Hasbro Board of Directors Issues Letter to Shareholders
Files Definitive Proxy Materials
Urges Shareholders to Vote on WHITE Proxy Card
For information about the 2022 Annual Meeting, please visit: www.HasbroGamePlan.com.
The full text of the letter follows.
Dear Fellow Shareholder:
As a Hasbro investor, you face a critical decision at the Company’s annual meeting of shareholders to be held on
Alta Fox’s campaign, which began just days after the passing of our long-time CEO
Hasbro’s Board of Directors operates with the best interests of ALL shareholders in mind as evidenced by the thorough succession planning process that identified
Robust succession planning is an ongoing point of focus for the Board. The Board regularly considers internal and external candidates as part of its extensive and thoughtful executive succession planning process with the goal of identifying and placing the best long-term leaders for Hasbro. This process allowed us to act definitively and quickly to appoint
Chris’s specific combination of expertise in both the Wizards business and the next generation of gaming makes him ideally positioned to develop, in conjunction with the Board, the strategy for the future of Hasbro. The Board fully supports Chris and believes that, given the opportunity to execute with such support, his forward-looking, consumer-focused strategy and gameplan will help create and drive long-term shareholder value in the best interests of ALL shareholders.
There is no doubt that Chris will apply the growth orientation and capital discipline that he successfully demonstrated during his time at Wizards to the rest of the Hasbro business along with his focus on games, multi-generational play and entertainment and direct to consumer. Chris is in the early days of refining the fundamental gameplan he used at Wizards to pursue long-term growth opportunities across the full Company, and we believe the actions and agenda of Alta Fox will only impair that progress to the detriment of all shareholders.
Hasbro has invested over
Alta Fox’s claim that Wizards has suffered as part of Hasbro and is starved of resources could not be further from the truth.
Over the past five years, the Board has supported Hasbro’s investment of more than
The Brand Blueprint maximizes the value of Wizards by expanding the reach and opportunity of its iconic IP into new channels, enhancing the number of ways our current fans can experience and enjoy these beloved brands and reaching new players across a holistic suite of brand executions, storytelling experiences and personal connections. For example, our upcoming MAGIC: THE GATHERING Netflix series and the theatrical release of the blockbuster DUNGEONS & DRAGONS: HONOR AMONG THIEVES feature film in 2023 – both of which will be supported by robust consumer products offerings – are strong testaments to the strength of our current Brand Blueprint strategy and demonstrate just the start of what we can achieve when we take Wizards’ brands across the Blueprint flywheel.
Our Board has independently and carefully considered the appropriateness of a spin-off of Wizards and found that a spin-off of Wizards would not create value for all shareholders. In our view it would limit growth and result in meaningful missed strategic and financial opportunities for both Wizards and the Hasbro business overall, in contrast to Alta Fox’s thesis.
In reviewing Alta Fox’s proposal for a Wizards spin-off, the Board noted that Alta Fox’s analysis assumed a significant multiple expansion for Wizards through reference to fundamentally flawed and inappropriate benchmarks that should not be used as a basis for strategic decision-making. Moreover, Alta Fox’s analysis fails to account for significant, quantifiable dis-synergies that would result from a separation, including the shift from an owned to a third-party content creation model, duplicative overhead costs and the material cost of executing a spin-off. Alta Fox also fails to account for the impact of non-quantifiable dis-synergies, including missed opportunities to maximize the full value of Wizards IP through Hasbro’s other capabilities.
Hasbro maintains a firm and ongoing commitment to Board refreshment and has one of the most diverse Boards in the S&P 500
Board refreshment has been and will continue to be an ongoing priority for us. We are always looking to find the best candidates that bring relevant expertise to help guide Hasbro’s leadership to deliver strong shareholder returns. We regularly engage with our shareholders to hear their viewpoints regarding our Board and broader corporate strategy. Importantly, our recent appointments of
Hasbro is a leader in its commitment to good corporate governance, shareholder engagement and maintaining a diversity of opinion and expertise on the Board. Our highly qualified and experienced Board consists of 13 directors, 12 of whom are independent and more than half of whom are women or ethnically diverse. The additions of Liz and Blake are a great example of the Board’s commitments in action and directly reflect the feedback we heard from our shareholders to add additional expertise in digital gaming, technology and capital allocation.
To address one specific misconception from Alta Fox, we want to clarify that, effective as of his retirement from the Board in
Our track record of Board refreshment speaks for itself. With the recent additions of Liz and Blake, and with the appointment of Chris as part of the CEO transition, we have added three new perspectives to the Board since the beginning of the year. Overall, we have added six new directors since 2016, replacing six departing directors since 2017. We also have plans to reduce the size of our Board in the near term, while allowing for continuity and transition time for our new Board members. Specifically, we expect to reduce the Board by one member by the 2023 annual shareholders meeting and another member by the year following, resulting in an 11-member Board by the 2024 annual shareholders meeting.
Our Board’s expertise and experience is directly relevant to overseeing Hasbro’s world class portfolio of assets across multiple play and entertainment categories
Alta Fox is pushing a board slate with experience and qualifications that are insufficient and irrelevant to Hasbro’s core in digital gaming, consumer products and entertainment. Alta Fox has also misleadingly claimed that our Board does not have enough gaming and technology experience, so we would highlight the following Hasbro directors in particular:
Hope Cochrancontributes significant gaming experience from the more than 20 years she has spent as a senior financial executive in the digital gaming and other industries, including as Chief Financial Officer of King Digital Entertainment, the creator of Candy Crushand other successful mobile games.
Ken Bronfinand Michael Burnsadd significant expertise in interactive media and digital businesses through experiences leading and growing innovative global content platforms as well as spearheading strategic investments and acquisitions in the digital content and media industries.
Liz Hamrenand Blake Jorgensen, bring exceptional experience in gaming, corporate leadership, finance, consumer products, technology, strategic growth and capital allocation through C-suite leadership roles at digital gaming companies. They are proven, experienced leaders who will bring tremendous incremental value and critical thinking to Hasbro’s Board.
A majority of our Board members, including
Alta Fox’s nominees lack corporate and business experience across consumer products, entertainment and gaming, all of which are critical to Hasbro’s long-term success
It is no surprise that Alta Fox’s nominees have limited qualifications related to Hasbro’s long-term success since Alta Fox’s stated goal is to push a spin-off of Wizards that would not create value. Shareholders should be concerned that if any of Alta Fox’s nominees were added to the Board, they would only serve to disrupt and distract the Company from executing its strategic plans for the future of Hasbro. Not one of the dissident nominees brings relevant expertise to support Chris in his new position as CEO, and their nominations show that Alta Fox’s interests are not aligned with Chris’ vision for the Company.
Matthew Calkins, in his role as founder and CEO of Appian, has a history of shareholder unfriendly governance practices. Appian maintains a dual class share structure in which Mr. Calkinscontrols 77% of the voting power. Furthermore, Appian’s stock price has fallen 79% since its January 2021peak.1 At the same time, Mr. Calkinshas told the media that he does not pay attention to Appian’s stock price, stating, “I don’t take it seriously and I don’t think anybody should. Stock prices move up and down.”
Jon Finkelhas absolutely no experience in leadership roles at corporate companies. He is first and foremost a gamer and fan and does not have experience in driving growth and strategic value at digital gaming companies, smartly allocating capital or delivering returns for shareholders. We welcome his passion for our products, but passion for a couple of product lines does not qualify him to sit on our Board.
Marcelo Fischerprimarily brings legacy telecommunications and personal care experience – neither of which are relevant to Hasbro’s business model nor the omni-channel storytelling strategy so central to our success. Based on his previous company experience, where he participated in numerous spin-offs as senior vice president – finance (not as CFO), we can only expect that Mr. Fischerwill advocate for the Wizards spin-off proposal being pushed by Alta Fox that would not create value.
Rani Hublou’s background is narrowly limited to marketing in the enterprise software space, and she has no experience in consumer businesses, which makes her credentials entirely irrelevant for Hasbro’s core audience and fan segments.
Ms. Hubloubrings no qualifications in consumer businesses focused on gaming, entertainment or consumer products to the Board.
- Carolyn Johnson’s experience is strictly limited to insurance and financial services. She has no experience leading or growing consumer businesses, and brings no relevant expertise in gaming, consumer products or entertainment.
The Brand Blueprint is a widely accepted and emulated business model and under this strategy, Hasbro has delivered exceptional growth and strong, long-term returns both on an absolute basis and relative to our closest competitors
The Brand Blueprint is increasingly becoming the model for success today, and other IP owners are now emulating it, including competitors such as Mattel, to whom Alta Fox regularly compares us.
Alta Fox has cherry picked its numbers and refuses to acknowledge that despite recent challenges, including the disruptive industry-wide impacts of the COVID-19 pandemic, Hasbro has delivered strong returns for our shareholders over the long term.
Since the Brand Blueprint strategy was instituted in 2008, Hasbro’s total shareholder return (“TSR”) has outpaced the S&P 500 Consumer Durables & Apparel Index (279% versus 245%).2
Since Alta Fox wants to compare us to Mattel, in that same timeframe, Hasbro has delivered more than double Mattel’s TSR on an annualized basis (10% versus 4.1%) and ~3.7x on an aggregate basis (279% versus 76%).
Up to the start of the COVID-19 pandemic, our relative TSR results are even stronger. Hasbro’s TSR of 296% up until the beginning of COVID outperformed both the S&P 500 (212%) and S&P 500 Consumer Durables (208%).3 Mattel experienced around 1% TSR over that same period.
In addition, we urge shareholders to look at the performance Chris has driven at Wizards over the last six years, with the support of the Board, and ask themselves if they should at least afford him the opportunity to execute his vision for Hasbro.
Alta Fox is pushing for the formation of a capital allocation committee, whose role would de facto duplicate that of our existing
Alta Fox wants you to believe that the Board is not focused on capital allocation, which shows another lack of understanding of our business. Hasbro has a long-established Board Finance Committee, which assists the Board in overseeing the Company’s annual and long-term financial plans, capital structure, use of funds, investments, financial and risk management and proposed significant acquisitions and other transactions. The Finance Committee’s mandate is to ensure disciplined capital allocation and that all capital allocation decisions are in the best interests of shareholders. This Committee is Chaired by
Reject the Alta Fox Nominees – Vote FOR Hasbro’s Board of Directors
The Board is fully aligned behind
We are very disappointed that Alta Fox continues to be more interested in chasing headlines and making a name for its founder and fund than engaging constructively. It has used a cherry-picked narrative that is not representative of the actions our Board has taken to try to constructively and quickly resolve this matter in the best interests of all shareholders.
Alta Fox’s analytical errors, weak candidate slate, demonstrated misunderstanding of our business and attempts to push the Hasbro Board and management team into a settlement, including in advance of the appointment of a successor CEO, are emblematic of an overall approach that will create a distraction, rather than drive thoughtful decision-making by a new CEO with a strong track record of value creation.
Having held his role for less than two months, Chris has not yet been able to show the full potential of his vision for the Company or apply the proven track record of growth and value creation that he demonstrated during his leadership of Wizards to Hasbro. We encourage shareholders to support Chris in executing in his new role, employing the Wizards gameplan at Hasbro and enacting his vision, along with the full support of our highly skilled, diverse, proven and recently refreshed Board.
VOTE THE WHITE PROXY CARD TODAY
The Board of Directors of Hasbro recommends shareholders vote “FOR ALL” the nominees proposed by the Hasbro Board at the upcoming annual meeting on the WHITE proxy card. Hasbro shareholders of record as of the close of business on
Shareholders should NOT sign, return or vote any gold proxy card sent to you by Alta Fox. Only the latest dated proxy card will count at Hasbro’s 2022 Annual Meeting. Hasbro’s Board urges shareholders to DISCARD all gold proxy cards and materials sent to you by Alta Fox.
Shareholders who have any questions or need assistance voting may contact the Company’s proxy solicitors,
Thank you for your continued support of Hasbro.
The Hasbro Board of Directors
The company’s unparalleled portfolio of approximately 1,500 brands includes MAGIC: THE GATHERING, NERF, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, MONOPOLY, BABY ALIVE, DUNGEONS & DRAGONS, POWER RANGERS, PEPPA PIG and PJ MASKS, as well as premier partner brands. For the past decade, Hasbro has been consistently recognized for its corporate citizenship, including being named one of the 100 Best Corporate Citizens by
This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be accompanied by such words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “project,” “target,” “will” and other words and terms of similar meaning. Among other things, these forward-looking statements may include statements concerning: the impact and contributions of our new director appointments, and our ability to achieve our financial and business plans, goals and objectives, including achieving long-term sustainable profitable growth and long-term value for shareholders. Specific factors that might cause such a difference include those risks detailed from time to time in Hasbro’s filings with the
Additional Information and Where to Find It
Hasbro has filed with the
Participants to the Solicitation
Hasbro, its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies with respect to a solicitation by Hasbro in connection with matters to be considered at the 2022 Annual Meeting. Information about Hasbro’s executive officers and directors, including information regarding the direct and indirect interests, by security holdings or otherwise, is available in Hasbro’s definitive proxy statement for the 2022 Annual Meeting, which was filed with the