DEF 14A
Table of Contents
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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
 
 
Filed by the Registrant  ☒
Filed by a party other than the Registrant  ☐
Check the appropriate box:
 
Preliminary Proxy Statement
 
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
 
Definitive Proxy Statement
 
Definitive Additional Materials
 
Soliciting Material Pursuant to
§240.14a-12
HASBRO, INC.
(Name of Registrant as Specified in its Charter)
Not applicable.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
 
No fee required.
 
Fee paid previously with preliminary materials.
 
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules
14a-6(i)(1)
and
0-11.
 
 
 


Table of Contents

LOGO


Table of Contents

Letter to Our Shareholders

April 3, 2023

Dear Hasbro Shareholders,

2022 has been a year of transformation for Hasbro. As a Board, we’ve worked closely with the management team during this important period of change. We’ve also spoken with our shareholders and taken a number of significant actions based on the feedback we heard. We greatly appreciate your support and belief in Hasbro as we position the organization for long-term growth behind a new management team and refreshed strategy.

Over the last year, we’ve overseen significant steps:

 

 

Strategic Review: In February 2022, Chris Cocks took over as Hasbro CEO. He and the executive team undertook a thorough strategic review of the company. In October, the leadership team unveiled its strategy for driving accelerated revenue and profit growth – Blueprint 2.0. This strategy builds on the strong foundation in place but focuses Hasbro’s resources on fewer initiatives and brands which we believe can deliver significant top and bottom-line growth, including strict profit margin targets, and where Hasbro is or can be a category leader. At the same time, we are investing in key growth areas including Gaming, Direct-to-Consumer and Data Insights.

 

     

As part of this review, Chris and his team established an Operational Excellence program to cut costs and increase efficiencies with a target to deliver $250-$300M of savings by year-end 2025.

 

     

We reaffirmed the importance of storytelling in brand building but are prioritizing assets and investments most closely tied to the Blueprint 2.0. As a result, we have commenced a sale process for entertainment assets not focused on Hasbro IP. As of this letter, this process is ongoing.

 

 

Board Refreshment & Governance Actions: Last year, we continued the ongoing refreshment of our Board with the addition of two highly qualified individuals who bring extensive digital gaming and capital allocation experience: Liz Hamren, CEO Ring and Blake Jorgensen, Former CFO Electronic Arts.

 

     

This year, Ken Bronfin and Ted Philip are not standing for re-election to Hasbro’s Board. Both Ken and Ted have been exceptional members of the board, making tremendous contributions over their tenures. We thank them for their valuable oversight and wish them well in all their future endeavors.

 

     

Following the annual meeting, the board will consist of 11 members. We committed to return to a smaller size last year with a goal to achieve by next year’s annual meeting. We accomplished it a year earlier than expected.

 

     

Our slate of Board nominees this year is 64% female, including two racially diverse candidates.

 

     

We also clarified the remit of the Finance Committee, renaming it the Finance and Capital Allocation Committee, to reinforce its long-standing role in capital allocation oversight.

 

     

Finally, we updated our compensation program, adding a metric to align to the transformation efforts, ensuring metrics aren’t repeated in short and long-term plans, and adding a TSR modifier to the long-term incentive plan.

 

 

Enhanced Disclosures: As Hasbro evolves and grows, we have added new disclosures to help investors understand the business in the context of Blueprint 2.0.

 

     

In 2022, MAGIC: THE GATHERING became Hasbro’s first $1 billion brand, growing 7% to $1.065 billion in revenue. The Company began reporting the brand’s revenue as part of its earnings release disclosures and committed to disclosing revenue for all $1 billion brands go forward.

 

     

Digital gaming is a key investment area for the company. Last year, we began disclosing the breakdown of tabletop and digital gaming revenue in the Wizards and Digital Gaming segment to provide investors with additional insight into the progress of this growth opportunity.

 

     

In Q1 2023, the Company will begin reporting under new Brand Portfolio categories: Franchise Brands, Partners Brands, Portfolio Brands and Other Entertainment. Franchise Brands have been updated and align to the key growth properties including all gaming brands.


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As Hasbro, its management team and the talented team of individuals representing its brands around the world undertake this strategic transformation, we take great pride in the values and ethics that guide the organization. Congratulations to the team for being recognized by Ethisphere as one of the 2023 World’s Most Ethical Companies. Hasbro has been honored for the last 12 years and is one of only five honorees in the Consumer Products industry.

We appreciate your ongoing support of Hasbro and look forward to continuing to work closely with shareholders to further unlock the value in this great Company. While our share price hasn’t performed to our standards, we’ve continued to support our category-leading dividend and are working closely with the management team with a focus on executing the Blueprint 2.0 strategy to drive long-term shareholder value.

Sincerely,

 

LOGO  

LOGO

Richard S. Stoddart

Chair of the Hasbro Board of Directors   

 

 


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Hasbro, Inc. Notice of 2023

Annual Meeting of Shareholders

 

Date:    Thursday, May 18, 2023
Time:    10:00 a.m. Eastern Time
Where:   

The Hasbro, Inc. 2023 Annual Meeting of Shareholders (the “Annual Meeting”) will be held in a virtual format only. Our virtual meeting will be structured in a manner intended to provide our shareholders with a participation experience similar to an in-person meeting.

 

Shareholders will be able to listen, vote, and submit questions during the Annual Meeting from any location that has Internet connectivity by registering to attend the meeting at www.meetnow.global/MPL92M4.

Record Date:    Only shareholders of record of the Company’s common stock at the close of business on March 22, 2023 are entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.

 

 

 

         

Purpose

 

         
  LOGO   Elect eleven (11) directors.  
  LOGO   Approve an advisory vote on the compensation of the Company’s named executive officers.  
  LOGO   Approve an advisory vote as to the frequency of the shareholder vote on the compensation of the Company’s named executive officers.  
  LOGO   Approve amendments to the Company’s Restated 2003 Stock Incentive Performance Plan, as amended.  
  LOGO   Ratify the selection of KPMG LLP as the Company’s independent registered public accounting firm for the 2023 fiscal year.  
  LOGO   Transact such other business as may properly come before the meeting and any adjournment or postponement of the meeting.  

Voting

 

How to Vote

 

Vote Right Away Through Advance Voting Methods   Voting During the Meeting

 

LOGO

 

 

LOGO

 

 

LOGO

 

 

LOGO

 

Vote by Internet

Go to the website
identified on the enclosed proxy card or voting
instruction form.

 

 

Vote by Phone

Call the number on
the enclosed
proxy card or voting instruction form.

 

 

Vote by Mail

Sign, date and return the enclosed proxy card or voting instruction form in the accompanying postage-paid pre-addressed envelope.

 

 

Vote During the Meeting

See the instructions

below regarding

how to vote

at the Annual Meeting.


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Your Board of Directors unanimously recommends that you vote “FOR ALL” the nominees proposed by your Board of Directors on the proxy card, “FOR” advisory approval of the Company’s compensation for its named executive officers, in support of having an annual advisory vote (a vote every year) on the Company’s compensation for its named executive officers, “FOR” the amendments to the Restated 2003 Stock Incentive Performance Plan, and “FOR” the ratification of the selection of KPMG LLP as the Company’s independent registered public accounting firm for fiscal 2023.

By Order of the Board of Directors,

 

LOGO

Tarrant Sibley

Executive Vice President, Chief Legal Officer &

Corporate Secretary

April 3, 2023

Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting

to be held on May 18, 2023:

On or about April 3, 2023, we will begin mailing a Notice of Internet Availability of Hasbro’s Proxy Materials to shareholders informing them that this Proxy Statement for the Annual Meeting and the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2022 and voting instructions are available, free of charge, at https://investor.hasbro.com/financial-information/annual-meeting. As is more fully described in that Notice, all shareholders may choose to access our proxy materials on the Internet or may request to receive paper copies of the proxy materials.

 


Table of Contents

Table of Contents

 

   
PROXY STATEMENT HIGHLIGHTS      i  
   
ELECTION OF DIRECTORS (Proposal 1)      1  
   
GOVERNANCE OF THE COMPANY      18  
   
COMPENSATION COMMITTEE REPORT      25  
   
COMPENSATION DISCUSSION AND ANALYSIS      26  
   
Executive Summary      26  
Executive Compensation Philosophy and Objectives      36  
Compensation Process      37  
Executive Compensation Program Elements      40  
Other Compensation Considerations      50  
Executive Compensation      52  

Summary Compensation Table

     52  

Grants of Plan-Based Awards

     55  

Outstanding Equity Awards at Fiscal Year-End

     56  

Option Exercises and Stock Vested

     58  

Retirement Plan Annual Benefits and Payments

     59  

Non-Qualified Deferred Compensation and Other Deferred Compensation

     60  

Potential Payments Upon Termination or Change in Control

     61  

Agreements and Arrangements Providing Post-Employment and Change in Control Benefits

     63  
   
SHAREHOLDER ADVISORY VOTE ON COMPENSATION FOR NAMED EXECUTIVE OFFICERS (Proposal 2)      75  
   
SHAREHOLDER ADVISORY VOTE ON THE FREQUENCY OF THE VOTE ON COMPENSATION FOR NAMED EXECUTIVE OFFICERS (Proposal 3)      76  
   
PROPOSAL TO APPROVE AMENDMENTS TO THE RESTATED 2003 STOCK INCENTIVE PERFORMANCE PLAN (Proposal 4)      78  
   
PROPOSAL TO RATIFY THE SELECTION OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2023 FISCAL YEAR (Proposal 5)      86  
   
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS      87  
   
ADDITIONAL INFORMATION REGARDING INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      90  
   
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF      92  
   
EQUITY COMPENSATION PLANS      95  

 

LOGO

     1


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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS      96  
   
DELINQUENT SECTION 16(a) REPORTS      96  
   
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING      97  
   
ADDITIONAL INFORMATION      101  
   
APPENDICES   

APPENDIX A —GAAP TO NON-GAAP RECONCILIATION

     A-1  

APPENDIX B —STANDARDS FOR DIRECTOR INDEPENDENCE

     B-1  

APPENDIX C —THIRD AMENDMENT TO 2003 RESTATED STOCK INCENTIVE PERFORMANCE PLAN, AS AMENDED

     C-1  

APPENDIX D —2003 RESTATED STOCK INCENTIVE PERFORMANCE PLAN

     D-1  

 

 

LOGO

     2


Table of Contents

In this Proxy Statement, the terms “Hasbro,” “the Company,” “we,” and “our” refer to Hasbro, Inc., and the terms “Board” and “Board of Directors” refer to the Board of Directors of Hasbro, Inc. Unless otherwise stated, information presented in this Proxy Statement is based on Hasbro’s fiscal year. This Proxy Statement includes website addresses and references to additional materials found on those websites. These websites and materials are not incorporated into this Proxy Statement by reference.

This Proxy Statement includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our Blueprint 2.0 strategy, the ability to achieve our financial and business goals and objectives, the proposals contained herein, and environmental and social goals, commitments, and strategies. These statements involve risks and uncertainties. Actual results could differ materially from any future results expressed or implied by the forward-looking statements for a variety of reasons, including due to the risks and uncertainties that are discussed in our most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Proxy Statement Highlights

This proxy summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider and you should read the entire Proxy Statement before voting.

 

Annual Meeting Information

 

LOGO

 

Date and Time

10:00 a.m. Eastern Time

Thursday, May 18, 2023

 

LOGO

 

Record Date

Tuesday

March 22, 2023

 

LOGO

 

Where

Virtually online at

 www.meetnow.global/MPL92M4

 

Meeting Agenda and Recommendation of the Board of Directors

Agenda Item

  

Board

Recommendation

  

Page

Number

Proposal 1

Election of Eleven (11) Directors

  

 

LOGO

 

“FOR ALL” Hasbro director nominees

   1

 

Proposal 2

Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers

   LOGO

 

“FOR”

 

   75

 

Proposal 3

Advisory Vote on the Frequency of the Vote on the Compensation of the Company’s Named Executive Officers

   LOGO

“ANNUAL” (a vote every year)

 

   76

 

Proposal 4

Approval of Amendments to the Company’s Restated 2003 Stock Incentive Performance Plan, as amended

  

LOGO

 

“FOR”

 

   78

 

Proposal 5

Ratification of KPMG LLP as the Independent Registered Public Accounting Firm for Fiscal Year 2023

  

LOGO

 

“FOR”

 

   86

 

 

LOGO

     i


Table of Contents

2022 Overview

2022 Overview

Fiscal year 2022 was a challenging year. We navigated a difficult economy with high inflation and rising interest rates, a challenged toy and game industry, the continued effects of the coronavirus pandemic, and leadership changes. During 2022, our new CEO, Chris Cocks, led a comprehensive, several month long strategic review of our business. In October 2022, we announced our Blueprint 2.0 strategy, a go-forward strategic plan to drive accelerated revenue and profit growth, by focusing on fewer, bigger and more profitable brands, leveraging our direct-to-consumer and digital businesses, scaling our brands through licensing opportunities, delivering operational excellence, and investing in our people. As we embark upon a multi-year transformational effort to support our revamped Blueprint 2.0 strategy, we have summarized key highlights and events for 2022 below.

Notable Leadership Changes

 

   

In February 2022, our Board appointed Chris Cocks as our new Chief Executive Officer. Mr. Cocks took over the role from Richard Stoddart, a member of our Board of Directors, who was serving as Interim Chief Executive Officer following the untimely passing of Brian Goldner, our former long-time CEO in October 2021.

   

In February 2022, we appointed Cynthia Williams as President of Wizards of the Coast and Digital Gaming to succeed Mr. Cocks in that role. Ms. Williams joined us from Microsoft, where she most recently served as General Manager and Vice President, Gaming Ecosystem Commercial Team, and drove the expansion of Xbox Gaming and the acceleration of game-creator growth. Prior to joining Microsoft, Ms. Williams spent more than a decade at Amazon, where she led the global growth of their ecommerce direct-to-consumer business Fulfillment by Amazon.

   

In May 2022, we appointed Najuma Atkinson to lead our Global HR function. Ms. Atkinson, our Executive Vice President and Chief People Officer, joined us from Dell Technologies, where she served as Senior Vice President of Global HR Services.

   

In November 2022, we announced that Deborah Thomas informed Hasbro of her intent to retire from her position as Executive Vice President and Chief Financial Officer after 24 years of distinguished service and leadership with the Company. Hasbro initiated a search process to identify her successor, which is ongoing. Ms. Thomas and Hasbro plan for her to remain as Chief Financial Officer until her successor is in place, and remain as an advisor to the Company thereafter until December 31, 2023 to ensure a smooth transition.

   

On December 30, 2022, Darren Throop, eOne CEO, retired from the Company.

   

In January 2023, we announced that Eric Nyman, President and Chief Operating Officer since February 2022, would be leaving the Company effective March 31, 2023.

Blueprint 2.0

Our Blueprint 2.0 strategy is a consumer-centric framework for bringing compelling and expansive brand experiences to audiences around the world. Hasbro’s purpose of creating joy and community for all people around the world, one game, one toy, one story at a time starts with consumers and our fans, who represent multigenerational audiences that sit at the center of Blueprint 2.0. Understanding our fans, expanding our fan base and delivering for them is the key driver behind our evolution as a branded play and entertainment company. The value of our strategy is fully activated when we can take a brand across multiple elements of the Blueprint 2.0 including consumer products such as toys, games and licensed products; digital gaming; entertainment and experiences; and our Hasbro Direct business. We believe the ability to build a brand and leverage in-house capabilities to create multiple categories of engagement with consumers and fans is unique to Hasbro and optimizes our business today and in the future.

During our strategic review we identified opportunities to focus and scale our business, enhance operational excellence, including through specialized organizational programs and supply chain transformation, to drive growth and profit and enhance shareholder value. We plan to increase strategic investment on our most valuable and profitable franchises across toys, games, entertainment and licensing, and exit certain non-core aspects of our business.

Our Blueprint 2.0 transformation is focused on key areas of importance: Brand, Insights and Entertainment; Direct and Digital; Licensing; People; and Operational Excellence.

 

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Brand, Insights and Entertainment

 

   

Focus on fewer, bigger, more profitable brands and drive market share in the key categories of preschool, games, creativity, outdoor and action brands.

   

Develop our insights and analytics capabilities heavily focused on putting consumers at the center of everything we do, as we build multi-generational brands.

   

Entertainment investments focused on Hasbro IP aligned with our Blueprint 2.0 strategy, including merchandise and digital engagement opportunities with a focus on franchise brands.

Direct and Digital

 

   

Invest in our Hasbro direct-to-consumer and digital business, inclusive of Hasbro PULSE, SECRET LAIR, MAGIC: THE GATHERING ARENA and D&D Beyond. An example of this investment includes our 2022 acquisition of D&D Beyond, the premier digital content platform for DUNGEONS & DRAGONS, for a purchase price of $146.3 million.

   

Continue to cultivate digital licensing relationships that activate our brands.

Licensing

 

   

Scale licensing of our brands through a growing portfolio of partners from theme park operators to toy companies, for consumers to experience our brands and drive communities of friendship and fandom around them.

People

 

   

Invest in our people at all levels of our organization and continue to foster a diverse and inclusive culture that drives accountability and focuses on profitability.

Operational Excellence

 

   

Execute operational savings initiatives, including supply chain transformation, to improve operating results and reinvest in our business.

 

2022 Financial Performance

 

 

LOGO

Adjusted operating profit, adjusted net earnings and adjusted earnings per diluted share are non-GAAP financial measures as defined under SEC rules. A reconciliation of these non-GAAP financial measures to GAAP is provided in Appendix A to this Proxy Statement.

 

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Board Matters

Proposal 1 — Election of Directors

The table below summarizes information about each of the eleven (11) director nominees nominated by your Board, including their current committees of the Board. Detailed information about each of your Board’s nominees, including their background, skills and areas of expertise, can be found beginning on page 1. Your Board of Directors unanimously recommends that you vote “FOR ALL” your Board’s director nominees. In September 2022, we announced that Mr. Kenneth A. Bronfin and Mr. Edward M. Philip, our two longest tenured directors, would not be standing for re-election at the Annual Meeting.

 

Name and Principal Occupation

   Age*      Director
Since
     Independent      AC    Comp      Cyber      Fin      NGS  

Michael R. Burns

Vice Chairman of Lions Gate Entertainment Corp.

     64        2014                                    LOGO        LOGO  

Hope F. Cochran

Managing Director of Madrona Venture Group

     51        2016           LOGO LOGO               LOGO        LOGO           

Christian P. Cocks

Chief Executive Officer of Hasbro

     49        2022                                                    

Lisa Gersh

Outside Advisor; Former Chief Executive Officer of Alexander Wang

     64        2010           LOGO      LOGO                             

Elizabeth Hamren

Chief Executive Officer of Ring, Inc.

     51        2022                  LOGO        LOGO                    

Blake Jorgensen

Special Advisor and Former Chief Financial Officer of PayPal Holdings, Inc.

     63        2022           LOGO                        LOGO           

Tracy A. Leinbach

Retired Executive Vice President and Chief Financial Officer of Ryder System, Inc.

     63        2008           LOGO                        LOGO        LOGO  

Laurel J. Richie

Independent Branding Consultant; Former President of Women’s National Basketball Association

     64        2020                  LOGO                          LOGO  

Richard S. Stoddart

Chair of the Board of Hasbro and Former President and Chief Executive Officer of InnerWorkings, Inc.

     60        2014                                                

Mary Beth West

Former Senior Vice President, Chief Growth Officer of The Hershey Company

     60        2016                                    LOGO        LOGO  

Linda Zecher Higgins

Chief Executive Officer and Managing Partner of The Barkley Group

     69        2014           LOGO               LOGO                    

 

*

Age and Committee memberships are as of April 3, 2023. Committee assignments are expected to be updated effective at the Annual Meeting to reflect the departure of Mr. Bronfin and Mr. Philip, including the appointment of new chairs of certain committees.

 

Chair:

LOGO

  

Member:

LOGO

  

Audit Committee Financial Expert:

LOGO

 

AC:    Audit Committee
Comp:    Compensation Committee
Cyber:    Cybersecurity and Data Privacy Committee
Fin:    Finance and Capital Allocation Committee
NGS:    Nominating, Governance and Social Responsibility Committee

 

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Profile of the Board’s Nominees for Director

The Board’s nominees are balanced by experience, age, gender and tenure. The Board’s nominees are an experienced, diverse group, with each member contributing and having his or her voice heard while supporting and appropriately challenging management. The Nominating, Governance and Social Responsibility Committee and the Board believe the mix of experience, diversity and perspectives on the Board serves to strengthen management and our Company.

 

 

LOGO

The Board’s nominees for director consist of a strong group of proven leaders with experience across a wide range of industries, including digital gaming, consumer products, and entertainment/media giving us a diverse set of skills, viewpoints and expertise.

 

 

LOGO

 

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Corporate Governance Matters

Hasbro is committed to strong corporate governance, ethical conduct, sustainability and the accountability of the Board and Hasbro’s senior management team to the Company’s shareholders.

 

         

Board and Board Committee Practices

 

         
 

 

LOGO

  Entire Board is elected annually  
 

 

LOGO

  10 out of 11 of the Board’s nominees for director are independent (as defined by NASDAQ)  
 

 

LOGO

  64% of our director nominees are women  
 

 

LOGO

  18% of our director nominees are racially diverse  
 

 

LOGO

  Balance of experience, gender, diversity, tenure and qualifications  
 

 

LOGO

  Separate CEO and Independent Chair with clearly defined responsibilities  
 

 

LOGO

  All committees consist entirely of independent directors  
 

 

LOGO

  Risk oversight by Board and its committees  
 

 

LOGO

  ESG oversight by the Board and the Nominating, Governance and Social Responsibility Committee of the Board  
 

 

LOGO

  Capital allocation and finance matters overseen by separate Finance and Capital Allocation Committee of the Board  
 

 

LOGO

  Cybersecurity overseen by separate Cybersecurity and Data Privacy Committee of the Board  
 

 

LOGO

  Annual Board and committee self-evaluations  
 

 

LOGO

  Director orientation and continuing education  
 

 

LOGO

  Policy limiting the number of public company boards on which our directors may serve  
         

Shareholder Rights, Accountability and Other Governance Practices

 

         
 

 

LOGO

  Comprehensive shareholder outreach program and track record of constructive engagement  
 

 

LOGO

  No shareholder rights plan  
 

 

LOGO

  Annual shareholder advisory vote on executive compensation (“Say-on-Pay”)  
 

 

LOGO

  Majority vote standard with a plurality carve-out for contested elections  
 

 

LOGO

  Proxy access bylaw provision  
 

 

LOGO

  No pledging or hedging of Company stock by directors, officers or other employees  
 

 

LOGO

  Strong compensation Clawback Policy  
 

 

LOGO

  Stock ownership and share retention policy for Board members, executive officers and other key employees
 

 

LOGO

  Written code of conduct and corporate governance principles  
 

 

LOGO

  Long-standing commitment to ESG and corporate sustainability  

 

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Shareholder Engagement

Hasbro has engaged with numerous shareholders on the Company’s strategy and performance, Environmental, Social and Governance (“ESG”) issues, compensation matters and corporate governance for many years. We do this as part of our commitment to build relationships, be responsive to shareholders and ensure that our actions are informed by the viewpoints of our investors. Our shareholder engagement efforts are conducted year-round.

 

 

LOGO

In addition to discussions just before our annual meeting, we initiate discussions during a quieter period several months before, typically in the fourth quarter, reaching out to our largest shareholders. Board members, such as the independent chair or chair of one of the Board committees, participate in many of these discussions. We believe that positive, two-way dialogue builds informed relationships that promote transparency and accountability. Management provides written and oral updates on the discussions with shareholders to your Board, which considers shareholder perspectives, as well as the interests of all stakeholders, when overseeing company strategy, formulating governance practices and designing compensation programs. In 2022, we had many conversations with our shareholders and proxy advisory firms to discuss our strategy, leadership and support for our board nominees for last year’s annual meeting.

In addition to our year round engagement, in 2022 and early 2023, we proactively extended an invitation to our top 30 shareholders (holding in aggregate approximately 53% of our outstanding shares) to meet and we had discussions with those who accepted our invitation. We also spoke with shareholders who reached out to us. The chair of the Board participated in a number of these conversations. This year we covered a variety of topics, with a primary focus on our actions we have taken in response to shareholder feedback over the past year, as well as contemplated changes to our executive compensation plans, corporate governance and our ESG disclosure, programs and priorities. The meetings with our shareholders were productive, with specific positive comments about the actions we have taken and proposed to take.

Key Actions Taken in the Past Year Considering Shareholder Feedback

Strategic Review:

 

   

Undertook a comprehensive strategy review.

   

Unveiled Blueprint 2.0, our strategy to drive accelerated revenue and profit growth.

   

Established an Operational Excellence Program to deliver $250 to $300 million in annual savings by end of fiscal 2025.

   

Divested certain non-core assets and commenced a sale process of our eOne television and film business.

Governance Changes:

 

   

Refreshed our Board of Directors with the appointment of Elizabeth Hamren and Blake Jorgensen, two highly proficient directors with capital allocation and digital gaming experience.

   

Announced that our two longest-tenured directors, Ken Bronfin and Ted Philip, would not be standing for re-election as this year’s annual meeting; thereby bringing our total number of directors for election at this meeting to eleven (11).

   

Clarified the role of our Finance Committee to explicitly provide for its oversight of capital allocation matters, including through renaming the committee to the Finance and Capital Allocation Committee.

   

Reaffirming the separation of the CEO and Chair of the Board positions.

 

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Compensation Changes:

 

   

Amended short-term incentive plan performance metrics to remove free cash flow and add metrics relating to our transformation efforts.

   

Reiterated the inclusion of an ESG or DE&I metric to our short-term incentive plan.

   

Amended long-term incentive plan performance metrics to remove revenue as a metric, thereby eliminating the potential for overlapping metrics with our short-term plan, and added a metric to the plan based on the Company’s TSR performance compared to the S&P 500 TSR performance over the performance period.

ESG Updates:

 

   

Reported that we committed to set Science Based Targets for 2030 and 2050.

   

Discussed our recently released DE&I report.

   

Reviewed key updates to our ESG progress report, which was released in late 2022.

Disclosure Changes:

 

   

Began disclosing tabletop and digital gaming revenues separately for Wizards of the Coast and Digital Gaming Segment.

   

Refreshed our list of franchise brands commencing in the first quarter of 2023.

   

Committed to separately disclose brands with revenue of $1 billion or greater.

 

Driving ESG Performance

Overview

At Hasbro, we believe strong ESG performance drives long-term value creation for our business and stakeholders. Our ESG priorities include climate and environment, human rights and ethical sourcing, human capital management and culture, including Diversity, Equity & Inclusion (“DE&I”), and product and content safety. Below are some ESG highlights from 2022:

 

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Building on Our Success and Reaching New Heights

ESG at Hasbro is the framework for translating our Company’s Purpose into action — getting from “why” we exist to “how” we deliver sustainable, long-term value for our Company and stakeholders. We continue to integrate ESG across our business and are proud of our strategic initiatives that are intended to further our purpose and make a positive impact for our employees, consumers, investors, and planet.

Recent recognition for Hasbro’s leadership in promoting and advancing the interests of our stakeholders, our communities and our planet include:

 

 

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Governance

The governance of ESG starts with our Board, with specific oversight by the Nominating, Governance, and Social Responsibility Committee of the Board (the “Governance Committee”). ESG topics, such as climate, human rights and DE&I are regular agenda items at the Governance Committee. Additionally, the Audit Committee of the Board oversees SEC and public disclosures in specific areas like conflict minerals, climate risk and sustainability, and enterprise risk. Through the Compensation Committee of the Board, the Board considers ESG performance and priorities when determining the plan design for compensation, and overall performance of our senior executives. The full Board receives regular updates regarding our ESG progress.

In addition to Board-level governance, our CEO and the executive leadership team (ELT) regularly review our ESG performance, progress and opportunities. Our ESG Committee, chaired by our Chief Purpose Officer and comprised of our ELT, meets several times a year to ensure rigorous management oversight of the Company’s ESG strategy, impact and performance. The Chief Purpose Officer, who reports to the CEO and is a member of the ELT, together with Chief Executive Officer, Chief Legal Officer and other members of our ELT, set the direction for our global ESG strategy and performance, and ensure the integration of ESG throughout the global organization and supply chain. Our Chief People Officer is also responsible for developing and executing key aspects of our human capital strategy, including the attraction, acquisition, development and engagement of talent to deliver on the Company’s strategy, the design of competitive compensation and employee benefit programs.

Our CEO and Chief People Officer chair our internal DE&I Steering Committee, a committee comprised of global management leaders from various parts of the business. The DE&I Steering Committee is responsible for setting and reviewing the Company’s DE&I strategy and performance and identifying any gaps and opportunities. Our Senior Vice President of DE&I and Multicultural Strategy is responsible for executing the strategy and presenting our DE&I progress to the Board twice yearly.

 

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ESG Strategic Priorities

 

 

Climate and Environment. We recognize the impact our business can have on the environment and are working to reduce our footprint. We view sustainability challenges as opportunities to innovate and continuously improve our product design and operational efficiencies. We believe the long-term viability and health of our own operations and our supply chain, and the significant potential for environmental improvements, are key components to our business success.

Reducing our Carbon Footprint and Setting Science-Based Targets: We committed to set greenhouse gas emission reductions with a near-term 2030 goal, based on limiting emissions to keep warming below 1.5°C above pre-industrial levels, and a long-term 2050 goal, based on net-zero emissions across our value chain. In joining the Science-Based Target Initiative (SBTi), we expect to leverage a globally accepted methodology for setting GHG reduction targets in line with the goals of the Paris Agreement.

We continue to invest in renewable electricity. To address the carbon footprint associated with electricity consumption of our owned and operated facilities, we purchase Renewable Energy Certificates (RECs), each of which represent one megawatt hour (MWh) of renewable energy generated on the same grid as our electricity consumption. We purchase RECs to cover virtually 100% of the electricity consumed in each market where available. The amount of money we have spent in this area has been de minimis.

Managing Climate Risk and Resilience and Leveraging the TCFD Framework: Managing the resilience of our business to the potential risks of climate change is a priority. We are working to further integrate climate risk and resilience into our overall enterprise risk management process. In 2022, we initiated work to evaluate the integration of the Task Force on Climate-related Financial Disclosures (TCFD) framework into our existing ERM process across four key areas: governance, risk management, strategy and metrics & targets. Once implemented, the TCFD framework will help identify any potential climate risks, guide management of those potential risks and measure the effectiveness of our mitigation measures.

 

 

Human Rights and Ethical Sourcing. Our Human Rights and Ethical Sourcing program is dedicated to ensuring that facilities involved in the production of our toys, games, and licensed consumer products, comply with Hasbro’s Global Business Ethics Principles. The program is designed to ensure fair and safe working conditions; fairness, dignity and respect for workers; and robust supplier engagement to ensure strong safety, health and environmental performance. While working on these issues with partners, suppliers, third-party factories and licensees is complex, we remain vigilant in our commitment to ensure workers in our supply chain are treated in accordance with our high ethical standards and applicable laws.

 

 

Human Capital Management and Culture. Our key human capital management objectives for our direct workforce are to attract, develop and retain diverse talent. The experience, dedication and diverse backgrounds of our employees are at the heart of our success, energizing everything we do, from developing innovative products to creating immersive game, consumer products and entertainment experiences. Our teams are inspired by our Purpose of creating joy and community for all people around the world. Our inclusive culture sets us up to deliver excellence, build impactful brands and expand our leadership in play, entertainment and beyond. As our organization continues to evolve, we remain steadfast in our ambition to provide a supportive and inclusive community where everyone can show up authentically as themselves and deliver their best work.

 

     

Diversity, Equity and Inclusion. We believe that the more inclusive we are as a company, the more effective our employees will be and the stronger our business will perform. Hasbro views DE&I as a strategic ESG priority that is linked to the future success of our business and the growth of our brands. We want our work to move beyond traditional gender and demographic stereotypes and to celebrate people of all backgrounds and lived experiences. We know this work begins with our people, and we work diligently to foster an inclusive culture with a diverse workforce that reflects the consumers and communities we serve globally. For our U.S. workforce, we disclose our diversity by job type, based on the EEO-1 filing, which is available on our CSR website.

 

     

Compensation, Health, Safety & Well-being of Employees. Employee attraction, development and retention has long been a key Hasbro priority. We recognize and reward our employees with a total rewards package that includes competitive base pay, equity compensation (for certain levels), annual incentives, product discounts and other comprehensive benefits, including wellness programs that help people integrate work and life commitments. We regularly review salary ratios for men and women in similar roles to help maintain internal equity and market competitiveness across the globe. We review both industry and local market data at least annually to identify trends and market gaps to maintain the competitiveness of our compensation and employee

 

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benefit programs. When conducting our global compensation reviews, we analyze salary information by a variety of factors, including gender globally and ethnicity in the United States. When designing our compensation and employee benefit programs, we also look beyond the fundamentals of these important components and consider the bigger picture of how these programs contribute to the overall employee experience. Employee health, safety and wellness are top priorities at Hasbro, and we support our colleagues’ well-being, which includes mental, physical and financial wellness, through a number of programs.

 

     

Employee Engagement. At Hasbro, we support a number of Employee Resource Groups (ERGs). These groups reflect our diverse employee population and provide dynamic opportunities for employee engagement. Our ERGs give voice to member concerns, create opportunities for networking and leadership skills development, support employee recruitment and retention efforts and celebrate ethnic and cultural themes important to our global team. In addition to our ERGs, we established a Business Resource Group (BRG), which provides a channel for employees to provide the business with input, guidance and perspective on strategic brand development and marketing initiatives early in the creation process related to race, ethnicity, gender identity, sexual orientation, veteran status and ability.

 

     

Training and Talent Development. We are committed to the continued development of our people. Strategic talent reviews and succession planning occur on a planned cadence annually — globally and across all business areas. The CEO and Chief People Officer convene meetings with senior company leadership and the Board to review top company talent. We provide opportunities for our employees to grow their careers. We invest in the development of our employees by providing in-house training and opportunities to participate in third-party programs, including specialized training as well as broader academic pursuits.

 

     

Philanthropy and Social Impact. Giving back to our local and global communities is core to our heritage and our culture. We empower our team members to give back through our volunteer program which grants four hours paid time off per month to volunteer in programs that support children, underserved communities, the environment and other important areas of impact. In addition, team-building company-sponsored volunteer projects and skills-based volunteer opportunities are organized throughout the year, providing our employees the opportunity to make a meaningful difference in their communities around the world. Global Day of Joy is Hasbro’s annual, company-wide day of service and has become a cherished tradition. Global Day of Joy takes place every December, and employees from each Hasbro office participate in service projects to benefit a variety of organizations.

 

     

Incentive Compensation. We also drive performance across our strategic ESG priority areas through incentives and executive compensation. Specifically, in 2021 and 2022 we included an ESG objective in each of our executives’ individual annual incentive plan modifiers, which are designed to embed ESG into our business strategy and reward meaningful progress against our ESG goals, including specifically diversity, equity and inclusion.

For a further discussion of our ESG efforts and goals, please see Part I, Item 1, Business, of our Annual Report on Form 10-K for the fiscal year ended December 25, 2022, under the headings “Environment, Social and Governance Performance” and “Human Capital Management”. You may also review our ESG progress report 2021-2022 and updates contained on our website at https://csr.hasbro.com/en-us/news. The contents of our website are not incorporated by reference into this Proxy Statement.

 

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Executive Compensation Matters

Proposal 2 — Advisory Vote on Compensation of Named Executive Officers

 

Our Board of Directors recommends that shareholders vote, on an advisory basis, to approve the compensation paid to our named executive officers (“NEOs”) as described in this Proxy Statement. Detailed information about this can be found beginning on page 75. Our compensation programs embody a pay-for-performance philosophy that supports our business strategy and closely aligns executive interests with those of our shareholders. Our shareholders supported our Say-on-Pay votes in the last three years, with favorable votes from 94.6%, 81.3% and 88.0% of the shares voted at the 2020, 2021 and 2022 Annual Meetings, respectively. Our average favorable approval of our Say-on-Pay votes over the past five years has been 91.5%. Highlights of our compensation programs for 2022 and our compensation best practices follow.

 

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2022 Executive Compensation Program Elements

Type of Annual Cash Compensation

Base Salary

  

•  Fixed compensation

•  Set at a market competitive level, in light of individual experience and performance

Annual Incentive Awards

  

•  Performance-based

•  Tied to company, business area and individual achievement against stated annual financial and strategic goals

•  Aligns management behavior with maximizing shareholder value

•  Performance measures evaluated

-  Total Net Revenues

-  Operating Profit Margin

-  Free Cash Flow

•  Individual Performance Adjustment: Designed to enable us to reward for strategic and operating performance not captured by the financial metrics listed by allowing the Committee to adjust the payouts up or down based on individual performance, including, in 2022, performance against ESG goals (which included goals promoting women in leadership and racial and ethnic diversity).

 

For 2023, we updated these metrics to remove free cash flow and replace it with a metric around performance against our transformation, including specific targets for costs savings as part of the Company’s operational excellence program.

 

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2022 Executive Compensation Program Elements

Type of Long-Term Incentive Compensation

Performance Contingent Stock Awards

  

•  Represented ~50% of annual target equity award value for our NEOs

•  Earned based on challenging long-term three-year goals requiring sustained strong operating performance

•  Tied to achievement of EPS, Net Revenue and Return on Invested Capital (ROIC) targets over a 3-year performance period.

 

In 2023, we have updated these metrics to be EPS and ROIC, removing Net Revenue, and adding a Relative TSR Modifier.

Stock Options

  

•  Represented ~25% of annual target equity award value for our NEOs

•  7-year term

•  Vest in three equal annual installments over the first three anniversaries of the grant date

Restricted Stock Units

  

•  Represented ~25% of annual target equity award value for CEO and the other NEOs

•  Vest in three equal annual installments over the first three anniversaries of the grant date

 

 

Compensation Best Practices

 

LOGO    Robust shareholder engagement process

 

LOGO    Program informed by and responsive to shareholder input

 

LOGO    Substantial portion of compensation is variable and performance-based

 

LOGO    Aligned with shareholder value creation

 

LOGO    Significant share ownership and retention requirements

 

LOGO    5x base salary for CEO

 

LOGO    2x base salary for other NEOs

 

LOGO    NEOs must hold 50% of net shares received upon option exercises or award vesting until they achieve the required ownership levels

 

LOGO    Fully independent Compensation Committee

  

LOGO    Independent Compensation Consultant

 

LOGO    Incentive programs do not incentivize excessive risk taking

 

LOGO    Robust anti-hedging and pledging policies prohibiting pledging or hedging of Company stock

 

LOGO    Double-trigger change in control provisions for equity grants

 

LOGO    Maximum payout caps under incentive plans

 

LOGO    No tax gross-ups

 

LOGO    No excessive perquisites

 

LOGO    No repricing of equity incentive awards

 

LOGO    Strong Clawback Policy

 

 

Frequency on Pay Vote

Proposal 3 — Frequency on Pay Vote

You are being asked, in a non-binding, advisory vote, to express whether you prefer that shareholder advisory votes on the compensation of our Named Executive Officers, such as the one set forth above under Proposal No. 2, be held every one, two or three years. The Board believes that the most appropriate approach at this time is to continue to have an annual (every year) shareholder advisory vote on the compensation of our Named Executive Officers, as the Company has done since 2011. We believe an annual vote best enables our shareholders to express their viewpoints so the Board and the Compensation Committee can understand and incorporate these views in structuring the Company’s executive compensation programs. As time progresses the Board may alter this view, but the Board is interested in obtaining more frequent feedback from shareholders to assist in evaluating and structuring the Company’s compensation programs. Detailed information about this proposal can be found beginning on page 76.

 

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Our Stock Incentive Plan

Proposal 4 — Approval of Amendments to our Restated 2003 Stock Incentive Performance Plan

You are being asked to approve amendments to our Restated 2003 Stock Incentive Performance Plan, as amended (the “2003 Plan”) to increase the authorized shares available for issuance under the plan and extend the duration of the plan. As we continue to evolve our Blueprint 2.0 strategy, we need the ability to grant appropriate and competitive incentives to attract, motivate and retain key personnel and reward those who contribute to the success and performance of our business. We provide variable performance-based compensation that aligns the interests of those persons with shareholders while appropriately rewarding those persons for contributing to our success and the delivery of strong performance.

We are requesting shareholders to approve an increase in the shares available for issuance under the 2003 Plan by 1,100,000 shares and to extend the duration of the 2003 Plan to December 31, 2028. Detailed information about this proposal can be found beginning on page 78.

 

Our Auditors

Proposal 5 — Ratification of Independent Registered Public Accounting Firm

You are being asked to vote to ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal 2023. Detailed information about this proposal can be found beginning on page 86.

 

 

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Election of Directors (Proposal 1)

 

 

The Board of Directors unanimously recommends a vote “FOR ALL” of the following
Board nominees at the 2023 Annual Meeting:

 

Michael R. Burns, Hope F. Cochran, Christian P. Cocks, Lisa Gersh, Elizabeth Hamren,
Blake Jorgensen, Tracy A. Leinbach, Laurel J. Richie, Richard S. Stoddart, Mary Beth
West and Linda Zecher Higgins.

The Board has set the number of directors at eleven (11), and you will be asked to elect eleven (11) directors at the Annual Meeting. All of the directors elected at the Annual Meeting will serve until the 2024 Annual Meeting of Shareholders (the “2024 Meeting”), and until their successors are duly elected and qualified, or until their earlier death, resignation or removal. Shareholders cannot vote “FOR” more than eleven (11) directors at the Annual Meeting.

Based upon the Company’s criteria for nominations of directors to the Board and the unanimous recommendation of the Nominating, Governance and Social Responsibility Committee, the Board unanimously determined to nominate Michael R. Burns, Hope F. Cochran, Christian P. Cocks, Lisa Gersh, Elizabeth Hamren, Blake Jorgensen, Tracy A. Leinbach, Laurel J. Richie, Richard S. Stoddart, Mary Beth West, and Linda Zecher Higgins for election by shareholders to serve until the 2024 Annual Meeting. Each nominee has consented to being named in the proxy statement and serving as a director if elected.

Under Article II, Section 2.6 of Hasbro’s Second Amended and Restated By-laws (“By-Laws”), the affirmative vote of a majority of votes cast with respect to each director nominee will be required for the nominee to be elected. A majority of votes cast means that the number of votes cast “FOR” a director nominee must exceed the number of votes cast “AGAINST” that director nominee. Abstentions will not be counted as votes cast either for or against the nominees.

If you submit a validly executed proxy card but do not specify how you want to vote your shares with respect to the election of directors, then your shares will be voted in line with the Board’s recommendation with respect to the proposal, i.e., “FOR ALL” the eleven (11) nominees proposed by your Board and named in this proxy statement. Should any of the Board’s nominees be unable or unwilling to stand for election at the time of the Annual Meeting, the proxies named on the proxy card may vote for a replacement nominee recommended by the Board of Directors, or the Board may reduce the number of directors to be elected at the Annual Meeting. At this time, the Board knows of no reason why any of the Board’s nominees would not be able to serve as a director if elected.

Election of Board Nominees

The Board is currently comprised of thirteen (13) members. As previously announced, Mr. Kenneth A. Bronfin and Mr. Edward M. Philip, directors since 2002 and 2008, respectively, are not standing for re-election at the Meeting. Accordingly, the size of the Board will be reduced to eleven (11) at the Annual Meeting, and the Board is presenting eleven (11) nominees for director.

In considering candidates for election to the Board, the Nominating, Governance and Social Responsibility Committee and the Board consider a number of factors, including:

 

 

employment, experience and overall qualifications;

 

 

skills, expertise and involvement in areas that are of importance to the Company’s business;

 

 

gender, diversity and other attributes;

 

 

the Board’s and the Company’s needs at that time;

 

 

business ethics and professional reputation;

 

 

other board service;

 

 

business, financial and strategic judgment; and

 

 

the desire to have a well-balanced Board that represents a diverse mix of backgrounds, perspectives and expertise.

Each of the Board nominees for election to the Board at the Annual Meeting has served in senior positions at complex organizations and has demonstrated a successful track record of strategic, business and financial planning, execution and operating skills in these positions. In addition, each of the Board nominees has proven experience in management and leadership development and an understanding of operating and corporate governance issues for a large multinational company.

 

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The following highlights certain skills, experience and characteristics possessed by the Board nominees for election to the Board and explains what we mean when referring to experience. Further information on each nominee’s qualifications is provided below in the individual biographies. In addition to the skills listed below, our nominees for election as directors each have experience with oversight of risk management, as described below under “Role of the Board in Risk Oversight.”

 

      Burns      Cochran      Cocks      Gersh      Hamren      Jorgensen      Leinbach      Richie      Stoddart      West     

Zecher

Higgins

 

Senior Management

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Directors with CEO or senior management experience bring leadership qualifications and skills that help the Board capably advise, support and oversee our management team.

 

Global Business

     LOGO        LOGO        LOGO        LOGO        LOGO        LOGO        LOGO        LOGO        LOGO        LOGO        LOGO  

We benefit from directors having experience as a senior leader in a large organization with international operations. International exposure yields an understanding of diverse business environments, economic conditions and cultural perspectives that informs our global business and strategy and enhances oversight of our multinational operations.

 

Strategic Planning

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Directors with board and management experience, particularly in industries in which we operate, provide vision and insights to effectively set and plan strategy for the business.

 

Digital Gaming/Digital Products

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Directors with experience or insights in digital gaming development and licensing as well as digital media, content and products adds to a greater understanding of the activation of our Blueprint 2.0.

 

Consumer Products

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Directors with experience in the design, development, marketing and sale of consumer products, as well as consumer insights, together with the interplay of consumer products with digital gaming and entertainment are important components to the success of Blueprint 2.0.

 

Entertainment

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Directors with experience or insights in the licensing, production and distribution of entertainment, and an understanding of how the entertainment can drive other aspects of our business, such as consumer products and digital gaming, is a key part to the success of Blueprint 2.0.

 

IT/Technology

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Technology experience helps the Board oversee cybersecurity and advise our management team as we seek to enhance the consumer experience and further develop our Blueprint 2.0 strategy.

 

Sales and Marketing

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We have an iconic and global portfolio brands with vast IP potential. As we look to capture the full value of our IP through our Blueprint 2.0 strategy, directors with relevant experience in sales, marketing or brand management provide important insights to the Board.

 

Human Capital Management

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Our people are among our most important assets, and we believe the successful development and retention of our employees is critical to our success. As such, we benefit from having directors with a deep understanding of human capital management obtained from experience as a senior leader in a large organization.

 

We also understand that a culture rich in diversity is key to our business success, as it allows us to better understand the business opportunities in various markets around the world and develop products that resonate with consumers in diverse cultures. Diverse directors representing a range of perspectives expands the Board’s understanding of the needs and viewpoints of consumers, employees and other stakeholders worldwide.

 

 

ESG

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We recognize our responsibility to be a global, corporate citizen and positive environmental steward, which is a priority for the entire organization. Our directors are committed to our sustainability initiatives designed to achieve long-term stockholder value through a responsible, sustainable business model.

 

 

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      Burns      Cochran      Cocks      Gersh      Hamren      Jorgensen      Leinbach      Richie      Stoddart      West     

Zecher

Higgins

 

Finance/Accounting

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We seek directors with strong financial acumen. Financial expertise assists the Board in overseeing our financial statements, capital structure and internal controls.

 

Corporate Governance

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We seek directors with strong understanding of corporate governance for public companies.

 

Operations

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We seek directors with experience in operational aspects of complex global companies.

 

Board Diversity Matrix as of April 3, 2023

As mentioned above, diversity is one of the factors considered by the Nominating, Governance and Social Responsibility Committee in identifying nominees for director. It does not, however, have a formal policy in this regard. The Nominating, Governance and Social Responsibility Committee views diversity broadly to include diversity of experience, skills and viewpoint, as well as diversity of gender, race and ethnicity. The Nominating, Governance and Social Responsibility Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. The Nominating, Governance and Social Responsibility Committee believes that the backgrounds and qualifications of the directors considered as a whole should provide a significant breadth of experience, knowledge and abilities to assist the Board in fulfilling its responsibilities. Generally, directors should be individuals who have succeeded in their particular fields and who demonstrate integrity, reliability and extensive knowledge of corporate affairs. The Nominating, Governance and Social Responsibility Committee also considers other relevant factors as it deems appropriate, including the current composition of the Board.

More specifically, the following chart lists the self-identified diverse attributes of our current directors.

 

Total Number of Directors    13  

Gender

   Male      Female      Non-Binary      Gender Undisclosed  

Number of directors based on gender identity

     6        7        0        0  

African American or Black

     0        2        0        0  

Alaskan Native or American Indian

     0        0        0        0  

Asian

     0        0        0        0  

Hispanic or Latinx

     0        0        0        0  

Native Hawaiian or Pacific Islander

     0        0        0        0  

White

     6        5        0        0  

Two or More Races or Ethnicities

     0        0        0        0  

LGBTQ+

     0        0        0        0  

Undisclosed

     0        0        0        0  

 

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Nominees for Election as Directors

The following sets forth certain biographical information regarding each of the Board’s director nominees as of April 3, 2023, as well as particular experience, qualifications, attributes or skills (beyond those indicated in the preceding charts), which led the Company’s Board to conclude that the nominee should serve as a director of the Company. Except as otherwise indicated, each person has had the same principal occupation or employment during the past five years.

 

 

 

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Michael R. Burns

 

Age: 64

 

Director Since: 2014

 

Committees:

•  Finance and Capital Allocation

•  Nominating, Governance and
Social Responsibility

 

 

       

EXPERIENCE

Michael R. Burns is the Vice Chairman and a member of the board of directors of Lions Gate Entertainment Corp. (a global entertainment company with significant motion picture and television operations), serving in this role since 2000. Lions Gate acquired Starz in December 2016. From 1991 to 2000, Mr. Burns was the Managing Director and Head of the Los Angeles Investment Banking Office of Prudential Securities Inc.

 

   

QUALIFICATIONS

•  Extensive knowledge and experience in content development and brand building, including in the use of creative storytelling and immersive entertainment across platforms to build global entertainment franchises.

•  Significant experience in the entertainment industry, including operating and financial expertise in motion picture and television development, production, financing, marketing, distribution and monetization.

•  Expertise in strategic planning, investing and content building in media and entertainment-driven multi-platform businesses.

•  Investment banking, corporate finance and international business experience.

 

   

OTHER CURRENT PUBLIC COMPANY BOARDS

•  Lions Gate Entertainment Corp.

 

   

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

None

 

 

 

 

   

       

 

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Hope F. Cochran

 

Age: 51

 

Director Since: 2016

 

Committees:

•  Audit (Chair)

•  Cybersecurity and Data Privacy

•  Finance and Capital Allocation

 

 

EXPERIENCE

Hope F. Cochran is a Managing Director at Madrona Venture Group (a technology-focused venture capital group). Prior to joining Madrona in January 2017, Ms. Cochran was the Chief Financial Officer of King Digital Entertainment, the creator of Candy Crush and other successful mobile games, from 2013 to 2016, where she helped drive the company’s employee and revenue growth, guided the Company’s IPO and successfully completed a $5.9 billion acquisition by Activision. From 2005 to 2013, Ms. Cochran was a financial executive at Clearwire, Inc., serving as Chief Financial Officer from 2011 to 2013.

 

 

QUALIFICATIONS

•  Extensive experience spanning more than 20 years as a senior financial executive in the digital gaming and telecom industries.

•  Significant knowledge of development of digital content businesses.

•  International business expertise in managing global teams, and talent in managing, growing and overseeing global businesses.

•  Substantial experience as a chief financial officer and overseeing financial and accounting issues for public companies.

 

 

OTHER CURRENT PUBLIC COMPANY BOARDS

•  MongoDB, Inc.

-  Audit Committee Chair

•  New Relic, Inc.

-  Audit Committee

 

 

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

None

 

 

 

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Christian P. Cocks

 

Age: 49

 

Director Since: 2022

 

Committees:

•  None

 

         

EXPERIENCE

Mr. Cocks has served Chief Executive Officer of Hasbro since February 2022. Prior to that, he served as President and Chief Operating Officer of Wizards of the Coast and Digital Gaming since 2021 and prior to that served as President of Wizards of the Coast since 2016, when he joined Hasbro from Microsoft. During his 14 years at Microsoft, Mr. Cocks led a global sales and technical engagement team as Vice President, OEM Technical Sales and served in product management and marketing leadership positions at MSN and Xbox Games, where he worked on hit franchises like HALO and FABLE.

 

   

QUALIFICATIONS

•  Highly strategic leader, who understands how to create and nurture brands to drive fan and consumer connection across channels.

•  Ability to channel gaming, product and storytelling passion into consumer experiences — across gaming, consumer products and entertainment.

•  Under his executive leadership as President and CEO of Wizards of the Coast, doubled global revenue in under five years, surpassing $1 billion in 2021.

•  Unique vision, skill and experience in tabletop and digital gaming, combined with extensive omni-channel experience and proven track record.

 

   

OTHER CURRENT PUBLIC COMPANY BOARDS

None

 

   

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

None

 

   
         

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Lisa Gersh

 

Age: 64

 

Director Since: 2010

 

Committees:

•  Audit

•  Compensation (Chair)

 

 

EXPERIENCE

Lisa Gersh is an outside advisor to companies investing in the media space. She previously served as the Chief Executive Officer of Alexander Wang (a global fashion brand) from October 2017 to October 2018. Ms. Gersh served as the Chief Executive Officer of Goop, Inc. (a lifestyle publication curated by Gwyneth Paltrow) from 2014 to 2016, and President and Chief Executive Officer of Martha Stewart Living Omnimedia, Inc. (an integrated media and merchandising company) from 2012 to 2013. Prior to that, she served as President and Chief Operating Officer of Martha Stewart Living Omnimedia, Inc. from 2011 to 2012, and a director of Martha Stewart Living Omnimedia, Inc. from 2011 to 2013.

 

 

QUALIFICATIONS

•  Extensive experience in the media, branded products and entertainment industries, including television, digital entertainment and publishing.

•  Operating and executive positions with multiple leading media and brand-driven companies, including as Chief Executive Officer of Alexander Wang, Chief Executive Officer of Goop, Inc., President and Chief Executive Officer of Martha Stewart Living Omnimedia and President and co-founder of Oxygen Media.

•  Expertise in business and strategic planning, in media, retail, brand-driven and entertainment industries, including the cable television and digital industries.

•  Skilled and highly knowledgeable in marketing and branding, media trends and in building global brand-driven businesses.

 

 

OTHER CURRENT PUBLIC COMPANY BOARDS

•  MoneyLion Inc.

-  Nominating and Governance Committee Chair

-  Compensation Committee

 

 

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

•  Establishment Labs Holdings Inc.

 

 

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Elizabeth Hamren

 

Age: 51

 

Director Since: 2022

 

Committees:

•  Compensation

•  Cybersecurity and Data Privacy

 

         

EXPERIENCE

Elizabeth Hamren has served as Chief Executive Officer of Ring, Inc., an Amazon smart doorbell and home security company, since March 2023. Prior to that she served as Chief Operating Officer at Discord Inc., a voice, video and text communication service that enables people to gather virtually, including while gaming, since from 2021 to March 2023. Prior to joining Discord, Ms. Hamren served as a Corporate Vice President at Microsoft Corporation from March 2017 to December 2021 running product and engineering for Xbox consumer products, including developing and launching the Xbox Series X|S and leading Xbox Game Pass. Prior to that, from August 2015 to March 2017, she led Global Marketing and Sales for Oculus at Meta Platforms, Inc. (formerly Facebook, Inc.), where she launched the industry-defining Oculus Rift virtual reality headset. Ms. Hamren holds a BSE in Civil Engineering and Operations Research from Princeton University, and an M.B.A. from Harvard Business School.

 

   

QUALIFICATIONS

•  Extensive management experience at world-class companies, including leading digital companies.

•  Extensive background in engineering, product management, marketing and operations for subscription-based technology products and gaming companies.

•  Expert in consumer tech products, including leading product and engineering for Xbox consumer products and services, including the flagship Xbox Game Pass subscription service, Xbox hardware and platform software, and PC experiences.

•  Proven track record in leading companies to growth in user base, including direct experience launching and scaling some of the most popular consumer technology and subscription-based services in the world.

 

   

OTHER CURRENT PUBLIC COMPANY BOARDS

•  LegalZoom.com, Inc.

 

   

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

None

 

   
         

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Blake Jorgensen

 

Age: 63

 

Director Since: 2022

 

Committees:

•  Audit

•  Finance and Capital Allocation

 

 

EXPERIENCE

Blake Jorgensen is a Special Advisor to, and former Executive Vice President and Chief Financial Officer of, PayPal Holdings Inc., which he joined in 2022. Prior to that, he spent a decade as Chief Financial Officer and Chief Operating Officer of Electronic Arts Inc. (“EA”), where helped to drive the transformation of the company. Mr. Jorgensen has over 20 years of experience in finance across various industries with a deep understanding of finance, consumer products, technology and gaming. Prior to joining EA, Mr. Jorgensen served as Executive Vice President and Chief Financial Officer of Levi Strauss & Co. from July 2009 to August 2012 and was Executive Vice President and Chief Financial Officer of Yahoo! Inc. from June 2007 to June 2009. Before joining Yahoo! Inc., Mr. Jorgensen also served as the Chief Operating Officer and Co-Director of Investment Banking at Thomas Weisel Partners, which he co-founded in 1998. He has also held financial and operational positions at Montgomery Securities, MAC Group/Gemini Consulting and Marakon Associates. Mr. Jorgensen earned his M.B.A. from Harvard Business School and his undergraduate degree from Stanford University.

 

 

QUALIFICATIONS

•  More than a decade as a senior executive at a leading digital gaming company.

•  Deep experience across finance, operations, consumer products, technology and gaming.

•  Expertise in capital allocation as a C-suite executive at multiple public companies, completing multiple significant M&A transactions throughout his career.

•  Consistent track record of driving growth and shareholder returns.

•  Demonstrated change agent leading a shift in revenue mix from legacy format to next generation interactivity in a leading digital gaming company.

 

 

OTHER CURRENT PUBLIC COMPANY BOARDS

None

 

 

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

None

 

 

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Tracy A. Leinbach

 

Age: 63

 

Director Since: 2008

 

Committees:

•  Audit

•  Finance and Capital Allocation

•  Nominating, Governance and Social Responsibility

 

 

       

EXPERIENCE

Tracy A. Leinbach served as interim Chair of the Board from October 2021 to February 2022, following the passing of the Company’s long-time Chairman and CEO, Brian Goldner. She previously served as Executive Vice President and Chief Financial Officer for Ryder System, Inc. (a global logistics and transportation and supply chain solutions provider) from 2003 until 2006. Prior thereto, Ms. Leinbach served as Executive Vice President, Fleet Management Solutions for Ryder since 2001, where she had increasing responsibilities for finance and operational matters. Prior to her career with Ryder, Ms. Leinbach worked for PricewaterhouseCoopers in public accounting and was a CPA.

 

   

QUALIFICATIONS

•  Extensive business experience in global operations, strategic and financial planning, auditing and accounting.

•  Significant oversight and management experience in global operations and financial management, as well as global supply chain management, with Ryder, spanning a career with Ryder of over 21 years. During her career she led the company’s largest business unit in the U.S., as well as units in Europe, Mexico and Canada.

•  Experience as a controller and chief financial officer at many of Ryder’s subsidiaries and divisions.

•  Possesses knowledge, expertise and experience in strategic planning, management, operations, logistics and risk management for a large multinational company, corporate finance, sales, and expertise in issues regarding financial reporting and accounting issues for large public companies.

 

   

OTHER CURRENT PUBLIC COMPANY BOARDS

•  Veritiv Corporation

-  Compensation and Leadership Development Committee

-  Nominating and Governance Committee

 

   

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

•  Forward Air Corporation

 

   
         

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Laurel J. Richie

 

Age: 64

 

Director Since: 2020

 

Committees:

•  Compensation

•  Nominating, Governance and Social Responsibility

 

 

EXPERIENCE

Laurel J. Richie has been an independent leadership and branding consultant since 2015. Prior to her current role, Ms. Richie served as President of the Women’s National Basketball Association LLC (“WNBA”) from May 2011 to November 2015. Prior to her appointment as President of the WBNA in 2011, she served as Chief Marketing Officer of Girl Scouts of the United States of America from 2008 to 2011. From 1984 to 2008, she held various positions at Ogilvy & Mather, including Senior Partner and Executive Group Director and founding member of the agency’s Diversity Advisory Board. Ms. Richie is a former Trustee of the Naismith Basketball Hall of Fame and and the Dartmouth College Board of Trustees where she served as chair from 2017-2021. She currently serves as a consultant to Fortune 100 c-suite executives on matters of personal leadership and corporate culture.

 

 

QUALIFICATIONS

•  Significant executive management and leadership experience, together with strategic and operational expertise.

•  Extensive experience and skills in global marketing and brand-management skills.

•  Deep experience in developing corporate culture.

•  Leader in creating and supporting diverse and inclusive teams.

 

 

OTHER CURRENT PUBLIC COMPANY BOARDS

•  Bright Horizons Family Solutions Inc.

-  Audit Committee

-  Nominating and Corporate Governance Committee Chair

•  Synchrony Financial

-  Nominating and Corporate Governance Committee

-  Management Development and Compensation Committee Chair

 

 

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

None

 

 

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Richard S. Stoddart

 

Age: 60

 

Director Since: 2014

 

Chair Since: 2022

 

Committees:

None

 

         

EXPERIENCE

Richard S. Stoddart served as Hasbro’s interim Chief Executive Officer from October 2021 to February 2022, following the passing of the Company’s former Chairman and CEO, Brian Goldner. He was appointed Chair of the Board of Hasbro in February 2022. Mr. Stoddart is the former President and Chief Executive Officer of InnerWorkings, Inc. (a global marketing execution firm), serving in that role from 2018 until 2020 when Innerworkings, Inc. was acquired. Mr. Stoddart was the Chief Executive Officer of Leo Burnett Worldwide from February 2017 to 2018, the Chief Executive Officer of Leo Burnett North America from 2013 to 2016 and the President of Leo Burnett North America from 2005 to 2013.

 

   

QUALIFICATIONS

•  Extensive experience in the advertising, marketing and communications industries, including in television, digital, social media, point-of-sale, packaging and print, and in building global brands and businesses.

•  As the former Chief Executive Officer of InnerWorkings, the largest global marketing execution company, Mr. Stoddart became recognized for his strategic and commercial leadership of the company, investor and analyst communications, and financial stewardship as well as his expertise in all facets of marketing execution and marketing supply chain management.

•  In his prior role as Chief Executive Officer of one of the world’s largest advertising agencies, Mr. Stoddart was recognized for his leadership in the development and integration of shopper, digital, social and mobile capabilities as part of a company’s overall marketing and brand strategy.

•  Possesses knowledge, expertise and experience regarding branding and brand building, marketing and marketing strategy across media platforms, including in traditional advertising, digital advertising and social media; expertise in media planning, launching branded content and products; expertise in marketing production, logistics and execution; and expertise in media trends and strategic planning for businesses building content-driven brands.

 

   

OTHER CURRENT PUBLIC COMPANY BOARDS

•  Selina

-  Audit Committee

-  Human Capital Management & Compensation Committee

-  Nominating & Corporate Governance Committee

 

   

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

•  Innerworkings, Inc.

   
         

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Mary Beth West

 

Age: 60

 

Director Since: 2016

 

Committees:

•  Finance and Capital Allocation (Chair)

•  Nominating, Governance and Social Responsibility

 

 

EXPERIENCE

Mary Beth West served as Senior Vice President, Chief Growth Officer of The Hershey Company from May 2017 until January 2020. Ms. West served as Executive Vice President, Chief Customer & Marketing Officer of J.C. Penney Company from 2015 through March 2017. From 2012 to 2014 she was the Executive Vice President, Chief Category & Marketing Officer for Mondelez International, Inc. Prior thereto, from 1986 to 2012, she served in various financial roles of increasing responsibility and culminating in her role as the Chief Marketing Officer for Kraft Foods, Inc.

 

 

QUALIFICATIONS

•  Extensive experience and expertise in marketing, brand building, managing global franchises, understanding and applying consumer insights, and developing compelling retail and sales experiences.

•  Possesses expertise in strategic and operational planning and execution, skill in managing global teams and a proven track record in delivering top tier consumer experiences and in building global brands.

•  Significant experience in developing growth strategies for complex consumer brand organizations, through use of insights, analytics, marketing, innovation, and research and development.

•  Deep experience in growing some of the world’s best known consumer brands through creative consumer engagement.

•  Extensive P&L management experience leading business up to $3 billion in revenue.

 

 

OTHER CURRENT PUBLIC COMPANY BOARDS

•  Albertsons Companies

-  Compensation Committee

-  Nominating, Governance and ESG Committee

•  Lowes Companies Inc.

-  Audit Committee

-  Sustainability Committee

 

 

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

None

 

 

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Linda Zecher Higgins

 

Age: 69

 

Director Since: 2014

 

Committees:

•  Audit

•  Cybersecurity and Data Privacy (Chair)

 

         

EXPERIENCE

Linda Zecher Higgins is the Chief Executive Officer and Managing Partner of the Barkley Group (a consulting firm focused on cybersecurity and digital transformation), serving in this capacity since January 2017. Prior to that, Ms. Higgins served as the President and Chief Executive Officer, and a member of the Board of Directors, of Houghton Mifflin Harcourt Company, from 2011 to 2016. Prior to that, she was Corporate Vice President, Worldwide Public Sector of Microsoft Corporation from 2003 to 2011.

 

   

QUALIFICATIONS

•  Extensive experience in leading the transformations of businesses in the fields of digital publishing, digital learning, and online sales and marketing.

•  Expertise and skill in driving technological innovation and in leading content development and distribution across channels and platforms.

•  Expertise in financial markets, financial investment, financial restructuring, taking companies public, and M&A expertise.

•  Expertise in digital brand building, online business development and in driving technological innovation.

 

   

OTHER CURRENT PUBLIC COMPANY BOARDS

•  C5 Acquisition Corporation

-  Audit Committee Chair

•  Tenable Holdings, Inc.

-  Compensation Committee

-  Governance Committee

 

   

FORMER PUBLIC COMPANY BOARDS HELD IN THE PAST FIVE YEARS

None

 

   
 

 

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Board Committees

Our Board of Directors has five standing committees:

 

 

Audit

 

Compensation

 

Cybersecurity and Data Privacy

 

Finance and Capital Allocation

 

Nominating, Governance and Social Responsibility

The members of each of our required committees, namely Audit, Compensation and Nominating, Governance and Social Responsibility, are all independent directors, as defined by the rules of The NASDAQ Stock Market (“Nasdaq”) and our Standards for Director Independence (“Independence Standards”). Additionally, all members of our Audit Committee meet the additional SEC and Nasdaq independence and experience requirements applicable specifically to audit committee members, and all members of our Compensation Committee satisfy the additional Nasdaq independence requirements specifically applicable to compensation committee members. The Chair of each committee regularly reports to the Board of Directors on committee deliberations and decisions. Each committee’s charter is posted on our website at https://hasbro.gcs-web.com/corporate-governance. The contents of our website are not incorporated by reference into this Proxy Statement.

The principal functions of each committee, together with the committee composition and number of meetings held in 2022, are set forth in the table below. We expect to update our committee composition effective at our Annual Meeting to reflect the departure of Mr. Bronfin and Mr. Philip.

 

  Committee   Principal Function  

Number

of

Meetings

in 2022

   

2022 Committee

Members (as of year end)

Audit

 

•  Directly responsible for the appointment, compensation, retention and oversight of the Company’s independent auditor.

 

•  Assists the Board in its oversight of:

 

- the integrity of the Company’s financial statements, including management’s conduct of the Company’s financial reporting process, the financial reports provided by the Company, the Company’s systems of internal accounting and financial controls, and the quarterly review and annual independent audit of the Company’s financial statements;

 

- the Company’s compliance with legal and regulatory requirements;

 

- the independent auditor’s qualifications and independence; and

 

- performance of the Company’s internal audit function and internal auditor.

    11    

Hope F. Cochran (Chair)

 

Kenneth A. Bronfin

 

Lisa Gersh†

 

Blake Jorgensen†

 

Tracy A. Leinbach†

 

Linda Zecher Higgins†

 

† The Board has determined that this person qualifies as an Audit Committee Financial Expert under applicable SEC rules.

 

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  Committee   Principal Function  

Number

of

Meetings

in 2022

   

2022 Committee

Members (as of year end)

Compensation

 

•  Responsible for establishing and overseeing the compensation policies, arrangements and plans of the Company with respect to senior management, including all executive officers.

 

•  Oversight of the Company’s incentive compensation and equity-based plans, including authorization to make grants and awards under the Company’s employee stock incentive performance plan.

 

•  Shares responsibility for evaluation of the Company’s Chief Executive Officer with the Nominating, Governance and Social Responsibility Committee.

    6    

Lisa Gersh (Chair)

 

Kenneth A. Bronfin

 

Elizabeth Hamren

 

Edward M. Philip

 

Laurel J. Richie

Cybersecurity and Data Privacy

 

•  Assists the Board in its oversight of the protection of information and assets collected, created, used, processed and/or maintained by or on behalf of the Company, including intellectual property, whether belonging to the Company or the Company’s customers, consumers, employees or business partners, globally.

 

•  Assists the Board in its oversight of the protection of the Company’s customers’, consumers’ and employees’ privacy and personal information.

 

•  Assists the Board in its oversight of the Company’s compliance with applicable global data privacy and security regulations and requirements, and the Company’s other cyber risk management activities, including measures to maintain the availability, integrity and functionality of the Company’s information technology systems, networks and assets.

    5    

Linda Zecher Higgins (Chair)

 

Kenneth A. Bronfin

 

Hope F. Cochran

 

Elizabeth Hamren

Finance and Capital Allocation

 

•  Assists the Board in overseeing the Company’s annual and long-term financial plans, capital structure, capital allocation decisions, use of funds, investments, financial and risk management and proposed significant transactions.

 

•  Reviews short and long term financing plans, including debt and equity financings and use of securitization facilities.

 

•  Reviews capital structure, capital allocation priorities, metrics, hurdle rates and underlying assumptions in capital allocation decisions.

 

•  Reviews use of funds for investments, dividends and share repurchases and acquisitions.

    6    

Mary Beth West (Chair)

 

Michael R. Burns

 

Hope F. Cochran

 

Blake Jorgensen

 

Tracy A. Leinbach

 

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  Committee   Principal Function  

Number

of

Meetings

in 2022

   

2022 Committee

Members (as of year end)

Nominating, Governance and Social Responsibility

 

•  Identifies and evaluates individuals qualified to become Board members and makes recommendations to the full Board on possible additions to the Board and on the director nominees for election at the Company’s annual meeting.

 

•  Oversees and makes recommendations regarding the governance of the Board and its committees.

 

•  Shares responsibility for evaluation of the CEO.

 

•  Periodically reviews and makes recommendations to the full Board with respect to, the compensation paid to non-employee directors for their service on the Company’s Board.

 

•  Oversees the Company’s codes of conduct and ethics.

 

•  Analyzes significant issues of ESG, corporate social responsibility and related corporate conduct, including product safety, environmental sustainability and climate change, human rights and ethical sourcing, gender, diversity and inclusion, human capital management, responsible content and marketing, transparency, public policy matters, community relations and charitable contributions.

 

•  Periodically reviews and assesses the Company’s communications and engagements with shareholders, stakeholders and the general public with respect to its policies and practices in the areas of corporate governance and corporate social responsibility, including the ESG report and other communications contained on the Company’s website, and receives periodic updates from the Company’s Chief Purpose Officer.

    7    

Edward M. Philip (Chair)

 

Michael R. Burns

 

Tracy A. Leinbach

 

Laurel J. Richie

 

Mary Beth West

 

 

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Role of the Board in Risk Oversight

The Board of Directors is actively involved in risk oversight for the Company. Although the Board as a whole has retained oversight over the Company’s risk assessment and risk management efforts, the efforts of the various committees of the Board are instrumental in this process. Each committee, generally through its Chair, regularly reports back to the full Board on the conduct of the committee’s functions. The Board, as well as the individual Board committees, also regularly speaks directly with key officers and employees of the Company involved in risk assessment and risk management.

Set forth below is a description of the role of the various Board committees, and the full Board, in risk oversight for the Company.

 

  COMMITTEE    RISK OVERSIGHT

Audit

  

•  Assists the Board in risk oversight for the Company by reviewing and discussing with management, internal auditors and the independent auditors the Company’s significant financial and other exposures, and guidelines and policies relating to enterprise risk assessment and risk management, including the Company’s procedures for monitoring and controlling such risks.

•  Oversees, on behalf of the Board, financial reporting, tax, and accounting matters, climate, sustainability and conflict minerals related reporting, and the Company’s internal controls over financial reporting.

•  Key role in oversight of the Company’s compliance with legal and regulatory requirements.

Compensation

  

•  Assists the Board in oversight of the compensation programs for the Company’s executive officers.

•  Ensures that the performance goals and metrics being used in the Company’s compensation plans and arrangements align the interests of executives with those of the Company and its shareholders and maximize executive and Company performance, while not creating incentives on the part of executives to take excessive or inappropriate risks.

Cybersecurity and Data Privacy

  

•  Assists the Board in its oversight of the protection of information and assets collected, created, used, processed and/or maintained by or on behalf of the Company.

•  Assists the Board in its oversight of the protection of the Company’s customers’, consumers’, and employees’ privacy and personal information.

•  Assists the Board in its oversight of the Company’s compliance with applicable global data privacy and security regulations and requirements, and the Company’s other cyber risk management activities, including measures to maintain the availability, integrity and functionality of the Company’s information technology systems, networks and assets.

Finance and Capital Allocation

  

•  Reviews and discusses with management the Company’s financial risk management activities and strategies, including with respect to foreign currency, credit risk, interest rate exposure and the use of hedging and other techniques to manage these risks.

•  As part of its review of the operating budget and strategic plan, the Finance and Capital Allocation Committee reviews major capital allocation decisions and business risks to the Company and the Company’s efforts to manage those decisions and risks.

 

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  COMMITTEE    RISK OVERSIGHT

Nominating, Governance and Social Responsibility

  

•  Assists the Board in its oversight of the Company’s governance policies and structures, management and director succession planning, ESG, corporate social responsibility, diversity, gender and inclusion, human capital management and issues related to health, safety and the environment and sustainability, as well as risks and efforts to manage risks to the Company in those areas.

Board

  

•  The full Board regularly reviews the efforts of each of its committees and discusses, at the level of the full Board, the key strategic, financial, business, legal and other risks facing the Company, as well as the Company’s efforts to manage those risks.

The Board and its committees receive periodic reports from internal and external advisors on risks to the organization. These reports come from the functional leaders across the organization. The Company’s compliance team, purpose team (which has oversight of our ESG team) and internal audit team also provide regular reports to our Board and its committees. The internal audit team presents a regular enterprise risk assessment to the Audit Committee, which is shared with the Board. In addition, other areas, such as cybersecurity and privacy risk, are assessed on a regular cadence by third parties who report to the Cybersecurity and Data Privacy Committee. Members of our disclosure committee receive and provide reports on risks identified, and review material risks that could rise to level of public disclosure.

 

Director Compensation

The following table sets forth information concerning compensation of the Company’s directors for fiscal 2022. Mr. Cocks, the Company’s Chief Executive Officer, and Mr. Stoddart, the Company’s interim CEO from October 2021 to February 2022, served on the Board during fiscal 2022. However, neither Mr. Cocks nor Mr. Stoddart received any compensation for their Board service in fiscal 2022 while performing duties as officers of the Company.

 

Name   

Fees

Earned

or Paid in

Cash(a)

    

Stock

Awards

(b)(c)

    

Option

Awards

(b)(c)

    

Change in
Pension
Value and
Non-qualified
Deferred

Compensation
Earnings

    

All Other

Compensation

(d)

     Total(e)  

Kenneth A. Bronfin

   $ 142,574      $ 175,000      $ 0        N/A      $ 5,000      $ 322,574  

Michael R. Burns

   $ 120,074      $ 175,000      $ 0        N/A      $ 0      $ 295,074  

Hope F. Cochran

   $ 160,074      $ 175,000      $ 0        N/A      $ 0      $ 335,074  

Lisa Gersh

   $ 0      $ 340,082      $ 0        N/A      $ 0      $ 340,082  

Elizabeth Hamren

   $ 92,005      $ 199,086      $ 0        N/A      $ 0      $ 291,091  

Blake Jorgensen

   $ 95,755      $ 199,086      $ 0        N/A      $ 0      $ 294,841  

Tracy A. Leinbach

   $ 156,087      $ 175,000      $ 0        N/A      $ 0      $ 331,087  

Edward M. Philip

   $ 130,074      $ 175,000      $ 0        N/A      $ 0      $ 305,074  

Laurel J. Richie

   $ 122,574      $ 175,000      $ 0        N/A      $ 0      $ 297,574  

Richard Stoddart

   $ 0      $ 403,483      $ 0        N/A      $ 5,000      $ 408,483  

Mary Beth West

   $ 137,574      $ 175,000      $ 0        N/A      $ 0      $ 312,574  

Linda Zecher Higgins

   $ 135,074      $ 175,000      $ 0        N/A      $ 0      $ 310,074  

 

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(a)

Includes amounts which are deferred by directors into the interest account under the Deferred Compensation Plan for Non-Employee Directors, as well as interest earned by directors on existing balances in the interest account. Does not include the amount of cash retainer payments deferred by the director into the stock unit account under the Deferred Compensation Plan for Non-Employee Directors, which amounts are reflected in the Stock Awards column.

 

(b)

Please see note 15 to the financial statements included in the Company’s Annual Report on Form 10-K, for the year ended December 25, 2022, for a detailed discussion of the assumptions used in valuing stock and option awards.

 

 

In addition to reflecting the grant date fair value for stock awards made to the directors (this expense for the director stock award in 2022 was $175,000 per director continuing service on the Board), the stock awards column also includes, to the extent applicable, the (i) amount of cash retainer payments deferred by the director into the stock unit account under the Deferred Compensation Plan for Non-Employee Directors and (ii) a 10% matching contribution which the Company makes to a director’s account under the Deferred Compensation Plan for Non-Employee Directors on all amounts deferred by such director into the Company’s stock unit account under that plan.

 

 

No options were granted to any of the non-employee directors in 2022.

 

(c)

The non-employee directors who were serving on the Board at that time held the following outstanding stock awards and stock units outstanding under the Deferred Plan as of December 25, 2022.

 

  Name   

Outstanding

Stock Awards

    

Outstanding

Stock Units

 

Kenneth A. Bronfin

     29,379        5,184  

Michael R. Burns

     0        0  

Hope F. Cochran

     0        0  

Lisa Gersh

     29,349        32,194  

Elizabeth Hamren

     0        0  

Blake Jorgensen

     0        0  

Tracy A. Leinbach

     10,369        0  

Edward M. Philip

     44,623        57,826  

Laurel J. Richie

     4,715        0  

Richard S. Stoddart

     17,273        14,697  

Mary Beth West

     5,895        0  

Linda Zecher Higgins

     14,797        8,961  

 

 

The outstanding stock awards consist of the aggregate number of non-employee director stock grants that the director elected to defer the receipt of any such shares until his or her retirement from the Board. To the extent a director did not defer the stock award, it is not included in the table and the shares have already been issued to the director. Each director was given the option, prior to the beginning of the year of grant, to receive the shares subject to the upcoming annual grant either at the time of grant, or to defer receipt of the shares until the person retires from the Board.

 

(d)

All Other Compensation reflects the Company’s matching charitable contribution of up to $5,000 per director per fiscal year. An aggregate of $10,000 was paid by the Company in fiscal 2022 in director matching contributions. All Other Compensation does not include interest and dividend equivalents earned on amounts deferred by directors under the Deferred Plan (defined and described below). These amounts are not required to be disclosed pursuant to SEC rules, as they are reflected in the value of the amounts at the time they are initially deferred and reported in this table. Therefore, such amounts have been excluded.

 

(e)

The total amount provided in previous years included interest and dividend equivalents earned on amounts deferred by directors under the Deferred Plan (defined and described below). As described in footnote (d) above, these amounts are not required to be disclosed pursuant to SEC rules, as they are reflected in the value of the amounts at the time they are initially deferred and reported in this table. Therefore, such amounts have been excluded.

Current Director Compensation Arrangements

In structuring the Company’s director compensation, the Nominating, Governance and Social Responsibility Committee seeks to attract and retain talented directors who will contribute significantly to the Company, fairly

 

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compensate directors for their work on behalf of the Company and align the interests of directors with those of shareholders. As part of its review of director compensation, the Nominating, Governance and Social Responsibility Committee reviews external director compensation market studies to assure that director compensation is set at reasonable levels which are commensurate with those prevailing at other similar companies and that the structure of the Company’s non-employee director compensation programs is effective in attracting and retaining highly qualified directors.

All members of the Board who are not otherwise employed by the Company (“non-employee directors”) receive annual cash retainers for service on the Board and its committees. Below is a summary of the cash retainers for service in 2022.

 

  Annual Retainers    Amount ($)  

Annual Base Board Retainer

   $ 95,000  

Annual Retainers (in addition to Annual Base Board Retainer)

        

•  Chair of Board

   $ 150,000  

•  Chair of Audit Committee

   $ 40,000  

•  Chair of Compensation Committee

   $ 35,000  

•  Chair of Finance and Capital Allocation Committee

   $ 30,000  

•  Chair of Nominating, Governance and Social Responsibility Committee

   $ 20,000  

•  Chair of Cybersecurity and Data Privacy Committee

   $ 20,000  

•  Audit Committee Member (other than Chair)

   $ 20,000  

•  Compensation Committee Member (other than Chair)

   $ 15,000  

•  Finance and Capital Allocation Committee Member (other than Chair)

   $ 12,500  

•  Nominating, Governance and Social Responsibility Committee Member (other than Chair)

   $ 12,500  

•  Cybersecurity and Data Privacy Committee Member (other than Chair)

   $ 12,500  

No meeting fees were paid for attendance at meetings of the full Board or committees.

In May of every year, the Company anticipates issuing to each non-employee director that number of shares of Common Stock which have a set fair market value (based on the fair market value of the Common Stock on the date of grant). In fiscal 2022, the director stock grants had grant date fair market values of $175,000. These shares are immediately vested, but the Board has adopted stock ownership guidelines which mandate that Board members may not sell any shares of the Company’s Common Stock that they hold, including shares obtained as part of this yearly stock grant, until they own shares of Common Stock with an aggregate market value equal to at least $475,000 (which is equivalent to five times the annual Board retainer). Board members are permitted to sell shares of Common Stock they hold with a value in excess of $475,000, as long as they continue to hold at least $475,000 worth of Common Stock. Board members may defer receipt of these shares under the Restated 2003 Stock Incentive Performance Plan, as amended, until their separation of service. An amount equal to the dividends paid on the number of shares of Common Stock deferred is credited to each non-employee director’s stock unit account as of the end of the quarter in which the dividend was paid, and such amount is paid after separation of service.

Pursuant to the Deferred Compensation Plan for non-employee directors (the “Deferred Plan”), which is unfunded, non-employee directors may defer some or all of the annual Board retainer and meeting fees into a stock unit account, the value of each unit initially being equal to the fair market value of one share of Common Stock as of the end of the quarter in which the compensation being deferred would otherwise be payable. Stock units increase or decrease in value based on the fair market value of the Common Stock. In addition, an amount equal to the dividends paid on an equivalent number of shares of Common Stock is credited to each non-employee director’s

 

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stock unit account as of the end of the quarter in which the dividend was paid. The Company offers this program as a means for our directors to increase their economic exposure to the value of our stock without having to buy shares in the public market, which may not always be practicable as a result of blackout periods and other restrictions on trading in our securities.

Non-employee directors may also defer any portion of their retainer and/or meeting fees into an interest account under the Deferred Plan, which bears interest at the five-year treasury rate.

The Company makes a deemed matching contribution to a director’s stock unit account under the Deferred Plan equal to 10% of the amount deferred by the director into the stock unit account, with one-half of such Company contribution vesting on December 31st of the calendar year in which the deferred compensation otherwise would have been paid and one-half on the next December 31st, provided that the participant remains a director on such vesting date. Unvested Company contributions will automatically vest on death, total disability or retirement by the director at or after age seventy-two. Compensation deferred under the Deferred Plan, whether in the stock unit account or the interest account, will be paid out in cash after termination of service as a director. Directors may elect that compensation so deferred be paid out in a lump sum or in up to ten annual installments, commencing either in the quarter following, or in the January following, the quarter in which service as a director terminates.

The Company also offers a matching gift program for its Board members pursuant to which the Company will match charitable contributions, up to a maximum yearly Company match of $5,000, made by Board members to qualifying non-profit organizations and academic institutions.

 

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Governance of the Company

Hasbro is committed to strong corporate governance, ethical conduct, sustainability and the accountability of the Board and Hasbro’s senior management team to the Company’s shareholders. We review our corporate governance principles and practices on a regular basis. Set forth below is a summary of our key governance principles and practices.

 

Code of Conduct

Hasbro has a Code of Conduct which is applicable to all of the Company’s officers, employees and directors, including the Company’s Chief Executive Officer, Chief Financial Officer and Controller. The Code of Conduct addresses issues such as conflicts of interest, protection of confidential Company information, financial integrity, compliance with laws, rules and regulations, insider trading and proper public disclosure. Compliance with the Code of Conduct is mandatory for all Company officers, employees and directors. Any violation of the Code of Conduct can subject the person at issue to a range of sanctions, including dismissal.

The Code of Conduct is available on Hasbro’s website at https://hasbro.gcs-web.com/corporate-governance. The contents of our website are not incorporated by reference into this Proxy Statement. Although the Company generally does not intend to provide waivers of, or amendments to, the Code of Conduct for its Chief Executive Officer, Chief Financial Officer, Controller, or any other officers, directors or employees, information concerning any waiver of, or amendment to, the Code of Conduct for the Chief Executive Officer, Chief Financial Officer, Controller, or any other executive officer or director of the Company, will be promptly disclosed on the Company’s website in the location where the Code of Conduct is posted.

 

Corporate Governance Principles

Hasbro has adopted a set of Corporate Governance Principles which address qualifications for members of the Board of Directors, director responsibilities, director access to management and independent advisors, director compensation and many other matters related to the governance of the Company. The Corporate Governance Principles are available on Hasbro’s website at https://hasbro.gcs-web.com/corporate-governance. The contents of our website are not incorporated by reference into this Proxy Statement.

 

Director Independence

Hasbro’s Board has adopted Independence Standards in accordance with Nasdaq’s corporate governance listing standards. The Independence Standards specify criteria used by the Board in making determinations with respect to the independence of its members and include strict guidelines for directors and their immediate family members with respect to past employment or affiliation with the Company or its independent auditor. The Independence Standards restrict commercial relationships between directors and the Company and include the consideration of other relationships with the Company, including charitable relationships, in making independence determinations. The Independence Standards are available on Hasbro’s website at https://hasbro.gcs-web.com/corporate-governance. A copy of the Independence Standards is also attached as Appendix B to this Proxy Statement.

The Board has determined in accordance with our Independence Standards, that each of the following directors are independent and have no relationships which impact an independence determination under the Company’s Independence Standards: Kenneth A. Bronfin, Michael R. Burns, Hope F. Cochran, Lisa Gersh, Elizabeth Hamren, Blake Jorgensen, Tracy A. Leinbach, Edward M. Philip, Laurel J. Richie, Richard S. Stoddart, Mary Beth West and Linda Zecher Higgins.

The only member of the Company’s Board who was determined not to be independent was Chris Cocks, the Company’s Chief Executive Officer. Under applicable Nasdaq rules, during the period of time in which Mr. Stoddart served as interim CEO, he was not deemed independent, but given his temporary tenure as interim CEO, has since been determined to be independent under applicable rules and standards. Therefore, of the eleven (11) Board nominees for director at the Annual Meeting, ten (10) are independent, with Mr. Cocks being the only non-independent nominee.

 

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Board Leadership Structure

We currently separate the role of Chair of the Board and CEO. The Chair of the Board is elected by the Board on an annual basis. Mr. Stoddart, the current Chair of the Board, was appointed in February 2022, simultaneous with the appointment of Chris Cocks as Chief Executive Officer. The Chairperson presides at all meetings of shareholders, chairs all meetings of the Board of Directors and attends all committee meetings. In addition, the Chairperson performs all duties which may be required by law and such other duties as specified by the Board. The Chairperson’s duties typically include:

 

 

working with the members of the Board and management to develop agendas and meeting schedules for Board and Committee meetings and to structure Board discussions around key strategic and other matters;

 

 

assuring that there is sufficient time for Board discussion and that the perspectives of all Board members are heard and considered;

 

 

reviewing and approving information and materials to be sent to the Board;

 

 

meeting and consulting with major shareholders when requested as part of the Company’s shareholder outreach programs and when otherwise requested by such shareholders;

 

 

regularly consulting with the Chair of the Nominating, Governance and Social Responsibility Committee and other Committee Chairs on matters related to corporate governance, Board performance and Board responsibilities; and

 

 

facilitating the retention of outside advisors for the Board as needed.

If the Chairperson is not an independent director, the Board will appoint elect a Lead Independent Director with such duties as may be prescribed from time to time.

 

Vote Standard for Director Elections

The Company has a majority vote standard for the election of directors in uncontested director elections, coupled with a director resignation policy for those directors who do not receive a majority vote. A plurality vote standard applies to contested director elections.

In an election of directors that is not a contested election (as defined below), when a quorum of shareholders entitled to vote is present, each nominee to be elected by shareholders shall be elected if the votes cast “FOR” such nominee exceed the votes cast “AGAINST” such nominee. In cases where as of the tenth (10th) day preceding the date on which the Company first mails its notice of meeting, for the meeting at which directors are being elected, the number of nominees for director exceeds the number of directors to be elected (referred to as a “contested election”), when a quorum of shareholders entitled to vote is present, each nominee to be elected by shareholders shall be elected by a plurality of the votes cast.

In an election that is not a contested election, in order for an incumbent director to become a nominee for re-election to the Board, such person must submit an irrevocable resignation, contingent on both that person not receiving a “FOR” vote that exceeds the “AGAINST” vote cast and acceptance of that resignation by the Board in accordance with the policies and procedures of the Board adopted for such purpose. In the event an incumbent director fails to receive a “FOR” vote that exceeds the “AGAINST” vote in an election that is not a contested election, the Company’s Nominating, Governance and Social Responsibility Committee shall make a recommendation to the Board as to whether to accept or reject the resignation of such incumbent director.

The Board shall act on the resignation, taking into account the recommendation of the Nominating, Governance and Social Responsibility Committee, and publicly disclose (by filing an appropriate disclosure with the SEC) its decision regarding the resignation and, if such resignation is rejected, the rationale for that decision, within sixty (60) days following the final certification of the vote at which the election was held. The Nominating, Governance and Social Responsibility Committee in making its recommendation, and the Board in making its decision, may each consider all factors and information that they consider relevant and appropriate. Both the Nominating, Governance and Social Responsibility Committee, in making their recommendation, and the Board in making its decision, with respect to any given nominee who has not received the requisite vote in an election that is not a contested election, will act without the participation of the nominee in question.

 

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Director Outside Board Service

The Company has a policy providing that Board members may not serve on the boards of directors of more than a total of four public companies (including the Company’s Board) and/or registered investment fund families. If the director is also a sitting chief executive officer of a public company, the director may not serve on more than one other public company board or registered investment fund family board, in addition to the Company’s Board. Any director whose service on boards exceeds the limits as a result of a private company becoming public, is given up to twelve (12) months to comply with this policy.

The Board does not have a policy setting rigid limits on the number of audit committees on which a member of the Company’s Audit Committee can serve. Instead, in cases where an Audit Committee member serves on more than three public company audit committees, the Board evaluates whether such simultaneous service would impair the service of such member on the Company’s Audit Committee.

Before accepting a seat on the board of another public company, the director is required to notify the Chair of Nominating, Governance and Social Responsibility Committee to avoid potential conflicts of interest, as well as to assist in the determination of whether the aggregate number of directorships and attendant responsibilities held by a director would interfere with such director’s ability to properly discharge his or her duties to the Company. The Chair and committee review the request and determine compliance with the Company’s overboarding policy. Additionally, as part of the nomination process for board members, the Nominating, Governance and Social Responsibility Committee reviews the director’s annual questionnaire, including independence, and outside board responsibilities and time commitments. Each of the Company’s Board nominees is in compliance with the outside board service limitations.

 

Director Orientation and Continuing Education

New directors receive an orientation to assist them in their roles as Board and committee members. Orientation includes subjects such as board governance and operation, Company history, strategic plans, business operations, financial position and legal and regulatory environment. Management also provides information on an ongoing basis to assure that Board members are aware of the business, legal and other developments necessary to fulfill their role. We also make available outside educational opportunities as the Board deems relevant and appropriate.

 

Annual Evaluation for the Board and Board Committees

Every year the entire Board, as well as each of the committees of the Board, conduct a self-evaluation process. This process includes each director and each committee member submitting confidential feedback on the performance of the Board, as well as on the performance of each committee on which they serve. The feedback is then collected and reviewed and discussed by the applicable committees, as well as the entire Board of Directors. This feedback informs changes the Board and the committees consider making to their processes and areas of review for the next year. There is an independent external review process that is conducted periodically, in addition to our annual board and committee evaluations.

 

Board Tenure

Although the Company does not have a formal policy with respect to Board tenure, the Board does seek to keep a balance of tenures to provide continuity of understanding of the business, long-term succession planning, corporate governance best practices and meaningful onboarding of new directors, including educating new directors with respect to the Company’s business, while also providing for new perspectives brought to bear by new Board members. The Board generally targets a mix of tenures in which roughly one-third of the Board members have been on the Board for a relatively short period of time, one-third for a medium period of time, and one-third for a longer

 

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period of time. Although that is a general target, the composition of Board tenures may vary over time for many factors, including the availability of appropriate director candidates or the importance of continuity during leadership transitions, such as the appointment of a new CEO. In 2022, we announced that Mr. Bronfin and Mr. Philip, our two longest-tenured directors, would not stand for re-election at the Annual Meeting, accelerating our previously stated intention to reduce the size our Board from thirteen (13) to eleven (11) by our 2024 Annual Meeting of Shareholders. Accordingly, as of our Annual Meeting the size of the Board will be eleven (11).

 

Proxy Access

We have adopted a “proxy access” procedure in our By-Laws. Our proxy access bylaw allows a shareholder or a group of up to 20 shareholders, that has maintained continuous ownership of at least 3% of the voting power of the Company’s outstanding voting stock for at least 3 years, to include nominees for election to the Board of Directors in the Company’s proxy statement. Subject to compliance with the requirements of the proxy access By-Law provisions, the shareholder or group of shareholders may include director nominees for up to the greater of (i) 20% of the Board, rounded down to the nearest whole number, or (ii) 2 nominees.

 

Share Retention Requirements

The Company has share ownership guidelines which apply to all officers and employees at or above the Senior Vice President level and establish target share ownership levels which executives are expected to achieve over a five-year period and then maintain, absent extenuating circumstances. The Company also requires employees at those levels to retain a portion of any net shares realized from stock vesting or option exercises during the five-year period an executive has to achieve their stock ownership requirement until the executive’s ownership requirement level is satisfied. Until the applicable ownership level is achieved, the executive is required to retain an amount equal to at least 50% of the net shares received as a result of the exercise, vesting or payment of any equity awards granted to the executive following such executive becoming subject to the policy. Once the required stock ownership level is achieved, the executive is required to maintain the stock ownership level for as long as the executive is employed by the Company and is subject to the policy.

 

Equity Awards Subject to Double Trigger Following a Change in Control

Under the Company’s Restated 2003 Stock Incentive Performance Plan, as amended, all awards are subject to a double trigger change in control provision. This means that rather than vesting automatically upon a change in control of the Company, such awards will only vest following a change in control if the award recipient’s employment with the Company is terminated under specified circumstances.

 

Clawback Policy

Under the Board-approved Clawback Policy, all equity and non-equity incentive plan compensation granted by the Company in 2013 and thereafter is subject to this Clawback Policy. The policy provides that if an accounting restatement is required due to the Company’s material non-compliance with any accounting requirements, then the Company will use reasonable efforts to recover from all of the Company’s executive officers, regardless of whether they were at fault or not in the circumstances leading to the restatement, any excess in the incentive compensation they earned over the prior three years over what they would have earned if there had not been a material non-compliance in the financial statements. In the event the officer’s misconduct, violation of Company policy or fraud contributed to the need for a restatement, then the Company will use reasonable efforts to recover up to 100% of the affected incentive compensation. The Company plans to review and, if necessary, amend the policy to ensure compliance with any applicable final Nasdaq rules regarding clawback policies that become effective.

 

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Policy Prohibiting the Pledging or Hedging of Company Stock

Under the Company’s Board approved insider trading policy, we prohibit any pledges or hedges of Company stock by directors, officers or other employees on a prospective basis. The Board believes this policy furthers the interest of shareholders by ensuring that directors, officers and employees have the same economic incentives as shareholders and that equity held by directors, officers and employees will not be sold in situations beyond the control of the director, officer or employee.

 

No Tax Gross-Ups

We do not have any tax gross-up arrangements with any of our directors, officers or other employees and we have made a commitment to not enter into such arrangements in the future.

 

Board Meetings and Director Attendance at the Annual Meeting

During 2022, the Board held fifteen (15) meetings. All directors attended at least 75% of the aggregate of (i) the Board meetings held during their tenure as directors during 2022 and (ii) the meetings of any committees held during their tenure as members of such committees during 2022. Although the Company does not have a formal policy requiring attendance of directors at the annual meeting of shareholders, the expectation of the Company and the Board is that all directors will attend the annual meeting of shareholders in person or virtually via the Internet unless conflicts prevent them from attending. All members of the Board attended the 2022 Annual Meeting of Shareholders.

 

Director Retirement Age

The Board has established a target retirement age of 72. Normally, a director who has reached this age will serve out his or her current term and not stand for re-election at the end of that term. However, the Board recognizes that from time to time there may be unusual circumstances where exceptions need to be made to this general rule to retain needed continuity and expertise, or for other business reasons.

 

Succession Planning

The Board devotes significant time reviewing and discussing the succession plans for the CEO and each of his direct reports as well as the talent pipeline leading to those positions, part of building a diverse and inclusive workforce. The Board, the Compensation and Nominating, Governance and Social Responsibility Committees are involved in succession planning, as well as our Chief Executive Officer and Chief People Officer.

A recent example of the Board’s CEO succession process was effected following the unexpected passing of our former Chairman and CEO, Brian Goldner. Following Mr. Goldner’s passing in October 2021, the Board appointed Richard Stoddart, a Board member since 2014, as interim CEO, while the Board completed its succession planning for a permanent CEO. In February 2022, following an extensive and thoughtful candidate review and selection process, the Board appointed Chris Cocks as Chief Executive Officer. Prior to his appointment, Mr. Cocks served as President and Chief Operating Officer of Wizards and Digital Gaming since 2021, and prior thereto served as President of Wizards of the Coast since 2016, when he joined Hasbro from Microsoft.

Another example is in the ongoing identification of our CFO’s successor. In November 2022, Ms. Deborah Thomas announced her intent to retire from her position as Executive Vice President and Chief Financial Officer of the Company after 24 years of distinguished service and leadership with the Company. In identifying her successor, the

 

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Company has considered both internal and external candidates. During this process, Ms. Thomas has continued to perform her duties and responsibilities, and has agreed to assist in orderly transition once her successor is appointed.

Succession planning is among the Board’s top priorities and is included in the annual goals for executive management. Mr. Cocks, as CEO, is responsible for providing a regular talent update to the Board and Compensation Committee, and the Board and the Nominating, Governance and Social Responsibility Committee continue to regularly review in-depth succession plans, considering long-term, medium-term and short-term options. The Board also has exposure to internal succession candidates through their periodic participation in Board meetings and/or engagement outside of Board meetings.

 

Director Emeritus

The Board may in its discretion designate one or more former directors as a Director Emeritus. In certain situations, such as when the person being appointed has previously served as Chair of the Board, the Director Emeritus may be designated as a Chairperson Emeritus. A Director Emeritus is not considered a Director under the Company’s Articles of Incorporation or By-Laws, applicable federal securities laws or state corporation law. Consequently, a Director Emeritus has no voting or other power or authority to manage the affairs of the Company and does not have any of the liabilities or duties of directors or officers under law in his or her capacity as a Director Emeritus.

The appointment of a Director Emeritus is expected to be infrequent and reserved for Directors who have served in a special capacity for, and made unusually valuable contributions to, the Company over an extended period of time. Each such designation shall be for a one-year term or until such Director Emeritus’ earlier death, resignation, retirement or removal by the Board (for any reason or no reason). Each Director Emeritus may be re-appointed by the Board in its discretion for one or more additional one-year terms.

Directors Emeriti may attend Board meetings as and when invited by the Board and attend meetings of any committee of the Board as and when invited by the committee, but they are not entitled to vote or be counted for quorum purposes at any such meetings. The Company will reimburse Directors Emeriti for the reasonable costs of attending meetings to which they are invited and performing the functions requested by the Company, but they will otherwise serve without compensation by the Company. Directors Emeriti will be entitled to the indemnification protections afforded by the Company to its officers and Directors.

In May 2021, Mr. Alan Hassenfeld was appointed as Chairperson Emeritus. In such capacity, Mr. Hassenfeld may attend Board and committee meetings, and executive sessions, only when invited by the Board or the applicable committee. Mr. Hassenfeld generally does not attend any committee meetings. Mr. Hassenfeld has no voting or other power or authority to manage the affairs of the Company, and he is not entitled to vote and is not counted for quorum purposes at any such meetings. The Board believes his extraordinary accomplishments as a board member of Hasbro, together with his knowledge of and expertise in the business, including more than 40 years of experience in the toy, game and family entertainment industry, his extensive service in senior leadership roles at Hasbro, culminating in his service as the Company’s Chair of the Board and Chief Executive Officer, expertise regarding strategic and operational planning and execution in the toy, game and family entertainment industries, experience in global markets, international business operations, and in issues of corporate social responsibility and sustainability, makes him a valuable resource to the Board and they plan to continue to access that experience and expertise through Mr. Hassenfeld’s role as Chairperson Emeritus.

 

Insider Trading Policy

We have a Board-approved Global Insider Trading Policy governing the purchase, sale, and other disposition of our securities by our directors, officers and employees, and other related persons and entities, that are designed to promote compliance with insider trading laws, rules, and regulations. More specifically, it is the policy of the Company that no director, officer or other employee of the Company who is aware of material nonpublic information relating to the Company may, directly or through family members or other persons or entities, (a) buy

 

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or sell securities of the Company (other than pursuant to a pre-approved trading plan that is adopted and operated in compliance with SEC Rule 10b5-1), or engage in any other action to take personal advantage of that information, or (b) pass that information, or make a recommendation to buy or sell the Company’s securities that is influenced by material nonpublic information, on to others outside the Company, including family and friends.

It is the policy of the Company that no director, officer or other employee of the Company who, in the course of working for the Company, learns of material nonpublic information about another company or another entity, including, without limitation, a company with which the Company does business, including a customer or supplier of the Company, may (a) trade in that company’s securities until the information becomes public or is no longer material, or (b) pass that information on to others outside the Company, including family and friends, or make a recommendation to buy or sell the other company’s or entities’ securities that is influenced by material nonpublic information.

We have a pre-clearance policy that applies to executive officers, and members of the Board of the Company and other designated employees of the Company who, although not executive officers, regularly become aware of earnings information or other potentially material nonpublic information about the Company. Under this policy directors and executive officers of the Company, and any other employees designated as being subject to the Company’s pre-clearance procedures, together with any of their family members who live in their household or whose transactions in Company securities are under their influence or control, and any trusts or other entities controlled by any such persons, may not engage in any transaction in the Company’s securities (including an open market purchase, open market sale, gift, cashless exercise of a stock option, contribution to a trust, or similar transfer) without first obtaining pre-clearance of the transaction from the Legal Department.

 

Additional Availability of Corporate Governance Materials

In addition to being accessible on the Company’s website, https://investor.hasbro.com/corporate-governance, copies of the Company’s Code of Conduct, Corporate Governance Principles and the charters of the five committees of the Board of Directors are all available free of charge to any shareholder upon request to the Company’s Chief Legal Officer and Corporate Secretary, c/o Hasbro, Inc., 1011 Newport Avenue, P.O. Box 1059, Pawtucket, Rhode Island 02861.

 

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Compensation Committee Report

The following section of this Proxy Statement, entitled “Compensation Discussion and Analysis,” contains a detailed discussion regarding the objectives of the Company’s executive compensation programs, how those programs drive Company performance and a review of the processes and program elements used by the Compensation Committee to attract and retain executive talent, align the interests of the executive team with those of the Company’s shareholders, create a powerful linkage between pay and performance, maximize the business results of the Company and enhance shareholder value.

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis that follows this report. Based on its review and discussions with management, the Compensation Committee recommended to the Company’s full Board, and the full Board has approved, the inclusion of the Compensation Discussion and Analysis in this Proxy Statement for the Meeting and, by incorporation by reference, in the Company’s Annual Report on Form 10-K for the year ended December 25, 2022.

Report issued by the members of the Compensation Committee as of the Company’s 2022 fiscal year end.

Lisa Gersh (Chair)

Kenneth A. Bronfin

Elizabeth Hamren

Edward M. Philip

Laurel J. Richie

 

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Compensation Discussion and Analysis

 

Executive Summary

In the following Compensation Discussion and Analysis (“CD&A”), we describe our approach to the executive compensation programs and our compensation decisions for 2022 for the following Named Executive Officers (“NEOs”).

 

  Name    Title

Richard S. Stoddart

   Non-Executive Chairman of the Board, Former Interim Chief Executive Officer

Christian P. Cocks

   Chief Executive Officer

Deborah M. Thomas

   Executive Vice President and Chief Financial Officer

Cynthia Williams

   President, Wizards of the Coast and Digital Gaming

Eric Nyman

   Former President and Chief Operating Officer

Darren Throop

   Former Chief Executive Officer, eOne

Business and Performance Overview

Hasbro, Inc. (“Hasbro”) is a global branded entertainment leader whose mission is to entertain and connect generations of fans through the wonder of storytelling and exhilaration of play. Hasbro delivers engaging brand experiences for global audiences through gaming, consumer products and entertainment, with a portfolio of iconic brands including MAGIC: THE GATHERING, DUNGEONS & DRAGONS, Hasbro Gaming, NERF, TRANSFORMERS, PLAY-DOH and PEPPA PIG, as well as premier partner brands.

Hasbro is guided by its purpose to create joy and community for all people around the world, one game, one toy, one story at a time. Hasbro delivers immersive brand experiences for global audiences through gaming, consumer products and entertainment. For more than a decade, we have been consistently recognized for our corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media, one of the World’s Most Ethical Companies by Ethisphere Institute and one of the 50 Most Community-Minded Companies in the U.S. by the Civic 50.

 

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2022 Overview

Fiscal year 2022 was a challenging year. We navigated a difficult economy with high inflation and rising interest rates, a challenged toy and game industry, the continued effects of the coronavirus pandemic, and leadership changes. During 2022, our new CEO, Chris Cocks, led a comprehensive, several month long strategic review of our business. In October 2022, we announced our Blueprint 2.0 strategy, a go-forward strategic plan to drive accelerated revenue and profit growth, by focusing on fewer, bigger and more profitable brands, leveraging our direct-to-consumer and digital businesses, scaling our brands through licensing opportunities, delivering operational excellence, and investing in our people. As we embark upon a multi-year transformational effort to support our revamped Blueprint 2.0 strategy, we have summarized key highlights, changes and events for 2022 below.

Notable Leadership Changes

 

 

In February 2022, our Board appointed Chris Cocks as our new Chief Executive Officer. Mr. Cocks took over the role from Richard Stoddart, a member of our Board of Directors, who was serving as Interim Chief Executive Officer following the untimely passing of Brian Goldner, our former long-time CEO in October 2021.

 

 

In February 2022, we appointed Cynthia Williams as President of Wizards of the Coast and Digital Gaming to succeed Mr. Cocks in that role. Ms. Williams joined us from Microsoft, where she most recently served as General Manager and Vice President, Gaming Ecosystem Commercial Team, and drove the expansion of Xbox Gaming and the acceleration of game-creator growth. Prior to joining Microsoft, Ms. Williams spent more than a decade at Amazon, where she led the global growth of their ecommerce direct-to-consumer business Fulfillment by Amazon.

 

 

In May 2022, we appointed Najuma Atkinson to lead our Global HR function. Ms. Atkinson, our Executive Vice President and Chief People Officer, joined us from Dell Technologies, where she served as Senior Vice President of Global HR Services.

 

 

In November 2022, we announced that Deborah Thomas informed Hasbro of her intent to retire from her position as Executive Vice President and Chief Financial Officer after 24 years of distinguished service and leadership with the Company. Hasbro initiated a search process to identify her successor, which is ongoing. Ms. Thomas and Hasbro plan for her to remain as Chief Financial Officer until her successor is in place, and remain as an advisor to the Company thereafter until December 31, 2023 to ensure a smooth transition.

 

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On December 30, 2022, Darren Throop, eOne CEO, retired from the Company.

 

 

In January 2023, we announced that Eric Nyman, President and Chief Operating Officer since February 2022, would be leaving the Company effective March 31, 2023.

Blueprint 2.0

Our Blueprint 2.0 strategy is a consumer-centric framework for bringing compelling and expansive brand experiences to audiences around the world. Hasbro’s purpose of creating joy and community for all people around the world, one game, one toy, one story at a time starts with consumers and our fans, who represent multigenerational audiences that sit at the center of Blueprint 2.0. Understanding our fans, expanding our fan base and delivering for them is the key driver behind our evolution as a branded play and entertainment company. The value of our strategy is fully activated when we can take a brand across multiple elements of Blueprint 2.0 including consumer products such as toys, games and licensed products; digital gaming; entertainment and experiences; and our Hasbro Direct business. We believe the ability to build a brand and leverage in-house capabilities to create multiple categories of engagement with consumers and fans is unique to Hasbro and optimizes our business today and in the future.

During our strategic review we identified opportunities to focus and scale our business, enhance operational excellence, including through specialized organizational programs and supply chain transformation, to drive growth and profit and enhance shareholder value. We plan to increase strategic investment on our most valuable and profitable franchises across toys, games, entertainment and licensing, and exit certain non-core aspects of our business.

 

 

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Our Blueprint 2.0 transformation is focused on key areas of importance: Brand, Insights and Entertainment; Direct and Digital; Licensing; People; and Operational Excellence.

Brand, Insights and Entertainment

 

 

Focus on fewer, bigger, more profitable brands and drive market share in the key categories of preschool, games, creativity, outdoor and action brands.

 

 

Develop our insights and analytics capabilities heavily focused on putting consumers at the center of everything we do, as we build multi-generational brands.

 

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Entertainment investments focused on Hasbro IP aligned with our Blueprint 2.0 strategy, including merchandise and digital engagement opportunities with a focus on franchise brands.

Direct and Digital

 

 

Invest in our Hasbro direct-to-consumer and digital business, inclusive of Hasbro PULSE, SECRET LAIR, MAGIC: THE GATHERING ARENA and D&D Beyond. An example of this investment includes our 2022 acquisition of D&D Beyond, the premier digital content platform for DUNGEONS & DRAGONS, for a purchase price of $146.3 million.

 

 

Continue to cultivate digital licensing relationships that activate our brands.

Licensing

 

 

Scale licensing of our brands through a growing portfolio of partners from theme park operators to toy companies, for consumers to experience our brands and drive communities of friendship and fandom around them.

People

 

 

Invest in our people at all levels of our organization and continue to foster a diverse and inclusive culture that drives accountability and focuses on profitability.

Operational Excellence

 

 

Execute operational savings initiatives, including supply chain transformation, to improve operating results and reinvest in our business.

Blueprint 2.0 and Impact on 2023 Compensation Decisions

To ensure success of our new Blueprint 2.0 strategy, the Committee understands that it is critical to align our executive compensation program with the goals of the strategy. As previously announced, we expect to attain operational excellence by focusing and scaling our operations with a plan to achieve 20% adjusted operating profit margin by full-year 2027, and deliver annual run rate cost savings between $250 and $300 million by 2025. If we can achieve these goals, we believe our total shareholder return will improve as well.

Our executive compensation plan design for 2023 takes these goals into account. For fiscal 2023, our annual incentive plan will contain financial performance metrics, which the Committee believes captures the most important aspects of the top and bottom line performance of the Company as well as the Company’s change in strategic direction and transformation efforts. Namely, total net revenue (weighted at 40%), operating profit margin (weighted at 40%) and metrics around performance relating to our transformation efforts, most notably specific targets for costs savings as part of the Company’s operational excellence program (collectively weighted at 20%). For the business area metrics, the Committee determined to use revenue and operating profit margin of the business area, each weighted at 40%, and similarly added metrics around performance against our transformation efforts for the business area (weighted 20%) stressing the importance of the Company’s transformation efforts. The cash flow metric from prior years has been removed as a metric for this year’s annual incentive plan, to focus on the progress of our transformation efforts, as that is a key component to the success of our Blueprint 2.0 strategy.

In 2023, the metrics for the performance contingent stock awards, which represent 50% of total LTI for our NEOs, have also been revised to focus on the metrics which the Committee believes capture the most important aspects of the Company’s long term performance. Namely, Diluted EPS (weighted at 50%) and return on invested capital (ROIC) (weighted at 50%), subject to +/- 25% modifier for the Company’s relative Total Shareholder Return (TSR) performance against the S&P 500 TSR comparator group. The TSR modifier replaces the revenue metric used in prior years to stress the importance of improving our relative TSR.

 

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2022 Financial Results

 

 

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Adjusted operating profit, adjusted net earnings and adjusted earnings per diluted share are non-GAAP financial measures as defined under SEC rules. A reconciliation of these non-GAAP financial measures to GAAP is provided in Appendix A to this Proxy Statement.

2022 Compensation Payouts Aligned with Performance

Our compensation program is aligned with performance.This alignment is evidenced by our results in 2022. With respect to the 2022 annual incentive plan, the Committee reviewed the performance of the Company and its business areas against the annual incentive plan targets for fiscal year 2022. The Company payout factor for awards under the 2022 annual incentive plan, as shared with the Committee, would have been 70% of target. The Committee reviewed the base incentive awards that would have been received by the NEOs using the Company and business area performance. In addition to the NEO’s individual performance, the Committee also considered the Company’s underperformance, the Company’s transformation efforts, its new strategy and focus areas under Blueprint 2.0 and cost reduction measures taken by the Company intended to position the Company for future success. After this review, the Committee determined to exercise negative discretion and reduce the Company payout factor to 20% of target for senior leaders and 25% for remaining employees. Following this determination, including recommendations from both our CEO and CFO that they receive no bonus for 2022, the Committee considered such recommendation and determined to award no payout for each of Mr. Cocks, Ms. Thomas and Mr. Nyman. Ms. Williams received a modified bonus of 75% of target under her bonus formula, reflecting a reduced payout for all senior executives due to the Company’s overall performance while acknowledging Wizards’ solid performance. Mr. Throop’s bonus was 80.9% of target based on calculations pursuant to the terms of his employment agreement. With respect to our long-term incentive awards, for 2022, a payout of 57% was achieved for the 2020-2022 three metric performance contingent stock award award and a payout of 45% for the 2020-2022 two metric performance contingent stock award. See “Long-Term Incentive Compensation — Performance Contingent Stock Awards” below. These payouts under the annual incentive plan and LTI program further evidence our pay for performance philosophy.

 

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Cash Returned to Shareholders

Providing value and return to our shareholders are fundamental corporate objectives. The table below shows the amounts we have returned to our shareholders since 2018, in the form of both cash dividends and share repurchases. As the table indicates, in 2020, we suspended our share repurchase program as we prioritized our goal of returning our gross debt to EBITDA target of 2 to 2.5x following our borrowing of funds for the acquisition of eOne. In 2022, we reinstated our share repurchase program on a limited basis.

 

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Net Revenues

The graph below charts the Company’s net revenues (in millions of dollars) for every fiscal year since 2018. For fiscal years 2020, 2021 and 2022 net revenues include revenues from eOne, which was acquired in the first fiscal quarter of 2020.

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The tables below provide the following for each of the fiscal years 2018-2022: the Company’s GAAP diluted earnings per share (adjusted earnings per share in green); operating cash flow; and operating profit margin (adjusted operating profit margin in green). The results for fiscal years 2020, 2021 and 2022 include the results of eOne. A reconciliation of our GAAP to Non-GAAP financial measures is included in Appendix A to this Proxy Statement.

 

 

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The table below compares the total return on our shares of common stock over the designated periods to the returns for the S&P 500 Index and Russell 1000 Consumer Discretionary Index.

 

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Our total shareholder return in recent years has been adversely affected by a number of exogenous factors. For example, in 2018, the bankruptcy and restructuring of Toys“R“Us resulted in the loss of one of the most significant customers to our consumer products business. In 2019, the Company’s business was adversely affected by the tariff environment, particularly the imposition or threat of tariffs on our products manufactured in China for import into the U.S. Beginning in 2020 and shortly after our acquisition of eOne in December 2019, the COVID-19 pandemic had a material impact across our businesses, including the shutdown of entertainment operations, retail store closures and supply chain challenges — many of these challenges continued through 2020, 2021 and into parts of 2022. 2022 was also adversely affected due to the high inflation and interest rates and challenged economic conditions experienced in many of our key markets, which has affected consumer discretionary spending.

Shareholder Engagement

We engage with our major shareholders on ESG, governance and compensation matters on a regular basis. We do this as part of our commitment to build relationships, be responsive to shareholders and ensure that our actions are informed by the viewpoints of our investors. Our shareholders supported our Say-on-Pay votes in the last three years, with favorable votes of 94.6%, 81.3% and 88.0% of the shares voted at the 2020, 2021 and 2022 Annual Meetings, respectively. Our average favorable approval of our Say-on-Pay votes over the past five years has been 91.5%.

In 2022 and early 2023, we proactively extended an invitation to our top 30 shareholders (holding in aggregate approximately 53% of our outstanding shares) to meet and we had discussions with those who accepted our invitation. We also spoke with shareholders who reached out to us. The chair of the Board participated in a number of these conversations. During these engagement discussions, as described above in our “Proxy Summary”, we discussed our compensation policies and practices, performance metrics and consideration of ESG measures in compensation decisions. The feedback we received from our shareholders was discussed in detail by our Board and its committees. Shareholders we have spoken to indicated that they were supportive of us having incorporated ESG measures into our annual incentive plan, which we began including in 2021, as well as a relative TSR modifier to our performance contingent stock units, which we did for our 2023 fiscal year. We also removed the revenue metric from our performance contingent stock units for 2023 based on shareholder feedback that including such metric could be viewed as rewarding participants twice for the same metric considering we have the metric in our short term incentive plan as well. Based on our continuing dialogue with our significant shareholders and the strong support we have seen for our compensation programs, we believe our current compensation program reflects the views of our shareholders and strongly drives our pay for performance objectives.

Executive Compensation Program Structure and Alignment with Performance

The Committee has implemented a carefully structured executive compensation program that is tightly linked to long-term shareholder value creation. The program incorporates a combination of short-term and long-term forms of compensation that are structured to incentivize company performance and the achievement of corporate and business unit objectives the Committee believes are critical to driving sustained long-term shareholder value. At the same time, the program incorporates elements that ensure the Company attracts and retains top executive talent with the creativity, innovation, relentless drive and diverse skills in branded-play, digital gaming, consumer products, media and technology, storytelling and entertainment that are critical to the successful execution of our Blueprint 2.0 strategy. As our strategy evolves, the Committee reviews the compensation program to ensure that it supports the underlying strategy of the Company and enables us to attract and retain key talent to execute on our strategy. See above under the heading “Blueprint 2.0 and Impact on 2023 Compensation Decisions” for more information on changes made for 2023.

 

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In support of this linkage to long-term shareholder value creation, a significant portion of the total compensation opportunity for our NEOs is performance-based and at-risk. The chart below shows that, for 2022, 84.3% of our CEO’s total target compensation was at-risk, while 68.1% of his total target compensation was performance-based.

 

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The following chart summarizes the components of our 2022 compensation program for NEOs other than Mr. Stoddart.

 

Compensation Program Elements
2022 Executive Compensation Program Elements

Type of Annual Cash Compensation

Base Salary

 

•  Fixed compensation

 

•  Set at a market competitive level, in light of individual experience and performance

Annual

Incentive Awards

 

•  Performance-based

 

•  Tied to company, business area and individual achievement against stated annual financial and strategic goals

 

•  Aligns management behavior with maximizing shareholder value

 

•  Performance measures evaluated

 

-  Total Net Revenues

 

-  Operating Profit Margin

 

-  Free Cash Flow

 

•  Individual Performance Adjustment: Designed to enable us to reward for strategic and operating performance not captured by the financial metrics listed by allowing the Committee to adjust the payouts up or down based on individual performance, including, in 2022, performance against ESG goals (which included goals promoting women in leadership and racial and ethnic diversity).

 

For 2023, we updated these metrics to remove free cash flow and replace it with a metric around performance against our transformation, including specific targets for costs savings as part of the Company’s operational excellence program.

 

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2022 Executive Compensation Program Elements

Type of Long-Term Incentive Compensation

Performance

Contingent

Stock

Awards

 

•  Represented ~50% of annual target equity award value for our NEOs

 

•  Earned based on challenging long-term three-year goals requiring sustained strong operating performance

 

•  Tied to achievement of EPS, Net Revenue and Return on Invested Capital (ROIC) targets over a 3-year performance period.

 

In 2023, we have updated these metrics to be EPS and ROIC, removing Net Revenue and adding a Relative TSR Modifier.

Stock Options

 

•  Represented ~25% of annual target equity award value for our NEOs

 

•  7-year term

 

•  Vest in three equal annual installments over the first three anniversaries of the grant date

Restricted

Stock Units

 

•  Represented ~25% of annual target equity award value for CEO and the other NEOs

 

•  Vest in three equal annual installments over the first three anniversaries of the grant date

 

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Executive Compensation Philosophy and Objectives

The Committee regularly reviews compensation practices to best align our compensation programs with shareholder interests, company strategy and best practices. The Committee’s fundamental objectives with our executive compensation program are to:

 

 

Attract, develop and retain talented executives who can contribute significantly to the achievement of the Company’s goals and deliver results in keeping with our mission to entertain and connect generations of fans through the wonder of storytelling and exhilaration of play.

 

 

Align the interests of the Company’s executives with the medium and long-term goals of the Company and its shareholders and other stakeholders.

 

 

Instill a pay-for-performance culture; a substantial majority of the compensation opportunity for the NEOs is composed of variable, performance-based compensation elements.

 

 

Reward superior performance by the Company, and its business units, as well as superior individual performance.

 

 

Accomplish these objectives effectively while managing the total cost of the Company’s executive compensation program, including by managing reasonable levels of dilution and annual share usage when granting equity-based compensation.

The Committee believes it is critical to have a robust succession planning and management development process and seasoned talent ready to deploy into key executive positions, and our compensation programs are designed to support these objectives.

The Committee structures the Company’s compensation program in a way it believes appropriately aligns pay with performance without encouraging excessive risk taking or other behavior on the part of executive officers that is not in the Company’s best interests.

Our goal is to position total target direct compensation for our NEOs within a competitive range around the peer group median that reflects the individual’s performance, criticality to the business, retention risk and future potential. For more information on the peer group used to benchmark our NEO’s compensation, please see below under the heading “Compensation Process — Peer Group and Benchmarking to the Market.”

All equity and non-equity incentive plan compensation is subject to the Board-approved Clawback Policy. The policy provides that if an accounting restatement is required due to the Company’s material non-compliance with any accounting requirements, then the Company will use reasonable efforts to recover from all of the Company’s executive officers, regardless of whether they were at fault or not in the circumstances leading to the restatement, any excess in the incentive compensation they earned over the prior three years over what they would have earned if there had not been a material non-compliance in the financial statements. In the event the officer’s misconduct, violation of Company policy or fraud contributed to the need for a restatement, then the Company will use reasonable efforts to recover up to 100% of the affected incentive compensation. The Company plans to review and amend, if necessary, its policy to ensure compliance with applicable Nasdaq listing standards that become effective.    

Strong Compensation Governance Practices

 

Compensation Best Practices

LOGO    Robust shareholder engagement process

 

LOGO    Program informed by and responsive to shareholder input

 

LOGO    Substantial portion of compensation is variable and performance-based

 

LOGO    Aligned with shareholder value creation

 

LOGO    Significant share ownership and retention requirements

 

LOGO    5x base salary for CEO

 

LOGO    2x base salary for other NEOs

 

LOGO    NEOs must hold 50% of net shares received upon option exercises or award vesting until they achieve the required ownership levels

 

 

LOGO    Fully independent Compensation Committee

 

LOGO    Independent Compensation Consultant

 

LOGO    Incentive programs do not incentivize excessive risk taking

 

LOGO    Robust anti-hedging and pledging policies prohibiting pledging or hedging of Company stock

 

LOGO    Double-trigger change in control provisions for equity grants

 

LOGO    Maximum payout caps under incentive plans

 

LOGO    No tax gross-ups

 

LOGO    No excessive perquisites

 

LOGO    No repricing of equity incentive awards

 

LOGO    Strong Clawback Policy

 

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Compensation Process

Hasbro’s executive compensation program is structured with input, analysis, review and/or oversight from various sources, including:

 

 

The Compensation Committee (the “Committee”);

 

 

The full Board;

 

 

The Committee’s independent compensation consultant, Meridian Compensation Partners LLC (“Meridian”);

 

 

The Company’s Executive Vice President & Chief People Officer;

 

 

The Company’s Chief Executive Officer; and

 

 

Market studies and other comparative compensation information.

All final decisions regarding the performance and compensation and retention programs for the Company’s executive officers, including the NEOs, are made by the Committee. The performance and compensation package for the Company’s Chief Executive Officer is also reviewed and approved by the full Board, without the Chief Executive Officer being present.

In structuring the various compensation elements, the Company and Committee review each element on both an individual basis and in totality as part of an overall compensation package. This process includes reviewing tally sheets for each of the executive officers that set forth total target direct compensation, and within that total summarize the target level for each element and the portion of total target direct compensation comprised of the various compensation elements.

For NEOs other than the CEO, the CEO makes recommendations to the Committee for each executive’s compensation package. The Committee then discusses these recommendations with the CEO, both with and without the presence of the Company’s EVP & Chief People Officer. The Committee further reviews and discusses all recommendations in executive session and, as part of these discussions, the Committee discusses the recommendations with representatives from Meridian.

Peer Group and Benchmarking to the Market

In designing the fiscal 2022 executive compensation program, the Committee reviewed certain market data as a market check for each of the NEO’s, including: (i) base salary, (ii) total target cash compensation (comprised of base salary and target management incentive plan award) and (iii) total target direct compensation (comprised of base salary, target short-term incentive award and target long-term incentive award). This market information is one element reviewed by the Committee. The Committee does not simply set compensation levels at a certain benchmark level or within a certain benchmark range.

As the Company has developed into a global branded play and entertainment leader, the companies with which Hasbro competes for executive talent have broadened considerably and the skills and expertise required of Hasbro’s executives have greatly increased. The Company competes with a broad range of companies that focus on immersive storytelling across brands, including those operating in the digital gaming, entertainment and media industries, in the hiring and retention of executives.

 

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The Committee, with the assistance of its independent compensation consultant, annually reviews the compensation peer group. The fiscal year 2022 peer group is as follows:

2022 Peer Group

 

Netflix, Inc.

   Discovery*    Electronic Arts, Inc.    Lions Gate Entertainment Corp.

The Estee Lauder Companies Inc.

   The Interpublic Group of Companies, Inc.    Under Armour, Inc.    Lululemon Athletica, Inc.

Fox Corporation

   Activision Blizzard, Inc.    Skechers USA, Inc.    Take-Two Interactive Software, Inc.**

Live Nation Entertainment, Inc.

   Ralph Lauren Corporation    Mattel, Inc.    Zynga, Inc.**

 

*

Discovery acquired Warner Brothers in April 2022.

 

**

Take-Two Interactive Software, Inc. acquired Zynga in May 2022.

The Committee reviews market data, including from the peer group, as part of assessing the appropriateness and reasonableness of compensation levels and mix of compensation elements to ensure that the compensation program:

 

 

is appropriate and effective in furthering Company goals;

 

 

provides adequate retention incentive for top-performing executives;

 

 

aligns pay with performance; and

 

 

fairly rewards executives for their performance and contribution to the achievement of the Company’s goals, rather than in having compensation packages align to a certain range of market data of the Company’s peers.

According to market data reviewed by the Committee, the 2022 total target direct compensation for NEOs was within a reasonable range of the 50th percentile of total target direct compensation for comparable positions at companies in the peer group.

 

2023 Peer Group

 

For determining the fiscal year 2023 peer group, the Committee, with assistance from its independent compensation consultant, reviewed the compensation peer group and determined that it would be appropriate to make adjustments that increase the focus on digital gaming companies. Additionally, the Committee reviewed the revenue and market capitalization of each company in the peer group to ensure that such company was an appropriate comparator. Based on this analysis, the Committee approved changes to the peer group that provided for the addition of Roblox and the removal of Warner Bros. Discovery. Roblox was added as they are the only public gaming company with revenues greater than $1.0B not currently part of the peer group and Hasbro is increasingly competing for talent in the gaming industry. Warner Brothers was removed as a result of the acquisition of Warner Brothers by Discovery primarily due to the fact that following the acquisition, Discovery was disproportionately sized from a revenue perspective to Hasbro. For 2023, the compensation peer group reflects a mix of companies with which Hasbro competes with for executive talent.

 

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Role of the Independent Compensation Consultant

In reviewing and establishing the fiscal 2022 compensation program for the Company’s executive officers, the Committee received input and recommendations from representatives from Meridian, which was retained by, and which reports directly to, the Committee. Meridian advised the Committee with respect to the Committee’s review of the Company’s executive compensation programs and provided additional information as to whether the Company’s proposed executive compensation programs were competitive, fair to the Company and the executives, reflected strong alignment between pay and performance, provided appropriate incentive to and retention of the executives and were effective in promoting the performance of the Company’s executives and achievement of the Company’s business and financial goals. Meridian did not provide any other services to Hasbro in 2022.

The Committee recognizes that it is essential to receive objective advice from compensation consultants that are independent. Therefore, the Committee maintains a policy requiring an annual assessment of compensation consultant independence based on the NASDAQ’s requirements. The Committee concluded that Meridian was independent and had no conflicts of interest or other relationships that may impair their independence during their service to the Committee.

 

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Executive Compensation Program Elements

The NEOs receive a mix of fixed and variable compensation. The following discussion summarizes the various elements of the executive compensation program.

Variable and Performance-Based Compensation Elements

A significant portion of the total compensation opportunity for our NEOs is performance-based. When structuring incentive compensation, the Committee identifies the performance metrics it considers most important for driving Company value and return to shareholders. The Committee then ties incentive compensation to performance against those metrics. For 2022, the Committee determined that the following forms of compensation and performance metrics were appropriate for aligning executive compensation with Company performance and shareholder interests.

 

Component of Incentive

Compensation

  Performance Metrics   Objectives

Annual Incentive/

Annual Cash

Bonus

      Total Net Revenue   Measures annual top line growth
  Operating Profit Margin   Measures ability to maximize profitability and drive shareholder value
  Free Cash Flow   Measures ability to convert revenue to cash (Company performance measure)
  Individual Performance Adjustment   Measures performance against individual objectives, including ESG objectives

Long-Term Incentive

 

 

•  Performance Contingent Stock Awards

  Cumulative Net Revenue   Measures ability to deliver top line growth over multi-year period
 

Cumulative Diluted Earnings

Per Share

  Measures long-term profitability
  Average Return on Invested Capital   Measures capital efficiency
 

•  Restricted Stock Units

  Stock Price   Provides alignment with shareholders
 

•  Stock Options

  Stock Price Appreciation   Measures how our stock performs

Annual Incentive Compensation

The annual incentive plan is designed to incentivize our NEOs to achieve critical financial and non-financial goals that drive our financial and operational results and help to enhance shareholder value. The Committee is responsible for approving performance goals and related payout levels, setting each NEO’s target award opportunity and approving payouts under the annual incentive plan, each as more fully described below. The Committee reserves the right to reduce otherwise earned incentive payouts as it deems appropriate.

 

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Target Annual Incentive Opportunity

The Compensation Committee assigned each NEO, other than Mr. Stoddart, a target annual incentive award opportunity (expressed as a percentage of base salary) based on competitive market data and the executive’s position, responsibilities and role. Mr.Stoddart was not eligible for an annual incentive award.

 

Named Executive Officer    2022 Target Annual Incentive
Award Opportunity (% of
Base Salary)
  2022 Target Annual Incentive
Award Opportunity($)(1)

Chris Cocks

   150%   $2,059,616

Deborah Thomas

   100%   $1,198,462

Cynthia Williams

   75%   $380,769

Eric Nyman

   100%   $1,032,308

Darren Throop

   100%   $1,500,000

 

(1)

Amounts are calculated based on earnings.

Each eligible named executive officer may earn between 0% and 200% of his or her target annual incentive opportunity based on achieved performance against pre-set performance goals, with 50% of target earned for threshold performance and 100% of target earned for target performance. For performance between threshold and target, and target and maximum, the payout is determined by linear interpolation. Any amounts earned are paid in cash.

Annual Incentive Performance Metrics

For 2022, the Committee selected the following performance measures and assigned the indicated weight based on the Company’s 2022 operating plan and budget.

 

Performance Measure   

Mr. Cocks
and
Ms. Thomas

 

   

Ms. Williams

 

   

Mr. Nyman

 

   

Mr. Throop

 

 

Company Net Revenue

     40     8     8     8

Company Operating Profit Margin

     40     8     8     8

Company Free Cash Flow

     20     4     4     4

Wizards Business Area1 Net Revenue

             40                

Wizards Business Areas Operating Profit

             40                

HCP Business Area2 Net Revenue

                     40        

HCP Business Area Operating Profit Margin

                     40        

Entertainment Business Area3 Net Revenue

                             40

Entertainment Business Area Operating Profit Margin

                             40

 

(1)

For Ms. Williams, the Committee established annual incentive performance metrics that were based on both Company performance and Wizards of the Coast performance, including digital gaming relating to Wizards brands (“Wizards Business Area”).

 

(2)

For Mr. Nyman, the Committee established annual incentive award metrics that were based on both Company performance and the performance of the Hasbro Consumer Products (“HCP”) business.

 

(3)

For Mr. Throop, the Committee established annual incentive award metrics that were consistent with the terms of his employment agreement and based on both Company performance and the performance of the Entertainment business area (“Entertainment Business Area”).

 

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The Company’s performance goals were set with the objective of achieving strong financial results while continuing with the Company’s transformation to a branded play and entertainment leader, and the business area performance goals were set with the objective of achieving strong profitable revenue growth. The Committee believes these performance metrics capture the most important aspects of the top and bottom-line performance of the Company, the Wizards Business Area, the Hasbro Consumer Products Business Area and the Entertainment Business Area, in the form of revenue, profitability and, solely with respect to Company performance, cash generation. The relative weighting among the performance metrics aligns with the relative importance of those metrics, in the Committee’s view, to the Company and business area’s performance and the strength of the Company’s business.

Calculation of 2022 Annual Incentive Payout

The tables below show the calculation of 2022 annual incentive award for each eligible NEO.

Mr. Cocks and Ms. Thomas 2022 Calculated Annual Incentive Payout

 

     

Goal

 

    

Actual

 

    

Percentage
Achievement

 

    

Payout
Percentage

 

    

Weighted
Payout

 

 

Company Net Revenue (Weighted 40%)

   $ 6,565,655      $ 5,856,655        89%        71%        28%  

Company Operating Profit Margin (Weighted 40%)

     15.6%        15.8%        101%        104%        42%  

Company Free Cash Flow (Weighted 20%)

   $ 544,000      $ 215,022        39%        0%        0%  

All numbers are in thousands, except percentages

     Total Weighted Payout        70%  

Ms. Williams’ 2022 Calculated Annual Incentive Payout

 

     

Goal

 

    

Actual

 

    

Percentage
Achievement

 

    

Payout
Percentage

 

    

Weighted
Payout

 

 

Wizards Business Area Net Revenue (Weighted 40%)

   $ 1,351,181      $ 1,347,003        100%        100%        40%  

Wizards Business Area Operating Profit Margin (Weighted 40%))

     41.27%        40.68%        99%        98%        39.20%  

Company Weighted Payout* (Weighted 20%)

                                70%        14%  

All numbers are in thousands, except percentages

     Total Weighted Payout        93.20%  

Note: For the Business Area to have a payout both Business Area metrics must achieve the minimum threshold.

 

*

Ms. Williams was subject to the same Company performance goals as Mr. Cocks and Ms. Thomas; however, those goals were weighted, in the aggregate, 20% for Ms. Williams.

 

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Mr. Nyman’s 2022 Calculated Annual Incentive Payout

 

     

Goal

 

    

Actual

 

    

Percentage
Achievement

 

    

Payout
Percentage

 

    

Weighted
Payout

 

 

HCP Business Area Net Revenue (Weighted 40%)

   $ 4,115,109      $ 3,745,294        91%        76%        0%  

HCP Business Area Operating Profit Margin (Weighted 40%)

     10.31%        8.14%        79%        0%        0%  

Company Weighted Payout* (Weighted 20%)

                                70%        14%  

All numbers are in thousands, except percentages

     Total Weighted Payout        14%  

Note: For the Business Area to have a payout both Business Area metrics must achieve the minimum threshold.

 

*

Ms. Nyman was subject to the same Company performance goals as Mr. Cocks and Ms. Thomas; however, those goals were weighted, in the aggregate, 20% for Mr. Nyman.

Mr. Throop’s 2022 Calculated Annual Incentive Payout

 

     

Goal

 

    

Actual

 

    

Percentage
Achievement

 

    

Payout
Percentage

 

    

Weighted
Payout

 

 

Entertainment Business Area Net Revenue (Weighted 50%)

   $ 1,118,983      $ 976,000        87%        65%        33%  

Entertainment Business Area Operating Profit Margin (Weighted 50%)

     7.93%        8.41%        106%        124%        62%  

All numbers are in thousands, except percentages

     Total Weighted Payout        95%  

Note: Mr. Throop’s employment agreement provides that 90% target achievement against the weighted financial goals results in a 60% of base salary payout percentage and 110% target achievement against the weighted financial goals results in a 200% of base salary payout percentage. Given both the Company Total Weighted Payout (70%) and the Entertainment Business Area Total Weighted Payout (95%), Mr. Throop received a weighted average payout of 80.9% in accordance with the bonus formula noted above and his employment agreement.

The calculation of achieved performance excluded certain pre-determined items including (i) unusual, one-time or other significant unbudgeted costs or expenses (such as restructuring costs, acquisitions or disposition of assets, asset impairment charges, intangible asset amortization, litigation related expenses), (ii) unanticipated one-time operation or tax costs associated with changes in the U.S. tax code, (iii) significant customer bankruptcy, (iv) changes in exchange rates and (v) significant unanticipated or unbudgeted payments outside the normal course of business related to certain other matters approved by the Committee.

Modification of Calculated Annual Incentive Payouts, including Negative Discretion

With respect to the 2022 annual management incentive plan, the Committee reviewed the performance of the Company and its business areas against the annual incentive plan targets for fiscal year 2022. The Company payout factor for awards under the 2022 annual incentive plan, as shared with the Committee, would have been 70% of target. The Committee reviewed the base incentive awards that would have been received by the NEOs using the Company and business area performance. In addition to the NEO’s individual performance, the Committee also considered the Company’s underperformance, the Company’s transformation efforts, its new strategy and focus areas under Blueprint 2.0 and cost reduction measures taken by the Company intended to position the Company for future success. After this review, the Committee determined to exercise negative discretion and reduce the Company payout factor to 20% of target for senior leaders and 25% for remaining employees. Following this

 

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determination, including recommendations from both our CEO and CFO that they receive no bonus for 2022, the Committee considered such recommendation and determined to award no payout for each of Mr. Cocks, Ms. Thomas and Mr. Nyman. Ms. Williams received a modified bonus of 75% of target under her bonus formula, reflecting a reduced payout for all senior executives due to the Company’s overall performance while acknowledging Wizards’ solid performance.

 

Named Executive Officer   

Calculated

Payout %

    Modified
Payout %
    Rationale for Modification to Calculated Payout

Chris Cocks

     70     0  

Mr. Cocks recommended that his earned annual incentive payout be reduced to zero due to the Company’s overall performance during 2022.

 

Deb Thomas

     70     0  

Ms. Thomas recommended that her earned annual incentive payout be reduced to zero due to the Company’s overall performance during 2022.

 

Cynthia Williams

     93.2     75  

Ms. Williams’ calculated annual incentive payout was reduced consistent with the Committee’s philosophy of holding senior executives accountable for the overall performance of the Company, while recognizing Wizards’ solid overall performance.

 

Eric Nyman

     14     0  

Mr. Nyman’s calculated annual incentive payout was reduced due to the results within the Hasbro Consumer Products Business Area.

 

Darren Throop

     80.9     80.9  

Mr. Throop’s payout is governed by his employment agreement.

 

2022 Modified Annual Incentive Payouts

The table below shows each eligible NEO’s calculated and modified 2022 annual incentive payout.

 

Named Executive Officer   

2022

Target

Incentive
Award
Opportunity

     Calculated
Incentive
Award
     Modified
Incentive
Award
     Modified
Incentive
Award
as a % of
Target
 

Chris Cocks

   $ 2,059,616      $ 1,441,731      $ 0        0

Deb Thomas

   $ 1,198,462      $ 838,923      $ 0        0

Cynthia Williams

   $ 380,769      $ 354,877      $ 285,577        75

Eric Nyman

   $ 1,032,308      $ 144,523      $ 0        0

Darren Throop

   $ 1,500,000      $ 1,213,500      $ 1,213,500        80.9

Note: Incentive amounts shown above calculated using fiscal year 2022 earnings.

 

 

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Changes for Fiscal Year 2023. After review of the annual incentive plan design, the Committee made certain changes to the metrics for 2023. For fiscal 2023, the financial performance metrics that will be utilized as Company performance measures, which the Committee believes captures the most important aspects of the top and bottom line performance of the Company as well as the Company’s change in strategic direction and transformation efforts are: total net revenue (weighted at 40%), operating profit margin (weighted at 40%) and metrics around performance relating to our transformation efforts, most notably specific targets for costs savings as part of the Company’s operational excellence program (collectively weighted at 20%). For the business area metrics, the Committee determined to use revenue and operating profit margin of the business area, each weighted at 40%, and similarly added metrics around performance against our transformation efforts for the business area (weighted 20%) stressing the importance of the Company’s transformation efforts.

 

 

Long-Term Incentive Compensation

The long-term incentive plan is designed to incent our NEOs to achieve critical sustainable long-term shareholder value and align the NEOs with shareholder interests. The Committee is responsible for approving performance goals and related payout levels, setting each NEO’s target long-term incentive opportunity and approving payouts under the performance contingent stock awards.

Annual Long-Term Incentive Awards

Long-term incentive compensation is provided to our NEOs, other than Mr. Stoddart, in the form of performance contingent stock awards, time-based restricted stock units, and non-qualified stock options. In 2022, the Committee allocated these awards as follows: 50% performance contingent stock awards, 25% restricted stock units and 25% non-qualified stock options for all of our NEOs other than Mr. Stoddart who was not eligible for LTI awards.

The Committee approves target annual equity award values for each of the Company’s executive officers and other eligible employees, which are designed to provide a strong link between pay and performance. Targets are expressed as a percentage of each individual’s base salary, which, for our NEOs other than Mr. Stoddart, were as follows:

 

Named Executive Officer    2022 LTI Award Target Value

Chris Cocks

   500%

Deborah Thomas

   400%

Cynthia Williams

   200%

Eric Nyman

   400%

Darren Throop

   400%

The division across award types, and the targeted total award value reflect the Committee’s view:

 

 

as to the appropriate total award opportunity for each NEO;

 

 

the optimal weighting of short-term and long-term objectives and drivers of retention value;

 

 

a total long-term compensation program that drives corporate performance and appropriately rewards executives for delivering a consistently high-level of performance;

 

 

a belief that over the performance period the realization of equity award values should be balanced among achievement of the Company’s longer-term financial targets and the Company’s stock price appreciation; and

 

 

the retention of key executive talent.

 

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As noted above, in connection with Mr. Stoddart’s appointment as Interim Chief Executive Officer in October 2021, the Board, upon recommendation of the Committee, awarded to Mr. Stoddart a long-term incentive award with a grant value equal to $2.5 million. Such award was issued in the form of restricted stock units that vested in full on the one-year anniversary of the grant date.

Performance Contingent Stock Awards

Performance contingent stock awards (“PSA Awards”) provide the recipient with the potential to earn shares of the Company’s common stock based on the Company’s achievement against financial performance metrics over a three-year performance period. For 2022, the Committee set the performance metrics and respective weightings for the PSA Awards issued to our NEOs as cumulative diluted earnings per share (“EPS”) (34%), cumulative net revenue (“Net Revenue”) (33%) and average return on invested capital (“ROIC”) (33%). The Committee selected these performance metrics because they are important drivers of long-term sustainable Company performance with respect to top-line growth (Net Revenue), effective profitability and balance sheet management (Diluted EPS), and our ability to generate returns from the capital we have deployed in our operations (ROIC). The Committee believes that these performance metrics are key factors in creating long-term shareholder value and appropriately align the interests of our executives with those of our shareholders.

In fiscal 2022, the Committee reviewed the plan design for our performance contingent stock awards, including feedback from shareholders regarding the use of Revenue as a performance metric in both the annual and long-term incentive plans. After considering the appropriateness of utilizing the same metric across both incentive plans, the respective weighting of such metric in each plan, the significance of top-line growth to the Company’s performance, and the strong alignment between top-line growth and sustainable long-term shareholder value creation, the Committee determined that it was appropriate to maintain Revenue as one of three financial performance measures for the PSA Awards. After such review, the Committee issued PSA Awards as part of our fiscal 2022 annual long-term incentive award that included three financial performance metrics—Diluted EPS (weighted 34%), ROIC (weighted 33%) and Net Revenue (weighted 33%). If the Company achieves less than threshold performance with respect to any performance metric, the payout achieved for that metric is 0%. The minimum payout for achievement against a given metric is set at 50% of target, and that minimum is awarded when actual performance reaches 80% of target performance. The maximum payout for over achievement against a given metric is set at 200% of target, and that maximum is awarded when actual performance reaches 115% of target performance in the case of Net Revenue, and 125% of target performance in the case of Diluted EPS and ROIC. For performance between threshold and target and target and maximum, the payout is determined by linear interpolation.

The Company considers the specific target performance levels for ongoing performance periods to be confidential information that would harm the Company if disclosed as they are based on confidential internal plans and forward-looking expectations concerning the Company’s performance over a three-year period. Retrospective disclosure is provided upon conclusion of each period. As discussed above, the performance targets set forth in the PSA Awards awards align with the Company’s budget, operating plan and strategic plan, and were set at levels the Committee determined will challenge the executive team in working to meet long-term objectives and drive performance and shareholder value creation. Strong performance from the Company and, in turn, its executives, is required to achieve a threshold payout and superior performance in managing the Company’s business will be required to achieve a higher than target payout.

 

 

Changes for Fiscal Year 2023. After review of the long-term incentive plan design, the Committee made certain changes to the metrics for the performance contingent stock awards for 2023. For fiscal 2023, the two financial performance metrics that will be utilized as Company performance measures, which the Committee believes captures the most important aspects of the Company’s long-term performance, are Diluted EPS (weighted at 50%) and ROIC (weighted at 50%), subject to +/- 25% modifier for the Company’s relative TSR performance against the S&P 500 TSR comparator group. The TSR modifier replaces the revenue metric used in prior years to stress the importance of improving our relative TSR.

 

 

 

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FY20-FY22 Performance Contingent Stock Award

Each year the Committee reviews the PSA Award whose performance period ends during such fiscal year to determine whether the applicable performance criteria have been satisfied. In fiscal 2020, the Committee issued a PSA Award for the three-year performance period that included fiscal 2020, 2021 and 2022 (the “FY20-FY22 PSA Award”). When the Committee issued the FY20-FY22 PSA Award, the Committee issued awards to Mr. Cocks and Mr. Nyman (who each received an award subject to two performance metrics at a time when they were not executive officers) and to Ms. Thomas and Mr. Throop (who received awards subject to three performance metrics). Mr. Stoddart and Ms. Williams were not employed by the Company at the time the Committee granted the FY20-FY22 PSA Award and therefore did not receive such an award. After the end of the performance period, the Committee reviewed and determined that the FY20-FY22 PSA Award, which was subject to two performance metrics achieved 45% of target performance and the FY20-FY22 PSA Award subject to three metrics achieved 57% of target performance.    

The following table compares the actual results achieved for the FY20-FY22 PSA Awards against the targeted goals for the three-year performance period.

 

Performance
Period
  Net Revenue*       Cumulative Diluted EPS*       Average ROIC   Weighted
Payout
Percentage
  Target   Results   Achievement        Target   Results   Achievement        Target   Results   Achievement

FY20-FY22

Two-Metric

    $ 20,020     $ 17,775       88.8 %               $ 14.12     $ 13.48       95.5 %                 N/A       N/A       N/A       45 %

FY20-FY22

Three-Metric

    $ 20,020     $ 17,775       88.8 %               $ 14.12     $ 13.48       95.5 %                 7.90 %       7.83 %       99.1 %       57 %

 

*

Net Revenue numbers are in millions. Performance for Net Revenue and cumulative Diluted EPS is calculated based on exchange rates in effect at the beginning of the relevant performance period. ROIC target and results included eOne’s results for the fiscal 2020 grants.

Restricted Stock Units

The Company uses restricted stock units as a reward and retention mechanism. The restricted stock units granted as part of our fiscal 2022 annual long-term incentive award to our NEOs, other than Mr. Stoddart, represented approximately 25% of their annual targeted equity award value and vest in three equal installments on the first three anniversaries of the grant date provided the recipient remains employed with the Company through the applicable vesting dates. Pro-rata vesting is provided earlier only in the event of the death, disability, early retirement at age 55 (with at least 10 years of credited service) or retirement at age 65 (with at least 5 years of credited service) of the executive. All other terminations of employment result in forfeiture of the awards.

Stock Options

Stock options granted as part of our fiscal 2022 annual long-term incentive award represented approximately 25% of the targeted equity award value for our NEOs, other than Mr. Stoddart, and vest in three equal installments on the first three anniversaries of the grant date, subject to the recipient’s continued employment with the Company through such vesting dates, and have seven-year terms. Options forward vest upon an executive officer retiring at age 65 or older with at least five years of credited service or upon an officer’s death or permanent disability.

The Company does not manage the timing of equity grants to attempt to give participants the benefit of material non-public information. Annual option grants are made with effective dates in open trading windows following the Company’s release of its financial results. All option grants are made with an exercise price at or above the average of the high and low sales prices of the Company’s common stock on the grant date.

 

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