Engaged Capital Calls on Rent-A-Center CEO Mark Speese to Cease Mischaracterizations to Investors & Calls on Incumbent Direct...
July 27 2017 - 4:33PM
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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version on businesswire.com: http://www.businesswire.com/news/home/20170727006567/en/
Media Contact:Bayfield Strategy, Inc.Riyaz Lalani,
416-907-9365rlalani@bayfieldstrategy.com
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