Alta Fox Urges Hasbro to Address Critical Questions Pertaining to its Corporate Governance and Strategic Priorities on Q1 2022 Earnings Call
April 18 2022 - 12:05PM
Business Wire
Alta Fox Capital Management, LLC (together with its affiliates,
“Alta Fox” or “we”), the beneficial owner of approximately 2.5% of
the outstanding shares of Hasbro, Inc. (NASDAQ: HAS) (“Hasbro” or
the “Company”), today urged the Company to address the following
questions when it reports Q1 2022 financial results tomorrow:
- Why has the Company pushed back the record date for the 2022
Annual Meeting of Shareholders (the “Annual Meeting”)? Given
that the Board of Directors (the “Board") appears to be more
focused on entrenchment than value creation, we are forced to
question the motivation behind moving the record date to May 9th.
We fear the Board is hoping that the delay will provide time to
court friendly shareholders, who are likely to support the
incumbents. In our view, this seemingly self-serving maneuver has
parallels to the defensive PIPE transactions recently initiated by
other underperforming companies facing election contests.
- Why is the Company forcing a costly election contest instead
of accepting a modest Board refresh and a capital allocation review
committee in response to shareholders’ concerns regarding Hasbro's
chronic underperformance? In our view, investors have reason to
question whether the Board is acting in shareholders’ best interest
or engaging in further entrenchment to maintain the Hassenfeld
family’s influence.
- Why did the Company expand its Board to 13 members instead
of carrying out a viable director refresh? We contend the
decision to expand the Board from 11 members to 13 members
following our nomination reflects an unacceptable level of
dysfunction and entrenchment in the boardroom.
- Why did the Company feel it was appropriate for Cynthia W.
Williams, the newly appointed President of Wizards of the Coast, to
join another public company’s board within two months of being
appointed to her new role? We question why Williams would want
to join the board of Aterian, Inc. (NASDAQ: ATER) ("Aterian"), a
company whose stock is down almost 70% from its IPO in 2019 and
which has been accused of serious wrongdoings. We find it
surprising that Hasbro’s Board allowed Ms. Williams to dilute her
attention so early in her tenure at Wizards of the Coast and was
comfortable associating Hasbro’s senior leadership with
Aterian.
- How did the Board determine so quickly that a spin-off of
Wizards of the Coast was ill-advised, and why will it not share
this analysis with shareholders? We believe spinning off
Wizards of the Coast could help enhance Hasbro's corporate
structure and unlock the full value of the division, which has a
completely different growth, margin and valuation profile than the
Consumer Products and Entertainment segments. In light of the
Board’s apparent credibility issues, we find it hard to believe the
Company comprehensively and objectively evaluated strategic
alternatives for the unit. We believe shareholders deserve a
detailed explanation of the Board’s purported evaluation, and that
the analysis should be re-examined with shareholder-appointed
directors focused on creating shareholder value rather than
preserving the Hassenfeld family legacy. To date, the Company has
provided little evidence of business unit “synergies” that could
not be accomplished through a partnership arrangement.
- Why is the Board resistant to forming a capital allocation
committee when investments, such as the Entertainment One deal,
have been value destructive? It is confounding to us that
Hasbro continues to assume no accountability for poor capital
allocation when organic and inorganic investments have failed to
produce meaningful shareholder value over many years.
Connor Haley, Managing Partner of Alta Fox, commented:
“We believe the Board has demonstrated through its actions that
it is entrenched, dismissive and unresponsive to shareholders. It
is clear to us that a change in culture and shift in strategy are
likely needed to reverse chronic underperformance, poor capital
allocation, opaque disclosures and a flawed corporate structure. We
have worked tirelessly in an attempt to compromise with the Board,
but it has been unreasonable at every turn and has forced an
unnecessary and costly proxy fight. This is all the more surprising
when considering the Company’s weak performance under this Board.
Shareholders need to hold the Board accountable for its persistent
underperformance and its disregard for shareholder concerns.”
***
As a reminder, Alta Fox has filed a preliminary proxy statement
with the U.S. Securities and Exchange Commission in connection with
its nomination of five highly qualified and independent candidates
for election to the Company's Board at this year's Annual Meeting.
Learn more about Alta Fox’s case for change and world-class slate
by visiting www.FreeTheWizards.com.
***
About Alta Fox
Founded in 2018 by Connor Haley, Alta Fox is a Texas-based
alternative asset management firm that employs a long-term focused
investment strategy to pursue exceptional risk-adjusted returns for
a diverse group of institutions and qualified individual clients.
Alta Fox focuses on identifying often overlooked and
under-the-radar opportunities across asset classes, market
capitalization ranges and sectors. Learn more by visiting
www.AltaFoxCapital.com.
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