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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(RULE 14a-101)Proxy Statement Pursuant to Section 14(a) of theSecurities Exchange Act of 1934| | | |
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RENT-A-CENTER, INC.
![[MISSING IMAGE: lg_racnew-bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-049258/lg_racnew-bw.jpg)
(Name of Registrant as Specified
In Itsin its Charter)
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It is our pleasure to invite you to attend Rent-A-Center, Inc.'s 2021’s 2022 Annual Meeting of Stockholders (the "2021“2022 Annual Meeting"Meeting”). The 20212022 Annual Meeting will be held as a virtual meeting conducted exclusively via live webcast at www.virtualshareholdermeeting.com/RCII2021RCII2022 on Tuesday, June 8, 2021,7, 2022, at 8:00 a.m. Central Time. In connection with the 20212022 Annual Meeting, the attached Notice of Annual Meeting and Proxy Statement describe the business items we plan to address at the meeting. We also plan to have a question and answer session during which our stockholders will have the opportunity to ask questions of management regarding our business. In accordance with the Securities and Exchange Commission's "NoticeCommission’s “Notice and Access"Access” model, we are furnishing proxy materials to our stockholders via the Internet. On or about April 26, 2021,25, 2022, we began mailing a Notice of Internet Availability of Proxy Materials detailing how to access the proxy materials electronically and how to submit your proxy via the Internet. The Notice of Internet Availability of Proxy Materials also provides instructions on how to request and obtain paper copies of the proxy materials and proxy card or voting instruction form, as applicable. We believe this process provides our stockholders with a convenient way to access the proxy materials and submit their proxies online, while allowing us to reduce our environmental impact as well as the costs of printing and distribution. Your vote is very important so we encourage you to review the information contained in the proxy materials and submit your proxy, regardless of the number of shares you own. It is important that beneficial owners of our common stock instruct their brokers on how they want to vote their shares. Please note that you will need the control number provided on your Notice of Internet Availability of Proxy Materials in order to submit your proxy online and, if desired, attend the 20212022 Annual Meeting virtually. We look forward to seeing you online on June 8, 2021.Sincerely,
7, 2022.
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/s/ Jeffrey Brown
Jeffrey Brown
Chairman of the Board
| | | /s/ Mitchell Fadel
Mitchell Fadel
Chief Executive Officer and Director
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| Notice of 20212022 Annual Meeting of Stockholders | |
Tuesday, June 8, 20217, 20228:00 a.m. Central Time The 20212022 annual meeting of stockholders of Rent-A-Center, Inc. will be held as a virtual meeting conducted exclusively via live webcast at www.virtualshareholdermeeting.com/RCII2021RCII2022 on Tuesday, June 8, 2021,7, 2022, at 8:00 a.m. Central Time, for the following purposes: 1.
To elect or re-elect the two Class IIIeight directors nominated by the Boardour board of Directors;directors;
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2.To ratify the Audit & Risk Committee'sCommittee’s selection of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2021;2022;
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3.To conduct an advisory vote approving the compensation of the named executive officers for the year ended December 31, 2020,2021, as set forth in the proxy statement; and
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4.To approve the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan;
5.To approve amendments to the Company's Certificate of Incorporation to declassify the Board of Directors; and
6.To transact other business that properly comes before the meeting and any adjournments or postponement thereof.
The foregoing items of business are more fully described in the proxy statement which is attached to, and made a part of, this notice. The BoardOur board of Directorsdirectors has fixed the close of business on April 12, 202111, 2022 as the record date for determining the stockholders entitled to receive notice of, and to vote at, the 20212022 annual meeting of stockholders and at any and all adjournments or postponements thereof. We are using the "Notice“Notice and Access"Access” method of furnishing proxy materials to our stockholders via the Internet. Instructions on how to access and review the proxy materials on the Internet can be found on the Notice of Internet Availability of Proxy Materials (the "Notice"“Notice”) mailed to stockholders of record on or about April 26, 2021.25, 2022. The Notice also contains instructions on how to receive a paper copy of the proxy materials. Your vote is important, and whether or not you plan to attend the virtual 20212022 annual meeting of stockholders, please vote as promptly as possible. We encourage you to vote via the Internet, as it is the most convenient and cost-effective method of voting. You may also vote by telephone or by mail (if you receive paper copies of the proxy materials or request a paper proxy card). Instructions regarding all three methods of voting are included in the Notice, the proxy card and the proxy statement. Thank you in advance for voting and for your support of Rent-A-Center. By Order of the Board of Directors, /s/ Bryan PecherskyBryan PecherskyExecutive Vice President — General Counsel
and Corporate SecretaryRent-A-Center, Inc.5501 Headquarters Drive, Plano, Texas 75024April 26, 202125, 2022
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE 20212022 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 8, 2021
7, 2022
This Notice of Annual Meeting, the proxy statement and our annual report on Form 10-K for the year ended December 31, 20202021 (the "2020“2021 Form 10-K"10-K”) (which we are distributing in lieu of a separate annual report to stockholders) are available on our website at investor.rentacenter.com, in the "Financial“Financial Information — Annual Reports and Proxies"Proxies” subsection. Additionally, you may access the Notice of Annual Meeting, the proxy statement and the 20202021 Form 10-K at www.proxyvote.com.
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TABLE OF CONTENTS
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SUMMARY
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| SUMMARY | | | | |
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What constitutes a quorum? | | | | |
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How will the proxies be voted? | | | | |
How do I revoke my proxy if desired? | | | | |
How many votes must each proposal receive to be adopted? | | | | |
What are broker non-votes? | | | | |
How will stockholders be able to participate in and ask questions at the 20212022 Annual Meeting? | | | | |
Who is soliciting my proxy? | | | | |
PROPOSAL ONE: ELECTION OF DIRECTORS | | | | |
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Nominees for Director at the 20212022 Annual Meeting | | | | |
Continuing Members of the Board
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Skills and Qualifications of Board of Directors and Nominees | | | | |
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Code of Business Conduct and Ethics | | | | |
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Procedures for Reporting Accounting Concerns | | | | |
Communications with the Board | | | | |
Related Person Transactions | | | | |
PROPOSAL TWO: RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | | | |
Principal Accountant Fees and Services | | | | |
AUDIT AND RISK COMMITTEE REPORT | | | | |
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COMPENSATION DISCUSSION AND ANALYSIS | | | | |
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Termination of Employment and Change-in-Control Arrangements | | | | |
Policies and Risk Mitigation | | 51 |
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Compensation Committee Interlocks and Insider Participation | | | | |
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Compensation Committee Report | | | | |
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Summary Compensation Table | | | | |
Grants of Plan-Based Awards | | | | |
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Outstanding Equity Awards at Fiscal Year End | | | | |
Option Exercises and Stock Vested | | | | |
Non-Qualified Deferred Compensation | | | | |
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Potential Payments and Benefits Uponupon Termination Without a Change in Control | | | | |
Potential Payments and Benefits Uponupon Termination With a Change in Control | | | | |
Potential Realizable Value of Outstanding Awards Upon a Change in Control Without Termination
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Equity Compensation Plan Information | | | | |
PROPOSAL THREE: ADVISORY VOTE ON EXECUTIVE COMPENSATION | | | | |
PROPOSAL FOUR: APPROVAL OF THE RENT-A-CENTER, INC. 2021 LONG-TERM INCENTIVE PLAN
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Highlights of the 2021 Plan
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Key Terms of the 2021 Plan
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U.S. Federal Income Tax Consequences
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New Plan Benefits
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PROPOSAL FIVE: APPROVAL OF THE DECLASSIFICATION AMENDMENTS
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Description of the Proposed Declassification Amendments
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Reasons for Declassifying the Board of Directors
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Vote Required
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | | | | |
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Delinquent Section 16(a) Reports | | | | |
Annual Report on Form 10-K | | | | |
"Householding"“Householding” of Proxy Materials
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Submission of Stockholder Proposals | | | | |
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ANNEX A: 2021 LONG-TERM INCENTIVE PLAN
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ANNEX B: FORM OF AMENDMENT OF CERTIFICATE TO EFFECT THE DECLASSIFICATION AMENDMENTS
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Proxy Statement
For the Annual Meeting of Stockholders
To Be Held on June 8, 2021
7, 2022
This proxy statement is furnished in connection with the solicitation of proxies by Rent-A-Center, Inc. on behalf of its Boardboard of Directorsdirectors (the "Board"“Board”), for the 20212022 Annual Meeting of Stockholders of the Company (the "2021“2022 Annual Meeting"Meeting”). In this proxy statement, references to "Rent-A-Center"“Rent-A-Center”, the "Company"“Company”, "we"“we”, "us"“us”, "our"“our” and similar expressions refer to Rent-A-Center, Inc., unless the context of a particular reference provides otherwise. Although we refer to our website and other websites in this proxy statement, the information contained on our website or other websites is not a part of this proxy statement. The Notice of Internet Availability of Proxy Materials (the "Notice"“Notice”) is being mailed on or about April 26, 202125, 2022 to stockholders of record as of April 12, 2021.11, 2022.
SUMMARY
This summary highlights certain information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. For information regarding our 20202021 performance, please review our Annual Report on Form 10-K for the year ended December 31, 20202021 (the "2020“2021 Form 10-K"10-K”).
Date & Time:8:00 a.m., Central Time, on Tuesday, June 8, 2021,7, 2022, or at such other time to which the meeting may be adjourned or postponed. References in this proxy statement to the 20212022 Annual Meeting also refer to any adjournments, postponements or changes in time or location of the meeting, to the extent applicable. Location:The meeting will be a virtual meeting conducted exclusively via live webcast at www.virtualshareholdermeeting.com/RCII2021.RCII2022.
Eligibility to Vote: You can vote if you were a stockholder of record at the close of business on April 12, 202111, 2022 by following the instructions set forth in this proxy statement. The Company'sCompany’s decision to hold a virtual meeting was made in light of ongoing developments relating to the novelcontinuing coronavirus outbreak (COVID-19). pandemic. We believe the virtual meeting will facilitate stockholder attendance and participation by enabling stockholders to participate from any location and at no cost, regardless of size, resources or physical location and will safeguard the health of our stockholders, Board and management. You will be able to attend the 20212022 Annual Meeting online, vote your shares electronically and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/RCII2021.RCII2022. To participate in the virtual meeting, you will need the control number included on the Notice, proxy card or voting instruction form. The meeting webcast will begin promptly at 8:00 a.m., Central Time. We encourage you to access the meeting website approximately 10-15 minutes prior to the start time.
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Overview of Proposals
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Proposal
| | Board Vote Recommendation
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| | One: Election of Directors | | | FOR each Director Nominee | |
| | Two: Ratification of Auditors | | | FOR | |
| | Three: Advisory Vote on Executive Compensation | | FOR |
Four: Approval of the 2021 Long-Term Incentive Plan | | FOR |
Five: Approval of Amendments to the Company's Certificate of Incorporation to Declassify the Board (the "Declassification Amendments") | | FOR |
| | | FOR | |
The following table provides summary information about each director nominee who is nominated for election or re-election at the 20212022 Annual Meeting. Unless the Declassification Amendments are approved by our stockholders at the 2021 Annual Meeting, eachEach director nominee will serve a three-yearone-year term expiring at the 20242023 annual meeting of stockholders and until their successors are elected and qualified.| | Name | | | Age | | | Director
Since | | | Experience/Qualification | | | Independent | | | Committee
Memberships | | | Other Public
Company
Boards | |
| | Jeffrey Brown (Chairman) | | | 61 | | | 2017 | | | •
Significant public and private company board experience •
Broad transactional expertise | | | Yes | | | Audit & Risk (chair) | | | Medifast, Inc. | |
| | Mitchell Fadel | | | 64 | | | 2017 | | | •
Chief Executive Officer and former Chief Operating Officer of the Company •
Significant knowledge of the business and rent-to-own industry | | | — | | | — | | | — | |
| | Christopher Hetrick | | | 43 | | | 2017 | | | •
Extensive investment experience •
Corporate strategy, capital allocation, executive compensation and investor communications | | | Yes | | | Compensation (chair) Nominating and Corporate Governance | | | — | |
| | Harold Lewis | | | 61 | | | 2019 | | | •
Financial technology •
Consumer finance | | | Yes | | | Audit & Risk Compensation | | | — | |
| | Glenn Marino | | | 65 | | | 2020 | | | •
Retail finance, business development and banking | | | Yes | | | Audit & Risk Nominating and Corporate Governance | | | — | |
| | Carol McFate | | | 69 | | | 2019 | | | •
Corporate finance and treasury •
Governance | | | Yes | | | Audit & Risk Nominating and Corporate Governance (chair) | | | Argo Group International Holdings, Ltd | |
| | B.C. Silver | | | 41 | | | 2021 | | | •
Financial technology, consumer products and retail industries | | | Yes | | | Compensation Nominating and Corporate Governance | | | — | |
| | Jen You | | | 40 | | | 2022 | | | •
Consumer technology products and platforms | | | Yes | | | Compensation | | | — | |
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Since
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Company Boards
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Glenn Marino | | | 64 | | | 2020 | | • Retail finance, business development and banking | | Yes | | Audit & Risk
Nominating and Corporate Governance |
| — |
B.C. Silver | | | 40 | | | 2021 | | • Financial technology, consumer products and retail industries | | Yes | | Compensation
Nominating and Corporate Governance | | — |
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As previously announced, Michael Gade determined not to stand for re-election at the 2021 Annual Meeting and will retire as a director at the end of his term at the 2021 Annual Meeting.
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Continuing Directors
The following directors are not standing for election or re-election and their terms will continue past this year's stockholder meeting:
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Name
| | Age
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Since
| | Current
Term
Expires
| | Experience/Qualification
| | Independent
| | Committee
Memberships
| | Other Public
Company
Boards
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Jeffrey Brown (Chairman) | | | 60 | | | 2017 | | | 2023 | | • Significant public and private company board experience | | Yes | | Audit & Risk (chair) | | • Medifast, Inc. |
| | | | | | | | | | | • Broad transactional expertise | | | | | | |
Christopher Hetrick | | | 42 | | | 2017 | | | 2023 | | • Extensive investment experience | | Yes | | Compensation (chair) | | — |
| | | | | | | | | | | • Corporate strategy, capital allocation, executive compensation and investor communications | | | | Nominating and Corporate Governance | | |
Harold Lewis | | | 60 | | | 2019 | | | 2022 | | • Financial technology | | Yes | | Audit & Risk | | — |
| | | | | | | | | | | • Consumer finance | | | | Compensation | | |
Carol McFate | | | 68 | | | 2019 | | | 2022 | | • Corporate finance and treasury | | Yes | | Audit & Risk | | • Argo Group International Holdings, Ltd |
| | | | | | | | | | | • Governance; leadership | | | | Nominating and Corporate Governance(1) | | |
Mitchell Fadel | | | 63 | | | 2017 | | | 2023 | | • Chief Executive Officer and former Chief Operating Officer of the Company
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| — | | — | | — |
| | | | | | | | | | | • Significant knowledge of the business and rent-to-own industry | | | | | | |
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(1)Following the 2021 Annual Meeting, Ms. McFate will replace Mr. Gade as Chair of the Nominating and Corporate Governance Committee.
Independent Directors
Other than our Chief Executive Officer, all members of the Board are independent as determined in accordance with applicable rules of Nasdaq and the SECSecurities and Exchange Commission (the “SEC”) and as determined by our Board. Board Leadership Structure; Independent Chairman Our Board separates the roles of Chairman and Chief Executive Officer. Mr. Brown serves as Chairman and Mr. Fadel serves as our Chief Executive Officer. Our Board includes a range of individuals with diverse backgrounds and experiences, including both gender and ethnic diversity. Our Board has established corporate governance practices designed to serve the best interests of our Company and our stockholders, including: •
a code of business conduct and ethics applicable to all of our Board members and employees;
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•a majority voting standard in non-contested elections for directors;
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annual elections for all directors;
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•a policy for the submission of complaints or concerns relating to accounting, internal accounting controls or auditing matters; and
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•procedures regarding stockholder communications with our Board and its committees.
Under our current compensation program, our non-employee directors are entitled to receive annual retainers, and meeting attendance fees, which are payable in cash unless the applicable director has elected to receive all or a portion of such amount in the form of deferred stock units ("DSUs"(“DSUs”), as well as an annual DSU award under the 2016Rent-A-Center, Inc. 2021 Long-Term Incentive Plan (or, if approved by stockholders at the 2021 Annual Meeting, the 2021 Long-Term Incentive Plan) valued at $120,000.(the “2021 Plan”) with a grant date value of $132,500. In addition, non-employee directors may elect to defer cash dividends otherwise payable on DSUs into additional DSUs. The Company provides a 25% matching contribution on deferrals of cash retainers and cash dividends into DSUs.
Mr. Fadel, our Chief Executive Officer and our only employee director, is not entitled to receive compensation for his service as a director. The objectives of our executive compensation program are to: •
attract, retain and motivate senior executives with competitive compensation opportunities;
•
•balance short-term and long-term strategic goals;
•
•align our executive compensation program with the core values identified in our mission statement, which focuses on improving the quality of life for our co-workers and our customers; and
•
•reward achievement of our financial and non-financial goals.
The Company'sCompany’s compensation philosophy is generally to refer to the 50th-75th50th to 75th percentile of target total direct compensation (base salary, annual incentive opportunity and long-term incentive compensation opportunity) paid at similarly-situatedsimilarly situated public companies in the retail and consumer finance sectors, which include companies in the Company'sCompany’s Peer Group (as described under "Compensation“Compensation Discussion and Analysis"Analysis” below), as a guideline, with cash compensation (base salary and annual incentive opportunity) generally targeted at around the 50th percentile and long-term incentive compensation generally targeted at around the 75th percentile.
The following are the primary forms of compensation currently utilized by the Compensation Committee in compensating our named executive officers: •
base salary, which is paid in cash;
•
•annual incentive compensation, which is paid in cash and, for 2021, iswas based on (1) consolidated adjusted EBITDA, (2) Acima (formerly Preferred Lease) segment revenues, (2)and (3) Rent-A-Center Business segment same store sales, and (3)sales. For purposes of the annual incentive compensation, consolidated adjusted EBITDA which is calculated as net earnings before interest, taxes, depreciation and amortization, and the impacts of the annual incentive compensation expense, as adjusted for certain gains and charges we view as extraordinary, unusual or non-recurring in nature and which we believe do not reflect our core business activities ("(“Adjusted EBITDA"EBITDA”); and
•
•long-term incentive compensation, which was updated in 2021 to eliminate stock options and implement ratable vesting of restricted stock units, and now consists of (1) restricted stock units which vest one-third each year over a three-year period, and (2) performance stock units which
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Pay for Performance; Relative Total Shareholder Return Our executive compensation program directly links a substantial portion of executive compensation to our financial and stock price performance through both annual and long-term incentives. For the 20202021 annual cash incentive program, based on strong Company performance, each executive officer received an amount equal to 180128% of such person'sperson’s target bonus amount. In 2020, performance stock units granted in 2018 also vested following their three-year vesting period. In 2018,2019, our Compensation Committee granted to oureligible executive officers performance-based restricted stock units based on our relative Total Shareholder Return ("TSR"(“TSR”) as compared to the S&P 1500 Specialty Retail Index over a three-year measurement period.period, which ended December 31, 2021. Our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period, ended December 31, 2020, ranked us 26 out of 6057 companies in the S&P 1500 Specialty Retail Index, or the 98th91st percentile, which resulted in the vesting of 200% of the performance-based restricted stock units that were granted. StockEquity Ownership GuidelinesWe believe that our Board and our management should have a significant financial stake in the Company to ensure that their interests are aligned with those of our stockholders. To that end, our directors, Chief Executive Officer, executive vice presidents, senior vice presidents and vice presidents are subject to equity interestownership guidelines. Hedging and Pledging Restrictions Our insider trading policy prohibits our directors, officers and employees from engaging in hedging, monetization or options transactions related to our securities or transactions involving any derivative security of the Company or similar instruments. Our insider trading policy also prohibits the holding of securities of the Company in a margin account or pledging securities of the Company as collateral for a loan, in each case unless they are treated as non-marginable by the brokerage firm. Our Board has adopted a clawback policy that allows the Company to seek recoupment, repayment and/or forfeiture of any annual or long-term cash, equity or equity-based incentive or bonus compensation outstanding and unpaid or paid and received during the three-year period preceding the date of a clawback event (as described under "Compensation“Compensation Discussion and Analysis — Policies and Risk Mitigation — Clawback Policy"Policy”).
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QUESTIONS AND ANSWERS ABOUT THE
2021 2022 ANNUAL MEETING AND VOTING PROCEDURES
Stockholders of record as of the close of business on April 12, 2021,11, 2022, the record date for the 20212022 Annual Meeting, may vote at the virtual meeting. Each share of common stock entitles the holder to one vote per share. As of April 12, 2021,11, 2022, there were 66,308,28759,138,942 shares of our common stock outstanding, which were held by 5046 holders of record. At least ten days prior to the 20212022 Annual Meeting, a complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose germane to the meeting, during ordinary business hours at our principal executive offices located at 5501 Headquarters Drive, Plano, Texas 75024. Any such examination will be subject to adhering to required safety protocols implemented due to the COVID-19 pandemic. The list will also be available online at the 20212022 Annual Meeting for examination by any stockholder who is present.
What constitutes a quorum? What constitutes a quorum?
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The holders of at least a majority of our outstanding shares of common stock entitled to vote at the 20212022 Annual Meeting must be present online or represented by proxy at the 20212022 Annual Meeting to have a quorum. Any stockholder present online at the 20212022 Annual Meeting or represented by proxy, but who abstains from voting, and "broker non-votes"“broker non-votes” will be counted for purposes of determining whether a quorum exists. If a quorum is not present, the meeting may be adjourned or postponed from time to time until a quorum is obtained.
You cannot vote your shares of common stock unless you are present online at the virtual meeting or you have previously given your proxy before the applicable deadline. If you are a registered stockholder, you may vote your shares or submit a proxy in one of the following convenient ways:
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Voting Method | | | | | | Description of Process | | |
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By Internet | | | | | | | | |
| | By Internet | | | | You may submit a proxy electronically on the Internet, by visiting the website shown on the Notice or proxy card and following the instructions. | | |
| | | By Telephone | | | | | | |
| | By Telephone | | | | If you request paper copies of the proxy materials by mail, you may submit a proxy by telephone, by calling the toll-free telephone number shown on the Notice or proxy card and following the instructions. | | |
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| | By Mail | | | | If you request paper copies of the proxy materials by mail, you may submit a proxy by signing, dating and returning a paper proxy card in accordance with its instructions. The Notice provides instructions on how to request a paper proxy card and other proxy materials. | | |
| | | | | Online at the 2022 Annual Meeting | | | | |
| | Online at the 2021 Annual Meeting | | | | You may vote by attending the 20212022 Annual Meeting and casting your vote during the designated portion of the meeting by following the instructions provided on the meeting website. Merely attending the meeting online, but without properly voting, will not count as a vote. | | |
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If you are voting on the Internet prior to the 20212022 Annual Meeting or by telephone, your voting instructions must be received by 11:59 p.m., Eastern Time on June 7, 2021,6, 2022, unless you are a participant in our 401(k) plan, in which case your voting instructions must be received by 11:59 p.m., Central Time, on June 2, 2021.2022.
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If your shares are held in street name, you will receive instructions from your bank, broker or other holder of record that you must follow in order for your shares to be voted.
How will the proxies be voted? How will the proxies be voted?
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The Board has appointed Mr. Bryan Pechersky, Executive Vice President, General Counsel and Corporate Secretary, and Ms. Maureen Short, Executive Vice President and Chief Financial Officer, as the management proxyholders for the 20212022 Annual Meeting. All properly executed proxies, unless revoked as described below, will be voted by a management proxyholder at the meeting in accordance with your directions on the proxy. If a properly executed proxy does not provide instructions, the shares of common stock represented by your proxy will be voted:
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Proposal | | | | | | Board Recommendation | | |
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One: Election of Directors | | | | | | “FOR” each of the Board’s nominees for director | | |
| | One: Election of Directors | | | | "FOR" each of the Board's nominees for Class III director | | |
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| | Two: Ratification of the Audit & Risk Committee'sCommittee’s Selection of Ernst & Young LLP | | | | "FOR"“FOR” the ratification of the Audit & Risk Committee'sCommittee’s selection of Ernst & Young LLP as our independent registered public accounting firm for 2021 | | |
2022 | | |
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| | Three: Advisory Vote on Executive Compensation | | | | "FOR"“FOR” the resolution approving, on an advisory basis, the compensation of the named executive officers for the year ended December 31, 2020,2021, as set forth in this proxy statement | | |
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| | Four: Approval of the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan | | | | "FOR" the approval of the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan | | |
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| | Five: Approval of the Declassification Amendments | | | | "FOR" the approval of the Declassification Amendments | | |
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As of the date of this proxy statement, the Board is not aware of any other business or nominee to be presented or voted upon at the 20212022 Annual meeting.Meeting. Should any other matter requiring a vote of stockholders properly arise, the management proxy holders will use their discretion to vote the proxies in accordance with their best judgment in the interests of the Company. Unless otherwise stated, all shares represented by your completed, returned, and signed proxy will be voted as described above. How do I revoke my proxy if desired? How do I revoke my proxy if desired?
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If you are a registered stockholder, you may revoke your proxy by timely following one of the processes set forth below.
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| | | Revocation Method | | | | Description of Process | | |
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| | New Proxy Card | | | | | | |
| | New Proxy Card | | | | Deliver a signed proxy, dated later than the first one, which proxy must be received by the Company prior to the vote at the 20212022 Annual Meeting | | |
| | | | | New Internet/Telephone Proxy | | | | |
| | New Internet/Telephone Proxy | | | | Vote at a later time on the Internet or by telephone, if you previously voted on the Internet or by telephone, which vote must be submitted prior to the deadline set forth above | | |
| | | New Vote Online at 2022 Annual Meeting | | | | | | |
| | New Vote Online At 2021 Annual Meeting | | | | Attend the virtual meeting and vote online or by proxy (attending the virtual meeting alone will not revoke your proxy) | | |
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| | Written Notice to the Company | | | | Deliver a signed, written revocation letter, dated later than the previously submitted proxy, to Bryan Pechersky, Executive Vice President — General Counsel & Corporate Secretary, at 5501 Headquarters Drive, Plano, TX 75024, which letter must be received by the Company prior to the vote at the 20212022 Annual Meeting | | |
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If you are a street name stockholder and you submit a voting instruction form, you may change your vote by submitting new voting instructions to your bank, broker or other holder of record in accordance with the procedures of such bank, broker or other holder of record.
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How many votes must each proposal receive to be adopted?
How many votes must each proposal receive to be adopted?
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| | | Proposal | | | | | | Required Vote for Approval | | | | |
| | Proposal
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| | | Impact of Broker Non-Votes and
Abstentions
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| | | One: Election of Directors | | | | | | | | | | | | |
| | One: Election of Directors | | | | Under our Bylaws,bylaws, directors are elected by a majority of the votes cast in uncontested elections. Accordingly, the numbers of votes cast "for"“for” a director nominee must exceed the number of votes cast "against"“against” that nominee. In contested elections, the vote standard would be a plurality of votes cast. Each share may be voted for each of the nominees, but no share may be voted more than once for any particular nominee. | | | | Broker non-votes and abstentions will not affect the outcome of the vote. | | |
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| | Two: Ratification of the Audit & Risk Committee'sCommittee’s Selection of Ernst & Young LLP | | | | A majority of the votes cast is required to ratify Ernst & Young LLP as our independent registered public accounting firm. | | | | BrokersCertain brokers have discretionary authority in the absence of timely instructions from their customers to vote on this proposal. Abstentions will not affect the outcome of the vote. | | |
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| | Three: Advisory Vote On Executive Compensation | | | | The affirmative vote of the holders of a majority in voting power of the shares of common stock present online or represented by proxy and entitled to vote at the meeting is required to approve the advisory resolution on executive compensation. | | | | Broker non-votes will not affect the outcome of the vote. Because abstentions are counted as shares present and entitled to vote on the proposal, each abstention will have the same effect as a vote "against"“against” this proposal. | | |
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| | Four: Approval of the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan | | | | The affirmative vote of the holders of a majority in voting power of the shares of common stock present online or represented by proxy and entitled to vote at the meeting is required to approve the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan. | | | | Broker non-votes will not affect the outcome of the vote. Because abstentions are counted as shares present and entitled to vote on the proposal, each abstention will have the same effect as a vote "against" this proposal. | | |
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| | Five: Approval of the Declassification Amendments | | | | The affirmative vote of the holders of at least eighty percent (80%) of the shares of common stock of the Company issued and outstanding as of the record date for the 2021 Annual Meeting is required to approve the Declassification Amendments. | | | | Broker non-votes and abstentions will have the same effect as a vote "against" this proposal. | | |
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A representative of Broadridge Financial Services, Inc. will tabulate the votes and act as inspector of elections. What are broker non-votes? What are broker non-votes?
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Broker non-votes occur when nominees, such as banks and brokers, holding shares on behalf of beneficial owners, or customers, do not receive voting instructions from the customers. Brokers holding shares of record for customers generally are not entitled to vote on certain matters unless they receive voting instructions from their customers. In the event that a broker does not receive voting instructions for these matters, a broker may notify us that it lacks voting authority to vote those shares. These broker non-votes refer to votes that could have been cast on the matter in question by brokers with respect to uninstructed shares if the brokers had received their customers'customers’ instructions. These broker non-votes will be included in determining whether a quorum exists.
Your bank or broker is not permitted to vote your uninstructed shares in respect of Proposal One (election of directors), or Proposal Three (advisory vote on executive compensation), Proposal Four (approval of the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan) or Proposal Five (approval of the Declassification Amendments). As a result, if you hold your shares in street name and you do not instruct your bank or broker how to vote, no votes will be cast on your behalf in respect of the foregoing matters. However, if
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you hold your shares in street name and you do not instruct your bank or broker how to vote in respect of Proposal Two (ratification of auditors), your bank or broker ismight be entitled to vote your shares.
To be certain your shares are voted in the manner you desire, you should instruct your bank or broker how to vote your shares.
How will stockholders be able to participate in and ask questions at the 2022 Annual Meeting? How will stockholders be able to participate in and ask questions at the 2021 Annual Meeting?
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The 20212022 Annual Meeting will be a virtual meeting conducted exclusively via live webcast at www.virtualshareholdermeeting.com/RCII2021.RCII2022. To participate in the virtual meeting, visit such website and enter the control number included on the Notice, proxy card or voting instruction form.
The virtual meeting will provide substantially the same opportunities to participate as stockholders would have at an in-person meeting. Stockholders will be able to attend and participate online and submit questions prior to or during the meeting. Questions may be submitted in advance of the meeting prior to 11:59 p.m., Eastern Time, on June 7, 2021,6, 2022, by logging into www.proxyvote.com, entering your control number and, once past the login screen, clicking on "Submit“Submit Questions,"” choosing a question type, typing in your question, and clicking "Submit."“Submit.” Alternatively, questions may be submitted during the meeting by logging into the virtual meeting platform, at www.virtualshareholdermeeting.com/RCII2021, clicking on "Q“Q&A,"” typing in your question, and clicking "Submit."“Submit.”
As part of the 20212022 Annual Meeting, we will hold a question and answer session, during which we intend to answer questions submitted prior to and during the meeting in accordance with the 20212022 Annual Meeting procedures and which are pertinent to the Company and the meeting matters, as time permits. Questions or comments that are irrelevant to the business of the meeting or the Company'sCompany’s business, in furtherance of the personal or business interests of a stockholder, relate to material non-public information of the Company or pending or threatened litigation or investigations, derogatory to individuals or groups or not in good taste, related to personal grievances or are otherwise not suitable for the conduct of the meeting as determined in the sole discretion of the Company will not be answered. The Company may not respond to questions that are substantially repetitious of other statements made or questions received, or may group questions together by topic with a representative question read aloud and answered. Any questions pertinent to meeting matters that are not answered during the meeting due to time constraints will be posted online and answered at investor.rentacenter.com. The questions and answers will be available as soon as practical after the meeting and will remain available until one week after posting. The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Shareholders should ensure that they have a strong internet connection if they plan to attend and/or participate in the meeting. We encourage you to access the meeting website approximately 10-15 minutes prior to the start time to allow for any unforeseen technical issues, as the meeting webcast will begin promptly at 8:00 a.m., Central Time. If you encounter any difficulties accessing the virtual meeting, please call the technical support number that will be posted on the virtual meeting login page for assistance. Technical support will be available beginning at 7:45 a.m., Central Time, on the date of the meeting through the conclusion of the meeting.
Who is soliciting my proxy?
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Who is soliciting my proxy?
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The Board is soliciting your proxy and we will bear the cost of soliciting proxies. Proxies may be solicited by telephone, electronic mail, personal interview or other means of communication. We will reimburse banks, brokers, custodians, nominees and fiduciaries for reasonable expenses they incur in sending proxy materials to you if you are a beneficial holder of our shares. We have engaged Saratoga Proxy Consulting LLC, a proxy solicitation firm, to assist in the solicitation of proxies for which we will pay a fee in the amount of $10,000 and will also reimburse Saratoga Proxy Consulting LLC for reasonable and customary out-of-pocket expenses incurred in performing such services.
Following approval of the amendment to the Company’s Certificate of Incorporation at the 2021 annual meeting of stockholders, each director elected at each annual meeting of stockholders, beginning with the 2022 Annual Meeting, will serve a one-year term expiring at the following annual meeting of stockholders and until his or her respective successor is duly elected and qualified, or until his or her earlier death, resignation, disqualification or removal. Currently, the number of directors constituting our entire Board is eight, divided into three classes. Directors in each class serve for a term of three years, or until their earlier death, resignation, disqualification or removal. One class of directors is elected each year at the annual meeting of stockholders.
eight.
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Director
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| | Expiration of Current Term
(Annual Stockholders Meeting)
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| | | | | Director Since | |
| Jeffrey Brown | | | 2017 | |
| | Mitchell Fadel | | | 2017 | |
| | Christopher Hetrick | | | 2017 | |
| | Harold Lewis | | Class I | 2019 | |
| | Glenn Marino | | | 2020 | |
| | Carol McFate | | | 2019 | |
| | B.C. Silver | | | 2021 | |
| | Jen You | | | 2022 | |
Carol McFate
| | Class I | | | 2022 | |
Jeffrey Brown
| | Class II | | | 2023 | |
Mitchell Fadel
| | Class II | | | 2023 | |
Christopher Hetrick
| | Class II | | | 2023 | |
Michael Gade
| | Class III | | | 2021 | |
Glenn Marino
| | Class III | | | 2021 | |
B.C. Silver
| | Class III | | | 2021 | |
Nominees for Director at the 2022 Annual Meeting
Nominees for Director at the 2021 Annual Meeting
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Two Class IIIEach of our eight directors are to be elected by our stockholders at the 20212022 Annual Meeting. Our Board, upon recommendation of the Nominating and Corporate Governance Committee, has nominated (1) Glenn Marino to be re-elected, and (2) B.C. Silver, who was appointed to the Board in January 2021,each of our sitting directors to be elected or re-elected as Class III directors by our stockholders. As noted above, Michael Gade determined not to stand for re-election at the 2021 Annual Meeting and will retire as a director at the end of his term at the 2021 Annual Meeting.
The qualifications necessary for a board nominee and the Nominating and Corporate Governance Committee'sCommittee’s process for evaluating prospective board members is discussed under "Director“Director Nominations — Qualifications"Qualifications” below. Specific experience and relevant considerations with respect to each nominee are set forth in each candidate'scandidate’s respective biography below.Mr. Marino and Mr. Silver have
Each director has agreed to stand for re-election and election respectively. However,or re-election; however, should eitherany of them become unable or unwilling to accept such nomination, the shares of common stock voted for that nominee by proxy will be voted for the election of a substitute nominee as the Board may recommend, or the Board may reduce the number of directors to eliminate the vacancy. If any nominee is unable to serve his or her full term, the Board may reduce the number of directors or designate a substitute to serve until the 2024subsequent annual meeting of stockholders. Our Board has no reason to believe that eitherany of Mr. Marino or Mr. Silverthe director nominees will be unable or unwilling to serve as a director, and, to the knowledge of the Board, each intends to serve the entire term for which election is sought.
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Our Board recommends that you vote "FOR"“FOR” each of Mr. Marino and Mr. Silver.
the director nominees.
| | | | | Jeffrey Brown | |
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Age: 61
Director Since: 2017
Committees Served: Audit & Risk (chair)
Gender: Male
Ethnicity: Caucasian | |
Mr. Brown is the Chief Executive Officer and founding member of Brown Equity Partners, LLC (“BEP”), which provides capital to management teams and companies needing equity capital. Prior to founding BEP in 2007, Mr. Brown served as a founding partner and primary deal originator of the venture capital and private equity firm Forrest Binkley & Brown from 1993 to 2007. Mr. Brown has worked at Hughes Aircraft Company, Morgan Stanley & Company, Security Pacific Capital Corporation and Bank of America Corporation.
In his 35 years in the investment business, Mr. Brown has served on over 50 boards of directors, including the boards of directors of ten public companies. Since June 2017, Mr. Brown has served as a director of Rent-A-Center, Inc., and is currently its Chairman. Since June 2015, Mr. Brown has served as the Lead Director of Medifast, Inc., where he also serves as chairman of the Audit Committee and is a member of the Executive Committee. Mr. Brown previously served as a director for companies such as Outerwall Inc., Midatech Pharma PLC and Nordion, Inc.
We believe Mr. Brown’s extensive public and private company board experience, significant transactional experience and strong financial experience, provide valuable perspectives and leadership to the Board as we pursue our strategic growth objectives.
| | | | Mitchell Fadel | |
| | Director; Chief Executive Officer
Age: 64
Director Since: 2017
Committees Served: N/A
Gender: Male
Ethnicity: Caucasian; Middle-Eastern | |
Mr. Fadel has served as one of our directors since June 2017 and was named Chief Executive Officer on January 2, 2018. Mr. Fadel was self-employed prior to joining the Company after most recently serving as President — U.S. Pawn for EZCORP, Inc., a leading provider of pawn loans in the United States and Mexico, from September 2015 to December 2016. Prior to that, Mr. Fadel served as President of the Company (beginning in July 2000) and Chief Operating Officer (beginning in December 2002) each until August 2015, and also as a director of the Company from December 2000 to November 2013. From 1992 until 2000, Mr. Fadel served as President and Chief Executive Officer of the Company’s subsidiary Rent-A-Center Franchising International, Inc. f/k/a ColorTyme, Inc. Mr. Fadel’s professional experience with the Company also includes previously serving as a Regional Director and a District Manager.
As our Chief Executive Officer, Mr. Fadel’s day-to-day leadership provides him with intimate knowledge of our operations that are a vital component of our Board discussions. In addition, Mr. Fadel brings 30 years of experience in and knowledge of the rent-to-own industry, including his previous tenure as our President and Chief Operating Officer, to the Board. We believe Mr. Fadel’s service as our Chief Executive Officer creates a critical link between management and our Board, enabling our Board to perform its oversight function with the benefit of management’s perspectives on our business.
| | | Glenn Marino
| | Christopher Hetrick | |
| | Independent Director
Age: 6443
Director Since: 2017
Committees Served: Compensation (chair); Nominating and Corporate Governance
Gender: Male
Ethnicity: Caucasian | |
Mr. Hetrick has been the Director of Research at Engaged Capital, a California based investment firm and registered advisor with the SEC focused on investing in small and mid-cap North American equities, since September 2012. Prior to joining Engaged Capital, Mr. Hetrick worked at Relational Investors LLC (“Relational”), a $6 billion activist equity fund, from January 2002 to August 2012. Mr. Hetrick began his career with Relational as an associate analyst. He eventually became the firm’s senior consumer analyst overseeing over $1 billion in consumer sector investments. Prior to his work heading up the consumer research team, Mr. Hetrick was a generalist covering major investments in the technology, financial, automotive and food sectors.
We believe that Mr. Hetrick’s extensive investment experience in a broad range of industries including consumer retail as well as his expertise in corporate strategy, capital allocation, executive compensation and investor communications provide valuable perspectives to our Board.
| | | | | Harold Lewis | |
| | Independent Director
Age: 61
Director Since: 2019
Committees Served: Audit & Risk; Compensation
Gender: Male
Ethnicity: African American | |
Mr. Lewis brings over 30 years of experience in financial services and mortgage lending. From August 2018 until June 2019, he served as the CEO of Renovate America, Inc., a national home improvement fintech company focused on energy efficient home improvement lending. From 2016 to 2018, Mr. Lewis was a senior advisor for McKinsey & Company, a worldwide management consulting firm. From 2012 to 2015 he served as President and COO of Nationstar Mortgage, one of the largest mortgage servicers in the country. In that position, he grew Nationstar’s servicing platform from $30 billion to $400 billion and mortgage origination portfolio from $1.8 billion to $25 billion while also building and managing Nationstar’s relationship with the newly created industry regulator, the Consumer Financial Protection Bureau. Prior to Nationstar Mortgage, he held C-Suite and senior executive positions at Citi Mortgage, Fannie Mae, Resource Bancshares Mortgage Group and Nations Credit, among others.
We believe that Mr. Lewis’ significant financial technology knowledge, broad experience with a similar customer demographic as our company and consumer finance regulatory experience provides our Board with an important resource across our Rent-A-Center and Acima businesses.
| | | | | Glenn Marino | |
| | Independent Director
Age: 65
Director Since: 2020
Committees Served: Audit & Risk; Nominating and Corporate Governance
Gender: Male
Ethnicity: Caucasian
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Mr. Marino was appointed to the Board in February 2020. Mr. Marino brings 40 years of experience in the consumer retail finance industry, most recently serving as Executive Vice President, CEO — Payment Solutions and Chief Commercial Officer of Synchrony Financial, Inc., a $21 billion financial services company, from 2014 until 2018. Prior to the spin-off in 2014 of Synchrony by General Electric Corporation, Mr. Marino was an executive with the North American retail finance business of General Electric, serving as CEO — Payment Solutions and Chief Commercial Officer from 2012-2013, and CEO — Sales Finance from 2001 to 2011. From 1999 to 2001, Mr. Marino served as CEO of Monogram Credit Services, a joint venture between GE and BankOne (now JPMorgan Chase & Co.). Prior to that, Mr. Marino held various roles of increasing responsibility in finance, business development, credit risk, and marketing with General Electric and Citibank. We believe Mr.
Marino'sMarino’s extensive knowledge in retail finance, business development, and banking
providesand his consumer finance regulatory experience provide a valuable perspective to our Board as we continue to grow our
retail partnerships, particularly as it relates to the expansion of our Acima
(formerly Preferred Lease) segment.
| | | |
 | | | Carol McFate | |
| | Independent Director
Age: 69
Director Since: 2019
Committees Served: Audit & Risk; Nominating and Corporate Governance (chair)
Gender: Female
Ethnicity: Caucasian | |
Ms. McFate served from 2006 until 2017 as the Chief Investment Officer of Xerox Corporation, a multinational document provider of multifunction document management systems and services, managing retirement assets for North American and United Kingdom plans. Previously, Ms. McFate served in various finance and treasury roles for a number of prominent insurance and financial services companies, including XL Global Services, Inc., a U.S.-based subsidiary of XL Capital Ltd., a leading Bermuda-based global insurance and reinsurance company, American International Group, Inc., an American multinational property & casualty insurance, life insurance, and financial services provider, and Prudential Insurance Company of America, an American Fortune Global 500 and Fortune 500 company whose subsidiaries provide life insurance, investment management and other financial products and services to both retail and institutional customers through the U.S. and in over 30 other countries. Ms. McFate is a Chartered Financial Analyst. Ms. McFate also serves as a director and member of the audit committee and as the chair of the investment committee of Argo Group International Holdings, Ltd.
Ms. McFate brings over 40 years of global corporate finance experience and a varied viewpoint to the Board which we believe supports us in our strategic initiatives and enhances our long-term vision, sustainable growth and shareholder value.
| | | | | B.C. Silver | |
| | Independent Director
Age: 41
Director Since: 2021
Committees Served: Compensation; Nominating and Corporate Governance
Gender: Male
Ethnicity: African American
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Mr. Silver was appointed to the Board in January 2021. Mr. Silver is an accomplished marketing executive and entrepreneur who has established several startup companies in the financial services and technology industries. Mr. Silver currently serves as the Chief Marketing Officer for Root Inc., an insurance fintech company currently serving the auto insurance market. Mr. Silver is also the founder of Grind Finance, a mobile banking company launched in 2019 designed to empower underserved communities. From 2017 to 2019, Mr. Silver served as President, Chief Marketing Officer for RushCard (which was acquired by Green Dot Corporation) and as General Manager-ConsumerManager — Consumer Division and Vice President of Digital Marketing and Account Acquisition for Green Dot Corporation, a financial technology leader and bank holding company that designs and deploys mobile banking and financial services products directly to consumers through one of the largest retail banking distribution platforms in America. From 2015 to 2017, Mr. Silver served as Senior Director of Marketing and Strategic Planning for Mars, Incorporated, a leading global consumer products company with a portfolio of confectionery, food and pet care products and services. Prior to Mars, Mr. Silver served in sales and marketing positions with The Clorox Company and Procter & Gamble. Mr. Silver has extensive knowledge of the financial technology, consumer products and retail industries and strong marketing and leadership skills, which we believe are valuable assets as we continue to invest in our digital lease-to-own solutions across our business.
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Continuing Members of the Board
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The terms of the following five members of our Board will continue past the 2021 Annual Meeting.
Terms to Expire at the 2022 Annual Meeting:
| | | |
 | | | Jen You | |
| | Independent Director
Age: 6040
Director Since: 20192022
Committees Served: Audit & Risk; Compensation
Gender: Male
Ethnicity: African American
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Mr. Lewis brings over 30 years of experience in financial services and mortgage lending. From August 2018 until June 2019, he served as the CEO of Renovate America, Inc., a national home improvement fintech company focused on energy efficient home improvement lending. From 2016 to 2018, Mr. Lewis was a senior advisor for McKinsey & Company, a worldwide management consulting firm. From 2012 to 2015 he served as President and COO of Nationstar Mortgage, one of the largest mortgage servicers in the country. In that position, he grew Nationstar's servicing platform from $30 billion to $400 billion and mortgage origination portfolio from $1.8 billion to $25 billion while also building and managing Nationstar's relationship with the newly created industry regulator, the Consumer Financial Protection Bureau. Prior to Nationstar Mortgage, he held C-Suite and senior executive positions at Citi Mortgage, Fannie Mae, Resource Bancshares Mortgage Group and Nations Credit, among others.
We believe that Mr. Lewis' significant financial technology knowledge and broad experience with a similar customer demographic provides our Board with an important resource with respect to our e-commerce platform and our Acima (formerly Preferred Lease) segment.
| | |
 | | Independent Director
Age: 68
Director Since: 2019
Committees Served: Audit & Risk; Nominating and Corporate Governance
Gender: Female
Ethnicity: CaucasianAsian
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Ms. McFateYou was appointed to the Board in January 2022. Ms. You is an accomplished technology executive. Ms. You currently serves as Head of Product for Uber Rides, a leading global mobility as a service provider, where she leads a global product organization building consumer experiences and reimagining mobility in over 80 countries around the world. Prior to her current position, Ms. You served from 2006 until October 2017 as the Chief Investment Officer of Xerox Corporation,VP Growth for RippleX Platform, a multinational document provider of multifunction document management systemstechnology infrastructure, tools, services, programs and services, managing retirement assetssupport for North Americancreation on the XRP Blockchain Ledger (XRPL), from April 2020 to January 2021; VP Technology Products, Growth & Monetization Strategy, for WeWork, a provider of flexible shared workspaces, from October 2018 to April 2020; and UK plans. Previously, Ms. McFateVP Product & Operations for UnitedMasters, a leading digital content distribution company, from December 2016 to August 2018. Prior to that, she served in various financeproduct and treasurybusiness roles for a number of prominent insurance and financial services companies, including XL Global Services, Inc., a US-based subsidiary of XL Capital Ltd.at Facebook (now Meta), a leading Bermuda-based global insurancesocial media platform, from 2012 to 2016. In 2020, Ms. You led the launch of a new open-source payment protocol called PayID reaching over 125 million consumers globally, and reinsurance company, American International Group, Inc., an American multinational property & casualty insurance, life insurance,launched the Open Payments Coalition, a consortium of the world’s largest wallets and financial services provider, Prudential Insurance Company of America, an American Fortune Global 500exchanges collaborating to make payments more open and Fortune 500 company whose subsidiaries provide life insurance, investment management and other financialinteroperable for all consumers.
Ms. You’s extensive knowledge in technology products and
services to both retail and institutional customers through the US and in over 30 other countries. Ms. McFate is a Chartered Financial Analyst. Ms. McFate also serves as a director and member of the investment and nominating committees of Argo Group International Holdings, Ltd.Ms. McFate brings over 40 years of global corporate finance experience and a varied viewpoint to the Board which we believe supports us in our strategic initiatives and enhances our long-term vision, sustainable growth and shareholder value.
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Terms to Expire at the 2023 Annual Meeting (unless the Declassification Amendments are approved):
| | |
 | | Chairman of the Board; Independent Director
Age: 60
Director Since: 2017
Committees Served: Audit & Risk (chair)
Gender: Male
Ethnicity: Caucasian
|
Mr. Brown is the Chief Executive Officer and founding member of Brown Equity Partners, LLC, which provides capital to management teams and companies. Mr. Brown's venture capital and private equity career spans 34 years,platforms, including positions with Hughes Aircraft Company, Morgan Stanley & Company, Security Pacific Capital Corporation and Bank of America Corporation and as founding partner of Forrest Binkley & Brown. Since June 2015, Mr. Brown has served as the Lead Director of Medifast, Inc., where he also serves as chairman of the Audit Committee and is a member of the Executive Committee. Mr. Brown previously served as a director of a number of public and private companies, including Cadiz, Inc., Outerwall Inc., Midatech Pharma PLC, Nordion, Inc. and Stamps.com Inc.
Mr. Brown brings to the Board extensive public and private company board experience and significant transactional expertise, having served as the chairman of the board of directors of 12 companies and as a member of the board of directors of over 50 companies in both the public and private sectors and having invested in a broad array of companies throughout his career.
| | |
 | | Director; Chief Executive Officer
Age: 63
Director Since: 2017
Committees Served: N/A
Gender: Male
Ethnicity: Caucasian; Middle-Eastern
|
Mr. Fadel has served as one of our directors since June 2017 and was named Chief Executive Officer on January 2, 2018. Mr. Fadel was self-employed prior to joining the Company after most recently serving as President — U.S. Pawn for EZCORP, Inc., a leading provider of pawn loans in the United Statesconsumer space, along with her strong background and Mexico, from September 2015leadership skills, provide a valuable addition to December 2016. Prior to that, Mr. Fadel served as President of the Company (beginning in July 2000) and Chief Operating Officer (beginning in December 2002) each until August 2015, and also as a director of the Company from December 2000 to November 2013. From 1992 until 2000, Mr. Fadel served as President and Chief Executive Officer of the Company's subsidiary Rent-A-Center Franchising International, Inc. f/k/a ColorTyme, Inc. Mr. Fadel's professional experience with the Company also includes previously serving as a Regional Director and a District Manager.
As our Chief Executive Officer, Mr. Fadel's day-to-day leadership provides him with intimate knowledge of our operations that are a vital component of our Board discussions. In addition, Mr. Fadel brings 30 yearsas we continue to implement digital solutions for consumers and merchants across our business.
Skills and Qualifications of experience inBoard of Directors and knowledge of the rent-to-own industry, including his previous tenure as our President and Chief Operating Officer, to the Board. We believe Mr. Fadel's service as our Chief Executive Officer creates a critical link between management and our Board, enabling our Board to perform its oversight function with the benefit of management's perspectives on our business.
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| | |
 | | Independent Director
Age: 42
Director Since: 2017
Committees Served: Compensation (chair); Nominating and Corporate Governance
Gender: Male
Ethnicity: Caucasian
|
Mr. Hetrick has been the Director of Research at Engaged Capital, a California based investment firm and registered advisor with the U.S. Securities and Exchange Commission ("SEC") focused on investing in small and mid-cap North American equities, since September 2012. Prior to joining Engaged Capital, Mr. Hetrick worked at Relational Investors LLC ("Relational"), a $6 billion activist equity fund, from January 2002 to August 2012. Mr. Hetrick began his career with Relational as an associate analyst. He eventually became the firm's senior consumer analyst overseeing over $1 billion in consumer sector investments. Prior to his work heading up the consumer research team, Mr. Hetrick was a generalist covering major investments in the technology, financial, automotive and food sectors.
We believe that Mr. Hetrick's extensive investment experience in a broad range of industries as well as his expertise in corporate strategy, capital allocation, executive compensation, and investor communications well qualifies him to serve on our Board.
Skills and Qualifications of Board of Directors and Nominees
|
The following table provides an overview of certain qualifications that we believe each of our directors possesses and which benefits our Board and Company. This table is not intended to provide a comprehensive list of all qualifications. Please refer to each directors'director’s biographical information above in this proxy statement for additional information.
![[MISSING IMAGE: tm223360d1-tb_boardbw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-049258/tm223360d1-tb_boardbw.jpg)
(1)Mr. Gade has determined not to stand for re-election at the 2021 Annual Meeting and will retire as a director at that time.
Our Nominating and Corporate Governance Committee believes that diversity is one of many attributes to be considered when selecting candidates for nomination to serve as one of our directors. While the Nominating and Corporate Governance Committee carefully considers diversity when evaluating nominees for director, the Nominating and Corporate Governance Committee has not established a formal policy regarding diversity in identifying director nominees.
nominees, we believe that it is important that our directors understand the diverse populations that we serve. Indeed, Board membership should reflect diversity in its broadest sense, including persons diverse in background, geography, age, perspective, gender, and ethnicity and the Nominating and Corporate Governance Committee strives to ensure that the candidate pool reflects these attributes.
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The matrix below summarizes the gender and ethnic diversity that exists on our Board (including Mr. Gade, who has determined not to stand for re-election at the 2021 Annual Meeting and will retire as a director at that time):
Board:
| | | Board Diversity Matrix (as of the date of this proxy statement) | | |
| | | Board Size: | | |
| | | Total Number of Directors | | | | 8 | | |
| | | Gender Identity: | | | | Male | | | | Female | | | | Non-Binary | | | | Did Not Disclose Gender | | |
| | | Directors | | | | 6 | | | | 2 | | | | — | | | | — | | |
| | | Number of directors who identify in any of the categories below: | | |
| | | African American or Black | | | | 2 | | | | — | | | | — | | | | — | | |
| | | Alaskan Native or Native American | | | | — | | | | — | | | | — | | | | — | | |
| | | Asian | | | | — | | | | 1 | | | | — | | | | — | | |
| | | Caucasian | | | | 3 | | | | 1 | | | | — | | | | — | | |
| | | Hispanic or Latino | | | | — | | | | — | | | | — | | | | — | | |
| | | Native Hawaiian or Pacific Islander | | | | — | | | | — | | | | — | | | | — | | |
| | | Two or More Races or Ethnicities | | | | 1 | | | | — | | | | — | | | | — | | |
| | | LGBTQ+ | | | | — | | |
| | | Did Not Disclose Demographic Background | | | | — | | |
| | | | | | | | | | | | | | | | | | | | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
|---|
| | | | | | | | | | | | | | | | | | | | | |
| | | Board Diversity Matrix (as of the date of this proxy statement)
|
| |
| | | | | | | | | | | | | | | | | | | | | |
| | | Board Size: | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Total Number of Directors | | | | 8 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Gender: | | | | Male |
| | | Female |
| | | Non-Binary |
| | | Gender Undisclosed |
| |
| | | | | | | | | | | | | | | | | | | | | |
| | | Number of directors based on gender identity | | | | 7 | | | | 1 | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Number of directors who identify in any of the categories below: |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | African American or Black | | | | 2 | | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Alaskan Native or American Indian | | | | — | | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Asian | | | | — | | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Caucasian | | | | 4 | | | | 1 | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Hispanic or Latino | | | | — | | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Native Hawaiian or Pacific Islander | | | | — | | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Two or More Races or Ethnicities | | | | 1 | | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | LGBTQ+ | | | | — | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Undisclosed | | | | — | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
14
Our Board has established corporate governance practices designed to serve the best interests of our Company and our stockholders. In this regard, our Board has, among other things, adopted:
•
a code of business conduct and ethics applicable to all members of our Board, as well as all of our employees, including our Chief Executive Officer, Chief Financial Officer, principal accounting officer and controller;
•
•separation of the Chairman and Chief Executive Officer roles;
•
•a majority voting standard in non-contested elections for directors;
•
annual elections for all directors;
•
•a policy for the submission of complaints or concerns relating to accounting, internal accounting controls or auditing matters;
•
•provisions in our Bylawsbylaws regarding director candidate nominations and other proposals by stockholders;
•
•written charters for its Audit & Risk Committee, Compensation Committee, and Nominating and Corporate Governance Committee;
•
•procedures regarding stockholder communications with our Board and its committees; and
•
•policies regarding the entry by our Company and its subsidiaries into transactions with certain persons related to our Company.
Our Board intends to monitor developing standards in the corporate governance area and, if appropriate, modify our policies and procedures with respect to such standards. In addition, our Board will continue to review and modify our policies and procedures as appropriate to comply with any new requirements of the SEC or Nasdaq and taking into consideration any feedback received from our stockholders.
Code of Business Conduct and Ethics Code of Business Conduct and Ethics
|
Our Board has adopted a Code of Business Conduct and Ethics applicable to all members of our Board, as well as all of our employees, including our Chief Executive Officer, Chief Financial Officer, principal accounting officer and controller. The Code of Business Conduct and Ethics forms the foundation of a compliance program we have established as part of our commitment to responsible business practices that includes policies, training, monitoring and other components covering a wide variety of specific areas applicable to our business activities and employee conduct. A copy of the Code of Business Conduct and Ethics is published on our website at https://investor.rentacenter.com/governance-documents. We intend to make all required disclosures concerning any amendments to, or waivers from, this Code of Business Conduct and Ethics on our website.
Independent Chairman
Our Board separates the roles of Chairman and Chief Executive Officer. Mr. Brown serves as Chairman and Mr. Fadel serves as our Chief Executive Officer. The Board believes that the separation of the roles of Chairman and Chief Executive Officer at this time is appropriate in light of Mr. Fadel'sFadel’s tenure as Chief
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Executive Officer and is in the best interests of the Company'sCompany’s stockholders. Separating these positions aligns the Chairman role with our independent directors, enhances the independence of our Board from management and allows our Chief Executive Officer to focus on developing and implementing our strategic initiatives and supervising our day-to-day business operations. Our Board believes that Mr. Brown is well situated to serve as Chairman because of his experience serving on the boards of directors of other public companies, including as lead director of MediFast, Inc. Mr. Brown works closely with Mr. Fadel to set the agenda for Board meetings and to coordinate information flow between the Board and management.
Our Board understands that there is no single, generally accepted approach to providing Board leadership and that, given the dynamic and competitive environment in which we operate, the right Board leadership structure may vary based on the situation. Our Board will review its determination to separate the roles of Chairman and Chief Executive Officer periodically or as circumstances and events may require.
As part of the
Company'sCompany’s corporate governance practices, and in accordance with Nasdaq rules, the Board has established a policy requiring a majority of the members of the Board to be independent. In January
2021,2022, each of our non-employee directors completed a questionnaire which inquired as to their relationship (and the relationships of their immediate family members) with us and other potential conflicts of interest. Taking into account our review of the responses to this questionnaire process and such other due consideration and diligence as it deemed appropriate, in March
2021,2022, our Board met to discuss the independence of those non-employee directors. Following such discussions and based on the recommendations of the Nominating and Corporate Governance Committee, our Board determined that the following directors are
"independent"“independent” as defined under Nasdaq rules: Jeffrey Brown,
Michael Gade, Christopher Hetrick, Harold Lewis, Glenn Marino, Carol McFate,
B.C. Silver and
B.C. Silver.Jen You.
The table below includes a description of categories or types of transactions, relationships or arrangements, if any, considered by our Board in reaching its determination that the directors are independent.| | Name | | | |
Name
| | Independent
| | Transactions/Relationships/Arrangements
|
|---|
| | | Independent | | | Transactions/Relationships/Arrangements | |
| Jeffrey Brown | | | Yes | | | None | |
Michael Gade(1)
| Christopher Hetrick | | | Yes | | None |
Christopher Hetrick
| | Yes | | Employee of Engaged Capital, LLC, a 4.4% stockholder inthat beneficially owns 2,355,730 shares of the Company (based on a Schedule 13D/AForm 13F filed by Engaged Capital, LLC with the SEC on August 25, 2020 and the number of shares of Common Stock outstanding as of April 5, 2021)February 14, 2022). The Board did not deem this ownership by Mr. Hetrick'sHetrick’s employer to impair his independence. |
Harold Lewis
| | Yes | | None |
Glenn Marino
| | Yes | | None |
Carol McFate
| | Yes | | None |
B.C. Silver
| | Yes | | None |
| | Harold Lewis | | | Yes | | | None | |
| | Glenn Marino | | | Yes | | | None | |
| | Carol McFate | | | Yes | | | None | |
| | B.C. Silver | | | Yes | | | None | |
| | Jen You | | | Yes | | | None | |
(1)Mr. Gade has determined not to stand for re-election at the 2021 Annual Meeting and will retire as a director at that time.
Committees of the Board
The standing committees of the Board during 20202021 included the (1) Audit & Risk Committee, (2) Compensation Committee, and (3) Nominating and Corporate Governance Committee. Each of the standing committees has the authority to retain independent advisors and consultants, with all fees and expenses to be paid by the Company. From time to time, the Board may also appoint special committees for specific matters, as it did in 2020.
Table2020 in connection with the Company’s evaluation of Contentsthe Acima transaction.
The following table provides membership and meeting information for the Board and each of the Board'sBoard’s standing committees during 20202021 for our current directors and also describesreflects changes to committees as of the date of this proxy statement:
| | Name | | | Independent(1) | | | Audit & Risk Committee(2) | | | Compensation
Committee | | | Nominating and
Corporate Governance
Committee | |
| | Jeffrey Brown | | | Yes | | | Chair | | | — | | | — | |
| | Mitchell Fadel | | | No | | | — | | | — | | | — | |
| | Christopher Hetrick | | | Yes | | | — | | | Chair | | | Member | |
| | Harold Lewis | | | Yes | | | Member | | | Member | | | — | |
| | Glenn Marino | | | Yes | | | Member | | | — | | | Member | |
| | Carol McFate | | | Yes | | | Member | | | — | | | Chair | |
| | B.C. Silver | | | Yes | | | — | | | Member | | | Member | |
| | Jen You | | | Yes | | | — | | | Member(3) | | | — | |
| | Number of Committee Meetings in 2021 | | | — | | | 8 | | | 7 | | | 6 | |
| | | | | | | | | |
Name
| | Independent(1)
| | Audit & Risk Committee(2)
| | Compensation
Committee
| | Nominating and
Corporate Governance
Committee
|
|---|
| | | | | | | | | | |
| Jeffrey Brown | | Yes | | | Chair | | — | | — |
| Mitchell Fadel | | No | | | — | | — | | — |
| Michael Gade(3) | | Yes | | | — | | Member | | Chair |
| Christopher Hetrick | | Yes | | | — | | Chair | | Member |
| Harold Lewis | | Yes | | | Member | | Member | | — |
| Glenn Marino | | Yes | | | Member | | — | | Member(4) |
| Carol McFate | | Yes | | | Member | | — | | Member(5) |
| B.C. Silver | | Yes | | | — | | Member(4) | | Member(4) |
| | | | | | | | | | |
| Number of Committee Meetings in 2020 | | — | | | 9 | | 7 | | 5 |
| | | | | | | | | | |
(1)- The Board has determined whether the director is independent as described above under
"Independent Directors"“Independent Directors”.
(2)
(2)The Board has determined that Mr. Brown is an "audit“audit committee financial expert"expert” as defined by SEC rules and that each of Mr. Lewis, Mr. Marino and Ms. McFate meets the financial sophistication requirements for Nasdaq audit committee members.
(3)
(3)Mr. Gade has determined not to stand for re-election at the 2021 Annual Meeting and will retire as a director at that time (and, as a result, will no longer serve on any committee of the Board following the 2021 Annual Meeting).
(4)The director was appointed to the indicated committee in March 20212022 and did not attend any meeting of such committee in 2020.2021.
16
(5)Following the 2021 Annual Meeting, Ms. McFate will replace Mr. Gade as Chair of the Nominating and Corporate Governance Committee.
The Audit & Risk Committee assists the Board in fulfilling its oversight responsibilities by reviewing risks relating to accounting matters, financial reporting, legal and regulatory compliance, and other enterprise-wide risks. To satisfy these oversight responsibilities, our Audit & Risk Committee reviews, among other things: •
the financial reports and other financial information provided by us to the SEC or the public;
•
•our systems of controls regarding finance, accounting, legal compliance and ethics that management and the Board have established;
•
•our independent auditor'sauditor’s qualifications and independence;
•
•the performance of our internal audit function and our independent auditors;
•
•the efficacy and efficiency of our auditing, accounting and financial reporting processes generally; and
•
•our risk management practices.
The Audit & Risk Committee has the direct responsibility for the appointment, compensation, retention and oversight of our independent auditors, and reviews our internal audit department'sdepartment’s reports, responsibilities, budget and staffing. In addition, the Audit & Risk Committee meets regularly with our Chief Financial Officer, the head of our internal audit department, our independent auditors and management (including regularly scheduled executive sessions with the head of our internal audit department, Chief Risk Officer and our independent auditors). The Audit & Risk Committee also oversees compliance with our Code of Business Conduct and Ethics.
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The Audit & Risk Committee pre-approves all audit and non-audit services provided by our independent auditors, other than de minimis exceptions for non-audit services that may from time to time be approved by the Audit & Risk Committee. The Audit & Risk Committee may delegate pre-approval authority to one or more of its members from time to time or may adopt specific pre-approval policies and procedures; however, any such pre-approvals must in all cases be presented for ratification by the Audit & Risk Committee at its next scheduled meeting.
The Board has adopted a charter for the Audit & Risk Committee, which can be found on our website at https://investor.rentacenter.com/governance-documents. The Audit & Risk Committee reviews, updates and assesses the adequacy of its charter on an annual basis, and may recommend any proposed modifications to its charter to the Board for its approval, if and when appropriate.
The Compensation Committee, among other things: •
discharges the Board'sBoard’s responsibilities with respect to all forms of compensation of our Chief Executive Officer, Chief Financial Officer, and each of our Executive Vice Presidents, including assessing the risks associated with our executive compensation policies and practices and employee benefits;
•
•administers our equity incentive plans;
•
•reviews and discusses with our management the Compensation Discussion and Analysis to be included in our annual proxy statement, Annual Report on Form 10-K or information statement, as applicable, and makes a recommendation to the Board as to whether the Compensation Discussion and Analysis should be included in our annual proxy statement, Annual Report on Form 10-K or any information statement, as applicable;(1) and
•
•recommends to the Board the form and amount of director compensation and conducts a review of such compensation from time to time, as appropriate.
The Board has adopted a charter for the Compensation Committee, which can be found on our website at https://investor.rentacenter.com/governance-documents. In addition, the Compensation Committee reviews, updates and assesses the adequacy of its charter on an annual basis, and may recommend any proposed modifications to its charter to the Board for its approval, if and when appropriate. The Compensation
Committee'sCommittee’s processes for fulfilling its responsibilities and duties with respect to executive compensation and the role of our executive officers in the compensation process are described in the section
"Compensation“Compensation Discussion and Analysis — Compensation
Process"Process” below in this proxy statement.
(1)
Ms. You was appointed to the Compensation Committee in March 2022, which was after the meeting in which the “Compensation Discussion and Analysis” section of this proxy statement was reviewed by the Compensation Committee.
Pursuant to its charter, the Compensation Committee has the authority, to the extent it deems necessary or appropriate, to retain compensation consultants, independent legal counsel or other advisors and has the sole authority to approve the fees and other retention terms with respect to such advisors. From time to time, the Compensation Committee has engaged compensation consultants to advise it on certain matters. See the section "Compensation“Compensation Discussion and Analysis — Compensation Process"Process” below in this proxy statement for more information. In addition, the Compensation Committee also has the authority, to the extent it deems necessary or appropriate, to delegate matters to a sub-committee composed of members of the Compensation Committee.
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Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee manages risks associated with corporate governance and potential conflicts of interest and assists the Board in fulfilling its responsibilities by, among other things: •
identifying individuals believed to be qualified to become members of the Board, consistent with criteria approved by the Board;
•
•recommending to the Board candidates for election or reelectionre-election as directors, including director candidates submitted by the Company'sCompany’s stockholders;
•
•recommending to the Board members of the Board to serve on committees;
•
•overseeing, reviewing and making periodic recommendations to the Board concerning our corporate governance policies; and
•
•directing the succession planning efforts for the Chief Executive Officer and reviewing management'smanagement’s succession planning process with respect to our other senior executive officers.officers; and
•
overseeing the public reporting regarding our environmental, social, governance and sustainability (“ESG”) initiatives.
The Board has adopted a written charter for the Nominating and Corporate Governance Committee, which is available on our website at https://investor.rentacenter.com/governance-documents. In addition, the Nominating and Corporate Governance Committee reviews, updates and assesses the adequacy of its charter on an annual basis, and may recommend any proposed modifications to its charter to the Board for its approval, if and when appropriate. Board and Committee Self-Evaluations Each year, the Board and its committees perform a rigorous self-evaluation. The Nominating and Corporate Governance Committee oversees the process. The evaluations solicit input from directors regarding the performance and effectiveness of the Board, its committees and its members and provide an opportunity for directors to identify areas of potential enhancements. Individual director responses are submitted through a
third partythird-party firm engaged by the Company to administer the evaluation process and report the results, which are compiled for review and discussion by the Board and its committees. The Board believes this process is effective to evaluate the Board, its committees and the contributions of its members, and identify opportunities for continuous improvement.
General Risk Oversight
Our Board takes an active role, as a whole and also at the committee level, in overseeing management of the Company'sCompany’s risks. The Board and the relevant committees receive regular reports from members of senior management on areas of material risk to the Company, including operational, financial, strategic, competitive, reputational, cybersecurity, legal and regulatory risks. The Board also meets with senior management annually for a strategic planning session and discussion of the key risks inherent in our short- and long-term strategies at the development stage, and also receives periodic updates on our strategic initiatives throughout the year. In addition, our Board has delegated the responsibility for oversight of certain risks to its standing committees, as discussed in this proxy statement. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, our entire Board is regularly informed through committee reports concerning such risks and, in general, all independent directors regularly attend committee meetings regardless of membership on that committee and the full Board is provided with all Board and standing committee meeting materials.
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Cybersecurity Oversight
The Board maintains oversight of the Company'sCompany’s cybersecurity risk through regular updates from management. Specifically, the Board and its Audit & Risk Committee receive updates from management, including the Company’s Chief Information Security Officer, regarding the status of ongoing projects to strengthen our effortsdefenses against cybersecurity events and reviews risks relevant to cybersecurity and existing controls in place to mitigate the risk and impacts of cybersecurity incidents. Among other things, the
Company maintains an incident response policy and plan designed to provide for timely, consistent responses to actual or attempted data and security incidents impacting the Company, and requires third party and other risk compliance attestations. Environmental, Social and Governance Initiatives Oversight Our Board recognizes that environmental, social, governance and sustainability ("ESG")ESG issues are of increasing importance to our investors, as well as our employees and customers, and that being a responsible corporate citizen helps drive shareholder value. Our Board is committed to integratingmaintaining strong ESG practices and maintaining responsibleintegrating ESG initiatives into our operations and strategic business objectives.Our Nominating and Corporate Governance Committee assists the Board in overseeing the Company’s ESG actionsinitiatives and reporting. In the second quarter of 2022, we plan to publish our first annual ESG report, to better communicate the Company’s ESG accomplishments, programs and objectives. As described further in our 2022 ESG Report, our ESG initiatives cover a wide range of areas of importance to our Company and our stakeholders and are ultimately driven by our core values and mission to improve the quality of life for our customers and employees. We provideThis includes ensuring the health and safety of our employees, customers and communities and serving our communities by providing household and other durable goods to underserved cash and credit constrained customers and offeroffering an affordable and flexible way to furnish a home and obtain access to other essential items without incurring a long-term debt obligation or accessing credit. OurIn addition, our employees are offered competitive pay and benefits and paid time off, and we have a longstandinglong-standing history of promoting from within to support our employees in advancing their careers and professional development. Our charitable giving efforts are aligned with our desire to help the underserved including hunger relief, family and youth empowerment, and disaster relief. We put our values into action by supporting causes that give families peace of mind and offer children opportunities that will help them reach their potential. We also strive to operate our retail stores efficiently to conserve the environment by optimizing our fleet of vehicles, implementing energy efficient lighting, recycling, and leasing energy efficient products.
In 2020, the COVID-19 pandemic created an unprecedented global health crisis and economic turmoil. The health and safety of our co-workers, customers and communities remained our top priorities as we navigated the impacts of the pandemic. Our culture of safety and the resilience of our co-workers served us well and allowed our stores to continue operating as an essential business so we could meet our customers' needs for critical household items. Our products allowed our customers and their families to focus on staying healthy and connected while they were forced to spend substantially more time at home and to address the economic dislocation caused by COVID-19. The Board was actively involved in the oversight of our COVID-19 responses throughout the year.
Also in 2020, the social unrest across the country gave rise to an important public discourse regarding racial justice and equality. With the support of our Board, we organized a series of town halls across our Company to openly discuss with our employees new programs and initiatives that would best support a diverse and inclusive workforce. Based on the feedback received, we have taken a number of initial steps. For example, we created a new Chief Diversity Officer position that will regularly report to the Board. While we intend to increase our overall focus on diversity within our development programs, the Chief Diversity Officer will take the lead in assessing the impact that proposed initiatives in our organization may have on our culture as well as in creating and implementing initiatives that are intended to promote an inclusive workforce. We have also implemented a program to deliver unconscious bias training to all employees. Further, we are launching additional Employee Resource Groups to continue the dialogue with our employees regarding our diversity initiatives.
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Our company and our Board firmly believe we are able to effect positive social and environmental change, enhance business results and improve the wellbeing of our employees through our robust ESG program.
Cash Compensation
The following table provides an overview of the directors' 2020directors’ 2021 annual retainers:
| | Position | | | 2021 Annual Retainer | |
| | All Non-Employee Directors (including the Chairman) | | | | $ | 77,500 | | |
| | Chairman of the Board | | | | $ | 175,000 | | |
| | Chair of the Audit & Risk Committee | | | | $ | 27,500 | | |
| | Other members of the Audit & Risk Committee | | | | $ | 15,000 | | |
| | Chair of the Compensation Committee | | | | $ | 25,000 | | |
| | Other members of the Compensation Committee | | | | $ | 10,500 | | |
| | Chair of the Nominating and Corporate Governance Committee | | | | $ | 20,000 | | |
| | Other members of the Nominating and Corporate Governance Committee | | | | $ | 10,000 | | |
| | |
Position
| | 2020 Annual Retainer
|
|---|
| | |
All Non-Employee Directors (including the Chairman)
| | $ 77,500 |
Chairman of the Board
| | $150,000 |
Chair of the Audit & Risk Committee
| | $ 27,500 |
Other members of the Audit & Risk Committee
| | $ 15,000 |
Chair of the Compensation Committee
| | $ 25,000 |
Other members of the Compensation Committee
| | $ 10,500 |
Chair of the Nominating and Corporate Governance Committee
| | $ 20,000 |
Other members of the Nominating and Corporate Governance Committee
| | $ 10,000 |
| | |
Additionally, each non-employee director receivesreceived $2,500 for each Board meeting he or she attended in person (or, at the discretion of the Compensation Committee, via telephonic or other electronic means) and isin 2021. The Board eliminated meeting attendance fees in 2022. Directors are also reimbursed for his or hertheir expenses in attending suchBoard and committee meetings.
In 2020, Messrs. Brown and Hetrick also served on multiple special committees of the Board in connection with specific matters and were entitled to a total of $20,000 each for such special committee service.
Mr. Fadel, as an employee of the Company, wasis not entitled to receive any cash compensation for his service as a director during 2020.Retainers and meeting attendance feesdirector.
DSU Deferral Awards
Under the current compensation program, retainers may be paid in a combination of cash or DSUs at each non-employee director'sdirector’s election. Deferred fees are matched 25% by the Company, and the total deferred fees and matching contributions are converted into an equivalent value of DSUs. Deferred fees plus matching contributions are converted to DSUs based on the closing price of Rent-A-Center common stock on the trading day immediately preceding the date on which the DSUs are granted. Currently, the Board'sBoard’s practice is to pay cash feesretainers and issue DSUs in respect of any deferred cash feesretainers on a quarterly basis. In addition, non-employee directors may elect to defer cash dividends otherwise payable on DSUs into additional DSUs. Deferred cash dividends are matched 25% by the Company, and the total deferred cash dividends and matching contributions are converted into an equivalent value of DSUs.
Our non-employee directors receive an annual award of DSUs on the first business day of each year pursuant to the Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (the "2016 Plan") or, if approved by stockholders as set forth in this proxy statement,2021 Plan. Annual DSU Awards are not eligible for the 2021 Long-Term Incentive Plan for future years.matching contribution.
The annual DSU award to our non-employee directors for 20202021 was valued at $120,000, which was the same value as 2019. All of our non-employee directors serving on January 2, 2020, the first business day of 2020, were granted DSUs valued at $120,000 on that date.2020.
Each DSU is fully vested and non-forfeitable at the time of award and represents the right to receive one share of common stock of the Company. Those shares of common stock are not issued to a director until that director ceases to be a member of the Board and, therefore, cannot be sold until such time. The DSUs do not have voting rights. The holder of a DSU is entitled to receive cash dividend equivalent
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payments with respect to the shares underlying such DSU if, as and when any cash dividend is declared by the Board with respect to our common stock.
Director Stock Ownership Guideline Our Board has adopted a guideline providing that each non-employee member of the Board should hold at least $200,000$400,000 in our common stock within 5 years ofby the later of (1) December 1, 2020 (the date on which such ownership guideline was most recently adopted),2025 and (2) five years after the date of their original election or appointment to the Board, and to hold such equity interest for so long as such member continues as a director. Moreover, because non-employee members of the Board receive equity compensation in the form of DSUs, they are effectively required to retain 100% of their equity compensation until they cease to be a member of the Board and are issued shares of common stock in respect of their DSUs. Non-employee members of the Board may satisfy the ownership requirements in the equity ownership guidelines with common stock owned directly or indirectly (including as a result of fully vested awards from previous grants), shares of our common stock held through any Company benefit plan in which non-employee directors are eligible to participate, DSUs and unvested time-based restricted stock awards or restricted stock units.
As of December 31, 2020, based on the closing price of our common stock on the Nasdaq Global Select Market of $38.29 per share as of such date, each of Messrs. Brown, Gade, Hetrick, Marino and Lewis and Ms. McFate met the foregoing guideline. Mr. Silver was appointed to the Board in January 2021.
Director Compensation for 20202021 The following table sets forth certain information regarding the compensation of our non-employee directors during 2020. Because Mr. Silver did not join2021. Ms. You, who joined the Board untilin January 2021, he2022, is not included in the table below because she did not earn any compensation for 2020 and is not included in the table below.2021.
| | Name | | | Fees Earned or
Paid in Cash(1) | | | DSUs(2) | | | Other
Compensation(3) | | | Total | |
| | Jeffrey Brown | | | | | — | | | | | $ | 499,777 | | | | | $ | 70,307 | | | | | $ | 570,085 | | |
| | Christopher Hetrick | | | | | — | | | | | $ | 234,830 | | | | | $ | 41,959 | | | | | $ | 276,788 | | |
| | Harold Lewis | | | | $ | 113,000 | | | | | $ | 120,001 | | | | | $ | 12,305 | | | | | $ | 245,306 | | |
| | Glenn Marino | | | | $ | 25,063 | | | | | $ | 382,375(4) | | | | | $ | 11,195 | | | | | $ | 418,633 | | |
| | Carol McFate | | | | $ | 64,069 | | | | | $ | 187,598 | | | | | $ | 16,706 | | | | | $ | 268,373 | | |
| | B.C. Silver | | | | $ | 97,177 | | | | | $ | 120,010 | | | | | $ | 3,528 | | | | | $ | 220,715 | | |
| | | | | | | | | | | | | |
Name
| | Fees Earned or
Paid in Cash(1)
| | DSUs(2)
| | Other
Compensation(3)
| | Total
| |
|---|
| | | | | | | | | | | | | | |
Jeffrey Brown | | | — | | $ | 448,139 | | $ | 48,067 | | $ | 496,206 | |
Michael Gade(4) | | $ | 108,000 | | $ | 138,891 | | $ | 62,792 | | $ | 309,683 | |
Christopher Hetrick(5) | | | — | | $ | 155,159 | | $ | 33,279 | | $ | 188,438 | |
Harold Lewis | | $ | 113,000 | | $ | 189,046 | | $ | 7,604 | | $ | 309,650 | |
Glenn Marino(6) | | $ | 19,844 | | $ | 50,381 | | $ | 892 | | $ | 71,117 | |
Carol McFate | | $ | 56,250 | | $ | 241,797 | | $ | 9,234 | | $ | 307,281 | |
| | | | | | | | | | | | | | |
(1)- Includes (a) annual retainers, (b) meeting attendance fees and (c) any special committee fees paid in cash to each non-employee director with respect to services rendered in
2020.2021. For directors who elected to defer cash fees into DSUs, those deferred amounts are included in the DSUs column to the extent such DSUs were awarded in 2020.2021.
(2)
(2)Reflects the grant date fair value calculated pursuant to FASB ASCFinancial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 of DSUs granted to each director in fiscal 2020,2021, as follows:
Each director (other than Mr. Marino) was granted 4,1613,134 DSUs in January 2020,2021, representing the $120,000 annual grant for service in fiscal 2020. Mr. Marino was appointed to the board of directors in February 2020 and in April 2021 was granted 1,882 DSUs, representing a portion of the $120,000 annual grant for his partial year of service in fiscal 2020, which grant is not reflected in the table above.2021.
•
•During fiscal 2020,2021, Messrs. Brown, Gade, Hetrick Lewis and Marino and Ms. McFate were granted 14,489, 760, 1,219, 2,3947,709, 2,066, 4,890 and 1,862 DSUs and 4,8801,359 DSUs, respectively, in lieu of quarterly cash retainer and meeting attendance fees payable in respect of the fourth quarter of 20192020 through and including the third quarter of 2020.2021. Such amounts (and the table above) exclude DSUs that were awarded to such persons in January 20212022 in lieu of quarterly cash retainer and meeting attendance fees payable in respect of the fourth quarter of 2020.2021.
(3)
(3)Represents dividend equivalents paid in cash in respect of vested DSUs.
(4)Mr. Gade has determined not to stand for re-election at the 2021 Annual Meeting and will retire as a director at that time.
(4)
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(5)Mr. Hetrick, by letter to the Board of Directors, declined to accept director fees otherwise payable to him from April 16, 2020 through December 31, 2020 and requested that the Company instead dedicate the amount to employees of the Company that need it the most in light of the COVID-19 pandemic and its effects. Such fees amounted to $132,500 in the aggregate and are not reflected in the table above.
(6)- Mr. Marino was appointed to the Board on February 6, 2020 and originally did not receive any portion of
Directorsthe annual award of DSUs valued at $120,000 awarded to directors for their service as a member of the Board during the year ended December 31, 2020. In 2021, Mr. Marino was awarded a number of DSUs in Februaryorder to reflect a portion of such annual award, prorated based on the number of days Mr. Marino served on the Board during 2020.
Director Compensation Changes for 20212022 At its December
20202021 meeting, the Compensation Committee
reviewedconducted its annual review of the non-employee director compensation
program as part of its annual review process.program. The Compensation Committee engaged an independent consulting firm, Korn Ferry,
Inc. (“Korn Ferry”), to assist with its review and recommendation to the Board of any changes to the program for
2021.2022. Korn Ferry provided the Compensation Committee with market data regarding director compensation programs from our Peer Group and a comparison of our director compensation program to the market data, which was taken into account by the Compensation Committee. As a result of its review, the Compensation Committee recommended, and the Board approved, retaining the same compensation program elements and amounts for
20212022 as in
2020, other than2021, with four modifications (1) increasing the stock ownership guideline to $400,000; (2) eliminating Board meeting fees; (3) increasing the value of the annual DSU award by $12,500 to a grant date value of $132,500; and (4) allowing non-employee directors to defer cash dividends otherwise payable on DSUs, providing a 25% Company matching contribution on such deferrals of cash dividends and converting the total deferred cash dividends and matching contributions into an
increase in the Chairman's annual retainer from $150,000 to $175,000 based on the market data provided by Korn Ferry.equivalent value of DSUs.
Director Nominees
Under our Bylaws,bylaws, only persons who are nominated in accordance with the procedures set forth in our Bylawsbylaws are eligible for election as, and to serve as, members of our Board. Under our Bylaws,bylaws, nominations of persons for election to our Board may be made at a meeting of our stockholders (1) by or at the direction of our Board or (2) by any stockholder, provided they comply with the provisions of Article I, Sections 3 and 4 of our Bylaws.bylaws. The Board has delegated the screening and recruitment process for Board members to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee selects individuals it believes are qualified to be members of the Board, and recommends those individuals to the Board for nomination for election or re-election as directors. From time to time, the Nominating and Corporate Governance Committee may engage a consultant to conduct a search to identify qualified candidates. The Nominating and Corporate Governance Committee then undertakes the evaluation process described below for any candidates so identified. In 2020,2021, the Nominating and Corporate Governance Committee engaged Daversa Partners to assist the Board in finding an additional candidate to consider to join the Board. As a result of that process, the Board appointed Mr. SilverMs. You as an additional director in January 2021.2022.
The goal of the Nominating and Corporate Governance Committee is to nominate qualified individuals with the objective of having membership on the Board that combines diverse business and industry experience, skill sets and other leadership qualities, represents diverse viewpoints and enables the Company to pursue its strategic objectives. The Nominating and Corporate Governance Committee also believes that members of the Board should possess character, judgment, skills (such as an understanding of the retail and lease-to-own industries, business management, finance, accounting, marketing, operations and strategic planning), diversity of viewpoints, background, experience and other demographics and experiences with businesses and other organizations of a comparable size and industry. The Nominating and Corporate Governance Committee also considers the interplay of the
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candidate's candidate’s experience with the experience of the other Board members, the fit of the individual'sindividual’s skills and personality with those of other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of the Company, and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board. In addition, the Nominating and Corporate Governance Committee considers the composition of the current Board and the Board'sBoard’s needs when evaluating the experience and qualification of director candidates. The Nominating and Corporate Governance Committee evaluates whether certain individuals possess the foregoing qualities and recommends to the Board candidates for nomination to serve as our directors. This process is the same regardless of whether the nominee is recommended by one of our stockholders.
Advance Resignation Policy As a condition to nomination by the Nominating and Corporate Governance Committee of an incumbent director, a nominee shall, upon request by the Board or the
Company'sCompany’s Corporate Secretary, submit an irrevocable offer of resignation to the Board, which resignation shall become effective in the event that (a) such nominee is proposed for
reelectionre-election and is not
reelectedre-elected at a meeting of the stockholders in which majority voting applies and (b) the resignation is accepted by the Board by the vote of a majority of the directors, not including any director who has not been
reelected.re-elected.
In addition to nominees by or at the direction of our Board, the Nominating and Corporate Governance Committee will consider candidates for nomination proposed by a stockholder in the same manner and based on the same criteria as other candidates considered by the Nominating and Corporate Governance Committee as described above under "Qualifications."“Qualifications.” The proposing stockholder must provide notice and information on the proposed nominee to the Nominating and Corporate Governance Committee through the Corporate Secretary in accordance with the provisions of Article I, Sections 3 and 4 of our Bylawsbylaws relating to direct stockholder nominations. Board Meetings and Executive Sessions
During 2020,2021, our Board met 16 times, including regularly scheduled and special meetings.10 times. All of our directors attended more than 75% of the aggregate of the total number of meetings of the Board and the total number of meetings of the Board committees on which they serve. In addition to full Board executive sessions, our independent directors meet in executive session at each regularly scheduled quarterly meeting of the Board. Executive sessions are chaired by our Chairman of the Board. Annual Meeting of Stockholders Each member of the Board is expected to attend our annual meeting of stockholders. All of our directors then serving as directors attended the Company's 2020Company’s 2021 annual meeting of stockholders. Procedures for Reporting Accounting Concerns Procedures for Reporting Accounting Concerns
|
The Audit & Risk Committee has established procedures for (1) the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters, and
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(2) the submission by our employees, on a confidential and anonymous basis, of concerns regarding questionable accounting or auditing matters. These procedures are posted on our website at https://investor.rentacenter.com/governance-documents.
Communications with the Board Communications with the Board
|
Our Board has established a process by which stockholders and other interested parties may communicate with our Board, Board committees or individual directors. Stockholders or other interested parties may contact our Corporate Secretary by any one of the below methods. The Corporate Secretary will forward such communications to the Board, committees or individual directors, as applicable. However, the Corporate Secretary is not required to forward communications if it is determined the communication is (1) unrelated to the duties and responsibilities of the Board, (2) unduly hostile, threatening or illegal, or (3) obscene or otherwise deemed inappropriate.
| | | | | | | | | |
| | 
By telephone:972-624-6210 | | | 
By mail:Rent-A-Center, Inc.Attn: Corporate Secretary5501 Headquarters DrivePlano, TX 75024 | | | 
By e-mail:RAC.Board@rentacenter.com | |
Related Person Transactions
Related Person Transactions
|
Policy on Review and Approval of Transactions with Related Persons
The Board has adopted a written statement of policy and procedures for the identification and review of transactions involving us and "related persons" (our“related persons” (our directors and executive officers, stockholders owning five percent or greater of our outstanding stock, and immediate family members of any of the foregoing). Our directors and executive officers are required to provide notice to our general counsel of the facts and circumstances of any proposed transaction involving amounts greater than $120,000 involving them or their immediate family members that may be deemed to be a related person transaction. Our general counsel, in
consultation with management and our outside counsel, as appropriate, will then assess whether the proposed related person transaction requires approval pursuant to the policy and procedures. If our general counsel determines that any proposed, ongoing or completed transaction involves an amount in excess of $120,000 and is a related person transaction, the Nominating and Corporate Governance Committee must be notified for consideration at the next regularly scheduled meeting of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee has reviewed and determined that each of the following related person transactions are to be deemed pre-approved by the Nominating and Corporate Governance Committee: (1) employment agreements related to executive officers if (a) the related compensation is reported in our proxy statement or (b) the executive officer is not an immediate family member of another "related person"“related person” and the Compensation Committee approved, or recommended to the Board for approval, such compensation, (2) any compensation paid to a director if the compensation is reported in our proxy statement, (3) transactions where all of our stockholders receive proportional benefits and (4) any transaction with a "related person"“related person” involving the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority. The Nominating and Corporate Governance Committee will approve or ratify, as applicable, only those related
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person transactions that are in, or are not inconsistent with, our best interests and those of our stockholders.
Reportable Transactions with Related Persons The Company has not been a participant in any transaction since January 1, 20202021 in which the amount involved exceeded or will exceed $120,000 and in which any of our directors, executive officers, nominees for director or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest that is reportable pursuant to Item 404(a) of Regulation S-K.
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PROPOSAL TWO:
RATIFICATION OF THE SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit & Risk Committee has selected Ernst & Young LLP ("(“E&Y"&Y”) as our independent registered public accounting firm for the fiscal year ended December 31, 2021.2022. E&Y also served as our independent registered public accounting firm in 2021 and 2020. The Audit & Risk Committee reviews and pre-approves both audit and all permissible non-audit services provided by our independent registered public accounting firm, as described in "—“Corporate Governance — Structure of the Board Information — Board Committees"Audit & Risk Committee” in this proxy statement, and accordingly, all services and fees in 20202021 provided by E&Y were pre-approved by the Audit & Risk Committee. The Audit & Risk Committee has considered whether the provision of services, other than services rendered in connection with the audit of our annual financial statements, is compatible with maintaining E&Y's&Y’s independence. The Audit & Risk Committee has determined that the rendering of non-audit services by E&Y during the year ended December 31, 2020,2021, was compatible with maintaining such firm'sfirm’s independence. Our Board has directed that we submit the selection of our independent registered public accounting firm for ratification by our stockholders at the 20212022 Annual Meeting. Stockholder ratification of the selection of E&Y as our independent registered public accounting firm is not required by our Bylawsbylaws or otherwise. However, the Board is submitting the selection of E&Y to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit & Risk Committee will reconsider whether or not to continue the retention of E&Y. Even if the selection is ratified, the Audit & Risk Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interests and those of our stockholders. The Audit & Risk Committee annually reviews the performance of our independent registered public accounting firm and the fees charged for their services. Based upon the Audit & Risk Committee'sCommittee’s analysis of this information, the Audit & Risk Committee will determine which registered independent public accounting firm to engage to perform our annual audit each year. Representatives of E&Y will attend the 20212022 Annual Meeting, will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions from stockholders. Our Board recommends that you vote "FOR"“FOR” the proposal to ratify the selection of E&Y as our independent registered public accounting firm.
Principal Accountant Fees and Services
Principal Accountant Fees and Services
|
The aggregate fees billed by E&Y for the years ended December 31, 20202021 and December 31, 2019, and the aggregate fees billed by KPMG LLP for the year ended December 31, 2019,2020, for the professional services described below are as follows:
| | | | | 2021 | | | 2020 | |
| | Audit Fees(1) | | | | $ | 2,419,085 | | | | | $ | 1,275,396 | | |
| | Audit-Related Fees(2) | | | | | — | | | | | $ | 588,480 | | |
| | Tax Fees(3) | | | | $ | 47,130 | | | | | $ | 74,394 | | |
| | All Other Fees | | | | | — | | | | | | — | | |
| | | | | | | |
| | 2020
| | 2019
| |
|---|
| | | | | | | | |
Audit Fees1 | | | $1,275,396 | | | $1,692,105 | |
Audit-Related Fees2 | | | $588,480 | | | — | |
Tax Fees3 | | | $74,394 | | | — | |
All Other Fees | | | — | | | — | |
| | | | | | | | |
(1)- Represents the aggregate fees billed by E&Y
and KPMG for (a) professional services rendered for the audit of our annual financial statements for the years ended December 31, 20202021 and December 31, 2019,2020, (b) the audit of management'smanagement’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 20202021 and December 31, 2019,2020, and (c) reviews of the financial statements included in our Quarterly Reports on Form 10-Q and in our 2021 Long-Term Incentive Plan Form S-8 filed with the SEC.
(2)
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(2)- Represents the aggregate fees billed by E&Y for 2020 for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under the caption
"Audit“Audit Fees."” These services include engagements related to the due diligence review by E&Y of certain financial and other information of Acima Holdings, LLC, in connection with the Agreement and Plan of Merger executed by the Company in December 2020.
(3)
(3)Represents the aggregate fees billed by E&Y for 2021 and 2020 for professional services rendered for tax compliance, tax advice and tax planning. These services comprise engagements related to federal and international tax compliance and planning.
The material in this Report is not
"soliciting material"“soliciting material”, is not deemed
"filed"“filed” with the SEC and is not to be incorporated by reference into any filing under the Securities Act of 1933 (the
"Securities Act"“Securities Act”) or the
Securities Exchange Act
of 1934 (the “Exchange Act”), whether made before or after the date hereof and irrespective of any general incorporation by reference language in such filing.
In accordance with its written charter adopted by the Board, the Audit & Risk Committee assists the Board in fulfilling its oversight responsibilities by, among other things, reviewing the financial reports and other financial information provided by the Company to any governmental body or the public. In discharging its oversight responsibilities, the Audit & Risk Committee obtained from the independent registered public accounting firm a formal written statement describing all relationships between the firm and the Company that might bear on the auditors'auditors’ independence consistent with the applicable requirements of the Public Company Accounting Oversight Board, discussed with the independent auditors any relationships that may impact their objectivity and independence, and satisfied itself as to the auditors'auditors’ independence. The Audit & Risk Committee also discussed with management, the internal auditors and the independent auditors the integrity of the Company'sCompany’s financial reporting processes, including the Company'sCompany’s internal accounting systems and controls, and reviewed with management and the independent auditors the Company'sCompany’s significant accounting principles and financial reporting issues, including judgments made in connection with the preparation of the Company'sCompany’s financial statements. The Audit & Risk Committee also reviewed with the independent auditors their audit plans, audit scope and identification of audit risks. The Audit & Risk Committee discussed with the independent auditors the matters required to be discussed by the Public Company Accounting Oversight Board and the SEC, and, with and without management present, discussed and reviewed the results of the independent auditors'auditors’ examination of the consolidated financial statements of the Company. The Audit & Risk Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the year ended December 31, 20202021 with management and the independent auditors. Management is responsible for the Company'sCompany’s financial reporting process, including its system of internal control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Exchange Act), and for the preparation of the Company'sCompany’s consolidated financial statements in accordance with generally accepted accounting principles. The independent auditor is responsible for auditing those financial statements, and expressing an opinion on the effectiveness of internal control over financial reporting. The Audit & Risk Committee'sCommittee’s responsibility is to monitor and review these processes. The members of the Audit & Risk Committee are "independent"“independent” as defined by SEC and Nasdaq rules, and our Board has determined that Mr. Jeffrey Brown is an "audit“audit committee financial expert"expert” as defined by SEC rules. The Audit & Risk Committee discussed with the Company'sCompany’s internal and independent auditors the overall scope and plans for their respective audits, including internal control testing under Section 404 of the Sarbanes-Oxley Act. The Audit & Risk Committee periodically meets with the Company'sCompany’s internal and independent auditors, with and without management present, and in private sessions with members of senior management to discuss the results of their examinations, their evaluations of the Company'sCompany’s internal controls, and the overall quality of the Company'sCompany’s financial reporting. The Audit & Risk Committee also periodically meets in executive session. In reliance on the reviews and discussions referred to above, the Audit & Risk Committee recommended to the Board (and the Board subsequently approved the recommendation) that the audited financial statements be included in the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 2020,2021, for filing with the SEC. AUDIT & RISK COMMITTEE
Jeffrey Brown, Chairman
Harold Lewis
Glenn Marino
Carol McFate
The Board appoints our executive officers annually and updates the executive officer positions as needed throughout the year. Each executive officer serves at the behest of the Board and until their successors are appointed, or until the earlier of their death, resignation or removal. The following table sets forth certain biographical information with respect to our executive officers as of the date of this proxy statement:statement. Mr. Fadel’s biographical information is set forth above under “Proposal One: Election of Directors.” Mr. Hogg, our former Executive Vice President — Acima, departed the Company on March 28, 2022.
| | | | | |
Name
| | Age
| | Position
|
|---|
| | | | | | |
Mitchell Fadel
| | | 63 | | Chief Executive Officer |
Anthony Blasquez
| | | 45 | | Executive Vice President — Rent-A-Center Business |
Ann Davids
| | | 52 | | Executive Vice President — Chief Customer and Marketing Officer |
Jason Hogg
| | | 49 | | Executive Vice President — Acima (formerly Preferred Lease) |
Bryan Pechersky
| | | 50 | | Executive Vice President — General Counsel & Corporate Secretary |
Maureen Short
| | | 46 | | Executive Vice President — Chief Financial Officer |
Catherine Skula
| | | 49 | | Executive Vice President — Chief Development Officer |
| | | | | Aaron Allred | |
| | Executive Vice President, Acima
Age: 47
Gender: Male
Ethnicity: Caucasian | |
Mitchell Fadel.Mr. Fadel hasAllred was named Executive Vice President — Acima in March 2022. Mr. Allred served as onea Senior Vice President for Acima since February 2021, following Rent-A-Center, Inc.’s acquisition of our directors since June 2017 and was named Chief Executive Officer on January 2, 2018.Acima. Over the past twenty years, Mr. Fadel was self-employed prior to joining the Company after most recently serving as President — U.S. Pawn for EZCORP, Inc.,Allred has been a leading provider of pawn loansserial entrepreneur in the United Statesconsumer services and Mexico,consumer finance space. Mr. Allred’s previous firms include multiple start-ups and eventual exits in industries ranging from September 2015mortgage lending to December 2016. Prior to that,pest control. In 2013, Mr. Fadel served as PresidentAllred founded Acima Digital, LLC, a technology driven point-of-sale leasing solution for customers irrespective of their credit position and he led Acima from 2013 until joining Rent-A-Center, Inc. in 2021 following the Company (beginningAcima acquisition. Mr. Allred earned his Bachelor’s degree in July 2000)Political Science from the University of Utah, and Chief Operating Officer (beginning in December 2002) each until August 2015, and also as a director ofattended the Company from December 2000 to November 2013. From 1992 until 2000, Mr. Fadel served as President and ChiefHarvard Business School’s OPM Executive Officer of the Company's subsidiary Rent-A-Center Franchising International, Inc. f/k/a ColorTyme, Inc. Mr. Fadel's professional experience with the Company also includes previously serving as a Regional Director and a District Manager.Education Program.| | | | | Anthony Blasquez | |
| | Executive Vice President, Rent-A-Center Business
Age: 46
Gender: Male
Ethnicity: Hispanic/Latino | |
Anthony Blasquez.Mr. Blasquez was named Executive Vice President — Rent-A-Center Business effective as of June 1, 2020. In such role, Mr. Blasquez focuses on improving the Rent-A-Center omni-channel business, which includes impacting performance from both e-commerce and the traditional store business. Mr. Blasquez has been with Rent-A-Center for 22 years and has served in every field operations position in the Company, most recently Divisional Vice President of Operations from 2015 to 2020 prior to being promoted to his current position.| | | | | Ann Davids | |
| | Executive Vice President, Chief Customer and Marketing Officer
Age: 53
Gender: Female
Ethnicity: Caucasian | |
Ann Davids.Ms. Davids was named Executive Vice President — Chief Customer and Marketing Officer effective as of February 21, 2018. Ms. Davids currently leads Rent-A-Center’s customer experience and omni-channel e-commerce innovation, along with marketing and merchandising. Ms. Davids served as Senior Vice President — Chief Customer and Marketing Officer for Direct General/National General Insurance from 2013 to 2018 with responsibility for the web channel development as well as marketing strategy and execution. Prior to 2013, Ms. Davids served as our chief marketing officer for 15 years.Jason Hogg. Mr. Hogg was named Executive Vice President — Preferred Lease effective as of June 22, 2020. In connection with our acquisition of Acima Holdings, LLC in February 2021, the Preferred Lease segment is now referred to as the Acima segment. Prior to joining Rent-A-Center, Mr. Hogg was the CEO of Aon Cyber Solutions from 2017 to 2020, where he oversaw global operations and held full
| | | | | Bryan Pechersky | |
| | Executive Vice President, General Counsel & Corporate Secretary
Age: 51
Gender: Male
Ethnicity: Caucasian | |
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profit and loss responsibility. Mr. Hogg has a proven track record as a leader and innovator in financial services and financial technology, with over 500 issued patent claims in complex technology systems. Prior to Aon, Mr. Hogg served as the CEO of Blackstone's B2R Holdings, L.P. from 2014 to 2016, where he led the organization to its first $1 billion in loans and to win the Innovator of the Year award from REFI Financing Awards in 2016. B2R was acquired by Finance of America. Mr. Hogg also founded, and served as the President and CEO of, Revolution Money, Inc., an alternative payment company from 2005 to 2010. Revolution Money was acquired by American Express in January of 2010. Following such acquisition, Mr. Hogg served as the President of American Express' Serve Enterprise division from 2010 to 2014. During his tenure, he launched the Bluebird alternative banking platform with Walmart and the Serve stored value platform, and established American Express' first mainland China office and operations while overseeing American Express' joint venture with LianLian.
Bryan Pechersky.Mr. Pechersky was named Executive Vice President — General Counsel & Corporate Secretary effective as of June 1, 2020. Mr. Pechersky oversees our legal department, government affairs department and risk management department. Prior to joining Rent-A-Center, Mr. Pechersky served from 2010 through 2019 as Executive Vice President, General Counsel and Corporate Secretary for Cloud Peak Energy Inc., a publicly traded mining and logistics supplier to U.S. and Asian utilities. From 2007 to 2010, Mr. Pechersky was Senior Vice President, General Counsel and Secretary for Harte-Hanks, Inc., a publicly traded worldwide, direct and targeted marketing company. From 2005 to 2007, Mr. Pechersky was Senior Vice President, Secretary and Senior Corporate Counsel for Blockbuster Inc., a publicly traded global movie and game entertainment retailer. From 2004 to 2005, Mr. Pechersky was Deputy General Counsel and Secretary for Unocal Corporation, a publicly traded international energy company acquired by Chevron Corporation in 2005. Prior to these positions, from 1996 to 2004, Mr. Pechersky was a capital markets, mergers and
acquisitions and litigation attorney for Vinson & Elkins L.L.P., a leading global law firm. Mr. Pechersky also served as a Law Clerk to the Hon. Loretta A. Preska of the U.S. District Court for the Southern District of New York in 1995 and 1996. | | | | | Maureen Short | |
| | Executive Vice President, Chief Financial Officer
Age: 47
Gender: Female
Ethnicity: Caucasian | |
Maureen Short.Ms. Short was named Executive Vice President — Chief Financial Officer on December 19, 2018. Ms. Short previously served as Interim Chief Financial Officer effective from December 2016 until December 2018, Senior Vice President — Finance, Investor Relations and Treasury from November 2014 until December 2016, as Senior Vice President — Finance, Analytics and Reporting from March 2013 until November 2014, and as Vice President — Finance, Analytics and Reporting from August 2010 until March 2013.Catherine Skula. Ms. Skula was named Executive Vice President — Chief Development Officer effective November 23, 2020. Prior to that position,joining Rent-A-Center, Ms. SkulaShort spent five years with Blockbuster in Strategic Planning and Finance leadership roles. Earlier in her career, Ms. Short held corporate finance and accounting positions with Sprint and Vartec Telecom. Ms. Short graduated with a Bachelor of Science degree in Business Administration from the University of Kansas and earned an MBA from the University of Florida.
| | | | | Transient Taylor | |
| | Executive Vice President, Chief Human Resources Officer
Age: 56
Gender: Male
Ethnicity: African American | |
Mr. Taylor has served as our Executive Vice President — Franchising effectiveChief Human Resources Officer, since July 2021. From 2008 through 2021, Mr. Taylor served on the executive leadership team as the CHRO/CPO for Bumble, Mr. Cooper and Travelocity. Mr. Taylor has a demonstrated track record of January 1, 2018, after previously servingleading the Human Resources function, establishing human resources strategy, and optimizing culture and people practices. Additionally, from 2001 to 2008, Mr. Taylor led the human resources function for retail-focused companies, such as Senior Vice President — Franchising since January 2012. Ms. SkulaAlliance Data and The Home Depot. He has directed human resources integration for multiple merger and acquisition efforts and also served as Presidenta key enabler for several transformational change initiatives. Mr. Taylor earned both his Bachelor and Chief Executive Officer of Rent A-Center Franchising International, Inc., a subsidiary of the Company, since January 2012. From August 2009 to January 2012, Ms. Skula served as Division Vice President — RTO Domestic. Ms. Skula began her employment with us in 1994 as a customer account representative and has held various other operations positions, including store manager, district manager, and regional director.Master degrees from West Virginia University.
We are committed to maintaining a strong pay-for-performance culture. The compensation program is reviewed annually in order to assure that its objectives and components are aligned with the Company'sCompany’s strategic goals and culture, and also that it incentivizes short- and long-term profitability and ethical business conduct in accordance with our values.
This Compensation Discussion and Analysis ("(“CD&A"&A”) describes key features of our executive compensation program, summarizes the 20202021 cash and equity incentive compensation received by our named executive officers, highlights the strong pay for performance alignment of our executives'executives’ compensation with our financial, operating and stockholder returns and provides additional context to the data presented in the compensation tables included below in this proxy statement. This CD&A also describes any significant changes to our executive compensation program for 2021 that have been implemented prior to filing this proxy statement. The term "executive officers"“executive officers” means our senior executives who are listed above under the heading "Executive Officers"“Executive Officers”. The term "named“named executive officers"officers” means the five executive officers identified in the table below, each of whom were considered "executive officers"“executive officers” as of December 31, 2020.2021.
| | | |
Named Executive Officer
| | Title
|
|---|
| | | Title | |
| | Mitchell Fadel | | | Chief Executive Officer | |
| | Maureen Short | | | Executive Vice President — Chief Financial Officer | |
Ann Davids | Anthony Blasquez | | | Executive Vice President — Chief Customer and Marketing OfficerRent-A-Center Business | |
| | Jason Hogg(1) | | | Former Executive Vice President — Acima | |
| | Bryan Pechersky | | | Executive Vice President — Acima (formerly Preferred Lease) |
Catherine Skula | | Executive Vice President — Chief Development Officer |
General Counsel & Corporate Secretary | | |
(1)
As previously disclosed, Mr. Hogg departed the Company effective March 28, 2022.
Please read the entirety of this CD&A and remaining compensation sections in this proxy statement for further details regarding the matters summarized below. Executive Compensation Program Overview Decisions with respect to compensation of our executive officers, including our Chief Executive Officer and other named executive officers, are made by our Compensation Committee, which is comprised solely of independent directors. Our Compensation Committee has identified four primary objectives for our executive compensation program, which guide the decisions it makes with respect to the amount and type of compensation paid to our named executive officers. The objectives of our executive compensation program are to: •
attract, retain and motivate senior executives with competitive compensation opportunities;
•
•balance short-term and long-term strategic goals;
•
•align our executive compensation program with the core values identified in our mission statement, which focuses on improving the quality of life for our co-workers and our customers; and
•
•reward achievement of our financial and non-financial goals.
The executive compensation program consists of a mix of three primary components, described below, which we believe appropriately rewards our executive officers for their overall contribution to company performance, contains a substantial portion of at-risk, performance-based compensation and aligns our
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executives' executives’ interests with those of our stockholders with the ultimate objective of increasing long-term stockholder value.
The Company'sCompany’s compensation philosophy is generally to position total directcash compensation (base salary and annual incentive opportunityopportunity) around the 50th percentile, and long-term incentive compensation opportunity) around the 50th-75th75th percentile of similarly-situatedsimilarly situated public companies in the retail and consumer finance sectors. This includes companies in the Company'sCompany’s Peer Group described below. Cash compensation (base salary and annual incentive opportunity) is generally targeted at around the 50th percentile, and long-term incentive compensation is generally targeted at around the 75th percentile. The pay ultimately realized is highly variable and dependent primarily on (1) our financial and operational performance, (2) individual executive performance and (3) our multi-year relative TSR performance.
The three primary components of our executive compensation program are:| Component | | | Overview | |
Component
| | Overview
|
|---|
| Base Salary | | | Competitive base salaries are determined in large part through in-depth comparative analyses of comparable positions at companies in our Peer Group and generally targeted at around the 50th50th percentile of the Peer Group and other similarly-situatedsimilarly situated public companies in the retail and consumer finance sectors with the opportunity for above or below median base salaries based on experience, responsibilities, competencies and individual performance. | |
Annual Incentive Opportunity |
|
| Opportunity for an annual cash incentive award to align our executives with annual corporate and individual performance achievements. For 2020,2021, the ultimate payout amount was based on (1) Consolidated Adjusted EBITDA (50% weighting), (2) Rent-A-Center Business same store sales (25% weighting), (2) Preferred Lease (now known as Acima) invoice volumesand (3) Acima revenues (25% weighting), (3) Adjusted EBITDA (40% weighting), and (4) Free Cash Flow (10% weighting). The targeted achievement levels take into account the rigorous goals included in our annual operating budget which is approved by the Board. Each executive officer'sofficer’s target annual incentive opportunity is generally targeted at around the 50th percentile of the Peer Group and other similarly-situatedsimilarly situated public companies in the retail and consumer finance sectors. In the 2021 bonus plan, Free Cash Flow was eliminated as a performance metric, and Acima invoice volumes were replaced with Acima revenues, as discussed in this CD&A. | |
Long-Term Incentive Compensation Opportunity |
|
| Long-term incentive plan and stockequity ownership guidelines to align our executives with longer term performance achievement and stockholder returns over time. The long-term incentive awards granted in February 20202021 consisted of (1) time-vestedtime-based restricted stock units (weighted 20%30%) that cliff-vested aftervest pro rata over a three-year period and (2) stock options (weighted 20%) that vested pro rata annually over a four-year period, and (3) relative TSR-based performanceperformance-based stock units (weighted 60%70%) that vest solely based on the satisfaction of our performance based on our three-year TSR compared to the S&P 1500 Specialty Retail Index. Stock options were eliminated from the long-term incentive awards starting in 2021, as discussed in this CD&A, with performance stock units now weighted at 70%.2021. | |
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Compensation Program Design and Governance Policies
In addition to our three primary components of executive compensation, our executive compensation program includes other features that we believe are consistent with strong governance practices, including:| | | |
| What We Do | |
|
|
|
Transparent Compensation Program: Maintain a transparent executive compensation program that is understandable both to our stockholders and employees and is not overly complex or subject to constantly changing features Compensation Aligned with Performance: A substantial percentage of both cash and equity compensation is at-risk and variable based on company performance Multi-Year Equity Vesting: Three-year full vesting for all executive equity awards (starting in 2021, restricted stock units vest pro rata annually over three years; performance stock units cliff vest after three years based on relative TSR performance) Annual SOP Vote: Annual Say on Paysay-on-pay stockholder vote regarding our executive compensation program to receive regular feedback from our investors Annual Program Risk Assessment: Our Compensation Committee performs annual risk assessments of our compensation program | | | Independent Compensation Consultant:
Engagement by the Compensation Committee of an independent compensation consultant to conduct a formal evaluation of, and advise the Compensation Committee with respect to, the compensation arrangements for our Chief Executive Officer, as well as provide guidance with respect to the compensation of our senior executives Rigorous Target Setting: Rigorous performance targets for our annual cash incentive and long-term incentive compensation programs Total Reward Statement Review: Regular review by the Compensation Committee of total reward statements for the Chief Executive Officer and other executive total reward statementsexecutives to evaluate multi-year cash and equity compensation awards as part of making compensation determinations Ownership Guidelines: StockEquity ownership guidelines for our directors, Chief Executive Officer, executive vice presidents, senior vice presidents and vice presidents Clawback Policy: Incentive compensation is subject to clawback, as described further in this proxy statement | |
| | | |
| What We Do Not Do | |
|
|
|
No Hedging or Pledging Stock: Insider Trading Policy that prohibits derivative transactions involving our common stock and pledging stock No gross-upsGross-ups: Employee benefits are provided without tax gross-ups (other than certain relocation-related expenses) No excessive perquisitesExcessive Perquisites: We provide only limited perquisites, as described in this CD&A | | | No Repricing Options: We do not reprice stock options without stockholder approval (and starting in 2021, we no longer grant stock options) No Dividends Paid on Unvested Equity: No prospective payment of dividends on unvested equity awards | |
20202021 Company Performance HighlightsAs described further in our year-end 20202021 earnings announcement and in "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” in our 20202021 Form 10-K, our Company had strong performance during 2020 despite the many challenges resulting from the COVID-19 pandemic on
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overall economic conditions, the business environment, retail operations and supply chains. Highlightshighlights of our 20202021 results and significant accomplishments are described below:
•
Acima Acquisition: In December 2020,February 2021, we entered into a definitive agreement to acquirecompleted the acquisition of Acima Holdings, LLC, a leading provider of virtual lease-to-own solutions. The transactionThis was completedthe largest acquisition in February our company’s history and expanded our strategic position and growth opportunities.
•
Financial Performance:
◦
2021 and significantly accelerates ourConsolidated Revenues of $4.6 billion, +62.9% vs. 2020; +17.3% on a pro forma basis.*
◦
2021 Adjusted EBITDA(1) growth plans. on a pro forma basis.*
◦
2021 Non-GAAP Diluted EPS(1) growth compared to 2020.
•
•Safely Continued Serving Customers and Managed Through COVID-19 Challenges with Strong ResultsReturned Capital to Shareholders:
oOur consolidated 2020 revenues of $2.8 billion were up 5.4% versus 2019.
oPreferred Lease (now known as our Acima segment) annual invoice volume rose over 20%, which drove 8.1% revenue growth in 2020.
oWe realized twelve consecutive quarters of positive same store sales in the Rent-A-Center Business (+14.9% on a 2-year basis), with a significant year over year increase in profitability.
oRent-A-Center e-commerce increased 53% in the fourth quarter 2020Returned $462 million to 22% of Rent-A-Center sales to end the year. shareholders through dividends and share repurchases.
•
oWe achieved significant year over year growth in our Adjusted EBITDA.
•Strong Stock Price Performance: On December 31, 2019, our common stock closed at $28.84 per share. On December 31, 2020, our common stock closed at $38.29 per share. On December 31, 2021, our common stock closed at $48.04, an increase of approximately 33%25%.
•Launched Preferred Dynamix Platform: Rent-A-Center launched its Preferred Dynamix platform, which includes a mobile application and is also planned to include a marketplace to empower unbanked and underbanked consumers with more financial freedom. Preferred Dynamix's proprietary digital platform leverages new decisioning technology and a portfolio of new lease-to-own solutions to expand the ways that consumers and retailers transact. This platform is being integrated with that of Acima Holdings, LLC as part of our integration efforts.
•Refranchised California Stores: On July 22, 2020, we entered into an asset purchase agreement to sell all 99 Rent-A-Center Business corporate stores in the state of California to an experienced franchisee. The sale was consummated on October 5, 2020.20202021 Executive Compensation Highlights
Highlights of our 20202021 executive compensation program are discussed below: •
Continued High Percentage of At-Risk, Variable Performance-Based Compensation: Targeted direct compensation (base salary, target annual incentive compensation and target long-term incentive compensation) for our Chief Executive Officer was 84.6%85% at-risk performance-based(performance-based) for the year ended December 31, 2020.2021. Such percentage represents the Chief Executive Officer'sOfficer’s target annual incentive compensation and target long-term incentive compensation as a percentage of his total targetedtarget direct compensation.
•
•Maintained Rigorous Annual Incentive Award Targets with Increases Overover Prior Year: In establishing the 20202021 annual cash incentive plan targets for each metric, the Compensation Committee considered sensitivities to the key business drivers of Adjusted EBITDA, Rent-A-Center Business same store sales, invoice volume and free cash flowAcima revenues to establish rigorous threshold, target and maximum performance levels. In addition, target levels of Adjusted EBITDA and free cash flowRent-A-Center Business same store sales were increased compared to the prior year targets.target. The metrics of same store sales and invoice volume wereAcima revenues metric was not used for purposes of assessing performance in the prior year.2020.
•
Table of Contents•Retained 60%Increased Weighting of Performance Stock Units in Long-Term Incentive Program to 70%: TheIn 2021, the Compensation Committee decided to retainincreased the same percentage split betweenperformance stock unit weighting and eliminated stock options, resulting in grants of time-vested restricted stock units (20%(30%), and performance-based performancerestricted stock units (60%(70%) and stock options (20%) as in 2019,, thereby including substantial weighting to the Company'sCompany’s relative TSR performance under the long-term incentive program.
•
•Strong Top Line and Bottom LineAnnual Financial Performance and Cash Flow Generation Resulted in 180%128% Bonus Plan Payouts: As a result of our Company's strongCompany’s annual financial performance in 20202021 despite the challenging business environment discussed above,due to the pandemic and related macro-economic challenges particularly in the latter portion of the year, we achieved strong results on our 20202021 bonus plan metrics and the Compensation Committee approved a 180%128% payout to our executives. This payout reflected an adjustment by the Compensation Committee to the invoice volume metric (which was established prior to the pandemic and was not adjusted in 2020) to reflect the adverse impact of the COVID-19 pandemic on our retail partner invoice volumes, as discussed in this CD&A.
•
•Strong Three-Year Stock Price Performance Resulted in 200% Vesting of 2018 Performance2019 Performance-Based Stock Units: Our strong relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three yearthree-year period ended
(1)
Non-GAAP financial measure.
*
Pro forma results and metrics represent estimated financial results and metrics as if the acquisition of Acima had been completed on January 1, 2020. The pro forma results and metrics may not necessarily reflect the actual results of operations or metrics that would have been achieved had the acquisition been completed on January 1, 2020, nor are they necessarily indicative of future results of operations or metrics.
December 31, 2020,2021, ranked us 26 out of 6057 companies in the S&P 1500 Specialty Retail Index, or the 98th91st percentile, which resulted in the vesting of 200% of the performance-based restricted stock units that were granted in 2018. 2019.
•
•Strong Stockholder Say on PaySay-on-Pay Approval: In June 2020,2021, we held a stockholder advisory vote on the compensation of our named executive officers, referred to as a say on paysay-on-pay vote. Our stockholders approved the compensation of our named executive officers, with 97.7%approximately 98% of the shares of common stock present and entitled to vote at the meeting cast in favor of our proposal, which our Compensation Committee believed conveyed a general endorsement of our executive compensation program and related compensation actions.
20212022 Executive Compensation Program ChangesIn February 2021,2022, the Compensation Committee conducted its annual review of the executive compensation program to ensure the program remains aligned with the Company'sCompany’s executive compensation philosophy and strategic objectives. In general, the Compensation Committee determined it was appropriate to retain the same overall structure in 20212022 as in 20202021 taking into account feedback from the Compensation Committee'sCommittee’s independent compensation consultant, comparisons to peer group compensation programs, the strong say on paysay-on-pay approval from stockholders, and other factors. Although the same overall structure of 2020 is retained for 2021, the Compensation Committee approved certain adjustments to the 2020 executive compensation program:•2021 Bonus Plan: The Preferred Lease revenue-based metric in the 2020 bonus plan (invoice volume) was replaced with Acima (formerly Preferred Lease) segment revenue. This change was implemented due to the variability of invoice volumes and impact of retail partner supply chain issues on invoice volumes and because revenue is more closely aligned with profitability. The cash flow metric in the 2021 bonus plan was removed because of the Company's strategic focus on becoming a higher growth company primarily in the retail partner business and the need to make investments for future growth as highlighted by its recent acquisition of Acima Holdings, LLC, and was replaced with an increased Adjusted EBITDA weighting. Based on these adjustments, the 2021 bonus plan design consists of: (1) Rent-A-Center Business segment same store sales (25% weighting); (2) Acima (formerly Preferred Lease) segment revenues (25% weighting); and (3) Adjusted EBITDA (50% weighting).
•2021 LTIP: The Compensation Committee replaced stock options with additional restricted stock units and performance stock units, weighted as 30% and 70%, respectively, and modified the
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Severance Arrangements
We have an employment agreement with Mr. Fadel and executive transition agreements with our other named executive officers to provide certain payments and benefits upon an involuntary termination of the named executive officer'sofficer’s employment or the occurrence of certain other circumstances that may affect the named executive officer. The Compensation Committee believes that such severance arrangements assist us in recruiting and retaining top-level talent. In addition, formalizing our severance practices benefits us (1) by providing us with certainty in terms of our obligations to an eligible executive in the event that our relationship with him or her is severed and (2) by virtue of the non-competition, non-solicitation and release provisions in our loyalty agreements, which inure to our benefit in the event that an eligible executive severs employment with us. For a more detailed description of the severance arrangements which apply to our named executive officers, please see "Termination“Termination of Employment and Change-in-Control Arrangements"Arrangements” below. Employee Benefits and Limited Perquisites Our named executive officers are eligible to participate in the benefit plans generally available to all of our employees, which include health, dental, life insurance, vision and disability plans, all of which the Compensation Committee believes are commensurate with plans of other similarly situated public companies in the retail industry. In addition, we will pay for the cost of an executive physical examination for each named executive officer each year and we do not gross up our executives up for any taxes related to the cost of perquisites. Our named executive officers were eligible in 20202021 to participate in our 401(k) Retirement Savings Plan and in the Rent-A-Center, Inc. Deferred Compensation Plan. The Deferred Compensation Plan allows our executive officers to defer certain compensation to help save for their longer term financial objectives on a tax-deferred basis. The Compensation Committee has determined it is beneficial to offer the above-described employee benefits and perquisites in order to attract and retain our named executive officers by offering compensation opportunities that are competitive with those offered by similarly-situatedsimilarly situated public companies in the retail industry. In determining the total compensation payable to our named executive officers for a given fiscal year, the Compensation Committee will examine such employee benefits and perquisites in the context of the total compensation which our named executive officers are eligible to receive. However, because such employee benefits and perquisites which are available to our named executive officers represent a relatively small portion of their total compensation, the availability of such items does not materially influence the decisions made by the Compensation Committee with respect to other elements of the total compensation to which our named executive officers are entitled or awarded.
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For a description of the employee benefits and perquisites received by our named executive officers in 2020,2021, please see "—“— All Other Compensation"Compensation” below.
The Compensation Committee typically begins the process of determining the amount and mix of total compensation to be paid to our senior executives, including our named executive officers, in December of each year and finalizes the amounts the following February. This enables the Compensation Committee to examine and consider our performance during the previous year in establishing the current year'syear’s compensation. During the Compensation Committee'sCommittee’s annual review of the executive compensation program, the Compensation Committee primarily considers market and Peer Group data (as described below), input provided by our Human Resources department, and input of the Chief Executive Officer other than with respect to his own compensation. The Compensation Committee also considers experience, responsibilities, competencies and individual performance.
Historically, the Compensation Committee has retained annually a compensation consultant to conduct a formal evaluation of, and advise it with respect to, the compensation arrangements for our Chief Executive Officer, as well as provide guidance with respect to the compensation of our senior executives, including our other named executive officers. For the 20202021 fiscal year, the Compensation Committee reviewed the executive compensation analysis conducted by Korn Ferry in December 2019,2020, which identified the Peer Group (as defined below), pursuant to its engagement by the Compensation Committee to assist the committee with compensation decisions for the 20202021 fiscal year. The Compensation Committee considered executive compensation practices of the following similarly-situatedsimilarly situated public companies (the "Peer Group"“Peer Group”) for the purpose of evaluating our 20202021 compensation arrangements for our senior executives:| | | | | | | |
20202021 Peer Group
| |
|---|
| | | Aaron’s, Inc. | | | | |
Aaron's, Inc.
| | Big Lots Inc. | | | Brinker International Inc. | | Conn's | Conn’s | |
| EZCorp, Inc. | | | FirstCash, Inc. | | | H&R Block, Inc. | | | La-Z-Boy Incorporated | |
| Michaels Stores, Inc. | | | MoneyGram International, Inc. | | | OneMain Holdings | | | Sally Beauty, Inc. |
Santander Consumer USA
Holdings Inc.
|
| | | | | |
| | | Santander Consumer USA
Holdings Inc. | | | | | | | | | | |
This Peer Group was approved by the Compensation Committee in the fall of 2019 based on work performed by Korn Ferry for use in connection with compensation decisions to be made for the 2020 fiscal year.
The following criteria were considered in the selection of companies for this Peer Group: •
U.S.-based public companies with a similar business focus as ours, including both consumer finance and retail (particularly home furnishings, appliances and other retail organizations with which we compete for customers in a similar demographic);
•
•Companies with annual revenue similar to us (generally 0.5 to 2.0 times our revenue, based on the most recent available financial information at the time of the analysis) and annuitized revenue streams; and
•
•Competitors for executive talent.
In late 2020,2021, the Compensation Committee considered the above criteria in reviewing the Peer Group to be used for 20212022 benchmarking purposes, and determined to make no changes to the Peer Group.Finally, variousremove Michaels Stores, Inc., Moneygram International, Inc. and EZcorp, Inc. and add PROG Holdings, Inc. and Western Union Company.
Various members of the Compensation Committee have significant professional experience in the consumer finance and retail industries, as well as with respect to the executive compensation practices of large publicly-tradedpublicly traded companies. This experience provides a frame of reference within which to evaluate our executive compensation program relative to general economic conditions and our progress in achieving our short-term and long-term goals.
TableAs discussed above, the Compensation Committee has engaged Korn Ferry as its independent compensation consultant, and in such role, Korn Ferry provides ongoing advisory services to the Compensation Committee on various aspects of Contentsits overall compensation practices. The Company paid Korn Ferry $109,600 in fiscal year 2021 for these advisory services related to executive compensation. In addition, Korn Ferry was engaged by management to provide executive search services. Fees for these executive search services totaled $554,400 in fiscal year 2021. The decision to retain Korn Ferry for these additional services was made by management. The Compensation Committee considered Korn Ferry’s provision of additional services and the fee related thereto in reviewing Korn Ferry’s independence as a compensation consultant.
The following forms of compensation are currently utilized by the Compensation Committee in compensating our named executive officers:
•
base salary, which is paid in cash;
•
•annual incentive compensation, which is paid in cash;
•
•long-term incentive compensation, which currently consists of restricted stock units and performanceperformance-based stock units;
•
•severance arrangements; and
•
•employee benefits, including limited perquisites, with no tax gross-ups (other than for certain relocation-related expenses).
The base salary for each of our named executive officers represents the guaranteed portion of their total compensation and is determined annually by the Compensation Committee. Base salaries help to achieve our goal of maintaining a competitive program that will attract and retain talent needed for our long-term success.
At the beginning of each year, the Compensation Committee considers whether adjustments should be made to the annual base salaries for our named executive officers. During the Compensation Committee'sCommittee’s review of the then-current base salaries, the Compensation Committee primarily considers market data, including from the Peer Group, input provided by our SeniorExecutive Vice President — Chief Human Resources Officer, input of the Chief Executive Officer (other than with respect to his own base salary), individual performance, our financial performance, the experience, responsibilities and competencies of the named executive officer, and each named executive officer'sofficer’s compensation in relation to our other executive officers. In early 2020,2021, based on the consideration of these factors, the Compensation Committee maintainedapproved the base salarysalaries of our Chief Executive Officer and increased the base salary for 2020 for each of our other then-existing named executive officers at a modest rate consistent withas shown in the salary increases for our other seniortable below. Mr. Blasquez became an executive management. Mr. Hogg joinedofficer of the Company in June 2020 and his revised base salary as an executive officer was established by the Committee in connection with his promotion in 2020. Mr. Hogg and Mr. Pechersky each joined the Company in June 2020 and their base salaries were established by the Committee in connection with their hiring. The following table sets forth the annual base salaries of the named executive officers for 20202021 and, to the extent applicable, provides a comparison to each of the previous two years:
| | Name | | | 2019 Base Salary | | | 2020 Base Salary | | | 2021 Base Salary | |
| | Mitchell Fadel | | | | $ | 1,000,000 | | | | | $ | 1,000,000 | | | | | $ | 1,100,000 | | |
| | Maureen Short | | | | $ | 416,300 | | | | | $ | 441,278 | | | | | $ | 500,000 | | |
| | Anthony Blasquez(1) | | | | | — | | | | | | — | | | | | $ | 410,000 | | |
| | Jason Hogg(2) | | | | | — | | | | | $ | 600,000 | | | | | $ | 625,000 | | |
| | Bryan Pechersky(3) | | | | | — | | | | | | — | | | | | $ | 365,000 | | |
| | | | | | |
Name
| | 2018 Base Salary
| | 2019 Base Salary
| | 2020 Base Salary
|
|---|
| | | | | | | |
Mitchell Fadel(1) | | $800,000 | | $1,000,000 | | $1,000,000 |
Maureen Short(2) | | $362,000 | | $416,300 | | $441,278 |
Ann Davids(3) | | $330,000 | | $339,900 | | $350,097 |
Jason Hogg(4) | | — | | — | | $600,000 |
Catherine Skula(5) | | $325,338 | | $335,098 | | $350,000 |
(1)- Mr.
Fadel was named Chief Executive Officer effective as of January 2, 2018.
(2)Ms. Short was named Chief Financial Officer effective as of December 19, 2018.
(3)Ms. DavidsBlasquez was named Executive Vice President — Chief Marketing and Customer OfficerRent-A-Center Business effective as of February 21, 2018.June 1, 2020 and was not a named executive officer prior to 2021.
(2)
(4)Mr. Hogg was named Executive Vice President — Preferred Lease (which role has beenwas subsequently retitled to Executive Vice President — Acima) effective as of June 22, 2020. As previously disclosed, Mr. Hogg departed the Company effective March 28, 2022.
(3)
(5)Ms. SkulaMr. Pechersky joined the Company and was named Executive Vice President — FranchisingGeneral Counsel & Corporate Secretary effective as of January 2, 2018,June 1, 2020 and Executive Vice President — Chief Development Officer effective as of November 23, 2020.was not a named executive officer prior to 2021.
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Annual Cash Incentive Compensation The Compensation Committee maintains an annual incentive compensation program for our named executive officers that provides for awards in the form of a cash bonus. These cash bonuses provide our named executive officers with short-term financial rewards based upon achievement of specified short-term objectives, which the Compensation Committee believes will ultimately increase the value of our Company by aligning our executive compensation with the achievement of annual performance objectives, as well as help us attract and retain our named executive officers by providing attractive compensation opportunities. Under our annual cash incentive program, target cash bonus eligibility is established at a pre-determined percentage of the named executive officer'sofficer’s base salary, with such percentage amount set in accordance with the named executive officer'sofficer’s position and responsibilities with us. The ultimate payouts pursuant to our annual cash incentive program for prior year performance are typically approved by the Compensation Committee in February at the same time that all compensation (including base salaries, target annual cash incentive compensation, and target long-term incentive compensation) for our named executive officers for the current year is reviewed and approved. This timing enables the Compensation Committee to evaluate the named executive officer'sofficer’s performance during the prior performance year, as well as determine performance targets for the new fiscal year in light of the previous year'syear’s performance. Payouts under the plan may range from 0% to 200% of target compensation. The Compensation Committee determined the ultimate payouts for the 2021 annual cash incentive program at the target award values established as a percentage of each executive’s base salary for each of Messrs. Blasquez, Fadel, Hogg and Pechersky and Ms. Short.
The annual cash incentive program for 20202021 included fourthree financial performance metrics focused on annual top line revenue performance profitability and cash flow generation: •Rent-A-Center Business Same Store Sales — The Compensation Committee determined to include a consolidated same store sales target in the 2020 annual cash incentive plan in lieu of the corporate revenue target used for the 2019 annual cash incentive program. This reflects the Compensation Committee's belief that a portion of the cash bonus opportunity should be based on our revenue growth, but takes into account potential impacts to the Company's revenues for 2020 in light of the Company's refranchising strategy, such as our 2020 California refranchising transaction.
•Preferred Lease (now known as Acima) Invoice Volumes — Because of the different business model for our Preferred Lease retail partner business, the Compensation Committee determined that invoice volume growth was an appropriate metric for top line performance of this business segment. Invoice volumes represent the amount of purchases that Preferred Lease makes from retail partners of merchandise, which Preferred Lease then leases to its customers. Invoice volumes are considered to be a leading indicator to future revenues.
•
Adjusted EBITDA — The Compensation Committee included an Adjusted EBITDA target in the annual cash incentive program because it believes Adjusted EBITDA generally represents an accurate indicator of our core financial performance and profitability over a one-year period of time, while excluding the impact of items such as interest and depreciation which can vary significantly and other adjustments that are not considered to reflect the performance of our core business operations.
•
Rent-A-Center Business Same Store Sales —
•Free Cash Flow — The Compensation Committee determined to include Free Cash Flow as oneincluded a same store sales target in 2021, which reflects its belief that a portion of the financial performance metrics comprisingcash bonus opportunity should be based on our revenue growth, but takes into account potential impacts to the annual cash incentive program to continue focusing management on this elementCompany’s revenues in light of our strategy, which allows us to not only investthe Company’s refranchising transactions and other changes in our store count.
•
Acima Revenue — For our Acima business, the Compensation Committee determined that revenue growth was an appropriate metric for top line performance of this business segment, rather than invoice volumes which are considered to be a leading indicator to future growth but also return capital to stockholders as part of our capital allocation strategy. Free Cash Flow is defined as cash flows from operating activities less capital expenditures.revenues.
Table of ContentsThe financial performance targets for the 20202021 annual cash incentive program were established in February 20202021 following a review of our financial projections developed pursuant to our strategic plan and objectives for 2020.2021 and taking into account the impact of the Acima acquisition, which was completed in February 2021. In setting the performance targets under the 20202021 annual cash incentive program, the Compensation Committee considered the level of actual achievement of the targets for the 20192020 annual cash incentive program, the level of the Company'sCompany’s anticipated investment in its strategic initiatives for 2020,2021, sensitivities for the key business drivers that may impact achievement of the targets and the Compensation Committee'sCommittee’s goal to ensure a rigorous target-setting process. Based upon that review, the Compensation Committee established the following threshold, target and maximum payout achievement levels for each metric in the 20202021 annual cash incentive program:
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Rent-A-Center Business same store sales |
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Threshold — Less than 0.0% growth
$563 million Target — 1.35%$620 to 1.65% growth
$632 million Maximum — Greater than or equal to 3.0% growth$688 million |
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Preferred Lease (now known as Acima) invoice volume |
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Threshold — Less than $623.07 million
0.0% growth Target — $685.383.80% to $699.23 million
4.20% growth Maximum — Greater than or equal to $761.53 million6.0% growth |
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Adjusted EBITDA |
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Threshold — Less than $249.50$2,256 million
Target — $274.45$2,363 to $277.22$2,387 million
Maximum — Greater than or equal to $304.94$2,494 million |
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Free Cash Flow |
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Threshold — Less than $95.99 million
Target — $117.59 million to $122.38 million
Maximum — Greater than or equal to $143.97 million |
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Despite the impacts
The target 2021 cash incentive values for each of Messrs. Blasquez, Fadel, Hogg and uncertainties associated with the COVID-19 pandemic, the Compensation Committee did not adjust anyPechersky and Ms. Short, as percentages of the 2020 bonus targets during 2020each executive’s base salary, were 55%, 135%, 100%, 55% and instead elected to assess bonus target performance as part of its determination of achievement levels in early 2021.60%, respectively.
In February 2021,2022, the Compensation Committee determined the level of achievement against the 20202021 bonus plan targets:
| | | Metric | | | | Weighting (% of total
bonus opportunity) | | | | 2021 Performance | | | | Percent of 2021
Target Achieved | | | | Payout for
2021
(% of Target) | | |
| | | Adjusted EBITDA(1)(2) | | | | 50% | | | | $643 million | | | | 103% | | | | 120% | | |
| | | Rent-A-Center Business Same Store Sales | | | | 25% | | | | 15.3% | | | | 387% | | | | 200% | | |
| | | Acima Revenues | | | | 25% | | | | $2,328 million | | | | 98% | | | | 70% | | |
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| | | Metric | | | | Weighting (% of total
bonus opportunity)
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Target Achieved
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2020
(% of Target)
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| | | Rent-A-Center Business segment same store sales | | | | 25% | | | | 9.0% | | | | 598.4% | | | | 200% | | |
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| | | Acima segment invoice volume (formerly known as the Preferred Lease segment) | | | | 25% | | | | $707 million (1) | | | | 102.1% (1) | | | | 120% | | |
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| | | Adjusted EBITDA (2) (3) | | | | 40% | | | | $344 million | | | | 124.1% | | | | 200% | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Free Cash Flow (2) (3) | | | | 10% | | | | $202 million | | | | 168.3% | | | | 200% | | |
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(1)Represents an adjustment to the invoice volume achievement calculation made by the Compensation Committee based on a detailed review of the estimated lost volumes due to the COVID-19 pandemic. The COVID-19 pandemic had an adverse impact on invoice volumes for our retail partner business due to our retail partners' supply chain disruptions and their substantial store closures for portions of 2020. This impact was beyond the control of our management team. As a result and because the bonus targets, including invoice volumes, were all established prior to the pandemic and were not subsequently adjusted during 2020, the Compensation Committee determined it was appropriate to adjust the achievement of the invoice volume metric from 91.3% to 102.1% to offset the estimated adverse impacts described above. This resulted in an overall 180% payout on the 2020 bonus plan, compared to 155% in the absence of the invoice volume adjustment.
(2)- Adjusted EBITDA is a non-GAAP financial measure calculated as net earnings before interest, taxes, depreciation and amortization, as adjusted for certain gains and charges we view as extraordinary, unusual or non-recurring in nature and which we believe do not reflect our core business activities.
Free Cash Flow is a non-GAAP financial measure calculated as cash flows from operating activities less capital expenditures.
(2)
(3)In reviewing our actual 20202021 performance relative to the performance targets, the Compensation Committee determined that it would be appropriate, consistent with past practices, to adjust Adjusted EBITDA to exclude the impact of the bonus payout itself. No other adjustments were made to Adjusted EBITDA, and no adjustments were made to Free Cash Flow.EBITDA.
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As a result, each executive officer in the 20202021 annual cash incentive program received an amount equal to 180%128% of such person'sperson’s target bonus amount. The actual amounts awarded to our named executive officers for their annual cash incentive bonus for 20202021 performance are included under the column "Non-Equity“Non-Equity Incentive Plan Compensation"Compensation” in the table appearing in the section "Compensation“Compensation Tables — Summary Compensation Table"Table” below in this proxy statement.
Long-Term Incentive Compensation Our equity incentive plans are administered by the Compensation Committee and are designed to enable the Compensation Committee to provide incentive compensation to our employees in the form of stock options, restricted stock and stock unit awards, other equity awards, and performance-based equity awards. The Compensation Committee believes that awarding our named executive officers non-cash, long-term equity incentive compensation, primarily in the form of long-term incentive awards which may increase or decrease in value depending on the satisfaction by us of pre-determined performance measures and/or an increase or decrease in the value of our common stock, more effectively aligns their interests with those of our stockholders. The Compensation Committee also believes that such awards will provide our named executive officers with an incentive to remain in their positions with us, since the determination as to whether a particular measure for our performance and/or an increase in the value of our common stock has been satisfied is typically made over an extended period of time.
Recent long-term incentive awards arewere made to our named executive officers pursuant to the 20162021 Plan. Under the terms of the 20162021 Plan, awards may be granted at times and upon vesting and other conditions as determined by the Compensation Committee, and may be made in the form of stock options, restricted stock and stock unit awards, other equity awards, and performance-based equity awards. •Stock Options — Stock option awards under our equity incentive plans are granted at the fair market value per share of our common stock on the date the option is granted as determined by reference to the closing price for shares of our common stock on the Nasdaq Global Select Market on the last market trading day prior to the date the option is granted. The options granted to our named executive officers typically vest ratably over a four-year period, commencing one year from the date of grant, and expire after 10 years. Starting in 2021, the Compensation Committee eliminated stock options from the long-term incentive plan mix as discussed in this CD&A.
•
Restricted Stock Units and Performance Stock Units — The restricted stock units granted by our Compensation Committee vest either after a set period of time or upon the achievement of specified goals for our performanceratably over a period of time.three years. Awards of time-based restricted stock units with time-based vesting provide our named executive officers with a minimum level of value while also providing an additional incentive for such individuals to remain in their positions with us.
•
Performance Stock Units — Awards of restrictedperformance-based stock units with performance-based vesting provide an additional incentive for our named executive officers to remain in their positions with us in order to realize the benefit of such award and also focus them on a performance parametermetric which the Compensation Committee considers beneficial to increasing the long-term value of our Company.
The Compensation Committee determines the timing of the annual grants of equity awards to our named executive officers as well as the terms and restrictions applicable to such grants. The Compensation Committee approves, generally in February of each year, the annual grant to our executive officers in conjunction with its review and determination of each executive officer'sofficer’s compensation for the current year. Grants may also be made in connection with commencement of employment promotions, or achieving certain tenure at Rent-A-Center.promotions.
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In February 2020, the Compensation Committee approved theThe target 2021 equity award percentages for 2020values for each of our named executive officers. The following table highlights the named executive officers' target 2020 equity award valuesMessrs. Blasquez, Fadel, Hogg and Pechersky and Ms. Short, as a percentagepercentages of each executive'sexecutive’s base salary, were 90%, 415%, 250%, 90% and provides a comparison to the previous two years:
130%, respectively.2020 Named Executive Officer
LTIP Target Award Percentages
(% of base salary, rounded to the nearest 1%)
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Name
| | 2018
| | 2019
| | 2020
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Mitchell Fadel | | | 250% | | | 350% | | | 415% | |
Maureen Short | | | 75% | | | 130% | | | 130% | |
Ann Davids | | | 85% | | | 85% | | | 85% | |
Jason Hogg | | | — | | | — | | | —(1) | |
Catherine Skula | | | 85% | | | 85% | | | 85%(2) | |
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(1)Mr. Hogg joined the Company in June 2020, several months after the Company's annual equity awards to executives. Mr. Hogg's 2020 LTIP award was made in connection with his hiring and took into account, among other considerations, the fact that Mr. Hogg would be forfeiting equity from a previous employer. Accordingly, his initial award in 2020 was not established as a specific percentage of his base salary.
(2)Ms. Skula's LTIP Target Award Percentage was increased from 85% to 90% of base salary in November 2020 in connection with her promotion to Executive Vice President — Chief Development Officer.
Consistent with prior years, theThe long-term incentive compensation awards for 20202021 were comprised of threetwo vehicles, with greater emphasis on the portion of the long-term incentive award which is contingent on relative stock price performance:
20202021 LTIP Award Types
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Award Type | | | | Weighting | | | | | |
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| Weighting
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| | | Performance Stock Units | | | | | 70% | | |
| | Performance Stock Units
| | | | | 60% | | |
| | | Restricted Stock Units | | | | | | | |
| | Restricted Stock Units
| | | | | 20% | | |
| | 30% | | | | | | | |
| | Stock Options
| | | | | 20% | | |
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The Compensation Committee has adopted a relative TSR metric over a three-year measurement period as the vesting condition for grants of performance stock units under our long-term incentive compensation program. The Compensation Committee made this decision in order to tie the performance of our common stock to executive compensation and because the Compensation Committee believes that a relative measure is a more appropriate basis for measuring long-term performance than an absolute measure. The Compensation Committee also took into consideration the fact that our annual cash incentive program includes an annual Adjusted EBITDA metric. The Compensation Committee selected a three-year period over which to measure relative TSR based upon the time-period utilized with respect to awards made by similarly-situatedsimilarly situated public companies in the retail industry, as well as upon its belief that a three-year measurement period was appropriate to place an emphasis on our relative TSR over an extended period of time, as opposed to the single year measure which is utilized in our annual cash incentive program.
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The Compensation Committee selected the S&P 1500 Specialty Retail Index as the comparison group for measuring our relative TSR over the applicable measurement period. The Compensation Committee selected this comparison group because it includes many of the Company'sCompany’s peers, represents the overall retail environment, and, in the determination of the Compensation Committee, was comprised of the companies most similar, in terms of operations and scope of operations, to the Company. The Compensation Committee adopted the following payout ranges applicable to the 20202021 awards of performance-based restricted stock units:
| | Performance Stock Unit Payout Chart | |
| | RCII’s TSR Percentile Rank in the
S&P 1500 Specialty Retail Index | | | | | | Payout | |
| | > | | | ≤ | | | | | | | |
| | 90% | | | 100% | | | | | | 200% | |
| | 80% | | | 90% | | | | | | 175% | |
| | 70% | | | 80% | | | | | | 150% | |
| | 60% | | | 70% | | | | | | 125% | |
| | 50% | | | 60% | | | | | | 100% | |
| | 40% | | | 50% | | | | | | 75% | |
| | 30% | | | 40% | | | | | | 50% | |
| | 25% | | | 30% | | | | | | 25% | |
| | 0% | | | 25% | | | | | | 0% | |
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Payout Chart
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RCII's TSR Percentile Rank in the
S&P 1500 Specialty Retail Index
| | RCII's TSR Actual Rank in the
S&P 500 Specialty Retail Index
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>
| | £
| | Low
| | High
| | Payout
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| | 90% | | | 100% | | | 1 | | | 7 | | | 200% | |
| | 80% | | | 90% | | | 8 | | | 13 | | | 175% | |
| | 70% | | | 80% | | | 14 | | | 19 | | | 150% | |
| | 60% | | | 70% | | | 20 | | | 25 | | | 125% | |
| | 50% | | | 60% | | | 26 | | | 31 | | | 100% | |
| | 40% | | | 50% | | | 32 | | | 37 | | | 75% | |
| | 30% | | | 40% | | | 38 | | | 43 | | | 50% | |
| | 25% | | | 30% | | | 44 | | | 46 | | | 25% | |
| | 0% | | | 25% | | | 47 | | | 61 | | | 0% | |
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35
See the columns "Stock Awards"“Stock Awards” and "Option Awards"“Option Awards” in the table appearing in the section "Compensation“Compensation Tables — Summary Compensation Table"Table” and the column "Estimated“Estimated Future Payouts Under Equity Incentive Plan Awards"Awards” in the table appearing in the section "Compensation“Compensation Tables — Grants of Plan-Based Awards"Awards” below in this proxy statement for threshold, target, and maximum amounts payable to our named executive officers under the 20202021 long-term incentive performance-based awards. In February 2021,2022, the Compensation Committee determined the level of achievement of the minimum TSR condition with respect to the performance-based awards made in 2018,2019, with a three-year measurement period. The Compensation Committee reviewed the Company'sCompany’s relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the period January 1, 20182019 through December 31, 2020,2021, and determined that our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ended December 31, 2020,2021, ranked us 26 out of 6057 companies in the S&P 1500 Specialty Retail Index, or the 98th91st percentile, which resulted in the vesting of 200% of the performance-based restricted stock units that were granted in 2018.2019.
Say on PaySay-on-Pay ResultsIn June 2020,2021, we held a stockholder advisory vote on the compensation of our named executive officers, referred to as a say-on-pay vote. Our stockholders approved the compensation of our named executive officers, with 97.7%approximately 98% of the shares of common stock present and entitled to vote at the meeting cast in favor of our proposal. As noted above, our Compensation Committee believed this strong support expressed by our stockholders indicated a general endorsement of our compensation philosophy and pay-for-performance culture. Accordingly, the compensation decisions and changes implemented during the 20202021 fiscal year were made keeping in mind this support. As a result, our Compensation Committee kept most facets of the executive compensation program consistent, with an emphasis on short- and long-term incentive compensation that rewards our executives for value creation for our stockholders.
TableTermination of ContentsEmployment and Change-in-Control Arrangements
Termination of Employment and Change-in-Control Arrangements
|
Arrangements with Named Executive Officers Other Than Mr. Fadel
We have entered into executive transition agreements with each of our named executive officers other than Mr. Fadel. Each executive transition agreement has similar terms and is intended to provide certain payments and benefits upon an involuntary termination of the named executive officer's employment or the occurrence of certain other circumstances that may affect the named executive officer.
Termination Not in Conjunction with a Change in Control
If the named executive officer's employment is terminated without "cause" or, with respect to Mr. Hogg, for "good reason," the named executive officer will be entitled to receive:
•unpaid but earned base salary through the date of such termination;
•unless such termination occurs prior to April 1, a pro rata bonus calculated based upon (i) with respect to Mr. Hogg, the annual bonus earned by such named executive officer for the calendar year preceding the year of such termination, or (ii) with respect to Ms. Davids, Ms. Short and Ms. Skula, the annual bonus such named executive officer would have earned for the calendar year of termination, as determined in the Company's sole discretion and paid in a lump sum in cash in the normal course upon the Company's completion of annual bonus calculations (such amount, the "Pro Rata Bonus");
•for (i) Ms. Davids and Ms. Short, 1.0x, and (ii) Mr. Hogg and Ms. Skula, 1.5x, of the named executive officer's highest annual rate of salary during the 24 months preceding such termination, payable in equal monthly or more frequent installments by no later than the second December 31 following the calendar year of such termination;
•for Ms. Short and Ms. Skula, 1.0x and 1.5x, respectively, of the named executive officer's average annual bonus for the two calendar years preceding such termination; and
•continued health insurance coverage for the named executive officer and the named executive officer's spouse and covered dependents for up to (i) 12 months, for Ms. Davids and Ms. Short, or (ii) 18 months, for Mr. Hogg and Ms. Skula.
If the named executive officer's employment is terminated due to disability or death, the named executive officer will be entitled to receive:
•unpaid but earned base salary through the date of termination;
•the Pro Rata Bonus applicable to such named executive officer; and
•continued health insurance coverage for the named executive officer and the named executive officer's spouse and covered dependents for up to 12 months.
If the named executive officer's employment is terminated for "cause" or if the named executive officer terminates his or her employment for any reason other than disability or death or, with respect to Mr. Hogg, without "good reason," the named executive officer will be entitled to receive his or her unpaid but earned base salary through the date of termination (reduced by amounts owed by the named executive officer to us or our affiliates).
Termination in Conjunction With a Change In Control
If the named executive officer's employment is terminated within 24 months following a change in control of us without "cause" or by the named executive officer for "good reason," the named executive officer will be entitled to receive the same severance payments and benefits as described above (not in
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connection with a change in control) with respect to a termination without "cause," except that the named executive officer will be entitled to receive:
•for (i) Ms. Davids and Ms. Short, 1.5x (instead of 1.0x), and (ii) for Mr. Hogg and Ms. Skula, 2.0x (instead of 1.5x), of the named executive officer's highest annual rate of salary during the 24 months preceding such termination, payable in a lump sum in cash within 10 business days following the later of such termination or the change in control;
•for Ms. Short and Ms. Skula, 1.5x (instead of 1.0x) and 2.0x (instead of 1.5x), respectively, of the named executive officer's average annual bonus for the two calendar years preceding such termination, payable in a lump sum in cash within 10 business days following the later of such termination or the change in control; and
•continued health insurance coverage for the named executive officer and the named executive officer's spouse and covered dependents for an extended period of up to (i) 18 months (instead of 12 months) for Ms. Davids and Ms. Short and (ii) 24 months (rather than 18 months) for Mr. Hogg and Ms. Skula.
If the named executive officer's employment is terminated in connection with a change in control due to disability or death, or for "cause" or without "good reason," the named executive officer will be entitled to receive the same severance payments and benefits as described above (not in connection with a change in control) with respect to a termination due to disability or death or for "cause," respectively. If payments would subject the named executive officer to excise tax under section 4999 of the Code, or the Company would be denied a deduction under Section 280G of the Code, then the amounts otherwise payable to the named executive officer will be reduced by the minimum amount necessary to ensure the named executive officer will not be subject to such excise tax and the Company will not be denied any such deduction.
Under each of the executive transition agreements, a "change in control" would generally occur upon any of the following:
•any person becomes the beneficial owner of 40% or more of the combined voting power of our then outstanding voting securities;
•a consolidation, merger or reorganization of us, unless (i) our stockholders immediately prior to such transaction own at least a majority of the voting power of the outstanding voting securities of the resulting entity, (ii) the members of our Board immediately prior to the execution of the agreement providing for such a transaction constitute a majority of the board of directors of the surviving corporation or of its majority stockholder, and (iii) no person beneficially owns more than 40% of the combined voting power of the then outstanding voting securities of the surviving corporation other than a person who is (a) us or a subsidiary of us, (b) an employee benefit plan maintained by us, the surviving corporation or any subsidiary, or (c) the beneficial owner of 40% or more of the combined voting power of our outstanding voting securities immediately prior to such transaction;
•individuals who constitute our entire Board (the "Incumbent Board") cease to constitute a majority of our Board, provided that anyone who becomes a director and whose appointment or nomination for election was approved by at least two-thirds of our directors at the time shall be considered as though such individual were a member of the Incumbent Board; or
•a complete liquidation or dissolution of us, or a sale or other disposition of all or substantially all of our assets (other than to an entity described in the second bullet point above).
Loyalty and Confidentiality Agreements executed in connection with our executive transition agreements provide non-competition, non-solicitation and release provisions for the benefit of the Company that remain in effect during the period of employment and an additional period of two years thereafter.
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Arrangements with Mr. Fadel
Pursuant to Mr. Fadel'sFadel’s employment agreement, if we terminate Mr. Fadel'sFadel’s employment due to his disability or death, Mr. Fadel will be entitled to receive: •
unpaid but earned base salary through the date of termination;
•
•a pro rata bonus calculated based upon Mr. Fadel'sFadel’s bonus amount from the previous year; and
•
•continued health insurance coverage for Mr. Fadel and Mr. Fadel'sFadel’s spouse and covered dependents for up to 24 months.
If we terminate Mr. Fadel'sFadel’s employment for "cause,"“cause,” or if Mr. Fadel terminates his employment with us for any reason other than death, disability or for "good“good reason,"” Mr. Fadel will be entitled to receive his unpaid but earned base salary through the date of termination (reduced by amounts owed by Mr. Fadel to us or our affiliates). If Mr. Fadel'sFadel’s employment is terminated by us without "cause" (as“cause” (as defined in the employment agreement) or by Mr. Fadel for "good“good reason,"” Mr. Fadel will be entitled to receive: •
unpaid but earned base salary through the date of termination;
•
•a pro rata bonus calculated based upon Mr. Fadel'sFadel’s bonus amount from the previous year;
•
•two times the sum of Mr. Fadel'sFadel’s (x) highest annual rate of salary during the previous 24 months and (y) his target cash bonus amount for the calendar year in which the termination occurs, payable in equal monthly installments over a period of 24 months; and
•
•continued health insurance coverage for Mr. Fadel and Mr. Fadel'sFadel’s spouse and covered dependents for up to 24 months.
If we terminate Mr. Fadel'sFadel’s employment without "cause"“cause” or if Mr. Fadel terminates his employment for "good“good reason,"” within the period beginning six months prior to a change in control or, if such change in control results in a person beneficially owning 40% or more of the voting power of the Company or is pursuant to a consolidation, merger or reorganization (subject to certain exceptions), beginning on the date of the definitive agreement pursuant to which the change in control is consummated and ending on the first anniversary of the date of the change in control, then Mr. Fadel will be entitled to receive in a lump sum the same aggregate severance payments and benefits as described above for a termination not in connection with a change in control. The Compensation Committee or the Board may condition the payment of severance or benefits on the execution and delivery by Mr. Fadel of a general release in favor of us, our affiliates and our officers, directors, and employees, provided that no such release will be required for the payment to Mr. Fadel of accrued compensation. If payments would subject Mr. Fadel to excise tax under section 4999 of the Internal Revenue Code (the “Code”), or the Company would be denied a deduction under Section 280G of the
Code, then the amounts otherwise payable to Mr. Fadel will be reduced by the minimum amount necessary to ensure Mr. Fadel will not be subject to such excise tax and the Company will not be denied any such deduction. Mr. Fadel is also subject to a Loyalty and Confidentiality Agreement which provides non-competition, non-solicitation and release provisions for the benefit of the Company that remain in effect during the period of employment and an additional period of two years thereafter.
Arrangements with Named Executive Officers Other Than Mr. Fadel
We have entered into executive transition agreements with each of our named executive officers other than Mr. Fadel. Each executive transition agreement has similar terms and is intended to provide certain payments and benefits upon an involuntary termination of the named executive officer’s employment or the occurrence of certain other circumstances that may affect the named executive officer.
Termination Not in Conjunction with a Change in Control
If the named executive officer’s employment is terminated without “cause” or, with respect to Mr. Hogg, for “good reason,” the named executive officer will be entitled to receive:
•
•
unless such termination occurs prior to April 1, a pro rata bonus calculated based upon (i) with respect to Mr. Hogg, the annual bonus earned by such named executive officer for the calendar year preceding the year of such termination, or (ii) with respect to Ms. Short, Mr. Blasquez and Mr. Pechersky, the annual bonus such named executive officer would have earned for the calendar year of termination, as determined in the Company’s sole discretion and paid in a lump sum in cash in the normal course upon the Company’s completion of annual bonus calculations (such amount, the “Pro Rata Bonus”);
•
for (i) Ms. Short, 1.0x, and (ii) Mr. Hogg, Mr. Blasquez and Mr. Pechersky, 1.5x, of the named executive officer’s highest annual rate of salary during the 24 months preceding such termination, payable in equal monthly or more frequent installments by no later than the second December 31 following the calendar year of such termination;
•
for (i) Ms. Short, 1.0x, and (ii) Mr. Blasquez, 1.5x, of the named executive officer’s average annual bonus for the two calendar years preceding such termination; and
•
continued health insurance coverage for the named executive officer and the named executive officer’s spouse and covered dependents for up to (i) 12 months, for Ms. Short, or (ii) 18 months, for Mr. Hogg, Mr. Blasquez and Mr. Pechersky.
If the named executive officer’s employment is terminated due to disability or death, the named executive officer will be entitled to receive:
•
unpaid but earned base salary through the date of termination;
•
the Pro Rata Bonus applicable to such named executive officer; and
•
continued health insurance coverage for the named executive officer and the named executive officer’s spouse and covered dependents for up to 12 months.
If the named executive officer’s employment is terminated for “cause” or if the named executive officer terminates his or her employment for any reason other than disability or death or, with respect to Mr. Hogg, without “good reason,” the named executive officer will be entitled to receive his or her unpaid but earned base salary through the date of termination (reduced by amounts owed by the named executive officer to us or our affiliates).
Termination in Conjunction with a Change In Control
If the named executive officer’s employment is terminated within 24 months following a change in control of us without “cause” or by the named executive officer for “good reason,” the named executive officer will be entitled to receive the same severance payments and benefits as described above (not in connection with a change in control) with respect to a termination without “cause,” except that the named executive officer will be entitled to receive:
•
for (i) Ms. Short, 1.5x (instead of 1.0x), and (ii) for Mr. Hogg, Mr. Blasquez and Mr. Pechersky, 2.0x (instead of 1.5x), of the named executive officer’s highest annual rate of salary during the 24 months preceding such termination, payable in a lump sum in cash within 10 business days following the later of such termination or the change in control;
•
for (i) Ms. Short, 1.5x (instead of 1.0x), and (ii) Mr. Blasquez, 2.0x (instead of 1.5x), of the named executive officer’s average annual bonus for the two calendar years preceding such termination, payable in a lump sum in cash within 10 business days following the later of such termination or the change in control; and
continued health insurance coverage for the named executive officer and the named executive officer’s spouse and covered dependents for an extended period of up to (i) 18 months (instead of 12 months) for Ms. Short and (ii) 24 months (rather than 18 months) for Mr. Hogg, Mr. Blasquez and Mr. Pechersky.
If the named executive officer’s employment is terminated in connection with a change in control due to disability or death, or for “cause” or without “good reason,” the named executive officer will be entitled to receive the same severance payments and benefits as described above (not in connection with a change in control) with respect to a termination due to disability or death or for “cause,” respectively. If payments would subject the named executive officer to excise tax under section 4999 of the Code, or the Company would be denied a deduction under Section 280G of the Code, then the amounts otherwise payable to the named executive officer will be reduced by the minimum amount necessary to ensure the named executive officer will not be subject to such excise tax and the Company will not be denied any such deduction.
Under each of the executive transition agreements, a “change in control” would generally occur upon any of the following:
•
any person becomes the beneficial owner of 40% or more of the combined voting power of our then outstanding voting securities;
•
a consolidation, merger or reorganization of us, unless (i) our stockholders immediately prior to such transaction own at least a majority of the voting power of the outstanding voting securities of the resulting entity, (ii) the members of our Board immediately prior to the execution of the agreement providing for such a transaction constitute a majority of the board of directors of the surviving corporation or of its majority stockholder, and (iii) no person beneficially owns more than 40% of the combined voting power of the then outstanding voting securities of the surviving corporation other than a person who is (a) us or a subsidiary of us, (b) an employee benefit plan maintained by us, the surviving corporation or any subsidiary, or (c) the beneficial owner of 40% or more of the combined voting power of our outstanding voting securities immediately prior to such transaction;
•
individuals who constitute our entire Board (the “Incumbent Board”) cease to constitute a majority of our Board, provided that anyone who becomes a director and whose appointment or nomination for election was approved by at least two-thirds of our directors at the time shall be considered as though such individual were a member of the Incumbent Board; or
•
a complete liquidation or dissolution of us, or a sale or other disposition of all or substantially all of our assets (other than to an entity described in the second bullet point above).
Loyalty and Confidentiality Agreements executed in connection with our executive transition agreements provide non-competition, non-solicitation and release provisions for the benefit of the Company that remain in effect during the period of employment and an additional period of two years thereafter.
Arrangements With Respect to Long-Term Incentive Plans Pursuant to restricted stock unit award agreements under the 2021 Plan, if the award holder’s employment with us is terminated because of death or disability, then any unvested restricted stock units will vest on the date of such termination of employment. In addition, upon the termination of the award holder’s employment or other service with us for any reason other than disability or death, any unvested restricted stock units will thereupon terminate and be canceled. Pursuant to performance stock unit award agreements under the 2021 Plan, if the award holder’s employment with us is terminated because of death or disability, then any unvested performance stock units will vest on a pro-rata basis at target (as determined by the Compensation Committee) on the date of such termination of employment. In addition, upon the termination of the award holder’s employment or other service with us for any reason other than disability or death, any unvested performance stock units will thereupon terminate and be canceled.
Pursuant to stock option agreements under the 20162021 Plan, and certain prior long-term incentive plans, if the individual'saward holder’s employment with us is terminated because of death or disability, any options that are vested and exercisable on the date of termination will remain exercisable for 12 months thereafter, but not beyond the term of the agreement. If the individual'saward holder’s employment is terminated by us for "cause,"“cause,” then the options (whether or not then vested and exercisable) will immediately terminate and cease to be exercisable. If the individual'saward holder’s employment with us is terminated for any other reason, any options that are vested and exercisable as of the date of termination will remain exercisable for three months thereafter, but not beyond the term of the agreement.Pursuant to the 2016 Plan and certain prior long-term incentive plans, each holder of an option to purchase shares of our common stock may exercise such option immediately prior to an "exchange transaction," regardless of whether currently vested, and any outstanding options not exercised before the exchange transaction shall terminate. However, if, as part of an exchange transaction, our stockholders receive capital stock of another corporation in exchange for our common stock, and if our Board so directs, then all outstanding options shall be converted into options to purchase shares of such stock, with the amount and price to be determined by adjusting the amount and price of the options granted under the 2016 Plan and certain prior long-term incentive plans, as applicable, on the same basis as the determination of the number of shares of exchange stock the holders of our outstanding common stock are entitled to receive in the exchange transaction. In addition, unless our Board determines otherwise, the vesting conditions with respect to the converted options shall be substantially the same as those set forth in the original option agreement. The Board may accelerate the vesting of stock awards and other awards, provide for cash settlement of and/or make such other adjustments to any outstanding award as it deems appropriate in the context of an exchange transaction.
Under the 2016 Plan and certain prior long-term incentive plans, the term "exchange transaction" means a merger (other than in which the holders of our common stock immediately prior thereto have the same proportionate ownership of common stock in the surviving corporation immediately thereafter), consolidation, acquisition or disposition of property or stock, separation, reorganization (other than a reincorporation or the creation of a holding company), liquidation of us or any other similar transaction or event so designated by our Board, as a result of which our stockholders receive cash, stock or other property in exchange for or in connection with their shares of our common stock.
Pursuant to stock compensation agreements under the 2016 Plan and certain prior long-term incentive plans, if the individual's employment with us is terminated because of death or disability, or there is a change in ownership of us, then any unvested restricted stock units will vest on the date of such termination of employment or immediately prior to the consummation of the change in ownership of us, as the case may be. However, any unvested restricted stock units do not vest by reason of a change in ownership unless the individual remains continuously employed by us until such change in ownership is complete or the individual's employment is sooner terminated by us in connection with such change in ownership. In addition, upon the termination of the individual's employment or other service with us for any reason other than disability or death, any unvested restricted stock units will thereupon terminate and be canceled.
Under each of the stock compensation agreements, the term "change in ownership" is defined as any transaction or series of transactions as a result of which any one person or group of persons acquires (i) ownership of our common stock that, together with the common stock previously held by such person, constitutes more than 50% of the total fair market value or total voting power of such stock, or (ii) ownership of our assets having a total gross fair market value at least equal to 80% of the total gross fair market value of all of the assets immediately prior to such transaction or series of transactions.
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Policies and Risk Mitigation
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Compensation-Related Risk
The Compensation Committee believes that the design of our compensation programs, including our executive compensation program, does not encourage our executives or employees to take unnecessary and excessive risks and that the risks arising from these programs are not reasonably likely to have a material adverse effect on us. The Compensation Committee considered the following factors in making that determination:
•- The
allocation among the components of direct annual compensation provides an appropriate balance between annual and long-term incentives and between fixed and performance-based compensation.
•The performance measures and the multi-year vesting features of the long-term equity incentive compensation component encourage participants to seek sustainable growth and value creation.
•Inclusion of share-based compensation through the long-term equity incentive compensation component encourages appropriate decision-making that is aligned with the long-term interests of our stockholders.
•Our annual cash incentive program and the awards of restricted stock with performance-based vesting contain provisions with respect to our achievement of the applicable performance target such that each participant may receive (1) an additional payout pursuant to such award in the event that we exceed the applicable performance target, and (2) a portion of the target payout pursuant to such award in the event that we approach, yet fail to achieve, the target level of financial performance.
•The various governance policies we have adopted to align the interests of our top management with those of our stockholders and to motivate sustainable growth, including stock ownership guidelines, hedging and pledging restrictions and our Clawback Policy, as described below.
•We maintain a values-driven, ethics-based culture supported by a strong tone at the top.
Stock Ownership Guidelines
We believe that our Chief Executive Officer, executive vice presidents, senior vice presidents and vice presidents should have a meaningful financial stake in the Company to ensure that their interests are aligned with those of our stockholders. To that end, in December 2020, the Board adopted new equity ownership guidelines to define our expectations for our Chief Executive Officer, executive vice presidents, senior vice presidents and vice presidents, which replaced our prior equity ownership guidelines. Under these new guidelines, our Chief Executive Officer, executive vice presidents, senior vice presidents and vice presidents are expected to own shares of our common stock having a value equal to a designated multiple of his or her annual base salary within five years of the later of (1) December 1, 2020 and (2) the date on which he or she was appointed to his or her position.
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| | | | | | | | |
| | Position
|
| | | Ownership Requirement
|
| |
| | | | | | | | |
| | Chief Executive Officer
| | | | 5 times annual base salary
| | |
| | | | | | | | |
| | Executive Vice President
| | | | 3 times annual base salary
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| | | | | | | | |
| | Senior Vice President or Vice President
| | | | 1 times annual base salary
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| | | | | | | | |
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Shares of our common stock that count toward meeting the foregoing equity ownership requirements include:
•shares of our common stock directly or indirectly beneficially owned outright, including as a result of fully vested awards from previous grants to the executive by the Company;
•shares of our common stock held through any Company benefit plan, including the Company's 401(k) plan, Non-Qualified Deferred Compensation Plan or any employee stock purchase plan; and
•unvested time-based restricted stock awards or restricted stock units granted to the executive by the Company.
Neither (i) performance-based stock awards or performance stock units, nor (ii) unexercised stock options (whether vested or unvested) count toward meeting the equity ownership requirements.
As of December 31, 2020, based on the closing price of our common stock on the Nasdaq Global Select Market of $38.29 per share as of such date, each of Ms. Short and Ms. Skula satisfied the new equity ownership guidelines. Each of our named executive officers is required to comply with the ownership guidelines no later than December 1, 2025.
Hedging and Pledging Restrictions
Our insider trading policy prohibits our directors, officers and employees, and members of their households, certain of their family members and certain other natural or legal persons or entities whose (i) management responsibilities are discharged by, (ii) are directly or indirectly controlled by or (iii) whose economic interests are substantially equivalent to those of any of the foregoing persons, from engaging in hedging, monetization or options transactions related to our securities or transactions involving any derivative security of the Company or other financial instruments that provide the economic equivalent of ownership of our common stock or an opportunity, whether direct or indirect, to profit from any change in the value of our common stock, such as prepaid variable forward contracts, puts, calls, equity swaps, credit default swaps and collars.
In addition, our insider trading policy prohibits (i) short sales of any securities of the Company, including through any "sale against the box" (sales with delayed delivery) and (ii) the holding of securities of the Company in a margin account or pledging securities of the Company as collateral for a loan, in each case unless they are treated as non-marginable by the brokerage firm.
Clawback Policy
Our Board has adopted a compensation recovery ("clawback") policy which provides that, in the event of a restatement of our financial statements due to our material noncompliance with any financial reporting requirement under the U.S. federal securities laws (other than restatements of financial results that are the direct result of changes in accounting standards) (a "clawback event"), we may seek recoupment, repayment and/or forfeiture of all or any portion of any annual or long-term cash, equity or equity-based incentive or bonus compensation outstanding and unpaid or paid and received during the three-year period preceding the date of the clawback event.
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Below sets forth our reasonable estimate, calculated in a manner consistent with the requirements of Item 402(u) of Regulation S-K, of the ratio of the annual total compensation for fiscal year 2020 of our current Chief Executive Officer to that of the median of the annual total compensation for all of our other employees (the "CEO Pay Ratio"). Please note that due to the flexibility in estimates, assumptions and adjustments permitted by the SEC in calculating such ratio, the CEO Pay Ratio may not be comparable to those presented by other companies, even other companies operating in the same industries as Rent-A-Center.
We identified our median employee using our employee population (excluding our Chief Executive Officer) as of December 31, 2020, which consisted of approximately 13,648 full-time, part-time, seasonal and temporary workers, of which approximately 12,369 (90.6%) were located in the United States and approximately 1,279 (9.4%) were located in Mexico. As of December 31, 2020, approximately 50 (0.4%) employees were employed on a part-time basis and approximately 1,750 (12.9%) were paid on an hourly (rather than salaried) basis. In order to attract and retain employees, we pay what we believe to be competitive rates in each market where we operate.
We selected the median employee first by using a consistently applied compensation measure of annual base pay, which reflects (i) for salaried employees, base salary, and (ii) for hourly employees, annualized base hourly compensation assuming that full-time and part-time workers work 2,080 and 1,040 hours per year, respectively, which calculation excluded any wages in respect of guaranteed overtime. After narrowing the population of potential median employees to normalize for potential drivers of pay differential (e.g., based on factors such as bonus eligibility and active status of employment), our median employee was randomly selected from a pool of 83 individuals. The annual base pay of our employees located in Mexico was converted to U.S. dollars using an exchange rate of 19.913 Mexican pesos to $1.00 U.S. dollar, reflecting the exchange rate reported by the U.S. Department of the Treasury as of December 31, 2020. We did not make any cost of living adjustments to annual base pay in identifying our median employee.
Our median employee identified using the assumptions and methodologies described above was located in Florida and served in an hourly position as a Customer Account Representative. Our median employee was furloughed for a period of approximately 1.5 months during fiscal year 2020 in connection with our response measures related to the COVID-19 pandemic and temporary and partial operational closures throughout the U.S. and Mexico.
The 2020 annual total compensation of our median employee, calculated using the same methodology used to calculate the same metric for our named executive officers in the Summary Compensation Table in this proxy statement, was $33,055. Comparing this to our Chief Executive Officer's 2020 annual total compensation of $9,217,950, we estimate that the CEO Pay Ratio was approximately 279:1. For informational purposes only (and not as a substitute for the foregoing ratio), the estimated 2020 annual total compensation of our median employee would have been approximately $37,444 on an annualized basis had such employee not been furloughed, which would have yielded an estimated CEO Pay Ratio of approximately 246:1.
Compensation Committee Interlocks and Insider Participation
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Messrs. Gade, Hetrick and Lewis each served as members of the Compensation Committee for all or a portion of 2020. Each such member is independent and no member of the Compensation Committee (1) has ever been employed by us, as an officer or otherwise, or (2) has or had any relationships requiring disclosure in this proxy statement pursuant to Item 404(a) of Regulation S-K.
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In addition, during 2020, none of our executive officers served as a member of the compensation or similar committee or as a member of the board of directors of any other entity having an executive officer that also served on the Compensation Committee or Board of Rent-A-Center.
Section 162(m) of the Internal Revenue Code (the "Code") generally prohibits a federal income tax deduction to public companies for compensation over $1,000,000 paid to a "covered employee." A "covered employee" includes (a) the Chief Executive Officer, (b) the Chief Financial Officer, (c) the three other most highly compensated executive officers, and (d) any individual who was a covered employee for any taxable year beginning after December 31, 2016. The Compensation Committee is not limited to paying compensation that is fully deductible and may determine it is appropriate to provide compensation that may exceed deductibility limits in order to recognize performance, meet market demands, retain key executives, and take into account other appropriate considerations.
Compensation Committee Report
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The material in this Report is not "soliciting material", is not deemed "filed" with the SEC and is not to be incorporated by reference into any filing under the Securities Act of 1933 (the "Securities Act") or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation by reference language in such filing.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with our management and, based upon such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the proxy statement on Schedule 14A related to the 2021 Annual Meeting of Stockholders, for filing with the SEC.
COMPENSATION COMMITTEE
Christopher Hetrick, Chairman
Michael Gade
Harold Lewis
B.C. Silver
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COMPENSATION TABLES
The following compensation tables in this proxy statement have been prepared pursuant to SEC rules. Although some amounts (e.g., salary and non-equity incentive plan compensation) represent actual dollars paid to an executive, other amounts are estimates based on certain assumptions about future circumstances (e.g., payments upon termination of an executive's employment) or may represent dollar amounts recognized for financial statement reporting purposes in accordance with accounting rules, but do not represent actual dollars received by the executive (e.g., dollar values of stock awards and option awards). The footnotes and other explanations to the Summary Compensation table and the other tables herein contain important estimates, assumptions and other information regarding the amounts set forth in the tables and should be considered together with the quantitative information in the tables.
Summary Compensation Table
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The following table summarizes the compensation earned by our named executive officers in fiscal year 2020, as well as the compensation earned by such individuals in each of fiscal year 2019 and fiscal year 2018, if serving as an executive officer during that time. Our named executive officers were not entitled to receive payments which would be characterized as "Bonus" payments for purposes of the Summary Compensation Table for 2020, 2019 and 2018.
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Name and Principal Position | | | Year | | | Salary | | | Stock
Awards(1) | | | Option
Awards(1) | | | Non-Equity
Incentive Plan
Compensation(2) | | | All Other
Compensation(3) | | | Total | |
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Mitchell Fadel | | | 2020 | | $ | 998,077 | | $ | 4,882,607 | | $ | 829,998 | | $ | 2,430,000 | | $ | 77,268 | | $ | 9,217,950 | |
Chief Executive Officer | | | 2019 | | $ | 953,846 | | $ | 5,222,035 | | $ | 700,002 | | $ | 1,690,000 | | $ | 99,522 | | $ | 8,665,405 | |
| | | 2018 | | $ | 800,000 | | $ | 2,156,237 | | $ | 388,141 | | $ | 1,488,000 | | $ | 29,632 | | $ | 4,862,010 | |
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Maureen Short | | | 2020 | | $ | 434,665 | | $ | 636,749 | | $ | 108,237 | | $ | 476,580 | | $ | 42,391 | | $ | 1,698,623 | |
Chief Financial Officer | | | 2019 | | $ | 406,902 | | $ | 807,439 | | $ | 201,537 | | $ | 386,951 | | $ | 39,805 | | $ | 1,842,634 | |
| | | 2018 | | $ | 362,000 | | $ | 292,711 | | $ | 52,690 | | $ | 302,994 | | $ | 30,444 | | $ | 1,040,839 | |
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Ann Davids | | | 2020 | | $ | 347,070 | | $ | 339,928 | | $ | 57,782 | | $ | 315,087 | | $ | 36,348 | | $ | 1,096,215 | |
Executive Vice President — | | | 2019 | | $ | 337,615 | | $ | 431,084 | | $ | 57,781 | | $ | 287,216 | | $ | 33,258 | | $ | 1,146,954 | |
Chief Customer and Marketing Officer | | | 2018 | | $ | 276,692 | | $ | 302,413 | | $ | 54,436 | | $ | 306,900 | | $ | 45,551 | | $ | 679,092 | |
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Jason Hogg(4) | | | 2020 | | $ | 311,538 | | $ | 3,499,998 | | | — | | $ | 1,080,000 | | $ | 297,931 | | $ | 5,189,467 | |
Executive Vice President — Acima | | | | | | | | | | | | | | | | | | | | | | |
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Catherine Skula | | | 2020 | | $ | 335,887 | | $ | 335,119 | | $ | 56,965 | | $ | 306,376 | | $ | 36,673 | | $ | 1,071,019 | |
Executive Vice President — | | | 2019 | | $ | 332,846 | | $ | 424,979 | | $ | 56,969 | | $ | 283,158 | | $ | 36,379 | | $ | 1,134,331 | |
Chief Development Officer | | | 2018 | | $ | 325,338 | | $ | 298,139 | | $ | 91,669 | | $ | 302,564 | | $ | 40,547 | | $ | 1,058,257 | |
(1)The amounts reflected in this column are the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for each award of stock option, restricted stock unit and performance stock unit awards in 2020, 2019 and 2018 to the applicable named executive officer. Assumptions used in the calculation of these amounts are included in Note O to our audited financial statements for our fiscal year ended December 31, 2020, included in our 2020 Form 10-K and our Annual Reports on Form 10-K for prior years.
For performance stock unit awards granted in February 2020, the maximum performance shares payable, and corresponding maximum aggregate value based on the grant date fair value of such awards, are (i) 268,030 shares and $8,105,227 for Mr. Fadel, (ii) 34,954 shares and $1,057,009 for Ms. Short, (iii) 18,660 shares and $564,278 for Ms. Davids, (iv) 262,960 shares and $6,999,995 for Mr. Hogg and (v) 18,396 shares and $556,295 for Ms. Skula.
(2)Represents the cash awards which were payable under our annual cash incentive program with respect to services for the year indicated.
(3)For 2020, represents the compensation as described in the "All Other Compensation" table below.
(4)Mr. Hogg joined the Company and was named Executive Vice President — Preferred Lease (which role has been retitled to Executive Vice President — Acima) effective as of June 22, 2020, several months after the Company's annual equity awards to executives. Mr. Hogg's 2020 LTIP award and short-term incentive award were made in connection with his hiring and took into account, among other considerations, the fact that Mr. Hogg would be forfeiting equity from a previous employer.
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All Other Compensation
The following table provides information regarding each component of compensation for 2020 included in the All Other Compensation column in the Summary Compensation Table above.
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Name | | | Company Matching
Contributions(1) | | | Value of Insurance
Premiums(2) | | | Relocation(3) | | | Other(4) | | | Total | |
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Mitchell Fadel | | $ | 38,904 | | $ | 30,836 | | | — | | $ | 7,528 | | $ | 77,268 | |
Maureen Short | | $ | 24,423 | | $ | 13,845 | | | — | | $ | 4,123 | | $ | 42,391 | |
Ann Davids | | $ | 17,533 | | $ | 15,698 | | | — | | $ | 3,117 | | $ | 36,348 | |
Jason Hogg | | $ | 346 | | $ | 3,489 | | $ | 293,723 | | $ | 372 | | $ | 297,931 | |
Catherine Skula | | $ | 13,827 | | $ | 17,832 | | | — | | $ | 5,014 | | $ | 36,673 | |
(1)Represents contributions or other allocations made by us to our 401(k) Retirement Savings Plan and/or Deferred Compensation Plan.
(2)Represents premiums paid by the Company for medical, long-term disability and life insurance.
(3)Represents reimbursements of relocation-related expenses, which may include the costs of housing, furniture, travel and similar expenses, gross of related taxes of $71,892.
(4)Represents fees paid by us for an annual executive physical examination and employee assistance program premiums.
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Grants of Plan-Based Awards
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The table below sets forth information about plan-based awards granted to the named executive officers during 2020 under the 2020 annual cash incentive program and the 2016 Plan.
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| | | Grant | | | Committee
Approval | | | Estimated Future 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 | | | All Other
Option
Awards:
Number of
Securities
Underlying | | | Exercise
or Base
Price of
Option | | | Closing
Price on
Grant | | | Grant Date
Fair Value
of Stock
and
Option | |
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Name
| | Date
| | Date
| | Threshold
| | Target
| | Maximum
| | Threshold
| | Target
| | Maximum
| | Units(3)
| | Options(4)
| | Awards(5)
| | Date
| | Awards
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Mitchell Fadel | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Short-Term Incentive | | | — | | | 3/4/20 | | | — | | $ | 1,350,000 | | $ | 2,700,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Restricted Stock Units | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | — | | | — | | | 33,508 | | | — | | | — | | $ | 23.50 | | $ | 829,993 | |
Performance Stock Units | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | 134,015 | | | 268,030 | | | — | | | — | | | — | | $ | 23.50 | | $ | 4,052,614 | |
Stock Options | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 120,991 | | $ | 24.77 | | $ | 23.50 | | $ | 829,998 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Maureen Short | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | |
Short-Term Incentive | | | — | | | 3/4/20 | | | — | | $ | 264,767 | | $ | 529,533 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Restricted Stock Units | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,370 | | | — | | | — | | $ | 23.50 | | $ | 108,245 | |
Performance Stock Units | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | 17,477 | | | 34,954 | | | — | | | — | | | — | | $ | 23.50 | | $ | 528,504 | |
Stock Options | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 15,778 | | $ | 24.77 | | $ | 23.50 | | $ | 108,237 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ann Davids | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | |
Short-Term Incentive | | | — | | | 3/4/20 | | | — | | $ | 175,049 | | $ | 350,097 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Restricted Stock Units | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,333 | | | — | | | — | | $ | 23.50 | | $ | 57,788 | |
Performance Stock Units | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | 9,330 | | | 18,660 | | | — | | | — | | | — | | $ | 23.50 | | $ | 282,139 | |
Stock Options | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,423 | | $ | 24.77 | | $ | 23.50 | | $ | 57,782 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jason Hogg | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | |
Short-Term Incentive(6) | | | — | | | 4/20/20 | | | — | | $ | 600,000 | | $ | 1,200,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Restricted Stock Units | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Performance Stock Units(6) | | | 7/1/2020 | | | 4/20/20 | | | — | | | — | | | — | | | 131,480 | | | 131,480 | | | 262,960 | | | — | | | — | | | — | | $ | 26.61 | | $ | 3,499,998 | |
Stock Options | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Catherine Skula | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | |
Short-Term Incentive | | | — | | | 3/4/20 | | | — | | $ | 192,500 | | $ | 385,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Restricted Stock Units | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,300 | | | — | | | — | | $ | 23.50 | | $ | 56,971 | |
Performance Stock Units | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | 9,198 | | | 18,396 | | | — | | | — | | | — | | $ | 23.50 | | $ | 278,148 | |
Stock Options | | | 2/26/20 | | | 2/13/20 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,304 | | $ | 24.77 | | $ | 23.50 | | $ | 56,965 | |
(1)These columns show the potential value of the payout of the annual cash incentive bonuses for 2020 performance for each named executive officer if the threshold, target and maximum performance levels are achieved. The potential payout is performance-based and driven by company performance. The actual amount of the annual cash incentive bonuses paid for 2020 performance is shown in the Summary Compensation Table under the "Non-Equity Incentive Plan Compensation" column.
(2)For all named executive officers other than Mr. Hogg, represents restricted stock units which vest depending on our relative TSR performance over a three-year measurement period as compared to the S&P 1500 Specialty Retail Index and the named executive officer remains an employee through the end of such measurement period. For Mr. Hogg, (1) one-half represents the restricted stock units described by the prior sentence, subject to a minimum payout of 100%, and (2) one-half represents restricted stock units described by the prior sentence, but subject to a two-year (rather than three-year) measurement period and a minimum payout of 100%. The issuance of the stock underlying the performance-based restricted stock units granted to our named executive officers will range from a minimum of zero shares (other than for Mr. Hogg, as described above) if our relative TSR performance is below the 25th percentile, to the maximum number of shares if our relative TSR performance ranks at least the 90th percentile.
(3)Represents restricted stock units which vest upon completion of three-years of continuous employment with us from February 26, 2020.
(4)Represents options to purchase shares of our common stock which vest ratably over a four-year period.
(5)Calculated by reference to the closing price for shares of our common stock on the Nasdaq Global Select Market on the last trading day before the date of grant, in accordance with the applicable plan.
(6)Mr. Hogg joined the Company effective as of June 22, 2020. Mr. Hogg's 2020 LTIP award and short-term incentive award were made in connection with his hiring and took into account, among other considerations, the fact that Mr. Hogg would be forfeiting equity from a previous employer.
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Outstanding Equity Awards at Fiscal Year End
|
The following table provides information regarding stock options and restricted stock units held by the named executive officers that were outstanding at December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | |
| | OPTION AWARDS | | STOCK AWARDS
| |
| | | | | | | | | | | | | | |
Name | | Number of
Securities
Underlying
Unexercised
Options -
Exercisable | | Number of
Securities
Underlying
Unexercised
Options -
Unexercisable | | Option
Exercise
Price | | Option
Expiration
Date | | 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) | |
| | | | | | | | | | | | | | |
Mitchell Fadel | | 53,909 | | 53,908(2) | | | $ | 8.22 | | 2/23/2028 | | 48,662(7) | | | $ | 1,863,268 | |
| | 18,757 | | 56,270(3) | | | $ | 20.87 | | 4/1/2029 | | 33,541(8) | | | $ | 1,284,285 | |
| | — | | 120,991(4) | | | $ | 24.77 | | 2/26/2030 | | 33,508(9) | | | $ | 1,283,021 | |
| | | | | | | | | | | 194,489(10) | | | $ | 7,446,984 | |
| | | | | | | | | | | 134,185(11) | | | $ | 5,137,944 | |
| | | | | | | | | | | 134,015(12) | | | $ | 5,131,434 | |
| | | | | | | | | | | | | | |
Maureen Short | | 1,642 | | — | | | $ | 37.19 | | 1/31/2022 | | 6,606(7) | | | $ | 252,944 | |
| | 2,126 | | — | | | $ | 34.77 | | 1/31/2023 | | 5,186(8) | | | $ | 198,572 | |
| | 5,066 | | — | | | $ | 25.03 | | 1/31/2024 | | 4,370(9) | | | $ | 167,327 | |
| | 6,088 | | — | | | $ | 29.31 | | 2/6/2025 | | 26,402(10) | | | $ | 1,010,933 | |
| | 10,527 | | — | | | $ | 10.34 | | 2/5/2026 | | 20,748(11) | | | $ | 794,441 | |
| | 16,355 | | 5,452(5) | | | $ | 8.32 | | 2/16/2027 | | 17,477(12) | | | $ | 669,194 | |
| | 7,318 | | 7,318(2) | | | $ | 8.22 | | 2/23/2028 | | | | | | |
| | 2,900 | | 8,701(3) | | | $ | 20.87 | | 4/1/2029 | | | | | | |
| | — | | 15,778(4) | | | $ | 24.77 | | 2/26/2030 | | | | | | |
| | | | | | | | | | | | | | |
Ann Davids | | 7,561 | | 7,560(2) | | | $ | 8.22 | | 2/23/2028 | | 6,825(7) | | | $ | 261,329 | |
| | 1,548 | | 4,645(3) | | | $ | 20.87 | | 4/1/2029 | | 2,769(8) | | | $ | 106,025 | |
| | — | | 8,423(4) | | | $ | 24.77 | | 2/26/2030 | | 2,333(9) | | | $ | 89,331 | |
| | | | | | | | | | | 27,277(10) | | | $ | 1,044,436 | |
| | | | | | | | | | | 11,077(11) | | | $ | 424,138 | |
| | | | | | | | | | | 9,330(12) | | | $ | 357,246 | |
| | | | | | | | | | | | | | |
Jason Hogg | | | | | | | | | | | 65,740(13) | | | $ | 2,517,185 | |
| | | | | | | | | | | 65,740(12) | | | $ | 2,517,185 | |
| | | | | | | | | | | | | | |
Catherine Skula | | 2,849 | | — | | | $ | 37.19 | | 1/31/2022 | | 6,728(7) | | | $ | 257,615 | |
| | 3,585 | | — | | | $ | 34.77 | | 1/31/2023 | | 2,730(8) | | | $ | 104,532 | |
| | — | | 4,454(5) | | | $ | 8.32 | | 2/16/2027 | | 2,300(9) | | | $ | 88,067 | |
| | — | | 7,454(2) | | | $ | 8.22 | | 2/23/2028 | | 26,892(10) | | | $ | 1,029,695 | |
| | — | | 5,000(6) | | | $ | 8.63 | | 4/2/2028 | | 10,920(11) | | | $ | 418,127 | |
| | — | | 4,579(3) | | | $ | 20.87 | | 4/1/2029 | | 9,198(12) | | | $ | 352,191 | |
| | — | | 8,304(4) | | | $ | 24.77 | | 2/26/2030 | | | | | | |
| | | | | | | | | | | | | | |
(1)Calculated by reference to the closing price for shares of our common stock on the Nasdaq Global Select Market on December 31, 2020, which was $38.29.
(2)These options to purchase shares of our common stock vest in equal parts on each of February 23, 2021 and February 23, 2022.
(3)These options to purchase shares of our common stock vest in equal parts on each of April 1, 2021, April 1, 2022 and April 1, 2023.
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(4)These options to purchase shares of our common stock vest in equal parts on each of February 26, 2022, February 26, 2023, February 26, 2024 and February 26, 2025.
(5)These options to purchase shares of our common stock vested on February 16, 2021.
(6)These options to purchase shares of our common stock vest in equal parts on each of April 2, 2021 and April 2, 2022.
(7)Represents the number of shares of our common stock that vested and became issuable pursuant to the time-based restricted stock unit awards upon the named executive officer's completion of three years of continuous employment with us from February 23, 2018.
(8)Represents the number of shares of our common stock that will vest and become issuable pursuant to the time-based restricted stock unit awards upon the named executive officer's completion of three years of continuous employment with us from April 1, 2019.
(9)Represents the number of shares of our common stock that will vest and become issuable pursuant to the time-based restricted stock unit awards upon the named executive officer's completion of three years of continuous employment with us from February 26, 2020.
(10)Represents the number of shares of our common stock that vested and became issuable pursuant to the performance-based restricted stock unit awards based on our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ended December 31, 2020, so long as the named executive officer remained an employee through December 31, 2020. Our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ended December 31, 2020, ranked at the 98th percentile, which resulted in 200% of the shares vesting.
(11)Represents the number of shares of our common stock that will vest and become issuable pursuant to the performance-based restricted stock unit awards based on our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ending December 31, 2021, and the named executive officer remains an employee through December 31, 2021.
(12)Represents the number of shares of our common stock that will vest and become issuable pursuant to the performance-based restricted stock unit awards based on our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ending December 31, 2022, and the named executive officer remains an employee through December 31, 2022.
(13)Represents the number of shares of our common stock that will vest and become issuable pursuant to the performance-based restricted stock unit awards based on our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the two-year period ending December 31, 2021, and the named executive officer remains an employee through December 31, 2021.
Option Exercises and Stock Vested
|
The following table reflects certain information with respect to options exercised by our named executive officers during the 2020 fiscal year, as well as applicable stock awards that vested, during the 2020 fiscal year:
| | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards
| |
| | | | | | | | | | |
| | Number of Shares
Acquired on Exercise | | Value Realized
on Exercise | | Number of Shares
Acquired on Vesting | | Value Realized
on Vesting | |
| | | | | | | | | | |
Mitchell Fadel | | — | | | — | | — | | | — | |
Maureen Short | | 6,525 | | | $ | 111,269 | | 58,738 | | | $ | 1,642,902 | |
Ann Davids | | — | | | — | | — | | | — | |
Jason Hogg | | — | | | — | | — | | | — | |
Catherine Skula | | 44,910 | | | $ | 753,683 | | 47,990 | | | $ | 1,342,280 | |
| | | | | | | | | | |
Non-Qualified Deferred Compensation
|
The Rent-A-Center, Inc. Deferred Compensation Plan is an unfunded, non-qualified deferred compensation plan for a select group of our key management personnel and highly compensated employees. The Deferred Compensation Plan first became available to eligible employees in July 2007, with deferral elections taking effect as of August 3, 2007. The Deferred Compensation Plan allows participants to defer up to 50% of their base compensation and up to 100% of any bonus compensation. Participants may invest the amounts deferred in measurement funds that are the same funds offered as the investment options in our 401(k) Retirement Savings Plan. We may make discretionary contributions to the Deferred Compensation Plan, which are subject to a two-year graded vesting schedule based on
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the participant's years of service with us. For 2020, we made matching contributions in the Deferred Compensation Plan of 50% of the employee's contribution to the plan up to an amount not to exceed 6% of such employee's compensation, which is the same matching policy as under our 401(k) Retirement Savings Plan. We are obligated to pay the deferred compensation amounts in the future in accordance with the terms of the Deferred Compensation Plan.
The following table provides information for the named executive officers regarding contributions, earnings and balances for our Deferred Compensation Plan:
| | | | | | | | | | | | | | | | | | | | |
Name | | Executive
Contributions
in FY 2020(1) | | Registrant
Contributions
in FY 2020(1)(2) | | Aggregate
Earnings
in FY 2020 | | Aggregate
Withdrawals/
Distributions | | Aggregate
Balance
at FYE 2020(3) | |
| | | | | | | | | | | | |
Mitchell Fadel | | | $ | 56,417 | | | $ | 25,904 | | | $ | 11,033 | | — | | | $ | 370,422 | |
Maureen Short | | | $ | 146,094 | | | $ | 21,280 | | | $ | 24,508 | | — | | | $ | 520,711 | |
Ann Davids | | | $ | 22,719 | | | $ | 10,086 | | | $ | 2,604 | | — | | | $ | 63,622 | |
Jason Hogg | | | — | | | — | | | — | | — | | | — | |
Catherine Skula | | | $ | 21,917 | | | $ | 10,959 | | | $ | 7,330 | | — | | | $ | 496,275 | |
| | | | | | | | | | | | |
(1)The entirety of the executive contributions and registrant contributions are reported in the "Summary Compensation Table" above as compensation of the named executive officer for the year ended December 31, 2020.
(2)Represents matching contributions or other allocations made by us under our Deferred Compensation Plan which amount was also reported as compensation in the table appearing in the section "Compensation Tables—Summary Compensation Table" above in this proxy statement.
(3)Of these amounts, the following aggregate amounts are reported in the "Summary Compensation Table" above as compensation of the named executive officer for the years ended December 31, 2020, 2019 and 2018: Mr. Fadel—$175,016; Ms. Short—$260,406; Ms. Davids—$58,008; Mr. Hogg—$0; and Ms. Skula—$72,648.
We do not sponsor or maintain any plans that provide for specified retirement payments or benefits, such as tax-qualified defined benefit plans or supplemental executive retirement plans.
Potential Payments and Benefits Upon Termination Without a Change in Control
|
The following table provides quantitative disclosure of the estimated payments that would be made to our named executive officers currently employed by us under their severance agreements, as well as the amounts our named executive officers would receive upon the exercise of the equity and cash awards held by them on December 31, 2020, the last business day of our fiscal 2020, assuming that:
•each named executive officer's employment with us was terminated on December 31, 2020, and was not in connection with an event which constituted a "change in control" or an "exchange transaction" under any agreement or plan described above;
•amounts payable to each named executive officer would not subject such person to excise tax under Section 4999 of the Code and the Company would not be denied a deduction under Section 280G of the Code;
•the base salary earned by each named executive officer for his or her services to us through December 31, 2020 has been fully paid to such named executive officer;
•the Board determined that the annual bonus for 2020 that would have been earned by each of Ms. Davids, Ms. Short and Ms. Skula was equal to the actual bonus awarded to such named executive officer for 2020;
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•to the extent not otherwise terminated in connection with the named executive officer's termination, each of our named executive officers exercised any previously unexercised, vested options and sold the underlying shares at the closing price for shares of our common stock on the Nasdaq Global Select Market on December 31, 2020, which was $38.29; and
•to the extent not otherwise terminated in connection with the named executive officer's termination, each of our named executive officers sold the shares of our common stock underlying their previously unvested restricted stock units at the closing price for shares of our common stock on the Nasdaq Global Select Market on December 31, 2020.
| | | | | | | | | | | | | | | | |
Name | | Cash
Severance
Payout | | Continuation
of Medical
Benefits | | Acceleration and
Continuation
of Outstanding
Awards | | Total
Termination
Benefits | |
| | | | | | | | | | |
Mitchell Fadel | | | | | | | | | | | | |
Termination by Us without "Cause" or for "Good Reason" | | $ | 6,390,000 | | | $ | 28,080 | | | $ | 1,947,791 | | | $ | 8,365,871 | |
Termination by Us for "Cause" | | — | | | — | | | — | | | — | |
Termination by Us due to Mr. Fadel's disability or death | | $ | 1,690,000 | | | $ | 28,080 | | | $ | 30,279,552 | | | $ | 31,997,632 | |
Termination by Mr. Fadel for Reason other than disability, death or for "Good Reason" | | — | | | — | | | $ | 1,947,791 | | | $ | 1,947,791 | |
| | | | | | | | | | |
Maureen Short | | | | | | | | | | | | |
Termination by Us without "Cause" | | $ | 1,262,830 | | | $ | 11,904 | | | $ | 1,229,644 | | | $ | 2,504,378 | |
Termination by Us for "Cause" | | — | | | — | | | — | | | — | |
Termination by Us due to Ms. Short's disability or death | | $ | 476,580 | | | $ | 11,904 | | | $ | 6,431,688 | | | $ | 6,920,172 | |
Termination by Ms. Short for Reason other than disability or death | | — | | | — | | | $ | 1,229,644 | | | $ | 1,229,644 | |
| | | | | | | | | | |
Ann Davids | | | | | | | | | | | | |
Termination by Us without "Cause" | | $ | 665,184 | | | $ | 14,040 | | | $ | 254,325 | | | $ | 933,549 | |
Termination by Us for "Cause" | | — | | | — | | | — | | | — | |
Termination by Us due to Ms. Davids' disability or death | | $ | 315,087 | | | $ | 14,040 | | | $ | 3,213,280 | | | $ | 3,542,407 | |
Termination by Ms. Davids for Reason other than disability or death | | — | | | — | | | $ | 254,325 | | | $ | 254,325 | |
| | | | | | | | | | |
Jason Hogg(1) | | | | | | | | | | | | |
Termination by Us without "Cause" or for "Good Reason" | | $ | 900,000 | | | $ | 29,304 | | | — | | | $ | 929,304 | |
Termination by Us for "Cause" | | — | | | — | | | — | | | — | |
Termination by Us due to Mr. Hogg's disability or death | | — | | | $ | 19,536 | | | $ | 5,034,369 | | | $ | 5,053,905 | |
Termination by Mr. Hogg for Reason other than disability or death or for "Good Reason" | | — | | | — | | | — | | | — | |
| | | | | | | | | | |
Catherine Skula | | | | | | | | | | | | |
Termination by Us without "Cause" | | $ | 1,270,668 | | | $ | 29,304 | | | $ | 15,753 | | | $ | 1,315,725 | |
Termination by Us for "Cause" | | — | | | — | | | — | | | — | |
Termination by Us due to Ms. Skula's disability or death | | $ | 306,376 | | | $ | 19,536 | | | $ | 2,979,697 | | | $ | 3,305,609 | |
Termination by Ms. Skula for Reason other than disability or death | | — | | | — | | | $ | 15,753 | | | $ | 15,753 | |
| | | | | | | | | | |
(1)Mr. Hogg joined the Company in June 2020 and his Pro Rata Bonus is based on the bonus earned during the calendar year preceding the year of termination. As a result, had Mr. Hogg's employment been terminated effective as of December 31, 2020, Mr. Hogg would not have been entitled to receive any Pro Rata Bonus.
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Potential Payments and Benefits Upon Termination With a Change in Control
|
The following table provides quantitative disclosure of the estimated payments that would be made to our named executive officers under their employment agreement or severance agreements, as well as the amounts our named executive officers would receive upon the exercise of the equity and cash awards held by them on December 31, 2020, the last business day of our fiscal 2020, assuming that:
•each named executive officer's employment with us was terminated on December 31, 2020, and was in connection with an event which constituted a "change in control" or an "exchange transaction" under any agreement or plan described above;
•amounts payable to each named executive officer would not subject such person to excise tax under Section 4999 of the Code and the Company would not be denied a deduction under Section 280G of the Code;
•the base salary earned by each named executive officer for his or her services to us through December 31, 2020 has been fully paid to such named executive officer;
•the Board determined that the annual bonus for 2020 that would have been earned by each of Ms. Davids, Ms. Short and Ms. Skula was equal to the actual bonus awarded to such named executive officer for 2020;
•with respect to options awarded pursuant to the 2016 Plan and certain prior equity plans, the Board does not direct such outstanding options to be converted into options to purchase shares of the exchange stock;
•to the extent not otherwise terminated in connection with the named executive officer's termination, each of our named executive officers exercised any previously unexercised options and sold the underlying shares at the closing price for shares of our common stock on the Nasdaq Global Select Market on December 31, 2020; and
•to the extent not otherwise terminated in connection with the named executive officer's termination, each of our named executive officers sold the shares of our common stock underlying their previously unvested restricted stock units at the closing price for shares of our common stock on the Nasdaq Global Select Market on December 31, 2020.
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| | | | | | | | | | | | | | | | |
Name | | Cash
Severance
Payout | | Continuation
of Medical
Benefits | | Acceleration and
Continuation
of Outstanding
Awards | | Total
Termination
Benefits | |
| | | | | | | | | | |
Mitchell Fadel | | | | | | | | | | | | |
Termination by Us without "Cause" or by Mr. Fadel for "Good Reason" | | $ | 6,390,000 | | | $ | 28,080 | | | — | | | $ | 6,418,080 | |
Termination by Us due to Mr. Fadel's disability or death | | $ | 1,690,000 | | | $ | 28,080 | | | $ | 34,516,588 | | | $ | 36,234,668 | |
Termination by Us for "Cause" or by Mr. Fadel without "Good Reason" | | — | | | — | | | — | | | — | |
Benefits upon Change in Control | | — | | | — | | | $ | 34,516,588 | | | $ | 34,516,588 | |
| | | | | | | | | | |
Maureen Short | | | | | | | | | | | | |
Termination by Us without "Cause" or by Ms. Short for "Good Reason" | | $ | 1,655,955 | | | $ | 17,856 | | | — | | | $ | 1,673,811 | |
Termination by Us due to Ms. Short's disability or death | | $ | 476,580 | | | $ | 11,904 | | | $ | 7,310,677 | | | $ | 7,799,161 | |
Termination by Us for "Cause" or by Ms. Short without "Good Reason" | | — | | | — | | | — | | | — | |
Benefits upon Change in Control | | — | | | — | | | $ | 7,310,677 | | | $ | 7,310,677 | |
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Ann Davids | | | | | | | | | | | | |
Termination by Us without "Cause" or by Ms. Davids for "Good Reason" | | $ | 840,233 | | | $ | 21,060 | | | — | | | $ | 861,293 | |
Termination by Us due to Ms. Davids' disability or death | | $ | 315,087 | | | $ | 14,040 | | | $ | 3,635,404 | | | $ | 3,964,531 | |
Termination by Us for "Cause" or by Ms. Davids without "Good Reason" | | — | | | — | | | — | | | — | |
Benefits upon Change in Control | | — | | | — | | | $ | 3,635,404 | | | $ | 3,635,404 | |
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Jason Hogg(1) | | | | | | | | | | | | |
Termination by Us without "Cause" or by Mr. Hogg for "Good Reason" | | $ | 1,200,000 | | | $ | 39,072 | | | — | | | $ | 1,239,072 | |
Termination by Us due to Mr. Hogg's disability or death | | — | | | $ | 19,536 | | | $ | 5,034,369 | | | $ | 5,053,905 | |
Termination by Us for "Cause" or by Mr. Hogg without "Good Reason" | | — | | | — | | | — | | | — | |
Benefits upon Change in Control | | — | | | — | | | $ | 5,034,369 | | | $ | 5,034,369 | |
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Catherine Skula | | | | | | | | | | | | |
Termination by Us without "Cause" or by Ms. Skula for "Good Reason" | | $ | 1,592,098 | | | $ | 39,072 | | | — | | | $ | 1,631,170 | |
Termination by Us due to Ms. Skula's disability or death | | $ | 306,376 | | | $ | 19,536 | | | $ | 3,677,662 | | | $ | 4,003,574 | |
Termination by Us for "Cause" or by Ms. Skula without "Good Reason" | | — | | | — | | | — | | | — | |
Benefits upon Change in Control | | — | | | — | | | $ | 3,677,662 | | | $ | 3,677,662 | |
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(1)Mr. Hogg joined the Company in June 2020 and his Pro Rata Bonus is based on the bonus earned during the calendar year preceding the year of termination. As a result, had Mr. Hogg's employment been terminated effective as of December 31, 2020, Mr. Hogg would not have been entitled to receive any Pro Rata Bonus.
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Potential Realizable Value of Outstanding Awards Upon a Change in Control Without Termination
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Under our long-term incentive plans, in the event of a "change in control" of us or an "exchange transaction" involving us, the vesting of outstanding awards may be accelerated regardless of whether the employment of the holder is terminated in connection therewith. The following table provides quantitative disclosure of the potential realizable value of outstanding awards granted to the named executive officers currently employed by us pursuant to our long-term incentive plans assuming that:
•an event which constituted a "change in control" and an "exchange transaction" under each of the agreements and plans described above was consummated on December 31, 2020;
•amounts payable to each named executive officer would not subject such person to excise tax under Section 4999 of the Code and the Company would not be denied a deduction under Section 280G of the Code;
•with respect to options awarded pursuant to the 2016 Plan and certain prior equity plans, the Board does not direct such outstanding options to be converted into options to purchase shares of the exchange stock;
•each named executive officer exercised any previously unexercised options and sold the underlying shares at the closing price for shares of our common stock on the Nasdaq Global Select Market on December 31, 2020; and
•each named executive officer sold the shares of our common stock underlying their previously unvested restricted stock units at the closing price for shares of our common stock on the Nasdaq Global Select Market on December 31, 2020.
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Name | | Potential Realizable Value(1) | |
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Mitchell Fadel | | | $ | 34,516,588 | |
Maureen Short | | | $ | 7,310,677 | |
Ann Davids | | | $ | 3,635,404 | |
Jason Hogg | | | $ | 5,034,369 | |
Catherine Skula | | | $ | 3,677,662 | |
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(1)Calculated by reference to the closing price for shares of our common stock on The Nasdaq Global Select Market on December 31, 2020, the last business day of fiscal 2020, which was $38.29.
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Equity Compensation Plan Information
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The following table sets forth certain information concerning all equity compensation plans previously approved by our stockholders and all equity compensation plans not previously approved by our stockholders as of December 31, 2020.
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Plan Category | | Number of Securities
to be issued upon
exercise of outstanding
options, warrants and rights | | Weighted-average
exercise price of
outstanding options,
warrants and rights(1) | | Number of securities
remaining available
for future issuance
under equity
compensation plan(2) | |
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Equity compensation plans approved by security holders | | 3,262,814 | | | $ | 22.91 | | —(3) | |
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Equity compensation plans not approved by security holders | | — | | | — | | — | |
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Total | | 3,262,814 | | | $ | 22.91 | | — | |
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(1)Reflects the weighted-average exercise price of outstanding options as of December 31, 2020. The weighted average grant date fair value of outstanding restricted stock units and performance stock units as of December 31, 2020 was $20.09.
(2)Pursuant to the terms of the plans, when an optionee leaves our employ, unvested options granted to that employee terminate and become available for re-issuance. Vested options not exercised within 90 days from the date the optionee leaves our employ terminate and become available for re-issuance.
(3)As of December 31, 2020, no additional securities remained available for issuance under the 2016 Plan or any other equity compensation plan of the Company. The Company seeks stockholder approval of additional equity issuances under the 2021 Plan as described in "Proposal Four: Approval of the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan" below.
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PROPOSAL THREE:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are seeking stockholder approval of our executive compensation program and practices as disclosed in this proxy statement. As described above in the "Compensation Discussion and Analysis" section of this proxy statement, the Compensation Committee has structured our executive compensation program to achieve the following key objectives:
•attract, retain and motivate senior executives with competitive compensation opportunities;
•balance short-term and long-term strategic goals;
•align our executive compensation program with the core values identified in our mission statement which focuses on improving the quality of lifeprovides for our co-workers and our customers; and
•reward achievement of our financial and non-financial goals.
We urge stockholders to read the section "Compensation Discussion and Analysis" above in this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the compensation tables and related narrative disclosures in the section "Compensation Tables" above in this proxy statement, which provide detailed information on the compensation of our named executive officers. The Compensation Committee and the Board believe that the policies and procedures articulated in the "Compensation Discussion and Analysis" are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has contributed to our recent and long-term success.
In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking stockholders to approve the following advisory resolution at the 2021 Annual Meeting:
"RESOLVED, that the stockholders of Rent-A-Center, Inc. (the "Company") approve, on an advisory basis, the compensation of the Company's named executive officers for the year ended December 31, 2020, as disclosed in the 2021 Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (including Item 402 of Regulation S-K), including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and narrative disclosure."
This advisory resolution, commonly referred to as a "say-on-pay" resolution, is non-binding on the Board. Although non-binding, the Board and the Compensation Committee will carefully take into account the outcome of the vote when considering future compensation arrangements for our named executive officers.
The affirmative vote of a majority of the shares of common stock present online or represented by proxy and entitled to be voted on the proposal at the meeting is required for approval of this advisory resolution.
Our Board recommends that you vote "FOR" approval of the advisory resolution on executive compensation.
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PROPOSAL FOUR:
APPROVAL OF THE RENT-A-CENTER, INC.
2021 LONG-TERM INCENTIVE PLAN
We are asking stockholders to approve the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan (the "2021 Plan").
On March 23, 2021, upon the recommendation of the Compensation Committee, the Board adopted, subject to stockholder approval, the 2021 Plan and has directed that it be submitted for the approval of the stockholders. If approved by stockholders, the 2021 Plan will replace the Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (the "2016 Plan") with respect to awards granted after the date such stockholder approval is received (the "Effective Date") and any awards that remain outstanding under the 2016 Plan as of the Effective Date will be settled under the 2021 Plan, subject to their original terms and conditions.
As discussed further in the CD&A, long-term incentive compensation, delivered in the form of restricted stock units and performance stock units, is a primary component of our executive compensation program. These equity-based awards motivate and reward achievement of long-term growth and align the interests of our employees with those of our stockholders.
In February 2021, the Compensation Committee approved the grant of restricted stock units and performance stock units to certain of our eligible employees (the "February 2021 Awards"). However, because there were not enough shares reserved under the 2016 Plan to be issued upon satisfaction of the conditions to vesting of these equity awards, the share-settlement of the February 2021 Awards is contingent on stockholder approval of the 2021 Plan. Accordingly, if stockholder approval of the 2021 Plan is obtained, the February 2021 Awards will be settled in shares of our stock in accordance with their terms. If stockholder approval of the 2021 Plan is not obtained, then the February 2021 Awards will be settled for an amount of cash based on the fair market value of one share of our stock.
We recommend that stockholders approve the 2021 Plan to permit the continued use of equity-based compensation. If the 2021 Plan is not approved, we will be unable to maintain our current equity grant practices and will be at a significant competitive disadvantage in attracting, retaining and motivating the talented individuals who contribute to our success. Moreover, we may need to replace equity-based components of our compensation structure with cash, which would increase cash compensation expense and reduce alignment with stockholder interests.
The affirmative vote of a majority of the shares of common stock present in person or represented by proxy and entitled to be voted on the proposal at the meeting is required for approval of the 2021 Plan.
Our Board of Directors recommends that you vote "FOR" approval of the 2021 Plan.
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Highlights of the 2021 Plan
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The terms of the 2021 Plan are generally consistent with the terms of the 2016 Plan, except that the 2021 Plan:
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| | Authorizes Shares | | | | Authorizes for issuance 5,000,000 shares. | | |
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| | Establishes 1:1 Share Counting | | | | Provides that each award (regardless of type) counts 1:1 against the share reserve (as compared to share-counting provisions under the 2016 Plan (1:1 for options and 2:1 for full-value awards). | | |
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| | Restricts Dividend Payments on Unvested Awards | | | | Requires that any dividends or dividend equivalent rights granted in connection with any type of award will be subject to the same vesting terms and conditions as the underlying award. | | |
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| | No Liberal Share Recycling | | | | Provides that shares delivered to pay the exercise price or to satisfy tax withholding obligations may not be reused for future awards. | | |
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| | Implements Director Limits | | | | Implements annual limits on the amount of compensation that may be granted to non-employee directors under the 2021 Plan. | | |
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| | Establishes Double Trigger Change in Control | | | | Establishes double-trigger vesting of awards upon a qualifying termination in connection with a change in control. | | |
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| | Provides for Clawback Policy Implementation | | | | Stipulates that the Compensation Committee has the authority to implement any clawback or recoupment policies that the Company has in place from time to time. | | |
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| | Removes References to Section 162(m) of the Internal Revenue Code | | | | Removes terms related to Section 162(m) of the Internal Revenue Code that have become obsolete as a result of the federal tax reform legislation enacted in December 2017. | | |
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Governance Best Practices. In addition to the above, the 2021 Plan maintains, or enhances, features and practices of the 2016 Plan that promote good governance and protect stockholders' interests, including:
•No "liberal" change in control definition. The change in control definition in the 2021 Plan is not "liberal" and, for example, would not occur merely upon stockholder approval of a merger transaction. A change in control must actually occur in order for the change in control provisions in the 2021 Plan to be triggered.
•No tax gross-ups. No participant is entitled under the 2021 Plan to any tax gross-up payments for any excise tax pursuant to Sections 280G or 4999 of the Code that may be incurred in connection with awards under the plan.
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•Stock-ownership guidelines. Our Chief Executive Officer and our other named executive officers are subject to stock ownership guidelines as described in "Compensation Discussion and Analysis — Policies and Risk Mitigation — Stock Ownership Guidelines" earlier in this proxy statement.
•No repricings or cash buyout of "underwater" awards. Neither a repricing of options or stock appreciation right ("SAR") awards, nor a cash buyout of underwater options or SARs, is permitted without stockholder approval, except for adjustments with respect to a change in control or an equitable adjustment in connection with certain corporate transactions.
•No evergreen provision. The 2021 Plan does not contain an "evergreen" feature pursuant to which the shares authorized for issuance under the plan can be increased automatically without stockholder approval.
•No "reload" options or stock appreciation rights. The 2021 Plan does not permit the use of reload options or stock appreciation rights which provide that the exercise of a stock option or stock appreciation right can automatically trigger the grant of a new stock option or stock appreciation right.
•No Transferability. Awards generally may not be transferred, except by the laws of decent and distribution.
Grant Practices and Key Data. When determining the number of shares authorized for issuance under the 2021 Plan, the Board and the Compensation Committee carefully considered the potential dilution to our current stockholders and projected future share usage needs for the Company to be able to make competitive grants to participants. Specifically, the Board and the Compensation Committee considered a number of factors, including our conservative historical and projected share usage. Burn rate (which is defined as the gross number of equity-based awards granted during a calendar year divided by the weighted average number of shares of common stock outstanding during the year) is a measure of share utilization in equity plans and an important factor for investors concerned about shareholder dilution. Under the Company's current equity incentive program implemented in 2020, our annual burn rate for 2020 was 1.96%. Our annual equity grants made in February 2021 were consistent with this program. Based on our conservative usage of shares authorized for issuance under the 2016 Plan and our reasonable expectation of future equity usage, we believe that the number of shares being requested for authorization under the 2021 Plan will last 4 to 5 years, depending on factors such as stock price movement, participation levels and corporate activities that could impact our grant practices.
Key Terms of the 2021 Plan
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The following summary of the material terms of the 2021 Plan is qualified in its entirety by reference to the complete text of the 2021 Plan, which is attached hereto as Annex A. Capitalized terms used in this proposal that are not otherwise defined have the meanings given to them in the 2021 Plan.
Purpose
The purpose of the 2021 Plan is to foster the ability of the Company and its subsidiaries to attract, motivate and retain key personnel and enhance stockholder value through the use of certain equity and cash incentive compensation opportunities.
Eligibility
Awards under the 2021 Plan may be made to any present or future directors, officers, employees, consultants and other personnel of the Company or a subsidiary. As of December 31, 2020, it is expected that approximately 13,648 officers, employees, consultants and other personnel of the Company and all six of our non-employee directors who are expected to continue to serve as directors following the 2021 Annual Meeting will be eligible to participate in the 2021 Plan.
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Shares Subject to the 2021 Plan
If approved, the 2021 Plan would authorize us to issue a total of 5,000,000 shares of common stock. Up to 5,000,000 shares of common stock may be issued under the 2021 Plan covering a stock option granted as an "incentive stock option" (within the meaning of Section 422 of the Internal Revenue Code of 1986).
Shares of common stock subject to an award that is forfeited, expires, terminates or is settled for cash (in whole or in part), to the extent of such forfeiture, expiration, termination or cash settlement will be available for future grants of awards under the 2021 Plan and will be added back in the same number of shares of common stock as were deducted in respect of such award. The payment of dividend equivalent rights in cash in conjunction with any outstanding awards will not be counted against the shares of common stock available for issuance under the 2021 Plan. Shares of common stock tendered by an award holder, repurchased by the Company using proceeds from the exercise of stock options, reserved for issuance upon grant of stock-settled stock appreciation rights to the extent the number of reserved shares exceeds the number of shares actually issued upon exercise of the stock appreciation rights or withheld by the Company in payment of the exercise price of a stock option or to satisfy any tax withholding obligation for an award will not again be available for awards under the 2021 Plan.
Limitations on Director Awards
The maximum value of awards that can be granted during any calendar year to any non-employee director, solely with respect to his or her service as a member of the board, is $800,000.
Minimum Vesting Requirements
No awards granted under the 2021 Plan shall vest or be exercisable (in the case of stock options and stock appreciation rights) earlier than the date that is one year following the date the award is granted; provided, however, (1) the Compensation Committee may provide that such restrictions may lapse or be waived upon the recipient's death or disability or termination of service, or in connection with a change in control, (2) awards that result in the issuance of an aggregate of up to five percent (5%) of the shares of common stock that may be authorized for grant (as such authorized number of shares of common stock may be adjusted as provided under the terms of the 2021 Plan) may be granted without respect to such minimum vesting provision, and (3) awards may be granted to non-employee directors without respect to such minimum vesting provision.
Administration
The 2021 Plan will generally be administered by the Compensation Committee. The Compensation Committee will have the full power and authority to: (1) select the persons to whom awards under the 2021 Plan will be made and when such awards will be made, (2) prescribe the types of awards to be granted and the terms and conditions of each such award and make amendments thereto, (3) construe, interpret and apply the provisions of the 2021 Plan and of any award agreement evidencing an award hereunder (each, an "Award Agreement") or other document governing the terms of an award made under the 2021 Plan, (4) make any and all determinations and take any and all other actions as it deems necessary or desirable in order to carry out the terms of the 2021 Plan and any award, (5) prescribe, amend and rescind rules and regulations relating to the 2021 Plan, including rules governing the Compensation Committee's own operations, or rules applicable to award holders, (6) correct any defect, supply any omission and reconcile any inconsistency in the 2021 Plan, (7) accelerate the time or times at which (a) the award becomes vested, unrestricted or may be exercised or (b) shares of common stock are delivered under the award, (8) waive or amend any goals, restrictions, vesting provisions or conditions set forth in any Award Agreement, or impose new goals, restrictions, vesting provisions and conditions, (9) determine at any time whether awards may be settled in cash, shares of common stock, other securities or other property and (10) exercise all powers granted to it under the 2021 Plan.
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Types of Awards
The types of awards that may be granted under the 2021 Plan are:
•Stock Options. The 2021 Plan permits the granting of stock options at such times and upon such vesting and other conditions as determined by the Compensation Committee. The purchase price per share of common stock covered by an option granted under the 2021 Plan may not be less than the Fair Market Value per share of common stock on the date the option is granted. The exercise price under an option which is intended to qualify as an "incentive stock option" granted to an employee who is a 10% stockholder may not be less than 110% of the Fair Market Value per share on the date the option is granted. Unless sooner terminated in accordance with its terms, an option will automatically expire on the tenth anniversary of the date it is granted (the fifth anniversary of the date it is granted in the case of an option which is intended to qualify as an "incentive stock option" granted to an employee who is a 10% stockholder).
•Stock Awards. The 2021 Plan permits the granting of restricted stock, deferred stock, stock units (whether in the form of restricted stock units or DSUs), stock bonus and other stock awards to such persons, at such times and upon such vesting and other conditions and restrictions as the Compensation Committee may determine. Unless otherwise determined by the Compensation Committee and set forth in the applicable Award Agreement, (1) the holder of a stock award will not be entitled to receive dividend payments (or, in the case of an award of stock units, dividend equivalent payments) with respect to the shares covered by the award and (2) the holder of shares of restricted stock may exercise voting rights pertaining to such shares.
•Other Equity-Based Awards. Under the 2021 Plan, the Compensation Committee may grant stock appreciation rights, dividend equivalent payment rights, phantom shares, phantom stock units, bonus shares and other forms of equity-based awards to eligible persons, subject to such terms and conditions as it may establish; provided, however that no dividend or dividend equivalent payment rights shall be attributable to awards of stock appreciation rights or stock options. The base price for a stock appreciation right granted under the 2021 Plan may not be less than the Fair Market Value per share of stock covered by the award at the time it is granted. Unless sooner terminated in accordance with its terms, a stock appreciation right will automatically expire on the tenth anniversary of the date it is granted. Awards made pursuant to this section may entail the transfer of shares of common stock to a participant or the payment in cash or other property determined with reference to shares of common stock.
•Cash Awards. Under the 2021 Plan, the Compensation Committee may grant awards in cash with the amount of the eventual payment subject to future service and such other restrictions and conditions as may be established by the Compensation Committee and set forth in the underlying agreement, including, but not limited to, continuous service with the Company and its subsidiaries, achievement of specific business objectives, increases in specified indices, attaining specified growth rates and other measurements of performance.
Performance-Based Equity and Cash Awards
Under the 2021 Plan, the Compensation Committee may condition the grant, exercise, vesting or settlement of equity-based awards or annual or long-term cash incentive awards on the achievement of specified performance goals over any time period specified by the Compensation Committee. Any performance goal established in connection with an award granted under the 2021 Plan may be based on any subjective or objective performance goal determined by the Compensation Committee in its discretion. The Compensation Committee, in its discretion, may determine to adjust any performance goals applicable to an award.
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Dividends and Dividend Equivalents
To the extent dividends or dividend equivalents are included in an Award Agreement for an applicable award, the right to receive such dividends and dividend equivalent rights shall be subject to the same performance-based vesting conditions and/or service-vesting conditions, as applicable, as the underlying award, and no dividends or dividend equivalents shall be released to the award holder until the award to which they pertain has vested. For the avoidance of doubt, no dividends or dividend equivalent rights may be granted in connection with stock options or stock appreciation rights granted under the 2021 Plan.
Change in Control
control. If an award holder'sholder’s employment or other service is terminated by the Company or any successor entity thereto without "cause"“cause” or by the award holder for "good reason" (as“good reason” (as each such term is defined in the applicable Award Agreementaward agreement or an award holder'sholder’s executive transition agreement or employment agreement, if applicable) upon or within two (2) years after a "change“change in control" (ascontrol” (as defined in the 2021 Plan), (1) each award granted to such award holder prior to such change in control will become fully vested (including the lapsing of all restrictions and conditions) and, as applicable, exercisable as of the date of such termination of employment or other service, and (2) any shares deliverable pursuant to stock units will be delivered promptly (but no later than fifteen (15) days) following such termination.
As of the change in control date, any outstanding performance-based awards will be deemed earned at the greater of the target level and the actual performance level through the change in control date for all open performance periods and will cease to be subject to any further performance conditions but will continue to be subject to time-based vesting following the change in control in accordance with the original vesting and/or performance period and subject to the provisions of clause (1) in the paragraph above.Amendment and Termination
The Board may amend or terminate the 2021 Plan; provided, however, that no such action may adversely affect a holder's rights under an outstanding award without his or her written consent. Any amendment that would increase the aggregate number of shares of common stock issuable under
Under the 2021 Plan,
the maximum number of shares with respect to which options, stock appreciation rights or other equity awards may be granted to any employeea “change in
any calendar year, or that would modify the class of persons eligible to receive awards shall be subject to the approval of the Company's stockholders. The Compensation Committee may amend the terms of any agreement or award made under the 2021 at any time and from time to time, provided, however, that any amendment which would adversely affect a holder's rights under an outstanding award may not be made without his or her consent.Clawback
Awards under the 2021 Plan will be subject to the Company's clawback policy described under "Compensation Discussion and Analysis — Policies and Risk Mitigation — Clawback Policy", or any other clawback or recapture policy that the Company may adopt from time to time to the extent provided in such policy, and, in accordance with such policy, may be subject to the requirement that the awards be repaid to the Company after they have been distributed to the award holder.
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U.S. Federal Income Tax Consequences
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The following is a brief description of the U.S. federal income tax consequences generally arising with respect to grants of awards under the 2021 Plan. This description is not intended to, and does not, provide or supplement tax advice to award participants. Participants are advised to consult with their own independent tax advisors with respect to the specific tax consequences that, in light of their particular circumstances, might arise in connection with their receipt of awards under the 2021 Plan, including any state, local or foreign tax consequences and the effect, if any, of gift, estate and inheritance taxes.
Incentive Stock Options
A participant will not recognize taxable income upon exercising an incentive stock option (an "ISO"), provided that the participant was, without a break in service, an employee of the Company or one of its subsidiaries during the period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant is disabled, as that term is defined in the Internal Revenue Code). Notwithstanding the foregoing, the alternative minimum tax may apply. Upon a disposition of shares acquired upon exercise of an ISO before the end of the applicable ISO holding periods, the participant generally will recognize ordinary income equal to the lesser of (a) the excess of the fair market value of the shares at the date of exercise of the ISO over the exercise price or (b) the amount realized upon the disposition of the ISO shares over the exercise price. Otherwise, a participant's disposition of shares acquired upon the exercise of an ISO for which the statutory holding periods (defined as on or after the later of (i) the second anniversary of the date of grant of the ISO and (ii) the first anniversary of the date of exercise of the ISO) are met generally will result in long-term capital gain or loss measured by the difference between the sale price and the participant's tax basis in such shares (the tax basis in the acquired shares of shares for which the ISO holding periods are met generally being the exercise price of the ISO).
Non-Qualified Stock Options and Stock Appreciation Rights
The grant of a non-qualified stock option (i.e., an option other than an ISO) or SAR will create no tax consequences at the grant date for the participant or the Company. Upon exercising such an option or SAR, the participant will recognize ordinary income equal to the excess of the fair market value of the vested shares (and/or cash or other property) acquired on the date of exercise over the exercise price and will be subject to FICA (Social Security and Medicare) tax in respect of such amounts. A participant's disposition of shares acquired upon the exercise of a non-qualified stock option or SAR generally will result in long- or short-term capital gain or loss measured by the difference between the sale price and the participant's tax basis in such shares (the tax basis in the acquired shares generally being the exercise price plus any amount recognized as ordinary income in connection with the exercise of the option).
Restricted Shares
A participant of restricted shares generally will not be subject to income taxation at grant. Instead, upon lapse of the restrictions, the participant will recognize ordinary income equal to the fair market value of the shares on the date of lapse. The participant's tax basis in the shares received will be equal to the fair market value of the shares on the date the restrictions lapse, and the participant's holding period in such shares begins on the day after the restrictions lapse.
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Restricted Stock Units
A participant of a restricted stock unit (whether time-vested or subject to achievement of performance goals) will not be subject to income taxation at grant. Instead, the participant will be subject to income tax at ordinary rates on the fair market value of the shares (or the amount of cash) received on the date of delivery. The recipient will be subject to FICA (Social Security and Medicare) tax at the time any portion of such award is deemed vested for tax purposes. The fair market value of the shares (if any) received on the delivery date will be the participant's tax basis for purposes of determining any subsequent gain or loss from the sale of the shares, and the recipient's holding period with respect to such shares will begin at the delivery date. Gain or loss resulting from any sale of shares delivered to a participant will be treated as long- or short-term capital gain or loss depending on the holding period. If any dividend equivalent amounts are provided to the participant, they will be includible in the participant's income as additional compensation (and not as dividend income) and will be subject to income and employment tax withholding.
Disposition of Shares
Unless stated otherwise above, upon the subsequent disposition of shares acquired under any of the preceding awards, a participant will recognize capital gain or loss based upon the difference between the amount realized on such disposition and the participant's basis in the shares, and such amount will be long-term capital gain or loss if such shares were held for more than 12 months. Capital gain is generally taxed at a maximum rate of 20% if the property is held more than one year.
Cash Awards
A participant who receives a cash award will not recognize any taxable income for federal income tax purposes at grant, provided that no cash is actually paid at the time of grant. Upon the payment of any cash in satisfaction of the cash incentive award, the participant will realize ordinary income in an amount equal to the cash award received and the Company will be entitled to a corresponding deduction.
Deduction
The Company generally will be entitled to a tax deduction equal to the amount recognized as ordinary income by the recipient in connection with the delivery of shares pursuant to a restricted stock unit or a performance stock unit, the exercise of an option or SAR or the lapse of restrictions on restricted shares. The Company will not be entitled to any tax deduction with respect to an ISO if the recipient holds the shares for the ISO holding periods prior to disposition of shares and is generally not entitled to a tax deduction for any award with respect to any amount that represents compensation in excess of $1 million paid to "covered employees" under Section 162(m) of the Internal Revenue Code.
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Awards granted under the 2021 LTIP will be subject to the Compensation Committee's discretion and, other than the February 2021 Awards, the Compensation Committee has not determined awards under the 2021 LTIP or who might receive them. As a result, the additional benefits that will be awarded or paid under the 2021 LTIP are not currently determinable. The February 2021 Awards and DSUs awarded in respect of 2020 service would not have changed in the 2021 LTIP had it been in place instead of the 2016 LTIP and are set forth in the following table.
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| | | NEW PLAN BENEFITS
Rent-A-Center, Inc. 2021 Long-Term Incentive Plan |
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| | | Name and Position | | | | Dollar Value
($)(1)
|
| | | Number of
Restricted
Stock Units
|
| | | Number of
Performance
Stock Units(2)
|
| | | Number of
Deferred Stock
Units
|
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| | | Mitchell Fadel
Chief Executive Officer | | | | $5,935,591 | | | | 24,995 | | | | 77,768 | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Maureen Short
Executive Vice President — Chief Financial Officer | | | | $845,144 | | | | 3,559 | | | | 11,073 | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Ann Davids
Executive Vice President — Chief Customer and Marketing Officer | | | | $398,544 | | | | 1,678 | | | | 5,222 | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Jason Hogg
Executive Vice President — Acima | | | | $2,031,592 | | | | 8,555 | | | | 26,618 | | | | — | | |
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| | | Catherine Skula
Executive Vice President — Chief Development Officer | | | | $421,879 | | | | 1,777 | | | | 5,527 | | | | — | | |
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| | | All current executive officers, as a group (7 persons) | | | | $10,539,756 | | | | 44,384 | | | | 138,091 | | | | — | | |
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| | | All non-employee directors, as a group (6 persons)(3) | | | | $1,222,034 | | | | — | | | | — | | | | 41,293 | | |
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| | | All non-executive officer employees, as a group | | | | $9,870,606 | | | | 70,761 | | | | 100,129 | | | | — | | |
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(1)For all employees, the dollar value reflects the number of restricted stock units and performance stock units granted in February 2021 multiplied by $57.76, which was the closing price of our common stock on the Nasdaq Global Select Market on the date of grant. For non-employee directors, the dollar value reflects the value of DSUs awarded in respect of 2020 service, as described in "Corporate Governance — Director Compensation."
(2)For all employees, the number of shares underlying the performance stock units reflects target payout. At maximum payout, the number of shares would increase by 100%. For additional information about how performance stock units are earned, see "Compensation Discussion and Analysis — Executive Summary — 2020 Executive Compensation Highlights."
(3)Includes DSUs awarded to Mr. Gade, who will retire from the Board following the 2021 Annual Meeting, in respect of his 2020 service. The group excludes Mr. Silver, who was appointed to the Board in January 2021 and did not receive any compensation in respect of 2020.
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PROPOSAL FIVE:
APPROVAL OF THE DECLASSIFICATION AMENDMENTS
Upon the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors adopted, subject to stockholder approval, the Declassification Amendments, which consist of amendments to Article FIFTH of the Company's Certificate of Incorporation to effectuate the declassification of the Board of Directors following the 2021 Annual Meeting.
To facilitate the declassification of the Board of Directors in a timely matter (following approval of the Declassification Amendments by stockholders), each current member of the Board (other than Mr. Gade, who will retire following the 2021 Annual Meeting) — including the Class III director nominees nominated by the Board in this proxy statement for election at the 2021 Annual Meeting (the "Class III Director Nominees") should they be elected at the 2021 Annual Meeting — has previously committed to tender his or her resignation following the 2021 Annual Meeting if he or she is a member of the Board at that time, and each such director (including the Class III Director Nominees should they be elected at the 2021 Annual Meeting) will subsequently be reappointed to the declassified Board by the remaining members of the Board such that each member of the Board will serve a one-year term following the 2021 Annual Meeting and stand for election annually, beginning at the Company's 2022 annual meeting of stockholders (the "Accelerated Declassification Plan").
Description of the Proposed Declassification Amendments
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Currently, the Company's Certificate of Incorporation provides that the Board be divided into three classes with the number of directors in each class being as nearly equal as reasonably possible. Accordingly, approximately one-third of the directors are elected annually, each serving a three-year term.
The proposed Declassification Amendments provide that each director elected at each annual meeting of stockholders, beginning with the 2022 Annual Meeting, will serve a one-year term expiring at the following annual meeting of stockholders and until his or her respective successor is duly elected and qualified, or until his or her earlier death, resignation, disqualification or removal.
Accordingly, if the proposed Declassification Amendments are approved by stockholders, as soon as practicable following the 2021 annual meeting, each director will, according to the Accelerated Declassification Plan, tender his or her resignation and will subsequently be reappointed to the declassified Board by the remaining members of the Board such that each member of the Board will serve a one-year term following the 2021 Annual Meeting and stand for election annually, beginning at the Company's 2022 annual meeting of stockholders and until his or her successor is duly elected and qualified or until his or her earlier death, resignation, disqualification or removal.
Under the Company's existing Certificate of Incorporation, and Delaware law (unless the certificate of incorporation provides otherwise), directors of companies that have a classified board of directors may be removed only for cause. Delaware law requires that directors of companies that do not have a classified board must be removable with or without cause. Accordingly, if the proposed Declassification Amendments are approved, any director elected at or after the 2021 Annual Meeting (after giving effect to the Accelerated Declassification Plan) may be removed from office at any time, with or without cause, by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of directors, voting together as a single class.
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Reasons for Declassifying the Board of Directors
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The Board considered a number of factors that favor continuing with a classified board structure, as well as a number of factors that favor adopting a declassified board structure. Ultimately, after weighing the various factors, the Board determined that it would be in the best interests of the Company and its stockholders to declassify the Board by amending the Certificate of Incorporation as set forth in Annex B to give effect to the Declassification Amendments.
A classified board structure has a number of advantages. It allows a majority of the board to remain in place from year to year, which promotes continuity and stability and encourages the board to plan for long-term goals. Further, at any one time, approximately two-thirds of the elected board has experience with the business and operations of the company it manages.
The Board also recognizes that a classified board structure can be viewed as diminishing a board's accountability to stockholders, because such structure does not enable stockholders to express a view on each director's performance by means of an annual vote. Annual voting allows stockholders to express their views on the individual performance of each director and on the entire board of directors more frequently than with a classified board structure, which provides stockholders a more active role in shaping and implementing corporate governance policies. Moreover, many institutional investors believe that the election of directors is the primary means for stockholders to influence corporate governance policies and to hold management accountable for implementing those policies. Public companies with classified boards also face increased scrutiny from proxy advisory firms.
After weighing the factors above, among others, the Board determined that retaining a classified board structure is no longer in the best interests of the Company and its stockholders. For this reason, the Board approved and declared advisable an amendment to the Company's Certificate of Incorporation giving effect to the Declassification Amendments, a form of which is attached hereto and incorporated by reference herein as Annex B, and recommends that our stockholders vote to approve the adoption of such Declassification Amendments.
If the stockholders approve the adoption of the Declassification Amendments, such amendments to our Certificate of Incorporation will become effective upon the filing of a Certificate of Amendment (giving effect to the Declassification Amendments) with the Secretary of State of the State of Delaware. We intend to file the Certificate of Amendment to effect the Declassification Amendments as soon as practicable following the 2021 Annual Meeting after the requisite vote for this proposal is obtained. After the filing of the Certificate of Amendment and implementing the Accelerated Declassification Plan, every director will stand for election at the 2022 annual meeting of stockholders (and thereafter) for one-year terms.
Approval of the adoption of the Declassification Amendments to eliminate the classified Board requires the affirmative vote of the holders of at least eighty percent (80%) of the common stock of the Company issued and outstanding as of the record date for the 2021 Annual Meeting.
Our Board of Directors recommends that you vote "FOR" the approval of the Declassification Amendments.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the common stock ownership for each of our directors, each of the named executive officers, all of our directors and executive officers as a group, and each of our known holders of 5% of our common stock. Beneficial ownership is determined in accordance with SEC rules and regulations. Unless otherwise indicated and subject to community property laws where applicable, we believe that each of the stockholders named in the table below has sole voting and investment control with respect to the shares indicated as beneficially owned. Information in the table is as of April 5, 2021, unless otherwise indicated.
| | | | |
Name of Beneficial Owner
| | Amount and Nature
of Beneficial Ownership
| | Percent of
Common Stock
|
|---|
| | | | | |
Jeffrey Brown | | 101,819 | (1) | * |
Ann Davids | | 40,546 | | * |
Mitchell Fadel | | 415,230 | (2) | * |
Michael Gade | | 61,737 | (3) | * |
Christopher Hetrick | | 46,212 | (4) | * |
Jason Hogg | | — | | * |
Harold Lewis | | 9,689 | (5) | * |
Glenn Marino | | 7,935 | (5) | * |
Carol McFate | | 12,912 | (5) | * |
Maureen Short | | 135,936 | | * |
B.C. Silver | | 2,778 | (5) | * |
Catherine Skula | | 94,161 | (6) | * |
All executive officers and directors as a group (14 total) | | 976,721 | | 1.5% |
BlackRock, Inc. | | 7,735,401 | (7) | 11.7% |
The Vanguard Group | | 7,214,667 | (8) | 10.9% |
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*Less than 1%.
(1)Includes 54,054 DSUs.
(2)Includes 5,256 DSUs.
(3)Includes 57,737 DSUs. Mr. Gade has determined not to stand for re-election at the 2021 Annual Meeting and will retire as a director at that time.
(4)Includes 32,487 DSUs and 13,725 shares of our common stock owned by Mr. Hetrick in his personal capacity. In addition, as an affiliate of Engaged Capital, LLC, Mr. Hetrick may be deemed to be a member of a Section 13(d) group that may be deemed to collectively beneficially own 2,918,609 shares held by funds affiliated with Engaged Capital, LLC (according to a Schedule 13D/A filed by Engaged Capital, LLC with the SEC on August 25, 2020).
(5)Comprised solely of DSUs.
(6)Includes 103 shares held under the Company's deferred compensation plan.
(7)The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York, 10055. BlackRock, Inc. exercises sole voting control over 7,616,178 of these shares and sole investment control over all 7,735,401 shares. This information is based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 26, 2021.
(8)The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. The Vanguard Group exercises sole voting control over none of these shares, shared voting control over 108,316 of these shares, sole investment control over 7,068,479 of these shares, and shared investment control over 146,188 of these shares. This information is based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 10, 2021.
For each of the named executive officers and his or her ownership as reported in the table above, the following table sets forth: (1) common stock underlying restricted stock units that may vest within 60 days of April 5, 2021, (2) common stock underlying performance stock units that may vest within 60 days of April 5, 2021, assuming 100% of the target performance is achieved and (3) shares issuable upon the exercise of outstanding stock options that are exercisable within 60 days of April 5, 2021.
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Name
| | Common Stock Underlying
Restricted Stock Units
| | Common Stock Underlying
Performance Stock Units
| | Shares Issuable Upon
Exercise of Options
|
|---|
| | | | | | |
Mitchell Fadel
| | — | | — | | 148,624 |
Maureen Short
| | — | | — | | 53,606 |
Ann Davids
| | — | | — | | 16,543 |
Jason Hogg
| | — | | — | | — |
Catherine Skula
| | — | | — | | 24,444 |
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OTHER INFORMATION
Delinquent Section 16(a) Reports
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Section 16(a) of the Securities Exchange Act of 1934 and related rules of the SEC require our directors and Section 16 officers, and persons who own more than 10% of a registered class of our equity securities, to file initial reports of ownership and reports of changes in ownership with the SEC. These persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports that they file. Based on a review of reports filed by those persons, and upon representations from those persons, we believe that all SEC stock ownership reports required to be filed by those reporting persons during and with respect to 2020 were timely made except for three Form 4s in respect of three transactions by Mr. Brown, two Form 4s in respect of two transactions by Mr. Gade, one Form 4 in respect of one transaction by Mr. Hetrick, one Form 4 in respect of one transaction by Mr. Marino, two Form 4s in respect of two transactions by Ms. McFate, one Form 4 in respect of three transactions by Ms. Short and one Form 4 in respect of one transaction by Ms. Skula. Such late filings were the result of administrative error that occurred in connection with the transition of the corporate secretary function of the Company during 2020.
Annual Report on Form 10-K
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The Company has filed with the SEC an Annual Report on Form 10-K for the year ended December 31, 2020 (which is not a part of the Company's proxy soliciting materials), a copy of which is available on our website at https://investor.rentacenter.com/financial-information/sec-filings. The Company will provide without charge a copy of the Company's Annual Report on Form 10-K for the year ended December 31, 2020 upon the written request of a stockholder to Corporate Secretary, Rent-A-Center, Inc., 5501 Headquarters Drive, Plano, Texas 75024.
"Householding" of Proxy Materials
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The SEC has adopted rules that permit companies and intermediaries (for example, brokers) to satisfy the delivery requirements for proxy statements, annual reports and Notices with respect to two or more stockholders sharing the same address by delivering a single copy of any such proxy statement, annual report or Notice addressed to those stockholders. This process, which is commonly referred to as "householding," potentially provides extra convenience for stockholders and cost savings for companies. If you are an affected shareholder and no longer wish to participate in householding, or if you are receiving multiple copies of the proxy statement or the Notice and wish to receive only one, please notify your broker if your shares are held in a brokerage account, or the Company if you are the record holder of your shares. Such a notification to the Company may be submitted to the Rent-A-Center Legal Department in writing at Attn: Legal Department, Rent-A-Center, Inc., 5501 Headquarters Drive, Plano, Texas 75024, or by calling 972-801-1100. Additionally, we will deliver promptly to any affected stockholder, upon his or her written request made to the address in the preceding sentence, an additional copy of the proxy statement, annual report and/or Notice.
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Submission of Stockholder Proposals
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From time to time, stockholders may seek to nominate directors or present proposals for inclusion in the proxy statement and form of proxy for consideration at an annual stockholders meeting. To be included in the proxy statement or considered at an annual or any special meeting, you must timely submit nominations of directors or proposals, in addition to meeting other legal requirements.
We must receive proposals for possible inclusion in the Company's proxy statement related to the 2022 annual stockholders meeting no later than December 27, 2021 and such proposals must otherwise comply with Rule 14a-8 under the Exchange Act.
Pursuant to our Bylaws, subject to certain limited exceptions, other proposals for possible consideration at the 2022 annual stockholders meeting, including proposals for the nomination of one or more directors, must be received in writing by us no earlier than the close of business on February 8, 2022, and no later than the close of business on March 10, 2022. Any such proposal must be in proper form as specified in our Bylaws, must be submitted by a stockholder of the Company meeting the requirements set forth in our Bylaws and must comply with the rules of the SEC concerning stockholder proposals.
Direct any proposals, as well as related questions, to Corporate Secretary, Rent-A-Center, Inc., 5501 Headquarters Drive, Plano, Texas 75024.
The Board does not intend to bring any business before the annual stockholders meeting other than the matters referred to in this proxy statement and at this date has not been informed of any matters that may be presented to the annual stockholders meeting by others. If, however, any other matters properly come before the annual stockholders meeting, or any adjournments or postponement thereof, it is intended that the persons named in the accompanying proxy will vote pursuant to the proxy in accordance with their best judgment on such matters.
PLEASE VOTE — YOUR VOTE IS IMPORTANT
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Annex A:
2021 Long-Term Incentive Plan
(See attached)
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RENT-A-CENTER, INC.
2021 LONG-TERM INCENTIVE PLAN
1.Purpose. The purpose of the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan (as amended from time to time, the "Plan") is to foster the ability of Rent-A-Center, Inc. (the "Company") and its subsidiaries to attract, motivate and retain key personnel and enhance stockholder value through the use of certain equity and cash incentive compensation opportunities. The Plan replaces the Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (the "Prior Plan") for Awards granted after the Effective Date. Awards may not be granted under the Prior Plan beginning on the Effective Date and any awards that remain outstanding under the Prior Plan as of the Effective Date shall be settled under the Plan, subject to their original terms and conditions and the Prior Plan shall be terminated as of the Effective Date.
2.Administration.
(a)Committee. The Plan will be administered by the compensation committee of the Company's board of directors (the "Committee").
(b)Responsibility and Authority of Committee. Subject to the provisions of the Plan, the Committee, acting in its discretion, will have responsibility and full power and authority to (i) select the persons to whom Awards under the Plan ("Awards") will be made and when such Awards will be made, (ii) prescribe the types of Awards to be granted and the terms and conditions of each such Award and make amendments thereto, (iii) construe, interpret and apply the provisions of the Plan and of any Award Agreement evidencing an Award hereunder (each, an "Award Agreement") or other document governing the terms of an Award made under the Plan, (iv) make any and all determinations and take any and all other actions as it deems necessary or desirable in order to carry out the terms of the Plan and any Award, (v) prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing the Committee's own operations, rules applicable to Award holders, (vi) correct any defect, supply any omission and reconcile any inconsistency in the Plan, (vii) accelerate the time or times at which (A) the Award becomes vested, unrestricted or may be exercised or (B) shares of Common Stock are delivered under the Award, (viii) waive or amend any goals, restrictions, vesting provisions or conditions set forth in any Award Agreement, or impose new goals, restrictions, vesting provisions and conditions, (ix) determine whether, to what extent and under what circumstances and method or methods Awards may be settled in cash, Shares of Common Stock, other securities, other Award or other Property and (x) exercise all powers granted to it under the Plan. Notwithstanding the foregoing, the Company's board of directors (the "Board") will have sole responsibility and authority for matters relating to the grant and administration of Awards to non-employee directors, and reference herein to the Committee with respect to any such matters will be deemed to refer to the Board. In exercising its responsibilities under the Plan, the Committee may obtain at the Company's expense such advice, guidance and other assistance from outside compensation consultants and other professional advisers as it deems appropriate.
(c)Delegation of Authority. Subject to the requirements of applicable law, the Committee may delegate to any person or group or subcommittee of persons (who may, but need not be, members of the Committee) such Plan-related functions within the scope of its responsibility, power and authority on such terms and conditions as it deems appropriate; provided, however, that the Committee may not delegate authority to grant or administer Awards granted to the Company's senior executive officers. Except as specifically provided to the contrary, references to the Committee include any person or group or subcommittee of persons to whom the Committee has delegated its duties and powers.
(d)Committee Actions. A majority of the members of the Committee shall constitute a quorum. The Committee may act by the vote of a majority of its members present at a meeting at which there is a quorum or by unanimous written consent. The decision of the Committee as to any disputed question, including questions of construction, interpretation and administration, shall be final, binding and conclusive on all persons. The Committee shall keep a record of its proceedings and acts and shall keep
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or cause to be kept such books and records as may be necessary in connection with the proper administration of the Plan.
(e)Indemnification. The Company shall indemnify and hold harmless each member of the Committee or subcommittee appointed by the Committee and any employee or director of the Company or of a subsidiary to whom any duty or power relating to the administration or interpretation of the Plan is delegated from and against any loss, cost, liability (including any sum paid in settlement of a claim with the approval of the Board), damage and expense, including legal and other expenses incident thereto, arising out of or incurred in connection with the such person's services under the Plan, unless and except to the extent attributable to such person's fraud or willful misconduct. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which Committee member may otherwise be entitled under the Company's organizational documents, pursuant to any individual indemnification agreements between such Committee member and the Company, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless.
3.Eligibility. Awards under the Plan may be made to any present or future directors, officers, employees, consultants and other personnel of the Company or a subsidiary.
4.Limitations on Plan Awards.
(a)Aggregate Share Limitations. The aggregate number of shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), that may be issued pursuant to Awards granted under the Plan shall not exceed 5,000,000 shares of Common Stock. Up to 5,000,000 shares of Common Stock (as adjusted pursuant to Section 13 below) may be issued under the Plan covering a stock option granted as an "incentive stock option" (within the meaning of Section 422 of the Internal Revenue Code of 1986). Shares of Common Stock subject to awards that are assumed, converted or substituted under the Plan as a result of the Company's acquisition of another company (including by way of merger, combination or similar transaction) ("Acquisition Awards") will not count against the number of shares of Common Stock that may be granted under the Plan or be subject to the minimum vesting provisions in Section 11 below. Available shares under a stockholder approved plan of an acquired company (as appropriately adjusted to reflect the transaction) may be used for Awards under the Plan (subject to Nasdaq rules) and do not reduce the maximum number of shares of Common Stock available for grant under the Plan.
(b)Replacement of Shares. Shares of Common Stock subject to an Award that is forfeited, expires, terminates or is settled for cash (in whole or in part), to the extent of such forfeiture, expiration, termination or cash settlement will be available for future grants of Awards under the Plan and will be added back in the same number of shares of Common Stock as were deducted in respect of such Award. The payment of dividend equivalent rights in cash in conjunction with any outstanding Awards will not be counted against the shares of Common Stock available for issuance under the Plan. Shares of Common Stock tendered by an Award holder, repurchased by the Company using proceeds from the exercise of stock options, reserved for issuance upon grant of stock-settled stock appreciation rights to the extent the number of reserved shares exceeds the number of shares actually issued upon exercise of the stock appreciation rights or withheld by the Company in payment of the exercise price of a stock option or to satisfy any tax withholding obligation for an Award will not again be available for Awards under the Plan.
(d)Director Award Limitations. Aggregate Awards to any one non-employee director in respect of any calendar year, solely with respect to his or her service as a director, may not exceed $800,000 based on the aggregate value of cash fees, cash-based Awards and Fair Market Value of stock-based Awards, in each case determined as of the grant date.
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5.Stock Option Awards. Subject to the Plan, the Committee may grant stock options to such persons, at such times and upon such vesting and other conditions as the Committee, acting in its discretion, may determine.
(a)Minimum Exercise Price. The purchase price per share of Common Stock covered by an option granted under the Plan may not be less than the Fair Market Value per share of Common Stock on the date the option is granted. For purposes of the Plan, "Fair Market Value" means: (i) if the Common Stock is listed on an established stock exchange or traded on the Nasdaq Stock Market, the closing sales price (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable, and (ii) if not so reported, as determined in accordance with a valuation methodology approved by the Committee. The exercise price under an option which is intended to qualify as an "incentive stock option" (within the meaning of Section 422 of the Internal Revenue Code of 1986) granted to an employee who is a 10% stockholder within the meaning of Section 422(b)(6) of the Code, may not be less than 110% of the Fair Market Value per share on the date the option is granted.
(b)Maximum Duration. Unless sooner terminated in accordance with its terms, an option will automatically expire on the tenth anniversary of the date it is granted (the fifth anniversary of the date it is granted in the case of an option which is intended to qualify as an "incentive stock option" granted to an employee who is a 10% stockholder).
(c)Nontransferability. No option shall be assignable or transferable except upon the optionee's death to a beneficiary designated by the optionee in a manner prescribed or approved for this purpose by the Committee or, if no designated beneficiary shall survive the optionee, pursuant to the optionee's will or by the laws of descent and distribution. During an optionee's lifetime, options may be exercised only by the optionee or the optionee's guardian or legal representative. Notwithstanding the foregoing, the Committee may permit, in its discretion, the inter vivos transfer of an optionee's options (other than options designated as "incentive stock options") by gift to any "family member" (within the meaning of Item A.1.(a)(5) of the General Instructions to Form S-8 or any successor provision), on such terms and conditions as the Committee deems appropriate.
(d)Manner of Exercise. An option may be exercised by transmitting to the Secretary of the Company (or such other person designated by the Committee) a written notice identifying the option being exercised and specifying the number of shares being purchased, together with payment of the exercise price and the amount of the applicable tax withholding obligations (unless other arrangements are made for the payment of such exercise and/or the satisfaction of such withholding obligations). The Committee, acting in its discretion, may permit the exercise price and withholding obligation to be paid in whole or in part in cash or by check, by means of a cashless exercise procedure to the extent permitted by law, by the surrender of previously-owned shares of Common Stock (to the extent of the Fair Market Value thereof) or, subject to applicable law, by any other form of consideration deemed appropriate.
(e)Rights as a Stockholder. No shares of Common Stock will be issued in respect of the exercise of an option until payment of the exercise price and the applicable tax withholding obligations have been made or arranged to the satisfaction of the Company. The holder of an option shall have no rights as a stockholder with respect to any shares covered by the option until the shares are issued pursuant to the exercise of the option.
6.Stock Awards. Subject to the Plan, the Committee may grant restricted stock, deferred stock, stock units (whether in the form of restricted stock units or deferred stock units), stock bonus and other stock Awards to such persons, at such times and upon such vesting and other conditions and restrictions as the Committee, acting in its discretion, may determine.
(a)Stock Certificates for Restricted Stock. As determined by the Committee in its discretion, shares of restricted stock issued pursuant to a stock Award may be evidenced by book entry
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on the Company's stock transfer records or by a stock certificate issued in the recipient's name and bearing an appropriate legend regarding the conditions and restrictions applicable to the shares. The Company may require that any stock certificates for restricted shares be held in custody by the Company or a designee pending the lapse of applicable forfeiture conditions and transfer restrictions. The Committee may condition the issuance of shares of restricted stock on the recipient's delivery to the Company of a stock power, endorsed in blank, for such shares.
(b)Stock Certificates for Vested Stock. As determined by the Committee in its discretion, the recipient of a stock Award which is vested at the time of grant or which thereafter becomes vested may be evidenced by book entry on the Company's stock transfer records or may be entitled to receive a stock certificate, free and clear of conditions and restrictions (except as may be imposed in order to comply with applicable law) for the shares covered by such vested Award, subject to the payment or satisfaction of applicable tax withholding obligations and, in the case of shares covered by a vested stock unit Award, subject to applicable deferral conditions permitted by Section 409A of the Code.
(c)Rights as a Stockholder. Unless otherwise determined by the Committee and set forth in the applicable Award Agreement, (i) the holder of a stock Award will not be entitled to receive dividend payments (or, in the case of an Award of stock units, dividend equivalent payments) with respect to the shares covered by the Award and (ii) the holder of shares of restricted stock may exercise voting rights pertaining to such shares.
(d)Nontransferability. Except as may be specifically permitted by the Committee in connection with transfers at death or pursuant to inter vivos gifts, no outstanding stock Award and no shares of stock covered by an outstanding stock Award may be sold, assigned, transferred, disposed of, pledged or otherwise hypothecated other than to the Company in accordance with the terms of the Award or the Plan. Any attempt to do any of the foregoing shall be null and void and, unless the Committee determines otherwise, shall result in the immediate forfeiture of the Award and/or the shares.
7.Other Equity-Based Awards. The Committee may grant stock appreciation rights, dividend equivalent payment rights, phantom shares, phantom stock units, bonus shares and other forms of equity-based Awards to eligible persons, subject to such terms and conditions as it may establish; provided, however that no dividend or dividend equivalent payment rights shall be attributable to Awards of stock appreciation rights or stock options. The base price for a stock appreciation right granted under the Plan may not be less than the Fair Market Value per share of stock covered by the Award at the time it is granted. Unless sooner termination in accordance with its terms, a stock appreciation right will automatically expire on the tenth anniversary of the date it is granted. Awards made pursuant to this section may entail the transfer of shares of Common Stock to a participant or the payment in cash or other property determined with reference to shares of Common Stock.
8.Cash Awards. The Committee may grant Awards in cash with the amount of the eventual payment subject to future service and such other restrictions and conditions as may be established by the Committee and set forth in the underlying agreement, including, but not limited to, continuous service with the Company and its subsidiaries, achievement of specific business objectives, increases in specified indices, attaining specified growth rates and other measurements of performance.
9.Performance-Based Equity and Cash Awards.
(a)General. The Committee may condition the grant, exercise, vesting or settlement of equity-based Awards or annual or long-term cash incentive Awards on the achievement of specified performance goals in accordance with this section. The applicable performance period for measuring achievement of specified performance goals may be any period designated by the Committee.
(b)Performance Goals. Any performance goal established in connection with an Award granted under the Plan may be based on any subjective or objective performance goal determined by the Committee in its discretion. The Committee, in its discretion, may determine to adjust any performance goals applicable to an Award.
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(c)Calculation of Performance-Based Award. At the expiration of the applicable performance period, the Committee shall determine the extent to which the performance goals established pursuant to this Section 9 have been achieved and the extent to which each performance-based Award has been earned. The Committee may exercise its discretion to increase or decrease the amount or value of an Award that would otherwise be payable in accordance with the terms of a performance-based Award granted under the Plan.
10.Dividends and Dividend Equivalents. To the extent dividends or dividend equivalents are included in an Award Agreement for an applicable Award, the right to receive such dividends and dividend equivalent rights shall be subject to the same performance-vesting conditions and/or service-vesting conditions, as applicable, as the underlying Award, and no dividends or dividend equivalents shall be released to the Award holder until the Award to which they pertain has vested. For the avoidance of doubt, no dividends or dividend equivalent rights may be granted in connection with stock options or stock appreciation rights granted under the Plan.
11.Minimum Vesting Period. Notwithstanding any other provision of the Plan to the contrary, no Awards granted under the Plan, shall vest or be exercisable (in the case of stock options and stock appreciation rights), earlier than the date that is one year following the date the Award is granted; provided, however, that, notwithstanding the foregoing, (a) the Committee may provide that such restrictions may lapse or be waived upon the recipient's death or disability or termination of service, or in connection with a Change in Control (as defined in Section 13(b) below), (b) Awards that result in the issuance of an aggregate of up to five percent (5%) of the shares of Common Stock that may be authorized for grant under Section 4 (as such authorized number of shares of Common Stock may be adjusted as provided under the terms of the Plan) may be granted without respect to such minimum vesting provision, and (c) Awards may be granted to non-employee directors without respect to such minimum vesting provision.
12.Prohibition on Stock Option and Stock Appreciation Right Repricing. Except as provided in Section 13 (Adjustments; Change in Control), the Committee may not, without prior approval of the Company's stockholders, effect any repricing of any previously granted "underwater" stock option or stock appreciation right by: (a) amending or modifying the terms of the stock option or stock appreciation right to lower the exercise price; or (b) canceling the underwater stock option or stock appreciation right and granting either (i) replacement stock options or stock appreciation rights having a lower exercise price, or (ii) restricted stock, restricted stock units, or other stock-based award in exchange, or (iii) cancelling or repurchasing the underwater stock options or stock appreciation rights for cash or other securities. A stock option or stock appreciation right will be deemed to be "underwater" at any time when the Fair Market Value of the shares of Common Stock covered by such Award is less than the exercise price or base price of the Award.
13.Adjustments; Change in Control.
(a)Adjustments Upon Changes in Capitalization. The aggregate number and class of shares issuable under the Plan, the maximum number of shares with respect to which options, stock appreciation rights and other equity Awards may be granted to or earned by any employee in any calendar year, the number and class of shares and the exercise price or base price per share covered by each outstanding option and stock appreciation right, and the number and class of shares covered by each outstanding stock Award or other-equity-based Award, and any per-share base or purchase price or target market price included in the terms of any such Award, and related terms shall be adjusted by the Board or the Committee in such manner as it deems appropriate (including, without limitation, by payment of cash) to reflect any increase or decrease in the number of issued shares of Common Stock resulting from a recapitalization, stock split, reverse stock split, stock dividend, spinoff, split up, combination, reclassification or exchange of shares, merger, consolidation, rights offering, separation, reorganization or liquidation or any other change in the corporate structure or shares, including any extraordinary
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dividend or extraordinary distribution, and/or to reflect a change in the character or class of shares covered by the plan arising from a readjustment or recapitalization of the Company's capital stock.
(b)Change in Control.
(i) If an Award holder's employment or other service is terminated by the Company or any successor entity thereto without "cause" or by the Award holder for "good reason" (as each such term is defined in the applicable Award Agreement or an Award holder's executive transition agreement or employment agreement, if applicable) upon or within two (2) years after a Change in Control, (A) each Award granted to such Award holder prior to such Change in Control will become fully vested (including the lapsing of all restrictions and conditions) and, as applicable, exercisable as of the date of such termination of employment or other service, and (B) any shares deliverable pursuant to stock units will be delivered promptly (but no later than fifteen (15) days) following such termination.
(ii) As of the Change in Control date, any outstanding performance-based Awards will be deemed earned at the greater of the target level and the actual performance level through the Change in Control date for all open performance periods and will cease to be subject to any further performance conditions but will continue to be subject to time-based vesting following the Change in Control in accordance with the original vesting and/or performance period and subject to the provisions of clause (i) above.
(iii) Notwithstanding the foregoing, in the event of a Change in Control, an Award holder's Award will be treated, to the extent determined by the Committee to be permitted under Section 409A, in accordance with one or more of the following methods as determined by the Committee in its discretion: (A) settle such Awards for fair value (as determined in the discretion of the Committee), which in the case of options and stock appreciation rights, may equal the excess, if any, of the value of the consideration to be paid in the Change in Control transaction to holders of the same number of shares of Common Stock subject to such options or stock appreciation rights over the aggregate exercise price of such options or stock appreciation rights, as the case may be; (B) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Committee in its discretion; or (C) provide that for a period of at least twenty (20) days prior to the Change in Control, any options or stock appreciation rights that would not otherwise become exercisable prior to the Change in Control will be exercisable as to all shares of Common Stock subject thereto (but any such exercise will be contingent upon and subject to the occurrence of the Change in Control and if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any options or stock appreciation rights not exercised prior to the consummation of the Change in Control will terminate and be of no further force and effect as of the consummation of the Change in Control. In the event that the consideration paid in the Change in Control includes contingent value rights, the Committee will determine if Awards settled under clause (A) above are (1) valued at closing taking into account such contingent value rights (with the value determined by the Committee in its sole discretion) or (2) entitled to a share of such contingent value rights. For the avoidance of doubt, in the event of a Change in Control where all options and stock appreciation rights are settled for an amount (as determined in the sole discretion of the Committee) of cash or securities, the Committee may, in its sole discretion, terminate any option or stock appreciation right for which the exercise price is equal to or exceeds the per share value of the consideration to be paid in the Change in Control transaction without payment of consideration therefor. Similar actions to those specified in this clause (iii) may be taken in the event of a merger or other corporate reorganization that does not constitute a Change in Control.
(c)"Change in Control" control” means the occurrence of any of the following:
(i) any "person" (as“person” (as that term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”)), is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities representing 30% or
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more of the combined voting power of the then outstanding securities of the Company eligible to vote for the election of the members of the Board (the "Company“Company Voting Securities"Securities”), unless (A) such person is the Company, (B) such person is an employee benefit plan (or a trust which is a part of such a plan) which provides benefits exclusively to, or on behalf of, employees or former employees of the Company, (C) such person is the Awardaward holder, an entity controlled by the Awardaward holder or a group which includes the Awardaward holder, or (D) such person acquired such securities in a Non-Qualifying Transaction (as defined in clause (iv) below);
(ii) during any period of not more than twelve (12) months, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors"“Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the beginning of such period, whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the Company'sCompany’s proxy statement in which such person is named as a nominee for director, without written objection to such nomination) will be an Incumbent Director; provided,, however,, that no individual initially elected or nominated as a director of the Company as a result of an actual or publicly threatened election contest with respect to directors or as a result of any other actual or publicly threatened solicitation of proxies by or on behalf of any person other than the Board will be deemed to be an Incumbent Director;
(iii) any dissolution or liquidation of the Company or any sale or the disposition of all or substantially all of the assets or business of the Company; or
(iv) the consummation of any reorganization, merger, consolidation or share exchange or similar form of corporate transaction involving the Company (a "Business Combination"“Business Combination”), unless immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the entity resulting from such Business Combination (the "Surviving Entity"“Surviving Entity”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting power, is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Entity or the parent), is or becomes the beneficial owner, directly or indirectly, of 30% or more of the total voting power of the outstanding voting securities eligible to elect directors of the parent (or, if there is no parent, the Surviving Entity) and (C) at least a majority of the members of the board of directors of the parent (or, if there is no parent, the Surviving Entity) following the consummation of the Business Combination were Incumbent Directors at the time of the Board'sBoard’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) of this clause (iv) will be deemed to be a "Non-Qualifying Transaction"“Non-Qualifying Transaction”).
Policies and Risk Mitigation (d)Compensation-Related Risk
The Compensation Committee believes that the design of our compensation programs, including our executive compensation program, does not encourage our executives or employees to take unnecessary and excessive risks and that the risks arising from these programs are not reasonably likely to have a material adverse effect on us. The Compensation Committee considered the following factors in making that determination:
Fractional Shares. In•
The allocation among the components of direct annual compensation provides an appropriate balance between annual and long-term incentives and between fixed and performance-based compensation.
•
The performance measures and the multi-year vesting features of the long-term equity incentive compensation component encourage participants to seek sustainable growth and value creation.
•
Inclusion of share-based compensation through the long-term equity incentive compensation component encourages appropriate decision-making that is aligned with the long-term interests of our stockholders.
•
Our annual cash incentive program and the awards of restricted stock with performance-based vesting contain provisions with respect to our achievement of the applicable performance target such that each participant may receive (1) an additional payout pursuant to such award in the event that we exceed the applicable performance target, and (2) a portion of the target payout pursuant to such award in the event that we approach, yet fail to achieve, the target level of performance.
•
The various governance policies we have adopted to align the interests of our top management with those of our stockholders and to motivate sustainable growth, including equity ownership guidelines, hedging and pledging restrictions and our Clawback Policy, as described below.
•
We maintain a values-driven, ethics-based culture supported by a strong tone at the top.
Equity Ownership Guidelines
We believe that our Chief Executive Officer, executive vice presidents, senior vice presidents and vice presidents should have a meaningful financial stake in the Company to ensure that their interests are aligned with those of our stockholders. To that end, in December 2020, the Board adopted new equity ownership guidelines to define our expectations for our Chief Executive Officer, executive vice presidents, senior vice presidents and vice presidents, which replaced our prior equity ownership guidelines. Under these new guidelines, our Chief Executive Officer, executive vice presidents, senior vice presidents and vice presidents are expected to own shares of our common stock having a value equal to a designated multiple of his or her annual base salary within five years of the later of (1) December 1, 2020 and (2) the date on which he or she was appointed to his or her position.
| | | Position | | | | Ownership Requirement | | |
| | | Chief Executive Officer | | | | 5 times annual base salary | | |
| | | Executive Vice President | | | | 3 times annual base salary | | |
Shares of our common stock that count toward meeting the foregoing equity ownership requirements include:
•
shares of our common stock directly or indirectly beneficially owned outright, including as a result of fully vested awards from previous grants to the executive by the Company;
•
shares of our common stock held through any Company benefit plan, including the Company’s 401(k) plan, Non-Qualified Deferred Compensation Plan or any employee stock purchase plan; and
•
unvested time-based restricted stock awards or restricted stock units granted to the executive by the Company.
Neither (i) performance-based stock awards or performance stock units, nor (ii) unexercised stock options (whether vested or unvested) count toward meeting the equity ownership requirements.
Hedging and Pledging Restrictions
Our insider trading policy prohibits our directors, officers and employees, and members of their households, certain of their family members and certain other natural or legal persons or entities (i) whose management responsibilities are discharged by, (ii) who are directly or indirectly controlled by or (iii) whose economic interests are substantially equivalent to those of any adjustmentof the foregoing persons, from engaging in the number and type of shares covered byhedging, monetization or options transactions related to our securities or transactions involving any Award pursuant to the provisions hereof, any fractional shares resulting from such adjustment shall be disregarded, and each such Award shall cover only the number of full shares resulting from the adjustment. (e)Determination of Board or Committee to be Final. All adjustments under this Section 13 shall be made by the Board or the Committee, and its determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive.
14.Tax Withholding. As a condition to the exercise or settlement of any Award, or in connection with any other event that gives rise to a tax withholding obligation on the partderivative security of the Company or a subsidiary relatingother financial instruments that provide the economic equivalent of ownership of our common stock or an opportunity, whether direct or indirect, to an Award,profit from any change in the value of our common stock, such as prepaid variable forward contracts, puts, calls, equity swaps, credit default swaps and collars.
In addition, our insider trading policy prohibits (i) short sales of any securities of the Company, and/including through any “sale against the box” (sales with delayed delivery) and (ii) the holding of securities of the Company in a margin account or pledging securities of the subsidiary may (a) deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to the recipient of an Award,
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whether or not made pursuant to the Plan or (b) require the recipient to remit cash (through payroll deduction or otherwise),Company as collateral for a loan, in each case unless they are treated as non-marginable by the brokerage firm.
Clawback Policy
Our Board has adopted a compensation recovery (“clawback”) policy which provides that, in the event of a restatement of our financial statements due to our material noncompliance with any financial reporting requirement under the U.S. federal securities laws (other than restatements of financial results that are the direct result of changes in accounting standards) (a “clawback event”), we may seek recoupment, repayment and/or forfeiture of all or any portion of any annual or long-term cash, equity or equity-based incentive or bonus compensation outstanding and unpaid or paid and received during the three-year period preceding the date of the clawback event.
CEO Pay Ratio
Below sets forth our reasonable estimate, calculated in a manner consistent with the requirements of Item 402(u) of Regulation S-K, of the ratio of the annual total compensation for fiscal year 2021 of our current Chief Executive Officer to that of the median of the annual total compensation for all of our other employees (the “CEO Pay Ratio”). Please note that due to the flexibility in estimates, assumptions and adjustments permitted by the SEC in calculating such ratio, the CEO Pay Ratio may not be comparable to those presented by other companies, even other companies operating in the same industries as Rent-A-Center.
We identified our median employee using our employee population (excluding our Chief Executive Officer) as of December 31, 2021, which consisted of approximately 13,298 full-time, part-time, seasonal and temporary workers, of which approximately
11,948 (90%) were located in the United States and approximately 1,350 (10%) were located in Mexico. As of December 31, 2021, approximately 14 (0.1%) employees were employed on a part-time basis and approximately 9,164 (69%) were paid on an hourly (rather than salaried) basis. In order to attract and retain employees, we pay what we believe to be competitive rates in each market where we operate.
We selected the median employee first by using a consistently applied compensation measure of annual base pay, which reflects (i) for salaried employees, base salary, and (ii) for hourly employees, annualized base hourly compensation assuming that full-time and part-time workers work 2,080 and 1,040 hours per year, respectively, which calculation excluded any wages in respect of guaranteed overtime. After narrowing the population of potential median employees to normalize for potential drivers of pay differential (e.g., based on factors such as bonus eligibility and active status of employment), our median employee was randomly selected from a pool of 3 individuals. The annual base pay of our employees located in Mexico was converted to U.S. dollars using an exchange rate of 20.281 Mexican pesos to $1.00 U.S. dollar, reflecting the exchange rate reported by the U.S. Department of the Treasury as of December 31, 2021. We did not make any cost of living adjustments to annual base pay in identifying our median employee.
Our median employee identified using the assumptions and methodologies described above was located in Wyoming and served in an amount sufficienthourly position as a Customer Account Representative.
The 2021 annual total compensation of our median employee, calculated using the same methodology used to calculate the same metric for our named executive officers in the opinionSummary Compensation Table in this proxy statement, was $32,729. Comparing this to our Chief Executive Officer’s 2021 annual total compensation of $11,732,761, we estimate that the CEO Pay Ratio was approximately 358:1.
Compensation Committee Interlocks and Insider Participation
Messrs. Hetrick, Lewis and Silver each served as members of the CompanyCompensation Committee for all or a portion of 2021. Each such member is independent and no member of the Compensation Committee (1) has ever been employed by us, as an officer or otherwise, or (2) has or had any relationships requiring disclosure in this proxy statement pursuant to satisfyItem 404(a) of Regulation S-K.
In addition, during 2021, none of our executive officers served as a member of the compensation or similar committee or as a member of the board of directors of any other entity having an executive officer that also served on the Compensation Committee or Board of Rent-A-Center.
Section 162(m)
Section 162(m) of the Code generally prohibits a federal income tax deduction to public companies for compensation over $1,000,000 paid to a “covered employee.” A “covered employee” includes (a) the Chief Executive Officer, (b) the Chief Financial Officer, (c) the three other most highly compensated executive officers, and (d) any individual who was a covered employee for any taxable year beginning after December 31, 2016. The Compensation Committee is not limited to paying compensation that is fully deductible and may determine it is appropriate to provide compensation that may exceed deductibility limits in order to recognize performance, meet market demands, retain key executives, and take into account other appropriate considerations.
Compensation Committee Report
The material in this Report is not “soliciting material”, is not deemed “filed” with the SEC and is not to be incorporated by reference into any filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation by reference language in such withholding obligation. Iffiling.
The Compensation Committee has reviewed and discussed the event giving riseCompensation Discussion and Analysis required by Item 402(b) of Regulation S-K with our management and, based upon such review and discussions, the Compensation Committee recommended to the withholding obligation involves a transferBoard that the Compensation Discussion and Analysis be included in the proxy statement on Schedule 14A related to the 2022 Annual Meeting of sharesStockholders, for filing with the SEC.
COMPENSATION COMMITTEE
Christopher Hetrick, Chairman
Harold Lewis
B.C. Silver
COMPENSATION TABLES
The following compensation tables in this proxy statement have been prepared pursuant to SEC rules. Although some amounts (e.g., salary and non-equity incentive plan compensation) represent actual dollars paid to an executive, other amounts are estimates based on certain assumptions about future circumstances (e.g., payments upon termination of an executive’s employment) or may represent dollar amounts recognized for financial statement reporting purposes in accordance with accounting rules, but do not represent actual dollars received by the executive (e.g., dollar values of stock then, atawards and option awards). The footnotes and other explanations to the discretionSummary Compensation table and the other tables herein contain important estimates, assumptions and other information regarding the amounts set forth in the tables and should be considered together with the quantitative information in the tables.
Summary Compensation Table
The following table summarizes the compensation earned by our named executive officers in fiscal year 2021, as well as the compensation earned by such individuals in each of fiscal year 2020 and fiscal year 2019, if serving as an executive officer during that time. Our named executive officers were not entitled to receive payments which would be characterized as “Bonus” payments for purposes of the Committee,Summary Compensation Table for 2021, 2020 and 2019.
| Name and Principal Position | | | Year | | | Salary | | | Stock
Awards(1) | | | Option
Awards(1) | | | Non-Equity
Incentive Plan
Compensation(2) | | | All Other
Compensation(3) | | | Total | |
Mitchell Fadel
Chief Executive Officer | | | | | 2021 | | | | | $ | 1,078,846 | | | | | $ | 8,687,619 | | | | | | — | | | | | $ | 1,900,800 | | | | | $ | 65,496 | | | | | $ | 11,732,761 | | |
| | | | 2020 | | | | | $ | 998,077 | | | | | $ | 4,882,607 | | | | | $ | 829,998 | | | | | $ | 2,430,000 | | | | | $ | 77,268 | | | | | $ | 9,217,950 | | |
| | | | 2019 | | | | | $ | 953,846 | | | | | $ | 5,222,035 | | | | | $ | 700,002 | | | | | $ | 1,690,000 | | | | | $ | 99,522 | | | | | $ | 8,665,405 | | |
Maureen Short
Chief Financial Officer | | | | | 2021 | | | | | $ | 487,578 | | | | | $ | 1,236,993 | | | | | | — | | | | | $ | 384,000 | | | | | $ | 40,783 | | | | | $ | 2,149,354 | | |
| | | | 2020 | | | | | $ | 434,665 | | | | | $ | 636,749 | | | | | $ | 108,237 | | | | | $ | 476,580 | | | | | $ | 42,391 | | | | | $ | 1,698,623 | | |
| | | | 2019 | | | | | $ | 406,902 | | | | | $ | 807,439 | | | | | $ | 201,537 | | | | | $ | 386,951 | | | | | $ | 39,805 | | | | | $ | 1,842,634 | | |
Anthony Blasquez(4)
Executive Vice President —
Rent-A-Center Business | | | | | 2021 | | | | | $ | 397,308 | | | | | $ | 702,199 | | | | | | — | | | | | $ | 288,640 | | | | | $ | 12,189 | | | | | $ | 1,400,336 | | |
Jason Hogg(5)
Former Executive Vice President — Acima | | | | | 2021 | | | | | $ | 619,711 | | | | | $ | 2,973,540 | | | | | | — | | | | | $ | 800,000 | | | | | $ | 21,685 | | | | | $ | 4,414,936 | | |
| | | | 2020 | | | | | $ | 311,538 | | | | | $ | 3,499,998 | | | | | | — | | | | | $ | 1,080,000 | | | | | $ | 297,931 | | | | | $ | 5,189,467 | | |
Bryan Pechersky(6)
Executive Vice President — General
Counsel & Corporate Secretary | | | | | 2021 | | | | | $ | 361,827 | | | | | $ | 625,168 | | | | | | — | | | | | $ | 256,960 | | | | | $ | 36,104 | | | | | $ | 1,280,059 | | |
(1)
The amounts reflected in this column are the recipient may satisfyaggregate grant date fair value computed in accordance with FASB ASC Topic 718 for each award of stock option, restricted stock unit and performance stock unit awards in 2021, 2020 and 2019 to the applicable tax withholding obligation by electingnamed executive officer. Assumptions used in the calculation of these amounts are included in Note O to haveour audited financial statements for our fiscal year ended December 31, 2021, included in our 2021 Form 10-K and our Annual Reports on Form 10-K for prior years.
For performance stock unit awards granted in February 2021, the maximum performance shares payable, and corresponding maximum aggregate value based on the grant date fair value of such awards, are (i) 77,768 shares and $7,050,447 for Mr. Fadel, (ii) 11,073 shares and $1,003,878 for Ms. Short, (iii) 6,286 shares and $569,888 for Mr. Blasquez, (iv) 26,618 shares and $2,413,188 for Mr. Hogg, and (v) 5,596 shares and $507,333 for Mr. Pechersky.
(2)
Represents the cash awards which were payable under our annual cash incentive program with respect to services for the year indicated.
(3)
For 2021, represents the compensation as described in the “All Other Compensation” table below.
(4)
Mr. Blasquez was named Executive Vice President — Rent-A-Center Business effective as of June 1, 2020. His compensation is shown for 2021 only since he was not a named executive officer in 2020 or 2019.
(5)
Mr. Hogg joined the Company withhold sharesand was named Executive Vice President — Preferred Lease (which role was retitled to Executive Vice President — Acima) effective as of stockJune 22, 2020, several months after the Company’s annual equity awards to executives. Mr. Hogg’s 2020 LTIP award and short-term incentive award were made in connection with his hiring and took into account, among other considerations, the fact that Mr. Hogg would be forfeiting equity from a previous employer. His compensation is shown for 2020 and 2021 since he was not a named executive officer in 2019. As previously disclosed, Mr. Hogg departed the Company effective March 28, 2022.
(6)
Mr. Pechersky joined the Company and was named Executive Vice President — General Counsel & Corporate Secretary effective as of June 1, 2020. His compensation is shown for 2021 only since he was not a named executive officer in 2020 or 2019.
All Other Compensation
The following table provides information regarding each component of compensation for 2021 included in the All Other Compensation column in the Summary Compensation Table above.
| | Name | | | Company Matching
Contributions(1) | | | Value of Insurance
Premiums(2) | | | Relocation | | | Other(3) | | | Total | |
| | Mitchell Fadel | | | | $ | 41,269 | | | | | $ | 24,227 | | | | | | — | | | | | | — | | | | | $ | 65,496 | | |
| | Maureen Short | | | | $ | 29,069 | | | | | $ | 7,742 | | | | | | — | | | | | $ | 3,973 | | | | | $ | 40,783 | | |
| | Anthony Blasquez | | | | | — | | | | | $ | 8,257 | | | | | | — | | | | | $ | 3,932 | | | | | $ | 12,189 | | |
| | Jason Hogg | | | | $ | 7,327 | | | | | $ | 9,836 | | | | | | — | | | | | $ | 4,552 | | | | | $ | 21,685 | | |
| | Bryan Pechersky | | | | $ | 14,406 | | | | | $ | 5,898 | | | | | $ | 148 | | | | | $ | 15,562(4) | | | | | $ | 36,104 | | |
(1)
Represents contributions or other allocations made by tendering previously-owned shares,us to our 401(k) Retirement Savings Plan and/or Deferred Compensation Plan.
(2)
Represents premiums paid by the Company for long-term disability and life insurance.
(3)
Represents fees paid by us for an annual executive physical examination.
(4)
Includes approximately $8,100 in each case having a Fair Market Value equalestimated rental cost during 2021 for rental furniture, electronics and other household items provided to Mr. Pechersky in connection with his temporary living and relocation benefits.
Grants of Plan-Based Awards
The table below sets forth information about plan-based awards granted to the named executive officers during 2021 under the 2021 annual cash incentive program, the 2021 Plan and certain prior equity plans.
| | Name | | | Grant
Date | | | Committee
Approval
Date | | | Estimated Future 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
Underlying
Options | | | Exercise
or Base
Price of
Option
Awards | | | Closing
Price on
Grant
Date | | | Grant
Date Fair
Value of
Stock and
Option
Awards | |
| | Threshold | | | Target | | | Maximum | | | Threshold | | | Target | | | Maximum | |
| | Mitchell Fadel | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Short-Term Incentive | | | | | — | | | | | | 2/19/21 | | | | | $ | 148,500 | | | | | $ | 1,485,000 | | | | | $ | 2,970,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Restricted Stock Units | | | | | 2/26/21 | | | | | | 2/19/21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 24,995 | | | | | | — | | | | | | — | | | | | $ | 57.76 | | | | | $ | 1,637,173 | | |
| | Performance Stock Units | | | | | 2/26/21 | | | | | | 2/19/21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 77,768 | | | | | | 155,536 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 57.76 | | | | | $ | 7,050,447 | | |
| | Maureen Short | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Short-Term Incentive | | | | | — | | | | | | 2/19/21 | | | | | $ | 30,000 | | | | | $ | 300,000 | | | | | $ | 600,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Restricted Stock Units | | | | | 2/26/21 | | | | | | 2/19/21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,559 | | | | | | — | | | | | | — | | | | | $ | 57.76 | | | | | $ | 233,115 | | |
| | Performance Stock Units | | | | | 2/26/21 | | | | | | 2/19/21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 11,073 | | | | | | 22,146 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 57.76 | | | | | $ | 1,003,878 | | |
| | Anthony Blasquez | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Short-Term Incentive | | | | | — | | | | | | 2/19/21 | | | | | $ | 22,550 | | | | | $ | 225,500 | | | | | $ | 451,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Restricted Stock Units | | | | | 2/26/21 | | | | | | 2/19/21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,020 | | | | | | — | | | | | | — | | | | | $ | 57.76 | | | | | $ | 132,310 | | |
| | Performance Stock Units | | | | | 2/26/21 | | | | | | 2/19/21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,286 | | | | | | 12,572 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 57.76 | | | | | $ | 569,889 | | |
| | Jason Hogg | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Short-Term Incentive | | | | | — | | | | | | 2/19/21 | | | | | $ | 62,500 | | | | | $ | 625,000 | | | | | $ | 1,250,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Restricted Stock Units | | | | | 2/26/21 | | | | | | 2/19/21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,555 | | | | | | — | | | | | | — | | | | | $ | 57.76 | | | | | $ | 560,353 | | |
| | Performance Stock Units | | | | | 2/26/21 | | | | | | 2/19/21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 26,618 | | | | | | 53,236 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 57.76 | | | | | $ | 2,413,188 | | |
| | Bryan Pechersky | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | �� | | | | |
| | Short-Term Incentive | | | | | — | | | | | | 2/19/21 | | | | | $ | 20,075 | | | | | $ | 200,750 | | | | | $ | 401,500 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Restricted Stock Units | | | | | 2/26/21 | | | | | | 2/19/21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,799 | | | | | | — | | | | | | — | | | | | $ | 57.76 | | | | | $ | 117,835 | | |
| | Performance Stock Units | | | | | 2/26/21 | | | | | | 2/19/21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,596 | | | | | | 11,192 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 57.76 | | | | | $ | 507,333 | | |
(1)
These columns show the potential value of the payout of the annual cash incentive bonuses for 2021 performance for each named executive officer if the threshold, target and maximum performance levels are achieved. The potential payout is performance-based and driven by company performance. The actual amount of
tax to be withheld (or by any other mechanism as may be required or appropriate to conform with local tax and other rules). 15.Amendment and Termination. The Board may amend or terminate the Plan; provided, however, that no such action may adversely affect a holder's rights under an outstanding Award without his or her written consent. Any amendment that would increaseannual cash incentive bonuses paid for 2021 performance is shown in the aggregate number of shares of Common Stock issuableSummary Compensation Table under the “Non-Equity Incentive Plan Compensation” column.
(2)
Represents performance-based restricted stock units which vest depending on our relative TSR performance over a three-year measurement period as compared to the S&P 1500 Specialty Retail Index and the named executive officer remains an employee through the end of such measurement period. The issuance of the stock underlying the performance-based restricted stock units granted to our named executive officers will range from a minimum of zero shares if our relative TSR performance is below the 25th percentile, to the maximum number of shares if our relative TSR performance ranks at least the 90th percentile.
(3)
Represents restricted stock units which vest ratably over a three-year period of continuous employment with us from February 26, 2021.
Outstanding Equity Awards at Fiscal Year End
The following table provides information regarding stock options and restricted stock units held by the named executive officers that were outstanding at December 31, 2021.
| | | | | OPTION AWARDS | | | STOCK AWARDS | |
| | Name | | | Number of
Securities
Underlying
Unexercised
Options -
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options -
Unexercisable | | | Option
Exercise
Price | | | Option
Expiration
Date | | | 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) | |
| | Mitchell Fadel | | | | | 53,243 | | | | | | 26,954(2) | | | | | $ | 8.22 | | | | | | 2/23/28 | | | | | | 33,541(6) | | | | | $ | 1,611,310 | | |
| | | | | | | 37,514 | | | | | | 37,513(3) | | | | | $ | 20.87 | | | | | | 4/1/29 | | | | | | 33,508(7) | | | | | $ | 1,609,724 | | |
| | | | | | | 30,248 | | | | | | 90,743(4) | | | | | $ | 24.77 | | | | | | 2/26/30 | | | | | | 24,995(8) | | | | | $ | 1,200,760 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 134,185(9) | | | | | $ | 6,446,247 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 134,015(10) | | | | | $ | 6,438,081 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 77,768(11) | | | | | $ | 3,735,975 | | |
| | Maureen Short | | | | | 6,077 | | | | | | 0 | | | | | $ | 10.34 | | | | | | 2/5/26 | | | | | | 5,186(6) | | | | | $ | 249,135 | | |
| | | | | | | 14,538 | | | | | | 0 | | | | | $ | 8.32 | | | | | | 2/16/27 | | | | | | 4,370(7) | | | | | $ | 209,935 | | |
| | | | | | | 10,977 | | | | | | 3,659(2) | | | | | $ | 8.22 | | | | | | 2/23/28 | | | | | | 3,559(8) | | | | | $ | 170,974 | | |
| | | | | | | 10,801 | | | | | | 10,800(3) | | | | | $ | 20.87 | | | | | | 4/1/29 | | | | | | 20,748(9) | | | | | $ | 996,734 | | |
| | | | | | | 3,945 | | | | | | 11,833(4) | | | | | $ | 24.77 | | | | | | 2/26/30 | | | | | | 17,477(10) | | | | | $ | 839,595 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,073(11) | | | | | $ | 531,947 | | |
| | Anthony Blasquez | | | | | 220 | | | | | | 0 | | | | | $ | 34.77 | | | | | | 1/31/23 | | | | | | 1,639(6) | | | | | $ | 78,738 | | |
| | | | | | | 2,618 | | | | | | 0 | | | | | $ | 8.32 | | | | | | 2/16/27 | | | | | | 1,381(7) | | | | | $ | 66,343 | | |
| | | | | | | 1,757 | | | | | | 1,757(2) | | | | | $ | 8.22 | | | | | | 2/23/28 | | | | | | 2,020(8) | | | | | $ | 97,041 | | |
| | | | | | | 916 | | | | | | 1,833(3) | | | | | $ | 20.87 | | | | | | 4/1/29 | | | | | | 6,556(9) | | | | | $ | 314,950 | | |
| | | | | | | 1,246 | | | | | | 3,739(4) | | | | | $ | 24.77 | | | | | | 2/26/30 | | | | | | 5,522(10) | | | | | $ | 265,277 | | |
| | | | | | | 2,500 | | | | | | 7,500(5) | | | | | $ | 26.62 | | | | | | 7/1/30 | | | | | | 6,286(11) | | | | | $ | 301,979 | | |
| | Jason Hogg | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,555(8) | | | | | $ | 410,982 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 65,740(9) | | | | | $ | 3,158,150 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 65,740(10) | | | | | $ | 3,158,150 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,618(11) | | | | | $ | 1,278,729 | | |
| | Bryan Pechersky | | | | | 2,500 | | | | | | 7,500(5) | | | | | $ | 26.62 | | | | | | 7/1/30 | | | | | | 1,799(8) | | | | | $ | 86,424 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,596(11) | | | | | $ | 268,832 | | |
(1)
Calculated by reference to the closing price for shares of our common stock on the Nasdaq Global Select Market on December 31, 2021, which was $48.04.
(2)
These options to purchase shares of our common stock vested on February 23, 2022.
(3)
These options to purchase shares of our common stock vest in equal parts on each of April 1, 2022 and April 1, 2023.
(4)
These options to purchase shares of our common stock vest in equal parts on each of February 26, 2022, February 26, 2023, and February 26, 2024.
(5)
These options to purchase shares of our common stock vest in equal parts on each of July 1, 2022, July 1, 2023, and July 1, 2024.
(6)
Represents the number of shares of our common stock that will vest and become issuable pursuant to the time-based restricted stock unit awards upon the named executive officer’s completion of three years of continuous employment with us from April 1, 2019.
(7)
Represents the number of shares of our common stock that will vest and become issuable pursuant to the time-based restricted stock unit awards upon the named executive officer’s completion of three years of continuous employment with us from February 26, 2020.
(8)
Represents the number of shares of our common stock that will vest and become issuable pursuant to the time-based restricted stock unit awards upon the named executive officer’s completion of three years of continuous employment with us from February 26, 2021.
(9)
Represents the number of shares of our common stock that vested and became issuable pursuant to the performance-based restricted stock unit awards based on our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ended December 31, 2021, so long as the named executive officer remained an employee through December 31, 2021. Our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ended December 31, 2021, ranked at the 91st percentile, which resulted in 200% of the shares vesting.
(10)
Represents the number of shares of our common stock that will vest and become issuable pursuant to the performance-based restricted stock unit awards based on our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ending December 31, 2022, and the named executive officer remains an employee through December 31, 2022.
(11)
Represents the number of shares of our common stock that will vest and become issuable pursuant to the performance-based restricted stock unit awards based on our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ending December 31, 2023, and the named executive officer remains an employee through December 31, 2023.
Option Exercises and Stock Vested
The following table reflects certain information with respect to which options exercised by our named executive officers during the 2021 fiscal year, as well as applicable stock appreciation rights or other equity awards may be granted to any employee in any calendar year, or that would modifyvested, during the class of persons eligible to receive Awards shall be subject2021 fiscal year:
| | | | | Option Awards | | | Stock Awards | |
| | | | | Number of Shares
Acquired on Exercise | | | Value Realized
on Exercise(1) | | | Number of Shares
Acquired on Vesting | | | Value Realized
on Vesting(1) | |
| | Mitchell Fadel | | | | | 27,620 | | | | | $ | 1,550,725 | | | | | | 437,640 | | | | | $ | 23,851,380 | | |
| | Maureen Short | | | | | 26,641 | | | | | $ | 1,070,330 | | | | | | 59,410 | | | | | $ | 3,237,845 | | |
| | Anthony Blasquez | | | | | 175 | | | | | $ | 2,387 | | | | | | 28,528 | | | | | $ | 1,554,776 | | |
| | Jason Hogg | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Bryan Pechersky | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
(1)
Calculated by reference to the
approval of the Company's stockholders. The Committee may amend the terms of any agreement or Award made hereunder at any time and from time to time, provided, however, that any amendment which would adversely affect a holder's rights under an outstanding Award may not be made without his or her consent. 16.General Provisions.
(a)Shares Issued Under Plan. Shares of Common Stock available for issuance under the Plan may be authorized and unissued, held by the Company in its treasury or otherwise acquired for purposes of the Plan. No fractional shares will be issued under the Plan.
(b)Compliance with Law and Other Requirements. The Company will not be obligated to issue or deliver shares of stock pursuant to the Plan unless the issuance and delivery of such shares complies with applicable law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the requirements of any stock exchange or market upon which the Company's stock may then be listed, and the Company's insider trading policy, as in effect from time to time. The Company may prevent or delay the exercise of an option or stock appreciation right, or the settlement of an Award and/or the termination of restrictions applicable to an Award if and to the extent the Company deems necessary or advisable in order to avoid a violation of applicable laws or its own policies regarding the purchase and sale of its stock. If, during the period of any such ban or delay, the term of an affected stock option, stock appreciation right or other Award would expire, then the term of such option, stock appreciation right or other Award will be extended for thirty days after the Company's removes the restriction against exercise.
(c)Transfer Orders; Placement of Legends. All certificatesclosing price for shares of Common Stock delivered underour common stock on the Nasdaq Global Select Market on December 31, 2021, which was $48.04.
Non-Qualified Deferred Compensation
The Rent-A-Center, Inc. Deferred Compensation Plan shall beis an unfunded, non-qualified deferred compensation plan for a select group of our key management personnel and highly compensated employees. The Deferred Compensation Plan first became available to eligible employees in July 2007, with deferral elections taking effect as of August 3, 2007. The Deferred Compensation Plan allows participants to defer up to 50% of their base compensation and up to 100% of any bonus compensation. Participants may invest the amounts deferred in measurement funds that are the same funds offered as the investment options in our 401(k) Retirement Savings Plan. We may make discretionary contributions to the Deferred Compensation Plan, which are subject to such stock-transfer orders and other restrictions asa two-year graded vesting schedule based on the Company may deem advisable, including pursuantparticipant’s years of service with us. For 2021, we made matching contributions in the Deferred Compensation Plan of 50% of the employee’s contribution to the rules, regulations, and other requirementsplan up to an amount not to exceed 6% of such employee’s compensation, which is the Securities and Exchange Commission, any stock exchange or market upon whichsame matching policy as under our 401(k) Retirement Savings Plan. We are obligated to pay the Company's stock may then be listed, and any applicable federal or state securities law. The Company may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions. (d)No Employment or other Rights. Nothing containeddeferred compensation amounts in the Plan or in any Award Agreement shall confer upon any recipient of an Award any right with respect to the continuation of his or her employment or other service with the Company or a subsidiary or interfere in any way with the right of the Company and its subsidiaries at any time to terminate such employment or other service or to increase or decrease, or otherwise adjust, the other terms and conditions of the recipient's employment or other service.
(e)Decisions and Determinations Final. All decisions and determinations made by the Board pursuant to the provisions hereof and, except to the extent rights or powers under the Plan are
Table of Contents
reserved specifically to the discretion of the Board, all decisions and determinations of the Committee, shall be final, binding and conclusive on all persons.
(f)Non-Uniform Determinations. The Board's and the Committee's determinations under the Plan and Award Agreements need not be uniform and any such determinations may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Board and the Committee will be entitled, among other things, to make non-uniform and selective determinations under Award Agreements, and to enter into non-uniform and selective Award Agreements, as to (i) the persons to receive Awards, (ii) the terms and provisions of Awards and (iii) whether an Award holder's employment or other service has been terminated for purposes of the Plan.
(g)Section 409A. The Plan is intended to comply with Section 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance therewith. Any payments described in the Plan that are due within the "short-term deferral period" as defined in Section 409A of the Code shall not be treated as deferred compensation unless applicable laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six-month period immediately following the Award recipient's "separation from service" as defined in Section 409A of the Code shall instead be paid on the first payroll date after the six-month anniversary of the recipient's separation from service (or the recipient's death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on any individual under Section 409A of the Code and neither the Company nor the Committee will have any liability to any individual for such tax or penalty. If the Award includes a "series of installment payments" (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the Award holder's right to the series of installment payments will be treated as a right to a series of separate payments and not as a right to a single payment.
(h)Clawback/Recapture Policy. Awards under the Plan will be subject to any clawback or recapture policy that the Company may adopt from time to time to the extent provided in such policy and, in accordance with such policy, may be subject to the requirement that the Awards be repaid to the Company after they have been distributed to the Award holder.
17.Governing Law. All rights and obligations under the Plan and each Award Agreement or instrument shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its principles of conflict of laws.
18.Dispute Resolution. Any controversy or claim between the Company and an Award holder arising out of or relating to or concerning the Plan or any Award granted hereunder will be finally settled by arbitration in Dallas, Texas administered by the American Arbitration Association (the "AAA") and each party shall be responsible for its own legal fees; provided, however, that the Company shall reimburse the Award holder for such holder's reasonable fees and expenses incurred in connection with such dispute if the arbitrator determines that the Award holder has substantially prevailed on at least one claim. The Award holder or the Company may bring an action or special proceeding in a state or federal court of competent jurisdiction sitting in Dallas, Texas to enforce any arbitration award under this Section 18.
19.Term of the Plan. The Plan shall become effective on the date of approval by the Company's stockholders. Unless terminated sooner by the Board, the Plan shall terminate on the tenth anniversary of the date of adoption by the Board. The rights of any person with respect to an Award made under the Plan that is outstanding at the time of the termination of the Plan shall not be affected solely by reason of the termination of the Plan and shall continuefuture in accordance with the terms of the AwardDeferred Compensation Plan.
The following table provides information for the named executive officers regarding contributions, earnings and balances for our Deferred Compensation Plan:
| | Name | | | Executive
Contributions
in FY 2021(1) | | | Registrant
Contributions
in FY 2021(1)(2) | | | Aggregate
Earnings
in FY 2021 | | | Aggregate
Withdrawals/
Distributions | | | Aggregate
Balance
at FYE 2021(3) | |
| | Mitchell Fadel | | | | $ | 64,615 | | | | | $ | 28,269 | | | | | $ | 40,126 | | | | | | — | | | | | $ | 525,465 | | |
| | Maureen Short | | | | $ | 241,040 | | | | | $ | 20,758 | | | | | $ | 134,411 | | | | | | — | | | | | $ | 886,117 | | |
| | Anthony Blasquez | | | | | — | | | | | | — | | | | | $ | 700 | | | | | $ | 3,058 | | | | | $ | 6,162 | | |
| | Jason Hogg | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Bryan Pechersky | | | | $ | 22,039 | | | | | $ | 5,475 | | | | | $ | 4,312 | | | | | | — | | | | | $ | 29,291 | | |
(1)
The entirety of the executive contributions and registrant contributions are reported in the “Summary Compensation Table” above as compensation of the named executive officer for the year ended December 31, 2021.
(2)
Represents matching contributions or other allocations made by us under our Deferred Compensation Plan which amount was also reported as compensation in the table appearing in the section “Compensation Tables — Summary Compensation Table” above in this proxy statement.
(3)
Of these amounts, the following aggregate amounts are reported in the “Summary Compensation Table” above as compensation of the named executive officer for the years ended December 31, 2021, 2020 and 2019: Mr. Fadel — $148,724; Ms. Short — $405,304; Mr. Blasquez — $0; Mr. Hogg — $0; and Mr. Pechersky — $22,039.
No Pension Benefits
We do not sponsor or maintain any plans that provide for specified retirement payments or benefits, such as tax-qualified defined benefit plans or supplemental executive retirement plans.
Potential Payments and Benefits upon Termination Without a Change in Control
The following table provides quantitative disclosure of the estimated payments that would be made to our named executive officers under their severance agreements, as well as the amounts our named executive officers would receive upon the exercise of the equity and cash awards held by them on December 31, 2021, the last business day of our fiscal 2021, assuming that:
•
each named executive officer’s employment with us was terminated on December 31, 2021, and was not in connection with an event which constituted a “change in control” or an “exchange transaction” under any agreement or plan described above;
•
amounts payable to each named executive officer would not subject such person to excise tax under Section 4999 of the Code and the Company would not be denied a deduction under Section 280G of the Code;
•
the base salary earned by each named executive officer for his or her services to us through December 31, 2021 has been fully paid to such named executive officer;
•
the Board determined that the annual bonus for 2021 that would have been earned by each of Mr. Blasquez, Mr. Pechersky and Ms. Short was equal to the actual bonus awarded to such named executive officer for 2021; and
•
to the extent not otherwise terminated in connection with the named executive officer’s termination, each of our named executive officers sold the shares of our common stock underlying their previously unvested performance stock units, at the target level of performance, and restricted stock units at the closing price for shares of our common stock on the Nasdaq Global Select Market on December 31, 2021, which was $48.04, and any outstanding equity-based awards held by our named executive officers that vested prior to December 31, 2021 were exercised and distributed prior to December 31, 2021.
| | Name | | | Cash
Severance
Payout | | | Continuation
of Medical
Benefits(1) | | | Acceleration
of Outstanding
Awards | | | Total
Termination
Benefits | |
| | Mitchell Fadel | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination by Us without “Cause” or by Mr. Fadel for “Good Reason” | | | | $ | 6,001,600 | | | | | $ | 28,080 | | | | | $ | 3,843,263 | | | | | $ | 9,872,943 | | |
| | Termination by Us for “Cause” or by Mr. Fadel without “Good Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Termination by Us due to Mr. Fadel’s disability or death | | | | $ | 1,900,800 | | | | | $ | 28,080 | | | | | $ | 21,042,096 | | | | | $ | 22,970,976 | | |
| | Termination by Mr. Fadel for Reason other than disability, death
or for “Good Reason” | | | | | — | | | | | | — | | | | | $ | 3,843,263 | | | | | $ | 3,843,263 | | |
| | Maureen Short | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination by Us without “Cause” or by Ms. Short for “Good Reason” | | | | $ | 930,290 | | | | | $ | 11,904 | | | | | $ | 1,628,920 | | | | | $ | 2,571,114 | | |
| | Termination by Us for “Cause” or by Ms. Short without “Good Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Termination by Us due to Ms. Short’s disability or death | | | | $ | 384,000 | | | | | $ | 11,904 | | | | | $ | 2,998,321 | | | | | $ | 3,394,225 | | |
| | Termination by Ms. Short for Reason other than disability or death or for “Good Reason” | | | | | — | | | | | | — | | | | | $ | 1,628,920 | | | | | $ | 1,628,920 | | |
| | Anthony Blasquez | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination by Us without “Cause” or by Mr. Blasquez for “Good
Reason” | | | | $ | 1,047,960 | | | | | | — | | | | | $ | 284,302 | | | | | $ | 1,332,262 | | |
| | Termination by Us for “Cause” or by Mr. Blasquez without “Good
Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Termination by Us due to Mr. Blasquez’s disability or death | | | | $ | 288,640 | | | | | | — | | | | | $ | 1,124,328 | | | | | $ | 1,412,968 | | |
| | Termination by Mr. Blasquez for Reason other than disability or death or for “Good Reason” | | | | | — | | | | | | — | | | | | $ | 284,302 | | | | | $ | 284,302 | | |
| | Jason Hogg(2) | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination by Us without “Cause” or by Mr. Hogg for “Good Reason” | | | | $ | 937,500 | | | | | $ | 29,304 | | | | | | — | | | | | $ | 966,804 | | |
| | Termination by Us for “Cause” or by Mr. Hogg without “Good Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Termination by Us due to Mr. Hogg’s disability or death | | | | $ | 800,000 | | | | | $ | 19,536 | | | | | $ | 8,006,010 | | | | | $ | 8,825,546 | | |
| | Termination by Mr. Hogg for Reason other than disability or death or for “Good Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Bryan Pechersky | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination by Us without “Cause” or by Mr. Pechersky for “Good Reason” | | | | $ | 547,500 | | | | | $ | 17,856 | | | | | $ | 53,550 | | | | | $ | 618,906 | | |
| | Termination by Us for “Cause” or by Mr. Pechersky without “Good Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Termination by Us due to Mr. Pechersky’s disability or death | | | | $ | 256,960 | | | | | $ | 11,904 | | | | | $ | 335,256 | | | | | $ | 624,120 | | |
| | Termination by Mr. Pechersky for Reason other than disability or
death or for “Good Reason” | | | | | — | | | | | | — | | | | | $ | 53,550 | | | | | $ | 53,550 | | |
(1)
The amounts listed herein reflect the value of medical insurance coverage that would be extended to a named executive officer following termination; provided, however, such named executive officer would continue to be responsible for normal employee premium contributions.
(2)
Jason Hogg departed the Company on March 28, 2022 and is thenentitled to receive a $1,128,184.86 cash severance payout in effectaccordance with the terms and conditions of his Executive Transition agreement.
Potential Payments and Benefits upon Termination With a Change in Control
The following table provides quantitative disclosure of the estimated payments that would be made to our named executive officers under their employment agreement or severance agreements, as of December 31, 2021, the last business day of our fiscal 2021, assuming that:
•
each named executive officer’s employment with us was terminated and an event which constituted a “change in control” or an “exchange transaction” under any agreement or plan described above both occurred on December 31, 2021;
•
amounts payable to each named executive officer would not subject such person to excise tax under Section 4999 of the Code and the Company would not be denied a deduction under Section 280G of the Code;
•
the base salary earned by each named executive officer for his or her services to us through December 31, 2021 has been fully paid to such named executive officer;
•
the Board determined that the annual bonus for 2021 that would have been earned by each of Mr. Blasquez, Mr. Pechersky and Ms. Short was equal to the actual bonus awarded to such named executive officer for 2021;
•
with respect to equity-based awards awarded pursuant to the 2021 Plan and certain prior equity plans, the Board does not direct such outstanding awards to be converted into awards with respect to shares of stock following the change in control or exchange;
•
any outstanding equity-based awards held by our named executive officers that vested prior to December 31, 2021 were exercised and distributed prior to December 31, 2021; and
•
to the extent not otherwise terminated in connection with the named executive officer’s termination, each of our named executive officers sold the shares of our common stock underlying their previously unvested equity-based awards (at the target level of performance for performance stock units) at the closing price for shares of our common stock on the Nasdaq Global Select Market on December 31, 2021.
| | Name | | | Cash
Severance
Payout | | | Continuation
of Medical
Benefits(1) | | | Acceleration
of Outstanding
Awards | | | Total
Termination
Benefits | |
| | Mitchell Fadel | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination by Us without “Cause” or by Mr. Fadel for “Good Reason” | | | | $ | 6,001,600 | | | | | $ | 28,080 | | | | | $ | 25,246,223 | | | | | $ | 31,275,903 | | |
| | Termination by Us for “Cause” or by Mr. Fadel without “Good Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Termination by Us due to Mr. Fadel’s disability or death | | | | $ | 1,900,800 | | | | | $ | 28,080 | | | | | $ | 25,246,223 | | | | | $ | 21,175,103 | | |
| | Maureen Short | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination by Us without “Cause” or by Ms. Short for “Good Reason” | | | | $ | 1,395,435 | | | | | $ | 17,856 | | | | | $ | 3,712,812 | | | | | $ | 5,126,103 | | |
| | Termination by Us for “Cause” or by Ms. Short without “Good Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Termination by Us due to Ms. Short’s disability or death | | | | $ | 384,000 | | | | | $ | 11,904 | | | | | $ | 3,712,812 | | | | | $ | 4,108,716 | | |
| | Anthony Blasquez | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination by Us without “Cause” or by Mr. Blasquez for “Good
Reason” | | | | $ | 1,397,280 | | | | | | — | | | | | $ | 1,491,751 | | | | | $ | 2,889,031 | | |
| | Termination by Us for “Cause” or by Mr. Blasquez without “Good
Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Termination by Us due to Mr. Blasquez’s disability or death | | | | $ | 288,640 | | | | | | — | | | | | $ | 1,491,751 | | | | | $ | 1,780,391 | | |
| | Jason Hogg(2) | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination by Us without “Cause” or by Mr. Hogg for “Good Reason” | | | | $ | 1,250,000 | | | | | $ | 39,072 | | | | | $ | 8,006,010 | | | | | $ | 9,925,082 | | |
| | Termination by Us for “Cause” or by Mr. Hogg without “Good Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Termination by Us due to Mr. Hogg’s disability or death | | | | $ | 800,000 | | | | | $ | 19,536 | | | | | $ | 8,006,010 | | | | | $ | 8,825,546 | | |
| | Bryan Pechersky | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination by Us without “Cause” or by Mr. Pechersky for “Good Reason” | | | | $ | 730,000 | | | | | $ | 23,808 | | | | | $ | 515,906 | | | | | $ | 1,269,714 | | |
| | Termination by Us for “Cause” or by Mr. Pechersky without “Good Reason” | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Termination by Us due to Mr. Pechersky’s disability or death | | | | $ | 256,960 | | | | | $ | 11,904 | | | | | $ | 515,906 | | | | | $ | 784,770 | | |
(1)
The amounts listed herein reflect the value of medical insurance coverage that would be extended to a named executive officer following termination; provided, however, such named executive officer would continue to be responsible for normal employee premium contributions.
(2)
Jason Hogg departed the Company on March 28, 2022 and is thereafter amended.entitled to receive a $1,128,184.86 cash severance payout in accordance with the terms and conditions of his Executive Transition agreement.
Equity Compensation Plan Information | | Plan Category | | | Number of securities
to be issued upon
exercise of outstanding
options, warrants and rights | | | Weighted-average
exercise price of
outstanding options,
warrants and rights(1) | | | Number of securities
remaining available
for future issuance
under equity
compensation plan(2) | |
| | Equity compensation plans approved by security holders | | | | | 1,121,489 | | | | | $ | 22.68 | | | | | | 4,085,077 | | |
| | Equity compensation plans not approved by security holders | | | | | — | | | | | | — | | | | | | — | | |
| | Total | | | | | 1,121,489 | | | | | $ | 22.68 | | | | | | 4,085,077 | | |
(1)
Annex B:
Form
Reflects the weighted-average exercise price of Amendmentoutstanding options as of Certificate to Effect theDecember 31, 2021. The weighted average grant date fair value of outstanding restricted stock units and performance stock units as of December 31, 2021 was $46.23.
(2)Declassification Amendments
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION OF
RENT-A-CENTER, INC.
Pursuant to the provisions of Section 242terms of the General Corporation Lawplans, when an optionee leaves our employ, unvested options granted to that employee terminate and become available for re-issuance. Vested options not exercised within 90 days from the date the optionee leaves our employ terminate and become available for re-issuance.
PROPOSAL THREE:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are seeking stockholder approval of our executive compensation program and practices as disclosed in this proxy statement. As described above in the “Compensation Discussion and Analysis” section of this proxy statement, the Compensation Committee has structured our executive compensation program to achieve the following key objectives:
•
attract, retain and motivate senior executives with competitive compensation opportunities;
•
balance short-term and long-term strategic goals;
•
align our executive compensation program with the core values identified in our mission statement which focuses on improving the quality of life for our co-workers and our customers; and
•
reward achievement of our financial and non-financial goals.
We urge stockholders to read the section “Compensation Discussion and Analysis” above in this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the compensation tables and related narrative disclosures in the section “Compensation Tables” above in this proxy statement, which provide detailed information on the compensation of our named executive officers. The Compensation Committee and the Board believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has contributed to our recent and long-term success.
In accordance with Section 14A of the StateExchange Act, and as a matter of Delawaregood corporate governance, we are asking stockholders to approve the following advisory resolution at the 2022 Annual Meeting:
“RESOLVED, that the stockholders of Rent-A-Center, Inc. (the "DGCL"“Company”), Rent-A-Center, Inc., a corporation organized and existing under approve, on an advisory basis, the DGCL, hereby files this Certificate of Amendment to its Certificate of Incorporation, and certifies as follows: 1. The namecompensation of the corporation (hereinafter calledCompany’s named executive officers for the "Corporation") is Rent-A-Center, Inc.
2. The Certificate of Incorporationyear ended December 31, 2021, as disclosed in the 2022 Proxy Statement pursuant to the compensation disclosure rules of the Corporation was originallySecurities and Exchange Commission (including Item 402 of Regulation S-K), including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and narrative disclosure.”
This advisory resolution, commonly referred to as a “say-on-pay” resolution, is non-binding on the Board. Although non-binding, the Board and the Compensation Committee will carefully take into account the outcome of the vote when considering future compensation arrangements for our named executive officers.
Our Board recommends that you vote “FOR” approval of the advisory resolution on executive compensation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the common stock ownership for each of our directors, each of the named executive officers, all of our directors and executive officers as a group, and each of our known holders of 5% of our common stock. Unless otherwise indicated and subject to community property laws where applicable, we believe that each of the stockholders named in the table below beneficially own the shares indicated as beneficially owned. Information in the table is as of April 11, 2022, unless otherwise indicated. Under applicable SEC rules, the definition of beneficial ownership for purposes of this table includes shares over which a person has sole or shared voting power, or sole or shared power to invest or dispose of the shares, whether or not a person has any economic interest in the shares, and also includes shares for which the person has the right to acquire beneficial ownership within 60 days of April 11, 2022.
| | Name of Beneficial Owner | | | Amount and Nature
of Beneficial Ownership | | | Percent of
Common Stock | |
| | Aaron Allred | | | | | 5,151,978(1) | | | | | | 8.7%(1) | | |
| | Anthony Blasquez | | | | | 64,055 | | | | | | * | | |
| | Jeffrey Brown | | | | | 138,977(2) | | | | | | * | | |
| | Mitchell Fadel | | | | | 700,718(3) | | | | | | * | | |
| | Christopher Hetrick | | | | | 67,565(4) | | | | | | * | | |
| | Jason Hogg | | | | | 85,217 | | | | | | * | | |
| | Harold Lewis | | | | | 12,447(5) | | | | | | * | | |
| | Glenn Marino | | | | | 14,226(5) | | | | | | * | | |
| | Carol McFate | | | | | 17,356(5) | | | | | | * | | |
| | Bryan Pechersky | | | | | 2,861 | | | | | | * | | |
| | Maureen Short | | | | | 155,312 | | | | | | * | | |
| | B.C. Silver | | | | | 5,536(5) | | | | | | * | | |
| | Jen You | | | | | 3,648(5) | | | | | | * | | |
| | All executive officers and directors as a group (15 total) | | | | | 6,488,017 | | | | | | 11.0% | | |
| | BlackRock, Inc. | | | | | 9,692,234(6) | | | | | | 16.4%(6) | | |
| | The Vanguard Group | | | | | 7,035,107(7) | | | | | | 11.9%(7) | | |
| | FMR LLC | | | | | 4,050,393(8) | | | | | | 6.8%(8) | | |
*
Less than 1%.
(1)
Includes 2,243,398 shares of our common stock owned by Mr. Allred in his personal capacity and 2,908,580 shares owned by Arklow Holdings, LLC of which Mr. Allred is a general member and manager.
(2)
Includes 65,493 DSUs.
(3)
Includes 5,256 DSUs.
(4)
Includes 38,840 DSUs and 28,725 shares of our common stock owned by Mr. Hetrick in his personal capacity. In addition, as an affiliate of Engaged Capital, LLC, Mr. Hetrick may be deemed to be a member of a Section 13(d) group that may be deemed to collectively beneficially own 2,355,730 shares held by funds affiliated with Engaged Capital, LLC (according to a Form 13F filed by Engaged Capital, LLC with the SEC on February 14, 2022).
(5)
Comprised solely of DSUs.
(6)
The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York, 10055. BlackRock, Inc. exercises sole voting control over all 9,692,234 of these shares and sole investment control over all 9,692,234 shares. This information is based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 27, 2022.
(7)
The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. The Vanguard Group exercises sole voting control over none of these shares, shared voting control over 118,704 of these shares, sole investment control over 6,861,240 of these shares, and shared investment control over 173,867 of these shares. This information is based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 10, 2022.
(8)
The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210. FMR LLC exercises sole voting control over all 44,063 of these shares and sole investment control over all 4,050,393 shares. This information is based solely on information set forth in Schedule 13G filed with the SecretarySEC on February 9, 2022 by FMR LLC on behalf of Stateitself and Abigail P. Johnson.
For each of the Statenamed executive officers and his or her ownership as reported in the table above, the following table sets forth: (1) common stock underlying restricted stock units that may vest within 60 days of DelawareApril 11, 2022, (2) common stock underlying performance stock units that may vest within 60 days of April 11, 2022, assuming 100% of the target performance is achieved and (3) shares issuable upon the exercise of outstanding stock options that are exercisable within 60 days of April 11, 2022.
| | Name | | | Common Stock Underlying
Restricted Stock Units | | | Common Stock Underlying
Performance Stock Units | | | Shares Issuable upon
Exercise of Options | |
| | Mitchell Fadel | | | | | — | | | | | | — | | | | | | 196,964 | | |
| | Maureen Short | | | | | — | | | | | | — | | | | | | 59,341 | | |
| | Anthony Blasquez | | | | | — | | | | | | — | | | | | | 13,177 | | |
| | Jason Hogg | | | | | — | | | | | | — | | | | | | — | | |
| | Bryan Pechersky | | | | | — | | | | | | — | | | | | | 2,500 | | |
OTHER INFORMATION
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 and related rules of the SEC require our directors and Section 16 officers, and persons who own more than 10% of a registered class of our equity securities, to file initial reports of ownership and reports of changes in ownership with the SEC. These persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports that they file. Based on November 26, 2002 (such Certificatea review of Incorporationreports filed by those persons, and upon representations from those persons, we believe that all SEC stock ownership reports required to be filed by those reporting persons during and with respect to 2021 were timely made except for one Form 4 in respect of a transaction by Mr. Brown. Such late filing was the result of administrative matters impacting the functioning of Mr. Brown’s EDGAR filing codes.
Annual Report on Form 10-K
The Company has filed with the SEC an Annual Report on Form 10-K for the year ended December 31, 2021 (which is not a part of the Company’s proxy soliciting materials), a copy of which is available on our website at https://investor.rentacenter.com/financial-information/sec-filings. The Company will provide without charge a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 upon the written request of a stockholder to Corporate Secretary, Rent-A-Center, Inc., 5501 Headquarters Drive, Plano, Texas 75024.
“Householding” of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (for example, brokers) to satisfy the delivery requirements for proxy statements, annual reports and Notices with respect to two or more stockholders sharing the same address by delivering a single copy of any previous amendments theretosuch proxy statement, annual report or Notice addressed to those stockholders. This process, which is commonly referred to herein as the "Certificate of Incorporation"). 3. The Certificate of Incorporation is hereby amended as follows:
Subsections (2)“householding,” potentially provides extra convenience for stockholders and (3) of Article FIFTHcost savings for companies. If you are deletedan affected shareholder and no longer wish to participate in their entirety and replaced with the following:
"(2) Number, Election and Terms of Directors. The number, qualifications, terms of office, manner of appointmenthouseholding, or election, time and place of meeting, compensation and powers and dutiesif you are receiving multiple copies of the directorsproxy statement or the Notice and wish to receive only one, please notify your broker if your shares are held in a brokerage account, or the Company if you are the record holder of your shares. Such a notification to the Company may be prescribed fromsubmitted to the Rent-A-Center Legal Department in writing at Attn: Legal Department, Rent-A-Center, Inc., 5501 Headquarters Drive, Plano, Texas 75024, or by calling 972-801-1100. Additionally, we will deliver promptly to any affected stockholder, upon his or her written request made to the address in the preceding sentence, an additional copy of the proxy statement, annual report and/or Notice.
Submission of Stockholder Proposals
From time to time, stockholders may seek to nominate directors or present proposals for inclusion in the Bylaws,proxy statement and form of proxy for consideration at an annual stockholders meeting. To be included in the Bylaws may also containproxy statement or considered at an annual or any special meeting, you must timely submit nominations of directors or proposals, in addition to meeting other provisionslegal requirements.
We must receive proposals for possible inclusion in the Company’s proxy statement related to the 2023 annual stockholders meeting no later than December 26, 2022 and such proposals must otherwise comply with Rule 14a-8 under the Exchange Act.
Pursuant to our bylaws, subject to certain limited exceptions, other proposals for possible consideration at the 2023 annual stockholders meeting, including proposals for the regulationnomination of one or more directors, must be received in writing by us no earlier than the close of business on February 7, 2023, and managementno later than the close of business on March 9, 2023. Any such proposal must be in proper form as specified in our bylaws, must be submitted by a stockholder of the affairs ofCompany meeting the Corporation not inconsistent with the law or this Certificate of Incorporation. The number of directors which shall constitute the whole Board of Directors of the Corporation shall be not less than one (1) as specified from time to time in the Bylaws of the Corporation. Each director shall hold office for a term expiring at the next annual meeting of the stockholders following such director's appointment or election and until such director's successor is duly elected and qualified, or until their earlier death, resignation, disqualification or removal. Nothing in this Certificate of Incorporation shall preclude a director from serving consecutive terms.
Election of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.
(3) Removal of Directors. Subject to the rights, if any, of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of capital stock of the Corporation then entitled to vote at an election of directors, voting together as a single class."
Subsection (4) of Article FIFTH is deleted in its entirety.
4. Except as expresslyrequirements set forth in our bylaws and must comply with the foregoing amendmentrules of the SEC concerning stockholder proposals.
Direct any proposals, as well as related questions, to Corporate Secretary, Rent-A-Center, Inc., 5501 Headquarters Drive, Plano, Texas 75024.
To comply with the SEC’s universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 8, 2023.
Other Business
The Board does not intend to bring any business before the annual stockholders meeting other than the matters referred to in this proxy statement and at this date has not been informed of any matters that may be presented to the Certificate of Incorporation,annual stockholders meeting by others. If, however, any other matters properly come before the provisions ofannual stockholders meeting, or any adjournments or postponement thereof, it is intended that the Certificate of Incorporation shall remainpersons named in the same and in full force and effect. 5. The Board of Directors duly adopted resolutionsaccompanying proxy will vote pursuant to the proxy in accordance with Sections 141 and 242 of the DGCL, approving the foregoing amendment to the Certificate of Incorporation, declaring said amendment to be advisable and in thetheir best interests of the Corporation, and directing that the forgoing amendment to the Certificate of Incorporation be considered and voted upon at the next annual meeting of the stockholders of the Corporation.
judgment on such matters.
PLEASE VOTE – YOUR VOTE IS IMPORTANT
Table of Contents
6. The foregoing amendment to the Certificate of Incorporation has been adopted by the stockholders of the Company in accordance with Section 242 of the DGCL.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed this day of June, 2021.
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SCAN TO VIEW MATERIALS & VOTE RENT-A-CENTER, INC. 5501 HEADQUARTERS DRIVE PLANO, TX 75024 VOTE BY INTERNET PRIOR TO THE MEETING - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Time, on June 7, 2021.6, 2022. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY INTERNET DURING THE MEETING - www.virtualshareholdermeeting.com/RCII2021RCII2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. RENT-A-CENTER, INC. 5501 HEADQUARTERS DRIVE PLANO, TX 75024 VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Time, on June 7, 2021.6, 2022. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you received paper copies of the proxy materials and would like to reduce the costs incurred by us in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D49518-P48117 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.D81043-P67356 RENT-A-CENTER, INC. The Board of Directors recommends you vote FOR each director nominee listed in Proposal 1 and FOR Proposals 2 3, 4 and 5:3: 1. To elect or re-elect the two Class III directors nominated by the Board of Directors: For Against Abstain ! ! ! ! ! ! 1a. Glenn Marino 1b. B.C. Silver For Against Abstain ! ! ! ! ! ! ! ! ! ! ! !For 1a. Jeffrey Brown 2. To ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 20212022 1b. Mitchell Fadel 1c. Christopher Hetrick 3. To approve, by non-binding vote, compensation of the named executive officers for the year ended December 31, 2020 4. To approve the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan 5. To approve amendments to the Company's Certificate of Incorporation to declassify the Board of Directors1d. Harold Lewis 1e. Glenn Marino NOTE: Such other business as may properly come before the meeting and any adjournment or postponement thereof. 1f. Carol McFate 1g. B.C. Silver 1h. Jen You NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and the Proxy Statement and most recent Annual Report on Form 10-K of Rent-A-Center, Inc. are available at www.proxyvote.com. D49519-P48117 2021investor.rentacenter.com and www.proxyvote.com.D81044-P673562022 Annual Meeting of Stockholders THISStockholdersTHIS PROXY IS SOLICITED ON BEHALF OF THEOFTHE BOARD OF DIRECTORS OF RENT-A-CENTER, INC. The undersigned hereby appoints Maureen Short and Bryan Pechersky, and each of them, with power to act without the other and with power of substitution, as proxies to cast all votes that the undersigned is entitled to cast at Rent-A-Center, Inc.'s 2021's2022 Annual Meeting of Stockholders to be held June 8, 20217, 2022 at www.virtualshareholdermeeting.com/RCII2021,RCII2022, or any postponement or adjournment thereof, with authority to vote on the proposals as indicated on the reverse side of this Proxy and in their discretion upon such other matters as may be properly presented at the meeting. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN AS TO ANY OR ALL PROPOSALS BUT THIS PROXY IS SIGNED AND DATED, THIS PROXY WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS WITH RESPECT TO SUCH PROPOSALS. (Continued(Continued and to be marked, signed and dated on the other side)
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SCAN TO VIEW MATERIALS & VOTE RENT-A-CENTER, INC. 5501 HEADQUARTERS DRIVE PLANO, TX 75024 VOTE BY INTERNET PRIOR TO THE MEETING - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Central Time, on June 2, 2021.2022. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY INTERNET DURING THE MEETING - www.virtualshareholdermeeting.com/RCII2021RCII2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. RENT-A-CENTER, INC. 5501 HEADQUARTERS DRIVE PLANO, TX 75024 VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Central Time, on June 2, 2021.2022. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you received paper copies of the proxy materials and would like to reduce the costs incurred by us in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D49520-P48117 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.D81045-P67356 RENT-A-CENTER, INC. The Board of Directors recommends you vote FOR each director nominee listed in Proposal 1 and FOR Proposals 2 3, 4 and 5:3: 1. To elect or re-elect the two Class III directors nominated by the Board of Directors: Against For Abstain For Against Abstain ! ! ! ! ! ! 1a. Glenn Marino 1b. B.C. Silver For Against Abstain ! ! ! ! ! ! ! ! ! ! ! !Jeffrey Brown 2. To ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 20212022 1b. Mitchell Fadel 1c. Christopher Hetrick 3. To approve, by non-binding vote, compensation of the named executive officers for the year ended December 31, 2020 4. To approve the Rent-A-Center, Inc. 2021 Long-Term Incentive Plan 5. To approve amendments to the Company's Certificate of Incorporation to declassify the Board of Directors1d. Harold Lewis 1e. Glenn Marino NOTE: Such other business as may properly come before the meeting and any adjournment or postponement thereof. 1f. Carol McFate 1g. B.C. Silver 1h. Jen You NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and the Proxy Statement and most recent Annual Report on Form 10-K of Rent-A-Center, Inc. are available at www.proxyvote.com. D49521-P48117 2021investor.rentacenter.com and www.proxyvote.com.D81046-P673562022 Annual Meeting of Stockholders THISStockholdersTHIS PROXY IS SOLICITED ON BEHALF OF THEOFTHE BOARD OF DIRECTORS OF RENT-A-CENTER, INC. The undersigned participant in the Rent-A-Center, Inc. 401(k) Retirement Savings Plan (the "401(k) Plan") hereby directs ReliancedirectsReliance Trust Company, the trustee of the 401(k) Plan, to vote his or her shares held through the 401(k) Plan as indicated on the reverse side of this Proxy, or if not so indicated, in accordance with the policy adopted by Rent-A-Center, Inc. in accordance with the 401(k) Plan document (voting for each proposal as recommended by the board of directors of Rent-A-Center, Inc.). (Continued(Continued and to be marked, signed and dated on the other side)
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