From Home Furnishing Business
Rent-A-Center Readies for Proxy Fight with Large Shareholder
Rent-A-Center (NASDAQ: RCII) said this week it will nominate three current directors for re-election at its upcoming annual meeting, and indicated in a regulatory filing that it is digging in for a proxy fight with dissident shareholder Engaged Capital.
Engaged Capital, an investment firm that owns about 13.7% of Rent-A-Center's shares, already has said it will nominate five people for the three board seats that will be up for election at the annual meeting. But in a filing this week with the Securities and Exchange Commission, Rent-A-Center said its board and management team "have held extensive discussions with Engaged in an effort to maintain a constructive dialog and understand its views" and decided to have current directors Mark Speese, Leonard Roberts and Jeffery Jackson stand for re-election.
The investment firm has been urging the struggling rent-to-own chain to hire a financial adviser and attempt to sell the company.
Two of the five people nominated by Engaged Capital are well known in the rent-to-own business -- Mitchell Fadel, a former president and chief operating officer of Rent-A-Center, and Ken Butler, former chief operating officer at arch-rival Aaron's Inc.
The current board has presided over years of declining operating performance, deteriorating financial results, and a decimation of shareholder value," said Glenn Welling, managing member of Engaged Capital. "Despite years of underperformance, these same directors refuse to act with a sense of urgency to explore all alternatives to create value for the owners of the company. As one of the company’s largest shareholders, we felt we had no choice but to present shareholders with an alternative slate of directors – directors who can help stabilize the business while also evaluating all strategic options available to the company."
Neither Engaged Capital nor Rent-A-Center have filed complete proxy statements with the SEC, and the date for the annual meeting has not been set.