Thursday, 09 June 2022 08:36

Hasbro board re-elected, Alta Fox responds

Written by Barry White/BUSINESS WIRE
Hasbro board re-elected, Alta Fox responds HASBRO

Wizards of the Coast parent company, Hasbro, Inc., announced the preliminary results at the 2022 Annual Meeting of Shareholders, as provided by its proxy solicitors, which indicate that Hasbro shareholders have voted, with a substantial margin, to re-elect all 13 of Hasbro’s highly qualified directors to the Hasbro Board: Richard Stoddart, Kenneth Bronfin, Michael Burns, Hope Cochran, Chris Cocks, Lisa Gersh, Elizabeth Hamren, Blake Jorgensen, Tracy Leinbach, Edward Philip, Laurel Richie, Mary Beth West and Linda Zecher Higgins. Similarly, the Company’s say-on-pay proposal and auditor ratification were approved by the shareholders.

"Hasbro’s Board of Directors would like to thank our shareholders for their continued support and engagement, as well as the invaluable views and perspectives they have shared with us over these last several months. As the vote indicates, our highly skilled and recently refreshed Board possesses experience and expertise directly relevant to overseeing Hasbro’s world class portfolio of assets across multiple play and entertainment categories," says the company via a statement. "Our directors will be instrumental to Chris as he undertakes a strategic review of the business and outlines our go-forward strategy to position Hasbro for long-term success and delivery of shareholder value. We know we have important work ahead of us, and you will be hearing from us as we continue to actively engage with our shareholders."

The results, which were announced Wednesday, are considered preliminary and are subject to certification by the Independent Inspector of Election. The final results of the 2022 Annual Meeting will be available in a Current Report on Form 8-K filed with the Securities and Exchange Commission and on Hasbro’s investor relations website within the next four business days.

Alta Fox Capital Management, LLC, the beneficial owner of approximately 2.5% of the outstanding shares of the company, issued a statement of their own regarding its campaign to refresh the Company’s Board of Directors meeting.

“We thank our fellow shareholders for their thoughtful engagement and support throughout this year’s election contest," says Connor Haley, Managing Partner of Alta Fox. "After five consecutive years of underperformance relative to the S&P 500 and an even longer period of questionable corporate governance, Alta Fox believed targeted boardroom change was necessary at the onset of a new Chief Executive Officer’s tenure. We ran a campaign based on the facts: absolute and relative underperformance, numerous capital allocation blunders under long-serving incumbents, and extremely poor disclosure reflective of an insular culture. While we are disappointed in the outcome at today’s Annual Meeting, we agree with Institutional Shareholders Services, Inc. that ‘all shareholders likely benefited from the campaign."

Some of the positives highlighted by Haley include:

  • Spotlighting the strength of the Wizards of the Coast (‘WOTC’) business in an extensive 100-page presentation. This represents more analysis and focus on the business than Hasbro has shared with investors during its more than 20 years of ownership.
  • Catalyzing the appointments of two gaming-focused directors, helping to fix a glaring and long-standing weakness given WOTC’s ~50% contribution to overall EBITDA and its estimated ~70% of total Hasbro value based on our analysis.
  • Spurring the Board to re-consider its Brand Blueprint strategy, as evidenced by the Company refusing to mention the strategy by name in its most recent press releases and instead purportedly undertaking a ‘full assessment of our business.’
  • Prompting improved disclosure, including of the trailing EBITDA multiple for the D&D Beyond acquisition, which the Company previously refused to provide to investors.
  • Forcing the Board to acknowledge and confront the Company’s meaningful long-term underperformance, a welcome change from its typical self-congratulatory tone.
  • Driving multiple directors to purchase shares on the open market, whereas not a single existing director had ever purchased a single share on the open market prior to our engagement this year.

"We plan to remain an engaged shareholder and hope that the Board recognizes improvements in corporate governance, capital allocation and investor disclosure are needed to strengthen the Company and drive improved results over the long term," he continues. "As a new era begins at Hasbro under [CEO] Mr. Cocks, shareholders expect to see the Company embrace the changes and ideas catalyzed by our involvement in order to create lasting value for all stakeholders. A strong foundation must be laid over the next year.”

Alta Fox, through their own Hasbro board nominees, had hoped to spin Wizards of the Coast off into its own company.