Shareholders Urged to Vote FOR ALL of Hasbro’s
Highly Qualified Directors on the WHITE Proxy Card
Hasbro, Inc. (NASDAQ: HAS) (“Hasbro” or the “Company”), a global
play and entertainment company, today issued the following letter,
which includes a Q&A with new CEO Chris Cocks, to Hasbro
shareholders in connection with the Company’s 2022 annual meeting
of shareholders (the “2022 Annual Meeting”) to be held on June 8,
2022.
For information about the 2022 Annual Meeting, please visit:
www.HasbroGamePlan.com.
The full text of the letter follows.
May 24, 2022
Dear Hasbro Shareholders,
The following is a brief interview with our new CEO, Chris
Cocks, that gives insight into how he intends to lead Hasbro in
partnership with the Board to drive value creation and profitable
growth for the benefit of all our shareholders. Hasbro’s Board
brings the right balance of fresh perspectives and institutional
knowledge to support Chris as he builds on our industry-leading
expertise to drive change and long-term value. Hasbro urges
shareholders to vote FOR ALL of Hasbro’s highly qualified directors
on the WHITE proxy card.
You were at Wizards of the Coast for five years before
becoming CEO of Hasbro. How did the Board support you in growing
the business at Wizards and how will it support you as CEO of
Hasbro?
The Hasbro Board was a great partner for me and the team at
Wizards of the Coast. When I joined Wizards in 2016, it was a small
but profitable business for Hasbro. It had been on a previous
growth run but had been plateauing. The big question at the time
was, what would drive the next leg of growth?
Ted and Rich with our full Board, including our late CEO Brian,
challenged me to think bigger. They were supportive when we needed
to significantly turn over our technical leadership and engineering
ranks and greatly ramp up our games industry recruiting. As we made
progress with what ultimately became Magic: The Gathering Arena,
our digital version of MAGIC: THE GATHERING, they saw potential for
our IP in more digital expressions and pushed us to “Go Big” in our
aspirations. Ultimately, the “Go Big” growth plan expanded beyond
digital trading cards to encompass our other great brands,
particularly DUNGEONS & DRAGONS. They supported these plans
through significant financial investments in the Wizards of the
Coast business. They also encouraged a data- and consumer-focused
approach to ensure these significant capital investments had the
greatest potential return possible, and to explore partnerships
with platforms and publishers to defray our risk.
Lisa—who, in her position as chair of the Compensation
Committee, leads the development and implementation of all major
compensation programs—has been a strong partner for our growth in
an industry with a highly competitive talent pool. She comes from a
creative industry and understands dynamic compensation and talent
markets. Leveraging this expertise, Lisa oversaw the reinvention of
our compensation model through a review of peer benchmarks and an
expansion of equity compensation. As a result, we have been able to
grow rapidly and have landed talented industry veterans who have
played a critical role in accelerating Wizards’ growth.
You became CEO of Hasbro less than 100 days ago. What have
your priorities been since assuming the CEO role on February
25?
The core functions of the CEO job are to review, set and execute
on our strategy through thoughtful deployment of our capital and
leadership of our talent, working in partnership with our Board to
drive total shareholder return. In these first 100 days, I’ve spent
much of my time learning about our teams, investments and execution
capabilities, and how Hasbro can best serve the interests of all
our shareholders, as part of my comprehensive review of the
Company’s go-forward strategy and our businesses. Important themes
that have emerged include:
- An emphasis on Focus and Scale as we think about our
brand and markets;
- Our growth thesis around Games, Multigenerational Play &
Entertainment and Direct To Consumer;
- Our continuing focus on our successful Brand Blueprint
Strategy; and
- A continued focus on disciplined capital
allocation.
Can you explain the Brand Blueprint strategy and why it is
important for Hasbro?
The Brand Blueprint is how we engage our consumers across our
portfolio of globally beloved brands. It’s about leveraging our IP
across multiple play and entertainment channels to maximize both
our connection with families and fans and returns for shareholders.
This strategy has helped us deliver an over 289% total shareholder
return since its inception in 2008.1
We start with fundamental insights and use this data to
profitably engage our consumers across gaming, including digital
and tabletop games, toys, animation, live action entertainment and
user-generated content with partnership capabilities and licenses.
Every brand in our portfolio is uniquely relevant to a specific
brand’s audience. Most brands use common executional capabilities
across Games, Consumer Products and Entertainment, which allow us
to monetize across touch points, assure creative consistency and
orchestrate execution to maximum commercial effect.
The results speak for themselves. Compared to 2006, prior to the
launch of Hasbro’s Brand Blueprint, MAGIC: THE GATHERING has
grown revenue by 8.4 times, leveraging a combination of
location-based entertainment and play events as well as digital
games. NERF has grown by 5.6 times due to new category
expansion, influencer marketing and user generated content.
TRANSFORMERS has grown 3.0 times from a combination of
blockbuster theatrical entertainment, toy category growth, licensed
partnerships and a drumbeat of animation. Most recently, MY
LITTLE PONY benefited from the release of our top-performing
animated feature on Netflix, with 100% point of sale growth in the
fourth quarter 2021. These are just a few examples in a long
list.
How do you and the Board think about where to allocate
capital and invest to drive growth and maximize shareholder
returns?
Our approach to capital allocation is focused on investing in
the business to drive profitable growth, returning excess cash to
shareholders via share repurchases and our dividend (which has
grown at a 7% CAGR over the last 5 years), and de-levering our
balance sheet to maintain our investment grade rating and achieve
our Debt to EBITDA targets. We are always focused on identifying
opportunities at the intersection of high growth, high profit and
our own executional capabilities. For existing categories, we use
extensive competitive benchmarking, coupled with proprietary
channel and consumer insights. For new or emerging categories, we
analyze the consumer and relevance of our brands, how our existing
capabilities can tap into the opportunity and what we think the
return on investment will be. We then make a build, buy or
partnership decision if we think the category merits
investment.
This is why specific industry experience is so important to our
Board. In order to provide proactive leadership and partnership,
our Board needs to have a deep understanding of not just financial
modelling, but the risk and return inputs unique to our sectors:
talent, business model, partnership and risk deferment
opportunities, and complex rights and library management. Our Board
includes four former CFOs (including the former Head of Film
Financing for Disney and the former CFO of Electronic Arts) and
five members with financial industry experience, all of whom have
deep knowledge of Games, Entertainment and Consumer Products. Our
Board’s strong capital allocation experience coupled with deep,
relevant industry backgrounds helps us evaluate and push ourselves
on deals like our recent acquisition of D&D Beyond. That
acquisition gives us a strong set of new digital direct
capabilities, a base of nearly 10 million highly engaged users for
one of our priority brands, a favorable 8 times trailing
twelve-month EBITDA multiple and a business that has been growing
at a 50% Compound Annual Growth Rate (CAGR) over the last 3
years.
That same experience and capital allocation discipline also led
to the Board’s decision to divest of the eOne music business last
year. The Board did not believe the music business was going to be
a core driver of the Brand Blueprint strategy. That decision
allowed the Board to invest in other areas of the business while
also paying down more than $1 billion in long-term debt and
maintaining the dividend for shareholders.
Why is it better for Hasbro to own a studio like eOne?
Couldn’t Hasbro make movies and films through partnerships with
other studios?
Hasbro has a long history of theatrical partnerships with strong
successes, most notably, TRANSFORMERS. However, partnership deals
have significant trade-offs, including a significant reduction in
creative control, a reduced ability to participate in upstream
economics, often long and complicated transfers of rights, little
influence on release timing and a generally low production
throughput. In the original TRANSFORMERS, the robots almost didn’t
talk! Can you imagine Optimus Prime not saying “Autobots, roll
out!”? If a movie release date slips because a studio has a full
slate, that can cost us in excess of $100 million of deferred
revenue and significant inventory carrying costs. In contrast,
owning in-house entertainment capabilities can provide huge
benefits. For example, a DUNGEONS & DRAGONS film was in
development for over seven years as part of a partnership model
prior to our acquisition of eOne, a common occurrence as studios
take a portfolio approach to optioning IP. Owning eOne and
participating directly with our own creative capabilities allows us
significantly more influence and allows us to more directly control
decisions and timing that can affect other aspects of our
business.
eOne has a track record of savvy risk-management, which allows
us to maximize creative and dating influence while retaining our
rights and minimizing financial downside. Consider DUNGEONS &
DRAGONS, a year after integrating eOne, we had greenlit a movie
with Paramount, our co-production partner, at a blockbuster budget
with amazing talent in front of and behind the camera. We are on
track to launch that film in March 2023 alongside a wave of games,
consumer products, toys, licensing partnerships and digital
experiences. That coordinated launch allows us to benefit from a
successful film release, drive a significant opportunity in
merchandise revenue and minimize our financing risks while
retaining rights to pursue a universe of entertainment projects
across partners.
Hasbro had some headwinds during the pandemic. Can you
explain some of the challenges and what Hasbro did to address
them?
COVID-19 was a challenging time for the world, and Hasbro was no
exception. Hollywood production was paused for a significant period
of time, the global supply chain became stressed and inflation
increased significantly. Our diversified business model proved to
be a strength. We were able to deliver strong operating cash flows,
maintain and ultimately increase our dividend and grow our
business. We also significantly increased EBITDA and net earnings
in 2021. While we aren’t satisfied with our Total Shareholder
Returns (TSR) since the start of the pandemic, we are overall
trending ahead of our entertainment segment peers significantly and
are at or ahead of our games industry benchmarks. Our Board’s
continued oversight and engagement is helping us prioritize the
work ahead.
As Hollywood production has ramped back up, our Film & TV
segment is now in growth mode. Our gaming business also continues
to be a bright spot. Hasbro is fortunate to have a portfolio of
games that generated $2.1 billion in revenue last year, growing 19%
year-over-year and generating in excess of 30% operating profit.
Our strong, diversified business model has allowed us to
continue to invest in new product innovation with a portfolio of
exciting new toys across NERF, PLAY-DOH, PEPPA PIG and our new line
of sports memorabilia figurines, STARTING LINE-UP. These are
just a few of the opportunities we are positioned to drive in
Hasbro’s next chapter of growth.
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.
Please Vote Now Using One of the
Following Methods
Vote by Internet
Go to the website identified on the
enclosed WHITE proxy card or voting
instruction form
Vote by Phone
Call the number on the enclosed
WHITE proxy card or voting
instruction form
Vote by Mail
Mark, sign, date and return the enclosed
WHITE proxy card or voting
instruction form in the accompanying postage-paid pre-addressed
envelope
We encourage shareholders NOT to 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. Shareholders
who have any questions or need assistance voting may contact the
Company’s proxy solicitors, Innisfree M&A Incorporated,
toll-free at 1 (877) 825-8971, or Morrow Sodali LLC, toll-free at 1
(800) 662-5200.
Sincerely,
The Hasbro Board of Directors
About Hasbro
Hasbro (NASDAQ: HAS) is a global play and entertainment company
committed to making the world a better place for all children, fans
and families. Hasbro delivers immersive brand experiences for
global audiences through consumer products, including toys and
games; entertainment through eOne, its independent studio; and
gaming, led by the team at Wizards of the Coast, an award-winning
developer of tabletop and digital games best known for fantasy
franchises MAGIC: THE GATHERING and DUNGEONS & DRAGONS.
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 3BL Media and one of the
World’s Most Ethical Companies by Ethisphere Institute. Important
business and brand updates are routinely shared on our Investor
Relations website, Newsroom and social channels (@Hasbro on
Twitter, Instagram, Facebook and LinkedIn.)
© 2022 Hasbro, Inc. All Rights Reserved.
Forward-Looking
Statements
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 SEC.
The statements contained herein are based on Hasbro’s current
beliefs and expectations and speak only as of the date of this
communication. Except as may be required by law, Hasbro does not
undertake any obligation to make any revisions to the
forward-looking statements contained in this communication or to
update them to reflect events or circumstances occurring after the
date of this communication. You should not place undue reliance on
forward-looking statements.
Additional Information and Where to
Find It
Hasbro has filed with the SEC a definitive proxy statement on
Schedule 14A on April 25, 2022, containing a form of WHITE proxy
card, and other relevant documents with respect to its solicitation
of proxies for Hasbro’s 2022 annual meeting of shareholders (the
“2022 annual meeting”). INVESTORS AND SECURITY HOLDERS ARE URGED TO
READ THE DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) FILED BY HASBRO AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT
ANY SOLICITATION. Investors and security holders may obtain copies
of these documents and other documents filed with the SEC by Hasbro
free of charge through the website maintained by the SEC at
www.sec.gov. Copies of the documents filed by Hasbro are also
available free of charge by accessing Hasbro’s website at
www.hasbro.com.
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 SEC on April 25, 2022. To the extent
holdings of Hasbro securities reported in the definitive proxy
statement for the 2022 annual meeting have changed, such changes
have been or will be reflected on Statements of Change in Ownership
on Forms 3, 4 or 5 filed with the SEC. These documents are or will
be available free of charge at the SEC’s website at
www.sec.gov.
HAS-IR
HAS-C
1 Source: FactSet; Represents date on which Brian Goldner was
appointed CEO of Hasbro (May 22, 2008 – May 12, 2022)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220523006063/en/
Investors: Debbie Hancock | Hasbro, Inc. | (401) 727-5401 |
debbie.hancock@hasbro.com Media: Carrie Ratner | Hasbro, Inc. |
(401) 556-2720 | carrie.ratner@hasbro.com
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