<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
AARON RENTS, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
AARON RENTS, INC.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
AARON RENTS, INC.
309 E. PACES FERRY ROAD, N.E.
ATLANTA, GEORGIA 30305-2377
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 1, 1995
The 1995 Annual Meeting of shareholders of Aaron Rents, Inc. (the
"Company"), will be held on Tuesday, August 1, 1995, at 10:00 a.m., Atlanta
time, at First Union National Bank of Georgia, First Union Plaza, 999
Peachtree Street, N.E., Atlanta, Georgia 30309, on the 28th floor, for the
purpose of considering and voting on the following:
(1) The election of ten directors to constitute the Board of Directors
until the next annual meeting and until their successors are elected and
qualified; and
(2) Such other matters as may properly come before the meeting or any
adjournment thereof.
Information relating to the above items is set forth in the accompanying
Proxy Statement.
Only shareholders of record of the Class A Common Stock at the close of
business on June 9, 1995 are entitled to notice of and to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
KEITH C. GROEN
Vice President, Legal and Secretary
Atlanta, Georgia
July 13, 1995
PLEASE COMPLETE AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY
SO THAT YOUR VOTE MAY BE RECORDED AT THE MEETING
IF YOU DO NOT ATTEND PERSONALLY.
No postage is required if mailed
in the United States in the accompanying envelope.
<PAGE>
AARON RENTS, INC.
309 E. PACES FERRY ROAD, N.E.
ATLANTA, GEORGIA 30305-2377
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 1, 1995
GENERAL INFORMATION
The enclosed proxy is being solicited by the Board of Directors of Aaron
Rents, Inc. (the "Company") for use at the 1995 annual meeting (the "Annual
Meeting") of shareholders to be held on Tuesday, August 1, 1995, and any
adjournment thereof.
Each proxy that is properly executed and returned by a shareholder will be
voted as specified thereon by the shareholder unless it is revoked.
Shareholders are requested to execute the enclosed proxy and return it in the
enclosed envelope. If no direction is specified on the proxy as to any matter
being acted upon, the shares represented by the proxy will be voted in favor
of such matter. Any shareholder giving a proxy has the power to revoke it at
any time before it is voted by the execution of another proxy bearing a later
date or by written notification to the Secretary of the Company. Shareholders
who are present at the Annual Meeting may revoke their proxy and vote in
person.
The affirmative vote of a plurality of the holders of shares of the
Company's Class A Common Stock present, in person or represented by proxy, at
the Annual Meeting will be necessary to elect the nominees for director listed
in this Proxy Statement. The presence, in person or by proxy, of holders of a
majority of the outstanding shares of the Company's Class A Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum.
Abstentions and broker non-votes will be included in determining whether a
quorum is present at the Annual Meeting, but will otherwise have no effect on
the election of the nominees for director. An automated system administered by
the Company's transfer agent will tabulate the votes cast.
Only shareholders of record of Class A Common Stock at the close of business
on June 9, 1995 are entitled to vote at the Annual Meeting. A list of all
shareholders entitled to vote will be available for inspection at the Annual
Meeting. As of June 9, 1995, the Company had 4,022,263 shares of Class A
Common Stock and 5,692,730 shares of Class B Common Stock outstanding. Each
share of Class A Common Stock entitles the holder thereof to one vote for the
election of directors and any other matters that may come before the Annual
Meeting. The holders of the Class B Common Stock are not entitled to vote with
respect to the election of directors nor with respect to most other matters
presented to the shareholders for a vote.
The Company will bear the cost of soliciting proxies, including the charges
and expenses of brokerage firms, banks and others for forwarding solicitation
material to beneficial owners of shares of the Company's Common Stock. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telephone, telegraph or personal interview by officers of the
Company who will not be additionally compensated therefore. It is anticipated
that this Proxy Statement and the accompanying proxy will first be mailed to
shareholders on July 13, 1995.
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of June 9, 1995 (except as otherwise
noted), the beneficial ownership of the Company's Common Stock by (i) each
person who owns of record or is known by management to own beneficially 5% or
more of the outstanding shares of the Company's Class A Common Stock, (ii)
each of the Company's directors, (iii) the Company's Chief Executive Officer
and the other executive officers of the Company listed in the Summary
Compensation Table below (the "Named Executive Officers") and (iv) all
executive officers and directors of the Company as a group.
Except as otherwise indicated, all shares shown in the table below are held
with sole voting and investment power. The Percent of Class column represents
the percentage that the named person or group would beneficially own if such
person or group, and only such person or group, exercised all currently
exercisable options to purchase shares of the applicable class of Common Stock
held by him, her or it.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
TITLE OF CLASS OF BENEFICIAL
BENEFICIAL OWNER OF COMMON STOCK OWNERSHIP (1) PERCENT OF CLASS (1)
---------------- --------------- ----------------- --------------------
<S> <C> <C> <C>
R. Charles Loudermilk,
Sr. Class A 2,413,176(2) 57.84%
3284 Northside Drive Class B 631,519(3) 10.81%
Atlanta, Georgia
Gabelli Funds, Inc. Class A 714,400(4) 17.76%
One Corporate Center Class B 331,925(5) 5.83%
Rye, New York
Gilbert L. Danielson Class A 4,000(6) *
Class B 12,330(7) *
Keith C. Groen Class A 4,000(6) *
Class B 6,092(7) *
John E. Aderhold Class A 1,000 *
Class B 51,740 *
Earl Dolive Class A 88,664 2.20%
Class B 41,164 *
Robert C. Loudermilk,
Jr. Class A 1,500 *
Class B 295,131(8) 5.18%
R.K. Sehgal Class A -0- *
Class B -0- *
Rankin M. Smith, Sr. Class A -0- *
Class B 18,392 *
Leo Benatar Class A 1,500 *
Class B -0- *
Ingrid Saunders Jones Class A -0- *
Class B -0- *
William Kenneth Butler Class A 4,000(6) *
Class B 16,049(9) *
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
TITLE OF CLASS OF BENEFICIAL
BENEFICIAL OWNER OF COMMON STOCK OWNERSHIP (1) PERCENT OF CLASS (1)
---------------- --------------- ----------------- --------------------
<S> <C> <C> <C>
Brian E. Stahl Class A 2,000(6) *
Class B 3,307(10) *
All executive officers
and directors as a group Class A 2,522,840(11) 60.22%
(a total of 13 persons) Class B 1,082,283(12) 18.44%
</TABLE>
- --------
* Less than 1%
(1) Amounts shown do not reflect that the Class B Common Stock is
convertible, on a share for share basis, into shares of Class A Common
Stock (i) by resolution of the Board of Directors, if, as a result of the
existence of the Class A Common Stock, either class is excluded from
listing on Nasdaq or any national securities exchange on which the Common
Stock is then listed, and (ii) automatically should the outstanding
shares of Class A Common Stock fall below 10% of the aggregate
outstanding shares of both classes of Common Stock.
(2) Includes currently exercisable options to purchase 150,000 shares of Class
A Common Stock.
(3) Includes 121,174 shares of Class B Common Stock held by certain trusts
for the benefit of Mr. Loudermilk, Sr.'s children of which Mr.
Loudermilk, Sr. serves as trustee. Also includes currently exercisable
options to purchase 150,000 shares of Class B Common Stock.
(4) As reflected in an amended Schedule 13D filed with the Securities and
Exchange Commission on November 23, 1992.
(5) Gabelli Funds, Inc. is not required to disclose its holdings of non-
voting, Class B Common Stock, but has reported to the Company that it
held 331,925 shares of Class B Common Stock as of May 30, 1995.
(6) Represents currently exercisable options to purchase shares of Class A
Common Stock.
(7) Includes currently exercisable options to purchase 4,000 shares of Class
B Common Stock.
(8) Includes 51,876 shares of Class B Common Stock held by certain trusts for
the benefit of Mr. Loudermilk, Jr.'s children of which Mr. Loudermilk,
Jr. serves as trustee.
(9) Includes currently exercisable options to purchase 14,000 shares of Class
B Common Stock.
(10) Includes currently exercisable options to purchase 2,000 shares of Class
B Common Stock.
(11) Includes currently exercisable options to purchase 167,000 shares of
Class A Common Stock.
(12) Includes currently exercisable options to purchase 177,000 shares of
Class B Common Stock.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of either
class of the Company's Common Stock, to file with the Securities and Exchange
Commission certain reports of beneficial ownership of the Company's Common
Stock. Based solely on copies of such reports furnished to the Company and
written representations that no other reports were required, the Company
believes that all applicable Section 16(a) filing requirements were complied
with by its directors, officers and 10% shareholders during the last fiscal
year, except that Mr. Dolive inadvertently filed one report showing an
incorrect number of shares held by him, which report was subsequently
corrected by amendment.
3
<PAGE>
ELECTION OF DIRECTORS
The Company's Bylaws provide for the Board of Directors to be comprised of
ten members. The Board recommends the election of the ten nominees listed
below to constitute the entire Board, who will hold office until the next
annual meeting of shareholders and until their successors are elected and
qualified. If, at the time of the Annual Meeting, any of such nominees should
be unable to serve, the persons named in the proxy will vote for such
substitutes, or will vote to reduce the number of directors for the ensuing
year, as management recommends. Management has no reason to believe any
substitute nominee or reduction in the number of directors for the ensuing
year will be required.
All of the nominees listed below are now directors of the Company. The
following information relating to age, positions with the Company, principal
occupation, directorships in companies with a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, subject to the
requirements of Section 15(d) of that Act or registered as an investment
company under the Investment Company Act of 1940, has been furnished by the
respective nominees.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR PAST DIRECTOR
NAME AGE FIVE YEARS AND OTHER DIRECTORSHIPS SINCE
---- --- ---------------------------------- --------
<C> <C> <S> <C>
R. Charles Loudermilk, 67 Mr. Loudermilk, Sr. has served as 1962
Sr.* President, Chief Executive Officer and
Chairman of the Board of the Company since
the Company's incorporation in 1962. He is
formerly a director of the Chattahoochee
Bank, and formerly the Chairman of the
Board of Directors of the Metropolitan
Atlanta Rapid Transit Authority.
Gilbert L. Danielson 48 Mr. Danielson has served as Vice 1990
President, Finance and Chief Financial
Officer and Director of the Company since
1990. Previously, he was Chief Financial
Officer, Secretary and Treasurer of
Americom Corporation, a radio
communications company, from 1989 to 1990.
Keith C. Groen 52 Mr. Groen has served as Vice President, 1987
Legal of the Company since 1984. He has
been a Director of the Company and
Secretary since 1987.
John E. Aderhold+ 69 Mr. Aderhold has served as a Director of 1982
the Company since 1982. He has been a
Director of The Actava Group Inc., since
1992, and American Business Products,
Inc., since 1986. He is currently Vice
Chairman of the Winter Group of Companies,
a general contractor and construction
management firm. He was Vice Chairman of
Intermet Corporation, a precision iron
castings manufacturer, from March to
November 1992. Prior to his retirement in
1992, Mr. Aderhold was Chairman and Chief
Executive Officer of Rayloc, a
remanufacturing division of Genuine Parts
Company.
Earl Dolive+* 77 Mr. Dolive has served as a Director of the 1977
Company since 1977. Prior to his
retirement in 1988, he was Vice Chairman
of the Board of Genuine Parts Company, a
distributor of automobile replacement
parts.
Robert C. Loudermilk, 36 Mr. Loudermilk, Jr., has served as a 1983
Jr. Director of the Company since 1983, and as
Vice President, Real Estate of the
Company, since 1993. From 1992 to 1993, he
was a self-employed real estate investor.
From 1990 to 1991, Mr. Loudermilk, Jr.,
was Executive Vice President of Ball
Stalker Co., then a subsidiary of the
Company. He also served as a Vice
President of the Company from 1990 to
1991.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR PAST DIRECTOR
NAME AGE FIVE YEARS AND OTHER DIRECTORSHIPS SINCE
---- --- ---------------------------------- --------
<C> <C> <S> <C>
Rankin M. Smith, Sr. 69 Mr. Smith has served as a Director of the 1979
Company since 1979. He is the Chief
Executive Officer, President and Chairman
of the Board of Directors of The Five
Smiths, Inc., owner of The Atlanta Falcons.
R.K. Sehgal 54 Mr. Sehgal has served as a Director of the 1994
Company since 1994. He has been President
and Chief Executive Officer of the Williams
Group International, Inc., a holding
company for various engineering and
specialty services companies, since 1995.
Previously, he was Chairman and Chief
Executive Officer of Law Companies Group,
Inc., a holding company for various
engineering and consulting companies, from
1963 to 1994.
Leo Benatar+ 65 Mr. Benatar has served as a Director of the 1994
Company since 1994. He is Chairman and
Chief Executive Officer of Engraph, Inc., a
manufacturer of packaging and product
identification materials, and is Vice
President of Sonoco Products Company,
Engraph's parent company. Mr. Benatar
serves as a Director of Sonoco Products
Company, Interstate Bakeries Corporation,
Mohawk Industries, Inc. and Riverwood
International Corporation. He currently is
Chairman of the Federal Reserve Bank of
Atlanta.
Ingrid Saunders Jones 49 Ms. Jones has served as a Director of the 1995
Company since 1995. She has been Vice
President of Corporate External Affairs of
The Coca-Cola Company and Chairperson of
The Coca-Cola Foundation since 1991.
Previously, she was an Assistant Vice
President of The Coca-Cola Company.
</TABLE>
- --------
* Member of the Stock Option Committee of the Board of Directors.
+ Member of the Audit Committee of the Board of Directors.
There are no family relationships among any of the executive officers,
directors and nominees of the Company, except that Robert C. Loudermilk, Jr.
is the son of R. Charles Loudermilk, Sr.
The Board held four meetings during the fiscal year ended March 31, 1995.
All of the incumbent directors attended at least 75% of the total number of
meetings of the Board and committees on which they served, except for Mr.
Benatar.
The Board has a standing Audit Committee which is composed of Messrs.
Dolive, Aderhold and Benatar. The function of the Audit Committee is to review
with the Company's independent auditors the scope and thoroughness of the
auditors' examination, consider recommendations of the independent auditors,
recommend to the Board the appointment of independent auditors for the year
and review the sufficiency of the Company's system of internal controls with
the financial officers and the independent auditors. The Audit Committee held
one meeting during the fiscal year.
The Board had a standing Stock Option Committee which was composed of
Messrs. Loudermilk, Sr. and Dolive. The function of the Stock Option Committee
was to administer the Company's 1990 Stock Option Plan, which expired March
31, 1995. The Stock Option Committee held three meetings during the fiscal
year.
The Board does not have a nominating or compensation committee.
5
<PAGE>
REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE OFFICERS
Set forth below are the names and ages of all executive officers of the
Company as of June 9, 1995. All positions and offices with the Company held by
each such person are also indicated. Officers are elected annually for one-
year terms or until their successors are elected and qualified. All executive
officers are United States citizens.
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL OCCUPATION
NAME (AGE) DURING THE PAST FIVE YEARS
---------- --------------------------------------------------
<C> <S>
R. Charles Loudermilk, Sr. President, Chief Executive Officer and Chairman of the Board of
(67) Directors of the Company.*
Gilbert L. Danielson Vice President, Finance and Chief Financial Officer of the
(48) Company.*
Keith C. Groen Vice President, Legal and Secretary of the Company.*
(52)
William Kenneth Butler Mr. Butler joined the Company in 1974 as a Store Manager. He
(42) served as Vice President of the Aaron's Rental Purchase division
-----------------------
from 1986 to 1995 and currently is President of that Division
Brian E. Stahl Mr. Stahl joined the Company in 1981 as an Assistant Store
(38) Manager. He served as Regional Vice President of the
Northeastern Region of the Aaron's Rent-to-Rent division from
--------------------
1990 to 1995 and currently is President of that Division.
Robert P. Sinclair, Jr. Mr. Sinclair has served as Controller of the Company since 1990.
(33) From 1987 to 1990, he was an auditor with Ernst & Young,
independent auditors.
</TABLE>
- --------
* Messrs. Loudermilk, Danielson and Groen are directors of the Company. For
additional information concerning those individuals, see ELECTION OF
DIRECTORS above.
EXECUTIVE COMPENSATION SUMMARY
The following table provides certain summary information for the last three
fiscal years of the Company concerning compensation paid or accrued by the
Company and its subsidiaries to or on behalf of the Company's Chief Executive
Officer and the other executive officers of the Company that earned in excess
of $100,000 in salary and bonus during the last fiscal year:
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS
------------------------------------ ----------------
NUMBER OF
SECURITIES
UNDERLYING STOCK
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS COMPENSATION (1) (#) COMPENSATION
- --------------------------- ---- ---------- -------- ---------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
R. Charles Loudermilk,
Sr..................... 1995 $454,000 $184,000 -- -0- $52,560(2)
President, Chief Execu- 1994 469,917 125,000 -- -0- 31,147(3)
tive Officer and Chairman 1993 477,692 -0- -- -0- 25,689(4)
Gilbert L. Danielson.... 1995 144,000 15,500 -- 42,000 1,971(5)
Vice President, Finance and 1994 137,417 29,000 -- 5,000 1,755(5)
Chief Financial Officer 1993 108,563 -0- -- -0- 1,357(5)
William Kenneth Butler.. 1995 125,000 17,500 -- 22,000 1,346(5)
President, Rental Purchase 1994 101,667 34,000 -- -0- 1,311(5)
Division 1993 86,250 10,000 -- 10,000 1,078(5)
Brian E. Stahl.......... 1995 86,668 38,332 -- 31,000 1,369(5)
President, Rent-to-Rent 1994 71,940 43,635 -- -0- 1,509(5)
Division 1993 71,940 21,635 -- -0- 1,026(5)
</TABLE>
- --------
(1) Excludes perquisites that do not exceed the lesser of $50,000 or 10% of
the executive's salary and bonus.
(2) Includes a matching contribution of $1,438 made by the Company to the
executive's account in the Company's 401(k) plan, and $51,122 representing
a portion of the premiums paid, and reimbursement of the executive's
resulting income tax liability, with respect to the split dollar life
insurance policies described in COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION below.
(3) Includes a matching contribution of $3,574 made by the Company to the
executive's account in the Company's 401(k) plan, and $27,573 representing
a portion of the premiums paid with respect to the split dollar life
insurance policies described in COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION below.
(4) Includes a matching contribution of $3,463 made by the Company to the
executive's account in the Company's 401(k) plan, and $22,226 representing
a portion of the premiums paid with respect to the split dollar life
insurance policies described in COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION below.
(5) Represents a matching contribution made by the Company to the executive's
account in the Company's 401(k) plan for the indicated fiscal year.
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executive officers generally are
made by the entire Board of Directors, based upon the recommendation of the
Chief Executive Officer. The Company has no separate compensation committee.
Pursuant to rules of the Securities and Exchange Commission designed to
enhance disclosure of public company policies toward executive compensation,
set forth below is a report submitted by the Board of Directors addressing the
Company's executive compensation policies.
GENERAL. The objectives of the Company's compensation program are to enhance
the profitability of the Company, and thus shareholder value, by aligning
executive compensation with the Company's business goals and performance and
by attracting, retaining and rewarding executive officers who contribute to
the long-term
7
<PAGE>
success of the Company. In determining the compensation to be paid to the
executive officers of the Company, the directors rely upon their own knowledge
of compensation paid to executives of companies of comparable size and
complexity and consider the performance of the Company and the merits of the
individual under consideration. It is the Company's intention that the
compensation to be paid to its executive officers will not exceed the present
maximum allowable amount for purposes of deductibility set forth in the
Internal Revenue Code.
SALARY AND BONUS. The Chief Executive Officer makes recommendations annually
to the Board of Directors regarding the base salary and bonus, if any, for the
Company's executive officers, including the Chief Executive Officer, based
upon the profitability of the Company and the level of responsibility, time
with the Company, contribution and performance of the executive officer.
Evaluation of these factors is subjective, and no fixed, relative weights are
assigned to the factors considered. The beginning point for determining such
salaries is the salary the executive officer received in the prior fiscal
year. The Chief Executive Officer received a salary of $454,000 during fiscal
year 1995, which represented a 3% decrease over his salary for fiscal year
1994. At its November 1994 meeting, the Board of Directors approved a bonus
plan (the "Plan") for its executive officers and key employees for the 1995
fiscal year. Under the Plan, bonuses were to be distributed from a bonus pool
of up to 2% of the Company's fiscal 1995 pre-tax earnings (without giving
effect to bonuses under the Plan) if the Company's fiscal 1995 pre-tax
earnings (after giving effect to bonuses under the Plan) exceeded fiscal year
1994 pre-tax earnings, which goal ultimately was achieved. Of the total amount
available, the Chief Executive Officer was eligible under the Plan to receive
a bonus of up to two-thirds of the bonus pool, and the remaining one-third was
to be distributed as determined in the discretion of the Chief Executive
Officer among designated executive officers and key employees of the Company.
The Board of Directors authorized a $184,000 bonus for the Chief Executive
Officer, as well as $216,832 in bonuses for the Chief Financial Officer, the
other executive officers and other officers and key employees of the Company,
for services rendered in fiscal year 1995. Factors considered in setting the
Chief Executive Officer's salary and bonus included the continued improvement
in the Company's financial condition and Common Stock trading prices during
the fiscal year, and his dual role as both Chairman of the Board of Directors
and President of the Company.
STOCK OPTIONS. The Company in the past has used grants of stock options to
its key employees and executive officers to more closely align the interests
of such employees and officers with the interests of its shareholders. Prior
to expiration of the 1990 Stock Option Plan on March 31, 1995, the Stock
Option Committee awarded options to purchase 252,000 shares of Class B Common
Stock during the 1995 fiscal year to key employees and executive officers of
the Company. No options were awarded to the Chief Executive Officer during
fiscal year 1995. Options granted to the other Named Executive Officers during
the last three fiscal years are reflected in the Summary Compensation Table
above.
THE BOARD OF DIRECTORS
R. Charles Loudermilk, Sr.
Gilbert L. Danielson
Keith C. Groen
John E. Aderhold
Leo Benatar
Earl Dolive
Ingrid Saunders Jones
Robert C. Loudermilk, Jr.
R.K. Sehgal
Rankin M. Smith, Sr.
8
<PAGE>
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
Set forth below is a line graph comparing, for the five-year period ending
March 31, 1995, the yearly percentage change in the cumulative total
shareholder return (assuming reinvestment of dividends) on the Company's
Common Stock with that of (i) all U.S. companies quoted on Nasdaq and (ii)
non-financial companies quoted on Nasdaq. Information with respect to the
Company's Common Stock for periods subsequent to November 1992 relates to the
Company's Class A Common Stock and Class B Common Stock and treats the
issuance to the shareholders of the Class B Common Stock in connection with
the Company's November 1992 recapitalization as a stock dividend on the Common
Stock. The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG AARON RENTS,
NASDAQ(US) STOCK INDEX AND NASDAQ NON-FINANCIAL STOCK INDEX
<CAPTION>
Measurement period AARON NASDAQ NASDAQ
(Fiscal year Covered) RENTS (US) STOCK NON-FINANCIAL STOCK
- --------------------- ----- ---------- -------------------
<S> <C> <C> <C>
Measurement PT -
03/31/90 $ 100 $ 100 $ 100
FYE 03/31/91 $ 78 $ 114 $ 118
FYE 03/31/92 $ 114 $ 146 $ 147
FYE 03/31/93 $ 184 $ 167 $ 159
FYE 03/31/94 $ 221 $ 181 $ 174
FYE 03/31/95 $ 243 $ 201 $ 190
</TABLE>
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
Messrs. Loudermilk, Sr., Danielson, Groen, Butler, Stahl and Sinclair have
each entered into employment agreements with the Company. The agreements
provide that each executive's employment with the Company will continue until
terminated by either party for any reason upon 60 days notice, or by either
party for just cause at any time. Each executive has agreed not to compete
with the Company for a period of one year after the termination of his
employment.
DIRECTOR COMPENSATION
Outside directors receive $1,000 for each Board meeting attended, and Audit
Committee members receive fees of $500 for each Audit Committee meeting
attended. Each outside director also is paid a quarterly retainer of $1,000.
Directors who are employees of the Company receive no compensation for
attendance at Board or committee meetings, and Stock Option Committee members
received no compensation for attendance at meetings of such committee.
9
<PAGE>
OPTION GRANTS
The following table sets forth information with respect to grants of stock
options under the Company's 1990 Stock Option Plan during the last fiscal year
to the Company's Chief Executive Officer and the Named Executive Officers. In
addition, the hypothetical gains or "option spreads" that would exist for the
respective options, based on assumed rates of annual compound stock
appreciation of 5% and 10% from the date the options were granted over the
full option term, are also reflected:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED
SECURITIES TOTAL OPTIONS ANNUAL RATES OF STOCK
UNDER- GRANTED TO EXERCISE PRICE APPRECIATION FOR
LYING EMPLOYEES OR BASE EXPIRA- OPTION TERM (1)
OPTIONS IN FISCAL PRICE TION ----------------------
NAME GRANTED YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------- -------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
R. Charles Loudermilk,
Sr..................... --
Gilbert L. Danielson
(2).................... 10,000 4% $12.00 5/1/99 $ 33,154 $ 73,261
17,000 7% $12.75 5/26/99 59,884 132,328
15,000 6% $13.88 3/31/00 57,522 127,108
William Kenneth Butler
(2).................... 12,000 5% $12.75 5/26/99 42,271 93,408
10,000 4% $13.88 3/31/00 38,348 84,739
Brian E. Stahl (2)...... 6,000 2% $12.75 5/26/99 21,136 46,704
25,000 10% $13.88 3/31/00 95,870 211,847
</TABLE>
- --------
(1) These amounts represent assumed rates of appreciation only. Actual gains,
if any, on stock option exercises and holdings of Common Stock are
dependent upon the future performance of the Common Stock and overall
market conditions. There can be no assurance that the amounts reflected in
this table will be achieved.
(2) These options were granted pursuant to the Company's 1990 Stock Option
Plan and consist of options to acquire Class B Common Stock. Such options
have terms of five years from the date of grant and will vest on the
second anniversary of the date of grant, or earlier upon the occurrence of
a change of control of the Company.
10
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows for the Company's Chief Executive Officer and the
Named Executive Officers information with respect to the exercise of options
during fiscal year 1995, the number of shares covered by both exercisable and
non-exercisable stock options as of March 31, 1995, and the values of "in-the-
money" options,based on the positive spread between the exercise price of any
such existing stock options and the year-end price of the applicable class of
the Company's Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
SHARES UNDERLYING UNEXERCISED THE-
ACQUIRED OPTIONS AT MARCH 31, 1995 MONEY OPTIONS AT
ON VALUE (NO. OF SHARES) MARCH 31, 1995(1)
EXERCISE REALIZED ------------------------- -------------------------
NAME CLASS (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Charles Loudermilk,
Sr..................... A 50,000 $400,000 150,000 -- $1,275,000 --
B 50,000 381,250 150,000 -- 1,162,500 --
Gilbert L. Danielson.... A 5,000 41,875 4,000 -- 34,000 --
B 5,000 27,500 4,000 47,000 31,000 $54,500
William Kenneth Butler.. A 5,000 41,250 4,000 -- 34,000 --
B 5,000 36,291 14,000 22,000 66,000 12,000
Brian E. Stahl.......... A 5,000 32,500 2,000 -- 17,000 --
B 5,000 36,250 2,000 31,000 15,500 6,000
</TABLE>
- --------
(1) Aggregate market value (based on March 31, 1995 closing stock price of
$14.50 per share for the Class A Common Stock and $13.75 per share for the
Class B Common Stock) of the shares covered by the options, less aggregate
exercise price payable by the executive.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has no Compensation Committee. The Board of Directors of the
Company, upon the recommendation of the Chairman and Chief Executive Officer,
determines the annual compensation payable to its executive officers. The
following directors of the Company served as officers or employees of the
Company or its subsidiaries during the last fiscal year or prior thereto: R.
Charles Loudermilk, Sr., Gilbert L. Danielson, Keith C. Groen and Robert C.
Loudermilk, Jr.
The Company leases from Mr. Loudermilk, Sr. a 51,000 square foot building
housing two stores and a vacant facility in Oklahoma City under a lease
expiring in 1999 at a basic monthly rental of $13,340, less the monthly rent
of $2,625 from the subtenant currently in the vacant facility. All insurance,
taxes, assessments and other charges related to the property are paid by the
Company as additional rent under the lease. Mr. Loudermilk, Sr. purchased the
building in November 1980 from the Company at its cost of $950,000.
The Company also leases a 49,000 square foot building housing four stores in
Alexandria, Virginia from a general partnership of which Mr. Loudermilk, Sr.
is a 25% partner under a lease expiring in 1999 at a basic monthly rental of
$16,882, subject to escalation every five years based on the consumer price
index, but not to exceed 5%. All insurance, taxes, assessments and other
charges related to the property are paid by the Company as additional rent
under the lease. The building was constructed by the Company at a cost of
$1,200,000 and was purchased by the partnership at the Company's cost upon the
building's completion in May 1980.
11
<PAGE>
The Company also leases a 27,000 square foot building housing one store and
a subtenant in College Station, Texas from a general partnership composed of
Messrs. Loudermilk, Sr. and Loudermilk, Jr., under a lease expiring in 1999 at
a basic monthly rental of $6,000, less the monthly rent of $1,500 from the
current subtenant. All insurance, taxes, assessments and other charges related
to the property are paid by the Company as additional rent under the lease.
The partnership purchased the building in March 1989 from an owner unrelated
to either the Company or the partnership at a cost of $525,000 and
subsequently expended approximately $71,250 on permanent improvements.
The Company also leases a 67,000 square foot building housing two stores and
a distribution center from Robert C. Loudermilk, Jr., under a lease expiring
in 2004 at a basic monthly rental of $15,913. All insurance, taxes, repairs,
assessments and other charges related to the property are paid by the Company
as additional rent under the lease. Mr. Loudermilk, Jr. purchased the building
in 1994 from an owner unrelated to either the Company or Mr. Loudermilk, Jr.
at a cost of $1,150,000 and subsequently expended approximately $150,000 on
repairs to the building. The Company spent $239,515 on improvements to
accommodate its use of the building.
The Company believes that the property sales and lease terms are as
favorable as those that could have been obtained at the same time from
unaffiliated parties.
Each of two irrevocable trusts holds a cash value life insurance policy on
the life of Mr. Loudermilk, Sr., the aggregate face value of which is
$4,400,000. The Company and the Trustee of such trusts are parties to split-
dollar agreements pursuant to which the Company has agreed to make all
payments on the policies until Mr. Loudermilk, Sr.'s death. Upon his death,
the Company will receive the aggregate cash value of those policies, which as
of March 31, 1995 represented $433,051, and the balance of such policies will
be payable to the trusts or beneficiaries of such trusts. The premiums paid by
the Company on these policies during the past fiscal year totalled $161,756.
AUDIT MATTERS
Ernst & Young served as auditors of the Company for the fiscal year ending
March 31, 1995. A representative of that firm is expected to be present at the
Annual Meeting and will have an opportunity to make a statement and respond to
appropriate questions.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
In accordance with the provisions of Rule 14a-8(a)(3)(i) of the Securities
and Exchange Commission, proposals of shareholders intended to be presented at
the Company's 1996 annual meeting must be received by March 17, 1996 in order
to be eligible for inclusion in the Company's proxy statement and form of
proxy for that meeting.
12
<PAGE>
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
brought before the Annual Meeting. However, if other matters should properly
come before the Annual Meeting, it is the intention of each person named in
the proxy to vote such proxy in accordance with his judgment of what is in the
best interest of the Company.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WILL BE FURNISHED TO SHAREHOLDERS UPON REQUEST WITHOUT
CHARGE. REQUESTS FOR FORM 10-K REPORTS SHOULD BE SENT TO GILBERT L. DANIELSON,
VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER, AARON RENTS, INC., 309 E.
PACES FERRY ROAD, N.E., ATLANTA, GEORGIA 30305-2377.
BY ORDER OF THE BOARD OF DIRECTORS
Keith C. Groen
Vice President, Legal and Secretary
July 13, 1995
13
<PAGE>
AARON RENTS, INC.
<PAGE>
LOGO
AARON RENTS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON AUGUST 1, 1995
CLASS A COMMON STOCK PROXY
The undersigned shareholder of Aaron Rents, Inc. hereby constitutes and
appoints R. Charles Loudermilk, Sr. and Keith C. Groen, or either of them, the
true and lawful attorneys and proxies of the undersigned with full power of
substitution and appointment, for and in the name, place and stead of the
undersigned, to vote all of the undersigned's shares of Class A Common Stock of
Aaron Rents, Inc., at the Annual Meeting of the Shareholders to be held in
Atlanta, Georgia on Tuesday, the 1st day of August, 1995, at 10:00 a.m., and at
any and all adjournments thereof as follows:
(1) [_] FOR all nominees listed below (except as marked to the
contrary below):
NOMINEES: R. Charles Loudermilk, Sr., Gilbert L.
Danielson, Keith C. Groen, John E. Aderhold, Earl Dolive,
Robert C. Loudermilk, Jr., Rankin M. Smith, Sr., R.K.
Sehgal, Leo Benatar and Ingrid Saunders Jones.
[_] WITHHOLD AUTHORITY to vote for the nominees listed.
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
----------------------------------------------------------------------
(2) For the transaction of such other business as may lawfully come before the
meeting, hereby revoking any proxies as to said shares heretofore given by
the undersigned and ratifying and confirming all that said attorneys and
proxies may lawfully do by virtue hereof.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" EACH OF THE NOMINEES LISTED ABOVE
AND UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED,
THE PROXY WILL BE SO VOTED.
<PAGE>
LOGO
It is understood that this proxy confers discretionary authority in respect
to matters not known or determined at the time of the mailing of the notice of
the meeting to the undersigned.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders dated July 13, 1995 and the Proxy Statement furnished
therewith.
Dated and signed: ___________________, 1995
-------------------------------------------
-------------------------------------------
(Signature should agree with the name(s)
hereon. Executors, administrators, trust-
ees, guardians and attorneys should so in-
dicate when signing. For joint accounts
each owner should sign. Corporations
should sign their full corporate name by a
duly authorized officer.)
This proxy is revocable at or at any time prior to the meeting. Please sign
and return this proxy to Trust Company Bank, Attn: Corporate Trust Department,
P.O. Box 4625, Atlanta, Georgia 30302, in the accompanying prepaid envelope.
