SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed By The Registrant x
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 | |||
| x | Definitive Additional Materials | |||
| ¨ | Soliciting Material Pursuant to sec.240.14a-12 | |||
HASBRO, INC. | ||||
| (Name of Registrant as Specified In Its Charter) | ||||
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| 3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): | |||
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Shareholder Engagement
May 2015
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Business Overview
Hasbro is a global company committed to Creating the World’s Best Play Experiences, by leveraging its beloved brands, including LITTLEST PET SHOP, MAGIC: THE GATHERING, MONOPOLY, MY
LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS in addition to premier partner brands
Hasbro builds brands across feature films, television, digital gaming and lifestyle licensing (e.g., with apparel, food and bedding companies) as well as toy and game innovation
- Brand Blueprint: The cornerstone of our strategy
- Rather than only producing toys and games, Hasbro now focuses on developing its brands, with emphasis on seven key Franchise Brands that deliver significant revenue and operating profit potential
Ongoing cultivation of strategic partnerships with industry leaders; e.g., The Walt Disney Company, including for MARVEL and STAR WARS as well as DISNEY PRINCESS and FROZEN brands (beginning in 2016)
Commitment to corporate social responsibility, including product safety, environmental responsibility and ethical sourcing
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Comprehensive Business Strategy to Drive Growth…
Strategy Results
• Global organization, including global development
and marketing operations • Hasbro 2014 revenues increased 5%
…Across • Robust expansion in emerging markets; key areas of • Revenue growth across all Hasbro
focus include Russia, Brazil and China international regions in 2014
Geographies
• Poised for future growth in developed economies with • Emerging market revenue up 20% in
a strong focus on brand, entertainment and 2014 and operating profit up 36%
innovation
• Emphasis on building and enhancing global content • Entertainment and Licensing segment
creation revenues up 15% in 2014
…In • Significant investment in content, including television
Consumer programming • Television programming airs in 180
territories globally
Engagement • Investment in and expansion of digital engagement:
digital gaming, mobile apps, branded websites and • Robust feature film slate based on
social media Hasbro and partner brands
• Re-imagination of Franchise Brands and imagination
of new brands • Franchise Brand revenues grew 31%
…Across • New strategic merchandising relationship with Disney revenues in 2014 and represented 55% of
for DISNEY PRINCESS and FROZEN properties
Brands(beginning in 2016) • Second consecutive billion dollar year
• Gaming Center of Excellence focused on key for revenues in Girls category
consumer demographics and brands
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Strong Performance and a History of Capital Return
Commitment to Share Repurchases and Dividend Growth
Aggregate Value of Dividends and Share Repurchases ($M)
2,606
1,928
1,672
1,347
770
2010 2011 2012 2013 2014
Buyback Dividend Total
Share Repurchases
New $500M share repurchase authorization announced in February 2015; total of $3.3B of share repurchases since 2005
Dividend
Dividend increased 7% in February 2015 to $0.46 per share (Payable May 15, 2015)
Latest increase is 11th in a 12 year period during which quarterly dividend grew from $0.03 per share to $0.46 per share
Long-Term TSR Performance Relative to Indices
Annualized 1-Year, 3-Year, 5-Year and 10-Year Total Shareholder Return Ending 12/31/2014
24.1%
20.4% 20.6%
13.7% 13.2% 14.6% 15.2% 13.4% 14.0%
7.7% 7.9%
3.2%
1-Year TSR 3-Year TSR 5-Year TSR 10-Year TSR
Hasbro S&P 500 Index Russell 1000 Consumer Discretionary Index
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Key Changes to CEO Pay
Our Board and CEO amended our CEO’s employment agreement in direct response to feedback received from shareholders
We engaged with nearly holders of 50% of total shares outstanding as of 2014 year end
Reduced Long- • Decreased annual target from 500% of base salary to 400% of base salary effective for balance of employment
term Incentive agreement
Target for CEO
Added ROIC as a • Added ROIC, along with net revenue and EPS, as a performance metric for performance share awards
Performance Metric beginning in 2015
Eliminated TSR
Performance • Eliminated 2.0X multiplier that could have increased the number of performance awards granted on the basis of
Multiplier a company/index TSR comparison (to S&P 500) from 2013 and 2014 performance share awards
• Added second requirement for full vesting of RSUs not yet earned at date of amendment
Added Vesting • Share price must be at or above designated share price threshold over a 30 trading day period prior to (1) end of
Component to CEO’s contract in December 2017, or (2) termination if that occurs at an earlier date, even if share price thresholds
One-Time RSU had been satisfied earlier
Grant • If stock price is not maintained over 30 trading day period, as little as 50% of RSUs will vest, with actual percentage
determined in accordance with fixed schedule
Net Result: Potential forfeiture of $11M in compensation
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CEO Pay is Closely Aligned with Company Performance
2014 of CEO Pay At-Risk* 2015 CEO Pay Program Elements
3.0%
9.0%
16.0%
72.0%
Fixed Compensation (Salary)
Variable Equity Compensation
Variable Non-Equity Compensation
Change in Pension Value and NQDC Earnings and All Other
Compensation
*Includes second tranche of Special RSU Award given
under amended employment agreement in 2014
Base Salary • Set at industry competitive level, in light of individual experience and
performance
• Performance-based; tied to company and individual achievement
against stated annual financial and non-financial goals
Annual • Align management behavior with shareholder interests
Incentive 40% Total Net Revenues
Plan Performance
Measures 40% Operating Margin
20% Free Cash Flow
• Earned based on challenging goals that
Performance require strong performance over three-
Contingent year performance period
50%
Long-Term Stock • EPS (34% weighting)
Incentive Awards • Net revenue (33% weighting)
• ROIC (33% weighting; new for 2015)
Plan
Stock • 7- year term
50%
Options • Vest over a 3-year period
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Experienced Board with Deep Industry Knowledge
Board refreshment in process, with three new directors appointed in 2014*
Richard Stoddart
CEO, Leo Burnett North America
Joined Board in March 2014
Extensive marketing & communications experience, including digital advertising and social media
Linda Zecher
CEO, Houghton Mifflin Harcourt
Joined Board in October 2014
Leading HMH’s transformation to a digitally-focused learning and content company
International business experience
Previously a senior executive at Microsoft
Michael Burns
Vice Chairman, Lionsgate
Joined Board in December 2014
Contributes substantial media expertise, as well as financial acumen and operational experience
Significant experience in motion picture and television production and distribution
Balanced Tenure Strong Independent Leadership Diverse Perspectives
Insider
1 Director
4
4 4
3
< 5 years 6—10 years > 10 years
*Data based on Board slate up for election at 2015 annual meeting
Insider
1 Director
Female
3 Directors
Independent Male
10 Directors 8 Directors
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Strong Corporate Governance Practices and Robust Independent Oversight of Management
All directors elected annually under majority vote standard
Lead Independent Director, with clearly defined, robust responsibilities
Mandatory director stock ownership (5x retainer)
Strong “overboarding” policy ( ? 3 other public boards; ? 1 other public board for sitting CEOs)
Careful board succession planning and annual board and committee self-assessments
In-depth annual Board review of management succession plans
History of substantive engagement and dialogue with shareholders
Longstanding commitment to and board leadership on corporate social responsibility
Board Leadership Changes
Our long-time Chairman and former CEO, Alfred Verrecchia, is retiring as of the 2015 annual meeting
The Board appointed CEO Brian Goldner as Chairman (effective as of 2015 annual meeting)
The Board created a robust Lead Independent Director position and appointed Basil Anderson to that role
- Mr. Anderson has a breadth of experience in corporate governance, finance, and strategic planning including as former Vice Chairman of Staples and former CFO of Campbell Soup
- Mr. Anderson has been a key participant in Hasbro’s shareholder outreach program
- Lead Independent Director duties include:
Reviewing and approving meeting agendas and schedules
Reviewing and approving materials sent to the Board
Advising management on quantity, quality and timeliness of information provided to the Board
Serving as liaison to shareholders and other stakeholders
The Board believes the combination of these roles with proven leaders positions Hasbro well for future success
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The Board Recommends a Vote AGAINST Three Shareholder Proposals
Proxy Access – Prop. #4
The Board believes the Proposal is not in the best interests of Hasbro’s shareholders
Our director nomination process is carefully designed to ensure a board with balanced skill sets, perspective and experience
The Proposal does not recognize our commitment to shareholder outreach and responsiveness to shareholders
Our strong governance practices include election of all directors annually based on a majority vote standard
We already have a mechanism in place for shareholders to propose nominees for election to the Board
Before we received this proposal, no shareholder had asked us to implement proxy access. Since receiving the proposal, we have been asking shareholders for views on proxy access; shareholders we have spoken with thus far have expressed differences on these issues, including whether they support any type of proxy access bylaw
Post-Termination Equity Holding Period – Prop. #5
Excessive retention requirements in proposal could harm
Company’s ability to attract and retain top executives (including by encouraging early departure from Company), and may encourage undesirable risk taking
Hasbro has significant share ownership requirements in place, as well as a policy prohibiting pledging or hedging of Company shares
Proposal does not recognize the existing strong alignment of executive compensation plans with shareholder interests
Limit on Equity Vesting on Change-in-Control – Prop. #6
Company’s current double trigger approach best serves the
Company and shareholders, including by incentivizing employees to remain through completion of change in control
Current structure gives Compensation Committee flexibility to accelerate vesting in situations it deems appropriate and in the best interests of Company and shareholders
Many senior executives receive the majority of compensation in equity; the proposal could put the Company at a competitive disadvantage in attracting and retaining talent
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Toy & Game
Product
Innovation
Storytelling
Digital Lifestyle
Media BRANDS Licensing
Consumer Insights
Im ve
Entertainment
Experiences
Strategic Retail Partnerships
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Safe Harbor
FORWARD-LOOKING STATEMENTS: This presentation contains forward-looking statements concerning management’s expectations, goals, objectives and similar matters, which are subject to risks and uncertainties. These forward-looking statements may include comments concerning our product and entertainment plans, business opportunities, plans and strategies, financial goals and expectations for our future financial performance and achieving our objectives. There are many factors that could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in these forward-looking statements, including consumer and retailer interest in and acceptance of our products and product lines, changes in marketing and business plans and strategies as well as future global economic conditions, including foreign exchange rates. Some of those factors are set forth in the Company’s Annual Reports on Form 10-K, in the Company’s Quarterly Reports on Form 10-Q, in the Company’s Current Reports on Form 8-K and in the Company’s other public disclosures. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this presentation to reflect events or circumstances occurring after the date of this presentation.
REGULATION G: Information required by Securities and Exchange Commission Regulation G, regarding non-GAAP financial measures, as well as other financial and statistical information, are available on the Investor Relations’ section of Hasbro’s website at: http://investor.hasbro.com, under the subheading “Financial Information” – “Quarterly Results.”
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Questions? Please contact:
Debbie Hancock
Vice President, Investor Relations debbie.hancock@hasbro.com (401) 727.5401