs which have met performance conditions and are scheduled to vest on March 7, 2019 and (xi) 34,254 PSUs which have met performance conditions and are scheduled to vest on March 15, 2019. Does not include (i) 74,20073,760 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that remain subject to vesting conditions or (ii) 34,61521,454 PSUs that remain subject to vesting conditions.
(10)
Amounts represent (i) 22,65629,847 shares of common stock held by Mr. Lindsay, (ii) 16,98053,470 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that are currently exercisable and (iii) 7,560 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 7, 2019, (iv) 10,850 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 15, 2019, (v) 1,840 RSUs vesting on March 15, 2019, (vi) 2,390 RSAs vesting on March 7, 2019, (vii) 1,540 RSAs vesting on March 15, 2019, (viii) 12,56015,190 RSAs which are entitled to voting and dividend rights as described in the related award agreement though still subject to vesting (ix) 4,818 PSUs which have met performance conditions and are scheduled to vest on March 7, 2019 and (x) 7,261 PSUs which have met performance conditions and are scheduled to vest on March 15, 2019. Does not include (i) 37,24043,580 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that remain subject to vesting conditions or (ii) 14,15211,316 PSUs that remain subject to vesting conditions.
(11)
Amounts represent (i) 62,345111,146 shares of common stock held by Mr. Doman, (ii) 72,00052,000 shares of common stock held by an LLC controlled by Mr. Doman, (iii)30,000 shares of common stock issuable upon the exercise of options issued under the 2001 Incentive Plan that are currently exercisable, (iv) 39,33098,070 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that are currently exercisable and (v) 7,980 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 7, 2019, (vi) 25,330 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 15, 2019, (vii) 4,400 RSUs vesting on March 15, 2019, (viii) 2,520 RSAs vesting on March 7, 2019, (ix) 3,680 RSAs vesting on March 15, 2019, (x) 15,32016,160 RSAs which are entitled to voting and dividend rights as described in the related award agreement though still subject to vesting (xi) 5,025 PSUs which have met performance conditions and are scheduled to vest on March 7, 2019 and (xii) 23,655 PSUs which have met performance conditions and are scheduled to vest on March 15, 2019. Does not include (i) 45,65046,290 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that remain subject to vesting conditions or (ii) 22,25312,743 PSUs that remain subject to vesting conditions.
(12)
Does notAmounts include 1,4672,144 RSUs that remain subject to vesting conditions.on May 8, 2020
.
(13)Includes 2,000 shares of common stock held by Mr. Harris’ spouse. Does not include 1,467spouse and 2,144 RSUs that remain subject to vesting conditions.
on May 8, 2020.
(14)Includes 3,000 shares of common stock issuable upon the exercise of options issued under the 2001 Incentive Plan that are currently exercisable. Does not include 1,467 RSUs that remain subject to vesting conditions.
(15)
Amounts represent (i) 421,020586,845 shares of common stock held directly by the respective individuals, (ii) 74,00054,000 shares of common stock held indirectly by certain individuals as described above, (iii) 322,809283,151 shares of common stock issuable upon the exercise of options issued under the 2001 Incentive Plan that are currently exercisable, (iv) 341,580845,420 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that are currently exercisable, (v) 70,300 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 7, 2019, (vi) 219,850 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that become exercisable on March 15, 2019, (vii) 38,24015,008 RSUs vesting on March 15, 2019, (viii) 22,170 RSAs vesting on March 7, 2019, (ix) 31,910 RSAs vesting on March 15, 2019, (x) 134,270May 8, 2020, (vi) 136,900 RSAs which are entitled to voting and dividend rights as described in the related award agreement though still subject to vesting (xi) 44,075 PSUs which have met performance conditions and are scheduled to vest on March 7, 2019, (xii) 175,269 PSUs which have met performance conditions and are scheduled to vest on March 15, 2019, and (xiii) 5,674(vii) 756 shares of common stock held in 401(k) plan accounts.accounts. Does not include (i) 400,420392,810 shares of common stock issuable upon the exercise of options issued under the 2015 Incentive Plan that remain subject to vesting conditions or(ii) 182,483111,751 PSUs that remain subject to vesting conditions, or (iii) 10,269 RSUs that remain subject to vesting conditions.


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Policies and Procedures Dealing with the Review, Approval and Ratification of Related Party Transactions

The charter of the Audit Committee provides that the Audit Committee shall review and ratify all transactions to which the Company is a party and in which any director or executive officer has a direct or indirect material interest, apart from their capacity as director or executive officer of the Company. To assist with this review process, the Audit Committee has adopted a policy on related party transactions that provides procedures for the review, and approval or ratification, of certain transactions involving related parties. This policy applies to any transaction or series of transactions in which we or one of our subsidiaries is a participant, the amount involved exceeds or may be expected to exceed $100,000 in any fiscal year and a related party has a direct or indirect material interest. Under the policy, a related party includes (i) any person who is or was, since the beginning of the last fiscal year, a director, executive officer or nominee for election as a director, (ii) a greater than 5% beneficial owner of any class of our voting securities, (iii) an immediate family member of either of the foregoing persons or (iv) any entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position in which such person has a 5% or greater beneficial ownership interest. Related party transactions are referred to the Audit Committee, or if there are not a sufficient number of directors on the Audit Committee without interests in the transaction, by the disinterested directors serving on our Board of Directors, for approval, ratification, or other action.

In addition, our Company’s Code of Business Conduct and Ethics provides that conflict of interest situations involving directors or executive officers must receive the prior review and approval of the Audit Committee. Our Code of Business Conduct and Ethics sets forth various examples of when conflict of interest situations may arise, including when an officer or director, or members of his or her family: receive improper personal benefits as a result of his or her position in or with the Company; have certain relationships with competing businesses or businesses with a material financial interest in the Company, such as suppliers or customers; or receive improper gifts or favors from such businesses.

Related Party Transactions

Aaron Ventures I, LLC, which we refer to as "Aaron Ventures," was formed in December 2002 for the purpose of acquiring properties from the Company and leasing them back to the Company and is controlled by certain of the Company’s current and former executives. Aaron Ventures purchased a combined total of 21 properties from the Company in 2002 and 2004, and leased the properties back to the Company. As of December 31, 2018,2019, the Company has fourhad no remaining capital leases and five remainingfinance or operating leases with Aaron Ventures with lease expiration dates between 2019 and 2026. During late 2017 and early 2018, all of these leases were renegotiated with Aaron Ventures. The four capital leases have aggregateCompany paid annual rental payments of approximately $0.2 million. The rate of interest implicit inrent for the leases is approximately 9.7%. The land and buildings, associated depreciation expense and lease obligations are recorded in the Company's condensed consolidated financial statements. The five operating leases have aggregate annual rental payments of approximately $0.3 million.

During 2018, Mr. Robert Sinclair, an executive officer of the Company, served as a manager of Aaron Ventures. All ofvarious properties leased from Aaron Ventures owners are current or former officers of $0.2 million for the Company and includes Mr. Sinclair, whose ownership interest in Aaron Ventures is approximately 6.667%.
year ending December 31, 2019.



QUESTIONS AND ANSWERS ABOUT VOTING AND THE ANNUAL MEETING
What is the purpose

ADDITIONAL INFORMATION

Legal Matters

The validity of this Proxy Statement?

This Proxy Statement provides information regarding matters to be voted on at the Annual Meeting. Additionally, it contains certain information that the SEC requires us to provide annually to our shareholders. This Proxy Statement is also used by our Board of Directors to solicit proxies to be used at the Annual Meeting so that all shareholders of record have an opportunity to vote on the matters to be presented at the Annual Meeting, even if they cannot attend the meeting in person. Our Board of Directors has designated John W. Robinson III, Steven A. Michaels, and Robert W. Kamerschen to vote the shares of common stock representedoffered by proxies atthis joint proxy statement/prospectus will be passed upon for us by King & Spalding LLP, 1180 Peachtree Street NE, Atlanta, Georgia 30309.

Experts

The consolidated financial statements of Aaron’s, Inc. appearing in Aaron’s, Inc.’s Annual Report (Form 10-K) for the Annual Meeting.


Who is entitled to vote onyear ended December 31, 2019 and the matters discussed in the Proxy Statement?
You are entitled to vote if you were a shareholdereffectiveness of record of our common stockAaron’s Inc.’s internal control over financial reporting as of the close of business on March 4,December 31, 2019, the “record date” for the Annual Meeting, including shares of restricted stock issued pursuant to the 2015 Incentive Plan that are still subject to vesting requirements. A list of all shareholders entitled to vote will be available for inspection at the Annual Meeting. Your shares can be voted at the Annual Meeting only if you are present in person or representedhave been audited by a valid proxy.

What constitutes a quorum for the Annual Meeting?
The holders of a majority of the outstanding shares of our common stock as of the close of business on the record date must be present, either in person or represented by valid proxy, to constitute a quorum necessary to conduct the Annual Meeting. On the record date, 67,778,066 shares of our common stock were issued and outstanding, including shares of restricted stock still subject to vesting requirements entitled to vote at the Annual Meeting. Shares represented by valid proxies received but marked as abstentions, and shares reflecting broker non­votes, will be counted as present at the Annual Meeting for purposes of establishing a quorum.

How many votes am I entitled to for each share of common stock I hold?
Each share of our common stock represented at the Annual Meeting is entitled to one vote for each director nominee with respect to the proposal to elect directors and one vote for each of the other proposals to be voted on. You are not entitled to cumulate votes with respect to the proposal to elect directors.

What proposals will require my vote?
You are being asked to vote on the following proposals:
To elect eight directors to serve for a term expiring at the 2020 Annual Meeting of Shareholders.
To vote on a non-binding, advisory resolution approving Aaron’s executive compensation.
To vote to approve the Aaron's, Inc. Amended and Restated 2015 Equity and Incentive Plan.
To ratify the appointment of Ernst & Young LLP, as Aaron’s independent registered public accounting firm, for 2019.

What vote is required to approve each proposal or elect directors,as set forth in their reports thereon, included therein, and how will my vote be counted?
Proposal 1-Election of Directors
Shareholders may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to each ofincorporated by reference in the nominees for director being considered pursuant to Proposal 1. Assuming a quorum is present, a nominee will be electedjoint proxy statement/prospectus. Such consolidated financial statements are incorporated herein by reference in reliance upon the affirmative vote of a majority of the total votes cast at the Annual Meeting, which means that the number of votes cast in favor of a nominee’s election exceeds the number of votes cast against that nominee’s election. Any shares that are not voted (whether by abstention or otherwise) will have no impactsuch reports given on the outcomeauthority of the vote with respect to this proposal.
If an incumbent director fails to receive a majority of the votes cast, the incumbent director will promptly tender his or her resignation to our Board of Directors which can then choose to accept it, reject it, or take other action our Board of Directors deems appropriate.


Proposal 2-Advisory Vote on Executive Compensation
Shareholders may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to the non-binding, advisory resolution approving our executive compensation. Assuming a quorum is present, the resolution approving our executive compensation will be approved if the votes cast by holders of shares of common stock present,such firm as experts in person or by proxy, at the Annual Meeting in favor of the resolution exceed the votes cast against the resolution. Any shares that are not voted (whether by abstention or otherwise) will have no impact on the outcome of the vote with respect to this proposal.
Proposal 3-Approval of the Aaron's, Inc. Amendedaccounting and Restated 2015 Equity and Incentive Plan
Shareholders may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to the proposal to approve our Amended and Restated 2015 Equity and Incentive Plan. Assuming a quorum is present, the proposal to approve our Amended and Restated 2015 Equity and Incentive Plan will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the proposal exceed the votes cast against the proposal. Any shares that are not voted (whether by abstention or otherwise) will have no impact on the outcome of the vote with respect to this proposal.
Proposal 4-Ratification of the Appointment of the Independent Registered Public Accounting Firm
Shareholders may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to the proposal to appoint EY as Aaron’s independent registered public accounting firmauditing.

Shareholder Proposals for 2019. Assuming a quorum is present, the proposal to ratify the appointment of our independent registered public accounting firm for 2019 will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the proposal exceed the votes cast against the proposal. Any shares that are not voted (whether by abstention or otherwise) will have no impact on the outcome of the vote with respect to this proposal.

How does our Board of Directors recommend that I vote?
Our Board of Directors recommends that you vote:
“FOR” the election of each of the eight director nominees named in this Proxy Statement to serve for a term expiring at the 20202021 Annual Meeting of Shareholders (Proposal 1).
“FOR” approval of a non-binding, advisory resolution approving Aaron’s executive compensation (Proposal 2).
“FOR” approval of the Aaron's, Inc. Amended and Restated 2015 Equity and Incentive Plan (Proposal 3).
“FOR” the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2019 (Proposal 4).
How do I vote?
If you are a shareholder of record, then you have four voting options. You may vote:
Over the Internet at the website listed in our Notice and Access Letter.
By telephone using the telephone number listed in our Notice and Access Letter.
By completing, signing, dating and returning a written proxy card. To vote by using a written proxy card, mark your selections on the proxy card, date the proxy card and sign your name exactly as it appears on your proxy card, and return your proxy card by mail in the pre-addressed, postage-paid envelope which will be included with the written proxy card.
By attending the Annual Meeting and voting in person.
We encourage you to vote your shares as soon as possible by proxy even if you plan to attend the Annual Meeting to ensure your shares are voted even if you later find you are unable to attend the Annual Meeting. Voting by telephone or over the Internet should be accomplished prior to May 7, 2019 at 11:59 p.m., Eastern Time, to ensure your vote is counted. Proxy cards from shareholders who requested a written proxy card will be accepted when received up through the closing of the polls at the Annual Meeting.
If you are a registered holder and you vote your proxy by telephone or over the Internet, or if you complete, sign, date, and return a written proxy card, and no direction is specified as to any matter to be acted upon, the shares represented by your proxy will be voted “FOR” proposals 1, 2 3, and 4 in this Proxy Statement, and in accordance with the proxy holder’s best judgment as to any other business that may properly come before the Annual Meeting.


If you are a beneficial holder, then please refer to the instructions provided by your broker, bank, or other nominee regarding how to vote.
What is the difference between a shareholder of record and a beneficial holder of shares?
If your shares of our common stock are registered directly in your name with our transfer agent, Computershare, Inc., then you are considered a “shareholder of record” with respect to those shares. Shareholders of record will receive a copy of the Notice and Access Letter and, if requested, written copies of this Proxy Statement, the Annual Shareholders Report and a proxy card to vote their shares of our common stock.
If your shares are held in “street name” through a broker, bank,or other nominee, then you are considered the “beneficial holder” of the shares held for you. Beneficial holders of shares should refer to the instructions provided by their broker, bank, or other nominee regarding how to vote their shares or to revoke previous voting instructions. The availability of Internet and telephone voting depends on the voting processes of the broker, bank, or other nominee. As the beneficial holder, you have the right to direct your broker, bank, or other nominee how to vote your shares. Beneficial holders may vote in person only if they have a legal proxy to vote their shares from their broker, bank, or other nominee.
I am a beneficial holder. How are my shares voted if I do not return voting instructions?
Your shares may be voted if they are held in the name of a brokerage firm, even if you do not provide the brokerage firm with voting instructions. Under the rules of the NYSE, brokerage firms have the authority to vote shares on certain routine matters for which their customers do not provide voting instructions by the tenth day before the Annual Meeting. The proposal to ratify the appointment of EY as our independent registered public accounting firm for 2019 is considered a routine matter.
The election of directors, the non-binding, advisory resolution to approve our executive compensation, and the proposal to approve the Aaron's, Inc. Employee Stock Purchase Plan are not considered routine matters under the rules of the NYSE. If a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial holder of the shares with respect to that proposal, then the brokerage firm cannot vote the shares on that proposal. This is called a “broker non-vote.” In tabulating the voting result for any particular proposal, shares that are subject to broker non­-votes with respect to that proposal will not be considered votes either for or against the proposal, but will be counted as present for determining whether or not a quorum exists. It is very important that you provide voting instructions to your brokerage firm if you want your shares to be voted at the Annual Meeting on a non­-routine matter.
Can I change my mind after I vote?
If you vote by proxy, then you can revoke that proxy at any time before it is voted at the Annual Meeting by giving written notice to the Corporate Secretary of the Company or though one of the following three methods:
Vote again using the Internet or by telephone prior to the Annual Meeting.
Sign another proxy card with a later date and return it to us prior to the Annual Meeting.
Attend the Annual Meeting in person and vote in person.
If you hold your shares in "street name" as a beneficial holder, your bank, broker or other nominee should provide you with instructions on how you may instruct it to vote on your behalf and how you may revoke any voting instructions given.
How will a proposal or other matter that was not included in this Proxy Statement be handled for voting purposes if it is raised at the Annual Meeting?
If any matter that is not described in this Proxy Statement should properly come before the Annual Meeting, then John W. Robinson III, Steven A. Michaels, and Robert W. Kamerschen, or any one of them, as proxies will vote the shares represented by valid proxies in accordance with their best judgment. For any other matter that may be properly presented at the Annual Meeting but which is not described in this Proxy Statement, assuming a quorum is present, the matter will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the matter exceed the votes cast against the matter, unless a greater vote is required by law or by our charter. At the time this Proxy Statement was printed, management was unaware of any other matters that might be presented for shareholder action at the Annual Meeting.
Who will tabulate and certify the vote?
Representatives of Computershare, Inc. will tabulate the vote, act as the independent inspector of elections for the Annual Meeting, and certify the final vote on all matters considered at the Annual Meeting.


What does it mean if I receive more than one copy of the Notice and Access Letter?

This means that you have multiple accounts holding shares of our common stock with brokers or our transfer agent. You will need to vote separately with respect to each proxy card that you receive. Please vote all of the shares you are entitled to vote. See “Additional Information—Householding of Annual Meeting Materials” for more information.

How can I request a written set of proxy materials, including a proxy card, or an additional set of proxy materials for the Annual Meeting?
All shareholders have the ability to access this Proxy Statement, the accompanying Notice of Annual Meeting of Shareholders, a written proxy card and the Annual Report by (i) accessing the materials at http://www.envisionreports.com/AAN or the Investor Relations section of our website located at aarons.com or (ii) requesting a printed set of these materials from us at no charge. To request a printed copy of these materials, please write to us at our principal executive offices located at 400 Galleria Parkway, S.E., Suite 300, Atlanta, Georgia 30339, Attn. Corporate Secretary.
What happens if I abstain from voting?
Abstentions with respect to a proposal are counted for purposes of establishing a quorum. If a quorum is present, then abstentions will have no impact on the outcome of the vote with respect to any of the proposals described in this Proxy Statement for consideration at the Annual Meeting.
What do I need to do if I want to attend the Annual Meeting?
Only shareholders, our Board of Directors, board nominees, management of the Company and management’s invited guests are permitted to attend the Annual Meeting. If you are a shareholder of record and wish to attend the Annual Meeting, you must provide valid picture identification, such as a driver’s license or passport, showing a name that matches a name on the Company’s list of record shareholders as of March 4, 2019 to be admitted to the Annual Meeting. If you hold your shares through a bank, broker, or other nominee, more commonly known as holding shares in “street name,” and desire to vote at the Annual Meeting, you must inform your bank, broker, or other nominee and request a “legal” proxy from the bank, broker, or nominee. You will need to bring the legal proxy to the Annual Meeting along with valid picture identification. If you do not have a legal proxy, you will not be able to vote at the Annual Meeting. You are, however, still welcome to attend the Annual Meeting, but you must bring your most recent brokerage account statement showing that you owned Aaron’s common stock as of the record date along with valid picture identification to be admitted to the Annual Meeting. You are advised that if you own shares in street name and obtain a legal proxy, any proxy you have previously executed will be revoked, and your vote will not be counted unless you appear at the Annual Meeting and vote in person or legally appoint another proxy to vote on your behalf.
How are proxies solicited and what is the cost?
We bear all expenses incurred in connection with the solicitation of proxies. We have engaged MacKenzie Partners, Inc. to assist with the solicitation of proxies for a fee estimated to be up to $11,000 for the initial solicitation services, plus reimbursement of out-of-pocket expenses.
In addition to solicitation by mail and the Internet, certain officers, directors, and employees of the Company may solicit proxies by telephone, email, facsimile, or in person, although no additional compensation will be paid for such solicitation. The Company may also request banks, brokers, and other nominees to solicit their customers who have a beneficial interest in our common stock registered in their names and will reimburse such banks, brokers, and other nominees for their reasonable out-of-pocket expenses.
IN ORDER THAT YOUR SHARES OF OUR COMMON STOCK MAY BE REPRESENTED AT THE ANNUAL MEETING IN CASE YOU ARE NOT PERSONALLY PRESENT, YOU ARE REQUESTED TO FOLLOW THE VOTING INSTRUCTIONS PROVIDED IN THE NOTICE AND ACCESS LETTER.


ADDITIONAL INFORMATION
Shareholder Proposals for 2020 Annual Meeting of Shareholders
In accordance with the provisions of Rule 14a-8(e) of the Exchange Act, proposals of shareholders intended to be presented at the 20202021 Annual Meeting of Shareholders must be received by November 25, 2019[●], 2020 to be eligible for inclusion in the Company’s Proxy Statement and form of proxy for that meeting.

Other shareholder proposals not made in accordance with the provisions of Rule 14a-8 must be submitted to our Board of Directors in compliance with the Company’s bylaws between 90 to 120 days prior to the date of the 20202021 Annual Meeting of Shareholders in order to be considered timely, which we currently anticipate will be held on or around May 6, 2020.[●], 2021. Any such shareholder proposals must also be accompanied by the following information: (i) the full text in writing of the shareholder proposal as it will be proposed; (ii) the purpose or purposes for which the shareholder proposal is desired and a statement that the shareholder proposal is to be considered at the 20202021 Annual Meeting of Shareholders; (iii) the names, addresses and number of shares of the Company held of record by the shareholder or shareholders making the proposal (or the number of shares of the Company beneficially owned and represented by a nominee certificate on file with the Company); (iv) the number of shares of the Company that have been solicited with regard to the proposal and the number of shares of the Company whose holders have agreed (in writing or otherwise) to vote in any specific fashion on the proposal; and (v) a written statement by the proponent that it intends to continue ownership of such voting shares through the date of the 20202021 Annual Meeting of Shareholders.

Any shareholder desiring to nominate a candidate for election as a director at the 20202021 Annual Meeting of Shareholders must submit the nomination in writing by first class registered mail to our President no earlier than the close of business on January 8, 2020,[●], 2021, and no later than the close of business on March 9, 2020,[●], 2021, unless the date of the 20202021 Annual Meeting of Shareholders is not scheduled to be held between April 8, 2020[●], 2021 and July 17, 2020[●], 2021 (in which case any such nomination must be submitted to our President not earlier than the close of business on the one hundred twentieth (120th) day prior to the 20202021 Annual Meeting of Shareholders and not later than the close of business on the later of the sixtieth (60th) day prior to the 20202021 Annual Meeting of Shareholders or the tenth (10th) day following the day when the date of the 20202021 Annual Meeting of Shareholders is first publicly announced by us). Any nomination must also contain the following information about the nominee, to the extent known by the shareholder submitting the nomination: (i) the nominee’s name, address and principal present occupation; (ii) to the shareholder’s knowledge, the total number of shares of our common stock that may be voted for the nominee; (iii) the names and addresses of the shareholders proposing to make the nomination, and the number of shares of our common stock owned by each such shareholder; (iv) the nominee’s age, past employment, education, beneficial ownership of shares of our common stock, past and present financial standing, criminal history (including any convictions, indictments or settlements thereof), involvement in any past or pending litigation or administrative proceedings (including threatened involvement), relationship to and agreements (whether or not in writing) with the shareholders (and their relatives, subsidiaries and affiliates) intending to make the nomination, past and present relationships or dealings with us or any of our subsidiaries, affiliates, directors, officers or agents, plans or ideas for managing our affairs (including any termination of employees, any sales of corporate assets, any proposed merger, business combination or recapitalization, and any proposed dissolution or liquidation); (v) the nominee’s written consent to being named in a proxy statement as a nominee and to serving as director if elected; and (vi) all additional information relating to the nominee that would be required to be disclosed, or otherwise required, pursuant to Sections 13 or 14 of the Exchange Act, and the rules and regulations promulgated there under, in connection with any acquisition of shares by the nominee or in connection with the solicitation of proxies by the nominee for his or her election as a director, regardless of the applicability of such provisions of the Exchange Act.


The Company retains discretion to vote proxies it receives with respect to director nominations or any other business proposals received after their respective deadlines for submission as described above. The Company retains discretion to vote proxies it receives with respect to such proposals received prior to such deadlines provided (i) the Company includes in its Proxy Statement advice on the nature of the proposal and how it intends to exercise its voting discretion and (ii) the proponent does not issue its own proxy statement.



Householding of Annual Meeting Materials

As permitted by the Securities and Exchange Commission, only one copy of our Notice and Access Letter regarding the annual meeting may be delivered to shareholders residing at the same address, unless such shareholders have notified us of their desire to receive multiple copies. We will promptly deliver, upon oral or written request, a separate copy of our Notice and Access Letter (or proxy materials, if applicable) to any shareholder residing at an address to which only one copy was mailed. Shareholders residing at the same address and currently receiving only one copy of our Notice and Access Letter may contact us to request multiple copies in the future. Alternatively, shareholders residing at the same address and currently receiving multiple copies of our Notice and Access Letter (or proxy materials, if applicable) may request that only a single copy be mailed in the future. The Company will promptly deliver additional copies of this Proxy Statementjoint proxy statement/prospectus and other proxy materials to any shareholder who contacts the Company’s principal corporate office at 400 Galleria Parkway, S.E., Suite 300, Atlanta, Georgia 30339 requesting such additional copies; alternatively, you may contact the Company’s proxy solicitor, MacKenzie Partners.

[●].

Communicating with the Board of Directors and Corporate Governance Documents

The Company’s security holders and other interested parties may communicate with our Board of Directors, the non-management or independent directors as a group, or individual directors by writing to them in care of the Corporate Secretary, Aaron’s, Inc., 400 Galleria Parkway, S.E., Suite 300, Atlanta, Georgia 30339. Correspondence will be forwarded as directed by the writer. The Company may first review, sort, and summarize such communications, and screen out solicitations for goods or services and similar inappropriate communications unrelated to the Company or its business. All concerns related to audit or accounting matters will be referred to the Audit Committee.

The charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, the Company’s Code of Business Conduct and Ethics, its Code of Ethics for the Chief Executive Officer and the Senior Financial Officers and Employees and its Corporate Governance Guidelines can each be viewed by clicking the “Corporate Governance” tab on the Investor Relations area of the Company’s website athttp://www.aarons.com.You may also obtain a copy of any of these documents without charge by writing to the Corporate Secretary, Aaron’s, Inc., 400 Galleria Parkway, S.E., Suite 300, Atlanta, Georgia 30339.

Where You Can Find Additional Information

Aaron’s files annual, quarterly and current reports, proxy statements and other information with the SEC. Aaron’s SEC file number is 1-13941. The SEC maintains a web site that contains reports, proxy and information statements and other information about issuers, like Aaron’s, who file electronically with the SEC. The address of that site is http://www.sec.gov. You can also obtain copies of the reports, proxy statements and other information Aaron’s files with the SEC, as well as copies of Aaron’s governing documents, on our website at www.aarons.com. We are “incorporating by reference” into this joint proxy statement/prospectus certain information Aaron’s files with the SEC, which means that we are disclosing important information to you by referring you to those documents. The documents incorporated by reference include important information about Aaron’s, including our financial condition, results of operations and description of Aaron’s business. The information incorporated by reference is an important part of this joint proxy statement/prospectus. The following documents that Aaron’s filed with the SEC are incorporated into this joint proxy statement/prospectus by reference:

●our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 20, 2020;
●Our Current Reports on Form 8-K filed on February 25, 2020 and March 19, 2020 (other than any portion of such filings not deemed to be filed).

Any future filings made by Aaron’s or HoldCo with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of this joint proxy statement/prospectus and up to the date of the Annual Meeting, are also incorporated by reference into this joint proxy statement/prospectus. Information incorporated by reference is considered to be a part of this joint proxy statement/prospectus, and later information filed with the SEC prior to the date of the Annual Meeting will automatically update and supersede information in this joint proxy statement/prospectus and in our other filings with the SEC. Information we elect to furnish to but not file with the SEC in accordance with SEC rules and regulations is not incorporated into this joint proxy statement/prospectus and does not constitute part of this joint proxy statement/prospectus.

You may request a copy of any filing referred to above (including any exhibits that are specifically incorporated by reference), at no cost, by contacting Aaron’s at the following address or telephone number:

Aaron’s, Inc.
Attn: Corporate Secretary
400 Galleria Parkway SE, Suite 300
Atlanta, Georgia 30339
Telephone: (678) 402-3000

THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS TO VOTE YOUR SHARES AT THE ANNUAL MEETING. AARON’S HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS. THIS PROXY STATEMENT/PROSPECTUS IS DATED [●], 2020. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT/PROSPECTUS TO SHAREHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

Other Action at the Meeting

As of the date of this Proxy Statement,joint proxy statement/prospectus, we have no knowledge of any business, other than described herein, and customary procedural matters that will be presented for consideration at the Annual Meeting. In the event any other business is properly presented at the Annual Meeting, it is intended that proxies will be voted in accordance with the discretion of the proxy holders.

Moreover, our Board of Directors reserves the right to adjourn or postpone the Annual Meeting for failure to obtain a quorum, for legitimate scheduling purposes, or based on other circumstances that our Board of Directors believes would cause such adjournments or postponements to be in the best interests of our shareholders.

*   *   *   *   *   *

BY ORDER OF THE BOARD OF DIRECTORS
rksignaturea05.jpg
Robert W. Kamerschen

Executive Vice President, General Counsel,

Chief AdministrativeCorporate Affairs Officer & Corporate Secretary
March 28, 2019

[●], 2020


Appendix A

USE OF NON-GAAP FINANCIAL INFORMATION

We use various non-GAAP financial measures to evaluate the performance of our management team, including the named executive officers. For the assessment of the performance of management, the Compensation Committee of our Board of Directors believes certain non-GAAP measures better reflect the operational performance of the business. Adjusted Revenues, Adjusted EBITDA and Return on Capital are supplemental measures of the Company's performance that are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) and are used to evaluate the performance of our management team. Adjusted Revenues, Adjusted EBITDA and Return on Capital provide the Compensation Committee, management, and investors with an understanding of the results from the primary operations of our business by excluding the effects of certain items that generally arose from one-time transactions that are not reflective of the ordinary earnings activity of our operations or transactions that have variability and volatility of the amount and typically are not budgeted for in setting management performance targets.

Certain incentive metrics have also been adjusted for the change in allowance for loan losses at Vive, as shown in the tables below. Management believes this adjustment is useful to arrive at a pre-provision metric that gives management and investors an additional, supplemental metric to assess Vive’s underlying operational performance for the period. Management also uses pre-provision measures as its bases for strategic planning and forecasting for Vive.

Non-GAAP financial measures, however, should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP, such as the Company’s GAAP basis net earnings and diluted earnings per share and the GAAP revenues and earnings before income taxes of the Company’s segments. Further, we caution investors that amounts presented in accordance with our definitions of non-GAAP measures may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate these measures in the same manner.

The Adjusted EBITDA metrics discussed in this joint proxy statement/prospectus are calculated as the Company and segment earnings before interest expense, depreciation on property, plant and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA also excludes restructuring charges, the regulatory charge related to Progressive Leasing's tentative settlement of the FTC matter discussed in the Company's Form 10-K filed with the SEC on February 20, 2020, regulatory legal expenses incurred related to the FTC matter and acquisition transaction and transition costs. Further adjustments were made to calculate Adjusted EBITDA used to evaluate the performance of our management team such as excluding insurance recoveries for the 2017 Hurricanes Harvey and Irma from the Aaron's Business and Consolidated results, to remove certain legal and due diligence costs from the Aaron's Business and Consolidated results, to adjust for certain regulatory legal expenses at Progressive Leasing and to remove the effect of the change in allowance for loan losses at Vive. The amounts for these after-tax non-GAAP adjustments can be found in the Adjusted EBITDA table below.


Appendix A

Adjusted EBITDAYear Ended December 31, 2019
(In Thousands)Progressive
Leasing1		Aaron’s BusinessViveConsolidated
Net Earnings - GAAP$   31,472
Income Taxes61,316
Earnings (Loss) Before Income Taxes   $   55,711   $   46,731   $   (9,654)   92,788
Interest Expense8,5724,8683,52716,967
Depreciation8,28460,41580569,504
Amortization21,68313,29458035,557
EBITDA94,250125,308(4,742)214,816
Restructuring Expenses—39,990—39,990
Acquisition Transaction and Transition Costs—735—735
Legal and Regulatory Expenses179,261——179,261
Adjusted EBITDA273,511166,033(4,742)434,802
Insurance Recoveries for Hurricanes and certain
Legal and Due Diligence Costs, net—(1,257)—(1,257)
Certain Regulatory Legal Expenses2(4,261)———
Vive Change in Allowance——1,9411,941
Adjusted EBITDA- used for Management incentive purposes$269,250$164,776$(2,801)$435,486

AARON’S, INC.
AMENDED AND RESTATED 2015 EQUITY AND INCENTIVE PLAN
(1)The Adjusted EBITDA metric used to evaluate Progressive Leasing for incentive purposes includes the consolidation of Progressive and Vive.
ARTICLE 1.(2)PURPOSE AND GENERAL PROVISIONSCertain regulatory legal expenses related to the FTC tentative settlement were adjusted in the calculation of Progressive Leasing's Adjusted EBITDA used for management incentive purposes. This adjustment did not impact the Consolidated incentive metrics.

The Adjusted Revenues figures presented in this joint proxy statement/prospectus have been reduced for the amount of provision expense at Vive, the amounts for which can be found in the Adjusted Revenues table below.

Adjusted RevenuesYear Ended December 31, 2019
(In Thousands)Progressive
Leasing1		Aaron's BusinessViveConsolidated
Revenues - GAAP     $     2,128,133     $     1,784,477     $     35,046     $     3,947,656
Less Vive Bad Debt Expense from Credit Losses2——21,66621,666
Adjusted Revenues$2,128,133$1,784,477$13,380$3,925,990

(1)The adjusted revenue metric used to evaluate Progressive Leasing for incentive purposes includes the consolidation of Progressive and Vive, further adjusted to remove the effect of provision expense at Vive.
(2)The adjustment removes the effect of Vive's Provision for Credit Losses.

Consolidated Return on Capital is calculated as adjusted net operating profit after tax (which is defined as operating profit adjusted for certain non-recurring items as shown in the Return on Capital table below) divided by the sum of average net debt (which is defined as total debt less cash and cash equivalents) and average total shareholders' equity, with the final result being an average of quarterly calculations.


Appendix A

Return on CapitalThree Months Ended
(In Thousands)  March 31, 2019  June 30, 2019  September 30, 2019  December 31, 2019
Operating Profit - GAAP$73,855$59,846$55,503$(83,330)
Add Restructuring Expense13,28118,7385,5162,455
Add FTC Tentative Settlement———175,000
Add FTC Legal Expenses———4,261
(Less) Add Insurance Recoveries, Acquisition
Transaction Costs, and Certain Legal and Due
Diligence Costs, net		(892)(3,635)—3,998
(Less) Add Vive Change in Allowance for Loan Losses(607)4211,271857
Adjusted Operating Profit Before Tax85,63775,37062,290103,241
Less Income Taxes1(17,333)(18,797)(14,302)(24,427)
Adjusted Operating Profit After Tax(a)$68,304$56,573$47,988$78,814
 
Average Capital2 (b)$      2,138,609$     2,107,887$              2,089,233$             2,137,552
Return on Capital(c) = (a)/(b)3.2%2.7%2.3%3.7%
Annual Return on Capital [sum(c)]11.9%

(1)

Income taxes calculated as the quarterly effective tax rate multiplied by Adjusted Operating Profit Before Tax.

(2)

Average Capital is defined as the sum of the average net debt (debt less cash and cash equivalents) and the average total shareholders' equity for each three month period. Average total shareholders' equity has been adjusted by the tax-effected amounts of the adjustments identified in the table above.

The Proxy Summary section of this joint proxy statement/prospectus also references an increase to Progressive Leasing revenues by comparing reported revenues for the year ended December 31, 2019 to non-GAAP revenues for periods prior to January 1, 2019 for Progressive Leasing as if the lessor accounting impacts of ASC 842 were in effect during the year ended December 31, 2018. “Progressive Leasing Revenues, net of Progressive Bad Debt Expense” for the prior year period shown in the respective table below is a supplemental measure of our performance that is not calculated in accordance with GAAP in place during 2018. This non-GAAP measure assumes that Progressive bad debt expense is recorded as a reduction to lease revenues and fees instead of within operating expenses in 2018. Management believes this non-GAAP measure for 2018 provides relevant and useful information for users of our financial statements, as they provide comparability with the financial results we are reporting beginning in 2019 when ASC 842 became effective and we began reporting Progressive's bad debt expense as a reduction to lease revenues and fees. We believe this non-GAAP measure provides management and investors the ability to better understand the results from the primary operations of our business in 2019 compared with 2018 by classifying Progressive's bad debt expense consistently between the periods. Please see Note 1 to the consolidated financial statements and the "Results of Operations" section of our Form 10-K for the year ended December 31, 2019 for a more comprehensive disclosure of bad debt expense and the impact of the adoption of ASC 842 related to accounting for leases for the prospective periods beginning with the first quarter of 2019.

Progressive Leasing Revenues, net of Progressive Bad Debt Expense1Year Ended
(In Thousands)     December 31, 2018
Progressive Leasing Revenues - GAAP$1,998,981
Less Progressive Leasing Bad Debt Expense227,813
Progressive Leasing Revenues, net of Progressive Bad Debt Expense$     1,771,168

(1)

The metric is for Progressive Leasing revenues and excludes Vive.


1.1Appendix B

EstablishmentAGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this“Agreement”), dated as of Plan.April [●], 2020, is among Aaron’s, Inc., a Georgia corporation (the “(“Aaron’s”), Aaron’s Holdings Company, Inc., a Georgia corporation and a wholly owned subsidiary of Aaron’s”(“HoldCo”), previously established an incentive compensation plan known asand Aaron’s Merger Sub, Inc., a Georgia corporation and a wholly owned subsidiary of HoldCo(“Merger Sub”).

RECITALS

WHEREAS, the “Aaron’s, Inc. 2015 Equitypurpose of this Agreement and Incentive Plan” (the “2015 Plan”). The 2015 Planthe transactions contemplated by this Agreement is amendedto create a new holding company structure, and restated byHoldCo and Merger Sub have been formed for the Compensation Committeepurpose of effecting this new holding company structure; and

WHEREAS, the Boardrespective Boards of Directors of Aaron’s, HoldCo and Merger Sub have each approved and adopted this Agreement and the Company (the “transactions contemplated by this Agreement, in each case after making a determination that this Agreement and such transactions are advisable and in the best interests of such company and its shareholders; and

Committee”) asWHEREAS, at the Effective Time (as defined herein), pursuant to the transactions contemplated by this Agreement and on the terms and subject to the conditions set forth in this document establishing the “Aaron’s Inc. Amendedherein, (a) Merger Sub will merge with and Restated 2015 Equity and Incentive Plan” (the “Plan”). The Committee amended and restated the 2015 Plan to (i) increase the number of shares of Common Stock available for issuance pursuant to Awards granted under the Plan, and (2) make certain other changes set forth herein.

1.2Purpose of Plan. The purpose of the Plan is to promote the long-term growth and profitability of the Company and its subsidiaries by (i) providing certain employees, directors, consultants, advisors and other persons who perform services for the Company and its subsidiaries with incentives to maximize shareholder value and otherwise contribute to the success of the Company, and (ii) enabling the Company to attract, retain and reward outstanding individuals to serve as directors, officers and employees.
1.3Types of Awards. Awards under the Plan may be made to eligible Participants in the form of Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Other Awards, Annual Incentive Awards, or any combination thereof.
1.4Effective Date. The 2015 Plan was originally effective March 10, 2015. The Plan, as amended and restated herein, shall be effective as of February 21, 2019, (the “Effective Date”), the date it was adopted by Committee, contingent upon approval by the Company’s shareholders.
1.5Termination of the Plan. No awards shall be granted under the Plan after the tenth (10th) anniversary of the Effective Date. Awards granted under the Plan on or prior to the tenth (10th) anniversary of the Effective Date shall remain outstanding beyond that dateinto Aaron’s in accordance with the termsGeorgia Business Corporation Code, as amended (the“GBCC”), with Aaron’s continuing as the surviving corporation (the“Merger”), (b) each outstanding share of common stock of Aaron’s(“Aaron’s Common Stock”)will be converted into one share of common stock of HoldCo(“HoldCo Common Stock”), and conditions(c) each share of HoldCo Common Stock held by Aaron’s will be canceled; and

WHEREAS, on the Plan andfirst business day after the Agreements corresponding to such Awards.

ARTICLE 2.DEFINITIONS
Except where the context otherwise indicates, the following definitions apply:
“409A AWARD” means an Award that is not exempt from Code section 409A.
“AGREEMENT” means the written or electronic agreement evidencing an Award grantedEffective Time, Aaron’s will convert to a Participant under the Plan. As determined by the Committee, each Agreement shall consist of either (i) a written agreement in a form approved by the Committee and executed on behalf of the Company by an officer duly authorized to act on its behalf, or (ii) an electronic notice of Award in a form approved by the Committee and recorded by the Company (or its designee) in an electronic recordkeeping system used for the purpose of tracking Awards, and if required by the Committee, executed or otherwise electronically accepted by the recipient of the Award in such form and manner as the Committee may require. The Committee may authorize any officer of the Company (other than the particular Award recipient) to execute any or all Agreements on behalf the Company.
Georgia limited liability company (the “ANNUAL INCENTIVE AWARDConversion” mean an Award under Article 10 that entitles the Participant to receive a payment in cash or other property specified by the Committee to the extent performance goals are achieved.
“AWARD” means an award granted to a Participant under the Plan that consists of one or more Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Other Awards, Annual Incentive Awards, or a combination of these.
“BOARD” means the Board of Directors of the Company.
“CAUSE” means, unless provided otherwise in the Agreement, (i) the Participant’s material fraud, malfeasance, gross negligence, or willful misconduct with respect to business affairs of the Employer, which is, or is reasonably likely to be if such action were to become known by others, directly or materially harmful to the business or reputation of the Employer; (ii) the Participant’s conviction of or failure to contest prosecution for a felony or a crime involving fraud, embezzlement, theft or moral turpitude; (iii) the Participant’s breach of the Agreement (including, without limitation, any provisions relating to maintaining confidential information and not soliciting the Employer’s employees and customers); or (iii) the willful and


Appendix A


continued failure or habitual neglect by the Participant to perform his duties with the Employer substantially) in accordance with the operatingSections 14-2-1109.1 and personnel policies and procedures14-11-212 of the Employer. “Cause” shall be determinedOfficial Code of Georgia Annotated (the “O.C.G.A.”).

WHEREAS, HoldCo, in its capacity as the sole shareholder of Merger Sub, has adopted and approved this Agreement; and

WHEREAS, the completion of the Merger requires, among other things, the approval of this Agreement by the Committee in its sole discretion. Notwithstanding the foregoing, if the Participant has entered into an employment agreement with the Employer that is binding asaffirmative vote of the date of employment termination, and if such employment agreement defines “Cause,” then the definition of “Cause” in such agreement shall apply to the Participant for Awards under this Plan.

“CHANGE IN CONTROL” means the occurrence of one of the following events:
(a)The acquisition (other than from the Company) by any Person of beneficial ownership (within the meaning of Rule 13d- 3 promulgated under the Exchange Act (but without regard to any time period specified in Rule 13d-3(d)(l)(i))), of thirty-five percent (35%) or more of the combined voting power of then outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding, however, (1) any acquisition by the Company or (2) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company;
(b)A majority of the members of the Board is replaced during any 12- month period by directors whose appointment or election is not endorsed by a majority of the membersoutstanding shares of Aaron’s Common Stock (the“Aaron’s Shareholder Approval”); and

WHEREAS, it is the intention of the Board beforeparties hereto that the date ofMerger, together with the appointment or election; or

(c)Consummation by the Company of a reorganization, merger, or consolidation or sale of all or substantially all of the assets of the Company (a “Transaction”); excluding, however, a Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Company Voting Securities immediately prior to such Transaction will beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors of the corporation resulting from such Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Transaction, of the Outstanding Company Voting Securities.
Notwithstanding the foregoing, for purposes of any 409A Award, if that Award provides for a change in the time or form of payment upon a Change in Control, then no Change in ControlConversion, shall be deemed to have occurred upon an event described above unless the event would also constitute a change in ownership of the Company, a change in effective control of the Company, or a change in ownership of a substantial portion of the Company’s assetstax-free reorganization under Code section 409A.
“CODE” means the Internal Revenue Code of 1986, as nowamended (the“Code”), and the rules and regulations promulgated thereunder.

NOW, THEREFORE, in effect and as hereafter amended from time to time. Any reference to a particular sectionconsideration of the Code includes any applicable regulations promulgated under that section. All citations to sectionspremises and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Code are to such sectionsparties hereto hereby agree as they may from time to time be amended or renumbered.follows:

ARTICLE I

MERGER

SECTION 1.1

“Merger.COMMITTEE” means the Compensation Committee of the Board or such other committee consisting of two or more members of the Board as may be appointed by the Board from time to time to administer this Plan pursuant to Article 3. If the Common Stock is traded on the NASDAQ or the NYSE, all of the members of the Committee shall be independent directors within the meaning of the NASDAQ’s or NYSE’s listing standards (as applicable). If any member of the Committee does not qualify as a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act, the Board shall appoint a subcommittee of the Committee, consisting of at least two Non-Employee Directors to grant Awards to Insiders; each member of such subcommittee shall be a Non-Employee Director. ReferencesSubject to the Committee in the Plan shall includeterms and as appropriate, apply to any such subcommittee.
“COMMON STOCK” means the Common Stock of the Company, and any other shares into which such stock may be changed by reason of a recapitalization, reorganization, merger, consolidation or any other change in the corporate structure or capital stock of the Company.
“COMPANY” means Aaron’s, Inc., a Georgia corporation, and its successors and assigns.


Appendix A


“DISABILITY” means, with respect to any Incentive Stock Option, a disability as determined under Code section 22(e)(3), and with respect to any other Award, unless provided otherwise in an Agreement (in which case such definition shall apply for purposes of the Plan with respect to that particular Award), (i) with respect to a Participant who is eligible to participate in a program of long-term disability insurance maintained by the Employer, the date on which the insurer or administrator under such program of long-term disability insurance determines that the Participant is eligible to commence benefits under such program, and (ii) with respect to any Participant (including a Participant who is eligible to participate in a program of long-term disability insurance maintained by the Employer), the Participant’s inability, due to physical or mental injury or illness, to perform the essential functions of his position with or without reasonable accommodation for a period of one hundred eighty (180) days, whether or not consecutive, occurring within any period of twelve (12) consecutive months, subject to any limitation imposed by federal, state or local laws, including, without limitation, the American with Disabilities Act.
Notwithstanding the preceding provisionsconditions of this definition or anything in any Agreement to the contrary, to the extent any provision of this Plan or an Agreement would cause a payment of a 409A Award to be made because of the Participant’s Disability, then there shall not be a Disability that triggers payment until the date (if any) that the Participant is disabled within the meaning of Code section 409A(a)(2)(C). Any payment that would have been made except for the application of the preceding sentence shall be madeand in accordance with the payment schedule that would have appliedGBCC, Merger Sub shall be merged with and into Aaron’s at the Effective Time. Following the Effective Time, the separate corporate existence of Merger Sub shall cease, and Aaron’s shall continue as the surviving corporation (the“Surviving Corporation”), becoming a direct wholly owned subsidiary of HoldCo. On the first business day after the Effective Time, HoldCo shall cause the Conversion to be consummated in accordance with Sections 14-2-1109.1 and 14-11-212 of the O.C.G.A.

SECTION 1.2Effective Time.

(a) Subject to the provisions of this Agreement, as soon as practicable following the satisfaction or waiver of the conditions set forth under Section 4.1, Aaron’s and Merger Sub shall duly execute and file a Certificate of Merger (the“Certificate of Merger”) in the absenceform substantially set forth asExhibit A hereto with the Georgia Secretary of a Disability (and other Participant rights that are tiedState pursuant to a Disability,Section 14-2-1105 of the GBCC. The Merger shall become effective upon such filing (or at such later time as vesting, shall not be affected byprovided in the prior sentence).

Certificate of Merger) in accordance with Section 14-2-1105 of the GBCC (the“Effective Time”EFFECTIVE DATE).”


(b) The Merger shall have the meaning ascribedeffects set forth in this Agreement and in the applicable provisions of the GBCC, including Section 14-2-1106. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, (i) right and title to such termall assets (including real estate and other property) owned by, and every contract right possessed by, Aaron’s and Merger Sub shall vest in Section 1.4 hereof.

“EMPLOYEE” means any individual whom the Employer treatsSurviving Corporation, and (ii) all liabilities of Aaron’s and Merger Sub shall become the liabilities of the Surviving Corporation.

SECTION 1.3Organizational Documents.

(a) Prior to or at the Effective Time, HoldCo shall cause to be filed with the Georgia Secretary of State the Articles of Incorporation of HoldCo in the form substantially set forth as a common law employee for payroll tax purposes,Exhibit B hereto, and shall adopt the Bylaws of HoldCo in the form substantially set forth asExhibit C hereto. The Articles of Incorporation and Bylaws of HoldCo shall be the Articles of Incorporation and Bylaws of HoldCo until thereafter amended either withinas provided therein or outsideby the United States.GBCC.

“EMPLOYER” means

(b) At the CompanyEffective Time, the Articles of Incorporation and the Subsidiaries.

“EXCHANGE ACT” means the Securities Exchange ActBylaws of 1934, as nowAaron’s in effect immediately prior to the Effective Time shall be and as hereafter amended from time to time. Any reference to a particular sectionremain the Articles of Incorporation and Bylaws of the Exchange Act includes any applicable regulations promulgated under that section. All citations to sectionsSurviving Corporation until thereafter amended as provided therein or by the GBCC.

SECTION 1.4Directors and Officers of the Exchange ActSurviving Corporation.From and after the Effective Time, (i) the directors of the Surviving Corporation shall be [], [] and [] and (ii) the officers of Aaron’s immediately prior to the Effective Time shall be the officers of the Surviving Corporation and shall, until further action, continue to hold office as provided in the Articles of Incorporation and Bylaws of the Surviving Corporation.

SECTION 1.5Directors and Officers of HoldCo.The directors and officers of HoldCo immediately prior to the Effective Time shall continue as directors and officers of HoldCo from and after the Effective Time and shall, until further action, continue to hold office as provided in the Articles of Incorporation and Bylaws of HoldCo.

ARTICLE II

CONVERSION OF SECURITIES; STOCK CERTIFICATES

SECTION 2.1Conversion of Securities.At the Effective Time, by virtue of the Merger and without any action on the part of the holders of shares of Aaron’s Common Stock, HoldCo Common Stock or rules thereunder are to such sections or rules as they may from time to time be amended or renumbered.the common stock of Merger Sub (“

“Merger Sub Common StockFAIR MARKET VALUE” of a):

(a) Each share of Aaron’s Common Stock issued and outstanding immediately prior to the Effective Time shall be automatically converted into one validly issued, fully paid and nonassessable share of HoldCo Common Stock;

(b) Each share of HoldCo Common Stock issued, outstanding and held by Aaron’s immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof and no payment shall be made with respect thereto; and

(c) Each share of Merger Sub Common Stock issued and outstanding immediately prior to the Effective Time shall automatically convert into one validly issued, fully paid and nonassessable share of the Company means, asSurviving Corporation.

SECTION 2.2Stock Certificates.Subject to Section 2.1, from and after the Effective Time, all of the date in question,

(a)    ifoutstanding certificates which immediately prior to the Common Stock is listed for trading on the NASDAQ, the closing sale priceEffective Time represented shares of a share of Common Stock on such date, as reported by the NASDAQ or such other source as the Committee deems reliable, or if no such reported sale of theAaron’s Common Stock shall be deemed for all purposes to evidence ownership of, and to represent, shares of HoldCo Common Stock into which the shares of Aaron’s Common Stock formerly represented by such certificates have occurred on such date,been converted as provided in this Agreement. The registered owner on the last daybooks and records of HoldCo or its transfer agent of any outstanding stock certificate shall, until such certificate shall have been surrendered for transfer or otherwise accounted for to HoldCo or its transfer agent, be entitled to exercise any voting and other rights with respect to the shares of HoldCo Common Stock evidenced by such outstanding certificates which prior to such date on which there was such a reported sale;
(b)    if the Merger represented shares of Aaron’s Common Stock.

SECTION 2.3Equity Awards; ESPP; Retirement Plan

(a) Each option to purchase or right to acquire or vest in Aaron’s Common Stock is listed for trading on(each a “Aaron’s Stock Award”) issued under the NYSE, the closing sale price of a share of Common Stock on such date, as reported by the NYSE or such other source as the Committee deems reliable, or if no such reported sale of the Common Stock shall have occurred on such date, on the last day prior to such date on which there was such a reported sale;

(c)    if the Common Stock is not listed for trading on the NASDAQ or the NYSE but is listed for trading on another national securities exchange, the closing sale price of a share of Common Stock on such date as reported on such exchange, or if no such reported sale of the Common Stock shall have occurred on such date, on the last day prior to such date on which there was such a reported sale;
(d)    if the Common Stock is not listed for trading on a national securities exchange but nevertheless is publicly traded and reported (through the OTC Bulletin Board or otherwise), the closing sale price of a share of Common Stock on such date, or if no such reported sale of the Common Stock shall have occurred on such date, on the last day prior to such date on which there was such a reported sale; or
(e)    if the Common Stock is not publicly traded and reported, the fair market value as established in good faith by the Committee or the Board.


Appendix A


For purposes of subsection (c) above, if the Common Stock is not traded on the NASDAQ or the NYSE but is traded on more than one other securities exchange on the given date, then the largest exchange on which the Common Stock is traded shall be referenced to determine Fair Market Value.
Notwithstanding the foregoing but subject to the next paragraph, if the Committee determines in its discretion that an alternative definition of Fair Market Value should be used in connection with the grant, exercise, vesting, settlement or payout of any Award, it may specify such alternative definition in the Agreement applicable to the Award. Such alternative definition may include a price that is based on the opening, actual, high, low, or average selling prices of a share of Common Stock on the NASDAQ or other securities exchange on the given date, the trading date preceding the given date, the trading date next succeeding the given date, or an average of trading days.
Notwithstanding the foregoing, (i) in the case of an Option or SAR, Fair Market Value shall be determined in accordance with a definition of fair market value that permits the Award to be exempt from Code section 409A; and (ii) in the case of an Option that is intended to qualify as an ISO under Code section 422, Fair Market Value shall be determined by the Committee in accordance with the requirements of Code section 422.
“INCENTIVE STOCK OPTION” or “ISO” means an Option that is designated as an “incentive stock option” and intended to meet the requirements of Code section 422.
“INSIDER” shall mean an individual who is, on the relevant date, subject to the reporting requirements of Exchange Act section 16(a).
“NASDAQ” means The NASDAQ Stock Market LLC or its successor.
“NON-EMPLOYEE” means any consultant or advisor, other than an Employee or Non-Employee Director, who provides bona fide services to the Employer not in connection with the offer or sale of securities in a capital raising transaction.
“NON -EMPLOYEE DIRECTOR” means any individual who is a member of the Board and who is not also employed by the Employer.
“NONQUALIFIED STOCK OPTION” or “NQSO” means any Option that is not designated as an “incentive stock option” or that otherwise does not meet the requirements of Code section 422.
“NYSE” means the New York Stock Exchange or its successor.
“OPTION” means an Award granted under Article 5 that is either an Incentive Stock Option or a Nonqualified Stock Option. An Option shall be designated as either an Incentive Stock Option or a NonqualifiedAaron’s, Inc. 2001 Stock Option and in the absence of such designation, shall be treated as a Nonqualified Stock Option.
“OPTION EXERCISE PRICE” means the price at which a share of Common Stock may be purchased by a Participant pursuant to the exercise of an Option.
“OTHER AWARD” means any form of equity-based or equity-related award, other than an Option, a Stock Appreciation Right, Restricted Stock, a Restricted Stock Unit, a Performance Share, a Performance Unit or an Annual Incentive Award that is granted pursuant to Article 9.
“PARTICIPANT” means an Employee, Non-Employee or Non-Employee Director who is eligible to receive or has received an Award under this Plan.
“PERFORMANCE PERIOD” shall have the meaning ascribed to such term in Section 8.3.
“PERFORMANCE SHARE” means an Award under Article 8 of the Plan that is valued by reference to a share of Common Stock, which value may be paid to the Participant by delivery of cash or other property as the Committee shall determine upon achievement of such performance objectives during the relevant Performance Period as the Committee shall establish at the time of such Award or thereafter.


Appendix A


“PERFORMANCE UNIT” means an Award under Article 8 of the Plan that has a value set by the Committee (or that is determined by reference to a valuation formula specified by the Committee), which value may be paid to the Participant by delivery of cash or other property as the Committee shall determine upon achievement of such performance objectives during the relevant Performance Period as the Committee shall establish at the time of such Award or thereafter.
“PERMITTED TRANSFEREE” means any members of the immediate family of the Participant (i.e., spouse, children, and grandchildren), any trusts for the benefit of such family members or any partnerships whose only partners are such family members.
“PERSON” means any “person” or “group” as those terms are used in Exchange Act Sections 13(d) and 14(d).
“PLAN” means the Aaron’s Inc. Amended and Restated 2015 Equity and Incentive Award Plan, set forth in this document and as it may be amended from time to time.
(collectively, the “PRIOR PLANAaron’s Stock Plans” means) or granted by Aaron’s outside of the Aaron’s Inc. 2001 Stock Option and Incentive Award Plan, as it may be amended from time to time.
“RESTRICTED STOCK” means an Award of shares of Common Stock under Article 7 of the Plan, which shares are issued with such restrictions as the Committee, in its sole discretion, may impose.
“RESTRICTED STOCK UNIT” or “RSU” means an Award under Article 7 of the PlanPlans that is valued by reference to a share of Common Stock, which value may be paidoutstanding and unexercised, unvested, unsettled, and/or not yet payable immediately prior to the Participant by delivery of cash or other propertyEffective Time shall, as the Committee shall determine and that has such restrictions as the Committee, in its sole discretion, may impose.
“RESTRICTION PERIOD” means the period commencing on the date an Award of Restricted Stock or an RSU is granted and ending on such date as the Committee shall determine, during which time the Award is subject to forfeiture as provided in the Agreement.
“SHARE POOL” shall have the meaning ascribed to such term in in Section 4.1.
“STOCK APPRECIATION RIGHT” or “SAR” means an Award granted under Article 6 that provides for delivery of cash or other property as the Committee shall determine with a value equal to the excess of the Fair Market Value of a share of Common Stock on the day the Stock Appreciation Right is exercised over the specified exercise price.
“SUBSIDIARY” means a corporation or other entity of which outstanding shares or ownership interests representing fifty percent (50%) or more of the combined voting power of such corporation or other entity entitled to elect the management thereof are owned directly or indirectlytime, be assumed by the Company. With respect to all purposes of the Plan, including but not limited to, the establishment, amendment, termination, operation and administration of the Plan, the Company and the Committee shall be authorized to act on behalf of all other entities included within the definition of “Subsidiary.”
ARTICLE 3.ADMINISTRATION; POWERS OF THE COMMITTEE
3.1General. This Plan shall be administered by the Committee.
3.2Authority of the Committee.
a.Subject to the provisions of the Plan, the Committee shall have the full and discretionary authority to (i) select the persons who are eligible to receive Awards under the Plan, (ii) determine the form and substance of Awards made under the Plan and the conditions and restrictions, if any, subject to which such Awards will be made, (iii) modify the terms of Awards made under the Plan, (iv) interpret, construe and administer the Plan and Awards granted thereunder, (v) make any adjustments necessary or desirable in connection with Awards made under the Plan to eligible Participants located outside the United States, and (vi) adopt, amend, or rescind such rules and regulations, and make such other determinations, for carrying out the Plan as it may deem appropriate.
b.The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Agreement in the manner and to the extent it shall deem desirable to carry it into effect.
c.Decisions of the Committee on all matters relating to the Plan shall be in the Committee’s sole discretion and shall be conclusive, final and binding on all parties. The validity, construction, and effect of the Plan and any


Appendix A


rules and regulations relating to the Plan shall be determined in accordance with applicable federal and state laws and rules and regulations promulgated pursuant thereto.
d.In the event the Company shall assume outstanding equity awards or the right or obligation to make such awards in connection with the acquisition of another corporation or business entity, the Committee may, in its discretion, make such adjustments in the terms of Awards as it shall deem equitable and appropriate to prevent dilution or enlargement of benefits intended to be made under the Plan.
e.In making any determination or in taking or not taking any action under the Plan, the Committee may obtain and may relay on the advice of experts, including but not limited to employees of the Company and professional advisors.
3.3Rules for Foreign Jurisdictions. Notwithstanding anything in the Plan to the contrary, the Committee may, in its sole discretion, (i) amend or vary the terms of the Plan in order to conform such terms with the requirements of each non-U.S. jurisdiction where a Participant works or resides or to meet the goals and objectives of the Plan; (ii) establish one or more sub-plans for these purposes; and (iii) establish administrative rules and procedures to facilitate the operation of the PlanHoldCo in such non-U.S. jurisdictions. For purposes of clarity,a manner that it is converted into an option to purchase or right to acquire or vest or be settled in, on otherwise the same terms and conditions contained herein that are subject to variation in a non-U.S. jurisdiction shall be reflected in a written addendum to the Plan with respect to each Participant or group of Participants affected by such non-U.S. jurisdiction.
3.4Delegation of Authority. The Committee may, in its discretion, at any time and from time to time, delegate to one or more of its members such of its authority as it deems appropriate (provided that any such delegation shall be to at least two members of the Committee with respect to Awards to Insiders). The Committee may, at any time and from time to time, delegate to one or more other members of the Board such of its authority as it deems appropriate. To the extent permitted by law andwere applicable stock exchange rules, the Committee may also delegate its authority to one or more persons who are not members of the Board, except that no such delegation will be permitted with respect to Insiders.
3.5Agreements. Each Award granted under the Plan shall be evidenced by an Agreement. Each Agreement shall be subject to and incorporate, by reference or otherwise, the applicable terms and conditions of the Plan, and any other terms and conditions, not inconsistent with the Plan, as may be imposed by the Committee, including without limitation, provisions related to the consequences of termination of employment. Each Agreement shall specify the period over which the Award will vest or with respect to which any risk of substantial forfeiture will lapse. A copy of the Agreement shall be provided to the Participant, and the Committee may, but need not, require that the Participant sign (or otherwise acknowledge receipt of) a copy of the Agreement or a copy of a notice of grant. Each Participant may be required, as a condition to receiving an Award under this Plan, to enter into an agreement with the Company containing such non-compete, confidentiality, and/or non-solicitation provisions as the Committee may adopt and approve from time to time (as so modified or amended, the “Non-Compete Agreement”). The provisions of the Non-Compete Agreement may also be included in, or incorporated by reference in, the Agreement.
3.6Indemnification. No member or former member of the Committeerespective Aaron’s Stock Plans or the Board or person to whom the Committee has delegated responsibility under the Plan shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it. The Company shall indemnify and hold harmless each member and former member of the Committee and the Board against all cost or expense (including counsel fees and expenses) or liability (including any sum paid in settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with the Plan, unless arising out of such member’s or former member’s own willful misconduct, fraud, bad faith or asunderlying equity award agreement (as expressly prohibitedmodified by statute. Such indemnification shall be in addition (without duplication) to any rights to indemnification or insurance the member or former member may have as a director or under the by-laws of the Company or otherwise.
ARTICLE 4.SHARES AVAILABLE UNDER THE PLAN
4.1Number of Shares. Subject to adjustment as provided in this Section 4.1 and in Section 4.3, the aggregate2.3), that number of shares of HoldCo Common Stock equal to the number of shares of Aaron’s Common Stock subject to such Aaron’s Stock Award and, for stock options, an exercise price per share equal to the exercise price per share for such Aaron’s stock option immediately prior to the Effective Time. Any shares of Aaron’s Common Stock that areremain available for issuance pursuant to Awards granted under the Plan is 8,000,000 shares (the “Share Pool”). All of the Share Pool may, but is not required to, be issued pursuant to IncentiveAaron’s Stock Options. If Awards are granted in substitution or assumption of awards of an entity acquired, by merger or otherwise, by the Company (or any Subsidiary),Plans immediately prior to the extent such grant shall not be inconsistent with the terms, limitations and conditions of Code section 422, Exchange Act Rule 16b-3 or applicable NASDAQ or NYSE rules, the number of shares subject to such substitute or assumed Awards shall not increase or decrease the Share Pool.
The shares issued pursuant to Awards under the PlanEffective Time shall be made available fromassumed by HoldCo in such a manner that such shares currently authorized but unissued or shares currently held (or subsequently acquired) by the Company as treasury shares, including shares purchased in the open market or in private transactions.


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No further grants shall be made under the Prior Plan after May 6, 2015 (the “Record Date”).
The following rules shall apply for purposes of the determination of theare converted into that number of shares of HoldCo Common Stock available for grantsequal to the number of Awardssuch shares of Aaron’s Common Stock.


(b) From and after the Effective Time, each participant eligible to purchase a share of Aaron’s Common Stock under the Plan:

Aaron’s, Inc. Employee Stock Purchase Plan (the “a.ESPPEach Option”) shall be counted aseligible to purchase one share subject to an Award and deducted from the Share Pool.
b.Each share of Restricted Stock, each Restricted Stock Unit that may be settled in shares ofHoldCo Common Stock, and each Other Award that may be settled inotherwise on the same terms and conditions as were applicable, under the ESPP immediately prior to the Effective Time. Any shares of Aaron’s Common Stock that remain available for issuance pursuant to the ESPP immediately prior to the Effective Time shall be counted as one share subject to an Award and deducted from the Share Pool. Restricted Stock Units and Other Awardsassumed by HoldCo in such a manner that may not be settled insuch shares of Common Stock shall not result in a deduction from the Share Pool.
c.Each Performance Shareare converted into that may be settled in shares of Common Stock shall be counted as one share subject to an Award, based on the number of shares that would be paid under the Performance Share for achievement of target performance, and deducted from the Share Pool. Each Annual Incentive Award and each Performance Unit that may be settled in shares of Common Stock shall be counted as a number of shares subject to an Award, based on the number of shares that would be paid under the Annual Incentive Award or Performance Unit for achievement of target performance, with the number determined by dividing the value of the Annual Incentive Award or Performance Unit at the time of grant by the Fair Market Value of a share of Common Stock at the time of grant, and this number shall be deducted from the Share Pool. In the event that the Award (of Performance Shares, Performance Units or an Annual Incentive Award) is later settled based on above-target performance, the additional number of shares of HoldCo Common Stock correspondingequal to the above-target performance, calculated pursuant to the applicable methodology specified above, shall be deducted from the Share Pool at the time of such settlement; in the event that the Award is later settled based on below-target performance, the difference between the number of such shares of Aaron’s Common Stock.

(c) From and after the Effective Time, each share of Aaron’s Common Stock awarded based onheld under the below-target performance and the number previously deducted from the Share Pool based on the target performance, calculated pursuant to the applicable methodology specified above,Aaron’s, Inc. Employees Retirement Plan (the “Retirement Plan”) shall be added back to the Share Pool. Annual Incentive Awards, Performance Shares and Performance Unitsassumed by HoldCo in such a manner that may not be settled in sharesit is converted into a share of HoldCo Common Stock shall not result in a deduction from the Share Pool.Stock.

d.Each Stock Appreciation Right that may be settled in shares of Common Stock shall be counted as one share subject to an Award and deducted from the Share Pool. Stock Appreciation Rights that may not be settled in shares of Common Stock shall not result in a reduction from the Share Pool.
e.If, for any reason, any shares subject to an Award under the Plan are not issued or are returned to the Company, for reasons including, but not limited to, a forfeiture of Restricted Stock or a Restricted Stock Unit, or the termination, expiration or cancellation of an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, or Other Award, or settlement of any Award in cash rather than shares, such shares shall again be available for Awards under the Plan and, if originally deducted from the Share Pool, shall be added back to the Share Pool.
f.If, for any reason, after the Record Date any shares subject to an award under the Prior Plan are not issued or are returned to the Company, for reasons including, but not limited to, a forfeiture of restricted stock or a restricted stock unit, or the termination, expiration or cancellation of an option, stock appreciation right, restricted stock, restricted stock unit, performance share, performance unit, or other award, or settlement of any award in cash rather than shares, such shares shall be available for Awards under the Plan and shall be added to the Share Pool.
g.

(d) Notwithstanding anything to the contrary contained herein, ifin this Agreement, the Option Exercise Price, purchase price and/or tax withholding obligation under an Award is satisfied by the Company retaining shares or by the Participant tendering shares (either by actual delivery or attestation), the numberassumption and conversion of shares so retained or tendered shall be deemed delivered for purposes of determining the Share Pool and shall not be available for further Awards under the Plan. To the extent an SAR that may be settled in shares ofAaron’s Common Stock is, in fact, settled in shares of Common Stock, the gross number of shares subject to such Stock Appreciation Right shall be deemed delivered for purposes of determining the Share Pool and shall not be available for further Awards under the Plan. Similarly, after the Record Date, if the option exercise price, purchase price and/or tax withholding obligation under a Prior Plan award is satisfied by the Company retaining shares or by the holder tendering shares (either by actual delivery or attestation), the number of shares so retained or tendered shall be deemed delivered for purposes of determining the Share Pool and shall not be available for further Awards under the Plan. Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Options or, after the Record Date, options under any Prior Plan, shall not be added back to the Share Pool.

4.2Individual Limits. Subject to adjustment as provided in Section 4.3, the maximum number of Options and Stock Appreciation Rights that, in the aggregate, may be granted in any one fiscal year of the Company to any one Participant


Appendix A


shall be one million (1,000,000). The multipliers specified in subsections (a) through (g) of Section 4.1 shall not apply for purposes of applying the foregoing individual limitation of this Section 4.2.
4.3Adjustment of Shares. If any change in corporate capitalization, such as a stock split, reverse stock split, stock dividend, or any corporate transaction such as a reorganization, reclassification, merger or consolidation or separation, including a spin-off, of the Company or sale or other disposition by the Company of all or a portion of its assets, any other change in the Company’s corporate structure, or any distribution to shareholders (other than an ordinary cash dividend) results in the outstanding shares of Common Stock, or any securities exchanged therefor or received in their place, being exchanged for a different number or class of shares or other securities of the Company, or for shares of stock or other securities of any other corporation (or new, different or additional shares or other securities of the Company or of any other corporation being received by the holders of outstanding shares of Common Stock), or a material change in the value of the outstanding shares of Common Stock as a result of the change, transaction or distribution, then the Committee shall make equitable adjustments, as it determines are necessary and appropriate to prevent the enlargement or dilution of benefits intended to be made available under the Plan, in:
a.the number and class of stock or other securities that comprise the Share Pool as set forth in this Section 4.1, including, without limitation, with respect to Incentive Stock Options;
b.the limitations on the aggregate number of shares of Common Stock that may be awarded to any one Participant under various Awards as set forth2.3 shall in Section 4.2;
c.the number and class of stock or other securities subject to outstanding Awards, and which have not been issued or transferred under an outstanding Award;
d.the Option Exercise Price under outstanding Options, the exercise price under outstanding Stock Appreciation Rights, and the number of shares of Common Stock to be transferred in settlement of outstanding Awards; and
e.the terms, conditions or restrictions of any Award and Agreement, including but not limited to the price payable for the acquisition of shares of Common Stock.
It is intended that, if possible, any adjustment contemplated above shall be made in a manner that satisfies applicable legal requirements as well as applicable requirements with respect to taxation (including, without limitation and as applicable in the circumstances, Code section 424, and Code section 409A) and accounting (so as to not trigger any charge to earnings with respect to such adjustment).
Without limiting the generality of the above, any good faith determination by the Committee as to whether an adjustment is required in the circumstances and the extent and nature of any such adjustment shall be final, conclusive and binding on all persons.
ARTICLE 5.STOCK OPTIONS
5.1Grant of Options. Subject to the terms and provisions of the Plan, the Committee may from time to time grant Options to eligible Participants. The Committee shall have sole discretion in determining the number of shares subject to Options granted to each Participant. The Committee may grant a Participant ISOs, NQSOs or a combination thereof, and may vary such Awards among Participants; provided that the Committee may grant Incentive Stock Options only to individuals who are employees (within the meaning of Code section 3401(c)) of the Company or its subsidiaries (as defined for this purpose in Code section 424(f)). Notwithstanding anything in this Article 5 to the contrary, except for Options that are specifically designated as intended to be subject to Code section 409A, the Committee may only grant Options to individuals who provide direct services on the date of grant of the Options to the Company or another entity in a chain of entities in which the Company or another such entity has a controlling interest (within the meaning of Treasury Regulation section l .409A-1(b)(S)(iii)(e)) in each entity in the chain.
5.2Agreement. Each Option grant shall be evidenced by an Agreement that shall specify the Option Exercise Price, the duration of the Option, the number of shares of Common Stock to which the Option pertains, the conditions upon which the Option shall become vested and exercisable and such other provisions as the Committee shall determine. The Option Agreement shall further specify whether the Award is intended to be an ISO or an NQSO. Any portion of an Option that is not designated in the Agreement as an ISO or otherwise fails or is not qualified as an ISO (even if designated as an ISO) shall be an NQSO. Dividend equivalents shall not be paid with respect to Options.
5.3Option Exercise Price. The per share Option Exercise Price for each Option shall not be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date the Option is granted. Notwithstanding the foregoing, an Option may be granted with an Option Exercise Price lower than set forth in the preceding


Appendix A


sentence if such Option is granted pursuant to an assumption or substitution for another Optionevents occur in a manner satisfying the provisionsrequirements of Code section 424(a) relating to a corporate merger, consolidation, acquisition of property or stock, separation, reorganization, spinoff, or liquidation; provided that the Committee determines that such Option Exercise Price is appropriate to preserve the economic benefitSections 409A, 422 and 424 of the replaced awardCode and will not impair the exemption of the Option from Code section 409A (unless the Committee clearlyregulations issued thereunder and expressly foregoes such exemption at the time the Option is granted).
5.4Duration of Options. Each Option shall expire at such time as the Committee shall determine at the time of grant; provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary of its grant date. If an Agreement does not specify an expiration date, the Option’s expiration date shall be the tenth (10th) anniversary of its grant date.
5.5Exercise of Options. Options shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall specify, including conditions related to the employment of the Participant with the Employer or provision of services by the Participant to the Employer, which need not be the same for each grant or for each Participant. The Committee may provide in the Agreement for automatic exercise on a certain date and/or for accelerated vesting and other rights upon the occurrence of events specified in the Agreement.
5.6Payment. Options shall be exercised, in whole or in part, by the delivery of a written or electronic notice of exercise to the Company or its designated representative in the form prescribed by the Company, setting forth the number of shares of Common Stock with respect to which the Option is to be exercised and satisfying any requirements that the Committee may apply from time to time. Full payment of the Option Exercise Price for such shares (less any amount previously paid by the Participant to acquire the Option) must be made on or prior to the Payment Date, as defined below. The Option Exercise Price shall be paid to the Company in United States dollars either: (a) in cash, (b) by check, bank draft, money order or other cash equivalent approved by the Committee, unless not permitted by the Committee, by tendering previously acquired shares of Common Stock (or delivering a certification or attestation of ownership of such shares) having an aggregate Fair Market Value at the time of exercise equal to the total Option Exercise Price (provided that the tendered shares must have been held by the Participant for any period required by the Committee), unless not permitted by the Committee, by cashless exercise as permitted under Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions, (e) by any other means which the Committee determines to be consistent with the Plan’s purpose and applicable law, including a net exercise; or (f) by a combination of the foregoing. “Payment Date” shall mean the date on which a sale transaction in connection with a cashless exercise (whether or not payment is actually made pursuant to a cashless exercise) would have settled in connection with the Option exercise. No certificate or cash representing a share of Common Stock shall be delivered until the full Option Exercise Price has been paid.
5.7Special Rules for ISOs. The following rules apply notwithstanding any other terms of the Plan.
a.No ISOs may be granted under the Plan after the tenth (10th) anniversary of the date the Plan was approved by the Board.
b.In no event shall any Participant who owns (within the meaning of Code section 424(d)) stock of the Company possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any “parent” or “subsidiary” (within the meaning of Code section 424(e) or (f), respectively) be eligible to receive an ISO (i) at an Option Exercise Price less than one hundred ten percent (110%) of the Fair Market Value of a share of Common Stock on the date the ISO is granted, or (ii) that is exercisable later than the fifth (5th) anniversary date of its grant date.
c.The aggregate Fair Market Value of shares of Common Stock with respect to which ISOs (within the meaning of Code section 422) granted to a Participant are first exercisable in any calendar year under the Plan and all other incentive stock option plans of the Employer shall not exceed One Hundred Thousand Dollars ($100,000). For this purpose, Fair Market Value shall be determined with respect to a particular ISO on the date on which such ISO is granted. In the event that this One Hundred Thousand Dollar ($100,000) limit is exceeded with respect to a Participant, then ISOs granted under this Plan to such Participant shall, to the extent and in the order required by Treasury Regulations under Code section 422, automatically become NQSOs granted under this Plan.
d.Solely for purposes of determining the limit on ISOs that may be granted under the Plan, the provisions of Section 4.1the applicable plan.

ARTICLE III

ACTIONS TO BE TAKEN IN CONNECTION WITH THE MERGER

SECTION 3.1Assumption of Certain Plans. HoldCo and Aaron’s hereby agree that replenishthey will, at the Share Pool shall only be appliedEffective Time, execute, acknowledge and deliver an assignment and assumption agreement pursuant to the extent permitted by Code section 422 and the regulations promulgated thereunder.

ARTICLE 6.STOCK APPRECIATION RIGHTS
6.1Grant of SARs. Subjectwhich Aaron’s will assign to the terms and provisionsHoldCo as of the Plan, the Committee may grant SARs to Participants in such amountsEffective Time, and upon such terms, and at any time andHoldCo will, from time to time, as the Committee shall determine. A


Appendix A


Stock Appreciation Right shall entitle the holder, within the specified period (which may not exceed 10 years), to exercise the SAR and receive in exchange therefor a payment having an aggregate value equal to the amount by which the Fair Market Value of a share of Common Stock on the exercise date exceeds the specified exercise price, times the number of shares with respect to which the SAR is exercised. The Committee may provide in the Agreement for automatic exercise on a certain date, for payment of the proceeds on a certain date, and/or for accelerated vesting and other rights upon the occurrence of events specified in the Agreement. Notwithstanding anything in this Article 6 to the contrary, except for SARs that are specifically designated as intended to be subject to Code section 409A, the Committee may only grant SARs to individuals who provide direct services on the date of grant of the SARs to the Company or another entity in a chain of entities in which the Company or another such entity has a controlling interest (within the meaning of Treasury Regulation section 1.409A-l(b)(5)(iii)(e)) in each entity in the chain.
6.2Agreement. Each SAR grant shall be evidenced by an Agreement that shall specify the exercise price, the duration of the SAR, the number of shares of Common Stock to which the SAR pertains, the conditions upon which the SAR shall become vested and exercisable and such other provisions as the Committee shall determine. Dividend equivalents shall not be paid with respect to SARs.
6.3Duration of SARs. Each SAR shall expire at such time as the Committee shall determine at the time of grant; provided, however, that no SAR shall be exercisable later than the tenth (10th) anniversary of its grant date. If an Agreement does not specify an expiration date, the SAR’s expiration date shall be the tenth (10th) anniversary of its grant date.
6.4Payment. The Committee shall have sole discretion to determine in each Agreement whether the payment with respect to the exercise of a Stock Appreciation Right will be in the form of all cash, all shares of Common Stock, or any combination thereof. Unless and to the extent the Committee specifies otherwise, such payment will be in the form of shares of Common Stock. If payment is to be made in shares, the number of shares shall be determined based on the Fair Market Value of a share on the date of exercise. The Committee shall have sole discretion to determine and set forth in the Agreement the timing of any payment made in cash or shares, or a combination thereof, upon exercise of SARs.
6.5Exercise Price. The exercise price for each Stock Appreciation Right shall be determined by the Committee and shall not be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date the SAR is granted. Notwithstanding the foregoing, an SAR may be granted with an exercise price lower than set forth in the preceding sentence if such SAR is granted pursuant to an assumption or substitution for another SAR in a manner satisfying the provisions of Code section 424(a) relating to a corporate merger, consolidation, acquisition of property or stock, separation, reorganization, or liquidation; provided that the Committee determines that such SAR exercise price is appropriate to preserve the economic benefit of the replaced award and will not impair the exemption of the SAR from Code section 409A (unless the Committee clearly and expressly foregoes such exemption at the time the SAR is granted).
6.6Exercise of SARs. SARs shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall specify, including conditions related to the employment of the Participant with the Employer or provision of services by the Participant to the Employer, which need not be the same for each grant or for each Participant. The Committee may provide in the Agreement for automatic accelerated vesting and other rights upon the occurrence of events specified in the Agreement.
ARTICLE 7.RESTRICTED STOCK AND RESTRICTED STOCK UNITS
7.1Grant of Restricted Stock and Restricted Stock Units. Subject to provisions of the Plan, the Committee may from time to time grant Awards of Restricted Stock and RSUs to Participants. Awards of Restricted Stock and RSUs may be made either alone or in addition to or in tandem with other Awards granted under the Plan.
7.2Agreement. The Restricted Stock or RSU Agreement shall set forth the terms of the Award, as determined by the Committee, including, without limitation, the number of shares of Restricted Stock or the number of RSUs granted; the purchase price, if any, to be paid for such Restricted Stock or RSUs, which may be equal to or less than Fair Market Value of a share and may be zero, subject to such minimum consideration as may be required by applicable law; any restrictions applicable to the Restricted Stock or RSU such as continued service or achievement of performance objectives; the length of the Restriction Period, if any, and any circumstances that will shorten or terminate the Restriction Period; and rights of the Participant to vote or receive dividends or dividend equivalents with respect to the shares during the Restriction Period. The Restriction Period may be of any duration and the Agreement may provide for lapse of the Restriction Period in monthly or longer installments over the course of the Restriction Period, as determined by the Committee. The Committee shall have sole discretion to determine and specify in each RSU Agreement whether the RSUs will be settled in the form of all cash, all shares of Common Stock, or any combination thereof. Unless and to the extent the Committee specifies otherwise, such settlement will be in the form of shares of Common Stock.


Appendix A


7.3Certificates. Upon an Award of Restricted Stock to a Participant, shares of restricted Common Stock shall be registered in the Participant’s name. Certificates, if issued, may either (i) be held in custody by the Company until the Restriction Period expires or until restrictions thereon otherwise lapse, and/or (ii) be issued to the Participant and registered in the name of the Participant, bearing an appropriate restrictive legend and remaining subject to appropriate stop-transfer orders. If required by the Committee, the Participant shall deliver to the Company one or more stock powers endorsed in blank relating to the Restricted Stock. Upon settlement of an RSU in shares, and, with respect to Restricted Stock, if and when the Restriction Period expires without a prior forfeiture of the Restricted Stock subject to such Restriction Period, unrestricted certificates for such shares shall be delivered to the Participant or registered in the Participant’s name on the Company’s or transfer agent’s records; provided, however, that the Committee may cause such legend or legends to be placed on any such certificates as it may deem advisable under the terms of the Plan and the rules, regulations and other requirements of the Securities and Exchange Commission and any applicable federal or state law. Concurrently with the settlement of RSUs by the delivery of shares and with the lapse of any risk of forfeiture applicable to the Restricted Stock, the Participant shall be required to pay to the Company an amount necessary to satisfy any applicable federal, state and local tax requirements as set out in Article 15 below.
7.4Dividends and Other Distributions. Except as provided in this Article 7 or in the applicable Agreement, a Participant who receives a Restricted Stock Award shall have (during and after the Restriction Period), with respectEffective Time, assume and agree to such Restrictedperform all obligations of Aaron’s pursuant to the Aaron’s Stock Award, all ofPlans, the rights of a shareholder of the Company, including the right to vote the sharesESPP, and the right to receive dividends and other distributions toRetirement Plan (collectively, the extent, if any, such shares possess such rights; provided, however, the Committee may require that any dividends on such shares of Restricted“Registered Stock (during the Restriction Period) be automatically deferred and reinvested in additional Restricted Stock subject to the same restrictions as the underlying Award, or may require that dividends and other distributions on Restricted Stock (during the Restriction Period) be paid to the Company for the account of the Participant and held pending and subject to the same restrictions on vesting as the underlying Award; provided, however that to the extent that any dividends are deferred, reinvested or otherwise not paid when such dividends would otherwise normally be paid (i) all terms and conditions for such delayed payment shall be included in the Agreement, and (ii) such deferral, reinvestment or delay in payment of the dividends shall only be allowed to the extent it complies with, or is exempt from, the requirements of Code section 409A. The Committee shall determine whether interest shall be paid on such amounts, the rate of any such interest, and the other terms applicable to such amounts (again, provided that all such terms shall, to the extent required, comply with Code section 409A). A Participant receiving a Restricted Stock Unit Award shall not possess voting rights and shall accrue dividend equivalents on such Units only to the extent provided in the Agreement relating to the Award; provided, however, that rights to dividend equivalents shall only be allowed to the extent they comply with, or are exempt from, Code section 409A. The Committee shall require that any such dividend equivalents be subject to the same restrictions on vesting and payment as the underlying Award.
ARTICLE 8.PERFORMANCE SHARES AND UNITS
8.1Grant of Performance Shares and Performance Units. The Committee may grant Performance Shares and Performance Units to Participants in such amounts and upon such terms, and at any time and from time to time, as the Committee shall determine.
8.2Agreement. The Performance Share or Performance Unit Agreement shall set forth the terms of the Award, as determined by the Committee, including, without limitation, the number of Performance Shares or Performance Units granted; the purchase price, if any, to be paid for such Performance Shares or Performance Units, which may be equal to or less than Fair Market Value of a share and may be zero, subject to such minimum consideration as may be required by applicable law; the performance objectives applicable to the Performance Shares or Performance Units; and any additional restrictions applicable to the Performance Shares or Performance Units such as continued service. Unless provided otherwise at the time of grant, each Performance Share or Performance Unit shall have a Performance Period of at least one year except that, if any Award is made at the time of the Participant’s commencement of employment with the Employer or on the occasion of a promotion, then the Performance Period may be less than one year. The Committee shall have sole discretion to determine and specify in each Performance Shares or Performance Units Agreement whether the Award will be settled in the form of all cash, all shares of Common Stock, or any combination thereof. Unless and to the extent the Committee specifics otherwise, such settlement will be in the form of shares of Common Stock. Any such shares may be granted subject to any restrictions deemed appropriate by the Committee.
8.3Value of Performance Shares and Performance Units. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a share of Common Stock on the date of grant. In addition to any non-performance terms applicable to the Award, the Committee shall set performance objectives in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Shares, Performance Units or both, as applicable, that will be paid out


Appendix A


to the Participant. For purposes of this Article 8, the time period during which the performance objectives must be met shall be called a “Performance Period.”
8.4Earning of Performance Shares and Performance Units. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of the Performance Shares or Performance Units shall be entitled to receive a payout of the number and value of Performance Shares or Performance Units, as applicable, earned by the Participant over the Performance Period, if any, to be determined as a function of the extent to which the corresponding performance objectives have been achieved and any applicable non­performance terms have been met.
8.5Dividends and Other Distributions. A Participant receiving Performance Shares or Performance Units shall not possess voting rights. A Participant receiving Performance Shares or Performance Units or any other Award that is subject to performance conditions shall accrue dividend equivalents on such Award only to the extent provided in the Agreement relating to the Award; provided, however, that rights to dividend equivalents shall only be allowed to the extent they comply with, or are exempt from, Code section 409A. Any rights to dividends or dividend equivalents on Performance Shares or Performance Units or any other Award subject to performance conditions shall be subject to the same restrictions on vesting and payment as the underlying Award.
ARTICLE 9.OTHER AWARDS
The Committee shall have the authority to specify the terms and provisions of other forms of equity-based or equity-related awards not described in Articles 5 through 8 or Article 10 of this Plan that the Committee determines to be consistent with the purpose of the Plan and the interests of the Company (“Other Awards”Plans”). Other Awards may include awards of, or the right to acquire, shares of Common Stock that are not subject to forfeiture or other restrictions, which may be awarded in payment of Non-Employee Director fees, in lieu of cash compensation, in exchange for cancellation of a compensation right, as a bonus, or upon the attainment of a performance goal, or otherwise. Other Awards may also provide for cash payments based in whole or in part on the value or future value of shares of Common Stock, for the acquisition or future acquisition of shares of Common Stock, or any combination of the foregoing. Notwithstanding the foregoing, where the value of an Other Award is based on the difference in the value of a share of Common Stock at different points in time, the grant or exercise price shall not be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant unless the Other Award is granted in replacement for an award previously granted by an entity that is assumed by the Company in a business combination, provided that the Committee determines that the Other Award preserves the economic benefit of the replaced award and is either exempt from or in compliance with the requirements of Code section 409A.
ARTICLE 10.ANNUAL INCENTIVE AWARDS
The Committee may grant Annual Incentive Awards to Participants in such amounts and upon such terms as the Committee shall determine. The Committee may specify the terms and conditions of Annual Incentive Awards in individual Agreements or through the timely adoption of plan rules or other Annual Incentive Award plan documentation. Unless provided otherwise at the time of grant, Annual Incentive Awards shall have a Performance Period of one fiscal year except that, if any Annual Incentive Award is made at the time of the Participant’s commencement of employment with the Employer or on the occasion of a promotion, then the Performance Period may be less than one fiscal year. Unless provided otherwise at the time of grant, Annual Incentive Awards (i) shall be payable in cash, and (ii) are intended to be exempt from Code section 409A as short-term deferrals, and, thus, will be payable no later than 2 ½ months after the end of the Company’s fiscal year to which the Award relates.
ARTICLE 11.PERFORMANCE MEASURES
11.1In General. The Committee may, in its discretion, include performance objectives in any Award. The performance objectives may include, but are not limited to, levels of, or growth or changes in, or other objective specification of performance with respect to one or more of the following performance criteria:
earnings, earnings before income taxes; earnings before interest and taxes (EBIT); earnings before interest, taxes, depreciation and amortization (EBITDA); earnings before interest, taxes, depreciation, amortization and rent (EBITDAR); gross margin; operating margin; profit margin; market value added; market share; revenue; revenue growth; return measures (including but not limited to return on equity, return on shareholders’ equity, return on investment, return on assets, return on net assets, return on capital, return on sales, and return on invested capital); total shareholder return (either in absolute terms or relative to that of a peer group determined by the Committee); profit; economic profit; capitalized economic profit; operating profit; after-tax profit; net operating profit after tax (NOPAT); pre-tax profit; cash; cash flow measures (including but not limited to operating cash flow; free cash flow; cash flow return; cash flow per share; and free cash flow per share); earnings per share (EPS); consolidated pre­ tax earnings; net earnings; operating earnings; segment income; economic value added; net income; net income from


Appendix A


continuing operations available to common shareholders excluding special items; operating income; adjusted operating income; assets; sales; net sales; sales volume; sales growth; net sales growth; comparable store sales; sales per square foot; inventory turnover; inventory turnover ratio; productivity ratios; number of active stores/sites (including but not limited to Company-owned stores, franchised stores, and/or retail or merchant stores at which the Company has entered into lease-to-own arrangements during a specified time period); number of customers; invoice volume; debt/capital ratio; return on total capital; cost; unit cost; cost control; expense targets or ratios, charge­ off levels; operating efficiency; operating expenses; customer satisfaction; improvement in or attainment of expense levels; working capital; working capital targets; improvement in or attainment of working capital levels; debt; debt to equity ratio; debt reduction; capital targets; capital expenditures; price/earnings growth ratio; acquisitions, dispositions, projects or other specific events, transactions or strategic milestones; the Company’s common stock price (and stock price appreciation, either in absolute terms or in relationship to the appreciation among members of a peer group determined by the Committee); and book value per share.
All criteria may be measured on a Generally Accepted Accounting Principles (“GAAP”) basis, adjusted GAAP basis, or non­GAAP basis. The Committee may provide for a threshold level of performance below which no amount of compensation will be paid, and it may provide for the payment of differing amounts of compensation for different levels of performance. The performance objective for an Award may be described in terms of Company-wide objectives or objectives that are related to a specific division, subsidiary, Employer, department, region, or function in which the participant is employed or as some combination of these (as alternatives or otherwise). A performance objective may be measured on an absolute basis or relative to a pre-established target, results for a previous year, the performance of other corporations, or a stock market or other index. If the Committee specifies more than one individual performance objective for a particular Award, the Committee shall also specify, in writing, whether one, all or some other number of such objectives must be attained.
The Committee may specify such other conditions and criteria as it chooses, and may specify that it can us its negative discretion to decrease the amount that would otherwise be payable under an Award based on the attainment or failure to attain such other conditions and criteria.
11.2Determinations of Performance. For each Award that has been made subject to a performance objective, within ninety (90) days following the end of each Performance Period (or such shorter period necessary to preserve the Employer’s tax deduction), the Committee shall determine whether the performance objective for such Performance Period has been satisfied. When applicable, prior to paying out an Award, the Committee shall also determine whether any performance objective or other conditions or criteria specified to guide the exercise of its negative discretion were satisfied, and thereby make a final determination with respect to the Award. If a performance objective applicable for a Performance Period is not achieved, the Committee in its sole discretion may pay all or a portion of that Award based on such criteria as the Committee deems appropriate, including without limitation individual performance, Company-wide performance or the performance of the specific division, subsidiary, Employer, department, region, or function employing the Participant.
11.3Adjustments and Exclusions. In determining whether any performance objective has been satisfied, the Committee may include or exclude the effect of any or all extraordinary items and/or other items that are unusual or non-recurring, including but not limited to (i) charges, costs, benefits, gains or income associated with reorganizations or restructurings of the Employer, discontinued operations, goodwill, other intangible assets, long-lived assets (non-cash), real estate strategy (e.g., costs related to lease terminations or facility closure obligations), litigation or the resolution of litigation (e.g., attorneys’ fees, settlements or judgments), or currency or commodity fluctuations; and (ii) the effects of changes in applicable laws, regulations or accounting principles. In addition, the Committee may adjust any performance objective for a Performance Period as it deems equitable to recognize unusual or non-recurring events affecting the Employer, changes in tax laws or regulations or accounting procedures, mergers, acquisitions and divestitures, or any other factors as the Committee may determine. To the extent that a performance objective is based on the price of the Company’s common stock, then in the event of any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, any merger, consolidation, spin-off, reorganization, partial or complete liquidation or other distribution of assets (other than a normal cash dividend), issuance of rights or warrants to purchase securities or any other corporate transaction having an effect similar to any of the foregoing, the Committee shall make or provide for such adjustments in such performance objective as the Committee in its sole discretion may in good faith determine to be equitably required in order to prevent dilution or enlargement of the rights of Participants.
ARTICLE 12.CHANGE IN CONTROL
Unless provided otherwise in an Award Agreement, upon a Change in Control of the Company, each outstanding Option, SAR, Restricted Stock and RSU shall vest as of or immediately prior to the Change in Control if such Award is not


Appendix A


assumed or continued or replaced with an Award that constitutes a Replacement Award. “Replacement Award” means an award (A) of the same type (e.g., option, RSU, etc.) as the Award, (B) that has a value at least equal to the value of the Award, (C) that relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control or is payable solely in cash, and (D) the other terms and conditions of which are not less favorable to the Participant than the terms and conditions of the Award (including the provisions that would apply in the event of a subsequent Change in Control). A Replacement Award may be granted only to the extent it does not result in the Award or Replacement Award failing to comply with or be exempt from Code section 409A. Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Award if the requirements of the two preceding sentences are satisfied.
Unless provided otherwise in an Award Agreement, if the Participant receives a Replacement Award in connection with a Change in Control, and the Participant’s employment is terminated without Cause within two years following the consummation of a Change in Control, outstanding Options, SARs, Restricted Stock and RSUs held by such Participant shall vest on the Participant’s termination date.
With respect to Awards that are subject to one or more performance objectives, the Committee may, in its sole discretion, provide that any such full or prorated Award will be paid under the provisions of this Article 12 prior to when any or all such performance objectives are certified (or without regard to whether they are certified) or may make necessary and appropriate adjustments in the performance objectives.
ARTICLE 13.BENEFICIARY DESIGNATION
To the extent permitted by the Committee, each Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any vested but unpaid Award is to be paid in case of the Participant’s death. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing (including electronically if permitted by the Company) with the Company or its designee during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s spouse, and if the Participant has no surviving spouse, to the Participant’s estate.
ARTICLE 14.DEFERRALS
The Committee may permit a Participant to defer such Participant’s receipt of the payment of cash or the delivery of shares that would otherwise be due to such Participant by virtue of the lapse or waiver of restrictions with respect to RSUs and Other Awards, or the satisfaction of any requirements or objectives with respect to Performance Shares and Performance Units. If any such deferral election is permitted or required, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals, which rules and procedures shall comply with Code section 409A. The deferral of Option and SAR gains is prohibited.
ARTICLE 15.WITHHOLDING TAXES
15.1Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of or in connection with this Plan or any Award.
15.2Share Withholding. Except as otherwise determined by the Committee or provided in the Agreement corresponding to an Award:
a.With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, the settlement of Restricted Stock Units or Other Awards, upon the achievement of performance objectives related to Annual Incentive Awards, Performance Shares or Performance Units, or upon any other taxable event arising as a result of or in connection with an Award granted hereunder that is settled in shares of Common Stock, unless other arrangements are made with the consent of the Committee, Participants shall satisfy the withholding requirement by having the Company withhold shares of Common Stock having a Fair Market Value on the date the tax is to be determined equal to not more than the amount necessary to satisfy the Company’s withholding obligations at the minimum statutory withholding rates (or at any greater rate as may be permitted under accounting standards without resulting in adverse accounting treatment, as determined by the Committee). All such withholding arrangements shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.


Appendix A


b.A Participant may elect to deliver shares of Common Stock to satisfy, in whole or in part, the withholding requirement. Such an election must be made on or before the date the amount of tax to be withheld is determined. Once made, the election shall be irrevocable. The Fair Market Value of the shares to be delivered will be determined as of the date the amount of tax to be withheld is determined. Such delivery must be made subject to the conditions and pursuant to the procedures established by the Committee with respect to the delivery of shares of Common Stock in payment of the corresponding Option Exercise Price.Aaron’s Inc. Deferred Compensation Plan.

c.SECTION 3.2A Participant who is subject to the Company’s securities Insider Trading Policy relative to disclosure and trading on inside information, at the time the tax withholding requirement arises with respect to his or her Restricted Stock or, to the extent settled in shares of Common Stock, his or her Restricted Stock Units, Performance Shares, Performance Units, Other Awards, Options or SARs, may elect to satisfy such withholding requirement by delivering payment of the tax required to be withheld in cash or by check on the date on which the amount of tax to be withheld is determined. Once made, the election shall be irrevocable.Post-Effective Amendments

ARTICLE 16.AMENDMENT AND TERMINATION
16.1Amendment or Termination of Plan. The Board or the Committee may at any time terminate and from time to time amend the Plan in whole or in part, but no such action shall materially adversely affect any rights or obligations with respect to any Awards previously granted under the Plan, unless such action is required by applicable law or any listing standards applicable to the Common Stock or the affected Participants consent in writing. To the extent required by Code section 422, other applicable law, and/or any such listing standards, no amendment shall be effective unless approved by the shareholders of the Company.
16.2Amendment of Agreement. The Committee may, at any time, amend outstanding Agreements in a manner not inconsistent with the terms of the Plan; provided, however, except as expressly permitted or provided for in the Plan or in the Agreement, if such amendment is materially adverse to the Participant, as determined by the Committee, the amendment shall not be effective unless and until the Participant consents, in writing, to such amendment. To the extent not inconsistent with the terms of the Plan, the Committee may, at any time, amend an outstanding Agreement in a manner that is not unfavorable to the Participant (as determined by the Committee) without the consent of such Participant. Except for adjustments as provided in Sections 4.3 or in connection with a Change in Control, the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Awards or cancel outstanding Options or SARs with per share exercise prices that are more than the Fair Market Value at the time of such cancellation in exchange for cash, other awards, or Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs without shareholder approval.
16.3Clawback. All Awards under the Plan (and payments and shares in settlement of Awards) shall be subject to clawback by the Company to the extent provided in any policy adopted by the Board including any policy adopted to comply with the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
16.4Cancellation of Awards for Detrimental Activity. The Committee may provide in the applicable Agreement or a separate policy that if a Participant engages in detrimental activity, as defined in such Agreement or separate policy, the Committee may, notwithstanding any other provision in this Plan to the contrary, cancel, rescind, suspend, withhold or otherwise restrict or limit any unexpired, unexercised, unpaid or deferred Award as of the first date the Participant engages in the detrimental activity, unless sooner terminated by operation of another term of this Plan or any other agreement. Without limiting the generality of the foregoing, the Agreement or separate policy may also provide that if the Participant exercises an Option or SAR, receives an RSU, Performance Share, Performance Unit, Annual Incentive Award or Other Award payout, or receives or vests in shares of Common Stock under an Award at any time during the time specified in such Agreement or separate policy, the Participant shall be required to pay to the Company the excess of the then fair market value of the shares that were received with respect to the Award (or if the Participant previously disposed of such shares, the fair market value of such shares at the time of the disposition) over the total price paid by the Participant for such shares.
16.5Assumption or Cancellation of Awards Upon a Corporate Transaction.
a.In the event of a sale of all or substantially all of the assets or stock of the Company, a spinoff, the merger of the Company with or into another corporation such that shareholders of the Company immediately prior to the merger exchange their shares of stock in the Company for cash and/or shares of another entity or any other corporate transaction to which the Committee deems this provision applicable (any such event is referred to as a “Corporate Transaction”), all Awards will be subject to the agreement of merger or consolidation or applicable transaction agreement.
b.The Committee may, in its discretion, cause each Award to be assumed or for an equivalent Award to be substituted by the successor or spun-off corporation or a parent or subsidiary of such successor corporation and adjusted as appropriate.


Appendix A


c.In addition or in the alternative, the Committee, in its discretion, may cancel all or certain types of outstanding Awards at or immediately prior to the time of the Corporate Transaction provided that the Committee either (i) provides that the Participant is entitled to a payment (in cash or shares) equal to the value of the Award, as determined below and to the extent there is any such value, or (ii) at least fifteen (15) days prior to the Corporate Transaction (or, if not feasible to provide fifteen (15) days’ notice, within a reasonable period prior to the Corporate Transaction), notifies the Participant that, subject to rescission if the Corporate Transaction is not successfully completed within a certain period, the Award will be terminated and provides the Participant the right to exercise the Option or other Award as to all shares, including shares that would not otherwise be exercisable (or with respect to Restricted Stock, RSUs, Performance Shares, Performance Units, or Other Awards, provides that all restrictions shall lapse) prior to the Corporate Transaction.
d.For purposes of this provision, the value of the Award shall be measured as of the date of the Corporate Transaction and shall equal the value of the cash, shares or other property that would be payable to the Participant upon exercise or vesting of the Award, as applicable, less the amount of any payment required to be tendered by the Participant upon such exercise. The Committee may adopt such valuation methodologies for outstanding Awards as it deems reasonable in the event of a cash settlement and, in the case of Options, SARs or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess (if any) of the per share amount payable upon or in respect of such event over the exercise price of such Option or SAR and may cancel each Option or SAR with an exercise price greater than the per share amount payable upon or in respect of such event without any payment to the person holding such Option or SAR. For example, under this provision, in connection with a Corporate Transaction, the Committee can cancel all outstanding Options under the Plan in consideration for payment to the holders thereof of an amount equal to the portion of the consideration that would have been payable to such holders pursuant to the Corporate Transaction if their Options had been fully exercised immediately prior to such Corporate Transaction, less the aggregate Option Exercise Price that would have been payable therefor, or if the amount that would have been payable to the Option holders pursuant to such Corporate Transaction if their Options had been fully exercised immediately prior thereto would be less than the aggregate Option Exercise Price that would have been payable therefor, the Committee can cancel any or all such Options for no consideration or payment of any kind. Payment of any amount payable pursuant to this cancellation provision may be made in cash or, in the event that the consideration to be received in such transaction includes securities or other property, in cash and/or securities or other property in the Committee’s discretion.
e.Any actions taken under this Section 16.4 shall be valid with respect to a 409A Award only to the extent that such action complies with Code section 409A.
ARTICLE 17.MISCELLANEOUS PROVISIONS
17.1Restrictions on Shares. If the Committee determines that the listing, registration or qualification upon any securities exchange or under any law of shares subject to any Award is necessary or desirable as a condition of, or in connection with, the granting of same or the issue or purchase of Shares thereunder, no such Award may be exercised in whole or in part (as applicable), no such Award may be paid out (as applicable) and no shares may be issued pursuant to such Award (as applicable) unless such listing, registration or qualification is effected free of any conditions not acceptable to the Committee. All certificates for shares of Common Stock delivered under the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any listing standards applicable to the Common Stock and any applicable federal or state laws, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions. In making such determination, the Committee may rely upon an opinion of counsel for the Company.
Notwithstanding any other provision of the Plan, the Company shall have no liability to deliver any shares under the Plan or make any other distribution of the benefits under the Plan unless such delivery or distribution would comply with all applicable state, federal and foreign laws (including, without limitation and if applicable, the requirements of the Securities Act of 1933), and any applicable requirements of any securities exchange or similar entity.
17.2Rights of a Shareholder. Except as provided otherwise in the Plan or in an Agreement, no Participant awarded an Option, SAR, RSU, Performance Share, Performance Unit or Other Award shall have any right as a shareholder with respect to any shares covered by such Award prior to the date of issuance to him or her or his or her delegate of a certificate or certificates for such shares or the date the Participant’s name is registered on the Company’s books as the shareholder of record with respect to such shares.
17.3Transferability. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than upon the Participant’s death, to a beneficiary in accordance with Article 13 or by will or the laws of descent and distribution. If permitted by the Committee, a Participant may transfer NQSOs to a Permitted Transferee in accordance with procedures approved by the Committee. Except for a permitted transfer of NQSOs by a


Appendix A


Participant to a Permitted Transferee, unless the Committee determines otherwise consistent with securities and other applicable laws, rules and regulations, (i) no Award granted under the Plan shall be sold, transferred, pledged, assigned or otherwise alienated or hypothecated by a Participant other than upon the Participant’s death, to a beneficiary in accordance with Article 13 or by will or the laws of descent and distribution, and (ii) each Option and SAR outstanding to a Participant may be exercised during the Participant’s lifetime only by the Participant or his or her guardian or legal representative (provided that Incentive Stock Options may be exercised by such guardian or legal representative only if permitted by the Code and any regulations promulgated thereunder). In the event of a transfer to a Permitted Transferee as permitted under this Section 17.3 or by the Committee, appropriate evidence of any transfer to the Permitted Transferee shall be delivered to the Company at its principal executive office. If all or part of an Award is transferred to a Permitted Transferee, the Permitted Transferee’s rights thereunder shall be subject to the same restrictions and limitations with respect to the Award as the Participant. For the avoidance of doubt, any permitted transfer of an Award will be without payment of consideration by the Permitted Transferee.
17.4No Fractional Shares. Unless provided otherwise in the Agreement applicable to an Award, no fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any Award, and any fractional share otherwise payable pursuant to an Award shall be forfeited unless the Agreement provides for payment of cash for such fractional share.
17.5No Implied Rights. Nothing in the Plan or any Agreement shall confer upon any Participant any right to continue in the employ or service of the Employer, or to serve as a Non-Employee Director thereof, or interfere in any way with the right of the Employer to terminate the Participant’s employment or other service relationship at any time and for any reason. Unless otherwise determined by the Committee, no Award granted under the Plan shall be deemed salary or compensation for the purpose of computing benefits under any employee benefit plan, severance program, or other arrangement of the Employer for the benefit of its employees. No Participant shall have any claim to an Award until it is actually granted under the Plan. An Award of any type made in any one year to an eligible Participant shall neither guarantee nor preclude a further grant of that or any other type of Award to such Participant in that year or any subsequent year. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall, except as otherwise provided by the Committee, be no greater than the right of an unsecured general creditor of the Company.
17.6Transfer of Employee. The transfer of an Employee from the Company to a Subsidiary, from a Subsidiary to the Company, or from one Subsidiary to another shall not be considered a termination of employment; nor shall it be considered a termination of employment if an Employee is placed on military, disability or sick leave or such other leave of absence which is considered by the Committee as continuing intact the employment relationship. If an Employee’s employment or other service relationship is with a Subsidiary and that entity ceases to be a Subsidiary of the Company, a termination of employment shall be deemed to have occurred when the entity ceases to be a Subsidiary unless the Employee transfers his or her employment or other service relationship to the Company or its remaining Subsidiaries.
17.7Expenses of the Plan. The expenses of the Plan shall be borne by the Company. The Company shall not be required to establish any special or separate fund or make any other segregation of assets to assume the payment of any Award under the Plan.
17.8Compliance with Laws.
a.The Plan and the grant of Awards shall be subject to all applicable federal and state laws, rules, and regulations and to such approvals by any United States government or regulatory agency as may be required. It is the intent of the Companyparties that HoldCo, as of the awards made hereunder comply in all respects with Rule 16b-3Effective Time, be deemed a “successor issuer” for purposes of continuing offerings under the Securities Act of 1933, as amended (the “Securities Act”). As soon as practicable following the Merger, HoldCo will file post-effective amendments to Aaron’s currently effective registration statements, adopting such statements as its own registration statements for all purposes of the Securities Act and the Securities Exchange Act of 1934, as amended, and thatsetting forth any ambiguitiesadditional information necessary to reflect any material changes made in connection with or inconsistencies in constructionresulting from the succession, or necessary to keep the registration statements from being misleading.

SECTION 3.3Reservation of Shares. On or prior to the Effective Time, HoldCo will reserve sufficient shares of HoldCo Common Stock to provide for the issuance of HoldCo Common Stock to satisfy HoldCo’s obligations under Section 3.1.

ARTICLE IV

CONDITIONS TO MERGER

SECTION 4.1Conditions Precedent.The respective obligation of each party to effect the Merger is subject to the satisfaction or waiver of each of the Planfollowing conditions:

(a) The Aaron’s Shareholder Approval shall have been obtained at the annual meeting of the shareholders of Aaron’s.

(b) The shares of HoldCo Common Stock issuable in the Merger pursuant to Section 2.1 and such other shares to be interpreted to give effect to such intention. Any provision herein relating to compliancereserved for issuance in connection with Rule 16b-3the Merger (including the assumption of the Registered Stock Plans) shall have been authorized for listing on The New York Stock Exchange.

(c) The registration statement on Form S-4 filed with the Securities and Exchange Commission by HoldCo in connection with the issuance of shares of HoldCo Common Stock in the Merger shall have become effective under the ExchangeSecurities Act and shall not be applicablethe subject of any stop order or proceeding seeking a stop order.

(d) Aaron’s shall have received an opinion from its legal counsel to the effect that (i) holders of Aaron’s Common Stock will not recognize any gain or loss on the exchange of such Aaron’s Common Stock for HoldCo Common Stock and (ii) the Merger, together with respectthe Conversion, will qualify as a tax-free reorganization under the Code.


(e) No court or governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law or order (whether temporary, preliminary or permanent) that is in effect and has a material adverse effect on Aaron’s or enjoins or otherwise prohibits consummation of the transactions contemplated by this Agreement and no judicial or administrative proceeding that seeks any such result shall continue to participationbe pending.

(f) All required approvals, licenses and certifications from, and notifications and filings to, governmental entities and third parties shall have been obtained or made, as applicable.

ARTICLE V

TERMINATION AND AMENDMENT

SECTION 5.1Termination.This Agreement may be terminated or the completion of the transactions contemplated herein may be deferred at any time prior to the Effective Time, whether before or after the Aaron’s Shareholder Approval, by either Aaron’s or HoldCo. In the event of such termination, this Agreement shall become null and void and have no effect, without any liability or obligation on the part of Aaron’s, HoldCo or Merger Sub by reason of this Agreement.

SECTION 5.2Amendment.This Agreement may be amended, modified or supplemented at any time before or after the Aaron’s Shareholder Approval;provided, however, that after any such approval and prior to the Effective Time, there shall be made no amendment that (a) alters or changes the amount or kind of shares to be received by shareholders of Aaron’s in the Plan by Participants who are not Insiders.

b.Grandfathered Performance-Based Awards. Notwithstanding anythingMerger; (b) alters or changes any term of the Articles of Incorporation or Bylaws of HoldCo; or (c) alters or changes any other terms and conditions of this Agreement if any of the alterations or changes, individually or in the Plan toaggregate, would materially adversely affect the contrary,shareholders of Aaron’s. This Agreement may not be amended except after approval by the Committeeboard of directors of Aaron’s and evidenced by an instrument in writing signed on behalf of each of the parties.

ARTICLE VI

GENERAL PROVISIONS

SECTION 6.1Governing Law.This Agreement shall administer any Awards in effect on November 2, 2017 which qualify as “performance-based compensation” under Code section 162(m), as amended the by Tax Cutsbe governed and Jobs Act (the “Tax Act”),construed in accordance with the “grandfathering” transition ruleslaws of the State of Georgia applicable to written binding contracts into be made and performed entirely therein without giving effect on November 2, 2017 and shall have the discretion to amend the Plan to conform to the TCJA,principles of conflicts of law thereof or of any other jurisdiction.

SECTION 6.2Entire Agreement.This Agreement (including the documents and the instruments referred to herein), together with all without obtaining further approval fromexhibits, schedules, appendices, certificates, instruments and agreements delivered pursuant hereto and thereto (a) constitutes the Company’s shareholders (unless otherwise required by applicable law). Further, this amendedentire agreement and restated Plansupersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder.

SECTION 6.3Further Assurances.From time to time, and when required by HoldCo, Aaron’s shall notexecute and deliver, or cause to be deemedexecuted and delivered, such deeds and other instruments, and Aaron’s shall take or cause to be taken such further and other action, as amending, any such Awardsshall be appropriate or necessary in order to the extent it would resultvest or perfect in or to conform of record or otherwise in the lossSurviving Corporation the title to and possession of deductibility underall the TCJA’s Code section 162(m) “grandfathering” rules.

17.9Successors. The termsproperty, interests, assets, rights, privileges, immunities, powers, franchises and authority of Aaron’s and otherwise to carry out the purposes of this Agreement, and the officers and directors of the PlanAaron’s are authorized fully in the name and outstanding Awards shall be binding upon the Companyon behalf of Aaron’s or otherwise to take any and its successorsall such action and assigns.


Appendix A


17.10Tax Elections. Each Participant agrees to give the Committee prompt written notice ofexecute and deliver any election made byand all such Participant under Code section 83(b) or any similar provision thereof. Notwithstanding the preceding sentence, the Committee may condition any Award on the Participant’s not making an election under Code section 83(b).deeds and other instruments.

17.11SECTION 6.4Uncertificated SharesCounterparts.. To the extent that the Plan provides for issuance of certificates to reflect the transfer of shares of Common Stock, the transfer of such sharesThis Agreement may be effected on a non-certificated basis, to the extent not prohibited by applicable lawexecuted in two or the rulesmore counterparts, each of any stock exchange on which shares of Common Stock are traded.

17.12Compliance with Code Section 409A. At all times, this Plan shall be interpretedwhen executed and operated (i) with respect to 409A Awards in accordance with the requirements of Code section 409A, and (ii) to maintain the exemptions from Code section 409A of Options, SARs and Restricted Stock and any Awards designed to meet the short-term deferral exception under Code section 409A. To the extent there is a conflict between the provisions of the Plan relating to compliance with Code section 409A and the provisions of any Agreement issued under the Plan, the provisions of the Plan control. Moreover, any discretionary authority that the Committee may have pursuant to the Plan shall not be applicable to a 409A Award to the extent such discretionary authority would conflict with Code section 409A. In addition, to the extent required to avoid a violation of the applicable rules under Code section 409A by reason of Code section 409A(a)(2)(B)(i), any payment under an Award shall be delayed until the earliest date of payment that will result in compliance with the rules of Code section 409A(a)(2)(B)(i) (regarding the required six (6) month delay for distributions to specified employees that are related to a separation from service). To the extent that a 409A Award provides for payment upon the recipient’s termination of employment as an Employee or cessation of service as a Non-Employee Director or Non-Employee, the 409A Awarddelivered shall be deemed to require payment uponbe an original and all of which shall together be considered one and the individual’s “separation from service” within the meaning of Code section 409A. To the extentsame agreement.

SECTION 6.5Severability.If any term, provision, covenant or restriction of this PlanAgreement is held by a court of competent jurisdiction or an Agreement would cause a payment of a 409A Awardother authority to be made because of the occurrence of a change in control, then such payment shall not be made unless such change in control also constitutes a “change in ownership”, “change in effective control”invalid, void, unenforceable or “change in ownership of a substantial portion of the Company’s assets” within the meaning of Code section 409A. Any payment that would have been made except for the application of the preceding sentence shall be made in accordance with the payment schedule that would have applied in the absence of a change in control. To the extent an Award is a 409A Award and is subject to a substantial risk of forfeiture within the meaning of Code section 409A (or will be granted upon the satisfaction of a condition that constitutes such a substantial risk of forfeiture), any compensation due under the Award (or pursuant to a commitment to grant an Award) shall be paid in full not later than the sixtieth (60th) day following the date on which there is no longer such a substantial risk of forfeiture with respect to the Award (and the Participant shall have no right to designate the year of the payment), unless the Committee shall clearly and expressly provide otherwise at the time of granting the Award. In the event that an Award shall be deemed not to comply with Code section 409A, then neither the Company, the Board, the Committee noragainst its or their designees or agents, nor any of their affiliates, assigns or successors (each a “protected party”) shall be liable to any Award recipient or other person for actions, inactions, decisions, indecisions or any other role in relation to the Plan by a protected party.

17.13Legal Construction.
a.If any provision of this Plan or an Agreement is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Agreement under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Agreement, it shall be stricken andregulatory policy, the remainder of the Plan or theterms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect.effect and shall in no way be affected, impaired or invalidated.

[Signature page follows]


b.Where

Appendix B

IN WITNESS WHEREOF, the context admits, wordsundersigned have executed this Agreement as of the date first written above.

AARON’S, INC.,
a Georgia corporation
By:
Name:     
Title:
AARON’S HOLDINGS COMPANY, INC.
a Georgia corporation
By:
Name:
Title:
AARON’S MERGER SUB, INC.,
a Georgia corporation
By:
Name:
Title:

Appendix C

SECOND AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

AARON’S HOLDINGS COMPANY, INC.

I.

The name of the corporation is:

AARON’S HOLDINGS COMPANY, INC.

II.

The Corporation is organized pursuant to the provisions of the Georgia Business Corporation Code (the “Code”).

III.

The Corporation shall have perpetual duration.

IV.

The Corporation is organized for the following purposes:

To buy, sell, rent and lease office and residential furniture and accessories and other personal property of all kinds; to manufacture, sell and deliver furniture of any kind whatsoever; and generally to manufacture, produce, assemble, fabricate, import, purchase or otherwise acquire, invest in, own, hold, use, maintain, service or repair, sell, rent, lease, pledge, mortgage, exchange, export, distribute, assign and otherwise dispose of and to trade and deal in and with, at wholesale or retail, goods, wares, merchandise, commodities, articles of commerce and property of every kind and description; and to engage in, conduct and carry on a general manufacturing, importing and exporting, merchandising, leasing, mercantile and trading business in any gender shall include the other gender, words in the singular shall include the plural and words in the plural shall include the singular.

c.To the extent not preempted by federal law, the Plan and all Agreements hereunderbranches thereof.

To do each and every thing necessary, suitable or proper for the accomplishment of any of the purposes or the attainment of any one or more of the objects herein enumerated, or which shall be construed in accordance with and governedat any time appear conducive to or expedient for the protection or benefit of the Corporation.

IN FURTHERANCE OF AND NOT IN LIMITATION of the general powers conferred by the laws of the State of Georgia without giving effectand the objects and purposes herein set forth, it is expressly provided that to such extent as a corporation organized under the Code may now or hereafter lawfully do, the Corporation shall have the power to do, either as principal or agent and either alone or in connection with other corporations, firms or individuals, all and anything necessary, suitable, convenient or proper for, or in connection with, or incident to, the accomplishment of any of the purposes or the attainment of any one or more of the objects herein enumerated, or designed directly or indirectly to promote the interests of the Corporation or to enhance the value of its properties; and in general to do any and all things and exercise any and all powers, rights and privileges which a corporation may now or hereafter be authorized to do or to exercise under the Code or under any act amendatory thereof, supplemental thereto or substituted therefor.

The foregoing provisions of this Article IV shall be construed both as purposes and powers and each as an independent purpose and power. The foregoing enumeration of specific purposes and powers herein specified shall, except when otherwise provided in this Article IV, be in no wise limited or restricted by referenced to, or inference from, the terms of any provision of this or any other Article of these Second Amended and Restated Articles of Incorporation.

V.

The Corporation shall have authority to issue shares of capital stock consisting of Two Hundred Twenty-Five Million (225,000,000) shares of Common Stock, par value $0.50 per share (“Common Stock”), and One Million (1,000,000) shares of Preferred Stock, par value $1.00 per share (“Preferred Stock”).


Appendix C

The Corporation may purchase its own shares of capital stock out of unreserved and unrestricted earned surplus and capital surplus available therefor and as otherwise provided by law. Shares so acquired shall become treasury shares of the Corporation. The Board of Directors may from time to time distribute to shareholders out of capital surplus of the Corporation a portion of its assets, in cash or in property.

Section 1.Terms of the Common Stock. The powers, preferences and rights of the Common Stock, and the qualifications, limitations or restrictions thereof, shall be as follows:

(a)Voting. At each annual or special meeting of stockholders, each holder of Common Stock shall be entitled to one (1) vote in person or by proxy for each share of Common Stock standing in such person’s name on the stock transfer records of the Corporation in connection with the election of directors and all other actions submitted to a vote of stockholders.
(b)Dividends and Other Distributions. The record holders of the Common Stock shall be entitled to receive such dividends and other distributions in cash, stock or property of the Corporation as may be declared thereon by the Board of Directors out of funds legally available therefor.

Section 2.Terms of the Preferred Stock. The following are the designations, powers, preferences and rights of the preferred stock and the qualifications, limitations and restrictions thereof:

(a)Except as otherwise provided by applicable law, or by the resolution or resolutions of the Board of Directors providing for the issue of any series of a Preferred Stock, the holders of shares of Preferred Stock, as such holders, (i) shall not have any right to vote, and are hereby specifically excluded from the right to vote, in the election of directors or for any other purpose, and (ii) shall not be entitled to notice of any meeting of shareholders.
(b)Before any sum or sums shall be set aside or applied to the purchase of any outstanding shares of Stock, and before any dividend shall be declared or paid or any distribution ordered or made upon the Stock (other than a dividend payable in shares of Stock), the Corporation shall have complied with the dividend and sinking fund requirements (if any) set forth in any resolution or resolutions of the Board of Directors with respect to the issue of any series of Preferred Stock of which any shares shall at the time be outstanding.
(c)Subject to the provisions of the immediately preceding paragraph, and to such other limitations as may be specified in any resolution or resolutions of the Board of Directors providing for the issue of any series of Preferred Stock, the holders of outstanding shares of Stock shall be entitled to the exclusion of the holders of shares of Preferred Stock of any and all series, to receive such dividends payable with respect to the Stock as may be declared by the Board of Directors from time to time.
(d)In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment shall have been made to the holders of shares of Preferred Stock of the full amount to which any series of the Preferred Stock is entitled as set forth in the resolution or resolutions of the Board of Directors providing for the issue thereof, the holders of outstanding shares of Stock shall be entitled, to the exclusion of the holders of shares of Preferred Stock of any and all series, to share in all remaining assets of the Corporation available for distribution to its shareholders ratably according to the number of shares of Stock held by them. Neither the merger nor consolidation of the Corporation with or into any other corporation or corporations, nor the merger or consolidation of any other corporation or corporations into or with the Corporation, nor the sale, transfer, mortgage, pledge or lease by the Corporation of all or any part of its assets shall be deemed to be a liquidation, dissolution or winding up of the Corporation.
(e)The Preferred Stock may be issued from time to time in one or more series of any number of shares, except that the aggregate number of shares issued and not canceled of any and all such series shall not exceed the total number of shares of Preferred Stock hereinabove authorized. Each series of Preferred Stock shall be distinctively designated by number, letter or descriptive words.

Appendix C

(f)Authority is hereby expressly granted to and vested in the Board of Directors to issue the Preferred Stock at any time, or from time to time, as Preferred Stock of any one or more series, and, in connection with the establishment of each such series, to fix by resolution or resolutions providing for the issue of the shares thereof  the voting powers, if any, and the designation, preferences and relative rights of each such series of Preferred Stock to the full extent now or hereafter permitted by these Second Amended and Restated Articles of Incorporation and the laws of the State of Georgia, including, without limiting the generality of the foregoing, all of the following matters which may vary between each series:
(1)The distinctive designation of such series and the number of shares which constitute such series, which number may be increased or decreased either before or subsequent to the issuance of any shares of such series (but not below the number of shares of such series then outstanding), from time to time by action of the Board of Directors;
(2)The dividend rate of such series, the dates of payment thereof, and any limitations, restrictions or conditions on the payment of dividends, including whether dividends shall be cumulative and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on the shares of each series;
(3)The price or prices at which, and the terms, times and conditions on which, the shares of such series may be redeemed at the option of the Corporation or at the option of the holders of such shares;
(4)The amount or amounts payable upon the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment to the holders of shares of each series;
(5)Whether or not the shares of such series shall be entitled to the benefit of a purchase, retirement or sinking fund to be applied to the redemption or purchase of such series, and if so entitled, the amount of such fund and the manner of its application, including the price or prices at which the shares of such series may be redeemed or purchased through the application of such fund;
(6)Whether or not the shares of such series shall be made convertible into, or exchangeable for, shares of any other class or classes of stock of the Corporation, or the shares of any other series of Preferred Stock, and, if made so convertible or exchangeable, the conversion price or prices, or the rate or rates of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;
(7)Whether or not the shares of such series shall have any voting rights, and, if voting rights are so granted, the extent of such voting rights and the terms and conditions under which such voting rights may be exercised.
(8)Whether or not the issue of any additional shares of such series or of any future series in addition to such series shall be subject to restrictions in addition to the restrictions, if any, on the issue of additional shares imposed in the resolution or resolutions fixing the terms of any outstanding series of Preferred Stock theretofore issued pursuant to this Section 2(f), and, if subject to additional restrictions, the extent of such additional restrictions; and
(9)Whether or not the shares of such series shall be entitled to the benefit of limitations restricting the purchase of, the payment of dividends on, or the making of other distributions in respect of stock of any class of the Corporation, and the terms of any such restrictions; provided, however, that such restrictions shall not include any prohibition on the payment of dividends or with respect to distributions in the event of voluntary or involuntary liquidation established for any outstanding series of Preferred Stock theretofore issued.

VI.

None of the holders of any capital stock of the Corporation of any kind, class or series now or hereafter authorized shall have preemptive rights with respect to any choiceshares of capital stock of the Corporation of any kind, class or series now or hereafter authorized.

VII.

No director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for breach of his duty of care or other duty as a director; provided, that this provision shall eliminate or limit the liability of a director only to the extent permitted from time to time by the Code or any successor law or laws.


Appendix C

VIII.

These Second Amended and Restated Articles of Incorporation contain amendments requiring shareholder approval and were duly adopted in accordance with the applicable provisions of Section 14-2-1003 of the Georgia Business Corporation Code by the Board of Directors of the Corporation on [●] and by the shareholders of the Corporation on [●].

IN WITNESS WHEREOF, AARON’S HOLDINGS COMPANY, INC., has caused these Second Amended and Restated Articles of Incorporation to be executed by its duly authorized officer on this [●]th day of[●], 2020.

AARON’S HOLDINGS COMPANY, INC.
By:
Name:
Title:

Appendix D

AMENDED AND RESTATED BYLAWS
OF
AARON’S HOLDINGS COMPANY, INC.

ARTICLE I
OFFICES

Section 1.Registered Office. The registered office shall be in the State of Georgia, County of Fulton.

Section 2.Other Offices. The corporation may also have offices at such other places both within and without the State of Georgia as the board of directors may from time to time determine and the business of the corporation may require or make desirable.

ARTICLE II
SHAREHOLDERS MEETINGS

Section 1.Annual Meetings. The annual meeting of shareholders of the corporation shall be held at the principal office of the corporation or at such other place in the United States as may be determined by the board of directors, at 10:00 a.m. on the last business day of the fifth month following the close of each fiscal year or at such other time and date following the close of the fiscal year as shall be determined by the board of directors, for the purpose of electing directors and transacting such other business as may properly be brought before the meeting.

Section 2.Special Meetings.

(a) Special meetings of shareholders of one or more classes or series of the corporation’s shares shall be called by the chief executive officer or the secretary (i) when so directed by the chairman or by a majority of the entire board of directors; or (ii) upon the demand of holders of at least twenty-five percent (25%) of all votes entitled to be cast on each issue to be considered at a proposed special meeting of shareholders. The business that may be transacted at any special meeting of shareholders shall be limited to that proposed in the notice of the special meeting given in accordance with Section 3 (including related or incidental matters that may be necessary or appropriate to effectuate the proposed business).

(b) Promptly after the date of receipt of written shareholder demands (the “Demand Date”) purporting to comply with the provisions of the Georgia Business Corporation Code, as amended from time to time (the “Code”), and these bylaws, the chief executive officer or the secretary of the corporation shall determine the validity of the demand. If the demand is valid, the chief executive officer or the secretary of the corporation shall call a special shareholders meeting by mailing notice within 20 days of the Demand Date.

(c) The time, date and place of any special shareholders meeting shall be determined by the board of directors and shall be set forth in the notice of meeting.

Section 3.Participation in Meetings by Remote Communication. The board of directors, acting in its sole discretion, may establish guidelines and procedures in accordance with applicable provisions of the Code and any other applicable law for the participation by shareholders and proxyholders in a meeting of shareholders by means of remote communications, and may determine that any meeting of shareholders will not be held at any place but will be held solely by means of remote communication. Shareholders and proxyholders complying with such procedures and guidelines and otherwise entitled to vote at a meeting of shareholders shall be deemed present in person and entitled to vote at a meeting of shareholders, whether such meeting is to be held at a designated place or solely by means of remote communication.

Section 4.Notice of Meetings. Written notice of every meeting of shareholders, stating the place, date and hour of the meeting (and the means of remote communications, if any, by which shareholders and proxyholders may be deemed to be present in person and vote at such meeting), shall be given personally or by mail to each shareholder of record not less than 10 nor more than 60 days before the date of the meeting. Such notice may be given in any manner permitted by, and shall be deemed to be effectively given at the times as provided in, the Georgia Business Corporation Code. A shareholder’s attendance at a meeting waives objection to lack of notice or defective notice of such meeting, unless the shareholder at the beginning of the meeting objects to the holding of the meeting or transacting business at the meeting, and waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. A shareholder may waive notice of a meeting before or after the date and time stated in the notice, which waiver must be in writing, signed by the shareholder entitled to such notice and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.


Appendix D

Section 5.QuorumThe holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of shareholders except as otherwise provided by statute, by the articles of incorporation, or by these bylaws. If a quorum is not present or represented at any meeting of shareholders, a majority of the shareholders entitled to vote thereat, present in person or represented by proxy, may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting (and the means of remote communications, if any, by which shareholders and proxyholders may be deemed to be present in person and vote at such meeting) shall be given to each shareholder of record entitled to vote at the meeting.

Section 6.Voting. When a quorum is present at any meeting, action on a matter brought before such meeting is approved if the votes cast favoring the action exceed the votes cast opposing the action, unless the matter is one upon which by express provision of law, provisions. Unlessthese bylaws or of the articles of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of the question. Each shareholder shall at every meeting of shareholders be entitled to one vote, in person or by proxy, for each share of the capital stock having voting power registered in his or her name on the books of the corporation, but no proxy shall be voted or acted upon after 11 months from its date, unless otherwise provided in the proxy.

Section 7.Shareholder Proposals.

(a) No shareholder proposal or resolution (each a “Shareholder Proposal”), whether purporting to be binding or nonbinding on the corporation or its board of directors, shall be considered at any annual or special meeting of shareholders unless:

(i)If such Shareholder Proposal relates solely to the nomination and election of directors, it satisfies the requirements of Article III, Section 3; or
(ii)With respect to any Shareholder Proposal to be considered at a special shareholders meeting called pursuant to Article II, Section 2, subsection (a)(i), the shareholder(s) proposing to make such Shareholder Proposal provided the information set forth in subsection (b) of this Section 7 to the board of directors within 14 days after the date of the notice calling such special shareholders meeting (or if less than 21 days notice of the meeting is given to shareholders, such information was delivered to the president not later than the close of the seventh day following the date on which the notice of the shareholders’ meeting was mailed); or
(iii)With respect to any Shareholder Proposal to be considered at a special shareholders meeting called pursuant to Article II, Section 2, subsection (a)(ii), the shareholder(s) proposing to make such Shareholder Proposal provided the information set forth in subsection (b) of this Section 7 to the board of directors concurrently with the filing of the initial demand by shareholders relating to such special shareholders meeting; or
(iv)With respect to any Shareholder Proposal to be considered at any regular meeting of shareholders, other than as described in clause (i) hereof, the shareholder(s) proposing to make such Shareholder Proposal provided the information set forth in subsection (b) of this Section 7 to the board of directors between 90 to 120 days prior to the regular meeting at which they wish the Shareholder Proposal to be considered. For the purposes of determining whether information was provided at the times or within the specified periods, the date of the applicable meeting shall be as set forth in the notice of meeting given by the corporation, and such times and periods will be determined without regard to any postponements, deferrals or adjournments of such meeting to a later date.

Appendix D

(b) The following information must be provided to the board of directors, within or at the times specified in subsection (a) above, in order for the Shareholder Proposal to be considered at the applicable Agreement,shareholders meeting:

(i)The Shareholder Proposal, as it will be proposed, in full text and in writing;
(ii)The purpose(s) for which the Shareholder Proposal is desired and the specific meeting at which such proposal is proposed to be considered;
(iii)The name(s), address(es), and number of shares held of record by the shareholder(s) making such Shareholder Proposal (or owned beneficially and represented by a nominee certificate on file with the corporation);
(iv)The number of shares that have been solicited with regard to the Shareholder Proposal and the number of shares the holders of which have agreed (in writing or otherwise) to vote in any specific fashion on said Shareholder Proposal; and
(v)A written statement by said shareholder(s) that they intend to continue ownership of such voting shares through the date of the meeting at which said Shareholder Proposal is proposed to be considered.

(c) Failure to fully comply with the recipientprovisions of this Section 7 shall bar discussion of and voting on the Shareholder Proposal at the applicable regular or special shareholders meeting. Any Shareholder Proposal that does not comply with the requirements of this Section 7 shall be disregarded by the chairman of the meeting, and any votes cast in support of the Shareholder Proposal, unless the Shareholder Proposal has been validly submitted by another shareholder, shall be disregarded by the chairman of such meeting.

(d) The provisions of this Section 7 shall be read in accordance with and so as not to conflict with the rules and regulations promulgated by the Securities and Exchange Commission and any stock exchange or quotation system upon which the corporation’s shares are traded. Nothing in these bylaws shall be deemed to require the consideration at any meeting of shareholders of any Shareholder Proposal that, pursuant to law, the corporation may refuse to permit consideration thereof.

Section 8.Consent of Shareholders. Any action required or permitted to be taken at any meeting of shareholders may be taken without a meeting if all of the shareholders consent thereto in writing, setting forth the action so taken. Such consent shall have the same force and effect as a unanimous vote of shareholders.

Section 9.List of Shareholders; Inspection of Records.

(a) The corporation shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving their names and addresses and the number, class and series, if any, of the shares held by each. The officer who has charge of the stock transfer books of the corporation shall prepare and make, before every meeting of shareholders or any adjournment thereof, a complete list of the shareholders entitled to vote at the meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number and class and series, if any, of shares held by each. The list shall be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder during the whole time of the meeting for the purposes thereof. The said list may be the corporation’s regular record of shareholders if it is arranged in alphabetical order or contains an alphabetical index.


Appendix D

(b) Shareholders are entitled to inspect the corporate records as and to the extent provided by the Code; provided, however, that only shareholders owning more than two percent (2%) of the outstanding shares of any class of the corporation’s stock shall be entitled to inspect (1) the minutes from any board, board committee or shareholders meeting (including any records of action taken thereby without a meeting); (2) the accounting records of the corporation; or (3) any record of the shareholders of the corporation.

ARTICLE III
DIRECTORS

Section 1.Powers. Except as otherwise provided by any legal agreement among shareholders, the property, affairs and business of the corporation shall be managed and directed by its board of directors, which may exercise all powers of the corporation and do all lawful acts and things which are not by law, by any legal agreement among shareholders, by the articles of incorporation or by these bylaws directed or required to be exercised or done by the shareholders. One member of the board of directors shall be selected by the board to serve as chairman. The chairman shall preside at all meetings of shareholders and the board and shall have such other powers and duties as may be assigned by the board of directors and as otherwise may be set forth herein. Except where by law the signature of the chief executive officer is required, the chairman shall possess the same power as the chief executive officer to sign all certificates representing shares of the corporation and all bonds, mortgages and other contracts requiring a seal, under the seal of the corporation.

Section 2.Number, Election and Term. The number of directors which shall constitute the whole board shall be at least 3; the exact number to be fixed from time to time by resolution of the board of directors, but no decrease shall have the effect of shortening the term of an Awardincumbent director. Commencing at the annual meeting of shareholders to be held during the fiscal year ending December 31, 2014, and at each annual meeting of shareholders thereafter, directors will be elected for a term of office to expire at the next succeeding annual meeting of shareholders. Each director whose term does not expire at the annual meeting of shareholders to be held during the fiscal year ending December 31, 2014, will hold office until the annual meeting of shareholders for the fiscal year in which such director’s term expires. Each director shall hold office until the expiration of his or her respective term of office and until his or her successor is deemed to submitduly elected and qualified or until his or her earlier resignation, removal from office or death. The directors shall be elected by a majority of the votes cast at the annual meeting of shareholders at which a quorum is present; provided, however that directors shall be elected by a plurality of the votes cast at such meeting for which (a) the president receives a notice that a shareholder has nominated a candidate for election to the exclusive jurisdictionboard of directors in compliance with the advance notice requirements for shareholder nominees for director set forth in Article III, Section 3; and venue(b) such nomination has not been withdrawn by such shareholder on or prior to the tenth (10th) day preceding the date that the corporation first mails its notice of meeting for such meeting to the shareholders. A majority of the Federalvotes cast means that the number of votes cast “for” a director’s election exceeds the number of votes cast “against” that director’s election. The following shall not be a vote cast: (1) a share otherwise present at the meeting but for which there is an abstention and (2) a share otherwise present at the meeting as to which a shareholder gives no authority or discretion, including “broker nonvotes.”In the event an incumbent director fails to receive a majority of the votes cast (unless, pursuant to the immediately preceding paragraph, the director election standard is a plurality of the votes cast), the incumbent director shall promptly tender his or her resignation to the board of directors. The Nominating and Corporate Governance Committee of the board of directors will make a recommendation to the board of directors on whether to accept or reject the resignation, or whether other action should be taken. The board of directors, taking into account the recommendation of the Nominating and Corporate Governance Committee, will determine whether to accept or reject such resignation, or what other action should be taken, within 100 days from the date of the certification of election results. Directors shall be natural persons who have attained the age of 18 years, but need not be residents of the State of Georgia.


Appendix D

Section 3.Nominations.

(a) If any shareholder intends to nominate or cause to be nominated any candidate for election to the board of directors (other than any candidate to be sponsored by and proposed at the instance of the management), such shareholder shall notify the president by first class registered mail sent not later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting (provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the shareholder must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later on the sixtieth (60th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the corporation). Such notification shall contain the following information with respect to each nominee, to the extent known to the shareholder giving such notification:

(i)

Name, address and principal present occupation;

(ii)

To the knowledge of the shareholder who proposed to make such nomination, the total number of shares that may be voted for such proposed nominee;

(iii)

The names and address of the shareholders who propose to make such nomination, and the number of shares of the corporation owned by each of such shareholders; and

(iv)

The following additional information with respect to each nominee: age, past employment, education, beneficial ownership of shares in the corporation, past and present financial standing, criminal history (including any convictions, indictments or settlements thereof), involvement in any past or pending litigation or administrative proceedings (including threatened involvement), relationship to and agreements (whether or not in writing) with the shareholder(s) (and their relatives, subsidiaries and affiliates) intending to make such nomination, past and present relationships or dealings with the corporation or any of its subsidiaries, affiliates, directors, officers or agents, plans or ideas for managing the affairs of the corporation (including, without limitation, any termination of employees, any sales of corporate assets, any proposed merger, business combination or recapitalization involving the corporation, and any proposed dissolution or liquidation of the corporation), such individual’s written consent to being named in a proxy statement as a nominee and to serving as director if elected and all additional information relating to such person that would be required to be disclosed, or otherwise required, pursuant to Sections 13 or 14 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated there under (the “Exchange Act”), in connection with any acquisition of shares by such nominee or in connection with the solicitation of proxies by such nominee for his or her election as a director, regardless of the applicability of such provisions of the Exchange Act

(b) Any nominations not in accordance with the provisions of this Section 3 may be disregarded by the chairman of the meeting, and upon instruction by the chairman, votes cast for each such nominee shall be disregarded. In the event, however, that a person should be nominated by more than one shareholder, and if one such nomination complies with the provisions of this Section 3, such nomination shall be honored, and all shares voted for such nominee shall be counted.


Appendix D

Section 4.Vacancies. All vacancies, including vacancies resulting from any increase in the number of directors, shall be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director. If there are no directors in office, then vacancies shall be filled through election by the shareholders. Any director elected to fill a vacancy shall serve the unexpired term of his or her predecessor and until his or her successor is duly elected and qualified; provided that any director filling a vacancy by reason of an increase in the number of directors, where such vacancy is filled by the directors, shall serve until the next annual meeting of shareholders and until his or her successor is duly elected and qualified.

Section 5.Meetings and Notice. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Georgia. Regular meetings of the board of directors may be held without notice at such time and place as shall from time to time be determined by resolution of the board. Special meetings of the board may be called by the chairman of the board or chief executive officer or by any two directors on one day’s oral, telegraphic or written notice duly given or served on each director personally, or three days’ notice deposited, first class postage prepaid, in the United States mail. Such notice shall state courtsa reasonable time, date and place of Georgiameeting, but the purpose need not be stated therein. A director may waive any notice required by the Code, the articles of incorporation, or these bylaws before or after the date and time of the matter to resolvewhich the notice relates, by a written waiver signed by the director and delivered to the corporation for inclusion in the minutes or filing with the corporate records. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and waiver of all objections to the place and time of the meeting, or the manner in which it has been called or convened except when the director states, at the beginning of the meeting, any such objection or objections to the transaction of business.

Section 6. Quorum. At all meetings of the board a majority of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board, except as may be otherwise specifically provided by law, by the articles of incorporation, or by these bylaws. If a quorum shall not be present at any meeting of the board, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 7.Conference Telephone Meeting. Unless the articles of incorporation or these bylaws otherwise provide, members of the board of directors, or any committee designated by such board, may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment whereby all persons participating in the meeting can hear each other. Participation in such a meeting shall constitute presence in person.

Section 8.Consent of Directors. Unless otherwise restricted by the articles of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, setting forth the action so taken, and the writing or writings are delivered to the corporation for inclusion in the minutes or filing with the corporate records. Such consent shall have the same force and effect as a unanimous vote of the board.

Section 9.Committees. The board of directors may, by resolution passed by a majority of the whole board, designate from among its members one or more committees, each committee to consist of two or more directors. The board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of such committee. Any such committee, to the extent provided in the resolution, shall have and may exercise all of the authority of the board of directors in the management of the business and affairs of the corporation except that it shall have no authority with respect to (1) amending the articles of incorporation or these bylaws; (2) adopting a plan of merger or consolidation; (3) the sale, lease, exchange or other disposition of all or substantially all of the property and assets of the corporation; (4) a voluntary dissolution of the corporation or a revocation thereof; and (5) any other action limited by law. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. A majority of each committee may determine its action and may fix the time and place of its meetings, unless otherwise provided by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

Section 10.Removal of Directors. At any shareholders meeting with respect to which notice of such purpose has been given, any director may be removed from office, with cause, by the vote of shareholders representing a majority of the issued and outstanding capital stock entitled to vote for the election of directors, and any vacancy created by such removal shall be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and a director so chosen shall hold office until the next annual meeting and until his or her successor is duly elected and qualified unless sooner displaced.

Section 11.Compensation of Directors. Directors shall be entitled to such reasonable compensation for their services as directors or members of any committee of the board as shall be fixed from time to time by resolution adopted by the board, and shall also be entitled to reimbursement for any reasonable expenses incurred in attending any meeting of the board or any such committee.

ARTICLE IV
OFFICERS

Section 1.Number. The officers of the corporation shall be chosen by the board of directors, which shall include a chief executive officer, a president, a chief financial officer and a secretary, and which may include one or more vice presidents (any one or more of whom may be given an additional designation of rank or function), assistant officers, and such other officers as the board of directors shall deem appropriate. Any number of offices may be held by the same person.

Section 2.Compensation. The salaries of all officers shall be fixed by the board of directors or a committee or officer appointed by the board.


Appendix D

Section 3.Term of Office. Unless otherwise provided by resolution of the board of directors, the principal officers shall be chosen annuallyby the board at the first meeting of the board following the annual meeting of shareholders of the corporation, or as soon thereafter as is conveniently possible. Subordinate officers may be elected from time to time. Each officer shall serve until his or her successor shall have been chosen and qualified, or until his or her death, resignation or removal.

Section 4.Removal. Any officer may be removed from office at any time, with or without cause, by the board of directors whenever in its judgment the best interest of the corporation will be served thereby.

Section 5.Vacancies. Any vacancy in an office resulting from any cause may be filled by the board of directors.

Section 6.Powers and Duties. The officers shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the board of directors. In addition, the following officers shall each have the powers and duties set forth below:Chief Executive Officer. The chief executive officer shall be the chief executive officer of the corporation and shall, in the absence of the chairman of the board, preside at all meetings of shareholders, and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. Except where by law the signature of the president is required, the chief executive officer shall possess the same power as the president to sign all certificates representing shares of the corporation and all bonds, mortgages and other contracts requiring a seal, under the seal of the corporation.

(b)President. The president shall, in the absence of the chairman of the board and the chief executive officer, preside at all meetings of shareholders. The president shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. The president shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required by law to be otherwise signed and executed.

(c)Chief Financial Officer. The chief financial officer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the corporation and shall deposit or cause to be deposited, in the name of the corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by or under authority of the board of directors. The chief financial officer shall keep or cause to be kept full and accurate records of all receipts and disbursements in books of the corporation.

(d)Vice President. In the absence of the president or in the event of the president’s inability or refusal to act, the vice president (or in the event there be more than one vice president, the vice president in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.

(e)Secretary. The secretary shall cause minutes of all meetings of the board of directors and shareholders to be recorded and kept and shall perform like duties for the standing committees when required. The secretary shall give, or cause to be given, notice of all meetings of shareholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision the secretary shall be. The secretary shall have custody of the corporate seal of the corporation and the secretary, or an assistant secretary, shall have authority to affix the same to the instrument requiring it and when so affixed, it may be attested by the secretary’s signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by such officer’s signature.

(f)Assistant Officers. Any assistant officer of the corporation shall have such duties and authority as the officer such assistant officer assists and, in addition, such other duties and authority as the board of directors or chief executive officer shall from time to time assign.

(g)Other Officers. Any other officer of the corporation shall have such duties and authority as the board of directors or chief executive officer shall from time to time assign.


Appendix D

Section 7.VotingSecurities of Corporation. Unless otherwise directed by the board of directors, the chief executive officer shall have full power and authority on behalf of the corporation to attend and to act and vote at any meetings of security holders of corporations in which the corporation may hold securities, and at such meetings shall possess and may exercise any and all issuesrights and powers incident to the ownership of such securities which the corporation might have possessed and exercised if it had been present. The board of directors by resolution from time to time may confer like powers upon any other person or persons.

ARTICLE V
CERTIFICATE

Section 1.Certificates for Shares. Shares of the corporation’s stock may be issued by certificate or issued without certificate as “Book Entry” shares and entered on the books of the corporation and registered as they are issued. Within a reasonable time after the issuance or transfer of shares without certificates, the corporation’s transfer agent shall send the shareholder a written notification of the information required on certificates by applicable law, rule or regulation. Certificates, if issued, shall be in such form as the board of directors may from time to time prescribe.

Section 2.Lost Certificates. The corporation may issue a new certificate or certificates of stock or “Book Entry” shares in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or “Book Entry” shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his or her legal representative, to give the corporation a bond in such sum as it may direct as indemnity against any claim that may arisebe made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 3.Transfers.

(a) Transfers of shares of the capital stock of the corporation shall be made only on the books of the corporation by the registered holder thereof, or by his or her duly authorized attorney, or with a transfer clerk or transfer agent appointed as provided in Section 5 of this Article, and, if such shares are represented by a certificate or certificates, on surrender of the certificate or certificates for such shares properly endorsed, or for “Book Entry” shares, upon the presentation proper evidence of authority to transfer by the record holder, and the payment of all taxes thereon.

(b) The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and for all other purposes, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

(c) Shares of capital stock may be transferred by (i) delivery of the certificates therefor, accompanied either by an assignment in writing on the back of the certificates or by separate written power of attorney to sell, assign and transfer the same, signed by the record holder, thereof, or by his or her duly authorized attorney-in- fact, or (ii) in the case of Book Entry shares, upon receipt of proper transfer instructions from the registered owner of such Book Entry shares, or from a duly authorized agent or attorney. No transfer shall affect the right of the corporation to pay any dividend upon the stock to the holder of record as the holder in fact thereof for all purposes, and no transfer shall be valid, except between the parties thereto, until such transfer shall have been made upon the books of the corporation as herein provided.

(d) The board may, from time to time, make such additional rules and regulations as it may deem expedient, not inconsistent with these bylaws, the articles of incorporation or applicable law, rule or regulation, concerning the issue, transfer and registration of shares of the capital stock of the corporation.


Appendix D

Section 4.Record Date. In order that the corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than 70 days and, in case of a meeting of shareholders, not less than 10 days prior to the date on which the particular action requiring such determination of stockholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of and to vote at any meeting of shareholders, the record date shall be at the close of business on the day next preceding the day on which the notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. If no record date is fixed for other purposes, the record date shall be at the close of business on the day next preceding the day on which the board of directors adopts the resolution relating thereto. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the board of directors shall fix a new record date for the adjourned meeting.

Section 5.Transfer Agent and Registrar. The board of directors may appoint one or more transfer agents or one or more transfer clerks and one or more registrars, and may require all certificates of stock to bear the signature or signatures of any of them.

ARTICLE VI
GENERAL PROVISIONS

Section 1.Distributions. Distributions upon the capital stock of the corporation, subject to the provisions of the articles of incorporation, if any, may be declared by the board of directors at any regular or special meetings, pursuant to law. Distributions may be paid in cash, in property, or in shares of the corporation’s capital stock, subject to the provisions of the articles of incorporation. Before payment of any distribution, there may be set aside out of any funds of the corporation available for distributions such sum or relatesums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing distributions, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the Planinterest of the corporation, and the directors may modify or abolish any such Agreement.reserve in the manner in which it was created.

Section 2. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the board of directors.

Section 3.Seal. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal” and “Georgia”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. In the event it is inconvenient to use such a seal at any time, the signature of the corporation followed by the word “Seal” enclosed in parentheses shall be deemed the seal of the corporation.

Section 4.Savings Clause. To the extent these bylaws conflict with any provision of any state or federal law as such laws may be amended from time to time, these bylaws shall be construed so as not to conflict with said law, and any discretionary actions made hereunder shall be made in accordance with applicable law.


Appendix D

ARTICLE VII
INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 1.Indemnification of Directors and Officers. To the fullest extent permitted by law, the corporation shall indemnify, defend and hold harmless any person (an “Indemnified Person”) who is or was a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal (a “Proceeding”) (other than an action or suit by or in the right of the corporation) by reason of the fact that he or she is or was a director or officer of the corporation, or, while a director or officer of the corporation, is or was serving in another Corporate Status (as defined below) against all expenses (including, but not limited to, attorneys’ fees and disbursements, court costs and expert witness fees) (collectively, “Expenses”), and against all judgments, fines, penalties and amounts paid in settlement (including any excise tax assessed with respect to an employee benefit plan) (collectively, “Liabilities”) that may be imposed upon or incurred by him or her in connection with or resulting from such Proceeding, if he or she acted in good faith and, in the case of conduct in his or her official capacity, in a manner he or she reasonably believed to be in the best interests of the corporation, and in all other cases, in a manner he or she reasonably believed to not be opposed to the best interests of the corporation, and with respect to any criminal Proceeding, had no reasonable cause to believe his or her conduct was unlawful. “Corporate Status” describes (a) the status of a person who is or was a director or officer of the corporation or an individual who, while a director or officer of the corporation, is or was serving at the corporation’s request as a director, officer, partner, trustee, employee, administrator or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, entity, or other enterprise, and (b) a person’s service in connection with an employee benefit plan at the corporation’s request if such person’s duties to the corporation also impose duties on, or otherwise involve services by, such person to the plan or to participants in or beneficiaries of the plan.

Section 2.Indemnification of Directors and Officers for Derivative Actions. The corporation shall indemnify, defend and hold harmless any Indemnified Person who is or was a party, or is threatened to be made a party, to any threatened, pending or completed Proceeding by or in the right of the corporation, by reason of the fact that he or she is or was a director or officer of the corporation, or, while a director or officer of the corporation, is or was serving in another Corporate Status (a) to the fullest extent permitted by law, against all Expenses that may be imposed upon or incurred by him or her in connection with or resulting from such Proceeding, if he or she acted in good faith and, in the case of conduct in his or her official capacity, in a manner he or she reasonably believed to be in the best interests of the corporation and in all other cases, in a manner he or she reasonably believed to not be opposed to the best interests of the corporation, and with respect to any criminal Proceeding, had no reasonable cause to believe his or her conduct was unlawful, and (b) to the fullest extent permitted by law (including through a determination by a court of competent jurisdiction pursuant to Section 14-2-854 of the Code) against all Expenses and Liabilities that may be imposed upon or incurred by him or her in connection with or resulting from such Proceeding.

Section 3.Indemnification Upon Successful Defense on Merits, Etc. Notwithstanding any other provision of this Article VII, to the extent that an Indemnified Person is, by reason of his or her Corporate Status, a party to and is successful on the merits or otherwise in any Proceeding, the Indemnified Person shall be indemnified against Expenses imposed upon or incurred by him or her in connection with the Proceeding, regardless of whether the Indemnified Person has met the standards set forth in the Code or in this Article VII and without any further action or determination by the board of directors of the corporation or otherwise. If an Indemnified Person is not wholly successful in such Proceeding but is successful on the merits or otherwise as to one or more but less than all claims, issues or matters in such Proceeding, the corporation shall indemnify the Indemnified Person against all Expenses imposed upon or incurred by him or her in connection with each claim, issue or matter with respect to which the Indemnified Person was successful. For the purposes of this Section 3 and without limiting the foregoing, (a) the termination of any claim, issue or matter in any such Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter, and (b) a decision by any government, regulatory or self-regulatory authority, agency or body not to commence or pursue any investigation, civil or criminal enforcement matter or case or in any civil suit, shall be deemed to be a successful result as to such claim, issue or matter. If an Indemnified Person is entitled under any provision of the Code or this Article VII to indemnification by the corporation for some or a portion of the Expenses or Liabilities imposed upon or incurred by him or her in connection with the investigation, defense, appeal or settlement of a Proceeding covered by this Article VII, but is not entitled to indemnification for the total amount thereof, the corporation shall nevertheless indemnify the Indemnified Person for the portion of such Expenses and Liabilities imposed upon or incurred by him or her to which the Indemnified Person is entitled.

Section 4.Indemnification and Advancement of Expenses for Directors and Officers When Acting as a Witness, Etc. To the fullest extent permitted by law, any Indemnified Person who acts as a witness or other participant in any Proceeding, shall be indemnified by the corporation against all Expenses imposed upon or incurred bythe Indemnified Person in connection therewith.

Section 5.Indemnification of Employees and Agents. The board of directors shall have the power to cause the corporation to provide to any person who is or was an employee or agent of the corporation all or any part of the right to indemnification and other rights of the type provided under Sections 1, 2, 3, 4, 7 and 12 of this Article VII (subject to the conditions, limitations, obligations and other provisions specified herein), upon a resolution to that effect identifying such employee or agent (by position or name) and specifying the particular rights provided, which may be different for each employee or agent identified. Each employee or agent of the corporation so identified shall be an “Indemnified Person” for purposes of the provisions of this Article VII.


Appendix D

Section 6.Effectuation of Rights. Sections 1, 2, 3, 4 and 7 of this Article VII are intended to, and shall be deemed to, satisfy the requirements for authorization referred to in Section 14-2-859(a) of the Code or any successor provision and any other requirements of applicable law such that the corporation shall be obligated to the maximum extent possible to provide such indemnification and advancement of Expenses without any further requirements for authorization or action referred to in Sections 14-2-853(c) or 14-2-855(c) of the Code or any successor provision, or otherwise. The corporation shall act in good faith and expeditiously take all actions necessary or appropriate to make available the indemnification, advancement of Expenses and other rights provided for Indemnified Persons in this Article VII, and shall expeditiously take all actions necessary or appropriate to remove any impediments or obstacles to such indemnification, advancement of Expenses and other rights. To the extent any determination of entitlement to indemnification is required for purposes of the Code or this Article VII, at the request of the Indemnified Person, such determination shall be made by Special Legal Counsel (as defined below) proposed by the Indemnified Person and reasonably acceptable to the corporation. In the event of any dispute as to whether an Indemnified Person is entitled to indemnification or advancement of Expenses under the Code or this Article VII, the Indemnified Person shall be entitled to an expeditious and final adjudication in the Business Case Division of the Fulton County Superior Court, State of Georgia (the “Fulton County Business Court”), which the corporation agrees shall be the exclusive venue for any court action to determine whether the Indemnified Person is entitled to such indemnification or advancement of Expenses. The corporation shall seek expedited resolution of the matter and agrees that the Fulton County Business Court may summarily determine the corporation’s obligation to advance Expenses. The corporation irrevocably waives trial by jury with respect to the determination whether an Indemnified Person is entitled to indemnification or advancement of Expenses. If an Indemnified Person, pursuant to this Section 6, seeks a judicial adjudication of his or her rights under this Article VII, the Indemnified Person shall be entitled to recover from the corporation, and shall be indemnified by the corporation against, any and all Expenses actually and reasonably incurred by him of her in such judicial adjudication, but only if he or she prevails therein.If it shall be determined in such judicial adjudication that the Indemnified Person is entitled to receive part but not all of the indemnification or advancement of expenses sought, the Expenses incurred by the Indemnified Person in connection with such judicial adjudication shall be appropriately prorated. As used in this Section 6, “Special Legal Counsel” means an attorney with an active membership in good standing in the State Bar of Georgia who is experienced in matters of corporate law and neither he or she, nor his or her law firm, presently is, nor in the past five years has been, retained to represent: (i) the corporation or the Indemnified Person in any other matter material to either such party; or (ii) any other party to the Proceeding giving rise to a claim for indemnification, provided that the term “Special Legal Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the corporation or the Indemnified Person in an action to determine the Indemnified Person’s rights under the Code or this Article VII.

Section 7.Advances. Expenses imposed upon or incurred by an Indemnified Person in defending any Proceeding of the kind described in Sections 1, 2 and 3 hereof shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding as set forth herein. The corporation shall promptly pay the amount of such Expenses to the Indemnified Person, but in no event later than ten days following the Indemnified Person’s delivery to the corporation of a written request for an advance pursuant to this Section 7, together with a reasonable accounting of such expenses; provided, however, that the Indemnified Person shall furnish the corporation a written affirmation of his or her good faith belief that he or she has met the standard of conduct set forth in the Code or that the proceeding involves conduct for which liability has been eliminated under a provision of the Articles of Incorporation of the corporation, as authorized by paragraph (4) of subsection (b) of Section 14-2- 202 of the Code or any successor provision, and a written undertaking and agreement, executed personally or on his or her behalf, to repay to the corporation any advances made pursuant to this Section 7 if it shall be ultimately determined that the Indemnified Person is not entitled to be indemnified by the corporation for such amounts. The corporation shall make the advances contemplated by this Section 7 regardless of the Indemnified Person’s financial ability to make repayment. Any advances and undertakings to repay pursuant to this Section 7 shall be unsecured and interest-free.


Appendix D

Section 8.Non-Exclusivity. Subject to any applicable limitation imposed by the Code or the Articles of Incorporation, the indemnification and advancement of expenses provided by or granted pursuant to this Article VII shall not be exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under applicable law or any bylaw, resolution or agreement, including as may be approved by the corporation’s shareholders.

Section 9.Insurance. The corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving as a director, officer, trustee, general partner, employee or agent of a Subsidiary or, at the request of the corporation, of any other organization or in any other Corporate Status, against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of this Article VII.

Section 10.Security. The corporation may designate certain of its assets as collateral, provide self-insurance or otherwise secure its obligations under this Article VII, or under any indemnification agreement or plan of indemnification adopted and entered into in accordance with the provisions of this Article VII, as the board of directors deems appropriate.

Section 11.Amendment. Any amendment to this Article VII that limits or otherwise adversely affects the right of indemnification, advancement of expenses, or other rights of any Indemnified Person hereunder shall, as to such Indemnified Person, apply only to claims, actions, suits or proceedings based on actions, events or omissions (collectively, “Post Amendment Events”) occurring after such amendment and after delivery of notice of such amendment to the Indemnified Person so affected. Any Indemnified Person shall, as to any claim, action, suit or proceeding based on actions, events or omissions occurring prior to the date of receipt of such notice, be entitled to the right of indemnification, advancement of expenses and other rights under this Article VII to the same extent as if such provisions had continued as part of the bylaws of the corporation without such amendment. This Section 11 cannot be altered, amended or repealed in a manner effective as to any Indemnified Person (except as to Post Amendment Events) without the prior written consent of such Indemnified Person.

Section 12.Agreements. In addition to the rights provided in this Article VII, the corporation shall have the power, upon authorization by the board of directors, to enter into an agreement or agreements providing to any person who is or was a director, officer, employee or agent of the corporation indemnification rights substantially similar to, or greater than, those provided in this Article VII.

Section 13.Continuing Benefits. The indemnification and advancement of expenses provided by or granted pursuant to this Article VII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the spouse, heirs, devisees, executors, administrators and other legal representatives of such a person.

Section 14.Successors. For purposes of this Article VII, the terms “the corporation” or “this corporation” shall include any corporation, joint venture, trust, partnership or unincorporated business association that is the successor to all or substantially all of the business or assets of this corporation, as a result of merger, consolidation, sale, liquidation or otherwise, and any such successor shall be liable to the persons indemnified under this Article VII on the same terms and conditions and to the same extent as this corporation.

Section 15.Severability. Each of the sections of this Article VII, and each of the clauses set forth herein, shall be deemed separate and independent, and should any part of any such section or clause be declared invalid or unenforceable by any court of competent jurisdiction, such invalidity or unenforceability shall in no way render invalid or unenforceable any other part thereof or any other separate section or clause of this Article VII that is not declared invalid or unenforceable. If any section, clause or part of this Article VII is determined to be invalid or unenforceable, the corporation in good faith shall expeditiously take all necessary or appropriate action to provide the Indemnified Persons with rights under this Article VII (including with respect to indemnification, advancement of Expenses and other rights) that effect the original intent of this Article VII as closely as possible.

Section 16.Additional Indemnification. In addition to the specific indemnification rights set forth herein, the corporation shall indemnify each of its directors and officers and advance expenses to its directors and officers to the full extent permitted by action of the board of directors without shareholder approval under the Code or other laws of the State of Georgia as in effect from time to time.


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Appendix D

ARTICLE VIII
AMENDMENTS

The board of directors shall have power to alter, amend or repeal the bylaws by majority vote of all of the directors, but any bylaws adopted by the board of directors may be altered, amended or repealed and new bylaws adopted, by the shareholders by majority vote of all of the shares having voting power.














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Annual Meeting Proxy Card
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proxycardfinalpage2.jpg


AProposals — The Board recommends a voteFORall director nominees andFORProposals 2, 3 and 4.
1. Election of Directors:
ForAgainstAbstainForAgainstAbstainForAgainstAbstain
01 – Kelly H. Barrett02 – Kathy T. Betty03 – Douglas C. Curling
04 – Cynthia N. Day05 – Curtis L. Doman06 – Walter G. Ehmer
07 – Hubert L. Harris, Jr.08 – John W. Robinson, III09 – Ray M. Robinson


ForAgainstAbstain       ForAgainstAbstain
2. Approval of a non-binding advisory resolution to approve the Company’s executive compensation.3. Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020.
ForAgainstAbstain
4.Effecting a Holding Company Formation and, in connection therewith, Approval of the Agreement and Plan of Merger, by and among Aaron’s, Inc., Aaron’s Holdings Company, Inc. and Aaron’s Merger Sub, Inc.


BAuthorized Signatures — This section must be completed for your vote to count. Please date and sign below.
Signature should agree with the name(s) hereon. Executors, administrators, trustees, guardians and attorneys should so indicate when signing. For joint accounts each owner should sign. The full name of a corporation should be signed by a duly authorized officer.
Date (mm/dd/yyyy) — Please print date below.Signature 1 — Please keep signature within the box.Signature 2 — Please keep signature within the box.
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IMPORTANT NOTE: Although it is our current intention to allow shareholders to participate in the Annual Meeting in-person, we are monitoring developments relating to the novel coronavirus, or COVID-19, outbreak. We are sensitive to the in-person meeting and travel concerns of our shareholders in these uncertain times. As a result, we may decide to allow shareholders to participate in the Annual Meeting by remote communication, or we may decide to hold the Annual Meeting entirely via remote communication. If we decide that either of these options is necessary or advisable, we will communicate this decision and related instructions in a press release and in the investor relations section of our website, www.aarons.com.






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▼IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
Proxy — Aaron’s, Inc.COMMON STOCK
This Proxy is Solicited by the Board of Directors for the Annual Meeting of Shareholders to be Held on[•], 2020.


The undersigned shareholder of Aaron’s, Inc. hereby constitutes and appoints John W. Robinson III, Steven A. Michaels and Robert W. Kamerschen, or any of them, the true and lawful attorneys and proxies of the undersigned with full power of substitution and appointment, for and in the name, place and stead of the undersigned, to vote all of the undersigned’s shares of common stock of Aaron’s, Inc., at the Annual Meeting of Shareholders to be held in Atlanta, Georgia on[•], 2020,at 9:00 a.m., local time, and at any and all adjournments or postponements thereof as you have indicated with respect to the matters referred to on the reverse side of this proxy. If this card is signed and returned without voting instructions, you will be deemed to have instructed the abovementioned attorneys and proxies to vote your shares in accordance with the recommendations of the Company’s Board of Directors listed below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED ABOVE, “FOR” APPROVAL OF A NON-BINDING ADVISORY RESOLUTION TO APPROVE THE COMPANY’S EXECUTIVE COMPENSATION, “FOR” RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020 AND “FOR” EFFECTING A HOLDING COMPANY FORMATION AND, IN CONNECTION THEREWITH, APPROVAL OF THE AGREEMENT AND PLAN OF MERGER, BY AND AMONG AARON’S, INC., AARON’S HOLDINGS COMPANY, INC. AND AARON’S MERGER SUB, INC.
Participants in any retirement plan of Aaron’s, Inc. may vote their proportionate share of Company common stock held in the plan by signing and returning this card, or by voting electronically or by telephone. By doing so, you are instructing the trustee to vote all of your shares at the meeting, and at any and all adjournments or postponements thereof, as you have indicated with respect to the matters referred to on the reverse side of this proxy.If this card is signed and returned without voting instructions, you will be deemed to have instructed the plan trustee to vote your shares in accordance with the recommendations of the Company’s Board of Directors listed above. If this card is not returned (and your shares are not otherwise voted electronically or by telephone) or if this card is returned unsigned, your shares will be voted by the plan trustee in the same proportion as the shares for which voting instructions are received from other participants in the plan.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders, dated[•], 2020,and the Proxy Statement furnished therewith.
It is understood that this proxy confers discretionary authority in respect to matters not known or determined at the time of the mailing of the Notice of the Annual Meeting of Shareholders to the undersigned.
This proxy is revocable at or at any time prior to the Annual Meeting.
(Continued and to be dated and signed on reverse side)
CNon-Voting Items
Change of Address— Please print new address below.Meeting Attendance
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