DEF 14A of Upbound Group, Inc.
Filed Apr 23, 2024 · FY20230001104659-24-050354
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 4, 2024
| | Page | | Option Exercises and Stock Vested | 49 | | Non-Qualified Deferred Compensation | 49 | | No Pension Benefits | 50 | | Potential Payments and Benefits Upon Termination Without a Change in Control | 50 | | Potential Payments and Benefits Upon Termination With a Change in Control | 51 | | Equity Compensation Plan Information | 53 | | CEO Pay Ratio | 53 | | Historical Pay Versus Performance Disclosure | 53 | | PROPOSAL THREE: ADVISORY VOTE ON EXECUTIVE COMPENSATION | 58 | | PROPOSAL FOUR: AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO LIMIT THE LIABILITY OF CERTAIN OFFICERS AS PERMITTED BY LAW | 59 | | PROPOSAL FIVE: MISCELLANEOUS AMENDMENTS TO THE CERTIFICATE OF INCORPORATION | 61 | | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 62 | | OTHER INFORMATION | 64 | | Delinquent Section 16(a) Reports | 64 | | Annual Report on Form 10-K | 64 | | “Householding” of Proxy Materials | 64 | | Submission of Stockholder Proposals | 64 | | Other Business | 65 | | ANNEX A: CERTIFICATE OF INCORPORATION AMENDMENT | A-1 | | ANNEX B: RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES | B-1 |
Board Nominees
Board Nominees The following table provides summary information about each director nominee who is nominated for re-election at the 2024 Annual Meeting. Each director nominee will serve a one-year term expiring at the 2025 annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, resignation, disqualification or removal. As previously disclosed, Ms. You will not seek re-election and her service on the Board will end at the 2024 Annual Meeting, and, accordingly, Ms. You is not one of the director nominees. Ms. You’s decision to not seek re-election was not due to any disagreement with the Company on any matters relating to the Company’s operations, practices or policies. Additional information about each nominee, including the Board’s diversity and skills matrix, can be found under “Proposal One: Election of Directors” below.
Board Nominees
| Name(1) | Age | Director Since | Independent | Committee Memberships | Other Public Company Boards | | Jeffrey Brown (Chairman) | 63 | 2017 | Yes | Audit & Risk (chair) | Medifast, Inc. | | Mitchell Fadel | 66 | 2017 | — | — | — | | Molly Langenstein | 60 | 2024 | Yes | Compensation Nominating and Corporate Governance | — | | Harold Lewis | 63 | 2019 | Yes | Audit & Risk Compensation | — | | Glenn Marino | 67 | 2020 | Yes | Compensation (chair) Nominating and Corporate Governance | PRA Group, Inc. | | Carol McFate | 71 | 2019 | Yes | Audit & Risk Nominating and Corporate Governance (chair) | — |
Board Nominees
(1) Former director Christopher Hetrick’s service on the Board ended upon his resignation on February 29, 2024 (which was not due to any disagreement with the Company on any matters relating to the Company’s operations, practices or policies) and, accordingly, Mr. Hetrick is not one of the director nominees.
Director Compensation
Director Compensation Under our current compensation program, our non-employee directors receive annual retainers, which are payable in cash unless the applicable director has elected to receive all or a portion of such amount in the form of deferred stock units (“DSUs”), as well as an annual DSU award under the Upbound Group, Inc. Amended 2021 Long-Term Incentive Plan (the “2021 Plan”) with a grant date value of $145,000 for 2024. In addition, non-employee directors may elect to defer cash dividends otherwise payable on DSUs into additional DSUs. The Company provides a 25% matching contribution on deferrals of cash retainers and cash dividends into DSUs. Mr. Fadel, our Chief Executive Officer and our only employee director, is not entitled to receive compensation for his service as a director.
Pay for Performance; Relative Total Shareholder Return
Pay for Performance; Relative Total Shareholder Return Our executive compensation program directly links a substantial portion of executive compensation to our financial and stock price performance through both annual and long-term incentives. For the 2023 annual cash incentive program, based on Company performance, each named executive officer received an amount equal to 144% of such person’s target bonus amount. In 2021, our Compensation Committee granted eligible executive officers performance-based restricted stock units based on our relative Total Shareholder Return (“TSR”) as compared to the S&P 1500 Specialty Retail Index over a three-year measurement period, which ended December 31, 2023. Our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ranked us 37 out of 54 companies in the S&P 1500 Specialty Retail Index, which resulted in the vesting of 50% of the performance-based restricted stock units that were granted.
Nominees for Director at the 2024 Annual Meeting
Nominees for Director at the 2024 Annual Meeting Currently, the number of directors constituting our entire Board is seven, each of whom is elected at the annual meeting of stockholders to serve one-year terms expiring at the following annual meeting of stockholders and until his or her respective successor is duly elected and qualified, or until his or her earlier death, resignation, disqualification or removal. Our Board, upon recommendation of the Nominating and Corporate Governance Committee, has nominated six sitting directors to be re-elected as directors by our stockholders. The nominees include Molly Langenstein who was first appointed by the Board as a director and member of the Company’s Compensation Committee and Nominating and Corporate Governance Committee effective April 1, 2024. The qualifications necessary for a board nominee and the Nominating and Corporate Governance Committee’s process for evaluating prospective board members is discussed under “Director Nominations — Qualifications” below. Specific experience and relevant considerations with respect to each nominee are set forth in each candidate’s respective biography below. Each nominated director has agreed to stand for re-election; however, should any of them become unable or unwilling to accept such nomination, the shares of common stock voted for that nominee by proxy will be voted for the election of a substitute nominee as the Board may recommend, or the Board may reduce the number of directors to eliminate the vacancy. If any nominee is unable to serve his or her full term, the Board may reduce the number of directors or designate a substitute to serve until the subsequent annual meeting of stockholders. Our Board has no reason to believe that any of the director nominees will be unable or unwilling to serve as a director, and, to the knowledge of the Board, each intends to serve a full term if elected as a director of the Company. Our Board recommends that you vote “FOR” each of the director nominees.
Nominees for Director at the 2024 Annual Meeting
| | Jeffrey Brown | | | Chairman of the Board; Independent Director Age: 63 Director Since: 2017 Committees Served: Audit & Risk (chair) Gender: Male Ethnicity: Caucasian |
Nominees for Director at the 2024 Annual Meeting
Mr. Brown is the Chief Executive Officer and founding member of Brown Equity Partners, LLC (“BEP”), which provides capital to management teams and companies needing equity capital. Prior to founding BEP in 2007, Mr. Brown served as a founding partner and primary deal originator of the venture capital and private equity firm Forrest Binkley & Brown from 1993 to 2007. Mr. Brown has worked at Hughes Aircraft Company, Morgan Stanley & Company, Security Pacific Capital Corporation and Bank of America Corporation. In his 37 years in the investment business, Mr. Brown has served on over 50 boards of directors, including the boards of directors of ten public companies. Since June 2017, Mr. Brown has served as a director of Upbound Group, Inc., and is currently its Chairman. Since June 2015, Mr. Brown has served as the Lead Director of Medifast, Inc., where he also serves as chairman of the Audit Committee and is a member of the Executive Committee. Mr. Brown previously served as a director for companies, including Cadiz, Inc., Golden State Vintners, Inc., Nordion, Inc., Outerwall, Inc. and Stamps.com, Inc. We believe Mr. Brown’s extensive public and private company board experience, significant transactional experience and strong financial experience, provide valuable perspectives and leadership to the Board as we pursue our strategic growth objectives.
Nominees for Director at the 2024 Annual Meeting
| | Mitchell Fadel | | | Director; Chief Executive Officer Age: 66 Director Since: 2017 Committees Served: N/A Gender: Male Ethnicity: Caucasian; Middle Eastern |
Nominees for Director at the 2024 Annual Meeting
Mr. Fadel has served as one of our directors since June 2017 and was named Chief Executive Officer on January 2, 2018. Mr. Fadel was self-employed prior to joining the Company after most recently serving as President — U.S. Pawn for EZCORP, Inc., a leading provider of pawn loans in the United States and Mexico, from September 2015 to December 2016. Prior to that, Mr. Fadel served as President of the Company (beginning in July 2000) and Chief Operating Officer (beginning in December 2002) each until August 2015, and also as a director of the Company from December 2000 to November 2013. From 1992 until 2000, Mr. Fadel served as President and Chief Executive Officer of the Company’s subsidiary Rent-A-Center Franchising International, Inc. f/k/a ColorTyme, Inc. Mr. Fadel’s professional experience with the Company also includes previously serving as a Regional Director and a District Manager. As our Chief Executive Officer, Mr. Fadel’s day-to-day leadership provides him with intimate knowledge of our operations that are a vital component of our Board discussions. In addition, Mr. Fadel brings 40 years of experience in and knowledge of the rent-to-own industry, including his previous tenure as our President and Chief Operating Officer, to the Board. We believe Mr. Fadel’s service as our Chief Executive Officer creates a critical link between management and our Board, enabling our Board to perform its oversight function with the benefit of management’s perspectives on our business.
Nominees for Director at the 2024 Annual Meeting
| | Molly Langenstein | | | Independent Director Age: 60 Director Since: 2024 Committees Served: Compensation; Nominating and Corporate Governance Gender: Female Ethnicity: Caucasian |
Nominees for Director at the 2024 Annual Meeting
Ms. Langenstein was appointed to the Board in 2024. Ms. Langenstein is a 30-year retail industry veteran with a proven track record of building multiple successful brands. Her experience and leadership include navigating the evolving digital landscape for consumers and delivering omni-channel experiences. Most recently, Ms. Langenstein served as the Chief Executive Officer and President and a member of the board of directors of Chico’s FAS (“Chico’s”), one of the leading fashion retailers in North America, until Chico’s was acquired by Sycamore Partners in January 2024. Ms. Langenstein joined Chico’s in August 2019 as the company’s President, Apparel Group. She transitioned to the role of CEO and President on June 24, 2020. Before joining Chico’s, she spent nearly three decades at Macy’s, Inc., where she was promoted to numerous executive positions with increasing scope and responsibility, including General Business Manager, Ready-to-Wear at Macy’s from 2017 to 2019. Prior to that, she served as Chief Private Brands Officer of Macy’s and Bloomingdale’s from 2015 to 2017. Ms. Langenstein served as Executive Vice President of Private Brands for Men’s and Children’s Wear at Macy’s Private Brands from 2013 to 2014. In 2012, she was named Executive Vice President, Group Merchandise Manager of Millennial at Macy’s. Ms. Langenstein received her Bachelor of Science degree in fashion merchandising from Kent State University. Ms. Langenstein has served on the Kent State University Advisory Board since 2017. We believe Ms. Langenstein’s significant recent experience in the retail industry, including omni-channel and digital consumer offerings, and her senior executive leadership experience provide our Board with a valuable perspective as our Company pursues its strategic objectives.
Nominees for Director at the 2024 Annual Meeting
| | Harold Lewis | | | Independent Director Age: 63 Director Since: 2019 Committees Served: Audit & Risk; Compensation Gender: Male Ethnicity: African American |
Nominees for Director at the 2024 Annual Meeting
Mr. Lewis brings over 30 years of experience in financial services and mortgage lending. Mr. Lewis currently serves as the President and Chief Operating Officer of BSI Financial Services, a financial services company in the mortgage industry. From August 2018 until June 2019, he served as the CEO of Renovate America, Inc., a national home improvement fintech company focused on energy efficient home improvement lending. From 2016 to 2018, Mr. Lewis was a senior advisor for McKinsey & Company, a worldwide management consulting firm. From 2012 to 2015, he served as President and COO of Nationstar Mortgage, one of the largest mortgage servicers in the country. In that position, he grew Nationstar’s servicing platform from $30 billion to $400 billion and mortgage origination portfolio from $1.8 billion to $25 billion while also building and managing Nationstar’s relationship with the newly created industry regulator, the Consumer Financial Protection Bureau. Prior to Nationstar Mortgage, he held C-Suite and senior executive positions at Citi Mortgage, Fannie Mae, Resource Bancshares Mortgage Group and Nations Credit, among others. We believe that Mr. Lewis’ significant financial technology knowledge, broad experience with a similar customer demographic as our company and consumer finance regulatory experience provides our Board with an important resource across our businesses.
Nominees for Director at the 2024 Annual Meeting
| | Glenn Marino | | | Independent Director Age: 67 Director Since: 2020 Committees Served: Compensation (chair); Nominating and Corporate Governance Gender: Male Ethnicity: Caucasian |
Nominees for Director at the 2024 Annual Meeting
Mr. Marino was appointed to the Board in February 2020. Mr. Marino brings 40 years of experience in the consumer retail finance industry, most recently serving as Executive Vice President, CEO — Payment Solutions and Chief Commercial Officer of Synchrony Financial, Inc., a leading financial services company, from 2014 until 2018. Prior to the spin-off in 2014 of Synchrony by General Electric Corporation, Mr. Marino was an executive with the North American retail finance business of General Electric, serving as CEO — Payment Solutions and Chief Commercial Officer from 2012 to 2013, and CEO — Sales Finance from 2001 to 2011. From 1999 to 2001, Mr. Marino served as CEO of Monogram Credit Services, a joint venture between GE and BankOne (now JPMorgan Chase & Co.). Prior to that, Mr. Marino held various roles of increasing responsibility in finance, business development, credit risk, and marketing with General Electric and Citibank. Mr. Marino has served as a director of PRA Group, Inc. since March 2024. We believe Mr. Marino’s extensive knowledge in retail finance, business development, and banking and his consumer finance regulatory experience provide a valuable perspective to our Board as we continue to pursue our strategic growth objectives.
Nominees for Director at the 2024 Annual Meeting
| | Carol McFate | | | Independent Director Age: 71 Director Since: 2019 Committees Served: Audit & Risk; Nominating and Corporate Governance (chair) Gender: Female Ethnicity: Caucasian |
Nominees for Director at the 2024 Annual Meeting
Ms. McFate served from 2006 until 2017 as the Chief Investment Officer of Xerox Corporation, a multinational provider of multifunction document management systems and services, managing retirement assets for North American and United Kingdom plans. Previously, Ms. McFate served in various finance and treasury roles for a number of prominent insurance and financial services companies, including XL Global Services, Inc., a U.S.-based subsidiary of XL Capital Ltd., a leading Bermuda-based global insurance and reinsurance company, American International Group, Inc., an American multinational property & casualty insurance, life insurance, and financial services provider, and Prudential Insurance Company of America, an American Fortune Global 500 and Fortune 500 company whose subsidiaries provide life insurance, investment management and other financial products and services to both retail and institutional customers through the U.S. and in over 30 other countries. Ms. McFate is a Chartered Financial Analyst. Ms. McFate previously served as a director, member of the Audit Committee and Human Resources Committee and as the chair of the Investment Committee of Argo Group International Holdings, Ltd from 2020 to 2023. Argo was sold to Brookfield Reinsurance, a subsidiary of Brookfield Asset management in November 2023. Ms. McFate brings over 40 years of global corporate finance experience and a varied viewpoint to the Board which we believe supports us in our strategic initiatives and enhances our long-term vision, sustainable growth and shareholder value.
Director Compensation
Director Compensation
Director Compensation for 2023
Director Compensation for 2023 The following table sets forth certain information regarding the compensation of our current and former non-employee directors during 2023.
Director Compensation for 2023
| Name | Fees Earned or Paid in Cash(1) | DSUs(2) | Other Compensation(3) | Total | | Jeffrey Brown | $— | $530,841 | $94,618 | $625,459 | | Harold Lewis | $103,000 | $132,504 | $24,489 | $259,993 | | Glenn Marino | $20,500 | $258,126 | $19,490 | $298,116 | | Carol McFate | $56,252 | $213,718 | $40,709 | $310,679 | | Jen You(4) | $66,000 | $173,738 | $6,222 | $245,960 | | Christopher Hetrick(5) | $— | $300,125 | $47,173 | $347,298 | | B.C. Silver(6) | $24,500 | $132,504 | $1,882 | $158,886 |
Director Compensation for 2023
(1) Includes annual retainers paid in cash to each non-employee director with respect to services rendered in 2023. For directors who elected to defer cash fees into DSUs, those deferred amounts are included in the DSUs column to the extent such DSUs were awarded in 2023. (2) Reflects the grant date fair value calculated pursuant to Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 of DSUs granted to each director in fiscal 2023, as follows: • Each director was granted 5,876 DSUs in January 2023, representing the $132,500 annual grant for service in fiscal 2023. • During fiscal 2023, Messrs. Brown, Hetrick and Marino and Mses. McFate and You were granted 15,056, 6,334, 4,746, 3,073, and 1,742 DSUs, respectively, in lieu of quarterly cash retainers and dividends payable in respect of the fourth quarter of 2022 through and including the third quarter of 2023. Such amounts (and the table above) exclude DSUs that were awarded to such persons in January 2024 in lieu of quarterly cash retainers payable in respect of the fourth quarter of 2023 and exclude DSUs that were awarded to such persons in January 2024 in lieu of dividend equivalents on their December 19, 2023 record date DSUs. (3) Represents dividend equivalents paid in cash in respect of vested DSUs and other reimbursable expenses. (4) Ms. You’s service as a director will end at the 2024 Annual Meeting. (5) Mr. Hetrick’s service as a director ended upon his resignation on February 29, 2024, which was not due to any disagreement with the Company on any matters relating to the Company’s operations, practices or policies. (6) Mr. Silver’s service as a director ended upon his resignation on January 28, 2023, which was not due to any disagreement with the Company on any matters relating to the Company’s operations, practices or policies.
Director Compensation for 2024
Director Compensation for 2024 At its December 2023 meeting, the Compensation Committee conducted its annual review of the non-employee director compensation program, which has not been changed since 2022. The Compensation Committee engaged an independent consulting firm, Korn Ferry, Inc. (“Korn Ferry”), to assist with its review and recommendation to the Board of any changes to the program for 2024. Korn Ferry provided the Compensation Committee with market data regarding director compensation programs from our Peer Group and a comparison of our director compensation program to the market data, which was taken into account by the Compensation Committee. As a result of its review, the Compensation Committee recommended, and the Board approved, retaining the same compensation program elements and amounts for 2024 as in 2023, with three modifications: (1) increasing the annual cash retainer for Board service by $7,500 to $85,000; (2) increasing the annual cash retainer for the Chairman of the Board by $25,000 to $200,000; and (3) increasing the value of the annual DSU award by $12,500 to a grant date value of $145,000.
Director Nominees
Director Nominees Under our bylaws, only persons who are nominated in accordance with the procedures set forth in our bylaws are eligible for election as, and to serve as, members of our Board. Under our bylaws, nominations of persons for election to our Board may be made at a meeting of our stockholders (1) by or at the direction of our Board or (2) by any stockholder, provided they comply with the provisions of Article I, Sections 3 and 4 of our bylaws. The Board has delegated the screening and recruitment process for Board members to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee selects individuals it believes are qualified to be members of the Board, and recommends those individuals to the Board for nomination for election or re-election as directors. In identifying prospective director candidates, the Nominating and Corporate Governance Committee may seek referrals from other members of the Board, management, stockholders and other sources. From time to time, pursuant to its committee charter, the Nominating and Corporate Governance Committee may also engage a consultant to conduct a search to identify qualified candidates. The Nominating and Corporate Governance Committee then undertakes the evaluation process described below for any candidates so identified. In 2024, the Nominating and Corporate Governance Committee engaged Spencer Stuart to assist the Board in finding an additional candidate to consider to join the Board. As a result of that process, the Board appointed Ms. Langenstein as an additional director in April 2024.
Compensation Program Design and Governance Policies
| What We Do | | | • Transparent Compensation Program: Maintain a transparent executive compensation program that is understandable both to our stockholders and employees and is not overly complex or subject to constantly changing features • Compensation Aligned with Performance: A substantial percentage of both cash and equity compensation is at-risk and variable based on company performance • Multi-Year Equity Vesting: Three-year full vesting for all executive equity awards (restricted stock units vest pro rata annually over three years; performance stock units cliff vest after three years based on relative TSR performance) • Annual SOP Vote: Annual say-on-pay stockholder vote regarding our executive compensation program to receive regular feedback from our investors • Annual Program Risk Assessment: Our Compensation Committee performs an annual risk assessment of our compensation program • Investor Outreach: Outreach program to our large institutional investors regarding executive compensation and governance-related topics | • Independent Compensation Consultant: Engagement by the Compensation Committee of an independent compensation consultant to conduct a formal evaluation of, and advise the Compensation Committee with respect to, the compensation arrangements for our Chief Executive Officer, as well as provide guidance with respect to the compensation of our senior executives • Rigorous Target Setting: Rigorous performance targets for our annual cash incentive and long-term incentive compensation programs • Total Reward Statement Review: Regular review by the Compensation Committee of total reward statements for the Chief Executive Officer and other executives to evaluate multi-year cash and equity compensation awards • Ownership Guidelines: Equity ownership guidelines for our directors, Chief Executive Officer, executive vice presidents, senior vice presidents and vice presidents • Clawback Policy: Incentive compensation is subject to clawback, as described further in this proxy statement |
Compensation Program Design and Governance Policies
| What We Do Not Do | | | • No Hedging or Pledging Stock: Insider Trading Policy that prohibits derivative transactions involving our common stock and pledging stock • No Gross-ups: Employee benefits are provided without tax gross-ups (other than certain relocation-related expenses) • No Excessive Perquisites: We provide only limited perquisites, as described in this CD&A | • No Repricing Options: We do not reprice stock options without stockholder approval (and as of 2021, we no longer grant stock options) • No Dividends Paid on Unvested Equity: No prospective payment of dividends on unvested equity awards |
2023 Executive Compensation Highlights
2023 Executive Compensation Highlights Highlights of our 2023 executive compensation program are discussed below: Continued High Percentage of At-Risk, Variable Performance-Based Compensation: Targeted direct compensation (base salary, target annual incentive compensation and target long-term incentive compensation) for our Chief Executive Officer was 85% at-risk (performance-based) for the year ended December 31, 2023. This represents the Chief Executive Officer’s target annual incentive compensation and target long-term incentive compensation as a percentage of his total target direct compensation. Maintained Rigorous Annual Incentive Award Targets: In establishing the 2023 annual cash incentive plan targets for each metric, the Compensation Committee considered sensitivities to the key business drivers of Adjusted EBITDA, Rent-A-Center segment revenue, and Acima segment revenue to establish rigorous threshold, target and maximum performance levels. • Annual Financial Performance Resulted in 144% Bonus Plan Payouts: As a result of our Company’s annual financial performance in 2023, for our 2023 bonus plan metrics, the Compensation Committee approved a 144% payout to our executives. For comparison, none of the named executive officers received a bonus payout for the 2022 performance year based on the Company’s annual financial performance in 2022. • Maintained Weighting of Performance Stock Units in Long-Term Incentive Program at 70%: In 2023, the Compensation Committee maintained the performance stock unit weighting as in 2022, resulting in grants of time-vested restricted stock units (30%) and performance-based restricted stock units (70%), thereby including substantial weighting to the Company’s relative TSR performance under the long-term incentive program. • Three-Year Stock Price Performance Resulted in 50% Vesting of 2021 Performance-Based Stock Units: Our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ended December 31, 2023, ranked us 37 out of 54 companies in the S&P 1500 Specialty Retail Index, which resulted in the vesting of 50% of the performance-based stock units that were granted in 2021. • Strong Stockholder Say-on-Pay Approval: In June 2023, we held a stockholder advisory vote on the compensation of our named executive officers, referred to as a say-on-pay vote. Our stockholders approved the compensation of our named executive officers, with approximately 99% of the shares of common stock present and entitled to vote thereon cast in favor of our proposal, which our Compensation Committee believed conveyed a general endorsement of our executive compensation program and related compensation actions.
Severance Arrangements
Severance Arrangements We have an employment agreement with Mr. Fadel and executive transition agreements with our other named executive officers to provide certain payments and benefits upon an involuntary termination of the named executive officer’s employment or the occurrence of certain other circumstances that may affect the named executive officer (and, in the case of Mr. Fadel, the employment agreement also provides for, among other items, annual compensation and certain employee benefits, as well as his entitlements upon an involuntary termination as described in the section “Arrangements with Mr. Fadel” below). The Compensation Committee believes that such severance arrangements assist us in recruiting and retaining top-level talent. In addition, formalizing our severance practices benefits us (1) by providing us with certainty in terms of our obligations to an eligible executive in the event that our relationship with him or her is severed and (2) by virtue of the non-competition and non-solicitation provisions in our loyalty agreements, which inure to our benefit in the event that an eligible executive severs employment with us. For a more detailed description of the severance arrangements which apply to our named executive officers, please see “Termination of Employment and Change-in-Control Arrangements” below.
Compensation Process
Compensation Process The Compensation Committee typically begins the process of determining the amount and mix of total compensation to be paid to our senior executives, including our named executive officers, in December of each year and finalizes the amounts the following February. This enables the Compensation Committee to examine and consider our performance during the previous year in establishing the current year’s compensation. During the Compensation Committee’s annual review of the executive compensation program, the Compensation Committee primarily considers market and Peer Group data (as described below), input provided by the Compensation Committee’s independent compensation consultant and by our Human Resources department, and input of the Chief Executive Officer other than with respect to his own compensation. The Compensation Committee also considers experience, responsibilities, competencies and individual performance. Historically, the Compensation Committee has retained annually a compensation consultant to conduct a formal evaluation of, and advise it with respect to, the compensation arrangements for our Chief Executive Officer, as well as provide guidance with respect to the compensation of our senior executives, including our other named executive officers. For the 2023 fiscal year, the Compensation Committee reviewed the executive compensation analysis conducted by Korn Ferry, which utilized the approved Peer Group (as defined below), pursuant to its engagement by the Compensation Committee to assist the committee with compensation decisions for the 2023 fiscal year. The Compensation Committee considered executive compensation practices of the following similarly situated public companies (the “Peer Group”) for the purpose of evaluating our 2023 compensation arrangements for our senior executives:
Compensation Process
| 2023 Peer Group | | | | | Aaron’s, Inc. | Big Lots Inc. | Brinker International Inc. | Conn’s | | FirstCash, Inc. | H&R Block, Inc. | La-Z-Boy Incorporated | OneMain Holdings | | Sally Beauty, Inc. | Bread Financial Holdings, Inc. | The Western Union Company | PROG Holdings |
Compensation Process
The following criteria were considered in the selection of companies for this Peer Group: • U.S.-based public companies with a similar business focus as ours, including both consumer finance and retail (particularly home furnishings, appliances and other retail organizations); • Companies with annual revenue similar to us (generally 0.5 to 2.0 times our revenue, based on the most recent available financial information at the time of the analysis); and • Competitors for executive talent. In late 2023, the Compensation Committee considered the above criteria in reviewing the Peer Group to be used for 2024 benchmarking purposes and determined to make no changes to the Peer Group. Certain members of the Compensation Committee have significant professional experience in the retail and consumer finance industry, as well as with respect to the executive compensation practices of large publicly traded companies. This experience provides a frame of reference within which to evaluate our executive compensation program relative to general economic conditions and our progress in achieving our short-term and long-term goals. As discussed above, the Compensation Committee has engaged Korn Ferry as its independent compensation consultant, and in such role, Korn Ferry provides ongoing advisory services to the Compensation Committee on various aspects of its overall compensation practices.
Forms of Compensation
Forms of Compensation The following forms of compensation are currently utilized by the Compensation Committee in compensating our named executive officers: • base salary, which is paid in cash; • annual incentive compensation, which is paid in cash; • long-term incentive compensation, which consists of restricted stock units and performance-based stock units; • severance arrangements; and • employee benefits, including limited perquisites, with no tax gross-ups (other than for certain relocation-related expenses).
Annual Cash Incentive Compensation
Annual Cash Incentive Compensation The Compensation Committee maintains an annual incentive compensation program for our named executive officers that provides for awards in the form of a cash bonus. These cash bonuses provide our named executive officers with financial rewards based upon achievement of specified annual objectives, which the Compensation Committee believes will ultimately increase the value of our Company by aligning our executive compensation with the achievement of annual Company performance objectives, as well as help us attract and retain our named executive officers by providing attractive compensation opportunities. Under our annual cash incentive program, target cash bonus eligibility is established at a pre-determined percentage of the named executive officer’s base salary, with such percentage amount set in accordance with the named executive officer’s position and responsibilities with us. The ultimate payouts pursuant to our annual cash incentive program for prior year performance are typically approved by the Compensation Committee in February at the same time that all compensation (including base salaries, target annual cash incentive compensation, and target long-term incentive compensation) for our named executive officers for the current year is reviewed and approved. This timing enables the Compensation Committee to evaluate the named executive officer’s performance during the prior year, as well as determine performance targets for the new fiscal year in light of the previous year’s performance. Payouts under the plan may range from 0% to 200% of target compensation. The annual cash incentive program for 2023 included three financial performance metrics focused on annual top line performance and profitability: • Adjusted EBITDA — The Compensation Committee included an Adjusted EBITDA target in the annual cash incentive program because it believes Adjusted EBITDA generally represents an accurate indicator of our core financial performance and profitability over a one-year period of time, while excluding the impact of items such as interest, depreciation and stock-based compensation expense, which can vary significantly and other adjustments that are not considered to reflect the performance of our core business operations. • Rent-A-Center Segment Revenue — The Compensation Committee included a Rent-A-Center segment revenue target in 2023, which reflects its belief that a portion of the cash bonus opportunity should be based on our top line performance for each primary business segment. In the past due to refranchising transactions or other significant changes in store count, same store sales has been used to measure Rent-A-Center segment top line performance. • Acima Segment Revenue — For our Acima segment, the Compensation Committee determined that revenue performance was an appropriate metric for top line performance of this business segment, rather than invoice volumes which are considered to be a leading indicator to future revenues. The financial performance targets for the 2023 annual cash incentive program were established in February 2023 following a review of our financial projections developed pursuant to our strategic plan and objectives for 2023. In setting the performance targets under the 2023 annual cash incentive program, the Compensation Committee considered the level of actual achievement of the targets for the 2022 annual cash incentive program, the level of the Company’s anticipated investment in its strategic initiatives for 2023, sensitivities for the key business drivers that may impact achievement of the targets and the Compensation Committee’s goal to ensure a rigorous target-setting process. Based upon that review, the Compensation Committee established the following threshold, target and maximum payout achievement levels for each metric in the 2023 annual cash incentive program:
Annual Cash Incentive Compensation
| Metric | Performance Levels | | Adjusted EBITDA(1) | Threshold — Less than $354 million Target — $417 million Maximum — Greater than or equal to $479 million | | Rent-A-Center Segment Revenue | Threshold — Less than $1,813 million Target — $1,888 million Maximum — Greater than or equal to $1,964 million | | Acima Segment Revenue | Threshold — Less than $1,787 million Target — $1,901 million Maximum — Greater than or equal to $2,015 million |
Annual Cash Incentive Compensation
(1) Non-GAAP financial measure. See Annex B for additional information regarding non-GAAP financial measures and reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measure. The target cash incentives in 2023 for each of the named executive officers are set forth below:
Annual Cash Incentive Compensation
| Officer | 2023 Target Cash Incentives as a Percentage of Base Salary | | Fadel | 135% | | Karam | 60% | | Blasquez | 60% | | Montrone | 60% | | Gautam | 90% |
Annual Cash Incentive Compensation
In February 2024, the Compensation Committee determined the level of achievement against the targets for purposes of the named executive officers’ 2023 bonus plan. In 2023, the Company’s operating profit was $163 million.
Annual Cash Incentive Compensation
| Metric | Weighting (% of total bonus opportunity) | 2023 Performance | Percent of 2023 Target Achieved | Payout for 2023 (% of Target) | | Adjusted EBITDA(1) | 50% | $474 million | 113.7% | 191% | | Rent-A-Center Segment Revenue | 25% | $1,864 million | 98.7% | 68% | | Acima Segment Revenue | 25% | $1,931 million | 101.6% | 127% |
Annual Cash Incentive Compensation
(1) Non-GAAP financial measure. See Annex B for additional information regarding non-GAAP financial measures and reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measure. In reviewing our actual 2023 performance relative to the performance targets, the Compensation Committee determined that it would be appropriate, consistent with past practices, to adjust Adjusted EBITDA to exclude the impact of the annual cash incentive bonus. No other adjustments were made to Adjusted EBITDA. As a result, our named executive officers in the 2023 annual cash incentive program received a 144% bonus plan payout with respect to the 2023 performance year. Refer to the column “Non-Equity Incentive Plan Compensation” in the table appearing in the section “Compensation Tables — Summary Compensation Table” below in this proxy statement, for additional information.
Long-Term Incentive Compensation
Long-Term Incentive Compensation Our equity incentive plans are administered by the Compensation Committee and are designed to enable the Compensation Committee to provide incentive compensation to our employees in the form of stock unit awards, performance-based equity awards, restricted stock and other equity awards. The Compensation Committee believes that awarding our named executive officers non-cash, long-term equity incentive compensation, primarily in the form of long-term incentive awards which may increase or decrease in value depending on the satisfaction by us of pre-determined performance measures and/or an increase or decrease in the value of our common stock, more effectively aligns their interests with those of our stockholders. The Compensation Committee also believes that such awards will provide our named executive officers with an incentive to remain in their positions with us, because the determination as to whether a particular measure for our performance and/or an increase in the value of our common stock has been satisfied is typically made over an extended period of time. Recent long-term incentive awards have been made to our named executive officers pursuant to the 2021 Plan. Under the terms of the 2021 Plan, awards may be granted at times and upon vesting and other conditions as determined by the Compensation Committee, and may be made in the form of restricted stock and stock unit awards, other equity awards, and performance-based equity awards. Stock options have not been granted in recent years. • Restricted Stock Units — The restricted stock units granted by our Compensation Committee vest ratably over three years. Awards of time-based restricted stock units provide our named executive officers with a minimum level of value while also providing an additional incentive for such individuals to remain in their positions with us. • Performance Stock Units — The performance stock units granted by our Compensation Committee cliff vest after three years based on relative TSR performance. Awards of performance-based stock units provide an additional incentive for our named executive officers to remain in their positions with us in order to realize the benefit of such award and also focus them on a performance metric which the Compensation Committee considers beneficial to increasing the long-term value of our Company. The Compensation Committee determines the timing of the annual grants of equity awards to our named executive officers as well as the terms and restrictions applicable to such grants. The Compensation Committee approves, generally in February of each year, the annual grant to our executive officers in conjunction with its review and determination of each executive officer’s compensation for the current year. Grants may also be made in connection with commencement of employment or promotions. Annual grants are typically made on the second business day following fourth quarter earnings disclosures. The target equity award values in 2023 for each of the named executive officers are set forth below:
Long-Term Incentive Compensation
| Officer | 2023 Target Equity Award Values as a Percentage of Base Salary(1) | | Fadel | 415% | | Karam | 100% | | Blasquez | 140% | | Montrone | 140% | | Gautam | 90% |
Long-Term Incentive Compensation
(1) Represents the target annual award values of the performance share units and restricted stock units granted to each executive, reflected as a percentage of each executive’s annual base salary. These award values were converted from dollar values into: (i) a number of performance share units based on the closing price of one share of our common stock on the trading day immediately preceding the grant date multiplied by a discount factor of 0.75 to reflect risk associated with achieving the performance condition to vesting, and (ii) a number of restricted stock units based on the closing price of one share of our common stock on the trading day immediately preceding the grant date. The number of performance share units and restricted stock units resulting from the conversion of the award value to the number of units awarded is rounded to the nearest whole unit, and the award values may differ from the accounting grant date fair value under ASC 718. The long-term incentive compensation awards for 2023 were comprised of two vehicles, with greater emphasis on the portion of the long-term incentive award which is contingent on relative stock price performance:
2023 LTIP Award Types
2023 LTIP Award Types
2023 LTIP Award Types
| Award Type | Weighting | | Performance Stock Units | 70% | | Restricted Stock Units | 30% |
2023 LTIP Award Types
The Compensation Committee has adopted a relative TSR metric over a three-year measurement period as the vesting condition for grants of performance stock units under our long-term incentive compensation program. The Compensation Committee made this decision to tie the performance of our common stock to executive compensation and because the Compensation Committee believes that a relative measure is a more appropriate basis for measuring long-term performance than an absolute measure. The Compensation Committee also took into consideration the fact that our annual cash incentive program includes an annual Adjusted EBITDA metric. The Compensation Committee selected a three-year period over which to measure relative TSR based upon the time period utilized with respect to awards made by similarly situated public companies in the retail and consumer finance industry, as well as upon its belief that a three-year measurement period was appropriate to place an emphasis on our relative TSR over an extended period of time, as opposed to the single year measure which is utilized in our annual cash incentive program. The Compensation Committee selected the S&P 1500 Specialty Retail Index as the comparison group for measuring our relative TSR over the applicable measurement period. The Compensation Committee selected this comparison group because it includes many of the Company’s peers, represents the overall retail environment, and, in the determination of the Compensation Committee, was comprised of the companies similar, in terms of operations and scope of operations, to the Company. The Compensation Committee adopted the following payout ranges applicable to the 2023 awards of performance-based restricted stock units:
2023 LTIP Award Types
| Performance Stock Unit Payout Chart | | | | UPBD’s TSR Percentile Rank in the S&P 1500 Specialty Retail Index | | Payout | | >= | < | | | 90% | 100% | 200% | | 80% | 90% | 175% | | 70% | 80% | 150% | | 60% | 70% | 125% | | 50% | 60% | 100% | | 40% | 50% | 75% | | 30% | 40% | 50% | | 25% | 30% | 25% | | 0% | 25% | 0% |
2023 LTIP Award Types
See the columns “Stock Awards” and “Option Awards” in the table appearing in the section “Compensation Tables — Summary Compensation Table” and the column “Estimated Future Payouts Under Equity Incentive Plan Awards” in the table appearing in the section “Compensation Tables — Grants of Plan-Based Awards” below in this proxy statement for threshold, target, and maximum amounts payable to our named executive officers under the 2023 grants of performance-based awards. Payout of 2021 PSUs. In February 2024, the Compensation Committee determined the level of achievement of the minimum TSR condition with respect to the performance-based awards made in 2021, with a three-year measurement period. The Compensation Committee reviewed the Company’s relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the period January 1, 2021 through December 31, 2023, and determined that our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ended December 31, 2023, ranked us 37 out of 54 companies in the S&P 1500 Specialty Retail Index, or the 32nd percentile, which resulted in the vesting of 50% of the performance-based restricted stock units that were granted in 2021.
Termination of Employment and Change-in-Control Arrangements
Termination of Employment and Change-in-Control Arrangements
Without Cause/For Good Reason
Without Cause/For Good Reason If Mr. Fadel’s employment is terminated by us without “cause” (as defined in the employment agreement) or by Mr. Fadel for “good reason,” Mr. Fadel will be entitled to receive: • unpaid but earned base salary through the date of termination; • a pro rata bonus calculated based upon Mr. Fadel’s bonus amount from the previous year; • 2.0x the sum of Mr. Fadel’s (x) highest annual rate of salary during the previous 24 months and (y) his target cash bonus amount for the calendar year in which the termination occurs, payable in equal monthly installments over a period of 24 months; and • continued health insurance coverage for Mr. Fadel and Mr. Fadel’s spouse and covered dependents for up to 24 months.
Change-in-Control
Change-in-Control If we terminate Mr. Fadel’s employment without “cause” or if Mr. Fadel terminates his employment for “good reason,” within the period beginning six months prior to a change in control or, if such change in control results in a person beneficially owning 40% or more of the voting power of the Company or is pursuant to a consolidation, merger or reorganization (subject to certain exceptions), beginning on the date of the definitive agreement pursuant to which the change in control is consummated and ending on the first anniversary of the date of the change in control, then Mr. Fadel will be entitled to receive in a lump sum the same aggregate severance payments and benefits as described above for a termination not in connection with a change in control.
Certain Other Provisions
Certain Other Provisions The Compensation Committee or the Board may condition the payment of severance or benefits on the execution and delivery by Mr. Fadel of a general release in favor of us, our affiliates and our officers, directors, and employees, provided that no such release will be required for the payment to Mr. Fadel of accrued compensation. If payments would subject Mr. Fadel to excise tax under Section 4999 of the Internal Revenue Code (the “Code”), or the Company would be denied a deduction under Section 280G of the Code, then the amounts otherwise payable to Mr. Fadel will be reduced by the minimum amount necessary to ensure Mr. Fadel will not be subject to such excise tax and the Company will not be denied any such deduction. Mr. Fadel is also subject to a Loyalty and Confidentiality Agreement which provides non-competition and non-solicitation provisions for the benefit of the Company that remain in effect during the period of employment and an additional period of two years thereafter.
Continued Vesting of Certain Equity-Based Awards
Continued Vesting of Certain Equity-Based Awards We entered into a letter agreement with Mr. Fadel in April 2024 to support his retention and, in recognition of his more than 30 years of service with the Company, to specify the treatment of certain of his equity-based awards in the event of his termination of employment. The letter agreement provides that Mr. Fadel’s equity-based awards granted on or before March 31, 2025 with respect to which he has remained employed with the Company through the first anniversary of the applicable grant date will continue to vest as set forth in the applicable award agreement following any termination of his employment (other than for cause) after March 31, 2025, unless the applicable award agreement provides full accelerated vesting for his termination event. Under this treatment, performance stock units will remain subject to performance objectives and stock options will remain exercisable through their remaining term, each as set forth in the applicable award agreement. This treatment also applies to a termination of employment by the Company without cause, subject to the conditions in Mr. Fadel’s employment agreement, including the execution and delivery by Mr. Fadel of a general release in favor of us. The affected equity-based awards will otherwise remain subject to the terms and conditions of the plan and award agreement pursuant to which such award was granted. This treatment will not apply to any equity-based awards granted to Mr. Fadel after March 31, 2025.
Termination Not in Conjunction with a Change in Control
Termination Not in Conjunction with a Change in Control
Without Cause
Without Cause If the named executive officer’s employment is terminated without “cause,” the named executive officer will be entitled to receive: • unpaid but earned base salary through the date of such termination; • unless such termination occurs prior to April 1, a pro rata bonus calculated based upon the annual bonus the named executive officer would have earned for the calendar year of termination, as determined in the Company’s sole discretion and paid in a lump sum in cash in the normal course upon the Company’s completion of annual bonus calculations (such amount, the “Pro Rata Bonus”); • 1.5x the named executive officer’s highest annual rate of salary during the 24 months preceding such termination (and, for Mr. Blasquez, his average annual bonus for the two preceding calendar years), payable in equal monthly or more frequent installments by no later than the second December 31 following the calendar year of such termination; and • continued health insurance coverage for the named executive officer and the named executive officer’s spouse and covered dependents for up to 18 months.
Certain Other Provisions
Certain Other Provisions The Compensation Committee or the Board may condition the payment of severance or benefits on the execution and delivery by the named executive officer of a general release in favor of us, our affiliates and our officers, directors, and employees, provided that no such release will be required for the payment to the named executive officer of accrued compensation. If payments would subject the named executive officer to excise tax under Section 4999 of the Code, or the Company would be denied a deduction under Section 280G of the Code, then the amounts otherwise payable to the named executive officer will be reduced by the minimum amount necessary to ensure the named executive officer will not be subject to such excise tax and the Company will not be denied any such deduction. Loyalty and Confidentiality Agreements executed in connection with our executive transition agreements provide noncompetition and non-solicitation provisions for the benefit of the Company that remain in effect during the period of employment and an additional period of one-and-a-half to two years thereafter.
Termination in Conjunction with a Change in Control
Termination in Conjunction with a Change in Control If the named executive officer’s employment is terminated within the period beginning six months prior to a change in control and ending 24 months following a change in control of us without “cause” or by the named executive officer for “good reason,” the named executive officer will be entitled to receive the severance payments and benefits as described below: • unpaid but earned base salary through the date of termination; • the Pro Rata Bonus applicable to such named executive officer; • 2.0x the named executive officer’s highest annual rate of salary during the 24 months preceding such termination (and, for Mr. Blasquez, his average annual bonus for the two preceding calendar years), payable in a lump sum in cash within 10 business days following the later of such termination or the change in control; and • continued health insurance coverage for the named executive officer and the named executive officer’s spouse and covered dependents for an extended period of up to 24 months. If the named executive officer’s employment is terminated in connection with a change in control due to disability or death, or for “cause” or without “good reason,” the named executive officer will be entitled to receive the same severance payments and benefits as described above (not in connection with a change in control) with respect to a termination due to disability or death or for “cause,” respectively. If payments would subject the named executive officer to excise tax under Section 4999 of the Code, or the Company would be denied a deduction under Section 280G of the Code, then the amounts otherwise payable to the named executive officer will be reduced by the minimum amount necessary to ensure the named executive officer will not be subject to such excise tax and the Company will not be denied any such deduction. Under each of the executive transition agreements, a “change in control” would generally occur upon any of the following: • any person becomes the beneficial owner of 40% or more of the combined voting power of our then outstanding voting securities; • a consolidation, merger or reorganization of us, unless (i) our stockholders immediately prior to such transaction own at least a majority of the voting power of the outstanding voting securities of the resulting entity, (ii) the members of our Board immediately prior to the execution of the agreement providing for such a transaction constitute a majority of the board of directors of the surviving corporation or of its majority stockholder, and (iii) no person beneficially owns more than 40% of the combined voting power of the then outstanding voting securities of the surviving corporation other than a person who is (a) us or a subsidiary of us, (b) an employee benefit plan maintained by us, the surviving corporation or any subsidiary, or (c) the beneficial owner of 40% or more of the combined voting power of our outstanding voting securities immediately prior to such transaction; • individuals who constitute our entire Board (the “Incumbent Board”) cease to constitute a majority of our Board, provided that anyone who becomes a director and whose appointment or nomination for election was approved by at least two-thirds of our directors at the time shall be considered as though such individual were a member of the Incumbent Board; or a complete liquidation or dissolution of us, or a sale or other disposition of all or substantially all of our assets (other than to an entity described in the second bullet point above). Loyalty and Confidentiality Agreements executed in connection with our executive transition agreements provide non-competition and non-solicitation provisions for the benefit of the Company that remain in effect during the period of employment and an additional period of one-and-a-half to two years thereafter.
Arrangements with Respect to Long-Term Incentive Plans
Arrangements with Respect to Long-Term Incentive Plans
RSUs
RSUs Pursuant to restricted stock unit award agreements under the 2021 Plan, if the award holder’s employment with us is terminated because of death or disability, then any unvested restricted stock units will vest on the date of such termination of employment. In addition, upon the termination of the award holder’s employment or other service with us for any reason other than disability or death or a change-in-control, any unvested restricted stock units will thereupon terminate and be canceled.
PSUs
PSUs Pursuant to performance stock unit award agreements under the 2021 Plan, if the award holder’s employment with us is terminated because of death or disability, then any unvested performance stock units will vest on a pro-rata basis at target (as determined by the Compensation Committee) on the date of such termination of employment. In addition, upon the termination of the award holder’s employment or other service with us for any reason other than disability or death or a change-in-control, any unvested performance stock units will thereupon terminate and be canceled.
“Double Trigger” Change-in-Control Provisions
“Double Trigger” Change-in-Control Provisions The 2021 Plan provides for double-trigger vesting of awards upon a qualifying termination in connection with a change in control. If an award holder’s employment or other service is terminated by the Company or any successor entity thereto without “cause” or by the award holder for “good reason” (as each such term is defined in the applicable award agreement or an award holder’s executive transition agreement or employment agreement, if applicable) upon or within two (2) years after a “change in control” (as defined in the 2021 Plan), (1) each award granted to such award holder prior to such change in control will become fully vested (including the lapsing of all restrictions and conditions) and, as applicable, exercisable as of the date of such termination of employment or other service, and (2) any shares deliverable pursuant to stock units will be delivered promptly (but no later than fifteen (15) days) following such termination. As of the change in control date, any outstanding performance-based awards will be deemed earned at the greater of the target level and the actual performance level through the change in control date for all open performance periods and will cease to be subject to any further performance conditions but will continue to be subject to time-based vesting following the change in control in accordance with the original vesting and/or performance period and subject to the provisions of clause (1) in the paragraph above. Under the 2021 Plan, a “change in control” means the occurrence of any of the following: (i) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities representing 30% or more of the combined voting power of the then outstanding securities of the Company eligible to vote for the election of the members of the Board (the “Company Voting Securities”), unless (A) such person is the Company, (B) such person is an employee benefit plan (or a trust which is a part of such a plan) which provides benefits exclusively to, or on behalf of, employees or former employees of the Company, (C) such person is the award holder, an entity controlled by the award holder or a group which includes the award holder, or (D) such person acquired such securities in a Non-Qualifying Transaction (as defined in clause (iv) below); (ii) during any period of not more than twelve (12) months, individuals who constitute the Board as of the beginning of the period (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the beginning of such period, whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the Company’s proxy statement in which such person is named as a nominee for director, without written objection to such nomination) will be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or publicly threatened election contest with respect to directors or as a result of any other actual or publicly threatened solicitation of proxies by or on behalf of any person other than the Board will be deemed to be an Incumbent Director; (iii) any dissolution or liquidation of the Company or any sale or the disposition of all or substantially all of the assets or business of the Company; or (iv) the consummation of any reorganization, merger, consolidation or share exchange or similar form of corporate transaction involving the Company (a “Business Combination”), unless immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the entity resulting from such Business Combination (the “Surviving Entity”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting power, is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination; (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Entity or the parent), is or becomes the beneficial owner, directly or indirectly, of 30% or more of the total voting power of the outstanding voting securities eligible to elect directors of the parent (or, if there is no parent, the Surviving Entity); and (C) at least a majority of the members of the board of directors of the parent (or, if there is no parent, the Surviving Entity) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) of this clause (iv) will be deemed to be a “Non-Qualifying Transaction”).
Compensation-Related Risk
Compensation-Related Risk The Compensation Committee believes that the design of our compensation programs, including our executive compensation program, does not encourage our executives or employees to take unnecessary and excessive risks and that the risks arising from these programs are not reasonably likely to have a material adverse effect on us. The Compensation Committee considered the following factors in making that determination: • The allocation among the components of direct annual compensation provides an appropriate balance between annual and long-term incentives and between fixed and performance-based compensation. • The performance measures and the multi-year vesting features of the long-term equity incentive compensation component encourage participants to seek sustainable growth and value creation. • Inclusion of share-based compensation through the long-term equity incentive compensation component encourages appropriate decision-making that is aligned with the long-term interests of our stockholders. • Our annual cash incentive program and the awards of restricted stock with performance-based vesting contain provisions with respect to our achievement of the applicable performance target such that each participant may receive either (1) an additional payout pursuant to such award in the event that we exceed the applicable performance target, or (2) none or only a portion of the target payout pursuant to such award in the event that we approach, yet fail to achieve, the target level of performance. • The various governance policies we have adopted to align the interests of our top management with those of our stockholders and to motivate sustainable growth, including equity ownership guidelines, hedging and pledging restrictions and our clawback policy, as described below. We maintain a values-driven, ethics-based culture supported by a strong tone at the top.
Summary Compensation Table
Summary Compensation Table The following table summarizes the compensation earned by our named executive officers in fiscal year 2023, as well as the compensation earned by such individuals in each of fiscal year 2022 and fiscal year 2021, if serving as a named executive officer during that time. Except for a one-time signing bonus for Mr. Karam (which was paid in two equal installments in each of 2022 and 2023) and a one-time signing bonus for Mr. Gautam (which was paid in two installments in 2023 and 2024), our named executive officers were not entitled to receive payments that would be characterized as “Bonus” payments for purposes of the Summary Compensation Table for 2023, 2022 and 2021.
Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards(1) | Option Awards(1) | Non-Equity Incentive Plan Compensation(2) | All Other Compensation(3) | Total | | Mitchell Fadel Chief Executive Officer | 2023 | $1,100,000 | $— | $6,502,656 | $— | $2,138,400 | $49,995 | $9,791,051 | | | 2022 | $1,100,000 | $— | $5,116,846 | $— | $— | $63,204 | $6,280,050 | | | 2021 | $1,078,846 | $— | $9,296,543(8) | $— | $1,900,800 | $65,496 | $12,341,685 | | Fahmi Karam(4)(5) Executive Vice President - Chief Financial Officer | 2023 | $1,000,000 | $500,000 | $3,561,176 | $— | $864,008 | $41,947 | $5,967,131 | | | 2022 | $153,846 | $500,000 | $1,999,992 | $— | $— | $— | $2,653,838 | | Anthony Blasquez Executive Vice President - Rent-A-Center | 2023 | $444,554 | $— | $897,446 | $— | $388,800 | $33,236 | $1,764,036 | | | 2022 | $422,931 | $— | $477,942 | $— | $— | $27,295 | $928,168 | | | 2021 | $397,308 | $— | $751,418(8) | $— | $288,640 | $12,189 | $1,449,555 | | Tyler Montrone(4)(6) Executive Vice President - Acima | 2023 | $440,385 | $— | $897,446 | $— | $388,800 | $35,504 | $1,762,135 | | Sudeep Gautam(4)(6)(7) Executive Vice President - Chief Technology and Digital Officer | 2023 | $424,039 | $200,000 | $576,933 | $— | $583,200 | $24,514 | $1,808,686 |
Summary Compensation Table
(1) The amounts reflected in this column are the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for each award of stock option, restricted stock unit and performance stock unit awards in 2023, 2022 and 2021 to the applicable named executive officer. Assumptions used in the calculation of these amounts are included in Note O to our audited financial statements for our fiscal year ended December 31, 2023, included in our 2023 Form 10-K and our Annual Reports on Form 10-K for prior years. For performance stock unit awards granted in February 2023, the maximum performance shares payable, and corresponding maximum aggregate value based on the grant date fair value of such awards, are (i) 317,842 shares and $10,266,297 for Mr. Fadel, (ii) 174,066 shares and $5,622,332 for Mr. Karam, (iii) 43,866 shares and $ 1,416,872 for Mr. Blasquez, (iv) 43,866 shares and $1,416,872 for Mr. Montrone and (v) 28,200 shares and $910,860 for Mr. Gautam. (2) Represents the cash awards which were payable under our annual cash incentive program with respect to services for the year indicated.None of our named executive officers in the 2022 annual cash incentive program received any bonus plan payout with respect to the 2022 performance year, as described in the section “Compensation Discussion and Analysis — Annual Cash Incentive Compensation” in the Company’s 2023 proxy statement. (3) For 2023, represents the compensation as described in the “All Other Compensation” table below. (4) 2021 compensation is not shown for Messrs. Karam, Montrone and Gautam because they were not named executive officers for 2021. (5) Mr. Karam joined the Company and was named Executive Vice President — Chief Financial Officer effective as of October 31, 2022. Mr. Karam received a signing bonus pursuant to his offer letter of $1,000,000, 50% of which was paid in 2022 and the remaining 50% of which was paid in 2023. In determining the signing bonus, the Compensation Committee considered that Mr. Karam joined the Company late in 2022 and would not be eligible for a 2022 annual incentive bonus. (6) 2022 compensation is not shown for Messrs. Montrone and Gautam because they were not named executive officers for 2022. Mr. Gautam joined the Company and was named Executive Vice President — Chief Technology and Digital Officer effective as of January 16, 2023. Mr. Gautam received a signing bonus pursuant to his offer letter of $300,000, two thirds of which was paid in 2023 and the remaining one third of which was paid in 2024 and is subject to repayment in the event of certain terminations of Mr. Gautam’s employment within the first 18 months of his employment. In determining the signing bonus, the Compensation Committee considered the foregone compensation opportunities at Mr. Gautam’s former employer. (8) These amounts reflect the aggregate grant date fair value of restricted stock unit and performance stock unit awards granted in 2021 and the incremental change in fair value as of stockholder approval of our 2021 Plan, each computed in accordance with FASB ASC Topic 718. These amounts have been updated from disclosures in the Company’s Definitive Proxy Statements filed on April 25, 2023 and April 25, 2022, which inadvertently did not reflect the incremental change in fair value as of stockholder approval of our 2021 Plan.
Grants of Plan-Based Awards
Grants of Plan-Based Awards The table below sets forth information about plan-based awards granted to the named executive officers during 2023 under the 2023 annual cash incentive program and the 2021 Plan.
Grants of Plan-Based Awards
| Name | Grant Date | Committee Approval Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units(3) | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards | Closing Price on Grant Date | Grant Date Fair Value of Stock and Option Awards(4) | | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | | | | Mitchell Fadel | | | | | | | | | | | | | | | Short-Term Incentive | — | 2/9/2023 | $148,500 | $1,485,000 | $2,970,000 | — | — | — | — | — | — | — | — | | Restricted Stock Units | 2/24/2023 | 2/9/2023 | — | — | — | — | — | — | 51,082 | — | — | $26.78 | $1,369,508 | | Performance Stock Units | 2/24/2023 | 2/9/2023 | — | — | — | 0 | 158,921 | 317,842 | — | — | — | $26.78 | $5,133,148 | | Fahmi Karam | | | | | | | | | | | | | | | Short-Term Incentive | — | 2/9/2023 | $60,000 | $600,000 | $1,200,000 | — | — | — | — | — | — | — | — | | Restricted Stock Units | 2/24/2023 | 2/9/2023 | — | — | — | — | — | — | 27,975 | — | — | $26.78 | $750,010 | | Performance Stock Units | 2/24/2023 | 2/9/2023 | — | — | — | 0 | 87,033 | 174,066 | — | — | — | $26.78 | $2,811,166 | | Anthony Blasquez | | | | | | | | | | | | | | | Short-Term Incentive | — | 2/9/2023 | $27,000 | $270,000 | $540,000 | — | — | — | — | — | — | — | — | | Restricted Stock Units | 2/24/2023 | 2/9/2023 | — | — | — | — | — | — | 7,050 | — | — | $26.78 | $189,011 | | Performance Stock Units | 2/24/2023 | 2/9/2023 | — | — | — | 0 | 21,933 | 43,866 | — | — | — | $26.78 | $708,436 | | Tyler Montrone | | | | | | | | | | | | | | | Short-Term Incentive | — | 2/9/2023 | $27,000 | $270,000 | $540,000 | — | — | — | — | — | — | — | — | | Restricted Stock Units | 2/24/2023 | 2/9/2023 | — | — | — | — | — | — | 7,050 | — | — | $26.78 | $189,011 | | Performance Stock Units | 2/24/2023 | 2/9/2023 | — | — | — | 0 | 21,933 | 43,866 | — | — | — | $26.78 | $708,436 | | Sudeep Gautam | | | | | | | | | | | | | | | Short-Term Incentive | — | 2/9/2023 | $40,500 | $405,000 | $810,000 | — | — | — | — | — | — | — | — | | Restricted Stock Units | 2/24/2023 | 2/9/2023 | — | — | — | — | — | — | 4,532 | — | — | $26.78 | $121,503 | | Performance Stock Units | 2/24/2023 | 2/9/2023 | — | — | — | 0 | 14,100 | 28,200 | — | — | — | $26.78 | $455,430 |
Grants of Plan-Based Awards
(1) These columns show the potential value of the payout of the annual cash incentive bonuses for 2023 performance for each named executive officer if the threshold, target and maximum performance levels are achieved. The potential payout is performance-based and driven by company performance. The actual amount of the annual cash incentive bonuses paid for 2023 performance is shown in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. (2) Represents performance-based restricted stock units that vest depending on our relative TSR performance over a three-year measurement period as compared to the S&P 1500 Specialty Retail Index and if the named executive officer remains an employee through the end of such vesting period. The issuance of the stock underlying the performance-based restricted stock units granted to our named executive officers will range from a minimum of zero shares if our relative TSR performance is below the 25th percentile, to the maximum number of shares if our relative TSR performance ranks at least the 90th percentile. (3) Represents restricted stock units that vest ratably over a three-year period of continuous employment with us from February 24, 2023. See footnote 1 to the “Summary Compensation Table” for a description of the method used to determine the grant date fair value of stock and option awards. This value may differ from the value represented in the “Summary Compensation Table” due to rounding.
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table provides information regarding stock options and restricted stock units held by the named executive officers that were outstanding at December 31, 2023.
Outstanding Equity Awards at Fiscal Year End
| Name | OPTION AWARDS | | | | STOCK AWARDS | | | | Number of Securities Underlying Unexercised Options - Exercisable | Number of Securities Underlying Unexercised Options - Unexercisable | Option Exercise Price | Option Expiration Date | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Mitchell Fadel | 80,197 | — | $8.22 | 2/23/2028 | 8,498(3) | $288,677 | | | 75,027 | — | $20.87 | 4/1/2029 | 31,586(4) | $1,072,976 | | | 90,743 | 30,248(2) | $24.77 | 2/26/2030 | 51,082(5) | $1,735,256 | | | — | — | — | — | 77,768(6) | $2,641,779 | | | — | — | — | — | 146,667(7) | $4,982,278 | | | — | — | — | — | 158,921(8) | $5,398,546 | | Fahmi Karam | — | — | — | — | 62,716(9) | $2,130,463 | | | — | — | — | — | 27,975(5) | $950,311 | | | — | — | — | — | 87,033(8) | $2,956,511 | | Anthony Blasquez | 3,739 | 1,246(2) | $24.77 | 2/26/2030 | 687(3) | $23,337 | | | 7,500 | 2,500(10) | $26.62 | 7/1/2030 | 2,951(4) | $100,245 | | | — | — | — | — | 7,050(5) | $239,489 | | | — | — | — | — | 6,286(6) | $213,535 | | | — | — | — | — | 13,700(7) | $465,389 | | | — | — | — | — | 21,933(8) | $745,064 | | Tyler Montrone | — | — | — | — | 912(3) | $30,981 | | | — | — | — | — | 3,391(4) | $115,192 | | | — | — | — | — | 7,050(5) | $239,489 | | | — | — | — | — | 8,348(6) | $283,582 | | | — | — | — | — | 15,743(7) | $534,790 | | | — | — | — | — | 21,933(8) | $745,064 | | Sudeep Gautam | — | — | — | — | 4,532(5) | $153,952 | | | — | — | — | — | 14,100(8) | $478,977 |
Outstanding Equity Awards at Fiscal Year End
(1) Calculated by reference to the closing price for shares of our common stock on the Nasdaq Global Select Market on December 29, 2023, which was $33.97. (2) These options to purchase shares of our common stock vested on February 26, 2024. (3) Represents the number of shares of our common stock that vested and became issuable pursuant to the time-based restricted stock unit awards upon the named executive officer’s completion of three years of continuous employment with us from February 26, 2021. (4) Represents the number of shares of our common stock that will vest and become issuable pursuant to the time-based restricted stock unit awards upon the named executive officer’s completion of three years of continuous employment with us from February 25, 2022. (5) Represents the number of shares of our common stock that will vest and become issuable pursuant to the time-based restricted stock unit awards upon the named executive officer’s completion of three years of continuous employment with us from February 24, 2023. (6) Represents the number of shares of our common stock that vested and became issuable pursuant to the performance-based restricted stock unit awards based on our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ended December 31, 2023, so long as the named executive officer remained an employee through December 31, 2023. Our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ended December 31, 2023, ranked at the 32nd percentile, which resulted in 50% of the shares vesting. Represents the number of shares of our common stock that may vest and become issuable pursuant to the performance-based restricted stock unit awards based on our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ending December 31, 2024, so long as the named executive officer remains an employee through December 31, 2024. Represents the number of shares of our common stock that may vest and become issuable pursuant to the performance-based restricted stock unit awards based on our relative TSR performance as compared to the S&P 1500 Specialty Retail Index for the three-year period ending December 31, 2025, so long as the named executive officer remains an employee through December 31, 2025. (9) Represents the number of shares of our common stock that will vest and become issuable pursuant to the time-based restricted stock unit awards upon the named executive officer’s completion of three years of continuous employment with us from November 4, 2022. These options to purchase shares of our common stock vest on July 1, 2024.
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table reflects certain information with respect to options exercised by our named executive officers during the 2023 fiscal year, as well as applicable stock awards that vested during the 2023 fiscal year:
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | | Mitchell Fadel | — | $— | 124,321 | $3,337,933 | | Fahmi Karam | — | $— | 31,357 | $893,518 | | Anthony Blasquez | 8,881 | $180,255 | 6,260 | $167,294 | | Tyler Montrone | — | $— | 2,555 | $66,975 | | Sudeep Gautam | — | $— | — | $— |
Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation The Upbound Group, Inc. Deferred Compensation Plan is an unfunded, non-qualified deferred compensation plan for a select group of our key management personnel and highly compensated employees. The Deferred Compensation Plan first became available to eligible employees in July 2007, with deferral elections taking effect as of August 3, 2007. The Deferred Compensation Plan allows participants to defer up to 50% of their base compensation and up to 100% of any bonus compensation. Participants may invest the amounts deferred in measurement funds that are the same funds offered as the investment options in our 401(k) Retirement Savings Plan. We may make discretionary contributions to the Deferred Compensation Plan, which are subject to a two-year graded vesting schedule based on the participant’s years of service with us. Consistent with last year, we made matching contributions in 2023 of 50% of the employee’s aggregate contributions to the Deferred Compensation Plan and the 401(k) Retirement Savings Plan, up to an amount not to exceed 6% of such employee’s compensation. These matching contributions are allocated to each of the Deferred Compensation Plan and the 401(k) Retirement Savings Plan based on the participant’s contributions to the respective plan for the year and, as a result, such allocations may vary year-to-year. We are obligated to pay the deferred compensation amounts in the future in accordance with the terms of the Deferred Compensation Plan. The following table provides information for the named executive officers regarding contributions, earnings and balances for our Deferred Compensation Plan:
Non-Qualified Deferred Compensation
| Name | Executive Contributions in FY 2023(1) | Registrant Contributions in FY 2023(1)(2) | Aggregate Earnings in FY 2023 | Aggregate Withdrawals/ Distributions | Aggregate Balance at FYE 2023(3) | | Mitchell Fadel | $66,000 | $635(4) | $90,400 | $— | $676,434 | | Fahmi Karam | $— | $— | $— | $— | $— | | Anthony Blasquez | $— | $— | $1,844 | $— | $7,137 | | Tyler Montrone | $— | $— | $— | $— | $— | | Sudeep Gautam | $— | $— | $— | $— | $— |
Non-Qualified Deferred Compensation
(1) The entirety of the executive contributions and registrant contributions are reported in the “Summary Compensation Table” above as compensation of the named executive officer for the year ended December 31, 2023. (2) Represents matching contributions or other allocations made by us under our Deferred Compensation Plan which amount was also reported as compensation in the table appearing in the section “Compensation Tables — Summary Compensation Table” above in this proxy statement. (3) Of these amounts, the following aggregate amounts are reported in the “Summary Compensation Table” above as compensation of the named executive officer for the years ended December 31, 2023, 2022 and 2021: Mr. Fadel — $243,426 and Mr. Blasquez — $0. Messrs. Karam, Montrone and Gautam are not participants in the Deferred Compensation Plan. Reflects our matching contribution to the Deferred Compensation Plan in respect of Mr. Fadel’s contributions to such plan in 2023. Our other matching contributions were made to the 401(k) Retirement Savings Plan in respect of Mr. Fadel’s contributions to such plan in 2023.
No Pension Benefits
No Pension Benefits We do not sponsor or maintain any plans that provide for specified retirement payments or benefits, such as tax-qualified defined benefit plans or supplemental executive retirement plans.
Potential Payments and Benefits Upon Termination Without a Change in Control
Potential Payments and Benefits Upon Termination Without a Change in Control The following table provides quantitative disclosure of the estimated payments that would be made under the severance agreements to the named executive officers, as well as the amounts our named executive officers would receive upon the exercise of the equity and cash awards held by them on December 31, 2023, the last day of our fiscal year 2023, assuming that: • each named executive officer’s employment with us was terminated on December 31, 2023, and was not in connection with an event which constituted a “change in control” or an “exchange transaction” under any agreement or plan described above; • amounts payable to each named executive officer would not subject such person to excise tax under Section 4999 of the Code and the Company would not be denied a deduction under Section 280G of the Code; • the base salary earned by each named executive officer for his or her services to us through December 31, 2023 has been fully paid to such named executive officer; • the Board determined that the annual bonus for 2023 that would have been earned by each of Messrs. Karam, Blasquez, Montrone and Gautam was equal to the actual bonus awarded to such named executive officer for 2023; • to the extent not otherwise terminated in connection with the named executive officer’s termination, each of our named executive officers sold the shares of our common stock underlying their previously unvested performance stock units, at the target level of performance, and restricted stock units at the closing price for shares of our common stock on the Nasdaq Global Select Market on December 29, 2023, which was $33.97; and • any outstanding equity-based awards held by our named executive officers that vested prior to December 31, 2023 were exercised and distributed prior to December 31, 2023.
Potential Payments and Benefits Upon Termination Without a Change in Control
| Name | Cash Severance Payout | Continuation of Medical Benefits(1) | Acceleration of Outstanding Awards | Total Termination Benefits | | Mitchell Fadel | | | | | | Termination by Us without “Cause” or by Mr. Fadel for “Good Reason” | $5,170,000 | $30,418 | — | $5,200,418 | | Termination by Us for “Cause” or by Mr. Fadel without “Good Reason” | — | — | — | — | | Termination due to Mr. Fadel’s disability or death(2) | — | $30,418 | $10,881,178 | $10,911,596 | | Termination by Mr. Fadel for Reason other than disability, death or for “Good Reason” | — | — | — | — | | Fahmi Karam | | | | | | Termination by Us without “Cause” or by Mr. Karam for “Good Reason” | $2,364,008 | $35,048 | — | $2,399,056 | | Termination by Us for “Cause” or by Mr. Karam without “Good Reason” | — | — | — | — | | Termination due to Mr. Karam’s disability or death | $864,008 | $23,365 | $4,065,291 | $4,952,664 | | Termination by Mr. Karam for Reason other than disability or death or for “Good Reason” | — | — | — | — |
Potential Payments and Benefits Upon Termination Without a Change in Control
| Name | Cash Severance Payout | Continuation of Medical Benefits(1) | Acceleration of Outstanding Awards | Total Termination Benefits | | Anthony Blasquez | | | | | | Termination by Us without “Cause” or by Mr. Blasquez for “Good Reason” | $1,280,280 | $35,048 | — | $1,315,328 | | Termination by Us for “Cause” or by Mr. Blasquez without “Good Reason” | — | — | — | — | | Termination due to Mr. Blasquez’s disability or death | $388,800 | $23,365 | $1,135,128 | $1,547,293 | | Termination by Mr. Blasquez for Reason other than disability or death or for “Good Reason” | — | — | — | — | | Tyler Montrone | | | | | | Termination by Us without “Cause” or by Mr. Montrone for “Good Reason” | $1,063,800 | $35,048 | — | $1,098,848 | | Termination by Us for “Cause” or by Mr. Montrone without “Good Reason” | — | — | — | — | | Termination due to Mr. Montrone’s disability or death | $388,800 | $23,365 | $1,034,566 | $1,446,731 | | Termination by Mr. Montrone for Reason other than disability or death or for “Good Reason” | — | — | — | — | | Sudeep Gautam | | | | | | Termination by Us without “Cause” or by Mr. Gautam for “Good Reason” | $1,258,200 | $35,048 | — | $1,293,248 | | Termination by Us for “Cause” or by Mr. Gautam without “Good Reason” | — | — | — | — | | Termination due to Mr. Gautam’s disability or death | $583,200 | $23,365 | $313,451 | $920,016 | | Termination by Mr. Gautam for Reason other than disability or death or for “Good Reason” | — | — | — | — |
Potential Payments and Benefits Upon Termination Without a Change in Control
(1) The amounts listed herein reflect the value of medical insurance coverage that would be extended to a named executive officer following termination; provided, however, such named executive officer would continue to be responsible for normal employee premium contributions. (2) Per the terms of his employment agreement, upon a termination due to Mr. Fadel’s disability or death without a change in control, Mr. Fadel receives a pro-rata bonus calculated based upon his bonus amount from the previous year, and no bonus was paid for 2022.
Potential Payments and Benefits Upon Termination With a Change in Control
Potential Payments and Benefits Upon Termination With a Change in Control The following table provides quantitative disclosure of the estimated payments that would be made under the employment or severance agreements to our named executive officers, as of December 31, 2023, the last day of our fiscal year 2023, assuming that: • each named executive officer’s employment with us was terminated and an event which constituted a “change in control” or an “exchange transaction” under any agreement or plan described above both occurred on December 31, 2023; • amounts payable to each named executive officer would not subject such person to excise tax under Section 4999 of the Code and the Company would not be denied a deduction under Section 280G of the Code; • the base salary earned by each named executive officer for his or her services to us through December 31, 2023 has been fully paid to such named executive officer; • the Board determined that the annual bonus for 2023 that would have been earned by each of Messrs. Fadel, Karam, Blasquez, Montrone and Gautam was equal to the actual bonus awarded to such named executive officer for 2023; • with respect to equity-based awards awarded pursuant to the 2021 Plan and certain prior equity plans, the Board does not direct such outstanding awards to be converted into awards with respect to shares of stock following the change in control or exchange; • any outstanding equity-based awards held by our named executive officers that vested prior to December 31, 2023 were exercised and distributed prior to December 31, 2023; and to the extent not otherwise terminated in connection with the named executive officer’s termination, each of our named executive officers sold the shares of our common stock underlying their previously unvested equity-based awards (at the target level of performance for performance stock units) at the closing price for shares of our common stock on the Nasdaq Global Select Market on December 29, 2023.
Potential Payments and Benefits Upon Termination With a Change in Control
| Name | Cash Severance Payout | Continuation of Medical Benefits(1) | Acceleration of Outstanding Awards | Total Termination Benefits | | Mitchell Fadel | | | | | | Termination by Us without “Cause” or by Mr. Fadel for “Good Reason” | $5,170,000 | $30,418 | $16,397,794 | $21,598,212 | | Termination by Us for “Cause” or by Mr. Fadel without “Good Reason” | — | — | — | — | | Termination due to Mr. Fadel’s disability or death(2) | — | $30,418 | $16,397,794 | $16,428,212 | | Fahmi Karam | | | | | | Termination by Us without “Cause” or by Mr. Karam for “Good Reason” | $2,864,008 | $46,731 | $6,037,284 | $8,948,023 | | Termination by Us for “Cause” or by Mr. Karam without “Good Reason” | — | — | — | — | | Termination due to Mr. Karam’s disability or death | $864,008 | $46,731 | $6,037,284 | $6,948,023 | | Anthony Blasquez | | | | | | Termination by Us without “Cause” or by Mr. Blasquez for “Good Reason” | $1,577,440 | $46,731 | $1,816,898 | $3,441,069 | | Termination by Us for “Cause” or by Mr. Blasquez without “Good Reason” | — | — | — | — | | Termination due to Mr. Blasquez’s disability or death | $388,800 | $46,731 | $1,816,898 | $2,252,429 | | Tyler Montrone | | | | | | Termination by Us without “Cause” or by Mr. Montrone for “Good Reason” | $1,288,800 | $46,731 | $1,949,097 | $3,284,628 | | Termination by Us for “Cause” or by Mr. Montrone without “Good Reason” | — | — | — | — | | Termination due to Mr. Montrone’s disability or death | $388,800 | $46,731 | $1,949,097 | $2,384,628 | | Sudeep Gautam | | | | | | Termination by Us without “Cause” or by Mr. Gautam for “Good Reason” | $1,483,200 | $46,731 | $632,929 | $2,162,860 | | Termination by Us for “Cause” or by Mr. Gautam without “Good Reason” | — | — | — | — | | Termination due to Mr. Gautam’s disability or death | $583,200 | $46,731 | $632,929 | $1,262,860 |
Potential Payments and Benefits Upon Termination With a Change in Control
(1) The amounts listed herein reflect the value of medical insurance coverage that would be extended to a named executive officer following termination; provided, however, such named executive officer would continue to be responsible for normal employee premium contributions. Per the terms of his employment agreement, upon a termination due to Mr. Fadel’s disability or death in connection with a change in control, Mr. Fadel is eligible to receive the same severance payments and benefits as described above for a termination due to Mr. Fadel’s disability or death without a change in control. Accordingly, Mr. Fadel is eligible to receive a pro-rata bonus calculated based upon his bonus amount from the previous year; however, no bonus was paid for 2022.
CEO Pay Ratio
CEO Pay Ratio This section sets forth our reasonable estimate, calculated in a manner consistent with the requirements of Item 402(u) of Regulation S-K, of the ratio of the annual total compensation for fiscal year 2023 of our Chief Executive Officer to that of the median of the annual total compensation for all of our other employees (the “CEO Pay Ratio”). Please note that due to the flexibility in estimates, assumptions and adjustments permitted by the SEC in calculating such ratio, the CEO Pay Ratio may not be comparable to those presented by other companies, even other companies operating in the same industries as Upbound. SEC rules permit identification of this median employee once every three years. As such, the median compensation amount for 2023 reflects the 2023 “per annum total compensation” of the employee we identified as of December 31, 2022, given that there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact the pay ratio disclosure. Our median employee identified using the assumptions and methodologies described above was located in Texas and served in an hourly position as a Customer Account Representative. The 2023 annual total compensation of our median employee, calculated using the same methodology used to calculate the same metric for our named executive officers in the Summary Compensation Table in this proxy statement, was $34,439. Comparing this to our Chief Executive Officer’s 2023 annual total compensation of $9,791,051, we estimate that the CEO Pay Ratio was approximately 284:1. This reflects an increase from the CEO Pay Ratio in 2022, which was approximately 181:1, as none of our executive officers received a bonus in 2022 due to the Company’s annual financial performance.
Historical Pay Versus Performance Disclosure
Historical Pay Versus Performance Disclosure
Pay Versus Performance Table
Pay Versus Performance Table As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, the following disclosure is provided about the relationship between executive compensation and the Company’s performance on select financial metrics. For information about how our executive compensation program is designed to align with the Company’s performance, please read the “Compensation Discussion and Analysis” above in this proxy statement. The amounts in the table below are calculated in accordance with SEC rules and do not all represent amounts actually earned or realized by our named executive officers (“NEOs”), including with respect to RSUs and PSUs. The table below presents the compensation amounts for our CEO and non-CEO named executive officers as defined and computed in accordance with SEC rules, our financial performance as measured by TSR, net income and Adjusted EBITDA, and our peer group’s TSR, for fiscal years 2023, 2022, 2021 and 2020.
Pay Versus Performance Table
| Year | CEO | | Non-CEO NEOs | | Value of Initial Fixed $100 Investment Based On: | | Net Income ($M) | Adjusted EBITDA(5) ($M) | | | Summary Compensation Table Total for CEO | Compensation Actually Paid to CEO(1) | Average Summary Compensation Table Total for non-CEO named executive officers(2) | Average Compensation Actually Paid to non-CEO named executive officers(3) | TSR | Proxy Peer Group TSR(4) | | | | 2023 | $9,791,051 | $15,601,868 | $2,825,497 | $3,893,968 | $142 | $163 | $(5) | $474 | | 2022(6) | $6,280,050 | $(3,792,985) | $1,742,035 | $128,413 | $90 | $145 | $12 | $459 | | 2021 | $12,341,685 | $25,616,911 | $2,408,210 | $2,962,970 | $179 | $177 | $135 | $643 | | 2020 | $9,217,950 | $14,829,388 | $2,263,831 | $3,512,231 | $140 | $119 | $208 | $344 |
Pay Versus Performance Table
(1) Compensation actually paid is the total Summary Compensation Table compensation, adjusted as set forth in the table below in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Fadel during the applicable year. (2) Includes the average total compensation for Messrs. Karam, Blasquez, Montrone and Gautam in 2023; for Messrs. Allred, Hogg (former Executive Vice President — Acima), Karam, Pechersky and Taylor and Ms. Short in 2022; for Messrs. Blasquez, Hogg and Pechersky and Ms. Short (former Executive Vice President — Chief Financial Officer) in 2021; and for Mr. Hogg and Mses. Short, Davids and Skula (former Executive Vice President — Franchising) in 2020. Total compensation for non-CEO named executive officers are as reported in the Summary Compensation Tables. (3) The table below presents a reconciliation of the average Summary Compensation Table total to the average compensation actually paid, as defined by SEC rules, to the non-CEO named executive officers: The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group during the applicable year. (4) The peer group selected is the S&P 1500 Specialty Retail Index. We use this published industry index as the comparator group to measure our relative total shareholder return for purposes of determining vesting of performance stock units granted under our long-term incentive compensation program. The peer group TSR values for 2020 and 2022 have been updated from disclosures in the Company’s Definitive Proxy Statement filed on April 25, 2023, which inadvertently transposed these numbers. (5) Non-GAAP financial measure. See Annex B for additional information regarding non-GAAP financial measures and reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measure. (6) None of our named executive officers in the 2022 annual cash incentive program received any bonus plan payout with respect to the 2022 performance year based on the Company’s annual financial performance in 2022.
Relationships Between Compensation Actually Paid and Financial Measures in Pay Versus Performance Table
Relationships Between Compensation Actually Paid and Financial Measures in Pay Versus Performance Table In accordance with Item 402(v) of Regulation S-K, we are providing the following graphic descriptions of the relationships between (i) compensation actually paid (as defined by SEC rules) to our CEO and average compensation actually paid to our other named executive officers and (ii) the Company performance measures presented in the pay versus performance table above.