UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

First Cash Financial Services,FirstCash, Inc.

Arlington,Fort Worth, Texas 7601176102

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Our Stockholders:

You should read with care the attached Proxy Statement, which contains detailed information about these proposals. As in previous years, the Company will furnish proxy materials to its stockholders primarily through the Internet. The Company will mail a Notice of Internet Availability of Proxy Materials (“Notice”) to most of its stockholders, which will contain instructions on how to access proxy materials on the Internet and vote. The Notice will also describe how to request a paper copy of proxy materials or electronic delivery of materials via e-mail, free of charge. Stockholders who have previously elected delivery of the Company’s proxy materials electronically will receive an e-mail with instructions on how to access these materials electronically. Stockholders who have previously elected to receive a paper copy of the Company’s proxy materials will receive a full paper set of these materials by mail.

Your vote is important, and accordingly, we urge you to complete the on-line voting procedures as described on the proxy card or you can sign, date and return the proxy card in the enclosed postage-paid envelope. The fact that you have voted on-line or returned your proxy in advance will in no way affect your right to vote in person should you attend the meeting. However, by signing and returning the proxy, you have assured representation of your shares at the Annual Meeting of Stockholders.

First Cash Financial Services,FirstCash, Inc.

Arlington,Fort Worth, Texas 7601176102

_______________

PROXY STATEMENT

for

Annual Meeting of Stockholders

_______________

GENERAL INFORMATION

If you do not provide voting instructions to your broker, bank or other nominee, the voting of your shares by the bank, broker or other nominee who holdsis governed by the rules of the New York Stock Exchange (the “NYSE”). These rules allow banks, brokers and other nominees to vote shares in their discretion on “routine” matters for another person returns a proxy butwhich the “beneficial holder” does not provide voting instructions. On matters considered “non-routine,” banks, brokers and other nominees may not vote on a particular item, usually becauseshares without your instruction. Shares that banks and brokers are not authorized to vote are referred to as “broker non-votes.”

If you do not instruct your bank, brokerage firm or other nominee in accordance with their directions how to vote your shares prior to the nominee does not have discretionary voting authority for that item and has not received instructions from the ownerdate of the shares.Annual Meeting, your bank, brokerage firm or other nominee cannot vote your shares on the following proposals: “Proposal 1 - Election of Directors,” “Proposal 3 - Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers,” or “Proposal 4 - Advisory Vote on Frequency of Advisory Votes on Executive Compensation,” and such shares will be considered “broker non-votes” and will not affect the outcome of these votes. However, your bank or brokerage firm may vote your shares in its discretion on “Proposal 2 - Ratification of Independent Registered Public Accounting Firm.”

Each share of Common Stock is entitled to one vote on all questions requiring a stockholder vote at the Annual Meeting. The votes required to act on each proposal at the Annual Meeting are summarized below.

If you are a stockholder of record, you may vote in person at the Annual Meeting, or by proxy without attending the Annual Meeting. You may vote by mail by signing, dating and returning your proxy card in the enclosed prepaid envelope. You may also vote over the Internet or by telephone. The proxy card the Company mails you will instruct you on how to vote over the Internet or by telephone. If you hold your shares in an account through a broker, bank or other nominee in “street name,” you should complete, sign and date the voting instruction card that your broker, bank or nominee provides to you or as your broker or nominee otherwise instructs.

All shares represented by properly executed proxies, unless such proxies previously have been revoked, will be voted at the Annual Meeting in accordance with the directions on the proxies. If no direction is indicated, the shares will be voted to: (i) ELECT AMB. JORGE MONTAÑOMESSRS. DANIEL E. BERCE, MIKEL D. FAULKNER AND RANDEL G. OWEN AS DIRECTOR;DIRECTORS; (ii) RATIFY THE SELECTION OF HEIN & ASSOCIATESRSM US LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 2016;2017; (iii) APPROVE THE ADVISORY PROPOSAL ON THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS; (iv) APPROVE THE ADVISORY PROPOSAL THAT AN ADVISORY VOTE ON EXECUTIVE COMPENSATION OCCUR ANNUALLY; AND (iv)(v) TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. The enclosed proxy, even though executed and returned, may be revoked at any time prior to the voting of the proxy (a) by the execution and submission of a revised proxy, (b) by written notice to the Secretary of the Company or (c) by voting in person at the Annual Meeting.

COMPANY OVERVIEW AND ANNUAL REPORT

ITEMPROPOSAL 1

The Bylaws of the Company provide that the Board of Directors will determine the number of directors, but shall consist of at least one director and no more than 15 directors, however, the NASDAQ stock exchange requires at least three independent directors make up the Board of Directors.directors. The stockholders of the Company elect the directors. At each annual meeting of the stockholders of the Company, successors of the class of directors whose term expires at the annual meeting will be elected for a three-year term. Any director elected to fill a vacancy or newly created directorship resulting from an increase in the authorized number of directors shall hold office for a term that shall coincide with the remaining term of that class. In no case will a decrease in the number of directors shorten the term of any incumbent director. Any vacancy on the Board of Directors, howsoeverhowever resulting, may be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director.

The stockholders will elect one directorthree directors for the coming year; the nominee, who does not presently serve as a director of the Company, will be appointedyear for a termterms of three years.

Unless otherwise instructed or unless authority to vote is withheld, the enclosed proxy will be voted for the election of the nomineenominees listed herein. Although the Board of Directors does not contemplate that the nominee will be unable to serve, if such a situation arises prior to the Annual Meeting, the person named in the enclosed proxy will vote for the election of such other person as may be nominated by the Board of Directors.

During 2016, the Company increased the size of its board from four directors to a total of seven directors, of which five are independent. The current directors are as follows:

There are no family relationships between any director or executive officers,officers.

The seven directors are divided into three classes. At each annual meeting of stockholders, one class is elected to hold office for a term of three years. Directors serve until the earlier of (i) his or between any directorher death, resignation, retirement, removal or disqualification, or (ii) until his or her successor is elected and executive officer.qualified. The directors standing for election at this year’s annual meeting are Messrs. Daniel E. Berce, Mikel D. Faulkner and Randel G. Owen. Messrs. Rick L. Wessel and James H. Graves will next stand for election in 2018 and Mr. Daniel R. Feehan and Amb. Jorge Montaño will next stand for election in 2019.

 

 

 

TheBased on the respective nominees’ experience, the Nominating and Corporate Governance Committee of the Board and the entire Board of Directors unanimously recommendrecommends a vote “FOR” the election of Amb. Jorge MontañoMessrs. Daniel E. Berce, Mikel D. Faulkner and Randel G. Owen as a directordirectors of the Company.

CORPORATE GOVERNANCE, AND BOARD MATTERS AND DIRECTOR COMPENSATION

The Board of Directors held foureight meetings during the year ended December 31, 2015. Messrs. Wessel, Faulkner, Owen and Guerra2016. All of the directors each attended, either telephonically or in person, allat least 75% of the meetings of the Board of Directors during their respective terms, except Amb. Montaño did not attend one of the year ended December 31, 2015.meetings held during his term as director during 2016 due to an illness. Members of the Board of Directors are encouraged to attend the Company’s annual meeting; however, attendance is not mandatory. Mr. Wessel attended last year’s Annual Meeting. In addition, the independent directors of the Company meet separately in executive sessions after regularly scheduled meetings of the Board of Directors and more frequently as deemed appropriate by the independent directors. 

During 2015,2016 through the date of the annual meeting on June 6, 2016, the Audit, Compensation and Nominating and Corporate Governance Committees each consisted of Mr. Faulkner, Mr. OwenGuerra and Mr. Guerra. The Audit Committee held fourOwen. From June 6, 2016 through September 1, 2016, the committees each consisted of Mr. Faulkner, Amb. Montaño and Mr. Owen. After the Merger, and as of today, the committees are composed as follows:

All of the committee members each attended, either telephonically or in person, at least 75% of their respective meetings of the committees during the year ended December 31, 2015, the Compensation Committee held three meetings during the year ended December 31, 2015, andtheir respective terms, except that Amb. Montaño did not attend the Nominating and Corporate Governance Committeemeeting held one meeting during the year ended December 31, 2015.time he was a member due to an illness.

The Company has adopted a Director Election (Majority Voting) Policy. Pursuant to this policy, in an uncontested election of directors (that is, an election where the number of nominees is equal to the number of seats open) any nominee for director who receives a greater number of “WITHHOLD” votes than “FOR” votes for his election must promptly submit an offer of resignation to the Nominating and Corporate Governance Committee following the certification of the stockholder vote for consideration in accordance with the following procedures.

The Nominating and Corporate Governance Committee will consider any tendered resignation and, promptly following the date of the stockholders’ meeting at which the election occurred, will make a recommendation to the Board of Directors concerning the acceptance or rejection of such resignation. In determining its recommendation to the Board of Directors, the Nominating and Corporate Governance Committee will consider all factors deemed relevant by the members of the Nominating and Corporate Governance Committee including, without limitation, the stated reason or reasons why stockholders who cast “withhold” votes for the director did so, the qualifications of the director (including, for example, the impact the director’s resignation would have on the Company’s compliance with the requirements of the SEC and the rules of the NASDAQ)NYSE), and whether the director’s resignation from the Board of Directors would be in the best interests of the Company and its stockholders.

The Nominating and Corporate Governance Committee also will consider a range of possible alternatives concerning the director’s tendered resignation as members of the committee deem appropriate including, without limitation, acceptance of the resignation, rejection of the resignation, or rejection of the resignation coupled with a commitment to seek to address and cure the underlying reasons reasonably believed by the Nominating and Corporate Governance Committee to have substantially resulted in the “withheld” votes.

The Board of Directors has determined that, with the exception of Mr. Wessel CEO and president of the Company,Mr. Feehan, all of its directors, including all of the members of the Audit, Compensation, and Nominating and Corporate Governance Committees, are “independent” as defined by NASDAQthe NYSE and the SEC and for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).Code. No director is deemed independent unless the Board of Directors affirmatively determines that the director has no material relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.Company. In making its determination, the Board of Directors observes all criteria for independence established by the rules of the SEC and NASDAQ.the NYSE.

The Board of Directors is responsible for overseeing and monitoring the material risks facing the Company. In its oversight role, the Board of Directors regularly reviews the Company’s strategic initiatives, which address, among other things, the risks and opportunities facing the Company. The Board of Directors also has overall responsibility for executive officer succession planning and reviews succession plans from time to time. The Board of Directors has delegated certain risk management oversight responsibility to its committees. As part of its responsibilities set forth in its charter, the Audit Committee is responsible for discussing with management the Company’s major financial risk exposures and the steps management has taken to monitor and control those exposures, including the Company’s risk assessment and risk management policies.

The Compensation Committee reviews the risks and rewards associated with the Company’s compensation programs. TheWith the assistance of an independent compensation consulting firm, the Compensation Committee designs compensation programs with features that mitigate risk without diminishing the incentive nature of the compensation. While these performance-based compensation and equity programs have been designed and administered in a manner that discourages undue risk-taking by employees, the Compensation Committee believes these programs create appropriate incentives to increase long-term stockholder value. The Compensation Committee has discussed the concept of risk as it relates to the compensation programs and the Compensation Committee does not believe the compensation programs encourage excessive or inappropriate risk taking for the following reasons:

Board Leadership Structure

The Board of Directors recognizes that the leadership structure and combination or separation of the CEO and chairman roles is driven by the needs of the Company at any point in time. The Board of Directors does not believe there should be a fixed rule as to whether the offices of chairman and CEO should be vested in the same person or two different people, or whether the chairman should be an employee of the Company or should be elected from among the non-employee directors. The needs of the Company and the individuals available to fulfill these roles may dictate different outcomes at different times, and the Board of Directors believes that retaining flexibility in these decisions is in the best interest of the Company and its stockholders.

In discharging its responsibilities to nominateAt a minimum, candidates for election or appointment to the Board of Directors must have integrity, be committed to act in the best interest of all the Company’s stockholders and be able and willing to devote the required amount of time to the Company’s affairs, including attendance at meetings of the Board of Directors. In recommending candidates, the Nominating and Corporate Governance Committee has not specifiedtakes into consideration any minimum qualifications for serving oncriteria approved by the Board and such other factors as it deems appropriate, including, among other things, the candidate’s judgment, skill, diversity, and experience with business and other organizations of Directors. However, thecomparable size. The Nominating and Corporate Governance Committee endeavors to evaluate, propose and approve candidates, including those recommended by stockholders, with business experience and personal skills in finance, marketing, financial reporting and other areas that may be expected to contribute to an effective Board of Directors. The Nominating and Corporate Governance Committee seeks to assure that the Board of Directors is composed of individuals who have experience relevant to the needs of the Company and who have the highest professional and personal ethics, consistent with the Company’s values and standards. Candidates should be committed to enhancing stockholder value and should

Although there is no specific policy on considering diversity, the Board of Directors and the Nominating and Corporate Governance Committee take various diversity-related considerations into account in the selection criteria for new directors. The Nominating and Corporate Governance Committee seeks members from diverse professional backgrounds to combine a broad spectrum of experience and expertise with a reputation for integrity. Some additional considerations may include national origin, gender, race, functional background and the diversity of perspectives that the candidate would bring to the Board of Directors.

The Nominating and Corporate Governance Committee will utilize a variety of methods for identifying and evaluating nominees for director. Candidates may come to the attention of the Nominating and Corporate Governance Committee through current members of the Board of Directors, professional search firms, stockholders or other persons. These candidates will be evaluated at regular or special meetings of the Nominating and Corporate Governance Committee, and may be considered at any point during the year. The Nominating and Corporate Governance Committee will also consider properly submitted stockholder nominations for candidates for the Board of Directors. The procedures to be followed by stockholders in submitting such nominations are set forth in the “Stockholder Proposals” section. Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by the Nominating and Corporate Governance Committee. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials will be forwarded to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder.

The Board of Directors has established a procedure for stockholders to send communications to the Board of Directors. Stockholders may communicate with the Board of Directors generally or with a specific director or the independent directors at any time by writing to the Company’s Corporate Secretary at the Company’s address, 690 East Lamar Boulevard, Suite 400, Arlington,1600 West 7th Street, Fort Worth, Texas 76011.76102. The Corporate Secretary will review all messages received and will forward any message that reasonably appears to be a communication from a stockholder about a matter of stockholder interest that is intended for communication to the Board of Directors. Communications will be sent as soon as practicable to the director, or group of directors, to whom they are addressed, or if addressed to the Board of Directors generally, to the chairman of the Nominating and Corporate Governance Committee. Because other appropriate avenues of communication exist for matters that are not of stockholder interest, such as general business complaints or employee grievances, communications that do not relate to matters of stockholder interest will not be forwarded to the Board of Directors. The Corporate Secretary has the option, but not the obligation, to forward these other communications to appropriate channels within the Company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon exercise of an option or warrant) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person’s actual voting power at any particular date.

To the best of the Company’s knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them. 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2015,2016, Messrs. Faulkner, OwenGraves, Guerra, Montaño and GuerraOwen served as members of the Compensation Committee, were not and have never been employed by the Company, and did not have any interlocking relationship with another entity requiring disclosure pursuant to SEC rules.

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

AUDIT COMMITTEE REPORT

The Audit Committee operates under a written charter adopted by the Board of Directors. All members of the Audit Committee meet the independence standards and other criteria established by NASDAQ.NYSE.

The Audit Committee met privately with Hein & AssociatesRSM US LLP, and discussed issues deemed significant by the auditor, including those required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board. In addition, the Audit Committee received from Hein & AssociatesRSM US LLP the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding Hein and Associates,RSM US LLP’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with Hein & AssociatesRSM US LLP its independence from the Company and its management. The Audit Committee also considered whether the provision of non-audit services, if any, by Hein & AssociatesRSM US LLP was compatible with maintaining its independence.

By the Audit Committee:

The Audit Committee report above does not constitute “soliciting material” and will not be deemed “filed” or incorporated by reference into any of the Company’s filings under the Securities Act or the Exchange Act except to the extent that the Company specifically incorporates it by reference therein.

Principal Accountant Fees and Services

The audit fees for the years ended December 31, 20152016 and 20142015 were for the audits of the consolidated financial statements of the Company, internal control auditing and reporting as required by Section 404 of the Sarbanes Oxley Act of 2002, issuance of consents, and review of the Company’s SEC filings. The audit related fees for fiscal 20142016 relate primarily to the Company’s March 2014 senior notes offering and subsequent SEC registration of the senior notes.Merger.

The Audit Committee implemented pre-approval policies and procedures related to the provision of audit and non-audit services. Under these procedures, the Audit Committee pre-approves both the type of services to be provided by the Company’s independent accountants and the estimated fees related to these services. During the approval process, the Audit Committee considers the impact of the types of services and the related fees on the independence of the auditor. The services and fees must be deemed compatible with the maintenance of the auditor’s independence, including compliance with SEC rules and regulations.

Throughout the year, the Audit Committee reviews any revisions to the estimates of audit and non-audit fees initially approved.

Ratification of the Independent Registered Public Accounting Firm

Representatives of Hein & AssociatesRSM are expected to be present at the meeting, with the opportunity to make a statement if desired to do so. Such representatives are also expected to be available to respond to appropriate questions.

 

The affirmative vote of the holders of a majority of the outstanding shares of Common Stock present or represented by proxy at the Annual Meeting and entitled to vote at the Annual Meeting is required to ratify the Audit Committee’s selection of Hein & Associates.RSM.

 

EQUITY COMPENSATION PLAN INFORMATION

EXECUTIVE OFFICERS

The following table lists the named executive officers of the Company as of the date hereof and the capacities in which they serve.

R. Douglas Orr joined the Company in July 2002 as the vice president of finance. Since January 2003, Mr. Orr has served as CFO, and since January 2005, Mr. Orr has also served as executive vice president. In addition, Mr. Orr has served as secretary and treasurer since November 2006. Prior to joining the Company, Mr. Orr spent 14 years at Ray & Berndtson, a global executive search firm, where he served in senior executive and financial management roles. Prior to his employment at Ray & Berndtson, Mr. Orr worked for four years at Price Waterhouse LLP.

Raul R. Ramos joined the Company in 1992 to be in charge of the jewelry operations center. Mr. Ramos has served in a progression of operational management roles, including his current position of senior vice president, Latin American operations. In this role, which he has held since May 2013, Mr. Ramos directs all store operations in the Company’s Latin America and South Texas markets. Prior to his employment with the Company, he worked in the pawn and retail jewelry industries.

Sean D. Moore joined the Company in 2003 in the store operations division as an area supervisor. Mr. Moore was promoted to senior vice president, store development and facilities in May 2013. In this role, Mr. Moore directs all aspects of store development and facilities management including site selection, leasing, construction, and maintenance and other store support functions. Prior to his employment with the Company, Mr. Moore served as an officer in the U.S. Marine Corps, where he achieved the rank of Captain and is a veteran of Operation Iraqi Freedom. Mr. Moore has a BBA in accounting from Baylor University.

All officers serve at the discretion of the Board of Directors.

EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Executive Summary

The goal for the executive compensation program is to attract, motivate and retain the highest quality executives who will provide leadership for the Company’s growth and success in a dynamic and competitive market. The Company’s overriding compensation philosophy is to promote a “culture of ownership” among its executives by aligning their interests with those of its stockholders. The Company’s compensation program’s specific objectives include:

The Company continually reviews and improves its pay practices and related disclosures to ensure that it drivesthey reward and drive superior performance and is alignedalign with stockholders’ interests. Based on a review of feedback obtained from management’s stockholder outreach efforts, as further described in the “Results of 2015 Stockholder Say on Pay Vote”“Stockholder Outreach” section below, the Compensation Committee made several changes to the Company’s compensation programs and practices in 2016 to better align them with stockholder interests, including theincluding:

All of whichthe above practices are described in greater detail below.

In assessing its performance for internal and external reporting purposes, the Company looks at certain key performance measures which include:

The Company’s long-term strategy and business plans are focused on growing revenues and operating profits by opening newadding retail pawn locations by acquiring existing pawn stores and opening new stores in strategic markets and increasing operating profits in its existing stores. During fiscal 2016, the Company achieved the following milestones:

Operating Results

The following table illustrates both as reported and constant currency total revenue highlights(retail merchandise sales and pawn loan fees revenue) for each of the Company’s performance arethree years ended December 31, 2016 and on a constantpro forma basis for the year ended December 31, 2016. Constant currency basis,results, which excludesare considered non-GAAP measurements of financial performance, exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates. Constant currency results may be considered a non-GAAP measurement of financial performance. Seerates (see Appendix A for further details.details). Pro forma results for the year ended December 31, 2016 reflect the results of the Company as if the Merger had occurred on January 1, 2016.

Earnings growth highlights for the fiscal year ended December 31, 2015 totaled $2.14, which includes2016:

Key Features of the Executive Compensation Program

Role of the Compensation Committee

The Compensation Committee reviews and administers the compensation program for the Company’s executive officers, including recommending to the Board of Directors for approval of the specific compensation of all of the named executive officers. Compensation is typically set at the first Compensation Committee meeting each calendar year after reviewing performance for the past year and prospects for the year ahead. The Compensation Committee regularly meets with the CEO and CFO, both of whom provide insight into how individual executives are performing. The Compensation Committee retains broad flexibility in the administration of the Company’s compensation packages.

The Compensation Committee has the authority to engage outside advisors to assist the Compensation Committee in the performance of its duties. In particular, the Compensation Committee has sole authority to retain and terminate any compensation consultant to assist in the evaluation of director, CEO or senior executive compensation, including sole authority to approve such consultant’s reasonable fees and other retention terms, all at the Company’s expense.  

  

The Compensation Committee believes the lack of a significant number of public pawn specificpawnshop competitors creates difficulty in constructing a direct peer group, which is also evident in peer groups some outside analysts have used to benchmark the Company’s named executive officer compensation. The Compensation Committee recognizes that the premier U.S. proxy advisory organizations, ISS and Glass Lewis, each determine their own peer groups based on their respective methodologies. The Compensation Committee believes the Company’s peer group2016 Peer

Group is more indicative of the underbanked, cash-constrained and value-conscious consumer the Company targets compared to the peer groups established by ISS and Glass Lewis for the following reasons:

In setting the compensation program for 2016, including the development of the proxy advisory organizations excluded Cash2016 Peer Group, the Compensation Committee did not retain the services of any outside consultants or advisors. Rather, the Compensation Committee relied on previous studies and current market data, which the Compensation Committee determined to be sufficient for the purposes of making comparisons necessary to evaluate the Company’s executives’ compensation for 2016.

The Merger created the largest combined retail pawn store operator in Latin America International, Inc.and the U.S., onewith over 2,000 locations across four countries. The combined company provides significant scale and a unified platform for leadership in the pawn industry while keeping the strong local presence and established brands from both companies. The table below illustrates the significance of two similar sized direct competitors, from theirthe Merger and the size of the post-Merger company ($ in thousands):

During 2016 and in connection with the Merger, the Compensation Committee retained the services of Pay Governance, an independent advisor, to advise the Committee on its 2017 peer group (“2017 Peer Group”) and pay targets and structure of new employment contracts for Messrs. Wessel, Stuart and Orr. The Committee assessed Pay Governance's independence, as required under NYSE listing butrules. Based on this review, we do not believe any conflict of interest exists with the work performed by Pay Governance and consider them to be independent.

Pay Governance worked with the Compensation Committee and management to develop the 2017 Peer Group discussed below, provided assistance in evaluating various new proposed pay packages for Messrs. Wessel, Stuart and Orr in the context of the Merger and made recommendations on revising the targets and maximums under the proposed 2017 annual cash and equity-based incentive plans and also provided recommendations on the performance metrics included in the 2017 incentive plans. These discussions resulted in annual and long-term incentive plans that were entirely performance-based and covering a variety of revenue, profitability and strategic goals and objectives for 2017.

Pay Governance reviewed the composition of the 2016 Peer Group based on the increased size and complexity of the Company as a result of the Merger. Based on this review, the Compensation Committee established the following group of peer companies such as Destination Maternity, Haverty Furniture Companies, Inc.for benchmarking compensation beginning in the fourth quarter of 2016 and West Marine, Inc. which caterall of 2017:

The Committee believes the “2017 Peer Group” is more closely aligned with the size and complexity of the post-Merger organization and thus is a better reference group for the Compensation Committee to consider in benchmarking executive compensation. The table below, based on data compiled by Pay Governance, shows a much differentcomparison of FirstCash’s relative percentile rank on market cap and more affluent demographic thanrevenues compared to the demographic serviced by“2017” and “2016” peer groups, using the Company.pro-forma revenues presented above.

In 2015, “Say-on-Pay”largely as a result of the 63% vote as compared to prior years,in favor of the named executive officers compensation programs at the Company’s 2015 Annual Meeting of Stockholders, management reached out to 27 of the Company’s largest stockholders, representing approximately 71% of the outstanding shares and to the major proxy advisory firms to engage, or attempt to engage, in discussions around executive compensation and corporate governance. From these conversations management made the following observations:

The Compensation Committee has considered the results of the 2015 advisory vote on executive compensation as well as feedback obtained from management’s shareholderstockholder outreach, and made the following changes with respect to the Company’s executive compensation programs:programs during 2016:

The Company’s principal focus is on total direct compensation, which includes a smaller portion that is guaranteed and a larger portion that is at risk. To achieve these objectives, the Company’s Boardtypes of Directors has consideredcompensation paid to the stockholder vote and management’s recommendation regarding the frequency of future stockholder advisory votes on the compensation of the Company’s named executive officers currently consists of base salary, annual performance-based cash incentives, annual cash bonuses to executive officers other than the CEO, COO and has adoptedCFO and long-term incentive compensation (primarily in the stockholders’ recommendationform of an annual advisory vote onperformance-based restricted stock awards).

A significant portion of the compensation of the Company’sfor our named executive officers untilis in the next required voteform of at-risk variable compensation. We believe this appropriately aligns the interests of our named executive officers with those of our stockholders. For the CEO, COO and CFO, the only significant element of fixed compensation is their base salary. All other annual cash awards are awarded under an objective, performance-based incentive plan and all equity awards are variable under an objective, long-term incentive plan. The Company does not grant time vested awards to these individuals nor does it provide for the other supplemental retirement plans or other non-qualified plans. The mix of compensation elements at target award levels for the CEO used in 2016 and as modified for 2017 are as follows:

The Company offers what it believes to be competitive base salaries to its named executive officers. The base salary must be sufficient to attract and retain talented executives and provide a secure base of cash compensation. In addition, base salary levels for the Company’s executive officers are set at levels the Compensation Committee believes to be, based on this matter,its general business experience and review of peer company data, competitive in relation to the salary levels of executive officers in the Company’s peer group, taking into consideration the executive officer’s position, tenure, responsibility and need for special expertise. Annual salary increases, typically determined in January of each year, are not assured for the three most senior executives and adjustments to base salaries take into account subjective factors such as the executive’s performance against job expectations, changes in the market and increased job responsibilities and experience.

The compensation objective of retaining the best people for the job leads the Company to make periodic equity awards to its executive officers. These awards provide incentive for the executive officers to stay with the Company over the long term and align the interests of the stockholdersexecutive officers with those of the Company.Company’s stockholders. These equity awards also provide additional flexibility to the Compensation Committee to reward superior performance by executive officers.

Anti-Hedging Policy

The Company’s insider trading policy prohibits all of its directors, officers and employees from engaging in “short sales” or “sales against the box” or trading in puts, calls, warrants or other derivative instruments on the Company’s securities. The Board of Directors believes this prohibition further aligns the interests of directors and executives with those of stockholders, facilitates compliance with insider-trading and other applicable laws, and aids in preventing directors and executives from subjecting themselves to an actual or potential conflict of interest with the Company or creating the appearance of such a conflict.

Executive Stock Ownership and Retention Guidelines

The Company’s Board of Directors has adopted stock ownership guidelines pursuant to which all executive officers are expected to own shares of Company stock equal in value to a multiple of the executive officer’s base salary, as follows:

Until an executive has satisfied the stock ownership guidelines, he or she is required to retain 75% of the after-tax shares received upon the exercise or vesting of equity incentive awards. Furthermore, any sales of Company stock by an executive will be permitted only to the extent that the executive will continue to meet the guidelines immediately following such sale.

The Company’s Board of Directors has adopted an executive compensation recovery, or “clawback,” policy that applies to all executive officers in the event the Company is required to restate its financial statements. The Compensation Committee may seek recovery of any short- or long-term incentive payment or award granted to executive officers during the three years preceding such restatement where (1) the payment or award grant was calculated based on achievement of the misstated financial results; (2) the Board of Directors determines the executive engaged in intentional misconduct that materially contributed to the need for the restatement; and (3) a lower payment or award grant would have been made to the executive based upon the restated financial results.

In connection with the Merger, which significantly increased the size and scope of FirstCash, the Board of Directors entered into a revised employment agreement with Mr. Wessel. The Company’s principal focus is on total direct compensation,revised agreement contains provisions that are consistent with market “best practices” including a portion that is assuredthe following notable provisions:

The Company’s Compensation Committee determines the participants in the APIP. Participation is limited to named executive officers who are deemed to have direct, overall responsibilityAdditionally, for directing the strategy and operations of the Company. For 2015, the CEO and CFO were the only executive officer participants in the APIP.

The Company considers accounting and tax implications when designing its executive compensation and incentive programs. For example, the Compensation Committee has carefully considered the implications of Section 162(m) of the Internal Revenue Code, and believes tax deductibility of compensation is an important consideration. Accordingly, the Compensation Committee, where possible and considered appropriate, strives to preserve corporate tax deductions, including the deductibility of compensation to named executive officers. The Compensation Committee also reserves flexibility, however, where it is deemed necessary and in the best interests of the

The Compensation Committee of the Company has reviewed and discussed the “Compensation Discussion and Analysis” set forth above with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K.

Members of the Compensation Committee:

The Compensation Committee report above does not constitute “soliciting material” and will not be deemed “filed” or incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended (“Securities Act”), or the Exchange Act, except to the extent that the Company specifically incorporates it by reference herein.