Rent-A-Center Announces Proposal to Declassify Board of Directors
Rent-A-Center recently announced that its board of directors has voted unanimously to submit a proposal to the company’s stockholders at its 2018 Annual Meeting of Stockholders to amend Rent-A-Center’s certificate of incorporation such that all directors will stand for election on an annual basis. Rent-A-Center’s directors are currently divided into three classes, with the members of each class serving staggered three-year terms so that one-third of the Board seats are up for election each year.
To facilitate the declassification of the board in a timely matter, each current director has committed to tender his resignation following the 2018 Annual Meeting if he is a member of the Board at that time, and each such director will subsequently be reappointed to the board by the remaining members of the board. The result of these actions will be that each member of the Rent-A-Center board will serve a one-year term following the company’s 2018 Annual Meeting, and will stand for election annually, beginning at the company’s 2019 Annual Meeting of Stockholders.
In connection with such announcement, Engaged Capital, the company’s largest stockholder, issued the following statement: “Engaged Capital fully supports the declassification of Rent-A-Center’s board and the corresponding resolution. We applaud the new board’s proactive decision to announce further shareholder friendly actions following their decision to explore strategic alternatives. It is clear the board realizes robust corporate governance practices, including strong and independent oversight, are and will continue to be important contributors to enhancing shareholder value at RCII.”
The amendment to the company’s certificate of incorporation permitting the declassification of the board of directors will require the approval of stockholders representing at least 80% of all shares of the company’s common stock entitled to vote on the declassification amendment.
The proposal for the board’s declassification plan will be detailed in Rent-A-Center’s 2018 proxy statement, which will be filed in advance of the 2018 Annual Meeting. The 2018 Annual Meeting is expected to take place on June 5, 2018.