NEWPORT BEACH, Calif.--(BUSINESS WIRE)--

Engaged Capital, LLC (together with its affiliates, “Engaged Capital” or “we”), an investment firm specializing in enhancing the value of small and mid-cap North American equities and the largest stockholder of Rent-A-Center, Inc. (“RCII” or the “Company”) (NASDAQ:RCII) with a 20.5% economic interest, today issued the following statement regarding its investment in RCII:

We find the statements made by RCII’s CEO, Mark Speese, on today’s earnings call regarding the Board’s evaluation (or lack thereof) of inbound interest from multiple parties to acquire the Company to be highly misleading to stockholders and underscores precisely what is wrong with the Board and governance of RCII.

First, we question why Mr. Speese is offering commentary regarding the deliberations of a Board to which he is no longer a member after being decidedly unseated by stockholders. Second, we question how the Board’s so-called “open-mindedness” and “assessment of a wide range of strategic options” is consistent with its outright refusal to engage with parties that have expressed a strategic interest in acquiring the Company. In fact, in his prepared remarks, Mr. Speese (again speaking for the Board he is no longer part of) rules out the consideration of strategic alternatives saying “based on where we are today the Board believes that this is not the right time to conduct a process.”

Given the track record of value destruction at RCII and the clear rejection of management’s risky turnaround plan by stockholders, we question how the Board could “strongly believe” that execution of management’s strategic plan “will drive greater shareholder value” than a sale of the Company at a substantial premium to the unaffected trading price.

It is apparent to us that the incumbent members of the Board and Mr. Speese are willfully ignoring the directive from stockholders who overwhelmingly elected three new directors to RCII’s seven-member Board at the annual meeting in June 2017. Stockholders supported Engaged Capital’s insistence that a parallel process be initiated whereby the Board would explore strategic alternatives while a turnaround of the Company was being attempted. Meanwhile, it appears that those in control of the Company are comfortable blatantly disregarding the will of the Company’s stockholders. Unfortunately, it does not appear that the pattern of behavior that saw the Board spend over $4 million of stockholder capital during the proxy fight in an apparent attempt defend the interests of certain individuals over and above those of the Company’s true owners – the stockholders – has changed.

While we cannot know what is occurring in the boardroom, we continue to believe that the four incumbent directors:

• Steven L. Pepper, former president of YUM Brands Mexico;
• J.V. Lentell, Vice Chairman of Intrust Bank, N.A.;
• Michael J. Gade, Founding Partner of Challance Group, LLP; and
• Rishi Garg, Partner at Mayfield Fund

have abrogated their duties as fiduciaries to stockholders and we call on them to either heed the unequivocal voices of stockholders or resign immediately.

About Engaged Capital:

Engaged Capital, LLC (“Engaged Capital”) was established in 2012 by a group of professionals with significant experience in activist investing in North America and was seeded by Grosvenor Capital Management, L.P., one of the oldest and largest global alternative investment managers. Engaged Capital is a limited liability company owned by its principals and formed to create long-term shareholder value by bringing an owner’s perspective to the managements and boards of undervalued public companies. Engaged Capital’s efforts and resources are dedicated to a single investment style, “Constructive Activism” with a focus on delivering superior, long-term, risk-adjusted returns for investors. Engaged Capital is based in Newport Beach, California.

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