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Alta Fox urges Hasbro to address questions on Q1 earnings call
Alta Fox Capital Management, the beneficial owner of approximately 2.5% of the outstanding shares of Hasbro (HAS), urged the Company to address the following questions when it reports Q1 financial results tomorrow:
“Why has the Company pushed back the record date for the 2022 Annual Meeting of Shareholders?
Given that the Board of Directors appears to be more focused on entrenchment than value creation, we are forced to question the motivation behind moving the record date to May 9th.
We fear the Board is hoping that the delay will provide time to court friendly shareholders, who are likely to support the incumbents.
In our view, this seemingly self-serving maneuver has parallels to the defensive PIPE transactions recently initiated by other underperforming companies facing election contests.
Why is the Company forcing a costly election contest instead of accepting a modest Board refresh and a capital allocation review committee in response to shareholders’ concerns regarding Hasbro’s chronic underperformance?
In our view, investors have reason to question whether the Board is acting in shareholders’ best interest or engaging in further entrenchment to maintain the Hassenfeld family’s influence.
Why did the Company expand its Board to 13 members instead of carrying out a viable director refresh?
We contend the decision to expand the Board from 11 members to 13 members following our nomination reflects an unacceptable level of dysfunction and entrenchment in the boardroom.
Why did the Company feel it was appropriate for Cynthia W. Williams, the newly appointed President of Wizards of the Coast, to join another public company’s board within two months of being appointed to her new role?
We question why Williams would want to join the board of Aterian, a company whose stock is down almost 70% from its IPO in 2019 and which has been accused of serious wrongdoings.
We find it surprising that Hasbro’s Board allowed Ms. Williams to dilute her attention so early in her tenure at Wizards of the Coast and was comfortable associating Hasbro’s senior leadership with Aterian.
How did the Board determine so quickly that a spin-off of Wizards of the Coast was ill-advised, and why will it not share this analysis with shareholders?
We believe spinning off Wizards of the Coast could help enhance Hasbro’s corporate structure and unlock the full value of the division, which has a completely different growth, margin and valuation profile than the Consumer Products and Entertainment segments.
In light of the Board’s apparent credibility issues, we find it hard to believe the Company comprehensively and objectively evaluated strategic alternatives for the unit.
We believe shareholders deserve a detailed explanation of the Board’s purported evaluation, and that the analysis should be re-examined with shareholder-appointed directors focused on creating shareholder value rather than preserving the Hassenfeld family legacy.
To date, the Company has provided little evidence of business unit “synergies” that could not be accomplished through a partnership arrangement.
Why is the Board resistant to forming a capital allocation committee when investments, such as the Entertainment One deal, have been value destructive?
It is confounding to us that Hasbro continues to assume no accountability for poor capital allocation when organic and inorganic investments have failed to produce meaningful shareholder value over many years.”
Alta Fox has filed a preliminary proxy statement with the U.S. Securities and Exchange Commission in connection with its nomination of five candidates for election to the Company’s Board at this year’s Annual Meeting.
Hasbro reports on April 19th before the market open. HAS is down 2% to $83.47.
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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
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