Alta Fox Issues Statement Regarding Outcome of Election Contest at Hasbro
June 08 2022 - 10:10AM
Business Wire
Thanks Fellow Shareholders for Thoughtfully
Engaging and Recognizing the Need for Boardroom Change
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 issued the following statement regarding its
campaign to refresh the Company’s Board of Directors (the “Board”)
at the 2022 Annual Meeting of Shareholders (the “Annual
Meeting”).
Connor Haley, Managing Partner of Alta Fox, commented:
“We thank our fellow shareholders for their thoughtful
engagement and support throughout this year’s election contest.
After five consecutive years of underperformance relative to the
S&P 500 and an even longer period of questionable corporate
governance, Alta Fox believed targeted boardroom change was
necessary at the onset of a new Chief Executive Officer’s tenure.
We ran a campaign based on the facts: absolute and relative
underperformance, numerous capital allocation blunders under
long-serving incumbents, and extremely poor disclosure reflective
of an insular culture. While we are disappointed in the outcome at
today’s Annual Meeting, we agree with Institutional Shareholders
Services, Inc. that ‘all shareholders likely benefited from the
campaign.'1 Specific positives that resulted from our engagement
include:
- Spotlighting the strength of the Wizards of the Coast (‘WOTC’)
business in an extensive 100-page presentation. This represents
more analysis and focus on the business than Hasbro has shared with
investors during its more than 20 years of ownership.
- Catalyzing the appointments of two gaming-focused directors,
helping to fix a glaring and long-standing weakness given WOTC’s
~50% contribution to overall EBITDA and its estimated ~70% of total
Hasbro value based on our analysis.
- Spurring the Board to re-consider its Brand Blueprint strategy,
as evidenced by the Company refusing to mention the strategy by
name in its most recent press releases and instead purportedly
undertaking a ‘full assessment of our business.’
- Prompting improved disclosure, including of the trailing EBITDA
multiple for the D&D Beyond acquisition, which the Company
previously refused to provide to investors.
- Forcing the Board to acknowledge and confront the Company’s
meaningful long-term underperformance, a welcome change from its
typical self-congratulatory tone.
- Driving multiple directors to purchase shares on the open
market, whereas not a single existing director had ever purchased a
single share on the open market prior to our engagement this
year.
Beyond these specific contributions, we also sparked a healthy
debate among the frustrated Hasbro shareholder base about how to
best maximize long-term shareholder value.
We will seek to maintain a dialogue with the Board to ensure a
culture of accountability is put in place as Chris Cocks develops
and implements what will hopefully be a superior and
well-articulated strategy for value creation. However, the strong
shareholder response to our campaign – including support from
long-term shareholders, institutional active investors and index
funds – has made evident that meaningful improvements in governance
and ultimately total shareholder returns are required. Hasbro’s
assets are too high quality to continue to underperform their
potential.
We plan to remain an engaged shareholder and hope that the Board
recognizes improvements in corporate governance, capital allocation
and investor disclosure are needed to strengthen the Company and
drive improved results over the long term. As a new era begins at
Hasbro under Mr. Cocks, shareholders expect to see the Company
embrace the changes and ideas catalyzed by our involvement in order
to create lasting value for all stakeholders. A strong foundation
must be laid over the next year.”
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.
____________________ 1 Permission to quote ISS was neither
sought nor received.
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