<PAGE> 1
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:
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[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
RENT-A-CENTER, INC.
(Name of Registrant as Specified in Its Charter)
Not Applicable
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
-------------------------------------------------------------------
[ ] 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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<PAGE> 2
[RENT-A-CENTER LOGO]
PROXY STATEMENT FOR
AND
NOTICE OF
2000 ANNUAL STOCKHOLDERS MEETING
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ANNUAL May 16, 2000.
MEETING: 9:30 a.m. C.S.T.
LOCATION: Rent-A-Center, Inc.
5700 Tennyson Parkway
Fourth Floor
Plano, Texas 75024
RECORD Close of business on March 23, 2000.
DATE:
If you were a stockholder of record at the close of business
on March 23, 2000, you may vote at the meeting.
NUMBER OF VOTES: Holders of our Common Stock are entitled to one vote for
each share of Common Stock they owned on March 23, 2000. The
holders of our Preferred Stock are entitled to convert their
271,426 shares of Preferred Stock into 9,716,373 shares of
our Common Stock, and thus are entitled to an equal number
of votes.
AGENDA: 1. To elect two directors.
2. To approve amendments to our Long-Term Incentive Plan
allowing for participation by independent contractors
(as defined in the Plan) and an increase in the number
of shares of our Common Stock, par value $.01 per share,
which are reserved for issuance under our Long-Term
Incentive Plan from 4,500,000 to 6,200,000 shares for
the purpose of retaining and recruiting quality
employees in order to achieve our aggressive growth
plans.
3. To transact any other proper business.
PROXIES: Unless you tell us on the proxy card to vote differently, we
will vote signed returned proxies "for" the Board's nominees
and "for" the approval of the Plan amendments. The proxy
holders will use their discretion on other matters. If a
nominee cannot or will not serve as a director, the proxy
holders will vote for a person whom they believe will carry
on our present policies.
PROXIES The Board of Directors.
SOLICITED BY:
FIRST MAILING This proxy statement is dated April 5, 2000. We are first
DATE: mailing this proxy statement on or about April 7, 2000.
REVOKING You may revoke your proxy before it is voted at the meeting.
YOUR PROXY: To revoke, follow the procedures listed on page 29 under
"Voting Procedures/Revoking Your Proxy."
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PLEASE VOTE BY RETURNING YOUR PROXY -- YOUR VOTE IS IMPORTANT
PROMPT RETURN OF YOUR PROXY WILL HELP REDUCE THE COSTS OF RESOLICITATION.
<PAGE> 3
CONTENTS
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ELECTION OF DIRECTORS....................................... 2
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION..... 11
PERFORMANCE GRAPH........................................... 12
EXECUTIVE COMPENSATION AND OTHER INFORMATION................ 13
FISCAL YEAR END OPTION VALUES............................... 15
EMPLOYMENT AGREEMENTS....................................... 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION............................................. 15
PROPOSALS FOR STOCKHOLDER ACTION............................ 17
OTHER BUSINESS.............................................. 27
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 27
RENT-A-CENTER STOCK OWNERSHIP............................... 28
VOTING PROCEDURES/REVOKING YOUR PROXY....................... 29
SUBMISSION OF STOCKHOLDER PROPOSALS......................... 30
EXHIBIT A -- AMENDED AND RESTATED RENT-A-CENTER, INC. LONG
TERM INCENTIVE PLAN....................................... A-1
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<PAGE> 4
ELECTION OF DIRECTORS
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BOARD STRUCTURE: Our Board has seven members. The directors are divided into three classes. At each annual
meeting, the term of one class expires. In general, directors in each class serve for a
term of three years. Under the terms of our Certificate of Incorporation, the holders of
our Preferred Stock are entitled to elect two of our seven directors. In addition to
Apollo's right pursuant to our Certificate of Incorporation, Apollo has similar rights
under the stockholders agreement we entered into with them and Messrs. Talley and Speese.
NUMBER OF DIRECTORS TO Two directors are to be elected.
BE ELECTED:
BOARD NOMINEES OUR BOARD HAS NOMINATED JOSEPH V. MARINER, JR. AND J.V. LENTELL TO BE REELECTED BY ALL OF
THE STOCKHOLDERS. WE URGE YOU TO VOTE FOR MESSRS. MARINER AND LENTELL.
TERMS TO EXPIRE AT THE Joseph V. Mariner, Jr. Mr. Mariner has served as a director of Rent-A-Center since
2003 ANNUAL MEETING: February 1995. Until his retirement in 1978, Mr. Mariner
served as Chairman of the Board of Directors and Chief
Executive Officer of Hydrometals, Inc., a large
conglomerate with subsidiaries engaged in the manufacture
of retail plumbing supplies, non-powered hand tools and
electronic components. Mr. Mariner currently serves as a
director of Temtex Industries, Inc., a manufacturer of
energy efficient fireplaces and gas logs, Peerless Mfg.
Co., a manufacturer of heavy oil and gas filtration
equipment and Dyson Kissner Moran Corp., a New York based
private investment company engaged in acquiring and
operating a multitude of manufacturing companies with
additional holdings in real estate. Mr. Mariner's term as a
director currently expires at this year's annual
stockholders meeting. Mr. Mariner is 79 years old.
J.V. Lentell Mr. Lentell has served as a director of Rent-A-Center since
February 1995. Mr. Lentell was employed by Kansas State
Bank & Trust Co., Wichita, Kansas, from 1966 through July
1993, serving as Chairman of the Board from 1981 through
July 1993. Since July 1993, he has served as a director and
Vice Chairman of the Board of Directors of Intrust Bank,
N.A., successor by merger to Kansas State Bank & Trust Co.
Mr. Lentell's term as a director currently expires at this
year's annual stockholders meeting. Mr. Lentell is 61 years
old.
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<PAGE> 5
CONTINUING DIRECTORS
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TERMS TO EXPIRE AT THE J. Ernest Talley Mr. Talley has served as Chairman of the Board of Directors
2001 ANNUAL MEETING: of Rent-A-Center since May 1989 and Chief Executive Officer
since November 1994. Mr. Talley operated a rent-to-own
business from 1963 to 1974 in Wichita, Kansas, which he
sold to Remco (later acquired by Thorn Americas and
acquired by us as part of the Thorn Americas acquisition)
in 1974. From 1974 to 1988, he was involved in the
commercial real estate business in Dallas, Texas. Mr.
Talley co-founded Talley Lease to Own, Inc. with his son,
Michael C. Talley, in 1987 and served as a director and
Chief Executive Officer of that company from 1988 until its
merger with Rent-A-Center on January 1, 1995. Mr. Talley's
term as a director expires at our 2001 annual stockholders
meeting. Mr. Talley is 65 years old.
Peter P. Copses Mr. Copses was appointed a director of Rent-A-Center in
August 1998. Since 1990, Mr. Copses has been a principal of
Apollo Advisors, L.P., which, together with its affiliates,
acts as managing general partner of Apollo Investment Fund,
L.P., AIF II, L.P., Apollo Investment Fund III, L.P. and
Apollo Investment Fund IV, L.P. Mr. Copses is also a
director of Prandium, Inc., a national restaurant operator,
and Zale Corporation, an operator of specialty retail
jewelry stores. Mr. Copses serves as one of the two
directors elected by the holders of our Preferred Stock.
Mr. Copses' term as a director expires at our 2001 annual
stockholders meeting. Mr. Copses is 41 years old.
TERMS TO EXPIRE AT THE Mark E. Speese Mr. Speese has served as Vice Chairman since September
2002 ANNUAL MEETING: 1999. Mr. Speese also has served as a director of
Rent-A-Center since 1990. From 1990 until April 1999, Mr.
Speese served as President of Rent-A-Center. Mr. Speese
also served as Rent-A-Center's Chief Operating Officer from
November 1994 until March 1999. From Rent-A-Center's
inception in 1986 until 1990, Mr. Speese served as a Vice
President responsible for Rent-A-Center's New Jersey
operations. Prior to joining Rent-A-Center, Mr. Speese was
a regional manager for Thorn Americas from 1979 to 1986.
Mr. Speese is also a director of Transportation Components,
Inc., a distributor of replacement parts and supplies for
commercial vehicles and equipment. Mr. Speese's term as a
director expires at our 2002 annual stockholders meeting.
Mr. Speese is 42 years old.
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3
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L. Dowell Arnette Mr. Arnette has served as a director of Rent-A-Center since
May 1999. Mr. Arnette has served as our President since
April 1999. From March 1999 until March 2000, Mr. Arnette
served as our Chief Operating Officer. From September 1996
until March 1999, Mr. Arnette served as Executive Vice
President of Rent-A-Center. From May 1995 to September
1996, Mr. Arnette served as Senior Vice President of
Rent-A-Center. From November 1994 to May 1995, he served as
Regional Vice President of Rent-A-Center. From 1993 to
November 1994, he served as a regional manager of
Rent-A-Center responsible for the southeastern region. From
1975 until 1993, Mr. Arnette was an Executive Vice
President of DEF Investments, Inc., an operator of
rent-to-own stores. Rent-A-Center acquired substantially
all of the assets of DEF and its subsidiaries in April
1993. Mr. Arnette is the brother of Joe T. Arnette, Vice
President -- Training & Personnel of Rent-A-Center. Mr.
Arnette's term as a director expires at our 2002 annual
stockholders meeting. Mr. Arnette is 52 years old.
Laurence M. Berg Mr. Berg was appointed a director of Rent-A-Center in
August 1998. Mr. Berg has been associated since 1992 and a
principal since 1995 with Apollo Advisors, L.P., which
together with its affiliates, acts as managing general
partner of Apollo Investment Fund, L.P., AIF II, L.P.,
Apollo Investment Fund III, L.P., and Apollo Investment
Fund IV, L.P. Mr. Berg is also a director of Continental
Graphics Holdings, Inc., a provider of information services
to the aerospace and professional services industry, and
Berlitz International, Inc., a provider of language
services. Mr. Berg serves as one of the two directors
elected by the holders of our Preferred Stock. Mr. Berg's
term as a director expires at our 2002 annual stockholders
meeting. Mr. Berg is 33 years old.
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BOARD INFORMATION
BOARD MEETINGS: During 1999, our Board of Directors met five times, including regularly scheduled and
special meetings. Each director attended all meetings of the Board during his service as a
director. The Board took action by unanimous written consent three times during 1999.
BOARD COMMITTEES: THE AUDIT COMMITTEE recommends the appointment of Rent-A-Center's independent auditors. It
also approves audit reports and plans, accounting policies, audit fees and certain other
expenses. The Audit Committee held two meetings in 1999. All members of the Audit Committee
are non-employee directors. A director elected by the holders of our Preferred Stock must
be a member of the Audit Committee. During 1999, Mr. Speese served as a member of the Audit
Committee while he served only as a director of Rent-A-Center. Members: Mr. Mariner,
Chairman, and Messrs. Lentell and Berg.
THE COMPENSATION COMMITTEE manages executive officer compensation. It also administers our
compensation and incentive plans, including the Long-Term Incentive Plan. The committee
evaluates the competitiveness of Rent-A-Center's compensation and the performance of the
Chief Executive Officer. It held one regular meeting in 1999 and acted by unanimous written
consent five times during 1999. All members of the Compensation Committee are non-employee
directors. A director elected by the holders of our Preferred Stock must be a member of the
Compensation Committee. During 1999, Mr. Speese served as a member of the Compensation
Committee while he served only as a director of Rent-A-Center. Members: Mr. Lentell,
Chairman, and Messrs. Mariner and Copses.
THE FINANCE COMMITTEE. In connection with the completion of the financing of the Thorn
Americas acquisition, the Board created a Finance Committee. Under our Certificate of
Incorporation, the Finance Committee must approve the issuance of debt and equity
securities, except in limited circumstances. In certain cases the approval must be
unanimous. A director elected by the holders of our Preferred Stock must be a member of the
Finance Committee. The Finance Committee did not meet during 1999. Members: Messrs.
Lentell, Talley, and Copses.
BOARD COMPENSATION
RETAINER AND FEES: Non-employee directors each receive $3,000 for each Board meeting and $1,000 for each
Committee meeting attended and are reimbursed for their expenses in attending such
meetings. Mr. Speese received Board and Committee compensation during 1999 while he served
only as a director of Rent-A-Center. Messrs. Talley and Arnette did not receive
compensation for their services as a director.
OPTION GRANTS: Non-employee directors receive options to purchase 9,000 shares of our Common Stock in
their first year of service as a director and options to purchase 3,000 shares of our
Common Stock on the first business day of each year thereafter. The exercise price of the
options is the fair market value of our Common Stock on the grant date. These options vest
and are exercisable immediately. Messrs. Talley, Speese and Arnette were not granted any
options for their services as a director.
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INDEMNIFICATION As permitted by the Delaware General Corporation Law, we have adopted provisions in our
ARRANGEMENTS: Certificate of Incorporation and Bylaws that provide for the indemnification of our
directors and officers to the fullest extent permitted by applicable law. These provisions,
among other things, indemnify each of our directors and officers for certain expenses,
including attorneys' fees, judgments, fines and settlement amounts incurred by such
director or officer in any action or proceeding, including any action by or in the right of
Rent-A-Center, on account of such director's or officer's service as a director or officer
of Rent-A-Center. In addition, we maintain a customary directors' and officers' liability
insurance policy covering our directors and officers. We believe that these indemnification
provisions are necessary to attract and retain qualified persons as directors and officers.
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<PAGE> 9
EXECUTIVE OFFICERS
The Board of Directors appoints our executive officers at the first Board of
Directors meeting following our Annual Meeting of Stockholders, and updates the
executive officer positions as needed throughout the year. Each executive
officer serves at the behest of the Board of Directors and until their
successors are elected and appointed or until the earlier of their death,
resignation or removal.
The following table sets forth certain information with respect to our executive
officers:
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NAME AGE POSITION
---- --- --------
<S> <C> <C>
J. Ernest Talley...... 65 Chairman of the Board of Directors and Chief Executive
Officer
Mark E. Speese........ 42 Vice Chairman of the Board of Directors
L. Dowell Arnette..... 52 President
Dana F. Goble......... 34 Executive Vice President and Chief Operating Officer
Robert D. Davis....... 28 Senior Vice President -- Finance, Chief Financial
Officer and Treasurer
Bradley W. Denison.... 39 Senior Vice President -- General Counsel
Mitchell E. Fadel..... 42 President and Chief Executive Officer of ColorTyme, Inc.
Anthony M. Doll....... 31 Senior Vice President
C. Edward Ford, III... 33 Senior Vice President
John H. Whitehead..... 50 Senior Vice President
David A. Kraemer...... 38 Senior Vice President
William C. Nutt....... 43 Senior Vice President
Timothy J. Stough..... 44 Senior Vice President
Mark S. Connelly...... 37 Senior Vice President
David M. Glasgow...... 31 Corporate Secretary
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J. Ernest Talley Mr. Talley has served as Chairman of the Board of
Directors of Rent-A-Center since May 1989 and Chief
Executive Officer since November 1994. Mr. Talley
operated a rent-to-own business from 1963 to 1974 in
Wichita, Kansas, which he sold to Remco (later
acquired by Thorn Americas and acquired by us as
part of the Thorn Americas acquisition) in 1974.
From 1974 to 1988, he was involved in the commercial
real estate business in Dallas, Texas. Mr. Talley
co-founded Talley Lease to Own, Inc. with his son,
Michael C. Talley, in 1987 and served as a director
and Chief Executive Officer of that company from
1988 until its merger with Rent-A-Center on January
1, 1995.
Mark E. Speese Mr. Speese has served as Vice Chairman since
September 1999. From 1990 until April 1999, Mr.
Speese served as President of Rent-A-Center. Mr.
Speese also served as Rent-A-Center's Chief
Operating Officer from November 1994 until March
1999. From Rent-A-Center's inception in 1986 until
1990, Mr. Speese served as a Vice President
responsible for Rent-A-Center's New Jersey
operations. Prior to joining Rent-A-Center, Mr.
Speese was a regional manager for Thorn Americas
from 1979 to 1986.
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L. Dowell Arnette Mr. Arnette has served as our President since April
1999. From March 1999 until March 2000, Mr. Arnette
served as our Chief Operating Officer. From
September 1996 until March 1999, Mr. Arnette served
as Executive Vice President of Rent-A-Center. From
May 1995 to September 1996, Mr. Arnette served as
Senior Vice President of Rent-A-Center. From
November 1994 to May 1995, he served as Regional
Vice President of Rent-A-Center. From 1993 to
November 1994, he served as a regional manager of
Rent-A-Center responsible for the southeastern
region. From 1975 until 1993, Mr. Arnette was an
Executive Vice President of DEF Investments, Inc.,
an operator of rent-to-own stores. Rent-A-Center
acquired substantially all of the assets of DEF and
its subsidiaries in April 1993. Mr. Arnette is the
brother of Joe T. Arnette, Vice
President -- Training & Personnel of Rent-A-Center.
Dana F. Goble Mr. Goble was appointed Chief Operating Officer in
March 2000 and Executive Vice President of Rent-A-
Center in March 1999. From December 1996 until March
1999, Mr. Goble served as Senior Vice President of
Rent-A-Center, and from May 1995 until December
1996, Mr. Goble served as Regional Vice President of
Rent-A-Center. From April 1993 to May 1995, Mr.
Goble served as regional manager for the Detroit,
Michigan area.
Robert D. Davis Mr. Davis was appointed Senior Vice President --
Finance in September 1999. In January 1999, Mr.
Davis was appointed Chief Financial Officer, Vice
President -- Finance and Treasurer. Between June
1997 and September 1998, Mr. Davis served as
Treasurer of Rent-A-Center. From January 1997 until
June 1997, Mr. Davis served as Rent-A-Center's
Assistant Secretary and Treasurer. Between June 1995
and January 1997, Mr. Davis served as the Payroll
Supervisor for Rent-A-Center and from June 1993 to
June 1995 served as an accountant for Rent-A-Center.
Bradley W. Denison Mr. Denison was appointed Senior Vice President --
General Counsel of Rent-A-Center in October 1998.
Between September 1996 and October 1998, Mr. Denison
was Vice President and Assistant General Counsel for
Thorn Americas, Inc. From August 1996 to October
1996, Mr. Denison served as Associate General
Counsel for Thorn Americas, Inc. and from June 1994
until August 1996, served as Director and Chief
Counsel for Thorn Americas, Inc. Prior to that time,
Mr. Denison served as a Staff Attorney for Thorn
Americas, Inc.
Mitchell E. Fadel Mr. Fadel has been President and Chief Executive
Officer of ColorTyme since November 1992. ColorTyme
was acquired by Rent-A-Center in May 1996.
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Anthony M. Doll Mr. Doll was appointed Senior Vice President of
Rent-A-Center in September 1998. From September 1996
until September 1998, Mr. Doll served as Regional
Vice President of Rent-A-Center. Between May 1995
and September 1996, Mr. Doll served as
Rent-A-Center's regional manager for the Detroit,
Michigan area. From April 1993 to May 1995, Mr. Doll
served as a store manager for Rent-A-Center.
C. Edward Ford, III Mr. Ford was appointed Senior Vice President of
Rent-A-Center in September 1998. From January 1997
until September 1998, Mr. Ford served as a Regional
Vice President of Rent-A-Center. Between November
1994 until January 1997, Mr. Ford served as a
regional manager for Rent-A-Center for the Tennessee
region. From July 1993 until November 1994, Mr. Ford
served as a store manager for Rent-A-Center.
John H. Whitehead Mr. Whitehead was appointed Senior Vice President of
Rent-A-Center in September 1997. Between May 1995
and September 1997, Mr. Whitehead served as a
Regional Vice President for Rent-A-Center. From July
1993 to May 1995, Mr. Whitehead served as Rent-A-
Center's regional manager for the Atlanta, Georgia
area.
David A. Kraemer Mr. Kraemer was appointed Senior Vice President of
Rent-A-Center in September 1998. From December 1995
until September 1998, Mr. Kraemer served as a
Regional Vice President for Rent-A-Center. Prior to
that time, Mr. Kraemer served as a Divisional Vice
President for MRTO Holdings from November 1990 until
Rent-A-Center acquired MRTO Holdings in September
1995.
William C. Nutt Mr. Nutt was appointed Senior Vice President of
Rent-A-Center in May 1998. Between December 1995
until May 1998, Mr. Nutt served as a Regional Vice
President for Rent-A-Center. From December 1992
through December 1995, Mr. Nutt served as Rent-A-
Center's regional manager for the Northeast Ohio
area.
Timothy J. Stough Mr. Stough was appointed Senior Vice President of
Rent-A-Center on February 1, 2000. From January 1998
to February 2000, Mr. Stough served as a Regional
Director of Thorn Americas, overseeing stores from
South Carolina to Vermont. From 1987 to 1998, Mr.
Stough served as a Market Manager for Thorn Americas
in North Carolina, South Carolina and Tennessee.
</TABLE>
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Mark S. Connelly Mr. Connelly was appointed Senior Vice President of
Rent-A-Center in September 1999. Between June 1998
and September 1999, Mr. Connelly served as Regional
Vice President for Rent-A-Center. Between February
1998 and May 1998, Mr. Connelly served as a Division
Manager of Central Rents. From October 1997 to
February 1998, Mr. Connelly acted as Director of
Operations/ Acquisitions of Spin Cycle, a start-up
chain of coin-operated laundromats. From April to
October 1997, Mr. Connelly was a group manager with
Rent Mart, a rent-to-own subsidiary of The
Associates. From June 1996 through March 1997, Mr.
Connelly was the Vice President-Operations of Trans
Texas Capital, a franchisee of ColorTyme. From
January 1995 to May 1995, Mr. Connelly served as the
Midwest area manager of Remco America.
David M. Glasgow Mr. Glasgow has served as Corporate Secretary for
Rent-A-Center since June 1995. Between June 1995 to
June 1997, Mr. Glasgow served as Corporate Secretary
and Treasurer for Rent-A-Center. From March 1995 to
June 1995, Mr. Glasgow served as accounting
operations supervisor and from June 1993 to March
1995, served as an accountant for Rent-A-Center.
</TABLE>
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<PAGE> 13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
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THE In February 1995, our Board of Directors established the
COMMITTEE: Compensation Committee to review and approve the
compensation levels for our members of senior management,
evaluate the performance of senior management, consider
management succession and consider any related matters for
us. The Compensation Committee is charged with reviewing
with our Board of Directors in detail all aspects of
compensation for our executive officers.
OVERALL We have developed a compensation program for executives and
PHILOSOPHY AND key employees designed to meet the following goals:
OBJECTIVES:
- Reward performance that increases the value of your
stock.
- Attract, retain and motivate executives and key
employees with competitive compensation opportunities.
- Build and encourage ownership of our shares.
- Balance short-term and long-term strategic goals.
- Address the concerns of our stockholders, employees, the
financial community and the general public.
To meet these objectives, we reviewed competitive
compensation data and implemented the base salary and annual
and long-term incentive programs discussed below.
EXECUTIVE The available forms of executive compensation include base
COMPENSATION: salary, cash bonus awards and incentive stock options,
restricted stock awards and stock appreciation rights. Our
performance is a key consideration in determining executive
compensation. However, our compensation policy recognizes
that stock price performance is only one measure of
performance and, given industry business conditions and our
long-term strategic direction and goals, it may not
necessarily be the best current measure of executive
performance. Therefore, our compensation policy also gives
consideration to the achievement of specified business
objectives when determining executive officer compensation.
An additional achievement of the Compensation Committee has
been to offer officers equity compensation in addition to
salary in keeping with our overall compensation philosophy,
which attempts to place equity in the hands of our employees
in an effort to further instill stockholder considerations
and values in the actions of all the employees and executive
officers.
Compensation paid to executive officers is based upon a
company-wide salary structure consistent for each position
relative to its authority and responsibility compared to
industry peers. Stock option awards in fiscal year 1999 were
used to reward certain officers and to retain them through
the potential of capital gains and equity buildup in
Rent-A-Center. The number of stock options granted is
determined by the subjective evaluation of the officer's
ability to influence our long term growth and profitability.
Stock options granted to our senior management have been
granted only pursuant to our Long-Term Incentive Plan. The
Board believes the award of options represents an effective
incentive to create value for the stockholders.
CEO Mr. Talley's base salary as our Chief Executive Officer for
COMPENSATION: fiscal year 1999 was $400,000. On January 2, 2000, we
increased his base salary approximately 25% to $500,000 in
order to raise his salary to a level the Compensation
Committee deemed to be commensurate with the Chief Executive
Officer's position at comparable publicly owned companies
and in recognition of the increased responsibilities
associated with the tremendous growth we experienced last
year. In determining the compensation of Mr. Talley, the
Compensation Committee considered Mr. Talley's performance,
his compensation history and other subjective factors. The
Compensation Committee believes that the Chief Executive
Officer's 1999 and 2000 compensation levels are justified by
Rent-A-Center's financial progress and performance against
the goals set by the Compensation Committee.
</TABLE>
COMPENSATION COMMITTEE
J. V. Lentell
Joseph V. Mariner, Jr.
Peter P. Copses
11
<PAGE> 14
PERFORMANCE GRAPH(1)
Comparison of Cumulative Total Return Among
Rent-A-Center, NASDAQ Stock Market -- Market Index and
Rent-A-Center's "Peer Group"(2)
<TABLE>
<CAPTION>
-------------------------- FISCAL YEAR ENDING ------------------------------
COMPANY/INDEX/MARKET 1/25/1995 12/29/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999
<S> <C> <C> <C> <C> <C> <C>
Rent A Center Inc 100 358.51 378.07 534.51 827.84 516.58
Customer Selected Stock List 100 75.05 70.77 61.22 42.03 28.00
NASDAQ Market Index 100 128.69 159.91 195.61 275.89 486.60
</TABLE>
(1) Assumes $100 invested on January 25, 1995 and dividends reinvested.
Historical performance does not necessarily predict future results.
(2) Because of the consolidation in the rent-to-own industry, our peer group has
changed since our initial public offering in January 1995. Our peer group
for the 1999 fiscal year consists of Aaron Rents, Inc., Bestway, Inc.,
Heilig Meyers Company, RentWay, Inc., and Rainbow Rentals, Inc.
12
<PAGE> 15
EXECUTIVE COMPENSATION AND OTHER INFORMATION
<TABLE>
<C> <S>
SUMMARY OF The following table summarizes the compensation we paid the
COMPENSATION: Chairman and Chief Executive Officer and each of the four
other most highly compensated executive officers at the end
of 1999, based on salary, bonus and stock option grants.
</TABLE>
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION(1) SECURITIES ALL OTHER
NAME & ----------------------------- UNDERLYING COMPENSATION
PRINCIPAL POSITION SALARY($) BONUS($) OPTIONS(#) ($)
------------------ --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
J. Ernest Talley......... 1999 $400,000 -- 100,000(2) --
Chairman of the Board 1998 280,000 -- -- --
& Chief Executive 1997 250,000 -- -- --
Officer
Mitchell E. Fadel(3)..... 1999 $245,000 $121,200 5,000(4) --
President & Chief 1998 235,000 104,000 -- --
Executive Officer -- 1997 210,000 96,000 10,000(5) --
ColorTyme, Inc.
L. Dowell Arnette........ 1999 $248,000 $ 15,250 25,000(6) --
President 1998 190,000 16,000 15,000(7) --
1997 160,000 25,000 -- --
Bradley W. Denison....... 1999 $235,000 $ 15,250 -- --
Senior Vice President & 1998 58,000(8) 211,000(9) 50,000(10) --
General Counsel 1997 -- -- -- --
Dana F. Goble............ 1999 $176,000 $ 15,250 20,000(11) --
Executive Vice 1998 125,000 15,865 -- --
President & Chief 1997 118,850 13,580 5,000(12) --
Operating Officer
</TABLE>
------------------------------
(1) The named executive officers did not receive any annual
compensation not properly categorized as salary or
bonus, except for certain perquisites or other benefits
the aggregate cost of which did not exceed the lesser of
$50,000 or 10% of the total of annual salary and bonus
for each such officer.
(2) In December 1999, Mr. Talley was granted 100,000 options
to purchase our Common Stock on a one-for-one basis,
pursuant to our Long-Term Incentive Plan. Of these
100,000 options, 20,189 vest over four years and expire
five years from the date of grant. The remaining 79,811
options vest over four years and expire 10 years from
the date of grant.
(3) Mr. Fadel is President of our wholly owned subsidiary
ColorTyme.
(4) In December 1999, Mr. Fadel was granted 5,000 options to
purchase our Common Stock on a one-for-one basis,
pursuant to our Long-Term Incentive Plan. The options
vest over four years and expire 10 years from the date
of grant.
(5) On January 2, 1997, Mr. Fadel was granted 10,000 new
options to replace options previously granted in 1996.
These options vest at 25% per year, beginning January 2,
1998.
(6) In January 1999, Mr. Arnette was granted 15,000 options
to purchase our Common Stock on a one-for-one basis and
in December 1999, was granted an additional 10,000
options to purchase our Common Stock on a one-for-one
basis, all pursuant to our Long-Term Incentive Plan. The
options each vest over four years and expire 10 years
from the date of grant.
(7) In July 1998, Mr. Arnette was granted 15,000 options to
purchase our Common Stock on a one-for-one basis,
pursuant to our Long-Term Incentive Plan. The options
vest over four years and expire 10 years from the date
of the grant.
13
<PAGE> 16
(8) Mr. Denison was employed by Thorn Americas, Inc. prior
to our acquisition of Thorn Americas. This amount
reflects the portion of Mr. Denison's salary paid by us.
(9) Pursuant to the Thorn Americas acquisition, Mr. Denison
received certain change of control payments under benefit
plans that Thorn Americas had in place. The Thorn
Americas purchase price was reduced by the
change-of-control payments. This amount reflects the
change-of-control payments made to Mr. Denison, which
were paid by us.
(10) In September 1998, Mr. Denison was granted 50,000 options
to purchase our Common Stock on a one-for-one basis,
pursuant to our Long-Term Incentive Plan. The options
vest over various periods and upon the achievement of
various objectives. The options expire 10 years from the
date of the grant.
(11) In January 1999, Mr. Goble was granted 10,000 options to
purchase our Common Stock on a one-for-one basis and in
December 1999, was granted an additional 10,000 options
to purchase our Common Stock on a one-for-one basis, all
pursuant to our Long-Term Incentive Plan. The options
each vest over four years and expire 10 years from the
date of grant.
(12) On January 2, 1997, Mr. Goble was granted 5,000 options
to purchase our Common Stock on a one-for-one basis,
pursuant to our Long-Term Incentive Plan. The options
vest over four years and expire 10 years from the date of
grant.
<TABLE>
<C> <S>
STOCK OPTIONS GRANTED The following table lists our grants during 1999 of stock options to the officers named
IN 1999: in the Summary Compensation Table. The amounts shown as potential realizable values
rely on arbitrarily assumed rates of share price appreciation prescribed by the SEC. In
assessing those values, please note that the ultimate value of the options, as well as
your shares, depends on actual future share values. Market conditions and the efforts
of the directors, the officers and others to foster the future success of Rent-A-Center
can influence those future share values.
</TABLE>
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF ANNUAL STOCK PRICE
SECURITIES TOTAL APPRECIATION FOR
UNDERLYING GRANTED OPTION TERM(1)
OPTIONS IN FISCAL EXERCISE EXPIRATION ---------------------
NAME GRANTED(2) 1999 PRICE DATE 5% 10%
---- ---------- --------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. Ernest Talley..... 20,189 1.0% 21.79(3) 12/31/04 $121,541 $ 268,575
79,811 3.9% 19.81(4) 12/31/09 $994,318 $2,519,796
Mitchell E. Fadel.... 5,000 0.2% 19.81(4) 12/31/09 $ 62,292 $ 157,860
L. Dowell Arnette.... 15,000 0.7% 30.50(4) 01/04/09 $287,719 $ 729,137
10,000 0.5% 19.81(4) 12/31/09 $124,584 $ 315,720
Bradley W. Denison... -- N/A N/A N/A N/A N/A
Dana F. Goble........ 10,000 0.5% 30.50(4) 01/04/09 $191,813 $ 486,091
10,000 0.5% 19.81(4) 12/31/09 $124,584 $ 315,720
</TABLE>
- ---------------
(1) These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option
exercises are dependent on the future performance of our
Common Stock and overall market conditions. There can be
no assurance that the amounts reflected in this table will
be achieved.
(2) Options are exercisable at 25% per year, beginning one
year from the date of grant.
(3) The exercise price was fixed at the date of grant and
represents 110% of the fair market value per share of our
Common Stock on such date.
(4) The exercise price was fixed at the date of the grant and
represented the fair market value per share of Common
Stock on such date.
14
<PAGE> 17
<TABLE>
<C> <S>
1999 OPTION HOLDINGS: The following table contains values for "in the money" options, meaning a positive
spread between the year-end share price of $19.81 and the exercise price for the
options held by our named executive officers. These values have not been, and may never
be, realized. The options might never be exercised, and the value, if any, will depend
on the share price on the exercise date. No shares were acquired during 1999 by our
named executive officers as a result of the exercise of options.
</TABLE>
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END
EXERCISABLE(E)/ EXERCISABLE(E)/
NAME UNEXERCISABLE(U) UNEXERCISABLE(U)(1)(2)
---- -------------------- ----------------------
<S> <C> <C> <C> <C>
J. Ernest Talley........................ 0(E) 100,000(U) 0(E) 0(U)
Mitchell E. Fadel....................... 5,000(E) 10,000(U) $ 27,150(E) $27,150(U)
L. Dowell Arnette....................... 18,750(E) 36,250(U) $197,100(E) 0(U)
Bradley W. Denison...................... 12,500(E) 37,500(U) 0(E) 0(U)
Dana F. Goble........................... 17,500(E) 22,500(U) $210,675(E) $13,575(U)
</TABLE>
- ------------
(1) The closing market price of our Common Stock on December
31, 1999 of $19.81, as reported on the Nasdaq National
Market of the Nasdaq Stock Market, Inc., was used in the
calculation to determine the value of unexercised options.
(2) The exercise price of certain options held by the
individuals listed in this table exceeded the closing
market price of our Common Stock on December 31, 1999.
Accordingly, no value is set forth in this table with
respect to such options.
EMPLOYMENT AGREEMENTS
<TABLE>
<C> <S>
MR. DENISON: We are a party to an employment agreement with Bradley W. Denison dated October 1,
1998, naming Mr. Denison our Senior Vice President and General Counsel effective on
October 5, 1998. The employment agreement provides for an annual salary of $235,000
plus bonus and a severance amount equal to one year's salary in the event of
termination. Mr. Denison received options to purchase 50,000 shares of our Common Stock
under our Long-Term Incentive Plan at an exercise price of $26.50 per share. Of the
50,000 options granted, 12,500 are currently exercisable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
INTRUST BANK: J.V. Lentell, one of our directors, serves as Vice Chairman of the Board of Directors
of Intrust Bank, N.A., one of our lenders. Intrust Bank, N.A. is a $15,566,540
participant in our senior credit facility, of which approximately $7,558,258 was
advanced at March 23, 2000. We also maintain a $5,000,000 revolving line of credit with
Intrust Bank, N.A. Although from time to time we may draw funds from the revolving line
of credit, no funds were advanced as of March 23, 2000. In addition, Intrust Bank, N.A.
serves as trustee of the Company's 401(k) plan.
PORTLAND/ Mitchell E. Fadel, President of ColorTyme, owns approximately 15% of each of Portland
WILSON/CTME, II RAC, Inc., CTME, LLC., and Wilson Enterprises of Maine, Inc., all of which are our
LLC: franchisees. As of March 23, 2000, Portland, Wilson and CTME collectively were indebted
to us for approximately $138,419.
APOLLO MANAGEMENT IV, On August 5, 1998, affiliates of Apollo Management IV, L.P. purchased $250 million of
L.P.: our Preferred Stock. Pursuant to the stock purchase agreement we entered into with
affiliates of Apollo Management IV, L.P., the affiliates of Apollo Management IV, L.P.
have voting control of 100% of our Preferred Stock, which gives them the right to elect
two individuals to our Board. Messrs. Berg and Copses currently serve as such directors
on our Board.
</TABLE>
15
<PAGE> 18
<TABLE>
<C> <S>
COMMITTEE INTERLOCKS: Mr. Speese served as a member of our Compensation Committee during 1999 when he served
Rent-A-Center solely as an outside director and prior to being named Vice Chairman.
Other than Mr. Speese, 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 of which an executive officer served on the Compensation Committee or Board of
Directors of Rent-A-Center.
</TABLE>
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<PAGE> 19
PROPOSALS FOR STOCKHOLDER ACTION
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
BOARD NOMINEES: Our Board has nominated Joseph V. Mariner, Jr. and J.V. Lentell to be elected by all of the
stockholders. Information about each of Messrs. Mariner and Lentell is contained in the
section entitled Election of Directors on page 2. We urge you to vote "FOR" Messrs. Mariner
and Lentell.
</TABLE>
2. APPROVAL OF THE AMENDMENTS TO THE LONG-TERM INCENTIVE PLAN
INFORMATION CONCERNING THE PLAN
<TABLE>
<C> <S>
AMENDMENTS TO THE In January 2000, the Board amended our Long-Term Incentive
PLAN: Plan to allow us to grant options under the Plan to
independent contractors. In March 2000, the Board again
amended the Plan to increase the number of common shares
reserved for issuance under the Plan from 4,500,000 to
6,200,000 for the purpose of retaining and recruiting
quality employees in order to achieve our aggressive growth
plans. We urge you to vote "FOR" the approval of these
amendments.
DESCRIPTION OF THE Below is a summary of the Plan. It does not restate the Plan
LONG-TERM INCENTIVE in its entirety and is qualified by the terms of the Plan. A
PLAN: copy of the Plan is attached to this Proxy as Exhibit A.
Under the Plan, officers, directors, employees and
independent contractors are eligible to receive awards in
the form of stock options, stock appreciation rights,
restricted stock grants and cash awards.
There are currently a total of 6,200,000 shares of our
Common Stock available for employee awards, director options
and independent contractor options granted wholly or partly
in Common Stock, including rights or options which may be
exercised for or settled in Common Stock. Of the 6,200,000
shares, 496,000 are set aside for issuance pursuant to
director options and 310,000 are set aside for stock awards.
As of March 23, 2000, 3,829,476 options were outstanding
under the Plan with a market value of $53,612,664 (based
upon the March 23, 2000 closing price of $15.00 per share),
955,475 of which are currently exercisable. The Compensation
Committee may from time to time adopt and observe such
procedures concerning the counting of shares against the
Plan maximum as it may deem appropriate under Rule 16b-3
under the Securities Exchange Act.
ADMINISTRATION OF THE The Plan is administered by the Compensation Committee of
LONG-TERM INCENTIVE our Board of Directors. The members of the Committee may be
PLAN: changed by the Board of Directors at any time as long as the
composition of the Committee still permits the Plan to
comply with Rule 16b-3 under the Exchange Act. The Committee
is presently comprised of Messrs. J. V. Lentell, Joseph V.
Mariner, Jr. and Peter P. Copses. Our members of the Board
of Directors serve three-year terms. Messrs. Lentell's and
Mariner's term will expire at this year's annual meeting and
Mr. Copses term will expire in 2001.
The Committee has full and exclusive power to interpret the
Plan and to adopt any rules, regulations and guidelines for
carrying out the Plan as it may deem necessary or proper in
the best interests of Rent-A-Center and in keeping with the
objectives of the Plan. The Committee is permitted, in its
discretion, to:
- Provide for the extension of the exercisability of an
employee award, a director option or an independent
contractor option;
- Accelerate the vesting or exercisability of an employee
award, a director option or an independent contractor
option;
- Eliminate or make less restrictive any restrictions
contained in an employee award, a director option or an
independent contractor option;
- Waive any restriction or other provision of an employee
award, a director option or an independent contractor
option; or
</TABLE>
17
<PAGE> 20
<TABLE>
<S> <C>
- Otherwise amend or modify an employee award, a director
option or an independent contractor option in any manner
that is either (a) not adverse to the participant
holding the employee award, director option or
independent contractor option, or (b) consented to by
the participant.
The Committee has the authority to correct any defect or
supply any omission or reconcile any inconsistency in the
Plan or in any employee award, director option or
independent contractor option in the manner and to the
extent the Committee deems necessary or desirable to carry
it into effect. Any decision made by the Committee in the
interpretation and administration of the Plan is final,
conclusive and binding on all parties concerned. The
Committee is permitted to delegate to the Chief Executive
Officer and to other senior officers of Rent-A-Center its
duties under the Plan. However, the Committee is not
permitted to delegate any person the authority to grant
employee awards, director options or independent contractor
options to, or take other action with respect to,
participants who are subject to Section 16 of the Exchange
Act.
The Board of Directors has the authority to amend, modify,
suspend or terminate the Plan for the purpose of meeting or
addressing any changes in legal requirements or for any
other purpose permitted by law, except that
- no amendment or alteration that would impair the rights
of any participant under any employee award, director option
or independent contractor option previously granted to
the participant will be made without the participant's
consent, and
- no amendment or alteration will be effective prior to
approval by our stockholders to the extent such approval is
then required pursuant to Rule 16b-3 in order to
preserve the applicability of any exemption provided by
that rule to any employee award, director option or
independent contractor option then outstanding, unless
the holder of such employee award, director option or
independent contractor option consents, or to the extent
stockholder approval is otherwise required by applicable
legal requirements.
The Plan is not subject to any provision of the Employee
Retirement Income Security Act of 1974.
PARTICIPANTS IN THE All of our employees and those of our subsidiaries are
LONG-TERM INCENTIVE eligible for employee awards under the Plan. The Committee
PLAN: selects the employees as participants in the Plan from time
to time by the grant of employee awards under the Plan. The
Committee will determine the type or types of awards to be
made to employees under the Plan. Our non-employee directors
are entitled to receive director options under the Plan.
Directors options are nonqualified stock options granted to
each eligible director on the first business day of each
year, providing for the purchase of 9,000 shares of our
Common Stock in the first year of service and 3,000 shares
each year thereafter. The Committee may, in its discretion,
also grant independent contractor options to independent
contractors. All independent contractor options are
nonqualified stock options. Each employee award, director
option and independent contractor option is made by a
written agreement, which contains the terms, conditions and
limitations of the employee award, director option or
independent contractor option.
AWARDS UNDER THE An employee award may consist of:
LONG-TERM INCENTIVE
PLAN: - a right to purchase a specified number of shares of our
Common Stock at a price specified by the Committee in the
agreement;
- a stock option, which is subject to applicable terms,
conditions and limitations established by the Committee
and, if the stock option is an incentive stock option,
which complies with Section 422 of the Internal Revenue
Code;
</TABLE>
18
<PAGE> 21
<TABLE>
<C> <S>
- a right to receive a payment, in cash or shares of our
Common Stock, equal to the excess of the fair market value
or other specified valuation of a specified number of
shares of our Common Stock on the date the stock
appreciation right is exercised over a specified strike
price as set forth in the applicable agreement; or
- shares of our Common Stock or may be denominated in
units of our Common Stock.
All or part of any employee award may be subject to
conditions established by the Compensation Committee and set
forth in the applicable agreement. These conditions may
include, but are not limited to:
- continuous service with us or our subsidiaries;
- achievement of specific business objectives;
- increases in specified indices; and
- attaining specified growth rates and other comparable
measurements of performance.
These employee awards may be based on fair market value or
other specified valuations. The certificates evidencing
shares of our Common Stock issued in connection with an
employee award will contain appropriate legends and
restrictions describing the terms and conditions of the
restrictions applicable to the employee award.
An employee award may be denominated 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 applicable agreement.
These restrictions and conditions may include:
- continuous service with us;
- achievement of specific business objectives;
- increases in specified indices;
- attaining specified growth rates; and
- other comparable measurements of performance.
Payment of employee awards may be made in the form of cash
or newly issued shares of our Common Stock or combinations
thereof and may include such restrictions as the
Compensation Committee shall determine including, in the
case of shares of our Common Stock, restrictions on transfer
and forfeiture provisions.
The Committee may, in its discretion, (A) permit selected
participants to elect to defer payments of some or all types
of employee awards in accordance with procedures established
by the Committee, or (B) provide for the deferral of an
employee award in an agreement or otherwise. Any such
deferral may be in the form of installment payments or a
future lump sum payment. Any deferred payment, whether
elected by the participant or specified by the applicable
agreement or by the Committee, may be forfeited if and to
the extent that the applicable agreement so provides.
Dividends or dividend equivalent rights may be extended to
and made part of any employee award denominated in shares of
our Common Stock, subject to such terms, conditions and
restrictions as the Committee may establish. The Committee
may also establish rules and procedures for the crediting of
interest on deferred cash payments and dividend equivalents
for deferred payment denominated in shares of our Common
Stock.
At the discretion of the Committee, a participant may be
offered an election to substitute an employee award for
another employee award of the same or different type.
</TABLE>
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<PAGE> 22
<TABLE>
<S> <C>
The price at which shares of our Common Stock may be purchased under a stock option must
be paid in full at the time of exercise in cash or, if permitted by the Committee, by
means of tendering shares of our Common Stock or surrendering all or part of that or any
other employee award, including restricted stock, valued at the fair market value on the
date of exercise, or any combination thereof. If permitted by the Committee, payment may
be made by successive exercises by the participant. The Committee may provide for
procedures to permit the exercise or purchase of employee awards, director options or
independent contractor options by (A) loans from us, or (B) use of the proceeds to be
received from the sale of shares of our Common Stock issuable pursuant to an employee
award, a director option or independent contractor option.
TAX EFFECTS OF PARTICIPATION IN THE LONG-TERM INCENTIVE PLAN
The following briefly summarizes the federal income tax consequences arising from
participation in the Plan. This discussion is based upon present law, which is subject to
change, possibly retroactively. The tax treatment to persons who participate in the Plan
may vary depending upon each person's particular situation and, therefore, may be subject
to special rules not discussed below. This discussion does not address the effects, if
any, under any potentially applicable foreign, state, or local tax laws, or the
consequences thereunder, or the effects, if any, of any local, federal gift, estate, or
inheritance taxes, or the consequences thereunder, that may result from the acquisition,
holding, or disposition of shares of our Common Stock issued under the terms of the Plan.
We have the right to deduct applicable taxes from any employee award, director option or
independent contractor option and withhold, at the time of delivery or vesting of cash
shares of our Common Stock under the Plan, an appropriate amount of cash or number of
shares of our Common Stock or a combination thereof for payment of taxes required by law
or to take such other action as may be necessary in our opinion to satisfy all obligations
for withholding of such taxes. The Committee may also permit withholding to be satisfied
by the transfer to us of shares of our Common Stock owned by the holder of the employee
award, director option or independent contractor option with respect to which withholding
is required. If shares of our Common Stock are used to satisfy tax withholding, those
shares shall be valued based on the fair market value when the tax withholding is required
to be made.
PARTICIPANTS The Plan is intended to comply with the requirements of Rule 16b-3 promulgated under the
SUBJECT TO Exchange Act relating to rules for our directors, officers and 10% stockholders. Therefore,
SECTION 16(b) because the acquisition of shares of our Common Stock will not be deemed to be a "purchase"
OF THE for purposes of Section 16(b) of the Exchange Act, a sale of shares of our Common Stock by
EXCHANGE a Plan participant within six months after the date of exercise of an option or SAR, or the
ACT: date restrictions on a restricted stock award lapse, should not necessarily subject the
Plan participant to liability under Section 16(b) of the Exchange Act. However, because the
sale of shares of our Common Stock can still be "matched" with other purchases, if a Plan
participant has purchased shares of our Common Stock or a right to acquire shares of our
Common Stock which is considered a "purchase" for purposes of Section 16(b) within six
months before the date of exercise of an option or SAR, or the date restrictions on a
restricted stock award lapse, the Plan participant may have short-swing liability under
Section 16(b) if he or she were to sell shares of our Common Stock within six months after
the date of the interim purchase. The IRS has not yet formally taken a position about the
tax consequences of this fact situation. However, because an interim purchase would trigger
liability upon the sale of shares of our Common Stock within six months after the interim
purchase, the shares of our Common Stock may be treated as subject to a "substantial risk
of forfeiture" under Section 83(c) of the Internal Revenue Code and not transferable and,
therefore, substantially non-vested. The following discussion assumes either that no
interim purchases were made or that interim purchases do not cause shares of our Common
Stock to be substantially non-vested for Plan participants subject to Rule 16b-3. Plan
participants subject to Rule 16b-3 should consult with a tax advisor.
</TABLE>
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<TABLE>
<C> <S>
NONQUALIFIED A Plan participant will not recognize taxable income upon
STOCK the grant of a nonqualified stock option. The federal income
OPTIONS: tax consequences to a Plan participant of exercising a
nonqualified stock option will vary depending on whether the
shares of our Common Stock received upon the exercise of
such option are either "substantially vested" or
"substantially non-vested" within the meaning of Section 83
of the Internal Revenue Code. Generally, such shares will be
"substantially non-vested" if they are both non-transferable
and subject to a substantial risk of forfeiture, and will be
"substantially vested" if they are either transferable or
not subject to a substantial risk of forfeiture. A Plan
participant generally should not recognize compensation
income upon exercising a nonqualified stock option for
shares that are "substantially non-vested" until such shares
become "substantially vested." A Plan participant who wishes
to recognize compensation income at the time of the exercise
of such an option, rather than when the shares become
"substantially vested," must file an election under Section
83(b) of the Internal Revenue Code.
A Section 83(b) election is made by filing a written notice
with the IRS office with which the Plan participant files
his or her federal income tax return. The notice must be
filed within 30 days of the Plan participant's receipt of
the shares of our Common Stock related to the applicable
award and must meet certain technical requirements.
Taxation of Plan Upon the exercise of a nonqualified stock option, a Plan
Participants participant will most likely receive stock that is
substantially vested. Therefore, the Plan participant will
recognize ordinary income upon the exercise of the
nonqualified stock option in an amount equal to the excess
of the fair market value of the shares of our Common Stock
received on the date of exercise over the exercise price.
Company Deduction We will be entitled to a corresponding deduction equal to
the amount recognized as income by a Plan participant at the
time such amount is recognized by the Plan participant,
provided that the Plan participant's compensation is
reasonable in amount, and otherwise within statutory
limitations.
Basis The Plan participant's basis in the shares of our Common
Stock acquired upon the exercise of a nonqualified stock
option will be the exercise price plus the amount of
ordinary income recognized by the Plan participant with
respect to those shares of Common Stock, assuming the
exercise price is paid solely in cash. The tax basis in the
shares of our Common Stock for which the exercise price is
paid in stock, if permitted by the Committee pursuant to the
Plan, is discussed below under the caption "Tax Implications
Related to the Exercise of Stock Options with Rent-A-Center
Common Stock."
Subsequent Sale or Upon the sale or other disposition of the shares of our
Disposition of Common Stock acquired upon the exercise of a nonqualified
Common Stock stock option, a Plan participant will recognize taxable
income, or a deductible loss, equal to the difference
between the amount realized on the sale or disposition and
the Plan participant's basis in the shares of our Common
Stock. The Plan participant's gain or loss will be taxable
as a capital gain or deductible as a capital loss provided
the shares constitute a capital asset in the hands of the
Plan participant. The type of capital gain or loss will
depend upon the holding period of the shares of our Common
Stock. If the shares of our Common Stock are held for twelve
months or less, there will be a short-term capital gain or
loss on sale or disposition.
Finally, if the shares of our Common Stock are held for more
than twelve months, there will be long-term capital gain or
loss on sale or disposition.
</TABLE>
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<TABLE>
<C> <S>
INCENTIVE Incentive stock options may be granted only to our employees
STOCK and employees of our subsidiaries.
OPTIONS:
An employee will not recognize any taxable income upon the
grant of an incentive stock option. An employee also will
not recognize any taxable income upon the exercise of an
incentive stock option provided that the employee (A) was an
employee at all times beginning on the date the option was
granted and ending on the date three months before the
option was exercised, or one year in the case of a disabled
employee, and (B) holds our Common Stock related to the
option for at least two years after the date the option was
granted and for at least one year after the date the option
was exercised.
Alternative The exercise of an incentive stock option will result,
Minimum Tax however, in an item of income for purposes of determining
the alternative minimum tax. Liability for tax under the
alternative minimum tax rules will arise only if the
employee's tax liability determined under the alternative
minimum tax rules exceeds the employee's tax liability
determined under the ordinary income tax rules. The exercise
of an incentive stock option will give rise to an item of
alternative minimum tax income to an employee in an amount
equal to the excess of the fair market value of the shares
of our Common Stock received on the date the option is
exercised over the exercise price. Plan Alternative
participants who exercise incentive stock options and
receive shares of our Common Stock that are subject to a
substantial risk of forfeiture within the meaning of Section
Minimum Tax 83(c) of the Internal Revenue Code are urged to
consult their tax advisor concerning the application of the
alternative minimum tax rules.
Company We will not be entitled to a deduction for federal income
Deduction tax purposes with respect to the grant of an incentive stock
option to an employee under the Plan, the exercise of such
option by the employee, or the sale of the shares of our
Common Stock acquired through the exercise of such option by
the employee subsequent to the expiration of the holding
period.
Basis The employee's tax basis in the shares of our Common Stock
acquired upon the exercise of an incentive stock option for
which the exercise price is paid solely in cash will be
equal to the amount of the cash paid. The tax basis in the
shares of our Common Stock for which the exercise price is
paid in stock, if permitted by the Committee pursuant to the
Plan, is discussed below under the caption "Tax Implications
Related to the Exercise of Stock Options With Rent-A-Center
Common Stock."
Subsequent Sale or If the shares of our Common Stock acquired upon the exercise
Disposition after of an incentive stock option are sold after the expiration
Holding Period of the holding period, which is two years after grant and
one year after exercise, upon the sale of such shares of our
Common Stock, the employee will recognize a long-term
capital gain, or loss, in an amount equal to the excess, or
deficiency, of the sales price over the employee's basis,
provided the shares are held as a capital asset by the
employee.
Disqualifying If the shares of our Common Stock acquired upon the exercise
Disposition by of an incentive stock option are sold before the expiration
Employees of the holding period, the employee will recognize ordinary
income in an amount equal to the lesser of (A) the excess of
the fair market value of the shares of our Common Stock on
the date of exercise over the exercise price, or (B) the
amount realized on the sale of such stock over the exercise
price.
Capital Gain If the amount realized by an employee on the sale of the
shares of our Common Stock exceeds the fair market value of
such shares on the date of exercise, the excess will be
taxed to the employee as a short-term or long-term capital
gain, provided that the employee held the shares of our
Common Stock as a capital asset.
</TABLE>
22
<PAGE> 25
<TABLE>
<C> <S>
Company Deduction Upon the occurrence of a disqualifying disposition, we will
be entitled to a deduction for federal income tax purposes
equal to the amount of ordinary income recognized by the
employee, provided that the employee's compensation is
reasonable and is otherwise within statutory limitations.
Alternative If an employee exercises an incentive stock option and sells
Minimum Tax the shares of our Common Stock related thereto in a
disqualifying disposition in the same taxable year, the tax
treatment for purposes of ordinary income tax and
alternative minimum tax will be the same, resulting in no
additional alternative minimum tax liability. Conversely, if
the employee sells shares of our Common Stock in a
disqualifying disposition in a tax year subsequent to the
tax year in which the incentive stock option was exercised,
the employee will recognize alternative minimum tax income,
as determined above, in the first taxable year, and ordinary
taxable income, but not alternative minimum tax income, in
the year in which the disposition was made.
Exercise Following Under certain circumstances, shares of our Common Stock
Employee's Death acquired upon exercise of an incentive stock option
following the employee's death will receive the tax
treatment described herein without regard to the holding
period requirement
TAX IMPLICATIONS The Plan permits, subject to the discretion of the
RELATED TO THE Committee, the exercise price of stock options to be paid
EXERCISE OF STOCK with shares of our Common Stock owned by the Plan
OPTIONS WITH participant. The Committee does not presently intend to
RENT-A-CENTER allow the use of shares of our Common Stock that are
COMMON STOCK: substantially non-vested, i.e., nontransferable or subject
to a substantial risk of forfeiture and for which a Section
83(b) election has not been filed, to pay the exercise price
of a stock option. Therefore, only shares of our Common
Stock that are substantially vested may be used to pay the
exercise price of a stock option.
Nonqualified If a Plan participant pays the exercise price of a
Stock Options nonqualified stock option with shares of our Common Stock
that are substantially vested, including, pursuant to
proposed IRS regulations, stock obtained through the
exercise of an incentive stock option and not held for the
holding period, the Plan participant will not recognize any
gain on the shares surrendered. With respect to the shares
of our Common Stock received, that portion of the shares of
our Common Stock equal in number to the shares of our Common
Stock surrendered will have a basis equal to the basis of
the shares surrendered. The excess shares received will be
taxable to the Plan participant as ordinary compensation
income in an amount equal to the fair market value (A) if
the excess shares are substantially vested, as of the
exercise date, or (B) if the excess shares are substantially
non-vested, as of the applicable date. As used in this
discussion, "applicable date" means the earlier of (1) the
date the Plan participant disposes of the shares of our
Common Stock issued under the terms of the Plan, or (2) the
first date on which shares of our Common Stock issued under
the terms of the Plan become substantially vested. The Plan
participant's basis in those excess shares of our Common
Stock will equal the amount of ordinary compensation income
recognized by the Plan participant.
Incentive The tax consequences to an employee from using shares of our
Stock Options Common Stock to pay the exercise price of incentive stock
options will depend on the status of the shares of our
Common Stock acquired.
If an employee pays the exercise price of an incentive stock
option for stock that is substantially vested with shares of
our Common Stock that are substantially vested, under
proposed IRS regulations the employee will not recognize any
compensation income or gain with respect to the shares
surrendered. With respect to the shares of our Common Stock
received, that portion of the shares of our Common Stock
equal in number to the shares of our Common Stock
surrendered will have a basis equal to the basis of the
shares surrendered. The holding period of the surrendered
shares will be carried over to the equivalent number of
shares of our Common Stock received. The employee will
recognize no gain with respect to the excess shares
received, the basis of such shares will be zero, and the
holding period of such shares will begin on the date of
receipt thereof by the employee. Similarly, it appears that
if the employee pays the exercise price for substantially
non-vested shares of our Common Stock with shares of our
Common Stock that are substantially vested, the tax
consequences will be the same.
</TABLE>
23
<PAGE> 26
<TABLE>
<C> <S>
If an employee exercises an incentive stock option granted
pursuant to the Plan using shares of our Common Stock that
were obtained through the exercise of an incentive stock
option, whether granted under the Plan or under another one
of our plans, and that have been held by the employee for
the holding period for either substantially vested shares of
our Common Stock or substantially non-vested shares of our
Common Stock, the tax consequences of such payment to the
employee will be identical to those discussed in the
preceding paragraph.
Conversely, if an employee exercises an incentive stock
option granted pursuant to the Plan using shares of our
Common Stock received upon the prior exercise of an
incentive stock option, whether granted under the Plan or
under another one of our plans, and the employee has not
held that Common Stock for the holding period, under
proposed IRS regulations the employee will have made a
disqualifying disposition of the number of shares of our
Common Stock used as payment for the exercise price of the
incentive stock option. If the employee receives shares of
our Common Stock that is substantially vested, the employee
generally will recognize ordinary compensation income with
respect to the surrender of those shares equal to the excess
of the fair market value of the shares of our Common Stock
surrendered, determined as of the date the option relating
to such shares of our Common Stock was exercised, over the
exercise price of the shares surrendered. It is unclear
whether, if the employee receives shares of our Common Stock
that is substantially non-vested, the recognition of income
will be deferred until the shares of our Common Stock
becomes substantially vested. The basis of the shares
received will equal the amount of ordinary compensation
income recognized by the employee plus the employee's basis
in the shares surrendered, allocated equally among the
shares received.
RESTRICTED STOCK
GRANTS:
Taxation of Plan A Plan participant who receives a restricted stock award
Participants will recognize ordinary income equal to the fair market
value of the shares of our Common Stock received at the time
the restrictions lapse, unless the Plan participant makes a
Section 83(b) election to report the fair market value of
the shares of our Common Stock received as restricted stock
as ordinary income at the time of receipt. If any amount is
paid for the restricted stock, the Plan participant will
include in income the excess of the fair market value of the
shares of our Common Stock received over the amount, if any,
paid for such shares, either at the time the restrictions
lapse or when the Plan participant makes a Section 83(b)
election.
Company Deduction We may deduct an amount equal to the income recognized by
the Plan participant at the time the Plan participant
recognizes the income, provided the Plan participant's
compensation is reasonable, and otherwise within statutory
limitations.
Basis The basis of the restricted stock in the hands of the Plan
participant will be equal to the fair market value of the
restricted stock on the date the Plan participant recognizes
ordinary income as described above plus the amount of
ordinary income recognized in excess of fair market value,
if any amount is paid for the restricted stock in excess of
fair market value.
Subsequent Sale or The restrictions placed on restricted stock do not permit
Disposition sale or disposition until the restrictions lapse. Upon the
sale or disposition of restricted stock after the
restrictions lapse, a Plan participant will recognize
taxable income or loss equal to the difference between the
amount realized by the Plan participant on the disposition
of the stock and the Plan participant's basis in the stock.
The gain or loss will be taxable to the Plan participant as
a capital gain or deductible by the Plan participant as a
capital loss, either short-term or long-term, depending on
the holding period of the restricted stock, provided that
the Plan participant held the restricted stock as a capital
asset.
</TABLE>
24
<PAGE> 27
<TABLE>
<S> <C>
Dividends During the period in which a Plan participant holds restricted stock, prior to the lapse
of the restrictions, if dividends are declared but not distributed to the Plan participant
until the restrictions lapse, the dividends will be treated for tax purposes by the Plan
participant and us in the following manner: (A) if the Plan participant makes a Section
83(b) election to recognize income at the time of receipt of the restricted stock, the
dividends will be taxed as dividend income to the Plan participant when the restrictions
lapse and we will not be entitled to a deduction and will not be required to withhold
income tax, (B) if the Plan participant does not make a Section 83(b) election, the
dividends will be taxed as compensation to the Plan participant when the restrictions
lapse and will be deductible by us and subject to applicable federal income tax
withholding at that time.
If the Company pays the dividends to the Plan participant prior to the lapse of the
restrictions and the Plan participant makes a Section 83(b) election, the dividends will
be taxed as dividend income at the time of payment and will not be deductible by us.
Conversely, if the Plan participant does not make a Section 83(b) election, the dividends
will be taxable to the Plan participant as compensation at the time of payment and we will
be entitled to a deduction
TAX IMPLICATIONS OF A Plan participant will not recognize taxable income upon the grant of a stock
STOCK APPRECIATION appreciation right.
RIGHTS:
Taxation of Plan Upon the exercise of a stock appreciation right, a Plan participant will recognize
Participants ordinary income in an amount equal to the cash and fair market value of the shares of our
Common Stock received.
Company Deduction We will be entitled to a deduction in the amount of, and at the time that, ordinary income
is recognized by the Plan participant in connection with the exercise of a stock
appreciation right, provided that the Plan participant's compensation is reasonable and is
otherwise within the statutory limitations.
Basis In the event that a stock appreciation right is paid in whole or in part in shares of our
Common Stock, the amount recognized by the Plan participant as ordinary income with
respect to those shares will be the Plan participant's basis in those shares for purposes
of determining any gain or loss on the subsequent sale of those shares.
THE ABOVE TAX INFORMATION IS ONLY A BRIEF DESCRIPTION OF THE FEDERAL INCOME TAX
CONSEQUENCES OF RECEIPT AND/OR EXERCISE OF OPTIONS. IT IS BASED ON PRESENT FEDERAL TAX AND
SECURITIES LAWS, REGULATIONS AND INTERPRETATIONS THEREOF AND DOES NOT PURPORT TO BE A
COMPLETE DESCRIPTION OF SUCH FEDERAL TAX CONSEQUENCES. THE FOREGOING SUMMARY OF FEDERAL
INCOME TAX CONSEQUENCES MAY CHANGE IN THE EVENT OF A CHANGE IN THE INTERNAL REVENUE CODE
OR REGULATIONS THEREUNDER OR INTERPRETATIONS THEREOF. IF AN OPTION HOLDER IS CONSIDERING
EXERCISING AN OPTION, HE OR SHE SHOULD CONSULT A TAX ADVISOR CONCERNING THE FEDERAL, STATE
AND LOCAL INCOME TAX CONSEQUENCES OF SUCH EXERCISE.
</TABLE>
25
<PAGE> 28
OPTIONS GRANTED UNDER THE PLAN
The following table sets forth certain information with respect to options
granted to the listed persons and groups under the Plan through March 23, 2000:
<TABLE>
<CAPTION>
NAME AND NUMBER
PRINCIPAL POSITION OF SHARES GRANT DATE EXERCISE PRICE EXPIRATION DATE
------------------ ---------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
J. Ernest Talley............. 100,000 December 31, 1999 $19.81 to $21.79 December 31, 2004
Chairman of the to
Board and Chief December 31, 2009
Executive Officer
Mitchell E. Fadel............ 15,000 January 2, 1997 $14.38 to $19.81 January 2, 2007
President and Chief to to
Executive Officer -- December 31, 1999 December 31, 2009
ColorTyme, Inc.
L. Dowell Arnette............ 55,000 May 9, 1995 $6.67 to $30.50 May 9, 2005
President to to
December 31, 1999 December 31, 2009
Bradley W. Denison........... 50,000 September 30, $26.50 September 30,
Senior Vice President and 1998 2008
General Counsel
Dana F. Goble................ 40,000 May 9, 1995 $6.67 to $30.50 May 9, 2005
Executive Vice to to
President and December 31, 1999 December 31, 2009
Chief Operating Officer
All current executive
officers as a group (15
persons)................... 407,750 May 9, 1995 $6.67 to $30.50 May 9, 2005
to to
December 31, 1999 December 31, 2009
Lawrence M. Berg............. 12,000 January 4, 1999 $22.31 to $30.50 January 4, 2009
Director to to
January 3, 2000 January 3, 2010
Peter P. Copses.............. 12,000 January 4, 1999 $22.31 to $30.50 January 4, 2009
Director to to
January 3, 2000 January 3, 2010
J.V. Lentell................. 24,000 April 1, 1995 $3.34 to $30.50 April 1, 2005
Director to to
January 3, 2000 January 3, 2010
Joseph V. Mariner, Jr. ...... 24,000 April 1, 1995 $3.34 to $30.50 April 1, 2005
Director to to
January 3, 2000 January 3, 2010
All current directors who are
not executive officers as a
group (4 persons).......... 72,000 April 1, 1995 $3.34 to $30.50 April 1, 2005
to to
January 3, 2000 January 3, 2010
All Employees (including
current officers who are
not executive officers) as
a group.................... 7,422,500(1) April 1, 1995 $3.34 to $30.50 April 1, 2005
to to
January 3, 2000 January 3, 2010
</TABLE>
- ---------------
(1) Pursuant to the terms of the Plan, when an optionee leaves our employ,
unvested options granted to that employee terminate and become available for
issuance. Vested options not exercised within 90 days from the date the
optionee leaves our employ terminate and become available for issuance. As a
result of terminations, the number of shares reserved under the Plan on a
historical basis, exceed the number of shares available for issuance.
However, at no time did grants under the Plan exceed the number of shares
available for issuance.
The closing sales price of the Common Stock as of March 23, 2000 was $15.00 per
share, as reported on Nasdaq.
26
<PAGE> 29
OTHER BUSINESS
The Board of Directors does not intend to bring any business before the annual
stockholders meeting other than the matters referred to in this notice 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, 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.
Representatives of Grant Thornton LLP, the Company's independent public
accountants for the fiscal year ended December 31, 1999, will attend the annual
stockholders meeting and be available to respond to appropriate questions which
may be asked by stockholders. These representatives will also have an
opportunity to make a statement at the meeting if they desire to do so.
The Audit Committee of the Board of Directors has not appointed an independent
public accounting firm for the 2000 fiscal year. The Board of Directors and the
Audit Committee annually review the performance of the our independent public
accountants and the fees charged for their services. The Board anticipates, from
time to time, obtaining competitive proposals from other independent public
accounting firms for our annual audit. Based upon the Board of Directors and
Audit Committee's analysis of such information, we will determine which
independent public accounting firm to engage to perform its annual audit each
year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of reports filed by our directors, executive officers and
beneficial holders of 10% or more of our shares, and upon representations from
those persons, we believe that all SEC stock ownership reports required to be
filed by those reporting persons during 1999 were timely made, except as noted.
Mr. Davis failed to file two Form 4's on a timely basis and Messrs. Ford, Lopez,
Nutt, Kraemer, and Doll failed to file a Form 4 on a timely basis. Late forms
were filed in each instance.
27
<PAGE> 30
RENT-A-CENTER STOCK OWNERSHIP
The following tables list our stock ownership for our directors, our named
executive officers, and our known 5% stockholders. Ownership includes direct and
indirect (beneficial) ownership, as defined by SEC rules. To our knowledge, each
person, along with his or her spouse, has sole voting and investment power over
the shares unless otherwise noted. Information in the table is as of March 23,
2000.
<TABLE>
<CAPTION>
SHARES OF SHARES OF SERIES A
COMMON STOCK PREFERRED STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED
--------------------- -------------------
NAME AND ADDRESS OF PERCENT PERCENT
BENEFICIAL OWNER NUMBER OF CLASS NUMBER OF CLASS
- ------------------- ---------- -------- -------- --------
<S> <C> <C> <C> <C>
J. Ernest Talley(1)....................................... 4,903,166(2) 20.2% -- --
Mark E. Speese(1)......................................... 1,991,832 8.2% -- --
SAFECO Corporation........................................ 3,196,150(3) 13.1%
L. Dowell Arnette......................................... 427,414(4) 1.8% -- --
Mitchell E. Fadel......................................... 47,800(5) * -- --
Bradley W. Denison........................................ 12,500(6) * -- --
Dana F. Goble............................................. 30,313(7) * -- --
J.V. Lentell.............................................. 19,000(6) * -- --
Joseph V. Mariner, Jr. ................................... 10,000(8) * -- --
Laurence M. Berg(9)....................................... 12,000(6) * -- --
Peter P. Copses(9)........................................ 12,000(6) * -- --
Apollo(10)................................................ 9,716,373 28.6% 271,426 100.0%
All officers and directors as a group (19 total).......... 7,547,395 30.8% -- --
</TABLE>
- ---------------
* Less than 1%.
(1) The address of Messrs. Talley and Speese is 5700 Tennyson Parkway Third
Floor, Plano, Texas 75024.
(2) Includes (A) 1,903,166 shares of our Common Stock held directly by him, (B)
2,000,000 shares held by the Talley 1999 Trust, a trust organized under the
laws of the State of Texas of which Mr. Talley is the sole trustee, and (C)
1,000,000 shares held by Talley Partners, Ltd., a Texas limited
partnership, whose sole general partner is Talley Management, Inc., a Texas
corporation, an entity controlled by Mr. Talley. Mr. Talley has sole voting
and dispositive power with respect to these shares. The amount listed in
the table does not include an aggregate of 326,184 shares owned by two of
Mr. Talley's children, as to which Mr. Talley disclaims beneficial
ownership.
(3) The address of SAFECO Corporation is SAFECO Plaza, Seattle, WA 98185.
Pursuant to a review of SAFECO Corporation's Schedule 13G filed with the
SEC, SAFECO Corporation disclaims beneficial ownership of these shares.
These shares represent shares owned beneficially by registered investment
companies for which a subsidiary of SAFECO Corporation serves as advisor,
including 2,321,350 shares held by SAFECO Common Stock Trust.
(4) Includes 22,500 shares issuable pursuant to options granted under the
Long-Term Incentive Plan, all of which are currently exercisable.
(5) Includes 7,500 shares issuable pursuant to options granted under the
Long-Term Incentive Plan, all of which are currently exercisable.
(6) These shares are issuable pursuant to options granted under the Long-Term
Incentive Plan, all of which are currently exercisable.
(7) Includes 21,250 shares issuable pursuant to options granted under the
Long-Term Incentive Plan, all of which are currently exercisable.
(8) Includes 6,000 shares issuable pursuant to options granted under the
Long-Term Incentive Plan, all of which are currently exercisable.
(9) Messrs. Berg and Copses are each principals and officers of certain
affiliates of Apollo. Accordingly, each of Messrs. Berg and Copses may be
deemed to beneficially own shares owned by Apollo. Messrs. Berg and Copses
disclaim beneficial ownership with respect to any such shares owned by
Apollo.
(10) The address of Apollo is 1999 Avenue of the Stars, Suite 1900, Los Angeles,
California 90067. The 9,716,373 shares of Common Stock represent the shares
of Common Stock into which the Series A Preferred Stock is convertible.
Apollo owns 261,000 shares of our Preferred Stock, which represents in
excess of 96% of the outstanding shares of our Preferred Stock. Apollo also
has the right to vote RC Acquisition Corp.'s 10,426 shares of Preferred
Stock. Apollo disclaims any beneficial ownership in these 10,426 shares
other than its right to vote these shares.
28
<PAGE> 31
VOTING PROCEDURES/REVOKING YOUR PROXY
<TABLE>
<C> <S>
QUORUM: The holders of the majority of the votes entitled to vote at this year's annual
stockholders meeting will constitute a quorum.
VOTES REQUIRED TO To be elected, directors must receive a plurality of the shares voting in person or by
APPROVE A PROPOSAL: proxy, provided a quorum exists. A plurality means receiving the largest number of
votes, regardless of whether that is a majority. To approve the Plan amendments, we
must receive a majority of the votes cast by persons entitled to vote and present in
person or by proxy at the meeting. All other matters which may be submitted to you at
the meeting will be decided by a majority of the votes cast on the matter, provided a
quorum exists, except as otherwise provided by law or our Certificate of Incorporation
or Bylaws.
SHARES OUTSTANDING AND On the Record Date, there were 24,315,421 shares of Common Stock outstanding. Each
NUMBER OF VOTES: share of Common Stock entitles the holder to one vote per share. On the Record Date,
there were 271,426 shares of Preferred Stock outstanding. Each share of Preferred Stock
entitles the holder to approximately 35.8 votes per share, or 9,716,373 votes in the
aggregate.
ABSTENTIONS AND BROKER Those who fail to return a proxy or attend the meeting will not count towards
NON-VOTES: determining any required plurality, majority or quorum. Stockholders and brokers
returning proxies or attending the meeting who abstain from voting on the election of
our directors will count towards determining a quorum. However, such abstentions will
have no effect on the outcome of the election of our directors or on the approval of
the Plan amendments.
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 from its
customers, 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' instructions. These broker non-votes will be included in determining
whether a quorum exists, but will have no effect on the outcome of the election of our
directors or on the approval of the Plan amendments.
HOW THE PROXIES WILL The enclosed proxies will be voted in accordance with the instructions you place on the
BE VOTED: proxy card. Unless otherwise stated, all shares represented by your returned, signed
proxy will be voted as noted on the first page of this proxy statement.
HOW YOU MAY REVOKE You may revoke your proxies by:
YOUR PROXIES:
- Delivering a signed, written revocation letter, dated later than the proxy, to David
M. Glasgow, Corporate Secretary, at 5700 Tennyson Parkway, Third Floor, Plano, Texas
75024;
- Delivering a signed proxy, dated later than the first one, to ChaseMellon Shareholder
Services, 600 Willow Tree Road, Leonia, NJ 07605, Attn: Norma Cianfaglione; or
- Attending the meeting and voting in person or by proxy. Attending the meeting alone
will not revoke your proxy.
PROXY SOLICITATION: We have engaged ChaseMellon Consulting Services, L.L.C. to assist us in solicitating
proxies related to the 2000 annual meeting of stockholders and have agreed to pay them
a fee of $8,500 for doing so. In addition, our employees will solicit proxies for no
additional compensation. We will reimburse banks, brokers, custodians, nominees and
fiduciaries for reasonable expenses they incur in sending these proxy materials to you
if you are a beneficial holder of our shares.
</TABLE>
29
<PAGE> 32
SUBMISSION OF STOCKHOLDER PROPOSALS
<TABLE>
<C> <S>
DATES FOR From time to time, stockholders may seek to nominate
SUBMISSION OF directors or present proposals for inclusion in the proxy
STOCKHOLDERS' statement and form of proxy for consideration at an annual
PROPOSALS: 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 the 2001 annual stockholders meeting
no later than December 8, 2000 for possible inclusion in the
proxy statement, or prior to February 15, 2001 for possible
consideration at the meeting, which is expected to take
place on May 16, 2001. Direct any proposals, as well as
related questions, to the undersigned.
</TABLE>
ANNUAL REPORT ON FORM 10-K
YOU MAY OBTAIN A COPY OF OUR ANNUAL REPORT ON FORM 10-K THAT WE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WITHOUT CHARGE, BY SUBMITTING A WRITTEN
REQUEST TO:
DAVID M. GLASGOW, CORPORATE SECRETARY
RENT-A-CENTER, INC.
5700 TENNYSON PARKWAY, THIRD FLOOR
PLANO, TEXAS 75024.
YOU MAY ALSO OBTAIN OUR SEC FILINGS THROUGH THE INTERNET AT WWW.SEC.GOV.
By order of the Board of Directors.
/s/ DAVID M. GLASGOW
David M. Glasgow
Corporate Secretary
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
30
<PAGE> 33
EXHIBIT A
---------
AMENDED AND RESTATED
RENT-A-CENTER, INC.
LONG-TERM INCENTIVE PLAN
1. Objectives. The Amended and Restated Rent-A-Center, Inc. Long-Term
Incentive Plan (formerly known as the 1994 Renters Choice, Inc. Long-Term
Incentive Plan) is designed to retain selected employees, non-employee directors
and Independent Contractors (as herein defined) of Rent-A-Center, Inc. (formerly
known as Renters Choice, Inc.) (the "Company") and reward them for making
significant contributions to the success of the Company and its Subsidiaries (as
hereinafter defined). These objectives are to be accomplished by making awards
under the Plan and thereby providing Participants (as hereinafter defined) with
a proprietary interest in the growth and performance of the Company and its
Subsidiaries.
2. Definitions. As used herein, the terms set forth below shall have the
following respective meanings:
"Agreement" means a written agreement between the Company and a
Participant that sets forth the terms, conditions and limitations applicable
to an Employee Award, a Director Option or an Independent Contractor Option.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means such committee of the Board as is designated by the
Board to administer the Plan. The Committee shall be constituted to permit
the Plan to comply with Rule 16b-3.
"Common Stock" means the Common Stock, par value $0.01 per share, of the
Company.
"Director" means an individual serving as a member of the Board who is
not an employee of the Company or any Subsidiary of the Company.
"Director Option" means a nonqualified stock option granted to a
Director under the terms of this Plan.
"Employee Award" means the grant of any form of Employee Stock Option,
stock appreciation right, stock award or cash award, whether granted singly,
in combination or in tandem, to an employee of the Company or any Subsidiary
pursuant to any applicable terms, conditions and limitations as the
Committee may establish in order to fulfill the objectives of the Plan.
"Employee Stock Option" means an incentive stock option or a
nonqualified stock option granted to an employee of the Company or any of
its Subsidiaries under this Plan by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Fair Market Value" means, as of a particular date, (a) if the shares of
Common Stock are listed on a national securities exchange, the mean between
the highest and lowest sales price per share of Common Stock on the
consolidated transaction reporting system for the principal such national
securities exchange on that date, or, if there shall have been no such sale
so reported on that date, on the last preceding date on which such a sale
was so reported, (b) if the shares of Common Stock are not so listed but are
quoted on the Nasdaq National Market, the mean between the highest and
lowest sales price per share of Common Stock on the Nasdaq National Market
on that date, or, if there shall have been no such sale so reported on that
date, on the last preceding date on which such a sale was so reported or (c)
if the Common Stock is not so listed or quoted, the mean between the closing
bid and asked price on that date, or, if there are no quotations available
for such date, on the last preceding date on which such quotations shall be
available, as reported by the Nasdaq Stock Market, Inc., or, if not reported
by the Nasdaq Stock Market, Inc., by the National Quotation Bureau, Inc.
"Independent Contractor" means any individual, partnership, limited
liability company, corporation, joint stock company, trust, estate, joint
venture, association or unincorporated organization or any other form of
business organization who or which is engaged by the Company or any
Subsidiary to render consulting, advisory or other independent contractor
services, as defined by the Board.
A-1
<PAGE> 34
"Independent Contractor Option" means a nonqualified stock option
granted to an Independent Contractor under the terms of this Plan.
"Participant" means an employee of the Company or any of its
Subsidiaries to whom an Employee Award has been made, a Director to whom a
Director Option has been made or an Independent Contractor to whom an
Independent Contractor Option has been made under the terms of the Plan.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, or any
successor rule.
"Subsidiary" means any corporation of which the Company directly or
indirectly owns shares representing more than 50% of the voting power of all
classes or series of capital stock of such corporation which have the right
to vote generally on matters submitted to a vote of the stockholders of such
corporation.
3. Eligibility.
(a) Employee Awards. All employees of the Company and its
Subsidiaries are eligible for Employee Awards under this Plan. The Committee
shall select the employees who shall become Participants in the Plan from
time to time by the grant of Employee Awards under the Plan.
(b) Director Options. Recipients of Director Options shall include
all persons who, as of the time Director Options are awarded, are serving as
Directors of the Company.
(c) Independent Contractor Options. The Committee, in its
discretion, shall determine which Independent Contractors are eligible to
become Participants in the Plan from time to time by the grant of
Independent Contractor Options under the Plan.
4. Common Stock Available Under the Plan. There shall be available for
Employee Awards, Director Options and Independent Contractor Options, any of
which may be granted wholly or partly in Common Stock (including rights or
options which may be exercised for or settled in Common Stock) during the term
of this Plan an aggregate of 6,200,000 shares of Common Stock, subject to
adjustment as provided in Paragraph 15, 496,000 of which shall be set aside for
issuance pursuant to Director Options and 310,000 of which shall be set aside
for stock awards, as described in subparagraph 6(iii) hereof. The Board and the
appropriate officers of the Company shall from time to time take whatever
actions are necessary to file required documents with governmental authorities
and stock exchanges and transaction reporting systems to make shares of Common
Stock available for issuance pursuant to Employee Awards, Director Options and
Independent Contractor Options. Common Stock related to Employee Awards,
Director Options or Independent Contractor Options that are forfeited or
terminated, expire unexercised, are settled in cash in lieu of Common Stock or
in a manner such that all or some of the shares covered by an Employee Award, a
Director Option or an Independent Contractor Option are not issued to a
Participant, or are exchanged for Employee Awards that do not involve Common
Stock, shall immediately become available for Employee Awards, Director Options
and Independent Contractor Options hereunder. The Committee may from time to
time adopt and observe such procedures concerning the counting of shares against
the Plan maximum as it may deem appropriate under Rule 16b-3.
5. Administration. This Plan shall be administered by the Committee,
which shall have full and exclusive power to interpret this Plan and to adopt
such rules, regulations and guidelines for carrying out this Plan as it may deem
necessary or proper, all of which powers shall be exercised in the best
interests of the Company and in keeping with the objectives of this Plan. The
Committee may, in its discretion, provide for the extension of the
exercisability of an Employee Award, a Director Option or an Independent
Contractor Option, accelerate the vesting or exercisability of an Employee
Award, a Director Option or an Independent Contractor Option, eliminate or make
less restrictive any restrictions contained in an Employee Award, a Director
Option or an Independent Contractor Option, waive any restriction or other
provision of an Employee Award, a Director Option or an Independent Contractor
Option or otherwise amend or modify an Employee Award, a Director Option or an
Independent Contractor Option in any manner that is either (a) not adverse to
the Participant holding such Employee Award, Director Option or Independent
Contractor Option or (b) consented to by such Participant. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in this
Plan or in any Employee Award, Director Option or Independent Contractor Option
in the manner and to the extent the Committee deems necessary or desirable to
carry it into effect. Any decision of the Committee in the interpretation and
administration of this Plan shall lie within its sole and absolute discretion
and shall be final, conclusive and binding on all parties
A-2
<PAGE> 35
concerned. No member of the Committee or officer of the Company to whom it has
delegated authority in accordance with the provisions of this Plan shall be
liable for anything done or omitted to be done by him or her, by any member of
the Committee or by any officer of the Company in connection with the
performance of any duties under this Plan, except for his or her own willful
misconduct or as expressly provided by statute. The Committee may delegate to
the Chief Executive Officer of the Company and to other senior officers of the
Company its duties under this Plan pursuant to such conditions or limitations as
the Committee may establish, except that the Committee may not delegate to any
person the authority to grant Employee Awards, Director Options or Independent
Contractor Options to, or take other action with respect to, Participants who
are subject to Section 16 of the Exchange Act.
6. Employee Awards. The Committee shall determine the type or types of
awards to be made to each Participant under this Plan. Each Employee Award made
hereunder shall be embodied in an Agreement, which shall contain such terms,
conditions and limitations as shall be determined by the Committee in its sole
discretion and shall be signed by the Participant and by the Chief Executive
Officer, the Chief Operating Officer or any Vice President of the Company for
and on behalf of the Company. Employee Awards may consist of those listed in
this Paragraph 6 and may be granted singly, in combination or in tandem.
Employee Awards may also be made in combination or in tandem with, in
replacement of, or as alternatives to grants or rights (a) under this Plan or
any other employee plan of the Company or any of its Subsidiaries, including the
plan of any acquired entity, or (b) made to any Company or Subsidiary employee
by the Company or any Subsidiary. An Employee Award may provide for the granting
or issuance of additional, replacement or alternative Employee Awards upon the
occurrence of specified events, including the exercise of the original Employee
Award. Notwithstanding anything herein to the contrary, no Participant may be
granted Employee Awards consisting of stock options or stock appreciation rights
exercisable for more than 20% of the shares of Common Stock originally
authorized for Employee Awards under this Plan, subject to adjustment as
provided in Paragraph 15. In the event of an increase in the number of shares
authorized under the Plan, the 20% limitation will apply to the number of shares
authorized.
(i) Employee Stock Option. An Employee Award may consist of a right
to purchase a specified number of shares of Common Stock at a price
specified by the Committee in the Agreement or otherwise. An Employee Stock
Option may be in the form of an incentive stock option ("ISO") which, in
addition to being subject to applicable terms, conditions and limitations
established by the Committee, complies with Section 422 of the Code.
Notwithstanding the foregoing, no ISO can be granted under the Plan more
than ten years following the Effective Date of the Plan.
(ii) Stock Appreciation Right. An Employee Award may consist of a
right to receive a payment, in cash or Common Stock, equal to the excess of
the Fair Market Value or other specified valuation of a specified number of
shares of Common Stock on the date the stock appreciation right ("SAR") is
exercised over a specified strike price as set forth in the applicable
Agreement.
(iii) Stock Award. An Employee Award may consist of Common Stock or
may be denominated in units of Common Stock. All or part of any stock
Employee Award may be subject to conditions established by the Committee and
set forth in the Agreement, which conditions may include, but are 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 comparable measurements of
performance. Such Employee Awards may be based on Fair Market Value or other
specified valuations. The certificates evidencing shares of Common Stock
issued in connection with a stock Employee Award shall contain appropriate
legends and restrictions describing the terms and conditions of the
restrictions applicable thereto.
(iv) Cash Award. An Employee Award may be denominated 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 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 comparable measurements of performance.
7. Director Stock Options. Director Options shall be granted to each
eligible Director as of the date of consummation of the initial public offering
of the Common Stock providing for the purchase of 9,000 shares of Common Stock.
Commencing on January 1, 1996, automatic annual awards of Director
A-3
<PAGE> 36
Options shall be made to each eligible Director on the first business day of the
Company's fiscal year, providing for the purchase of 3,000 shares of Common
Stock; provided that such Director Options shall provide for the purchase of
9,000 shares of Common Stock if the recipient of such Director Option had not
previously received a grant of a Director Option pursuant to this Plan. The
purchase price of each share of Common Stock placed under a Director Option
shall be equal to the Fair Market Value of such shares on the date the Director
Option is granted; provided, that the purchase price of each share of Common
Stock placed under a Director Option on the date of consummation of the initial
public offering of the Common Stock shall be equal to the initial public
offering price of the Common Stock. Director Options shall terminate and be of
no force or effect with respect to any shares not previously purchased by the
Director Optionee upon the expiration of ten years from the date of granting of
each Director Option, notwithstanding any earlier termination of the Director
Optionee's status as a Director of the Company. All Director Options shall be
exercisable immediately on the date of grant. Notwithstanding the foregoing, no
grant of Director Options shall be made unless the number of shares available
under the Plan is sufficient to make all automatic grants of Director Options on
the grant date. All Director Options shall be evidenced by a written Agreement
conforming with the terms of this Plan.
8. Independent Contractor Options. Independent Contractor Options shall
be granted to each eligible Independent Contractor (as selected by the Board or
the Committee) pursuant to the terms of an Agreement. Independent Contractor
Options granted under this Plan will contain such terms and conditions with
respect to the death or disability of the Independent Contractor or termination
of the Independent Contractor's relationship with the Company or a Subsidiary as
the Committee or Board deems necessary and/or appropriate.
9. Payment of Employee Awards.
(a) General. Payment of Employee Awards may be made in the form of
cash or Common Stock or combinations thereof and may include such
restrictions as the Committee shall determine including, in the case of
Common Stock, restrictions on transfer and forfeiture provisions. As used
herein, "Restricted Stock" means Common Stock that is restricted or subject
to forfeiture provisions.
(b) Deferral. The Committee may, in its discretion, (i) permit
selected Participants to elect to defer payments of some or all types of
Employee Awards in accordance with procedures established by the Committee
or (ii) provide for the deferral of an Employee Award in an Agreement or
otherwise. Any such deferral may be in the form of installment payments or a
future lump sum payment. Any deferred payment, whether elected by the
Participant or specified by the Agreement or by the Committee, may be
forfeited if and to the extent that the Agreement so provides.
(c) Dividends and Interest. Dividends or dividend equivalent rights
may be extended to and made part of any Employee Award denominated in Common
Stock or units of Common Stock, subject to such terms, conditions and
restrictions as the Committee may establish. The Committee may also
establish rules and procedures for the crediting of interest on deferred
cash payments and dividend equivalents for deferred payment denominated in
Common Stock or units of Common Stock.
(d) Substitution of Employee Awards. At the discretion of the
Committee, a Participant may be offered an election to substitute an
Employee Award for another Employee Award of the same or different type.
10. Stock Option Exercise. The price at which shares of Common Stock may
be purchased under a stock option (whether pursuant to an Employee Award, a
Director Option or an Independent Contractor Option) shall be paid in full at
the time of exercise in cash or, if permitted by the Committee, by means of
tendering Common Stock or surrendering all or part of that or any other Employee
Award, including Restricted Stock, valued at Fair Market Value on the date of
exercise, or any combination thereof. The Committee shall determine acceptable
methods for tendering Common Stock or Employee Awards to exercise a stock option
as it deems appropriate. If permitted by the Committee, payment may be made by
successive exercises by the Participant. The Committee may provide for
procedures to permit the exercise or purchase of Employee Awards, Director
Options or Independent Contractor Options by (a) loans from the Company or (b)
use of the proceeds to be received from the sale of Common Stock issuable
pursuant to an Employee Award, a Director Option or an Independent Contractor
Option. Unless otherwise provided in the applicable Agreement, in the event
shares of Restricted Stock are tendered as consideration for the exercise of a
stock option, a number of the shares issued upon the exercise of the stock
option, equal to the number of shares of Restricted Stock used as consideration
therefor, shall be subject to the same
A-4
<PAGE> 37
restrictions as the Restricted Stock so submitted as well as any additional
restrictions that may be imposed by the Committee.
11. Tax Withholding. The Company shall have the right to deduct
applicable taxes from any Employee Award, Director Option or Independent
Contractor Option payment and withhold, as applicable, at the time of delivery
or vesting of cash or shares of Common Stock under this Plan, an appropriate
amount of cash or number of shares of Common Stock or a combination thereof for
payment of taxes required by law or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. The Committee may also permit withholding to be
satisfied by the transfer to the Company of shares of Common Stock theretofore
owned by the holder of the Employee Award, Director Option or Independent
Contractor Option with respect to which withholding is required. If shares of
Common Stock are used to satisfy tax withholding, such shares shall be valued
based on the Fair Market Value when the tax withholding is required to be made.
12. Amendment, Modification, Suspension or Termination. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law except that (a) no amendment or alteration that would impair the rights
of any Participant under any Employee Award, Director Option or Independent
Contractor Option previously granted to such Participant shall be made without
such Participant's consent, and (b) no amendment or alteration shall be
effective prior to approval by the Company's stockholders to the extent such
approval is then required pursuant to Rule 16b-3 in order to preserve the
applicability of any exemption provided by such rule to any Employee Award,
Director Option or Independent Contractor Option then outstanding (unless the
Participant consents) or to the extent stockholder approval is otherwise
required by applicable legal requirements.
13. Termination of Employment or Provision of Service. Upon the
termination of employment or provision of service by a Participant, any
unexercised, deferred or unpaid Employee Awards, Director Options or Independent
Contractor Options shall be treated as provided in the specific Agreement
evidencing the Employee Award, Director Option or Independent Contractor Option.
In the event of such a termination, the Committee may, in its discretion,
provide for the extension of the exercisability of an Employee Award, a Director
Option or an Independent Contractor Option, accelerate the vesting or
exercisability of an Employee Award, a Director Option or an Independent
Contractor Option, eliminate or make less restrictive any restrictions contained
in an Employee Award, a Director Option or an Independent Contractor Option,
waive any restriction or other provision of this Plan or an Employee Award, a
Director Option or an Independent Contractor Option or otherwise amend or modify
the Employee Award, Director Option or Independent Contractor Option in any
manner that is either (a) not adverse to such Participant or (b) consented to by
such Participant.
14. Assignability. Unless otherwise determined by the Committee and
provided in the Agreement, no Employee Award, Director Option, Independent
Contractor Option or any other benefit under this Plan constituting a derivative
security within the meaning of Rule 16a-l(c) under the Exchange Act shall be
assignable or otherwise transferable except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder. The Committee may prescribe and include in
applicable Agreements other restrictions on transfer. Any attempted assignment
of an Employee Award, a Director Option, an Independent Contractor Option or any
other benefit under this Plan in violation of this Paragraph 14shall be null and
void.
15. Adjustments.
(a) The existence of outstanding Employee Awards, Director Options or
Independent Contractor Options shall not affect in any manner the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
capital stock of the Company or its business or any merger or consolidation
of the Company, or any issue of bonds, debentures, preferred or prior
preference stock (whether or not such issue is prior to, on a parity with or
junior to the Common Stock) or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding of any kind, whether or
not of a character similar to that of the acts or proceedings enumerated
above.
A-5
<PAGE> 38
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock or declaration of a dividend payable in shares of
Common Stock or capital reorganization or reclassification or other
transaction involving an increase or reduction in the number of outstanding
shares of Common Stock, the Committee may adjust proportionally (i) the
number of shares of Common Stock reserved under this Plan and covered by
outstanding Employee Awards, Director Options and Independent Contractor
Options denominated in Common Stock or units of Common Stock; (ii) the
exercise or other price in respect of such Employee Awards, Director Options
and Independent Contractor Options; and (iii) the appropriate Fair Market
Value and other price determinations for such Employee Awards, Director
Options and Independent Contractor Options. In the event of any
consolidation or merger of the Company with another corporation or entity or
the adoption by the Company of a plan of exchange affecting the Common Stock
or any distribution to holders of Common Stock of securities or property
(other than normal cash dividends or dividends payable in Common Stock), the
Committee shall make such adjustments or other provisions as it may deem
equitable, including adjustments to avoid fractional shares, to give proper
effect to such event. In the event of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation,
the Committee shall be authorized to issue or assume stock options,
regardless of whether in a transaction to which Section 424(a) of the Code
applies, by means of substitution of new options for previously issued
options or an assumption of previously issued options, or to make provision
for the acceleration of the exercisability of, or lapse of restrictions with
respect to, Employee Awards, Director Options or Independent Contractor
Options and the termination of unexercised options in connection with such
transaction.
16. Restrictions. No Common Stock or other form of payment shall be
issued with respect to any Employee Award, Director Option or Independent
Contractor Option unless the Company shall be satisfied based on the advice of
its counsel that such issuance will be in compliance with applicable federal and
state securities laws. It is the intent of the Company that this Plan comply
with Rule 16b-3 with respect to persons subject to Section 16 of the Exchange
Act unless otherwise provided herein or in an Agreement, that any ambiguities or
inconsistencies in the construction of this Plan be interpreted to give effect
to such intention and that, if any provision of this Plan is found not to be in
compliance with Rule 16b-3, such provision shall be null and void to the extent
required to permit this Plan to comply with Rule 16b-3. Certificates evidencing
shares of Common Stock delivered under this Plan may be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under
the rules, regulations and other requirements of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which
the Common Stock is then listed and any applicable federal and state securities
law. The Committee may cause a legend or legends to be placed upon any such
certificates to make appropriate reference to such restrictions.
17. Unfunded Plan. Insofar as it provides for Employee Awards of cash,
and Employee Awards, Director Options and Independent Contractor Options
covering Common Stock or rights thereto, this Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to Participants who are
entitled to cash, Common Stock or rights thereto under this Plan, any such
accounts shall be used merely as a bookkeeping convenience. The Company shall
not be required to segregate any assets that may at any time be represented by
cash, Common Stock or rights thereto, nor shall this Plan be construed as
providing for such segregation, nor shall the Company, the Board or the
Committee be deemed to be a trustee of any cash, Common Stock or rights thereto
to be granted under this Plan. Any liability or obligation of the Company to any
Participant with respect to a grant of cash, Common Stock or rights thereto
under this Plan shall be based solely upon any contractual obligations that may
be created by this Plan and any Agreement, and no such liability or obligation
of the Company shall be deemed to be secured by any pledge or other encumbrance
on any property of the Company. None of the Company, the Board or the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.
18. Governing Law. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Texas.
A-6
<PAGE> 39
19. Effective Date of Plan.
(a) This Plan was approved by the Board of Directors of the Company
as of December 5, 1994, and by the unanimous written consent dated as of
December 21, 1994, of the holders of all of the shares of Common Stock
outstanding and entitled to vote thereon.
(b) The Plan was amended effective May 20, 1996 for the purpose of
increasing the number of shares reserved for issuance under the Plan from
1,500,000 to 2,000,000. The amendments to the Plan were approved by the
Board of Directors of the Company as of March 18, 1996, and by the holders
of a majority of the issued and outstanding shares of Common Stock of the
Company as of May 20, 1996.
(c) The Plan was again amended effective May 21, 1998 for the purpose
of increasing the number of shares reserved for issuance under the Plan from
2,000,000 to 3,000,000. The amendment to the Plan was approved by the Board
of Directors of the Company on March 16, 1998, and by the holders of a
majority of the issued and outstanding shares of Common Stock of the Company
on May 18, 1998. For purposes of ease of administration and clarity of
reference, the Plan was amended and restated to incorporate the 1996 and the
1998 amendments.
(d) The Plan was again amended on September 14, 1998 for the purpose
of increasing the number of shares reserved for issuance under the Plan from
3,000,000 to 4,500,000. The amendment to the Plan was approved by the Board
of Directors of the Company on September 14, 1998 and by the holders of a
majority of the issued and outstanding shares of Common Stock of the Company
on October 20, 1998. For purposes of ease of administration and clarity of
reference, the Plan was amended and restated to incorporate all amendments.
RENT-A-CENTER, INC.
A-7
<PAGE> 40
RENT-A-CENTER, INC.
5700 TENNYSON PARKWAY, 3RD FLOOR
PLANO, TEXAS 75024
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
---------------------------------------
COMMON STOCK
The undersigned, hereby revoking all prior proxies, hereby appoints Robert
D. Davis and David M. Glasgow jointly and severally, with full power to act
P alone, as my true and lawful attorneys-in-fact, agents and proxies, with full
and several power of substitution to each, to vote all the shares of Common
R Stock of Rent-A-Center, Inc. which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Stockholders of Rent-A-Center,
O Inc. to be held on May 16, 2000 and at any adjournments and postponements
thereof. The above-named proxies are hereby instructed to vote as shown on
X the reverse side of this card.
Y THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED HEREIN, BUT
WHERE NO DIRECTION IS GIVEN IT WILL BE VOTED "FOR" PROPOSALS 1 AND 2 IN THE
DISCRETION OF THE ABOVE-NAMED PERSONS ACTING AS PROXIES ON SUCH OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE MEETING.
- -------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS CHANGE ON REVERSE SIDE
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
<PAGE> 41
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Please mark
your votes as
indicated in
this example [X]
1. ELECTION OF CLASS III DIRECTORS for the Item 2. To approve amendments to our Long-Term Incentive
set forth in the accompanying proxy statement. Joseph V. Mariner, Jr. Plan allowing for participation by independent
and J.V. Lentell contractors (as defined in the Plan) and an
FOR the WITHHOLD increase in the number of shares of our Common
nominee AUTHORITY WITHHELD FOR: (To withhold Stock, par value $.01 per share, which are
listed to the to vote for the nominee authority to vote for any reserved for issuance under our Long-Term
right listed to the right individual nominee, write Incentive Plan from 4,500,000 to 6,200,000 shares
the nominee's name in the for the purpose of retaining and recruiting
[ ] [ ] space provided below.) quality employees in order to achieve our
aggressive growth plans.
--------------------------
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, upon such other business as may properly come before The undersigned(s) acknowledges receipt of the
the meeting. Notice of 2000 Annual Meeting of Stockholders
and the proxy statement accompanying the same, each
dated April 5, 2000.
Please date this proxy and sign your name exactly as
it appears hereon. If there is more than one owner,
I PLAN TO ATTEND [ ] each should sign. When signing as an agent,
attorney, administrator, guardian or trustee, please
indicate your title as such. If executed by a
corporation this proxy should be signed in the
corporate name by a duly authorized officer who
should so indicate his or her title.
PLEASE DATE, SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE.
----------------------------------------------------
Date
----------------------------------------------------
Signature
----------------------------------------------------
Signature if held jointly
- ------------------------------------------------------------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
</TABLE>
<PAGE> 42
PROXY
RENT-A-CENTER, INC.
5700 TENNYSON PARKWAY, 3RD FLOOR
PLANO, TEXAS 75024
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
----------------------------------------------
SERIES A PREFERRED STOCK
The undersigned, hereby revoking all prior proxies, hereby appoints
Robert D. Davis and David M. Glasgow jointly and severally, with full power
P to act alone, as my true and lawful attorneys-in-fact, agents and proxies,
with full and several power of substitution to each, to vote all the shares
R of Series A Preferred Stock of Rent-A-Center, Inc. which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
O Stockholders of Rent-A-Center, Inc. to be held on May 16, 2000 and at any
adjournments and postponements thereof. The above-named proxies are hereby
X instructed to vote as shown on the reverse side of this card.
Y THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED HEREIN,
BUT WHERE NO DIRECTION IS GIVEN IT WILL BE VOTED "FOR" PROPOSALS 1 AND 2 IN
THE DISCRETION OF THE ABOVE-NAMED PERSONS ACTING AS PROXIES ON SUCH OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS CHANGE ON REVERSE SIDE
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
<PAGE> 43
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Please mark
your votes as
indicated in
this example [X]
1. ELECTION OF CLASS III DIRECTORS for the Item 2. To approve amendments to our Long-Term
set forth in the accompanying proxy statement. Incentive Plan allowing for participation by
independent contractors (as defined in the Plan)
FOR the WITHHOLD Joseph V. Mariner, Jr. and an increase in the number of shares of our
nominee AUTHORITY and J.V. Lentell Common Stock, par value $.01 per share, which are
listed to the to vote for the nominee reserved for issuance under our Long-Term
right listed to the right WITHHELD FOR: (To withhold Incentive Plan from 4,500,000 to 6,200,000 shares
authority to vote for any for the purpose of retaining and recruiting
[ ] [ ] individual nominee, write quality employees in order to achieve our
the nominee's name in the aggressive growth plans.
space provided below.)
FOR AGAINST ABSTAIN
--------------------------
[ ] [ ] [ ]
3. In their discretion, upon such other business as may properly come before The undersigned(s) acknowledges receipt of the
the meeting. Notice of 2000 Annual Meeting of Stockholders
and the proxy statement accompanying the same, each
dated April 5, 2000.
Please date this proxy and sign your name exactly as
it appears hereon. If there is more than one owner,
I PLAN TO ATTEND [ ] each should sign. When signing as an agent,
attorney, administrator, guardian or trustee, please
indicate your title as such. If executed by a
corporation this proxy should be signed in the
corporate name by a duly authorized officer who
should so indicate his or her title.
PLEASE DATE, SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE.
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Date
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Signature
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Signature if held jointly
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o FOLD AND DETACH HERE o
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