Edgar Filing: AARON'S INC

Document

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. )

Filed by the Registrant ý Filed by a Party other than the Registrant ¨

Check the appropriate box:



¨		Preliminary Proxy Statement

¨		Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý		Definitive Proxy Statement

¨		Definitive Additional Materials

¨		Soliciting Material Under Rule 14a-12

Aaron’s, Inc.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):



ý	No fee required
¨	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
	(1	)	Title of each class of securities to which transaction applies:
	(2	)	Aggregate number of securities to which transaction applies:
	(3	)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
	(4	)	Proposed maximum aggregate value of transaction:
	(5	)	Total fee paid:
¨	Fee paid previously with preliminary materials.
¨	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	(1	)	Amount previously paid:
	(2	)	Form, Schedule or Registration Statement No.:
	(3	)	Filing Party:
	(4	)	Date Filed:

400 Galleria Parkway, S.E., Suite 300

Atlanta, Georgia 30339

March 29, 2018

To Our Fellow Shareholders:

It is our pleasure to invite you to attend the 2018 Annual Meeting of Shareholders of Aaron’s, Inc. to be held on Wednesday, May 9, 2018, at 9:15 a.m., local time, at the Georgian Club located at 100 Galleria Parkway SE, 17th Floor, Atlanta, Georgia 30339. The Annual Meeting will begin with a discussion of, and voting on, the matters described in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement, and will be followed by a report on Aaron’s financial performance and operations.

The Proxy Statement is 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 our 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.

We look forward to seeing you at 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,




Ray M. Robinson	John W. Robinson III
Chairman of the Board	President and Chief Executive Officer

400 Galleria Parkway, S.E., Suite 300

Atlanta, Georgia 30339

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 9, 2018

The 2018 Annual Meeting of Shareholders of Aaron’s, Inc., which we refer to as “Aaron’s” or the “Company,” will be held on Wednesday, May 9, 2018, at 9:15 a.m., local time, at the Georgian Club located at 100 Galleria Parkway SE, 17th Floor, Atlanta, Georgia 30339, for the purpose of considering and voting on the following items:



1.	To elect nine directors to serve for a term expiring at the 2019 Annual Meeting of Shareholders.
2.	To vote on a non-binding, advisory resolution approving Aaron’s executive compensation.
3.	To approve the Aaron's, Inc. Employee Stock Purchase Plan.
4.	To ratify the appointment of Ernst & Young LLP as Aaron’s independent registered public accounting firm for 2018.
5.	To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

Information relating to these items is provided in the accompanying Proxy Statement.

Only shareholders of record, as shown on the stock transfer books of Aaron’s, on March 13, 2018 are entitled to notice of, or to vote at, the 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 March 13, 2018, you are strongly encouraged to vote in one of the following ways whether or not you plan to attend the Annual Meeting: (1) by telephone; (2) via the Internet; or (3) 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

	Robert W. Kamerschen
	Executive Vice President, General Counsel,
	Chief Administrative Officer & Corporate Secretary
Atlanta, Georgia
March 29, 2018

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON MAY 9, 2018.

We are pleased to announce that we are delivering your proxy materials for the 2018 Annual Meeting of Shareholders via the Internet. Because we are delivering proxy materials via the Internet, the Securities and Exchange Commission 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 March 29, 2018.

Our Notice of Proxy Materials will instruct you on how you may vote your proxy via 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://www.aarons.com/proxy and

http://www.aarons.com/annualreport, respectively,

and at http://www.envisionreports.com/AAN

Table of Contents




Proxy Summary	1

Matters To Be Voted On	4
Proposal 1: Election of Nine Directors	4
Proposal 2: Advisory Vote to Approve Executive Officer Compensation	5
Proposal 3: Approval of the Aaron's, Inc. Employee Stock Purchase Plan	6
Proposal 4: Ratification of the Appointment of Ernst & Young LLP as our Independent Registered Public Accounting Firm	10
Governance	11
Nominees to Serve as Directors	11
Executive Officers Who Are Not Directors	13
Composition, Meetings and Committees of the Board of Directors	14
Assessment of Director Candidates and Required Qualifications	15
Shareholder Recommendations and Nominations for Election to the Board	16
Board Leadership Structure	16
Board of Directors and Committee Evaluations	17
Board Role in Risk Oversight	17
Compensation Committee Interlocks and Insider Participation	17
Section 16(a) Beneficial Ownership Reporting Compliance	18

Non-Management Director Compensation in 2017	18
Stock Ownership Guidelines	18

Compensation Discussion and Analysis	19
Executive Summary	19
Objectives of Executive Compensation	20
Compensation Process Summary for 2017	21
Benchmarking	21
Components of the Executive Compensation Program	22
Base Salary	23
Annual Cash Incentive Awards	24
Long-Term Equity Incentive Awards	26
Executive Compensation Policies	29
Executive Benefits & Perquisites	29
Employment Agreements and Other Post Termination Protections	30
Policy on Compensation Tax Deductibility	30


Compensation Committee Report	31

Executive Compensation	32
Summary Compensation Table	32
Grants of Plan-Based Awards in 2017	33
Employment Agreements with Named Executive Officers	33



Aaron's, Inc. 2015 Equity and Incentive Plan	34
Amended and Restated 2001 Stock Option and Incentive Award Plan	35
Outstanding Equity Awards at 2017 Fiscal Year-End	36
Options Exercised and Stock Vested in 2017	37
Pension Benefits	37
Nonqualified Deferred Compensation as of December 31, 2017	37
Potential Payments Upon Termination or Change in Control	38
Securities Authorized for Issuance under Equity Compensation Plans	42
CEO Pay Ratio Disclosure	42

Audit Committee Report	44

Audit Matters	47
Fees Billed in the Last Two Fiscal Years	47
Approval of Auditor Services	47

Beneficial Ownership of Common Stock	48

Certain Relationships and Related Transactions	50
Policies and Procedures Dealing with the Review, Approval and Ratification of Related Party Transactions	50
Related Party Transactions	50

Questions and Answers About Voting and the Annual Meeting	51

Additional Information	55
Shareholder Proposals for 2019 Annual Meeting of Shareholders	55
Householding of Annual Meeting Materials	56
Communicating with the Board of Directors and Corporate Governance Documents	56
Other Action at the Meeting	56

Appendix A - Aaron's, Inc. Employee Stock Purchase Plan	57

PROXY SUMMARY

This Proxy Statement is furnished in connection with the solicitation by the board of directors of Aaron’s, Inc., which we refer to as “we,” “our,” “us,” “Aaron’s” or the “Company,” of proxies for use at the 2018 Annual Meeting of Shareholders, 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 and our 2017 Annual Report to Shareholders will first be made available to our shareholders, on or about March 29, 2018.

2018 Annual Meeting of Shareholders



Date and Time	May 9, 2018, at 9:15 a.m., local time
Place	The Georgian Club 100 Galleria Parkway SE, 17th Floor Atlanta, Georgia 30339
Record Date	March 13, 2018
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
Elect nine directors to serve for a term expiring at the 2019 Annual Meeting of Shareholders	“FOR” each director nominee
Vote on a non-binding advisory resolution approving Aaron’s executive compensation	“FOR”
Approve the Aaron's, Inc. Employee Stock Purchase Plan	“FOR”
Ratify the appointment of Ernst & Young LLP as Aaron’s independent registered public accounting firm for 2018	“FOR”

See “Matters To Be Voted On” beginning on page 4 for more information.

Executive Compensation Matters

The Compensation Committee of our board of directors designed our executive compensation program to retain key executives and motivate them to foster a culture of engagement and performance. Our executive compensation program is also structured so that a meaningful percentage of compensation is tied to the achievement of challenging levels of corporate and personal performance objectives. We believe this design will enable us to meet the operational, financial and strategic objectives established by our board of directors. 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 do 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.

Incentive compensation for 2017 performance reflects solid financial results. Despite the challenges faced by the traditional rent-to-own industry, the Compensation Committee was pleased with management’s achievements and our performance for the year ended December 31, 2017, particularly the following:


•	We reported record revenues of $3.4 billion in 2017, compared to $3.2 billion in 2016, driven by strong growth in our Progressive Leasing segment, partially offset by a decline in revenues in our Aaron's Business segment.


•	Progressive Leasing achieved record revenues of $1.6 billion, an increase of 26.6% over 2016. Progressive Leasing’s revenue growth is due to a 23.0% increase in active doors, which contributed to a 31.2% increase in total invoice volume.

•

Net earnings before income tax (benefit) expense increased to a record $239.6 million compared to $218.4 million in 2016, driven by Progressive Leasing, partially offset by declines from our Aaron's Business. We acquired the store operations of SEI/Aaron's, Inc. ("SEI"), the Company's largest franchisee, for approximately $140 million. The acquisition is benefiting our omnichannel platform through added scale, strengthening our presence in Northeast markets, and enhancing our ability to drive inventory supply-chain synergies between the Aaron's Business and Progressive Leasing in markets that SEI served.


•	We generated cash from operating activities of $159.1 million in 2017 and had $51.0 million in cash and $393.9 million available on our revolving credit facility as of December 31, 2017.


•	We returned $70.5 million to our shareholders through the repurchase of 2.0 million shares and the payment of our quarterly dividends, which we have paid for 30 consecutive years.


•	We continued optimizing our Aaron's store-based operations by implementing various cost efficiency and lease-margin-improvement initiatives, including optimizing merchandising and promotional strategies and continuing store consolidations.


•	We continued the development of management talent across our entire organization.


•	Our stock price increased 25% during the year, from January 3, 2017 to December 29, 2017.


•	We further improved the Company’s compliance programs and achieved important compliance objectives for the year.

Based on our 2017 performance, the Compensation Committee approved the following incentive awards for our named executive officers:

•

Messrs. John W. Robinson III and Steven A. Michaels earned annual cash incentive awards of 144% of target based on Company-wide financial performance and the achievement of compliance goals. Mr. Douglas A. Lindsay earned an annual cash incentive award of 149% of target based on Aaron’s Business results for financial performance and compliance-related goals. Messrs. Ryan K. Woodley and Curtis L. Doman earned annual cash incentive awards of 139% of target, based on Progressive’s results for financial performance and compliance-related goals.

•

Our named executive officers also earned awards under the performance share component that constitutes 50% of their annual grant values under our 2017 long-term incentive program. Messrs. Robinson and Michaels earned awards at 140% of target, based on the Company’s overall performance. Mr. Lindsay earned awards at 147% of target, based on the financial performance of our Aaron’s Business and the Company as a whole. Messrs. Woodley and Doman earned awards at 166% of target based on the financial performance of Progressive and the Company as a whole. The value realized from 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 resulted in year-end award values that were also greater than the grant date award values.

See “Compensation Discussion and Analysis” beginning on page 19 for more information.

MATTERS TO BE VOTED ON

Proposal 1-Election of Directors

Our board of directors recommends the election of the nominees listed below, each of whom will have a term of office expiring at our 2019 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 nine 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
Kathy T. Betty	62	Former Owner Atlanta Dream (WNBA team)	Yes	August 2012
Douglas C. Curling	63	Managing Principal New Kent Capital LLC and New Kent Consulting LLC	Yes	January 2016
Cynthia N. Day	52	President and Chief Executive Officer Citizens Bancshares Corporation and Citizens Trust Bank	Yes	October 2011
Curtis L. Doman	45	Chief Product Officer Progressive	No	August 2015
Walter G. Ehmer	52	President and Chief Executive Officer Waffle House, Inc.	Yes	May 2016
Hubert L. Harris, Jr.	74	Former Chief Executive Officer Invesco North America	Yes	August 2012
John W. Robinson III	46	President and Chief Executive Officer Aaron’s, Inc.	No	November 2014
Ray M. Robinson	70	Former President for the Southern Region AT&T	Yes	November 2002
Robert H. Yanker	59	Director Emeritus McKinsey & Company	Yes	May 2016

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, 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.

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.

To meet this objective, during 2017, the Compensation Committee’s deliberations regarding how much to pay our named executive officers included, among other performance metrics, (i) objective measurements of business performance, (ii) the accomplishment of strategic, financial and compliance objectives, (iii) the development of management talent, (iv) enhancement of shareholder value and (v) other matters relevant to both the short- and the long-term success of Aaron’s. Our focus on internal financial performance as measured in our annual incentive plans led to solid results for 2017, and we believe has positioned our operations well for the future. 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. At last year’s annual meeting of shareholders, over 98% of votes cast were in support of the compensation paid to our named executive officers. 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.

Proposal 3-Approval of the Aaron’s, Inc. Employee Stock Purchase Plan

We are seeking your vote to approve the Aaron's, Inc. Employee Stock Purchase Plan, which we refer to as the “ESPP.” Upon the recommendation of the Compensation Committee, the ESPP was approved and adopted by our board of directors, and became effective, on March 2, 2018, subject to approval by shareholders at the Annual Meeting. If shareholders do not approve the ESPP, the ESPP will not become effective.

Summary of the Proposal

The primary purpose of the ESPP is to encourage ownership of our common stock by eligible employees of Aaron’s and certain Aaron’s subsidiaries which have been designated as eligible to participate in the ESPP. Specifically, the ESPP provides eligible employees of Aaron’s and certain Aaron’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 Aaron’s.

Summary of Material Terms of the ESPP

The following summary of the ESPP is qualified in its entirety by the specific language of the ESPP, a copy of which is attached to this Proxy Statement as Appendix A.

General

The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). The ESPP is not subject to any provision of the Employee Retirement Income Security Act of 1974, as amended, nor is it qualified under Section 401(a) of the Code.

Shares Available for Issuance under the ESPP

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.

Administration

The ESPP will be 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 Aaron’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 all cases, the ESPP is required to be administered in such a manner so as to comply with applicable requirements of Section 423 of the Code. All determinations of the Compensation Committee are final and binding on all persons having an interest in the ESPP.

Eligibility

Employees eligible to participate in the ESPP for a given offering period generally include employees who are employed on the first day of the offering period, or the enrollment date. Employees who have not been employed for at least six months or that customarily work 20 hours per week or less are not eligible to participate in the ESPP. As of March 27, 2018, we had approximately 6,000 employees eligible to participate in the ESPP. Highly compensated employees (as defined in Section 414(q) of the Code) who are subject to the disclosure requirements of Section 16(a) of the Exchange Act are not eligible to participate in the ESPP. Finally, employees who own (or are deemed to own through attribution) 5% or more of the combined voting power or value of all our classes of stock or of one of our subsidiaries are not allowed to participate in the ESPP.

Employees may enroll under the ESPP by completing a payroll deduction form permitting the deduction from their compensation of at least 1% of their compensation but not more than 10% of their compensation. Eligible compensation includes base salary and wages paid to the employee, before deduction for any deferral contributions to any tax-qualified or nonqualified deferred compensation plan.

Such payroll deductions may be expressed as a whole number percentage and the accumulated deductions are applied to the purchase of shares on each semi-annual purchase date. However, a participant may not purchase more than 500 shares in each offering period and may not subscribe for more than $25,000 in fair market value of shares of our common stock (determined at the time the ability to purchase shares of our common stock is granted) during any calendar year. The Compensation Committee has the authority to change these limitations for any subsequent offering period, in compliance with the rules prescribed by the ESPP and Section 423 of the Code.

Offering Period, Purchase of Shares and Payroll Deductions

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. Unless otherwise determined by the Compensation Committee, each offering period will be six months in length. However, in no event may an offering period be longer than 27 months in length.

The purchase price of each share of our common stock will be the lower of 85% of the closing trading price per share of our common stock on the first trading date of an offering period in which a participant is enrolled or 85% of the closing trading price per share of our common stock on the purchase date, which occurs on the last trading day of each offering period.

Unless a participant has previously canceled his or her participation in the ESPP before the purchase date, the participant is deemed to have exercised his or her ability to purchase shares of our common stock in full as of each purchase date. Upon exercise, the participant purchases the number of whole shares that his or her accumulated payroll deductions will buy at the purchase price per share of our common stock, subject to the participation limitations listed above and shares available under the ESPP.

A participant may cancel his or her payroll deduction authorization at any time prior to the end of the offering period. Upon cancellation, a participant will be paid his or her account balance in cash without interest. A participant may decrease (but not increase) his or her payroll deduction authorization once during any offering period. If a participant wants to increase or decrease the rate of payroll withholding, he or she may do so effective for the next offering period by submitting a new form before the offering period for which such change is to be effective; otherwise, a participant will automatically participate in the next offering period at the same rate of payroll withholding as in effect at the end of the prior offering period (so long as the participant remains eligible to participate in the ESPP).

Non-Transferability and Restrictions on Resale

A participant may not assign, transfer, pledge or otherwise dispose of (other than by will or the laws of descent and distribution) payroll deductions credited to a participant’s account or any rights to purchase shares of our common stock or to receive shares of our common stock under the ESPP, and during a participant’s lifetime, rights to purchase shares of our common stock in the ESPP shall be exercisable only by such participant. Any such attempt at assignment, transfer, pledge or other disposition will not be given effect.

Shares of our common stock purchased under the ESPP may not be sold, transferred or otherwise disposed of by a participant for a period of one year from the date the shares are purchased. The Compensation Committee may, in its sole discretion, place additional restrictions on the sale or transfer of our shares purchased under the ESPP by notice to the participants in advance of the offering period.

Termination of Eligibility

If an individual’s eligibility to participate in the ESPP terminates for any reason before the last day of the offering period, the termination will cause payroll deductions to cease immediately. If the eligible employee’s subscription account has a cash balance remaining when he or she terminates, this balance will be refunded to the eligible employee in cash (without interest) as soon as practicable.

Change in Control or Occurrence of Significant Corporate Transactions

In the event of any increase or decrease in the number of issued shares of our common stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the common stock, or any other increase or decrease in the number of shares of common stock effected without receipt of consideration by us, we will proportionately adjust the aggregate number of shares of our common stock offered under the ESPP, the number and price of shares which any participant has elected to purchase under the ESPP, and the maximum number of shares which a participant may elect to purchase in any single offering period. If there is a proposal to dissolve or liquidate Aaron’s, then the ESPP will terminate immediately prior to the consummation of such proposed dissolution or liquidation, and any offering period then in progress will be shortened by

setting a new purchase date to take place before the date of our dissolution or liquidation. We will notify each participant of such change in writing at least ten business days prior to the end of the new offering period. If we undergo a merger with or into another entity or a sale of all or substantially all of our assets, each outstanding right to purchase shares of our common stock will be assumed, or an equivalent right to purchase shares of common stock substituted, by the successor entity or the parent or subsidiary of the successor entity. If the successor entity refuses to assume the outstanding rights to purchase shares of our common stock or substitute equivalent rights, then any offering period then in progress will be shortened by setting a new purchase date to take place before the date of the proposed sale or merger. We will notify each participant of such change in writing at least ten business days prior to the end of the new offering period.

Federal Income Tax Consequences

The following is a brief summary of the federal income tax consequences relating to the purchase and sale of stock under the ESPP for individuals who are both citizens and residents of the United States, under the assumption that the ESPP satisfies the requirements of Section 423 of the Code. Individual circumstances may change these results. This brief discussion is based on current U.S. federal income tax laws, regulations, and judicial and administrative interpretations. The following discussion does not set forth any tax consequences other than U.S. federal income tax consequences, including any state, local or foreign tax consequences that may apply.

Although after-tax amounts are used to purchase shares under the ESPP, a participant will not recognize taxable income upon the grant of the right to purchase shares at the start of an offering period or when he or she purchases shares under the ESPP. Generally, participants will recognize taxable income in the year in which such participant sells or otherwise disposes of the purchased shares (whether by sale, exchange or gift).

The tax consequences on a sale or disposition of shares of our common stock acquired under the ESPP depend in part on whether the disposition occurs before or after expiration of a statutory holding period, which is the period ending on the later of (i) two years after the first day of the offering period in which such shares were acquired (the “offering date”) and (ii) one year after the date such shares were acquired. If the shares are sold or otherwise disposed of after the holding period expires, or if a participant dies while owning the shares, then it is a “qualifying” disposition. If the shares are sold before the holding period expires, then it is a “disqualifying” disposition.

If a participant makes a “qualifying” disposition of stock, the participant will have ordinary income from the sale equal to the lesser of:


•	the fair market value of the shares on the offering date, less the purchase price of the shares, or


•	the fair market value of the shares on the date of the disposition (or the date of the participant’s death, if applicable), less the purchase price of the shares.

Aaron’s reports the ordinary income that participants incur at the time of sale on participant’s Form W-2. Individuals who do not receive a Form W-2 from us are still responsible for reporting all income.

If a participant makes a “qualifying” disposition of stock, the ordinary income, if any, that such participant recognized on the disposition of the shares is added to the participant’s basis in the shares, except where the disposition is due to the participant’s death. In that case, any ordinary income recognized on the disposition is not added to the participant’s basis in the shares. After increasing the basis in the shares by the ordinary income recognized, any additional gain realized on the sale or disposition is treated as a long-term capital gain. If the participant sells shares for less than the purchase price, such participant will not have ordinary income. Instead, the participant will realize a capital loss equal to the difference between the sales price and his or her purchase price.

If a participant makes a “disqualifying” disposition, the participant will have ordinary income upon the sale of the shares equal to the excess of the value of such shares on the date the shares were purchased over the purchase price of the shares (this amount must be recognized even if the value of the shares has decreased since the date the shares were purchased). This amount is added to the participant’s basis in the shares. After increasing the basis by this amount, any gain realized on the disposition in excess of the basis will be treated as a capital gain or loss. Whether such capital gain or loss will be long-term or short-term will depend on how long the shares were held (e.g., long-term capital gain or loss if the shares were held for over one year).

Aaron’s does not receive any U.S. federal income tax deduction as a result of issuing shares pursuant to the ESPP, except upon a sale or disposition of shares by a participant prior to the expiration of the statutory holding period. In that case, Aaron’s will generally be entitled to a U.S. federal income tax deduction equal to the amount of ordinary income recognized by such participant with respect to the sale or disposition of the shares.

New Plan Benefits

The amounts of future purchases under the ESPP are not determinable because participation is voluntary, participation levels depend on each participant’s elections and the restrictions of Section 423 of the Code and the ESPP, and the per-share purchase price depends on the future value of our common stock. Further, as of the date of this Proxy Statement, no employee has been granted the right to purchase shares under the proposed ESPP. Accordingly, the benefits to be received pursuant to the ESPP by our employees are not determinable at this time.

Amendment and Termination of the ESPP

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 Code, without obtaining shareholder approval within 12 months before or after such amendment. If the ESPP is terminated before the scheduled expiration of any offering period, each participant’s account balance will be distributed to him or her in cash (without interest) as soon as practicable.

Adoption of the ESPP

Assuming a quorum is present, the proposal to approve the ESPP 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 approval of our Employee Stock Purchase Plan.

Proposal 4-Ratification of the Appointment of the Independent Registered Public Accounting Firm

The Audit Committee of our board of directors has appointed Ernst & Young LLP, which we refer to as “EY,” to audit our consolidated financial statements for the year ending December 31, 2018, as well as the effectiveness of our internal controls over financial reporting as of December 31, 2018. 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 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 2018 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 2019. 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 2018 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 2018.

GOVERNANCE

Nominees to Serve as Directors

Kathy T. Betty, 62, has served as a director of the Company since August 2012. From 2009 until 2011, Ms. Betty was the owner of the Atlanta Dream of the WNBA. She also founded The Tradewind Group, an incubator company, where she worked until 2007. Her other experience includes serving as Executive Vice President and Partner of ScottMadden from 1993 to 2000, where she worked on international mergers and acquisitions, and working at Ernst & Young LLP from 1989 to 1993, including serving as one of the first women admitted to the partnership.

Among other qualifications, Ms. Betty brings over 30 years of business management and consultancy experience to our board of directors. Her leadership positions in the Atlanta community, including serving on the boards of the Children’s Healthcare of Atlanta Foundation, YMCA of Metropolitan Atlanta and the Alexander-Tharpe Fund, Georgia Institute of Technology, as well as the Board of Councilors of the Carter Center, provide her with management, entrepreneurial, financial and accounting experience, which are utilized by our board of directors. These skills and experience qualify her to serve on our board of directors.

Douglas C. Curling, 63, has served as a director of the Company since January 2016. Since March 2009, Mr. Curling has been the managing principal of New Kent Capital LLC, a family-run investment business, and New Kent Consulting LLC, a privacy and mergers and acquisitions consulting business. From 1997 until September 2008, Mr. Curling held various executive positions at ChoicePoint Inc., a provider of identification and credential verification services that was sold to Reed Elsevier in 2008, including serving as President from April 2002 to September 2008, as Chief Operating Officer from 1999 to September 2008 and as Executive Vice President, Chief Financial Officer and Treasurer from 1997 to May 1999. Mr. Curling also served as a director of ChoicePoint Inc. from May 2000 to September 2008. Mr. Curling currently serves on the board of directors of CoreLogic, a New York Stock Exchange listed company providing global property information, analytics and data-enabled services to financial services organizations and real estate professionals.

Among other qualifications, Mr. Curling brings substantial experience in managing and operating businesses with privacy, data analytics and other data-enabled matters to our board of directors. His prior service as a chief financial officer provides him with valuable accounting and financial expertise, and his consulting experience provides him with significant mergers and acquisitions expertise, all of which is utilized by our board of directors. These skills and experiences qualify him to serve on our board of directors.

Cynthia N. Day, 52, has served as a director of the Company since October 2011. Ms. Day is currently President and Chief Executive Officer of Citizens Bancshares Corporation and Citizens Trust Bank. She served as Chief Operating Officer and Senior Executive Vice President of Citizens Trust Bank from 2003 to January 2012 and served as its acting President and Chief Executive Officer from January 2012 to February 2012. Ms. Day previously served as the Executive Vice President and Chief Operating Officer and in other capacities of Citizens Federal Savings Bank of Birmingham from 1993 until its acquisition by Citizens Trust Bank in 2003 and previously served as an audit manager for KPMG. She currently serves on the board of directors of Primerica, Inc., Citizens Bancshares Corporation and its subsidiary, Citizens Trust Bank. As of January 2017, Citizens Bancshares Corporation's stock is traded only on over-the-counter markets. Its subsidiary, Citizens Trust Bank, is not a publicly traded company. Ms. Day has also served as a member of the board of directors of the National Bankers Association, the Georgia Society of CPAs, the University of Alabama Continuing Education Advisory Board and the United Negro College Fund.

Among other qualifications, Ms. Day brings significant 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 accounting and financial expertise, which are utilized by our board of directors. These skills and experiences qualify her to serve on our board of directors.

Curtis L. Doman, 45, has served as a director of the Company since August 2015. Mr. Doman currently serves as the Chief Product Officer of the Company’s Progressive segment, and is a co-founder of Progressive. Previously, he served as Chief Technology Officer of Progressive from 1999 until January 8, 2018. He was also President of IDS, Inc. from September 1993 until October 2015.

Among other qualifications, Mr. Doman brings significant experience in technology and data analytics matters to our board of directors. Mr. Doman’s intimate knowledge of our Progressive segment, including as the creator of the dynamic decision-making engine used by our Progressive segment in evaluating underwriting criteria for our lease products, is utilized by our board of directors. These skills and experiences qualify him to serve on our board of directors.

Walter G. Ehmer, 52, has served as a director of the Company since May 2016. Mr. Ehmer is currently the President and Chief Executive Officer of Waffle House, Inc., or “Waffle House,” a position he has held since 2012. Mr. Ehmer has held various positions with Waffle House 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 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 executive committee of the Georgia Tech Foundation. Mr. Ehmer also serves on the boards of the City of Atlanta Policy Foundation and the Metro Atlanta Chamber of Commerce.

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.

Hubert L. Harris, Jr., 74, has served as a director of the Company since August 2012. 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 1988 to 2005, 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 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.

John W. Robinson III, 46, has been a director of the Company since November 2014 when he was named the Chief Executive Officer of the Company. Mr. Robinson was also named President of the Company as of February 2016. From 2012 to November 2014, Mr. Robinson served as the Chief Executive Officer of Progressive Finance Holdings, LLC, 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. TMX Finance filed a voluntary Chapter 11 bankruptcy proceeding in April 2009 from which it emerged in April 2010. 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, including our Progressive segment in particular, 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.

Ray M. Robinson, 70, has served as a director of the Company since November 2002 and has been our Chairman since April 2014. From November 2012 until his appointment as Chairman, Mr. Robinson was the Company’s independent lead director. Mr. Robinson started his career at AT&T in 1968, and prior to his retirement in 2003, he held several executive positions, including President of the Southern Region, its largest region, President and Chief Executive Officer of AT&T Tridom, Vice President of Operations for AT&T Business Customer Care, Vice President of AT&T Outbound Services, and Vice President of AT&T Public Relations. Mr. Robinson is also a director of Acuity Brands, Inc., a lighting solutions company, American Airlines Group Inc., a holding company operating various commercial airlines (including American Airlines and US Airways), and Fortress Transportation and Infrastructure Investors LLC, an investor in infrastructure and equipment for the transportation of goods and people, all of which are public companies. Since 2003, Mr. Robinson has also served as a director and non-executive Chairman of Citizens Bancshares Corporation and its subsidiary, Citizens Trust Bank, the largest African American-owned bank in the Southeastern United States and the nation’s second largest. As of January 2017, Citizens Bancshares Corporation's stock is traded only on over-the-counter markets. Its subsidiary, Citizens Trust Bank, is not a publicly traded company. Mr. Robinson previously served as a director of RailAmerica, Inc. from 2010 to 2012. Mr. Robinson has also been Vice Chairman of the East Lake Community Foundation in Atlanta, Georgia since November 2003.

Among other qualifications, Mr. Robinson brings experience in senior management and board service for numerous public companies to our board of directors. His service on the boards of a number of organizations of varying sizes provides him with extensive operational skills and governance expertise, which are utilized by our board of directors. These skills and experiences qualify him to serve on our board of directors.

Robert H. Yanker, 59, has served as a director of the Company since May 2016. Mr. Yanker is currently a Director Emeritus at McKinsey & Company, or “McKinsey.” Mr. Yanker served at McKinsey for 27 years, from 1986 to 2013, where he worked with a variety of clients in the industrial, consumer and telecommunications sectors on a full range of issues from strategy, portfolio assessment, sales and operations transformation, restructuring and capability building. Mr. Yanker is a member of the board of directors of Bemis Company, Inc., a NYSE-listed supplier of flexible and rigid plastics packaging used by leading food, consumer products, healthcare and other companies worldwide. Mr. Yanker also served as a director of Wausau Paper Corp., a NYSE-listed manufacturer of away-from-home towel and tissue products, from July 2015 until January 2016 when the company was acquired by a subsidiary of SCA Americas, Inc.

Among other qualifications, Mr. Yanker brings significant management and operational experience to our board of directors. His experience throughout his career in advising and consulting for senior management teams provide him with significant managerial and operational expertise, and his prior and current service on other public company boards provide him with governance expertise. Mr. Yanker's skills and areas of expertise are utilized by our board of directors. These skills and experiences qualify him to serve on our board of directors.

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
Robert W. Kamerschen (50)		Chief Administrative Officer since February 2016 and Executive Vice President, General Counsel and Corporate Secretary since April 2014. Previously, Mr. Kamerschen served as Senior Vice President and General Counsel from June 2013 and also as Corporate Secretary from November 2013. Before joining the Company, Mr. Kamerschen worked at information solution provider Equifax Inc. from 2008 through 2013, serving in multiple executive positions and most recently as its U.S. Chief Counsel, Senior Vice President and Chief Compliance Officer. Mr. Kamerschen began his legal career in 1994 in the Atlanta office of the international law firm Troutman Sanders LLP.
Douglas A. Lindsay (47)		President of Aaron’s Business since February 2016. Prior to joining the Company, 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.
Steven A. Michaels (46)		Chief Financial Officer and President of Strategic Operations since February 2016. Mr. Michaels previously served as President from April 2014 until February 2016, Vice President Strategic Planning & Business Development from 2013 until April 2014, Vice President, Finance from 2012 until April 2014 and Vice President, Finance, Aaron’s Sales & Lease Ownership Division from 2008 until 2011.
Robert P. Sinclair, Jr. (56)		Vice President, Corporate Controller since 1999.
Ryan K. Woodley (41)		Chief Executive Officer of Progressive Finance Holdings, LLC since January 2015. Mr. Woodley joined Progressive Finance Holdings, LLC as Chief Operating Officer and Chief Financial Officer in June of 2013. Prior to that, he was Chief Operating Officer and Chief Financial Officer at DigiCert, a digital security certificate provider which was sold to TA Associates in November 2012.

Composition, Meetings and Committees of the Board of Directors

Our board of directors is currently comprised of nine directors having terms expiring at the Annual Meeting. Each of our directors will continue to 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.

Our Corporate Governance Guidelines include categorical standards adopted by our board of directors to determine director independence that meet the listing standards of the New York Stock Exchange, or “NYSE.” Our Corporate Governance Guidelines also require that at least 75% of our board of directors be “independent,” a requirement that is more stringent than the NYSE listing requirement that a majority of the board of directors be independent. Our board of directors has affirmatively determined that all of our directors are “independent” in accordance with NYSE listing requirements and the requirements of our Corporate Governance Guidelines, other than Mr. John Robinson, our President and Chief Executive Officer, and Mr. Doman, the Chief Product Officer of our Progressive segment.

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 our website located at http://www.aaronsinc.com. The current members of each committee are identified in the table below:



Director	Audit Committee*	Compensation Committee	Nominating and Corporate Governance Committee
Kathy T. Betty		Member	Member
Douglas C. Curling	Member	(Chair)
Cynthia N. Day	(Chair)	Member
Walter G. Ehmer	Member		Member
Hubert L. Harris, Jr.	Member		(Chair)
Ray M. Robinson		Member	Member
Robert H. Yanker	Member		Member
Number of Meetings in Fiscal Year 2017	9	6	4



	*	Four of the members of the Audit Committee have been designated as an “audit committee financial expert” as defined by Securities and Exchange Commission, or "SEC", regulations.

Meetings

Our board of directors held seven meetings during 2017. The number of meetings held by each of our committees in 2017 is shown in the table above. Each of our directors attended 75% or more of the total of all meetings of our board and the committees on which he or she served during 2017.

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. All of our directors, except Mr. Ehmer due to an unavoidable scheduling conflict, attended the 2017 Annual Meeting of Shareholders held on May 2, 2017.

The non-management and independent members of our board of directors meet frequently in executive session, without management present. Mr. Ray Robinson, the Chairman of our board of directors, chairs these meetings.

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 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 and procedures to assess, monitor and manage business 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 and cybersecurity initiatives. 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.

Each member of the Audit Committee satisfies the 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 of Ms. Day and Messrs. Curling, Ehmer and Harris 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 associate 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 President and 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.

Each member of the Compensation Committee satisfies the independence requirements of the NYSE applicable to compensation committee members, is a non-employee director under Rule 16b-3 of the Securities Exchange Act of 1934, or the “Exchange Act,” and is an outside director under Section 162(m) of the Internal Revenue Code.

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.

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 directors, diversity of race, ethnicity, gender, age, cultural background and professional experience is considered in evaluating candidates for membership on our board of directors.

No person may be nominated for election to our board of directors or appointed to fill a vacancy on the board of directors if he or she will be age 75 or older upon his or her election or appointment, unless a waiver is granted by 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.

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 2019 Annual Meeting of Shareholders” and otherwise comply with the advance notice provisions and information requirements contained in our bylaws. The shareholder submission should be sent to the President of Aaron’s, 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

We currently separate the roles of Chairman and Chief Executive Officer in recognition of the differences between the two roles. The Chairman is responsible for leading our board of directors in its duty to oversee the management of our business and affairs. The Chief Executive Officer is responsible for oversight of our day-to-day operations and business affairs, including directing the business conducted by our employees, managers and officers.

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. John Robinson’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.

Our board of directors does not have a formal policy on whether the Chairman 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 an independent 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. Our board of directors has determined that Mr. Ray Robinson, who serves as our Chairman, is independent under NYSE listing requirements. As a result, our board of directors has not designated a Lead Director.

Board of Directors and Committee Evaluations

Our board of directors and each of its committees 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 2018, 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 were reported to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee oversees the evaluation process.

Board Role in Risk Oversight

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. For example, 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 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 2017, our Compensation Committee, aided by its independent third-party compensation consultant, reviewed our 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.

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. For example, during 2017, our board of directors received presentations from external legal advisors regarding the board’s duties and role in overseeing cybersecurity-related risks and our efforts to mitigate those risks. In addition, the board received presentations from management regarding trends in cybersecurity risks and risk mitigation initiatives and plans, and the role of various federal and state government agencies in helping companies prepare for and respond to cybersecurity incidents. In addition, our board of directors reviewed our cybersecurity-related initiatives and plans with management.

Compensation Committee Interlocks and Insider Participation

For the year ended December 31, 2017, the Compensation Committee consisted of Mses. Betty and Day and Messrs. Curling and Ray Robinson, each of whom our board of directors determined was independent in accordance with NYSE listing requirements.

No member of the Compensation Committee during 2017 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.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% of the Company’s common stock, to file with the SEC certain reports of beneficial ownership of the Company’s common stock. Based solely on a review of information furnished to us, the Company believes that its directors, officers and more than 10% shareholders complied with all applicable Section 16(a) filing requirements during the year ended December 31, 2017, except for one Form 4 for Mr. Michaels disclosing the sale of shares held in his 401(k) retirement account in connection with an asset rebalancing, which was filed late due to an unintentional miscommunication by the account administrator regarding the timing of the sale.

NON-MANAGEMENT DIRECTOR COMPENSATION IN 2017

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.

Effective in January 2016, and based upon the recommendation of the Compensation Committee's independent third-party compensation consultant, the compensation program for our non-employee directors was revised to better align with the interests of our shareholders as well as with current market practices. Under the re-designed program, non-employee directors received an annual cash retainer of $75,000 and an annual award of restricted stock units having a value of $100,000, which generally vests one year following the grant date. Our Chairman, Mr. Ray Robinson, also received a cash retainer of $100,000, paid quarterly in $25,000 installments, in recognition of the additional duties he performs by serving as our Chairman. 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.

Directors who are employees of the Company receive no compensation for their service on our board of directors.

The following table shows compensation paid to our non-employee directors during 2017.



Name	Fees Earned or Paid in Cash($)		Stock Awards⁽¹⁾($)	Total ($)
Kathy T. Betty^{(2), (3)}	90,000	⁽⁴⁾	100,000	190,000
Douglas C. Curling^{(2), (5)}	75,000		100,000	175,000
Cynthia N. Day^{(2), (6)}	95,000		100,000	195,000
Walter G. Ehmer^{(2), (7)}	75,000		100,000	175,000
Hubert L. Harris, Jr.^{(2), (8)}	85,000		100,000	185,000
Ray M. Robinson^{(2), (9)}	175,000		100,000	275,000
Robert H. Yanker^{(2), (10)}	75,000		100,000	175,000


(1)	Represents the grant date fair value of stock awards pursuant to Financial Accounting Standards Board Codification Topic 718

(2)

As of December 31, 2017, each of our non-executive directors, held 3,125 units of restricted stock subject to vesting, which was the number of units of restricted stock granted to them in January 2017. As of December 31, 2017, Mr. Robinson also held an aggregate of 6,000 vested options, of which 3,000 expire in October 2018 and have an exercise price of $14.11 and 3,000 expire in February 2020 and have an exercise price of $19.92.


(3)	Includes $22,500 in fees earned for services in the fourth quarter of 2017 which will be paid in 2018.


(4)	Amounts listed for Ms. Betty reflect cash fees taken in the form of shares of our common stock. During 2017, Ms. Betty received 2,572 shares of our common stock in lieu of cash fees payable in connection with service on our board of directors, which includes 702 shares that Ms. Betty received for services rendered during 2016.


(5)	Includes $18,750 in fees earned for services in the fourth quarter of 2017 which will be paid in 2018.


(6)	Includes $23,750 in fees earned for services in the fourth quarter of 2017 which will be paid in 2018.


(7)	Includes $18,750 in fees earned for services in the fourth quarter of 2017 which will be paid in 2018.


(8)	Includes $21,250 in fees earned for services in the fourth quarter of 2017 which will be paid in 2018.


(9)	Includes $43,750 in fees earned for services in the fourth quarter of 2017 which will be paid in 2018.


(10)	Includes $18,750 in fees earned for services in the fourth quarter of 2017 which will be paid in 2018 and $56,250 in compensation Mr. Yanker deferred under the Company's Nonqualified Deferred Compensation Plan.

Stock Ownership Guidelines

Under the current stock ownership guidelines adopted by our board of directors in November 2015, each director is expected to own or acquire shares of our common stock and common stock equivalents (including restricted stock and restricted stock units, or "RSUs") having a value of at least $400,000 prior to the later of January 31, 2020 or four years from when the director first joined our board of directors.

COMPENSATION DISCUSSION AND ANALYSIS

The purpose of this section is to provide material information about the compensation objectives and policies for our named executive officers (“NEOs”) and to explain how the Compensation Committee of our board of directors made its compensation decisions for 2017. For 2017, our NEOs are listed below.



Named Executive Officer		2017 Position
John W. Robinson III		President and Chief Executive Officer
Steven A. Michaels		Chief Financial Officer and President of Strategic Operations
Ryan K. Woodley		Chief Executive Officer, Progressive
Curtis L. Doman		Chief Product Officer, Progressive
Douglas A. Lindsay		President, Aaron’s Business

Executive Summary

Our compensation programs are 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. This linkage between pay and performance is demonstrated by the following pay and performance results for 2017:



2017 Company Performance Results	2017 Executive Pay Results
• Consolidated Revenue increased by 5% to $3,384 million	• Short-term incentive awards were earned at a level between 138% and 149% of Target
• Consolidated Adjusted EBITDA increased by 6% to $363 million	• Performance Share Units (PSUs) were earned at a level between 140% and 166% of Target
• Consolidated Return on Capital of 10.8%, which was an increase of 1.4% from 2016 and was 111% of Target	• Restricted Stock Awards (“RSAs”) granted in 2017 and Restricted Stock Units granted in prior years increased in value above their grant date value given the increase in the stock price
• All compliance goals for the Company and each of its Aaron’s Business and Progressive subsidiaries were fully achieved	• All unexpired options achieved “in-the-money” value given the increase in the stock price
• Reduced debt by $135 million while also returning approximately $70.5 million to shareholders through stock repurchases and dividends
• Increased the stock price by 25% from $31.90 on January 3, 2017, the first trading day of the year, to $39.85 on December 29, 2017, the last trading day of the year

"Target" refers to either (i) the performance target established by the Compensation Committee at the beginning of the year or (ii) the target award opportunity under our short-term and long-term incentive programs.

We believe these performance and pay results for 2017 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 employ sound compensation and governance principles and policies, 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 option repricing without shareholder approval

ü Pay mix that emphasizes performance-based compensation over fixed compensation		û No excise or other tax gross ups on CIC payments

ü Pay mix that emphasizes long-term, equity-based incentives over short-term cash incentives		û No hedging or pledging of Company stock

ü Incentive plans that utilize multiple measures, including growth, profitability, and returns		û No excessive perquisites or other benefits

ü Reasonable incentive plan targets and ranges, with capped incentive payouts		û No payment of dividends on unearned or unvested shares

ü Double-trigger equity vesting acceleration upon a change of control (awards granted in 2015 and later)

ü Meaningful stock ownership requirements

ü Clawback policy

Say on Pay Vote. Last year, our shareholders cast an advisory vote on our executive compensation practices as described in our 2017 proxy statement, with the result that over 98% of the total votes cast approved the compensation of our NEOs. The Compensation Committee appreciates the shareholder support that this vote reflects, and regularly evaluates and revises the executive compensation program as it considers necessary to better reflect our evolving business circumstances.

The strong shareholder support received in 2017 was one of the many factors reviewed and considered by the Compensation Committee when designing the 2018 compensation program. Given this support, combined with the demonstrated linkage between pay and performance for 2017, the 2018 compensation framework remains similar to the 2017 framework, with only minor changes to performance measures, weights, and the correlation of incentive payout amounts to the level of achievement of performance metrics.

Objectives of Executive Compensation

The primary objectives and priorities of our executive compensation program are to:


•	attract, motivate and retain quality executive leadership;


•	align the incentive goals of our executive officers with the interests of our shareholders;


•	enhance the individual performance of each executive officer;


•	improve our overall performance; and


•	support achievement of our business plans and long-term goals.

To accomplish these objectives, the Compensation Committee considers a variety of factors when approving compensation programs, including (i) changes in our business strategy, (ii) performance expectations for the Company and, with respect to the compensation programs for certain NEOs, the performance expectations for Aaron’s Business or Progressive, (iii) external market data, (iv) actual performance of the Company and, with respect to the compensation programs for certain NEOs, the actual performance of Aaron’s Business or Progressive, (v) individual executive performance, and (vi) internal compensation equity with the NEOs. A more complete description of the annual process for establishing our executive compensation programs is described below and throughout this Compensation Discussion and Analysis.

Compensation Process Summary for 2017

Role of the Compensation Committee. The Compensation Committee is comprised solely of directors that our board has determined to be independent under applicable SEC and NYSE listing standards. Its role is 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 associate resources matters.

More specifically, the Compensation Committee reviews and discusses proposed compensation for NEOs, evaluates their performance and sets their compensation. In addition, the Compensation Committee approves all equity awards for NEOs and other executive officers.

Role of Management. The Compensation Committee considered the input and recommendations of Mr. Robinson with respect to our executive compensation programs and decisions that impact other NEOs. Mr. Michaels also provided input with respect to financial goals and recommendations and overall program design. Although management and other invitees at Compensation Committee meetings may participate in discussions and provide input, all votes and final decision-making on NEO compensation are solely the responsibility of the Compensation Committee, and those final deliberations and votes are conducted in executive sessions in which no executive officer participates.

Role of Independent Compensation Consultants. The Compensation Committee has the authority to retain independent consultants and other advisors. With respect to 2017 compensation arrangements, the Compensation Committee retained Meridian Compensation Partners, LLC, which we refer to as “Meridian.” In this role, Meridian reported directly to the Compensation Committee, but worked with management at the direction of the Compensation Committee. The Compensation Committee assessed Meridian’s independence, including the potential for conflicts of interest as required by the SEC and NYSE listing standards, and concluded that Meridian was appropriately independent and free from potential conflicts of interest.

Although the specific services of the independent consultant 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 the benchmarking peer group 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 our compensation programs from a risk assessment perspective;


•	preparing compensation tally sheets on our executive officers;


•	assisting with review and disclosures regarding the executive compensation programs; and


•	reviewing the Compensation Committee’s annual calendar and related governance matters.

Meridian representatives attended a majority of the Compensation Committee meetings pertaining to 2017 executive compensation decisions, and also participated in executive sessions as requested by the Compensation Committee.

During 2017, and with respect to 2018 executive compensation planning, the Compensation Committee retained Pearl Meyer. In selecting Pearl Meyer, the Compensation Committee assessed Pearl Meyer’s independence, including the potential for conflicts of interests as required by NYSE listing requirements, and concluded that Pearl Meyer was appropriately independent and free from potential conflicts of interest.

Benchmarking

Role of Benchmark Data. We use compensation market data as a reference for understanding the competitive positioning of each element of our compensation program and of total compensation. The Compensation Committee generally requests these market studies from its independent consultant from time to time as the Compensation Committee deems appropriate. Given that a market study was conducted in 2015, a market study was not conducted in 2016 or prior to establishing 2017 compensation programs for our NEOs. Instead, the Compensation Committee continued to reference the analyses and conclusions of the 2015 market study when making 2017 compensation decisions.

In referencing these market studies, the Compensation Committee does not manage total compensation for our NEOs within a prescribed competitive position or percentile of the compensation market. Rather, the Compensation Committee reviews compensation for each NEO relative to market data and considers other internal and external factors when exercising its business judgment as to compensation decisions. Other factors material to the Compensation Committee’s deliberations include (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 relevant to our short-term and long-term success.

Peer Group. As previously mentioned, with respect to 2017 compensation decisions, the Compensation Committee continued to reference the prior market study that was conducted by the independent consultant in 2015. The peer group used in that study was proposed by the independent consultant and approved by the Compensation Committee, and included publicly traded retail and related consumer finance peers that were similar to the Company in terms of size, complexity and business focus at that time. The following are the specific peer companies that were used in that study:



Retail Peers
Big Lots	hhgregg	Rent-A-Center
Cabelas	Mattress Firm	Sears Hometown & Outlet
Conn’s	Outerwall	Select Comfort
Dick’s Sporting Goods	Overstock.com	Tractor Supply
Fred’s	Pier 1 Imports	Wayfair

Consumer Finance Peers
Blackhawk Network Holdings	EZCorp	Santander Consumer USA Holdings
Cash America International	Fair Isaac	SpringLeaf Holdings
Credit Acceptance	Green Dot	Transunion
Enova International	Heartland Payment Systems	WEX
EPlus	LendingClub	World Acceptance

Survey Data. If data from the proxy peer group are not available for all NEO positions, the Compensation Committee may also review broader survey benchmarking data from time to time, as necessary.

Components of the Executive Compensation Program

The three primary components of each NEOs total direct compensation for 2017 were as follows:


•	base salary;


•	annual performance-based cash incentive award; and


•	long-term equity incentive awards.

These components are designed to be competitive with employers with whom we compete for executive talent and to support our compensation program objectives. The Compensation Committee has not set a prescribed mix or allocation for each component, but rather focuses on total direct compensation when making compensation decisions for our executives. In making these decisions, the Compensation Committee also considers 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 executive officers emphasizes variable and performance-based compensation more so than for our other employees. This reflects our philosophy that performance-based compensation opportunities - linked to financial, operating, and stock price performance - should increase as overall responsibility increases.

The following graphs demonstrate this philosophy by showing the mix of target pay for 2017 for our CEO and for our other NEOs as a group:

Base Salary

The Compensation Committee views base salary as fixed compensation intended to reflect the scope of an executive’s role. It reviews base salaries annually and adjusts them as necessary to ensure that salary levels remain appropriate and competitive. Salary increases are periodic rather than annual and are made after the Compensation Committee considers 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, Company performance and, with respect to certain NEOs, the performance of Aaron’s Business or Progressive.

Based on the Compensation Committee’s review of the above factors, none of the NEOs received a base salary increase for 2017. The following is the base salary for each NEO for 2017:



Named Executive Officer	2017 Base Salary
John W. Robinson III	$	700,000
Steven A. Michaels	$	550,000
Ryan K. Woodley	$	435,000
Curtis L. Doman	$	400,000
Douglas A. Lindsay	$	500,000

Annual Cash Incentive Awards

Annual cash incentive awards provide the opportunity to earn cash rewards for meeting Company or Aaron’s Business or Progressive financial and operational performance goals. Under the 2017 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 the year, the Compensation Committee approves the target award opportunity for each NEO. For 2017, these target award opportunities remained unchanged from 2016, and were as follows:



Named Executive Officer		2017 Target % of Salary
John W. Robinson III		115%
Steven A. Michaels		100%
Ryan K. Woodley		100%
Curtis L. Doman		100%
Douglas A. Lindsay		100%

Performance Measures and Weights. The following were the performance measures and weights in the 2017 annual cash incentive program for each NEO:



Aaron's, Inc. Robinson and Michaels	Progressive Woodley and Doman	Aaron's Business Lindsay
• 45% Adjusted EBITDA	• 50% Adjusted EBITDA	• 45% Adjusted EBITDA
• 35% Adjusted Revenue	• 30% Adjusted Revenue	• 35% Adjusted Revenue
• 20% Compliance	• 20% Compliance	• 20% Compliance

In each case, the measures are specific to each entity, and calculated as follows:


•	Adjusted revenues generally are measured on a GAAP basis, subject to the adjustments described below.


•	Adjusted EBITDA is based on GAAP earnings before interest, taxes, depreciation, and amortization, with overall Company and Progressive Adjusted EBITDA results (which, for purposes of determining Messrs. Woodley and Doman’s annual cash incentive award, is a combination of Progressive Leasing and Dent-A-Med, Inc. (“DAMI”) Adjusted EBITDA), subject to the adjustments described below.


•	Performance results for each measure also will exclude the effects of certain nonrecurring items of revenue or gain and expense or loss. For 2017, this included adjustments, as applicable, to remove various negative effects from Hurricanes Harvey and Irma from both the Adjusted revenue and Adjusted EBITDA metrics, and to remove the effect of the provision for loan losses at DAMI.


•	Compliance-related goals for Progressive and our Aaron's Business for 2017 focused on several areas, including launching a new Code of Conduct and related compliance training, the development and implementation of various processes to further improve compliance monitoring, and improving further compliance procedures related to our Progressive business.

The only change to the 2017 performance measures and weights were to add a Compliance component for the Aaron’s, Inc. participants, and adjust the weights of the other two metrics accordingly.

Performance Goals and Results. The Compensation 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 the financial measures (Adjusted EBITDA and Adjusted revenue), the payout range was from 25% to 200% of Target and for Compliance the payout range was from 0% to 125% of Target (based on the number of compliance goals achieved).

The following tables summarize the performance goals, performance results, and related incentive payout levels as a percent of target for each NEO:



Aaron's, Inc: Robinson and Michaels
($ Million)	Weight	Plan Performance Range					Actual Performance and Payout
Metric	Weight	Threshold	Target Zone			Maximum	Year Ending 12/31/2017	% of Target	Payout Calculation
Consolidated Adj. Revenue	35%	$2,749	$3,202	-	$3,267	$3,720	$3,390	104.8%	115.2%
Consolidated Adj. EBITDA¹	45%	$287	$334	-	$341	$388	$378	112.0%	174.0%
Compliance	20%		3 Projects			4 Projects	4 Projects	100.0%	125.0%
Payout³		25%	100%			200%			143.6%



Progressive: Woodley and Doman
($ Million)	Weight	Plan Performance Range					Actual Performance and Payout
Metric	Weight	Threshold	Target Zone			Maximum	Year Ending 12/31/2017	% of Target	Payout Calculation
Progressive Adj. Revenues²	30%	$1,274.4	$1,469	-	$1,529	$1,724.2	$1,605	107.0%	128.2%
Progressive Adj. EBITDA^1,2	50%	$150.5	$173.5	-	$180.6	$203.6	$194	109.8%	150.4%
Compliance	20%		3 Projects			4 Projects	4 Projects	100.0%	125.0%
Payout³		25%	100%			200%			138.7%



Aaron's Business: Lindsay
($ Million)	Weight	Plan Performance Range					Actual Performance and Payout
Metric	Weight	Threshold	Target Zone			Maximum	Year Ending 12/31/2017	% of Target	Payout Calculation
Aaron's Business Adj. Revenue	35%	$1,475.3	$1,700	-	$1,770	$1,996	$1,786	102.9%	103.5%
Aaron's Business Adj. EBITDA⁽⁴⁾	45%	$136.2	$157.0	-	$163.4	$184.3	$184	114.4%	194.9%
Compliance	20%		3 Projects			4 Projects	4 Projects	100.0%	125.0%
Payout³		25%	100%			200%			148.9%

¹Further adjusted for provision expense at DAMI and to remove certain negative effects of Hurricane Harvey and Irma
²Consolidation of Progressive and DAMI
³Maximum payout on Compliance is 125%
⁴Futher adjusted to remove certain negative effects of Hurricanes Harvey and Irma

Based on the above performance results and incentive calculations, the chart below shows the final annual cash incentive awards paid to our NEOs for 2017 performance:



Named Executive Officer	Award Earned under Annual Incentive Plan
John W. Robinson III	$	1,156,100
Steven A. Michaels	$	789,900
Ryan K. Woodley	$	603,200
Curtis L. Doman	$	554,600
Douglas A. Lindsay	$	744,600

Long-Term Equity Incentive Awards

Aaron’s long-term equity incentive awards are intended to:


•	reward the achievement of business objectives that the Compensation Committee believes will benefit our shareholders;


•	align the interests of our senior management with those of our shareholders; and


•	assist with retaining our senior management to ensure continuity of leadership.

Beyond these objectives, the Compensation Committee also considers market design practices, equity dilution, accounting expense and other internal considerations when deciding on the structure and size of equity awards.

Award Type and Mix. Each year the Compensation Committee grants equity awards to our named executive officers, however the award type and mix may change from time to time. In order to balance performance and retention incentives, the 2017 equity awards were made in the form of performance share units, stock options, and time-based RSAs.

The following highlights the 2017 equity award mix, along with the key objectives of each component.

Time-based vesting RSAs and stock options are subject to a pro rata annual three-year vesting period, with vestings occurring in three equal increments on dates that are soon after the first, second and third anniversaries of the date of grant. The number of performance shares earned is determined over a one-year performance period after the date of grant, and those earned performance shares are subject to a pro rata, annual three-year vesting period, with the vestings occurring in three equal increments on dates that are soon after the first, second and third anniversaries of the date of grant. The Compensation Committee believes these extended vesting periods promote retention and ensures that the ultimate value of any awards earned is tied to subsequent stock price performance.

Target Awards. Mr. Robinson’s target award is expressed as a dollar amount, with an annual grant date value that was established at $5.2 million as per the employment agreement we entered into with him when he was promoted to serve as our Chief Executive Officer. Target awards for 2017 for our other NEOs are expressed as a percentage of base salary, and are shown below:



Named Executive Officer		LTIP Target % of Salary
Steven A. Michaels		200%
Ryan K. Woodley		400%
Curtis L. Doman		300%
Douglas A. Lindsay		100%

These award target percentages were set by the Compensation Committee after reviewing the general award levels across our peer group and considering the responsibilities of each NEO. There were no changes to these target award levels for 2017 as compared with 2016 for any of the NEOs.

Awards generally are converted to a target number of performance shares and time-based RSAs by dividing the allocable portion of the grant date award value by our closing stock price on the date of grant. To determine the number of options to grant, the allocable portion of the grant date award value was divided by the estimated fair value of an option, as determined for benchmarking purposes using the Black-Scholes valuation methodology.

The long-term incentive target awards that were granted to our NEOs pursuant to the 2017 program structure are set forth in the table below:



Named Executive Officer	Number of Options	Number of Time Based Restricted Stock Awards	Number of Performance Shares	Aggregate Shares Underlying Target 2017 Equity Awards
John W. Robinson III	147,180	47,850	95,670	290,700
Steven A. Michaels	31,140	10,140	20,250	61,530
Ryan K. Woodley	49,260	16,020	32,010	97,290
Curtis L. Doman	33,990	11,040	22,080	67,110
Douglas A. Lindsay	14,160	4,620	9,210	27,990

Performance Shares Performance Measures and Weights. The following were the performance measures and weights for the Performance Shares granted in 2017:



Aaron's, Inc. Robinson and Michaels	Progressive Woodley and Doman	Aaron's Business Lindsay
• 25% Adjusted EBITDA	• 50% Invoice Volume	• 40% Adjusted EBITDA
• 50% Adjusted Revenue	• 30% Adjusted EBITDA	• 60% Adjusted Revenue (Consolidated)
• 25% Return on Capital	• 10% Adjusted EBITDA (Consolidated)
	• 10% Adjusted Revenue (Consolidated)

The Compensation Committee selected these measures to focus participants on growing our business and on sustaining and improving the quality of our earnings.

In each case, the measures are specific to each entity, except where noted as “consolidated,” which is referring to Aaron’s, Inc., and are calculated as follows:


•	Adjusted revenue is based on consolidated Aaron’s, Inc., Progressive, or Aaron’s Business results for 2017, as described above in “-Components of the Executive Compensation Program-Annual Cash Incentive Awards;”


•	Adjusted EBITDA is based on consolidated Aaron’s, Inc., Progressive or Aaron's Business results for 2017, as described above in “-Components of the Executive Compensation Program-Annual Cash Incentive Awards;”


•	Return on capital was measured by dividing net operating profit after tax 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; and


•	Invoice volume for Progressive is defined as the retail price of lease merchandise acquired and leased to a customer by Progressive during the performance period, net of returns.

Performance Goals and Results. The Compensation Committee established goals for each of the performance measures in the performance share 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 following tables summarize the performance goals, performance results, and related earning levels as a percent of target for each NEO:



Aaron's, Inc: Robinson and Michaels
($ Million)	Weight	Plan Performance Range					Actual Performance and Payout
Metric	Weight	Threshold	Target			Maximum	Actual	% of Target	Payout Calculation
Consolidated Adj. Revenue	50%	$2,750	$3,203	-	$3,267	$3,720	$3,390	104.8%	115.2%
Consolidated Adj. EBITDA¹	25%	$287.0	$334	-	$341	$388	$378	112.0%	174.0%
Consolidated ROC²	25%	8.3%	9.6%	-	10.0%	11.3%	10.8%	110.5%	157.0%
Payout		25%	100%			200%			140.4%


Progressive: Woodley and Doman
($ Million)	Weight	Plan Performance Range					Actual Performance and Payout
Metric	Weight	Threshold	Target			Maximum	Actual	% of Target	Payout Calculation
Progressive Invoice Volume	50%	$889	$1,025	-	$1,067	$1,203	$115	113.3%	183.5%
Progressive Adj. EBITDA^{1, 3}	30%	$150	$174	-	$181	$204	$194	109.8%	150.4%
Consolidated Adj. EBITDA¹	10%	$287	$334	-	$341	$388	$378	112.0%	174.0%
Consolidated Adj. Revenue	10%	$2,750	$3,203	-	$3,267	$3,720	$3,390	104.8%	115.2%
Payout		25%	100%			200%			165.8%


Aaron's Business: Lindsay
($ Million)	Weight	Plan Performance Range					Actual Performance and Payout
Metric	Weight	Threshold	Target			Maximum	Actual	% of Target	Payout Calculation
Consolidated Adj. Revenue	60%	$2,750	$3,203	-	$3,267	$3,720	$3,390	104.8%	115.2%
Aaron's Business Adj. EBITDA⁴	40%	$136	$157	-	$163	$184	$184	114.4%	194.6%
Payout		25%	100%			200%			147.0%

¹Further adjusted for provision expense at DAMI and to remove certain negative effects of Hurricanes Harvey and Irma.
²Return on Capital: Net Operating Profit and Tax/the Sum of Average Net Debt and Average Equity.
³Consolidation of Progressive and DAMI.
⁴Further adjusted to remove certain negative effects of Hurricanes Harvey and Irma.

The Performance Shares earned by the NEOs based on 2017 performance will vest in three annual increments on March 15, 2018, 2019 and 2020.

CEO Discretionary Equity Award Pool. In 2017, the Compensation Committee again established a pool of 100,000 shares to be granted by the Chief Executive Officer at his discretion to employees other than himself for retention and recognition purposes. Any awards proposed by Mr. Robinson for executive officers must be approved by the Compensation Committee. No awards to executive officers were made from this pool during 2017.

Executive Compensation Policies

Stock Ownership Guidelines. The Compensation Committee has adopted stock ownership guidelines to further align the interests of senior executives with our shareholders. The table below summarizes the current guidelines that apply to our NEOs:



Feature		Provision
Required levels		5x base salary: Chief Executive Officer 3x base salary: CFO and President, Strategic Operations; Chief Executive Officer, Progressive; and Chief Product Officer, Progressive 2x base salary: President, Aaron's Business

Shares counted toward guidelines		Stock owned outright Shares held in retirement accounts Unvested time-based RSUs and RSAs Earned but unvested performance shares “In the money” value of vested but unexercised stock options

Clawback Policy. The Compensation Committee 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 Compensation Committee reviews 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 allow the Compensation Committee to understand the cumulative effect of prior pay decisions and stock performance, as well as the retentive ability of existing long-term incentives, severance and change in control arrangements. The tally sheets are intended to facilitate the Compensation Committee’s understanding of the nature and amounts of total compensation under our executive compensation program and to assist the Compensation Committee in its overall evaluation of our program.

Executive Benefits and Perquisites

Our executive compensation program also provides certain benefits and perquisites to our NEOs. The value of these benefits and perquisites represents a small portion of a NEO’s overall total compensation opportunity and does not materially influence the Compensation Committee’s decisions with respect to the salary and incentive elements of the compensation of our NEOs. The Compensation Committee periodically reviews 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 the 401(k) Retirement Savings 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 new plan formula and any prior contributions will continue to vest under the preceding vesting schedule.

Under the Company’s Nonqualified Deferred Compensation Plan, which we refer to as the “Deferred Compensation Plan,” 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 matching contributions under the same formula that applies for our 401(k) Plan, with the combined benefit not exceeding the 401(k) Plan benefit.

Perquisites. The primary perquisite we offer to our NEOs is corporate aircraft use. Our NEOs may use the Company’s aircraft from time to time for non-business use. Incremental operating costs associated with such personal use is paid by the Company. The amount of income attributed to each NEO for income tax purposes from personal aircraft use is determined by the Standard Industry Fare Level method, and the executives are responsible for paying the tax on this income. The aggregate incremental cost to the Company of such use by each NEO, if any, is included under the “All Other Compensation” column of “Executive Compensation-Summary Compensation Table.”

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 have entered into an employment agreement with Mr. Robinson that details the duties and related compensation for his service as our Chief Executive Officer. We also entered into employment agreements with Messrs. Woodley and Doman when we acquired Progressive. Finally, we have adopted a severance plan, under which Messrs. Michaels, Lindsay, Woodley and Doman are covered, that is intended to provide certain benefits in the event employment is terminated by us without cause, or termination of employment occurs without cause or by the executive officer for good reason within two years after a change in control of the Company. Both the employment 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.

The specific details of the employment agreements and our severance plan are described later in this Proxy Statement, in the sections titled “Executive Compensation-Employment Agreements with Named Executive Officers” and “Executive Compensation-Potential Payments Upon Termination or Change in Control-Severance Plan.”

Policy on Compensation Tax Deductibility

In approving executive compensation arrangements for 2017, the Compensation Committee reviewed and considered the tax deductibility of executive compensation arrangements under Internal Revenue Code Section 162(m), and generally attempted to structure the short-term and long-term incentive programs in a way that would qualify most payments thereunder as “performance-based” in order to preserve tax deductibility. However, the Committee has always reserved the right to approve compensation arrangements that do not meet the requirements of Section 162(m) and are therefore not tax deductible, when doing so serves the purpose of accomplishing other important objectives of the executive compensation program.

Effective for tax years beginning after December 31, 2017, U.S. tax law changes will expand the definition of covered employees under Section 162(m) to, include among others, the Chief Financial Officer, and eliminate the performance-based compensation exception. At this time, it is not certain that our performance-based compensation for periods prior to 2018 will qualify for an exemption from the deduction limit under transition relief applicable to arrangements in place as of November 2, 2017, as we, like many other companies, are awaiting guidance from the Internal Revenue Service related to this matter before we are able to make a final determination.

The Compensation Committee views the tax deductibility of executive compensation as one factor to be considered in the context of its overall compensation philosophy. The Compensation Committee reviews each material element of compensation on a continuing basis to determine whether deductibility can be accomplished without sacrificing flexibility and other important elements of the overall executive compensation program.

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, http://www.aarons.com. The Compensation Committee is composed of four independent members of the board as defined under the listing standards of the New York Stock Exchange and under the 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 the Proxy Statement related to the Company's 2018 Annual Meeting of Shareholders and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. 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 the Proxy Statement and incorporated into the Annual Report on Form 10-K.

This report is respectfully submitted by the Compensation Committee of the board of directors.

Douglas C. Curling (Chair)

Kathy T. Betty

Cynthia N. Day

Ray M. Robinson

EXECUTIVE COMPENSATION

The following Summary Compensation Table summarizes the total compensation earned by, or awarded to, our named executive officers in 2017, 2016 and 2015, as applicable.

Summary Compensation Table



Name and Principal Position	Year	Salary ($)	Bonus⁽¹⁾ ($)	Stock Awards⁽²⁾($)	Option Awards($)	Non-Equity Incentive Plan Compensation⁽³⁾($)	All Other Compensation⁽⁴⁾($)		Total ($)
John W. Robinson III	2017	700,000	—	3,900,874	1,258,389	1,156,100	3,846		7,019,209
Chief Executive Officer	2016	700,000	—	3,902,004	1,297,620	781,600	5,982		6,687,206
	2015	700,000	—	5,443,622	—	754,600	32,435		6,930,657
Steven A. Michaels	2017	550,000	—	826,000	266,247	789,900	19,452	(5)	2,451,599
Chief Financial Officer &	2016	531,689	—	825,228	274,476	516,200	14,142		2,161,735
President of Strategic	2015	410,000	—	750,200	195,804	442,000	11,071		1,809,075
Operations
Ryan K. Woodley	2017	435,000	—	1,305,455	421,173	603,200	11,340	(5)	2,776,168
Chief Executive Officer	2016	429,166	—	1,304,064	434,676	665,200	10,556		2,843,662
Progressive	2015	410,963	—	1,197,840	384,252	430,400	10,812		2,434,267
Curtis L. Doman	2017	400,000	—	900,202	290,615	554,600	11,610	(5)	2,157,027
Chief Product Officer	2016	395,833	—	899,940	299,040	613,500	8,744		2,217,057
Progressive	2015	387,213	—	843,640	270,600	403,500	12,643		1,917,596
Douglas A. Lindsay	2017	500,000	—	375,899	121,068	744,600	17,480	(5)	1,759,047
President,	2016	458,333	180,000	801,359	115,489	341,400	175,207		2,071,788
Aaron's Business


(1)	Represents cash bonuses paid to Mr. Lindsay in recognition of the important role that he played in developing the restructuring plan for our Aaron's Business, and to reward him for the numerous operational and other business improvements he initiated during 2016, as well as the strategies he developed and implemented to improve our ongoing results.

(2)

Represents the aggregate grant date fair value of awards of time-based RSUs, RSAs and performance shares recognized by the Company as required by Financial Accounting Standards Board Codification 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, 2017 for a discussion of the assumptions used in calculating these amounts. For the time-based RSUs and RSAs, the fair value is calculated using the closing stock price on the date of grant. For the performance shares, the fair value is also the closing stock price 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 performance share awards, the grant date fair value would be: Mr. Robinson $5,200,621; Mr. Michaels $1,100,790; Mr. Woodley $1,740,064; Mr. Doman $1,200,269; and Mr. Lindsay $500,656.


(3)	Reflects the value of the cash bonus earned under our annual cash incentive award program.

(4)

We provide a limited number of perquisites to our named executive officers and value those perquisites based on their aggregate incremental cost to the Company. We calculated the incremental cost of Company aircraft use based on the average variable operating costs to the Company. 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 to the Company. 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.


(5)	Includes matching contributions in the amount of $10,800 made by the Company to Messr. Michaels’, Woodley’s, Doman’s or Lindsay’s account, as applicable, in the Company’s 401(k) plan.

Grants of Plan-Based Awards in 2017

Our Compensation Committee granted restricted stock, stock options and performance shares to our named executive officers during 2017. Set forth below is information regarding awards granted in 2017.



Name	Grant Date	Potential 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 ($/Sh)	Grant Date Fair Value of Stock and Option Awards⁽⁵⁾ ($)
Name	Grant Date	Threshold ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)			Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Stock and Option Awards⁽⁵⁾ ($)
John W. Robinson III		201,250	805,000	1,714,650
	2/24/2017				23,918	95,670	191,340				2,600,311
	2/24/2017							47,850			1,300,563
	2/24/2017								147,180	27.18	1,258,389
Steven A. Michaels		137,500	550,000	1,017,500
	2/24/2017				5,063	20,250	40,500				550,395
	2/24/2017							10,140			275,605
	2/24/2017								31,140	27.18	266,247
Ryan K. Woodley		108,750	435,000	804,750
	2/24/2017				16,005	32,010	64,020				870,031.8
	2/24/2017							16,020			435,423.6
	2/24/2017								49,260	27.18	421,173
Curtis L. Doman		100,000	400,000	740,000
	2/24/2017				11,040	22,080	44,160				600,134.4
	2/24/2017							11,040			300,067.2
	2/24/2017								33,990	27.18	290,614.5
Douglas A. Lindsay		125,000	500,000	925,000
	2/24/2017				2,303	9,210	18,420				250,327.8
	2/24/2017							4,620			125,572
	2/24/2017								14,160	27.18	121,068

(1)

For the named executive officers, represents the amounts that could be earned under the annual cash incentive award program based on performance against pre-determined goals for Adjusted revenue and Adjusted EBITDA, measured on a Company-wide basis or for Aaron's Business or Progressive, based on each executive’s organizational level. The amounts actually earned are included in the non-equity incentive plan compensation column of the Summary Compensation Table.

(2)

Represents the performance shares granted under our 2017 long-term equity incentive award program. Performance metrics for Messrs. Robinson and Michaels included consolidated Company Adjusted revenues, consolidated Company Adjusted EBITDA and consolidated return on capital. Performance metrics for Messrs. Woodley and Doman included Progressive Adjusted EBITDA and invoice volume and consolidated Company total Adjusted revenues and Adjusted EBITDA. Performance metrics for Mr. Lindsay included consolidated Company Adjusted revenue and Adjusted EBITDA for the Aaron's Business. 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 15, 2018, 2019 and 2020. Based on our performance for the year, performance shares were earned under the 2017 program at 140.4% of target for Messrs. Robinson and Michaels, at 165.8% of target for Messrs. Woodley and Doman, and at 147.0% of target for Mr. Lindsay


(3)	Includes the time-based RSAs granted to each of our named executive officers under our 2017 long-term equity incentive award program, that are expected to vest in three approximately equal increments over a three-year period on each of March 15, 2018, 2019 and 2020.


(4)	Includes stock options granted under our 2017 long-term equity incentive award program that are expected to vest in three approximately equal increments over a three-year period on each of March 15, 2018, 2019 and 2020.


(5)	Represents the aggregate grant date fair value of awards recognized by the Company as required by Financial Accounting Standards Board Codification Topic 718. See Note 11 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for a discussion of the assumptions used in calculating these amounts.

Employment Agreements with Named Executive Officers

Employment Agreement with Mr. Robinson. In connection with his appointment as Chief Executive Officer effective November 10, 2014, we entered into a new employment agreement with Mr. Robinson that superseded our prior agreement with him that was entered into when we acquired the Progressive segment.

Mr. Robinson’s compensation as Chief Executive Officer was established by the Compensation Committee after considering the following: his compensation as Chief Executive Officer of Progressive, the significant increase in his responsibilities as a result of his appointment as Chief Executive Officer of the Company, market compensation levels generally for chief executive officers across the Company’s historical retail-oriented peer group, and the need to provide compensation opportunities to Mr. Robinson commensurate with his experience in and knowledge of the industry.

Mr. Robinson’s current agreement contains a rolling, three-year term although the Company may, upon proper notice, cease the automatic extension. The agreement provides for an annual base salary of $700,000 for Mr. Robinson, a target annual cash incentive award of 100% of base salary, and an annual target long-term incentive award with a value of $5,200,000. The agreement also provided for an initial equity grant of 5,000 time-based RSUs that vest on the first anniversary of the grant date.

Pursuant to this agreement, Mr. Robinson is entitled to participate in any of the Company’s present and future stock or cash bonus plans that are generally available to the Company’s executive officers. Mr. Robinson is also entitled to paid vacation, life insurance, health insurance, fringe benefits and such other employee benefits generally made available by the Company to its executive officers. Specific benefits will be provided in the event Mr. Robinson’s employment is terminated without cause by the Company or by him for good reason which are discussed in greater detail in “—Potential Payments Upon Termination or Change in Control.” Mr. Robinson’s employment agreement also contains customary confidentiality, non-competition, non-solicitation and release provisions in favor of the Company.

Employment Arrangement with Mr. Woodley. In connection with our acquisition of Progressive in 2014, we entered into an employment agreement with Mr. Woodley to serve as the Chief Operating Officer / Chief Financial Officer of Progressive at an initial annual base salary of $350,000 and a four-year term. Under the terms of his employment agreement, Mr. Woodley is eligible to participate in the Company’s annual cash and long-term incentive programs. Mr. Woodley will receive benefits under his agreement in the event of death or disability, and will receive severance benefits under the Severance Plan in the event he is terminated by the Company without cause or resigns for good reason. Mr. Woodley has also agreed to customary confidentiality, non-competition, non-solicitation and release provisions in favor of the Company. The Company subsequently appointed Mr. Woodley as Chief Executive Officer of Progressive in January 2015. The Company did not enter into an amended or new employment agreement with Mr. Woodley upon his appointment as CEO of Progressive.

Employment Arrangement with Mr. Doman. In connection with our acquisition of Progressive in 2014, we entered into an employment agreement with Mr. Doman to serve as the Chief Technology Officer of Progressive at an initial annual base salary of $350,000 and a four-year term. Under the terms of his employment agreement, Mr. Doman is eligible to participate in the Company’s annual cash and long-term incentive programs. Mr. Doman will receive benefits under his agreement in the event of death or disability, and will receive severance benefits under the Severance Plan in the event he is terminated by the Company without cause or resigns for good reason. Under his employment agreement, Mr. Doman has also agreed to customary confidentiality, non-competition, non-solicitation and release provisions in favor of the Company.

Aaron’s, Inc. 2015 Equity and Incentive Plan

General. The purpose of the Aaron’s, Inc. 2015 Equity and Incentive Plan, or the “2015 Plan,” which was approved by our shareholders at an annual meeting on May 6, 2015, is to promote the long-term growth and profitability of Aaron’s and our subsidiaries by providing employees, directors, consultants, advisors and other persons who work for us and our subsidiaries with incentives to maximize shareholder value and otherwise contribute to our continued success. In addition, we believe the 2015 Plan is a critical component to help us attract, retain and reward the best talent and align their interests with our shareholders. The 2015 Plan may be amended and terminated by the Compensation Committee at any time, and no awards may be made under the 2015 Plan after March 10, 2025.

Administration. The Compensation Committee administers the 2015 Plan and has the right to select the persons who receive awards under the 2015 Plan. The Compensation Committee also has the authority to set the terms and conditions of all grants and awards made under the 2015 Plan, including the term, exercise price, vesting conditions, performance measures and the consequences of termination of employment of any such grants and awards. In particular, the Compensation Committee has the authority to reduce any award as it determines appropriate and, with regard to performance criteria, to determine whether the applicable performance criteria have been met for any awards made under the 2015 Plan.

Awards Available for Grant. The 2015 Plan provides for the grant of non-qualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted stock, RSUs, performance shares, performance units, annual cash incentive awards and other stock-based awards to eligible participants. Incentive stock options may only be granted to employees of the Company or its subsidiaries.

Number of Shares Authorized. The number of shares available for issuance pursuant to awards granted under the 2015 Plan is 5,000,000 shares, subject to certain adjustments described in the 2015 Plan. Except to the extent the Compensation Committee determines that an award is not intended to comply with the performance-based compensation provisions of Section 162(m) of the Internal Revenue Code, the number of awards that, in the aggregate, may be granted in any one fiscal year to any participant is limited as follows:


•	the maximum number of options and SARs is 1,000,000;


•	the maximum number of shares of restricted stock and/or RSUs is 600,000 shares and/or units;


•	the maximum aggregate payout with respect to performance units is $5,000,000 dollars (to the extent settled in cash) or 600,000 shares (to the extent settled in shares);


•	the maximum number of other awards is the fair market value (determined as of the grant date) of 600,000 shares;


•	the maximum aggregate payout (determined as of the end of the applicable performance period) with respect to annual incentive cash awards is $5,000,000; and


•	the maximum aggregate number of shares under all awards granted in any one fiscal year to any non-employee director (excluding any awards made at the election of the director in lieu of all or a portion of the director’s annual and committee cash retainer fees) is 20,000 shares.

The limitations on performance shares, performance units and other awards are applied based on the maximum amount that could be paid under each such award.

Amended and Restated 2001 Stock Option and Incentive Award Plan

The Aaron Rents, Inc. 2001 Stock Option and Incentive Award Plan, as amended, or the “2001 Incentive Plan,” was terminated and replaced by the 2015 Plan. The 2001 Incentive Plan is no longer open to participation by any of our employees, officers or directors, and no further awards may be granted under the 2001 Incentive Plan. While the plan remained in effect, the Compensation Committee administered the 2001 Incentive Plan and had the exclusive right to set the terms and conditions of grants and awards, including the term, exercise price, vesting conditions (including vesting based on the Company’s performance or upon share price performance), and consequences of termination of employment. The Compensation Committee also selected the persons who receive such grants and awards and interpreted and administered the 2001 Incentive Plan. The last awards granted under the 2001 Incentive Plan are expected to vest in 2018, and the last stock options granted under that plan will expire in 2025.

Outstanding Equity Awards at 2017 Fiscal Year-End

The following table provides information on outstanding stock option and stock awards held by the named executive officers, including both unexercised and unvested awards, as of December 31, 2017. The market value of the stock awards is based upon the closing market price for the Company’s common stock as of December 31, 2017, which was $39.85.



Name of Executive	Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options Unexercisable		Option Exercise Price ($)	Option Expiration Date	Number of Shares of Stock That Have Not Vested		Market Value of Shares or Units of Stock That Have Not Vested ($)⁽¹⁾	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)⁽¹⁾
John W. Robinson III
	160,919		—		27.80	12/5/2024
	60,750	⁽²⁾	121,500	⁽²⁾	22.64	2/26/2026
			147,180	⁽³⁾	27.18	2/24/2027
							28,846	⁽⁴⁾	1,149,513
							19,756	⁽⁵⁾	787,277	36,974		1,473,414
							38,300	⁽⁶⁾	1,526,255	75,068		2,991,460
							47,850	⁽⁷⁾	1,906,823	95,670	⁽⁹⁾	3,812,450
Steven A. Michaels
	11,250		—		19.92	2/23/2020
	4,735		—		29.77	2/18/2024
	7,597		—		29.25	4/15/2024
	16,884	⁽⁹⁾	8,316	⁽⁹⁾	28.04	3/10/2025
	12,850	⁽²⁾	25,700	⁽²⁾	22.64	2/26/2026
			31,140	⁽³⁾	27.18	2/24/2027
							629	⁽⁸⁾	25,066
							2,409	⁽⁵⁾	95,999	5,448		217,103
							8,100	⁽⁶⁾	322,785	15,876		632,659
							10,140	⁽⁷⁾	404,079	20,250	⁽⁹⁾	806,963
Ryan K. Woodley
	28,542	⁽¹⁰⁾	14,058	⁽¹⁰⁾	32.20	2/6/2025
	20,350	⁽²⁾	40,700	⁽²⁾	22.64	2/26/2026
			49,260	⁽³⁾	27.18	2/24/2027
							26,923	⁽⁴⁾	1,072,882
							4,092	⁽⁵⁾	163,066	8,069		321,550
							12,800	⁽⁶⁾	510,080	33,126		1,320,071
							16,020	⁽⁷⁾	638,397	32,010	⁽⁹⁾	1,275,599
Curtis L. Doman
	20,100	⁽¹⁰⁾	9,900	⁽¹⁰⁾	32.20	2/6/2025
	14,000	⁽²⁾	28,000	⁽²⁾	22.64	2/26/2026
			33,990	⁽³⁾	27.18	2/24/2027
							26,923	⁽⁴⁾	1,072,882
							2,871	⁽⁵⁾	114,409	5,694		226,906
							8,800	⁽⁶⁾	350,680	22,904		912,724
							11,040	⁽⁷⁾	439,944	22,080	⁽⁹⁾	879,888
Douglas A. Lindsay
	6,130	⁽²⁾	12,260	⁽²⁾