UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549 
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.      )
 
 
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The Aaron’s Company, Inc.
(Name of Registrant as Specified in Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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THEAARONSCOMPANYLOGOA.JPG
400 Galleria Parkway, S.E., Suite 300
Atlanta, Georgia 30339


July 14, 2021

To Our Fellow Shareholders:

It is our pleasure to invite you to attend the 2021 Annual Meeting of Shareholders (the "Annual Meeting") of The Aaron’s Company, Inc., which we refer to as "we," "our," "us," "Aaron's" or the "Company" to be held on Wednesday, August 25, 2021, at 9:00 a.m., local time, at the law offices of Jones Day, Suite 400, located at 1221 Peachtree Street N.E., Atlanta, Georgia 30361. We will also offer a webcast of the Annual Meeting on the Investor Relations page of our website at investor.aarons.com that will allow you to listen to the Annual Meeting but will not provide the opportunity to participate. Although it is our current intention for shareholders to participate in the Annual Meeting in-person, we are monitoring developments relating to the novel coronavirus, or COVID-19, pandemic. We are sensitive to the in-person meeting and travel concerns of our shareholders in these uncertain times. As a result, we may decide to allow shareholders to participate in the Annual Meeting by remote communication, or we may decide to hold the Annual Meeting entirely by remote communication. If we decide that either of these options is necessary or advisable, we will communicate this decision and related instructions in a press release and in the investor relations section of our website, www.aarons.com.

Fiscal year 2020 was exciting, as we completed our separation from PROG Holdings, Inc. (formerly Aaron's Holdings Company, Inc.) and became an independent, public company on December 1, 2020. We believe we exited the separation poised for earnings growth with an experienced leadership team and a well-positioned balance sheet. We expect to continue the strong operating momentum through our three-pronged strategy to (i) promote the Aaron's value proposition, (ii) simplify and digitize the customer experience, and (iii) align store footprint to customer opportunity. We are also engaging in a capital allocation strategy which we believe will create shareholder value.

The Annual Meeting will begin with a discussion of, and voting on proposals to: (i) elect the Class I directors, (ii) approve a non-binding, advisory resolution on Aaron's executive compensation, (iii) approve a non-binding, advisory recommendation to the Board of Directors of the Company (the "Board of Directors") regarding the frequency of the advisory vote on executive compensation, (iv) adopt and approve the Company's Amended and Restated 2020 Equity and Incentive Plan, (v) ratify the appointment of Ernst & Young LLP as Aaron's independent registered public accounting firm for 2021, and (vi) transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. The Annual Meeting will be followed by a report on Aaron’s financial performance and operations.

We believe the Proxy Statement and Annual Meeting are critical to our corporate governance process. We use this document to discuss the proposals being submitted to a vote of shareholders at the Annual Meeting, solicit your vote on those proposals, provide you with information about our Board of Directors and executive officers, and inform you of the steps we are taking to fulfill our responsibilities to you as shareholders.

Your vote is important to us. Your broker cannot vote on certain of the proposals without your instruction. Please use your proxy card or voter instruction form to inform us, or your broker, as to how you would like to vote your shares on the proposals in the Proxy Statement. For instructions on voting, please refer to the notice you received in the mail or, if you requested a hard copy of the Proxy Statement, to your enclosed proxy card, so that your shares may be represented at the Annual Meeting.











We look forward to your participation in the Annual Meeting. On behalf of our management and directors, I want to thank you for your continued support of, and confidence in, Aaron’s.



Sincerely,                    
JOHNROBINSONSIGNATURE.JPG
DOUGLASLINDSAYSIGNATUREA.JPG
John W. Robinson III Douglas A. Lindsay
Chairman of the Board of Directors Chief Executive Officer



THEAARONSCOMPANYLOGOA.JPG
400 Galleria Parkway, S.E., Suite 300
Atlanta, Georgia 30339
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 25, 2021
The 2021 Annual Meeting of Shareholders (the "Annual Meeting") of The Aaron’s Company, Inc., which we refer to as "we," "our," "Aaron’s" or the "Company," will be held on Wednesday, August 25, 2021, at 9:00 a.m., local time, and currently is scheduled to be held at the law offices of Jones Day, Suite 400, located at 1221 Peachtree Street, N.E., Atlanta, Georgia 30361, for the purpose of considering and voting on the following items:
 
1. Election of two Class I directors.
2. A non-binding, advisory resolution approving Aaron’s executive compensation.
3. A non-binding, advisory recommendation to the Board of Directors of the Company regarding the frequency of the advisory vote on executive compensation.
4. Adoption and approval of the Company's Amended and Restated 2020 Equity and Incentive Plan.
5. Ratification of the appointment of Ernst & Young LLP as Aaron’s independent registered public accounting firm for 2021.
6. Such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
Information relating to these items is provided in the accompanying Proxy Statement.

We will also offer a webcast of the Annual Meeting on the Investor Relations page of our website at investor.aarons.com that will allow you to listen to the Annual Meeting but will not provide the opportunity to participate. Although it is our current intention for shareholders to participate in the Annual Meeting in-person, we are monitoring developments relating to the novel coronavirus, or COVID-19, pandemic. We are sensitive to the in-person meeting and travel concerns of our shareholders in these uncertain times. As a result, we may decide to allow shareholders to participate in the Annual Meeting by remote communication, or we may decide to hold the Annual Meeting entirely by remote communication. If we decide that either of these options is necessary or advisable, we will communicate this decision and related instructions in a press release and in the investor relations section of our website, www.aarons.com.
    Only shareholders of record, as shown on the stock transfer books of Aaron’s, on June 21, 2021 are entitled to notice of, and to vote at, the Annual Meeting. If you hold shares through a bank, broker or other nominee, more commonly known as holding shares in "street name," you must contact the firm that holds your shares for instructions on how to vote your shares.










If you were a shareholder of record on June 21, 2021, you are strongly encouraged to vote in one of the following ways whether or not you plan to participate in the Annual Meeting: (1) in person; (2) by telephone; (3) by the Internet; or (4) by completing, signing and dating a written proxy card and returning it promptly to the address indicated on the proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
RACHELGEORGESIGNATUREA.JPG
Rachel G. George
Executive Vice President, General Counsel,
Corporate Secretary & Chief Corporate Affairs Officer
Atlanta, Georgia
July 14, 2021







































 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON AUGUST 25, 2021.

We are pleased to announce that we are delivering your proxy materials for the 2021 Annual Meeting of Shareholders by the Internet. Because we are delivering proxy materials by the Internet, the United States Securities and Exchange Commission (the "SEC") requires us to mail a notice to our shareholders notifying them that these materials are available on the Internet and how these materials may be accessed. This notice, which we refer to as our "Notice of Proxy Materials," will be mailed to our shareholders on or about July 14, 2021.

Our Notice of Proxy Materials will instruct you on how you may vote your proxy by the Internet or by telephone, or how you can request a full set of printed proxy materials, including a proxy card to return by mail. If you would like to receive printed proxy materials, you should follow the instructions contained in our Notice of Proxy Materials. Unless you request them, you will not receive printed proxy materials by mail.


The Proxy Statement and Annual Report are available free of charge on our website at http://investor.aarons.com/financials/annual-and-proxy-reports/default.aspx
and at http://www.proxyvote.com.



Table of Contents
Proxy Summary
Matters To Be Voted On
Proposal 1: Election of Two Class I Directors
Proposal 2: Advisory Vote on Executive Compensation
Proposal 3: Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation
Proposal 4: Vote to Adopt and Approve The Aaron's Company, Inc. Amended and Restated 2020 Equity and Incentive Plan
Proposal 5: Ratification of the Appointment of the Independent Registered Public Accounting Firm
Governance
Nominees to Serve as Directors (Class I Directors)
Continuing Directors (Class II and Class III Directors)
Executive Officers Who Are Not Directors
Composition, Meetings and Committees of the Board of Directors
Assessment of Director Candidates and Required Qualifications
Board Recruitment Process and Director Onboarding
Shareholder Recommendations and Nominations for Election to the Board
Board Leadership Structure
Lead Director
Board of Directors and Committee Evaluations
Board and Committee Role in Risk Oversight
Environmental, Social and Governance Oversight
Compensation Committee Interlocks and Insider Participation
Non-Management Director Compensation in 2020
2020 Director Compensation
Stock Ownership Guidelines
Compensation Discussion and Analysis
2020 Spin-Off Transaction
Executive Summary
Components of the Executive Compensation Program
Management of the Business During the COVID-19 Pandemic
2020 Performance and Incentive Pay Outcomes
Objectives of Executive Compensation
Compensation Process Summary for 2020
Comparative Market Data
2020 Peer Group - Former Parent
2019 Peer Group - Former Parent
2020 Company Peer Group
Base Salary
Annual Cash Incentive Awards
Bonus Compensation
Long-Term Equity Incentive Awards
2020 Equity Awards



Changes for 2021
Treatment of Outstanding Former Parent Equity Compensation in the Separation
Executive Compensation Policies
Executive Benefits and Perquisites
Employment Agreements and Other Post-Termination Protections
Tax Effects of Compensation
     Risk Assessment in Compensation Program
Compensation Committee Report
Executive Compensation
2020 Summary Compensation Table
Grants of Plan-Based Awards in Fiscal Year 2020
The Aaron's Company, Inc. 2020 Equity and Incentive Plan
The Aaron's Company, Inc. Employee Stock Purchase Plan
Individual Executive Agreements and Pay Mix
Outstanding Equity Awards at 2020 Fiscal Year-End
Options Exercised and Stock Vested in Fiscal Year 2020
Pension Benefits
Nonqualified Deferred Compensation
Potential Payments Upon Termination or Change in Control
Audit Committee Report
Committee Composition and Skills
Responsibilities of the Audit Committee, Management, and the External Auditor
Appointment and Oversight of EY
Discussions with EY
Audited Consolidated Financial Statements
Pre-Approval of Services Performed by EY
Audit Matters
Fees Billed in the Last Two Fiscal Years
Approval of Auditor Services
Beneficial Ownership of Common Stock
Certain Relationships and Related Transactions
Policies and Procedures Dealing with the Review, Approval and Ratification of Related Party Transactions
Related Party Transactions
Questions and Answers About Voting and the Annual Meeting
Additional Information
Shareholder Proposals for 2022 Annual Meeting of Shareholders
Householding of Annual Meeting Materials
Communicating with the Board of Directors and Corporate Governance Documents
Corporate Governance Documents
Other Action at the Annual Meeting



Appendix A: The Aaron's Company, Inc. Amended and Restated 2020 Equity and Incentive Plan



PROXY SUMMARY
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the "Board of Directors" or the "Board") of The Aaron’s Company, Inc., which we refer to as "we," "our," "us," "Aaron’s" or the "Company," of proxies for use at the 2021 Annual Meeting of Shareholders (the "Annual Meeting"), including any adjournment or postponement thereof, which we refer to as the "Annual Meeting." This summary highlights certain material information relating to the Annual Meeting contained elsewhere in this Proxy Statement, but does not contain all of the information you should consider prior to casting your vote. As a result, you should read this entire Proxy Statement carefully before voting. We anticipate that our Notice and Access Letter will first be mailed, and that this Proxy Statement along with our 2020 Annual Report to Shareholders will be made available to our shareholders, on or about July 14, 2021.
2021 Annual Meeting of Shareholders
Date and Time August 25, 2021, at 9:00 a.m., local time
Place Jones Day
1221 Peachtree St NE Suite 400
Atlanta, Georgia 30361
Record Date June 21, 2021
Voting Shareholders as of the record date are entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on at the Annual Meeting.
Admission Attendance at the Annual Meeting will be limited to shareholders as of the record date or their authorized representatives.
Matters To Be Considered and Voting Recommendations
Proposal Board Recommendation
Election of two Class I directors "FOR" each director nominee
Vote on a non-binding advisory resolution approving Aaron’s executive compensation "FOR"
Vote on a non-binding advisory recommendation to the Board of Directors regarding the frequency of the advisory vote on executive compensation "FOR" one year
Approve The Aaron's Company, Inc. Amended and Restated 2020 Equity and Incentive Plan (the "Amended and Restated 2020 Plan") "FOR"
Ratify the appointment of Ernst & Young LLP ("EY") as Aaron’s independent registered public accounting firm for 2021 “FOR”

See "Matters To Be Voted On" beginning on page 4 for more information.
Executive Compensation Matters
On November 30, 2020 (the "separation and distribution date"), Aaron's Holdings Company, Inc. completed the previously announced separation of the business segment which held the assets and liabilities historically associated with the historical Aaron's Business segment (the "Aaron's Business") from its Progressive Leasing segment ("Progressive Leasing") and Vive segment and changed its name to PROG Holdings, Inc. (referred to herein as the "Former Parent"). The separation of the Aaron's Business was affected through a distribution (the "separation", the "separation and distribution", or the "spin-off transaction") of all outstanding shares of common stock of the newly formed company, Aaron's, to the Former Parent shareholders of record as of November 27, 2020. Since the spin-off transaction, our executive compensation program, policies, and practices for our executive officers have been subject to the review and approval of the Compensation Committee of the Company (the "Compensation Committee"). While our executive compensation program, policies, and practices are similar, and are expected to continue to be similar going forward, to those employed at our Former Parent immediately prior to the spin-off transaction, the Compensation Committee has begun and will continue to review our executive compensation program, policies, and practices and will make adjustments as appropriate over time in order to meet our particular business needs and goals.

The Company expects to benefit from the stability and predictability of a large, recurring-revenue portfolio of leases. The Company serves over 1.9 million unique customers annually, of which approximately 66% are repeat customers. The Company
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is also vertically integrated with manufacturing assets that produce approximately 40% of the Company's total upholstered furniture and bedding purchases. The Company also has a strategic advantage of an extensive distribution and last-mile logistics network. With a mission to enhance people’s lives by providing access to high quality products through affordable lease-to-own purchase solutions, the Company has developed several strategic priorities to center the organization including:

Strengthen the Aaron's brand by promoting the compelling value proposition to the target market,
Continue to simplify and digitize customer interactions, making it easier for customers to do business with the              Company, and
Align the store footprint with the customer opportunity, including repositioning stores in key markets.
Each of our named executive officers identified in the "Compensation Discussion and Analysis" section of this Proxy Statement, which we refer to as our "named executive officers" or "NEOs", generally has a greater portion of their total direct compensation that is variable and performance-based than other employees. This is consistent with our philosophy that incentive compensation opportunities linked to performance - including financial, operating and stock price performance - should increase as overall responsibility increases.

2020 Performance and Incentive Pay Outcomes

The COVID-19 pandemic has been a challenging crisis throughout the world. Extraordinary and wide-ranging actions have been taken by public health and governmental authorities to mitigate the impact of COVID-19, including quarantines, stay-at-home orders and business closure mandates requiring that individuals restrict daily activities and that businesses modify, curtail, or cease normal operations. Despite these challenges, our Former Parent’s management team and employees worked diligently to continue to successfully manage the business, and we continue to do so. In particular, during 2020 our Former Parent implemented temporary measures to reduce operating expenses and conserve its cash position to mitigate the impact of the COVID-19 pandemic, while remaining mindful of the economic and health challenges faced by our customers and employees. We believe diligent action by our Former Parent early in the COVID-19 pandemic was key to helping manage the business effectively. Despite the challenges posed by the pandemic, no COVID-19 related adjustments were made to the metrics, relative weightings, or performance goal levels for our NEOs’ annual cash incentive or long-term incentive ("LTI") awards.

As described in more detail below, the level of performance under the 2020 annual cash incentive and performance share unit awards was determined by the compensation committee of our Former Parent's Board of Directors (the "Former Parent Committee") in November 2020, immediately prior to the spin-off transaction, based on actual performance for January 2020 through October 2020 and an estimate of performance achievement that would have occurred in November and December 2020 if the separation had not occurred, in each case adjusted to exclude expenses associated with the separation. Given the pending separation of the two businesses into new public entities prior to the end of the 2020 fiscal year, the Former Parent Committee determined that attempting to calculate performance against the pre-set annual targets after the separation would not be reasonable.

Based on 2020 estimated performance (see "Compensation Discussion and Analysis" for further details), the Former Parent Committee approved the following incentive awards for our named executive officers:
Messrs. Douglas A. Lindsay and Steve Olsen earned annual cash incentive awards of 185% of target based on Aaron's Business financial performance and the achievement of compliance-related goals and Messrs. C. Kelly Wall and Robert Sinclair earned annual cash incentive awards of 185% of target based on Former Parent's financial performance and the achievement of compliance-related goals. Ms. Rachel G. George was hired in November 2020 and therefore not eligible for the 2020 annual incentive award.
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Our named executive officers also earned awards under the performance share component of our 2020 long-term incentive program ("LTIP"). This component represents 50% of the annual grant value made under our 2020 LTIP to our NEOs. Messrs. Lindsay and Olsen earned awards at 200% of target based on the Aaron's Business performance. Messrs. Wall and Sinclair earned awards at 135.6% of target, based on the Former Parent's performance. Ms. George was hired in November 2020 and therefore not eligible for the 2020 LTI award. As of the June 21, 2021 record date, the potential value of these awards was greater than the corresponding grant date target values in light of the subsequent increase in our stock price. Further, for the stock options and time-based restricted stock awards that comprise the remainder of the annual grant for our named executive officers, our stock price increase as of June 21, 2021 resulted in award values that were also greater than the grant date award values.
See "Compensation Discussion and Analysis" beginning on page 42 for more information.
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MATTERS TO BE VOTED ON
Proposal 1: Election of Two Class I Directors
Our amended and restated articles of incorporation provides for a classified board of directors divided into three classes, each class as nearly equal in number as practicable, designated Class I, Class II and Class III. The directors designated as Class I directors have initial terms expiring at the Annual Meeting. The directors designated as Class II directors have initial terms expiring at the 2022 Annual Meeting of Shareholders. The directors designated as Class III directors have initial terms expiring at the 2023 Annual Meeting of Shareholders. Each Class I director elected at the Annual Meeting, each Class II director elected at the 2022 Annual Meeting of Shareholders and each Class III director elected at the 2023 Annual Meeting of Shareholders shall hold office until the 2024 Annual Meeting of Shareholders. Beginning at the 2024 Annual Meeting of Shareholders, all of our directors will stand for election each year for annual terms, and our Board will thereafter no longer be divided into three classes.
Our Board recommends the election of the nominees listed below, each of whom will have a term of office expiring at our 2024 Annual Meeting of Shareholders. Each nominee elected to serve as a director will hold office until the expiration of his or her term and until his or her successor is duly elected and qualified or until his or her earlier resignation, removal from office or death. If, at the time of the Annual Meeting, any of such nominees should be unable to serve, the persons named in the proxy will vote for such substitutes as our Board of Directors recommends. In no event will the proxy be voted for more than two nominees. Our management has no reason to believe that any nominee for election at the Annual Meeting will be unable to serve if elected.
The following table provides summary information about each nominee, all of whom currently serve on our Board of Directors. All of the nominees listed below have consented to serve as directors if elected.
Nominee Age Occupation Independent Joined Our Board
Hubert L. Harris, Jr. 77 Former Chief Executive Officer
Invesco North America
Yes December 2020
John W. Robinson III 49 Former President and Chief Executive Officer
Aaron’s, Inc.
No December 2020
Assuming a quorum is present, a nominee will be elected upon the affirmative vote of a majority of the total votes cast at the Annual Meeting with respect to the election of any nominee, which means that the number of votes cast in favor of a nominee’s election exceeds the number of votes cast against that nominee’s election. If an incumbent director fails to receive a majority of the votes cast, the incumbent director will promptly tender his or her resignation to our Board of Directors. Our Board of Directors can then choose to accept the resignation, reject it or take such other action that our Board of Directors deems appropriate.

Our Board of Directors recommends that you vote "FOR"
the election of each of the nominees above.
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Proposal 2: Advisory Vote on Executive Compensation
We provide our shareholders with the annual opportunity to cast an advisory vote on the compensation of our named executive officers. The vote on this proposal represents an additional means by which we obtain feedback from our shareholders about executive compensation. Among other responsibilities, our Compensation Committee sets executive compensation for our named executive officers, which is designed to link pay with performance while enabling us to competitively attract, motivate and retain key executives. The overall objective of our executive compensation program is to encourage and reward the creation of sustainable, long-term shareholder value.
We believe 2020 performance and pay results are indicative of a strong linkage between pay and performance created by our executive compensation structure and incentive plan design. During 2020, the Compensation Committee’s deliberations regarding how much to pay our named executive officers included, among other performance metrics, (i) changes in business strategy, (ii) company performance expectations, (iii) external market data, (iv) actual company performance and, with respect to the compensation for certain named executive officers, the actual performance of business segments, (v) individual executive performance and (vi) internal compensation equity with named executive officers. Our focus on these performance metrics as measured in our annual incentive plans led to solid results for 2020, and we believe has positioned our operations well for the future. We believe our equity program serves to align the interests of our named executive officers with those of our shareholders.
We encourage our shareholders to read the "Compensation Discussion and Analysis" section of this Proxy Statement, which discusses how our compensation policies and programs support our compensation philosophy. Our Board of Directors and the Compensation Committee believe these policies and programs are strongly aligned with the long-term interests of our shareholders.
Accordingly, we ask for shareholder approval of the following resolution:
"RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement, including the Compensation Discussion and Analysis, compensation tables and narrative disclosure, is hereby APPROVED."
This vote is advisory and therefore not binding on us, our Board of Directors or the Compensation Committee. Our Board of Directors and the Compensation Committee value the opinions of our shareholders, and the Compensation Committee takes seriously its role in the governance of compensation. The Compensation Committee will consider the result of this year’s vote, as well as other communications from shareholders relating to our compensation practices, and take them into account in future determinations concerning our executive compensation program.
Assuming a quorum is present, the resolution above approving our executive compensation will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the resolution exceed the votes cast against the resolution.

Our Board of Directors recommends that you vote "FOR"
the resolution approving our executive compensation.












5


Proposal 3: Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act enables our shareholders to indicate how frequently we should seek an advisory vote on the compensation of our named executive officers. By voting on this Proposal 3,
shareholders may indicate whether they would prefer an advisory vote on named executive officer compensation once every
one, two or three years.

After careful consideration, the Board of Directors has determined that an advisory vote on executive compensation that occurs every year is the most appropriate policy for the Company at this time, and therefore our Board of Directors recommends that you vote for an annual advisory vote on executive compensation. This advisory vote on the frequency of future advisory votes on executive compensation is non-binding on the Board of Directors.

You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting when you vote in response to the following resolution:

"RESOLVED, that the shareholders advise, on a non-binding basis, whether the preferred frequency of an advisory
vote on the executive compensation of the Company's named executive officers as set forth in the Company's proxy
statement should be every year, every two years, or every three years."

The option of one year, two years or three years that receives the highest number of votes cast by shareholders will be the frequency for the advisory vote on executive compensation that has been selected by shareholders. However, because this vote is advisory and not binding on the Board of Directors or the Company in any way, the Board of Directors may decide that it is in the best interests of our shareholders and the Company to hold an advisory vote on executive compensation more or less
frequently than the option approved by our shareholders. The Board of Directors currently intends to consider the shareholders'
selection in deciding on a frequency.

Assuming a quorum is present, the option of one year, two years or three years that receives the highest number of votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting will be the shareholders'
preferred frequency.

Our Board of Directors recommends that you vote "FOR"

the option of once every year as the preferred frequency for future advisory votes on executive compensation.















6



Proposal 4: Vote to Adopt and Approve The Aaron's Company, Inc. Amended and Restated 2020 Equity and Incentive Plan

On November 11, 2020, Aaron’s Holdings Company, Inc. (the "Former Parent") (at the time, The Aaron's Company, Inc.'s which we refer to as "we," "our," or the "Company," sole shareholder) approved The Aaron’s Company, Inc. 2020 Equity and Incentive Plan (the "Existing 2020 Plan") in anticipation of our spin-off as an independent, publicly traded company. Our Board of Directors also adopted the Existing 2020 Plan on the same date. On July 12, 2021, our Board of Directors unanimously approved and adopted, subject to the approval of our shareholders, The Aaron’s Company, Inc. Amended and Restated 2020 Equity and Incentive Plan (the "Amended and Restated 2020 Plan"). The Amended and Restated 2020 Plan continues to afford the Compensation Committee the flexibility to design and operate cash and equity-based compensatory awards that are responsive to the Company’s business needs and authorizes a variety of awards designed to advance the interests and long-term success of the Company.

The Amended and Restated 2020 Plan amends and restates in its entirety the Existing 2020 Plan. If the Amended and Restated 2020 Plan is approved by shareholders, it will be effective as of the date of the 2021 Annual Meeting of Shareholders (the "Annual Meeting"). Outstanding awards under the Existing 2020 Plan will continue in effect in accordance with applicable terms. If the Amended and Restated 2020 Plan is not approved by our shareholders, no awards will be made under the Amended and Restated 2020 Plan, and the Existing 2020 Plan will remain in effect.

Our principal reason for amending the Existing 2020 Plan is to increase the number of shares of common stock, par value $0.50 per share, of the Company ("Common Stock") available for awards under the plan. The Amended and Restated 2020 Plan will increase the maximum number of shares available for issuance pursuant to awards granted under the plan from 3,300,000 (of which 84,563 remained available as of June 30, 2021) to 6,775,000, an increase of 3,475,000 shares (or 10.4% of our outstanding Common Stock as of June 30, 2021).

While the primary purpose of amending the Existing 2020 Plan is to permit an increase in the number of shares available for awards, the Company is also proposing to amend the Existing 2020 Plan to make certain additional changes to the Existing 2020 Plan. The material substantive changes are described below under the heading "Summary of Material Changes from Existing 2020 Plan."

We are asking our shareholders to approve the Amended and Restated 2020 Plan.

Why We Believe You Should Vote for this Proposal

The Amended and Restated 2020 Plan authorizes our Compensation Committee to provide annual incentive awards and equity-based compensation in the form of options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, dividend equivalents and other equity-based or equity-related awards for the purpose of providing our non-employee directors, officers and other employees (and those of our subsidiaries), and certain non-employees, incentives and rewards for performance. Some of the key features of the Amended and Restated 2020 Plan that reflect our commitment to effective management of equity and incentive compensation are set forth below in this subsection.

The use of Common Stock as part of our compensation program is important because it fosters a pay-for-performance culture that is an important element of our overall compensation philosophy. We believe equity compensation provides additional motivation for directors and employees to create stockholder value because the value such individuals realize from their equity compensation is based on our stock price performance. Equity compensation also aligns the compensation interests of our directors and employees with the investment interests of our shareholders and promotes a focus on long-term value creation, because our equity compensation awards are subject to vesting and/or performance criteria.

As of June 30, 2021, largely due to the impact of the "Assumed Spin-Off Awards" granted in connection with our spin-off transaction (as described below), only 84,563 shares of Common Stock remained available for awards under the Existing 2020 Plan. If the Amended and Restated 2020 Plan is not approved, we may be compelled to increase significantly the cash component of our employee and director compensation, which may not necessarily align compensation interests with the investment interests of our shareholders. Replacing equity awards with cash also would increase cash compensation expense and use cash that could be better utilized.

The following includes aggregated information regarding the overhang and dilution associated with the Existing 2020 Plan and the potential dilution associated with the Amended and Restated 2020 Plan. This information is as of June 30, 2021. As of that date, there were approximately 33,563,522 shares of Common Stock outstanding:

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Under the Existing 2020 Plan

Outstanding full-value awards (restricted stock, restricted stock units, and performance share units ("PSUs") based on maximum performance): 799,286 shares (2.4% of our outstanding Common Stock);

Outstanding options: 774,002 shares (2.3% of our outstanding Common Stock) (outstanding options have a weighted average exercise price of $14.31 and a weighted average remaining term of 7.9 years);

Total shares of Common Stock subject to outstanding awards, as described above (full-value awards and options): 1,573,288 shares (4.7% of our outstanding Common Stock);

As of June 30, 2021, 84,563 shares of Common Stock remained available for awards under the Existing 2020 Plan; and

The total number of shares of Common Stock subject to outstanding awards (1,573,288 shares), plus the total number of shares available for future awards under the Existing 2020 Plan (84,563), represents a current overhang percentage of 4.9% (in other words, the potential dilution of our shareholders represented by the Existing 2020 Plan).

Under the Amended and Restated 2020 Plan

Proposed additional shares of Common Stock to be available for future awards under the Amended and Restated 2020 Plan: 3,475,000 shares (10.4% of our outstanding Common Stock).

Total Potential Overhang or Dilution Under the Amended and Restated 2020 Plan

The total shares of Common Stock subject to outstanding awards as of June 30, 2021 (1,573,288 shares), plus the total number of shares available for future awards under the Existing 2020 Plan as of such date (84,563), plus proposed additional shares to be available for issuance under the Amended and Restated 2020 Plan (3,475,000 shares), represent a total fully-diluted overhang of 5,132,851 shares (15.3%) under the Amended and Restated 2020 Plan.

Due to the limited number of shares of Common Stock available under the Existing 2020 Plan for grants of 2021 long-term incentive awards, the 135,690 PSUs granted in March 2021 to our executive officers and other participating employees will be settled solely in cash unless our Amended and Restated 2020 Plan is approved by our shareholders and our Compensation Committee takes certain actions discussed below. As a result, no shares are currently counted against the Existing 2020 Plan share pool or reflected in the dilution and overhang information provided above with respect to those PSU awards. To help preserve cash for the Company, if our shareholders approve the Amended and Restated 2020 Plan, we expect the Compensation Committee to take action to cause those awards to be settled in shares of Common Stock. This proposal includes under the heading "New Plan Benefits" information regarding the shares of Common Stock that we expect would be used in this action. If our shareholders do not approve the Amended and Restated 2020 Plan, the March 2021 PSU awards are expected to be settled solely in cash, to the extent they become earned and vested.

Based on the closing price on the New York Stock Exchange for our Common Stock on June 30, 2021 of $31.99 per share, the aggregate market value as of June 30, 2021 of the 3,475,000 additional shares of Common Stock requested under the Amended and Restated 2020 Plan was $111,165,250.

In 2020, the first calendar year of the Existing 2020 Plan's operation, we granted awards under the Existing 2020 Plan covering 2,850,861 shares of Common Stock. All of the awards granted in 2020 were "Assumed Spin-Off Awards" granted in connection with our spin-off transaction, as further described below.

In determining the number of shares to request for approval under the Amended and Restated 2020 Plan, our management team worked with the Compensation Committee and Exequity, LLP to evaluate a number of factors, including our recent share usage and criteria expected to be utilized by institutional proxy advisory firms in evaluating our proposal for the Amended and Restated 2020 Plan.

If the Amended and Restated 2020 Plan is approved, we intend to utilize the shares authorized under the Amended and Restated 2020 Plan to continue our practice of incentivizing key individuals through equity grants. We currently anticipate that the shares requested in connection with the approval of the Amended and Restated 2020 Plan combined with the shares available for future awards will last for approximately five years, based on our recent grant rates and the approximate current share price, but could last for a shorter period of time if actual practice does not match recent rates or our share price changes materially. We recognize that equity compensation awards dilute shareholder equity, so we have carefully managed our equity incentive compensation. Our equity compensation practices are intended to be competitive and consistent with market practices, as well as responsible and mindful of shareholder interests, as described above.

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As noted below, our Compensation Committee retains full discretion under the Amended and Restated 2020 Plan to determine the number and amount of awards to be granted under the Amended and Restated 2020 Plan, subject to the terms of the Amended and Restated 2020 Plan. Except as described below, future benefits that may be received by recipients under the Amended and Restated 2020 Plan are not determinable at this time.

Summary of Material Changes from Existing 2020 Plan

Increase in Shares Available for Awards. The Amended and Restated 2020 Plan increases the number of shares available for awards by 3,475,000 shares to a total of 6,775,000 shares.

Extension of Term. The Amended and Restated 2020 Plan extends the term under which awards may be granted until the tenth anniversary of the date shareholders approve the Amended and Restated 2020 Plan.

Minimum Vesting Requirement. The Amended and Restated 2020 Plan includes a one-year minimum vesting requirement for all awards, subject to limited exceptions, as further described below. The Existing 2020 Plan only included a minimum vesting requirement with respect to performance shares and performance units, which minimum vesting requirement could be overridden in the Compensation Committee’s discretion.

Limitations on Dividends and Dividend Equivalents. The Amended and Restated 2020 Plan now provides that dividends and dividend equivalents on all unvested awards will be subject to the same restrictions on vesting and payment as the awards to which they relate. The Existing 2020 Plan limited this requirement to only certain types of awards. The Amended and Restated 2020 Plan does not allow for dividends or dividend equivalents on option or SAR awards.

Clarification of Vesting Terms. The Amended and Restated 2020 Plan includes language clarifying that certain awards can provide for continued vesting (in addition to accelerated vesting) upon the occurrence of specified events.

Update to "Detrimental Activity" Provision. The Amended and Restated 2020 Plan clarifies that the Compensation Committee may provide for the repayment to the Company of cash received with respect to an award in the event a participant engages in certain detrimental activity, as further described below.

Other Changes. In addition to the changes described above, the Amended and Restated 2020 Plan includes various non-substantive conforming and clarifying changes.

Summary of the Amended and Restated 2020 Plan

The actual text of the Amended and Restated 2020 Plan is attached as Appendix A to this Proxy Statement. The following description is only a summary of the principal terms and provisions of the Amended and Restated 2020 Plan and is qualified by reference to the actual text as set forth in Appendix A to this Proxy Statement.

Capitalized terms used in this summary, but not otherwise defined in this summary, have the respective meanings ascribed to them in the Amended and Restated 2020 Plan.

Administration of the Amended and Restated 2020 Plan

The Board of Directors may appoint the Compensation Committee or such other committee consisting of two or more members of the Board of Directors (in each case, the "Committee") to administer the Amended and Restated 2020 Plan, and the Board of Directors has currently designated the Compensation Committee to serve this function. The Committee has the right to select the persons who receive awards under the Amended and Restated 2020 Plan, to set the terms and conditions of such awards subject to the limitations under the Amended and Restated 2020 Plan (including the term, exercise price, vesting conditions, and the consequences of termination of employment, as applicable), to modify the terms of awards made under the Amended and Restated 2020 Plan, to interpret and administer the Amended and Restated 2020 Plan and awards made thereunder, to make any adjustments necessary or desirable in connection with awards under the Amended and Restated 2020 Plan to eligible participants located outside the United States, and to adopt, amend or rescind such rules and regulations, and make such other determinations, for carrying out the Amended and Restated 2020 Plan as it may deem appropriate.

Decisions of the Committee on all matters relating to the Amended and Restated 2020 Plan will be in the Committee’s sole discretion and will be conclusive, final and binding on all parties, subject to applicable law.

In the event the Company assumes outstanding equity awards or the right or obligation to make such awards in connection with the acquisition of another corporation or business entity, the Committee may, in its discretion, make such adjustments in the terms of awards as it deems equitable and appropriate to prevent dilution or enlargement of benefits intended to be made under the Amended and Restated 2020 Plan.

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The Committee may delegate to one or more of its members such of its authority as it deems appropriate (provided that any such delegation shall be to at least two members of the Committee with respect to awards to individuals who are, on the relevant date, subject to the reporting requirements of Section 16(a) if the Securities Exchange Act of 1934 ("Insiders")). The Committee may, at any time and from time to time, delegate to one or more other members of the Board of Directors such of its authority as it deems appropriate. To the extent permitted by law and applicable stock exchange rules, the Committee may also delegate its authority to one or more persons who are not members of the Board of Directors, except that no such delegation will be permitted with respect to Insiders.

Award Agreements

Each award granted under the Amended and Restated 2020 Plan will be evidenced by an award agreement. Each award agreement will be subject to and incorporate, by reference or otherwise, the applicable terms and conditions of the Amended and Restated 2020 Plan, and any other terms and conditions, not inconsistent with the Amended and Restated 2020 Plan, as may be imposed by the Committee, including without limitation, provisions related to the consequences of termination of employment. Each award agreement will specify the period over which the award will vest or with respect to which any risk of substantial forfeiture will lapse. Each participant may be required, as a condition to receiving an award under the Amended and Restated 2020 Plan, to enter into an agreement with the Company containing such non-compete, confidentiality, and/or non-solicitation provisions as the Committee may adopt and approve from time to time (“Non-Compete Agreement”). The provisions of the Non-Compete Agreement may also be included in, or incorporated by reference in, the award agreement. Award agreements under the Amended and Restated 2020 Plan may be written agreements or electronic notices of award recorded in an electronic recordkeeping system.

Eligible Participants

Employees of the Company and its subsidiaries, non-employee members of the Board of Directors, and consultants or advisors (other than employees or non-employee members of the Board of Directors) who are natural persons that provide bona fide services to the Company or its subsidiaries not in connection with the offer or sale of securities in a capital raising transaction (subject to certain limitations) and do not directly or indirectly promote or maintain a market for the Company’s securities will be eligible for selection by the Committee for the grant of awards under the Amended and Restated 2020 Plan. As of June 30, 2021, the Company and its subsidiaries had approximately 8,900 employees and 7 non-employee members of the Board of Directors. Although consultants of the Company and its subsidiaries are also eligible to participate in the Amended and Restated 2020 Plan, we have not granted equity awards to consultants under the Existing 2020 Plan, and due to the temporary status of such service providers, do not have a current estimate of how many such consultants may be eligible in the future to participate in the Amended and Restated 2020 Plan. We do not currently expect to make material grants of awards under the Amended and Restated 2020 Plan to consultants.

The basis for participation in the Amended and Restated 2020 Plan is selection for participation by the Committee (or its delegate).

Spin-Off Awards

In connection with the distribution of shares of Common Stock to the shareholders of PROG Holdings, Inc. ("PROG") pursuant to a Separation and Distribution Agreement between the Company and PROG (the "Spin-Off"), and in accordance with the terms of the Employee Matters Agreement between the Company and PROG entered into in connection with the Spin-Off, certain employees and directors of the Company, PROG, and their respective subsidiaries received awards under the Existing 2020 Plan ("Assumed Spin-Off Awards"). The Assumed Spin-Off Awards were made as an adjustment to, in substitution of, or in accordance with, stock options, restricted stock, restricted or deferred stock units, or performance share units that were granted to certain employees and directors of the Company, PROG and their respective subsidiaries under an equity plan of Former Parent and were issued upon the effective time of the Spin-Off.

Notwithstanding anything in the Amended and Restated 2020 Plan to the contrary, each Assumed Spin-Off Award is subject to the terms and conditions of the equity compensation plan and award agreement to which such Assumed Spin-Off Award was subject immediately prior to the Spin-Off, subject to the adjustment of such award by the Compensation Committee of Former Parent and the terms of the Employee Matters Agreement, provided that following the date of the Spin-Off, each Assumed Spin-Off Award relates solely to shares of Common Stock and is administered by the Committee in accordance with the administrative procedures in effect under the Amended and Restated 2020 Plan.

Although the Amended and Restated 2020 Plan includes certain legacy provisions related to the Assumed Spin-Off Awards, no future Assumed Spin-Off Awards will be granted, and no grants will be made under the Amended and Restated 2020 Plan to persons who do not meet the eligibility criteria described above under "Eligible Participants."

Types of Awards

The Amended and Restated 2020 Plan permits the grant of non-qualified stock options ("NQSOs"), incentive stock options intended to meet the requirements of Section 422 of the Internal Revenue Code ("ISOs"), stock appreciation rights
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("SARs"), restricted stock, restricted stock units ("RSUs"), performance shares, performance units, annual incentive awards and other equity-based or equity-related awards to eligible participants. ISOs may only be granted to employees of the Company or certain of its subsidiaries.

Shares Available for Issuance

The aggregate number of shares of Common Stock that will be available for issuance pursuant to awards granted under the Amended and Restated 2020 Plan is 6,775,000 shares (the "Share Pool") (consisting of 3,300,000 shares that were approved by the Company’s sole shareholder in 2020 and 3,475,000 shares to be approved by the Company’s shareholders under the Amended and Restated 2020 Plan), subject to adjustment as described in the Amended and Restated 2020 Plan. Subject to the share counting rules of the Amended and Restated 2020 Plan, shares of Common Stock used under the Existing 2020 Plan, including with respect to Assumed Spin-Off Awards, count against the Share Pool. As of June 30, 2021, only 84,563 shares remained available under the Existing 2020 Plan's original share pool of 3,300,000 shares, so the number of shares available for awards following shareholder approval of the Amended and Restated 2020 Plan is expected to be approximately 3,559,563 (assuming no additional grants or share recycling under the Existing 2020 Plan between June 30, 2021 and the date of such shareholder approval).

All of the Share Pool may, but is not required to be, issued pursuant to ISOs. If awards are granted in substitution or assumption of awards of an entity acquired, by merger or otherwise, by the Company (or any subsidiary of the Company), to the extent such grant will not be inconsistent with the terms, limitations and conditions of Section 422 of the Internal Revenue Code, Rule 16b-3 under the Securities Exchange Act of 1934 or applicable stock exchange rules, the number of shares subject to such substitute or assumed awards will not increase or decrease the Share Pool (the awards described in this sentence, "Substitute Awards").

The shares issued by the Company pursuant to awards under the Amended and Restated 2020 Plan will be authorized but unissued shares or shares currently held (or subsequently acquired) as treasury shares, including shares purchased on the open market or in private transactions.

If shares subject to an award granted under the Amended and Restated 2020 Plan are not issued, or are returned to the Company, for reasons including (but not limited to) a forfeiture of restricted stock or an RSU, or the termination, expiration or cancellation of an NQSO, ISO, SAR, restricted stock, RSU, performance share, performance unit or other equity-based or equity-related award, or the settlement of an award in cash rather than shares, that number of shares will again be available for awards under the Amended and Restated 2020 Plan and, if originally deducted from the Share Pool, will be added back to the Share Pool. If the exercise price of an option, or the purchase price and/or tax withholding obligation under any award is satisfied by the Company retaining shares or by the participant tendering shares (either by actual delivery or attestation), the number of shares so retained or tendered will be deemed delivered for purposes of determining the Share Pool and will not be available for further awards under the Amended and Restated 2020 Plan. To the extent a SAR is settled in shares of Common Stock, the gross number of shares subject to such SAR will be deemed delivered for purposes of determining the Share Pool and will not be available for further awards under the Amended and Restated 2020 Plan. Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of options will not be added back to the Share Pool.

Individual Limits

Subject to adjustment as described in the Amended and Restated 2020 Plan, the maximum number of options and SARs that, in the aggregate, may be granted in any one fiscal year to any participant is 1,000,000. However, such limit does not apply to Assumed Spin-Off Awards.

Adjustments

If any change in corporate capitalization, such as a stock split, reverse stock split, stock dividend, or any corporate transaction such as a reorganization, reclassification, merger or consolidation or separation, including a spin-off, of the Company or sale or other disposition by the Company of all or a portion of its assets, any other change in the Company’s corporate structure, or any distribution to shareholders (other than an ordinary cash dividend) results in the outstanding shares of Common Stock, or any securities exchanged therefore or received in their place, being exchanged for a different number or class of shares or other securities of the Company, or for shares of stock or other securities of any other corporation (or new, different or additional shares or other securities of the Company or of any other corporation being received by the holders of outstanding shares of Common Stock), or a material change in the value of the outstanding shares of Common Stock as a result of the change, transaction or distribution, then the Committee will make equitable adjustments in the number and class of stock or other securities that comprise the Share Pool (including with respect to ISOs), the limitation on the aggregate number of options and SARs that may be granted in any one fiscal year to any one participant, the number and class of stock or other securities subject to outstanding awards under the Amended and Restated 2020 Plan (and which have not been issued or transferred under an outstanding award), the exercise price under outstanding stock options, the exercise price under outstanding SARs, the number of shares to be transferred in settlement of outstanding awards, and the terms, conditions or restrictions of any award and award agreement, as it determines are necessary and appropriate to prevent the enlargement or dilution of benefits intended to be made available under the Amended and Restated 2020 Plan.


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Minimum Vesting Requirement

Awards granted under the Amended and Restated 2020 Plan (other than cash-based awards) will vest no earlier than the first anniversary of the applicable grant date. However, the following Awards will not be subject to the foregoing minimum vesting requirement: any (a) Substitute Awards; (b) Common Stock delivered in lieu of fully vested cash obligations; and (c) additional awards the Committee may grant, up to a maximum of 5% of the share reserve authorized for issuance under the Amended and Restated 2020 Plan (subject to adjustment as described in the Amended and Restated 2020 Plan). Further, the minimum vesting requirement does not preclude the Committee, in is sole discretion, from providing for continued vesting or accelerated vesting for any award under the Amended and Restated 2020 Plan upon certain events, including in connection with or following a participant’s death, disability, or termination of service or a change in control.

Stock Options

A stock option provides the participant with the right to buy a specified number of shares at a specified price ("exercise price") after certain conditions have been met. The Committee may grant both NQSOs and ISOs under the Amended and Restated 2020 Plan. The tax treatment of NQSOs is different from the tax treatment of ISOs, as explained in the section below entitled "Federal Income Tax Consequences." The Committee will determine and specify in the award agreement whether the option is an NQSO or ISO, the number of shares subject to the option, the exercise price of the option, the period of time during which the option may be exercised, the conditions upon which the option will become vested and exercisable and such other provisions as the Committee determines. No dividends or dividend equivalents will be paid with respect to options.

No option can be exercisable more than ten years after the date of grant and the exercise price of a stock option must be at least equal to the fair market value (as defined in the Amended and Restated 2020 Plan) of a share of Common Stock on the date of grant of the option (except with respect to Assumed Spin-Off Awards). However, an option may be granted with an exercise price lower than set forth in the preceding sentence if such option is granted pursuant to an assumption or substitution for another option in a manner satisfying applicable tax law requirements relating to a corporate merger, consolidation, acquisition of property or stock, separation, reorganization, spin-off, or liquidation; provided that the Committee determines that such exercise price is appropriate to preserve the economic benefit of the replaced award and will not impair the exemption of the option from Section 409A of the Internal Revenue Code (unless the Committee clearly and expressly foregoes such exemption at the time the option is granted).

Among other tax law requirements, with respect to an ISO granted to a participant who owns stock of the Company possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary (as further described in the Amended and Restated 2020 Plan), the ISO cannot be exercisable more than five years after the date of grant and the exercise price must be at least equal to 110% of the fair market value of a share of Common Stock on the date of grant.

Each option will be counted as one share subject to an award and deducted from the Share Pool.

A participant may pay the exercise price under an option (i) in cash, by check, bank draft, money order or other cash equivalent approved by the Committee, (ii) unless not permitted by the Committee, by tendering previously-acquired shares of Common Stock (or delivering a certification or attestation of ownership of such shares) having an aggregate fair market value at the time of exercise equal to the total exercise price (provided that the tendered shares must have been held by the participant for any period required by the Committee), (iii) unless not permitted by the Committee, pursuant to a cashless exercise procedure adopted by the Committee in accordance with the terms of the Amended and Restated 2020 Plan, (iv) by any other means which the Committee determines to be consistent with the Amended and Restated 2020 Plan’s purpose and applicable law, including net exercise, or (v) by a combination of these payment methods. No certificate or cash representing a share of Common Stock will be delivered until the full exercise price has been paid.

The Committee may provide in the award agreement for automatic exercise on a certain date and/or for accelerated or continued vesting and other rights upon the occurrence of events specified in the award agreement.

Stock Appreciation Rights

A SAR entitles the participant to receive on exercise cash, shares, or a combination thereof, with a value equal to the excess of the fair market value of a share of Common Stock on the exercise date over the exercise price for the SAR, after certain conditions have been met. Unless the Committee specifies otherwise, payment for SARs will be in the form of shares of Common Stock. The Committee will determine and specify in the SAR award agreement the number of shares subject to the SAR, the SAR exercise price (which generally must be at least equal to the fair market value of a share on the date of grant of the SAR), the conditions upon which the SAR becomes vested and exercisable, and the period of time during which the SAR may be exercised. A SAR may be granted with an exercise price lower than set forth in the preceding sentence if such SAR is granted pursuant to an assumption or substitution for another SAR in a manner satisfying applicable tax law relating to a corporate merger, consolidation, acquisition of property or stock, separation, reorganization, or liquidation; provided that the Committee determines that such SAR exercise price is appropriate to preserve the economic benefit of the replaced award and will not impair the exemption of the SAR from Section 409A of the Internal Revenue Code (unless the Committee clearly and expressly foregoes such exemption at the time the SAR is granted). No SAR can be exercisable more than ten years after the
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date of grant. Each SAR that may be settled in shares of Common Stock shall be counted as one share subject to an award and deducted from the Share Pool. SARs that may not be settled in shares of Common Stock shall not result in a reduction from the Share Pool. No dividends or dividend equivalents will be paid with respect to SARs.

The Committee may provide in an award agreement for automatic exercise on a certain date, for payment of the proceeds on a certain date, and/or for accelerated or continued vesting and other rights upon the occurrence of events specified in the award agreement.

Restricted Stock and RSUs

The Committee will specify the terms of a restricted stock or RSU award in the award agreement, including the number of shares of restricted stock or units, the purchase price, if any, to be paid for such restricted stock/unit, any restrictions applicable to the restricted stock/unit such as continued service or achievement of performance goals, the length of the restriction period (if any), whether any circumstances shorten or terminate the restriction period, the rights of a participant to vote restricted stock or conditions to receive dividends or dividend equivalents with respect to restricted stock or RSUs, and whether RSUs will be settled in cash, shares or a combination of both. Unless the Committee specifies otherwise, RSUs will be settled in shares of Common Stock.

Except as provided in the Amended and Restated 2020 Plan or in the award agreement, a participant who receives a restricted stock award will have all of the rights of a shareholder of the Company, including the right to vote the shares and the right to receive dividends and other distributions to the extent, if any, such shares possess such rights. However, any dividends or distributions on such shares of restricted stock will either be automatically deferred and reinvested in additional restricted stock subject to the same restrictions as the underlying award or be paid to the Company for the account of the participant and held pending and subject to the same restrictions on vesting as the underlying award, as set forth in the applicable award agreement. For the avoidance of doubt, payment with respect to any such amounts will not occur until, and will be contingent upon, the vesting of the restricted stock to which they relate. A participant receiving a RSU will not have voting rights and will accrue dividend equivalents only to the extent provided in the RSU agreement and subject to the same vesting and payment restrictions as on the underlying award. Each share of restricted stock and each RSU that may be settled in shares of Common Stock shall be counted as one share subject to an award and deducted from the Share Pool. RSUs that may not be settled in shares of Common Stock will not result in a deduction from the Share Pool.

Performance Shares and Units

A performance share will have an initial value equal to the fair market value of a share of Common Stock on the date of grant. A performance unit will have an initial value that is established by the Committee at the time of grant. In addition to any non-performance terms applicable to the performance share or performance unit, the Committee will set performance goals which, depending on the extent to which they are met, will determine the number or value of the performance shares or units that will be paid out to the participant. The Committee may provide for payment of earned performance shares/units in cash or in shares of Common Stock, or any combination of the two. Unless the Committee specifies otherwise, earned performance shares/units will be settled in the form of shares of Common Stock. Any such shares may be granted subject to any restrictions deemed appropriate by the Committee.

Performance shares/units will not possess voting rights and will accrue dividend equivalents only to the extent provided in the agreement relating to the award and subject to the same restrictions on vesting and payment as the underlying award.

Each performance share that may be settled in shares of Common Stock shall be counted as one share subject to an award, based on the number of shares that would be paid under the performance share for achievement of target performance, and deducted from the Share Pool. Each performance unit that may be settled in shares of Common Stock shall be counted as a number of shares subject to an award, based on the number of shares that would be paid under the performance unit for achievement of target performance, with the number determined by dividing the value of the performance unit at the time of grant by the fair market value of a share of Common Stock at the time of grant, and this number shall be deducted from the Share Pool. In the event that the performance shares or performance units are later settled for a greater number of shares than the number previously deducted from the Share Pool for such award, such additional number of shares of Common Stock actually settled in respect of such award will be deducted from the Share Pool at the time of such settlement. In the event that the award is later settled for a lesser number of shares than the number previously deducted from the Share Pool for such award, the difference between the number of shares of Common Stock actually settled in respect of such award and the number previously deducted from the Share Pool shall be added back to the Share Pool. Performance shares and performance units that may not be settled in shares of Common Stock will not result in a deduction from the Share Pool.

Other Awards

The Committee will have the authority to grant other forms of equity-based or equity-related awards, not otherwise described herein, that the Committee determines consistent with the purpose of the Amended and Restated 2020 Plan and the interests of the Company and its shareholders. Subject to the minimum vesting requirements under the Amended and Restated
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2020 Plan, these other awards may include an award of, or the right to acquire, shares of Common Stock that are not subject to restrictions, or provide for cash payments based in whole or in part on the value or future value of shares of Common Stock, for the acquisition or future acquisition of shares, or any combination thereof. Where the value of such an award is based on the difference in the value of a share at different points in time, the grant or exercise price may not be less than 100% of the fair market value of a share on the date of grant unless the other award is granted in replacement for an award previously granted by an entity that is assumed by the Company in a business combination, provided that the Committee determines that the other award preserves the economic benefit of the replaced award and is either exempt from or in compliance with the requirements of Section 409A of the Internal Revenue Code. The Committee may authorize the payment of dividends or dividend equivalents on other awards on a deferred and contingent basis, either in cash or in additional Common Stock; provided, however, that dividend equivalents or other distributions on Common Stock underlying other awards will be deferred until, and paid contingent upon, the earning and vesting of such other awards.

The Committee will determine all terms and conditions of such awards, including (as applicable) the performance measures (as described below), the performance period, the potential amount payable, and the timing of the payment. Other awards that may be settled in shares of Common Stock will be counted as a number of shares subject to an award and deducted from the Share Pool. Other awards that may not be settled in shares of Common Stock shall not result in a deduction from the Share Pool.

Annual Incentive Awards

The Committee may grant annual incentive awards to participants in such amounts and upon such terms as the Committee shall determine. Unless provided otherwise at the time of grant, annual incentive awards (i) shall be payable in cash, and (ii) are intended to be exempt from Section 409A of the Internal Revenue Code as short-term deferrals, and, thus, will be payable no later than two and a half (2 12) months after the end of the Company’s fiscal year to which the award relates. Unless provided otherwise at the time of grant, annual incentive awards will have a performance period of one fiscal year except that, if any annual incentive award is made at the time of the participant’s commencement of employment or on the occasion of a promotion, then the performance period may be less than one fiscal year.

Each annual incentive award that may be settled in shares of Common Stock will be counted as a number of shares subject to an award, based on the number of shares that would be paid under the annual incentive award for achievement of target performance, with the number determined by dividing the value of the annual incentive award at the time of grant by the fair market value of a share of Common Stock at the time of grant, and this number shall be deducted from the Share Pool. In the event that annual incentive award is later settled for a greater number of shares than the number previously deducted from the Share Pool for such award, such additional number of shares of Common Stock actually settled in respect of such award will be deducted from the Share Pool at the time of such settlement. In the event that the annual incentive award is later settled for a lesser number of shares than the number previously deducted from the Share Pool for such award, the difference between the number of shares of Common Stock actually settled in respect of such award and the number previously deducted from the Share Pool will be added back to the Share Pool. Annual Incentive Awards that may not be settled in shares of Common Stock will not result in a deduction from the Share Pool.

Performance Measures

The Committee may establish performance measures for awards granted to participants under the Amended and Restated 2020 Plan. The performance measure or measures may include, but are not limited to, levels of, or growth or changes in, or other objective specification of performance with respect to one or more of the following performance criteria: earnings, earnings before income taxes; earnings before interest and taxes (EBIT); earnings before interest, taxes, depreciation and amortization (EBITDA); earnings before interest, taxes, depreciation, amortization and rent (EBITDAR); gross margin; operating margin; profit margin; market value added; market share; revenue; revenue growth; return measures (including but not limited to return on equity, return on shareholders’ equity, return on investment, return on assets, return on net assets, return on capital, return on sales, and return on invested capital); total shareholder return (either in absolute terms or relative to that of a peer group determined by the Committee); profit; economic profit; capitalized economic profit; operating profit; after-tax profit; net operating profit after tax (NOPAT); pre- tax profit; cash; cash flow measures (including but not limited to operating cash flow; free cash flow; cash flow return; cash flow per share; and free cash flow per share); earnings per share (EPS); consolidated pre-tax earnings; net earnings; operating earnings; segment income; economic value added; net income; net income from continuing operations available to common shareholders excluding special items; operating income; adjusted operating income; assets; sales; net sales; sales volume; sales growth; net sales growth; comparable store sales; sales per square foot; inventory turnover; inventory turnover ratio; productivity ratios; number of active stores/sites (including but not limited to Company-owned stores, franchised stores, and/or retail or merchant stores at which the Company has entered into lease-to-own arrangements during a specified time period); number of customers; invoice volume; debt/capital ratio; return on total capital; cost; unit cost; cost control; expense targets or ratios, charge off levels; operating efficiency; operating expenses; customer satisfaction; improvement in or attainment of expense levels; working capital; working capital targets; improvement in or attainment of working capital levels; debt; debt to equity ratio; debt reduction; capital targets; capital expenditures; price/earnings growth ratio; acquisitions, dispositions, projects or other specific events, transactions or strategic milestones; the Company’s common stock price (and stock price appreciation, either in absolute terms or in relationship to the appreciation among members of a peer group determined by the Committee); and book value per share.

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All criteria may be measured on a Generally Accepted Accounting Principles ("GAAP") basis, adjusted GAAP basis, or non-GAAP basis. Any performance measure for an award may be described in terms of Company-wide objectives or objectives that are related to a specific segment, division, subsidiary, employer, department, region, or function in which the participant is employed or as some combination of these (as alternatives or otherwise). A performance objective may be measured on an absolute basis or relative to a pre-established target, results for a previous year, the performance of other corporations, or a stock market or other index. The Committee will specify the period over which the performance goals for a particular award will be measured.

The Committee may specify such other conditions and criteria as it chooses and may specify that it can use its negative discretion to decrease the amount that would otherwise be payable under an award based on the attainment or failure to attain such other conditions and criteria.

The Committee will determine whether the applicable performance goals have been met with respect to a particular award within 75 days following the end of each performance period. If a performance objective applicable for a performance period is not achieved, the Committee in its sole discretion may pay all or a portion of that award based on such criteria as the Committee deems appropriate, including without limitation individual performance, Company-wide performance or the performance of the specific division, subsidiary, employer, department, region, or function employing the participant.

In determining whether any performance objective has been satisfied, the Committee may include or exclude the effect of any or all extraordinary items and/or other items that are unusual or non-recurring, including but not limited to (i) charges, costs, benefits, gains or income associated with reorganizations or restructurings of the employer, discontinued operations, goodwill, other intangible assets, long-lived assets (noncash), real estate strategy (e.g., costs related to lease terminations or facility closure obligations), litigation or the resolution of litigation (e.g., attorneys’ fees, settlements or judgments), or currency or commodity fluctuations; and (ii) the effects of changes in applicable laws, regulations or accounting principles. In addition, the Committee may adjust any performance objective for a performance period as it deems equitable to recognize unusual or non-recurring events affecting the employer, changes in tax laws or regulations or accounting procedures, mergers, acquisitions and divestitures, or any other factors as the Committee may determine. To the extent that a performance objective is based on the price of the Common Stock, then in the event of any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, any merger, consolidation, spin-off, reorganization, partial or complete liquidation or other distribution of assets (other than a normal cash dividend), issuance of rights or warrants to purchase securities or any other corporate transaction having an effect similar to any of the foregoing, the Committee will make or provide for such adjustments in such performance objective as the Committee in its sole discretion may in good faith determine to be equitably required in order to prevent dilution or enlargement of the rights of participants.

Change in Control

Unless otherwise provided in an award agreement, upon a change in control of the Company, any outstanding option, SAR, restricted stock and RSU shall vest as of or immediately prior to the change in control if such award is not assumed, continued or replaced with a "replacement award." Unless provided otherwise in an award agreement, if the participant receives a replacement award in connection with a change in control, and the participant’s employment is terminated without cause (as defined in the Amended and Restated 2020 Plan) within two years following the consummation of a change in control, outstanding replacement awards held by such participant shall vest on the participant’s termination date. "Replacement award" means an award (a) of the same type (e.g., option, RSU, etc.) as the award, (b) that has a value at least equal to the value of the award, (c) that relates to publicly traded equity securities of the Company or its successor or is payable solely in cash, and (d) the other terms and conditions of which are not less favorable to the participant than the terms and conditions of the award.

With respect to awards that are subject to performance objectives, the Committee may, in its sole discretion, provide that any such full or prorated award will be paid prior to when any or all such performance objectives are certified (or without regard to whether they are certified) or may make necessary and appropriate adjustments in the performance objectives.

The Amended and Restated 2020 Plan provides that a "change in control" means, in general, and subject to certain tax-based limitations, the occurrence of one of the following events (as further described in the Amended and Restated 2020 Plan):

The acquisition by any person of beneficial ownership of 35% or more of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors, subject to certain exceptions;

A majority of the members of the Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the date of the appointment or election; or

Consummation by the Company of a reorganization, merger, or consolidation or sale of all or substantially all of the assets of the Company, unless such transaction does not result in a substantial change in ownership as further described in the Amended and Restated 2020 Plan.

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Clawback and Cancellation Policies

Awards under the Amended and Restated 2020 Plan (and payments and shares in settlement of awards) are subject to forfeiture or clawback to the extent provided in any policy adopted by the Board of Directors including clawback policies adopted to comply with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. For information regarding the Company’s existing clawback policy, see "Compensation Discussion and Analysis—Executive Compensation Policies."

The Committee may provide in the applicable award agreement or a separate policy that if a participant engages in detrimental activity, as defined in such award agreement or separate policy, the Committee may, notwithstanding any other provision in the Amended and Restated 2020 Plan to the contrary, cancel, rescind, suspend, withhold or otherwise restrict or limit any unexpired, unexercised, unpaid or deferred award as of the first date the participant engages in the detrimental activity, unless sooner terminated by operation of another term of the Amended and Restated 2020 Plan or any other agreement. Without limiting the generality of the foregoing, the award agreement or separate policy may also provide that if the participant exercises an option or SAR, receives an RSU, performance share, performance unit, annual incentive award or other award payout, or receives or vests in shares of Common Stock under an award at any time during the time specified in such award agreement or separate policy, the participant will be required to (a) pay to the Company any cash received with respect to the award or (b) pay to the Company the excess of the then fair market value of the shares that were received with respect to the award (or if the participant previously disposed of such shares, the fair market value of such shares at the time of the disposition) over the total price paid by the participant for such shares.

Transferability

No ISO granted under the Amended and Restated 2020 Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than upon the participant’s death, to a beneficiary in accordance with the beneficiary designation provisions of the plan or by will or the laws of descent and distribution. If permitted by the Committee, a participant may transfer NQSOs to a permitted transferee (as defined in the Amended and Restated 2020 Plan) in accordance with procedures approved by the Committee. Except for a permitted transfer of NQSOs by a participant to a permitted transferee, unless the Committee determines otherwise consistent with securities and other applicable laws, rules and regulations, (i) no award granted under the Amended and Restated 2020 Plan will be sold, transferred, pledged, assigned or otherwise alienated or hypothecated by a participant other than upon the participant’s death, to a beneficiary in accordance with the beneficiary designation provisions of the plan or by will or the laws of descent and distribution, and (ii) each option and SAR outstanding to a participant may be exercised during the participant’s lifetime only by the participant or his or her guardian or legal representative (subject to tax-based limitations).

If all or part of an award is transferred to a permitted transferee, the permitted transferee’s rights thereunder will be subject to the same restrictions and limitations with respect to the award as the participant. For the avoidance of doubt, any permitted transfer of an award will be without payment of consideration by the permitted transferee.

Withholding Taxes

The Company has the power and the right to deduct or withhold, or require a participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of or in connection with the Amended and Restated 2020 Plan or any award thereunder.

Except as otherwise determined by the Committee or provided in the award agreement corresponding to an award, the following terms apply:

With respect to withholding required upon the exercise of options or SARs, upon the lapse of restrictions on restricted stock, upon the settlement of RSUs or other awards, upon the achievement of performance objectives related to annual incentive awards, performance shares or performance units, or upon any other taxable event arising as a result of or in connection with an award granted under the Amended and Restated 2020 Plan that is settled in shares of Common Stock, unless other arrangements are made with the consent of the Committee, participants will satisfy the withholding requirement by having the Company withhold shares of Common Stock having a fair market value on the date the tax is to be determined equal to not more than the amount necessary to satisfy the Company’s withholding obligations at the minimum statutory withholding rates (or at any greater rate as may be permitted under accounting standards without resulting in adverse accounting treatment, as determined by the Committee). All such withholding arrangements shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

A participant may elect to deliver shares of Common Stock to satisfy, in whole or in part, the withholding requirement. Such an election must be made on or before the date the amount of tax to be withheld is determined. Once made, the
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election shall be irrevocable. The fair market value of the shares to be delivered will be determined as of the date the amount of tax to be withheld is determined. Such delivery must be made subject to the conditions and pursuant to the procedures established by the Committee with respect to the delivery of shares of Common Stock in payment of the corresponding option exercise price.

A participant who is subject to the Company’s securities Insider Trading Policy relative to disclosure and trading on inside information, at the time the tax withholding requirement arises with respect to his or her restricted stock or, to the extent settled in shares of Common Stock, his or her RSUs, performance shares, performance units, other awards, options or SARs, may elect to satisfy such withholding requirement by delivering payment of the tax required to be withheld in cash or by check on the date on which the amount of tax to be withheld is determined. Once made, the election will be irrevocable.

Amendment and Termination

The Board of Directors or the Committee may amend or terminate the Amended and Restated 2020 Plan in whole or in part at any time, but the amendment or termination cannot materially adversely affect any rights or obligations with respect to an award previously granted without the affected participant’s written consent, unless such action is required by applicable law or any listing standards applicable to the Common Stock. The Company must obtain the approval of the shareholders for amendments to the Amended and Restated 2020 Plan to the extent required by Section 422 of the Internal Revenue Code, applicable listing standards, or other applicable law.

The Committee may amend an outstanding award agreement in a manner not inconsistent with the terms of the Amended and Restated 2020 Plan, but, except as expressly permitted or provided for in the Amended and Restated 2020 Plan or the award agreement, the amendment will not be effective without the participant’s written consent if the amendment is materially adverse to the participant. Except for certain adjustments permitted under the Amended and Restated 2020 Plan or in connection with a change in control, the Committee cannot amend outstanding awards, without shareholder approval, to reduce the exercise price of outstanding awards, or cancel outstanding options or SARs with per share exercise prices that are more than the fair market value of the Common Stock at the time of such cancellation in exchange for cash, another award or stock options or SARs with an option exercise price or SAR price that is less than the option exercise price or SAR price of the original stock option or SAR.

No awards will be granted under the Amended and Restated 2020 Plan on or after the tenth anniversary of the date the Amended and Restated 2020 Plan is approved by the Company’s shareholders. Awards granted under the Amended and Restated 2020 Plan prior to the tenth anniversary of such date will remain outstanding beyond that date in accordance with the terms and conditions of the Amended and Restated 2020 Plan and the award agreements corresponding to such awards.

Assumption or Cancellation of Awards in a Corporate Transaction

In the event of a sale of all or substantially all of the assets or stock of the Company, a spinoff, the merger of the Company with or into another corporation such that shareholders of the Company immediately prior to the merger exchange their shares of stock in the Company for cash and/or shares of another entity or any other corporate transaction to which the Committee deems this provision applicable (any such event is referred to as a "Corporate Transaction"), all awards under the Amended and Restated 2020 Plan will be subject to the agreement of merger or consolidation or applicable transaction agreement.

The Committee may, in its discretion, cause each award to be assumed or for an equivalent award to be substituted by the successor or spun-off corporation or a parent or subsidiary of such successor corporation and adjusted as appropriate.

In addition or in the alternative, the Committee, in its discretion, may cancel all or certain types of outstanding awards at or immediately prior to the time of the Corporate Transaction provided that the Committee either (i) provides that the participant is entitled to a payment (in cash or shares) equal to the value of the award, as determined below and to the extent there is any such value, or (ii) at least 15 days prior to the Corporate Transaction (or, if not feasible to provide 15 days’ notice, within a reasonable period prior to the Corporate Transaction), notifies the participant that, subject to rescission if the Corporate Transaction is not successfully completed within a certain period, the award will be terminated and provides the participant the right to exercise the option or other award as to all shares, including shares that would not otherwise be exercisable (or with respect to restricted stock, RSUs, performance shares, performance units, or other awards, provides that all restrictions shall lapse) prior to the Corporate Transaction.

For purposes of the above, the value of the award shall be measured as of the date of the Corporate Transaction and shall equal the value of the cash, shares or other property that would be payable to the participant upon exercise or vesting of the award, as applicable, less the amount of any payment required to be tendered by the participant upon such exercise. The Committee may adopt such valuation methodologies for outstanding Awards as it deems reasonable in the event of a cash settlement and, in the case of options, SARs or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess (if any) of the per share amount payable upon or in respect of such event over the exercise
17


price of such option or SAR and may cancel each option or SAR with an exercise price greater than the per share amount payable upon or in respect of such event without any payment to the person holding such option or SAR. For example, under this provision, in connection with a Corporate Transaction, the Committee can cancel all outstanding options under the Amended and Restated 2020 Plan in consideration for payment to the holders thereof of an amount equal to the portion of the consideration that would have been payable to such holders pursuant to the Corporate Transaction if their options had been fully exercised immediately prior to such Corporate Transaction, less the aggregate exercise price that would have been payable therefore, or if the amount that would have been payable to the option holders pursuant to such Corporate Transaction if their options had been fully exercised immediately prior thereto would be less than the aggregate exercise price that would have been payable therefore, the Committee can cancel any or all such options for no consideration or payment of any kind. Payment of any amount payable pursuant to this cancellation provision may be made in cash or, in the event that the consideration to be received in such transaction includes securities or other property, in cash and/or securities or other property in the Committee’s discretion.

Certain United States Federal Income Tax Consequences

The following is a brief summary of certain of the Federal income tax consequences of certain transactions under the Amended and Restated 2020 Plan based on Federal income tax laws in effect. This summary, which is presented for the information of shareholders considering how to vote on this proposal and not for Amended and Restated 2020 Plan participants, is not intended to be complete and does not describe Federal taxes other than income taxes (such as Medicare and Social Security taxes), or state, local or foreign tax consequences.

Tax Consequences to Participants

Restricted Stock. The recipient of restricted stock generally will be subject to tax at ordinary income rates on the fair market value of the restricted stock (reduced by any amount paid by the recipient for such restricted stock) at such time as the restricted stock is no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Internal Revenue Code ("Restrictions"). However, a recipient who so elects under Section 83(b) of the Internal Revenue Code within 30 days of the date of transfer of the shares will have taxable ordinary income on the date of transfer of the shares equal to the excess of the fair market value of such shares (determined without regard to the Restrictions) over the purchase price, if any, of such restricted stock. If a Section 83(b) election has not been made, any dividends received with respect to restricted stock that are subject to the Restrictions generally will be treated as compensation that is taxable as ordinary income to the recipient.

Performance Shares, Performance Units and Annual Incentive Awards. No income generally will be recognized upon the grant of performance shares, performance units or annual incentive awards. Upon payment in respect of the earn-out of performance shares, performance units or annual incentive awards, the recipient generally will be required to include as taxable ordinary income in the year of receipt an amount equal to the amount of cash received and the fair market value of any unrestricted shares of Common Stock received.

Nonqualified Stock Options. In general:

no income will be recognized by an optionee at the time an NQSO is granted;

at the time of exercise of an NQSO, ordinary income will be recognized by the optionee in an amount equal to the     difference between the option price paid for the shares and the fair market value of the shares, if unrestricted, on the date of exercise; and

at the time of sale of shares acquired pursuant to the exercise of an NQSO, appreciation (or depreciation) in value of the shares after the date of exercise will be treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held.

Incentive Stock Options. No income generally will be recognized by an optionee upon the grant or exercise of an "incentive stock option" as defined in Section 422 of the Internal Revenue Code. If shares of Common Stock are issued to the optionee pursuant to the exercise of an incentive stock option, and if no disqualifying disposition of such shares is made by such optionee within two years after the date of grant or within one year after the transfer of such shares to the optionee, then upon sale of such shares, any amount realized in excess of the option price will be taxed to the optionee as a long-term capital gain and any loss sustained will be a long-term capital loss.

If shares of Common Stock acquired upon the exercise of an incentive stock option are disposed of prior to the expiration of either holding period described above, the optionee generally will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of such shares at the time of exercise (or, if less, the amount realized on the disposition of such shares if a sale or exchange) over the exercise price paid for such shares. Any further gain (or loss) realized by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period.

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SARs. No income will be recognized by a participant in connection with the grant of a SAR. When the SAR is exercised, the participant normally will be required to include as taxable ordinary income in the year of exercise an amount equal to the amount of cash received and the fair market value of any unrestricted shares of Common Stock received on the exercise.

RSUs. No income generally will be recognized upon the award of RSUs. The recipient of an RSU award generally will be subject to tax at ordinary income rates on the fair market value of unrestricted shares of Common Stock on the date that such shares are transferred to the participant under the award (reduced by any amount paid by the participant for such RSUs), and the capital gains/loss holding period for such shares will also commence on such date.

Tax Consequences to the Company and its Subsidiaries

To the extent that a participant recognizes ordinary income in the circumstances described above, the Company or the subsidiary for which the participant performs services will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code and is not disallowed by the $1 million limitation on certain executive compensation under Section 162(m) of the Internal Revenue Code.

New Plan Benefits

The Aaron's Company, Inc. Amended and Restated 2020 Equity and Incentive Plan

Name
Dollar Value ($)
Number of Units (1)
Named Executive Officers:
Douglas A. Lindsay, Chief Executive Officer
—  54,390
Steve Olsen, President
—  12,270
C. Kelly Wall, Chief Financial Officer
—  7,680
Rachel G. George, General Counsel, Corporate Secretary and Chief Corporate Affairs Officer
—  7,290
Robert Sinclair, Former Corporate Controller and Chief Accounting Officer
—  — 
All current executive officers as a group2
  83,610
All current non-executive directors as a group
   
All employees, excluding current executive officers
  52,080
(1) Represents the target number of shares expected to be subject to PSUs based on Compensation Committee action if shareholders approve the Amended and Restated 2020 Plan. PSU awards can pay out at up to 200% of target based on the level of achievement with respect to the applicable performance goals.
(2) Partially duplicative of previous rows in table due to the inclusion of amounts for Messrs. Lindsay, Olsen and Wall and Ms. George.

Other than as described above, it is not possible to determine specific amounts and types of awards that may be awarded in the future under the Amended and Restated 2020 Plan because the grant and actual settlement of awards under the Amended and Restated 2020 Plan are subject to the discretion of the plan administrator.

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The following table shows, as to each named executive officer and the various indicated groups, the aggregate number of awards granted under the Existing 2020 Plan from inception through June 30, 2021, including Assumed Spin-Off Awards. This table does not reflect cash-settled awards.


Name
Number of Options Granted
Number of Shares of Restricted Stock Granted
Number of RSUs Granted
Number of Performance Share Units Granted
Named Executive Officers:
Douglas A. Lindsay, Chief Executive Officer
439,913  87,549  —  66,314 
Steve Olsen, President
72,565  24,136  —  23,629 
C. Kelly Wall, Chief Financial Officer
46,761  20,551  —  8,662 
Rachel G. George, General Counsel, Corporate Secretary and Chief Corporate Affairs Officer
13,950  7,290  —  — 
Robert Sinclair, Former Corporate Controller and Chief Accounting Officer
—  4,056  —  8,009 
All current executive officers as a group
573,189  143,456    98,605 
All current non-executive directors as a group
831,068  117,908  26,265  235,817 
Each nominee for election as a director1
       
Each associate of any of the foregoing
       
Each other person who received at least 5% of all options granted
       
All employees, excluding current executive officers
326,535  522,853    230,043 

1 Current Directors who are nominees for election at the annual meeting are already included in the "All current non-executive directors as a group" row above.

Registration with the United States Securities and Exchange Commission ("SEC")

The Company intends to file a Registration Statement on Form S-8 relating to the issuance of the additional shares of Common Stock under the Amended and Restated 2020 Plan with the SEC pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the Amended and Restated 2020 Plan by shareholders.

Vote Required for Approval

The approval of the Amended and Restated 2020 Plan requires that the votes cast in favor of the proposal exceed the votes cast against the proposal. New York Stock Exchange rules require that the total votes cast on this proposal represent greater than 50% of all shares entitled to vote on this proposal. For purposes of this proposal, the New York Stock Exchange considers an abstention as a vote against approval. Because your bank, broker or other holder of record does not have discretionary voting authority to vote your shares on this proposal absent specific instructions from you, broker non-votes could create a situation where the total votes cast do not exceed 50% of all shares entitled to vote on this proposal. It is therefore important that you vote, or direct the holder of record to vote, on this proposal.


Our Board of Directors unanimously recommends that you vote "FOR" approval of
The Aaron’s Company, Inc. Amended and Restated 2020 Equity and Incentive Plan.

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Securities Authorized for Issuance Under Equity Compensation Plans

Equity Incentive Plan Information

The following table sets forth aggregate information as of December 31, 2020 about the Company’s compensation plans under which our equity securities are authorized for issuance.
Plan Category
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(2)
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans(3)
Equity Compensation Plans Approved by Security Holders(4)
Equity Compensation Plans Not Approved by Security Holders
1,203,675
$
11.99
676,180
Total
1,203,675
$
11.99
676,180
(1) Represents the number of shares of common stock subject to outstanding stock options, restricted stock units and performance stock units granted under The Aaron’s Company, Inc. 2020 Equity and Incentive Plan (the “2020 Plan”).
(2) Represents the weighted-average exercise price of outstanding stock options granted under the 2020 Plan. Restricted stock units and performance stock units have no exercise price.
(3) Represents 476,180 shares under the 2020 Plan, all of which may be issued for awards other than options, warrants or rights (such as restricted stock), and 200,000 shares under The Aaron’s Company, Inc. Employee Stock Purchase Plan (the “ESPP”).
(4) For a narrative description of material features of the 2020 Plan and the ESPP, see the narrative that follows "Executive Compensation-Grants of Plan-Based Awards in Fiscal Year 2020".
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Proposal 5: Ratification of the Appointment of the Independent Registered Public Accounting Firm
The Audit Committee of our Board of Directors (the "Audit Committee") has appointed Ernst & Young LLP, which we refer to as "EY," to audit our consolidated financial statements for the year ending December 31, 2021, as well as the effectiveness of our internal controls over financial reporting as of December 31, 2021. A representative of EY will be present at the Annual Meeting, will have the opportunity to make a statement and will be available to respond to appropriate questions from shareholders.
We are asking our shareholders to ratify EY's appointment as our independent registered public accounting firm. Although ratification is not required by our amended and restated bylaws or otherwise, our Board of Directors is submitting the selection of EY to our shareholders for ratification because we value our shareholders’ views on our independent registered public accounting firm and view the ratification vote as a matter of good corporate practice. In the event that our shareholders fail to ratify the appointment, it is anticipated that no change in our independent registered public accounting firm would be made for fiscal year 2021 because of the difficulty and expense of making any change during the current fiscal year. However, our Board of Directors and the Audit Committee would consider the vote results in connection with the engagement of an independent registered public accounting firm for fiscal year 2022. Even if EY's appointment is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of the Company and its shareholders.
Assuming a quorum is present, the proposal to ratify the appointment of our independent registered public accounting firm for 2021 will be approved if the votes cast by holders of shares of common stock present, in person or by proxy, at the Annual Meeting in favor of the proposal exceed the votes cast against the proposal.

Our Board of Directors recommends that you vote "FOR"
the ratification of the appointment of our independent registered public accounting firm for 2021.
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GOVERNANCE
Nominees to Serve as Directors (Class I Directors)
Class I
HUBERTHARRIS.JPG
Hubert L. Harris, Jr., 77, has served as a director of the Company since December 2020 and currently serves as the Lead Director. Since 1992, Mr. Harris has owned and operated Harris Plantation, Inc., a cattle, hay and timber business. Mr. Harris has also served as a trustee for SEI mutual funds since 2008. Mr. Harris previously served as CEO of Invesco North America, CFO of Invesco PLC and Chairman of Invesco Retirement Services, and served on the Board of Directors of Invesco from 1993 to 2004. From 1983 to 1988, Mr. Harris was President and Executive Director of the International Association for Financial Planning. Mr. Harris also served as the Assistant Director of the Office of Management and Budget in Washington, D.C. from 1977 to 1980. Mr. Harris previously served as a director for Former Parent from August 2012 until November 2020. Mr. Harris is on the Board of Councilors of the Carter Center, and he previously served as chair of the Georgia Tech Foundation and chair of the Georgia Tech Alumni Association.
Among other qualifications, Mr. Harris brings a strong financial background and extensive business experience to our Board of Directors. His service on numerous for-profit and non-profit boards and management experience provide him with governance and financial expertise, which are utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.
JOHNROBINSON.JPG
John W. Robinson III, 49, has been a director of the Company since December 2020 and serves as Chairman of the Board. Mr. Robinson previously served as the Chief Executive Officer of Former Parent from November 2014 to November 2020 and was also named President of Former Parent from February 2016 to November 2020. Mr. Robinson also served on the board of Former Parent from November 2014 to November 2020. From 2012 to November 2014, Mr. Robinson served as the Chief Executive Officer of Progressive Finance Holdings, LLC ("Progressive"), which was acquired by Aaron’s, Inc. in April 2014. Prior to working at Progressive, he served as the President and Chief Operating Officer of TMX Finance LLC, or "TMX Finance." He joined TMX Finance as Chief Operating Officer in 2004 and was appointed President in 2008. Prior to working at TMX Finance, he worked in the investment banking groups at Morgan Stanley, Lehman Brothers and Wheat First Butcher Singer.
Among other qualifications, Mr. Robinson brings significant operational and financial experience to our Board of Directors. His considerable experience in senior management, and his leadership and intimate knowledge of our business, provide him with strategic and operational expertise generally and for the Company specifically, which are utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.









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Continuing Directors (Class II and Class III Directors)
Class II
LAURANBAILEY.JPG
Laura N. Bailey, 61, has served as a director of the Company since May 2021. Prior to her retirement in April 2021, Ms. Bailey was employed by Capital One Financial Corporation for almost fifteen years commencing in 2006 including most recently as Corporate Senior Vice President Community Impact and Investment and also serving in the role of Corporate Senior Vice President, Community Finance and Community Affairs during her career at Capital One Financial Corporation. Her other experience includes serving as Regional Executive, Central U.S. Community Development Banking for Bank of America Corporation from 1999 to 2006; Vice President, Corporate Banking for JP Morgan Chase & Company from 1992 to 1999; and Vice President, Commercial Real Estate Lending for Bank United Corporation. Ms. Bailey previously served as a trustee for Enterprise Community Partners and on the boards of Community Preservation Development Corporation, Affordable Housing Investors Council, Capital One Foundation and the Affordable Housing Tax Credit Coalition.

Among other qualifications Ms. Bailey brings significant management, financial and regulatory experience to our Board of Directors. Her experience in leadership positions, including with responsibility for financial-related matters provide her with managerial and financial expertise that is utilized by our Board of Directors. These skills and experiences qualify her to serve on our Board of Directors.

KELLYBARRETTA.JPG
Kelly H. Barrett, 57, has served as a director of the Company since December 2020. Prior to her retirement in 2018, Ms. Barrett was employed by The Home Depot for sixteen years, commencing in 2003 serving in various roles of increasing responsibility including most recently as Senior Vice President-Home Services where she ran the $5 billion Home Services division of The Home Depot, including in-home sales and installation, operations, customer contact centers as well as contractor sourcing, onboarding and compliance. She also held the positions of Vice President-Internal Audit and Corporate Compliance, Senior Vice President - Enterprise Program Management and Vice President-Corporate Controller. Before joining The Home Depot, Ms. Barrett served for more than 10 years in senior management positions and ultimately as Senior Vice President and Chief Financial Officer of Cousins Properties Incorporated, a publicly traded real estate investment trust. Ms. Barrett has served on the Board of Directors of EVERTEC, Inc., a full service transaction processing business since May 2021 and the Board of Directors of both Piedmont Office Realty Trust, a real estate investment trust since 2016, and Americold Realty, since May 2019. She previously served on the Board of Directors of State Bank Financial Corporation from 2011 to 2016 and Former Parent from May 2019 to November 2020. Her leadership positions in the Atlanta community include currently serving on the Board of the Metro Atlanta YMCA, where she was formally Chair of the Board, a member of the Georgia Tech Foundation Board of Trustees and the Advisory Board of Scheller College of Business at Georgia Tech where she was formally the Chair of the Board. She has previously served on the Board of the Girl Scouts of Greater Atlanta, Partnership Against Domestic Violence and the Atlanta Rotary Club.

Among other qualifications, Ms. Barrett brings significant operational management and financial experience to our Board of Directors. Her experience in multiple senior executive leadership positions and service on other boards provide her with retail operations, accounting, financial and compliance expertise which are utilized by our Board of Directors. These skills and experiences qualify her to serve on our Board of Directors.

DOUGLASLINDSAYA.JPG
Douglas A. Lindsay, 51, has been a director of the Company since December 2020. He previously served as the Chief Executive Officer of the Aaron's Business from July 2020 to November 2020 and was the President of the Aaron's Business from February 2016 to June 2020. Prior to that Mr. Lindsay served as the Executive Vice President and Chief Operating Officer at ACE Cash Express from February 2012 to January 2016. Previously Mr. Lindsay also served as the Executive Vice President and Chief Financial Officer from June 2007 to February 2012 and the Vice President, Finance and Treasurer from February 2005 to June 2007 for ACE Cash Express. His leadership positions in the Atlanta Community include currently serving on the Executive Committee of the Atlanta Chamber of Commerce and he is a member of Rotary Club of Atlanta.
Among other qualification, Mr. Lindsay brings significant operational and financial experience to our Board of Directors. His considerable experience in senior management, and his leadership and intimate knowledge of our business and operations provide him with strategic and operational expertise generally and for the Company specifically, which are utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.
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Class III
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Walter G. Ehmer, 55, has served as a director of the Company since December 2020. Mr. Ehmer is currently the President and Chief Executive Officer of Waffle House, Inc., a position he has held since 2012. Mr. Ehmer has held various positions with Waffle House, Inc. since joining the company in 1992 as a senior buyer in the purchasing department, including most recently serving as its President and Chief Operating Officer from 2006 until 2012 and as Chief Financial Officer from 1998 until 2002. Mr. Ehmer previously served on the Board of Directors of Former Parent from May 2016 to November 2020. Mr. Ehmer previously served as a member of the Georgia Tech Industrial Engineering Advisory Board, the Georgia Tech Alumni Association Board of Trustees and the Georgia Tech President’s Advisory Board. Mr. Ehmer is also a past chairperson of the Georgia Tech Alumni Association and currently serves as a member of the board of the Georgia Tech Foundation. Mr. Ehmer also serves on the boards of the City of Atlanta Police Foundation, the Metro Atlanta Chamber of Commerce, and Children's Healthcare of Atlanta Foundation. He is also a trustee on the University System of Georgia Foundation Board.
Among other qualifications, Mr. Ehmer brings significant management and financial experience to our Board of Directors. His experience in multiple senior executive leadership positions, including with responsibility for accounting-related matters, provide him with managerial and financial expertise that is utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.



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Timothy A. Johnson, 54, has served as a director of the Company since May 2021. Mr. Johnson currently is the Chief Financial Officer of Victoria Secret & Co., world's largest intimates specialty retailer, a position he has held since June 2021. Mr. Johnson was previously employed by Big Lots, Inc., a retail company, for nineteen years, commencing in 2000 serving in various roles of increasing responsibility including most recently as Executive Vice President, Chief Financial Officer and Chief Administrative Officer. He also held the positions of Senior Vice President and Chief Financial Officer; Senior Vice President, Finance; Vice President Strategic Planning and Investor Relations and Director, Strategic Planning. Before joining Big Lots, Inc. Mr. Johnson was employed by Limited Brands, Inc. From 1992 to 2000 serving as a senior accountant and then as Director, Financial Reporting. Prior to that he was a senior associate for Coopers and Lybrand from 1989 to 1992. Mr. Johnson currently serves on the boards of DYLN, a health and fitness company; FST Logistics, a third party logistics company serving food and grocery brands; and LogicSource, a professional services firm focused on retail and consumer clients. He also serves on the boards of Marburn Academy and Nationwide Children’s Hospital Foundation.

Among other qualifications, Mr. Johnson brings significant operational management and financial experience to our Board of Directors. His experience in multiple senior executive leadership positions provide him with retail operations, accounting and financial experience, which are utilized by our Board of Directors. These skills and experiences qualify him to serve on our Board of Directors.

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Marvonia P. Moore, 64, has served as a director of the Company since May 2021. She held a variety of senior management positions at AT&T, Inc., a telecommunications company, throughout her 37 year career until her retirement in 2021. Most recently she was Vice President and General Manager for the AT&T portfolio in Georgia and South Carolina. Prior to that she also held positions of Assistant Vice President-Market Development, Region Vice President-Business Sales (AT&T Mobility LLC) and Vice President-AT&T Customer Care. During a brief time between AT&T assignments, Ms. Moore served as Region Vice President for W.W. Grainger, Inc. and Managing Partner for her consulting practice. Her leadership roles focused extensively on B2B sales, marketing and operations and consumer market growth strategies, utilizing direct and indirect retail and omni-channels.

Among other qualifications, Ms. Moore brings significant management and operational experience to our Board of Directors. She served as a director on the corporate board and compensation committee for Minneapolis based Ault, Inc. Her leadership positions in the Atlanta community, include serving as Chair of Atlanta Technical College Local Board and the Atlanta Workforce Development Agency, and a board member/trustee for Morehouse Women in Golf Foundation, Atlanta Partners for Education, Central Atlanta Progress Advisory Board, Georgia 100 Mentor Exchange, and AT&T Management Review Committee’s Family Care Development Fund. These skills and experiences qualify her to serve on our Board of Directors.

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Executive Officers Who Are Not Directors
Set forth below are the names and ages of each current executive officer of the Company who is not a director. All positions and offices with the Company held by each such person are also indicated.
Name (Age)   Position with the Company and Principal Occupation During
the Past Five Years
Rachel G. George (42) Executive Vice President, General Counsel, Corporate Secretary & Chief Corporate Affairs Officer since November 2020. Prior to joining the Company, she served as Senior Vice President and Deputy General Counsel of Navient Solutions, a financial services company, a position she held since January 2018. Prior to that time, Ms. George was Vice President and Deputy General Counsel of Navient Solutions from July 2017 to December 2017, and Vice President and Associate General Counsel of Navient Solutions from April 2015 to June 2017. Prior to that, Ms. George was a partner at Chapman and Cutler LLP from 2012 to March 2015.
Douglass L. Noe (51) Vice President, Corporate Controller and Principal Accounting Officer since March 2021. He previously served as Vice President, Corporate Controller from January 2021 to March 2021. Prior to joining the Company, Mr. Noe served as Vice President, Controller of Acoustic, L.P., a marketing software solutions provider, from August 2019 to December 2020. Prior to that he served as the Senior Vice President, Corporate Controller and Treasurer of Premiere Global Services, Inc., a conferencing and collaboration provider, from June 2009 to August 2019. He also served as the Vice President and Corporate Controller of ChoicePoint, Inc., an information and decision-making technology provider, from October 2006 to June 2009.
Steve Olsen (49) President since December 2020. He previously served as President of the Aaron's Business from July 2020 to November 2020. Prior to that he served as Chief Operating Officer of the Aaron's Business from April 2020 to June 2020 and as Chief Merchandising, Supply Chain and Transformation Officer of the Aaron's Business from December 2016 to March 2020. He also served as Senior Vice President and General Merchandising Manager of Total Wine and More from April 2013 to November 2016. Previously Mr. Olsen served as Chief Strategy Officer and Senior Vice President of Supply, E-commerce and Information Technology of Orchard Supply Hardware from June 2011 to February 2013 and as General Merchandising Officer and Senior Vice President from June 2010 to June 2011. Prior to working at Orchard Supply Hardware, Mr. Olsen served as Vice President, Merchandising in the Supplies/Office Products Division of Office Depot from November 2007 to May 2010.
C. Kelly Wall (46) Chief Financial Officer since December 2020. He previously served as the Interim Chief Financial Officer for Former Parent from July 2020 to November 2020. Prior to that Mr. Wall served as Senior Vice President of Finance and Treasurer of Aaron's, Inc. from January 2019 to July 2020 and Vice President of Finance, Treasury and Investor Relations of Aaron's, Inc. from February 2017 to January 2019. Previously Mr. Wall served as Chief Financial Officer of CNG Holdings, Inc., a financial services company, from August 2016 to February 2017. Previously, Mr. Wall served as President of KW Financial Consulting LLC, a consulting company, from November 2015 to August 2016, and as Senior Vice President of Finance of TMX Finance, LLC from July 2013 to October 2015.

Composition, Meetings and Committees of the Board of Directors
Our Board of Directors is currently comprised of eight directors. The Class I directors will have initial terms expiring at our Annual Meeting, the Class II directors will have initial terms expiring at our 2022 Annual Meeting of Shareholders and our Class III director will have initial terms expiring at our 2023 Annual Meeting of Shareholders. Each Class I director elected at the Annual Meeting, each Class II director elected at the 2022 Annual Meeting of Shareholders and each Class III director elected at the 2023 Annual Meeting of Shareholders will hold office until the 2024 Annual Meeting of Shareholders and, in each case, until his or her respective successor shall have been duly elected and qualified or until his or her earlier resignation or removal. Commencing with the 2024 Annual Meeting of Shareholders, each director will be elected annually and shall hold office until the next annual meeting of shareholders and until his or her respective successor shall have been duly elected and qualified or until his or her earlier resignation or removal.

Our Corporate Governance Guidelines include categorical standards adopted by our Board of Directors to determine director independence that must meet the listing standards of the New York Stock Exchange ("NYSE"). Our Corporate
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Governance Guidelines also require that at least a majority of our Board of Directors be "independent" under the rules of the NYSE. Our Board of Directors has affirmatively determined that all of our directors are "independent" under the rules of the NYSE. Our Board of Directors has affirmatively determined that all of our directors are "independent" in accordance with the NYSE listing requirements and the requirements of our Corporate Governance Guidelines, other than John W. Robinson III, Chairman of the Board, and Douglas A. Lindsay, our Chief Executive Officer.
Our Board of Directors currently has three standing committees consisting of an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. From time to time, our Board of Directors may establish ad-hoc committees at its discretion. Our Board of Directors has adopted a charter for each of its standing committees, copies of which are available on the Investor Relations section of the Company's website at https://investor.aarons.com. The current members of each committee are identified in the table below: 
Director Audit
Committee*
Compensation
Committee
Nominating and
 Corporate
Governance Committee
Laura N. Bailey Member Member
Kelly H. Barrett (Chair) Member
Walter G. Ehmer (Chair) Member
Hubert L. Harris, Jr. Member (Chair)
Timothy A. Johnson Member Member
Marvonia P. Moore Member Member
Number of Meetings in Fiscal Year 2020
  * All members of the Audit Committee have been designated as an “audit committee financial expert” as defined by SEC regulations.
Meetings
On November 30, 2020 we completed the spin-off transaction and the reported number of meetings held by our Board of Directors and each of the Board committees reflect the fact that The Aaron's Company, Inc. was a stand-alone public company in 2020 for one month following the spin-off transaction.
The Board of Directors held one meeting during 2020. There were no committee meetings held in 2020. Each of our directors attended 100% of the total of all meetings of our Board during 2020 that occurred during the time when he or she served as a director.
The non-management and the independent members of our Board of Directors meet in executive session, without management present. Mr. Hubert Harris, the Lead Director of our Board of Directors effective January 1, 2021, chairs these meetings.
It is our policy that directors are expected to attend the annual meeting of shareholders in the absence of a scheduling conflict or other valid reason. We anticipate that at least a majority of our directors will attend the Annual Meeting.
Committees
Audit Committee. The function of the Audit Committee is to assist our Board of Directors in fulfilling its oversight responsibility relating to: (i) the integrity of the Company’s consolidated financial statements; (ii) the financial reporting process and the systems of internal accounting and financial controls; (iii) the performance of the Company’s internal audit function and independent auditors; (iv) the independent auditors’ qualifications and independence; (v) the Company’s compliance with ethics policies (including oversight and approval of related party transactions and reviewing and discussing certain calls to the Company’s ethics hotline and the Company’s investigation of and response to such calls) and legal and regulatory requirements; (vi) the adequacy of the Company’s policies, procedures and initiatives to assess, monitor and manage business risks including financial, regulatory and cybersecurity risks and its corporate compliance programs, including receiving quarterly reports related to such risks and programs; and (vii) the adequacy of the Company's information security and privacy program. The Audit Committee is directly responsible for the appointment, compensation, retention, and termination of our independent auditors, who report directly to the Audit Committee, and for recommending to our Board of Directors that the Board recommend to our shareholders that the shareholders ratify the retention of our independent auditors.  In connection with its performance of these responsibilities, the Audit Committee regularly receives reports from and holds discussions with Company management, leaders from the Company’s internal audit department, leaders from the Company’s legal department, and the independent auditors.  Many of those discussions are held in executive session with the Audit Committee.  
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The Board has concluded that each member of the Audit Committee satisfies the heightened independence requirements of the NYSE and SEC rules applicable to audit committee members, and each is financially literate. Our Board of Directors has designated each member of the Audit Committee as an "audit committee financial expert" as defined by SEC regulations.
Compensation Committee. The purpose of the Compensation Committee is to assist our Board of Directors in fulfilling its oversight responsibilities relating to: (i) executive and director compensation; (ii) equity compensation plans and other compensation and benefit plans; and (iii) other significant human resources matters.
The Compensation Committee has the authority to review and approve performance goals and objectives for the named executive officers in connection with the Company’s compensation programs, and to evaluate the performance of the named executive officers, in light of such performance goals and objectives and other matters, for compensation purposes. Based on such evaluation and other matters, the Compensation Committee determines the compensation of the named executive officers, including our Chief Executive Officer. The Compensation Committee also has the authority to approve grants of equity incentives and to consider from time to time, and recommend to our Board of Directors, changes to director compensation. The Compensation Committee may form and delegate its authority to subcommittees consisting of one or more members of the Compensation Committee or to management of the Company, subject to applicable law. For information regarding the role of executive officers and the Compensation Committee's independent compensation consultant in determining or recommending the amount or form of executive and director compensation, see "Compensation Discussion and Analysis" and "Non-Management Director Compensation in 2020" below.
The Board has concluded each member of the Compensation Committee satisfies the heightened independence requirements of the NYSE applicable to compensation committee members and is a non-employee director under Rule 16b-3 of the Securities Exchange Act of 1934, or the "Exchange Act."
Nominating and Corporate Governance Committee. The purpose of the Nominating and Corporate Governance Committee is to assist our Board of Directors in fulfilling its responsibilities relating to: (i) Board and committee membership, organization, and function; (ii) director qualifications and performance; (iii) management succession; and (iv) corporate governance. The Nominating and Corporate Governance Committee from time to time identifies and recommends to our Board of Directors individuals to be nominated for election as directors and develops and recommends to our Board of Directors for adoption corporate governance principles applicable to the Company.
The Board has concluded that each member of the Nominating and Corporate Governance Committee satisfies the independence requirements of the NYSE.
Assessment of Director Candidates and Required Qualifications
The Nominating and Corporate Governance Committee is responsible for considering and recommending to our Board of Directors nominees for election as director at our annual meeting of shareholders and nominees to fill any vacancy on our Board of Directors. Our Board of Directors, after taking into account the assessment provided by the Nominating and Corporate Governance Committee, is responsible for considering and recommending to our shareholders nominees for election as director at our annual meeting of shareholders. In accordance with our Corporate Governance Guidelines, both the Nominating and Corporate Governance Committee and our Board of Directors, in evaluating director candidates, consider the experience, talents, skills and other characteristics of each candidate and our Board of Directors as a whole in assessing potential nominees to serve as director.
We believe that, at a minimum, a director should have the highest personal and professional ethics, moral character and integrity, demonstrated accomplishment in his or her field, and the ability to devote sufficient time to carry out the duties of a director. To help ensure the ability to devote sufficient time to Board matters, no director may serve on the board of more than four other public companies while continuing to serve on our Board of Directors, and no director that serves as chief executive officer of another company may serve on the board of more than two other public companies while continuing to serve on our Board of Directors, unless our Board determines in its business judgment that such simultaneous service will not impair the director's ability to serve on our Board of Directors, and that such simultaneous service is otherwise in the best interests of the shareholders.
In addition to these minimum qualifications, our Board of Directors may consider all information relevant in their business judgment to the decision of whether to nominate a particular candidate for a particular Board seat. These factors may include a candidate’s professional and educational background, reputation, industry knowledge and business experience and the relevance of those characteristics to us and our Board of Directors. In addition, candidates will be evaluated on their ability to complement or contribute to the mix of talents, skills and other characteristics needed to maintain the effectiveness of our Board of Directors and their ability to fulfill the responsibilities of a director and of a member of one or more of the standing committees of our Board of Directors. While our Board of Directors does not have a specific policy regarding diversity among
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directors, diversity of race, ethnicity, gender, age, cultural background and professional experience is considered in evaluating candidates for membership on our Board of Directors.
A director is required to offer his or her resignation immediately in the event the director, or any of his or her respective affiliates or associates, takes any action (including encouraging or supporting others) to (i) nominate, propose or vote in favor of any candidate to serve on our Board of Directors (other than the nominees proposed by our Board of Directors) or oppose for election any nominee proposed by our Board of Directors or (ii) solicit proxies with respect to any of our securities within the meaning of the Exchange Act and the rules thereunder (other than any proxy solicitation in favor of a matter approved by our Board of Directors).
In determining whether to nominate an incumbent director for re-election, the Nominating and Corporate Governance Committee and our Board of Directors evaluate each incumbent’s continued service, in light of these collective requirements. When the need for a new director arises (whether because of a newly created seat or vacancy), the Nominating and Corporate Governance Committee and our Board of Directors proceed to identify a qualified candidate or candidates and to evaluate the qualifications of each candidate identified. Final candidates are generally interviewed by one or more members of the Nominating and Corporate Governance Committee or other members of our Board of Directors before a decision is made.
Board Recruitment Process and Director Onboarding
The Nominating and Corporate Governance Committee is responsible for identifying and evaluating candidates for nomination as a director. Nominee candidates may come to the attention of the Nominating and Corporate Governance Committee from a variety of sources, including current Board members and management. All candidates are reviewed in the same manner, regardless of the source of the recommendation. Historically, the Nominating and Corporate Governance Committee has engaged a leading, nationally recognized third-party director search firm to assist in identifying, screening and assessing the capabilities of potential director candidates.
We have an onboarding program for new directors that is intended to educate a new director on the Company and the Board's practices. During the first year of a director's service, the newly elected director meets with the Company's Chief Executive Officer, Chief Financial Officer, President, General Counsel and other members of senior management to review, among other things, the Company's business operations, financial matters, strategy, investor relations, risk management and compliance programs, corporate governance, and composition of the Board and its committees. Additionally, they visit our stores with senior management for an introduction to Company operations.
Shareholder Recommendations and Nominations for Election to the Board
Our Nominating and Corporate Governance Committee will consider nominees recommended by shareholders. Any shareholder wishing to nominate a candidate for director at the next annual shareholders’ meeting must submit a proposal as described under "Additional Information—Shareholder Proposals for the 2022 Annual Meeting of Shareholders" and otherwise comply with the advance notice provisions and information requirements contained in our amended and restated bylaws. The shareholder submission should be sent to Mr. Steve Olsen, who is the President of The Aaron’s Company, Inc., at 400 Galleria Parkway, S.E., Suite 300, Atlanta, Georgia 30339.
Shareholder nominees are evaluated under the same standards as other candidates for board membership described above in "Assessment of Director Candidates and Required Qualifications." In addition, in evaluating shareholder nominees for inclusion with the Board’s slate of nominees, the Nominating and Corporate Governance Committee and our Board of Directors may consider any other information they deem relevant, including (i) the factors described in "Assessment of Director Candidates and Required Qualifications," (ii) whether there are or will be any vacancies on our Board of Directors, (iii) the size of the nominating shareholder’s holdings in the Company, (iv) the length of time such shareholder has owned such holdings and (v) any statements by the nominee or the shareholder regarding proposed changes in our operation.
Board Leadership Structure
The Company's current Board leadership structure consists of a non-executive Chairman of the Board, and, because the Chairman is not independent due to his prior employment with Aaron's, Inc., a Lead Director was appointed by the independent directors of the Board. The Board believes the current structure of separating the roles of Chairman of the Board and Chief Executive Officer, as well as having an independent Lead Director, allows for alignment of corporate governance with the interests of shareholders. The Board believes that this structure allows our Chief Executive Officer to focus on oversight of our day-to-day operations and business affairs, including directing the business conducted by our employees, managers and officers and leverages our Chairman's experience in guidance and oversight, and ensures overall independence of the Board through clearly defined roles and responsibilities of the Lead Director.
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Our Chief Executive Officer serves on our Board of Directors, which we believe helps to serve as a bridge between management and our Board of Directors, ensuring that both groups act with a common purpose. We believe that Mr. Lindsay's presence on our Board of Directors enhances his ability to provide insight and direction on important strategic initiatives to both management and the independent directors.
While the Board believes that this structure currently is in the best interests of the Company and its shareholders, it does not have a formal policy on whether the Chairman of the Board and Chief Executive Officer roles should be separated or combined but, instead, makes that determination from time to time employing its business judgment. Our Board of Directors, however, does believe that if the Chairman and Chief Executive Officer roles are combined, or if the Chairman is not an independent director, that our Board of Directors should appoint a Lead Director to serve as the leader and representative of the independent directors in interacting with the Chairman and Chief Executive Officer and, when appropriate, our shareholders and the public.
Lead Director
The Board has determined that Mr. Robinson, a former employee of Aaron's, Inc., is currently not independent and has appointed Mr. Harris as the Lead Director in accordance with our Corporate Governance Guidelines. In electing Mr. Harris, the independent directors of the Board considered Mr. Harris in light of the following selection criteria:
Qualified as independent, in accordance with relevant listing standards;
Able to commit the time and level of engagement required to fulfill the substantial responsibilities of the role; and
Possess effective communication skills to facilitate discussions among members of the Board, including among the independent directors, and engage with key stakeholders.
As the Lead Director, Mr. Harris has the following duties and responsibilities:
Engage with the Chairman of the Board, Chief Executive Officer and other directors to identify matters for discussion at Board meetings and executive sessions of the independent directors and advise the Chairman of the Board and Chief Executive Officer of decisions reached and suggestions made at executive sessions;
Call meetings of the independent directors and preside at all meetings at which the chairman is not present including executive sessions of the independent directors;
Meet directly with management and non-management employees of the Company;
Be available for consultation and direct communications with the Company's shareholders and represent the independent directors to the public under circumstances in which it is appropriate for the independent directors to represent the Company; and
Perform such other duties as the Board may determine from time to time.
Board of Directors and Committee Evaluations
Our Board of Directors and each of its committees will conduct an annual evaluation, which includes a qualitative assessment by each director of the performance of our Board of Directors and the committee or committees on which the director sits. In 2021, our Board of Directors also engaged a third-party legal advisor to facilitate our Board self-evaluation process and Board and committee reviews. The results of the evaluation and any recommendations for improvement are reported to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee oversees the evaluation process. The Nominating and Corporate Governance Committee will annually review the scope and content of the self-evaluation to ensure it is appropriate for the needs of the Company.
Board and Committee Role in Risk Oversight
Risk Oversight Generally
Senior management is responsible for day-to-day risk management, while our Board of Directors oversees planning for and responding to risks, as a whole, through its committees and independent directors. Although our Board of Directors has ultimate responsibility with respect to risk management oversight, primary responsibility for certain areas has been delegated, as appropriate, to its committees.
The Audit Committee is charged with, among other matters, overseeing risks attendant to (i) our system of disclosure controls and procedures, (ii) internal control over financial reporting, (iii) performance of our internal audit function and independent auditors, and (iv) the identification and mitigation of cybersecurity risks. The Audit Committee considers the steps management has taken to monitor and control such risks, including our risk assessment and risk management policies. The
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Audit Committee, together with our General Counsel or another representative from our legal department, also considers issues at its meetings relating to our legal and regulatory compliance obligations, including consumer protection laws in the lease-to-own industry.
Likewise, the Compensation Committee considers risks that may be implicated by our compensation programs. For 2020, the Former Parent Committee, aided by its independent third-party compensation consultant, reviewed the compensation policies and practices and determined that they do not encourage excessive or unnecessary risk taking, and do not otherwise create risks that are reasonably likely to have a material adverse effect on the Company.
Cybersecurity and Data Privacy Oversight
As part of its risk oversight role, our full Board of Directors periodically receives reports from management, external professional advisors and others regarding various types of risks faced by the Company and the Company’s risk mitigation efforts related thereto, including cybersecurity risks and related mitigation efforts.  The Board receives presentations from management regarding trends in cybersecurity risks and risk mitigation initiatives and plans, including briefings on recent breaches at other companies and key takeaways and lessons learned that are applicable to our business. The Board also reviewed key cybersecurity-related benchmarks for the Company. In addition, our Board of Directors reviewed our cybersecurity-related investments, initiatives, and plans with management.

We have developed a program designed to detect, identify, classify and mitigate cybersecurity and other data security threats, as part of our efforts to protect and maintain the confidentiality and security of customer, employee and vendor information, and non-public information about our Company. That program is based in-part on, and its maturity is measured using, the U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) CyberSecurity Framework (CSF). Our program classifies potential threats by risk levels and we typically prioritize our threat mitigation efforts based on those risk classifications, while focusing on maintaining the resiliency of our systems. In recent years, we have increased our investments in our ability to detect, identify, classify and mitigate cybersecurity and other data privacy risks within our environment. In the event we identify a potential privacy or data security issue, we have defined procedures for responding to such issues, including procedures that address when and how to engage with Company management, our Board of Directors, other stakeholders and law enforcement when responding to such issues. We have a dedicated team of employees overseeing our cybersecurity and data privacy initiatives, led by our Vice President, Information Security, in consultation with internal and external attorneys and other professional advisors. We also have an Enterprise Information Security Steering Committee comprised of a cross-functional group of senior executives and other employees that meets on a regular basis to provide oversight with respect to our cybersecurity and data privacy risk detection, identification, classification and mitigation efforts. Our Vice President, Information Security regularly provides updates to the Audit Committee, and periodically to our Board of Directors, regarding the status and effectiveness of our cybersecurity and data privacy programs. Some of the other steps we have taken to detect, identify, classify and attempt to mitigate data security and privacy risks include:

Adopting and periodically reviewing and updating information security and privacy policies;

Conducting targeted audits and penetration tests throughout the year, using both internal and external resources;

Complying with the Payment Card Industry Data Security Standard;

Engaging an industry-leading, nationally-known third party to independently evaluate our information security maturity on a regular basis;

Adopting a vendor risk management program, which includes receiving the results of cybersecurity and data privacy audits conducted on certain vendors, classifying vendor, service provider or business partner risk based on several factors and evaluating and monitoring related risk mitigation efforts;

Providing security and privacy training and awareness to all of our employees; and

Maintaining cyber liability insurance.

We also understand the importance of collecting, storing, using, sharing and disposing of personal information in a manner that complies with all applicable laws. To facilitate compliance with those laws, we have privacy policies in place regarding our treatment of customer data in both our offline and online retail environments, as well as policies relating to the protection of employee and vendor data. Our policies provide explanations of the types of information we collect, how we use and share information, and generally describe the measures we take to protect the security of that information. Our policies also describe how customers may initiate inquiries and raise concerns regarding the collection, storage, sharing and use of their
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personal data. In addition, our employees also must complete mandatory training to understand the behaviors and technical requirements necessary to safeguard information resources at the Company.

We are not aware of any data breaches occurring during the Company’s 2020 fiscal year.

Environmental, Social and Governance Oversight

In connection with our strong foundational purpose and values, management, at the direction and subject to the oversight of our Board of Directors and its Nominating and Corporate Governance Committee, is engaged in an ongoing effort to continually evaluate and improve in the areas of environmental, social and governance ("ESG") matters.

In the past several months the Company has taken a variety of steps to enhance its ESG program:

ESG Oversight: The Board expanded the scope of the Nominating and Corporate Governance Committee's charter to include oversight of the Company's ESG initiatives and to report to the Board. In addition, by the end of the 2021 year management will form an ESG steering committee led by members of its senior leadership team which will report to the Nominating and Corporate Governance Committee and the Board, as appropriate.

Board Diversity: Our Board is diverse in its expertise and experience, with members who have unique perspectives, backgrounds and experiences. With the addition of Messes. Bailey and Moore, female members now constitute 38% of the Board's composition and the Board has increased its racial diversity (with 13% of its members representing ethnic minorities). The Board and its Nominating and Corporate Governance Committee will continue to consider diversity in all forms as it evaluates Board composition in the future.

Enhanced Code of Business Conduct and Ethics Policy: The Board, with the recommendation of the Nominating and Corporate Governance Committee, adopted revisions to our Code of Business Conduct and Ethics policy to further incorporate the Company's values with respect to Diversity & Inclusion and the Company's commitment to creating a respectful workplace and enhance the Company's policies around conflicts of interests and confidentiality.

Enhanced Ethics Compliance Policy: The Board, with the recommendation of the Audit Committee, adopted revisions to the Ethics Compliance Policy to further strengthen the Company's policy against illegal or unethical conduct and reinforce the availability of the Company's channels to report this behavior without fear of retaliation.

Enhanced Audit Committee Charter: In light of the increased focus on cybersecurity and information technology risks, the Board, with the recommendation of the Audit Committee, adopted revisions to its Audit Committee charter to clarify the Company's internal audit department's role in providing the Audit Committee with ongoing assessments of the Company's risk management processes.

Environmental Sustainability

Our Woodhaven manufacturing operations have implemented meaningful initiatives and strategies to reduce the amount of materials and packaging they use and dispose of, while significantly increasing the portion of those materials that are recycled.

Recently the initiatives have included:

Implementing a comprehensive waste audit program at our manufacturing facilities, which covers all materials we use in our manufacturing processes;

Adopting waste-reduction programs that require the re-use or recycling of scrap material, including paper, plastic, foam, fabric, wood, metal and cardboard, resulting in the recycling of approximately 10 million pounds of materials annually;

Reducing the amount of materials our manufacturing facilities send to landfills by more than 90% since 2009;

Manufacturing "50 State Compliant" bedding and furniture products, by using wood and foam materials that do not contain lead, mercury, formaldehyde or CFCs, and, when possible, use foam that contains soy-based polyols, instead of those derived from fossil fuels; and
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Replacing metal halide lighting with more energy efficient Versabay and LED lighting, and using skylight panels in approximately 600,000 square feet of our manufacturing space, to further reduce energy demand.

With respect to our stores, certain of the Company-owned and franchise locations are already recycling paper and packaging materials, and we have begun the process of discussing possible strategies for developing centralized, corporate-driven initiatives to reduce packaging and increase recycling of those materials in our Company-owned stores. We have also undertaken steps to proactively and positively impact the environment, reduce energy consumption, and improve the fuel efficiency of our vehicle fleet. Those steps and related accomplishments have included:

Offering our customers energy efficient, ENERGY STAR certified products, in our stores and online, which we believe contributes to reduced energy consumption and, indirectly, to lower greenhouse gas emissions;

Improving the average miles-per-gallon fuel efficiency of our delivery vehicles by approximately 9% over the past five years by removing and/or replacing approximately 35% of our delivery fleet with lighter, more fuel-efficient vehicles;
Converting our fleet of lift trucks from using fossil fuels to using renewable energy;

Adopted a strict no-idling policy for our fleet drivers; and

Regulating our delivery and service trucks to a maximum speed of 65 miles-per-hour to increase overall fuel economy.

With respect to our headquarters we have:

Located our Aaron's headquarters in a building that is ENERGY STAR Certified and

Provided recycling containers at our headquarters buildings, through which we recycle aluminum, cardboard, paper and plastic.

Energy Management

Electricity is the primary form of energy used by our Company stores and fulfillment centers. We have made, and expect to continue, efforts to improve the energy efficiency of our operations because we believe it is good for our business and the environment. During 2020, the Company-owned stores used a total of approximately 110 kilowatt hours of electricity, the fulfillment centers used a total of approximately 3.5 million kilowatt hours of electricity, and the store support centers used a total of approximately 1.8 million kilowatt hours of electricity. According to data provided by Vervantis, Inc., the firm we have engaged to assist us with measuring and reducing energy usage: (i) on a per-store basis, our electrical energy usage decreased by approximately 10% for 2020, as compared to 2015, due in part to initiatives such as installing LED lighting in certain locations, accelerating the replacement of older HVAC units with newer, more energy-efficient units, and emphasizing stricter controls regarding in-store temperature/thermostat settings; and (ii) the average amount of electricity used at each of our fulfillment centers in 2020 decreased by approximately 16.6%, as compared to 2015, due in part to initiatives such as installing more energy-efficient lighting, including LED lighting, installing motion sensors to activate and deactivate lighting by zone, and converting older material handling equipment that was powered by electricity to more efficient equipment that is powered by propane.

During 2020, we believe our fleets of delivery, long-haul, service and other trucks decreased fuel usage due in part to our initiatives such as removing and/or replacing our fleet with lighter, more fuel-efficient vehicles; adopting a strict no-idling policy; regulating our trucks to a maximum speed of 65 miles-per-hour; and closing and consolidating stores to improve operating efficiencies, including reducing the number of trucks we need to deliver products to customers. Due to the COVID-19 pandemic, we did not directly utilize any renewable energy sources in 2020, but we intend to explore the possibility of doing so in 2021 and future years, including through possibly entering into renewable power purchase agreements, that are accompanied by renewable energy certifications or guarantees of origin.

Corporate Social Responsibility
Our Board of Directors and management team recognize that being a responsible corporate citizen is important to our investors and helps drive shareholder value. We are committed to making a positive impact on the environment and the communities where our customers and employees live and work.

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Our initiatives through the Aaron's Foundation, Inc. and the Aaron's Community Outreach Program, both of which are funded from the earnings of our Company, are helping build stronger communities where our customers and employees live and work, with a special focus on improving the lives of underserved youth. We have a goal of contributing 1% of our annual, consolidated pre-tax profits to these efforts each year and plan to continue to do so in 2021.

Recently, our initiatives have included:

Participating in our second three-year national partnership with the Boys & Girls Clubs of America, under which we have committed $5 million of funding and other resources though 2021. As part of this partnership, we are committed to complete 53 Boys & Girls Clubs' teen center makeovers by the end of 2021, 45 of which we already have completed, including donating $20,000 of merchandise to each of those teen centers. We are also the primary sponsor of the Boys & Girls Clubs’ National Keystone Conference, a character and leadership development event that brings together teen club members and their advisors from around the country;

Providing financial support and internship programs to 20 students of Morehouse College, a historically black college, through 2021, underwritten by a gift of $1 million;

Sponsoring Cristo Rey Atlanta Jesuit High School - which provides students of limited economic means with four years of college preparatory classes and professional work experience - and hiring eight Cristo Rey students to work with the Company through the school's Corporate Work Study Program, for each of the past six years;

Providing community-level assistance to veterans, youth organizations and community centers through approximately $400,000 in-kind donations from our Aaron’s Community Outreach Program, which is our local, store-based giving initiative;

Contributing approximately $112,000 in merchandise to the Warrick Dunn Charities’ to furnish fourteen homes and approximately $24,000 in merchandise to Kurt Warner’s First Things First Foundation’s "Home for the Holidays" program to furnish three homes, both of which assist single parents in becoming first-time homeowners, through a partnership with Habitat for Humanity;

Donating $100,000 to various charities supporting racial equality, in connection with the International Day of Tolerance and Juneteenth, and joining a coalition advocating for the passage of Georgia Hate Crime Legislation;

Matching employee donations to not-for-profit organizations within the areas of arts and culture, health and human services, civic and community concerns, and education, on a dollar-for-dollar basis, up to $1,000 per employee; and

Responding to the COVID-19 pandemic, among other things, converted our Woodhaven production facility to focus on creating masks, donated laptops, mattresses, masks and other personal protective equipment and our employees volunteered to donate blood at community drives.


Human Capital Management

Diversity and Inclusion

We believe in being an inclusive workplace for all of our employees and are committed to having a diverse workforce that represents the customers that choose to shop with us in-store or online. We believe a variety of perspectives enriches our culture, leads to innovative solutions for our business and enables us to better meet the needs of a diverse customer base and reflects the communities we serve. Our aim is to develop inclusive leaders and an inclusive culture, while also recruiting, developing, mentoring, training, and retaining a diverse workforce, including a diverse group of management-level employees. As of December 31, 2020, for the employees that disclosed this information, 31% of our total workforce was female, 25% of management (which we define as manager level employees and higher) was female, 38% of our total workforce was racially/ethnically diverse and 28% of management was racially/ethnically diverse. 30% of our total workforce and 23% of management did not disclosure race/ethnicity.


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WORKFORCECHARTA.JPG

Fostering a culturally diverse and inclusive environment and creating a true sense of belonging are among our top priorities. Our Diversity and Inclusion Council, Employee Business Resource Groups ("EBRG") and executive officers are dedicated to building diversity, inclusion and belonging into all aspects of our operations.

Our diversity and inclusion initiatives include:

Providing two executive sponsors, monetary and other support to each of our EBRGs which allow a safe space for traditionally underrepresented employees to connect and discuss experiences as well as provide educational and motivational events and mentorship experiences for our employees and support the Company’s objectives related to developing associates and creating diversity awareness which include the Aaron’s Women’s Leadership Network, Aaron’s Black Leadership Exchange, Aaron's Pride Alliance and Inspiring Growth and Unity at Aaron's for Latinos/Hispanics;

Establishing the Aaron's Diversity and Inclusion Council to provide management with support and oversight to our EBRGs, which includes leaders from multiple functional areas and executive leadership;

Celebrating cultural events led by our EBRGs, including Black History Month, Women's History Month, National Hispanic Heritage Month, Pride Month, and Juneteenth;

Hiring women to serve in our key leadership roles of Executive Vice President, General Counsel, Corporate Secretary & Chief Corporate Affairs Officers and Senior Vice President, Chief People Officer;

Hiring a strategic consulting firm to help define the Company's Diversity & Inclusion vision and strategy for the future;

Developing access to unconscious bias training for all people leaders across the Company through e-learnings platforms; and

Implementing a talent review process that is designed to utilize a multi-factor approach to understanding the talents of our employees and the potential they have to become future Company leaders.

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Development and Career Opportunities

We believe in offering career opportunities, resources, programs and tools to help employees grow and develop, as well as competitive wages and benefits. Our efforts in these areas include:

Offering platforms, including our Learning and Development portal and other on-line and in-person professional growth and development training, to help employees develop their skills and grow their careers at the Company, including a third-party learning platform that offers over 16,000 courses to all management and store support center employees;

Providing management development training to all of our management-level employees in 2020, including compliance, ethics and leadership training;

Conducting quarterly feedback sessions between our employees and their supervisors on their collaboration and development;

Providing employees with recurring training on critical issues such as safety and security, compliance, ethics and integrity and information security;

Gathering engagement feedback from our employees on a regular basis and responding to that feedback in a variety of ways including personal, one-on-one interactions, team meetings, leadership communications, and town hall meetings with employees, led by senior executives;

Offering a tuition reimbursement program that provides eligible employees up to $1,500 per year for courses related to current or future roles at the Company;

Offering health benefits for all eligible employees, including our eligible hourly store-based, fulfillment center, manufacturing and call-center employees;

Providing confidential counseling for employees through our Employee Assistance Program;

Providing a comprehensive suite of wellbeing offerings, including physical, financial and emotional programs and resources, at no cost to our employees;

Providing paid parental leave – maternity, paternity and adoption;

Providing paid time off;

Matching employees’ 401(k) plan contributions of up to 5% of eligible pay after one year of service; and

Offering an employee stock purchase program for eligible employees.

Health and Safety of Employees and Customers

We take the safety of our employees and our customers seriously. Aaron's policies and training programs support our health and safety practices. Throughout the year, employees complete compliance training relevant to their role. Completion of required compliance training is closely managed to ensure that employees have the required skills and knowledge to perform ethically and safely. Additional protocols were implemented in 2020 designed to protect the health and safety of our employees and customers in response to the global COVID-19 pandemic related to the novel coronavirus disease. Additionally, beginning in mid-March 2020, we transitioned associates whose job duties allow them to do so to work remotely from home. Some of the additional protocols implemented in our stores and store support center include:

Reconfiguring the store layout to support one-way traffic, creating a center aisle and installing sneeze guards;

Reducing store operating hours, when warranted, temporarily closing stores to the public and offering curbside service;

Requiring face masks for customers and employees;

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Altering the way we deliver products to customers;

Limiting the number of employees and customers in-store to ensure social distancing;

Improving our ability to sell and collect virtually;

Enhancing our digital and e-commerce experience for customers to better accommodate "contact-less" transactions;

Enhancing cleaning and sanitation; and

Providing hourly employees with paid time off to obtain the COVID-19 vaccine.

We expect our suppliers to provide us with safe, energy-efficient, high quality products. We strive to set high expectations for our suppliers. Our suppliers enter into a Master Supply Agreement with us in which they represent and warrant that all products are manufactured, packaged, tagged and sold in compliance with all applicable laws and are legal for retail re-sale in each store that we operate without violation of any law. Specifically, all products must be packaged, labeled and tested in compliance with all applicable laws and the supplier must obtain and maintain all permits, licenses, certifications and registrations required by all applicable laws to provide their products.

Labor Practices and Human Rights

All of our employees earn more than the federal minimum wage. The average hourly wage of a full-time hourly field employee in our Company-owned, stores and fulfillment centers as of December 31, 2020 is $13.99, with a meaningful portion of those employees earning an average hourly wage of $15 or more. The average total compensation and benefits for a full-time hourly field employee in our Company-owned, stores and fulfillment centers is approximately $32,000 including wages, bonuses and benefits, such as paid time off.

We strive to help associates maintain job stability so they are encouraged to stay with the Company and positioned to grow their skills and knowledge on the job. The 2020 annualized voluntary turnover rate in our stores and fulfillment centers was 52% and the 2020 annualized involuntary turnover rate in the stores and fulfillment centers was 27%. In an effort to reduce employee turnover we engage in annual surveys with employees, are conducting stay interviews to help identify any issues before they cause an employee to leave the Company, and review exit interview data, hotline calls and root cause analysis to help deter turnover.

Aaron’s respects the rights of workers who offer services and create the products that we purchase from our suppliers. We communicate our expectations to suppliers on social conditions, worker safety and integrity in the workplace, and compliance with applicable laws through our Supplier Code of Conduct. Our Supplier Code of Conduct outlines our expectations with respect to hiring practices, forced labor, child labor, discrimination, and other labor rights. Suppliers must comply with our Supplier Code of Conduct, conduct their business with a high level of integrity, and maintain accurate records to demonstrate that compliance.

From time to time, we are party to legal proceedings arising in the ordinary course of business including those alleging employment discrimination or violations of wage-and-hour laws. During 2020, the total amount we paid to resolve proceedings alleging employment claims was immaterial to our earnings. In our efforts to have all of our employees comply with applicable employment-related laws, to drive positive workplace conduct, to strive to foster a fair and equitable workplace, and to reduce the number of employment discrimination claims brought against us. Additionally, we provide a variety of resources, including non-discrimination and anti-harassment training as part of the Company’s mandatory compliance training, for all employees including employees in our call centers, fulfillment and service centers, store support center, and stores.




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Corporate Governance

Corporate Governance Highlights

The Board remains committed to strong corporate governance and protection of long-term shareholder value. We encourage you to visit the "Corporate Governance" section of our Investor Relations website where you will find information about our corporate governance practices, including our key governance documents. We have taken steps to adopt many corporate best practices including:

Board Independence

Majority independent Board;
Independent Lead director;
Fully independent standing committees; and
Executive session of non-employee directors at all regularly scheduled Board meetings.

Other Board and Committee Practices

Separate Chief Executive Officer and Chairman of the Board roles;
Risk oversight;
Oversight of political and social engagement;
Robust stock ownership guidelines;
Anti-hedging and anti-pledging policy;
Periodic review of governance policies and committee charters;
Oversight of ESG initiatives; and
Broad director diversity search criteria.

Board Performance

Board oversight of company strategy;
Annual Board evaluations;
Commitment to Board refreshment and succession planning; and
Focus on management succession planning.

Shareholder Rights

Shareholder right to call special meeting;
No supermajority voting requirements; and
Majority voting in director elections.

Board Demographics

The members of our Board bring a variety of backgrounds, qualifications, skills and experience that contribute to a well-rounded Board that we believe is uniquely positioned to effectively guide our strategy and oversee our operations. Diversity and inclusion are values embedded in our culture and fundamental to our business. We believe that a Board comprised of directors with diverse business and occupational experiences, skills, talents, expertise, educational backgrounds, and the diversity of race, ethnicity, gender, age and cultural backgrounds improves the dialogue and decision-making in the boardroom, contributes to overall Board effectiveness, helps strengthen our business and drives increased shareholder value.

Our Board currently consists of eight highly experienced and engaged members. Except for our Chief Executive Officer and Chairman of the Board, all of our directors are independent under the NYSE rules. We continually focus on Board composition to ensure an appropriate mix of tenure and expertise that provides fresh perspective and industry and subject matter experience.

The complexity of our business requires oversight by experienced, informed individuals that understand the industry and challenges, and our Company on a deep level. Our directors' diverse backgrounds contribute to an effective and well-balanced Board that is able to provide valuable insight to, and effective oversight of, our senior management team.


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*Includes board service on Former Parent



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Relevant Skills and Experience


Director Other Board Service Financial Expertise Consumer Services Industry Operational Experience Compliance Governance Diversity Management Experience
Laura N. Bailey X X X X X X X X
Kelly H. Barrett X X X X X X X X
Walter G. Ehmer X X X X X X X
Hubert L. Harris X X X X X X
Timothy A. Johnson X X X X X X X
Douglas A. Lindsay X X X X X X
Marvonia P. Moore X X X X X X X
John W. Robinson III X X X X X X
Compensation Committee Interlocks and Insider Participation
For the year ended December 31, 2020, the Compensation Committee consisted of Ms. Barrett and Messrs. Harris and Ehmer, each of whom our Board of Directors determined was independent in accordance with NYSE listing requirements.
No member of the Compensation Committee during 2020 is or was formerly an officer or employee of the Company or any of its subsidiaries or was a related person in a related person transaction with the Company required to be disclosed under applicable SEC rules.
NON-MANAGEMENT DIRECTOR COMPENSATION IN 2020
The compensation program for our non-employee directors is designed to fairly compensate them for the effort and responsibility required to serve on the board of a company of our size and scope as well as to align our directors’ interests with those of our shareholders more generally.
Prior to the spin-off transaction, the board of directors of our Former Parent adopted a compensation program for our non-employee directors effective beginning December 1, 2020, which was the first day following the completion of the spin-off transaction. The compensation program was subsequently amended effective January 1, 2021 based upon the recommendation of the Compensation Committee's independent third-party compensation consultant to (i) increase the Audit Committee chair quarterly cash retainer by $5,000 and (ii) provide for a lead director quarterly cash retainer of $6,250 to revise the compensation program for our non-employee directors to better align with the interests of our shareholders as well as with current market practices.
Under the 2020 compensation program in effect during December 2020, non-employee directors receive an annual cash retainer of $75,000 and an annual award of restricted stock units having a value of $125,000, which generally vests one year following the grant date. Non-employee directors serving as the chairperson of the Audit, Compensation, and Nominating and Corporate Governance Committees also received an additional annual retainer of $20,000, $15,000 and $10,000, respectively, for their service in these roles and the additional time commitments required. The non-employee directors may also participate in the Deferred Compensation Plan.
Directors who are employees of the Company receive no compensation for their service on our Board of Directors. Mr. Robinson received no compensation for services on our Board of Directors in 2020.
The following table shows compensation earned by non-employee directors during 2020. Prior to the spin-off transaction Ms. Barrett and Messrs. Ehmer and Harris served as directors of Former Parent. In connection with the spin-off transaction they resigned as directors of Former Parent and joined our Board effective November 11, 2020. While serving on the Former Parent board, each of them received compensation and equity awards from Former Parent for their service as non-employee directors. Amounts reported do not include any compensation received by Ms. Barrett and Messrs. Ehmer and Harris for their service as directors of Former Parent prior to the spin-off transaction.
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2020 Director Compensation
Name
Fees Earned or 
Paid in Cash ($)
Stock Awards($)(1)
Total
($)
Kelly H. Barrett (2)
7,917  23,065  30,982 
Walter G. Ehmer(3)
7,500  67,588  75,088 
Hubert L. Harris, Jr. (4)
7,083  83,667  90,750 
(1)Amounts in this column represent the incremental fair value associated with the modifications to the non-employee directors' outstanding Former Parent restricted stock units in connection with the separation and distribution, calculated as of the modification date (November 30, 2020) in accordance with FASB ASC Topic 718. As of December 31, 2020, each of the non-executive directors held 1,440 units of restricted stock subject to vesting, which was the number of shares of restricted stock granted to them in June 2020, after giving effect to the November 30, 2020 adjustments made in connection with the separation and distribution.
(2)Includes $7,917 in fees earned for services in the fourth quarter of 2020 which will be paid in 2021.
(3)Includes $7,500 in fees earned for services in the fourth quarter of 2020 which will be paid in 2021 that Mr. Ehmer deferred under the Company's Nonqualified Deferred Compensation Plan.
(4)Includes $7,083 in fees earned for services in the fourth quarter of 2020 which will be paid in 2021.
With respect to all other restricted stock unit awards described in footnote 1 to the table above, our non-employee directors retained Former Parent restricted stock unit awards of the same type as a result of the separation. For each such outstanding restricted stock unit award set forth in the table above, the non-employee directors retained a corresponding Former Parent restricted stock unit award subject to substantially the same terms (including vesting terms) as the Former Parent restricted stock unit award to which it relates, but covering twice as many Former Parent shares as reflected in footnote 1 to the table above.
Stock Ownership Guidelines
Under the current stock ownership guidelines each director is expected to own or acquire shares of our common stock and common stock equivalents (including restricted stock and restricted stock units) having a value of at least $400,000 within four years from when the director first joined our Board of Directors. As of December 31, 2020, each of our directors currently serving on the Board of Directors at that time, is currently in compliance with the requirements established in these guidelines.
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COMPENSATION DISCUSSION AND ANALYSIS
2020 Spin-Off Transaction
On October 16, 2020, management of Aaron’s, Inc. finalized the formation of a new holding company structure in anticipation of the separation and distribution described below. Under the holding company structure, Aaron’s, Inc. became a direct, wholly owned subsidiary of a newly formed company, Aaron’s Holdings Company, Inc; (the "Former Parent"). Aaron's, Inc. thereafter was converted to a limited liability company ("Aaron’s, LLC"). Upon completion of the holding company formation, Aaron’s Holdings Company, Inc. became the publicly traded parent company of the Progressive Leasing segment ("Progressive Leasing"), Aaron’s Business segment ("Aaron's Business"), and Vive segment ("Vive").
On November 30, 2020, the "separation and distribution date", the Former Parent completed the previously announced spin-off transaction of all outstanding shares of common stock of our newly formed company (the "separation". the "separation and distribution", or the "spin-off transaction") called The Aaron's Company, Inc., (the "Company") to the Former Parent shareholders of record as of November 27, 2020. Upon the separation and distribution, Aaron's, LLC became a wholly owned subsidiary of the Company. Shareholders of Former Parent received one share of the Company for every two shares of Former Parent common stock. Upon completion of the separation and distribution, the Company became an independent, publicly traded company under the ticker "AAN" on the New York Stock Exchange ("NYSE"). References to Former Parent may refer to Aaron's, Inc. or Aaron's Holdings Company, Inc. for transactions, events, and obligations prior to the separation and distribution date or PROG Holdings, Inc. for transactions, events, and obligations of Former Parent at or subsequent to the separation and distribution date.
Prior to the spin-off transaction on November 30, 2020, the Company was part of Former Parent and not an independent company, and our employees participated in the compensation and benefit programs of Former Parent and its subsidiaries. The Compensation Committee of the Company’s Board of Directors (the "Compensation Committee") was not constituted until November 11, 2020, and the compensation decisions regarding our named executive officers for our fiscal year ended December 31, 2020 were generally made by the Former Parent Committee, in the case of Mr. Lindsay, our Chief Executive Officer, and Mr. Sinclair, our Corporate Controller prior to his retirement on March 15, 2021; by Mr. Lindsay, in consultation with the President and Chief Executive Officer of our Former Parent, for Mr. Olsen (who was not an executive officer of Former Parent); and by the Chief Executive Officer of our Former Parent, for Mr. Wall. Ms. George’s initial compensation package was also determined by the Former Parent Committee. As a result, except as otherwise indicated, this Compensation Discussion and Analysis describes the compensation practices of our Former Parent for the fiscal year ended December 31, 2020 as they related to the individuals who are our named executive officers (“named executive officers" or "NEOs") for 2020.
Unless the context otherwise requires or we specifically indicate otherwise, references to "we," "our," "the Company," and "Aaron's" refer to The Aaron's Company, Inc. which holds, directly or indirectly, the assets and liabilities historically associated with Aaron's Business prior to the separation and distribution date.
Since the spin-off transaction, our executive compensation program, policies, and practices for our executive officers have been subject to the review and approval of the Compensation Committee. While our executive compensation program, policies, and practices are similar, and are expected to continue to be similar going forward, to those employed at our Former Parent immediately prior to the spin-off transaction, the Compensation Committee has begun and will continue to review our executive compensation program, policies, and practices and will make adjustments as appropriate over time in order to meet our particular business needs and goals. Decisions made by the Company’s Committee for the fiscal year ending December 31, 2021 are expected to be discussed in the Compensation Discussion and Analysis included in our Proxy Statement for our 2022 annual meeting of shareholders. However, to the extent decisions have already been made by the Compensation Committee and are material to an understanding of our named executive officers’ compensation for fiscal year 2020, a discussion of such decisions is included in this Compensation Discussion and Analysis.
The Company expects to benefit from the stability and predictability of a large, recurring-revenue portfolio of leases. The Company serves over 1.9 million unique customers annually, of which approximately 66% are repeat customers. The Company is also vertically integrated with manufacturing assets that produce approximately 40% of the Company's total upholstered furniture and bedding purchases. The Company also believes it has a strategic advantage of an extensive distribution and last-mile logistics network.
With a mission to enhance people’s lives by providing access to high quality products through affordable lease-to-own purchase solutions, the Company has developed several strategic priorities to center the organization and deliver long-term growth in earnings, including:
Strengthen the Aaron’s brand by promoting the compelling value proposition to the target market,
Continue to simplify and digitize customer interactions, making it easier for customers to do business with the Company, and
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Align the store footprint with the customer opportunity, including repositioning stores in key markets.
Executive Summary
The purpose of this section is to provide material information about the compensation objectives and policies for our named executive officers and to explain how the Former Parent Committee made compensation decisions for 2020. For 2020, our NEOs are listed below.
Named Executive Officer
Pre-Separation Position with Former Parent (as of November 30, 2020)
Position with Company
(effective as of December 1, 2020)
Douglas A. Lindsay Chief Executive Officer, Aaron's Business Chief Executive Officer
Steve Olsen President, Aaron's Business President
C. Kelly Wall
Interim Chief Financial Officer—Former Parent
EVP – Chief Financial Officer
Rachel G. George1
N/A
EVP – General Counsel & Chief Corporate Affairs Officer
Robert P. Sinclair
VPCorporate Controller and Chief Accounting Officer, Former Parent
VP – Corporate Controller and Chief Accounting Officer
(1) Ms. George was hired on November 23, 2020 and therefore her compensation was initially established in contemplation of her role with the Company.

We believe 2020 performance and pay results are indicative of a strong linkage between pay and performance created by our executive compensation structure and incentive plan designs.
In addition to this linkage between pay and performance, we currently employ sound compensation and governance principles and policies (consistent with our Former Parent), while avoiding problematic or disfavored practices, as noted below:
What We Do What We Don’t Do
ü    Independent Compensation Committee assisted by an independent consultant
û No repricing or cash buyouts of stock options without shareholder approval
ü    We plan to annually assess company compensation policies to ensure that the features of our program do not encourage undue risk

û No excise or other tax gross-ups on change-in-control payments
ü    All executives are "at will" employees, with no employment agreements for NEOs

û No hedging or pledging of Company stock
ü    Pay mix that emphasizes performance-based compensation over fixed compensation (approximately 76% performance-based for CEO and approximately 57% for all other NEOs, other than Ms. George)
û No excessive perquisites or other benefits
ü Pay mix that emphasizes long-term, equity-based incentives over short-term cash incentives
û No single-trigger severance benefits upon a change-in-control
ü Incentive plans that measure financial success through various measures, focused on growth, profitability, and returns
û No payment of dividends on unearned or unvested shares
ü Robust and meaningful incentive plan targets and ranges, with capped incentive payouts
û No guaranteed bonus payments
ü Double-trigger equity vesting acceleration upon a change of control
ü Meaningful stock ownership requirements
ü Formal clawback policy to recoup performance-based compensation from our senior executives, including NEOs, under certain prescribed acts of misconduct
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Components of the Executive Compensation Program
The three primary components of each NEO's total direct compensation for 2020 were as follows:
Component Terms and Objectives
Base Salary
Fixed amount of compensation for performing day-to-day job responsibilities intended to reflect the scope of an executive’s role.
Reviewed annually for potential adjustment based on factors such as market levels, individual performance, and scope of responsibility.
Annual Cash Incentive Award
Variable performance-based award opportunity based on achievements with respect to financial and operational performance goals.

Long-Term Equity Incentive Award
To balance long-term performance and retention, 2020 equity awards were made in the form of 50% performance share units, 25% stock options, and 25% time-based restricted stock awards.
For 2020, these components were designed by our Former Parent to be competitive with employers with whom it competed for executive talent and to support our Former Parent’s compensation program objectives. The Former Parent Committee did not set a prescribed mix or allocation for each component, but rather focused on total direct compensation when making compensation decisions for our executives. In making these decisions, the Former Parent Committee also considered the following related factors: (i) performance against corporate and individual objectives for the fiscal year; (ii) performance of general management responsibilities; (iii) the value of any unique skills and capabilities; (iv) contributions as a member of the executive management team; and (v) competitive market considerations.
Total direct compensation for our NEOs in 2020 emphasizes variable and performance-based compensation. This reflects our Former Parent’s philosophy that a significant portion of NEO compensation should be linked to financial, operating, and stock price performance, helping to ensure alignment of pay and performance.
The following graphs demonstrate this philosophy by showing the mix of target pay established in early 2020 for our Chief Executive Officer and for our other NEOs as a group. Ms. George is not included in these graphs because her compensation package for 2020 was not directly comparable to our other NEOs as a result of her late 2020 hire date. We expect the mix of 2021 target pay elements for our NEOs to differ from the 2020 pay mix shown in these graphs as a result of compensation adjustments approved at the time of the separation to reflect the NEOs’ new roles and responsibilities, as further described below.
COMPONENTSOFEXECCOMP.JPG
Management of the Business During the COVID-19 Pandemic
The COVID-19 pandemic has been a challenging crisis throughout the world. Extraordinary and wide-ranging actions have been taken by public health and governmental authorities to mitigate the impact of COVID-19, including quarantines, stay-at-home orders and business closure mandates requiring that individuals restrict daily activities and that businesses modify,
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curtail, or cease normal operations. Despite these challenges, our Former Parent’s management team and employees worked diligently to continue to successfully manage the business, and we continue to do so.
In particular, during 2020 our Former Parent implemented temporary measures to reduce operating expenses and conserve its cash position to mitigate the impact of the COVID-19 pandemic, while remaining mindful of the economic and health challenges faced by our customers and employees, including the following:
the Former Parent Committee approved, and Mr. Lindsay agreed to, a 20% reduction to Mr. Lindsay’s base salary from April 2020 through June 2020;
the annual cash retainer for non-employee members of our Former Parent’s board of directors was reduced by 20% from April 2020 through June 2020;
the Former Parent enacted furloughs for a portion of our store employees and store support employees, while continuing to provide health and welfare benefit plan participation to furloughed employees;
the Former Parent took steps to reduce the number of in-person interactions for our employees and customers, including temporarily implementing curbside-only service; and
the Former Parent provided two weeks of paid leave for employees with a positive COVID-19 diagnosis.
Diligent action by our Former Parent early in the COVID-19 pandemic was key to helping manage the business effectively.
Despite the challenges posed by the pandemic, no COVID-19 related adjustments were made to the metrics, relative weightings, or performance goal levels for our NEOs’ annual cash incentive or LTI awards.
2020 Performance and Incentive Pay Outcomes
Our Former Parent’s 2020 compensation programs were designed to attract, motivate, and retain key executives by offering market-competitive pay opportunities with an emphasis on incentive compensation to create a strong linkage between pay and performance.
As described in more detail below, the level of performance under the 2020 annual cash incentive and performance share unit awards was determined by the Former Parent Committee in November 2020, immediately prior to the spin-off transaction, based on actual performance for January 2020 through October 2020 and an estimate of performance achievement that would have occurred in November and December 2020 if the separation had not occurred, in each case adjusted to exclude expenses associated with the separation. Given the pending separation of the two businesses into new public entities prior to the end of the 2020 fiscal year, the Former Parent Committee determined that attempting to calculate performance against the pre-set annual targets after the separation would not be reasonable.
The linkage between pay and estimated performance is demonstrated by the following table and related footnotes, which summarize and define the performance measures associated with our NEOs' 2020 annual cash incentive and performance share unit awards and highlight key performance results for 2020:
2020 Performance1
2020 Executive Pay Results
Consolidated Adjusted Revenues2 were $4,212 million, which was 1.3% below target
Short-term incentive awards were earned at a level of 185% of Target
Consolidated Adjusted EBITDA3 was $546.5 million, which was 20% above target
Performance Share Units (PSUs) were earned at a level of 135.6% of Target for the Consolidated Former Parent and 200% of Target for the Aaron's Business
Consolidated Return on Capital ("ROC")4 of 19.3%, which was 660 bps above target
Consolidated Adjusted Pre-Tax Income5 was $460 million, which was 28% above target
All compliance goals6 , established in the first quarter of 2020, for the Company and its Aaron’s Business were on target, as of November 30, 2020, to be fully achieved
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Aaron’s Business Revenue was $1,743 million, which was 7.8% above target


Aaron’s Business Adjusted EBITDA7 was $191.5 million, which was 47.1% above target


Aaron’s Business Adjusted Pre-Tax Income8 was $127 million, which was 108% above target
1 As discussed above, the estimated results shown above are based on actual performance for January 2020 through October 2020 and an estimate of performance achievement that would have occurred in November and December 2020 if the separation had not occurred.
2 Consolidated Adjusted Revenues are based on consolidated revenues of our Former Parent reduced for the amount of provision expense at Vive.
3 Consolidated Adjusted EBITDA is based on consolidated earnings before interest expense, taxes, depreciation, and amortization for our consolidated Former Parent adjusted to exclude certain non-GAAP items related to non-routine items that are not reflective of ordinary earnings activity. Estimated Consolidated Adjusted EBITDA results reflect adjustments to exclude restructuring charges, consulting and early termination charges related to a sales and marketing agreement, goodwill impairment charges, separation costs associated with the separation and distribution that resulted in our spin-off into a separate publicly-traded company, certain legal and regulatory income and to remove the effect of the change in allowance for loan losses for Vive.
4 Consolidated ROC is based on our Former Parent’s net operating profit (which we define as operating profit adjusted for certain non-recurring items that are not reflective of ordinary earnings activity) after tax divided by the sum of average net debt (which we define as debt less cash and cash equivalents) and average total shareholders' equity, with the final result being an average of quarterly calculations. For purposes of this calculation, actual net operating profit was adjusted to normalize amortization expense resulting from franchisee acquisitions, restructuring charges, consulting and early termination charges included related to a sales and marketing agreement, goodwill impairment charges, separation costs associated with the separation and distribution that results in our spin-off into a separate publicly-traded company, legal and regulatory income, Progressive Leasing intangible amortization and the change in allowance for loan losses for Vive.
5 Consolidated Adjusted Pre-Tax Income is earnings before income taxes for our consolidated Former Parent adjusted for non-GAAP items related to non-routine items that are not reflective of ordinary earnings activity. Estimated Consolidated Adjusted Pre-Tax Income results from adjustments to exclude certain adjustments to normalize amortization expense resulting from franchisee acquisitions, restructuring charges, consulting and early termination charges incurred related to a sales and marketing agreement, goodwill impairment charges, separation costs associated with the separation and distribution that resulted in our spin-off into a separate publicly-traded company, legal and regulatory income, Progressive Leasing intangible amortization and the change in allowance for loan losses for Vive.
6 Compliance-related goals established in the first quarter of 2020 for the overall Former Parent focused on (1) enhancing customer communication, (2) enhancing compliance procedures, (3) enhancing disclosures for e-commerce retailers, (4) enhancing information security, and (5) enhancing information security training. Compliance-related goals established in the first quarter of 2020 for the Aaron's Business focused on (1) enhancing compliance visibility, (2) enhancing information security, (3) enhancing monitoring procedures, (4) enhancing driver safety, and (5) enhancing compliance training.
7 Aaron’s Business Adjusted EBITDA is based on GAAP earnings before interest expense, taxes, depreciation, and amortization for the Aaron's Business, adjusted for certain non-GAAP items related to non-routine items that are not reflective of ordinary earnings activity. Estimated Aaron's Business Adjusted EBITDA results reflect adjustments to exclude restructuring charges, consulting and early termination charges related to a sales and marketing agreement, goodwill impairment charges and separation costs associated with the separation and distribution that resulted in our spin-off into a separate publicly-traded company.
8 Aaron’s Business Adjusted Pre-Tax Income is earnings before income taxes for the Aaron's Business adjusted for non-GAAP items related to non-routine items that are not reflective of ordinary earnings activity. Estimated Aaron's Business Adjusted Pre-Tax Income results reflect adjustments to exclude certain adjustments to normalize amortization expense resulting from franchisee acquisitions, restructuring charges, consulting and early termination charges related to a sales and marketing agreement, goodwill impairment charges, and separation costs associated with the separation and distribution that resulted in our spin-off into a separate publicly-traded company.
Objectives of Executive Compensation
The primary objectives and priorities of our Former Parent’s executive compensation program were to:
• attract, motivate, and retain quality executive leadership;
• align the incentive goals of executive officers with the interests of shareholders;
• motivate the individual performance of each executive officer;
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• improve overall company performance; and
• support achievement of our business plans and long-term goals.
To accomplish these objectives, the Former Parent Committee considered a variety of factors when approving compensation programs, including (i) changes in business strategy, (ii) company performance expectations, (iii) external market data, (iv) actual company performance and, with respect to the compensation programs for certain NEOs, the actual performance of business segments, (v) individual executive performance, and (vi) internal compensation equity with the NEOs. A more complete description of the process for establishing our executive compensation programs is described below and throughout this Compensation Discussion and Analysis.
Compensation Process Summary for 2020
Role of the Former Parent Committee. The Former Parent Committee’s role was to oversee (i) executive and outside director compensation, (ii) benefit plans and policies, including equity compensation plans and other forms of compensation, and (iii) other significant human resources matters.
More specifically, the Former Parent Committee reviewed and discussed proposed compensation for our Former Parent’s executive officers (including Messrs. Lindsay, Wall and Sinclair), evaluated their performance, and set their compensation. In addition, the Former Parent Committee approved all equity awards for Former Parent executive officers.
Role of Management. The Former Parent Committee considered the input and recommendations of the Chief Executive Officer of our Former Parent with respect to its pre-separation executive compensation programs and decisions that impacted Messrs. Lindsay and Sinclair and its post-separation executive compensation programs and decisions that impacted all of our NEOs. Mr. Lindsay, in consultation with the Chief Executive Officer of our Former Parent, generally made determinations with respect to pre-separation compensation for Mr. Olsen as an officer of the Aaron’s Business. The Chief Executive Officer of our Former Parent generally made determinations with respect to pre-separation compensation for Mr. Wall. The Chief Financial Officer of our Former Parent also provided input with respect to financial goals and recommendations and overall program design. Although Former Parent management and other invitees at Former Parent Committee meetings had the opportunity to participate in discussions and provide input, all votes and final decision-making on Former Parent executive compensation were solely the responsibility of the Former Parent Committee, and those final deliberations and votes were conducted in executive sessions in which no Former Parent executive officer participated.
Role of Independent Compensation Consultants. The Former Parent Committee had the authority to retain independent consultants and other advisors. During 2020, the Former Parent Committee retained the services of Exequity, LLP ("Exequity") which reported directly to the Former Parent Committee but worked with Former Parent management at the direction of the Former Parent Committee. The Former Parent Committee assessed the independence of the advisors, including the potential for conflicts of interest as required by the SEC and NYSE listing standards, and concluded that Exequity was appropriately independent and free from potential conflicts of interest.
Although the specific services of the independent consultant could vary from year to year, the following are the services generally provided by the independent consultant:
providing information on trends and related legislative, regulatory, and governance developments;
reviewing and recommending any changes to our Former Parent’s peer group used for comparative market analysis for the consideration and approval of the Compensation Committee;
conducting competitive assessments of executive compensation levels and incentive program designs;
consulting on compensation for outside directors;
conducting a review of Former Parent’s compensation programs from a risk assessment perspective;
reviewing compensation tally sheets on our Former Parent’s executive officers;
assisting with review and disclosures regarding the Former Parent’s executive compensation programs; and
reviewing the Former Parent Committee’s annual calendar and related governance matters.
Representatives from Exequity attended all of the Former Parent Committee meetings pertaining to 2020 executive compensation decisions made prior to the separation, and also participated in executive sessions as requested by the Former Parent Committee.
Around the time of the separation, Exequity was engaged by the Chair of the Company's Compensation Committee as the Compensation Committee’s independent compensation consultant. However, the Compensation Committee did not make any decisions with respect to 2020 compensation for our NEOs (as those decisions had already been made by the Former Parent
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Committee), and Exequity did not provide any advice to the Compensation Committee that directly impacted our NEOs’ 2020 compensation. We generally expect that the Compensation Committee will use Exequity’s services in a manner similar to the Former Parent Committee, and we expect to discuss Exequity’s services in further detail in our 2022 proxy statement.
Post-2020 Compensation Decisions by the Compensation Committee. In making future compensation decisions for our executive officers, the Compensation Committee’s guiding philosophy and objectives, and its processes and procedures for evaluating and making decisions with respect to executive compensation, are expected to be substantially similar to those described above for decisions made by the Former Parent Committee prior to the separation. However, as noted above, the Compensation Committee has begun and will continue to review our executive compensation program, policies, and practices and will make adjustments as appropriate over time in order to meet our particular business needs and goals.
Comparative Market Data
Role of Market Data. Our Former Parent used compensation market data as a reference for understanding the competitive positioning of each element of our Former Parent’s compensation program and of total compensation. Market data informed compensation-related decisions as our Former Parent set pay levels for its executive officers, including Messrs. Lindsay and Sinclair, at the beginning of 2020, and again for all of our NEOs as we contemplated the spin-off transaction later in the year.
In referencing these market studies, the Former Parent Committee did not manage total compensation for executive officers within a prescribed competitive position or percentile of the compensation market. Rather, the Former Parent Committee reviewed compensation for each applicable executive relative to market data and considered other internal and external factors when exercising its business judgment as to compensation decisions. Other factors material to the Former Parent Committee’s deliberations included (i) objective measurements of business performance, (ii) the accomplishment of compliance, strategic, and financial objectives, (iii) the development and retention of management talent, (iv) enhancement of shareholder value, and (v) other matters the Former Parent Committee deemed relevant to our Former Parent’s (and, as applicable, the Company’s) short-term and long-term success. Similarly, Mr. Lindsay, in consultation the Chief Executive Officer of our Former Parent, made determinations with respect to pre-separation compensation for Mr. Olsen as an officer of the Aaron’s Business. The Chief Executive Officer of our Former Parent made determinations with respect to pre-separation compensation for Mr. Wall.
Peer Groups. With respect to 2020 compensation decisions, the Former Parent Committee referenced the market study that was conducted by its independent consultant for 2019. The peer group used in that study was proposed by the independent consultant and approved by the Former Parent Committee. That peer group, which is listed below, includes 25 companies representing a blend of retail and consumer finance companies similar to our Former Parent in size in terms of revenues and market capitalization. The peer group served as the principal reference group for our Former Parent’s executives. Peer group data was sourced from the most recently filed proxy statements for each peer company. In addition, the Former Parent Committee and Former Parent management also reviewed general industry survey data as a secondary reference. Survey data was sourced from Aon’s 2019 U.S. TCM Online Executive and Senior Management Survey.
2020 Peer Group – Former Parent
Consumer Financial Companies Retail Companies
Synchrony Financial Wayfair Inc.
Discover Financial Services Tractor Supply Company
Ally Financial Inc. DICK’S Sporting Goods, Inc.
Santander Consumer USA Holdings Inc. Foot Locker, Inc.
OneMain Holdings, Inc. Williams-Sonoma, Inc.
FirstCash, Inc. Big Lots, Inc.
Encore Capital Group, Inc. Burlington Stores, Inc.
SLM Corporation Sally Beauty Holdings, Inc.
Green Dot Corporation Designer Brands Inc.
CURO Group Holdings Corp. Rent-A-Center, Inc.
Enova International, Inc. RH
Credit Acceptance Corporation Sleep Number Corporation
Conn’s, Inc.

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2019 Peer Group - Former Parent
In 2019, at the request of the compensation committee of Aaron's, Inc., Exequity conducted a comprehensive review of potential peers taking into account revenue size, industry, and labor market. The compensation committee of Aaron's, Inc. approved the peer group, which is comprised of the 25 companies listed below. The peer group was used for the 2019 benchmarking and to inform 2020 pay levels. The peer group is comprised of both retail and consumer finance companies that approximate Aaron’s, Inc. in terms of key size metrics. The composition of the group considers the major operating segments of Aaron’s, Inc. as represented by Aaron’s Business which operates in the retail space, and the Progressive Leasing segment which operates in the consumer finance space. In addition to the peer group shown below, general industry pay survey data was also provided and considered to ensure a fulsome evaluation of the competitive pay landscape.
Company Name Primary Industry
Ally Financial Inc. Consumer Finance
Big Lots, Inc. Multiline Retail
Burlington Stores, Inc. Specialty Retail
Conn’s, Inc. Specialty Retail
Credit Acceptance Corporation Consumer Finance
CURO Group Holdings Corp. Consumer Finance
Designer Brands Inc. Specialty Retail
DICK’S Sporting Goods, Inc. Specialty Retail
Discover Financial Services Consumer Finance
Encore Capital Group, Inc. Consumer Finance
Enova International, Inc. Consumer Finance
FirstCash, Inc. Consumer Finance
Foot Locker, Inc. Specialty Retail
Green Dot Corporation Consumer Finance
OneMain Holdings, Inc. Consumer Finance
Rent-A-Center, Inc. Specialty Retail
RH Specialty Retail
Sally Beauty Holdings, Inc. Specialty Retail
Santander Consumer USA Holdings Inc. Consumer Finance
Sleep Number Corporation Specialty Retail
SLM Corporation Consumer Finance
Synchrony Financial Consumer Finance
Tractor Supply Company Specialty Retail
Wayfair Inc. Internet and Direct Marketing Retail
Williams-Sonoma, Inc. Specialty Retail
2020 Company Peer Group
In connection with the spin-off transaction and at the request of the Former Parent Committee, Exequity conducted a comprehensive review of potential peers for the Company taking into account revenue size, industry, and labor market given the anticipated characteristics of the Company. The Former Parent Committee approved the peer group, which is comprised of the 17 companies listed below. The peer group was used to inform pay levels that took effect concurrent with the completion of the spin-off transaction. The peer group is comprised of both retail and consumer finance companies that approximate the Company in terms of key size metrics. In addition to the peer group shown below, general industry pay survey data was also provided and considered to help ensure a fulsome evaluation of the competitive pay landscape.
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Consumer Finance Companies Retail Companies
OneMain Holdings, Inc. Big Lots, Inc.
FirstCash, Inc. The Michaels Companies, Inc.
Encore Capital Group, Inc. Rent-A-Center, Inc.
CURO Group Holdings Corp. RH
EZCORP, Inc. Five Below, Inc.
Enova International, Inc. Sleep Number Corporation
Credit Acceptance Corporation Ollie’s Bargain Outlet Holdings, Inc.
Conn’s, Inc.
Haverty Furniture Companies, Inc.
Ethan Allen Interiors, Inc.
Survey Data. If data from the proxy peer group is not available for all NEO positions, the Compensation Committee may also review broader survey benchmarking data from time to time, as necessary.
    
Base Salary
The Former Parent viewed base salary as fixed compensation intended to reflect the scope of an executive’s role. It reviewed executive officer base salaries annually and adjusted them as necessary to ensure that salary levels remained appropriate and competitive. Salary increases were periodic rather than annual and were made after considering relevant factors, including:
• breadth and scope of an executive’s role, including any significant change in duties;
• competitive market pay levels;
internal comparisons to similar roles;
individual performance throughout the year; and
overall economic climate and company performance.
Base Salary decisions for periods prior to the separation were made by the Former Parent Committee with respect to Former Parent’s executive officers, including Messrs. Lindsay and Sinclair; by Mr. Lindsay, in consultation with the Chief Executive Officer of the Former Parent, for Mr. Olsen; and by the Chief Executive Officer of the Former Parent, for Mr. Wall.
Pre-Separation Base Salary Adjustments. The adjustments shown below were made at the beginning of 2020 for Mr. Lindsay to move his pay closer to the market for his position, and for Mr. Olsen to reflect his additional responsibilities in his role as the Chief Operating Officer, Aaron’s Business, and in July 2020 for Mr. Wall in connection with his appointment as Interim CFO of our Former Parent. Ms. George’s compensation was approved by the Former Parent Committee effective as of her hire date in November 2020. No pre-separation changes were made to the base salary of Mr. Sinclair in 2020.
Named Executive Officer – Former Parent
Prior Base Salary Rate Adjusted Base Salary Rate
Douglas A. Lindsay $ 600,000  $ 650,000 
Steve Olsen $ 450,000  $ 550,000 
C. Kelly Wall $ 320,000  $ 500,000 
Rachel G. George N/A $ 450,000 
Robert P. Sinclair $ 350,000  $ 350,000 
Base Salary Reduction for Our Chief Executive Officer. As noted above, in light of the challenges faced during the COVID-19 pandemic, the Former Parent Committee approved, and Mr. Lindsay agreed to, a 20% reduction to his base salary from April 2020 through June 2020.
Base Salary Adjustments at Separation. The Former Parent Committee further adjusted the base salaries of Messrs. Lindsay and Olsen in connection with the spin-off transaction. The adjustments shown below were made effective at the beginning of December 2020 to reflect the applicable NEOs’ new roles with the Company, which had become a standalone, publicly traded company, as opposed to only a segment of a pre-existing public company.
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Named Executive Officer – Aaron's
December 1, 2020 Base Salary Rate
Douglas A. Lindsay $ 850,000 
Steve Olsen $ 600,000 
C. Kelly Wall $ 500,000 
Rachel G. George $ 450,000 
Robert P. Sinclair $ 350,000 

Annual Cash Incentive Awards
Annual cash incentive awards for 2020 provide the opportunity to earn cash rewards for meeting Former Parent and business segment financial and operational performance goals. Under the 2020 program, our NEOs had the potential to earn cash incentive awards based on performance against pre-determined performance goals, with amounts that vary based on the degree to which the related goals are achieved.
Target Awards. At the beginning of 2020, the Former Parent Committee approved a target award opportunity for each of Messrs. Lindsay and Sinclair. Mr. Lindsay, in consultation with the Chief Executive Officer of our Former Parent, made determinations with respect to Mr. Olsen who was an officer of the Aaron’s Business, but was not an executive officer of the Former Parent. The Chief Executive Officer of our Former Parent made determinations with respect to Mr. Wall's target award opportunity. For 2020, these target award opportunities remained unchanged from 2019 other than for Mr. Olsen and Mr. Wall, each of whose target incentive was increased in recognition of their respective appointments as Chief Operating Officer of Aaron’s Business and Interim CFO of Former Parent.
Named Executive Officer
2020 Target1
Douglas A. Lindsay $ 650,000 
Steve Olsen $ 412,500 
C. Kelly Wall $ 300,000 
Rachel G. George2
N/A
Robert P. Sinclair $ 122,500 
1 Target amounts are calculated based on annual base salary.
2 Hired in November 2020 and therefore not eligible for 2020 Annual Incentive Award.
Performance Measures and Weights. The following were the performance measures and weights in the 2020 annual cash incentive program for each NEO:
Former Parent
Wall and Sinclair
Aaron's Business
Lindsay and Olsen
80% Consolidated Adjusted EBITDA 80% Aaron's Business Adjusted EBITDA
20% Compliance 20% Compliance
In each case, the measures are specific to each entity, and where noted as "consolidated," are referring to Former Parent. The measures are calculated as described under the heading "2020 Performance and Incentive Pay Outcomes."
Performance Goals and Results. The Former Parent Committee established annual goals for each of the performance measures in the annual incentive program, including a Threshold, Target, and Maximum performance goal that corresponded to a Threshold, Target, and Maximum incentive payout level. For Adjusted EBITDA, the payout range was from 25% of target (if Threshold was achieved) to 200% of Target (if Maximum was achieved), with interpolation for performance falling between the Threshold and Target or Target and Maximum levels. For Compliance, the payout range was from 0% to 125% of Target (based on the number of compliance goals achieved).
The level of performance under the 2020 incentive compensation program was determined by the Former Parent Committee in November 2020, immediately prior to the spin-off transaction, based on actual performance from January 2020 through October 2020 and an estimate of performance that would have been achieved in November and December if the separation had not occurred. Given the pending separation of the two businesses into new public entities prior to the end of the fiscal year, the Former Parent Committee determined that attempting to calculate performance against pre-set annual targets after the separation would not be reasonable.
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The following tables summarize the performance goals, performance results, and related incentive payout levels as a percent of target for each NEO. In the event that the applicable Adjusted EBITDA Threshold level was not achieved, any payout earned with respect to the Compliance objectives would be reduced by 50%. Adjustments to the applicable financial metrics are described above under the heading "2020 Performance and Incentive Pay Outcomes."
Former Parent: Wall and Sinclair
($ Million) Weight Plan Performance Range Actual Performance and Payout
Metric Threshold
Target Zone1
Maximum
Estimated Year Ending 12/31/20202
% of Target Payout Calculation
Consolidated Adj. EBITDA 80% $419 $451 - $460 $492 $546 120.0% 200.0%
Potential Payout % 25% 100% 200%
Compliance 20% 3 Projects 4 Projects 5 Projects 5 Projects 125.0% 125.0%
Potential Payout % 50% 100% 125% Final Payout 185.0%
Aaron's Business: Lindsay and Olsen
($ Million) Weight Plan Performance Range Actual Performance and Payout
Metric Threshold
Target Zone1
Maximum
Estimated Year Ending 12/31/20202
% of Target Payout Calculation
Aaron's Business Adj. EBITDA 80% $116 $129 - $132 $143 $191 147.1% 200.0%
Potential Payout % 25% 100% 200%
Compliance 20% 3 Projects 4 Projects 5 Projects 5 Projects 125.0% 125.0%
Potential Payout % 25% 100% 200% Final Payout 185.0%
(1) If actual performance falls anywhere within this range then payout is at 100% of target.
(2) For the period beginning on January 1, 2020 and ending on October 31, 2020, actual Consolidated Adjusted EBITDA was tracking above the Maximum performance level for the full year and actual Aaron’s Business Adjusted EBITDA was tracking above the maximum performance level for the full year.
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Based on the above performance results and incentive calculations, the chart below shows the final annual cash incentive awards paid to our NEOs for estimated 2020 performance as compared to what those payments would have been at the target level:
Named Executive Officer
Target Annual Incentive1
Award Earned under Annual Incentive Plan
Douglas A. Lindsay $640,385 $1,184,800
Steve Olsen $401,769 $743,400
C. Kelly Wall $206,646 $382,300
Rachel G. George2
N/A N/A
Robert P. Sinclair $122,500 $226,600
(1) Calculated on annual base salary paid for 2020.
(2) Hired in November 2020 and therefore not eligible for 2020 Annual Incentive Award.
Changes to Award Opportunities for 2021. The Former Parent Committee approved changes to target annual cash incentive award opportunities for our NEOs in connection with the spin-off transaction and the NEOs’ assumption of executive officer positions with our newly-publicly traded Company. The levels shown below were adjusted and effective at the beginning of December 2020 for the 2021 fiscal year and had no impact on the NEOs’ 2020 annual incentive awards:
Named Executive Officer Fiscal Year 2021 Target
($)
Douglas A. Lindsay $1,000,000
Steve Olsen $600,000
C. Kelly Wall $325,000
Rachel G. George $310,000
Robert P. Sinclair1
N/A
(1) Mr. Sinclair retired in March 2021.
Bonus Compensation
In connection with her appointment as our General Counsel, Corporate Secretary and Chief Corporate Affairs Officer in November 2020, as part of our recruiting effort and in recognition of incentive compensation Ms. George would forfeit when leaving her former employer, we agreed to provide Ms. George with a signing bonus equal to $200,000 (subject to being repaid should Ms. George not remain employed for 24 months) and, within thirty days after completion of one year of employment, a $200,000 retention bonus. The signing bonus was paid in 2020 and is reported in the 2020 Summary Compensation Table below.
In light of the varied challenges in executing the spin-off transaction coupled with the COVID-19 pandemic, the Former Compensation Committee believed it was beneficial to the Company and its shareholders to provide a special incentive award program for select executives key to the success of the spin-off transaction and to recognize the work required to accomplish this challenging goal in under a year. Under the program, in connection with his extraordinary efforts in preparing for and helping to execute the separation, Mr. Wall was paid a cash bonus of $250,000 in November 2020.
The Former Compensation Committee also approved a cash bonus pool of up to $4.4 million to be administered by the Chief Executive of the Former Parent and awarded to select executives whose performance in executing the spin-off transaction and smoothing transitioning of the two companies was deserving of special merit. As part of that program, and in recognition of Mr. Sinclair's key role with the Former Parent and his efforts in assisting the Company in completing the separation, in August 2020 the Former Parent granted to Mr. Sinclair the opportunity to receive a special cash payment equal to $337,500 as a completion bonus for the separation, generally subject to completion of the separation and Mr. Sinclair’s continuous employment with Former Parent or its successors through his retirement on March 15, 2021. Mr. Sinclair earned this bonus in 2021 prior to his retirement.
Long-Term Equity Incentive Awards
2020 long-term equity incentive awards are intended to:
reward the achievement of business objectives that the Former Parent Committee believed would benefit shareholders;
align the interests of senior management with those of shareholders; and
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assist with retaining senior management to ensure continuity of leadership.
Beyond these objectives, the Former Parent Committee also considered market design practices, equity dilution, accounting expense, and other internal considerations when deciding on the structure and size of 2020 equity awards.
Award Type and Mix. Each year the Former Parent Committee granted equity awards to executive officers of our Former Parent; however, the award type and mix could change from time to time. In order to balance performance and retention incentives, the 2020 regular annual equity awards were made in the form of PSUs, stock options, and time-based restricted stock awards ("RSAs"), consistent with 2019.
The graphic below depicts the 2020 equity award mix:
LTIPIECHART.JPG

Equity Award Objective Provisions
Performance Share Units
Focus participants on the fundamentals of growing the business and increasing the level of earnings over the long term.
One-year performance period helps ensure greater validity in our forecasts.
Number of PSUs earned based on one-year company performance.
Earned awards are subject to additional time-based vesting, with vesting generally occurring in three equal increments following the first, second, and third anniversaries of the grant.
Stock Options
Aligns executives with shareholders, with the value of an award realized only if the stock price appreciates following the date of grant.

Pro rata annual three-year vesting, with vesting generally occurring in three equal increments following the first, second, and third anniversaries of the grant.

Restricted Stock
Addresses competitive concerns with a focus on retaining key executives needed to realize long-term performance objectives.
Pro rata annual three-year vesting, with vesting generally occurring in three equal increments following the first, second, and third anniversaries of the grant.
Target Awards. Target awards for 2020 for our NEOs are shown below. The target levels for regular annual awards were generally unchanged from 2019 levels, except that Mr. Olsen’s target percentage was increased in connection with his promotion.

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Named Executive Officer 2020 LTIP Target
Douglas A. Lindsay $ 1,475,000 
Steve Olsen $ 550,000 
C. Kelly Wall $ 192,000 
Rachel G. George1
N/A
Robert P. Sinclair $ 175,000 
(1) Hired in November 2020 and therefore not eligible for 2020 a LTI award.
These award targets were set by the Former Parent Committee for Messrs. Lindsay and Sinclair after reviewing the general award levels across our Former Parent’s peer group and considering the responsibilities of each such NEO. Mr. Lindsay, in consultation with the Chief Executive Officer of our Former Parent, made determinations with respect to Mr. Olsen as an officer of the Aaron’s Business, when Mr. Olsen was not an executive officer of the Former Parent. The Chief Executive Officer of our Former Parent made determinations with respect to Mr. Wall's target award opportunity.
The dollar value of the target award levels for regular annual awards presented in the table above differ from the aggregate grant date fair values for our NEOs’ LTI awards as reported in the 2020 Summary Compensation Table and the Grants of Plan-Based Awards in Fiscal Year 2020 table because the Former Parent determined the number of shares subject to each award based on its view of the appropriate value to assign to each award rather than the accounting expense that would be recognized by our Former Parent.
The LTI target awards that were granted to our NEOs pursuant to the 2020 program structure are set forth in the table below:

2020 Equity Awards
LTI Target Value
Named Executive Officer Stock Options 25% + Restricted Stock 25% + PSUs
50%
= 2020 LTI Value Target
Douglas A. Lindsay $368,750 $368,750 $737,500 $1,475,000
Steve Olsen $137,500 $137,500 $275,000 $550,000
C. Kelly Wall $48,000 $48,000 $96,000 $192,000
Rachel G. George1
N/A N/A N/A N/A
Robert P. Sinclair $43,750 $43,750 $87,500 $175,000
Shares Awarded (reflects shares of Former Parent at target)
Named Executive Officer Stock Options 25% + Restricted Stock 25% + PSUs
50%
= 2020 LTI Shares at Target
Douglas A. Lindsay 24,420 8,640 17,280 50,340
Steve Olsen 9,180 3,240 6,450 18,870
C. Kelly Wall 3,210 1,140 2,250 6,600
Rachel G. George1
N/A N/A N/A N/A
Robert P. Sinclair 2,910 1,050 2,070 6,030
(1) Hired in November 2020 and therefore not eligible for 2020 a LTI award.

Performance Share Units Performance Measures and Weights. The metrics and weights for the PSUs granted in 2020 were as follows:
Former Parent
Wall and Sinclair
Aaron's Business
Lindsay and Olsen
60% Consolidated Adjusted Revenues 70% Aaron's Business Revenues
20% Consolidated Adjusted Pre-Tax Income 30% Aaron's Business Adjusted Pre-Tax Income
20% Consolidated Adjusted ROC
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The Former Parent Committee selected these measures to focus participants on growing the business and on sustaining and improving the quality of our Former Parent’s earnings, as well as to ensure no overlap in the incentive metrics utilized in the annual and long-term plan
In each case, the measures are specific to each entity, and where noted as "consolidated," is referring to Former Parent. The measures are calculated as described under the heading "2020 Performance and Incentive Pay Outcomes."
Performance Goals and Results. The Former Parent Committee established goals for each of the performance measures in the PSU program, including a Threshold, Target, and Maximum performance goal that corresponded to a Threshold, Target, and Maximum number of shares that could be earned. The number of shares that could be earned ranged from 25% to 200% of Target. Payouts for results between these levels are interpolated, with scales that vary by business segment. If the results are less than threshold, then no shares would be earned.
The level of performance for 2020 for the PSU awards was determined by the Former Parent Committee in November 2020, immediately prior to the spin-off transaction, based on actual performance from January 2020 through October 2020 and an estimate of performance that would have been achieved in November and December if the separation had not occurred. Given the pending separation of the two businesses into new public entities prior to the end of the fiscal year, the Former Parent Committee determined that attempting to calculate performance against pre-set annual targets after the separation would not be reasonable.
The following tables summarize the performance goals, performance results (adjusted as described above under the heading "2020 Performance and Incentive Pay Outcomes"), and related earning levels as a percent of target for each NEO:
Former Parent: Wall and Sinclair
($ Million) Weight Plan Performance Range Actual Performance and Payout
Metric Threshold
Target Zone1
Maximum
Estimated Year Ending 12/31/20202
% of Target Payout Calculation
Consolidated Adjusted Revenue 60% $4,054 $4,246 - $4,289 $4,481 $4,212 98.7% 92.6%
Consolidated Adj. Pre-Tax Income 20% $331 $356 - $363 $388 $460 128.0% 200.0%
Consolidated ROC 20% 10.8% 12.6  % - 12.9% 14.6% 19.3% 151.5% 200.0%
Payout 25% 100% 200% 135.6%
Aaron's Business: Lindsay and Olsen
($ Million) Weight Plan Performance Range Actual Performance and Payout
Metric Threshold
Target Zone1
Maximum
Estimated Year Ending 12/31/20202
% of Target Payout Calculation
Aaron's Business Revenue 70% $1,496 $1,593 - $1,641 $1,738 $1,743 107.8% 200.0%
Aaron's Business Adj. Pre-Tax Income 30% $54 $60 - $61 $67 $127 208.0% 200.0%
Payout 25% 100% 200% 200.0%
(1) If actual performance falls anywhere within this range then payout is at 100% of target.
(2) For the period beginning on January 1, 2020 and ending on October 31, 2020, actual Consolidated Adjusted Revenue, Consolidated Adjusted Pre-Tax Income, and the Consolidated ROC were all tracking at well above target performance levels for the full year. Actual Aaron’s Business Revenue and actual Aaron's Business Adjusted Pre-Tax Income were tracking above the maximum performance level for the full year during that period.
The PSUs earned by the NEOs based on 2020 performance will generally vest in three annual increments on March 7, 2021, 2022, and 2023.
Special Grant to Mr. Wall. In July 2020, the Former Parent granted Mr. Wall an additional award of restricted stock valued at $128,000 in connection with his promotion to the Interim Chief Financial Officer position with our Former Parent. The restricted stock award vests over a three-year period in equal annual installments beginning on March 7, 2021.
Changes for 2021
The Former Parent Committee approved changes to target awards for our NEOs in conjunction with the spin-off transaction. The levels shown below were adjusted to be effective for the 2021 fiscal year and had no impact on the NEOs’ 2020 LTI awards.
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Target awards for 2021 are shown below. We expect to disclose further information regarding these awards in our 2022 Proxy Statement.
Named Executive Officer Fiscal Year 2021 LTIP Target
Douglas A. Lindsay $3,550,000
Steve Olsen $800,000
C. Kelly Wall $500,000
Rachel G. George $475,000
Robert P. Sinclair1
N/A
(1) Mr. Sinclair retired in March 2021.
Treatment of Outstanding Former Parent Equity Compensation in the Separation
In general, pursuant to the Employee Matters Agreement entered into in connection with the separation, outstanding Former Parent equity awards held by the NEOs as of the separation were treated as described below.
Vested and Unvested Stock Options. Except as described below, each outstanding vested and/or unvested stock option held by an NEO as of the separation was converted entirely into a stock option with respect to our common stock. In each case, the awards were converted or adjusted, as applicable, in a manner intended to preserve the aggregate value of the original corresponding Former Parent stock option. Each such converted or adjusted stock option is generally subject to the same terms and conditions that applied to the original corresponding Former Parent stock option, including vesting requirements. However, Mr. Sinclair’s outstanding Former Parent stock options were not converted into Former Company stock options.1
Unvested Restricted Stock Awards and Performance Share Unit Awards Granted On or After January 1, 2020. Each outstanding unvested Former Parent restricted stock award and/or performance share unit award granted on or after January 1, 2020 held by an NEO was converted entirely into the same type of award (i.e., restricted stock award or performance share unit award) with respect to our common stock. In each case, the award was converted or adjusted, as applicable, in a manner intended to preserve the aggregate value of the original corresponding Former Parent restricted stock award or performance share unit award. Each converted or adjusted restricted stock award and performance share unit award is generally subject to the same terms and conditions that applied to the original corresponding award, including vesting requirements.
Unvested Restricted Stock Awards and Performance Share Unit Awards Granted On or After January 1, 2018 but Prior to January 1, 2020. Unless otherwise elected by the NEO, each outstanding unvested Former Parent restricted stock award and/or performance share unit award granted on or after January 1, 2018 but before January 1, 2020 ("Pre-2020 Award") held by an NEO was generally replaced with an award of the same type (i.e., restricted stock award or performance share unit) that relates to our common stock. In each case, the replacement or adjustment, as applicable, was completed in a manner intended to preserve the aggregate value of the original corresponding Pre-2020 Award, and the converted or adjusted awards are generally subject to the same terms and conditions that applied to the original corresponding awards.
NEOs, like other holders of Former Parent equity awards, had the opportunity to elect to retain their Pre-2020 Awards instead of having those awards converted to Company equity awards in their entirety. In the event of such an election, the participant would receive a Company equity award of the same type covering a number of Company shares equal to the number of shares of Company stock that would have been distributed in the separation with respect to the number of shares of Former Parent Company common stock subject to the participant’s applicable Pre-2020 Award. Of our NEOs, all elected to receive this treatment, and as a result, retained both Company and Former Parent equity awards in connection with the separation.
(1) Mr. Sinclair's Former Parent stock options were retained by Mr. Sinclair and adjusted in connection with the separation in a manner intended to preserve their aggregate value, as negotiated with the Former Parent prior to the separation based on his pending retirement.
Executive Compensation Policies
Stock Ownership Guidelines. The Compensation Committee, at its first meeting in early 2021, adopted stock ownership guidelines, requiring compliance within five years, to further align the interests of our senior executives with our shareholders. The table below summarizes the guidelines that apply to our executives. All of the continuing NEOs are currently in
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compliance with these guidelines.
Feature Provision
Required levels
5x base salary: Chief Executive Officer
2x base salary: Chief Financial Officer, President, and EVP, General Counsel & Chief Corporate Affairs Officer
Shares counted toward guidelines
Stock owned outright
Shares held in retirement accounts
Unvested time-based RSUs and RSAs
Earned but unvested PSUs
"In the money" value of vested but unexercised stock options
Clawback Policy. The Company has adopted a policy that provides that annual incentive and equity awards to our executive officers may be recouped if we restate our consolidated financial statements. Under this policy, covered employees including our NEOs may be required to repay to the Company the difference between the amount of incentives and awards received and the amount that would have been payable under the restated financial statements.
Securities Trading Policy. As part of our Insider Trading Policy, all of our officers and directors are prohibited from trading any interest or position relating to the future price of our securities. These prohibited transactions include trading in puts, calls, short sales, or hedging transactions, but do not generally prohibit other purchases and sales of our common stock made in compliance with the limitations contained in our Insider Trading Policy. Pledging of Company securities is prohibited under our Insider Trading Policy.
Tally Sheets. The Former Parent Committee reviewed tally sheets for select executives. These tally sheets provide a comprehensive view of target, actual, and contingent executive compensation payouts under a variety of termination and performance scenarios. The tally sheets allowed the Former Parent Committee to understand the cumulative effect of prior pay decisions and stock performance, as well as the retentive ability of existing LTIs, severance, and change-in-control arrangements. The tally sheets were intended to facilitate the Former Parent Committee’s understanding of the nature and amounts of total compensation under our executive compensation program and to assist the Former Parent Committee in its overall evaluation of the compensation program.
Executive Benefits and Perquisites
Our Former Parent’s executive compensation program (prior to the separation) and our executive compensation program (following the separation) also provides or provided certain benefits and perquisites to our NEOs. The value of these benefits and perquisites generally represents a small portion of an NEO’s overall total compensation opportunity and does not materially influence the Committees’ decisions with respect to the salary and incentive elements of the compensation of our NEOs. The Compensation Committee expects to periodically review the perquisites and other personal benefits that we provide to senior management to ensure they remain in the best interests of the Company and its shareholders.
Healthcare Benefits. Our NEOs receive a full range of standard benefits, including the medical, dental, vision, life and voluntary disability coverage available to our employees generally.
Retirement Plans. Our NEOs participate on the same basis as other employees in our 401(k) retirement plan, which we refer to as the 401(k) Plan, for all full-time employees. Employees with at least one year of service who meet certain eligibility requirements are eligible for a Company match.
Our 401(k) Plan uses a safe harbor formula that allows employees to contribute up to 75% of their annual compensation with 100% matching by the Company on the first 3% of compensation and an additional 50% match on the next 2% of compensation. All matching by the Company is immediately vested under the Company’s 401(k) Plan and any prior contributions will continue to vest under the preceding vesting schedule that applied under the Former Parent’s 401(k) retirement plan.
Under the Company’s Deferred Compensation Plan (as defined below), a select group of management or highly compensated employees are eligible to elect to defer up to 75% of their base salary and up to 75% of their annual bonus on a pre-tax basis. Should they so elect, the Company will make discretionary matching contributions under the same formula that applies for our 401(k) Plan, with the benefit not exceeding the 401(k) Plan statutory limit.
Perquisites. Our NEOs may use company aircraft from time to time for non-business use. Incremental operating costs associated with such personal use is paid by the Company (or, prior to the separation, by our Former Parent). The amount of income attributed to each NEO for income tax purposes from personal aircraft use is determined by the Standard Industry Fare
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Level method, and the executives are responsible for paying the tax on this income. The aggregate incremental cost of such use by each NEO, if any, is included under the "All Other Compensation" column of "Executive Compensation - 2020 Summary Compensation Table."
In connection with her appointment as our General Counsel, Corporate Secretary and Chief Corporate Affairs Officer in November 2020, we agreed to reimburse Ms. George for up to $150,000 in relocation expenses in connection with her relocation to the Atlanta, Georgia area. We also agreed to provide her a tax gross-up reimbursement payment for the tax impact of the relocation reimbursements. Tax gross-up of reimbursement payment for relocation expenses is our standard practice and available to other employees who relocate. These reimbursement payments related to expenses associated with Ms. George's relocation were not incurred until 2021, and will be subject to clawback in the event Ms. George ceases employment with us within 18 months of her date of hire.
Employment Agreements and Other Post-Termination Protections
To attract and retain talented executives, we recognize the need to provide protection to our executives in the event of certain termination situations. The highly competitive nature of the relevant market for key leadership positions means we may be at a competitive disadvantage in trying to retain our current leaders, or hire executives from outside the Company, if we are not able to offer them the type of protections typically found in the market.
Accordingly, we are party to a severance and change in control agreement with Mr. Lindsay that details the benefits he would receive in the event his employment is terminated under various scenarios. In anticipation of the spin-off transaction, the Former Parent entered into a severance and change in control agreement with Mr. Wall (to which we are currently a party) when he was named Interim Chief Financial Officer of the Former Parent that detailed the benefits he would receive in the event his employment was terminated under various scenarios. Our other NEOs are covered by our severance plan, which is intended to provide certain benefits in the event employment is terminated other than for cause, disability or death. The severance and change-in-control agreements and the severance plan aid us in retaining key leaders who are critical to the ongoing stability of our business, foster objectivity across the participants should they be asked to evaluate proposals that may result in the loss of their employment, and provide important protections to us in terms of confidential information and competitive matters that could arise after their employment is terminated. We have not entered into any employment agreements with our NEOs.
The specific details of the severance and change in control agreements and our severance plan are described later in this Proxy Statement, in the section titled "Executive Compensation - Potential Payments Upon Termination or Change in Control."
Tax Effects of Compensation
Under Section 162(m) of the Internal Revenue Code, compensation paid to certain executive officers (and, beginning in 2018, certain former executive officers) in excess of $1 million is not tax deductible. The Compensation Committee believes that the tax deduction limitation should not be permitted to compromise the Company’s ability to design and maintain executive compensation arrangements that will attract and retain the executive talent to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes.
Risk Assessment in Compensation Programs
We believe our compensation programs encourage and reward prudent business judgment without encouraging undue risk. The Compensation Committee reviews our compensation programs for features that might encourage inappropriate risk-taking. We believe our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us.
Consideration of Shareholder Advisory Vote. This Compensation Discussion and Analysis will be subject to an advisory say-on-pay vote at the Annual Meeting, and we will also conduct an advisory say-on-frequency vote at the Annual Meeting. Our Board and the Compensation Committee value the benefits of maintaining a dialogue with our shareholders and understanding their views. Although the say-on-pay vote is non-binding, the Compensation Committee intends to consider the outcomes of future say-on-pay votes when making future compensation decisions for our NEOs and will consider adjustments to support our strategies and to remain market competitive.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee operates pursuant to a written charter adopted by the Board of Directors and available through the Company's website, https://investor.aarons.com under "Corporate Governance"—"Highlights". The Compensation Committee is comprised of three independent members of the Board as defined under the listing standards of the NYSE and under the Compensation Committee's charter. The Compensation Committee is responsible for assisting the Board of Directors in fulfilling its oversight responsibilities with respect to executive and director compensation.
In keeping with its responsibilities, the Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis section included in this Proxy Statement. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis section be included in this Proxy Statement.
This report is respectfully submitted by the Compensation Committee of the Board of Directors.

Walter G. Ehmer (Chair)
Kelly H. Barrett
Hubert L. Harris, Jr.

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EXECUTIVE COMPENSATION
2020 Summary Compensation Table 
The following Summary Compensation Table summarizes the total compensation earned by, or awarded to, our named executive officers in 2020. Amounts for 2020 reflect compensation paid to our NEOs by Former Parent prior to the separation and distribution and by us after the separation and distribution.
Name and Principal Position Year
Salary
($)(1)
Bonus(8),(9)
($)
Stock
Awards
(2)($)
Option
Awards
(3)($)
Non-Equity
Incentive Plan
Compensation
(4)($)
All Other
Compensation
(5)($)
  Total
($)
Douglas A. Lindsay 2020 624,425 1,506,953 1,430,671 1,184,800 25,199 (6),(7) 4,772,048
Chief Executive Officer 2019 600,000 1,014,250 340,866 542,800 12,010 2,509,926
2018 584,615 1,015,145 375,127 610,100 25,418 2,610,405
Steve Olsen 2020 547,115 625,947 306,312 743,400 22,800 (6),(7) 2,245,574
President 2019 450,000 204,800 68,173 183,200 30,563 936,736
C. Kelly Wall 2020 393,395 250,000 364,684 156,209 382,300 22,800 (6),(7) 1,569,388
Chief Financial Officer 2019 300,000 136,534 45,841 130,700 22,850 635,925
Rachel G. George 2020 45,673 200,000 245,673
General Counsel, Corporate Secretary and Chief Corporate Affairs Officer
Robert Sinclair 2020 350,000 166,276 35,124 226,600 25,920 (6),(10) 803,920
Controller and Chief Accounting Officer
(1)Amounts reported reflect the NEO’s annual salary earned during the fiscal year paid by our Former Parent prior to the spin-off transaction and by the Company after the spin-off transaction.
(2)Amounts in this column include the aggregate grant date fair value of awards of RSAs and PSUs as calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") Topic 718. These awards were granted by our Former Parent with respect to the Former Parent's common stock prior to the separation and converted into Company awards in connection with the separation and distribution as described in the "Treatment of Outstanding Former Parent Equity Compensation in the Separation" section of the Compensation Discussion and Analysis above. See Note 12 to the Company’s consolidated and combined financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, for a discussion of the assumptions used in calculating these amounts. For the time-based RSAs, the grant date fair value is calculated using the closing stock price of our Former Parent's common stock on the date of grant. For the PSUs, the grant date fair value is also based on the closing stock price of our Former Parent's common stock on the date of grant, multiplied by a number of shares that is based on the targeted attainment level, which represents the probable outcome of the performance condition on the date of grant. The amounts do not reflect the value actually realized or that may ultimately be realized by our named executive officers. Assuming the highest performance conditions for the PSU awards granted in 2020 are achieved, the grant date fair value of the 2020 PSU awards would be: for Mr. Lindsay, $1,201,651; for Mr. Wall, $192,150; for Mr. Olsen, $550,830; and for Mr. Sinclair, $143,948. Amounts in this column also include the aggregate incremental fair value associated with the modifications to the NEOs' outstanding Former Parent stock awards in connection with the separation and distribution, computed as of the modification date (November 30, 2020) in accordance with FASB ASC Topic 718.
(3)Amounts in this column include the grant date fair value of awards of stock options as calculated in accordance with Financial Accounting Standards Board Codification Topic 718. These stock options were granted by our Former Parent with respect to the Former Parent’s common stock prior to the separation and (other than with respect to Mr. Sinclair) generally converted into Company awards in connection with the separation and distribution as described in the "Treatment of Outstanding Former Parent Equity Compensation in the Separation" section of the Compensation Discussion and Analysis above. The Company determines the fair value of stock options on the grant date using a Black-Scholes-Merton option pricing model that incorporates expected volatility, expected option life, risk-free interest rates, and expected dividend yields. See Note 12 to the Company’s consolidated and combined financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, for a discussion of the assumptions used in calculating these amounts. Amounts in this column also include the aggregate incremental fair value associated with the modifications to the NEOs' outstanding Former Parent option awards in connection with the separation and distribution, computed as of the modification date (November 30, 2020) in accordance with FASB ASC Topic 718.
(4)Reflects the value of the annual cash incentive award earned under the annual cash incentive award program.
(5)We provide a limited number of perquisites to our named executive officers and value those perquisites based on their aggregate incremental cost to our Former Parent or the Company, as applicable. We calculated the incremental cost of company aircraft use based on the average variable operating costs to our Former Parent or the Company, as applicable. Variable operating costs include fuel costs, maintenance fees, positioning costs, catering costs, landing/ramp fees, and the amount, if any, of disallowed tax deductions associated with the personal use of company aircraft. The total annual variable operating costs are divided by the annual number of flight hours flown by the aircraft to derive an average variable cost per flight hour. This average variable cost per flight hour is then multiplied by the flight hours flown for personal use to derive the incremental cost. This method excludes fixed costs that do not change based on usage, such as pilots’ and other employees’ salaries and benefits and hangar expenses. Aggregate incremental cost, if any, of travel by the executive’s family or other guests when accompanying the executive is also included.
(6)Amounts in this column include matching contributions in the amount of $11,400 made to Mr. Lindsay’s, Mr. Wall’s, Mr. Olsen’s or Mr. Sinclair's account, as applicable, in the Company’s 401(k) plan.
(7)Amounts in this column also include matching contributions in the amount of $11,400 made to Mr. Lindsay's, Mr. Wall's or Mr. Olsen's account, as applicable, as part of our Former Parent's nonqualified deferred compensation plan. These amounts are also included in the 2020 Nonqualified Deferred Compensation table below.
(8)For Mr. Wall, reflects a $250,000 discretionary cash bonus paid to him during 2020 as described in the "Bonus Compensation" section of the Compensation Discussion and Analysis above.
(9)For Ms. George, reflects a $200,000 sign-on bonus paid to her during 2020 as described in the "Bonus Compensation" section of the Compensation Discussion and Analysis above. Note that Ms. George was not eligible for non-equity or equity incentive compensation during 2020.
(10)Includes a watch with a cost to the Company of $13,000 awarded to Mr. Sinclair for thirty years of service.

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Grants of Plan-Based Awards in Fiscal Year 2020
The following table sets forth information regarding non-equity incentive plan awards, stock options awards, restricted stock and performance share units initially granted by our Former Parent to our named executive officers during 2020 prior to the separation, which (other than with respect to Mr. Sinclair's stock option award) were subsequently converted into Company awards in connection with the separation and distribution as described in the "Treatment of Outstanding Former Parent Equity Compensation in the Separation" section of the Compensation Discussion and Analysis above. The following table also sets forth information regarding the incremental accounting value associated with the modification of the NEOs' outstanding Former Parent equity awards in connection with the separation and distribution. The Company did not grant any other awards to the NEOs in 2020. All equity award amounts presented below reflect the number of shares of Former Parent common stock underlying the awards at grant, and option exercise prices reflect the original exercise prices associated with Former Parent stock options.
Name Grant
Date
Estimated Possible 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
Under-
lying
Options(4)
Exercise
or Base
Price of
Option
Awards
($/Sh)
Grant
Date
Fair
Value of
Stock
and
Option
Awards(5)
($)
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Douglas A. Lindsay 160,000  640,000  1,185,000 
3/6/2020 4,320  17,280  34,560  600,826 
3/6/2020 8,640  300,413 
3/6/2020 24,420  34.77  294,749 
11/30/2020(6)
605,714 
11/30/2020(7)
1,135,922 
Steve Olsen 100,000  402,000  743,000 
2/25/2020 1,613  6,450  12,900  275,415 
2/25/2020 3,240  138,348 
2/25/2020 9,180  42.70  138,802 
11/30/2020(6)
212,184 
11/30/2020(7)
167,510 
C. Kelly Wall 52,000  207,000  382,000 
2/25/2020 563  2,250  4,500  96,075 
2/25/2020 1,140  48,678 
2/25/2020 3,210  42.70  48,535 
7/31/2020 2,454  128,050 
11/30/2020(6)
91,881 
11/30/2020(7)
107,674 
Rachel G. George(8)
—  —  —  —  —  —  —  —  —  — 
Robert Sinclair 31,000  123,000  227,000 
3/6/2020 518  2,070  4,140  71,974 
3/6/2020 1,050  36,509 
3/6/2020 2,910 
(9)
34.77  35,124 
11/30/2020(6)
57,793 
(1)For the NEOs, represents the amounts that could be earned under the annual cash incentive award program based on performance against pre-determined goals for Adjusted EBITDA and compliance, measured on a Company-wide basis or for Aaron's Business, based on each executive’s organizational level. The amounts actually earned are included in the "Non-Equity Incentive Plan Compensation" column of the 2020 Summary Compensation Table.
(2)Represents the PSUs granted to our NEOs in 2020 by Former Parent prior to the separation and distribution which were subsequently converted into PSUs with respect to the Company's common stock as part of the separation and distribution. For all named executive officers who received awards, the threshold number of shares represents 25% of target, and the maximum number of shares represents 200% of target. Any awards earned vest in three approximately equal increments over a three-year period on March 7, 2021, 2022 and 2023. Based on financial performance for the year as determined by the Former Parent Committee immediately prior to the separation, PSUs were earned under the 2020 program at 135.6% of target for Messrs. Wall and Sinclair and, at 200% of target for Messrs. Lindsay and Olsen. As a result of such determination, the named executive officers received in substitution for their 2020 Former Parent PSU awards the following earned PSUs with respect to the Company’s common stock (subject to three-year service-based vesting as described above) in connection with the separation: for Mr. Lindsay, 119,538 earned PSUs; for Mr. Olsen, 44,618 earned PSUs; for Mr. Wall, 10,551 earned PSUs; and for Mr. Sinclair, 9,707 earned PSUs.
(3)Represents the time-based RSAs granted to our NEOs in 2020 by Former Parent prior to the separation and distribution, which were subsequently converted into restricted stock of the Company as part of the separation and distribution, that are expected to vest in three approximately equal increments over a three-year period on each of March 7, 2021, 2022 and 2023. As a result of such conversion, the named executive officers received Company restricted stock in substitution for their 2020 Former Parent restricted stock awards in the following amounts: for Mr. Lindsay, 29,884 shares of restricted stock; for Mr. Olsen, 11,206 shares of restricted stock; for Mr. Wall, 12,431 shares of restricted stock; and for Mr. Sinclair, 3,631 shares of restricted stock.
(4)Represents stock options granted to our NEOs in 2020 by Former Parent prior to the separation and distribution, of which all (except as described in footnote 7 for Mr. Sinclair) were subsequently converted into stock options of the Company as part of the separation and distribution, that are expected to vest in three approximately equal increments over a three-year period on each of March 7, 2021, 2022 and 2023. As a result of such conversion, the named executive officers received stock options with respect to the Company’s
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common stock in substitution for their 2020 Former Parent stock option awards in the following amounts: for Mr. Lindsay, 84,466 stock options with an exercise price of $10.06; for Mr. Olsen, 31,752 stock options with an exercise price of $12.35; and for Mr. Wall, 11,103 stock options with an exercise price of $12.35.
(5)Represents the aggregate grant date fair value of awards calculated in accordance with FASB ASC Topic 718. See Note 12 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of the assumptions used in calculating these amounts.
(6)Amounts represent the incremental fair value related to the modifications of the NEOs' outstanding Former Parent stock awards in connection with the separation and distribution, as further described in the "Treatment of Outstanding Former Parent Equity Compensation in the Separation" section of the Compensation Discussion and Analysis above and in the narrative following the Outstanding Equity Awards at 2020 Fiscal Year-End table below.
(7)Amounts represent the incremental fair value related to the modifications of the NEOs' outstanding Former Parent option awards in connection with the separation and distribution, as further described in the "Treatment of Outstanding Former Parent Equity Compensation in the Separation" section of the Compensation Discussion and Analysis above and in the narrative following the Outstanding Equity Awards at 2020 Fiscal Year-End table below.
(8)Ms. George was not eligible for non-equity or equity incentive compensation during 2020.
(9)Mr. Sinclair retained the stock options granted to him in 2020 by Former Parent prior to the separation and distribution and did not receive a Company stock option in substitution for such stock options.
The Aaron’s Company, Inc. 2020 Equity and Incentive Plan
General. The purpose of The Aaron’s Company, Inc. 2020 Equity and Incentive Plan, or "the 2020 Plan," which was approved by the Company’s Board of Directors and Aaron’s Holdings Company, Inc. (at the time, the Company's sole shareholder), on November 11, 2020, is to promote the long-term growth and profitability of the Company and its subsidiaries by (i) providing certain employees, directors, consultants, advisors and other persons who perform services for the Company and its subsidiaries with incentives to maximize shareholder value and otherwise contribute to the success of the Company, and (ii) enabling the Company to attract, retain and reward outstanding individuals to serve as directors, officers and employees.
Administration of the 2020 Equity and Incentive Plan. The Board of Directors may appoint the Compensation Committee or such other committee consisting of two or more members (in each case, the "Committee") to administer the 2020 Plan, and the Board of Directors has currently designated the Compensation Committee to serve this function. The Committee has the right, subject to the terms of the 2020 Plan, to select the persons who receive awards under the 2020 Plan, to set the terms and conditions of such awards (including the term, exercise price, vesting conditions, and the consequences of termination of employment), and to interpret and administer the 2020 Plan. Subject to the express provisions of the 2020 Plan, the Committee is authorized and empowered to do all things that the Committee in its discretion determines to be necessary or appropriate in connection with the administration and operation of the 2020 Plan.
Types of Awards. The 2020 Plan permits grants of non-qualified stock options ("NQSOs"), incentive stock options ("ISOs"), stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs"), performance share units, performance units, annual incentive awards and other stock-based awards to eligible participants. ISOs may only be granted to employees of the Company or its subsidiaries.
Shares Available for Issuance. The aggregate number of shares available for issuance pursuant to awards granted under the 2020 Plan is 3,300,000 shares (the "Share Pool"), subject to adjustment as described in the 2020 Plan. As of June 21, 2021, there are no available shares remaining for awards under the 2020 Plan. As of such date, most of the shares subject to awards under the 2020 Plan were pursuant to awards under the 2020 Plan made as adjustments to, in substitution for, or in accordance with awards that had been granted to certain employee and directors of the Company, Former Parent or their subsidiaries prior to the separation. The shares issued by the Company under the 2020 Plan will be authorized but unissued shares or shares currently held (or subsequently acquired) as treasury shares, including shares purchased on the open market or in private transactions.
If shares subject to awards under the 2020 Plan are not issued, or are returned to the Company, including as a result of a forfeiture of restricted stock or an RSU, or the termination, expiration or cancellation of an NQSO, ISO, SAR, RSA, RSU, performance share, performance unit or other stock-based award under the 2020 Plan, or the settlement of an award in cash in lieu of shares, that number of shares will be added back to the Share Pool. If the exercise price of an option, or the purchase price and/or tax withholding obligation under any award is satisfied by the Company retaining shares or by the participant tendering shares (either by actual delivery or attestation), the number of shares so retained or tendered will be deemed delivered for purposes of determining the Share Pool and will not be available for further awards under the 2020 Plan. To the extent a SAR is settled in shares of common stock, the gross number of shares subject to such SAR shall be deemed delivered for purposes of determining the Share Pool and shall not be available for further awards under the 2020 Plan. Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of options will not be added back to the Share Pool.
Amendment and Termination. The Board of Directors or the Committee may amend or terminate the 2020 Plan in whole or in part at any time, but the amendment or termination cannot materially adversely affect any rights or obligations with respect to an award previously granted without the affected participant's written consent, unless otherwise required by law. The Company must obtain the approval of the shareholders before amending the 2020 Plan to the extent required by Section 422 of the Internal Revenue Code or the rules of the NYSE or other applicable law.
The Committee may amend an outstanding award agreement in a manner not inconsistent with the terms of the 2020 Plan, but the amendment will generally not be effective without the participant's written consent if the amendment is materially adverse to the participant. The Committee cannot amend outstanding awards, without shareholder approval, to reduce the exercise price of
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outstanding awards, or cancel outstanding options or SARs in exchange for cash, another award or stock option or SAR with an option exercise price or SAR price that is less than the option exercise price or SAR price of the original stock option or SAR.
The Aaron’s Company, Inc. Employee Stock Purchase Plan
General. The purpose of The Aaron's Company, Inc. Employee Stock Purchase Plan (the "ESPP"), which was approved by the Company's Board of Directors and Former Parent (at the time, the Company's sole shareholder), on November 11, 2020, is to encourage ownership of the Company's common stock by eligible employees. Specifically, the ESPP provides eligible employees of the Company and certain of the Company's subsidiaries an opportunity to use payroll deductions to purchase shares of our common stock on periodic purchase dates at a discount. The Compensation Committee believes that the ESPP is a valued benefit for our eligible employee base. We believe that allowing employees to purchase shares of our common stock through the ESPP motivates high levels of performance and provides an effective means of encouraging employee commitment to our success and recruiting new employees. We expect that employee participation in the ownership of the business through the ESPP will be to the mutual benefit of both our employees and the Company. Our Board of Directors or the Compensation Committee may amend, suspend or terminate the ESPP at any time. However, no amendment may increase the number of shares of common stock available under the ESPP, change the employees eligible to participate, or cause the ESPP to cease to be an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue Code, without obtaining shareholder approval within 12 months before or after such amendment. The ESPP is a tax-qualified plan under Section 423 of the Internal Revenue Code.
Administration. The ESPP is administered by the Compensation Committee, although the Compensation Committee may, where permitted by the terms of the ESPP and applicable law, delegate administrative tasks under the ESPP to the services of an agent and/or the Company's employees to assist with the administration of the ESPP. Subject to the provisions of the ESPP and applicable law, the Compensation Committee or its delegate will have full and exclusive authority to interpret the terms of the ESPP and determine eligibility to participate in the ESPP. In general, the ESPP will be administered in such a manner so as to comply with applicable requirements of Section 423 of the Internal Revenue Code. All determinations of the Compensation Committee are final and binding on all persons having an interest in the ESPP.
Offering Period, Purchase of Shares. Under the ESPP, participants have the ability to purchase shares of our common stock at a discount during a series of successive offering periods, which will commence and end on such dates as determined by the Compensation Committee or its delegate. Unless otherwise determined by the Compensation Committee or its delegate, each offering period will be six months in length. However, in no event may an offering period be longer than 27 months in length. Historically, and until the separation and distribution was completed on November 30, 2020, the Company's employees participated in the Aaron's, Inc. Employee Stock Purchase Plan. The final offering period for the year ended December 31, 2020 was modified to accelerate the purchase date for our employees to be November 13, 2020, prior to the completion of the spin-off transaction. The first offering period under the ESPP began on January 1, 2021.
Shares Available for Issuance. The maximum number of shares of our common stock authorized for sale under the ESPP is 200,000. The shares made available for sale under the ESPP may be authorized but unissued shares, treasury shares, reacquired shares reserved for issuance under the ESPP, or shares acquired on the open market. As of June 30, 2021, the aggregate number of shares of common stock that may be issued under the ESPP was 163,030.
Individual Executive Agreements and Pay Mix
For information regarding the individual agreements we have entered into with certain of our NEOs, see "Potential Payments Upon Termination or Change of Control" below. For information regarding the amount of salary and annual incentive compensation in proportion to total compensation, see "Compensation Discussion and Analysis—Components of the Executive Compensation Program."
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Outstanding Equity Awards at 2020 Fiscal Year-End
The following table provides information on outstanding stock option and stock awards with respect to the Company's common stock held by the named executive officers, including both unexercised and unvested awards, as of December 31, 2020, after giving effect to the November 30, 2020 adjustments made in connection with the separation and distribution. The market value of the stock awards is based upon the closing market price for the Company’s common stock as of December 31, 2020, which was $18.96.
Option Awards Stock Awards
Name Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
 
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or Units of
Stock That
Have Not
Vested (#)
 
Market Value
of Shares
or Units
of Stock
That Have
Not Vested
($)
(1)
Equity Incentive
Plan Awards:
Number of
Unearned Shares, Units or
Other Rights
That Have Not
Vested (#)(8)
 
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned Shares, Units or
Other Rights
That Have Not
Vested
($)
(1)
Douglas A. Lindsay
63,597  —  6.55  2/1/2026 —  —  —  — 
48,969  —  7.86  2/24/2027 —  —  —  — 
52,298  (2) 26,149  (2) 13.67  3/2/2028 —  —  —  — 
20,061  (3) 40,123  (3) 15.67  2/21/2029 —  —  —  — 
—  84,466  (4) 10.06  3/6/2030 —  —  —  — 
—  —  —  —  1,195