<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] 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)
Payment of Filing Fee (Check the appropriate box):
[X] No Filing Fee Required.
[_] $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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AARON RENTS, INC.
309 E. PACES FERRY ROAD, N.E.
ATLANTA, GEORGIA 30305-2377
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 6, 1997
The 1997 Annual Meeting of Shareholders of Aaron Rents, Inc. (the "Company")
will be held on Tuesday, May 6, 1997, at 10:00 a.m., Atlanta time, on the
tenth floor of SunTrust Bank, 303 Peachtree St., Suite 1000, Atlanta, Georgia
30303, 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 March 7, 1997 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
April 11, 1997
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 MAY 6, 1997
GENERAL INFORMATION
The enclosed proxy is being solicited by the Board of Directors of Aaron
Rents, Inc. (the "Company") for use at the 1997 annual meeting (the "Annual
Meeting") of shareholders to be held on Tuesday, May 6, 1997, 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 March 7, 1997 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 March 7, 1997, the Company had 3,941,906 shares of Class A
Common Stock and 15,696,246 shares of Common Stock (formerly known as 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 Common Stock are
not entitled to vote with respect to the election of directors, or 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 Class A and 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 April 14, 1997.
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of December 31, 1996 (except as otherwise
noted), the beneficial ownership of the Company's Class A and 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, Class A 2,379,249 60.34%
Sr. Common 3,472,444(2) 22.04%
309 E. Paces Ferry Road
Atlanta, Georgia
Gabelli Funds, Inc. Class A 429,000(3) 10.88%
One Corporate Center Common 703,000(4) 4.46%
Rye, New York
Gilbert L. Danielson Class A -0- *
Common 67,710(5) *
Keith C. Groen Class A -0- *
Common 12,433(6) *
Earl Dolive Class A 86,374 2.19%
Common 128,702 *
Robert C. Loudermilk, Jr. Class A 1,500 *
Common 518,330(7) 3.28%
R.K. Sehgal Class A -0- *
Common -0- *
Leo Benatar Class A 2,500 *
Common 2,500 *
Ingrid Saunders Jones Class A -0- *
Common 100 *
M. Collier Ross Class A -0- *
Common 1,000 *
J. Rex Fuqua Class A -0- *
Common 23,000(8) *
William K. Butler, Jr. Class A -0- *
Common 51,877(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(10) *
Common 15,148(11) *
All executive officers Class A 2,471,623(10) 62.65%
and directors as a Common 4,299,494(12) 26.99%
group (a total of 13
persons)
</TABLE>
- --------
* Less than 1%
(1) Amounts shown do not reflect that the 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 such class 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.
(2) Includes 242,348 shares of Common Stock held by a trust for the benefit
of a daughter of Mr. Loudermilk, Sr. of which Mr. Loudermilk, Sr. serves
as trustee.
(3) As reflected in an amended Schedule 13D filed with the Securities and
Exchange Commission in January, 1997.
(4) Gabelli Funds, Inc. is not required to disclose its holdings of non-
voting, Common Stock, but the Company is advised by The Nasdaq Stock
Market that Gabelli Funds, Inc. held 703,000 shares of Common Stock as of
December 31, 1996.
(5) Includes currently exercisable options to purchase 64,000 shares of
Common Stock.
(6) Includes currently exercisable options to purchase 8,000 shares of Common
Stock.
(7) Includes 54,906 shares of Common Stock held by certain trusts for the
benefit of Mr. Loudermilk, Jr.'s children of which Mr. Loudermilk, Jr.
serves as trustee and currently exercisable options to purchase 40,000
shares of Common Stock.
(8) Includes 8,000 shares of Common Stock held by certain trusts for the
benefit of Mr. Fuqua's children, with respect to which Common Stock Mr.
Fuqua has neither voting rights nor dispositive power.
(9) Includes currently exercisable options to purchase 44,000 shares of
Common Stock.
(10) Represents currently exercisable options to purchase 2,000 shares of
Class A Common Stock.
(11) Includes currently exercisable options to purchase 12,000 shares of
Common Stock.
(12) Includes currently exercisable options to purchase 173,000 shares of
Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 fiscal year
ended December 31, 1996, except that Mr. Dolive inadvertently was late in
filing one report.
3
<PAGE>
ELECTION OF DIRECTORS
(ITEM 1)
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, Sr. 69 Mr. Loudermilk, Sr. has served as 1962
President, Chief Executive Officer
and Chairman of the Board of the
Company since the Company's
incorporation in 1962. He has been a
director of America's Mart
Corporation, owner and manager of
the Atlanta Merchandise Mart, since
1996. He is a member of the Advisory
Board of the Norfolk Southern
Company, 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 50 Mr. Danielson has served as Vice 1990
President, Finance and Chief
Financial Officer and Director of
the Company since 1990.
Keith C. Groen 54 Mr. Groen has served as Vice 1987
President, Legal of the Company
since 1984. He has been a Director
of the Company and Secretary since
1987.
Earl Dolive+ 79 Mr. Dolive has served as a Director 1977
of the Company since 1977. He
currently serves as a Director
Emeritus of Genuine Parts Company
and a Director of Exide Corporation,
Pameco Corp. and Greenway
Corporation. 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, Jr. 38 Mr. Loudermilk, Jr. has served as a 1983
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.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR PAST DIRECTOR
NAME AGE FIVE YEARS AND OTHER DIRECTORSHIPS SINCE
---- --- --------------------------------------- --------
<C> <C> <S> <C>
R.K. Sehgal 56 Mr. Sehgal has served as a Director of 1994
the Company since 1994. He has been
Vice Chairman and Chief Executive
Officer of H. J. Russell and Company, a
construction and property management
company, since 1996. He was President
and Chief Executive Officer of The
Williams Group International, Inc., a
holding company for various engineering
and specialty services companies, from
1995 to 1996. He was Chairman and Chief
Executive Officer of Law Companies
Group, Inc., a holding company for
various engineering and consulting
companies, serving in various
capacities with that company from 1963
to 1994.
Leo Benatar+* 67 Mr. Benatar has served as a Director of 1994
the Company since 1994. He has been an
associated consultant with A.T.
Kearney, Inc., a management consultant
and executive search company, since
1996. He was Chairman of Engraph, Inc.
and served as Chief Executive Officer
of that company from 1981 to 1995. Mr.
Benatar serves as a Director of
Interstate Bakeries Corporation, Mohawk
Industries, Inc., Riverwood
International Corporation, Paxar
Corporation and Schuller Corporation.
He previously served as Chairman of the
Federal Reserve Bank of Atlanta.
Ingrid Saunders Jones * 51 Ms. Jones has served as a Director of 1995
the 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.
J. Rex Fuqua 47 Mr. Fuqua has served as a Director of 1996
the Company since 1996. He has been
President and Chief Executive Officer
of Realan Capital Corporation, a
privately-held real estate investment
corporation, since 1985. He is
currently a Director, Vice Chairman and
a member of the Executive Committee of
Fuqua Enterprises, Inc., a company
engaged in the manufacture and sale of
medical products. He is also President
of Fuqua Capital Corporation, a
privately-held investment management
corporation owned by Mr. Fuqua and J.B.
Fuqua.
M. Collier Ross+ 70 Gen. Ross has served as Director of the 1996
Company since 1996. He is the former
Executive Vice President of Sidwell-
Ross and Associates, Inc., a management
and technical consulting firm. Gen.
Ross retired from the United States
Army in 1983 as a Lt. General after 39
years of distinguished service.
</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 December 31, 1996.
All of the incumbent directors attended at least 75% of the meetings of the
Board and committees on which they served, except for Messrs. Benatar and
Fuqua.
5
<PAGE>
The Board has a standing Audit Committee which is composed of Messrs.
Dolive, Ross 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
two meetings during the fiscal year ended December 31, 1996.
The Board has a Stock Option Committee which is composed of Mr. Benatar and
Ms. Jones. The function of the Stock Option Committee is to administer the
Company's stock option plans. The Stock Option Committee held one meeting
during the fiscal year ended December 31, 1996.
The Board does not have a nominating or compensation committee.
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 December 31, 1996. 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
(69) the Board of Directors of the Company.*
Gilbert L. Danielson Vice President, Finance and Chief Financial Officer
(50) of the Company.*
Keith C. Groen Vice President, Legal and Secretary of the
(54) Company.*
William K. Butler, Jr. Mr. Butler joined the Company in 1974 as a Store
(44) Manager. He 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
(40) Assistant Store Manager. He served as Regional Vice
President of the Northeastern Region of the Aaron
Rents' Rent-to-Rent Division from 1990 to 1995 and
currently is President of that Division.
Robert C. Loudermilk, Jr. Vice President, Real Estate of the Company.*
(38)
Robert P. Sinclair, Jr. Mr. Sinclair has served as Controller of the
(35) Company since 1990 and as Chief Financial Officer
of the Aaron's Rental Purchase Division since 1995.
</TABLE>
- --------
* Messrs. Loudermilk, Sr., Danielson, Groen and Loudermilk, Jr. are directors
of the Company. For additional information concerning those individuals, see
ELECTION OF DIRECTORS (Item 1) 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 fiscal year. The Company changed
its fiscal year-end from March 31 to December 31 effective December 31, 1995.
Amounts shown for the fiscal year ended December 31, 1995 are for the nine
month period ended on that date.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
ANNUAL COMPENSATION AWARDS
--------------------------- --------------
OTHER NUMBER OF
FISCAL ANNUAL SECURITIES
NAME AND PRINCIPAL YEAR COMPEN- UNDERLYING ALL OTHER
POSITION ENDED(1) SALARY BONUS SATION(2) STOCKOPTIONS(#) COMPENSATION
------------------ -------- -------- -------- --------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
R. Charles Loudermilk, 12/31/96 $454,000 $254,290 -- 200,000 $72,725(3)
Sr. 12/31/95 340,500 160,720 -- -0- 58,653(4)
President, Chief 3/31/95 454,000 184,000 -- -0- 56,218(5)
Executive Officer and
Chairman
Gilbert L. Danielson 31,325(6)
Vice President, Finance 12/31/96 177,500 -0- -- 100,000 36,778(7)
and Chief Financial 12/31/95 123,500 -0- -- -0- 1,498(8)
Officer 3/31/95 144,000 15,500 -- 84,000
William K. Butler, Jr. 12/31/96 162,500 -0- -- 60,000 1,909(8)
President, Rental 12/31/95 111,250 -0- -- -0- 1,271(8)
Purchase Division 3/31/95 125,000 17,500 -- 44,000 1,346(8)
Brian E. Stahl 12/31/96 162,500 -0- -- 60,000 25,436(9)
President, Rent-to-Rent 12/31/95 110,000 -0- -- -0- 32,942(10)
Division 3/31/95 86,668 38,332 -- 62,000 1,369(8)
Robert C. Loudermilk, 12/31/96 152,500 -0- -- 60,000 1,792(8)
Jr. 12/31/95 94,750 -0- -- -0- 1,260(8)
Vice President, Real 3/31/95 79,000 35,500 -- 160,000 1,354(8)
Estate
Keith C. Groen 12/31/96 100,250 -0- -- 30,000 1,178(8)
Vice President, Legal 12/31/95 73,875 -0- -- -0- 749(8)
and Secretary 3/31/95 94,750 -0- -- 12,000 1,113(8)
</TABLE>
- --------
(1) The Company changed its fiscal year-end from March 31 to December 31,
effective December 31, 1995. Amounts shown for the year ended December
31, 1995 are for the nine month period from April 1, 1995 to December 31,
1995.
(2) Excludes perquisites that do not exceed the lesser of $50,000 or 10% of
the executive's salary and bonus.
(3) Includes a matching contribution of $3,758 made by the Company to the
executive's account in the Company's 401(k) plan, club dues of $7,320 and
$61,647 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.
(4) Includes a matching contribution of $1,040 made by the Company to the
executive's account in the Company's 401(k) plan, club dues of $6,080 and
$57,613 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.
(5) Includes a matching contribution of $966 made by the Company to the
executive's account in the Company's 401(k) plan, club dues of $4,130 and
$51,122 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.
7
<PAGE>
(6) Includes a matching contribution of $2,330 made by the Company to the
executive's account in the Company's 401(k) plan, club dues of $3,650 and
$25,345 representing the reimbursement of the executive's income tax
liability resulting from club dues paid by the Company in the prior
fiscal year.
(7) Represents a matching contribution of $1,379 made by the Company to the
executive's account in the Company's 401(k) plan and club dues of
$35,280.
(8) Represents a matching contribution made by the Company to the executive's
account in the Company's 401(k) plan.
(9) Includes a matching contribution of $1,843 made by the Company to the
executive's account in the Company's 401(k) plan and $23,593 representing
the reimbursement of the executive's income tax liability resulting from
moving expenses paid by the Company in the prior fiscal year.
(10) Includes a matching contribution of $1,667 made by the Company to the
executive's account in the Company's 401(k) plan and reimbursement of
$31,275 for moving expenses.
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 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 the
fiscal year ended December 31, 1996, which represented no change in his salary
for the twelve months ended December 31, 1995. At its February, 1996 meeting,
the Board of Directors approved a bonus plan (the "Plan") for the Chief
Executive Officer for the fiscal year. Under the Plan, a bonus was to be given
to the Chief Executive Officer in an amount equal to 1% of the Company's pre-
tax earnings for the fiscal year ended December 31, 1996 (without giving
effect to his bonus under the Plan) if the Company's pre-tax earnings for such
fiscal year (after giving effect to his bonus under the Plan) exceeded pre-tax
earnings for the twelve months ended December 31, 1995, which goal ultimately
was achieved. 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.
8
<PAGE>
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. Under
the Company's 1996 Stock Option and Incentive Award Plan, options to purchase
390,000 shares of Common Stock were awarded to the Chief Executive Officer and
other officers and employees during the fiscal year ended December 31, 1996.
Pursuant to the Plan, a 100% stock dividend which was declared subsequent to
the grant of those options had the effect of increasing to 780,000 the number
of options to purchase Common Stock which were granted during the fiscal year
ended December 31, 1996. Options granted to the Chief Executive Officer and
the other Named Executive Officers during the fiscal year ended December 31,
1996 and the two prior fiscal years are reflected in the Summary Compensation
Table above.
THE BOARD OF DIRECTORS
R. Charles Loudermilk, Sr.
Gilbert L. Danielson
Keith C. Groen
Leo Benatar
Earl Dolive
Ingrid Saunders Jones
Robert C. Loudermilk, Jr.
R.K. Sehgal
J. Rex Fuqua
M. Collier Ross
9
<PAGE>
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
Set forth below is a line graph comparing, for the last five fiscal years of
the Company, 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 it's former Class B Common Stock, which was reclassified as
Common Stock during the fiscal year ending December 31, 1996, and treats the
issuance of the former Class B Common Stock to the shareholders in connection
with the Company's November 1992 recapitalization as a stock dividend. The
stock price performance shown on the graph below is not necessarily indicative
of future price performance.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG AARON RENTS, INC., NASDAQ (US) STOCK INDEX AND NASDAQ NON-FINANCIAL STOCK INDEX
Measurement period Measurement PT -
(Fiscal Year Covered) 03/31/92 FYE 3/31/93 FYE 3/31/94 FYE 3/31/95 FYE 12/31/95 FYE 12/31/96
- --------------------- ---------------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
AARON RENTS, INC. $100 $162 $194 $214 $274 $379
NASDAQ (US) STOCK INDEX $100 $115 $124 $138 $179 $220
NASDAQ NON-FINANCIAL
STOCK INDEX $100 $108 $118 $131 $162 $202
</TABLE>
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
Messrs. Loudermilk, Sr., Danielson, Groen, Butler, Stahl, Loudermilk, Jr.
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 such 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 $2,000 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 $1,000.
Directors who are employees of the Company receive no compensation for
attendance at Board or committee meetings.
10
<PAGE>
OPTION GRANTS
The following table sets forth information with respect to grants of stock
options under the Company's 1996 Stock Option and Incentive Award Plan during
the last fiscal year to the Company's Chief Executive Officer and the Named
Executive Officers. In addition, the hypothetical gains or "option spreads"
that would exist for the respective options, based on assumed rates of annual
compound stock appreciation of 5% and 10% from the date the options were
granted over the full option term, are also reflected:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS EXERCISE PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM (1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
R. Charles Loudermilk,
Sr...................... 200,000 25.6% $9.875 4/7/06 $1,242,000 $3,147,600
Gilbert L. Danielson.... 100,000 12.8% $9.875 4/7/06 621,000 1,573,800
William K. Butler, Jr... 60,000 7.7% $9.875 4/7/06 372,600 944,280
Brian E. Stahl.......... 60,000 7.7% $9.875 4/7/06 372,600 944,280
Robert C. Loudermilk,
Jr...................... 60,000 7.7% $9.875 4/7/06 372,600 944,280
Keith C. Groen.......... 30,000 3.8% $9.875 4/7/06 186,300 472,140
</TABLE>
- --------
(1) These amounts represent assumed rates of appreciation only. Actual gains,
if any, on stock option exercises and holdings of Class A and Common Stock
are dependent upon the future performance of the shares and overall market
conditions. There can be no assurance that the amounts reflected in this
table will be achieved.
(2) These options were granted pursuant to the Company's 1996 Stock Option and
Incentive Award Plan and consist of options to acquire Common Stock. Such
options have terms of ten years from the date of grant and will vest on
the third anniversary of the date of grant, or earlier upon the occurrence
of a change of control of the Company.
11
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows for the Company's Chief Executive Officer and the
Named Executive Officers information with respect to the exercise of options
during the fiscal year ended December 31, 1996, the number of shares covered
by both exercisable and non-exercisable stock options as of December 31, 1996,
and the values of "in-the-money" options, based on the positive spread between
the exercise price of any such existing stock options and the year-end price
of the applicable class of the Company's Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
ACQUIRED OPTIONS AT DECEMBER 31, THE-MONEY OPTIONS AT
ON VALUE 1996(NO. OF SHARES) DECEMBER 31, 1996(1)
EXERCISE REALIZED ------------------------- -------------------------
NAME CLASS (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----- -------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Charles Loudermilk, A 150,000 $1,500,000 -- -- -0- --
Sr...................... Common 450,000 3,656,250 -- 200,000 -0- $425,000
Gilbert L. Danielson.... A 4,000 47,000 -- -0- --
Common 12,000 136,500 64,000 130,000 $382,500 364,375
William K. Butler, Jr... A 4,000 54,000 -- -0- --
Common 6,500 76,001 44,000 80,000 272,500 228,750
Brian E. Stahl.......... A -0- -0- 2,000 -- 20,500 --
Common 6,000 63,000 12,000 110,000 67,500 380,625
Robert C. Loudermilk, A -0- -0- -- -- -- --
Jr...................... Common -0- -0- 40,000 200,000 247,500 836,250
Keith C. Groen.......... A 4,000 54,000 -- -- -- --
Common -0- -0- 8,000 42,000 72,000 124,500
</TABLE>
- --------
(1) Aggregate market value (based on December 30, 1996 closing stock price of
$13.25 per share for the Class A Common Stock and a December 31, 1996
closing stock price of $12.00 per share for the 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 leased from Mr. Loudermilk, Sr. a 51,000 square foot building
housing two stores and a vacant facility in Oklahoma City under a lease which
was to expire in 1999 at a basic monthly rental of $14,007, less the monthly
rent of $2,625 from the partial subtenant currently in the vacant facility.
All insurance, taxes, assessments and other charges related to the property
were 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. He sold the building to a party unrelated either to the Company or
to Mr. Loudermilk, Sr. on February 7, 1997.
The Company 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
$17,726, 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.
12
<PAGE>
The Company 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
partial subtenant. All insurance, taxes, assessments and other charges related
to the property are paid by the Company as additional rent under the lease.
The Company leases a 67,000 square foot building housing two stores and a
warehouse in Arlington, Texas 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. The Company has spent $336,537 on
improvements to accommodate its use of the building. Mr. Loudermilk, Jr. sold
the building to a party unrelated to either the Company or Mr. Loudermilk, Jr.
on March 26, 1997.
The Company leases a 22,000 square foot building housing one store in
Webster, Texas from Robert C. Loudermilk, Jr., under a lease expiring June 30,
2005 at a basic monthly rental of $8,031. All insurance, taxes, repairs and
assessments and other charges relating to the property are paid by the Company
as additional rent under the Lease. The Company has spent $114,836 on
improvements to accommodate its use of the building. Mr. Loudermilk, Jr. has
contracted to sell the building to a party unrelated to either the Company or
Mr. Loudermilk, Jr.
During the fiscal year ended December 31, 1996, the Company purchased
substantially all of the assets utilized in the operation of two rental
purchase stores located in Pensacola, Florida that were franchised to a
corporation owned by H. Ford Bohannon and Linda L. Bohannon, the son-in-law
and daughter, respectively, of R.C. Loudermilk, Sr. The purchase price was
$922,000.
The Company believes that the property sales, lease terms and asset purchase
described above are as favorable as those that could have been obtained at the
same time from unaffiliated parties.
During the fiscal year ended December 31, 1996, the Company made certain
cash advances for personal expenses to Mr. Loudermilk, Sr. The maximum amount
of indebtedness outstanding during the period was $55,000. Interest charged on
the advances was 6% and as of December 31, 1996 the outstanding balance of
such advances was $25,000.
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 December 31, 1996 represented $634,185, 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 fiscal year ended December
31, 1996 totaled $173,316.
In February 1996, William K. Butler and Keith C. Groen each exercised
options to acquire 4,000 shares of Class A Common Stock, which shares were
repurchased from them by the Company at the then-current market price per
share, for an aggregate purchase price of $78,000 each.
AUDIT MATTERS
Ernst & Young served as auditors of the Company for the fiscal year ended
December 31, 1996. 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.
13
<PAGE>
SHAREHOLDER PROPOSALS FOR 1998 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 1998 annual meeting must be received by December 22, 1997 in
order to be eligible for inclusion in the Company's proxy statement and form
of proxy for that meeting.
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
April 11, 1997
14
<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 MAY 6, 1997
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 6th day of May, 1997, 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, Earl Dolive, Robert C. Loudermilk, Jr., R.K. Sehgal, Leo
Benatar, Ingrid Saunders Jones, J. Rex Fuqua and M. Collier Ross.
[_] WITHHOLD AUTHORITY to vote for all 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.
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.
<PAGE>
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders dated April 11, 1997 and the Proxy Statement furnished therewith.
Dated and signed ___________, 1997
----------------------------------
----------------------------------
(Signature should agree with the
name(s) hereon. Executors, admin-
istrators, trustees, guardians
and attorneys should so indicate
when signing. For joint accounts
each owner should sign. Corpora-
tions should sign their full cor-
porate 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 SunTrust Bank, Atlanta, Attn: Corporate Trust Depart-
ment, P.O. Box 4625, Atlanta, Georgia 30302, in the accompanying prepaid enve-
lope.
