Rent-A-Center, Activist Shareholder Avoid Proxy Fight

February 6, 2018  by Larry Thomas in Business Strategy, Industry   

The company said the nominee, whose name has not been announced, will replace board member Rishi Garg, who will not stand for re-election at the annual meeting.

Engaged Capital, who owns about 16.9% of Rent-A-Center’s stock, also agreed to vote its shares in support of board chairman J.V. Lentell and board member Michael Gade, avoiding a repeat of a proxy fight at last year’s annual meeting that resulted in the ouster of longtime board chairman Mark Speese.

Lentell and Gade and the new independent director proposed by Engaged Capital would serve on the board together with Jeffrey Brown, Mitchell Fadel and Christopher Hetrick, who were all Engaged Capital nominees and elected at the 2017 annual meeting.

“We believe this consensus on board composition for our stockholders’ consideration is an important step forward as the Board conducts its review of strategic and financial alternatives for the company,” said Fadel, who also is CEO of Rent-A-Center. “These activities are ongoing and robust, and we look forward to reporting to our stockholders in due course.”

Under terms of the cooperation agreement, Engaged Capital has also agreed to vote all of its shares in favor of Rent-A-Center’s previously announced proposal to declassify the board which, if approved, will result in all directors standing for election on an annual basis.

Glenn W. Welling, founder and chief investment officer at Engaged Capital, said, “We are pleased to reach a cooperation agreement with Rent-A-Center. With the nominating window for the 2018 Annual Meeting upon us, this agreement helps ensure that the board’s review of strategic and financial alternatives will continue unabated and without distraction – enabling Rent-A-Center’s directors to continue working constructively to maximize value for all stockholders.”

No date has been set for the annual meeting.