| • | | General Shareholder Proposals Any proposal which a shareholder of the Company wishes to have considered for inclusion in the proxy statement and proxy relating to the Company’s 20142016 Annual Meeting of Shareholders must be received by the Secretary of the Company at the Company’s executive offices no later than December 9, 20137, 2015 (the date that is 18
120 calendar days before the anniversary of the release date of the proxy statement relating to the 20132015 Annual Meeting of Shareholders). The address of the Company’s executive offices is 1011 Newport Avenue, Pawtucket, Rhode Island 02862.02861. Such proposals must also comply with the other requirements of the rules of the United States Securities and Exchange Commission relating to shareholder proposals. | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 15 |
With the exception of the submission of director nominations for consideration by the Nominating Committee, which must be submitted to the Company in the manner described below, any new business proposed by any shareholder to be taken up at the 20142016 Annual Meeting, but not included in the proxy statement or proxy relating to that meeting, must be stated in writing and filed with the Secretary of the Company no later than 150 days prior to the date of the 20142016 Annual Meeting. Except for shareholder proposals made pursuant to the preceding paragraph, the Company will retain discretion to vote proxies at the 20142016 Annual Meeting with respect to proposals received prior to the date that is 150 days before the date of such meeting, provided (i) the Company includes in its 20142016 Annual Meeting proxy statement advice on the nature of the proposal and how it intends to exercise its voting discretion and (ii) the proponent does not issue a proxy statement. Director Nominations The Company’s By-laws provide that shareholders may themselves nominate directors for consideration at an annual meeting provided they give written notice to the Secretary of the Company, such notice must be received at the principal executive office of the Company not less than 60 days nor more than 90 days prior to the one-year anniversary date of the immediately preceding annual meeting of shareholders and provide specified information regarding the proposed nominee and each shareholder proposing such nomination. Nominations made by shareholders in this manner are eligible to be presented by the shareholder to the meeting, but such nominees will not have been considered by the Nominating Committee as a nominee to be potentially supported by the Company. To be considered by the Nominating Committee, director nominations must be submitted to the Chief Legal Officer and Corporate Secretary of the Company at the Company’s executive offices, 1011 Newport Avenue, Pawtucket, Rhode Island 0286202861 at least 120 days prior to the one-year anniversary of the release to the Company’s shareholders of the proxy statement for the preceding year’s annual meeting. As such, director nominations to be considered for the Company’s 20142016 Annual Meeting of Shareholders must be submitted no later than December 9, 2013.7, 2015. The Nominating Committee is only required to consider recommendations made by shareholders, or groups of shareholders, that have beneficially owned at least 1% of the Company’s Common Stock for at least one year prior to the date the shareholder(s) submit such candidate to the Nominating Committee and who undertake to continue to hold at least 1% of the Company’s Common Stock through the date of the next annual meeting. In addition, a nominating shareholder(s) may only submit one candidate to the Nominating Committee for consideration. Submissions to the Nominating Committee should include (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Company that are owned beneficially or of record by the person, (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, and (v) confirmation that the candidate is independent under the Company’s Independence Standards and the rules of The NASDAQ Stock Market, or if the candidate is not independent under all such criteria, a description of the reasons why the candidate is not independent; and (b) as to the shareholder(s) giving the notice (i) the name and record address of such shareholder(s) and each participant in any group of which such shareholder is a member, (ii) the class or series and number of shares of capital stock of the Company that are owned beneficially or of record by such shareholder(s) and each participant in any group of which such shareholder is a member, (iii) if the nominating shareholder is not a record holder of the shares of 19
capital stock of the Company, evidence of ownership as provided in Rule 14a-8(b)(2) under the Exchange Act, (iv) a description of all arrangements or understandings between such shareholder(s) and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder(s), and (v) any other information relating to such shareholder(s) that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. The Nominating Committee may require that any proposed nominee for election to the Board furnish such other information as may reasonably be required by the Nominating Committee to determine the eligibility of such proposed nominee to serve as director of the Company. The written notice from the nominating shareholder specifying a candidate to be considered as a nominee for election as a director must be accompanied by a written consent of each proposed nominee for director. In this written consent the nominee must consent to (i) being named as a nominee for director, (ii) serve as a director and represent all shareholders of the Company in accordance with applicable laws and the Company’s Articles of Incorporation, By-laws and other policies if such nominee is elected, (iii) comply with all rules, policies or requirements generally applicable to non-employee directors of the Company, and (iv) complete and sign customary information requests upon the request of the Company. 20
| | | 16 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS The Company has a policy that any transaction which would require disclosure under Item 404(a) of Regulation S-K of the rules and regulations of the United States Securities and Exchange Commission, with respect to a director or nominee for election as a director, must be reviewed and approved or ratified by the Company’s full Board, excluding any director interested in such transaction. All other related person transactions which would require disclosure under Item 404(a), including, without limitation, those involving executive officers of the Company, must be reviewed and approved or ratified by either the Company’s full Board or a committee of the Board which has been delegated with such duty. Any such related person transactions will only be approved or ratified if the Board, or the applicable committee of the Board, determines that such transaction will not impair the involved person’s service to, and exercise of judgment on behalf of, the Company, or otherwise create a conflict of interest which would be detrimental to the Company. This policy is contained in Section 20, entitled “Code of Conduct; Conflicts of Interest” of the Company’s Corporate Governance Principles. Michael Verrecchia, son of Alfred J. Verrecchia, is employed by the Company as Director of Entertainment Retail Business Development. For fiscal 2012,2014, Michael Verrecchia was paid an aggregate salary and bonus of $158,792.42.$160,192. 21
| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 17 |
COMPENSATION COMMITTEE REPORT The Compensation Committee (the “Compensation Committee” or the “Committee”) of the Company’s Board of Directors (the “Board”) is responsible for establishing and overseeing the compensation programs for the Company’s executive officers, including all of the Company’s Named Executive Officers appearing in the compensation tables following this report, and is authorized to make grants and awards under the Company’s equity compensation plans. The Committee operates under a written charter, which has been established by the Company’s Board and which is reviewed and evaluated by both the Committee and the Board on an annual basis. The current Compensation Committee charter is available on the Company’s website at www.hasbro.com, under “Corporate — Investor RelationsInvestors — Corporate Governance.” The Committee is composed solely of persons who are both “Non-Employee Directors,” as defined in Rule 16b-3 of the rules and regulations of the United States Securities and Exchange Commission, and “outside directors,” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The Board has determined that each member of the Committee is independent under the Company’s Independence Standards and the requirements of The NASDAQ Stock Market’s corporate governance listing standards. The exercise of independent judgment in furtherance of the interests of the Company and its shareholders is a cornerstone of the Committee’s actions. The following section of this proxy statement,Proxy Statement, entitled “Compensation Discussion and Analysis”, contains a detailed discussion regarding the philosophy, policies, processes and compensation plans utilized by the Committee in establishing the compensation programs for the Company’s executive officers and in assuring that the Company’s compensation programs attract and retain top executive talent, align the interests of the executive team with those of the Company’s shareholders, create a powerful alignmentlinkage between pay and performance and maximize the business results of the Company. The 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 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 statementProxy Statement for the Meeting and, by incorporation by reference, in the Company’s Annual Report on Form 10-K for the year ended December 30, 2012.28, 2014. Report issued by John M. Connors, Jr. (Chair), Basil L. Anderson, Frank J. Biondi, Jr., Kenneth A. Bronfin and Edward M. Philip as the members of the Compensation Committee as of the 2012Company’s 2014 fiscal year end. Edward Philip (Chair) Basil Anderson 22Frank Biondi, Jr.
COMPENSATION DISCUSSION AND ANALYSISKenneth Bronfin
Key Notes for 2012Michael Burns
Compensation Program StructureJohn Connors, Jr.
The Company employed four elements in its compensation program for the Named Executive Officers in 2012. Those four elements, which are discussed in detail in the report that follows, were:Linda Zecher
Cash performance-based incentive compensation;
Equity performance-based and stock-price based incentive compensation; and
The substantial majority of the total potential value of the compensation packages for the Named Executive Officers in 2012 were performance based. For Mr. Goldner, the Company’s Chief Executive Officer, approximately 82.5% of the 2012 total compensation reported for him in the Summary Compensation Table was composed of variable performance-based and stock-price based compensation.
2012 Company Accomplishments
In 2012 the Company achieved many key business objectives. Among our accomplishments in 2012, we:
Grew our earnings per share, absent the impact of foreign exchange and discrete restructuring charges and tax benefits;
Returned the U.S. and Canada segment to historical operating profit margins;
Stabilized our games business, growing it from 2011, and positioned it for growth in 2013 and beyond; and
Delivered a one-year total shareholder return of 18.1%.
Our 2012 performance, and the connection between that performance and the compensation earned by our Named Executive Officers, is discussed in greater detail in the remainder of this report.
2012 Key Compensation Actions
With respect to our 2012 compensation programs we took several key actions impacting our Named Executive Officers. Among these actions we:
Established challenging 2012 cash incentive plan financial performance objectives;
Established challenging three-year financial performance objectives for our contingent stock performance awards granted in 2012;
Did not pay out any shares under the contingent stock performance awards we granted in 2010, for which the performance period ended at the end of 2012;
Adopted a clawback policy;
Adopted a policy prohibiting the pledging or hedging of company stock; and
Amended and restated Mr. Goldner’s employment agreement, in the process of which we implemented many shareholder favorable provisions, which are described below, including the use of restricted stock units, which vest based upon achievement of specified share price thresholds, as a key component of his future equity compensation opportunity, and the implementation of a relative total shareholder return modifier on the contingent stock performance awards to be granted to Mr. Goldner in 2013 and 2014.
23
Overview of 2012 Executive Compensation Program Elements
The following table summarizes the elements of the Company’s 2012 executive compensation program, and the objectives served by each element. A detailed discussion of each element is contained in the following pages.
| | | 18 Elements of Compensation
| | Objective Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc.
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COMPENSATION DISCUSSION AND ANALYSIS In the following Compensation Discussion and Analysis, we describe the details of our Named Executive Officer (NEO) executive compensation program. Table of Contents | | | Hasbro, Inc. | Notice of their base salaryAnnual Meeting of Shareholders and 2015 Proxy Statement | | Align the interests of executives and shareholders and maintain an ownership culture among the executive officers19 |
Executive Summary 2014 Named Executive Officers The name and title of each of the Company’s Named Executive Officers (NEOs) for 2014 are as follows: | | | | Name | | Title | | Brian D. Goldner | | President and Chief Executive Officer | | Deborah M. Thomas | | Executive Vice President and Chief Financial Officer | | Duncan J. Billing | | Executive Vice President, Chief Global Operations and Business Development Officer | | John A. Frascotti | | President, Hasbro Brands | | Wiebe Tinga | | Executive Vice President and Chief Commercial Officer |
24Business and Performance Overview
Overview of 2012 Company PerformanceHasbro is a global company committed to Creating the World’s Best Play Experiences. We strive to accomplish this by leveraging our beloved brands, including our seven Franchise Brands: LITTLEST PET SHOP, MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS, as well as our premier Partner Brands, such as MARVEL and STAR WARS, across our Brand Blueprint. From toys and games to television programming, motion pictures, digital gaming and a comprehensive licensing program, Hasbro fulfills the fundamental need for play and connection for children and families around the world.
In 20122014, we continued the evolution of our development into a global branded-play company and achieved many ofsaw measurable results against our long-term strategic plan objectives. The following are among the Company’s achievements in 2012:objectives and investment priorities. DeliveredOur focus on building Franchise Brands and key Partner Brands (including MARVEL and STAR WARS from The Walt Disney Company,) delivered 5% revenue growth for the 12th consecutive yearCompany. Franchise Brand revenues increased 31% from 2013 and six of growthour seven Franchise Brands grew in earnings per share, with our full-year 2012 earnings per diluted share increasing from $2.74 in 2011, to $2.81 in 2012, excluding in both years restructuring charges and discrete tax benefits;2014.
ReturnedThe execution of our Brand Blueprint globally across consumer categories resulted in revenue growth in all geographic regions, including the U.S. & Canada (+1%), Europe (+6%), Latin America (+14%) and Canada segmentAsia Pacific (+10%). Our expansion and investment in Emerging Markets continued to historical operating profit margins;deliver strong growth and revenue in these markets grew 20%.
Executed our business plan globally by leveraging our investments in newAdditionally, the Entertainment & Licensing category had a record year, increasing revenues 15% behind the licensing of Franchise Brands MY LITTLE PONY and emerging markets;TRANSFORMERS.
Stabilized our games business, growing it in 2012,Innovation and positioned it forstorytelling delivered revenue growth in 2013both the Boys category (+20%) and beyond;the Girls category (+2%) for 2014.
GrewTo build on our girls business;second consecutive billion dollar year for revenues in the Girls category, we announced a new strategic merchandising relationship with Disney Consumer Products for the DISNEY PRINCESS and FROZEN properties. This new agreement gives Hasbro global rights (excluding Japan) to develop fashion and small dolls based on the DISNEY PRINCESS and FROZEN stories and characters beginning in 2016.
GrewThrough the implementation of our Entertainmentcost savings initiative and Licensing segment in a year without a Transformers motion picture; andour focus on improving organizational efficiencies, we increased profitability across all of our operating segments.
Instituted a cost-savings initiative designed to remove $100 million in annual operating expenses from the business by 2015.
In addition, for the benefit of our shareholders in 2012 we:
Delivered a one-year total shareholder return of 18.1%, a three-year average total shareholder return of 7.4% annually, and a five-year average total shareholder return of 10.4% annually; and
Returned $323.5We accomplished these objectives while returning $678 million to our shareholders in the form of $225.52014: $217 million in cash dividends (including the acceleration of payment of the dividend normally paid in February 2013 to December 2012) and the repurchase of $98$461 million of our stock.via share repurchases.
We believe that
In February 2015, our ongoing efforts in 2012 to continue our international expansion and to drive all aspects of our global brand blueprint, through the offering of innovative toys and games, immersive entertainment experiences, digital gaming and lifestyle licensing products, made significant progress in positioning our Company for long-term success. The one key objective for 2012 which we did not achieve was to grow our overall net revenues, absent the impact of foreign exchange. The Company had set an aggressive goal for itself of growing revenues in 2012 notwithstanding the difficult comparisons we faced in looking back at 2011. In 2011 we had grown our consolidated net revenuesBoard approved a 7%, to $4.29 billion, the highest global net revenues in our Company’s history. The growth in our 2011 net revenues was driven by factors including an 85% year over year increase in Transformers net revenues, with the release of TRANSFORMERS: DARK OF THE MOON driving $483quarterly dividend and an additional $500 million in revenue from that brand in 2011, $477 million in global net revenues from BEYBLADE and the first full year of our relationship with Sesame Workshop related to the SESAME STREET brand.
In addition to facing these difficult comparisons, 2012 proved to be very challengingauthorization for our industry in certain established markets, including in the United States and in many countries in Western Europe. Sales of our products in those markets in the critical weeks leading up to the holidays at the end of the fourth quarter fell short of our expectations and our targeted operating plan performance. future share repurchases.
As is discussed in the following pages,detail beginning on page 22 in 2014 our revenue shortfallBoard and our Chief Executive Officer, Brian Goldner, amended certain terms of Mr. Goldner’s employment agreement in 2012 as compareddirect response to feedback we received from our operating plan goal has had a direct impact in reducing the variable compensation paid toshareholders during our executive officers and other employees.engagement efforts. | | | 20 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
Providing value and return to our shareholders is a cornerstone of our corporate objectives. The following tables illustrate our performance over the last few years in achieving certain metrics we believe are fundamental to our shareholders. 25
The following table provides the total amounts we have returned to our shareholders since 2008, in the form of cash dividends and share repurchases. In early 2013 we raised our quarterly dividend, payable in May 2013, 11% from $.36 to $.40 per share. That was our ninth dividend increase in ten years. The dividends paid in 2012 include the accelerated payment of the dividend normally paid in February 2013, which was paid in December 2012.
Aggregate Value of Dividends and Share Repurchases in Millions of Dollars
The table below shows the aggregate annualized total shareholder return to our shareholders for the three and five-year periods ended in each of 2010, 2011 and 2012. Total shareholder return combines the Company’s stock price appreciation and reinvested dividends to showcompares the total return on our shares of common stock over the designated periods to the shareholder expressed as an annualized percentage.
Annualized Total Shareholder Return Over the Prior Three and Five-Year Periods
26
The following graph tracks an assumed investment of $100 at the end of 2007 in the Company’s common stock,returns for the S&P 500 Index and the Russell 1000 Consumer Discretionary Index, assuming full reinvestment of dividends and no payment of brokerage commissions or fees. The data reflects Hasbro’s fiscal year ends. Source data is provided by Zacks Investment Research, Inc. and is used with permission.Index.
 
Our operating margins continue to improveThe following graphs provide the Company’s annual dividend rate and the year-over-year increases in dividend rates since 2005, as we focus on expense management, while investingwell as the growth in the growth of our business globally across our brand blueprint, including in emerging markets.
Operating Margin Percentage
27
Finally, the following table shows our growth inCompany’s underlying diluted earnings per share (“EPS”) over the priorpast five years.
Diluted Earnings Per Share
 
| * | Operating margins | 2014 diluted earnings per share excludes pre-tax charges of $28.3 million associated with restructuring of the Company’s joint venture television network and $5.2 million associated with other restructuring activities, which were more than offset by excluded pre-tax benefits of $36.0 million from the sale of licensed rights for intellectual property and $6.6 million in favorable tax adjustments related to tax exam settlements. 2013 diluted earnings per share excludes aggregate pre-tax charges of $145.4 million from restructuring and related pension costs, product |
| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 21 |
| related expense and the settlement of an adverse arbitration award, partially offset by a $23.6 million favorable tax adjustment, which is also excluded. 2012 and 2011 diluted earnings per share exclude pre-tax restructuring charges of $47.2 million pre-tax, or $.26 per diluted share, in 2012, and $14.4 million, pre-tax, or $.07 per diluted share, in 2011.respectively. Diluted earnings per share exclude favorable tax benefits of $20.5 million, or $.15 per diluted share,and $21.2 million, in both 2011 and 2010.2010, respectively. |
Finally, the following table provides the aggregate amounts we have returned to our shareholders since 2010, in the form of both cash dividends and share repurchases. 
KeyShareholder Engagement and Changes to Our CEO’s Compensation Actions For Fiscal 2012
AtShareholder Outreach
Hasbro has engaged with our May 2012major shareholders on governance and compensation matters for several years. We do this as part of our commitment to be responsive to shareholders and to ensure that our actions are informed by the viewpoints of our investors. Both before and after the 2014 Annual Meeting we pursued these continuing outreach efforts. We were disappointed with the Company’s shareholders were presented with an advisory vote asking them to approve the Company’s 2011 compensation program for its Named Executive Officers. The 2011 compensation program was overwhelmingly approved by shareholders at the 2012 Annual Meeting, with 93.5%results of the shares votedvotes on the proposal voting in favor of approval. The results of this vote showed strong shareholder support for our executive compensation programs. The Committee carefully considersprograms (the say-on-pay vote) at both our 2013 and 2014 Annual Meetings. Following our failed 2014 say-on-pay vote and informed by our discussions with our shareholders in 2014, both our Board of Directors and our Chief Executive Officer mutually decided that they would take the outcomeunusual step of shareholder votesamending certain of the terms contained in Mr. Goldner’s existing employment agreement. Following the amendment of Mr. Goldner’s employment agreement in August of 2014, we again reached out to shareholders to obtain their views on the Company’s executive compensation programs in reviewingamended terms. During 2014, we have reached out to shareholders holding approximately 63% of our total shares outstanding, including all of our top 25 holders as of the 2014 year end, and establishing future programswe had discussions with all of the shareholders who accepted our invitation to talk, comprising holders representing approximately 47% of our total outstanding shares as of the end of 2014. The Chairman of our Nominating, Governance and in determining whether changes should be made to our compensation programs. For 2012Social Responsibility Committee, who also serves on the Compensation Committee of our Board, and who was recently designated Lead Independent Director effective as of the 2015 Annual Meeting, participated in many of these meetings with shareholders. Also participating in these meetings were members of our management team, including our Chief Human Resources Officer, our Senior Vice President, Talent & Rewards, and our Head of Investor Relations.
Responding to Shareholder Input on the Compensation Program Shareholder compensation feedback expressed during our meetings focused on our CEO’s 2012 employment contract, which took effect in 2013. Key shareholder concerns included the: overall magnitude of pay; use of stock price hurdles for the one-time restricted stock unit grant that could be achieved at a single point in time; and the structure of the total shareholder return multiplier on Mr. Goldner’s contingent performance share grants In the 2014 proxy statement, we enhanced the disclosure regarding our rationale for the contract with our CEO following engagement with shareholders in 2013 on this matter. Following the 2014 say-on-pay vote and related discussions with shareholders, the Committee and the Company took key stepsCEO reopened and renegotiated our CEO’s 2012 employment contract to maintainimplement the strong linkage between payfollowing changes in response to shareholder feedback. These amendments represent a potential forfeiture by Mr. Goldner of approximately $11 million in compensation that could be earned over the remaining term of the agreement and performanceare detailed in the Company’sfollowing table. | | | 22 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
| | | | | | Shareholder Feedback | | Changes Hasbro Made In Response | | Description | | | | • Total target compensation for CEO was perceived as above the median of relevant peer group • Similar performance metrics were used in the annual and long-term incentive plans • Wanted to see Return on Invested Capital used as a performance metric. | | • Reduced long-term incentive target for CEO • Added Return on Invested Capital (ROIC) as a performance metric, in addition to Net Revenues and EPS, for performance share awards to CEO and other senior executives beginning in 2015 | | • Decreased annual equity compensation target for CEO from 500% of base salary to 400% of base salary effective for balance of employment agreement (2015, 2016, 2017) • Added ROIC as a performance metric at 33% weighting for performance contingent share awards beginning in 2015 | | Impact: Reduces total target compensation by $3.9 million ($1.3 million per year) so that ongoing annual total target compensation is just below peer median | | | | • The TSR multiplier on performance contingent share awards granted to the CEO in 2013 and 2014 offered too much upside tying into concerns over potential earnings • S&P 500 as a relative peer group could reward for market performance | | • Completely eliminated the TSR performance multiplier from Mr. Goldner’s 2013 and 2014 performance share awards | | • Eliminated 2.0X multiplier that could have increased the number of performance awards granted on the basis of a TSR comparison to the S&P 500 index from both the 2013 and 2014 performance share awards | | | Impact: Reduces potential pay package by $2.4 million (based upon the accounting value at date of grant) | | | | • Concern that stock price may not be maintained once the stock price hurdles are achieved for the one-time RSU grant to Mr. Goldner • Stock price hurdles could be achieved by stock price movement rather than underlying company financial performance | | • Implemented an additional vesting component to the second two tranches (stock price hurdles) of the one-time RSU grant | | • Added a second requirement for full vesting for the RSUs not yet earned as of the date of the contract amendment • Share price for the unearned hurdles at the time of the amendment ($56 and $60), if achieved in the future, must be maintained such that the price is at or above threshold over a 30 day period prior to (1) end of CEO’s contract in December 2017, or (2) termination of employment if that occurs at an earlier date. • If stock price is not maintained over the 30 day period, as little as 50% of the RSUs previously earned in those two tranches will vest, with actual percentage determined in accordance with a fixed schedule attached to the employment agreement. | | | Impact: Potential to give up 146,824 shares, approximately $7.3 million in value, if stock price hurdles are not maintained and stock price falls to $50 per share at the end of the contract period |
The forfeitures described in the table above equal a bit more than $13 million in potential future value that the CEO could have received over the remaining term of the contract. However, the Committee has valued our CEO’s total net reduction in compensation programsfrom the 2014 amendments to this employment agreement at approximately $11 million as the agreement as amended now provides for pro-rata payout of earned performance-contingent stock awards post termination due to the CEO’s age and service at the end of the contract period. We estimate the value of this clarification at a bit more than $2 million assuming the pro-rata portion of the PSAs are earned at target performance. In the event the PSAs are not earned during the performance cycle, there is no payout of any award value to the CEO under those grants. The Committee believes the pro-rata vesting of earned contingent stock awards at the end of the employment | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 23 |
term is appropriate because our CEO will be three months away from early retirement age at the end of his employment agreement in 2017 and our contingent performance share awards granted to other officers and employees have historically provided for such pro-rata vesting for any employee reaching the early retirement age. Mr. Goldner’s employment agreement, and the amendments to that agreement made in 2014, are discussed in more detail beginning on page 37 of this proxy statement. It is also important to note that the dollar amounts reflected under the Stock Awards column in the Summary Compensation Table appearing on page 41 for Mr. Goldner reflect the original grant date values of the contingent stock performance awards and special restricted stock units granted in 2013 and 2014 prior to the modifications described above, which significantly reduce their potential value. Applicable disclosure rules required that we continue to usereflect those awards at the compensation programs to driveoriginal grant date values, even though the Company’s future performance in the best interests of the Company’s shareholders andawards have been subsequently modified in a manner reflectiveto eliminate some of governance best practices. Below is a summary of key actions thetheir potential value. Executive Compensation Program Structure and Alignment with Performance The Compensation Committee took with respecthas implemented a carefully-structured executive compensation program that is tightly linked to long-term shareholder value creation. The program incorporates a combination of short- and long-term forms of executive compensation that are structured to incentivize company performance the Committee believes is critical to driving long-term shareholder value. At the same time, the program incorporates elements that ensure the appropriate attraction and retention of top talent, which is particularly critical to the 2012successful execution of our long-term strategy and business transformation. In support of this linkage to long-term shareholder value creation, a significant portion of the total compensation programs. The impact of these actions on the actual compensation realized byopportunity for our Named Executive Officers is highlightedperformance based and at risk. The following charts summarize the components of our 2014 compensation program for our CEO, with the values for contingent compensation reflected at target: 2014 CEO Pay At-Risk* 
| * | Includes second tranche of Special RSU Award given under amended employment agreement in 2014 |
| | | 24 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
| | | | | | | | 2014 CEO Pay Program Elements | | Annual Cash Compensation | | Long-Term Equity Incentive Plan | | | | | | Base Salary | | • Base cash compensation • Set at industry competitive level, in light of individual experience and performance | | Performance Contingent Stock Awards | | • Represent ~50% of annual target equity award value • Earned based on challenging goals that require strong performance; No shares have been earned in the three most recently completed cycles • Tied to achievement of EPS and net revenue targets over a 3-year performance period. 3 year average ROIC added as a third performance metric beginning for 2015 grants | | | | | | Management Incentive Awards | | • Performance-based; tied to company and individual achievement against stated annual financial and non-financial goals • Align management behavior with shareholder interests • Performance measures evaluated (weighting) • Total Net Revenues (40%) • Operating Margin (40%) • Free Cash Flow (20%) | | Stock Options | | • Represent ~50% of annual target equity award value • 7-year term • Vest over a 3-year period | | | | | | | | | Special Restricted Stock Unit Grant | | • CEO received a special one-time performance restricted stock unit grant, divided into two tranches, one in 2013 and one in 2014. • Not part of the annual equity grant on an ongoing basis. • Grant earned by achieving four progressively higher stock price thresholds and by remaining employed with the Company through December 31, 2017. • As amended, last two tranches of the award also subject to the stock price remaining at our above the stated share price hurdles at the end of the vesting period or employment, or the overall award is reduced pursuant to a sliding scale. |
Our CEO’s long-term equity compensation is 100% performance-based. While the value of the CEO’s annual equity compensation is divided approximately evenly between performance contingent stock awards and stock options, for the other Named Executive Officers they receive 25% of their long-term incentive target award in time-based restricted stock, 50% in contingent stock performance awards and 25% in stock options. The CEO’s compensation does not use time-based restricted stock units to further the linkage between earned pay and performance for the CEO. Variable Compensation Outcomes Annual and long-term incentives are based on clear, measurable and objective performance goals that consider the overall financial performance of the Company as well as achievement against strategic goals. | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 25 |
Performance goals for annual management incentive awards were established by the Committee early in the charts that begin on page 34 of this report. Establishment of Challenging 2012 Cash Incentive Plan Objectives. Early in 2012 the Compensation Committee set challenging net revenue, operating margin and free cash flow performance metrics for thefiscal year under the Company’s annual cash incentive plans. Those metrics were based on the 20122014 operating plan and budget approved by the Company’s Board of Directors atDirectors. The Committee gives careful consideration to selecting metrics that will be used to drive short-term business performance, and setting performance objectives that are both challenging but achievable. For 2014, the beginningCommittee selected three performance metrics to capture the most important aspects of 2012,the top and bottom line performance of the Company, in the form of revenues, profitability (operating margin), and cash generation (free cash flow). There is no payout for a given metric if the Company achieves less than 80% of the target performance against that metric. In 2014, we achieved an aggregate weighted performance payout of 99% of target. The table below compares our actual 2014 performance against the performance targets under the management incentive awards.
| | | | | | | | | | | | | | | | | | | | | | | | Goal | | | Actual* | | | Percentage Achievement | | | 2014 Payout
Percentage | | | 2014
Weighted
Payout | | Revenue | | $ | 4,250,482 | | | $ | 4,268,960 | | | | 100% | | | | 100% | | | | 40% | | Operating Margin | | | 14.79% | | | | 14.88% | | | | 101% | | | | 103% | | | | 41% | | Free Cash Flow | | $ | 487,873 | | | $ | 464,169 | | | | 95% | | | | 90% | | | | 18% | | | | | | | | | | Total weighted payout | | | | 99% | |
All numbers are discussed in detail beginningthousands. *Adjusted for certain activities. See discussion on page 43 of this proxy statement. Following31. The final award amount for Mr. Goldner under the completion of 2012, the Committee reviewed the Company’s 2012 financial results and performance against itsannual management incentive plan objectives. Althoughwas based primarily on the Company’s achievementfinancial performance against the targets set forth above (99% of its 2012Mr. Goldner’s annual target cash incentive plan objectives would have allowed for a higher funding level, the Committee determined that the Company’s overachievement of its operating margin and free cash flow objectives should not offset the 2012 revenue shortfall to the extent that was allowableamount under the plan weightingwas $1.9 million) and included a 20% strategic modifier for Mr. Goldner’s performance against his individual objectives (adding $400,000 to the financial formula award to arrive at the final award amount). This modifier was based on recognition of the threeMr. Goldner’s leadership and achievement of goals related to Company performance, metrics. The Committee’s view was that driving revenue was a key
strategy and investments, during 2014 including: | • | | Revenue and Profit Growth |
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element of the 2012 performance planHasbro grew revenues 5% in 2014 and that the Company’s highly effective management of costs and cash flow should not mute the impact of the Company missing its net revenue goal for the year. Asgrew operating profit at a result, the Committee exercised negative discretion to lower the payout under the Company’s cash management incentive plans from the level that otherwise would have been payable for 2012,faster rate, resulting in a plan payouthigher operating profit margin versus 2013.
Hasbro’s Franchise Brand revenues grew 31% versus 2013. This was a result of 90% of target, even thoughsignificant innovation across our Brands by creating play experiences that align with evolving consumer play behavior. We delivered revenue growth across all geographic regions, including 8% revenue growth in the international segment. This was fueled by 20% growth in the Emerging Markets, with the highest growth in the Latin America (14%) and Asia Pacific (10%) regions. | • | | Strategic Relationships and Investments |
We grew our long-term relationship with The Walt Disney Company achieved 117% of its financial performance targets. Establishment of Challenging Three-Year Performance Share Objectivesby securing a new strategic merchandising agreement for the 2012 Grants. As partDISNEY PRINCESS and FROZEN properties beginning in 2016.
We successfully expanded our content strategy through an updated partnership with Discovery Communications, allowing us to program the new Discovery Family Channel Network while also airing some of its annual equity compensation programsour programming on other channels. We introduced our new film label, Allspark Pictures, to enable us to gain greater control of the film process and increase our opportunity to reach a broader audience through storytelling for select brands. We invested in technological capabilities to support the global growth of our business and to enhance our products and product development capabilities. | • | | Corporate Social Responsibility |
The Company received a number of prestigious awards: World’s Most Ethical Companies; 100 Best Corporate Citizens; as well as several other recognitions in the environmental and sustainability space. Each year the Committee grantedapproves annual long-term incentive awards tied to achievement of specified objectives for that year. Target values are based on a percentage of each executive’s base salary. For our CEO, these awards include performance contingent stock awards and stock options (other NEOs also receive time-based restricted stock). The metrics for the performance contingent stock awards, in February 2012 with challenging three-year net revenue andstated cumulative diluted earnings per share targets which must be met for executives to earn shares underand cumulative net revenues over a three-year period, are taken from the awards. The three-year performance targets for our contingent stock performance awards are based on the three-yearCompany’s long-term strategic plan and budget and operating plan that have been approved by our Board. The Committee also granted stock options in February 2012 under which the executives will only realize value if the Company’s share price appreciates from the fair market valueBoard. Beginning with 2015 grants, three-year average Return on the date of grant. No Payment of Any Shares Under the Performance Share Awards Granted in 2010. The three-yearInvested Capital (ROIC) has been added as a third performance periodmetric for the contingent stock performance awards granted in February 2010 was completedto the CEO and other senior officers based on feedback received from our shareholders.
Under the 2014 performance contingent stock award program, cumulative EPS over the three-year performance period serves as the primary base trigger for earning any award under the plan. If the cumulative EPS achieved over the performance period is at 90% of target or higher, the endcumulative revenue metric is also applied to determine the final payout under the awards. If cumulative EPS does not achieve a minimum of December 2012. The Committee had set challenging three-year cumulative net revenue and earnings per share targets under those awards that required the Company to achieve at least 90% of the net revenue and earnings per share targets to earn any payouttarget, no award is payable under the awards. The Company did not meet this threshold performance and as a result, recipientsawards regardless of the 2010Company’s net revenues. The | | | 26 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
performance contingent stock performance awards did not receive any shares under these awards. In the pages that follow we discuss the differences between annual compensation, as it is reported pursuant to the rules of the Securities and Exchange Commission, and compensation that is actually realized by an executive. There can be a dramatic difference between those values, driven by the connection between realized compensation and performance and stock price. These differences are primarily driven by the fact that the SEC disclosure rules require disclosure of the grant date accounting fair values for equity awards. However, these values may or may not be realized by the grant recipients dependent on achievement of the performance goals for the performance shares and appreciation in the stock price with respect to stock options and performance shares.
For example, in the Summary Compensation Table for 2010, Mr. Goldner is shown as having received stock awards with trailing three-year performance periods ending in each of December 2012, 2013 and 2014 all failed to achieve even a grant date value of $9,688,837. That was the accounting value assigned to the contingent stock performance awards granted to Mr. Goldner in 2010, including the supplemental retentionthreshold payout and performance awards associated with an amendment to his employment agreement in 2010. At the end of 2012 the performance period related to these awards ended, and Mr. Goldner received no shares at allwere earned by any officers or employees under any of those awards. The following table compares the contingent stockactual results achieved against the targeted goals for each three-year performance awards granted to him in 2010, as the Company did not achieve the threshold levels of performance required to earn sharesperiod under the awards. Although there is a period of a few years from the grant date of athree most recently completed contingent stock performance award until it can be determined what an executive actually may realize under such an award,periods.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Period | | Cumulative
revenues* | | | Percentage
Achieved | | | Cumulative EPS | | | Percentage
Achieved | | | Payout | | | | Target | | | Results | | | | Target | | | Results | | | | 2010 – 2012 | | | $14,342 | | | | $12,153 | | | | 85% | | | | $ 9.52 | | | | $8.26 | | | | 87% | | | | 0% | | 2011 – 2013 | | | $14,478 | | | | $12,242 | | | | 85% | | | | $10.77 | | | | $8.08 | | | | 75% | | | | 0% | | 2012 – 2014 | | | $14,022 | | | | $12,733 | | | | 91% | | | | $10.01 | | | | $8.88 | | | | 89% | | | | 0% | |
| * | Numbers are in millions. |
Strong Compensation Governance Practices | | | | Compensation Governance Highlights | | | ü Robust shareholder engagement process ü Program informed by and responsive to shareholder input ü Significant portion of compensation is variable and performance based ü Significant share ownership and retention requirements ü 5x base salary for CEO ü 2x base salary for other NEOs ü NEOs must hold 50% of net shares received upon option exercises or award vesting until they achieve the required ownership levels | | ü Robust anti-hedging and pledging policies prohibiting pledging or hedging of Company stock ü Double-trigger change in control provisions for equity grants ü Fully independent Compensation Committee ü Independent Compensation Consultant ü No tax gross-ups ü No excessive perquisites ü No repricing of equity incentive awards ü Strong clawback policy |
Summary of Our Peer Group Composition In 2013, the Committee approved changes to the peer group used for our compensation planning and structuring for our CEO to more closely align with the Company’s transformation into a global play organization with a robust portfolio of brands. The 2014 compensation program for the CEO reflects alignment with this revised peer group. The revised peer group reflects a diverse set of consumer products and entertainment businesses with comparable revenues and market capitalization. It includes companies of similar size and complexity, those against whom we compete and recruit for talent, and many of which face economic challenges and opportunities similar to those we experience. Recognizing that the Company has few direct competitors, the Committee selected a peer group for use in providing a market check on CEO compensation that is a mix of direct competitors and companies in related business lines with each having one or more of the following characteristics: | • | | House of Brands: Companies that have a portfolio of recognizable brand names |
| • | | Entertainment/Leisure: Companies focused on products used for entertainment or leisure |
| • | | Global Business: Companies that have at least 10% non-US revenue |
| • | | Trend Oriented: Companies operating in trend oriented business |
| • | | Mom Advertising Demographic: Advertising that appeals to mothers |
| • | | Kid Focus: Products designed for children and their families |
Our goal is to position total target compensation for our CEO within a competitive range of the peer group median. For more information on the peer group used as a market check for the CEO, as well as a discussion of the market checks performed for our other NEOs, please see the discussion beginning on page 36 of this Proxy Statement. Executive Compensation Philosophy and Objectives The Committee’s fundamental objectives in our executive compensation program are to: Attract, develop and retain talented executives who can contribute significantly to the achievement of Company goals and deliver results in keeping with our objective of Creating the World’s Best Play Experiences | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 27 |
Align the interests of the Company’s executives with the medium and long-term goals of the Company and its shareholders Instill a pay-for-performance culture; a substantial majority of the compensation opportunity for the CEO and other NEOs is composed of variable, performance-based compensation elements Reward superior performance in achievingby the Company and its pre-established financial metrics duringbusiness units as a whole, as well as superior individual performance Accomplish these objectives effectively while managing the associated performance period,total cost of the Company’s executive compensation program, including by managing reasonable levels of equity dilution and annual share usage when granting equity-based compensation In considering talent development the Committee believes it is critical to note that because of the strong performance metrics set by thehave a robust succession planning and management development process and seasoned talent ready to deploy into key executive positions. The Committee which required a significant degree of stretch performance to achieve, the ultimate value Mr. Goldner realized under these awards was $0, notwithstanding the grant date value assigned to them of almost $10 million. That is the same for every executive and other employee of the Company who was granted contingent stock performance awards in 2010. No shares were earned under any of those awards as the Company fell short of its strategic plan targets for the three-year performance period running from 2010 through the end of 2012. This alignment of pay for performance is shown by the significant reduction in the pay realized by our executives. Adoption of a Clawback Policy. In 2012 the Committee andstructures the Company’s Board adoptedcompensation program in a Clawback Policy. All equity and non-equity incentive plan compensation granted byway it believes appropriately aligns pay with performance without encouraging excessive risk taking or other behavior on the Company in 2013 and thereafter will be 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 allpart of the Company’s executive officers regardless of whether they were at fault orthat is not in the circumstances leading to the restatement, will be
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subject to forfeiting 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.Company’s best interests.
AdoptionExecutive Compensation Program Elements
The NEOs receive a mix of a Policy Prohibitingfixed and variable compensation. The following charts summarize the Pledging or Hedgingvarious forms of Company Stock. In 2012 the Board also adopted a policy prohibiting any pledges or hedges of Company stock by officers or other employees on a prospective basis. This policy is effective from the date of its adoption in October 2012. The Board believes this policy furthers the interest of shareholders by ensuringcompensation and demonstrate that officers and employees have the same economic incentives as shareholders and that equity held by officers and employees will not be sold in situations beyond the controlnearly 90% of the officer or employee. Proposal of Amendments toCEO’s compensation opportunity, as well as the Company’s Equity Incentive Plan. In this proxy statement the Company is also proposing to shareholders the approval of an amendment to the Company’s Restated 2003 Stock Incentive Performance Plan. This amendment is discussed in detail beginning on page 87substantial majority of the proxy statement. The amendmentcompensation opportunity for the other NEOs, is neededvariable and tied to extend the termCompany performance.
Elements of the plan and to add shares to allow for equity grants to officers and employees beyond 2013, as the current plan expires on December 31st, 2013. The amendment also implements a number of shareholder favorable provisions. Among them:Compensation Summarized the amendment clarifies that optionsVariable and other awardsmay not be repriced, nor may underwater options otherwise be replaced with substitute awards or cash without the approval of the Company’s shareholders; andPerformance-Based Compensation Elements
if approved by shareholders, the amendment will on a prospective basis for all future awards to be made under the equity plan, change the current single trigger for equity awards upon a change in control to adouble trigger. In other words, for any equity awards granted by the Company following approval of the amendment, if the amendment is approved by shareholders, the awards will no longer accelerate automatically upon a change in control of the Company. Rather, an award will only accelerate if the recipient’s employment is terminated following such a change in control. If the amendment is approved at the 2013 Annual Meeting this double trigger will also be applied to the annual equity grants which the Company has already made in 2013. If it is not approved, the grants already made in 2013 will be subject to a single trigger.
Amendment and Restatement of Mr. Goldner’s Employment Agreement. Finally, in October 2012 the Company entered into an amended and restated employment agreement with Mr. Goldner. The amended and restated employment agreement is discussed in detail beginning on page 51 of this proxy statement. The agreement extends the term of Mr. Goldner’s employment through the end of 2017 and provides additional retention value, in the form of highly performance-based equity awards planned to be made in 2013 and 2014, to facilitate retaining him through the end of this extended term. These equity awards include restricted stock units, which vest based upon achievement of both designated share price thresholds by the Company and Mr. Goldner remaining employed with the Company through the end of the employment term, and contingent stock performance awards with a relative total shareholder return modifier, which adjusts the payouts under the awards to reflect the Company’s total shareholder return as compared to the total shareholder return for the S&P 500 Index. The amended agreement also:
eliminated the tax gross-up provisions in Mr. Goldner’s prior agreement;Incentive Compensation
eliminated the auto-renewal feature in the prior agreement;Cash Bonus
eliminated the special bonus payable one year following a change in control if Mr. Goldner remained employed with the Company; andLong-Term Incentive Compensation
subjects all of the incentive compensation to be granted to Mr. Goldner in 2013, 2014Performance Contingent Stock Awards
Special CEO Performance-Based Restricted Stock Grant Fixed Compensation and thereafter, including the performance-based retention grants set forth in the employment agreement, to the Company’s recently adopted clawback policy.Benefits Prior to this amendment, Mr. Goldner’s employment term was scheduled to expire at the end of 2014. With only two years remaining in that term the Committee believed it was vital to ensure Mr. Goldner’s continued service to the Company.
30Reasonable and Limited Benefits and Perquisites
Shareholder Outreach. Beginning in December of 2012 the Company reached out to its 25 largest shareholdersVariable and offered to discuss our compensation programs with them individually and give them an opportunity to ask questions and offer their viewpoint on our compensation plans. Many of our shareholders accepted this invitation and the discussions we had with them were extremely informative and valuable, and we are very appreciative of the time they took to speak with us. We are taking their feedback into consideration in our decisions going forward. One outcome of these discussions was that shareholders confirmed their general desire to have a double trigger for acceleration of equity awards following a change in control. This is consistent with the equity plan amendment we are proposing to shareholders at the 2013 Annual Meeting, which eliminates our existing equity plan single trigger, and establishes a double trigger for all future equity grants.
Alignment Between Pay and Performance in thePerformance-Based Compensation PlansElements
The vastsubstantial majority of the total compensation opportunity for our executive officers, including all of the Named Executive Officers,NEOs is performance based, including our entire long-term equity incentive compensation program and annual cash incentive program. This performance based compensation can only be earned based upon achievement ofPerformance targets are derived from the Company’s long-term strategic plan and budget and operating plan that have been approved by the Board. The Committee and the individual’sBoard set performance targets that they believe will challenge the Company and objectives. We align pay withits executive team to achieve a threshold payout, and superior performance by using the following performance based elements asto achieve a substantial majority of the total compensation package for our Named Executive Officers:higher than target payout. | | | 28 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
variable performance-based cash
When structuring incentive plan awards which are earned based on (i) achievement of annualcompensation, the Committee identifies the performance metrics it considers most important for driving Company value and return to shareholders, such as net revenue,revenues, operating margin andmargins, free cash flow, targets forreturn on invested capital and stock price. The Committee then ties the Company and (ii) achievement of individualincentive compensation to performance objectives; and equity incentive plan compensation generally divided between:
contingent stock performance awards, under which a Named Executive Officer only earns shares if the Company achieves cumulative net revenue and earnings per share targets over a three-year performance period, and
stock options, vesting over three years and granted with an exercise price equal to the fair market value on the date of grant, suchagainst those metrics. The Committee has determined that an executive only realizes value if the Company’s stock price appreciates.
The tables on page 42 of this discussion show the exact amount of the total compensation package for each of our Named Executive Officers in 2012 which was variable and tied to our performance in achieving our financial objectives and/or to the total return experienced by you, our shareholders. That breakdown is captured graphically in the following chart.
Breakdownforms of 2012 Reported Compensation Opportunity
Among Variable Performance-Based Componentscompensation and Non-Variable Componentsperformance metrics are appropriate for aligning executive compensation with performance.
| | | | | | | | | Component of Incentive Compensation | | Setting Target
Amounts | | Variability Factor /
Performance Metrics | | Objectives | | Annual Incentives | | • Annual cash bonus | | Based on Board approved budget and operating plan | | Total Net Revenues (40%) | | Measures Company’s annual top line growth | | | | Operating Margins (40%) | | Measures Company’s ability to maximize profitability and drive shareholder value | | | | Free Cash Flow (20%) | | Measures Company’s ability to convert revenues into cash | | | | | | | Long-Term Incentives | | • Performance Contingent Stock • Restricted Stock • Stock Options • Special CEO Performance-Based Restricted Stock Grant (One-time) | | Based on Board approved budget and operating plan | | Cumulative Net Revenues | | Measures Company’s ability to maintain top line growth over multi-year period | | | | Cumulative Diluted Earnings Per Share | | Measures Company’s profitability over the long-term | | | | Return on Invested Capital* | | Measures capital efficiency | | | | Stock Price | | Measures how publicly-traded Company stock performs |
| * | Added effective for grants in 2015 |
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Given the predominance of variable, performance-based elements in the total executive compensation program for 2012, ifIf we do not meet our financial objectives, and if we do not deliver share price appreciation to you, our shareholders, our executives’ realized compensation is reduced dramatically. This reduction is manifested through both reductions in the payouts under our cash management incentive plans and in a reduction in the realized compensation from awards under our equity compensation plans.
In 2012 weAnnual Incentive Compensation
All of the Company’s employees participate in some form of annual incentive program. Approximately 34% of the Company’s employees, including all of the NEOs, received management incentive awards with respect to fiscal 2014. The management incentive award is performance based, with payout of awards tied to the Company’s achievement of specific yearly performance measures, as well as individual performance for the year to the extent discussed below. Structure of the Annual Incentive Plans. Management incentive awards for the Company’s executive officers for fiscal 2014 were determined under two programs, the 2014 Senior Management Annual Performance Plan (the “Annual Performance Plan”) and the 2014 Performance Rewards Program (the “PRP”). The Annual Performance Plan has been approved by the Company’s shareholders and is intended to allow for the deduction by the Company of the bonuses paid to “covered employees” as defined in Code Section 162(m). The PRP is not a shareholder approved plan. Despite certain differences in the two plans, both the Annual Performance Plan and the PRP use the same corporate performance criteria and targets. Under the Annual Performance Plan, awards are structured to provide a range of maximum permissible payouts corresponding to a range of Company performances against the performance targets, with the Committee reserving negative discretion to reduce any such award to any level below the achieved a weightedmaximum payout as it deems appropriate. The actual achievement against targeted corporate financial performance and attainment of key non-financial goals are the primary factors used by the Committee in exercising this negative discretion under the Annual Performance Plan. The target and maximum awards for each of the NEOs for 2014, as well as the threshold, target and maximum awards for NEOs participating in the PRP Plan, are included in the Grants of Plan-Based Awards table that follows this discussion on page 43. | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 29 |
Selecting Annual Incentive Performance Metrics. The Committee selects performance metrics that will be used to drive short-term (annual) business performance and establishes rigorous yet achievable performance targets for each of those metrics. The Committee established the fiscal 2014 corporate and business unit performance goals in the first quarter of fiscal 2014 based on the Company’s 2014 operating plan and budget approved by the Board. The Committee selected three performance metrics: (i) total net revenues (weighted at 40%), (ii) operating margin (weighted at 40%) and (iii) free cash flow (weighted at 20%). The Committee believes these performance metrics capture the most important aspects of the top and bottom line performance of 117%the Company, in the form of revenues, profitability and 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’s performance and the strength of the Company’s business. If the Company achieves less than a threshold performance of 80% of target against any given metric, the payout for that metric is 0%. Calculating the Annual Incentive Payout. The following process was used in determining the annual incentive payout for our CEO and other NEOs under the Annual Performance Plan in 2014: 
Annual Incentive Plan Targets for 2014. The target annual incentive award for our CEO in 2014 was 150% of earned base salary. For our other NEOs, the target annual incentive award was 70% of earned base salary in 2014. The table set forth below provides the 2014 corporate total net revenue,revenues, operating margin and free cash flow performance targets established by the Committee at the beginning of the year under our cashthe annual management incentive plans. Forplan, as well as the Company’s actual performance against those targets in 2014. The Company’s actual weighted performance in fiscal 2014 corresponded to a 99% weighted payout against target. | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Measure | | Weight | | | 2014 Target* | | | 2014 Actual
Performance* | | | Percentage
Achievement | | | 2014 Payout
Percentage | | | 2014 Weighted
Payout | | Revenue | | | 40% | | | | $4,250,482 | | | | $4,268,960 | | | | 100% | | | | 100% | | | | 40% | | Operating Margin | | | 40% | | | | 14.79% | | | | 14.88% | | | | 101% | | | | 103% | | | | 41% | | Free Cash Flow | | | 20% | | | | $ 487,873 | | | | $ 464,169 | | | | 95% | | | | 90% | | | | 18% | | | | | | | | | | | | | | Total weighted payout | | | | 99% | |
| * | Dollar figures are in thousands; based on the Company’s actual performance the maximum payout allowed under the Annual Performance Plan for 2014 for Mr. Goldner, Mr. Billing, Mr. Frascotti, and Mr. Tinga was 283% of earned salary. In the case of Mr. Goldner this equated to approximately $3.7 million. The actual bonus paid to Mr. Goldner was $2.3 million. |
Adjusting for Individual Performance. The Company’s financial performance on which all employees bonuses are calculated serves as the starting point for the annual incentive award amount. The Committee then determines how Mr. Goldner and the other NEOs performed relative to their individual objectives to determine, what, if any, adjustments should be made to the corporate performance factor (99% of target in 2014) to arrive at the final payout amount, which can be adjusted down to 0% or up to 150% of the formula payout. The total 2014 payout for the CEO was $2.3 million, which equated to 99% of his target award, directly tied to the 99% weighted corporate payout described above, with the addition of a positive adjustment of $400,000 based on recognition of Mr. Goldner’s leadership and achievement of goals related to Company performance, strategy and investments, as described starting on page 26. With respect to NEOs other than the CEO, the Committee considered the recommendations of the CEO as one of the factors in making the final management incentive bonus determinations. The CEO and Committee used the Company’s achievement of 99% of its targets under the management incentive award as a starting point and then adjusted this baseline award for each of the NEOs in accordance with performance against their personal objectives for 2014. A positive adjustment for the NEOs were based on factors including: Executive Vice President, Chief Global Operations and Business Development Officer (Mr. Billing): The corporate formula award would have yielded a payout of $362,096. The actual bonus paid to Mr. Billing was $500,000 based upon him delivering innovation in product development across all of the Company’s product categories (Mr. Billing managed the global product development function in 2013 and for much of 2014); successfully managing the Company’s supply chain in an efficient manner and efficiently managing around West Coast port disruptions in 2014, and driving key new business initiatives across the Company’s business. President, Hasbro Brands (Mr. Frascotti): The corporate formula award would have yielded a payout of $386,348. The actual bonus paid to Mr. Frascotti was $550,000 based upon him driving revenue and profit growth across the Company; driving growth in the Entertainment and Licensing segment; delivering innovation in product development across all of the Company’s product categories; delivering continued growth in the Girls business on top of 2013’s record performance of over $1 billion in revenues; and strong content creation and storytelling behind the Company’s brands. | | | 30 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
Executive Vice President and Chief Commercial Officer (Mr. Tinga): The corporate formula award would have been $408,696. The actual bonus paid to Mr. Tinga was $500,000 based upon him driving revenue and profit growth across the Company; returning growth to the United States business; and driving growth across all geographic regions, including 20% revenue growth in the Emerging Markets. Executive Vice President and Chief Financial Officer (Ms. Thomas): Due to the fact that the requirements of Code Section 162(m) do not, by their terms, apply to the compensation of Chief Financial Officers, Ms. Thomas participates in the PRP, rather than in the Annual Performance Plan. Under the PRP, Ms. Thomas’ fiscal 2014 management incentive award opportunity was set to provide for a payout of 70% of earned salary for target performance. A range of payouts as a percentage of target then corresponded to a range of performances against target both above and below 100%. Threshold performance for each given financial metric under the PRP is set at 80% of target performance for purposes of the cash awards paidachievement of that goal contributing to executives and employees,payout of the Compensation Committee exercised negative discretionmanagement incentive award. An 80% achievement of a performance goal under the PRP equates to reducea 60% payout against that goal. In addition to taking into account Company performance, the PRP also allows for a multiplier of up to 150% of the formula award in recognition of superior performance against individual performance objectives. The 99% weighted payout against the corporate performance goals in 2014 would have corresponded with approximately 99% of the target payout for Ms. Thomas under the management incentive award for 2014, absent personal performance adjustments. The corporate formula award under the PRP, prior to personal performance adjustments, for Ms. Thomas, would have been $384,271. In determining the actual corporate payout percentagebonus for 2012 to 90%, based uponMs. Thomas, as with the Committee’s view thatother executive officers, the shortfallCommittee also considered the recommendations of Mr. Goldner. Ms. Thomas was paid a bonus of $525,000 for fiscal 2014 in meeting the revenue target should impact the incentive payouts to a greater degree for allrecognition of her: (i) successful management of the plan participants, withCompany’s expenses and cash flow, and progress toward achieving the exceptionCompany’s targeted cost savings of $100 million in its underlying business by the end of 2015, (ii) role in the Company’s fourteenth consecutive year of delivering underlying earnings per share growth, absent certain charges and benefits described on pages 21 and 22, (iii) contributions to the ongoing return of $678 million to shareholders, through both the quarterly cash dividend and share repurchase programs, and (iv) successful management of the limited numberCompany’s enterprise risk management (ERM) efforts and global information technology enhancements. Performance Metric Adjustments and Exclusions to Accurately Measure Management’s Performance. At the time the performance goals were set at the beginning of executives who were responsible2014, the Committee provided that certain events that might occur during the performance period would not be taken into account in determining the Company’s performance against these targets. The Committee adjusts for takingsuch one-time events as it deems appropriate. Such exclusions included events such as the actions that allowedimpact of any acquisitions or dispositions consummated by the Company during the year that had a total acquisition or sale price, as applicable, of $100 million or more, as well as the impact of any major discrete restructuring activities undertaken by the Company after the performance goals are set which result in aggregate costs or charges to deliver onthe Company of $10 million or more. In calculating the 99% weighted payout following the completion of the 2014 fiscal year, the Committee also excluded the impact of both the Company’s settlement of an adverse arbitration award with an inventor ($58 million), and as well as the settlement payment ($65 million) made to the Mexican tax authorities to resolve claims and potential claims for the years 2001 through 2013. These two items were excluded only in computing the Company’s achievement against its operating margin and free cash flow objectives, notwithstandingmetric, and did not impact the shortfallcalculation of the Company’s revenues and operating margin performance. Management was able to settle the outstanding Mexican tax liability for $65 million as opposed to the potential liability of over $400 million being claimed by the tax authorities. The Committee believed that neither of these matters should negatively impact the corporate formula award for participants in meeting its net revenue objective. The 117% weightedthe bonus plans. Neither of these items were excluded for purposes of determining the maximum bonus that was payable to the CEO and other NEO’s participating in the Annual Performance Plan, and thus the maximum bonus payable under that plan was reduced by the impact of these two items. | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 31 |
Long-Term Incentive Compensation Long-term incentive compensation is provided in the form of performance contingent stock awards, time-based restricted stock units, and non-qualified stock options, as shown below. In addition, in 2013 and 2014 Mr. Goldner received one-time special restricted stock unit awards which may be earned based on achievement of our performance targets in 2012 comparedspecified stock price hurdles, as well as continuing to a weighted achievementserve as Chief Executive Officer through the end of our corporate performance targets of 68% for 2011 and 92% for 2010.December 31, 2017. Under our equity compensation plans approximately half of
| * | Mr. Goldner’s 2013 and 2014 long-term incentive compensation included a one-time performance-based restricted stock unit grant that is not reflected in the graph above. The award is described in detail on page 38 of this proxy statement. |
For 2014, the Committee approved target annual equity award opportunityvalues for each of the Company’s executive officers is grantedand other equity eligible employees. Targets are expressed as a percentage of each individual’s base salary which for our NEOs in 2014 were as follows: | | | | Equity Grant Target Value as Percentage of Salary | CEO | | 500% (400% for 2015 and future years) | NEOs (other than CEO) | | 175% |
This division of award types and targeted award value reflect the formCommittee’s belief that over the performance period the realization of equity award values should be balanced among achievement of the Company’s longer-term internal financial targets and the Company’s stock price appreciation – as well as, for NEOs, the retention of key executive talent. Performance Contingent Stock Performance contingent stock performance awards. These contingent stock performance awards provide the recipient with the abilitypotential to earn shares of ourthe Company’s common stock based uponon the Company’s achievement of designatedstated cumulative diluted earnings per share (“EPS”) and cumulative net revenue (“Revenue”) targets over the specified three-year performance periods tied to each award. The performance shares which were earned by executives in February 2012 had been granted in February 2009 and had a three-year performance period that endedbeginning January 2014 and ending December 2016 (the “Performance Period”). For stock performance awards granted in December 2011. Because2014, the EPS metric is weighted at 60% and the Revenue metric is weighted at 40%. Unless the Company achieved such strong financial results in fiscal 2009achieves at least 90% performance against the EPS metric, no shares are earned under the award, regardless of the revenue performance. Beginning with 2015 grants, three-year average ROIC will be added as a third metric with a weighting of 33% based on feedback received from our shareholders, with the remaining weighting being assigned to EPS at 34% and 2010,Revenues at 33%. The Company considers the totalspecific 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 multi-year period. As discussed above, the three-year performance period ended December 2011 equatedtargets set forth in the contingent stock performance awards align with the Company’s Board approved budget and operating plan and strategic plan, and were set at levels the Committee determined will challenge the executive team in working to meet the objectives and drive performance. Solid performance from the Company, and in turn its executives, will be required to achieve a 105%threshold payout, againstand superior performance in managing the Company’s business will be required to achieve a higher than target for the February 2009 performance shares.payout. However, forThe maximum payout under the contingent stock performance awards granted in February 2010, which had2014 for overachievement of the financial objectives is equal to 200% of the target number of shares. Threshold performance for both metrics (at 90% of the target level) is required to earn a three-year performance periodthreshold payout of 40% of the target number of shares under those awards. Assuming the threshold target is met for each cumulative
| | | 32 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
metric, the actual payout scales between 40% (threshold) to maximum (200%) with achievement of the target metric equating to a 100% payout for that ended in December 2012,metric. EPS serves as the primary trigger for any award under the plan. If the EPS target is achieved at a level of 90% of target or higher, the cumulative revenue metric is also applied to determine final payout. If the Company’s performance didagainst the EPS target does not achieve even a threshold payout. As such, noneminimum of 90% of target, no award is payable under the plan regardless of revenue achievement. The following table compares the targeted goals and actual performance of the recipients of the 2010 contingent stock performance awards earned any sharesCompany under such awards. This is reflected in a significant reduction in the compensation realized by the executives for 2012. For the contingent stock performance awards granted in early 2011,for the below target Company2012 – 2014 performance in fiscal 2011, and below targetperiod. Because the Company’s performance against the net revenue metric inEPS target under the 2012 meanscontingent stock performance awards was below the recipients of those awards will not receive90% threshold necessary to earn any shares under thosethe awards, unlessno shares were earned for this performance period. This is the third consecutive year that no shares have been earned under the annual contingent stock performance awards.
| | | | | | | | | | | | | | | | | | | | 3-Year Target
Performance | | | 3-Year Actual
Performance | | | % of Target | | | Payout | | Cumulative Revenues | | $ | 14,022 | | | $ | 12,733 | | | | 91% | | | | 0% | | Cumulative EPS | | $ | 10.01 | | | $ | 8.88 | | | | 89% | | | | 0% | |
If an officer retires at an early retirement date (at least 55 years old with ten years of credited service with the Company) or a normal retirement date (at least 65 years old with at least five years of credited service with the Company) the contingent stock performance award remains outstanding for its remaining term and at the end of the performance period the retired executive earns a pro-rata portion (based on the amount of the performance period served) of the actual shares earned under the award. Restricted Stock Units CEO Special Restricted Stock Unit Award. As more fully described on page 38 of this proxy statement, the Board made a special performance-based restricted stock unit award to Mr. Goldner to further drive the linkage between the Company’s performance in 2013 can compensate enoughand Mr. Goldner’s compensation, and to provide an additional incentive for Mr. Goldner to remain employed with the below target performances in 2011 and 2012 to achieve at least a threshold payout performance under the awards. Company through December 31, 2017. The remainder of our target annual equity incentive compensation grants to executive officers areSpecial RSU Grant was made in two tranches, the formfirst in April of 2013 and the second in February 2014. Both tranches of the Special RSU Grant were granted at the same time that the Company made its yearly equity awards to other equity-eligible employees. Other NEO Restricted Stock Unit Awards. The Company uses restricted stock options, which areunits as a reward and retention mechanism. The restricted stock units granted with exercise prices equalin 2014 to our NEOs (excluding our CEO) represented approximately 25% of their annual targeted equity award value in 2014 and cliff vest on the fair market valuethird anniversary of our stock on the date of grant provided the recipient remains employed with the Company during the three-year vesting period. Pro-rata vesting is provided earlier only in the event of the death, disability, early retirement (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 termination of the awards. Stock Options Stock options represent approximately 25% of the targeted annual equity award value for our NEOs, and 50% for our CEO. The options vest in three equal cumulative annual installments over three years, and have seven-year terms. The realization of value from such options depends entirely on increases in our stock price following the date of grant of such options. Notwithstanding the theoretical grant date values for these awards which are reported in the Summary Compensation Table, the Named Executive Officers will not realize any actual value from these awards unless the price of our stock appreciates following the date of grant. Certain executive officers and employees are selected for restricted stock unit retention awards from time to time based on their roles and performance. When made these restricted stock unit grants are in addition to the target annual equity awards discussed above. The restricted stock units generally cliff vest on the fifth anniversaryfirst three anniversaries of the date of grant, subject to the recipient’soptionee’s continued employment with the Company through that date. They are designed to provide significant retention value by requiringsuch 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 servicecredited service.
The Company does not manage the timing of equity grants to attempt to give participants the benefit of material non-public information. The effective date of equity grants are made 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 Company in order to realize any value underaverage of the awards. The valuehigh and low sales prices of any such awards actually realized by the recipients will be based on their employment through the vesting date and the value of ourCompany’s common stock on the vesting date. No restricted stock units were granteddate of grant. Fixed Compensation and Benefits Base Salary The Company’s philosophy is to anyonly increase executive base salaries in the event of: (i) increases in responsibility, or (ii) perceived lack of competitiveness with market compensation offered to executives with similar responsibilities, expertise and experience in other companies the Company considers to be comparable to and/or competitive with the Company. In 2014, in connection with his promotion to President, Hasbro Brands, and assumption of responsibility for the Company’s entire global product development function, Mr. Frascotti’s base salary was increased from $515,000 to $600,000. Other changes made to the base salaries for the Named Executive Officers in 2012.2014 were made to remain competitive with companies in the Company’s peer groups for similar positions and were as follows: Ms. Thomas from $542,000 to $567,000; Mr. Billing from $515,000 to $530,000; and Mr. Tinga from 420,000 Euros to 461,538 Euros ($561,960 to $617,538). Mr. Goldner did not receive any increase in his base salary during 2014. 32
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To graphically illustrateBenefits
The Company’s officers also participate in certain employee benefit programs provided by the connection betweenCompany that are offered to the compensationCompany’s other full-time employees. The executive officers of the Company are eligible for life insurance benefits on the terms applicable to the Company’s other employees. The Company’s executive officers participate in the same medical and dental benefit plans as are provided to the Company’s other employees. Company-Sponsored Retirement Plans The Company provides retirement benefits to its employees primarily through the Hasbro, Inc. Retirement Savings Plan (the “401(k) Plan”) and the Supplemental Benefit Retirement Plan (the “Supplemental Plan”). The 401(k) Plan and the Supplemental Plan, provide for Company matching contributions, an annual Company contribution of 3% of aggregate salary and bonus and a transition contribution ranging from 1% to 9% for the years 2008 through 2012 for participants meeting certain age and service requirements. Executive officers are eligible to participate in the 401(k) Plan and the Supplemental Plan on the same basis as all other U.S. Hasbro employees. The Supplemental Plan is intended to provide a competitive benefit for employees whose employer-provided retirement contributions would otherwise be limited. However, the Supplemental Plan is designed only to provide the benefit which the executive would have accrued under the Company’s 401(k) Plan if the Code limits had not applied. It does not further enhance those benefits. The amount of the Company’s contributions to the Named Executive Officers under both the 401(k) Plan and the Supplemental Plan, are included in the “All Other Compensation” column of the Summary Compensation Table that follows this report. The Hasbro, Inc. Pension Plan (the “Pension Plan”), a defined benefit pension plan for eligible Company employees in the United States, and the pension portion of the Supplemental Plan were frozen effective December 31, 2007. Executive officers hired prior to December 31, 2007, continue to participate in the Pension Plan and the pension portion of the Supplemental Plan, which are described starting on page 46 of this Proxy Statement, but will not accrue additional benefits thereunder subsequent to the plan freeze on December 31, 2007. Description of Pension Benefits for Mr. Tinga Mr. Tinga participates in the Hasbro B.V. Pension Plan in the Netherlands (the “Netherlands Pension Plan”). Upon becoming a member of the Netherlands Pension Plan on January 1, 1997, an additional payment was made to the plan granting Mr. Tinga an additional one year and two months of credited service, changing his credited service date to November 1, 1995. The Netherlands Pension Plan is described in more detail below. Mr. Tinga was hired by Tonka Corporation on October 1, 1987, which was subsequently acquired by the Company in January 1992. The Company does not have any obligation to pay pension benefits to Mr. Tinga from his service with Tonka. Netherlands Pension Plan The Netherlands Pension Plan provides benefits to all employees in service of Hasbro B.V. that are at least 21 years of age. Effective January 1, 2006, the plan was amended and became a career average pay plan with an annual accrual rate of 1.3% of Pension Base for each year of service. As of January 1, 2015, the plan has been further amended, increasing the annual accrual rate to 1.47% of Pension Base for each year of service from January 1, 2015 to retirement. Accrued benefits are conditionally indexed each year for active employees. Increases of 2% have been granted in each year, except in 2006 when there were no increases granted. Benefits are provided in the form of an annuity with 70% payable to the spouse or partner upon the participant’s death. Prior to the January 1, 2006 amendment, the plan was a final average pay plan with an formula equal to 1.25% of final average Pension Base per year of service. The final average pay benefits were frozen as of December 31, 2005, with indexation applied from this date as described above. The Pension Base is defined as Pensionable Salary minus the Offset, where Pensionable Salary is 12 times fixed monthly salary plus holiday allowance plus 13th month salary and the Offset is equal to 100/70 times the state old age pension for a married person. Effective January 1, 2015, as a result of legislative changes in the Netherlands, the annual Pensionable Salary will be capped. The government mandated pensionable salary cap for 2015 is EUR 100,000 for the Netherlands Pension Plan. Prior to this date Mr. Tinga’s Pensionable Salary under the plan was not capped. Credited service in the plan is defined as all years and completed months of service up to the date of retirement, with a maximum of 40 years. Effective January 1, 2015, the maximum credited service was increased to 42 years. A new participant with accrued pension benefits at a former employer can transfer their pension benefits into the Netherlands Pension Plan and get additional years of credited service beyond the plan definition. | | | 34 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
Effective January 1, 2015, as a result of legislative changes in the Netherlands, the normal retirement age of the plan changed to age 67. Prior to this date, the normal retirement age under the plan was age 65. The pension benefits accrued through December 31, 2014 are guaranteed as unreduced from age 65 and are actuarially increased for retirement after age 65. Plan members are eligible for early retirement from age 55; however benefits are reduced for early commencement and the participant must officially request early retirement six months before the desired retirement date. Nonqualified Deferred Compensation Plan Executive officers who are employees of the Company’s U.S. operations are also eligible to participate in the Company’s Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”), which is available to all of the Company’s employees based in the United States at or above selected management levels and whose annual base salary is equal to or greater than $115,000. The Deferred Compensation Plan allows participants to defer compensation into various investment vehicles, the performance of which determines the return on compensation deferred under the plan. Potential investment choices include a fixed rate option, a choice that tracks the performance of the Company’s Common Stock, and other equity indices. Earnings on compensation deferred by the executive officers do not exceed the returns on the relevant investments earned by other non-executive officer employees deferring compensation into the applicable investment vehicles. Mr. Tinga is not eligible to participate in achieving its goalsthe Deferred Compensation Plan. Perquisites The Company offers perquisites that the Committee believes are reasonable yet competitive for attracting, retaining and protecting the Company’s executives. The Company reimburses designated executive officers for the cost of certain tax, legal and financial planning services they obtain from third parties provided that such costs are within the limits established by the Company. The 2014 annual limit on these costs for the Chief Executive Officer was $25,000 and for Ms. Thomas was $5,000. Mr. Billing and Mr. Frascotti did not receive reimbursement for any tax, legal or financial planning services in 2014. Mr. Tinga receives certain tax services due to his secondment from the Netherlands. The cost to the Company for this reimbursement to the Named Executive Officers receiving it is included in the “All Other Compensation” column of the Summary Compensation Table. Severance and Change in Control Benefits Beginning on page 49 of this proxy statement there is a discussion of the severance and change in control benefits that may be payable to the NEOs in certain situations, as well as the plans under variouswhich those benefits are payable. Compensation Process Hasbro’s executive compensation program is structured with input, analysis, review and/or oversight from a number of sources, including: The Compensation Committee and the full Board; The Company’s Human Resources and Compensation Departments; The Committee’s and Company’s outside compensation consultants; The Company’s Chief Executive Officer; and Market studies and other comparative compensation information. All final decisions regarding the compensation and retention programs for the Company’s executive officers, including the NEOs, are made by the Compensation Committee. The compensation and retention package for the Company’s Chief Executive Officer is also reviewed and approved by the full Board of Directors without Mr. Goldner being present. Each of these compensation elements was described in detail in the preceding pages. In structuring these elements the Company and the Committee review each element on an individual basis, as well as review them in totality as part of an overall target compensation package. This process includes reviewing tally sheets for each of the executive officers which set forth total target compensation for the officer, and within that total summarize the target level for each element and the portion of total target compensation comprised of the various compensation elements. For the NEOs other than the CEO, the CEO makes recommendations for each individual’s compensation package to the Committee. The Committee discusses these recommendations with the CEO, both with and without the presence of the Company’s Chief Human Resources Officer, the Company’s Senior Vice President, Talent & Rewards and outside compensation consultants. The Committee further reviews and discusses these recommendations in executive sessions, and as part of these discussions the Committee discusses the proposed compensation and retention programs with representatives of its outside compensation advisor, Compensation Advisory Partners. | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 35 |
Peer Group and Benchmarking to the Market In designing the fiscal 2014 executive compensation program, we providethe Committee and the Company reviewed certain market data as a market check for the proposed executive officer: (i) base salaries, (ii) total target cash compensation (comprised of base salaries and target management incentive awards) and (iii) total target direct compensation (comprised of base salaries, target management incentive awards and target equity awards, combined). 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 with respect to other companies. As the Company has developed into a global brand-driven organization, rather than a traditional toy and game manufacturer, 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. As a result, the Company now competes with a broad range of consumer products, entertainment and branded portfolio companies in the hiring and retention of employees and executives. For purposes of establishing a market check for base salaries, total target cash compensation and total target direct compensation for the NEOs, other than Mr. Goldner, in 2014 the Company and the Committee reviewed the 2013 US Mercer Benchmark Database — Executive, as well as Towers Watson’s 2013 Executive Compensation Databank. Both the Mercer and Towers Watson surveys are employed by the Company as a market check against other companies of similar size, in terms of their consolidated net revenues. Within these surveys the Committee and the Company focused on companies in the general industry category. The total sample of companies in the general industry category in each data set is then size adjusted to indicate pay levels for a company with approximately the level of annual revenues of Hasbro. There are hundreds of companies included in the Mercer and Towers Watson data sets. Appendix B to this Proxy Statement contains a listing of all of the companies included in the 2013 US Mercer Benchmark Database — Executive, and Appendix C contains a listing of all of the companies included in the Towers Watson 2013 Executive Compensation Databank. For Mr. Goldner, the Committee conducted a pay for performance comparison in 2014. The Company’s core peer group, which was used in connection with this pay for performance comparison was updated in October 2013. The peer group comprises the following tables. companies: | | | | | | Activision Blizzard, Inc. | | Energizer Holdings, Inc. | | Polaris Industries, Inc. | | | | | Brunswick Corp | | Hanesbrands, Inc. | | PVH Corp | | | | | The Clorox Company | | Jarden Corporation | | Spectrum Brands Holdings, Inc. | | | | | Church & Dwight Co., Inc. | | Lions Gate Entertainment Corp | | Tiffany & Co. | | | | | Discovery Communications Inc. | | Mattel, Inc. | | Viacom Inc. | | | | | Electronic Arts, Inc. | | Newell Rubbermaid, Inc. | | |
The first table showsCommittee reviews the market data as part of assessing the appropriateness and reasonableness of the compensation levels and mix of compensation elements to ensure that the compensation program: is appropriate and effective in furthering the goals of the Company; 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 Company the total target direct compensation (target management incentive award opportunities, base salary and target equity award value) for the NEOs for 2014, generally ranged between the 50th and the 75th percentiles of total target direct compensation at companies in the market surveys reviewed by the Company and the Committee. Role of the Independent Compensation Consultant In reviewing and establishing the proposed fiscal 2014 compensation and retention program for the Company’s executive officers, the Committee received input and recommendations from Compensation Advisory Partners LLC (“CAP”), who served as the Committee’s outside compensation consultant. CAP was retained by, and reported directly to, the members of the Committee. CAP advised the Committee with respect to the Committee’s review of the Company’s 2014 executive compensation programs and provided additional information as to whether the Company’s proposed 2014 executive compensation programs were competitive, fair to the Company and the executives, reflected strong alignment between pay and performance, provided appropriate retention to executives, and were effective in promoting the performance over the prior three years, of the Company’s executives and achievement of the Company’s business and financial goals. | | | 36 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
In February 2014, the Committee reviewed CAP’s independence relative to the following factors: (i) CAP’s provision of other services to the Company, of which there are none; (ii) the amount of fees CAP receives from the Company as a percentage of CAP’s total revenue; (iii) the policies and procedures of CAP that are designed to prevent conflicts of interest; (iv) any business or personal relationship between Hasbro officers and directors and CAP or its compensation consultants, of which they aren’t any; (v) any Hasbro stock owned by CAP or its compensation consultants, of which there isn’t any; (vi) any business or personal relationship between our executive officers and CAP or any of its compensation consultants, of which there aren’t any; and (vii) any other factors that would be relevant to CAP’s independence from management. On the basis of such review, the Committee concluded that CAP is independent and no conflicts of interest exist or relationships that may impair CAP’s independence. Towers Watson & Co. was retained by the Company to assist with the preparation of compensation information presented to the Committee in achieving2014, including tally sheets showing each NEO’s forward-looking target compensation and actual earned compensation, as well as certain compensation tables for this proxy statement. Other Considerations CEO Employment Agreement Hasbro’s Chief Executive Officer, Brian Goldner is one of a select group of executives who straddles the more traditional consumer products business and the world of entertainment. With the Company still early in the execution of its corporate performance targets under (i)global brand blueprint strategy, of which Mr. Goldner is the principal architect and integral to its successful execution, the Board believed retaining Mr. Goldner through the end of 2017 is in shareholders’ best interest. In recognition of Mr. Goldner’s critical role in continuing the transformation of Hasbro, effective on October 4, 2012 the Company entered into an Amended and Restated Employment Agreement (the “Amended Employment Agreement”) with Mr. Goldner. The Amended Employment Agreement replaced the Amended and Restated Employment Agreement, dated March 26, 2010, and the Change in Control Employment Agreement, dated March 18, 2000, as amended (together referred to as the “Prior Agreements”) previously in place between Mr. Goldner and the Company. In response to shareholder feedback received by the Company during its 2013 and 2014 outreach programs, the Board and Mr. Goldner mutually agreed to make certain changes to the Amended Employment Agreement in August of 2014. Those changes were described in a Current Report on Form 8-K dated August 5, 2014 and among the changes to the Amended Employment Agreement implemented in 2014 the Company: Reduced the annual cash managementlong-term equity incentive planstarget for that year and (ii) the three-yearCEO from 500% to 400% of base salary beginning in 2015; Added Return on Invested Capital as an additional performance periods formetric under the contingent stock performance awards that endedgranted in December2015 to Mr. Goldner and other senior executives of that year. The second table shows the Company’s annualizedCompany; Eliminated the total shareholder return overperformance multiplier on the contingent stock performance awards granted to Mr. Goldner in 2013 and 2014; and Added a requirement that the number of shares actually earned under the special restricted stock unit awards made to Mr. Goldner in 2013 and 2014 if the Company achieves the $56 and $60 stock price hurdles will be adjusted if the trading price of the Company’s common stock is below those respective thresholds during the thirty-day trading period ending just prior to December 31, 2017, or the earlier termination of Mr. Goldner’s employment in certain situations. Set forth below is a description of the Amended Employment Agreement, as it was modified in August of 2014 in response to shareholder feedback. The objectives of the Amended Employment Agreement were to: ensure that Mr. Goldner only benefits if shareholders realize significant value, which is why the special RSU award, granted in two tranches (the first tranche in 2013 and the second in 2014), was tied to absolute stock price appreciation; structure the agreement to incentivize Mr. Goldner to remain at Hasbro through 2017, which the Board believes is a sufficient timeframe to have developed and executed the key elements of the Company’s global branded-play strategy and measure the success of the strategy; and implement a number of compensation and governance best practices, including: the elimination of the tax-gross up provisions contained in the prior agreements with Mr. Goldner with respect to excess parachute payments under Section 4999 and taxes and charges under Section 409A of the Internal Revenue Code; the elimination of the auto-renewal feature contained in the Prior Agreements, pursuant to which the term of Mr. Goldner’s employment with the Company would continue to be automatically extended for additional one-year periods unless Mr. Goldner or the Company provided notice of non-renewal; the elimination of a special bonus which was payable under the prior agreements one year following a Change in Control of the Company provided Mr. Goldner remained employed with the Company through that one-year anniversary; subjecting all of Mr. Goldner’s incentive-based compensation, both cash and equity-based incentive compensation, granted on or after October 4, 2012 to the Company’s Clawback Policy and to future clawback policies that apply to senior management of the Company; and providing for a more restrictive definition of a Change in Control than was provided in the prior agreements. | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 37 |
Enhanced Pay for Performance Linkage and Retention The Amended Employment Agreement: extended the term of Mr. Goldner’s scheduled employment with the Company for three years, from the previously scheduled expiration date of December 31, 2014 to the new expiration date of December 31, 2017; and provided additional performance-based equity incentives designed to retain Mr. Goldner in the employ of the Company during this extended term and to strengthen the linkage between Mr. Goldner’s potential future compensation and Hasbro’s performance and delivery of shareholder value. To further drive the linkage between the Company’s performance and Mr. Goldner’s compensation, and to provide an additional incentive for Mr. Goldner to remain employed with the Company through December 31, 2017, the Amended Employment Agreement provided for the grant to Mr. Goldner of an aggregate of 587,294 restricted stock units (referred to as the “Special RSU Grant”). The Special RSU Grant was made in two tranches, the first in April of 2013 and the second in February 2014. Both tranches of the Special RSU Grant were granted at the same time that the Company made its yearly equity awards to other equity-eligible employees. Both tranches of the Special RSU Grant have two vesting components, each of which must be satisfied for Mr. Goldner to earn any shares under the award. The first vesting component is based entirely on achievement of specified Hasbro stock price thresholds, with each threshold being progressively higher. For Mr. Goldner to realize the full value from his Special RSU Grant, all four stock price thresholds must be achieved, which would result in the Company’s market capitalization increasing approximately 60% or $3 billion, from October 2012, when the amended agreement was entered. This market capitalization increase does not capture any of the incremental value created by dividends paid to shareholders in the intervening years. The stock price thresholds and the percentage of the shares subject to the Special RSU Grant attributable to achievement of each threshold are as follows: | | | | | | Stock Price Threshold | | Percentage of Shares Earned | | $45/share | | | 25 | % | $52/share | | | 25 | % | $56/share | | | 25 | % | $60/share | | | 25 | % |
To achieve the stock price thresholds the average closing price of the Company’s stock must meet or exceed the threshold for a period of at least thirty consecutive trading days by December 31, 2017. The second vesting component requires that, subject to certain termination scenarios which are discussed below, Mr. Goldner must remain continuously employed with the Company through December 31, 2017 to vest in any earned shares under the Special RSU Grant. The August 2014 amendment to the Amended Employment Agreement added a further price requirement to the $56 and $60 tranches of the special restricted stock unit award. Even if those stock hurdles are achieved during the term of the agreement, that actual number of shares earned will be adjusted downward (according to a schedule attached to the back of the 2014 amendment to the Amended Employment Agreement) if the trading price of the Company’s common stock is below those respective thresholds during the thirty-day trading period ending just prior to December 31, 2017, or the earlier termination of Mr. Goldner’s employment in certain situations. The Amended Employment Agreement provides that Mr. Goldner will participate in Hasbro’s other long-term incentive programs during the term of his employment and will have an annual long-term equity grant target level equal to four (4) times his annualized base salary for each year beginning in 2015. Prior to the August 2014 amendment the target level was five (5) times his annualized base salary. Other Compensation The Amended Employment Agreement provided that the Company increase Mr. Goldner’s annualized based salary from $1,200,000 to $1,300,000 beginning July 1, 2013, and in 2013 Mr. Goldner was eligible to receive a management incentive plan bonus based on a target of one hundred and fifty percent (150%) of his earned base salary. Thereafter Mr. Goldner’s base salary, management incentive bonus target and long-term incentive target will be reviewed in accordance with the Company’s compensation policies for senior executives and will be adjusted to the extent, if any, deemed appropriate by the Compensation Committee of the Company’s Board of Directors. Post-Employment Restrictions The Amended Employment Agreement contains certain post-employment restrictions on Mr. Goldner, including: a two-year non-competition provision which prohibits Mr. Goldner from engaging, in any geographical area in which Hasbro is doing business at the time of the termination of his employment, in any business which is competitive with the business of Hasbro as it exists at the time of termination of Mr. Goldner’s employment; and a two-year non-solicitation provision, providing that Mr. Goldner will not (a) solicit or recruit any employee of Hasbro to leave the Company or (b) solicit the business of any clients, customers or accounts of Hasbro. | | | 38 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
If Mr. Goldner violates these restrictions and does not cure such violation, the Amended Employment Agreement provides that he will forfeit and pay to Hasbro the Net Proceeds (as defined in the Amended Employment Agreement) obtained with respect to any unvested stock options, restricted stock units, contingent stock performance awards or other equity that had been accelerated in connection with the termination of his employment by Hasbro without Cause (as defined in the Amended Employment Agreement) or by Mr. Goldner for Good Reason (as defined in the Amended Employment Agreement). Stock Ownership Guidelines Our stock ownership and retention guidelines are rigorous. | | | | | Stock Ownership Guidelines | CEO | | 5X Base Salary | NEOs (other than CEO) | | 2X Base Salary |
| * | | Base salary, through termination from company or until no longer a corporate officer |
An executive has five years to achieve the stock ownership requirement level. Thereafter, during the executive’s employment with the Company they must maintain the required stock ownership. All NEOs are in compliance with the stock ownership guidelines as of Dec. 31, 2014. 2014 Stock Ownership Guideline Update. To further align our executives’ interests with the long-term interests of shareholders, effective March 1, 2014, the Company adopted amendments to the Hasbro, Inc. Executive Stock Ownership Policy (“Stock Ownership Policy”), which include a requirement to retain a portion of any net shares realized from stock vesting or option exercises during the five-year period ending in Decemberthe 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 yearnet 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 Stock Ownership Policy. Anti-Hedging and Pledging Policies. The Company has had a longstanding policy in question.place that prohibits all directors, executive officers and other employees from hedging or pledging any Company securities. Weighted AchievementRealized Pay Table
Our shareholders have indicated that realized pay disclosure would provide a useful tool in assessing the alignment of Corporate Performance Targets Under Annual Cash Management Incentive Planspay and Contingent Stock Performance Incentive Plans 
Annualized Total Shareholder Return overperformance. For purposes of helping our shareholders see the Five-Year Period Ended
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The following tables then present thestrong alignment of pay and performance in our executive compensation program, we are showing a comparison of Mr. Goldner’s reported andtotal compensation to realized compensation for the Company’s top three Named Executive Officerspay over the prior three years.
The following section of this discussion explains in detail how realized compensation is computed for purposes of this purpose. These tables illustratetable. The table illustrates that the reported compensation often exceeds the actual, realized compensation for the executive, and this divergence can become greater as the percentage of the executive’s compensation composed of variable performance-based elements increases. The tables also demonstrate that the value of compensation actually realized by an executive correlates with the performance of the Company in achieving its financial goals and with the total shareholder return. Reported and Realized Compensation for Mr. Goldner
Reported and Realized Compensation for Mr. Hargreaves
 
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| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 39 |
Reported and Realized Compensation for Ms. Thomas
Difference Between Reported Compensation and Realized Compensation
As a result of the fact that we are required to reflect, in the compensation tables that follow this Compensation Discussion and Analysis, the value of equity awards and changes in pension values and nonqualified deferred compensation earnings for our Named Executive Officers at values which are impacted by accounting and actuarial assumptions, thereThere can be a significant difference between what is reported for a given year in suchthe compensation tables that follow this Compensation Discussion and Analysis as compensation to an executive officer and the value of what the executive actually realizes as compensation in that year or over time. This difference results from the fact that we are required to include in the reported compensation tables the value of equity awards and changes in pension values and nonqualified deferred compensation earnings for our NEOs at values which are impacted by accounting and actuarial assumptions. Realized compensation is not a substitute for reported compensation in evaluating our executive compensation programs, but we believe understanding realized compensation is important in understanding the impact of the performance components and stock price appreciation components of an award on the value of what an executive ultimately realizes or may receive.
The following table shows the total realized compensation for the Named Executive Officers for each of 2012, 2011 and 2010.
Total Realized Compensation is computed by: Taking the Total Compensation Amount reported in the Summary Compensation Table appearing on page 5741 of this proxy statement,Proxy Statement, and making the following adjustments;adjustments: subtract the grant date accounting values of stock awards and option awards made during the year, as such amounts are reflected in the Stock Awards and Option Awards columns in the Summary Compensation Table for the applicable year; add the value realized on the date of exercise from any actual option exercises by the executive in such year, as such amounts are reflected in the Option Exercises and Stock Vested table for the proxy statement covering that year; add the value of any stock awards which were earned by the executive for the period ending in that year (such as contingent stock performance awards earned for the performance period ending in December of that year) or which vested in such year (to the extent the executive has access to such awards and they are not subject to a forced deferral), at the value such stock had on the date of vesting or the date it was earned; and 35
subtract the year over year change in pension value and nonqualified deferred compensation earnings, as such amounts are reflected in the Summary Compensation Table for that year under the heading Change in Pension Value and NQDC Earnings. | | | | | | | | | | | Name and Principal Position
| | Year | | | Total Reported
Compensation in
Summary
Compensation Table
| | Total Realized
Compensation | | Brian Goldner
President and Chief
Executive Officer
| |
| 2012
2011
2010
|
| | $ 9,684,285
7,552,582
23,153,471
| | $
| 6,698,214
5,690,802
9,326,601
|
(1)
| David Hargreaves
Executive Vice President and
Chief Strategy Officer
| |
| 2012
2011
2010
|
| | 4,703,223
4,700,615
5,847,233
| |
| 2,569,892
2,607,663
6,796,181
|
| Deborah Thomas
Executive Vice President
and Chief Financial Officer
| |
| 2012
2011
2010
|
| | 1,939,511
1,769,212
1,872,447
| |
| 912,450
1,065,919
2,386,231
|
| Duncan Billing
Executive Vice President and
Chief Development Officer
| |
| 2012
2011
2010
|
| | 2,021,909
1,877,969
2,020,593
| |
| 1,682,878
1,245,816
3,222,206
|
| John Frascotti
Executive Vice President and
Chief Marketing Officer
| |
| 2012
2011
2010
|
| | 1,795,953
1,761,904
1,889,915
| |
| 1,032,197
1,233,412
2,443,808
|
|
(1) | An equity award, such as the restricted stock unit award which vested for Mr. Goldner in May 2011, but which has a forced deferral feature such that Mr. Goldner will not receive any actual shares under the award until he leaves the employment of the company, is not included in total realized compensation until the year in which the executive actually receives shares under the award. |
2012 Compensation Philosophy and Objectives
In structuring the compensation of the Company’s executive officers, including the Named Executive Officers who appear in the compensation tables following this Compensation Discussion and Analysis, the Company’s fundamental objectives are to:
Attract and retain talented executives who can contribute significantly to the achievement of the Company’s goals and deliver results which are in keeping with a leading global branded-play entertainment company;
Align the interests of the Company’s executives with the medium and long-term goals of the Company and the Company’s shareholders and other stakeholders;
Instill a pay-for-performance culture in which the substantial majority of the compensation opportunity for Named Executive Officers is composed of variable, performance-based compensation elements;
Set the level of an executive’s compensation with consideration for the role of the executive and the executive’s contribution to the Company, as well as the external competition for the executive’s services;
Focus executives on achievement of the Company’s goals in a manner that fosters team performance and a team focus;
Reward superior performance by the Company and its business units as a whole, and to a lesser extent superior individual performance; and
Accomplish these objectives effectively while managing the total cost of the Company’s executive compensation program.
Over the last several years Hasbro has been building and inculcating its brand blueprint across its business, which entails offering a wide range of innovative toys and games, immersive entertainment offerings, including
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television programming and motion pictures, digital engagement, and lifestyle products, ranging from traditional to high-tech. As Hasbro has developed into a global branded-play company, rather than a traditional toy and game company, 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. As a result, the Company now competes with a broad range of consumer products, entertainment and general industry companies in the hiring and retention of employees and executives. In the branded family entertainment and consumer products markets where the Company competes for talent, base compensation, variable incentive cash compensation, equity compensation and employee benefits are all significant components of a competitive and effective overall executive compensation and retention package.
The Company utilizes two overarching principles in structuring its executive compensation and retention program.
Pay for performance is critical; and
The long-term success of the Company is dependent on attracting and retaining top talent.
First, pay for performance is critical, and a large majority of an executive’s overall compensation opportunity should be at risk and based upon the performance of the Company in meeting its financial objectives and upon delivering total return to the Company’s shareholders. The Company believes that the primary responsibility of the executive team is to drive the financial and business performance of the Company and create value for the Company’s shareholders and other stakeholders. As a result, if the Company fails to achieve some of its business and financial goals, and/or if the Company’s share price does not rise, the value realized from the executive’s compensation packages is significantly reduced. The Company implements this principle by using variable compensation elements, such as cash management incentive plan awards and equity awards, for the vast majority of the total compensation package granted to its Named Executive Officers.
In aligning pay with performance the Company seeks predominately to reward overall performance by the Company, or its major business units, and to a lesser extent to reward individual executive performance. The Company believes this is appropriate to foster an environment of team work and maximizes the performance of the Company as a whole, as opposed to individuals within the Company. As a result, the two most significant variable components of the Company’s executive compensation program, namely management incentive plan awards and equity awards, are most heavily weighted to achievement of Company goals and Company performance. The incentive plan awards most significantly reward achievement of stated Company and business unit financial metrics, with individual performance and individual achievements playing a smaller role. Equity awards also reward achievement of long-term Company financial goals and Company stock price appreciation.
The second overarching principle the Company uses in structuring its executive compensation packages is that it is critical to the long-term success of the Company that it be able to attract and retain top management talent. To accomplish its goals and deliver on its vision of becoming a global branded entertainment company Hasbro must be able to attract and retain world class executives.
The Committee structures the Company’s compensation program in a way it believes appropriately aligns pay with performance and maximizes future performance, without encouraging excessive risk taking or other behavior on the part of executive officers that is not in the Company’s best interests.
Designing the Executive Compensation Program at Hasbro
Hasbro’s executive compensation program is structured with input, analysis, review and/or oversight from a number of sources. Those sources include:
The Compensation Committee;
The Company’s Human Resources and Corporate Compensation Departments;
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The Committee’s and Company’s outside compensation consultants;
The Company’s Chief Executive Officer; and
Market studies and other comparative compensation information.
All final decisions regarding the compensation and retention programs for the Company’s executive officers, including the Named Executive Officers, are made by the Committee. The compensation and retention package for the Company’s Chief Executive Officer is also reviewed and approved by the full Board of Directors without Mr. Goldner being present.
In reviewing and establishing the proposed fiscal 2012 compensation and retention program for the Company’s executive officers, the Committee received input and recommendations from Compensation Advisory Partners LLC (“CAP”), who served as the Committee’s outside compensation consultant. For its work with respect to advising the Committee with respect to the 2012 compensation program, CAP was retained by, and reported directly to, the members of the Committee. CAP advised the Committee with respect to the Committee’s review of the Company’s 2012 executive compensation programs and provided additional information as to whether the Company’s proposed 2012 executive compensation programs were competitive, fair to the Company and the executives, reflected strong alignment between pay and performance, provided appropriate retention to executives, and were effective in promoting the performance of the Company’s executives and achievement of the Company’s business and financial goals. CAP did not perform any other work for the Company in 2012 and in order to maintain CAP’s independence the Committee has established a policy that CAP will not provide any services directly to the Company and will only provide services directly to the Committee.
In February 2013, the Committee reviewed CAPs independence relative to the following factors: (i) CAP’s provision of other services to the Company, of which there are none; (ii) the amount of fees CAP receives from the Company as a percentage of CAP’s total revenue; (iii) the policies and procedures of CAP that are designed to prevent conflicts of interest; (iv) any business or personal relationship between Hasbro officers and directors and CAP or its compensation consultants, of which they aren’t any; (v) any Hasbro stock owned by CAP or its compensation consultants, of which there isn’t any; (vi) any business or personal relationship between our executive officers and CAP or any of its compensation consultants, of which there aren’t any; and (vii) any other factors that would be relevant to CAP’s independence from management. On the basis of such review, the Committee concluded that CAP is independent and no conflicts of interest exist or relationships that may impair CAP’s independence.
In addition to the work performed by CAP directly for the Committee with respect to the 2012 compensation program, Towers Watson & Co. (“Towers Watson”) was retained by the Company’s Human Resources and Corporate Compensation Departments to perform analysis on the Company’s proposed compensation and retention programs, including with respect to their fairness to the Company and the executives, retention value, effectiveness in promoting and rewarding performance and achievement of the Company’s goals and competitiveness with comparable companies. As part of this work, Towers Watson assisted the Company with the preparation of compensation information presented to the Committee at various times during 2012, including tally sheets showing each executive officer’s forward-looking target, and backward looking actual compensation, as well as certain of the compensation tables and other information included in the Company’s proxy statement. In addition to this work, in 2012 Towers Watson also performed (i) consulting and benefits administration services for the Company, including administration services for the Company’s health and group benefits programs and retirement plans, (ii) work in connection with employee communications and implementation of the Company’s online total reward statements for employees and (iii) work providing compensation surveys and other compensation and benefits information.
The Compensation Committee also retained Goodwin Procter LLP in Boston, Massachusetts to advise the Committee in connection with the negotiation of Mr. Goldner’s Amended and Restated Employment Agreement.
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The advice provide by Goodwin Procter LLP to the Compensation Committee was in addition to advice provided by CAP. Goodwin Procter LLP was retained directly by the Committee for this purpose and did not perform any services directly for the Company in 2012.
The Company’s Chief Executive Officer, Chief Human Resources Officer, Senior Vice President, Talent & Rewards and Chief Legal Officer each attend portions of the meetings of the Committee. However, the Committee also considers and discusses issues and the Company’s compensation programs without the presence of any officers or employees of the Company.
For the Named Executive Officers other than the Chief Executive Officer, as well as for the Company’s other executive officers, the Company’s Chief Executive Officer makes recommendations for each individual’s compensation package to the Committee. In making these recommendations the Chief Executive Officer considers the individual’s performance and past contributions to the Company, the potential future contribution of the individual to the Company and achievement of the Company’s business and financial goals, including the potential for the individual to make even greater contributions to the Company in the future than he or she has in the past, the risk that the individual may be lured away by a competitor, input from the Company’s Human Resources and Corporate Compensation Departments and market compensation data. The Committee then discusses these recommendations with the Chief Executive Officer, both with and without the presence of the Company’s Chief Human Resources Officer, the Company’s Senior Vice President, Talent & Rewards and outside compensation consultants. The Committee further reviews and discusses these recommendations in executive sessions, and as part of these discussions the Committee discusses the proposed compensation and retention programs with representatives of its outside compensation advisor.
For the Chief Executive Officer, the Committee directly determines the compensation and retention package, receiving input, recommendations and market data as it deems appropriate from the Company’s Human Resources and Corporate Compensation Departments, the Committee’s outside compensation consultant, and the Company’s compensation consultant. Other than the Company’s Chief Human Resources Officer and Senior Vice President, Talent & Rewards, the Committee does not receive a recommendation as to the Chief Executive Officer’s compensation from any member of Company’s management or any other employees of the Company. In addition to being reviewed and approved by the Committee, the compensation package for the Company’s Chief Executive Officer is reviewed and approved by the full Board of Directors in executive session. The Committee does not delegate, to management or any other parties, its duties to review and approve the Company’s executive compensation programs, including the compensation programs for all of the Named Executive Officers.
Although the Company considers the tax treatment, including the requirements of Code Section 162(m), and the accounting treatment of various forms of compensation in determining the elements of its executive compensation program and, to the extent it is consistent with meeting the objectives of the Company’s executive compensation program, structures such compensation to maximize the ability of the Company to receive a tax deduction for such compensation, the Company feels strongly that maximizing the performance of the Company and its executives is more important than assuring that every element of compensation complies with the requirements for tax deductibility under Section 162(m). The Company selects performance goals under its variable compensation programs that are intended to be objective within the meaning of the Code, such as achieving certain net revenues, operating margin, free cash flow or earnings per share goals. However, in certain situations, such as with our targeted retention grants of restricted stock units, the Company may feel a particular goal, such as retaining a key talented individual, is very important to the Company, even though the form of compensation being used is not considered objective within the meaning of the Code or the associated compensation is otherwise not deductible under the requirements of Section 162(m). The Company reserves the right to compensate executives for achievement of such objectives, or to reflect other individual performance measures in an executive’s compensation, even if they do not comply with the requirements of Section 162(m).
In 2012 the Committee and the Board adopted a Clawback Policy. All equity and non-equity incentive plan compensation granted by the Company in 2013 and thereafter will be 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
39
accounting requirements, then all of the Company’s executive officers, regardless of whether they were at fault or not in the circumstances leading to the restatement, will be subject to forfeiting 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
Market Compensation Checks
In designing the fiscal 2012 executive compensation program, the Committee and the Company also reviewed certain market studies as a market check for the proposed executive officer: (i) base salaries, (ii) total target cash compensation (comprised of base salaries and target management incentive awards together) and (iii) total target direct compensation (comprised of base salaries, target management incentive awards and target equity awards, combined). Such market information is one element reviewed by the Committee, but the Committee does not simply set compensation levels at a certain benchmark level or within a certain benchmark range with respect to other companies. The Committee and its advisors consider the appropriate structure and levels of the compensation packages for the executive officers and use market check data only as one element of evaluating the reasonableness of those proposed packages.
For purposes of establishing a market check for base salaries, total target cash compensation and total target direct compensation for the Named Executive Officers, other than Mr. Goldner and Mr. Hargreaves, in 2012 the Company and the Committee reviewed the 2011 US Mercer Benchmark Database — Executive, as well as Towers Watson’s 2011 Executive Compensation Databank. Both the Mercer and Towers Watson surveys are employed by the Company as a market check against other companies of similar size, in terms of their consolidated net revenues. Within these surveys the Committee and the Company focused on companies in the general industry category. The total sample of companies in the general industry category in each data set is then size adjusted to indicate pay levels for a company with approximately the level of annual revenues of Hasbro. There are hundreds of companies included in the Mercer and Towers Watson data sets. Appendix D to this proxy statement contains a listing of all of the companies included in the 2011 US Mercer Benchmark Database — Executive, and Appendix E contains a listing of all of the companies included in the Towers Watson 2011 Executive Compensation Databank.
For Messrs. Goldner and Hargreaves, the Committee reviewed market information for the following group of companies, which it considered to be particularly relevant in performing a market check for its Chief Executive Officer and Chief Operating Officer, based on the skill sets required and challenges faced by the chief executive and operating officers at such companies, and their similarity to Hasbro:
| | | | | Activision Blizzard, Inc. | | Campbell Soup Company | | Coach, Inc. | | | | The Clorox Company | | Discovery Communications, Inc. | | Electronic Arts Inc. | | | | Energizer Holdings, Inc. | | Beam Inc. (f/k/a Fortune Brands Inc.) | | Harley-Davidson, Inc. | | | | The Hershey Company | | Lions Gate Entertainment Corporation | | Mattel, Inc. | | | | Newell Rubbermaid Inc | | Polo Ralph Lauren Corp. | | Sirius XM Radio Inc. | | | | Tiffany & Co. | | V.F. Corporation | | Warner Music Group Corp. |
The Committee reviews the market data as part of assessing the appropriateness and reasonableness of the compensation levels and mix of compensation elements to ensure that the compensation program:
is appropriate and effective in furthering the goals of the Company;
provides adequate retention incentive for top performing executives;
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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.
The Committee believes that this approach to the Company’s compensation program allows the Company to effectively hire, retain and motivate talented executives and maximizes the performance of the Company. In performing market checks for Mr. Goldner’s compensation, in recognition of the Company’s increasing presence and development in immersive entertainment media and the importance of media to the branded-play strategy, the Committee also considers a secondary peer group of companies in the entertainment industry including:
| | | | | CBS Corporation | | Cablevision Systems Corporation | | Comcast Corporation | | | | DIRECTV | | DISH Network Corporation | | News Corporation | | | | Time Warner Inc. | | Time Warner Cable Inc. | | Viacom Inc. | | | | The Walt Disney Company | | | | |
Due to the relative size of these companies as compared to Hasbro, the Committee primarily considers the pay levels and mix of the number two and three executives of these companies in considering Mr. Goldner’s compensation package.
When determining overall compensation specific to Mr. Goldner, the Committee looks not just to the types of comparable companies or their size, but also evaluates how Hasbro has performed as compared to such companies along multiple metrics, including both one-year and three-year earnings per share, and one-year and three-year total shareholder return (defined as stock price appreciation plus dividends, assuming reinvestment of dividends). The Committee uses this component of the market check to help evaluate whether the Company is maintaining the appropriate link between relative performance of the Company, compared to other companies, and realized compensation for the Company’s Chief Executive Officer, as compared to Chief Executive Officers at such other companies.
According to market data reviewed by the Company the total target direct compensation (target management incentive award opportunities, base salary and target equity award value) for the Named Executive Officers for 2012, generally ranged between the 50th and the 75th percentiles of total target direct compensation at companies in the market surveys reviewed by the Company and the Committee, as such market data was adjusted to reflect the Company’s revenue size.
Primary Elements of 2012 Executive Compensation
The executive compensation and retention program for fiscal year 2012 was composed of the following primary elements:
cash management incentive awards;
employee benefits; coupled with
share ownership guidelines.
The Company uses these five elements in the combination it believes (i) maximizes performance and business results, (ii) establishes a solid pay for performance compensation structure and (iii) appropriately divides the compensation of its executives among fixed and variable components. Some variable compensation is
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tied to achievement of yearly financial objectives. Other compensation, such as option grants vesting over multiple years and performance share awards with multi-year performance periods, are tied to the achievement of longer-term business and financial goals and the creation of longer-term shareholder value. The Company seeks to have the large majority of its overall executive compensation program comprised of variable performance-based elements, reflecting a commitment to pay for performance. As an illustration of this approach, of Mr. Goldner’s total compensation for fiscal 2012, as reported in the Summary Compensation Table appearing on page 57 of this proxy statement, approximately 82.5% of the value of the total compensation was comprised of equity awards and performance based non-equity incentive plan compensation. The following table shows the distribution of the 2012 compensation for the Named Executive Officers (as reported in the Summary Compensation Table) over fixed compensation, variable performance based elements, and all other compensation.
| | | | | | | | | | | | | Name | | Fixed Compensation
(Salary) | | | Variable
Compensation
(Equity Compensation
and Non-Equity
Incentive
Compensation) | | | Change in Pension
Value and NQDC
Earnings and
All Other
Compensation | | Brian Goldner | | $ | 1,200,000 | | | $ | 7,991,330 | | | $ | 485,955 | | David Hargreaves | | $ | 800,000 | | | $ | 2,597,694 | | | $ | 1,305,529 | | Deborah Thomas | | $ | 515,000 | | | $ | 1,282,575 | | | $ | 141,936 | | Duncan Billing | | $ | 485,000 | | | $ | 1,242,575 | | | $ | 294,334 | | John Frascotti | | $ | 485,000 | | | $ | 1,242,575 | | | $ | 68,378 | |
The following table shows the same breakdown in terms of the percentage of total 2012 reported compensation represented by each group of compensation elements.
| | | | | | | Name | | Fixed Compensation (Salary) | | Variable Compensation (Equity Compensation and Non-Equity Incentive Compensation) | | Change in
Pension Value and
NQDC Earnings
and All Other Compensation | Brian Goldner | | 12.4% | | 82.5% | | 5.1% | David Hargreaves | | 17.0% | | 55.2% | | 27.8% | Deborah Thomas | | 26.6% | | 66.1% | | 7.3% | Duncan Billing | | 24.0% | | 61.5% | | 14.5% | John Frascotti | | 27.0% | | 69.2% | | 3.8% |
The Company believes that having the majority of compensation tied to variable performance-based elements fosters a performance-driven culture and best serves the interests of the Company and its stakeholders, since the compensation of the Company’s executives is significantly dependent upon achievement of the Company’s financial goals and the creation of shareholder value. Each of these compensation elements is described in detail below. In structuring these elements the Company and the Committee review each element on an individual basis, as well as review them in totality as part of an overall target compensation package. This process includes reviewing tally sheets for each of the executive officers which set forth total target compensation for the officer, and within that total summarize the target level for each element and the portion of total target compensation comprised of the various compensation elements.
Base Salary
The salaries for all five of the Company’s Named Executive Officers in fiscal 2012 are included in the Summary Compensation Table that follows this report. The Company’s philosophy is to only increase executive base salaries in the event of: (i) changes in responsibility, (ii) particular achievements or noteworthy contributions to the performance of the Company, (iii) concerns over executive retention or (iv) perceived lack of
42
competitiveness with market compensation offered to executives with similar responsibilities, expertise and experience in other companies the Company considers to be comparable to and/or competitive with the Company.
Base salaries for new executive officers are initially set at a level the Company determines represents a competitive fixed reward to the executive. By “competitive”, the Company means the reward is sufficient to (i) hire the executive in question, rather than lose that person to a competitive employment opportunity, (ii) retain the executive, and (iii) fairly compensate the executive for his or her responsibilities, skills and contributions to the Company. This is done by evaluating the responsibilities of the position being filled, the experience of the individual being hired and the competitive marketplace for comparable executive talent.
According to the market data which the Committee and the Company considered as part of its annual market check at the end of fiscal 2011, the base salaries for the Named Executive Officers were deemed competitive and fair. None of the Named Executive Officers received an increase in base salary for 2012.
Management Incentive Awards
Summary of 2012 Management Incentive Awards
All of the Company’s employees participate in some form of annual incentive program. Approximately 36% of the Company’s employees, including all of the Named Executive Officers, received management incentive awards with respect to fiscal 2012. The management incentive award is performance based, with payout of these awards tied to the Company’s achievement of specific yearly net revenue, operating margin and free cash flow performance objectives, as well as individual performance for the year to the extent discussed below.
Management incentive awards for the Company’s executive officers for fiscal 2012 were determined under two programs, the 2009 Senior Management Annual Performance Plan (the “Annual Performance Plan”) and the 2012 Management Incentive Plan (“MIP”). The Annual Performance Plan has been approved by the Company’s shareholders and is intended to allow for the deduction by the Company of the bonuses paid to “covered employees” as defined in Code Section 162(m). The MIP is not a shareholder approved plan. Despite certain differences in the two plans, both the Annual Performance Plan and the MIP use the same corporate performance criteria and targets. Under the Annual Performance Plan, awards are structured to provide a range of maximum permissible payouts corresponding to a range of Company performances against the performance targets, with the Committee reserving negative discretion to reduce any such award to any level below the achieved maximum payout as it deems appropriate. The targeted corporate performance is then one of the factors used by the Committee in exercising this negative discretion under the Annual Performance Plan.
The Committee established the fiscal 2012 corporate and business unit performance goals for the Company under these two plans in the first quarter of fiscal 2012. These performance goals were based on the 2012 operating plan and budget approved by the Company’s Board. Setting performance goals involves both selecting the performance metrics that will be used to evaluate bonus eligibility and establishing the performance targets for each of those metrics. The Committee used three performance metrics to measure corporate performance in 2012. The three corporate performance criteria, and their respective weights under the plans, were as follows: (i) total net revenues (40%), (ii) operating margin (40%) and (iii) free cash flow (20%). Free cash flow is defined as the Company’s cash flow from operations, minus capital expenditures. The Committee selected these three performance metrics to capture the most important aspects of the top and bottom line performance of the Company, in the form of revenues, profitability and cash generation. The Committee sets the relative weighting among the performance metrics in accordance with the relative importance of those metrics, in the Committee’s view, to the Company’s performance and the strength of the Company’s business.
The table set forth below provides the 2012 corporate total net revenues, operating margin and free cash flow performance targets established by the Committee at the beginning of the year, as well as the Company’s
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actual performance against those targets in 2012. The Company’s actual weighted performance in fiscal 2012 under the MIP and the Annual Performance Plan corresponded to a 117% weighted payout against achievement of the target corporate performance goals. When the performance goals were set at the beginning of 2012, the Committee provided that certain events which might occur during the performance period after the goals were set would not be taken into account in determining the Company’s performance against these targets. Such exclusions included events such as the impact of any acquisitions or dispositions consummated by the Company during the year which had a total acquisition or sale price, as applicable, of $100 million or more. Similarly, the Committee provided that in assessing the Company’s performance, actual results would not be impacted by any major discrete restructuring activities undertaken by the Company after the goals were set which resulted in costs or charges to the Company of $10 million or more.
| | | | | | | | | | | | | | | | | Performance Measure | | Weighting under Incentive Award Opportunity | | 2012
Performance
Target | | | 2012
Actual
Performance | | | 2012 Performance as a Percentage of Target | | 2012
Payout
Percentage | | 2012 Weighted Payout | Total Net Revenues | | 40% | | $ | 4.39 billion | | | $ | 4.089 billion | | | 93% | | 86% | | 34% | Operating Margin | | 40% | | | 14.09% | | | | 14.37% | | | 102% | | 106% | | 42% | Free Cash Flow | | 20% | | $ | 307.24 million | | | $ | 422.7 million | | | 138% | | 200% | | 40% | | | | | | | | | | | | | | | Total 2012
Weighted Payout | | 117% |
The total weighted potential payout percentage of 117% against target (based on performance against the three corporate performance metrics ranging from 93% to 138%) reflects that performance under the plans is leveraged, both in a positive and negative direction. As a result, when performance against a target is surpassed, the plan recognizes incremental gains over target performance to an increasingly greater extent the more the target is exceeded. Similarly, leverage is applied to reduce awards to an increasingly disproportionate extent as performance falls further below target. If the Company achieves less than a threshold performance of 80% of target against a given metric, the payout for that metric is 0% under the management incentive plan.
The Committee sets the corporate and business unit performance goals under the management incentive plan awards at levels it believes require strong performance for a target payout and superior performance for a greater than target payout. The corporate performance targets for fiscal 2012 represented the following changes over the Company’s actual corporate performance in fiscal 2011 in order to achieve 100% of target performance, (i) an increase of $105 million in total net revenues over the reported 2011 net revenues of $4.286 billion, (ii) an operating margin increase of 0.23% compared to a reported 2011 operating margin of 13.86%, and (iii) an increase of $10.54 million in free cash flow over 2011’s free cash flow of $296.7 million.
Notwithstanding the Company’s overachievement of its operating margin and free cash flow objectives for 2012, and the resulting total potential payout percentage of 117% of target, the Committee exercised negative discretion to reduce the corporate payout percentage to 90%. The Committee’s view was that the Company’s underachievement of its net revenue performance target should impact the management incentive awards more negatively than the bonus formula provided, and that the Company’s overachievement of the other two targets, particularly against the free cash flow objective, was driven by the efforts of a much narrower group of executives and employees than the revenue shortfall. As such, the Committee believed that only that narrower group which so positively impacted the free cash flow of the Company, should benefit from the full impact of the overachievement of the free cash flow objective. Mr. Goldner, Mr. Hargreaves and Ms. Thomas were viewed as the key executives driving the highly efficient management of the Company’s cash flow and expenses in 2012.
For Mr. Goldner, Mr. Hargreaves, Mr. Billing and Mr. Frascotti who participated in the Annual Performance Plan in 2012, fiscal 2012 management incentive award opportunities were structured in terms of maximum permissible payouts corresponding with various levels of Company performance. In every case these awards could then be reduced, but not increased, at the sole discretion of the Committee. To the extent that the Committee determined it was appropriate to reward Mr. Goldner, Mr. Hargreaves, Mr. Billing or Mr. Frascotti
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for achievement of subjective goals or individual performance beyond the payouts allowed under the Annual Performance Plan, the Committee would need to award discretionary bonuses outside of the Annual Performance Plan. None of those executives received discretionary bonuses for 2012.
To assist in making decisions as to when, and to what extent, to exercise negative discretion to reduce the bonuses which are otherwise payable under the Annual Performance Plan, the Committee looks to the Company’s performance against it corporate objectives, the Company’s relative performance as compared to its peers, and also sets personal objectives for each of the Named Executive Officers participating in the Annual Performance Plan for fiscal 2012. These personal objectives include strategic or transformational goals for the Company which do not directly correspond with a financial metric but are considered critical to the success of the Company. The executive’s achievement of these personal objectives was then used as one of the factors considered by the Committee in its determination as to whether to apply any negative discretion to the amount of the bonus which could otherwise be paid based upon the Company’s achievement of its corporate performance metrics under the Annual Performance Plan. In no event may performance against these individual objectives increase in any way the bonus which may be otherwise paid to an executive under the Annual Performance Plan.
Based upon the Company’s adjusted 90% overall weighted payout against achievement of its corporate performance objectives in 2012, and the weighting of the individual objectives within that total, the Annual Performance Plan allowed for payment of 90% of the maximum management incentive award to each of Mr. Goldner, Mr. Hargreaves, Mr. Billing and Mr. Frascotti for 2012. In each case, the maximum incentive award for 2012 for the executives participating in the Annual Performance Plan was set at three times the executive’s base salary if 100% of target or higher performance is achieved.
Among the business performance factors and personal objectives considered by the Committee in determining the level of negative discretion it applied in lowering Mr. Goldner’s and Mr. Hargreaves’ actual bonuses for 2012 from their potential bonuses (the actual bonus paid to Mr. Goldner represented 57%, and the actual bonus paid to Mr. Hargreaves represented 43%, of the bonuses which could have been paid to each of them under the terms of the Annual Performance Plan for 2012 before the Committee exercised negative discretion) were, in the negative, the underperformance of the Company in its goal to grow consolidated net revenues, absent the impact of foreign exchange, which was driven by the Company’s lower than targeted revenues in certain developed markets during the fourth quarter. In only partial mitigation of this negative factor were that the Company: (i) delivered its 12th consecutive year of growth in earnings per share, absent restructuring charges and certain discrete tax events, (ii) developed a new leadership team in the U.S. and Canada and returned the U.S. and Canada business segment to historical operating profit margins, (iii) stabilized and grew the games business, (iv) grew the girls business, (v) grew the Entertainment and Licensing segment in a year without a Transformers motion picture, (vi) continued the successful development of the Company’s business in emerging markets, (vii) established and began implementation of a cost savings initiative designed to reduce annual operating costs by $100 million by 2015 and (viii) overachieved the Company’s free cash flow and operating margin performance targets. In making the bonus determination for Mr. Hargreaves, the Committee also considered the recommendations of Mr. Goldner and his assessment of Mr. Hargreaves’ contributions to the Company’s performance and achievements in 2012.
As with the other executive officers, for each of Mr. Billing and Mr. Frascotti, the Committee considered the recommendations of Mr. Goldner as one of the factors in making the management incentive bonus determinations. Mr. Goldner in his recommendations to the Committee, and the Committee in their determination, put significant weight on the underperformance of the Company against its goal of growing consolidated net revenues, absent the impact of foreign exchange, and the appropriateness of having Mr. Billing’s and Mr. Frascotti’s incentive bonuses for 2012 be negatively impacted by those two factors in a manner similar to the impact on management incentive awards for other members of the Company’s management team and other employees. In partial mitigation of this underperformance, a positive adjustment for Mr. Billing was based on factors including: (i) his successful management of the Company’s global product development function, including the achievement of reductions in the time taken to develop and bring products to
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market globally and increases in product development and sourcing efficiencies, (ii) Mr. Billing’s success in further developing the Company’s global product development capabilities in bringing to market digital assets and in developing products that combine digital and analog play, (iii) Mr. Billing’s role in contributing to the Company’s development into a global branded-play company, (iv) his role in bringing to market industry leading product innovation and in helping to re-imagine and stabilize and grow the Company’s games business and (v) his role in building on the Company’s record of leading the industry in product and manufacturing sustainability. A positive adjustment for Mr. Frascotti was based on factors including his and his global marketing organization’s: (i) contributions to the re-imagination and revitalization of the Company’s games business, (ii) tremendous success in driving the Company’s Wizards of the Coast business and Magic the Gathering trading card game, including Magic the Gathering Online, (iii) partnership with the new leadership in the U.S. and Canada segment and contributions to the success in returning that segment to historical operating profits, (iv) development of the Company’s digital marketing initiatives, (v) efforts in re-imagining and stabilizing and growing the Company’s games business, (vi) success in developing the Company’s global marketing capabilities, (vii) success in driving the Company’s outlicensing business and (viii) Mr. Frascotti’s role in contributing to the Company’s development into a global branded-play company.
In the case of each of Messrs. Goldner, Hargreaves, Billing and Frascotti the executive was paid an incentive bonus the Committee believed appropriately balanced the underperformance of the Company against achieving its objective of growing net revenues with the executive’s respective significant contributions to achieving other key objectives for the Company’s in 2012.
Due to the fact that the requirements of Section 162(m) do not, by their terms, apply to the compensation of Chief Financial Officers, Ms. Thomas participates in the MIP, rather than in the Annual Performance Plan. For Ms. Thomas, who participated in the MIP in 2012, her fiscal 2012 management incentive award opportunity, rather than being structured as a range of maximum awards corresponding to various levels of performance against target, were instead set to provide for a payout of 60% of earned salary for target performance. A range of payouts as a percentage of target then corresponded to a range of performances against target both above and below 100%. Threshold performance for each given financial metric under the MIP is set at 80% of target performance for purposes of the achievement of that goal contributing to payout of the management incentive award. An 80% achievement of a performance goal under the MIP equates to a 60% payout against that goal. In addition to taking into account Company performance, the MIP, unlike the Annual Performance Plan, also allows for a multiplier of up to 150% of the formula award in recognition of superior performance against individual performance objectives. Taking into account the Company’s performance in 2012 and the personal performance multiplier, the maximum incentive award which could have been paid to Ms. Thomas for fiscal 2012 was 81% of her earned salary, or $417,150.
The adjusted 90% weighted payout against the corporate performance goals in 2012 would have corresponded with approximately 90% of the target payout for Ms. Thomas under the management incentive award for 2012, absent personal performance multipliers and adjustments. The corporate formula award under the MIP, prior to personal performance adjustments or discretionary awards, for Ms. Thomas, would have been $278,100. In determining the actual bonus for Ms. Thomas, as with the other executive officers, the Committee also considered the recommendations of Mr. Goldner. Ms. Thomas was paid a bonus of $320,000 for fiscal 2012 in recognition of: (i) her support of Mr. Goldner in the formation and implementation of corporate objectives, (ii) successful management of the Company’s expenses and cash flow, and contributions to the Company’s overachievement of its free cash flow and operating margin objectives for 2012, (iii) management of the Company’s information technology resources and contributions to significant enhancements in the Company’s IT capabilities, (iv) contributions to the Company’s twelfth consecutive year of delivering earnings per share growth, absent restructuring charges and discrete tax events, (v) contributions to the ongoing return of significant cash to shareholders, through both the quarterly cash dividend and share repurchase programs and (vi) contributions to the development and implementation of a cost savings initiative designed to reduce the Company’s annual operating costs by $100 million by 2015.
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In all cases, the bonuses for performance under the Annual Performance Plan and the MIP for executive officers, including all of the Named Executive Officers, were reviewed and approved by the Committee. The bonuses for Mr. Goldner and Mr. Hargreaves were also reviewed and approved by the full Board.
The maximum awards for each of the Named Executive Officers for 2012, as well as the threshold and target awards for Named Executive Officers participating in the MIP Plan, are included in the Grants of Plan-Based Awards table that follows this discussion on page 60.
Long-Term Equity Awards
In determining the 2012 annual equity award targets the Committee reviewed the overall competitiveness of the total target direct compensation levels for the Named Executive Officers and considered the appropriate mix of that total target direct compensation which should be made in the form of equity awards to align realized pay with performance and total shareholder return. To a lesser extent the Committee and its outside advisor, Compensation Advisory Partners, consider the retention value and award opportunity represented by outstanding prior equity grants made to the executive officers in reviewing and establishing equity grants. In conjunction with the Company’s stock ownership guidelines, which are described below, the Committee is also reviewing each executive officer’s progress in achieving their targeted stock ownership level as a criterion in establishing appropriate target equity grant levels.
For fiscal 2012, the Committee approved target annual equity award values for each of the Company’s executive officers and other equity eligible employees. These targets were expressed as a percentage of each individual’s base salary. For the Named Executive Officers the annual target equity award values in 2012, as a percentage of their base salaries, were as follows:
| | | Name
| | Equity Grant Target Value as a Percentage of Salary | Brian Goldner
| | 500% | David Hargreaves
| | 200% | Deborah Thomas
| | 150% | Duncan Billing
| | 150% | John Frascotti
| | 150% |
Mr. Goldner’s target equity incentive award for 2012 was increased from the target of 400% of base salary in 2011. Otherwise, the target award value for the Named Executive Officers in 2012 was the same as in 2011.
In addition to its own analysis and the recommendations of Compensation Advisory Partners, the Committee considers the recommendations of Mr. Goldner when establishing the target equity award levels for each of the other Named Executive Officers. In all cases the final target equity award values were set at levels the Committee believed would compensate the individual for future achievement of the Company’s long-term financial goals and stock price appreciation in a manner commensurate with their duties and contributions to the performance of the Company and its stock performance. As is the case with management incentive plan awards, the performance metrics are designed to reward Company performance, as opposed to individual performance.
The overall target annual equity award pool value for the Company’s executive officers and other equity award eligible employees as established by the Committee is generally divided 50/50 between two award types, non-qualified stock options and performance share awards, such that approximately 50% of the total target equity award value would be represented by each type of award in the pool. This division of the targeted award value reflected the Committee’s belief that over the performance period the realization of equity award values should be divided between achievement of the Company’s longer-term internal financial targets and the Company’s stock price appreciation. The Committee exercises some discretion in adjusting the specific per share option and performance share award division for each Named Executive Officer, such that the ultimate awards may not be exactly even, in terms of the value of the portion attributable to options and the value of the portion attributable
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to performance shares. The target values for 2012 were based on the Company’s share price at the end of fiscal 2011. Changes in the share price from that date to the February 2012 grant resulted in the value of the stock awards being higher than the value of the option awards for 2012.
For the approximately 50% of the annual equity award value in 2012, which was made in the form of stock performance awards, these awards provide the recipient with the potential to earn shares of the Company’s common stock based on the Company’s achievement of stated cumulative diluted earnings per share (“EPS”) and cumulative net revenue (“Revenue”) targets over a three-year period beginning January 2012 and ending December 2014 (the “Performance Period”). The cumulative net revenue and diluted earnings per share targets were taken from the Company’s long-term strategic plan (for the years 2013 and 2014) and the Company’s budget and operating plan (for 2012) as those plans had been approved by the Company’s Board of Directors.
The Company considers the specific target EPS and Revenue levels for ongoing performance periods to be confidential information which would harm the Company if it were disclosed, as they are based on confidential internal plans and forward-looking expectations concerning the Company’s performance over a multi-year period. The financial targets reflected in the Company’s budget and operating plan, and in the Company’s strategic plan, as well as the performance targets set forth in the contingent stock performance awards and in the management incentive awards, both of which are based on the Board approved plan levels, were all set at levels which the Committee and the Board determined will challenge the Company and its executive team in working to meet the objectives and will require solid performance from the Company, and in turn its executives, in order to achieve a threshold payout, and superior performance in managing the Company’s business to achieve a higher than target payout. The maximum payout under the contingent stock performance awards granted in 2012 for overachievement of the financial objectives is equal to 200% of the target number of shares. Threshold performance for both metrics must be achieved to earn a threshold payout of 50% of the target number of shares under those awards.
The following table shows the target share payouts, as a percentage of the target number of shares covered by a stock performance award, corresponding with various combined levels of achievement against the EPS and Revenue targets for the contingent stock performance awards made in 2012.
Revenues Measure
| | | | | | | | | | | | | EPS Measure | | Revenues 25% or more over Target | | Revenues of at least 10% over, but not 25% or more
over, Target | | Revenues of at least Target but not 10% or more over Target | | Revenues of at least 95% of Target but less than Target | | Revenues of at least 90% of Target but less than 95% of Target | | Revenues of under 90% of Target | EPS of 25% or more over Target | | 200% | | 163% | | 150% | | 138% | | 125% | | 0% | EPS at least 10% over, but not 25% or more over, Target | | 163% | | 125% | | 113% | | 100% | | 88% | | 0% | EPS of at least Target but not 10% or more over Target | | 150% | | 113% | | 100% | | 88% | | 75% | | 0% | EPS of at least 95% of Target but less than Target | | 138% | | 100% | | 88% | | 75% | | 63% | | 0% | EPS of at least 90% of Target but less than 95% of Target | | 125% | | 88% | | 75% | | 63% | | 50% | | 0% | EPS under 90% of Target | | 0% | | 0% | | 0% | | 0% | | 0% | | 0% |
Ninety-percent (90%) achievement of each target under the contingent stock performance awards was established as a threshold to that metric contributing to the ultimate award payout under the contingent stock performance awards granted in 2012, which will be earned, to the extent applicable, at the end of 2014. Each stock performance award has a target number of shares of common stock, a portion of which may be earned by the recipient if the Company achieves at least 90% of the stated EPS and Revenue targets over the Performance Period. For example, 90% achievement of both of the performance metrics corresponds with a planned payout of 50% of the target number of shares. The actual number of shares to be received at the end of the Performance
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Period can be below or above the target number based on the actual levels of the target performance achieved against the two metrics. In all cases the Committee retained the right to reduce the number of actual shares received pursuant to any award to any level, including 0%, to the extent it believes the actual payout should be below the number called for by the award agreements.
For the grant of contingent stock performance awards made in early 2010, the three-year performance period ended in December 2012. Those awards had the same performance grid as is set forth above.
The table set forth below shows how the Company performed against the net revenues and EPS performance metrics set forth in the 2010 contingent stock performance awards.
Actual Performance Under the 2010 Contingent Stock Performance Awards
| | | | | | | | | | | | | | | | Target
Performance | | | Actual Performance | | | % of Target | | Cumulative Revenues | | $ | 14,342,000,000 | | | $ | 12,152,552,000 | | | | 84.7 | % | Cumulative EPS | | $ | 9.52 | | | $ | 8.26 | | | | 86.8 | % |
Because the Company’s performance against both the net revenue and earnings per share targets under the 2010 contingent stock performance awards was below the 90% thresholds necessary to earn any shares under the awards, absolutely no shares were earned by any of the recipients of the 2010 contingent stock performance awards. This is the case for the Named Executives Officers as well, including Mr. Goldner. In the Summary Compensation table appearing on page 57 of this proxy statement, Mr. Goldner is shown as having received contingent stock performance awards in 2010 with an aggregate grant date value of $9,688,837. However, the actual value realized by Mr. Goldner under these awards was $0, due to the Company’s strong performance targets, shortfall in meeting those targets, and direct pay for performance linkage in the contingent stock performance awards.
For the approximately 50% of the target equity award value made in the form of stock options, the options vest in three equal cumulative annual installments on the first three anniversaries of the date of grant, subject to the optionee’s continued employment with the Company through such dates, and have seven-year terms.
The Company does not manage the timing of equity grants to attempt to give participants the benefit of material non-public information. Further, 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 date of grant.
Prior to 2010, the Company has only infrequently used restricted stock and restricted stock units as a reward and retention mechanism. In 2010 and 2011 the Company did grant restricted stock units to a number of executive officers and other employees considered to be of significant value to the Company and its success to provide an additional retention mechanism. These awards were made above and beyond the targeted annual equity awards. The Company did not grant restricted stock units awards to any of the Named Executive Officers in 2012.
The restricted stock units granted in 2010 and 2011 cliff vest on the fifth anniversary of the date of grant provided the recipient stays employed with the Company during the five-year vesting period. Pro-rata vesting is provided earlier only in the event of the death, disability, or retirement at age 65, of the recipients. All other terminations of employment result in termination of the awards. Each of Ms. Thomas, Mr. Billing and Mr. Frascotti received a grant of 4,000 and 7,500 restricted stock units in 2011 and 2010, respectively.
The Committee believes the equity compensation awards to the Company’s executive officers are appropriate to properly incentivize these officers to achieve maximum performance, to align their interests with
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those of the Company’s shareholders, and to promote retention of executives, while not incentivizing the executive officers to take undue risks or otherwise take actions which are contrary to the best interests of the Company.
The stock option, performance share awards and restricted stock unit grants to the Company’s Named Executive Officers in 2012 are reflected in the Grants of Plan-Based Awards table that follows this report. The grant date for the Company’s yearly stock performance awards and options in fiscal 2012 was February 8, 2012.
Share Ownership Guidelines
The Company has share ownership guidelines which apply to all employees at or above the Senior Vice President level. The share ownership guidelines establish target share ownership levels which executives are expected to achieve over a five-year period and then maintain, absent extenuating circumstances which are approved by the Company’s Human Resources Department, for as long as they remain with the Company. The target ownership levels are expressed as a percentage of the executives’ base salary and range from 50% of yearly base salary for certain Senior Vice Presidents to 500% of base salary for the Company’s Chief Executive Officer. The table below shows the stock ownership levels, as a percentage of base salary, which each of the Named Executive Officers are required to achieve and maintain under the stock ownership guidelines. Each of the Named Executive Officers has achieved their share ownership requirements.
| | | | | Name
| | Share Ownership Requirement | | Brian Goldner
| | | 5 x Base Salary | | David Hargreaves
| | | 3 x Base Salary | | Deborah Thomas
| | | 2 x Base Salary | | Duncan Billing
| | | 2 x Base Salary | | John Frascotti
| | | 2 x Base Salary | |
In making the yearly equity grants the Committee specifically approves the grants for every member of the Company’s senior management team, which includes every executive officer. Other than the annual equity grants, off-cycle equity grants are made during the year generally only in the case of new hires or in connection with significant promotions or in the case of significant actions taken to increase the retention value of an equity compensation package. All of these off-cycle grants are also reviewed and approved by the Committee.
Executive Benefits
In addition to receipt of salary, management incentive awards and equity compensation, the Company’s U.S. based officers also participate in certain employee benefit programs provided by the Company.
Beginning in 2008, the Company provides retirement benefits to its employees primarily through the 401(k) Retirement Savings Plan (the “401(k) Plan”) and the Supplemental Benefit Retirement Plan (the “Supplemental Plan”). The Company’s Pension Plan (the “Pension Plan”) and the pension portion of the Supplemental Plan were frozen effective December 31, 2007. The enhanced 401(k) Plan and the Supplemental Plan, provide for Company matching contributions, an annual Company contribution of 3% of aggregate salary and bonus and a transition contribution ranging from 1% to 9% for the years 2008 through 2012 for participants meeting certain age and service requirements. In lieu of the annual Company and transition contributions, Mr. Hargreaves receives certain retirement benefits discussed below. Other executive officers are eligible to participate in the 401(k) Plan and the Supplemental Plan on the same basis as all other U.S. Hasbro employees.
Executive officers hired prior to December 31, 2007, continue to participate in the Pension Plan and the pension portion of the Supplemental Plan, which are described starting on page 65 of this proxy statement, but, except as is discussed below for Mr. Hargreaves, will not accrue additional benefits thereunder after December 31, 2007.
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The Supplemental Plan is intended to provide a competitive benefit for employees whose employer-provided pension benefits and retirement contributions would otherwise be limited. However, the Supplemental Plan is designed only to provide the benefit which the executive would have accrued under the Company’s Pension Plan and 401(k) Plan if the Code limits had not applied. It does not further enhance those benefits.
The amount of the Company’s contributions to the Named Executive Officers under both the 401(k) Plan and the Supplemental Plan (401(k)), are included in the “All Other Compensation” column of the Summary Compensation Table that follows this report.
In light of the significant reduction in projected retirement income resulting from the retirement program redesign, the Company elected to provide Mr. Hargreaves, who has been with the Company for 30 years, with a retirement benefit which effectively grandfathered for Mr. Hargreaves the Company’s retirement program as it was in effect prior to January 1, 2008. Mr. Hargreaves retirement benefit is described on page 67 of this proxy statement.
The executive officers of the Company are eligible for life insurance benefits on the terms applicable to the Company’s other employees. The Company’s executive officers participate in the same medical and dental benefit plans as are provided to the Company’s other employees.
Executive officers are also eligible to participate in the Company’s Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”), which is available to all of the Company’s employees who are in band 40 (director level) or above and whose annual compensation is equal to or greater than $115,000. The Deferred Compensation Plan allows participants to defer compensation into various investment vehicles, the performance of which determines the return on compensation deferred under the plan. Potential investment choices include a fixed rate option, a choice that tracks the performance of the Company’s Common Stock, and other equity indices. Earnings on compensation deferred by the executive officers do not exceed the returns on the relevant investments earned by other non-executive officer employees deferring compensation into the applicable investment vehicles.
The Company reimburses designated executive officers for the cost of certain tax, legal and financial planning services they obtain from third parties provided that such costs are within the limits established by the Company. The 2012 annual limit on these costs for the Chief Executive Officer was $25,000, for the Chief Operating Officer was $7,500, and for the Chief Financial Officer was $5,000. In 2012 Mr. Goldner’s reimbursement exceeded the above limit due to reimbursement of certain costs associated with the negotiation of his amended and restated employment agreement, which was approved by the Compensation Committee. The cost to the Company for this reimbursement to the Named Executive Officers is included in the “All Other Compensation” column of the Summary Compensation Table.
2012 Amended and Restated Employment Agreement with Mr. Goldner
In recognition of Mr. Goldner’s critical role in continuing the transformation of Hasbro into a global branded-play company and in executing Hasbro’s future business strategies, effective on October 4, 2012 the Company entered into an Amended and Restated Employment Agreement (the “Amended Employment Agreement”) with its President and Chief Executive Officer, Brian Goldner. The Amended Employment Agreement replaced the Amended and Restated Employment Agreement, dated March 26, 2010, and the Change in Control Employment Agreement, dated March 18, 2000, as amended (together referred to as the “Prior Agreements”) previously in place between Mr. Goldner and the Company.
Prior to the Amended Employment Agreement, Mr. Goldner’s employment term was scheduled to expire at the end of 2014. With only two years remaining in that term the Committee believed it was vital to ensure Mr. Goldner’s continued service to the Company.
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The Amended Employment Agreement implements a number of compensation and governance best practices by, among other things:
eliminating the tax-gross up provisions contained in the Prior Agreements with respect to excess parachute payments under Section 4999 and taxes and charges under Section 409A of the Internal Revenue Code;
eliminating the auto-renewal feature contained in the Prior Agreements, pursuant to which the term of Mr. Goldner’s employment with the Company would continue to be automatically extended for additional one-year periods unless Mr. Goldner or the Company provided notice of non-renewal;
eliminating a special bonus which was payable under the Prior Agreements one year following a change in control of the Company provided Mr. Goldner remained employed with the Company through that one-year anniversary;
subjecting all of Mr. Goldner’s incentive-based compensation, both cash and equity-based incentive compensation, granted on or after October 4, 2012 to the Company’s newly-adopted Clawback Policy and to future clawback policies that apply to senior management of the Company; and
by providing for a more restrictive definition of a Change in Control than was provided in the Prior Agreements.
Enhanced Pay for Performance Linkage and Retention
The Amended Employment Agreement also:
extends the term of Mr. Goldner’s scheduled employment with the Company for three years, from the previously scheduled expiration date of December 31, 2014 to the new expiration date of December 31, 2017; and
provides additional performance-based equity incentives designed to retain Mr. Goldner in the employ of the Company during this extended term and to strengthen the linkage between Mr. Goldner’s potential future compensation and Hasbro’s performance and delivery of shareholder value.
To further drive the linkage between the Company’s performance and Mr. Goldner’s compensation, and to provide an additional incentive for Mr. Goldner to remain employed with the Company through December 31, 2017, the Amended Employment Agreement provides for the grant to Mr. Goldner of an aggregate of 587,294 restricted stock units (referred to as the “Special RSU Grant”). The Special RSU Grant will be made in two tranches, one scheduled to be made in April of 2013 and the other scheduled to be made in 2014. Both tranches of the Special RSU Grant are currently expected to be granted at the same time that the Company makes its yearly equity awards to other equity eligible employees. The second tranche of the Special RSU Grant is subject to shareholder approval of an amendment to the Company’s equity stock incentive performance plan authorizing the issuance of additional shares under the plan, or adoption of a new equity performance plan, in 2013 or thereafter during the term of the Amended Employment Agreement. If such approval is obtained after 2013, the second tranche will be made at such time during the term that the Company secures that approval.
Both tranches of the Special RSU Grant have two vesting components, each of which must be satisfied for Mr. Goldner to earn any shares under the award. The first vesting component is based entirely on achievement of specified Hasbro stock price thresholds, with each threshold being progressively higher. The stock price thresholds and the percentage of the shares subject to the Special RSU Grant attributable to achievement of each threshold are as follows:
| | | Stock Price Threshold
| | Percentage of Shares Earned
| $45/share
| | 25% | $52/share
| | 25% | $56/share
| | 25% | $60/share
| | 25% |
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To achieve the stock price thresholds the average closing sales prices for Hasbro’s common stock must trade at or above the applicable threshold price for at least 30 consecutive trading days at some time after the grant of the award and during the term of Mr. Goldner’s employment. The second vesting component requires that, subject to certain termination scenarios which are discussed below, Mr. Goldner must remain continuously employed with the Company through December 31, 2017 to earn any shares under the Special RSU Grant.
The Amended Employment Agreement provides that Mr. Goldner will participate in Hasbro’s other long-term incentive programs during the term of his employment and will have an annual long-term equity grant target level equal to five (5) times his annualized base salary for each year. For the last several years the annual equity grant to Mr. Goldner and Hasbro’s other senior executives has been made in a combination of stock options and contingent stock performance awards, with the grant date value being divided roughly evenly between those two types of awards. The contingent stock performance awards have provided senior executives with the ability to earn shares of Hasbro’s stock based upon achievement of stated net revenues and earnings per share performance targets during the applicable three-year performance period for each contingent stock performance award.
The Amended Employment Agreement provides that for the contingent stock performance awards intended to be made to Mr. Goldner in each of 2013 and 2014 (with the grant in 2014 being subject to shareholder approval of an amendment to the Company’s equity compensation plan authorizing the issuance of additional shares under the plan, or adoption of a new equity performance plan, in 2013 or thereafter, with such grant being made in 2014 or at such time thereafter following the Company’s securing such approval), those awards will have an additional relative total shareholder return performance multiplier. This additional performance multiplier enhances the linkage between the payout under those awards and the value generated for Hasbro’s shareholders by increasing, or decreasing, the number of shares which would otherwise be earned by Mr. Goldner under those awards based upon a comparison of Hasbro’s total shareholder return to the total shareholder return for the Standard & Poor’s 500 Index (“S&P 500 Index”) over the three-year performance period applicable to each contingent stock performance award.
If the total shareholder return (computed as a function of changes in the stock price and the value of dividends earned on the stock) for Hasbro’s common shares is greater than or equal to the 75th percentile of the S&P 500 Index over the applicable three-year performance period for one or both of these contingent stock performance awards, Mr. Goldner earns twice the number of shares he would otherwise have earned under such award. A total shareholder return between the 65th and 75th percentiles results in a payout of 1.5 times the number of shares which would otherwise be earned under the awards. If Hasbro’s total shareholder return is below the 25th percentile of the S&P 500 Index over the applicable three-year performance period for the contingent stock performance awards, Mr. Goldner will only earn 75% of the number of shares he otherwise would have earned under such awards.
The multiplier based on relative total shareholder return for Hasbro’s stock as compared to the S&P 500 Index is applied after the underlying performance metrics for these contingent stock performance awards is calculated. For example, if the Company’s net revenues and earnings per share metrics for a given contingent stock performance award were not achieved, no shares would be earned under such award and the total shareholder return multiplier would not change that underlying result. The multiplier is only applied to the shares that are otherwise earned under the award based upon achievement of the underlying performance metrics.
Other Compensation
The Amended Employment Agreement provides that the Company will continue to pay Mr. Goldner his current annualized base salary of $1,200,000 through June 30, 2013. Beginning July 1, 2013 the Company will pay Mr. Goldner an annualized based salary of $1,300,000.
For 2012 Mr. Goldner remains eligible, as he was under the Prior Agreements, to receive a management incentive plan bonus based on a target of one hundred and twenty-five percent (125%) of his earned base salary. Beginning in 2013 Mr. Goldner is eligible to receive a management incentive plan bonus based on a target of one hundred and fifty percent (150%) of his earned base salary.
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Thereafter Mr. Goldner’s base salary, management incentive bonus target and long-term incentive target will be reviewed in accordance with the Company’s compensation policies for senior executives and will be adjusted to the extent, if any, deemed appropriate by the Compensation Committee of the Company’s Board of Directors.
Post-Employment Restrictions
The Amended Employment Agreement contains certain post-employment restrictions on Mr. Goldner, including:
a two-year non-competition provision which prohibits Mr. Goldner from engaging, in any geographical area in which Hasbro is doing business at the time of the termination of his employment, in any business which is competitive with the business of Hasbro as it exists at the time of termination of Mr. Goldner’s employment; and
a two-year non-solicitation provision, providing that Mr. Goldner will not (a) solicit or recruit any employee of Hasbro to leave the Company or (b) solicit the business of any clients, customers or accounts of Hasbro.
If Mr. Goldner violates these restrictions and does not cure such violation, the Amended Employment Agreement provides that he will forfeit and pay to Hasbro the Net Proceeds (as defined in the Amended Employment Agreement) obtained with respect to any unvested stock options, restricted stock units, contingent stock performance awards or other equity that had been accelerated in connection with the termination of his employment by Hasbro without Cause (as defined in the Amended Employment Agreement) or by Mr. Goldner for Good Reason (as defined in the Amended Employment Agreement).
The Amended Employment Agreement with Mr. Goldner is discussed in more detail beginning on page 76 of this proxy statement.
Other Change of Control Agreements and Plans
Mr. Hargreaves is party to a Change in Control Agreement with the Company. Mr. Hargreaves is also party to an arrangement grandfathering certain aspects of the Company’s pension plans for him. Both of these agreements and arrangements, and the payments which the executive can receive in certain situations, are described in detail under the caption “Agreements and Arrangements Providing Post-Employment and Change in Control Benefits” that follows this report. The Committee authorizes the Company to enter into Change of Control or other employment related agreements or arrangements with executives only in those situations where the Committee feels doing so is necessary to recruit and/or retain the most talented executives and to provide optimal incentive to the executive in question to work to maximize the performance of the Company and the creation of long-term value for the Company’s shareholders. The change in control provisions in these agreements are generally double-trigger provisions in that the executive officer receives the majority of benefits under the agreements only if, following a change in control, the individual executive officer is either terminated by the Company without cause, or leaves on account of events which qualify under the definition of good reason in the agreement. The Company believes that double-trigger change in control agreements are generally most appropriate as an executive would only be compensated thereunder in the event that the executive was no longer employed with the Company following the change in control.
The Company’s equity compensation plans currently provide that equity awards (including performance share awards) for all participants, including the Named Executive Officers, fully vest in the event of a change in control of the Company. The participant is entitled to receive the value of such awards either in cash or shares of the Company’s stock, determined in the Committee’s discretion, following such change in control. However, if the shareholders approve the amendment to the Restated 2003 Stock Incentive Performance Plan which is set forth beginning on page 87 of this proxy statement, then for all equity awards granted after the date of such
54
approval, such equity awards will contain a double trigger and will not vest following a change in control unless the award recipient’s employment with the Company is terminated.
In 2011 the Company adopted the Hasbro, Inc. Change in Control Severance Plan for Designated Senior Executives (the “Plan”). Participants in the Plan include Ms. Thomas, Mr. Billing and Mr. Frascotti. Mr. Goldner and Mr. Hargreaves do not participate in the Plan as they were subject to pre-existing Change in Control Agreements. Under the Plan, if a Change in Control (as defined in the Plan) occurs and the covered executive’s employment is terminated by the Company without Cause (as defined in the Plan) or the covered executive resigns from the Company with Good Reason (as defined in the Plan) in the 24 month period following the Change in Control, the covered executive will be entitled to the following payments and benefits: (A) two times the sum of the (i) covered executive’s annual base salary in effect on the date of termination (or, if higher, immediately preceding the Change in Control), and (ii) percentage of earned salary which constitutes the target bonus for the covered executive assuming target Company performance under the annual incentive plan in place at the time of termination, and (B) payment by the Company of the employer and employee premiums for continued health coverage for the covered executive and his/her covered dependents for the shorter of 12 months following cessation of employment and the period for which the individuals are eligible for and elect such coverage.
The annual base salary and target bonus payouts will be reduced by an amount equal to the total of severance payments to which the covered executive is entitled to receive or will receive under any other severance plan, policy or individual agreement applicable to the covered executive’s employment termination. The severance payments and benefits above are subject to the covered executive complying with a non-competition covenant, which is effective while the covered executive is employed by the Company and for a period of 18 months after the covered executive’s employment ends, regardless of the reason for the termination of employment. The Plan does not provide for any tax gross-ups and does not provide benefits to the executive unless their employment with the Company is terminated.
Actions Taken After the 2012 Fiscal Year End
Effective on February 6, 2013, Mr. Hargreaves, formerly the Company’s Chief Operating Officer, was appointed Executive Vice President and Chief Strategy Officer. In this role, Mr. Hargreaves will focus on building the Company’s new business pipeline, identifying opportunities for long-term growth and on fostering relationships with current and new business partners. Beginning in 2013, Mr. Hargreaves will no longer participate in the Company’s equity compensation plans, and will instead receive his variable incentive based compensation through an enhanced annual cash incentive compensation opportunity, the target for which was increased, effective in 2013, from 80% of his base salary to 125% of his base salary. Mr. Hargreaves’ former responsibilities for the Company’s global sales organizations have been assumed by Wiebe Tinga, who was promoted to Chief Commercial Officer of the Company on February 6, 2013.
In recognition of their key contributions to the Company, and the role they are playing in the Company’s future business performance and development, in March of 2013 each of Ms. Thomas, Mr. Billing and Mr. Frascotti were promoted to Executive Vice President. None of these officers received any salary increase as part of such promotions. However, for 2013 the target annual cash incentive compensation opportunity for each of them was increased from 60% to 70% of their base salary, and the target annual equity compensation grants were increased from 150% to 175% of their base salary. This increase in variable compensation will strengthen the alignment between pay and performance and provide an enhanced reward for these key executives only if the Company achieves its objectives.
Risk AssessmentManagement As part of structuring the Company’s executive compensation programs, the Committee (A) evaluates the connection between such programs and the risk-taking incentives they engender, to ensure that the Company is incenting its executives to take an appropriate level of business risk, but not excessive risk, and (B) considers any 55
changes in the Company’s risk profile and whether those changes should impact the compensation structure. To achieve this appropriate level of risk taking, and avoid excessive risk, the Committee structures the compensation program to (i) link the performance objectives under all incentive-based compensation to the strategic and operating plans of the Company which are approved by the full Board of Directors, with the Board ensuring that the goals set forth in such plans require significant performance to achieve, but are not so out of reach that they require excessively aggressive behavior to be met, (ii) provide for a balance of shorter-term objectives or exercise periods (such as the annual cash incentive plan objectives) and longer-term objectives or exercise periods (such as the three-year performance period under the contingent stock performance awards and seven-year option terms) to mitigate the risk that short-term performance would be driven at the expense of longer-term performance and shareholder value creation, and (iii) include stock ownership guidelines which require executives to maintain significant equity ownership during their entire career with the Company, thus linking personal financial results for the executives with the investment performance experienced by the Company’s shareholders. In addition to the analysis performed by the Committee, the Committee also had Compensation Advisory Partners (CAP)CAP perform a risk assessment of the Company’s executive compensation programs for 20122014 and advise on the appropriateness of the levels of risk presented by those programs and the effectiveness of their design to mitigate risk. As a result of its analysis and the work performed by CAP, the Committee believes the Company’s compensation programs promote appropriate, but not excessive, risk taking and are designed to best further the interests of the Company while mitigating risk. Tax Considerations Although the Company considers the tax treatment, including the requirements of Code Section 162(m), and the accounting treatment of various forms of compensation in determining the elements of its executive compensation program and, to the extent it is consistent with meeting the objectives of the Company’s executive compensation program, structures such compensation to maximize the ability of the Company to receive a tax deduction for such compensation, the Company feels strongly that maximizing the performance of the Company and its executives is more important than assuring that every element of compensation complies with the requirements for tax deductibility under Section 162(m). The Company selects performance goals under its variable compensation programs that are intended to be objective within the meaning of the Code, such as achieving certain net revenues, operating margin, free cash flow, earnings per share or ROIC goals. However, in certain situations, such as with our targeted retention grants of restricted stock units, the Company may feel a particular goal, such as retaining a key talented individual, is very important to the Company, even though the form of compensation being used is not considered objective within the meaning of the Code or the associated compensation is otherwise not deductible under the requirements of Section 162(m). The Company reserves the right to compensate executives for achievement of such objectives, or to reflect other individual performance measures in an executive’s compensation, even if they do not comply with the requirements of Section 162(m). 56
| | | 40 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
EXECUTIVE COMPENSATIONExecutive Compensation
The following table summarizes compensation paid by the Company for services rendered during fiscal 2012,2014, fiscal 20112013 and fiscal 20102012 by any person serving as the Company’s Chief Executive Officer during any part of fiscal 2012,2014, by any person serving as the Company’s Chief Financial Officer during any part of fiscal 2012,2014, and by the three other most highly compensated executive officers of the Company in fiscal 20122014 (to the extent that such person was an executive officer during the year in question). Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary(a) | | | Bonus | | | Stock
Awards(b) | | | Option
Awards(b) | | | Non-Equity
Incentive Plan
Compensation
(a)(c) | | | Change in
Pension Value
and NQDC
Earnings(d) | | | All Other
Compensation
(e) | | | Total | | Brian Goldner(f) | | | 2012 | | | $ | 1,200,000 | | | $ | 0 | | | $ | 3,350,509 | | | $ | 2,640,821 | | | $ | 2,000,000 | | | $ | 174,041 | | | $ | 318,914 | | | $ | 9,684,285 | | President and Chief | | | 2011 | | | | 1,200,000 | | | | 0 | | | | 2,233,459 | | | | 2,134,709 | | | | 1,500,000 | | | | 95,144 | | | | 389,270 | | | | 7,552,582 | | Executive Officer | | | 2010 | | | | 1,180,769 | | | | 0 | | | | 9,688,837 | | | | 9,132,035 | | | | 2,600,000 | | | | 131,168 | | | | 420,662 | | | | 23,153,471 | | | | | | | | | | | | David D.R. Hargreaves(g) | | | 2012 | | | | 800,000 | | | | 0 | | | | 893,474 | | | | 704,220 | | | | 1,000,000 | | | | 1,207,529 | | | | 98,000 | | | | 4,703,223 | | Executive Vice President and | | | 2011 | | | | 800,000 | | | | 0 | | | | 744,486 | | | | 711,570 | | | | 750,000 | | | | 1,547,459 | | | | 147,100 | | | | 4,700,615 | | Chief Strategy Officer | | | 2010 | | | | 790,385 | | | | 0 | | | | 786,451 | | | | 697,014 | | | | 1,600,000 | | | | 1,818,960 | | | | 154,423 | | | | 5,847,233 | | | | | | | | | | | | Deborah Thomas(h) | | | 2012 | | | | 515,000 | | | | 0 | | | | 542,025 | | | | 420,550 | | | | 320,000 | | | | 64,486 | | | | 77,450 | | | | 1,939,511 | | Executive Vice President and | | | 2011 | | | | 511,154 | | | | 0 | | | | 519,161 | | | | 385,077 | | | | 245,000 | | | | 26,705 | | | | 82,115 | | | | 1,769,212 | | Chief Financial Officer | | | 2010 | | | | 472,596 | | | | 0 | | | | 662,928 | | | | 310,391 | | | | 310,000 | | | | 29,672 | | | | 86,860 | | | | 1,872,447 | | | | | | | | | | | | Duncan Billing(i) | | | 2012 | | | | 485,000 | | | | 0 | | | | 542,025 | | | | 420,550 | | | | 280,000 | | | | 204,934 | | | | 89,400 | | | | 2,021,909 | | Executive Vice President and | | | 2011 | | | | 485,000 | | | | 0 | | | | 566,693 | | | | 375,445 | | | | 260,000 | | | | 92,431 | | | | 98,400 | | | | 1,877,969 | | Chief Development Officer | | | 2010 | | | | 478,029 | | | | 0 | | | | 670,328 | | | | 316,923 | | | | 335,000 | | | | 102,950 | | | | 117,363 | | | | 2,020,593 | | | | | | | | | | | | John Frascotti(j) | | | 2012 | | | | 485,000 | | | | 0 | | | | 542,025 | | | | 420,550 | | | | 280,000 | | | | 1,328 | | | | 67,050 | | | | 1,795,953 | | Executive Vice President and | | | 2011 | | | | 485,000 | | | | 0 | | | | 566,693 | | | | 375,445 | | | | 260,000 | | | | 966 | | | | 73,800 | | | | 1,761,904 | | Chief Marketing Officer | | | 2010 | | | | 479,231 | | | | 0 | | | | 670,328 | | | | 316,923 | | | | 335,000 | | | | 302 | | | | 88,131 | | | | 1,889,915 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Fiscal
Year | | | Salary(a) | | | Bonus | | | Stock
Awards(b) | | | Option Awards(b) | | | Non-Equity
Incentive Plan Compensation (a)(c) | | | Change in
Pension Value
and
Non-Qualified
Deferred
Compensation
Earnings(d) | | | All Other
Compensation (e) | | | Total | | Brian Goldner(f) | | | 2014 | | | | $1,300,000 | | | | $ 0 | | | | $ 7,741,677 | | | | $2,798,372 | | | | $2,300,000 | | | | $185,125 | | | | $297,938 | | | | $14,623,112 | | | President and Chief | | | 2013 | | | | $1,248,077 | | | | $ 0 | | | | $21,562,343 | | | | $2,421,045 | | | | $1,800,000 | | | | $ 61,934 | | | | $347,327 | | | | $27,440,726 | | | Executive Officer | | | 2012 | | | | $1,200,000 | | | | $ 0 | | | | $ 3,350,509 | | | | $2,640,821 | | | | $2,000,000 | | | | $174,041 | | | | $318,914 | | | | $ 9,684,285 | | Deborah Thomas(g) | | | 2014 | | | | $ 554,504 | | | | $ 0 | | | | $ 726,935 | | | | $ 199,090 | | | | $ 525,000 | | | | $ 66,365 | | | | $ 86,780 | | | | $ 2,158,674 | | | Executive Vice President and | | | 2013 | | | | $ 527,981 | | | | $ 0 | | | | $ 878,910 | | | | $ 195,359 | | | | $ 400,000 | | | | $ 8,193 | | | | $ 77,193 | | | | $ 2,087,636 | | | Chief Financial Officer | | | 2012 | | | | $ 515,000 | | | | $ 0 | | | | $ 542,025 | | | | $ 420,550 | | | | $ 320,000 | | | | $ 64,486 | | | | $ 77,450 | | | | $ 1,939,511 | | Duncan Billing(h) | | | 2014 | | | | $ 522,505 | | | | $ 0 | | | | $ 721,724 | | | | $ 189,830 | | | | $ 500,000 | | | | $197,195 | | | | $ 83,025 | | | | $ 2,214,279 | | | Executive Vice President, | | | 2013 | | | | $ 499,423 | | | | $ 0 | | | | $ 955,901 | | | | $ 234,104 | | | | $ 400,000 | | | | $ 13,886 | | | | $ 70,148 | | | | $ 2,173,462 | | | Chief Global Operations and | | | 2012 | | | | $ 485,000 | | | | $ 0 | | | | $ 542,025 | | | | $ 420,550 | | | | $ 280,000 | | | | $204,934 | | | | $ 89,400 | | | | $ 2,021,909 | | | Business Development Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | John Frascotti(i) | | | 2014 | | | | $ 557,501 | | | | $ 0 | | | | $ 721,724 | | | | $ 189,830 | | | | $ 550,000 | | | | $ 3,126 | | | | $ 86,175 | | | | $ 2,108,356 | | | President, Hasbro Brands | | | 2013 | | | | $ 499,423 | | | | $ 0 | | | | $ 955,901 | | | | $ 234,104 | | | | $ 400,000 | | | | $ 5,514 | | | | $ 70,148 | | | | $ 2,165,090 | | | | | 2012 | | | | $ 485,000 | | | | $ 0 | | | | $ 542,025 | | | | $ 420,550 | | | | $ 280,000 | | | | $ 1,328 | | | | $ 67,050 | | | | $ 1,795,953 | | Wiebe Tinga(j) | | | 2014 | | | | $ 589,749 | | | | $ 0 | | | | $ 718,493 | | | | $ 191,441 | | | | $ 500,000 | | | | $461,984 | | | | $ 32,453 | | | | $ 2,494,120 | | | Executive Vice President and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chief Commercial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | Includes amounts deferred pursuant to the Company’s 401(k) Plan and Non-qualified Deferred Compensation Plan (the “Deferred Compensation Plan”). |
| (b) | Reflects the grant date fair value for stock and option awards to the Named Executive Officers. Please see note 13 to the financial statements included in the Company’s Annual Report on Form 10-K, for the year ended December 30, 2012,28, 2014, for a detailed discussion of assumptions used in valuing options and stock awards generally, and see footnote (d)(f) to the following Grants of Plan-Based Awards table for a discussion of certain assumptions used in valuing equity awards made to the NEOs. |
| In each of the years shown, these executives were granted non-qualified stock options and contingent stock performance awards. Each of Mr. Goldner, Ms. Thomas, Mr. Billing, Mr. Frascotti, and Mr. Tinga were granted restricted stock units in 2013 and 2014. For Mr. Goldner, these grants were comprised of the special restricted stock unit grants. |
| The grant date fair values included in the table of the contingent stock performance awards, and for Mr. Goldner, the 2013 and 2014 tranches of his special RSU award, have been calculated based on the probable outcomes under such awards (assumed to be realization of the target values of such awards). If it were assumed that the maximum amount payable under each of the contingent stock performance awards were paid, which maximum is 200% of the target value, then the grant date fair values included under the stock award column for each of the Named Executive Officers.Officers for performance shares in 2014, would have been as follows: Mr. Goldner $6,998,269, Ms. Thomas $964,035, Mr. Billing $964,035, Mr. Frascotti $964,035, and Mr. Tinga $957,573. This is in addition to the grant date value of restricted stock units. In addition, for Mr. Goldner, if it were assumed that the maximum amount payable under his special RSU award was ultimately paid, which maximum is 100% of the units granted in 2014, then the grant date fair value included would have the same as the target amount, or $4,242,542. |
In each of the years shown, these executives were granted non-qualified stock options and contingent stock performance awards. Each of Ms. Thomas, Mr. Billing and Mr. Frascotti were granted restricted stock units in 2010 and 2011.
The grant date fair values included in the table for the contingent stock awards have been calculated based on the probable outcomes under such awards (assumed to be realization of the target values of such awards). If it were assumed that the maximum amount payable under each of these awards were ultimately paid, which maximum is 200% of the target value for contingent stock performance awards granted in 2012, then the grant date fair values included under the stock award column for each of the Named Executive Officers in 2012, would have been as follows: Mr. Goldner $6,701,018, Mr. Hargreaves $1,786,948, Ms. Thomas $1,084,050, Mr. Billing $1,084,050 and Mr. Frascotti $1,084,050.
| (c) | For Mr.Messrs. Goldner, Billing, Frascotti, and Mr. HargreavesTinga these amounts consist entirely of the management incentive awards earned by such executives under the Company’s 20092014 Senior Management Annual Performance Plan for |
57
| fiscal 2012, 2011 and 2010. the applicable year. For Ms. Thomas these amounts consist entirely of the management incentive awards earned by her under the Company’s Management Incentive2014 Performance Rewards Plan for the applicable year. For Mr. Billing and Mr. Frascotti these amounts consist of the management incentive awards earned by such executives under the Company’s 2009 Senior Management Annual Performance Plan for fiscal 2012 and 2011, and of the management incentive awards earned by such executives under the Company’s Management Incentive Plan for fiscal 2010. |
| (d) | The amounts reflected in this table primarily consist of the change in pension value during fiscal 2012,2014, fiscal 20112013, and fiscal 20102012 for each Named Executive Officer. |
| The significantamounts reflected in this table also include the following amounts which were earned on balances under the Supplemental Plan and are considered above market, as the Company paid interest on account balances at a rate of 5.2%, when 120% of the applicable long-term rate was 4.19%: |
| | | | | | | | 2014 | | Brian Goldner | | $ | 32,114 | | Deborah Thomas | | $ | 4,454 | | Duncan Billing | | $ | 7,086 | | John Frascotti | | $ | 3,126 | | Wiebe Tinga | | $ | — | |
| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 41 |
| Does not include the following aggregate amounts, in fiscal 2014, fiscal 2013 and fiscal 2012 respectively, which were earned by the executives on the balance of (i) compensation previously deferred by them under the Deferred Compensation Plan and (ii) amounts previously contributed by the Company to the executive’s account under the Supplemental Plan (401(k)): |
| | | | | | | | | | | | | | | | 2014 | | | 2013 | | | 2012 | | | Brian Goldner | | $ | 242,513 | | | $ | 323,543 | | | $ | 182,034 | | | Deborah Thomas | | $ | 43,605 | | | $ | 67,877 | | | $ | 46,110 | | | Duncan Billing | | $ | 36,923 | | | $ | 107,730 | | | $ | 60,826 | | | John Frascotti | | $ | 22,608 | | | $ | 17,878 | | | $ | 11,942 | | | Wiebe Tinga | | $ | — | | | $ | — | | | $ | — | |
| Earnings on compensation previously deferred by the executive officers and on the Company’s prior contributions to the Supplemental Plan do not exceed the market returns on the relevant investments which are earned by other participants selecting the same investment options. |
| For fiscal 2014, all of the Named Executive Officers experienced an increase in Mr. Hargreaves’ Change in Pension Values resulted largely from the fact thatpresent value of their pension benefits versus the pension benefit is computed as a function of a rolling five-year compensation average and Mr. Hargreaves’ eligible compensation has increased in recent yearsprevious fiscal year, 2013. This was primarily due to higher incentive compensation earnings and his more senior positions with the Company.decrease in market interest rates as well as the update in mortality tables used to calculate the present value of their benefits. For Mr. Tinga the increase is also attributable to the additional year of benefit accrual earned. |
The amounts reflected in this table also include the following amounts which were earned on balances under the Supplemental Plan and are considered above market, as the Company paid interest on account balances at a rate of 5.60%, when 120% of the applicable long-term rate was 4.66%:
| | | | | | | | 2012 | | Brian Goldner | | $ | 16,877 | | David Hargreaves | | $ | 7,883 | | Deborah Thomas | | $ | 2,098 | | Duncan Billing | | $ | 3,773 | | John Frascotti | | $ | 1,328 | |
Does not include the following aggregate amounts, in fiscal 2012, fiscal 2011 and fiscal 2010 respectively, which were earned by the executives on the balance of (i) compensation previously deferred by them under the Deferred Compensation Plan and (ii) amounts previously contributed by the Company to the executive’s account under the Supplemental Plan (401(k)):
| | | | | | | | | | | | | | | | 2012 | | | 2011 | | | 2010 | | Brian Goldner | | $ | 182,034 | | | $ | 97,396 | | | $ | 94,961 | | David Hargreaves | | $ | 523,943 | | | $ | 38,357 | | | $ | 429,619 | | Deborah Thomas | | $ | 46,110 | | | $ | 13,277 | | | $ | 30,467 | | Duncan Billing | | $ | 60,826 | | | $ | 4,202 | | | $ | 49,251 | | John Frascotti | | $ | 11,942 | | | $ | 5,702 | | | $ | 2,149 | |
Earnings on compensation previously deferred by the executive officers and on the Company’s prior contributions to the Supplemental Plan do not exceed the market returns on the relevant investments which are earned by other participants selecting the same investment options.
| (e) | Includes the following amounts, for fiscal 2012, fiscal 20112014, 2013 and fiscal 20102012 respectively, paid by the Company for each Named Executive Officer in connection with a program whereby certain financial planning, legal and tax preparation services provided to the individual are paid for by the Company: |
| | | | | | | | | | | | | | | | 2012 | | | 2011 | | | 2010 | | Brian Goldner | | $ | 38,914 | | | $ | 4,270 | | | $ | 27,585 | | David Hargreaves | | $ | 5,000 | | | $ | 3,100 | | | $ | 5,000 | | Deborah Thomas | | $ | 1,450 | | | $ | 0 | | | $ | 1,100 | | Duncan Billing | | $ | 0 | | | $ | 0 | | | $ | 0 | | John Frascotti | | $ | 0 | | | $ | 0 | | | $ | 0 | |
| | | | | | | | | | | | | | | | 2014 | | | 2013 | | | 2012 | | | Brian Goldner | | $ | 18,938 | | | $ | 50,000 | | | $ | 38,914 | | | Deborah Thomas | | $ | 875 | | | $ | 875 | | | $ | 1,450 | | | Duncan Billing | | $ | — | | | $ | — | | | $ | — | | | John Frascotti | | $ | — | | | $ | — | | | $ | — | | | Wiebe Tinga | | $ | 32,453 | | | $ | — | | | $ | — | |
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Includes the Company’s matching contribution to each individual’s savings account, the annual company contribution, as well as the annual transition contribution, if applicable, for each individual under the 401(k) Plan and the Supplemental Plan, such amounts as follows:
| Includes $7,500 matching charitable contribution made in the name of Mr. Goldner for the applicable year. |
| | | | | | | | | | | | | | | | 2012 | | | 2011 | | | 2010 | | Brian Goldner | | $ | 275,000 | | | $ | 380,000 | | | $ | 388,077 | | David Hargreaves | | $ | 93,000 | | | $ | 144,000 | | | $ | 149,423 | | Deborah Thomas | | $ | 76,000 | | | $ | 82,115 | | | $ | 85,760 | | Duncan Billing | | $ | 89,400 | | | $ | 98,400 | | | $ | 117,363 | | John Frascotti | | $ | 67,050 | | | $ | 73,800 | | | $ | 88,131 | |
| Includes a $1,204 unemployment contribution made for Mr. Tinga for 2014 (the contribution was made in Euros but has been converted to U.S. dollars using the computed monthly average exchange rate for 2014 of 1 Euro equals $1.338). |
These amounts are in part contributed to the individual’s account in the 401(k) Plan and, to the extent in excess of certain Code maximums, deemed allocated to the individual’s account in the Supplemental Plan (401(k)).
| Includes the Company’s matching contribution to each individual’s savings account, the annual company contribution, as well as the annual transition contribution, if applicable, for each individual under the 401(k) Plan and the Supplemental Plan, such amounts as follows: |
Includes $5,000 matching charitable contribution made in the name of Mr. Goldner in fiscal 2010, fiscal 2011 and fiscal 2012.
| | | | | | | | | | | | | | | | 2014 | | | 2013 | | | 2012 | | | Brian Goldner | | $ | 279,000 | | | $ | 292,327 | | | $ | 275,000 | | | Deborah Thomas | | $ | 85,905 | | | $ | 76,318 | | | $ | 76,000 | | | Duncan Billing | | $ | 83,025 | | | $ | 70,148 | | | $ | 89,400 | | | John Frascotti | | $ | 86,175 | | | $ | 70,148 | | | $ | 67,050 | | | Wiebe Tinga | | $ | — | | | $ | — | | | $ | — | |
| These amounts are in part contributed to the individual’s account in the 401(k) Plan and, to the extent in excess of certain Code maximums, deemed allocated to the individual’s account in the Supplemental Plan (401(k)). |
| (f) | Mr. Goldner became President and Chief Executive Officer of the Company on May 22, 2008. Prior thereto, Mr. Goldner served as Chief Operating Officer of the Company. |
| (g) | Mr. Hargreaves became Executive Vice President and Chief Strategy Officer on February 6, 2013. Prior thereto, Mr. Hargreaves served as Chief Operating Officer of the Company since May 22, 2008. Mr. Hargreaves also served as Chief Financial Officer of the Company until May of 2009. Prior to becoming Chief Operating Officer, Mr. Hargreaves served as Executive Vice President, Finance and Global Operations, and Chief Financial Officer. |
(h) | Ms. Thomas became Executive Vice President and Chief Financial Officer in March 2013. Prior thereto Ms. Thomas served as Senior Vice President and Chief Financial Officer since May 2009. Prior thereto Ms. Thomas was Senior Vice President and Head of Corporate Finance. |
(i)(h) | Mr. Billing became Executive Vice President, Chief Global Operations and Business Development Officer in 2014. Prior thereto Mr. Billing served as Executive Vice President and Chief Development Officer in Marchsince 2013. Prior thereto Mr. Billing served as Global Chief Development Officer since 2008. |
(j)(i) | Mr. Frascotti became President, Hasbro Brands in 2014. Prior thereto Mr. Frascotti served as Executive Vice President and Chief Marketing Officer in Marchsince 2013. Prior thereto Mr. Frascotti servedserviced as Global Chief Marketing Officer since 2008. |
* * *
| (j) | Mr. Tinga became Executive Vice President and Chief Commercial Officer in 2013. Prior thereto Mr. Tinga served as President, North America since 2012. Mr. Tinga’s base salary and certain elements of All Other Compensation are established and paid in Euros. The dollar figures in this table for salary and certain elements of All Other Compensation have been converted from Euros to dollars at the computed monthly average exchange rate over 2014 of 1 Euro equals $1.338. |
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| | | 42 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
The following table sets forth certain information regarding grants of plan-based awards for fiscal 20122014 to the Named Executive Officers. Grants of Plan-Based Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under
Non-Equity
Incentive Plan Awards | | | Estimated Future Payouts
Under Equity
Incentive Plan Awards | | | All
Other
Stock
Awards:
Number
of
Shares | | All Other
Option
Awards:
Number of
Shares
Underlying
Options | | | Exercise
Price of
Option
Awards | | | Closing
Market
Price
on the
Date of
Grant | | | Grant
Date Fair
Value of
Stock and
Option
Awards(d) | | Name | | Grant Date | | | Threshold | | | Target | | | Maximum | | | Threshold | | | Target | | | Maximum | | | | | | | Brian Goldner | | | 2/6/2012 | (a) | | | | | | | | | | $ | 3,600,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/8/2012 | (b) | | | | | | | | | | | | | | | 46,361 | | | | 92,722 | | | | 185,444 | | | | | | | | | | | | | | | | | $ | 3,350,509 | | | | | 2/8/2012 | (c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 408,164 | | | $ | 36.135 | | | $ | 35.73 | | | | 2,640,821 | | David Hargreaves | | | 2/6/2012 | (a) | | | | | | | | | | | 2,400,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/8/2012 | (b) | | | | | | | | | | | | | | | 12,363 | | | | 24,726 | | | | 49,452 | | | | | | | | | | | | | | | | | | 893,474 | | | | | 2/8/2012 | (c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 108,844 | | | | 36.135 | | | | 35.73 | | | | 704,220 | | Deborah Thomas | | | 2/6/2012 | (a) | | $ | 185,400 | | | | 309,000 | | | | 927,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/8/2012 | (b) | | | | | | | | | | | | | | | 7,500 | | | | 15,000 | | | | 30,000 | | | | | | | | | | | | | | | | | | 542,025 | | | | | 2/8/2012 | (c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 65,000 | | | | 36.135 | | | | 35.73 | | | | 420,550 | | Duncan Billing | | | 2/6/2012 | (a) | | | | | | | | | | | 1,455,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/8/2012 | (b) | | | | | | | | | | | | | | | 7,500 | | | | 15,000 | | | | 30,000 | | | | | | | | | | | | | | | | | | 542,025 | | | | | 2/8/2012 | (c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 65,000 | | | | 36.135 | | | | 35.73 | | | | 420,550 | | John Frascotti | | | 2/6/2012 | (a) | | | | | | | | | | | 1,455,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/8/2012 | (b) | | | | | | | | | | | | | | | 7,500 | | | | 15,000 | | | | 30,000 | | | | | | | | | | | | | | | | | | 542,025 | | | | | 2/8/2012 | (c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 65,000 | | | | 36.135 | | | | 35.73 | | | | 420,550 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Possible Payouts Under
Non-Equity
Incentive Plan Awards(a) | | | Estimated Future Payouts
Under Equity
Incentive Plan Awards | | | All
Other
Stock
Awards:
Number
of
Shares
of Stock
(#) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | | Exercise
or Base
Price of
Option
Awards | | | Grant
Date Fair
Value of
Stocks and
Option
Awards(f) | | | Name | | Grant Date | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | | | | Brian Goldner | | 2/4/2014(a) | | | | | | $ | 1,950,000 | | | $ | 3,900,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/12/2014(b) | | | | | | | | | | | | | | | 33,575 | | | | 67,149 | | | | 134,298 | | | | | | | | | | | | | | | $ | 3,499,134 | | | | 2/12/2014(c) | | | | | | | | | | | | | | | 0 | | | | 119,318 | | | | 119,318 | | | | | | | | | | | | | | | $ | 4,242,542 | | | | 2/12/2014(d) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 302,200 | | | $ | 52.11 | | | $ | 2,798,372 | | Deborah Thomas | | 2/4/2014(a) | | $ | 232,892 | | | $ | 388,153 | | | $ | 1,164,459 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/12/2014(b) | | | | | | | | | | | | | | | 4,625 | | | | 9,250 | | | | 18,500 | | | | | | | | | | | | | | | $ | 482,018 | | | | 2/12/2014(e) | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,700 | | | | | | | | | | | $ | 244,917 | | | | 2/12/2014(d) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,500 | | | $ | 52.11 | | | $ | 199,090 | | Duncan Billing | | 2/4/2014(a) | | | | | | $ | 365,754 | | | $ | 1,567,515 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/12/2014(b) | | | | | | | | | | | | | | | 4,625 | | | | 9,250 | | | | 18,500 | | | | | | | | | | | | | | | $ | 482,018 | | | | 2/12/2014(e) | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,600 | | | | | | | | | | | $ | 239,706 | | | | 2/12/2014(d) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,500 | | | $ | 52.11 | | | $ | 189,830 | | John Frascotti | | 2/4/2014(a) | | | | | | $ | 390,251 | | | $ | 1,672,503 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/12/2014(b) | | | | | | | | | | | | | | | 4,625 | | | | 9,250 | | | | 18,500 | | | | | | | | | | | | | | | $ | 482,018 | | | | 2/12/2014(e) | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,600 | | | | | | | | | | | $ | 239,706 | | | | 2/12/2014(d) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,500 | | | $ | 52.11 | | | $ | 189,830 | | Wiebe Tinga | | 2/4/2014(a) | | | | | | $ | 412,824 | | | $ | 1,718,999 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/12/2014(b) | | | | | | | | | | | | | | | 4,594 | | | | 9,188 | | | | 18,376 | | | | | | | | | | | | | | | $ | 478,787 | | | | 2/12/2014(e) | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,600 | | | | | | | | | | | $ | 239,706 | | | | | 2/12/2014(d) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,674 | | | $ | 52.11 | | | $ | 191,441 | |
| (a) | For Mr.Messrs. Goldner, Mr. Hargreaves, Mr. Billing, Frascotti and Mr. FrascottiTinga these management incentive awards were made pursuant to the Company’s 20092014 Senior Management Annual Performance Plan. For Ms. Thomas, thesethe management incentive plan awards were made pursuant to the Company’s 2012 Management2014 Performance Rewards Plan. Mr. Tinga’s Maximum Estimated Possible Payout Under Non-Equity Incentive Plan.Plan Awards has been calculated using the computed monthly average exchange rate over 2014 of 1 Euro equals $1.338. |
| (b) | All of these contingent stock performance awards were granted pursuant to the Company’s Restated 2003 Stock Incentive Performance Plan (the “2003 Plan”). These awards provide the recipients with the ability to earn shares of the Company’s Common Stock based on the Company’s achievement of stated cumulative diluted earnings per share (“EPS”) and cumulative net revenue (“Revenues”) targets over a three-year period beginning January 20122014 and ending December 20142016 (the “Performance Period”). Each Stock Performance Award has a target number of shares of Common Stock associated with such award which may be earned by the recipient if the Company achieves the stated EPS and Revenues targets set for the Performance Period. Upon a Change of Control, as defined inThe grant date fair values for the 2003 Plan, allcontingent stock performance awards will be canceled in exchange for payment inwere based on the amountaverage of the product of the highest price paid for a share of Common Stock in the transaction or series of transactions pursuant to which the Change of Control shall have occurred or, if higher, the highest reported sales price of a share of Common Stock during the sixty-day period immediately precedinghigh and low trading prices on the date of the Changegrant of Control, and the target number of shares applicable to the award. This payment will be made in cash or shares of Common Stock, or a combination thereof, in the discretion of the Compensation Committee.these awards, which was $52.11 per share on February 12, 2014. |
| (c) | This award represents the second and final part of the special restricted stock unit award granted pursuant to Mr. Goldner’s Amended Employment Agreement. The award provides Mr. Goldner with the ability to earn shares of the Company’s common stock based on the Company’s achievement of four stated stock price hurdles and continued employment through December 31, 2017. At the completion of the service period, he will receive one quarter of the award for each stock price hurdle achieved. The four stock price hurdles are $45, $52, $56 and $60, which must be met for a period of at least thirty consecutive trading days calculated using the average closing price over such period. In addition to satisfying the $56 and $60 stock price thresholds in accordance with the 30 Day Requirement, such stock price thresholds must also be met for the thirty consecutive trading day period immediately prior to December 31, 2017, calculated using the average closing price of Hasbro’s common stock over such thirty day period, or the earned awards will be reduced. The Company used a Monte Carlo simulation valuation model to determine the fair value of the award, resulting in an average grant date fair value for this award of $35.5566. Awards may be eligible for accelerated vesting in connection with a change in control or certain termination scenarios, as described more fully below under “Potential Payments Upon Termination or Change in Control; Employment Agreements”. |
| (d) | All of these options were granted pursuant to the 2003 Plan. These options are non-qualified, were granted with an exercise price equal to the average of the high and low sales prices of the Company’s common stock on the date of grant, and vest in equal annual installments over the first three anniversaries of the date of grant. All options become fully vested in the event of death, disability or retirement at the optionee’s normal retirement date and are exercisable for a period of one year from the date of such disability or retirement, or in the case of death, from the appointment and qualification of the executor, administrator or trustee for the optionee’s estate. An optionee taking early retirement may exercise the options which are vested upon his or her early retirement date and may exercise such options for three months or such longer period as the Compensation Committee may approve. Unless otherwise approved by the Compensation Committee in its discretion, upon termination of employment for any other reason, only options vested at the date of the terminationAwards may be exercised, and are exercisableeligible for accelerated vesting in connection with a period of three months following termination.change-in-control or certain termination scenarios, as described more fully below under “Potential Payments Upon Termination or Change in Control; Employment Agreements”. |
| (e) | Upon a ChangeAll of Control, as defined inthese restricted share units were granted pursuant to the 2003 Plan, all options become immediately exercisable and will be canceled in exchange for payment inPlan. These units cliff vest on the amountthird anniversary of the difference between the highest price paid for a share of Common
|
60
| Stock in the transaction or series of transactions pursuant to which the Change of Control shall have occurred or, if higher, the highest reported sales price of a share of Common Stock during the sixty-day period immediately preceding the date of thegrant. Awards may be eligible for accelerated vesting in connection with a change-in-control or certain termination scenarios, as described more fully below under “Potential Payments Upon Termination or Change of Control, and the exercise price of such options. This payment will be made in cash or shares of Common Stock, or a combination thereof, in the discretion of the Compensation Committee. Participants may exercise options and satisfy tax withholding liabilities by payments in cash or by delivery of Common Stock equal to the exercise price and the tax withholding liability. In addition, participants may instruct the Company to withhold shares issuable upon exercise in satisfaction of tax withholding liability.Control; Employment Agreements”. |
(d)(f) | The Grant Date Present Values for optionsfair value of option grants for the Named Executive OfficersNEOs were determined using the standard application of the Black-Scholes option pricing methodologymodel using the following weighted average assumptions: volatility 30.79%26.86%, dividend yield 3.99%3.30% and a risk free interest rate of 0.82%1.59% based on the options being outstanding foran estimated option life of approximately five and a half years. The Grant Date Present Values dofair value of option grants does not take into account risk factors such as non-transferability and limits on exercisability. In assessing the Grant Date Present Valuesfair value of option grants indicated in the above table, it should be kept in mind that no matter what theoretical value is placed on an option on the date of grant, the ultimate value of the option is dependent on the market value of the Common Stock at a future date, and the extent if any, by which such market value exceeds the exercise price on the date of exercise. The grant date fair values |
| Please see note 13 to the financial statements included in the Company’s Annual Report on Form 10-K, for the contingent stock performance awards were based on the averageyear ended December 28, 2014, for a detailed discussion of the highassumptions used in valuing these options and low trading prices on the date of grant of these awards, which was $36.135 per share on February 8, 2012.stock awards. |
Please see note 13 to the financial statements included in the Company’s Annual Report on Form 10-K, for the year ended December 30, 2012, for a detailed discussion of the assumptions used in valuing these options and stock awards.
* * *
61
| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 43 |
The following table sets forth information for equity awards held by the named individuals as of the end of the Company’s 20122014 fiscal year. Outstanding Equity Awards at Fiscal Year-End | | | | | | | | | | | | Stock Awards | | | | | | | | | | | Stock Awards | | | | Option Awards | | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#) | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(l) | | | Equity
Incentive Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#) | | Equity Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)(l) | | Option Awards | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(o) | Name | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | | Number of Securities Underlying Unexercised Options (# Exercisable) | | Number of Securities Underlying Unexercised Options (# Unexercisable) | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($) | | Option Expiration Date | | | | Brian Goldner | | | | | | | | | | | | | 0 | | | $ | 0 | | | 0(c) | | $ 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0(d) | | 0 | | | | | | | | | | | | | | | | 0(e) | | $ 0 | | | | | | | | | | | | | | | | | 0(e) | | 0 | | | | | | | | | | | | | | | | 70,506(f) | | $ 3,915,903 | | | | | | | | | | | | | | | | | 0(f) | | 0 | | | | | | | | | | | | | | | | | | 46,361(g) | | 1,637,007 | | | | | 75,000 | | | | — | | | — | | $ | 18.5750 | | | | 5/19/2014 | | | | | | | | | | | | | | 181,406 | | | | — | | | — | | $ | 18.8150 | | | | 7/26/2013 | | | | | | | | | | | | | | 122,888 | | | | — | | | — | | $ | 32.4250 | | | | 5/23/2014 | | | | | | | | | | | | | | 164,609 | | | | — | | | — | | $ | 27.0950 | | | | 2/12/2015 | | | | | | | | | | | | | | 397,614 | | | | | — | | $ | 22.7300 | | | | 5/20/2016 | | | | | | | | | | | | | | 208,063 | | | | 104,031 | (h) | | — | | $ | 31.625 | | | | 2/3/2017 | | | | | | | | | | | | | | 274,800 | | | | 412,200 | (i) | | — | | $ | 38.395 | | | | 3/25/2017 | | | | | | | | | | | | | | 37,400 | | | | 56,100 | (i) | | — | | $ | 41.14 | | | | 6/30/2017 | | | | | | | | | | | | | | 68,552 | | | | 137,104 | (j) | | — | | $ | 45.66 | | | | 2/8/2018 | | | | | | | | | | | | | | — | | | | 408,164 | (k) | | — | | $ | 36.135 | | | | 2/7/2019 | | | | | | | | | | | David Hargreaves | | | | | | | | | | | | | 0 | | | $ | 0 | | | 0(c) | | 0 | | | | | | | | | | | | | | | | | | 0(f) | | 0 | | | | | | | | | | | | | | | | 67,149(g) | | $ 3,729,455 | | | | | | | | | | | | | | | | | 12,363(g) | | 436,538 | | | | | | | | | | | | | | | | 467,976(h) | | $25,991,387 | | | | 40,000 | | | | — | | | — | | $ | 18.5750 | | | | 5/19/2014 | | | | | | | | | | | | | | | | | | | | | | | | | 119,318(i) | | $ 6,626,922 | | | | 85,034 | | | | — | | | — | | $ | 18.8150 | | | | 7/26/2013 | | | | | | | | | | | | 76,703 | | | | 0 | | | — | | $ | 31.63 | | | | 2/3/2017 | | | | | | | | | | | | | 80,645 | | | | — | | | — | | $ | 32.4250 | | | | 5/23/2014 | | | | | | | | | | | | 549,600 | | | | 137,400 | (j) | | — | | $ | 38.40 | | | | 3/25/2017 | | | | | | | | | | | | | 108,025 | | | | — | | | — | | $ | 27.0950 | | | | 2/12/2015 | | | | | | | | | | | | 74,800 | | | | 18,700 | (k) | | — | | $ | 41.14 | | | | 6/30/2017 | | | | | | | | | | | | | 139,165 | | | | — | | | — | | $ | 22.7300 | | | | 5/20/2016 | | | | | | | | | | | | 205,656 | | | | 0 | | | — | | $ | 45.66 | | | | 2/8/2018 | | | | | | | | | | | | | 69,355 | | | | 34,677 | (h) | | — | | $ | 31.625 | | | | 2/3/2017 | | | | | | | | | | | | 272,109 | | | | 136,055 | (l) | | — | | $ | 36.14 | | | | 2/7/2019 | | | | | | | | | | | | | 22,851 | | | | 45,701 | (j) | | — | | $ | 45.66 | | | | 2/8/2018 | | | | | | | | | | | | 105,769 | | | | 211,537 | (m) | | — | | $ | 47.21 | | | | 4/23/2020 | | | | | | | | | | | | | — | | | | 108,844 | (k) | | — | | $ | 36.135 | | | | 2/7/2019 | | | | | | | | | | | | 0 | | | | 302,200 | (n) | | — | | $ | 52.11 | | | | 2/12/2021 | | | | | | | | | | Deborah Thomas | | | | | | | | | | | | | 7,500 | (a) | | $ | 264,825 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,000 | (b) | | $ | 141,240 | | | 0(c) | | 0 | | | | | | | | | | | | | | | | 0(e) | | $ 0 | | | | | | | | | | | | | | | | | 0(f) | | 0 | | | | | | | | | | | | | | | | 12,986(f) | | $ 721,242 | | | | | | | | | | | | | | | | | 7,500(g) | | 264,825 | | | | | | | | | | | | | | | | 9,250(g) | | $ 513,745 | | | | 30,864 | | | | — | | | — | | $ | 27.0950 | | | | 2/12/2015 | | | | | | | | | | | | | | | | | | | | | | 7,500 | (a) | | $ | 416,550 | | | | | | | | | 34,791 | | | | — | | | — | | $ | 22.7300 | | | | 5/20/2016 | | | | | | | | | | | | | | | | | | | | | | 4,000 | (b) | | $ | 222,160 | | | | | | | | | 30,885 | | | | 15,442 | (h) | | — | | $ | 31.625 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | 5,633 | (c) | | $ | 312,857 | | | | | | | | | 12,366 | | | | 24,732 | (j) | | — | | $ | 45.66 | | | | 2/8/2018 | | | | | | | | | | | | | | | | | | | | | | 4,700 | (d) | | $ | 261,038 | | | | | | | | | — | | | | 65,000 | (k) | | — | | $ | 36.135 | | | | 2/7/2019 | | | | | | | | | | | | 0 | | | | 21,668 | (l) | | — | | $ | 36.14 | | | | 2/7/2019 | | | | | | | | | | | | | | 0 | | | | 17,070 | (m) | | — | | $ | 47.21 | | | | 4/23/2020 | | | | | | | | | | | | | | 0 | | | | 21,500 | (n) | | — | | $ | 52.11 | | | | 2/12/2021 | | | | | | | | | | Duncan Billing | | | | | | | | | | | | | 7,500 | (a) | | $ | 264,825 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0(e) | | $ 0 | | | | | | | | | | | | | | | | | | 13,500(f) | | $ 749,790 | | | | | | | | | | | | | | | | | | 9,250(g) | | $ 513,745 | | | | | | | | | | | | | | | 7,500 | (a) | | $ | 416,550 | | | | | | | | | | | | | | | | | | | | 4,000 | (b) | | $ | 222,160 | | | | | | | | | | | | | | | | | | | 4,000 | (b) | | $ | 141,240 | | | 0(c) | | 0 | | | | | | | | | | | | | 6,750 | (c) | | $ | 374,895 | | | | | | | | | | | | | | | | | | | | | | 0(f) | | 0 | | | | | | | | | | | | | 4,600 | (d) | | $ | 255,484 | | | | | | | | | | | | | | | | | | | | | | 7,500(g) | | 264,825 | | | 36,170 | | | | 0 | | | — | | $ | 45.66 | | | | 2/8/2018 | | | | | | | | | | | | | 31,535 | | | | 15,767 | (h) | | — | | $ | 31.625 | | | | 2/3/2017 | | | | | | | | | | | | 0 | | | | 21,667 | (l) | | — | | $ | 36.14 | | | | 2/7/2019 | | | | | | | | | | | | | 12,057 | | | | 24,113 | (j) | | — | | $ | 45.66 | | | | 2/8/2018 | | | | | | | | | | | | 10,228 | | | | 20,454 | (m) | | — | | $ | 47.21 | | | | 4/23/2020 | | | | | | | | | | | | | — | | | | 65,000 | (k) | | — | | $ | 36.135 | | | | 2/7/2019 | | | | | | | | | | | | 0 | | | | 20,500 | (n) | | — | | $ | 52.11 | | | | 2/12/2021 | | | | | | | | | | John Frascotti | | | | | | | | | | | | | 7,500 | (a) | | $ | 264,825 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,000 | (b) | | $ | 141,240 | | | 0(c) | | 0 | | | | | | | | | | | | | | | | 0(e) | | $ 0 | | | | | | | | | | | | | | | | | 0(f) | | 0 | | | | | | | | | | | | | | | | 13,500(f) | | $ 749,790 | | | | | | | | | | | | | | | | | 7,500(g) | | 264,825 | | | | | | | | | | | | | | | | 9,250(g) | | $ 513,745 | | | | 63,370 | | | | — | | | — | | $ | 22.7300 | | | | 5/20/2016 | | | | | | | | | | | | | | | | | | | | | | 7,500 | (a) | | $ | 416,550 | | | | | | | | | 31,535 | | | | 15,767 | (h) | | — | | $ | 31.625 | | | | 2/3/2017 | | | | | | | | | | | | | | | | | | | | | | 4,000 | (b) | | $ | 222,160 | | | | | | | | | 12,057 | | | | 24,113 | (j) | | — | | $ | 45.66 | | | | 2/8/2018 | | | | | | | | | | | | | | | | | | | | | | 6,750 | (c) | | $ | 374,895 | | | | | | | | | — | | | | 65,000 | (k) | | — | | $ | 36.135 | | | | 2/7/2019 | | | | | | | | | | | | | | | | | | | | | | 4,600 | (d) | | $ | 255,484 | | | | | | | | | | 31,602 | | | | 0 | | | — | | $ | 31.63 | | | | 2/3/2017 | | | | | | | | | | | | | | 36,170 | | | | 0 | | | — | | $ | 45.66 | | | | 2/8/2018 | | | | | | | | | | | | | | 43,333 | | | | 21,667 | (l) | | — | | $ | 36.14 | | | | 2/7/2019 | | | | | | | | | | | | | | 10,228 | | | | 20,454 | (m) | | — | | $ | 47.21 | | | | 4/23/2020 | | | | | | | | | | | | | | 0 | | | | 20,500 | (n) | | — | | $ | 52.11 | | | | 2/12/2021 | | | | | | | | | | Wiebe Tinga | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0(e) | | $ 0 | | | | | | | | | | | | | | | | | | 11,485(f) | | $ 637,877 | | | | | | | | | | | | | | | | | | 9,188(g) | | $ 510,302 | | | | | | | | | | | | | | | 7,500 | (a) | | $ | 416,550 | | | | | | | | | | | | | | | | | | | | 4,000 | (b) | | $ | 222,160 | | | | | | | | | | | | | | | | | | | | 5,742 | (c) | | $ | 318,911 | | | | | | | | | | | | | | | | | | | | 4,600 | (d) | | $ | 255,484 | | | | | | | | | | 28,844 | | | | 0 | | | — | | $ | 45.66 | | | | 2/8/2018 | | | | | | | | | | | | | | 43,333 | | | | 21,667 | (l) | | — | | $ | 36.14 | | | | 2/7/2019 | | | | | | | | | | | | | | 10,003 | | | | 20,006 | (m) | | — | | $ | 47.21 | | | | 4/23/2020 | | | | | | | | | | | | | | | 0 | | | | 20,674 | (n) | | — | | $ | 52.11 | | | | 2/12/2021 | | |
| | | 44 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
| (a) | Comprised of restricted stock units granted on July 29, 2010 which cliff vest on the five-year anniversary of the date of grant, provided the recipient continued employment with the Company through that date. |
| (b) | Comprised of restricted stock units granted on July 28, 2011 which cliff vest on the five-year anniversary of the date of grant, provided the recipient continued employment with the Company through that date. |
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| (c) | These contingentComprised of restricted stock performance awardsunits granted in February 2010, are reflected at 0 shares. In Februaryon April 24, 2013 which cliff vest on the Compensation Committee certifiedthree-year anniversary of the Company’s financial results under these awards and no shares were earned under such awards.date of grant provided the recipient continued employment with the Company through that date. |
| (d) | These contingentComprised of restricted stock performance awardsunits granted in March 2010 to Mr. Goldner, are reflected at 0 shares. Inon February 201312, 2014 which cliff vest on the Compensation Committee certifiedthree-year anniversary of the Company’s financial results under these awards and no shares were earned under such awards.date of grant provided the recipient continued employment with the Company through that date. |
| (e) | These contingent stock performance awards granted in July 2010 to Mr. Goldner,February 2012, are reflected at 0 shares. In0% of the target number of shares for such awards. The performance period for those awards ended at the end of December 2014, but the awards were not actually earned by the recipients until February 2013 the Compensation Committee certified2015, following certification of the Company’s financial resultsperformance under these awards and no shares were earned under such awards.at a level which yielded a payout of 0% of target. |
| (f) | These contingent stock performance awards granted in February 2011,April 2013, are reflected at 0100% of the targeted number of shares for such awards, and there is no assurance that the target amounts, or even the threshold amounts, will be earned under these awards even though the performance period will not end until December 2013. Given the Company’s underperformance against certain of its performance targets under these awards in 2011 and 2012, the Company views it as unlikely that any shares will be earned under such awards in February 2014.2015. |
| (g) | These contingent stock performance awards granted in February 2012,2014, are reflected at the thresholdtarget number of shares for such awards, (which is 50% of the target number), even though the performance period will not end until December 20142016 and there is no assurance that the target amounts, or even the threshold amounts, will be earned under these awards. |
| (h) | The remainderThese restricted share units granted in April 2013, are reflected at the target number of shares, even though the performance period will not end until December 2017, vesting is contingent on meeting four stock price hurdles; (the first three of which have been achieved as of December 28, 2014), and for the last two of the four hurdles, the ultimate shares earned are also a function of the stock price for the thirty trading days immediately prior to December 31, 2017; therefore, there is no assurance that the target amounts will be earned under these options will vest on February 4, 2013, subject to the optionee’s continued employment with the Company through those dates.awards. |
| (i) | One thirdThese restricted share units granted in February 2014, are reflected at the target number of theseshares, even though the performance period will not end until December 2017 and vesting is contingent on meeting four stock price hurdles (the first three of which have been achieved as of December 28, 2014), and for the last two of the four hurdles, the ultimate shares earned are also a function of the stock price for the thirty trading days immediately prior to December 31, 2017; see (h) above. |
| (j) | These options will vest on each of March 26, 2013, March 26, 2014 and December 31, 2014, subject to the optionee’s continued employment with the Company through those dates.this date. |
(j)(k) | One half of theseThese options will vest on each of February 9, 2013 and February 9,December 31, 2014, subject to the optionee’s continued employment with the Company through those dates.this date. |
(k)(l) | One third of theseThese options will vest on each of February 8, 2013, February 8, 2014 and February 8, 2015, subject to the optionee’s continued employment with the Company through this date. |
| (m) | One half of these options will vest on each April 24, 2015 and April 24, 2016, subject to the optionee’s continued employment with the company through those dates. |
(l)(n) | TheseOne third of these options will vest on each February 12, 2015, February 12, 2016 and February 12, 2017, subject to the optionee’s continued employment with the company through those dates. |
| (o) | Other than contingent stock performance awards granted in February 2012, the amounts were computed by multiplying the number of shares by the closing share price of $35.31$55.54 on December 28, 2012,26, 2014, the last trading day of the Company’s 20122014 fiscal year. |
***
63
The following table sets forth information concerning aggregate option exercises, vesting of restricted stock and stock earned pursuant to contingent stock performance awards during the 20122014 fiscal year for the Named Executive Officers. Option ExercisesOptions Exercised and Stock Vested
| | | | Option Awards | | | Stock Awards | | | Option Awards | | | Stock Awards | | Name | | Number of
Shares
Acquired on
Exercise
(#) | | | Value Realized
On Exercise
($) | | | | Number of Shares Acquired on Exercise (# Exercisable) | | | Value Realized On Exercise ($) | | | | | | Shares
Acquired
on Vesting
(#)(1) | | | Value Realized
On Vesting
($) | | | | Shares Acquired on Vesting (#) | | | Value Realized On Vesting ($) | | Brian Goldner | | | 190,000 | | | $ | 3,179,300 | | | | 72,315 | | | $ | 2,601,532 | | | | 400,000 | | | $ | 8,926,993 | | | | 0 | | | $ | 0 | | David Hargreaves | | | 45,000 | | | $ | 671,893 | | | | 25,311 | | | $ | 910,563 | | | Deborah Thomas | | | 0 | | | $ | 0 | | | | 6,328 | | | $ | 227,650 | | | | 123,755 | | | $ | 2,650,690 | | | | 0 | | | $ | 0 | | Duncan Billing | | | 62,223 | | | $ | 774,478 | | | | 11,186 | | | $ | 402,416 | | | | 21,666 | | | $ | 410,896 | | | | 0 | | | $ | 0 | | John Frascotti | | | 21,862 | | | $ | 200,147 | | | | 11,525 | | | $ | 414,612 | | | | 21,124 | | | $ | 681,671 | | | | 0 | | | $ | 0 | | | Wiebe Tinga | | | | 46,992 | | | $ | 1,102,804 | | | | 0 | | | $ | 0 | |
(1) | All | | Hasbro, Inc. | Notice of these shares were earned in February 2012 pursuant to the contingent stock performance awards granted in February 2009,Annual Meeting of Shareholders and the value reflected in the value realized column was computed by multiplying the number of shares by $35.975, which was the average of the high and low trading prices on February 21, 2012, the day the shares were earned.2015 Proxy Statement | | 45 |
***
The following table sets forth information regarding each of the Named Executive Officers’NEOs’ years of credited service and accrued pension benefits with the Company under plans providing specified retirement payments and benefits, including tax-qualified defined benefit plans and supplemental executive retirement plans, but excluding tax-qualified defined contribution plans and non-qualified defined contribution plans. Information is provided as of the plans’ measurement dates used for financial reporting purposes for the Company’s 20122014 fiscal year. PensionRetirement Plan Annual Benefits and Payments
| | | | | | | | | Name | | Plan Name | | Number of Years of Credited Service | | Present Value of Accrued Benefit Payable at Normal Retirement ($)(a) | | Payments During The Last Fiscal Year($) | Brian Goldner | | Pension Plan | | 8.0 | | $ 144,490 | | $ 0 | | | Supplemental Plan | | 8.0 | | $1,113,025 | | $ 0 | David Hargreaves | | Pension Plan | | 15.0 | | $ 460,820 | | $ 0 | | | Supplemental Plan | | 15.0 | | $1,554,037 | | $ 0 | | | Retirement Agreement | | 30.0 | | $6,965,597 | | $ 0 | Deborah Thomas | | Pension Plan | | 9.0 | | $ 173,107 | | $ 0 | | | Supplemental Plan | | 9.0 | | $ 97,238 | | $ 0 | Duncan Billing | | Pension Plan | | 16.0 | | $ 381,939 | | $ 0 | | | Supplemental Plan | | 16.0 | | $ 634,545 | | $ 0 | John Frascotti(b) | | Pension Plan | | N/A | | N/A | | N/A |
| | | | | | | | | | | | | | | | Name | | Plan Name | | Number of
Years of
credited
Service
(#) | | | Present Value of
Accrued Benefit
Payable at Normal
Retirement
($)(a) | | | Payments
During the Last
Fiscal Year($) | | Brian Goldner | | Qualified Plan | | | 8.00 | | | | $ 157,235 | | | | $ 0 | | | | Supplemental Plan | | | 8.00 | | | | $1,201,599 | | | | $ 0 | | Deborah Thomas | | Qualified Plan | | | 9.00 | | | | $ 186,934 | | | | $ 0 | | | | Supplemental Plan | | | 9.00 | | | | $ 103,637 | | | | $ 0 | | Duncan Billing | | Qualified Plan | | | 16.00 | | | | $ 413,249 | | | | $ 0 | | | | Supplemental Plan | | | 16.00 | | | | $ 679,748 | | | | $ 0 | | John Frascotti(b) | | Qualified Plan | | | n/a | | | | n/a | | | | n/a | | Wiebe Tinga(c) | | Hasbro B.V. Pension Plan | | | 19.17 | | | | $1,741,675 | | | | $ 0 | |
| (a) | The “Present Value of Accrued Benefit” is the lump-sum value as of December 30, 201228, 2014 of the annual pension benefit earned as of December 30, 201228, 2014 payable under a plan for the executive’s life beginning on the date in which the Named Executive OfficerNEO may commence an unreduced pension under the respective plan, reflecting credited service and five-year average compensation as of the plan freeze date of December 31, 2007 for the Pension and Supplemental Plans, and current statutory benefit and pay limits as applicable. Certain assumptions were |
64
| used to determine the lump-sum values and are outlined below. These assumptions are consistent with those used for financial statement purposes, except that the Named Executive OfficerNEO is assumed to continue to be employed until the assumed retirement age (i.e., there will be no assumed termination for any reason, including death or disability). The assumptions are as follows: (i) measurement date is December 30, 2012,28, 2014, (ii) it is assumed that 65% of participants will elect a lump sum payment and 35% will elect an annuity under the Pension Plan and the Supplemental Plan, and that Mr. Hargreaves will elect an annuity for any benefits provided under the Retirement Agreement, (iii) the discount rate is assumed to be 4.09%4.19% for the Pension Plan 3.92%and 4.08% for the Supplemental Plan, and 3.93% for the Retirement Agreement, (iv) the lump sum interest rate is assumed to be 4.09%4.19% for the Pension Plan and the Supplemental Plan, (v) for mortality (post-commencement) the RP-2000sex-distinct RP-2014 mortality tables projected totable with mortality improvements from the base year 2028 using the two dimensional, generational Scale AA are used with separate rates for males and femalesBB projection table, for benefits paid as annuities and the IRS table promulgated in Revenue Ruling 2007-67 for benefits paid as lump sums, (vi) the earliest unreduced retirement age is age 65 for the plans prior to the January 1, 2000 amendment, and age 55 for the plans following such amendment and (vii) all values are estimates only; actual benefits will be based on data, pay and service at the time of retirement. Mr. Hargreaves is currently eligible for an unreduced retirement benefit. |
| (b) | The Pension Plan was frozen prior to Mr. Frascotti joining the Company.Company |
| (c) | For Mr. Tinga, the material assumptions used in determining the “Present Value of Accrued Benefit” of the Netherlands Pension Plan benefits are (i) a discount rate of 1.80% (ii) for mortality (post-commencement) the AG Prognosetafel 2014 table with adjustment tables HM, and (iii) assumed retirement at the earliest age to receive unreduced benefits, or age 65 for benefits accrued through December 31, 2014. The assumptions used are consistent with those used for financial statement purposes, except that the Named Executive Officer is assumed to continue to be employed until the assumed retirement age. The Netherlands Pension Plan amounts are converted from Euros to U.S. dollars as of year-end at the same conversion rate used to prepare the Company’s financial statements. |
Description of Pension Plans The Company sponsors the Hasbro, Inc. Pension Plan (the “Pension Plan”) and the Supplemental Benefit Plan (the “Supplemental Plan”) for substantially all of its U.S. employees. The Pension Plan provides funded, tax-qualified benefits subject to the limits on compensation and benefits applicable under the Internal Revenue Code. Except for John Frascotti, who joined the Company on January 21, 2008, after the Pension Plan benefits had been frozen, and Wiebe Tinga, who participates in the Netherlands Pension Plan, all of the Named Executive Officersother NEOs participate in the Pension and Supplemental Plans. As a result of his service while in the U.K., Mr. Hargreaves accrued a benefit under the Company’s former U.K. Employee Benefits Plan (the “U.K. Plan”) and the Hasbro International Expatriate Pension Plan (the “Expatriate Plan”). As is discussed in the “Executive Benefits” section of the Compensation Discussion and Analysis, the Company entered into a Retirement Agreement with Mr. Hargreaves. The Retirement Agreement effectively replaces the benefit accrued under the Expatriate Plan while providing for continued pension accruals until Mr. Hargreaves’ retirement. The U.K. Plan was closed in 1994 and the accrued benefits under the U.K. Plan were transferred to Legal and General. The Company no longer has any obligation to pay those benefits. Mr. Hargreaves is, however, entitled to an annuity benefit from Legal and General relating back to the closed U.K. Plan. The Pension Plan, Supplemental Plan, Post-Employment Agreement, former U.K. Plan annuity benefit and Retirement Agreement are described in more detail below. The Company does not have a policy of granting any additional years of benefit service beyond the definition of benefit service within the plans identified above. A year of benefit service is earned for each year in which an employee completes at least 1,000 hours of service for the Company. Benefits earned under the Pension Plan, the Supplemental Plan (Pension) and the Expatriate Plan were frozen effective December 31, 2007. Effective January 1, 2008, the Company amended its 401(k) Plan to include an additional annual Company contribution targeted at 3% of an employee’s base salary and bonus, which is in addition to the pre-existing Company matching formula. In addition, for eligible employees meeting certain age and service requirements, there will be an additional annual transition contribution ranging from 1% to 9% of the employees’ base salary and bonus during the years 2008 through 2012. Annual contributions in excess of IRS limits are provided on a nonqualified plan basis in the Supplemental Plan (401(k)). Mr. Hargreaves waived his right to participate in either of these new 401(k) Plan features. U.S. Pension Plan Effective January 1, 2000, the Company amended the Pension Plan as part of an overall redesign of its retirement programs. The January 1, 2000 amendments to the Pension Plan implemented a number of changes. 65
Among the significant changes, the amendments to | | | 46 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
the Pension Plan provided for a lump sum benefit or an annual benefit, both determined primarily on the basis of average compensation and actual years of service (previously years of service in excess of 30 years were excluded). Another aspect of the amendments made the benefits under the Pension Plan portable after five years of service with the Company. Until January 1, 2007, employees working for the Company at the time of the January 1, 2000 amendments received the greater of the benefit provided by the unamended plan and the benefit provided by the amended plan. For such employees retiring on or after January 1, 2007, to compute their benefits the Company determines what the employee’s benefits would have been under the Pension Plan, prior to the amendment, as of December 31, 2006. If the benefits under the Pension Plan, prior to the amendment, are higher than the benefits provided for such employee under the Pension Plan following the amendment, the employee’s pension benefits are computed by adding the benefits accrued under the unamended plan, as of December 31, 2006, to the benefits accrued under the plan, as amended, for periods of service after January 1, 2007. For employees joining the Company after January 1, 2000, benefits will only be computed with respect to the Pension Plan as amended. Mr. Goldner was hired after January 1, 2000 and, therefore, is covered only by the amended Pension Plan. Prior to the January 1, 2000 amendment the annual annuity under the Pension Plan was computed as follows: (I) (A) 50% of the person’s five-year average compensation was reduced by (B) X% of the lesser of (i) the person’s three-year average compensation and (ii) the person’s social security covered compensation, and (II) the resulting amount was then multiplied by the ratio of years of benefit service (not to exceed 30) over 30. For purposes of computing benefits in this formula X equals: (i) 22.5 if the social security retirement age is 65, (ii) 21.0 if the social security retirement age is 66 and (iii) 19.5 if the social security retirement age is 67. If benefits commenced prior to age 65, (A) and (B) above were adjusted separately for early commencement as follows: (A) is reduced by 4% per year until age 50 and on an actuarially equivalent basis thereafter and (B) is reduced 5/9th of 1% for the first 60 months commencement precedes social security retirement age and 5/18th of 1% for the next 60 months. Thereafter, (B) is reduced on aan actuarially equivalent basis. In all cases, X above equals 22.5% for early commencement of benefits. Following the January 1, 2000 amendment annual annuity benefits under the Pension Plan are computed as follows: (I) (A) 2/3 of 1% of the person’s five-year average compensation is added to (B) 1/3 of 1% of the person’s five-year average compensation in excess of the social security taxable wage base and the resulting amount is multiplied by (II) the person’s years of benefit service. Under the amended plan, benefits commencing prior to age 55 are reduced 1/4th of 1% for each month commencement precedes age 55, with a maximum reduction of 75%. For purposes of the computations set forth above under the Pension Plan, “five-year average compensation” equals the highest consecutive five years of compensation during the last ten years, while “three-year average compensation” equals the three most recent years during the same five-year period. Compensation includes salary, non-equity incentive plan payments and any additional cash bonus (in the year paid) as well as tax-qualified elective deferrals and excludes equity based compensation, sign-on or retention bonuses and other forms of non-cash compensation that may be taxable to the executive. Compensation is subject to the maximum limits imposed under the Code (which were $225,000 for 2007, the last year that compensation was considered under the plan). Participants may elect to receive benefits as a lump sum payment or one of the annuity forms of payment available under the Pension Plan. Because the plan provides for a lump sum payment, benefits may commence at any age after termination, once vested (generally after five years of benefit service). For early commencement, the comparison of benefits under the amended and unamended formulae is determined based on the reduced benefit under each formula at the commencement age. As is noted in the description of Pension Plans set forth above, the benefits under this plan were frozen effective December 31, 2007. 66
Supplemental Plan (Pension) The Supplemental Plan provides benefits determined under the same benefit formula as the Pension Plan, but without regard to the compensation and benefit limits imposed by the Code. For determination of Supplemental Plan benefits, compensation deferred into the Non-qualified Deferred Compensation Plan is included in the year of deferral. Benefits under the Supplemental Plan are reduced by benefits payable under the Pension Plan. The Supplemental Plan benefits are not tax-qualified and are unfunded. As is noted in the description of Pension Plans set forth above, the benefits under this plan were frozen effective December 31, 2007. U.K. Employee BenefitsNetherlands Pension Plan
As a result of his service whileMr. Tinga participates in the U.K., Mr. Hargreaves accrued a benefit under the Company’s former U.K. Employee Benefits Plan (the “U.K. Plan”) and the Hasbro International ExpatriateB.V. Pension Plan in the Netherlands (the “Expatriate“Netherlands Pension Plan”). The U.K.Netherlands Pension Plan provides benefits to all employees in service of Hasbro B.V. that are at least 21 years of age. Upon becoming a member of the Netherlands Pension Plan on January 1, 1997, an additional payment was closed in 1994 and an annuity was purchased from Legal and General to provide the accrued benefits under the U.K. Plan. The Company no longer has any obligation to pay those benefits. Mr. Hargreaves is, however, entitledmade to the annuity benefitplan granting Mr. Tinga an additional one year and two months of credited service, changing his credited service date to November 1, 1995.
Effective January 1, 2006, the plan was amended and became a career average pay plan with an annual accrual rate of 1.3% of Pension Base for each year of service. As of January 1, 2015, the plan has been further amended, increasing the annual accrual rate to 1.47% of | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 47 |
Pension Base for each year of service from Legal and General relating backJanuary 1, 2015 to the closed U.K. Plan. The annual single straight-life annuity benefit earned by Mr. Hargreaves under the U.K. Plan as of the date his participation in the U.K. Plan ceased was 9,617 British pounds. This annuity amount is adjustedretirement. Accrued benefits are conditionally indexed each year for inflation. Retirement Agreement With Mr. Hargreaves
Mr. Hargreaves is entitled to a defined benefit from a Retirement Agreement that replaces the benefits previously accrued under the Expatriate Plan and considers allactive employees. Increases of his services with Hasbro, including periods2% have been granted in each year, except in 2006 when there were no increases granted. Benefits are provided in the U.K.form of an annuity with 70% payable to the spouse or partner upon the participant’s death.
Prior to the January 1, 2006 amendment, the plan was a final average pay plan with an formula equal to 1.25% of final average Pension Base per year of service. The single straight-life annuity benefit underfinal average pay benefits were frozen as of December 31, 2005, with indexation applied from this date as described above. The Pension Base is defined as Pensionable Salary minus the Retirement AgreementOffset, where Pensionable Salary is determined as follows: (I) (A) 1% of five-year average compensation multiplied by (B) years of benefit service (for this purpose Mr. Hargreaves12 times fixed monthly salary plus holiday allowance plus 13th month salary and the Offset is continuingequal to accrue years of benefit service), with such benefits then being reduced by (II)100/70 times the benefits payable from the (i) former U.K. Plan sponsored by Hasbro (which benefits are now being provided by Legal and Generalstate old age pension for a married person. Effective January 1, 2015, as a result of legislative changes in the buyoutNetherlands, the annual Pensionable Salary will be capped. The cap for 2015 is EUR 100,000. Prior to this date Mr. Tinga’s Pensionable Salary under the plan was not capped. Credited service in the plan is defined as all years and completed months of deferred pensioners), (ii)service up to the date of retirement, with a maximum of 40 years. Effective January 1, 2015, the maximum credited service is 42 years. A new participant with accrued pension benefits at a former employer can transfer their pension benefits into the Netherlands Pension Plan and (iii) Supplementalget additional years of credited service beyond the plan definition. Effective January 1, 2015, as a result of legislative changes in the Netherlands, the normal retirement age of the plan changed to age 67. Prior to this date, the normal retirement age under the plan was age 65. The pension benefits accrued through December 31, 2014 are guaranteed as unreduced from age 65 and are actuarially increased for retirement after age 65. Plan (pension benefits). Due to Mr. Hargreavesmembers are eligible for early retirement from age 55; however benefits are reduced for early commencement and service, benefits under this plan are payable on an unreduced basis.the participant must officially request early retirement six months before the desired retirement date. 67
The following table provides information with respect to fiscal 20122014 for each of the Named Executive OfficersNEOs regarding defined contribution plans and other plans which provide for the deferral of compensation on a basis that is not tax-qualified. Non-Qualified Deferred Compensation and Other Deferred Compensation Plans | | | | | | | | | | | | | | | | | | Non-qualified Deferred Compensation | | Name | | Plan Name | | Executive
Contributions
in Last Fiscal Year
($)(a) | | Registrant
Contributions in
Last Fiscal Year
($)(a) | | Aggregate
Earnings in Last
Fiscal Year($)(b) | | Aggregate
Withdrawals /
Distributions
($) | | Aggregate Balance at
Last Fiscal Year End
($)(c) | | | Brian Goldner | | Nonqualified Deferred Compensation Plan | | $99,090 | | $ — | | $ 69,145 | | $— | | $ | 618,279 | | | | Supplemental Savings Plan | | — | | 245,000 | | 112,889 | | — | | | 2,482,710 | | | David Hargreaves | | Nonqualified Deferred Compensation Plan | | — | | — | | 471,223 | | — | | | 3,442,657 | | | | Supplemental Savings Plan | | — | | 78,000 | | 52,720 | | — | | | 1,115,750 | | | Deborah Thomas | | Nonqualified Deferred Compensation Plan | | — | | — | | 32,069 | | — | | | 354,492 | | | | Supplemental Savings Plan | | — | | 51,000 | | 14,041 | | — | | | 331,985 | | | Duncan Billing | | Nonqualified Deferred Compensation Plan | | — | | — | | 35,592 | | — | | | 243,245 | | | | Supplemental Savings Plan | | — | | 59,400 | | 25,234 | | — | | | 557,516 | | | John Frascotti | | Nonqualified Deferred Compensation Plan | | 121,250 | | — | | 3,055 | | — | | | 124,305 | | | | Supplemental Savings Plan | | — | | 44,550 | | 8,887 | | — | | | 225,420 | |
| | | | | | | | | | | | | | | | | | | | | | | | Name | | Plan Name | | Executive
Contributions
in Last Fiscal Year
($)(a) | | | Registrant
Contributions in
Last Fiscal Year
($)(a) | | | Aggregate
Earnings in Last
Fiscal Year ($)(b) | | | Aggregate
Withdrawals /
Distributions
($)(b) | | | Aggregate Balance
at Last Fiscal
Year End
($)(c) | | Brian Goldner | | Nonqualified Deferred Compensation Plan | | | $ 95,364 | | | | — | | | | $ 91,856 | | | | — | | | | $1,067,035 | | | | Supplemental Savings Plan | | | — | | | | $255,600 | | | | $150,657 | | | | — | | | | $3,287,977 | | Deborah Thomas | | Nonqualified Deferred Compensation Plan | | | — | | | | — | | | | $ 22,722 | | | | — | | | | $427,856 | | | | Supplemental Savings Plan | | | — | | | | $ 62,505 | | | | $ 20,883 | | | | — | | | | $485,889 | | Duncan Billing | | Nonqualified Deferred Compensation Plan | | | $104,501 | | | | — | | | | $3,667 | | | | — | | | | $429,990 | | | | Supplemental Savings Plan | | | — | | | | $ 59,625 | | | | $ 33,256 | | | | — | | | | $726,661 | | John Frascotti | | Nonqualified Deferred Compensation Plan | | | $ 55,750 | | | | — | | | | $ 7,961 | | | | — | | | | $194,301 | | | | Supplemental Savings Plan | | | — | | | | $ 62,775 | | | | $ 14,647 | | | | — | | | | $361,581 | | Wiebe Tinga | | Nonqualified Deferred Compensation Plan | | | — | | | | — | | | | — | | | | — | | | | — | | | | | Supplemental Savings Plan | | | — | | | | — | | | | — | | | | — | | | | — | |
| (a) | Both the executive and registrant contributions above are also disclosed in the preceding Summary Compensation Table as either salary, non-equity incentive plan compensation or under all other compensation, as applicable. Registrant contributions earned during 20122014 and credited to the account during 20122014 as well as executive contributions on amounts earned during 20122014 but paid in 20132015 are included in the table above. |
| (b) | The aggregate earnings in the last fiscal year include earnings on amounts deferred by the individual in years prior to fiscal 2012.2014. |
| (c) | Includes registrant and executive contributions on amounts earned during 20122014 but credited during 2013.2015. In addition to the amounts contributed for 2012,2014, the amounts below were reported as compensation in prior Summary Compensation Tables (Mr. Goldner and Mr. Hargreaves havehas had theirhis compensation for fiscal 2000 forward reported as named executive officers in the Company’s previous proxy statements, Ms. Thomas had her compensation for fiscal 2009 forward reported as a Named Executive Officer, and Mr. Billing and Mr. Frascotti have had their compensation for fiscal 2008 forward reported in the Company’s proxy statements). |
| Brian Goldner | | $ | 2,581,553 | | | $ | 3,262,735 | | David Hargreaves | | $ | 2,824,889 | | | Deborah Thomas | | $ | 158,678 | | | $ | 263,046 | | Duncan Billing | | $ | 277,376 | | | $ | 383,974 | | John Frascotti | | $ | 163,968 | | | $ | 376,966 | | Wiebe Tinga | | | $ | — | |
| | | 48 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
Amounts included in the “Non-qualified Deferred Compensation” table above consist of executive deferrals and registrant contributions under the Supplemental Plan and the Non-qualified Deferred Compensation Plan, each of which are described below. Supplemental Plan (401(k)) Each of the Named Executive Officers participated in the Supplemental Plan. All registrant contributions reflected in the preceding table were allocated to the Supplemental Plan. Elective deferrals are not permitted under the Supplemental Plan. Account balances received interest at the rate of 5.45%5.2% per year for 2012.2014. This rate reflects the 20122014 return, less an allowance for certain expenses, paid by the insurance companies providing this corporate owned life insurance product to Hasbro. Matching contributions are fully vested at all times while the annual Company and transition contributions are subject to a 3-year vesting requirement, however remaining benefits are subject to forfeiture for violations of non-competition or 68
confidentiality obligations or for termination due to certain criminal acts involving Company property. Benefits under the Supplemental Plan are payable as a lump sum upon termination of employment (including retirement and death), subject to a six-month waiting period under Code Section 409A, as applicable. As is noted in the description of Pension Plans set forth in the preceding pages, effective January 1, 2008, this plan was expanded to include new program employer contributions in excess of IRS limits. Non-qualified Deferred Compensation Plan The Company’s Non-qualified Deferred Compensation Program is available to all of the Company’s U.S. based employees who are in band 40 (director level) or above and whose base compensation is equal to or greater than $115,000 for 2012,2014, including the Named Executive Officers. Participants may defer up to 75% of their base salary and 85% of the awards they are paid under the Company’s non-equity incentive plans. Participant account balances are credited with earnings based on the participant’s selection from the list of investments below.offered in the plan. The fixed rate option was added to the plan effective July 21, 2009. The allocation of investments may be changed as often as daily, with the exception of the Hasbro Stock Fund and the fixed rate option. Selection of the Company Stock Fund and the fixed rate option is made once per year and becomes effective the following January. Rates of return earned (lost) by the Named Executive Officers are the same as the rates of return earned (lost) by other participants selecting the same investment choices and are set forth in the table below for fiscal 2012.choices. As such, the Company does not consider these rates of return to be “above-market” within the meaning of the rules of the United States Securities and Exchange Commission. | | | | | | | | | | | Investment | | Rate of
Return
for 2012 | | | | | Investment | | Rate of Return for 2012 | Money Market | | | 0.00 | % | | | | Large Cap Growth | | 14.55% | Intermediate Bond | | | 9.60 | % | | | | Mid-Cap Core Index | | 15.82% | Balanced | | | 12.56 | % | | | | Small-Cap Growth | | 14.65% | Large Cap Value | | | 16.50 | % | | | | International Equity | | 20.14% | S&P 500 Index | | | 15.92 | % | | | | Real Return | | 8.76% | Fixed Rate Option | | | 5.45 | % | | | | Hasbro Stock Fund | | Approximates the | | | | | | | | | | | rate of return
on the Company’s common stock |
Generally, account balances under the plan may be paid as a lump sum or in installments over a five, ten or fifteen-year period following the termination of employment, except amounts designated as short-term payouts which are payable at a pre-selected date in the future. Account balances may be distributed prior to retirement in the event of a financial hardship, but not in excess of the amount needed to meet the hardship. Potential Payments Upon Termination or Change in Control; Employment Agreements The following tables provide information as to the value of incremental payments and other benefits that would have been received by the Named Executive OfficersNEOs upon a termination of their employment with the Company due to various types of situations, including upon a change in control of the Company, assuming such termination and change in control had taken place on December 28, 201226, 2014 (the last business day of the Company’s 20122014 fiscal year). The benefits reflect the closing price of the Company’s Common Stock of $35.31$55.54 on December 28, 2012,26, 2014, where appropriate, except that in the case of a Change in Control, the benefits reflect a price of $39.01$59.42 per share (which was the highest sale price during the sixty days prior to December 28, 2012,26, 2014, as computed in accordance with the Company’s equity compensation plans). Following these tables is a narrative description of the plans and agreements pursuant to which these payments and benefits are payable. 69
In addition to the benefits detailed in the following tables, the Named Executive OfficersNEOs are eligible to receive vested benefits under the Company’s pension plans and deferred compensation plans, to the extent applicable, which are quantified in the preceding tables in this proxy statement,Proxy Statement, as well as benefits under stock options held by such executive officers which are vested and exercisable as of the date of their termination. In addition, the Named Executive OfficersNEOs are eligible to participate in the Company’s post-retirement medical program, which is available to all salaried employees and provides post-retirement life insurance and access to health coverage funded by the retiree at the same rates as an active employee. Brian GoldnerThe NEOs would not receive any incremental payments or other benefits if they voluntarily resigned from the Company or were involuntarily terminated by the Company for cause.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voluntary
Resignation | | | Involuntary
for Cause | | | Involuntary
Without
Cause/
Voluntary
For Good Reason | | | Involuntary
Without
Cause or for
Good
Reason(w/
Change
in Control)(a) | | | Disability | | | Death | | | Retirement | | Cash Severance | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | $ | 0 | | | $ | 0 | | | $ | 2,400,000 | | | $ | 2,200,616 | | | $ | 0 | | | $ | 0 | | | | N/A | | Bonus | | $ | 0 | | | $ | 0 | | | $ | 3,000,000 | | | $ | 4,680,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | Bonus for 2012 | | $ | 0 | | | $ | 0 | | | $ | 2,000,000 | | | $ | 2,000,000 | | | $ | 2,000,000 | | | $ | 2,000,000 | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 7,400,000 | | | $ | 8,880,616 | | | $ | 2,000,000 | | | $ | 2,000,000 | | | | N/A | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension(b) | | $ | 0 | | | $ | 0 | (c) | | $ | 0 | | | $ | 29,566 | | | $ | 0 | | | $ | 0 | | | | N/A | | Health and Welfare Benefits | | $ | 0 | | | $ | 0 | | | $ | 37,420 | | | $ | 56,130 | | | $ | 0 | | | $ | 0 | | | | N/A | | Outplacement | | $ | 0 | | | $ | 0 | | | $ | 17,000 | | | $ | 17,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Benefits & Perquisites | | $ | 0 | | | $ | 0 | | | $ | 54,420 | | | $ | 102,696 | | | $ | 0 | | | $ | 0 | | | | N/A | | 280G Tax Gross-Up | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | Long-Term Incentives | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gain of Accelerated Stock Options | | $ | 0 | | | $ | 0 | | | $ | 383,354 | | | $ | 2,195,244 | | | $ | 383,354 | | | $ | 383,354 | | | | N/A | | Value of Accelerated Performance Shares | | $ | 0 | | | $ | 0 | | | $ | 2,257,368 | (c) | | $ | 5,525,259 | | | $ | 5,001,202 | | | $ | 5,001,202 | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Value of Accelerated Equity Grants | | $ | 0 | | | $ | 0 | | | $ | 2,640,722 | | | $ | 7,720,503 | | | $ | 5,384,556 | | | $ | 5,384,556 | | | | N/A | | Total Value: Incremental Benefits | | $ | 0 | | | $ | 0 | | | $ | 10,095,142 | | | $ | 16,703,815 | | | $ | 7,384,556 | | | $ | 7,384,556 | | | | N/A | |
| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 49 |
| | | | | | | | | | | | | | | | | | | | | | | | | | No Change in Control | | | | | Change in Control | | Name | | Involuntary
Termination(a) | | | Death or
Disability | | | Retirement(b) | | | | | No
Termination | | | Involuntary Termination in
connection with a change
in control(c) | | Brian Goldner | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | $6,500,000 | | | | $0 | | | | | | | | | | $0 | | | | $6,691,538 | | FY 2014 Bonus | | | $2,300,000 | | | | $2,300,000 | | | | | | | | | | $0 | | | | $2,300,000 | | Pension(d) | | | $0 | | | | $0 | | | | | | | | | | $0 | | | | $190,490 | | Other Benefits(e) | | | $56,124 | | | | $0 | | | | | | | | | | $0 | | | | $75,686 | | Accelerated Equity(f) | | | $22,330,975 | | | | $36,377,810 | | | | | | | | | | $6,398,712 | | | | $45,542,878 | | | | | | | Total Incremental Benefits | | | $31,187,099 | | | | $38,677,810 | | | | n/a | | | | | | $6,398,712 | | | | $54,800,592 | | Deborah Thomas | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | $567,008 | | | | $0 | | | | | | | | | | $0 | | | | $1,927,827 | | FY 2014 Bonus | | | $0 | | | | $0 | | | | | | | | | | $0 | | | | $0 | | Pension(d) | | | $0 | | | | $0 | | | | | | | | | | $0 | | | | $0 | | Other Benefits(e) | | | $22,120 | | | | $0 | | | | | | | | | | $0 | | | | $22,120 | | Accelerated Equity(f) | | | $0 | | | | $2,058,946 | | | | | | | | | | $1,187,869 | | | | $3,488,709 | | | | | | | Total Incremental Benefits | | | $589,128 | | | | $2,058,946 | | | | n/a | | | | | | $1,187,869 | | | | $5,438,656 | | Duncan Billing | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | $530,010 | | | | $0 | | | | $0 | | | | | | $0 | | | | $1,802,034 | | FY 2014 Bonus | | | $0 | | | | $0 | | | | $0 | | | | | | $0 | | | | $0 | | Pension(d) | | | $0 | | | | $0 | | | | $0 | | | | | | $0 | | | | $0 | | Other Benefits(e) | | | $31,783 | | | | $0 | | | | $0 | | | | | | $0 | | | | $31,783 | | Accelerated Equity(f) | | | $0 | | | | $2,135,790 | | | | $954,607 | | | | | | $1,187,846 | | | | $3,613,666 | | | | | | | Total Incremental Benefits | | | $561,793 | | | | $2,135,790 | | | | $954,607 | | | | | | $1,187,846 | | | | $5,447,483 | | John Frascotti | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | $600,002 | | | | $0 | | | | | | | | | | $0 | | | | $2,040,007 | | FY 2014 Bonus | | | $0 | | | | $0 | | | | | | | | | | $0 | | | | $0 | | Pension(d) | | | $0 | | | | $0 | | | | | | | | | | $0 | | | | $0 | | Other Benefits(e) | | | $36,510 | | | | $0 | | | | | | | | | | $0 | | | | $36,510 | | Accelerated Equity(f) | | | $0 | | | | $2,135,790 | | | | | | | | | | $1,187,846 | | | | $3,613,666 | | | | | | | Total Incremental Benefits | | | $636,512 | | | | $2,135,790 | | | | n/a | | | | | | $1,187,846 | | | | $5,690,183 | | Wiebe Tinga | | | | | | | | | | | | | | | | | | | | | | | Cash Severance(g) | | | $2,036,156 | | | | $0 | | | | | | | | | | $0 | | | | $1,911,007 | | FY 2014 Bonus | | | $0 | | | | $0 | | | | | | | | | | $0 | | | | $0 | | Pension(d) | | | $0 | | | | $0 | | | | | | | | | | $0 | | | | $0 | | Other Benefits(e) | | | $75,000 | | | | $0 | | | | | | | | | | $0 | | | | $112,584 | | Accelerated Equity(f) | | | $0 | | | | $2,025,623 | | | | | | | | | | $1,187,846 | | | | $3,426,158 | | | | | | | Total Incremental Benefits | | | $2,111,156 | | | | $2,025,623 | | | | n/a | | | | | | $1,187,846 | | | | $5,449,749 | |
| (a) | In“Involuntary Termination” means termination by the event of a Change in ControlCompany without Cause, and nofor Mr. Goldner only, termination of employment, onlyby the long-term incentive values would be payable to the executive.executive for Good Reason. |
| (b) | As of December 28, 2014, Mr. Billing qualifies for early retirement and accelerated vesting of a portion of his equity awards. |
| (c) | “Involuntary Termination” means termination by the Company without Cause or termination by the executive for Good Reason. |
| (d) | Represents the additional service credit in connection with a change in control under Mr. Goldner’s employment agreement. In the case of a termination for Cause, non-qualified benefits under the Supplemental Plan and(and Mr. Goldner’s employment agreement, as it was in effect at the end of fiscal 2012,2014), including both pension and deferred compensation, were subject to forfeiture. |
(c)(e) | For purposes of this calculationUnder Mr. Tinga’s employment agreement, should he be terminated involuntarily by the target number of shares is pro-ratedCompany for certain ofreasons other than cause, the awardsCompany will pay for the portionmost direct economy class airfare for himself and his partner to return to their point of origin in The Netherlands. Additionally, the performance period completed asCompany would provide for the shipping and transportation of December 28, 2012. |
70
David Hargreaves
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voluntary
Resignation | | | Involuntary
for Cause | | | Involuntary
Without
Cause | | | Involuntary
Without
Cause or for
Good Reason
(w/Change in
Control)(a) | | | Disability | | | Death
Pre-
Retirement | | | Retirement | | Cash Severance | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | $ | 0 | | | $ | 0 | | | $ | 750,154 | | | $ | 2,250,462 | | | $ | 0 | | | $ | 0 | | | | N/A | | Bonus | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 4,200,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | Target Bonus for 2012 | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 640,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 750,154 | | | $ | 7,090,462 | | | $ | 0 | | | $ | 0 | | | | N/A | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | $ | 0 | | | $ | 0 | (b) | | $ | 0 | | | $ | 846,185 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | Health and Welfare Benefits | | $ | 0 | | | $ | 0 | | | $ | 14,635 | | | $ | 43,905 | | | $ | 0 | | | $ | 0 | | | | N/A | | Outplacement | | $ | 0 | | | $ | 0 | | | $ | 17,000 | | | $ | 17,000 | | | | N/A | | | | N/A | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Benefits & Perquisites | | $ | 0 | | | $ | 0 | | | $ | 31,635 | | | $ | 907,090 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | 280G Tax Gross-Up | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | Long-Term Incentives | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gain of Accelerated Stock Options | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 569,017 | | | $ | 127,785 | | | $ | 127,785 | | | $ | 0 | | Value of Accelerated Performance Shares | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 1,600,619 | | | $ | 678,976 | (c) | | $ | 678,976 | (c) | | $ | 678,976 | (c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Value of Accelerated Equity Grants | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 2,169,636 | | | $ | 806,761 | | | $ | 806,761 | | | $ | 678,976 | | Total Value: Incremental Benefits | | $ | 0 | | | $ | 0 | | | $ | 781,789 | | | $ | 10,167,188 | | | $ | 806,761 | | | $ | 806,761 | | | $ | 678,976 | |
(a) | Inall personal affects. The value of these costs have been estimated at $75,000. Under a change in control, other benefits include the eventCompany’s cost of a Change in Controlcontinued health and no termination of employment, only the long-term incentive values would be payable to the executive.welfare benefits coverage and outplacement services. |
(b)(f) | InIncludes the casevalue of a termination for Cause, non-qualified benefits underaccelerated equity awards pursuant to the Supplemental Plan and Mr. Hargreaves’terms of the plan, award agreement or individual employment or change in control agreement, including both pensionas applicable, and deferred compensation, are subject to forfeiture.summarized below. For awards whose vesting is based on actual performance, the calculations assume a target level of performance is achieved. |
(c)(g) | For purposesUnder Involuntary Termination, assumes Mr. Tinga is provided severance benefits under Dutch employment law standards. The value of these calculations the target numberMr. Tinga’s cash severance benefits have been converted from Euros to dollars at a computed exchange rate of shares is pro-rated for the portion of the performance period completed as of1 Euro equals $1.2178 on December 28, 2012.2014. |
71
Deborah Thomas | | | 50 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voluntary
Resignation | | | Involuntary
for Cause | | | Involuntary
Without
Cause | | | Involuntary
Without
Cause or for
Good Reason
(w/Change in
Control)(a) | | | Disability | | | Death | | | Retirement | | Cash Severance | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | $ | 0 | | | $ | 0 | | | $ | 515,000 | | | $ | 1,030,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | Bonus | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 618,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 515,000 | | | $ | 1,648,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | $ | 0 | | | $ | 0 | (b) | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | N/A | | Health and Welfare Benefits | | $ | 0 | | | $ | 0 | | | $ | 13,959 | | | $ | 13,959 | | | $ | 0 | | | $ | 0 | | | | N/A | | Outplacement | | $ | 0 | | | $ | 0 | | | $ | 17,000 | | | $ | 17,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Benefits & Perquisites | | $ | 0 | | | $ | 0 | | | $ | 30,959 | | | $ | 30,959 | | | $ | 0 | | | $ | 0 | | | | N/A | | 280G Tax Gross-Up | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | Long-Term Incentives | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gain of Accelerated Stock Options | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 300,914 | | | $ | 56,904 | | | $ | 56,904 | | | | N/A | | Value of Accelerated Restricted Stock | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 448,615 | | | $ | 168,321 | | | $ | 168,321 | | | | N/A | | Value of Accelerated Performance Shares | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 892,276 | | | $ | 364,223 | (c) | | $ | 364,223 | (c) | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Value of Accelerated Equity Grants | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 1,641,805 | | | $ | 589,447 | | | $ | 589,447 | | | | N/A | | Total Value: Incremental Benefits | | $ | 0 | | | $ | 0 | | | $ | 545,959 | | | $ | 3,320,764 | | | $ | 589,447 | | | $ | 589,447 | | | | N/A | |
(a) | In the event of a Change in Control and no termination of employment, only the long-term incentive values would be payable to the executive. |
(b) | In the case of a termination for Cause, non-qualified benefits under the Supplemental Plan, including both pension and deferred compensation, are subject to forfeiture. |
(c) | For purposes of these calculations the target number of shares is pro-rated for the portion of the performance period completed as of December 28, 2012. |
72
Duncan Billing
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voluntary
Resignation | | | Involuntary
for Cause | | | Involuntary
Without
Cause | | | Involuntary
Without
Cause or for
Good Reason
(w/Change in
Control)(a) | | | Disability | | | Death | | | Retirement | | Cash Severance | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | $ | 0 | | | $ | 0 | | | $ | 485,000 | | | $ | 970,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | Bonus | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 582,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 485,000 | | | $ | 1,552,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | $ | 0 | | | $ | 0 | (b) | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | N/A | | Health and Welfare Benefits | | $ | 0 | | | $ | 0 | | | $ | 18,293 | | | $ | 18,293 | | | $ | 0 | | | $ | 0 | | | | N/A | | Outplacement | | $ | 0 | | | $ | 0 | | | $ | 17,000 | | | $ | 17,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Benefits & Perquisites | | $ | 0 | | | $ | 0 | | | $ | 35,293 | | | $ | 35,293 | | | $ | 0 | | | $ | 0 | | | | N/A | | 280G Tax Gross-Up | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | Long-Term Incentives | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gain of Accelerated Stock Options | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 303,314 | | | $ | 58,101 | | | $ | 58,101 | | | | N/A | | Value of Accelerated Restricted Stock | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 448,615 | | | $ | 168,321 | | | $ | 168,321 | | | | N/A | | Value of Accelerated Performance Shares | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 932,885 | | | $ | 388,834 | (c) | | $ | 388,834 | (c) | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Value of Accelerated Equity Grants | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 1,684,814 | | | $ | 615,256 | | | $ | 615,256 | | | | N/A | | Total Value: Incremental Benefits | | $ | 0 | | | $ | 0 | | | $ | 520,293 | | | $ | 3,272,107 | | | $ | 615,256 | | | $ | 615,256 | | | | N/A | |
(a) | In the event of a Change in Control and no termination of employment, only the long-term incentive values would be payable to the executive. |
(b) | In the case of a termination for Cause, non-qualified benefits under the Supplemental Plan, including both pension and deferred compensation, are subject to forfeiture. |
(c) | For purposes of these calculations the target number of shares is pro-rated for the portion of the performance period completed as of December 28, 2012. |
73
John Frascotti
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voluntary
Resignation | | | Involuntary
for Cause | | | Involuntary
Without
Cause | | | Involuntary
Without
Cause or for
Good Reason
(w/Change in
Control)(a) | | | Disability | | | Death | | | Retirement | | Cash Severance | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | $ | 0 | | | $ | 0 | | | $ | 485,000 | | | $ | 970,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | Bonus | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 582,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Cash Severance | | $ | 0 | | | $ | 0 | | | $ | 485,000 | | | $ | 1,552,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | N/A | | Health and Welfare Benefits | | $ | 0 | | | $ | 0 | | | $ | 18,657 | | | $ | 18,657 | | | $ | 0 | | | $ | 0 | | | | N/A | | Outplacement | | $ | 0 | | | $ | 0 | | | $ | 17,000 | | | $ | 17,000 | | | $ | 0 | | | $ | 0 | | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Benefits & Perquisites | | $ | 0 | | | $ | 0 | | | $ | 35,657 | | | $ | 35,657 | | | $ | 0 | | | $ | 0 | | | | N/A | | 280G Tax Gross-Up | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | Long-Term Incentives | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gain of Accelerated Stock Options | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 303,314 | | | $ | 58,101 | | | $ | 58,101 | | | | N/A | | Value of Accelerated Restricted Stock | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 448,615 | | | $ | 168,321 | | | $ | 168,321 | | | | N/A | | Value of Accelerated Performance Shares | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 932,885 | | | $ | 388,834 | (b) | | $ | 388,834 | (b) | | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Value of Accelerated Equity Grants | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 1,684,814 | | | $ | 615,256 | | | $ | 615,256 | | | | N/A | | Total Value: Incremental Benefits | | $ | 0 | | | $ | 0 | | | $ | 520,657 | | | $ | 3,272,471 | | | $ | 615,256 | | | $ | 615,256 | | | | N/A | |
(a) | In the event of a Change in Control and no termination of employment, only the long-term incentive values would be payable to the executive. |
(b) | For purposes of these calculations the target number of shares is pro-rated for the portion of the performance period completed as of December 28, 2012. |
Agreements and Arrangements Providing Post-Employment and Change in Control Benefits The Company provides post-employment benefits through broad-based programs as well as individual agreements for certain executives. Benefits provided through each of the following programs are summarized below and the value of these benefits in various situations is included in the preceding tables. Hasbro Equity Incentive Plans Hasbro Severance Benefit Plan Change of ControlEmployment Agreement with David HargreavesBrian Goldner
Letter Agreement with Mr. Tinga Change in Control Severance Plan for Designated Senior Executives Employment Agreement with Brian Goldner
Retirement Agreement with David Hargreaves
Benefits Under Hasbro Equity Incentive Plans The executive officers of the Company and certain of the Company’s other employees have received outstanding equity awards, in the form of stock options, restricted stock units and/or contingent stock performance awards, under a number of equity incentive plans, including the Company’s 1995 Stock Incentive Performance Plan, 1997 Employee Non-qualified Stock Plan and Restated 2003 Stock Incentive Performance Plan. 74
Unless modified by the individual employment agreements or equity grant agreements entered into between the Company and an executive officer, all equity awards (including stock options, restricted stock grants, deferred restricted stock units and contingent stock performance awards) under all of the Company’s equity incentive plans are subject to the post-termination provisions which are summarized below, based on the type of termination or the occurrence of a change of control. Effect of a Change of Control UponFor option awards granted prior to January 1, 2013, upon a change in control, whether or not an executive officer’s employment is terminated, all of such officer’s options become immediately exercisable and will be canceled in exchange for payment in the amount of the difference between the highest price paid for a share of the Company’s Common Stock in the transaction or series of transactions pursuant to which the Change of Control shall have occurred or, if higher, the highest reported sales price of a share of Common Stock during the sixty-day period immediately preceding the date of the Change of Control, and the exercise price of such options. This payment will be made in a lump sum in cash or shares of Common Stock, or a combination thereof, in the discretion of the Compensation Committee.
Shares of restricted stock, restricted stock units and the target number of shares subject to contingent stock performance awards granted prior to January 1, 2013 will become immediately vested upon a change in control and settled in a similar manner as stock options, as described above, except that there is no exercise price for restricted stock, restricted stock units or performance shares, so the value received will be the product of the number of shares multiplied by the highest price paid for a share of the Company’s Common Stock in the transaction or series of transactions pursuant to which the Change of Control shall have occurred or, if higher, the highest reported sales price of a share of Common Stock during the sixty-day period immediately preceding the date of the Change of Control. For purposesOption awards, shares of restricted stock, restricted stock units and the Company’s equity incentive plans, “Changetarget number of Control” bears the same definition as described in the Change of Control Agreement with Mr. Hargreaves, which is described below, except that for equityshares subject to contingent stock performance awards madegranted on orand after May 24, 2006, the threshold forJanuary 1, 2013, will vest upon a change in control only if the executive officer’s employment is 35%, rather than 20%.terminated by the Company without Cause, or by the executive for Good Reason, each as defined under the Restated 2003 Stock Incentive Performance Plan, as amended (the “2003 Plan”) within twenty-four (24) months following a Change of Control, as defined under the 2003 Plan. If an award should vest in accordance with these, terms, they are settled in a similar manner as described above for the respective award, but calculated as of the date of the executive’s termination of employment based on the fair market value of the stock, calculated in accordance with the 2003 Plan, on such date of the termination of employment.
Disability Termination If an executive officer’s employment with the Company is terminated due to a permanent disability of such officer, then, except to the extent this treatment is modified in an individual officer’s employment agreement, for such officer’s outstanding equity awards: (i) all unvested stock option awards immediately vest and become exercisable for a period of one year following the date of such disability, (ii) a pro-rata portion, reflecting the portion of the total vesting period which has elapsed, of restricted stock unit awards immediately vest and (iii) outstanding contingent stock performance awards remain outstanding for the remainder of the performance period and at the end of the performance period the number of shares which would have been earned under the award is pro-rated based on the portion of the performance period prior to the officer’s termination due to disability and such pro-rated number of shares is paid to the officer. Termination due to Death of an Officer If an executive officer’s employment with the Company terminates due to the officer’s death, then, except to the extent this treatment is modified in an individual officer’s employment agreement, for such officer’s outstanding equity awards (i) all unvested stock option | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 51 |
awards immediately vest and become exercisable for a period of one year following the date of death or the appointment of the executor of such officer’s estate, (ii) a pro-rata portion, reflecting the portion of the total vesting period which has elapsed, of restricted stock unit awards immediately vest and (iii) outstanding contingent stock performance awards are paid out based on the pro-rated portion of the performance period completed prior to the officer’s death, with such pro-rated period applied to the target number of shares subject to such awards. 75
Retirement Upon retirement of an executive officer, outstanding equity awards are treated in the following manner: (i) if the retirement qualifies as normal retirement, where the officer is 65 or older and has five or more years of service with the Company, all stock option awards vest and become exercisable for a period of one year following retirement and a pro-rata portion, reflecting the portion of the total vesting period which has elapsed, of restricted stock unit awards immediately vest, and (ii) if it qualifies as normal retirement or early retirement, unearned performance share awards remain outstanding for the remainder of the performance period and at the end of the period the number of shares which are actually earned are pro-rated for the portion of the performance period during which the officer was employed and such pro-rated portion is paid to the retired executive. Other Voluntary or Involuntary Terminations For all other terminations of employment of an executive officer, either voluntary or involuntary, except to the extent this treatment is modified in an individual officer’s employment agreement or by action of the Compensation Committee, no additional vesting of equity awards occurs as a result of termination but (i) stock options that were currently exercisable prior to termination remain exercisable for a period of from three (in the case of stock options granted with an exercise price equal to fair market value on the date of grant) to six (in the case of stock options granted with an exercise price in excess of the fair market value on the date of grant) months following the date of termination and (ii) all unvested restricted shares and stock units, and unearned contingent stock performance awards, are forfeited. Hasbro Severance Benefit Plan The Company’s Severance Benefits Plan provides for a basic level of severance benefits and a more substantial level of benefits, subject to the individual signing a severance agreement acceptable to the Company. These benefits are provided if the executive is terminated by the Company without cause. The benefits shown for Mr. Hargreaves, Ms. Thomas, Mr. Billing, Mr. Frascotti and Mr. FrascottiTinga in the preceding tables assume that each officer signs an acceptable severance agreement and is thereby eligible for the following benefits under the Company’s Severance Benefits Plan: (i) continuation of base salary for a period equal to the greater of 2 weeks for each complete year of service with the Company or one year, (ii) continuation of Health & Welfare benefits for the same period including medical, dental, vision and life insurance, with the Company sharing the cost at the same rate as a similarly situated active employee and (iii) participation in an outplacement program. The amount shown in the tables above assumes one year of participation for each of these executives other than Mr. Hargreaves, for which the amount reflects 60 weeks.executives. However, benefits under the Company’s Severance Benefits Plan cease upon re-employment of an executive, provided that if the individual notifies the Company of the new employment, the Company will provide a lump sum equal to 50% of the remaining severance pay as of the date of new employment. Employment Agreement with Mr. Goldner In recognition of Mr. Goldner’s critical role in continuing the transformation of Hasbro into a global branded-play company and in executing Hasbro’s future business strategies, effective on October 4, 2012 the Company entered into an Amended and Restated Employment Agreement (the “Amended Employment Agreement”) with its President and Chief Executive Officer, Brian Goldner. The Amended Employment Agreement replaces the Amended and Restated Employment Agreement, dated March 26, 2010, and the Change in Control Employment Agreement, dated March 18, 2000, as amended (together referred to as the “Prior Agreements”) previously in place between Mr. Goldner and the Company. The Amended Employment Agreement was amended in August 2014. The terms of the Amended Employment Agreement, as amended in August 2014, are described beginning on page 5137 of this proxy statement.Proxy Statement. In addition to that description, set forth below is a description of the consequences under the Amended Employment Agreement of various terminations of employment. 76
Treatment Following Various Terminations of Employment The Amended Employment Agreement provides for the following treatment upon various terminations of Mr. Goldner’s employment with the Company. For Cause or Other than for Good Reason.Reason. If Mr. Goldner’s employment is terminated by the Company for Cause, or if Mr. Goldner terminates his employment for other than Good Reason, Hasbro will pay Mr. Goldner the compensation and benefits otherwise payable to him through the last day of his actual employment with Hasbro. All stock options, restricted stock units and contingent stock performance awards granted to Mr. Goldner will be treated as provided in the relevant grant agreements and plans, which currently provide that such awards will terminate. For Death or Disability.Disability. If Mr. Goldner’s employment is terminated by death or because of Disability (as defined in the Amended Employment Agreement), Hasbro shall pay to Mr. Goldner’s estate or to Mr. Goldner, as the case may be, the compensation which would | | | 52 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
otherwise be payable up to the end of the month in which the termination of employment occurs, and Hasbro shall pay Mr. Goldner (or his estate, if applicable) an amount equal to the annual management incentive plan bonus that would have been otherwise payable for the fiscal year in which termination of employment occurs based on the actual performance of Hasbro for such year, multiplied by a fraction, the numerator of which is the number of days elapsed in the fiscal year of termination of employment through the date of such termination, and the denominator of which is 365 (the “Pro-Rata Bonus”). In the event of the termination of Mr. Goldner’s employment for death or Disability, and, if and only to the extent one or more of the stock price thresholds for the Special RSU Grant were satisfied prior to Mr. Goldner’s death or Disability, the service component for that award would be waived and the shares for which the thresholds were met would vest immediately, with any shares for which the stock price thresholds were not met being forfeited. All other stock options, restricted stock units, and contingent stock performance awards granted to Mr. Goldner will vest on death or Disability in accordance with the relevant agreements and plans, provided that if any such award consists of unvested contingent stock performance awards (including as set forth above, the Retention Grant Performance Shares in the event of the termination of employment for Disability), Mr. Goldner would be entitled to the number of shares of common stock, if any, that would have been earned (had Mr. Goldner’s employment not ended) based on achievement of the applicable targets during the full relevant performance period. Termination by Hasbro Without Cause of by Mr. Goldner for Good Reason. If, prior to or more than two years following a “Change in Control” (as defined in the Amended Employment Agreement), Mr. Goldner’s employment is terminated at the election of Hasbro without Cause, or at the election of Mr. Goldner for Good Reason, Mr. Goldner would be entitled to: a severance amount equal to two (2) times his target cash compensation (base salary plus annual bonus) for the fiscal year immediately prior to the year in which termination occurs; continuation of his then–current level of life insurance and medical, dental and vision coverage, with Hasbro and Mr. Goldner sharing the cost on the same basis as it is shared on the last day of his employment, until the date Mr. Goldner commences new employment or two years from the effective date of termination, whichever is earlier; acceleration of the vesting of, and lapse of restrictions on, all unexpired, unvested stock options and time-based restricted stock units, such that said stock options and restricted stock units become fully vested as of the termination of Mr. Goldner’s employment, except as otherwise provided in the Amended Employment Agreement for the Special RSU Grant or in the terms of any such awards. In addition, to the extent Mr. Goldner is the holder of any equity award, he shall be entitled to the number of shares of common stock, if any, that would have been earned (had his employment not ended) based on achievement of the applicable targets during the full relevant performance period for such award, pro-rated by multiplying that number of shares by a fraction, the numerator of which is the number of days from the start of the performance period to the effective date of termination of employment, and the denominator of which is the total number of days in the applicable performance period; and 77
| of shares of common stock, if any, that would have been earned (had his employment not ended) based on achievement of the applicable targets during the full relevant performance period for such award, pro-rated by multiplying that number of shares by a fraction, the numerator of which is the number of days from the start of the performance period to the effective date of termination of employment, and the denominator of which is the total number of days in the applicable performance period; and
|
provided one or more of the stock price thresholds for the Special RSU Grant have been satisfied prior to such termination of employment, a pro-rated portion of the Special RSU Grant will vest, calculated by multiplying the number of shares for which the stock price thresholds have been met by a fraction, the numerator of which is the number of days from October 4, 2012 to the effective date of Mr. Goldner’s termination of employment, and the denominator of which is the total number of days between October 4, 2012 and December 31, 2017. If one or more of the stock thresholds are not met in the Special RSU Grant as of the time of Mr. Goldner’s termination without Cause or resignation for Good Reason, such portions will not vest and will be forfeited. If, within two years following a Change in Control, Mr. Goldner’s employment is terminated by Hasbro without Cause or by Mr. Goldner for Good Reason, Mr. Goldner shall be entitled to: the sum of (1) his base salary through the date of termination to the extent not theretofore paid, (2) his annual bonus for the last fiscal year, to the extent not theretofore paid, (3) the product of (x) the “Highest Annual Bonus” (as defined in the Amended Employment Agreement), and (y) a fraction, the numerator of which is the number of days in the current fiscal year through his date of termination, and the denominator of which is 365, and (4) any compensation previously deferred by Mr. Goldner and any accrued vacation pay, in each case to the extent not theretofore paid; a severance amount (the “Change in Control Severance”) equal to the product of (1) two and (2) the sum of (x) his Average Annual Salary (as defined in the Amended Employment Agreement) and (y) the greater of (A) the Highest Annual Bonus and (B) the Average Annual Bonus (as defined in the Amended Employment Agreement); until such date that is three years following the Change in Control, or such longer period as any plan, program, practice or policy may provide, Hasbro will continue providing benefits to Mr. Goldner and/or his family at least equal to those which would have been provided to them if his employment had not been terminated in accordance with the most favorable plans, practices, programs or policies of Hasbro applicable generally to other peer executives and their families during the 90-day period immediately preceding the Change in Control or, if more favorable to Mr. Goldner and/or his family, as in effect generally at any time thereafter with respect to other peer executives of Hasbro and its affiliated companies and their families; acceleration of vesting of, and lapse of restrictions on, all unexpired, unvested stock options and time-based restricted stock units, such that said stock options and restricted stock units become fully vested as of the termination of Mr. Goldner’s employment, except as otherwise provided in the Amended Employment Agreement for the Special RSU Grant or in the terms of such awards. In addition, to the extent Mr. Goldner is the holder of any performance award, he shall be entitled to the number of shares of common stock, if any, that would have been earned (had Mr. Goldner’s employment not ended) based on achievement of the applicable performance targets during the full relevant performance periods, pro-rated by multiplying that number of shares by a fraction, the numerator of which is the number of days from the start of the performance period to the effective date of his termination of employment, and the denominator of which is the total number of days in the applicable performance period; and | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 53 |
| except as otherwise provided in the Amended Employment Agreement for the Special RSU Grant or in the terms of such awards. In addition, to the extent Mr. Goldner is the holder of any performance award, he shall be entitled to the number of shares of common stock, if any, that would have been earned (had Mr. Goldner’s employment not ended) based on achievement of the applicable performance targets during the full relevant performance periods, pro-rated by multiplying that number of shares by a fraction, the numerator of which is the number of days from the start of the performance period to the effective date of his termination of employment, and the denominator of which is the total number of days in the applicable performance period; and |
provided one or more of the stock price thresholds in the Special RSU Grant have been satisfied, any such shares for which the thresholds have been met will vest. If one or more of the stock thresholds are not met in the Special RSU Grant as of the time of Mr. Goldner’s termination without Cause or resignation for Good Reason, such portions will not vest and will be forfeited. 78
Change of ControlLetter Agreement with Wiebe Tinga
Mr. Hargreaves David Hargreaves, the Company’s Executive Vice President, Chief Strategy Officer,Tinga is party to a change in controlletter agreement with the Company as amended (the “Changegoverning his employment. Mr. Tinga is an employee of Control Agreement”Hasbro International, Inc. and pursuant to the letter agreement is seconded from the Netherlands to Hasbro, Inc. in the U.S. (80%) and Hasbro SA in Switzerland (20%). Mr. Tinga’s base salary is set at 461,538 Euros and is updated from time to time in accordance with Hasbro’s general compensation policies. The Changeletter agreement provides that Mr. Tinga is eligible to participate in the Company’s 2014 Senior Management Annual Performance Plan with a target bonus of Control Agreement comes into effect only upon a “Change70% of Control,” as defined therein, and continueshis earned base salary. Mr. Tinga is also eligible to participate in the Company’s equity compensation plans for three years after such date (the “Employment Period”).executive officers with an annual target award equal to 175% of base salary.
If, duringMr. Tinga participates in the Employment Period,Netherlands Pension Plan which is described beginning on page 47 of this proxy statement. In addition, beginning in 2015, Mr. Hargreaves’ employment withTinga is eligible for an annual cash payment equal to 17.85% of the Companyamount by which his ending base salary is involuntarily terminated other than for “Cause,” then he is entitledabove the new pension cap of 100,000 Euros to his (a) average annual salarycompensate him for the five years preceding the Changeloss of Control (or such lesser number of actual years employed) plus (b) the greater of (x) the target bonus during the year of termination and (y) the average annual bonus for the five completed years preceding the Change of Control, in each case multiplied by three (or multiplied by two if the special bonus described in the following sentence has already been paid). In addition, if Mr. Hargreaves remains employed through the first anniversary of the Change in Control he will receive a special bonus equal to one year’s salary and bonus, computed using the five-year look back period described in the prior sentence.
If Mr. Hargreaves’ employment is involuntarily terminated other than for “Cause” during the Employment Period, he would also be entitled to an amount equal to the shortfall between the actuarial benefit payable to him under the Company’s retirement planspension value as a result of the early termination and the amount he would have received if he had continuedlegislative changes in the employ ofNetherlands which cap the Companypensionable salary at 100,000 Euros. Mr. Tinga is required to pay all taxes on this annual cash payment.
Finally, under a tax protection agreement. Mr. Tinga pays all US taxes related to his compensation, and Hasbro is responsible for the remainder of the Employment Period. In addition, Mr. Hargreaves andincremental social taxes related to his family would be entitledsecondment to the continuation of medical, welfare, life insurance, disability and other benefits for at least the remainder of the Employment Period. If Mr. Hargreaves is subject to the payment of excise tax under Section 4999 of the Code or any tax imposed by Section 409A of the Code, the Company will pay him an additional amount so as to place the executive in the same after-tax position such executive would have been in had such taxes not applied. In addition, the Change of Control Agreement permits Mr. Hargreaves to terminate his employment for “Good Reason” at any time or for any reason during a 30-day period immediately following the first anniversary of the Change of Control and receive the above-described severance benefits. “Good Reason” includes diminution of the executive’s responsibilities or compensation, relocation or purported termination otherwise than as expressly permitted by the Change of Control Agreements. Under certain circumstances, certain payments by the Company pursuant to the Change of Control Agreements may not be deductible for federal income tax purposes pursuant to Section 280G of the Code.
A “Change of Control” is defined as the occurrence of certain events, including acquisition by a third party of 20% or more of the Company’s outstanding voting securities, a change in the majority of the Board, consummation of a reorganization, merger, consolidation, substantial asset sale involving, or shareholder approval of a liquidation or dissolution of, the Company subject, in each case, to certain exceptions. “Cause” is defined, for purposes of the Agreements, as demonstrably willful or deliberate violations of the executive’s responsibilities which are committed in bad faith or without reasonable belief that such violations are in the best interests of the Company, which are unremedied after notice, or conviction of the executive of a felony involving moral turpitude.Hasbro SA.
Change in Control Severance Plan for Designated Senior Executives In 2011 the Company adopted the Hasbro, Inc. Change in Control Severance Plan for Designated Senior Executives (the “Plan”). Participants in the Plan include Ms. Thomas, Mr. Billing, Mr. Frascotti and Mr. Frascotti.Tinga. Under the Plan, if a Change in Control (as defined in the Plan) occurs and the covered executive’s employment is terminated by the Company without Cause (as defined in the Plan) or the covered executive resigns from the Company with Good Reason (as defined in the Plan) in the 24 month period following the Change in Control, the covered executive will be entitled to the following payments and benefits: (A) two times (i) the sum of the covered executive’s annual base salary in effect on the date of termination (or, if higher, immediately preceding 79
the Change in Control) and (ii) the percentage of earned salary which constitutes the target bonus for the covered executive assuming target Company performance under the annual incentive plan in place at the time of termination, and (B) payment by the Company of the employer and employee premiums for continued health coverage for the covered executive and his/her covered dependents for the shorter of 12 months following cessation of employment and the period for which the individuals are eligible for and elect such coverage. The annual base salary and target bonus payouts will be reduced by an amount equal to the total of severance payments to which the covered executive is entitled to receive or will receive under any other severance plan, policy or individual agreement applicable to the covered executive’s employment termination. The severance payments and benefits above are subject to the covered executive complying with a non-competition covenant, which is effective while the covered executive is employed by the Company and for a period of 18 months after the covered executive’s employment ends, regardless of the reason for the termination of employment. The Plan does not provide for any tax gross-ups and does not provide benefits to the executive unless their employment with the Company is terminated. Retirement Agreement With David Hargreaves
Mr. Hargreaves is entitled to a defined benefit from a Retirement Agreement that replaces the benefits previously accrued under the Expatriate Plan and considers all of his services with Hasbro, including periods in the U.K. The single straight-life annuity benefit under the Retirement Agreement is determined as follows: (I) (A) 1% of five-year average compensation multiplied by (B) years of benefit service (for this purpose Mr. Hargreaves is continuing to accrue years of benefit service), with such benefits then being reduced by (II) the benefits payable from the (i) former U.K. Plan sponsored by Hasbro (which benefits are now being provided by Legal and General as a result of the buyout of deferred pensioners), (ii) Pension Plan and (iii) Supplemental Plan (pension benefits). Due to Mr. Hargreaves age and service, benefits under this plan are payable on an unreduced basis.
Compensation Committee Interlocks and Insider Participation The members of the Compensation Committee of the Board as of the 20122014 fiscal year end were John M. Connors, Jr.Edward Philip (Chair), Basil L. Anderson, Frank J. Biondi, Jr., Kenneth A. Bronfin, Michael Burns, John Connors, Jr. and Edward M. Philip.Linda Zecher. None of the members of the Compensation Committee during fiscal 20122014 had at any time been an officer or employee of the Company or of any of its subsidiaries. No executive officer of the Company served as a member of the compensation committee or board of directors of any other entity which had an executive officer serving as a member of the Company’s Board or Compensation Committee during fiscal 2012.2014. 80
| | | 54 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
SHAREHOLDER ADVISORY VOTE ON COMPENSATION FOR NAMED EXECUTIVE OFFICERS (Proposal (Proposal No. 2)
Pursuant to Section 14A of the Exchange Act, we are seeking shareholder approval for the compensation of our Named Executive Officers, as such compensation is discloseddescribed in this proxy statementProxy Statement under the headings “Compensation Discussion and Analysis” beginning on page 19, and “Executive Compensation”. This vote is advisory beginning on page 41. Shareholders are urged to carefully review the “Compensation Discussion and is not binding on the Company. Analysis” and “Executive Compensation” sections of this Proxy Statement. Shareholders are being asked to vote on the following advisory resolution: RESOLVED, that the shareholders of Hasbro, Inc. approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as such compensation is disclosed pursuant to the rules of the Securities and Exchange Commission in this proxy statementProxy Statement under the headings “Compensation Discussion and Analysis” and “Executive Compensation”. At our 2011 Annual Meeting we recommended to our shareholders that we have an annual advisory vote on the compensation of our Named Executive Officers. The recommendation of having this vote annually was overwhelmingly supported by our shareholders. In keeping with the expressed interests of our shareholders, we plan to submit annual advisory votes to our shareholders in the future on the compensation of our Named Executive Officers. At our 2014 Annual Meeting the vote to approve our compensation programs for our Named Executive Officers did not pass, and only approximately 46% of the shares present and entitled to vote on the proposal voted in favor of it. As we discussed under the sectiondiscuss in detail beginning on page 22 of this proxy statement, entitled “Compensation Discussionfollowing our failed 2014 say-on-pay vote and Analysis”,informed by our discussions with shareholders to help ensure that any changes we made properly addressed key shareholder concerns, both our Board of Directors and our Chief Executive Officer mutually decided that they would take the unusual step of amending certain of the terms contained in Mr. Goldner’s existing employment agreement. The changes made to Mr. Goldner’s employment agreement were made in direct response to feedback from our shareholders. Those changes are described in a table on page 23 of this proxy statement, and are discussed in detail in the pages following that table. The amendments made to Mr. Goldner’s employment agreement in response to shareholder feedback represent a potential reduction in Mr. Goldner’s net compensation over the remaining term of his employment agreement (which expires on December 31, 2017) of up to approximately $11 million. Following the amendment of Mr. Goldner’s employment agreement in August of 2014, we again reached out to shareholders to explain the changes we had made and to obtain their views on the amended terms. We have designed our compensation programs for our Named Executive Officers in the way we believe enables the Company to attract and retain top executive talent, maximizes the performance of those executives in furthering the objectives of the Company, aligns our realized executive compensation with the Company’s performance in meeting its financial and strategic objectives and with the delivery of total shareholder return, and promotes the creation of long-term shareholder value, all while containing the cost of the executive compensation program to a level the Compensation Committee believes is reasonable and appropriate. To further these objectives, the vast majority of the compensation opportunity for our Named Executive Officers is tied to achievement of Company performance targets which are based upon our Board approved operating and strategic plans and/or to increases in the value of our stock. We design our executive compensation program in the way we believe best promotes the interests of you, our shareholders. Shareholdersshareholders and we are urgedcommitted to carefully reviewbeing responsive to the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this proxy statement.
At our 2011 Annual Meeting we recommended to our shareholders that we have an annual advisory vote on the compensation of our Named Executive Officers. The recommendation of having this vote annually was overwhelmingly supported by our shareholders. In keeping with the expressed interestsviews of our shareholders we plan to submit annual advisory votes toon our shareholders in the future on the compensation of our Named Executive Officers.programs and governance practices.
Approval Although the vote is non-binding, the Board of Directors and Compensation Committee of the Company will carefully consider the results of this vote in connection with their ongoing evaluation, and establishment, of the Company’s compensation arrangements and programs for the Company’s Named Executive Officers. At our 2012 Annual Meeting the shareholders of the Company approved our compensation programs for our Named Executive Officers by a vast majority, with 93.5% of the shares which voted on the proposal having voted in favor of its approval.
The affirmative vote of a majority of the shares of Common Stock present (in person or by proxy) and entitled to vote at the Meeting on this shareholder advisory vote is required for approval of the resolution. Abstentions are considered shares entitled to vote on the proposal and as such abstentions are the equivalent of a vote against the proposal. In contrast, broker non-votes are not counted as present and entitled to vote on the proposal for purposes of determining if the proposal receives an affirmative vote of a majority of the shares present and entitled to vote. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTEFOR ADVISORY APPROVAL OF THE COMPANY’S COMPENSATION FOR ITS NAMED EXECUTIVE OFFICERS. 81
| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 55 |
COMPENSATION OF DIRECTORS The following table sets forth information concerning compensation of the Company’s directors for fiscal 2012.2014. Mr. Goldner, the Company’s current President and Chief Executive Officer, served on the Board during fiscal 2012.2014. However, Mr. Goldner did not receive any compensation for his Board service in fiscal 20122014 beyond his compensation as Chief Executive Officer. | | | | | | | | | | | | | | | | | | | | | | | 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
(d) | | | All Other
Compensation
(e) | | | Total | | Basil L. Anderson | | $ | 112,343 | | | $ | 129,967 | | | $0 | | | N/A | | | $ | 80,496 | | | $ | 322,806 | | Alan R. Batkin | | $ | 1,762 | | | $ | 253,753 | | | $0 | | $ | 90,591 | | | $ | 146,099 | | | $ | 492,205 | | Frank J. Biondi, Jr. | | $ | 107,533 | | | $ | 129,967 | | | $0 | | | N/A | | | $ | 57,864 | | | $ | 295,364 | | Kenneth A. Bronfin | | $ | 133,007 | | | $ | 129,967 | | | $0 | | | N/A | | | $ | 33,538 | | | $ | 296,512 | | John M. Connors, Jr. | | $ | 0 | | | $ | 270,253 | | | $0 | | | N/A | | | $ | 100,810 | | | $ | 371,063 | | Michael W.O. Garrett | | $ | 0 | | | $ | 253,753 | | | $0 | | | N/A | | | $ | 74,095 | | | $ | 327,848 | | Lisa Gersh | | $ | 0 | | | $ | 250,316 | | | $0 | | | N/A | | | $ | 24,889 | | | $ | 275,205 | | Jack M. Greenberg | | $ | 112,533 | | | $ | 129,967 | | | $0 | | | N/A | | | $ | 48,935 | | | $ | 291,435 | | Alan G. Hassenfeld | | $ | 122,395 | | | $ | 129,967 | | | $0 | | | N/A | | | $ | 23,521 | | | $ | 275,883 | | Tracy A. Leinbach | | $ | 157,533 | | | $ | 129,967 | | | $0 | | | N/A | | | $ | 13,215 | | | $ | 300,715 | | Edward M. Philip | | $ | 0 | | | $ | 248,253 | | | $0 | | | N/A | | | $ | 113,086 | | | $ | 361,339 | | Alfred J. Verrecchia | | $ | 160,033 | | | $ | 129,967 | | | $0 | | | N/A | | | $ | 27,494 | | | $ | 317,494 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 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
(d) | | | All Other
Compensation
(e) | | | Total | | Basil L. Anderson | | | $120,338 | | | | $129,974 | | | | $0 | | | | N/A | | | | $89,663 | | | | $339,975 | | Alan R. Batkin | | | $3,958 | | | | $253,752 | | | | $0 | | | | $91,259 | | | | $166,821 | | | | $515,790 | | Frank J. Biondi, Jr. | | | $107,525 | | | | $129,974 | | | | $0 | | | | N/A | | | | $65,969 | | | | $303,468 | | Kenneth A. Bronfin | | | $166,693 | | | | $129,974 | | | | $0 | | | | N/A | | | | $41,590 | | | | $338,257 | | Michael R. Burns | | | $6,221 | | | | $57,180 | | | | $0 | | | | N/A | | | | $0 | | | | $63,401 | | John M. Connors, Jr. | | | $0 | | | | $256,834 | | | | $0 | | | | N/A | | | | $120,939 | | | | $377,773 | | Michael W.O. Garrett | | | $0 | | | | $253,752 | | | | $0 | | | | N/A | | | | $83,723 | | | | $337,475 | | Lisa Gersh | | | $0 | | | | $253,752 | | | | $0 | | | | N/A | | | | $42,925 | | | | $296,677 | | Jack M. Greenberg | | | $103,527 | | | | $129,974 | | | | $0 | | | | N/A | | | | $48,846 | | | | $282,347 | | Alan G. Hassenfeld | | | $92,525 | | | | $129,974 | | | | $0 | | | | N/A | | | | $31,717 | | | | $254,216 | | Tracy A. Leinbach | | | $132,525 | | | | $129,974 | | | | $0 | | | | N/A | | | | $17,523 | | | | $280,022 | | Edward M. Philip | | | $119,723 | | | | $129,974 | | | | $0 | | | | N/A | | | | $125,726 | | | | $375,423 | | Richard S. Stoddart | | | $0 | | | | $218,232 | | | | $0 | | | | N/A | | | | $8,850 | | | | $227,082 | | Alfred J. Verrecchia | | | $160,025 | | | | $129,974 | | | | $0 | | | | N/A | | | | $35,861 | | | | $325,860 | | Linda K. Zecher | | | $0 | | | | $119,669 | | | | $0 | | | | N/A | | | | $678 | | | | $120,347 | |
| (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 13 to the financial statements included in the Company’s Annual Report on Form 10-K, for the year ended December 30, 2012,28, 2014, 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 2012 was approximately $130,000 per director), 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 (the “Deferred Plan”) on all amounts deferred by such director into the Company’s stock unit account under the Deferred Plan.
| In addition to reflecting the grant date fair value for stock awards made to the directors (this expense for the director stock award in 2014 was approximately $130,000 per director), 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 (the “Deferred Plan”) on all amounts deferred by such director into the Company’s stock unit account under the Deferred Plan. |
No options were granted to any of the non-employee directors in 2012.
| No options were granted to any of the non-employee directors in 2014. |
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| | | 56 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
| (c) | The non-employee directors held the following outstanding stock and option awards as of December 30, 2012.28, 2014. |
| Name | | Outstanding
Option Awards | | | Outstanding
Stock Awards | | | Outstanding
Option Awards | | | Outstanding
Stock Awards | | Basil L. Anderson | | | 6,000 | | | | 24,576 | | | | 0 | | | | 29,767 | | Alan R. Batkin | | | 0 | | | | 24,576 | | | | 0 | | | | 29,767 | | Frank J. Biondi, Jr. | | | 18,000 | | | | 24,576 | | | | 6,000 | | | | 29,767 | | Kenneth A. Bronfin | | | 0 | | | | 17,032 | | | | 0 | | | | 22,223 | | Michael R. Burns | | | | 0 | | | | 1,017 | | Jack M. Connors, Jr. | | | 18,000 | | | | 24,576 | | | | 0 | | | | 29,767 | | Michael W.O. Garrett | | | 0 | | | | 20,916 | | | | 0 | | | | 20,916 | | Lisa Gersh | | | 0 | | | | 9,302 | | | | 0 | | | | 14,493 | | Jack M. Greenberg | | | 6,000 | | | | 15,196 | | | | 0 | | | | 15,196 | | Alan G. Hassenfeld | | | 100,000 | | | | 14,149 | | | | 0 | | | | 19,340 | | Tracy A. Leinbach | | | 0 | | | | 7,595 | | | | 0 | | | | 10,369 | | Edward M. Philip | | | 18,000 | | | | 24,576 | | | | 0 | | | | 29,767 | | Richard S. Stoddart | | | | 0 | | | | 2,417 | | Alfred J. Verrecchia | | | 1,062,491 | | | | 13,999 | | | | 0 | | | | 19,190 | | Linda K. Zecher | | | | 0 | | | | 1,577 | |
The outstanding stock awards consist of the non-employee director stock grants made in May of 2006 (4,769 shares), May of 2007 (2,775 shares), May of 2008 (3,033 shares), May of 2009 (4,619 shares) May of 2010 (2,994 shares), May of 2011 (2,726 shares) and May of 2012 (3,660 shares) to the extent 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 in this footnote. 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 he or she retires from the Board. Mr. Verrecchia’s and Mr. Hassenfeld’s outstanding option awards include options granted to them while they were an officer and an employee of the Company.
| The outstanding stock awards consist of the non-employee director stock grants made in May of 2006 (4,769 shares), May of 2007 (2,775 shares), May of 2008 (3,033 shares), May of 2009 (4,619 shares), May of 2010 (2,994 shares), May of 2011 (2,726 shares), May of 2012 (3,660 shares), May of 2013 (2,774 shares) and May of 2014 (2,417 shares) to the extent 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 in this footnote. 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 he or she retires from the Board. |
| (d) | The amounts reflected in this column consist entirely of the changeincrease in pension present value during fiscal 2012 for Mr. Batkin and are driven by a reductionis due to: (1) the decrease in the discount rate used for computing benefits from 4.253.93% to 3.14%.3.52%, and (2) the change in mortality assumption to the RP-2014 mortality table with mortality improvements from the base year using the two dimensional, generational Scale BB projection table. The actual pension benefits to be provided to Mr. Batkin were not increased in 2012.2014. As is discussed in more detail in the following pages, in 2003 the Company eliminated its director pension plan on a going-forward basis, such that directors joining the board after that time would not be eligible to participate in the pension plan. However, directors serving on the Board at the time that the pension plan was eliminated were given the ability to (i) either continue to accrue benefits under the director pension plan or instead to elect, effective as of specified dates ranging from May 1, 2003 through May 1, 2006, to start receiving stock options under the 2003 Stock Option Plan for Non-Employee Directors (the “2003 Director Option Plan”) and (ii) to the extent that a director opted into participation in the 2003 Director Option Plan, to have their accumulated benefits under the pension plan converted into stock units under the Deferred Compensation Plan for Non-employee directors (the “Deferred Plan”). All of the Company’s other current directors who were directors at the time of this transition opted into the 2003 Director Option Plan in 2003 and elected to convert their balance in the director pension plan into deferred stock units under the Deferred Plan. As such, other than Mr. Batkin, no current directors will receive any pension benefits and none of these directors accrued any such benefits during 2012.2014. |
This column does not include interest earned on balances held in directors’ interest accounts under the Deferred Plan. Such interest accrues based on the five-year treasury bill rate.
| This column does not include interest earned on balances held in directors’ interest accounts under the Deferred Plan. Such interest accrues based on the five-year treasury bill rate. |
| (e) | Comprises (i) deemed dividends which are paid on outstanding balances in stock unit accounts under the Deferred Plan and (ii) deemed dividends paid on annual stock awards which have been deferred. Balances deferred by directors into the stock unit account track the performance of the Company’s common stock. Also includes the Company’s matching charitable contribution of up to $5,000 per director per fiscal year. An aggregate of $35,000$30,000 was paid by the Company in fiscal 20122014 in director matching contributions. |
83
Current Director Compensation Arrangements All members of the Board who are not otherwise employed by the Company (“non-employee directors”) received a base retainer of $85,000 per year for their Board service in fiscal 2012.2014. The Chair of the Audit Committee received an additional retainer of $40,000 for her service as Chair of this committee in fiscal 2012.2014. The Chairs of the Compensation Committee and the Finance Committee received an additional retainer of $35,000 and $30,000, respectively, for service as Chair of their respective committee in fiscal 2012.2014. The Chair of the Nominating, Governance and Social Responsibility Committee received an additional retainer of $20,000 for his service as Chair of such committee in fiscal 2012.2014. The Chairman of the Board received an additional retainer of $75,000 per year for his service as Chairman, and the Company’s Presiding Director receives an additional retainer of $25,000 per year for serving in that role. Non-employee directors also received an annual committee membership retainer if they are not chair of the applicable committee of $20,000 for serving on the Audit Committee, $15,000 for serving on the Compensation Committee, and $7,500 for serving on either of the Finance Committee and/or the Nominating, Governance and Social Responsibility Committee. No meeting fees were paid for attendance at meetings of the full Board or committees. Beginning in 2006, the Company shifted to stock awards, instead of stock options, to provide equity compensation to its non-employee directors. As part of the implementation of this policy, the Company terminated the 2003 Stock Option Plan for Non-Employee Directors (which | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 57 |
(which is described below) effective as of December 31, 2005. Under its new program, the Company anticipates issuing to each non-employee director, in May of every year, 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 2012,2013, the director stock grants had grant date fair market values of $130,000. 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 which they hold, including shares which are obtained as part of this yearly stock grant, until they own shares of Common Stock with an aggregate market value equal to at least $425,000 (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 $425,000, as long as they continue to hold at least $425,000 worth of Common Stock. 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 stock unit account as of the end of the quarter in which the dividend was paid. 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. 84
Chairmanship Agreement with Alan G. Hassenfeld Effective on August 30, 2005 the Company entered into a Chairmanship Agreement, which agreement was subsequently amended effective May 22, 2008, and October 2009 and November 2013 (as amended, the “Chairmanship Agreement”) with Alan G. Hassenfeld. Pursuant to the Chairmanship Agreement, Mr. Hassenfeld serves as a non-employee member of the Board and as Chairman of the Executive Committee of the Board for an initial two-year term ended May 2010. Thereafter, Mr. Hassenfeld’s Chairmanship Agreement automatically renews for additional one-year periods unless he or the Board provide notice of the intent not to renew by December 31st of the year prior to the end of the then current term. Mr. Hassenfeld’s continued service as the non-employee Chairman of the Executive Committee will be contingent upon his annual reelection to the Board by the Company’s shareholders. Under the Chairmanship Agreement, Mr. Hassenfeld received a retainer for the twelve-month period ending in May of 2010 of $300,000. Beginning in June of 2010, the annual cash stipend was adjusted to an amount computed pursuant to the following formula: $300,000 minus the current director cash retainer ($85,000 as of the date of this proxy statement), multiplied by 2/3. That amount is paid in addition to the amount of the current director cash retainer in equal monthly installments. Beginning in June of 2011, the cash stipend was further adjusted to an amount computed as follows: $300,000 minus the current director cash retainer, multiplied by 1/3, plus the current director retainer, with the total amount again paid in equal monthly installments. Beginning in June of 2012, the cash stipend was further adjusted so that it is equal to, and paid in the same manner as, the cash retainer paid to other directors of the Company.
Mr. Hassenfeld is eligible to receive Board fees, equity grants and such other benefits as may be provided from time to time to the other non-employee members of the Company’s Board. Until OctoberAs of November 1, 2013, the Company (a) bearsmakes available to Mr. Hassenfeld the reasonablesupport services for one administrative assistant (the “Hasbro Employee”). Mr. Hassenfeld reimburses the Company quarterly in advance for the Company’s pro-rata cost of the Hasbro Employee’s annual base salary, target bonus and fringe benefits (including 401(k), payroll taxes, FICA, social security, insurance costs for one secretaryhealth, dental, vision benefits, and cost to administer these benefits) for Mr. Hassenfeld; (b) reimburses Mr. Hassenfeld on a quarterly basis for the cost of mutually-acceptable office space for Mr. Hassenfeld and his support staff in Providence, Rhode Island (the “Providence office space”); and (c) pays $6,250 per calendar quarter towards office expenses incurred in connection with the operation of the Providence office space. Such payments are contingent upon Mr. Hassenfeld remaining as a director of the Company. The Company also paid a set amount per calendar quarter towards expenses incurred by Mr. Hassenfeld in connection with his activities as a director ofsuch Hasbro his co-chairmanship of the ICTI “CARE” process, and as a public ambassador for the toy industry (including, without limitation, travel expenses and dues for membership in such organizations as the World Economic Forum). This payment was phased out entirely after the second quarter of 2012.
By virtue of his ongoing service as a member of the Board, Mr. Hassenfeld’s outstanding stock options will remain vested, in accordance with their terms, during the time that Mr. Hassenfeld serves as a non-employee director.Employee.
In the event that Mr. Hassenfeld’s service as a non-employee Chairman of the Executive Committee of the Board ends due to his resignation, death, disability, or failure to be re-elected to the Board by the Company’s shareholders, or in the event that the Company terminates Mr. Hassenfeld’s service for Cause (as defined in the Chairmanship Agreement), Mr. Hassenfeld’s compensation as a non-employee Chairman of the Executive Committee including the Chairmanship Retainer and any additional compensation provided to non-employee directors,a director would cease immediately. If Mr. Hassenfeld’s service is terminated by Hasbro without Cause during the Chairmanship Period,current year of service, Mr. Hassenfeld would be entitled to receive the Chairmanship Retainerretainer payable for the remaining timeportion of the Chairmanship Period.that year. In the case of termination resulting from disability, failure to be reelected, or without Cause by Hasbro, Mr. Hassenfeld would continue to receive his retirement benefits described above as well.benefits. The Chairmanship Agreement contains certain post-Chairmanship restrictions on Mr. Hassenfeld, including a two-year non-competition agreement and provisions protecting Hasbro’s confidential information. 85
| | | 58 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
Former Director Compensation Arrangements In Which Certain Directors Participate or Under Which Directors Previously Received Awards Under the Hasbro, Inc. Retirement Plan for Directors (the “Retirement Plan”), which is unfunded, each non-employee director who was serving on the Board prior to May 13, 2003 (and who was not otherwise eligible for benefits under the Company’s Pension Plan), has attained the age of sixty-five and completed five years of service on the Board was entitled to receive, beginning at age seventy-two, an annual benefit equal to the annual retainer payable to directors during the year in which the director retires (which does not include the fees paid to directors for attendance at meetings). If a director retires on or after the director’s seventy-second birthday, the annual benefit continues for the life of the director. If a director retires between the ages of sixty-five and seventy-two, the number of annual payments will not exceed the retired director’s years of service. Upon a Change of Control, as defined in the Retirement Plan, participating directors and retired directors are entitled to lump-sum payments equal to the present value of their benefits under the Retirement Plan. Directors appointed to the Board on or after May 14, 2003, the date that the Company’s shareholders approved the Company’s former 2003 Stock Option Plan for Non-Employee Directors (the “2003 Director Plan”) were not eligible to participate in the Retirement Plan, and automatically participated in the 2003 Director Plan prior to its termination on December 31, 2005. The benefits of the 2003 Director Plan replaced the benefits of both the Retirement Plan and the Company’s previous 1994 Stock Option Plan for Non-Employee Directors (the “1994 Director Plan”). Non-employee directors who were serving on the Board prior to May 13, 2003, and thus were participating in the Retirement Plan, and who were not scheduled to retire at the end of their current term in office as of the time of approval by shareholders of the 2003 Director Plan, were given the opportunity to elect to participate in the 2003 Director Plan effective on either May 14, 2003, May 1, 2004, May 1, 2005 or May 1, 2006. Directors who were serving on the Board prior to May 13, 2003 and who did not elect to participate in 2003 Director Plan on one of these dates continued to participate in the Retirement Plan in accordance with its terms. Directors serving as of May 13, 2003 who elected to participate in the 2003 Director Plan stopped accruing further years of service under the Retirement Plan and did not have their benefits under the Retirement Plan adjusted for changes in the annual retainer following the effective date of their participation in the 2003 Director Plan. The Company’s 2003 Director Plan, which was approved by the Company’s shareholders at the 2003 Annual Meeting of Shareholders (the “2003 Meeting”), replaced the benefits of the Retirement Plan and the 1994 Director Plan. The 2003 Director Plan was cancelled effective December 31, 2005 and no further grants are being made under the 2003 Director Plan, provided, however, that options previously granted under the 2003 Director Plan continue in effect in accordance with their terms. 86
PROPOSAL TO APPROVE AMENDMENTS TO THE RESTATED 2003 STOCK INCENTIVE PERFORMANCE PLAN
(Proposal No. 3)
On February 6, 2013, the Company’s Board adopted, subject to shareholder approval, the Third Amendment (the “Third Amendment”) to the Company’s Restated 2003 Stock Incentive Performance Plan (the “2003 Plan”). A copy of the Third Amendment is attached to this proxy statement as Appendix C. The Board further directed that the Third Amendment be submitted to the shareholders of the Company for their consideration and the Board recommends that shareholders approve the Third Amendment. The Third Amendment effects amendments (collectively the “Amendments”) to the 2003 Plan which are described below. Approval by the shareholders of this Third Amendment shall also constitute reapproval of the 2003 Plan, and the Performance Criteria, all as amended by the Third Amendment, for purposes of Rule 162(m).
Approval of the Amendments is necessary to allow the Company to have the ability to make equity awards to its officers and employees beyond December 31, 2013, the date upon which the 2003 Plan is currently scheduled to expire. If the Amendments are not approved, the Company will not have any plan in place providing for equity grants to officers or employees after December 31, 2013. As such, the Board believes that it is critical that the shareholders approve the Third Amendment, so that the Company will continue to have the ability to grant awards under the 2003 Plan to attract and retain key officers and employees, and to utilize awards under the 2003 Plan to provide variable performance-based compensation that aligns the interests of shareholders and grant recipients.
The Amendments make the following changes to the 2003 Plan:
| • | | Extend the Term. The Amendments extend the term of the 2003 Plan to December 31, 2017, from the currently scheduled expiration date of December 31, 2013.
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| • | | Add Authorized Shares. The Amendments increase the maximum number of total shares of stock that may be delivered pursuant to all awards under the 2003 Plan over its lifetime by 4,300,000 shares. With the addition of these 4,300,000 shares, and based upon the Company’s equity grants made as of March 22, 2013, the Company would have approximately 6,306,418 total shares available for future awards after approval of the Amendments (assuming that outstanding contingent stock performance awards are earned at their target level), which constitutes approximately 4.9% of the Company’s outstanding stock as of March 22, 2013. Of the 6,306,418 shares available for future grant, only 4,846,225 could be delivered pursuant to awards other than stock options or stock appreciation rights (SARs) under the limit on Full-Value Awards as amended by the Amendments.
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| • | | Implement a Double Trigger for Acceleration Following a Change in Control. Approval of the Amendments by shareholders will provide that all awards granted after the date of approval of the Amendments by shareholders will be subject to a double trigger change in control provision. This means that rather than vesting automatically upon a change in control, such awards will only vest following a change in control if the recipient’s employment with the Company terminates under specified circumstances. Approval of the Amendments by shareholders will also subject awards which have already been granted in 2013 prior to the date of approval to a double trigger provision, including the grants made in 2013 to Mr. Goldner and the other Named Executive Officers. If the Amendments are not approved, these 2013 awards which have already been granted will be subject to the single trigger which is currently provided in the 2003 Plan.
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| • | | Increase the Per Person Per Year Award Limit to Provide Flexibility. The Amendments increase the permitted per person per year limits on share awards (other than options or SARs) to 1,000,000 to the extent (i) paid in shares or (ii) denominated in shares but paid in cash. The intent of this amendment is to provide greater flexibility to the Compensation Committee in making share awards, such that if and when the Compensation Committee considers it necessary to use a more significant share award as part of the appropriate overall compensation package for an executive, it would have the ability to do so.
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| • | | Prohibit Cash Substitution for Underwater Options. The Amendments prohibit, without shareholder approval, the substitution of cash for outstanding options or SARs with an exercise price less than the then fair market value of the shares.
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| • | | No Repricing Stock Options or SARs. The Amendments clarify that the 2003 Plan prohibits, without shareholder approval, the repricing of stock options or SARs or the substitution of new awards for options or SARs which have exercise prices above the then fair market value of the stock.
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| • | | Add Flexibility in using relative TSR Performance Criteria.The Amendments add, as permissible Performance Criteria that can be used for performance awards under the 2003 Plan, total shareholder return on Common Stock relative to any index of companies or groups of companies, or one or more specific companies, all as selected by the Compensation Committee. This amendment is designed to broaden the ability of the Compensation Committee to grant performance awards with performance metrics tied to relative total shareholder return.
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| • | | Narrow the Definition of Change in Control. The Amendments narrow, in the manner described in the subsection “Purpose of the Amendments” below, the definition of “Change in Control” for awards granted after approval of the Amendments.
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Equity incentives are critical to attract and retain key officers and employees and without an equity plan allowing for equity incentive grants, the Company will be at a significant disadvantage in attracting and retaining qualified employees. As of March 22, 2013, there were approximately 385 officers, employees and directors holding equity awards under the 2003 Plan. Without approval of the Amendments, the Company will not have any equity plan in place providing for equity grants beyond 2013. The Board unanimously recommends that the shareholders approve the Amendments to the 2003 Plan because it believes that providing equity incentives and a proprietary interest in the growth and performance of the Company to key personnel, will advance the interests of the Company, by further aligning the interests of award recipients with those of shareholders, and by tying the realization of key compensation elements for individuals who contribute significantly to the Company’s performance with the performance of the Company and increases in the value of the Company’s stock.
The Company has designed the 2003 Plan, inclusive of the Amendments, to include a number of provisions that the Company believes promote best practices and reinforce the alignment between compensation payable to or realizable by participating officers, other key employees and directors, and shareholders’ interests. These provisions include, but are not limited to, the following:
| • | | No Evergreen Provision. There is no “evergreen” feature pursuant to which the shares authorized for issuance under the 2003 Plan can be automatically replenished.
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| • | | No Automatic Grants. The 2003 Plan does not provide for “reload” or automatic grants to participants and all grants must be approved by the Compensation Committee.
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| • | | Double Trigger Acceleration Following a Change in Control. The Amendments provide for a double trigger change in control provision for awards granted after approval of the Amendments, such that awards will only automatically forward vest if there is (i) a change in control, as defined under the 2003 Plan and (2) the award holder’s employment is terminated by the Company without Cause, or by the employee for Good Reason (each as defined under the Amendments) within twenty-four (24) months following the change in control. Approval of the Amendments will subject all awards already granted in 2013, inclusive of the 2013 awards already made to Mr. Goldner and the other Named Executive Officers, to the double trigger change in control provisions as well.
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| • | | No Liberal Share Recycling. Shares tendered in payment of an award’s exercise price, shares withheld to pay taxes, and shares purchased by the Company using proceeds from awards will not increase the total number of remaining shares authorized to be delivered pursuant to awards under the 2003 Plan, and the gross number of shares covered by SARs count against the shares remaining available for grant under the 2003 Plan.
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| • | | Minimum Vesting Requirements. Stock options, SARs, restricted stock and restricted stock units granted under the 2003 Plan cannot fully vest over a period of less than three years, and performance awards must have a minimum performance period of at least one year, all subject to limited exceptions for awards made in connection with the recruitment of new employees or directors.
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| • | | No Dividends on Unearned or Unvested Awards. The 2003 Plan prohibits the payment or accrual of dividends on (i) outstanding options or SARs or (ii) other awards subject to performance criteria or time vesting criteria that have not yet been met.
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| • | | No Tax Gross-Ups. The 2003 Plan does not provide for any tax gross-ups.
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| • | | No Repricing Stock Options or SARs, or Substituting Cash, without Shareholder Approval. The 2003 Plan does not allow for the repricing of stock options or SARs, or substitution of cash for underwater options or SARs, without shareholder approval.
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| • | | Stock Options and SARs cannot be Granted at Less Than Fair Market Value. The 2003 Plan prohibits granting stock options at an exercise price less than fair market value or granting SARs with a strike price less than the fair market value on the date of grant.
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| • | | Annual Award Limits. The 2003 Plan sets limits on awards that can be made to any individual in any calendar year.
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| • | | Full-Value Award Limitations. No more than 4,846,225 of the total shares authorized and remaining available for issuance under the 2003 Plan, based on the awards outstanding as of March 22, 2013, and inclusive of the additional shares provided by the Amendments, may be used for Full-Value Awards (Full-Value Awards being defined as equity awards other than stock options or SARs).
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| • | | Term Limits. No award under the 2003 Plan can be outstanding for more than ten years.
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Key Data
The following table provides information regarding the Company’s unadjusted annual burn rate for the past five years. All equity award grants during this period have been made under the 2003 Plan. This table shows a significant trend downward in the Company’s burn rate over the last five years.
| | | | | | | | | | | | | | | | | | | | | Fiscal
Year | | Shares Subject
to Options
Granted | | | Shares Subject
to Full-Value
Awards
Granted(a) | | | Full-Value
Shares
Actually
Earned(b) | | | Weighted Average
Common Shares
Outstanding | | | Burn Rate | | 2012 | | | 1,730,221 | | | | 132,504 | | | | 0 | | | | 130,145,538 | | | | 1.43 | % | 2011 | | | 1,079,889 | | | | 129,057 | | | | 477,079 | | | | 133,822,771 | | | | 1.26 | % | 2010 | | | 2,420,181 | | | | 173,950 | | | | 620,800 | | | | 139,078,861 | | | | 2.31 | % | 2009 | | | 2,955,320 | | | | 60,047 | | | | 579,952 | | | | 139,487,000 | | | | 2.58 | % | 2008 | | | 3,177,569 | | | | 96,126 | | | | 769,615 | | | | 140,877,000 | | | | 2.87 | % |
(a) | Includes restricted stock units or other restricted stock awards with a time-based vesting component which are granted in that year, and shares that are vested upon grant. Does not include share awards subject to future performance criteria. |
(b) | Includes contingent stock performance awards or other awards subject to performance criteria earned for the three-year performance period ending in December of that year (so for example, the 2012 figure would include any contingent stock performance awards earned for the three-year performance period ending December 2012). |
The Company’s average unadjusted burn rate for the prior three years, as derived from the table above, was 1.67%. The Company’s average adjusted burn rate for the prior three years was 2.23%, which is well below the ISS burn rate industry threshold for companies in GICS 2520 (Consumer Durables & Apparel) of 4.83% for 2013. The adjusted burn rate is computed by counting all Full-Value Share Awards as 2.5 shares for every one share subject to the award.
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On March 22, 2013, the Compensation Committee of the Board of Directors approved the Company’s annual equity grants to employees and officers for 2013, all of which will be effective on April 24, 2013, the day that is two business days after the Company’s next earnings release date. The 2013 annual awards include contingent stock performance awards, stock options and restricted stock units. The Compensation Committee also made discretionary restricted stock unit awards to certain mid-level employees of the Company in February 2013 to provide these employees with an equity incentive that could be realized based upon their continued service to the Company. All of these awards have been deducted in computing shares available for future grant as of March 22, 2013.
The following table provides information regarding outstanding Full-Value equity awards and shares available for future issuance under the 2003 Plan (without taking into account the Amendments) as of March 22, 2013. As such, the number of shares subject to the grants approved on or before March 22, 2012 has been deducted from shares available for future grant as of March 22, 2013:
| | | | | | | 2003 Plan | | Total shares subject to outstanding contingent stock performance awards (reflecting such awards at their target numbers)
| | | 1,340,338 | | Total shares subject to outstanding restricted stock units which are not vested
| | | 1,184,346 | | Total shares available for future awards (all of which are available for use as Full-Value Awards)
| | | 2,006,418 | |
The following table provides information regarding outstanding option awards (without taking into account the Amendments) as of March 22, 2013. The total shares underlying outstanding options reflects option grants approved by the Compensation Committee on March 22, 2013. However, the weighted average exercise price and the weighted average remaining life of outstanding options do not reflect option grants approved on March 22, 2013 because these options are awarded effective as of April 24, 2013 and the exercise price of those option awards will be equal to the fair market value of the Company’s Common Stock calculated on April 24, 2013:
| | | | | | | 2003 Plan | | Total shares underlying outstanding options
| | | 9,140,326 | | Weighted average exercise price of outstanding options
| | | $31.99 | | Weighted average remaining contractual life of outstanding options
| | | 3.5 years | |
Immediately following approval of the Amendments, the total shares authorized for future issuance under the 2003 Plan, including shares subject to currently outstanding awards under the 2003 Plan, added together with all shares of Common Stock subject to outstanding awards under the Company’s previous equity incentive plans, will only be approximately 12.9% of the Company’s diluted outstanding number of shares on March 22, 2013 (computed by adding the number of outstanding shares of Common Stock on such date to the number of shares then issuable pursuant to all of the Company’s prior and current equity compensation plans).
Purpose of the Amendments
The 2003 Plan is designed to advance the interests of the Company and to increase shareholder value by providing key personnel of the Company, or its affiliates, with a proprietary interest in the growth and performance of the Company, to provide incentives for such individuals to join the company and to continue their service with the Company or its affiliates and to allow for the grant of equity and other performance-based awards that reward participants for achievement of the Company’s objectives and for increases in the value of the Company’s stock. Equity awards under the 2003 Plan are a key source of variable compensation and are critical to the retention of officers, other key employees and directors.
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The Board believes that having the ability to provide officers, other selected employees and directors of the Company with equity awards is critical if the Company is to continue to attract and retain qualified individuals who can make significant contributions to the performance of the Company, and that such awards help align the interests of those individuals with the interests of the shareholders of the Company in increasing the value of the Common Stock and improving the Company’s performance.
If the Amendments are approved:
The term of the 2003 Plan will be extended through December 31, 2017; and
An additional 4,300,000 shares will be available for grant, for a total of approximately 6,306,418 shares available for grant (assuming that outstanding contingent stock performance awards are earned at their target level). This constitutes only 4.9% of the Company’s shares outstanding as of March 22, 2013 and would provide for approximately three years of grants under the 2003 Plan based upon historical grant practices.
The 2003 Plan, before approval of the Amendments, is only effective through December 31, 2013. As such, if the Amendments are not approved, the Company will not be able to make awards under the 2003 Plan after 2013. The 2003 Plan is the only plan the Company has in place which provides for the grant of equity awards to employees and directors.
Increasing the per person, per year award limits under the Plan is crucial as the Compensation Committee and the Board recognize the competitive conditions for top talent, and the need to retain those individuals who can make the most significant contributions to the Company’s future performance. Additional flexibility in the per person, per year award limits, is needed to allow for the types of grants and grant levels that may be required from time to time to properly compensate certain key individuals at the Company.
To enable the Company to continue to provide equity compensation to its officers, other key employees and directors the Company is requesting that the shareholders approve the Amendments extending the term of the plan through December 31, 2017, adding shares to the total authorized shares under the 2003 Plan and increasing the number of shares which may be granted subject to Full-Value Awards under the 2003 Plan. The Board believes that these changes are critical to allow the Company to continue to attract and retain qualified individuals who can contribute to the Company’s performance, including to retain talented executives at the senior most levels of the Company.
Beginning in December of 2012 the Company reached out to its 25 largest shareholders and offered to discuss its compensation plans, including the 2003 Plan, with them individually. As a result of this outreach, the Company had discussions with approximately 15 major shareholders. Among other things these discussions reaffirmed the Company’s existing intent to replace the single trigger under the 2003 Plan with a double trigger following a change in control. The Amendments effectuate other changes as well, which the Company believes reflect good equity plan practices and provide enhanced protection to the Company’s shareholders. These changes are discussed above and include:
| • | | Double Trigger Following Change in Control. The Amendments eliminate the single-trigger change in control provision and implement a double trigger change in control provision (requiring both a change in control and termination of employment for an award recipient’s awards to automatically forward vest for awards made after shareholder approval). Approval of the Amendments by shareholders will also subject other awards already granted in 2013 under the 2003 Plan to the double trigger.
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| • | | Narrow the Definition of Change in Control. The Amendments narrow the definition of “Change in Control” for awards granted after approval of the Amendments such that a Change in Control means the occurrence of one of the following events:
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consummation of a sale of all or substantially all (defined as at least 85%) of the assets of the Company to one or more individuals, entities or groups (other than an Excluded Owner, as defined under the Amendments);
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consummation of the acquisition of ownership by a person, entity or group (other than an Excluded Owner) of more than 50% of the total voting power of the Company then outstanding and eligible to vote to elect members of the Board of Directors;
consummation of a merger or consolidation of the Company (other than with or into an Excluded Owner); or
individuals who constitute the Board of Directors cease for any reason during a twelve-month period to constitute at least a majority of the Board.
The changes (i) specify that a sale of all or substantially all of the assets of the Company must comprise at least 85% of the assets of the Company (previously the 2003 Plan did not define what constituted substantially all of the assets), (ii) increase the threshold for the acquisition of ownership of voting securities triggering a change in control from 35% to 50%, and (iii) eliminate liquidation or dissolution of the Company as a triggering event.
| • | | Substitution of Awards for Cash Prohibited. The Amendments prohibit the substitution of cash for outstanding underwater options or SARs.
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| • | | Provide Additional Performance Criteria. The Amendments add total shareholder return on Common Stock relative to any index of companies or groups of companies, or one or more specific companies, all as selected by the Compensation Committee, as additional performance criteria which are permitted for performance awards. This amendment is designed to broaden the ability of the Compensation Committee to grant performance awards with performance metrics tied to relative total shareholder return.
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For the reasons set forth above, the Board adopted the Amendments and unanimously recommends approval of the Amendments by the shareholders of the Company.
Awards Granted Under the Plan and Existing Plan Benefits
Since inception of the 2003 Plan through March 22, 2013, the Company has granted Full-Value Awards under the 2003 Plan, net of forfeitures, covering approximately 5,353,775 shares. For purposes of this computation, the Company includes outstanding contingent stock performance awards at the target number of shares subject to such awards. As such, after the Amendments are approved, only approximately 4,846,225 shares will be available for future Full-Value Awards to be made under the 2003 Plan (again, assuming that the outstanding contingent stock performance awards are ultimately earned at their target level). The Company believes that the Amendments will provide enough shares to cover annual equity grants by the Company for approximately the next three years based upon projected grant practices.
By way of updating the information regarding outstanding awards under both the 2003 Plan and the Company’s former equity compensation plans which the Company reported in its Annual Report on Form 10-K for the year ended December 30, 2012, from January 1, 2013 through March 22, 2013 the Company granted options, restricted stock units, and performance share awards under the 2003 Equity Plan covering an aggregate of 2,053,149 shares of Common Stock. These grants comprised the Company’s discretionary long-term incentive awards and annual grants of contingent stock performance awards, restricted stock units and stock options for fiscal 2013 to the Company’s officers and selected other employees, as well as the first tranche of Mr. Goldner’s Special RSU Grant as is described below and the grant to Mr. Goldner of the 2013 continent stock performance awards.
In addition, from January 1, 2013 through March 22, 2013, there were stock options, contingent stock performance awards and other awards outstanding under the 2003 Plan and former equity plans of the Company that vested, were earned, were exercised, expired or were forfeited.
As a result of pay for performance alignment, the Company did not pay out any shares under the contingent stock performance awards that were granted in 2010, for which the performance period ended at the end of 2012. As such, 682,325 shares of Common Stock, including 186,500 shares subject to awards granted to Mr. Goldner, returned to the pool of shares available for award under the 2003 Plan.
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The table set forth below provides the number of shares earned under the Company’s contingent stock performance awards for each of the last three years.
| | | | | | | Shares Earned under Contingent Stock Performance Awards in 2010 and Paid in Early 2011 (for performance period from 2008 through end of 2010) | | Shares Earned under
Contingent Stock
Performance Awards in
2011 and Paid in Early
2012 (for performance
period from 2009 through
end of 2011) | | Shares Earned under
Contingent Stock
Performance Awards in
2012 and Paid in Early
2013 (for performance
period from 2010 through
end of 2012) | | Total Shares Earned Under
Contingent Stock
Performance Awards for
the years 2010, 2011 and
2012 | 620,800 | | 477,079 | | 0 | | 1,097,879 |
To drive the linkage between the Company’s performance and Mr. Goldner’s compensation, and to provide an additional incentive for Mr. Goldner to remain with the Company through 2017, the Amended Employment Agreement entered with Mr. Goldner, which is described beginning on page 51, provides for the grant to Mr. Goldner of an aggregate of 587,294 restricted stock units (referred to as the “Special RSU Grant”). The first tranche of restricted stock units, consisting of 467,976 shares, was approved by the Compensation Committee on March 22, 2013, with the grant being effective as of April 24, 2013. That grant is not contingent on approval of the Amendments. The second tranche, consisting of the remaining 119,318 shares, will be made in fiscal year 2014, and is contingent on the authorization of additional shares and extension of the 2003 Plan, or adoption of an alternate equity plan. The Amended Employment Agreement additionally provides that the contingent stock performance awards made to Mr. Goldner in each of 2013 and 2014 will be subject to a performance multiplier based on the Company’s total shareholder return relative to the S&P 500 Index.
If the Amendments are approved, both tranches of the Special RSU Grant, and all contingent stock performance awards made to Mr. Goldner in 2013 and thereafter, will be subject to the double trigger change in control provision set forth in the Amendments. If the Amendments are not approved, the grants already made to Mr. Goldner and the other executive officers and employees of the Company in 2013 will be subject to the single trigger change in control provisions contained in the 2003 Plan prior to the Amendments.
With the exception of the second tranche of the Special RSU Grant, consisting of 119,318 shares, to Mr. Goldner, the awards that will be made and the amounts that will be paid pursuant to the 2003 Plan in the future are discretionary and are therefore not currently determinable. The table set forth below provides the number of shares subject to future award to Mr. Goldner.
Number of Shares Subject to Future Award
| | | | | | | | | Name and Position | | Dollar Value ($)(a) | | | Number of Units | | Brian Goldner | | $ | 4,469,652 | | | | 119,318 | | President and Chief Executive Officer | | | | | | | | |
(a) | Dollar value calculated based on the closing price of the Company’s Common Stock on October 4, 2012. |
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The following table sets forth the number of shares subject to options, restricted stock units, deferred stock awards and contingent stock performance awards (outstanding contingent stock performance awards for which the performance period has not ended are included at the target number of shares for such awards) granted under the 2003 Plan during the period from January 1, 2012 to March 22, 2013 to the named individuals, all current executive officers as a group, all current directors who are not executive officers and were not executive officers at the time of grant, as a group, and all employees, excluding executive officers.
Number of Shares Subject to Awards
| | | NameHasbro, Inc. | Notice of Annual Meeting of Shareholders and Position2015 Proxy Statement
| | Granted Under the 2003 Plan During
the Period From January 1,59
2012 through March 22, 2013
| Brian Goldner
| | 1,356,674 | President and Chief Executive Officer
| | | David Hargreaves
| | 133,570 | Executive Vice President and Chief Strategy Officer
| | | Deborah Thomas
| | 124,223 | Executive Vice President and Chief Financial Officer
| | | Duncan Billing
| | 130,932 | Executive Vice President and Chief Development Officer
| | | John Frascotti
| | 130,932 | Executive Vice President and Chief Marketing Officer
| | | All current executive officers as a group (including the five officers above)
| | 2,111,292 | All current directors who were not executive officers at the time of grant, as a group
| | 43,920 | All employees and officers, excluding current executive officers and directors, as a group
| | 2,458,365 |
Summary of 2003 Plan, as Amended by the Amendments
The following is a summary of the 2003 Plan, as amended by the Amendments, and is therefore not complete. A complete copy of the 2003 Plan, as it existed prior to the Amendments in March 2013, is attached to this proxy statement as Appendix B, and a complete copy of the Amendments being considered by shareholders is attached to this proxy statement as Appendix C.
Background
The 2003 Plan is intended to attract and retain talented employees and directors for the Company and its affiliates who are in a position to make significant contributions to the success of the Company, to reward such persons for making these contributions and to encourage such persons to take into account the long-term interests of the Company and enhancement of the Company’s value for its shareholders.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) places annual limitations on the deductibility by public companies of compensation in excess of $1 million paid to each of the chief executive officer and the three most highly compensated other executive officers (other than the chief financial officer), unless, among other things, the compensation is performance-based. For compensation attributable to stock options, SARs, performance shares and other equity awards to qualify as performance-based, the plan under which such stock options and SARs are granted must state a maximum number of shares with respect to which options and rights may be granted to an individual during a specified period, must specify the persons eligible to participate in the plan, must set forth the permissible performance criteria which may be used for performance awards, and must be approved by the Company’s shareholders. The 2003 Plan is intended to comply with the provisions of Section 162(m) so as to permit the Company to claim an income tax deduction for total remuneration paid in excess of $1 million in any one year to the chief executive officer or the other three
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most highly compensated other executive officers (other than the chief financial officer), although the Company has not requested or received, and does not expect to receive a ruling from the Internal Revenue Service to that effect. The Company is asking shareholders to approve the Amendments, in part, to satisfy the requirement under Section 162(m) regarding shareholder approval of the material terms of the 2003 Plan, including, without limitation, the performance goals described therein.
The 2003 Plan was originally adopted by the Board on February 12, 2003 and was approved by the Company’s shareholders at the 2003 Annual Meeting of Shareholders. The 2003 Plan was amended by the Board and the shareholders in 2005, 2007, 2009 and 2010. As amended in 2010 (but prior to the Amendments being currently proposed to shareholders), the 2003 Plan made 28,300,000 shares of Common Stock available for the grant of equity awards over the lifetime of the 2003 Plan, 8,200,000 shares of which could be used for stock awards other than options and SARs.
Administration
The 2003 Plan is administered by the Compensation Committee of the Board (the “Committee”), comprised entirely of independent directors. The Committee has the authority to establish rules for the administration of the 2003 Plan; to select the employees and directors of the Company and its affiliates to whom awards are granted; to determine the types of awards to be granted and the number of shares covered by such awards; and to set the terms and conditions of such awards.
The Committee may also determine whether the payment of any proceeds of any award shall or may be deferred. The Committee may provide that awards denominated in stock earn dividends or dividend equivalents, except that dividends and dividend equivalents may not be paid or accrued with respect to (i) outstanding options or SARs or (ii) other Awards subject to performance criteria or time vesting criteria that have not yet been met. Determinations and interpretations of the Committee will be binding on all parties.
Eligibility
Employees and directors of the Company and of any other entity, including a subsidiary or joint venture, that is directly or indirectly controlled by the Company (collectively “affiliates”) are eligible to receive awards under the 2003 Plan, as are other persons who have service relationships with the Company which are covered by the 2003 Plan’s definition of “Employment.” At February 28, 2013, the Company employed approximately 5,410 persons worldwide. As of March 22, 2013 there are approximately 385 officers, employees and directors holding equity awards granted under the 2003 Plan.
Incentive stock options (“ISOs”) may only be granted to employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code.
Awards
The 2003 Plan permits granting awards for: (1) stock options, including ISOs meeting the requirements of Section 422 of the Code; (2) SARs; (3) stock awards, including restricted and unrestricted stock, restricted stock units and other deferred stock awards, (4) performance awards, and (5) cash awards.
Shares Available and Limits on Awards
If the Amendments are approved 4,300,000 shares will be added to the authorized shares under the 2003 Plan. Based on the number of outstanding awards as of March 22, 2013, approximately 6,306,418 shares of Common Stock would be available for future awards under the 2003 Plan (assuming that outstanding contingent stock performance awards are earned at their target level). These 6,306,418 available shares represent only approximately 4.9% of the outstanding Common Stock as of March 22, 2013. After the Amendments are adopted, approximately 4,846,225 of these shares will be available for future Full-Value Awards to be made under the 2003 Plan (again assuming that outstanding contingent stock performance awards are earned at their target level).
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The number of shares that may be subject to options or SARs granted to any one individual may not exceed 2,000,000 in any calendar year. The maximum benefit that may be paid to any person under other awards which are granted in any calendar year will be: (i) to the extent paid in shares, 1,000,000 shares, (ii) to the extent such awards are denominated in shares but paid in cash, 1,000,000 shares multiplied by the fair market value of the shares on the date of payment under such awards, and, (iii) to the extent otherwise paid in cash, $10 million.
If any shares subject to an option or award under the 2003 Plan are forfeited or if any such option or award terminates, the shares previously covered by such option or award will be available for future grant or award under the plan. If another company is acquired by the Company or an affiliate in the future, any grants or awards made and any of the Company’s shares delivered upon the assumption of or in substitution for outstanding grants made by the acquired company may be deemed to be granted or awarded under the 2003 Plan, but will not decrease the number of shares available for grant or award under the 2003 Plan.
In the event of any stock dividend, stock split, combination or exchange of shares, recapitalization or other change in the Company’s capital structure, the Committee will make appropriate adjustments to reflect such change with respect to (i) the aggregate number of shares that may be issued under the 2003 Plan and the limits on certain types of awards under the 2003 Plan; (ii) the number of shares subject to awards under the 2003 Plan; and/or (iii) the price per share for any outstanding stock options, SARs and other awards under the 2003 Plan. To the extent consistent with applicable rules, the Committee may make adjustments of the type described in the preceding sentence to take into account other events and circumstances if the Committee determines such adjustments are appropriate to preserve the value of awards under the 2003 Plan.
Additional Terms of Awards
Options. The Committee establishes the exercise price per share for options, the term of options (which cannot exceed ten years), the time at which they may be exercised and such other terms as the Committee deems appropriate, except that the exercise price of each option shall be not less than the Fair Market Value (as defined below) of the Common Stock on the date of grant.
“Fair Market Value” for purposes of the 2003 Plan shall mean the average of the high and low sales prices of the Common Stock, or, if no sales of Common Stock were made on that date, the average of the high and low prices of Common Stock as reported for the preceding day on which sales of Common Stock were made. On March 22, 2013, the average of the high and low sales prices of the Common Stock, as reported in the Wall Street Journal, was $43.353.
Subject to the limitations described below, options will become exercisable at such time or times, and on and subject to such conditions, as the Committee may specify. Except in the case of awards made in connection with the recruitment of new employees, including new officers, or new directors, and except for a total of 5% of the shares authorized under the 2003 Plan which may be granted pursuant to shorter vesting periods, stock options shall vest in one or more installments over a total vesting period of not less than three years. Notwithstanding the foregoing, the Committee may provide for the acceleration of vesting of stock options upon the death, disability, retirement or other termination of employment or service of the participant. Unless the Committee determines otherwise, payment of the purchase price in full in cash is required upon option exercise.
Stock Appreciation Rights. The holder of a SAR will be entitled to receive the excess of the fair market value, calculated as of the exercise date, of a specified number of shares over the grant price of the SAR. The strike price of a SAR must be no less than the fair market value of the stock on the date of grant. SARs need not be granted in tandem with stock options. SARs are also subject to the same minimum vesting period requirements set forth above for stock options.
Stock Awards, Restricted Stock Awards and Restricted Stock Units. The 2003 Plan provides for the award of restricted stock subject to forfeiture, restricted stock units and other forms of deferred stock providing for the
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delivery of stock in the future subject to specified conditions, and unrestricted stock which is immediately vested. A stock award may provide the recipient with all of the rights of a shareholder of the Company, including the right to vote the shares and to receive any dividends, subject to the limitations set forth in the 2003 Plan.
Stock awards and awards of restricted stock units or other forms of deferred stock generally will be subject to certain conditions established by the Committee, including continuous service with the Company, achievement of specific business objectives, and other measurements of individual, business unit or Company performance. Except in the case of awards made in connection with the recruitment of new employees, including new officers, or new directors, and except for 5% of the shares authorized under the 2003 Plan which may be granted subject to shorter vesting periods or may be vested upon grant (which is what the Company currently does for its annual stock grants to non-employee directors, which are vested upon grant), stock awards and restricted stock units shall vest in one or more installments over a total vesting period of not less than three years from the date of grant. Notwithstanding the foregoing, the Committee may provide for the acceleration of vesting of stock awards or restricted stock units upon the death, disability, retirement or other termination of employment or service of the participant or as otherwise described herein.
Performance Awards. The Committee may grant awards under the 2003 Plan other than options and SARs which are designed to qualify as performance-based compensation. In the case of grants of stock awards or cash awards, including to executive officers of the Company designated by the Committee as a “covered employee” under Section 162(m), the Committee may establish one or more performance goals for such participant or for the Company for the period of time designated by the Committee at the time of grant of the award. As an example, starting in 2006 the Company began granting contingent stock performance awards which provide the recipients with the ability to earn shares of the Company’s Common Stock based upon the Company’s achievement of stated diluted earnings per share and net revenues targets over specified performance periods.
The performance goals for each participant under a performance award shall be objectively determinable measures of performance based on any one or a combination of the following criteria: cash net earnings; core brands growth; core brands net revenues; cost control; earnings before income taxes; earnings before interest and taxes; earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; economic value added; free cash flow; gross profit; net cash provided by operating activities; net earnings; earnings per share; net earnings per share; net revenues; operating margin; operating profit; return on assets; return on capital; return on capital investment; return on net revenues; return on shareholders’ equity; sales; stock price; total shareholder return on common stock relative to S&P 500 Index; total shareholder return on common stock relative to Russell 1000 Consumer Discretionary Index; total shareholder return on common stock relative to any index of companies or groups of companies or one or more specific companies; and working capital. These business criteria may be measured on a consolidated basis or on a segment, divisional, sector or other business unit basis (herein collectively “business unit”), all as selected by the Committee in each individual case. Satisfaction of performance criteria may, in the Administrator’s discretion, be determined to the extent applicable, (i) in accordance with generally accepted accounting principles applied on a consistent basis and/or (ii) exclusive of designated (a) changes in accounting principles, (b) extraordinary items, (c) material restructurings, (d) material nonrecurring items, (e) material non-budgeted items and (f) results of operations of acquisitions or divestitures consummated during the fiscal year; each of the items in this section (ii) being excluded to the extent authorized by the Administrator.
The percentage vesting of any stock award and/or cash award shall in each case be based on the percentage of the performance goal achieved, as determined by the Committee, although the Committee generally has the discretion to reduce, or refuse to make (but not to increase), payments under stock or cash awards otherwise payable as a result of the achievement of a designated percentage of a performance goal.
Cash Awards. Cash awards generally will be subject to certain conditions established by the Committee, including continuous service with the Company, achievement of specific business objectives, or other measurements of individual, business unit or Company performance.
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General. Awards may be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law. Awards may provide that upon their exercise or vesting the holder will receive cash, Common Stock or any combination thereof as the Committee shall determine. Any shares of stock deliverable under the 2003 Plan may consist in whole or in part of authorized and unissued shares or treasury shares.
Neither ISOs, nor, except as the Committee otherwise expressly provides in compliance with the following sentence, other awards may be transferred other than by will, by the laws of descent and distribution, or pursuant to a qualified domestic relations order or other domestic relations order, and during a participant’s lifetime ISOs (and, except as the Committee otherwise expressly provides, other non-transferable awards requiring exercise) may be exercised only by the participant. In no case will the Administrator allow awards under the 2003 Plan to be transferred for value to persons who are not related or previously related to the award recipient. The intent of this prohibition is to prohibit programs pursuant to which award recipients would be able to sell awards in the open market to unrelated parties.
Change in Control. The 2003 Plan, as amended by the Amendments, provides that if a participant’s employment by the Company is terminated by the Company without Cause during the twenty-four (24) month period following a Change in Control, or a participant resigns from the Company for Good Reason during the twenty-four (24) month period following a Change in Control, all of such participant’s awards outstanding on such date become 100% vested and the value will be paid in either cash or shares of the Company’s Common Stock, in the discretion of the Committee, as soon as practicable. Prior to the Amendments, the 2003 Plan provided that upon a Change in Control, as defined, all Awards outstanding under the 2003 Plan immediately vested. Even after the Amendment is approved, that treatment will continue for Awards granted under the 2003 Plan prior to December 31, 2012.
Since Awards will no longer automatically forward vest following a Change in Control absent termination of a participant’s employment, the 2003 Plan, as amended by the Amendments, introduces a mechanism for adjusting outstanding Awards going forward to account for a Reorganization Event (as defined in the 2003 Plan), which can include a Change in Control. The 2003 Plan provides following a Reorganization Event, the Administrator may generally take any one or more of the following actions as to all (or any portion of) outstanding Awards on such terms as the Administrator determines in its sole discretion: (i) provide that such Awards shall be assumed, or other Awards shall be substituted, by the acquiring or succeeding entity (or an affiliate thereof), (ii) upon written notice to a participant, provide that all of the participant’s unexercised Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the participant (to the extent then exercisable) within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event (but only in connection with a termination of the participant’s employment), (iv) in the event of a Reorganization Event under the terms of which holders of stock will receive upon consummation thereof a cash payment for each share of stock surrendered, make or provide for a cash payment to participants with respect to each Award held by a participant equal to (A) the number of shares of stock subject to the vested portion of the Award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such Reorganization Event in connection with the termination of the participant’s employment) multiplied by (B) the excess, if any, of (I) the acquisition price over (II) the exercise, measurement or purchase price of such Award and any applicable tax withholdings, in exchange for the termination of such Award, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards that are vested shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. In taking any of the actions permitted the Administrator is not be obligated by the 2003 Plan to treat all Awards, all Awards held by a participant, or all Awards of the same type, identically.
Amendment or Termination
The Board or the Committee may terminate the 2003 Plan at any time, and shall have the right to amend or modify the 2003 Plan at any time, and from time to time, provided, however, that no material amendment to the
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terms of the 2003 Plan, including an amendment to reprice options or SARs granted under the Plan, shall become effective without shareholder approval. If shareholders approve the proposed Amendments, the 2003 Plan will terminate on December 31, 2017, unless terminated earlier by the Board or the Committee. Absent shareholder approval of the Amendments, the 2003 Plan expires on December 31, 2013.
Federal Income Tax Consequences of Certain Awards
The following is a summary of the principal United States federal income tax consequences generally applicable to certain awards under the 2003 Plan. Note that there may be state, local, foreign and other taxes applicable to participants in the 2003 Plan.
The grant of a stock option or SAR under the 2003 Plan will generally create no immediate tax consequences for the recipient or for the Company or an affiliate employing such individual (the “employer”). An employee exercising an ISO has no taxable income for regular income tax purposes (but the alternative minimum tax may apply) in connection with the exercise, and no tax deduction is available to the employer. In general, an ISO that is exercised by the recipient more than three months following termination of employment is treated as a non-ISO for federal income tax purposes, as are stock options granted to an employee and otherwise qualifying as ISOs to the extent that in the aggregate they first become exercisable in any calendar year for stock having a grant-date value in excess of $100,000.
Upon exercising a stock option other than an ISO, the optionee has ordinary income equal to the excess of the fair market value of the shares acquired on the date of exercise over the option exercise price, and a corresponding tax deduction is available to the employer. Upon exercising a SAR, the amount of any cash received and the fair market value on the exercise date of any shares or other property received are taxable to the recipient as ordinary income and a corresponding deduction is available to the employer.
The tax consequence to an optionee of a disposition of shares acquired through the exercise of a SAR or a stock option will depend on how long the shares have been held and upon whether the shares were acquired by exercising an ISO or by exercising a SAR or a stock option other than an ISO. An employee who disposes of shares acquired upon exercise of an ISO, if the disposition occurs within one year following the date of exercise or within two years from the date of grant of the ISO, will have income, taxable at ordinary income rates, equal in general to the spread at exercise (or, with limited exceptions, to the gain on disposition, if less), and a corresponding deduction will be available to the employer. Any additional gain recognized in the disposition will be taxed as a capital gain, either at long-term or at short-term gain rates depending on the employee’s tax holding period in the shares. If the employee does not dispose of the shares until after the expiration of these one and two-year holding periods, any gain or loss recognized on a subsequent sale or exchange is treated as a long-term capital gain or loss, and no corresponding tax deduction is available to the employer. Any gain or loss recognized upon a sale or exchange of shares acquired upon exercise of a stock option other than an ISO or a SAR will be taxed as a capital gain or loss, long-term or short-term depending on the holder’s tax holding period in the shares. No deduction is available to the employer in respect of these capital gains or losses.
If cash, shares of Common Stock or other property is transferred under or in settlement of other awards under the 2003 Plan, including if shares are earned by a recipient pursuant to a contingent stock performance award which provides the opportunity to earn shares if the Company meets certain performance targets over a stated performance period, or if a recipient earns shares under a restricted stock unit grant, the recipient will generally recognize ordinary income at the time the property or shares are transferred to or earned by the recipient equal to the excess of (a) the cash (if any) transferred, plus the fair market value of the vested shares or other vested property (if any) transferred over (b) the amount (if any) paid for such shares or other property by the participant, and a corresponding deduction will be available to the employer. If any of the transferred shares or other property is unvested (subject to a substantial risk of forfeiture), the ordinary income associated with the transfer will be includible and measured only when the property vests (and the associated deduction will be similarly delayed), unless the award recipient makes a special election to take the awarded shares or other property into income at the time of transfer.
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Some awards under the 2003 Plan could constitute or give rise to “nonqualified deferred compensation” subject to Section 409A of the Code. Where applicable, Section 409A regulates, among other things, both the deferral of compensation and the time and manner in which previously deferred amounts may be paid. The summary above assumes that the awards are exempt from, or comply with, the requirements of Section 409A.
Approval
The affirmative vote of a majority of the shares of Common Stock present (in person or by proxy) and entitled to vote at the Meeting on the Amendments to the 2003 Plan is required for approval of the Amendments. Abstentions are considered shares entitled to vote on the proposal and as such abstentions are the equivalent of a vote against the proposal. In contrast, broker non-votes are not counted as present and entitled to vote on the proposal for purposes of determining if the proposal receives an affirmative vote of a majority of the shares present and entitled to vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTEFOR APPROVAL OF THE AMENDMENTS TO THE 2003 PLAN.
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EQUITY COMPENSATION PLANS The following table summarizes information, as of December 30, 2012,28, 2014, relating to equity compensation plans of the Company pursuant to which grants of options, restricted stock, restricted stock units, performance shares or other rights to acquire shares may be granted from time to time. Equity Compensation Plan Information | | | | | | | | | | | | | Plan Category | | Number of Securities
to be Issued Upon
Exercise of Outstanding
Options, Warrants
and Rights
(a) | | | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)(3) | | | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected
in Column(a))
(c) | | Equity compensation plans approved by shareholders(1) | | | 10,878,898 | (2) | | $ | 31.25 | | | | 3,970,013 | (4) | Equity compensation plans not approved by shareholders | | | 0 | | | | — | | | | 0 | | Total | | | 10,878,898 | (2) | | $ | 31.25 | | | | 3,970,013 | (4) |
| | | | | | | | | | | | | | Plan Category | | Number of Securities
to be Issued Upon
Exercise of Outstanding
Options, Warrants
and Rights
(a) | | | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)(3) | | | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected
in Column(a))
(c) | | Equity compensation plans approved by shareholders(1) | | | 6,697,442(2) | | | | $41.68 | | | | 6,101,023(4) | | Equity compensation plans not approved by shareholders | | | 0 | | | | — | | | | 0 | | Total | | | 6,697,442(2) | | | | $41.68 | | | | 6,101,023(4) | |
| (1) | The only shareholder approved plan which was in effect as of December 30, 201228, 2014 was the Company’s Restated 2003 Stock Incentive Performance Plan, as amended (the “2003 Plan”). |
The 1995 Stock Incentive Performance Plan (the “1995 Plan”) expired on December 31, 2005 and the 2003 Stock Option Plan for Non-Employee Directors (the “2003 Director Plan”) was terminated effective as of December 31, 2005. Although no further awards may be made under the 1995 Plan or the 2003 Director Plan, awards outstanding under those plans as of the dates of their termination continue in effect in accordance with the terms of the applicable plan.
| The 2003 Stock Option Plan for Non-Employee Directors (the “2003 Director Plan”) was terminated effective as of December 31, 2005. Although no further awards may be made under the 2003 Director Plan, awards outstanding at the time of plan termination continue in effect in accordance with the terms of the award. |
Included in shares which may be issued pursuant to outstanding awards is the target number of shares subject to outstanding contingent stock performance awards under the 2003 Plan. The actual number of shares, if any, which will be issued pursuant to these awards may be higher or lower than this target number based upon the Company’s achievement of the applicable performance goals over the performance periods specified in these awards. Also included in shares to be issued pursuant to outstanding awards are shares granted to outside directors in May of 2006 through 2012 (as part of the yearly equity grant to outside directors) to the extent that such directors deferred receipt of those shares until they retire from the Board.
| Included in shares which may be issued pursuant to outstanding awards is the target number of shares subject to outstanding contingent stock performance awards under the 2003 Plan. The actual number of shares, if any, which will be issued pursuant to these awards may be higher or lower than this target number based upon the Company’s achievement of the applicable performance goals over the performance periods specified in these awards. Also included in shares to be issued pursuant to outstanding awards are shares granted to outside directors in May of 2006 through 2014 (as part of the yearly equity grant to outside directors) to the extent that such directors deferred receipt of those shares until they retire from the Board. |
| (2) | Includes 9,282,926Comprised of 4,186,980 shares subject to outstanding option awards, 1,019,1151,241,851 shares subject to outstanding contingent stock performance awards (reflecting such awards at their target numbers), 353,384995,632 shares subject to outstanding restricted stock unit awards and 223,473272,979 shares subject to deferred stock awards. |
| (3) | The weighted average exercise price of outstanding options, warrants and rights excludes restricted stock units and performance-based stock awards, which do not have an exercise price. |
| (4) | All such shares are eligible for issuance as contingent stock performance awards, restricted stock or deferred restricted stock, or other stock awards under the 2003 Plan. |
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| | | 60 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF Security Ownership of Certain Beneficial Owners The following table sets forth information, as of March 11, 20132015 (except as noted), with respect to the ownership of the Common Stock (the only class of outstanding equity securities of the Company) by certain persons known by the Company to be the beneficial owners of more than 5% of such stock. There were 129,387,003124,698,965 shares of Common Stock outstanding on March 11, 2013.2015. | | | | | Name and Address of Beneficial Owner | | Amount and Nature
of Beneficial
Ownership | | Percent of
Class | Alan G. Hassenfeld(1) | | 12,919,969 | | 10.0% | Hassenfeld Family Initiatives LLC 101 Dyer Street Suite 401 Providence, Rhode Island 02903 | | | | | | | | Massachusetts Financial Services Company (“MFS”)(2) | | 10,833,980 | | 8.4% | 82 Devonshire Street Boston, Massachusetts 02109 | | | | | | | | T. Rowe Price Associates, Inc. (“T. Rowe”)(3) | | 10,702,925 | | 8.3% | 100 East Pratt Street Baltimore, Maryland 21202 | | | | | | | | The Vanguard Group (“Vanguard”)(4) | | 6,969,595 | | 5.4% | 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | | | | |
| | | | | | | | | | Name and Address of Beneficial Owner | | Amount and Nature
of Beneficial
Ownership | | | Percent of
Class | | Capital Research Global Investors (“Capital Research”)(1) | | | 13,288,772 | | | | 10.7% | | 333 South Hope Street Los Angeles, CA 90071 | | | | | | | | | Alan G. Hassenfeld(2) | | | 11,187,239 | | | | 9.0% | | Hassenfeld Family Initiatives LLC 101 Dyer Street Suite 401 Providence, Rhode Island 02903 | | | | | | | | | The Vanguard Group (“Vanguard”)(3) | | | 9,604,963 | | | | 7.7% | | 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | | | | | | | | |
| (1) | Capital Research has sole power to vote or to direct the vote and sole power to dispose or direct the disposition of all 13,288,772 shares. This information is based solely upon a review of the Schedule 13G reports or related amendments filed with the Securities and Exchange Commission with respect to holdings of the Company’s Common Stock as of December 31, 2014. |
(1)(2) | Includes 6,670,9215,200,000 shares held as sole trustee of a trust for the benefit of his mother,family members, 5,643,064 shares held as sole trustee of trusts for Mr. Hassenfeld’s benefit 14,149and 19,340 shares the receipt of which is deferred until Mr. Hassenfeld retires from the Board, and currently exercisable options or options exercisable within 60 days of March 11, 2013 to purchase 100,000 shares.Board. Mr. Hassenfeld has sole voting and investment authority with respect to all shares except those described in the following sentence, as to which he shares voting and investment authority. Also includes 333,000166,000 shares owned by The Hassenfeld Foundation, of which Mr. Hassenfeld is an officer and director, and 154,216 shares held as one of the trustees of a trust for the benefit of his mother and her grandchildren.family members. Mr. Hassenfeld disclaims beneficial ownership of all shares except to the extent of his proportionate pecuniary interest therein. This information is based upon information furnished by the shareholder or contained in filings made with the Securities and Exchange Commission. |
(2) | Includes 9,356,581 shares over which MFS has sole power to vote or to direct the vote, and 10,833,908 shares over which MFS has sole power to dispose or direct the disposition. This information is based solely upon a review of the Schedule 13G reports or related amendments filed with the Securities and Exchange Commission with respect to holdings of the Company’s Common Stock as of December 31, 2012. |
| (3) | Includes 3,020,561 shares over which T. Rowe has sole power to vote or to direct the vote, and 10,702,925 shares over which T. Rowe has sole power to dispose or direct the disposition. This information is based solely upon a review of the Schedule 13G reports or related amendments filed with the Securities and Exchange Commission with respect to holdings of the Company’s Common Stock as of December 31, 2012. |
(4) | Includes 202,616195,921 shares over which Vanguard has sole power to vote or to direct the vote, and 6,775,9999,420,926 shares over which Vanguard has sole power to dispose or direct the disposition. This information is based solely upon a review of the Schedule 13G reports or related amendments filed with the Securities and Exchange Commission with respect to holdings of the Company’s Common Stock as of December 31, 2012.2014. |
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| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 61 |
Security Ownership of Management The following table sets forth information, as of March 11, 2013,2015, with respect to the ownership of the Common Stock (the only class of outstanding equity securities of the Company) by each current director of the Company or nominee for election to the Board, each Named Executive Officer and by all directors and executive officers as a group. Unless otherwise indicated, each person has sole voting and dispositive power with respect to such shares. | | | | | | | | | Name of Director, Nominee or Executive Officer(1) | | Amount and
Nature of
Beneficial
Ownership(#) | | | Percent
of Class (%) | | Basil L. Anderson(2) | | | 54,589 | | | | * | | Alan R. Batkin(3) | | | 87,035 | | | | * | | Duncan J. Billing(4) | | | 136,266 | | | | * | | Frank J. Biondi, Jr.(5) | | | 54,463 | | | | * | | Kenneth A. Bronfin(6) | | | 17,032 | | | | * | | John M. Connors(7) | | | 104,554 | | | | * | | John A. Frascotti(8) | | | 183,919 | | | | * | | Michael W.O. Garrett(9) | | | 70,663 | | | | * | | Lisa Gersh(10) | | | 16,952 | | | | * | | Brian D. Goldner(11) | | | 2,113,351 | | | | 1.6 | | Jack M. Greenberg(12) | | | 48,288 | | | | * | | David D.R. Hargreaves(13) | | | 778,044 | | | | * | | Alan G. Hassenfeld(14) | | | 12,919,969 | | | | 10.0 | | Tracy A. Leinbach(15) | | | 16,975 | | | | * | | Edward M. Philip(16) | | | 77,702 | | | | * | | Deborah M. Thomas(17) | | | 202,805 | | | | * | | Alfred J. Verrecchia(18) | | | 1,767,506 | | | | 1.4 | | All Directors and Executive Officers as a Group (includes 20 persons)(19) | | | 19,038,817 | | | | 14.2 | |
| | | | | | | | | | Name of Director, Nominee or Executive Officer(1) | | Amount and
Nature of
Beneficial
Ownership(#) | | | Percent
of Class (%) | | Basil L. Anderson(2) | | | 55,091 | | | | * | | Alan R. Batkin(3) | | | 100,709 | | | | * | | Duncan J. Billing(4) | | | 94,308 | | | | * | | Frank J. Biondi, Jr.(5) | | | 48,032 | | | | * | | Kenneth A. Bronfin(6) | | | 22,223 | | | | * | | Michael R. Burns(7) | | | 1,017 | | | | * | | John M. Connors(8) | | | 83,136 | | | | * | | John A. Frascotti(9) | | | 214,727 | | | | * | | Michael W.O. Garrett(10) | | | 82,253 | | | | * | | Lisa Gersh(11) | | | 30,017 | | | | * | | Brian D. Goldner(12) | | | 1,735,331 | | | | 1.6 | | Jack M. Greenberg(13) | | | 48,070 | | | | * | | Alan G. Hassenfeld(14) | | | 11,187,239 | | | | 9.0 | | Tracy A. Leinbach(15) | | | 22,166 | | | | * | | Edward M. Philip(16) | | | 75,843 | | | | * | | Richard S. Stoddart(17) | | | 4,054 | | | | * | | Deborah M. Thomas(18) | | | 92,868 | | | | * | | Wiebe Tinga(19) | | | 139,848 | | | | * | | Alfred J. Verrecchia(20) | | | 710,349 | | | | * | | Linda K. Zecher(21) | | | 2,177 | | | | * | | All Directors and Executive Officers as a Group (includes 22 persons)(22) | | | 15,403,178 | | | | 12.1 | |
| (1) | Information in this table is based upon information furnished by each director and executive officer. There were 129,387,003124,698,965 shares of Common Stock outstanding on March 11, 2013.2015. |
| (2) | Includes currently exercisable options and options exercisable within sixty days of March 11, 2013 to purchase an aggregate of 6,000 shares, 24,57629,767 shares the receipt of which is deferred until Mr. Anderson retires from the Board, as well as 23,01324,324 shares deemed to be held in Mr. Anderson’s stock unit account under the Deferred Plan. |
| (3) | Includes 24,57629,767 shares the receipt of which is deferred until Mr. Batkin retires from the Board and 60,77269,255 shares deemed to be held in Mr. Batkin’s stock unit account under the Deferred Plan. |
| (4) | Includes currently exercisable options and options exercisable within sixty days of March 11, 20132015 to purchase an aggregate of 93,08238,729 shares. |
| (5) | Consists of 11,250 shares held by The Biondi Family Trust, currently exercisable options and options exercisable within sixty days of March 11, 2013 to purchase an aggregate of 12,000 shares (9,000 of which are held by The Biondi Family Trust), 24,57629,767 shares (3,760 of which are held by The Biondi Family Trust) the receipt of which is deferred until Mr. Biondi retires from the Board, as well as 6,6377,015 shares deemed to be held in Mr. Biondi’s stock unit account under the Deferred Plan. |
| (6) | Consists of 17,03222,223 shares the receipt of which is deferred until Mr. Bronfin retires from the Board. |
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| (7) | Consists of 1,017 shares the receipt of which is deferred until Mr. Burns retires from the Board. |
| (8) | Includes currently exercisable options and options exercisable within sixty days of March 11, 2013 to purchase an aggregate of 18,000 shares, 24,57629,767 shares the receipt of which is deferred until Mr. Connors retires from the Board, as well as 34,17841,569 shares deemed to be held in Mr. Connors’ stock unit account under the Deferred Plan. |
(8)(9) | Includes currently exercisable options and options exercisable within sixty days of March 11, 20132015 to purchase an aggregate of 135,329149,834 shares and 19,200 shares held jointly with his wife. |
(9)(10) | Includes 20,916 shares the receipt of which is deferred until Mr. Garrett retires from the Board and 24,18730,586 shares deemed to be held in Mr. Garrett’s stock unit account under the Deferred Plan. |
(10)(11) | Represents 9,302Includes 14,493 shares the receipt of which is deferred until Ms. Gersh retires from the Board and 7,65013,107 shares deemed to be held in Ms. Gersh’s stock unit account under the Deferred Plan. |
(11) | | | 62 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
| (12) | Includes currently exercisable options and options exercisable within sixty days of March 11, 20132015 to purchase an aggregate of 1,813,6641,677,526 shares, as well as 57,787 restricted stock units, which are payable in shares to Mr. Goldner upon Mr. Goldner leavingGoldner’s retirement from the Company and 241,882351,882 shares held by the Brian D. Goldner Trust. Does not include 16,51827,424 shares held by the Barbara S. Goldner Trust (Mr. Goldner’s wife’s trust), of which shares Mr. Goldner disclaims beneficial ownership. |
(12)(13) | Represents currently exercisable options and options exercisable within sixty day of March 11, 2013 to purchase 6,000 shares,Includes 15,196 shares the receipt of which is deferred until Mr. Greenberg retires from the Board as well as 10,36710,958 shares deemed to be held in Mr. Greenberg’s stock unit account under the Deferred Plan. |
(13) | Includes currently exercisable options and options exercisable within sixty days of March 11, 2013 to purchase an aggregate of 553,850 shares. Includes 224,194 shares that are subject to a pledge in support of a line of credit. |
| (14) | See note (1)(2) to the immediately preceding table. |
| (15) | Includes 7,59510,369 shares the receipt of which is deferred until Ms. Leinbach retires from the Board. |
| (16) | Represents currently exercisable options and options exercisable within sixty days of March 11, 2013 to purchase an aggregate of 12,000 shares, 24,576Includes 29,767 shares the receipt of which is deferred until Mr. Philip retires from the Board as well as 41,12646,076 shares deemed to be held in Mr. Philip’s stock unit account under the Deferred Plan. |
| (17) | Includes currently exercisable options and options exercisable within sixty days2,417 shares the receipt of March 11, 2013which is deferred until Mr. Stoddart retires from the Board as well as 1,637 shares deemed to purchase 158,381 shares.be held in Mr. Stoddart’s stock unit account under the Deferred Plan. |
| (18) | Includes currently exercisable options and options exercisable within sixty days of March 11, 20132015 to purchase an aggregate28,836 shares. |
| (19) | Includes currently exercisable options and options exercisable within sixty days of 1,062,491 shares andMarch 11, 2015 to purchase 80,739 shares. |
| (20) | Includes currently exercisable options to purchase 182,715 shares held in the Alfred J. Verrecchia GRAT. Also includes 13,99919,190 shares the receipt of which is deferred until Mr. Verrecchia retires from the Board and 2,5092,652 shares deemed to be held in Mr. Verrecchia’s stock unit account under the deferred plan. Does not include 91,225 shares held by Mr. Verrecchia’s wife’s GRAT and 60,650 shares owned by Mr. Verrecchia’s wife, as to which shares Mr. Verrecchia disclaims beneficial ownership. |
(19)(21) | Includes 1,577 shares the receipt of which is deferred until Ms. Zecher retires from the Board and well as 600 shares deemed to be held in Ms. Zecher’s stock unit account under the Deferred Plan. |
| (22) | Of these shares, all directors and executive officers as a group have sole voting and dispositive power with respect to 18,532,40115,001,762 shares and have shared voting and/or dispositive power with respect to 506,416401,416 shares. Includes 4,289,3982,020,324 shares purchasable by directors and executive officers upon exercise of currently exercisable options, or options exercisable within sixty days of March 11, 2013; 210,4392015; 275,573 shares deemed to be held in stock unit accounts under the Deferred Plan; and 100,487185,623 restricted stock units held under the Restated 2003 Stock Incentive Performance Plan, 57,787 of which are vested. |
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| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 63 |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file with the United States Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Executive officers, directors and greater than ten-percent shareholders are required by regulation promulgated by the United States Securities and Exchange Commission to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, based on review of the copies of such reports furnished to the Company and certain written representations made by directors and executive officers that no other reports were required during the last fiscal year ended December 30, 2012,28, 2014, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten-percent beneficial owners were complied with during fiscal 2012.2014. 105
| | | 64 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
PROPOSAL TO RATIFY THE SELECTION OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 20132015 FISCAL YEAR (Proposal (Proposal No. 4)3)
The Audit Committee has selected KPMG LLP (“KPMG”), independent registered public accounting firm, to perform the integrated audit of the consolidated financial statements and effectiveness of internal control over financial reporting of the Company for the fiscal year ending December 29, 201327, 2015 (“Fiscal 2013”2015”), and the Company’s Board has ratified this selection. A representative of KPMG is expected to be present at the Meeting, will have the opportunity to make a statement if so desired, and will be available to respond to appropriate questions. The Board is submitting the selection of KPMG as the Company’s independent registered public accounting firm for Fiscal 20132015 to the shareholders for their ratification. The Audit Committee of the Board bears the ultimate responsibility for selecting the Company’s independent registered public accounting firm and will make the selection it deems best for the Company and the Company’s shareholders. As such, the failure by the shareholders to ratify the selection of the independent registered public accounting firm made by the Audit Committee will not require the Audit Committee to alter its decision. Similarly, ratification of the selection of KPMG as the independent registered public accounting firm does not limit the Committee’s ability to change this selection in the future if it deems appropriate. Approval The affirmative vote of a majority of the shares of Common Stock present (in person or by proxy) and entitled to vote at the Meeting on the ratification of the selection of KPMG is required for approval. Abstentions are considered shares entitled to vote on the proposal and as such abstentions are the equivalent of a vote against the proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTEFOR RATIFICATION OF THE SELECTION OF KPMG AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2013.2015. 106
| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 65 |
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Audit Committee of the Board (the “Audit Committee”) is comprised solely of non-employee directors, each of whom has been determined by the Board to be independent under the Company’s Standards for Director Independence and the requirements of The NASDAQ Stock Market’s corporate governance listing standards. All six of the Audit Committee members possess significant financial, business and accounting expertise. Ms. Leinbach, Chair of the Committee, served as Executive Vice President and Chief Financial Officer of Ryder System, Inc. a public company, from 2003 to 2006. Prior thereto her twenty-one year career with Ryder included multiple senior operating and financial roles, including service as controller and chief financial officer of several of Ryder’s subsidiaries. Mr. Batkin has more than forty years of experience and financial expertise spanning his work in public accounting, investment banking and international strategic consulting. Mr. Garrett’s forty-year career with Nestle S.A. involved service in a number of operating and executive positions, culminating in his role as Executive Vice President responsible for Asia, Africa, the Middle East and Oceania. Ms. Gersh has served as a senior operating executive of a number of media and brand-driven companies, including as President and Chief Executive Officer of Martha Stewart Living Omnimedia, Inc. and most recently as President and Chief Executive Officer of Goop, Inc. Mr. Stoddart has spent thirty years helping to build his client’s businesses and most recently has served as President of Leo Burnett North America from 2005 to 2013 and as Chief Executive Officer since 2013. Ms. Zecher has over thirty-five years of business and operating experience across a number of companies and industries, culminating most recently in her role as President and Chief Executive Officer of Houghton Mifflin Harcourt Company since 2011. The Audit Committee operates under a written charter, which is available on the Company’s website (www.hasbro.com) under “Corporate — Investor Relations — Corporate Governance — Committee Charters”. Under the charter, the Audit Committee’s primary purpose is to: Appoint the independent registered public accounting firm (hereafter referred to as the independent auditors) and oversee the independent auditors’ work; and Assist the Board in its oversight of the: Integrity of the Company’s consolidated financial statements;statements and financial reporting; Company’s compliance with legal and regulatory requirements; Company’s system of internal controls; Company’s significant financial and other risks and exposures; Independent auditors’ qualifications and independence; and Performance of the Company’s internal audit function and independent auditors. In conductingcarrying out these responsibilities the Audit Committee reviews all earnings releases and quarterly and annual financial reports prepared by management, prior to their issuance and filing with the United States Securities and Exchange Commission (SEC). The Audit Committee supervises the relationship between the Company and the independent auditors and has direct responsibility for the appointment and compensation of the independent auditors, as well as for reviewing and approving the scope of the audit and all audit and permitted non-audit services. The Committee met eleven times during 2014. Many of the Committee’s meetings include executive sessions in which the Committee meets separately with the independent auditors, the Company’s Vice President of Internal Audit and with other members of the Company’s management. As part of its oversight function, the Audit Committee discusses with the Company’s internal auditor and independent auditors, with and without management present, the overall scope and plans for their respective audits. The Audit Committee also reviews the Company’s programs and key initiatives to implement and maintain effective internal controls over financial reporting and disclosure controls.controls, including the Company’s code of conduct. The Audit Committee maintains procedures for receipt, retention and treatment of complaints regarding accounting, internal accounting controls and auditing matters, as well as a policy regarding the hiring of former employees of the independent auditor. The Audit Committee assists the Board in risk oversight for the Company by reviewing and discussing with management, internal auditors, internal legal and compliance personnel and the independent auditors the Company’s significant financial and other risks and exposures, and guidelines and policies relating to enterprise risk assessment and risk management, including the Company’s procedures for monitoring and controlling such risks. The Audit Committee meets with the Company’s head of internal audit, and with the independent auditors, with and without management present, to discuss the results of their audits, the evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting. The Audit Committee discusses with management and the independent auditors all annual and | | | 66 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
quarterly consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations prior to their filing with the United States Securities and Exchange Commission.SEC. The Audit Committee also discusses with management, on a quarterly basis, management’s evaluation of the Company’s internal controls over financial reporting and disclosure controls. The Audit Committee is responsible for selecting the Company’s independent auditors. In making this selection the Audit Committee reviews the recent and historical performance of the independent auditors and their expertise and capability in handling the types and breadth of issues facing the Company and the geographic reach of the Company’s business, discusses with management their view on the performance of the auditor, reviews and discusses the results of the most recent Public Company Accounting Oversight Board (United States) (PCAOB) and peer reviews of the independent auditor, as well as any significant regulatory or legal proceedings involving the independent auditor, considers the tenure of the independent auditors, including the benefits from knowledge gained by the auditors of the Company’s business over time, and reviews the reasonableness of the independent auditors’ fees. The Audit Committee is directly responsible for approving the fees of the independent auditors and in doing so they review fee benchmarking information regarding audit and non-audit fees paid by multinational companies which are comparable in terms of size, complexity, and type of financial and accounting issues to the Company. When the audit engagement partner is due to rotate off of the Company’s audit team the Audit Committee meets with the potential candidates within the independent auditors to replace the audit engagement partner to ensure the Company receives the highest quality replacement. While the Audit Committee selects the independent auditors and oversees their work, the independent auditors are responsible for performing an independent integrated audit of the Company’s consolidated financial statements and effectiveness of internal control over financial reporting and issuing an opinion as to whether the consolidated financial statements conform with accounting principles generally accepted in the United States of America and an opinion as to the effectiveness of internal control over financial reporting. The Audit Committee has reviewed and discussed with management and the independent auditors the Company’s audited consolidated financial statements for the fiscal year ended December 30, 2012.28, 2014 and the Company’s report on the effectiveness of internal controls over financial reporting as of December 28, 2014, as well as the independent auditors’ audit of those financial statements and the Company’s internal controls over financial reporting. The Audit Committee has also reviewed and discussed with the independent auditors the matters required to be discussed by The Public Company Accounting Oversight Board (United States)the PCAOB and the Securities and Exchange Commission.SEC. In addition, the Audit Committee discussed with the independent auditors the audit and permitted non-audit services they provide to the Company and any 107
other matters impactingthat might impact their independence from management, and the Audit Committee has received from the independent auditors the written disclosures and letters required by the applicable requirements of the Public Company Accounting Oversight Board (United States).PCAOB. Based on its review and discussions with management and the independent auditors referred to in the preceding paragraph and the other oversight actions discussed above, the Audit Committee recommended to the Board and the Board has approved the inclusion of the audited consolidated financial statements for the fiscal year ended December 30, 201228, 2014 in the Company’s Annual Report on Form 10-K for filing with the United States Securities and Exchange Commission.SEC. The Audit Committee has also selected, and the Board has approved the selection of, KPMG LLP as the independent auditor for Fiscal 2013.2015. Report issued by Tracy A. Leinbach (Chair), Alan R. Batkin, Michael W.O. Garrett and Lisa Gersh, as the members of the Audit Committee as of the 20122014 fiscal year end. Tracy Leinbach (Chair) Alan Batkin Michael Garrett Lisa Gersh Richard Stoddart Linda Zecher | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 67 |
ADDITIONAL INFORMATION REGARDING INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The following table presents fees for professional audit services rendered by KPMG LLP for the integrated audits of the Company’s annual consolidated financial statements and effectiveness of internal control over financial reporting for fiscal 20122014 and 2011,2013, as well as fees for other services rendered by KPMG to the Company during fiscal 20122014 and 2011.2013. | | | | | | | | | | | | 2012 | | | 2011 | | Audit Fees(1) | | $ | 4,236,000 | | | $ | 4,404,000 | | Audit-Related Fees(2) | | $ | 185,000 | | | $ | 330,000 | | Tax Fees(3) | | $ | 931,000 | | | $ | 918,000 | | All Other Fees | | | — | | | $ | — | | | | | | | | | | | Total Fees | | $ | 5,352,000 | | | $ | 5,652,000 | |
| | | | | | | | | | | | 2014 | | | 2013 | | Audit Fees(1) | | $ | 6,157,000 | | | $ | 4,687,000 | | Audit-Related Fees(2) | | $ | 178,000 | | | $ | 566,000 | | Tax Fees(3) | | $ | 836,000 | | | $ | 815,000 | | All Other Fees | | | — | | | $ | — | | | | | | | Total Fees | | $ | 7,171,000 | | | $ | 6,068,000 | |
| (1) | Audit Fees consist of services related to the integrated audit of the Company’s consolidated financial statements and effectiveness of internal control over financial reporting. Audit fees also include consultations on accounting and reporting matters, as well as services generally only the independent auditor can reasonably be expected to provide, such as statutory audits and services in connection with filings with the United States Securities and Exchange Commission. |
| (2) | Audit-Related Fees consist of fees for audits of financial statements of employee benefit plans, accounting and reporting consultations related to proposed transactions and agreed upon procedures reports. |
| (3) | Tax Fees consist primarily of fees for tax compliance services, such as assistance with the preparation of tax returns and in connection with tax examinations, as well as fees for other tax consultations rendered to the Company. |
The Audit Committee has considered whether the provision of the approved non-audit services by KPMG is compatible with maintaining KPMG’s independence and has concluded that the provision of such services is compatible with maintaining KPMG’s independence. Policy on Audit Committee Pre-Approval of Audit Services and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm Consistent with the rules and regulations of the United States Securities and Exchange Commission regarding auditor independence, the Audit Committee has responsibility for appointing, approving compensation for and overseeing the services of the independent registered public accounting firm (hereafter referred to as the 108
independent auditors). In fulfilling this responsibility the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services to be provided by the independent auditors. Prior to engagement of the independent auditor for the fiscal year, management of the Company submits to the Audit Committee for the Audit Committee’s pre-approval: A description of, and estimated costs for, the proposed audit services to be provided by the independent auditors for that fiscal year. A description of, and estimated costs for, the proposed non-audit services to be provided by the independent auditors for that fiscal year. These non-audit services are comprised of permissible audit-related, tax and other services, and descriptions and estimated costs are proposed for these permissible non-audit services. Audit and permissible non-audit services which are pre-approved by the Audit Committee pursuant to this review may be performed by KPMG during the fiscal year. During the course of the year management periodically reports to the Audit Committee on the audit and non-audit services which are being provided to the Company pursuant to these pre-approvals. In addition to pre-approving all audit and permissible non-audit services at the beginning of the fiscal year, the Audit Committee has also instituted a procedure for the consideration of additional services that arise during the course of the year for which the Company desires to retain KPMG. For individual projects with estimated fees of $75,000 or less which have not previously been pre-approved by the Audit Committee, the Chair of the Audit Committee is authorized to pre-approve such services. The Chair of the Committee reports any services which are pre-approved in this manner to the full Audit Committee at its next meeting. Any proposed additional projects with an estimated cost of more than $75,000 must be pre-approved by the full Audit Committee prior to the engagement of KPMG. 109
| | | 68 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
SHAREHOLDER PROPOSAL (Proposal (Proposal No. 5)
Introduction4) — PROXY ACCESS
The following shareholder proposal,which is opposed by the Board, and supporting statement were submitted to the Company for inclusion in this Proxy Statement by the City of New York, Office of the Comptroller, Scott M. Stringer, One Centre Street, New York, NY 10007-2341, on behalf of the New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New York City Teachers’ Retirement System, the New York City Police Pension Fund and the New York City Board of Education Retirement System. The proposal is co-sponsored by the UAW Retiree Medical Benefits Trust, 110 Miller Avenue, Suite 100, Ann Arbor, MI 48104-1296 and the Philadelphia Public Employees Retirement System, 16th Floor, Two Penn Center Plaza, Philadelphia, PA 19102-1712 (collectively all of the proponents are referred to as the “Proponents”). The Proponents have represented to the Company that they have each held in excess of $2,000 shares of the Company’s common stock for more than one year and that they plan to present the proposal to the Company’s shareholders for their consideration at the Annual Meeting. The following is the text of the shareholder proposal and supporting statement as it was submitted to the Company. “RESOLVED: Shareholders of Hasbro, Inc. (the “Company”) ask the board of directors (the “Board”) to adopt, and present for shareholder approval, a “proxy access” bylaw. Such a bylaw shall require the Company to include in proxy materials prepared for a shareholder meeting at which directors are to be elected the name, Disclosure and Statement (as defined herein) of any person nominated for election to the board by a shareholder or group (the “Nominator”) that meets the criteria established below. The Company shall allow shareholders to vote on such nominee on the Company’s proxy card. The number of shareholder-nominated candidates appearing in the proxy materials shall not exceed one quarter of the directors then serving. This bylaw, which shall supplement existing rights under Company bylaws, should provide that a Nominator must: | (a) | have beneficially owned 3% or more of the Company’s outstanding common stock continuously for at least three years before submitting the nomination; |
| (b) | give the Company, within the time period identified in its bylaws, written notice of the information required by the bylaws and any Securities and Exchange Commission rules about (i) the nominee, including consent to being named in the proxy materials and to serving as director if elected; and (ii) the Nominator, including proof it owns the required shares (the “Disclosure”); and |
| (c) | certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s communications with the Company shareholders; including the Disclosure and Statement; (ii) it will comply with all applicable laws and regulations if it uses soliciting material other than the Company’s proxy materials; and (iii) to the best of its knowledge, the required shares were acquired in the ordinary course of business and not to change or influence control at the Company; |
The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of the nominee (the “Statement”). The Board shall adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority to be given to multiple nominations exceeding the one-quarter limit. SUPPORTING STATEMENT We believe proxy access is a fundamental shareholder right that will make directors more accountable and contribute to increased shareholder value. The CFA Institute’s 2014 assessment of pertinent academic studies and the use of proxy access in other markets similarly concluded that proxy access: Would “benefit both the markets and corporate boardrooms, with little cost or disruption.” | • | | Has the potential to raise overall US market capitalization by up to $140.3 billion if adopted market-wide. (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1) |
The proposed bylaw terms enjoy strong investor support — votes for similar shareholder proposals averaged 55% from 2012 through September 2014 — and similar bylaws have been adopted by companies of various sizes across industries, including Chesapeake Energy, Hewlett-Packard, Western Union and Verizon. We urge shareholders to vote FOR this proposal.” | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 69 |
RESPONSE OF THE HASBRO, INC. BOARD OF DIRECTORS YOUR BOARD OF DIRECTORS RECOMMENDS A VOTEAGAINST THIS PROPOSAL We believe this proposal is not in the best interests of Hasbro’s shareholders because it: Seeks to bypass a process carefully designed to identify the most qualified candidates for service on the Board; May promote the influence of special interests to the detriment of Hasbro’s other shareholders and long-term shareholder value; Does not recognize our commitment to shareholder outreach and responsiveness to our shareholders; Does not mention that we already have a mechanism in place for shareholders to propose nominees for election to the Board; Contains an ownership threshold and holding period that we believe may be too low and with which there is an insufficient amount of experience; and May result in significant cost and disruption to Hasbro without a corresponding gain to our shareholders. Acting pursuant to our written Corporate Governance Principles and their fiduciary duties to serve the best interests of Hasbro and all of its shareholders, the Nominating, Governance and Social Responsibility Committee of our Board (the “Governance Committee”) is responsible for identifying and screening potential director candidates and for recommending the most appropriate candidates for election or re-election to the Board. The Governance Committee employs a third-party search firm to assist it in identifying the best possible candidates for Board service and then spends considerable time reviewing the qualifications for each of the individual candidates that are identified and in meeting with and evaluating such candidates. Following this process the Governance Committee submits its recommendations to the full Board of Directors for the full Board’s review, evaluation and decision. In evaluating potential candidates the Governance Committee and the Board consider a number of factors, including employment and other experience, qualifications, attributes, skills, expertise and involvement in areas that are of relevance to the Company’s business, business ethics and integrity, professional reputation, other Board service, judgment, independence, commitment to shareholders and to the creation of shareholder value, and the desire to have a Board that represents a diverse mix of backgrounds, perspectives and expertise. The Governance Committee and the entire Board view their responsibility for identifying appropriate candidates for service on the Board as one of their greatest responsibilities and they select potential candidates based on a careful judgment as to the people who will best serve the entire Company and all of its shareholders. For example, in the last thirteen months three entirely new directors were recommended for service on the Board, Michael Burns, Richard Stoddart and Linda Zecher. Each of those candidates were selected based upon a careful review of the skills and qualifications he or she would bring to bear in his or her service and his or her commitment to serve all shareholders to the best of his or her ability. We believe that mandatory proxy access, which allows a fairly small group of shareholders (owning only 3% of the Company’s total shares outstanding in the case of the current proposal) to force the Company to include in its proxy materials candidates for Board election, without such candidates first being evaluated for suitability and commitment to the overall Company, creates a significant risk that candidates may be elected to the Board who will not serve the best interests of all shareholders. A small minority of the Company’s shareholders could submit candidates for purposes that are unrelated, or even contrary to, the best interests of the Company and its shareholders as a whole. Without evaluating such candidates prior to inclusion in the proxy, shareholders will be asked to effectively make a judgment as to the suitability and objectives of a candidate based on what may be only brief disclosure in the proxy statement. We also note that in submitting such potential candidates, minority shareholders are not subject to the fiduciary duties which apply to the Governance Committee and the Board and which require that the Governance Committee and the Board act in the best interest of the Company and its shareholders as a whole. Further, mandatory proxy access is unnecessary for the Company’s shareholders who wish to submit candidates for election or otherwise engage in discussions with the Board. For many years Hasbro has had a mechanism, which is described on page 16 of this proxy statement, that allows a shareholder, or group of shareholders, holding 1% or more of the Company’s common stock for at least one year prior to the date of submission, to submit a candidate for service on the Board. The Governance Committee evaluates such candidates on the same basis applied to all other candidates for Board service and will include such candidate in the Company’s proxy material if the person is determined to be a suitable candidate based on the earlier-described factors. Hasbro is highly committed to giving shareholders a voice in their Company and in responsiveness to its shareholders. All of Hasbro’s directors are elected annually and our bylaws provide that each director must submit a resignation that will become effective if they do not receive a FOR vote from the majority of shares voting in an uncontested election of directors. In the case of a contested election, directors are elected by a plurality of votes cast. In the event that such a resignation becomes effective both the Governance Committee and the full Board will evaluate accepting the resignation and the Company will report publicly to its shareholders on the Board’s decision within 60 days of the vote. Any shareholder may contact the Board care of the Board’s Presiding Director (after the 2015 Annual Meeting the Lead Independent Director) in the manner set forth on page 10 of this proxy statement. In addition, the Company conducts a robust proactive shareholder outreach that has included members of the Board. Following the Company’s 2013 Annual meeting the Company reached out to and | | | 70 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
offered to speak with shareholders holding approximately 93% of the shares held by our top 25 institutional investors and approximately 55% of our total shares outstanding as of year-end 2013. In our most recent round of shareholder outreach, during 2014 we have reached out to shareholders holding approximately 63% of our total shares outstanding, including all of our top 25 holders as of the 2014 year end. We had discussions with all of the shareholders who accepted our invitation to talk, comprising holders representing approximately 47% of our total outstanding shares as of the end of 2014. The Chairman of the Nominating, Governance and Social Responsibility Committee, who also serves on the Compensation Committee of our Board, and who was recently designated Lead Independent Director effective at the 2015 Annual Meeting, participated in many of these meetings with shareholders. In direct response to feedback we received from shareholders over the last year and a half, in 2014 we: Implemented significant changes to the employment contract between Hasbro and our Chief Executive Officer, Brian Goldner; Adopted an overboarding policy limiting the number of total boards on which any of our directors may serve, and Added additional structure to our majority vote standard for the election of directors, including implementation of the mandatory resignation policy for directors not achieving the requisite majority vote. Prior to receiving this proxy access shareholder proposal none of our shareholders had asked us, in connection with our outreach efforts or otherwise, to implement any type of a proxy access mechanism. Nor have any of our shareholders asked us to consider a nominee for election to the Board. In connection with our latest round of outreach we are asking our shareholders for their views on proxy access and proxy access bylaws, including whether they support such bylaws and if so, what ownership thresholds and holding periods they believe are appropriate. We note that shareholders we have spoken with thus far have expressed differences on these issues, including whether they support any type of proxy access bylaw. Even if you believe proxy access bylaw provisions are appropriate, there is very little experience to date with these types of mechanisms in the United States, and it is not currently clear what are the appropriate share ownership thresholds and holding periods. We have concerns with the 3% ownership threshold and three-year holding period that are contained in the proposal. Currently we believe four of our shareholders would each individually meet those thresholds. We want to be sure that if we adopt a proxy access bylaw provision it is appropriate and serves the interests of all of our shareholders. We will continue to engage with our shareholders to seek their views on proxy access and the issues around its implementation, and will consider those views in connection with the results of the vote on this proxy access proposal in determining our future actions in this area. We also urge you, our shareholders, to read the research study prepared by the CFA Institute which is referred to in the proponent’s supporting statement. The issue of proxy access is an important one and we applaud that study’s work to try and analyze issues around proxy access. However, in many cases, as the study points out, the findings from that research are not unequivocal, and whether proxy access improved shareholder value over the longer-term in companies is not addressed by the findings. We point these items out so that shareholders will read the study and formulate their own opinions from it, rather than relying on anyone’s summary of the findings. In conclusion, we believe this proposal creates significant risk to the Company that candidates will appear in the Company’s proxy materials for election to the Board who have not been properly evaluated, is unnecessary to protect our shareholders and to give them a meaningful voice in the governance of their Company, does not recognize our ongoing shareholder outreach and responsiveness to shareholders, contains terms with which there is little experience thus far in the United States in terms of how well they work and serve shareholder interests and may cause the Company to incur significant expense and potential disruption without any corresponding benefit to shareholders. For the above reasons, the Board recommends that the shareholders voteAGAINST this proposal. Vote required. Approval of the proposal would require the affirmative vote of a majority of all shares present (in person or by proxy) and entitled to vote at the Meeting to be approved. Abstentions and broker non-votes are each counted as present for purposes of establishing a quorum at the Meeting. Abstentions are also considered shares entitled to vote on the proposal and as such abstentions are the equivalent of a vote against the proposal. In contrast, broker non-votes are not counted as present and entitled to vote on the proposal for purposes of determining if the proposal receives an affirmative vote of a majority of the shares present and entitled to vote. | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 71 |
SHAREHOLDER PROPOSAL (Proposal No. 5) – POST-TERMINATION HOLDING PERIOD FOR PORTION OF EQUITY HELD BY SENIOR EXECUTIVES One ofThe following shareholder proposal,which is opposed by the Company’s shareholders has submitted the following resolutionBoard, and supporting statement were submitted to the Company for inclusion in this Proxy Statement. Upon a written or oral request madeStatement by As You Sow, 1611 Telegraph Ave., Suite 1450, Oakland, CA 94612, on behalf of The Penney Family Fund (the “Proponent”). The Proponent has represented to the SecretaryCompany that it has held more than $2,000 worth of the Company,Company’s common stock for more than one-year and that it plans to present the Company will provideproposal to the name, address and shareholdingsCompany’s shareholders for their consideration at the Annual Meeting. The following is the text of the proponent of this resolutionshareholder proposal and supporting statement as it was submitted to any shareholder of the Company.
SUPPLIER SUSTAINABILITY REPORTING
“RESOLVED:RESOLVED: Shareholders request thatof Hasbro urge the Compensation Committee of the Board of Directors take(the “Committee”) to adopt a policy requiring that senior executives retain a significant percentage of shares acquired through equity compensation programs until two years following the steps necessarytermination of their employment (through retirement or otherwise), and to report to shareholders regarding the policy before Hasbro’s annual meeting of shareholders. The shareholders recommend that the Committee not adopt a percentage lower than 75% of net after-tax shares. The policy shall apply to future grants and awards of equity compensation and should address the permissibility of transactions, such as hedging transactions, which are not sales but reduce the risk of loss to the executive. Supporting Statement. Requiring senior executives to hold a significant portion of shares obtained through compensation plans after the termination of employment would focus them on Hasbro’s long-term success and would better align their interests with those of Hasbro’s shareholders. Shareholders have given a low level of support to Hasbro’s advisory vote on compensation for the past two years. The directors stated that the 2013 vote, with 64% in support, was “well below what we consider satisfactory.” In 2014, the proposal failed to win even majority support from shareholders. Of major concern to shareholders was an employment agreement entered into in October 2012, which provided the CEO Brian Goldner with extraordinarily large restricted stock awards. While performance-based (with stock price thresholds weighted equally with 25% of the award subject to achievement of specific stock price thresholds), the agreement did not require the Company’s significant suppliersexecutive to each publish an annual, independently verifiable sustainability reportretain the stock for any period of time once they had vested. One reason boards provide incentives with stock is to create a long-term alignment between shareholder and executive interests. Awards that the Company makes availablefail to its shareholders. Among other disclosures, reports should include the supplier’s objective assessments and measurements of performance on workplace safety, human and worker rights, and environmental compliance using internationally recognized standards, indicators and measurement protocols. In addition, reports should include incidents of non-compliance, actions takensuch requirements instead allow executives to remedy those incidents, and measures taken to contribute to long-term prevention and mitigation. Significant suppliers are those from which the Company reasonably expects to purchase at least $1 million in goods and services annually.
SUPPORTING STATEMENT
Increasingly, global companies recognize that their suppliers’ impacts and sustainability are inextricably intertwined with their own success. According to “A New Era of Sustainability, UN Global Compact-Accenture CEO Study 2010,” 93% of CEO’s agree that integrating sustainability issues is critical to the future success of their business and 88% believe they should integrate sustainability through their supply chains. The CEOs identified the difficulty of implementing across supply chains ascash out options near the top barrier to the full integration of sustainability.
This is a significant concern for shareholders given that egregious human and worker rights abuses can occur in a company’s supply chain, creating legal, reputational and operational risks.
Leading companies require suppliers to adhere to international labor and human rights protocols, including the core conventions of the International Labor Organizationmarket. In fact, according to Barrons, in February 2014 Hasbro CEO Goldner sold 390,000 Hasbro shares for $20,310,264 after exercising options priced from $27.09 to $31.62 each. These sales only represent a portion of the shares awarded under the plan. In 2013, in addition to receiving equity and option awards valued at $24 million, Goldner received cash salary and incentives of an additional $3 million.
Hasbro has a very limited holding requirement, adopted only in March 2014, and even that is only effective until modest stock ownership guidelines have been met. Other companies have more rigorous policies. ExxonMobil has placed holding requirements on equity incentive awards since 2002, requiring that half the United Nations Guiding Principles on Businessannual award is restricted for five years, and Human Rights. However, a Harvard Law School study by Aaron Bernstein and Christopher Greenwald, “Benchmarking Corporate Policies on Labor and Human Rights in Global Supply Chains,” (Nov. 2009), found a significant gap between general policies against labor and human rights abuse and more detailed standards and enforcement mechanisms required to carry them out. Independent supplier audits are essential, but insufficient. By requiring suppliers to prepare annual sustainability reports using the Global Reporting Initiative (GRI) guidelines that the Company itself useshalf for
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sustainability reporting, the Company would strengthen its ability to assess its suppliers’ performance and hold its suppliers accountable; enable shareholders to better understand and assess potential reputational and/ 10 years or operational risks; and, consistent with the principle that “what gets measured gets managed,” prompt more responsible business practices by suppliers.
As Microsoft stated in announcing its plan in October 2011 to require sustainability reporting from key hardware vendors, “The new reporting mechanism complements and strengthens Microsoft’s existing auditing and assurance programs, which include third-party monitoring of its contract hardware manufacturers. The reporting requirement will also drive sustainability improvements in Microsoft’s supply chain.”
Other leading corporations taking steps to require or encourage suppliers to prepare GRI-based sustainability reports include Apple, Cisco, Dell, Hewlett Packard, Intel, Oracle and PUMA. In some cases, the companies provide guidance to suppliers who need assistance, show preference to suppliers who meet or exceed expectations, and/or include web links to their suppliers’ sustainability reports.until retirement, whichever is later.
We urge shareholdersview a more rigorous retention requirement as superior to vote for this proposal.a stock ownership policy with a one year retention guideline, because a guideline loses effectiveness once it has been satisfied and a one year retention requirement is not sufficiently long.” RESPONSE OF THE HASBRO, INC. BOARD OF DIRECTORS YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTEAGAINST THIS PROPOSAL NUMBER FIVE FOR THE FOLLOWING REASONS The Board of DirectorsWe believe this proposal is opposed to the proposal requiring suppliers to produce annual sustainability reports. Hasbro’s existing sustainability and corporate social responsibility (CSR) reporting programs, described below, already provide shareholders with an effective means for evaluating supplier performance, supplier accountability, potential reputational and operational risks, and responsible business practices. Therefore, the proposal would create duplicative efforts and would force our suppliers to incur significant expenses in connection with the commitment of resources necessary to prepare such reports. This requirement — and the increased expenses incurred by our suppliers in preparing these reports — could ultimately lead to higher costs for us to manufacture our products and higher prices to our consumers. This would place Hasbro at a competitive disadvantage against those competitors whose suppliers are not required to incur the expenses associated with mandated, annual sustainability reports.
Public reporting is important for shareholder evaluation of company performance, including supply chain performance, and Hasbro has been and continues to be an industry leader in this area. Hasbro issues a CSR Report, together with regular updates, and also publicly reports to the world’s largest public carbon database, the Carbon Disclosure Project (CDP). It is important to note that the public reporting includes data and information regarding Hasbro’s supply chain and supplier performance.
For example, in Hasbro’s full, GRI-based CSR Report, and update report, the following information relating to supplier performance and sustainability progress is already publicly disclosed:
List of Vendors: A complete list of Hasbro owned and operated factories as well as third party vendors (available at: http://csr.hasbro.com/downloads/Hasbro_factories.pdf).
Ratings of Vendors: The ethical, social, and health and safety ratings or “seals” of our vendors, as per the International Council of Toy Industries (ICTI) (available at: http://csr.hasbro.com/das02-products.php).
Product Safety Requirements: The product safety and quality assurance five-step “Total Quality” processes, to which all Hasbro vendors are required to adhere (available at: http://csr.hasbro.com/saf03-quality-assurance-testing.php).
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Product Safety Record: Hasbro’s product safety record, which is a reflection not only of Hasbro’s performance, but also a reflection of the performance standards to which vendors manufacturing Hasbro products are held and with which they comply (available at: http://csr.hasbro.com/das02-products.php and at http://csr.hasbro.com/downloads/CSR_2011_Report.pdf).
Packaging Material Usage: Per Hasbro requirements, Hasbro vendors no longer utilize polyvinyl chloride (PVC) in packaging for new toy and game packaging, and by the end of 2013, all packaging being produced will be PVC — free.
Paper Usage: Hasbro’s paper sourcing policy outlines our approach and our expectations of suppliers on sustainable paper sourcing. We have communicated our paper policy to our suppliers, informing them of our expectations and goals, and we have embedded the policy into our company-wide quality assurance policies and procedures. Hasbro monitors and reports on progress in this area.
Transportation Footprint: Information about our transportation efficiencies, including how we work closely with our contract carriers and manufacturers to minimize emissions from product distribution is publicly disclosed and available at http://csr.hasbro.com/sus06-logistics.php.
Sustainability Support for Vendors: We seek to conduct business with factories that share our commitment to reducing the impact of operations on the environment. Vendors must comply with all applicable laws relating to the environment, including disposal of toxic materials in a controlled and safe manner. We monitor and address environmental issues and instances of non-compliance in our supply chain through regular audits and onsite assessments. Many of the processes we use to ensure ethical compliance in manufacturing vendors incorporate environmental checks. In addition, in the past, we organized webinars for Hasbro licensees and licensors, exploring how to manage social and environmental compliance in the supply chain. This initiative was part of our work with the Licensing Working Group (LWG) in collaboration with the International Licensing Industry Merchandisers’ Association (LIMA) and BSR.
Additionally, Hasbro annually collects and publicly reports, through the CDP, data relating to greenhouse gas emissions associated with vendor energy use including electricity consumption and fuel use (natural gas, fuel oil and coal). As a result of Hasbro’s sustainability and supply chain transparency, Hasbro has been named one of the World’s Most Ethical Companies and one of the 100 Best Corporate Citizens. Hasbro also was named by the U.S. Environmental Protection Agency (EPA) for excellence in greenhouse gas management.
In summary, we believe that requiring our suppliers to produce annual sustainability reports would be duplicative in nature and would force our suppliers to incur significant expenses in connection with the commitment of resources necessary to prepare and publish such reports. This requirement — and the increased expenses incurred by our suppliers in preparing these reports — could ultimately lead to higher costs for us to manufacture our products and higher prices to our consumers. This would not be in the best interests of Hasbro’s shareholders customers,because:
Our compensation plans, both equity and consumerscash, are already designed to align the interests of our shareholders and executives and to reward executives based upon achievement of the Company’s goals and furthering shareholder interests; We already have significant share ownership requirements in place, as well as a policy prohibiting pledging or hedging of Company shares held by executives, directors and employees; and We believe mandated post-retirement holding requirements would placehave negative effects for the Company. Hasbro’s compensation plans are designed to closely align executives’ realized pay (both from equity grants and from cash compensation plans) with the performance of the Company. As discussed in detail beginning on page 24 of this proxy statement, the vast majority of the total compensation opportunity for our Named Executive Officers is performance-based, including our entire long-term equity incentive compensation program and annual cash incentive program. This performance-based compensation can only be earned based upon achievement of the Company’s and the individual’s performance targets and objectives, all of which are set by our Compensation Committee and Board with the objective of serving shareholders’ long-term interests. In the case of our Chief Executive Officer, the | | | 72 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
significant majority of his annual compensation potential is reflected in equity grants comprised of contingent stock performance awards, under which shares of the Company’s common stock are only earned if the Company achieves cumulative net revenue and earnings per share targets (beginning with grants in 2015, ROIC is being added as a third measure) over a three-year performance period, and stock options, vesting over three years and granted with an exercise price equal to the fair market value on the date of grant, such that he only realizes value if the Company’s stock price appreciates. The contingent stock performance awards, which have three-year performance periods, and the options, which vest over three-years, require a longer-term view by our Chief Executive Officer and other executives and no value is realized from such awards unless the Company achieves its objectives and/or shareholders realize an increase in share price from the date of grant of the award. In addition to aligning shareholder and executive interests through the design of our compensation programs, Hasbro already has significant stock ownership requirements in place. In early 2010 we adopted a stock ownership policy which requires that all executives at the level of Senior Vice President or above must achieve and then maintain, over the entire course of their employment with the Company, share ownership at specified multiples of base salary, with the multiples increasing with positions of greater seniority. An executive has five years from their appointment or promotion to a competitive disadvantage against those competitors whose suppliers aredesignated position to achieve the specified stock ownership. During that five-year period until the required share ownership is achieved at least 50% of the net shares realized upon any exercise of options or vesting of stock must be retained by the executive. For our Chief Executive Officer, the required stock ownership is five times his base salary, which we believe is a significant requirement. For Executive Vice Presidents the requirement is two times the person’s annual base salary. We note that as of March 31, 2015, our Chief Executive Officer, Mr. Goldner, in fact holds (inclusive of his wife’s holdings and shares held in trusts for his children) shares of Hasbro stock with a value almost eight times his annual base salary, which we believe manifests a major commitment by Mr. Goldner to our Company and its shareholders. In 2012 Hasbro adopted a policy that prohibits any pledging or hedging of Company shares held by executives. At that time Hasbro also adopted a clawback policy providing that if an accounting restatement is required due to the Company’s material non-compliance with any accounting requirements, then all of the Company’s executive officers, regardless of whether they were at fault or not in the circumstances leading to the restatement, will be subject to forfeiting any excess in the incentive compensation (both equity and cash) 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. We also have an insider trading policy which prohibits all directors, executive officers and employees from trading in our common stock or other securities while in possession of material non-public information about our business. The proposal refers to the restricted stock grants made to Mr. Goldner pursuant to his October 2012 employment agreement and states that he is not required to incurretain the expenses associatedstock under those grants for any period of time once they vest. We think it is important for shareholders to realize that for those awards there are two distinct requirements, one for them to be earned and a second for them to vest. They are earned based on achieving the designated stock price thresholds set forth in the awards. However, even for portions of the award that are earned because of achievement of those thresholds, they do not vest unless and until the service requirement is also met. As is detailed on page 38 of this proxy statement, those shares are earned based upon achievement of specified stock price thresholds (25% of the shares are tied to each of four increasingly higher stock price hurdles). But even once a tranche of shares is earned, Mr. Goldner does not vest in the shares unless he remains employed with mandated, annual sustainability reports.the Company through December 31, 2017. By their nature the awards, which were designed to provide significant retention value, have a multi-year holding period requirement built into them in order to vest. We also note that pursuant to amendments made to Mr. Goldner’s employment agreement in August 2014 in response to comments from our shareholders during shareholder outreach, even if the shares subject to the $56 and $60 price thresholds are earned, and Mr. Goldner remains employed with the Company through December 31, 2017 such that the awards then vest, the number of shares he actually receives under one or both of those tranches will be reduced if the price of the stock during the thirty-day trading period ending immediately prior to December 31, 2017 is below the specified stock thresholds. While we agree that significant executive stock ownership is an important factor to create alignment between executive and shareholder interests (our policies already require that ownership), we also believe it can be undesirable for an executive to become overweight in the Company’s stock. An executive with the vast majority of their personal wealth held only in Company stock, without any meaningful diversification of assets, may be incented to engage in overly risky behavior that could jeopardize the Company’s interests. Furthermore, if the majority of an executive’s personal wealth is locked into Company stock and only accessible following the person’s retirement from the Company, it may encourage talented executives to leave employment with the Company earlier than the Company desires, simply to be able to obtain some of the money they have earned through their service to the Company. We believe that annual sustainability reportingexecutives should be able to realize some of the wealth earned by suppliers would be duplicative of existing data collection and reporting efforts as well as costly, with no added benefittheir service to the shareholders orCompany and engage in prudent financial diversification. To require that 75% of all net after tax equity compensation be retained until after retirement, when the Company.vast majority of an executive’s total compensation is equity based, is unreasonable and we believe would both significantly harm our ability to attract and retain top executives and may incent them to engage in undesirable risk taking. Hasbro’s existing public reporting programs already provide shareholders with a means to evaluateFor the information cited in the proposal: supplier performance; supplier accountability; potential reputationalreasons set forth above we believe our current share ownership and operational risks; and responsible business practices by suppliers. For these reasons, the Board believes that the Company’s current corporate social responsibility programs and existing public reporting mechanismsother requirements are in the best interests of the Company and its shareholders and that the current proposal is unnecessary and potentially harmful to the Company.
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For the above reasons, the Board recommends that the shareholders voteAGAINST this proposal. Vote required. Approval of the proposal would require the affirmative vote of a majority of all shares present (in person or by proxy) and entitled to vote at the Meeting to be approved. Abstentions and broker non-votes are each counted as present for purposes of establishing a quorum at the Meeting. Abstentions are also considered shares entitled to vote on the proposal and as such abstentions are the equivalent of a vote against the proposal. In contrast, broker non-votes are not counted as present and entitled to vote on the proposal for purposes of determining if the proposal receives an affirmative vote of a majority of the shares present and entitled to vote. | | | 74 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
SHAREHOLDER PROPOSAL (Proposal No. 6) — LIMITATION ON VESTING OF EQUITY HELD BY SENIOR EXECUTIVES FOLLOWING A CHANGE IN CONTROL The following shareholder proposal,which is opposed by the Board, and supporting statement were submitted to the Company for inclusion in this Proxy Statement by the Comerica Bank & Trust, National Association, c/o Institutional Services Group, 411 West Lafayette Boulevard, Detroit, MI 48226, as Trustee of the Trowel Trades S&P 500 Index Fund, and the Board of Trustees of the International Brotherhood of Electrical Workers Pension Benefit Fund, 900 Seventh Street, NW, Washington, DC 20001 (together the “Proponents”). The Proponents have represented to the Company that they have each hold more than $2,000 worth of the Company’s common stock for more than one-year and that they plan to present the proposal to the Company’s shareholders for their consideration at the Annual Meeting. The following is the text of the shareholder proposal and supporting statement as it was submitted to the Company. “RESOLVED: The shareholders ask the board of directors of Hasbro to adopt a policy that in the event of a change in control (as defined under any applicable employment agreement, equity incentive plan or other plan), there shall be no acceleration of vesting of any equity award granted to any senior executive officer, provided, however, that the board’s Compensation Committee may provide in an applicable grant or purchase agreement that any unvested award will vest on a partial,pro rata basis up to the time of the named executive officer’s termination, with such qualifications for an award as the Committee may determine. For purposes of this Policy, “equity award” means an award granted under an equity incentive plan as defined in Item 402 of the SEC’s Regulation S-K, which addresses elements of executive compensation to be disclosed to shareholders. This resolution shall be implemented so as not to affect any contractual rights in existence on the date this proposal is adopted, and it shall apply only to equity awards made under equity incentive plans or plan amendments that shareholders approve after the date of the 2015 annual meeting. SUPPORTING STATEMENT Hasbro (“Company”) allows senior executives to receive an accelerated award or unearned equity under certain conditions after a change in control of the Company. According to last year’s proxy statement, a termination without cause or by the executive for good reason in connection with a change in control as of Dec. 27, 2013 could have accelerated the vesting of $48 million worth of long-term equity to Company’s five senior executives, with $34.6 million going to the CEO. We note that Hasbro subsequently issued an 8-K to change the terms of the CEO’s special restricted stock grant to vest on a pro-rata basis. However, Hasbro has not implemented a pro-rata vesting policy across the board for all equity awards to the named executive officers. We are unpersuaded by the argument that executives somehow “deserve” to receive unvested awards. To accelerate the vesting of unearned equity on the theory that an executive was denied the opportunity to earn those shares seems inconsistent with a “pay for performance” philosophy worthy of the name. We do believe, however, that an affected executive should be eligible to receive an accelerated vesting of equity awards on apro rata basis as of the termination date, with the details of anypro rata award to be determined by the Compensation Committee. Other major corporations, including Apple, Chevron, ExxonMobil, IBM, Intel, Microsoft, and Occidental Petroleum, have limitations on accelerated vesting of unearned equity, such as providing pro rata awards or simply forfeiting unearned awards. Research from James Reda & Associates found that over one third of the largest 200 companies now have pro rate, forfeit, or only partially vest performance shares upon a change in control. We urge you to vote FOR this proposal.” RESPONSE OF THE HASBRO, INC. BOARD OF DIRECTORS FOR THE ABOVE REASONS, THEYOUR BOARD UNANIMOUSLYOF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERSA VOTEAGAINST THIS PROPOSAL.PROPOSAL
We believe this proposal is not in the best interests of Hasbro’s shareholders for the following reasons. First, effective in 2013 Hasbro implemented a double trigger for all future equity grants under our 2003 Stock Incentive Performance Plan, which is our only current equity compensation plan. As a result, all of our equity grants made since January 1, 2013, and all future equity grants to be made under our equity compensation plan, are subject to a double trigger and the vesting of such awards may only accelerate based upon a change in control if the award recipient is either terminated by the Company without cause (as defined in the equity plan), or terminates their employment with the Company for good reason (also as defined in the equity plan), within the twenty-four month period following the change in control. We believe that our current double trigger approach to acceleration of vesting following a change in control best serves the Company and its shareholders. The current double trigger structure only allows for the Compensation Committee to provide for acceleration of vesting in a grant agreement when an executive is terminated without cause or leaves for good reason within twenty-four months following a change in control. We believe the Compensation Committee should have the ability to provide for acceleration in such a situation where it deems it appropriate, as we consider such circumstances to be the equivalent of a no fault termination of the executive by the Company. | | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 75 |
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Providing for double trigger acceleration of vesting following a change in control also aligns the interests of shareholders and equity eligible executives and employees. Such a provision makes it less likely that an executive or employee will be resistant to a change in control that is beneficial to our shareholders out of personal concern that following such a change in control they may both lose their job and lose substantial potential future equity value. In this way the double trigger can prevent conflicts of interest between executives and employees on the one hand, and shareholders. The double trigger also incentivizes executives and employees to remain with the Company through completion of the change in control transaction, thus mitigating the risk of potential loss of key personnel at the time that the Company is working to complete a beneficial transaction and the consequent risk to completion of the transaction. Further, we do not believe double trigger acceleration of vesting following a change in control provides a windfall for executives and employees. Many senior executives receive the majority of their annual compensation opportunity in the form of equity awards. As such, the largest component of their current pay is the opportunity to earn the equity award over time. To remove the possibility of accelerated vesting following a change in control and termination of their employment can significantly lessen the executive’s overall pay opportunity in circumstances where the executive has done nothing but serve the interests of the Company and its shareholders, and may put the Company at a competitive disadvantage in attracting and retaining executives and other equity eligible employees. For the reasons set forth above we believe our current double trigger approach to acceleration of equity vesting following a change in control, under which no acceleration occurs unless an executive is terminated without cause or resigns for good reason within twenty-four months following the change in control, but which allows the Compensation Committee to determine the level of acceleration in such a situation, is in the best interests of the Company and its shareholders. For the above reasons, the Board recommends that the shareholders voteAGAINST this proposal. Vote required. Approval of the proposal would require the affirmative vote of a majority of all shares present (in person or by proxy) and entitled to vote at the Meeting to be approved. Abstentions and broker non-votes are each counted as present for purposes of establishing a quorum at the Meeting. Abstentions are also considered shares entitled to vote on the proposal and as such abstentions are the equivalent of a vote against the proposal. In contrast, broker non-votes are not counted as present and entitled to vote on the proposal for purposes of determining if the proposal receives an affirmative vote of a majority of the shares present and entitled to vote. | | | 76 | | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | Hasbro, Inc. |
OTHER BUSINESS Management knows of no other matters that may be presented to the Meeting. However, if any other matter properly comes before the Meeting, or any adjournment or postponement thereof, it is intended that proxies in the accompanying form will be voted in accordance with the judgment of the persons named therein. IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS In accordance with a notice sent to certain street name shareholders of our Common Stock who share a single address, only one copy of the Notice of Internet Availability of Proxy Materials or proxy materials for the year ended December 30, 201228, 2014 is being sent to that address unless we received contrary instructions from any shareholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, if any shareholder residing at such an address wishes to receive a separate copy of this Notice of Internet Availability of the Proxy Materials, the proxy statementProxy Statement or our Annual Report on Form 10-K for the year ended December 30, 2012,28, 2014, he or she may contact Debbie Hancock, Vice President of Investor Relations, Hasbro, Inc., 1027 Newport Avenue, Pawtucket, Rhode Island 02862,02861, phone (401) 431-8697, and we will deliver those documents to such shareholder promptly upon receiving the request. Any such shareholder may also contact our Investor Relations Department using the above contact information if he or she would like to receive separate Notices of the Internet Availability of Proxy Materials or proxy statements and annual reports in the future. If you are receiving multiple copies of our Notice of Internet Availability of the Proxy Materials, annual report or proxy statement, you may request householding in the future by contacting the Investor Relations Department using the above contact information. 113
COST AND MANNER OF SOLICITATION The cost of soliciting proxies in the accompanying form has been or will be borne by the Company. In addition to solicitation by mail, arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy material to their principals and the Company will reimburse them for any reasonable expenses incurred in connection therewith. The Company has also retained Morrow & Co., LLC, 470 West Avenue, Stamford CT 06902 to aid in the solicitation of proxies at an estimated cost of $12,000 plus reimbursement of reasonable out-of-pocket expenses. In addition to use of mail, proxies may be solicited by officers and employees of the Company or of Morrow & Co., LLC in person or by telephone. It is important that your shares be represented at the Meeting. If you are unable to be present in person, you are respectfully requested to vote by Internet, by telephone or by marking, signing and dating a proxy and returning it in as promptly as possible. No postage is required if mailed in the United States. By Order of the Board of Directors Barbara Finigan Executive Vice President, Chief Legal Officer and Corporate Secretary Dated: April 8, 20136, 2015 Pawtucket, Rhode Island 114
| | | Hasbro, Inc. | Notice of Annual Meeting of Shareholders and 2015 Proxy Statement | | 77 |
Appendix A HASBRO, INC. STANDARDS FOR DIRECTOR INDEPENDENCE FEBRUARY 20132015 The following are the standards that will be employed by the Hasbro, Inc. (the “Company”) Board of Directors in determining issues of director independence pursuant to applicable legal requirements and the rules of The NASDAQ Stock Market. For purposes of these standards (i) the Company is meant to include not only Hasbro, Inc., but all of its subsidiaries and divisions, and (ii) a director’s immediate family is deemed to include the following relationships, whether by blood, marriage or adoption: the director’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law and brothers and sisters-in-law, or anyone else residing in such person’s home. The Board of Directors (the “Board”) must affirmatively determine that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization which has a relationship with the Company). The Company will disclose this determination in compliance with all applicable rules and regulations. No director who is an employee (or whose immediate family member is an executive officer) of the Company can be independent until at least three years after such employment or executive officer relationship has ended. No director who is affiliated with or employed by (or whose immediate family member is affiliated or employed in a professional capacity by) a present or former internal or external auditor of the Company can be independent until at least three years after the end of either the affiliation or the employment or auditing relationship. No director can be independent if he or she directly or indirectly receives from the Company any fees or compensation other than that which is related solely to his or her (i) service as a member of the Board or one of its committees, (ii) benefits under a tax-qualified retirement plan or (iii) non-discretionary compensation. A director who accepts any consulting, advisory or other compensatory fees from the Company other than in this connection will not be considered independent. The same prohibition applies with respect to members of a director’s immediate family, with the exclusion of compensation received by an immediate family member as a non-executive officer employee of the Company, which will be considered in making an independence determination, but which does not preclude a determination of independence. No director who (or whose immediate family member) is employed as an executive officer of another entity where any of the Company’s present executives serve on that entity’s compensation committee can be independent until at least three years after the end of such service or employment relationship. No director who is an executive officer, partner, controlling shareholder or an employee (or whose immediate family member is an executive officer, partner or controlling shareholder) of an entity (including a charitable entity) that makes payments to or receives payments from the Company in amount which, in any single fiscal year, exceeds the greater of $200,000 or 5% of such entity’s consolidated gross revenues, can be independent until three years after falling below such threshold. No director who is performing, or is a partner, member, officer, director or employee of any entity performing, paid consulting, legal, investment banking, commercial banking, accounting, financial advisory or other professional services work (“professional services”) for the Company can be independent until three years after such services have ended. Additional Relationships to Consider in Determining Director Independence The following are suggested parameters that the Board has agreed to consider in determining whether a director has a material relationship or affiliation with the Company that would impact a finding of independence. A-1
If a director satisfies all of the criteria set forth below it would suggest that the director, absent other contrary considerations, does not have a material relationship with the Company and is independent. If a director fails to satisfy one or more of the criteria set forth below, further Board inquiry and discussion is needed to determine if the director has a material relationship with the Company or may be found independent. Business and Professional Relationships of Directors and Their Family Members The director is not currently providing personally, and has not provided personally within the past three years, property, goods or services (other than services as a member of the Board or any committees thereof) to the Company or any of its executive officers. No member of the director’s immediate family is currently providing personally, or has provided personally within the past three years, property, goods or services (other than services as an unpaid intern of the Company) to the Company or any of its executive officers. The director is not currently receiving personally, and has not received personally within the past three years, property, goods or services from the Company. The foregoing requirements do not apply to compensation, services or goods paid or provided to the director solely in connection with the director’s service on the Board or any committees thereof, including $1,000 or less a year in the Company’s products which may be given to the director or one or more of the director’s family members as a director benefit. A-1
No member of the director’s immediate family is currently receiving personally, or has received personally within the past three years, property, goods or services from the Company, excluding the de minimus Company product benefit mentioned above. The foregoing requirements do not apply to unpaid internships provided to a member of the director’s immediate family. The director is not an executive officer or employee of any entity to which the Company was indebted at any time within the past three years or which was indebted to the Company at any time within the past three years in an amount that exceeded at the end of any such year the greater of (i) 2% of such entity’s consolidated assets or (ii) $1,000,000. Compensation Notwithstanding the restriction described above with respect to direct or indirect receipt of consulting, advisory or other compensatory fees other than in connection with Board or committee service, arrangements between the Company and (i) entities affiliated with the director or (ii) immediate family members of the director, which may be deemed to provide a form of indirect compensation to the director, will not result in a loss of status as an independent director provided such relationships do not violate the requirements set forth above. Charitable Relationships The director is not an executive officer or an employee of an entity that has received charitable contributions from the Company in excess of $100,000 in any of the past three fiscal years. No member of the director’s immediate family is an executive officer of an entity that has received charitable contributions from the Company in excess of $100,000 in any of the past three fiscal years. Stock Ownership The director’s stock ownership, as determined in accordance with the rules of the SEC as applied to preparation of proxy statements, does not exceed 5% of the Company’s outstanding stock. Other Family Relationships The director is not related to any other member of the Company’s board of directors or any officer of the Company. A-2
Appendix B HASBRO, INC.
RESTATED 2003 STOCK INCENTIVE PERFORMANCE PLAN
Exhibit A, which is incorporated herein by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms.
The Plan has been established to advance the interests of the Company and to increase shareholder value by providing for the grant to Participants of Stock-based and other incentive Awards which provide such Participants with a proprietary interest in the growth and performance of the Company and with incentives for continued service to the Company and its Affiliates.
The Plan shall become effective upon adoption of the Plan by the Board, subject to shareholder approval within twelve months after adoption. The Board may grant Awards under the Plan prior to such shareholder approval, but any such Award shall become effective as of the date of grant only upon such approval and, accordingly, no such Award may be exercisable prior to such approval. The Plan shall remain in effect until December 31, 2010 unless sooner terminated by the Board, subject to Section 10 hereof. After termination of the Plan, no future Awards may be granted under the Plan, but previously granted Awards shall remain outstanding in accordance with their applicable terms and conditions.
The Administrator has full and exclusive discretionary authority, subject only to the express provisions of the Plan, to interpret, construe and implement the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; prescribe, implement and modify forms, rules and procedures for operation of the Plan; and otherwise do all things necessary to carry out the purposes of the Plan. In the case of any Award intended to be eligible for the performance-based compensation exception under Section 162(m), the Administrator will exercise its discretion consistent with qualifying the Award for that exception. Determinations of the Administrator made under the Plan will be conclusive and will bind all parties and Participants under the Plan. The Administrator shall be entitled to rely on reports, opinions, or statements of officers or employees of the Company as well as those of counsel, public accountants and other professional or expert persons. No member of the Administrator shall be subject to any individual liability with respect to the Plan.
Notwithstanding the foregoing, as is more fully set forth in Section 10 of the Plan, the Administrator may not make material amendments to the Plan or reprice Stock Options granted under the Plan without shareholder approval.
The grant of any Awards under the Plan is at the sole discretion of the Administrator. The Plan does not entitle any person eligible to participate in the Plan to any Awards and there is no guarantee that any person eligible to participate will be granted Awards under the Plan. No Participant shall have any right by reason of the grant of any Award under the Plan to continued employment by the Company. To the extent that Awards are made under the Plan, the terms of Awards may differ between different Award grants and Participants, whether or not such Participants or potential Participants are similarly situated.
The Administrator will exercise its discretion under the Plan in such a way as to comply, to the maximum extent practicable in carrying out the goals of the Plan, in a manner consistent with the requirements of Code Section 409A or an exemption from those requirements, provided, however, that neither the Administrator, the Company or the Plan shall have any liability for any failure to so comply.
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5. | Shares Subject to the Plan and Limits on Awards Under the Plan |
(a)Number of Shares. A maximum of 17,500,000 shares of Stock may be delivered pursuant to Awards under the Plan. No more than 6,500,000 shares of Stock may be delivered pursuant to Awards other than Stock Options or SARs. Notwithstanding anything in the Plan to the contrary, any shares of Stock that are issued by the Company, and any Awards that are granted by, or become obligations of, the Company, through the assumption by the Company of, or in substitution for, outstanding awards previously granted by an acquired company shall not be counted against the shares of Stock available for delivery under the Plan and the terms and conditions of any such awards shall be the original terms and conditions thereof as adjusted by or pursuant to any applicable acquisition agreements. Shares tendered in payment of an Award’s exercise price, shares withheld to pay taxes due upon an Award and shares purchased by the Company using proceeds from Awards will not increase the total number of remaining shares authorized to be delivered pursuant to Awards under the Plan, and the gross number of shares covered by any SAR Awards granted under the Plan, as opposed to the net number of shares actually delivered under SARs, will be deducted from the number of shares remaining available for delivery pursuant to Awards under the Plan.
(b)Type of Shares. Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company. No fractional shares of Stock will be delivered under the Plan. Any fractional Shares which, but for this provision, would have been issued shall be deemed to have been issued and immediately sold to the Company for their Fair Market Value, and the Participant shall receive from the Company cash in lieu of such fractional shares, less all applicable withholding taxes.
(c)Award Limits. The maximum number of shares of Stock for which Stock Options may be granted to any person in any calendar year and the maximum number of shares of Stock subject to SARs granted to any person in any calendar year will together be an aggregate of 1,000,000 shares. The maximum benefit that may be paid to any person under other Awards in any calendar year will be, to the extent paid in shares, 200,000 shares, and, to the extent paid in cash, $1 million. The foregoing provisions will be construed and applied consistent with Section 162(m). No Award under the Plan may be outstanding for a term longer than ten years from the date of grant of such Award.
6. | Eligibility and Participation |
The Administrator will select Participants from among key Employees and directors of the Company or its Affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its Affiliates. Eligibility for ISOs is limited to employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code.
7. | Rules Applicable to Awards |
(a) All Awards
(1)Award Provisions. The Administrator will determine the terms of all Awards, subject to the limitations provided herein. A Participant shall have no rights with respect to the Plan, or any Award, contingent or otherwise, until written evidence of the Award shall have been delivered to the Participant and all the terms, conditions, and provisions of the Plan and the Award applicable to such Participant have been met. The Plan shall be binding on all successors and permitted assigns of a Participant, including, without limitation, the estate of such Participant.
(2)Transferability. Neither ISOs, nor, except as the Administrator otherwise expressly provides, other Awards may be transferred other than by will or by the laws of descent and distribution, and during a Participant’s lifetime ISOs (and, except as the Administrator otherwise expressly provides, other non-transferable Awards requiring exercise) may be exercised only by the Participant.
(3)Vesting, Etc. The Administrator shall determine the time or times at which an Award will vest or become exercisable and the terms on which an Award requiring exercise will remain exercisable,provided that, except in the case of Awards made in connection with the recruitment of new Employees (including new officers) or new directors, (i) Stock Options shall vest in equal annual installments over a period of not less than three years and (ii) Restricted Stock and Deferred Stock shall vest not earlier than three years from the grant date of the Award. Subject to the
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foregoing restriction, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration. The Administrator may at any time accelerate the vesting or exercisability of an Award, without being subject to the limitations set forth in the first sentence of this Section 7(a)(3), if such acceleration is associated with the death, disability, retirement or other termination of Employment or service of a Participant. For purposes of the foregoing sentence, the Administrator will have sole and conclusive power to define the types of disability, retirement or other termination of Employment or service associated with such acceleration.
The Administrator has full power and authority to determine, for each Award, how long after cessation of the Participant’s Employment or service as a director an Award requiring exercise will continue to be exercisable. Unless the Administrator expressly provides otherwise in the applicable Award agreement or through other means, immediately upon the cessation of the Participant’s Employment or service as a director an Award requiring exercise will cease to be exercisable and will terminate, and all other Awards to the extent not already vested will be forfeited, except that these default rules further provide, unless otherwise modified by the Administrator for a particular Award or Awards, that:
(A) subject to (B) and (C) below, all Stock Options and SARs held by the Participant or the Participant’s permitted transferee, if any, immediately prior to the cessation of the Participant’s Employment or service as a director, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of three months from the date of termination or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 7(a)(3)(A), and will thereupon terminate;
(B) all Stock Options and SARs held by a Participant or the Participant’s permitted transferee, if any, immediately prior to the Participant’s death, to the extent then exercisable, will remain exercisable for the lesser of (i) the one year period ending with the first anniversary of the Participant’s death or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 7(a)(3)(B), and will thereupon terminate; and
(C) all Stock Options and SARs held by a Participant or the Participant’s permitted transferee, if any, immediately prior to the cessation of the Participant’s Employment or service as a director will immediately terminate upon such cessation if the Administrator in its sole discretion determines that such cessation of Employment or service as a director has resulted for reasons which cast such discredit on the Participant as to justify immediate termination of the Award.
(4)Taxes. The Administrator will make such provision for the withholding of all applicable taxes as it deems necessary. The Administrator may, but need not, permit a Participant to satisfy tax withholding requirements by (i) having the Participant deliver cash or a check payable to the order of the Company, (ii) holding back shares of Stock from an Award, or (iii) permitting a Participant to tender shares of Stock which have been owned by the Participant for at least six months having a Fair Market Value equal to the amount of the applicable withholding taxes. In no event may withholding taxes paid by a Participant exceed the minimum withholding required by law. Subject to the provisions of the Plan, the Administrator may, but need not, pay all or a portion of the tax liability incurred or to be incurred by a Participant as a result of Awards made to or settled by such Participant under the Plan.
(5)Dividend Equivalents, Deferrals, Etc. The Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award. Such dividend equivalents and other payments may be paid currently or may be credited to an account established under the Plan in the name of the Participant.
The Administrator may require or permit Participants to elect to defer the issuance of Stock or the settlement of Awards under such rules and procedures as it may establish under the Plan. It may also provide that deferred settlements include the payment or crediting of interest on the deferral amounts, or the payment or crediting of dividend equivalents on deferred amounts denominated in Stock.
(6)Rights Limited. Nothing in the Plan will be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as a shareholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation of an obligation of the Company or an Affiliate to the Participant.
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Unless otherwise determined by the Administrator, the Plan shall be unfunded and shall not create, or be construed to create, a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company and any Participant or other person. To the extent any person holds any rights by virtue of an Award under the Plan, such rights, unless otherwise determined by the Administrator, shall be no greater than the rights of an unsecured general creditor of the Company.
(7)Section 162(m). This Section 7(a)(7) applies to any Performance Award intended to qualify as performance-based for the purposes of Section 162(m), other than a Stock Option or a SAR. In the case of any Performance Award to which this Section 7(a)(7) applies, the Plan and such Award will be construed to the maximum extent permitted by law in a manner consistent with qualifying the Award for such exception. With respect to such Performance Awards, the Administrator will preestablish, in writing, one or more specific Performance Criteria no later than 90 days after the commencement of the period of service to which the performance relates (or at such earlier time as is required to qualify the Award as performance-based under Section 162(m)). The Performance Criteria so established shall serve as a condition to the grant, vesting or payment of the Performance Award, as determined by the Administrator. Prior to grant, vesting or payment of the Performance Award, as the case may be, the Administrator will certify whether the Performance Criteria have been attained and such determination will be final and conclusive. If the Performance Criteria with respect to the Award are not attained, no other Award will be provided in substitution of the Performance Award. No Performance Award to which this Section 7(a)(7) applies may be granted after the fifth anniversary of the approval of the Plan by shareholders of the Company until the Performance Criteria (as originally approved or as subsequently amended) have been resubmitted to and reapproved by the shareholders of the Company in accordance with the requirements of Section 162(m), unless such grant is made contingent upon such approval.
(b) Awards Requiring Exercise
(1)Time And Manner Of Exercise. Unless the Administrator expressly provides otherwise, an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a notice of exercise (in form acceptable to the Administrator) signed by the appropriate person and accompanied by any payment required under the Award. If the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so.
(2)Exercise Price. The exercise price of a Stock Option will not be less than the Fair Market Value of the Stock subject to the Stock Option, determined as of the date of grant.
(3)Payment Of Exercise Price. Where the exercise of an Award is to be accompanied by payment, the Administrator may determine the required or permitted forms of payment, subject to the following: (a) all payments will be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of shares of Stock that have been outstanding for at least six months (unless the Administrator approves a shorter period) and that have a Fair Market Value equal to the exercise price, (ii) by delivery to the Company of a promissory note of the person exercising the Award, payable on such terms as are specified by the Administrator, (iii) through a broker-assisted exercise program acceptable to the Administrator, (iv) by any other means acceptable to the Administrator or (v) by any combination of the foregoing permissible forms of payment; and (b) where shares of Stock issued under an Award are part of an original issue of shares, the Award will require that at least so much of the exercise price as equals the par value of such shares be paid other than by delivery of a promissory note or its equivalent. The delivery of shares in payment of the exercise price under clause (a)(i) above in this Section 7(b)(3) may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.
(c) Awards Not Requiring Exercise
Awards of Restricted Stock, Deferred Stock and Unrestricted Stock may be made in exchange for past services or other lawful consideration.
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8. | Effect of Certain Transactions |
(a) Change in Control
(1) Upon the occurrence of an event constituting a Change in Control, all Awards outstanding on such date shall become 100% vested and the then value of such Awards, less all applicable withholding taxes, shall be paid to the Participant in cash (or, in the case of Stock Options, SARs, Restricted Stock, Unrestricted Stock, Deferred Stock and any other Awards providing for equity in the Company, either in cash or in shares of Stock, or in any combination thereof, as may be determined by the Administrator in its sole and absolute discretion) as soon as may be practicable (but in all events not later than the fifteenth (15th) day of the third month following the end of year in which the Change of Control occurs). Upon such payment, such Awards shall be cancelled.
(2) The amount of cash to be paid with respect to Stock Options, SARs, Restricted Stock, Deferred Stock, Unrestricted Stock and Performance Awards providing for shares of Stock shall be determined by multiplying the number of such Awards by (i) in the case of Restricted Stock, Unrestricted Stock, Deferred Stock and Performance Awards providing for shares of Stock, the CIC Price,provided, however, that in the case where the performance period, if any, has been completed on or prior to the occurrence of a Change in Control, the number of Awards to be multiplied shall be the number of shares issued or vested pursuant to the Award as determined in accordance with the Award agreement and in the case where the performance period, if any, has not been completed upon the occurrence of a Change in Control, the number of Awards to be multiplied shall be either, as determined by the Administrator at the time of grant of the Award and set forth in the Award agreement, the (i) target number of such Awards as determined by the Administrator at the time of grant or (ii) higher of the target number of such Awards as determined by the Administrator at the time of grant and the number of shares issuable based on actual performance to date, in each case prorated based on the number of fiscal years then completed during the performance period, unless the Administrator has set forth in the applicable Award agreement that no such proration shall take place, in which case the Award would not be so prorated according to the amount of the performance period completed, (ii) in the case of Stock Options, the difference between the exercise price per share and the CIC Price, if the CIC price is higher, and (iii) in the case of SARs, the difference between the exercise or designated price per share and the CIC Price, if the CIC price is higher. In addition, all accrued dividends and dividend equivalents or interest accrued on deferred settlements shall be paid. In the case of Cash Awards the amount of cash to be paid shall be determined, (i) where the performance period, if any, has been completed on or prior to the occurrence of a Change in Control, the value of such award as determined in accordance with the Award agreement and (ii) where the performance period, if any, has not been completed upon the occurrence of a Change in Control, either, as determined by the Administrator at the time of grant of the Award and set forth in the Award agreement, the (i) target value of such Awards as determined by the Administrator at the time of grant or (ii) the higher of the target value of such Awards as determined by the Administrator at the time of grant and the value of such awards based on actual performance to date, in each case prorated based on the number of fiscal years then completed during the performance period, unless the Administrator has set forth in the applicable Award agreement that no such proration shall take place, in which case the Award would not be so prorated according to the amount of the performance period completed.
(3) In the event that the Administrator determines pursuant to Section 8(a)(1) above to pay Participants the value of an equity Award in shares of Stock, the number of shares of Stock to be paid to each Participant will be determined by taking the cash value which would have been paid if the Administrator had elected to pay in cash, computed in accordance with Section 8(a)(2) above, and dividing such value by the Payout Fair Market Value of the Stock. No fractional shares of Stock will be issued. The value of any fractional share amount will be paid to the Participant in cash.
(b) Changes in and Distributions with Respect to the Stock
(1)Basic Adjustment Provisions. In the event of a stock dividend, stock split or combination or exchange of shares (including a reverse stock split), recapitalization or other change in the Company’s capital structure, the Administrator will make appropriate adjustments to the maximum numbers of shares that may be delivered under the Plan and certain types of Awards under the Plan under Section 5(a) and to the maximum share limits described in Section 5(c), and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change.
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(2)Certain Other Adjustments. To the extent consistent with qualification of ISOs under Section 422 of the Code and with the performance-based compensation rules of Section 162(m), where applicable, the Administrator may also make adjustments of the type described in paragraph (1) above to take into account distributions to shareholders and other changes that impact the Stock or Awards other than those provided for in Section 8(a) and 8(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder.
(3)Continuing Application of Plan Terms. References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 8.
9. | Legal Conditions on Delivery of Stock |
The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved; (ii) if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act. The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.
10. | Amendment and Termination |
The Administrator may at any time terminate the Plan as to any future grants of Awards and may at any time and from time to time amend or modify the Plan or any outstanding Award for any purpose which may at the time be permitted by law;provided, however, that no material amendment to the Plan (including an amendment to reprice Stock Options granted under the Plan) shall become effective without shareholder approval;and further provided, that except as otherwise expressly provided in the Plan or required by law, the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time of the Award. For purposes of this Section 10, neither a termination of the Plan nor any amendment or modification to an outstanding Award under the Plan (other than to reprice Stock Options) shall be considered a material amendment to the Plan.
The Administrator may, subject to the provisions of the Plan, create sub-plans to the Plan that may incorporate such terms as it considers necessary or desirable to operate the Plan in any non-United States jurisdiction in which Participants are situated and may implement such sub-plans in the form of schedules to the Plan applicable to the specified jurisdiction, provided that any Stock issued pursuant to such sub-plans shall be counted against the limits set forth in Section 5 of the Plan. Any such sub-plans created by the Administrator may provide for greater restrictions on Awards than those set forth in the Plan, but may not provide for greater benefits to Participants than the benefits permitted under the Plan itself.
11. | Other Compensation Arrangements |
The existence of the Plan or the grant of any Award will not in any way affect the Company’s right to award a person bonuses or other compensation in addition to Awards under the Plan.
The validity, construction and effect of the Plan and any action taken or relating to the Plan shall be determined in accordance with the laws of the State of Rhode Island and applicable federal law.
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Exhibit A
Definition of Terms
The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:
“Administrator”: The Board or, if one or more has been appointed, the Committee. The Administrator may delegate ministerial tasks to such persons as it deems appropriate. For any Awards subject to the requirements of Section 162(m), the composition of any Committee functioning as the Administrator with respect to such Awards will meet all of the requirements of Section 162(m).
“Affiliate”: Any corporation or other entity owning, directly or indirectly, 50% or more of the outstanding Stock of the Company, or in which the Company or any such corporation or other entity owns, directly or indirectly, 50% of the outstanding capital stock (determined by aggregate voting rights) or other voting interests.
“Award”: Any or a combination of the following:
(i) Stock Options.
(ii) SARs.
(iii) Restricted Stock.
(iv) Unrestricted Stock.
(v) Deferred Stock.
(vi) Performance Awards.
(vii) Cash Awards.
“Board”: The Board of Directors of the Company.
“Cash Award”: An award denominated in cash that would constitute a “derivative security” for purposes of Rule 16b-6 or any successor Rule under the Securities Exchange Act of 1934 (the “1934 Act”) if not awarded pursuant to a plan satisfying the provisions of Rule 16b-3 under the 1934 Act. The payment of a Cash Award may be subject to such restrictions and conditions as may be established by the Administrator.
“Change in Control”: Any of the following events, except to the extent that the Administrator, in its discretion, determines to further restrict the definition of a Change in Control for any given Award or Awards under the Plan at the time that such Award or Awards are made (with any such restriction eliminating and/or narrowing one or more of the following listed events as they would constitute a Change in Control for the impacted Award(s)):
(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% [With respect to Awards made on or after May 24, 2006, the preceding “20%” is replaced with “35%”] or more of either (i) the then outstanding shares of the Stock (the “Outstanding Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”);provided, however, that the following acquisitions shall not constitute a Change of Control:
(a) any acquisition directly from the Company or any of its subsidiaries;
(b) any acquisition by the Company or any of its subsidiaries;
(c) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries;
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(d) any acquisition by Alan or Sylvia Hassenfeld, members of their respective immediate families, or heirs of Alan or Sylvia Hassenfeld or of any member of their respective immediate families, the Sylvia Hassenfeld Trust, the Merrill Hassenfeld Trust, the Alan Hassenfeld Trust, The Hassenfeld Foundation, any trust or foundation established by or for the primary benefit of any of the foregoing or controlled by one or more of any of the foregoing, or any affiliates or associates (as such terms are defined in Rule 12b-2 promulgated under the 1934 Act) of any of the foregoing; or
(e) any acquisition by any corporation with respect to which, following such acquisition, more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Stock and the Outstanding Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, immediately prior to such acquisition, of the Outstanding Stock and Outstanding Voting Securities, as the case may be; or
(ii) Individuals who, as of the effective date of the Plan constitute the Board (the “Incumbent Board”) ceasing for any reason to constitute at least a majority of the Board;provided, however, that any individual becoming a director subsequent to the effective date of the Plan whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents; or
(iii) Approval by the shareholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Stock and Outstanding Voting Securities immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Stock and Outstanding Voting Securities, as the case may be; or
(iv) Approval by the shareholders of the Company of (a) a complete liquidation or dissolution of the Company or (b) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Stock and Outstanding Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Stock and Outstanding Voting Securities, as the case may be.
“CIC Price”: The higher of (i) the highest price paid for a share of the Stock in the transaction or series of transactions pursuant to which a Change in Control shall have occurred, or (ii) the highest reported sales price of a share of the Stock during the 60 day period immediately preceding the date upon which the event constituting a Change in Control shall have occurred. To the extent that the consideration paid in any transaction or series of transactions described in (i) above consists in whole or in part of non-cash consideration, the value of such non-cash consideration shall be determined in the sole discretion of the Administrator.
“Code”: The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.
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“Committee”: One or more committees of the Board meeting any applicable legal and other requirements.
“Company”: Hasbro, Inc.
“Deferred Stock”: An unfunded and unsecured promise to deliver Stock or other securities in the future on specified terms.
“Employee”: Any person who has an Employment relationship with the Company or an Affiliate.
“Employment”: A Participant’s employment or other service relationship with the Company and/or its Affiliates. Employment will be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in the instructions to Form S-8 promulgated by the Securities and Exchange Commission to the Company or any of its Affiliates. If a Participant’s employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participant’s Employment will be deemed to have terminated when the entity ceases to be an Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates.
“Fair Market Value”: The average of the high and low sales prices of the Stock as reported in The Wall Street Journal for New York Stock Exchange Transactions or similar successor consolidated transactions reports for the relevant date (or the comparable consolidated transaction reports for any other national securities exchange or NASDAQ National Market Issues, if the Stock is admitted for trading or quotation on said exchange or market), or, if no sales of the Stock were made on said exchange or market on that date, the average of the high and low prices of the Stock as reported in said composite transactions report for the preceding day on which sales of the Stock were made on said exchange or market. If the Stock is not then trading on an exchange or quoted in NASDAQ National Market Issues, then Fair Market Value shall be the mean between the bid and asked prices for the relevant over-the-counter transaction on such date or the preceding day on which sales of Stock were made over-the-counter, or if there are not such transactions, Fair Market Value shall be determined in good faith by the Administrator. Notwithstanding the foregoing, for purposes of valuing Stock delivered to the Company by a Participant in payment of the exercise price of a Stock Option or Stock delivered or withheld in payment of applicable tax withholding, if the Participant sells, on a national securities exchange, or on NASDAQ or over-the-counter, the Stock acquired on the same day as the date of exercise, the Administrator shall have the discretion to deem the per share Fair Market Value of the Stock so delivered or withheld to be the actual sales price per share of the Stock so sold. Under no circumstances shall Fair Market Value be less than the par value of the Stock.
“ISO”: A Stock Option intended to be an “incentive stock option” within the meaning of Section 422 of the Code. Each option granted pursuant to the Plan will be treated as providing by its terms that it is to be a non-incentive option unless, as of the date of grant, it is expressly designated as an ISO.
“Participant”: A person who is granted an Award under the Plan.
“Payout Fair Market Value”: The average of the Fair Market Values of the Stock for the ten trading days immediately preceding the date on which the Change in Control shall have occurred.
“Performance Award”: An Award subject to Performance Criteria. The Administrator in its discretion may grant Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to qualify.
“Performance Criteria”: Specified criteria the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award. For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section 162(m), a Performance Criterion will mean an objectively determinable measure of performance relating to any one or any combination of the following criteria (determined either (i) on a consolidated basis or, (ii) as the context permits and as determined by the Administrator, on a segment, divisional,
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sector, subsidiary, business unit, line of business, project or geographical basis or on the basis of one or more designated products or brands (herein collectively “business unit”), or in combinations thereof, all as selected by the Administrator in each individual case): net earnings; earnings per share; net earnings per share; stock price; net revenues; gross profit; operating profit; earnings before income taxes; earnings before interest and taxes; earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; cost control; cash net earnings; return on assets; return on capital investment; return on shareholders’ equity; return on net revenues; net cash provided by operating activities; working capital; economic value added; total shareholder return on common stock relative to S&P 500 Index; total shareholder return on common stock relative to the Russell 1000 Consumer Discretionary Index; sales; core brands growth; core brands net revenues; operating margin; and free cash flow. Performance goals utilizing the foregoing business criteria may be based upon the achievement of specified levels of consolidated or other business unit performance under one or more of the measures described above relative to internal targets, the past performance of the Company or relevant business unit, or the past, present or future performance of other corporations or their relevant business units. A Performance Criterion measure and any targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss. In setting the Performance Criteria the Administrator intends to set goals which are indicative of strong performance. Satisfaction of Performance Criteria may, in the Administrator’s discretion, be determined to the extent applicable, (i) in accordance with generally accepted accounting principles applied on a consistent basis and/or (ii) exclusive of designated (a) changes in accounting principles, (b) extraordinary items, (c) material restructurings, (d) material nonrecurring items, (e) material non-budgeted items and (f) results of operations of acquisitions or divestitures consummated during the fiscal year; each of the items in this section (ii) being excluded to the extent authorized by the Administrator.
“Plan”: The Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan as from time to time amended and in effect.
“Restricted Stock”: An Award of Stock for so long as the Stock remains subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified conditions are not satisfied.
“Section 162(m)”: Section 162(m) of the Code, or any successor provision.
“SARs”: Rights entitling the holder upon exercise to receive cash or Stock, as the Administrator determines, equal to a function (determined by the Administrator using such factors as it deems appropriate) of the amount by which the Stock has appreciated in value since the date of the Award.
“Stock”: Common Stock of the Company, par value $.50 per share.
“Stock Options”: Options entitling the recipient to acquire shares of Stock upon payment of the exercise price. Stock Options can be either ISO’s or non-incentive options.
“Unrestricted Stock”: An Award of Stock not subject to any restrictions under the Plan.
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FIRST AMENDMENT TO
HASBRO, INC. RESTATED 2003 STOCK INCENTIVE PERFORMANCE PLAN
The Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan (the “2003 Plan”) is hereby amended in the manner set forth below, such amendment to be effective as of the effective time of approval of this First Amendment to Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan (the “First Amendment”) by the shareholders of Hasbro, Inc. (the “Company”).
Notwithstanding the foregoing, this First Amendment shall only become effective if approved by the Company’s shareholders at the Company’s 2009 Annual Meeting of Shareholders, or any adjournment thereof.
1. The first two sentences of Section 5(a) of the 2003 Plan are deleted and replaced in their entirety with the following:
“A maximum of 23,500,000 shares of Stock may be delivered pursuant to Awards under the Plan. No more than 4,090,000 shares of Stock may be delivered pursuant to Awards other than Stock Options or SARs.”
2. The third sentence of Section 3 of the 2003 Plan is deleted and replaced in its entirety with the following:
“The Plan shall remain in effect until December 31, 2013 unless sooner terminated by the Board, subject to Section 10 hereof.”
3. Subsections (a)(ii) and (b) of the first sentence of Section 7(b)(3) of the Plan are removed and the remaining subsections of subsection (a) renumbered such that Section 7(b)(3) now reads in its entirety as follows:
“(3)Payment Of Exercise Price. Where the exercise of an Award is to be accompanied by payment, the Administrator may determine the required or permitted forms of payment, subject to the following: (a) all payments will be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of shares of Stock that have been outstanding for at least six months (unless the Administrator approves a shorter period) and that have a Fair Market Value equal to the exercise price, (ii) through a broker-assisted exercise program acceptable to the Administrator, (iii) by any other means acceptable to the Administrator or (iv) by any combination of the foregoing permissible forms of payment. The delivery of shares in payment of the exercise price under clause (a)(i) above in this Section 7(b)(3) may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.”
4. The first sentence of Section 7(a)(5) of the 2003 Plan is deleted and replaced in its entirety with the following:
“The Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award, provided that no such cash dividends or distributions will be paid or accrued with respect to Awards subject to performance criteria (other than time vesting criteria) that have not yet been met.”
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SECOND AMENDMENT TO
HASBRO, INC. RESTATED 2003 STOCK INCENTIVE PERFORMANCE PLAN
The Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan (the “2003 Plan”) is hereby amended in the manner set forth below, such amendment to be effective as of the effective time of approval of this Second Amendment to Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan (the “Second Amendment”) by the shareholders of Hasbro, Inc. (the “Company”).
Notwithstanding the foregoing, this Second Amendment shall only become effective if approved by the Company’s shareholders at the Company’s 2010 Annual Meeting of Shareholders, or any adjournment thereof.
1. The first two sentences of Section 5(a) of the 2003 Plan are hereby deleted and replaced in their entirety with the following:
“A maximum of 28,300,000 shares of Stock may be delivered pursuant to Awards under the Plan. No more than 8,200,000 shares of Stock may be delivered pursuant to Awards other than Stock Options or SARs.”
2. Section 5(c) of the 2003 Plan is hereby deleted and replaced in its entirety with the following:
“(c)Award Limits. The maximum number of shares of Stock for which Stock Options may be granted to any person in any calendar year and the maximum number of shares of Stock subject to SARs granted to any person in any calendar year will together be an aggregate of 2,000,000 shares. The maximum benefit that may be paid to any person under other Awards which are granted in any calendar year will be: (i) to the extent paid in shares, 750,000 shares, (ii) to the extent such Awards are denominated in shares but paid in cash, 750,000 shares multiplied by the Fair Market Value of the shares on the date of payment under such Awards, and, (iii) to the extent otherwise paid in cash, $10 million. The foregoing provisions will be construed and applied consistent with Section 162(m). No Award under the Plan may be outstanding for a term longer than ten years from the date of grant of such Award.”
3. Section 7(a)(2) of the 2003 Plan is hereby deleted and replaced in its entirety with the following:
“(2)Transferability. Neither ISOs, nor, except as the Administrator otherwise expressly provides consistent with the following sentence, other Awards may be transferred other than by will, a qualified domestic relations order or other domestic relations order, or by the laws of descent and distribution, and during a Participant’s lifetime ISOs (and, except as the Administrator otherwise expressly provides, other Awards requiring exercise) may be exercised only by the Participant. The Administrator may provide that Awards may be transferable by gift or as part of estate planning transactions, provided that in no case will the Administrator allow for transfers of Awards for value to persons who are not related or previously related to the Participant making the transfer.”
4. The first sentence of Section 7(a)(3) of the 2003 Plan is hereby deleted and replaced in its entirety with the following two sentences:
“The Administrator shall determine the time or times at which an Award will vest or become exercisable and the terms on which an Award requiring exercise will remain exercisable,provided that, except in the case of Awards made in connection with the recruitment of new Employees (including new officers) or new directors and except as otherwise permitted under Section 10 of the Plan, (i) Stock Options and SARs shall vest in one or more installments over a total vesting period of not less than three years, such that a Stock Option or SAR award will not become vested for the full number of shares subject to the Award over a period of less than three years from the date of grant of the Award, (ii) Restricted Stock and Deferred Stock shall vest in one or more installments over a total vesting period of not less than three years, such that Restricted Stock or Deferred Stock awards will not become vested for the full number of shares subject to the Award over a period of less than three years from the
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date of grant of the Award, and (iii) Performance Awards must have a performance period of at least one year. Notwithstanding the foregoing restrictions, up to 5% of the shares authorized under the Plan may be granted under Awards subject to shorter performance, vesting, or other periods, including subject to being immediately vested upon grant.”
The remainder of Section 7(a)(3) is not amended by this Amendment.
5. Section 7(a)(4) of the 2003 Plan is hereby deleted and replaced in its entirety with the following:
“(4)Taxes. The Administrator will make such provision for the withholding of all applicable taxes as it deems necessary. The Administrator may, but need not, permit a Participant to satisfy tax withholding requirements by (i) having the Participant deliver cash or a check payable to the order of the Company, (ii) holding back shares of Stock from an Award, or (iii) permitting a Participant to tender shares of Stock which have been owned by the Participant for at least six months having a Fair Market Value equal to the amount of the applicable withholding taxes. In no event may withholding taxes paid by a Participant exceed the minimum withholding required by law.”
6. The first sentence of Section 7(a)(5) of the 2003 Plan is hereby deleted and replaced in its entirety with the following:
“The Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award, provided that no such cash dividends or distributions will be paid or accrued with respect to (i) outstanding Options or SARs or (ii) other Awards subject to performance criteria (other than time vesting criteria) that have not yet been met.
7. Section 7(b)(2) of the 2003 Plan is hereby deleted and replaced in its entirety with the following:
“(2)Exercise Price. The exercise price of a Stock Option and the strike price of a SAR will not be less than the Fair Market Value of the Stock subject to the Stock Option or the SAR, determined as of the date of grant.”
8. The first paragraph of Section 10 of the 2003 Plan is hereby deleted and replaced in its entirety with the following:
“The Administrator may at any time terminate the Plan as to any future grants of Awards and may at any time and from time to time amend or modify the Plan or any outstanding Award for any purpose which may at the time be permitted by law;provided, however, that no material amendment to the Plan (including an amendment to reprice Stock Options or SARs granted under the Plan) shall become effective without shareholder approval;and further provided, that except as otherwise expressly provided in the Plan or required by law, the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time of the Award. For purposes of this Section 10 the following shall be considered material amendments to the Plan: (i) increasing benefits already accrued to participants under the Plan (other than in compliance with clause (iv) of this sentence), (ii) increasing the number of shares that may be issued under the Plan, (iii) modifying the requirements for participation in the Plan or (iv) waiving restrictions (such as accelerating the vesting period or waiving other Award restrictions), except in the case of death, disability, retirement, termination of employment or a Change in Control, provided that the Administrator may waive restrictions with respect to Awards covering up to an aggregate of 5% of the total shares authorized under the Plan for reasons other than those specified in the exceptions set forth in this clause (iv). For purposes of this Section 10, neither a termination of the Plan nor any amendment or modification to an outstanding Award under the Plan (other than to reprice Stock Options or SARs or to otherwise effect a change deemed material under the prior sentences of this Section 10) shall be considered a material amendment to the Plan.
9. The definition of “Administrator” in the 2003 Plan is hereby deleted and replaced in its entirety with the following:
““Administrator”: A Committee appointed by the Board to be the Administrator which is composed entirely of independent directors. The Administrator may delegate ministerial tasks to such persons as it deems appropriate. For
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any Awards subject to the requirements of Section 162(m), the composition of any Committee functioning as the Administrator with respect to such Awards will meet all of the requirements of Section 162(m).”
10. The definition of “Cash Award” in the 2003 Plan is hereby deleted and replaced in its entirety with the following:
“Cash Award”: An award denominated in cash. The payment of a Cash Award may be subject to such restrictions and conditions as may be established by the Administrator.”
11. The definition of “Change in Control” in the 2003 Plan is amended to replace the phrase “Approval by the shareholders of the Company”, which appears at the beginning of both subsection (iii) and subsection (iv) of such definition, with the word “Consummation”.
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Appendix C
[As Proposed for Approval at the 2013 Annual Meeting]
THIRD AMENDMENT TO
HASBRO, INC. RESTATED 2003 STOCK INCENTIVE PERFORMANCE PLAN
The Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan (the “2003 Plan”) is hereby amended in the manner set forth below, such amendment to be effective as of the effective time of approval of this Third Amendment to the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan (the “Third Amendment”) by the shareholders of Hasbro, Inc. (the “Company”).
Notwithstanding the foregoing, this Third Amendment shall only become effective if approved by the Company’s shareholders at the Company’s 2013 Annual Meeting of Shareholders, or any adjournment thereof.
Approval by the shareholders of this Third Amendment shall also constitute reapproval of the 2003 Plan, and the Performance Criteria, all as amended by the Third Amendment, for purposes of Rule 162(m).
1. The third sentence of Section 3 of the 2003 Plan is deleted and replaced in its entirety with the following:
“The Plan shall remain in effect until December 31, 2017 unless sooner terminated by the Board, subject to Section 10 hereof.”
2. The first two sentences of Section 5(a) of the 2003 Plan are hereby deleted and replaced in their entirety with the following:
“A maximum of 32,600,000 shares of Stock may be delivered pursuant to Awards under the Plan (which represents an increase of 4,300,000 shares of Stock from the aggregate level previously authorized by the shareholders of the Company at the 2010 Annual Meeting of Shareholders). Of those authorized shares of Stock, no more than 10,200,000 shares of Stock (which represents an increase of 2,000,000 shares of Stock from the aggregate level previously authorized by the shareholders of the Company at the 2010 Annual Meeting of Shareholders) may be delivered pursuant to Awards other than Stock Options or SARs.”
3. Section 5(c) of the 2003 Plan is hereby deleted and replaced in its entirety with the following:
“(c)Award Limits. The maximum number of shares of Stock for which Stock Options may be granted to any person in any calendar year and the maximum number of shares of Stock subject to SARs granted to any person in any calendar year will together be an aggregate of 2,000,000 shares. The maximum benefit that may be paid to any person under other Awards which are granted in any calendar year will be: (i) to the extent paid in shares, 1,000,000 shares, (ii) to the extent such Awards are denominated in shares but paid in cash, 1,000,000 shares multiplied by the Fair Market Value of the shares on the date of payment under such Awards, and (iii) to the extent otherwise paid in cash, $10 million. The foregoing provisions will be construed and applied consistent with Section 162(m). No Award under the Plan may be outstanding for a term longer than ten years from the date of grant of such Award.”
4. The first sentence of Section 7(a)(5) of the 2003 Plan is hereby deleted and replaced in its entirety with the following:
“The Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award, provided that no such cash dividends or distributions will be paid or accrued with respect to (i) outstanding Options or SARs or (ii) other Awards subject to performance criteria or time vesting criteria that have not yet been met.
5. The following sentence is added to the end of the existing first paragraph of Section 10 of the 2003 Plan:
“The following actions are considered material amendments under the Plan and the Company may not (except as provided for under Section 8(c) in connection with a Reorganization Event) take any such actions unless they are
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approved by the Company’s shareholders: (1) amend any outstanding Stock Option or SAR granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Stock Option or SAR, (2) cancel any outstanding Stock Option or SAR (whether or not granted under the Plan) and grant in substitution therefore new Awards under the Plan (other than substitute Awards granted by the Administrator pursuant to Section 8(c) in connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity) covering the same or a different number of shares of Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled Stock Option or SAR, (3) cancel in exchange for a cash payment any outstanding Stock Option or SAR with an exercise price per share above the then-current Fair Market Value, other than pursuant to Section 8(c), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the NASDAQ Stock Market.”
6. The definition of “Performance Criteria” is amended and replaced in its entirety with the following:
““Performance Criteria”: Specified criteria the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award. For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section 162(m), a Performance Criterion will mean an objectively determinable measure of performance relating to any one or any combination of the following criteria (determined either (i) on a consolidated basis or (ii) as the context permits and as determined by the Administrator, on a segment, divisional, sector, subsidiary, business unit, line of business, project or geographical basis or on the basis of one or more designated products or brands (herein collectively “business unit”), or in combinations thereof, all as selected by the Administrator in each individual case): net earnings; earnings per share; net earnings per share; stock price; net revenues; gross profit; operating profit; earnings before income taxes; earnings before interest and taxes; earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; cost control; cash net earnings; return on assets; return on capital; return on capital investment; return on shareholders’ equity; return on net revenues; net cash provided by operating activities; working capital; economic value added; total shareholder return on common stock relative to S&P 500 Index; total shareholder return on common stock relative to the Russell 1000 Consumer Discretionary Index; total shareholder return on common stock relative to any index of companies or group of companies, such index or group either being assembled by a third party or by the Administrator, or one or more specific companies, all as selected by the Administrator; sales; core brands growth; core brands net revenues; operating margin; and free cash flow. Performance goals utilizing the foregoing business criteria may be based upon the achievement of specified levels of consolidated or other business unit performance under one or more of the measures described above relative to internal targets, the past performance of the Company or relevant business unit, or the past, present or future performance of other corporations or their relevant business units. A Performance Criterion measure and any targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss. In setting the Performance Criteria the Administrator intends to set goals which are indicative of strong performance. Satisfaction of Performance Criteria may, in the Administrator’s discretion, be determined to the extent applicable, (i) in accordance with generally accepted accounting principles applied on a consistent basis and/or (ii) exclusive of designated (a) changes in accounting principles, (b) extraordinary items, (c) material restructurings, (d) material nonrecurring items, (e) material non-budgeted items and (f) results of operations of acquisitions or divestitures consummated during the fiscal year; each of the items in this section (ii) being excluded to the extent authorized by the Administrator.”
The purpose of this Section 6 of the Third Amendment is to amend the definition of Performance Criteria to add, as permissible Performance Criteria, total shareholder return on common stock relative to any index of companies or group of companies, such index or group either being assembled by a third party or by the Administrator, or one or more specific companies, all as selected by the Administrator
7. Effective for both Awards granted after the date of approval of this Third Amendment by the shareholders of the Company, and such Awards granted prior to the date of approval of this Third Amendment by the shareholders of the Company that state that they are subject to the amended terms regarding a change in control contained in this Third Amendment and/or in future amendments to these provisions, the Plan shall reflect the amendments set forth below in
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subsections (A), (B), (C), (D) and (E) of this Section 7. For Awards granted prior to the date of approval of this Third Amendment by the shareholders of the Company that do not expressly state that they are subject to the amended terms contained in this Third Amendment regarding a change in control and/or in future amendments to these provisions, the Plan provisions in effect prior to the amendments set forth in this Section 7 of the Third Amendment shall govern.
(A) Section 8(a)(1) of the Plan is hereby deleted and replaced in its entirely with the following:
“(1) If a Participant’s Employment by the Company is terminated by the Company without Cause during the twenty-four (24) month period following a Change in Control, or the Participant resigns from the Company with Good Reason during the twenty-four (24) month period following a Change in Control, all of such Participant’s Awards outstanding on such date shall become 100% vested and the then value of such Awards (calculated in the manner set forth in Section 8(a)(2) of the Plan but calculated as of the date of the Participant’s termination of employment based on the then Fair Market Value of the Stock on such date of the termination of employment, rather than based on the date of a Change in Control and based on a CIC Price), less all applicable withholding taxes, shall be paid to the Participant in cash (or, in the case of Stock Options, SARs, Restricted Stock, Unrestricted Stock, Deferred Stock and any other Awards providing for equity in the Company, either in cash or in shares of Stock, or in any combination thereof, as may be determined by the Administrator in its sole and absolute discretion) as soon as may be practicable. Upon such payment, such Awards shall be cancelled.”
(B) The definition of “Change in Control” in the Plan is hereby deleted and replaced in its entirety with the following:
““Change in Control” means the occurrence of any one of the following events:
(i) consummation of the sale of all or substantially all (at least 85%) of the assets of the Company to one or more individuals, entities, or groups (other than an Excluded Owner);
(ii) consummation of the acquisition or attainment of ownership by a person, entity, or group (other than an Excluded Owner) of more than 50% of the total voting power of the Company’s then-outstanding securities eligible to vote to elect members of the Board (“Company Voting Securities”);
(iii) consummation of a merger or consolidation of the Company with or into any other entity (other than an Excluded Owner) unless the holders of the Company Voting Securities outstanding immediately before such merger or consolidation, together with any trustee or other fiduciary holding securities under a Company benefit plan, hold securities that represent immediately after such merger or consolidation more than 50% of the combined voting power of the Company Voting Securities and the then outstanding voting securities of the other surviving entity or its ultimate parent, as applicable; or
(iv) individuals who constitute the Board on the date hereof (“Incumbent Directors”) cease for any reason during a twelve-month period to constitute at least a majority of the Board;provided, that any individual who becomes a member of the Board subsequent to the date hereof and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall be treated as an Incumbent Director unless he or she assumed office as a result of an actual or threatened election contest with respect to the election or removal of directors.
Notwithstanding the foregoing, where required to avoid extra taxation under Section 409A, a “Change in Control” must also constitute a change in control as defined in Code section 409A(2)(A)(v) and the regulations thereunder (a “Section 409A Change in Control”) unless the Administrator determines otherwise.”
(C) The definition of an “Excluded Owner” is added to the Plan as follows:
“Excluded Owner”consists of (i) the Company, (ii) any entity in which the Company holds, directly or indirectly, stock or other ownership interests representing at least 50% of the voting power of all outstanding stock or ownership interests of such entity, (iii) any entity that holds, directly or indirectly, stock or other ownership interests representing at least 50% of the voting power of all stock or ownership interests of the Company, (iv) any Company benefit plan, and (v) any underwriter temporarily holding securities for an offering of such securities.”
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(D) The definition of “Cause” is added to the Plan as follows:
““Cause” means a termination of a Participant’s Employment if such termination involves:
(i) an unauthorized use or disclosure of the Company’s confidential information or trade secrets, which use or disclosure causes material harm to the Company;
(ii) a material breach of a material agreement with the Company;
(iii) a material failure to comply with the Company’s written policies or rules, which failure results in material harm to the Company;
(iv) a conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State thereof or the equivalent under the applicable laws of foreign jurisdictions;
(v) gross negligence or willful misconduct that results in material harm to the Company;
(vi) continuing failure to perform assigned duties;
(vii) failure to cooperate in good faith with a governmental or internal investigation of the Company or its directors, officers or employees, if the Company has requested such cooperation;
(viii) an intentional violation of Federal or state securities laws; or
(ix) fraud, embezzlement, theft or dishonesty against the Company.
Provided that no finding of Cause shall be made pursuant to subsections (ii), (iii), (vi) or (vii) above unless the Company has provided the Participant with written notice stating the facts and circumstances underlying the allegations of Cause, and the Participant has failed to cure such violation, if curable, within 30 calendar days following receipt thereof. The Administrator will determine whether a violation is curable and/or cured in its reasonable discretion.”
(E) The definition of “Good Reason” is added to the Plan as follows:
““Good Reason” means, without the Participant’s written consent, the occurrence of any of the following events or actions during the twenty four (24) months following a Change in Control:
(i) a material reduction in the aggregate amount of Participant’s base compensation in effect immediately preceding the Change in Control other than in connection with a general reduction that is also applied to other similarly situated employees;
(ii) a material reduction in the Participant’s position or reporting status in effect immediately prior to the Change in Control, or any material diminution in the Participant’s duties, responsibilities, powers or authorities relative to the Participant’s duties, responsibilities, powers or authorities in effect immediately prior to the Change in Control;
(iii) any relocation of the Participant’s principal place of employment by more than 50 miles; or
(iv) a material breach by the Company or any successor of any material provision of an employment agreement or other agreement under which the Participant provides services to the Company.
No resignation will be treated as resignation for Good Reason unless (1) the Participant has given written notice to the Company of his or her intention to terminate his or her employment for Good Reason, describing the grounds for such action, no later than sixty (60) days after the first occurrence of such circumstances, (2) the Participant has provided the Company with at least thirty (30) days in which to cure the circumstances giving rise to the Good Reason, and (3) provided that the Company is not successful in curing the circumstance giving rise to the Good Reason, the Participant ends his or her employment within 180 days following the end of the cure period.”
8. Effective for both Awards granted after the date of approval of this Third Amendment by the shareholders of the Company and such Awards granted prior to the date of approval of this Third Amendment by the shareholders of the Company that state they are subject to the amended terms regarding a change in control contained in this Third Amendment and/or in future amendments to these provisions, a new Section 8(c) is added to the Plan as follows below. For Awards granted prior to the date of approval of this Third Amendment by the shareholders of the Company that do
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not expressly state that they are subject to the amended terms contained in this Third Amendment regarding change in control and/or in future amendments to these provisions, the Plan provisions in effect prior to this Section 8(c) shall govern.
“(c) Reorganization Events.
(1)Definition. A “Reorganization Event” shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any transfer or disposition of all of the Stock of the Company for cash, securities or other property pursuant to a share exchange or other transaction or (c) any liquidation or dissolution of the Company. For purposes of this Section 8(c) and the 2003 Plan, any reference to “Stock” shall include reference to any successor securities resulting from a prior recapitalization of the Company.
(2)Consequences of a Reorganization Event on Outstanding Awards.
(A) In connection with a Reorganization Event, the Administrator may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock on such terms as the Administrator determines in its sole discretion (except to the extent specifically provided otherwise in an applicable Award agreement or another agreement between the Company and the Participant): (i) provide that such Awards shall be assumed, or other Awards shall be substituted, by the acquiring or succeeding entity (or an affiliate thereof), (ii) upon written notice to a Participant, provide that all of the Participant’s unexercised Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant (to the extent then exercisable) within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event (but in case of this subsection (iii) only in connection with a termination of the Participant’s Employment), (iv) in the event of a Reorganization Event under the terms of which holders of Stock will receive upon consummation thereof a cash payment for each share of Stock surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to Participants with respect to each Award held by a Participant equal to (A) the number of shares of Stock subject to the vested portion of the Award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such Reorganization Event in connection with the termination of a Participant’s Employment) multiplied by (B) the excess, if any, of (I) the Acquisition Price over (II) the exercise, measurement or purchase price of such Award and any applicable tax withholdings, in exchange for the termination of such Award, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards that are vested shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. In taking any of the actions permitted under this Section 8(c)(2), the Administrator shall not be obligated by the Plan to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically.
(B) Notwithstanding the terms of Section 8(c)(2)(A), in the case of outstanding Awards that are subject to Section 409A of the Code: (i) if the applicable Award agreement provides that the vested portion of such Award shall be settled upon a Section 409A Change in Control, and the Reorganization Event constitutes such a Section 409A Change in Control, then no assumption or substitution shall be permitted pursuant to Section 8(c)(2)(A)(i), and the Awards shall instead be settled in accordance with the terms of the applicable Award agreement; and (ii) the Administrator may only undertake the actions set forth in clauses (iii), (iv) or (v) of Section 8(c)(2)(A) if the Reorganization Event constitutes a Section 409A Change in Control and such action is permitted or required by Section 409A of the Code; if the Reorganization Event is not a Section 409A Change in Control, and the acquiring or succeeding entity does not assume or substitute the Awards pursuant to clause (i) of Section 8(c)(2)(A), then, unless the Administrator provides otherwise, the unvested Awards shall terminate immediately prior to the consummation of the Reorganization Event without any payment in exchange therefore.
(C) For purposes of Section 8(c)(2)(A)(i), an Award (other than Restricted Stock) shall be considered assumed if, following consummation of the Reorganization Event, such Award confers the right to purchase or receive pursuant to the terms of such Award, for each share of Stock subject to the Award immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Stock for each share of Stock held immediately prior to the
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consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock);provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock or other equity of the acquiring or succeeding entity (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding entity, provide for the consideration to be received upon the exercise or settlement of the Award to consist solely of such number of shares of common stock or other equity of the acquiring or succeeding entity (or an affiliate thereof) that the Administrator determined to be equivalent in value (as of the date of such determination or another date specified by the Administrator) to the per share consideration received by holders of outstanding shares of Stock as a result of the Reorganization Event.
(3)Consequences of a Reorganization Event on Restricted Stock. Upon the occurrence of a Reorganization Event, other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company with respect to outstanding shares of Restricted Stock shall inure to the benefit of the Company’s successor and shall, unless the Administrator determines otherwise, apply to the cash, securities or other property into which the Stock was converted or for which it was exchanged pursuant to such Reorganization Event in the same manner and to the same extent as such repurchase and other rights applied to such Restricted Stock;provided,however, that the Administrator may provide for termination or deemed satisfaction of such repurchase or other rights under the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, either initially or by amendment, in connection with the termination of a Participant’s Employment. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, the Administrator may provide that a pro-rata portion of such restricted stock will vest in connection with the termination of the Participant’s Employment.
9. A new Section 13 is added to the Plan as follows:
“Section 13. Other Provisions.
(a)Compliance with Section 409A of the Code. Except as provided in individual Award agreements initially or by amendment, if and to the extent (i) any portion of any payment, compensation or other benefit provided to a Participant pursuant to the Plan in connection with his or her employment termination constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code and (ii) the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company in accordance with its procedures, by which determinations the Participant (through accepting the Award) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A of the Code) (the “New Payment Date”), except as Section 409A of the Code may then permit. The aggregate of any payments that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid in accordance with their original schedule.
All terms in the Plan and in any Award agreement will be construed in compliance with the requirements of Section 409A of the Code and the regulations promulgated thereunder to the maximum extent possible.
The Company makes no representations or warranties and shall have no liability to the Participant or any other person if any provisions of or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A of the Code but do not to satisfy the conditions of that section.
Limitations on Liability.Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, employee or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, employee or agent of the Company. The Company will indemnify and hold harmless each director, officer, employee or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith.”
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Appendix D
2011 US Mercer Benchmark Database — Executive
2020 Technologies3eTI
3M Company 7-Eleven, Inc. AAA Insurance Exchange AAA National Office AAA Northern California, Nevada and Utah ABB Concise Optical GroupAarhusKarlshamn USA Inc.
Abbott Laboratories AbbVie, Inc. Abt Associates, Inc. Access Community Health NetworkAccellent, Inc.
ACCO Brands Corporation — AmericasAccenture, Inc.
Accolade Wines North America, Inc. ACE Limited —– ACE USA ACH Food CompaniesAcentia, LLC
ACIST Medical Systems,ACUITY
Acushnet Company Adaptive Materials Adidas America, Inc. ACUITYAditi Technologies
ADT LLC Adva Optical Networking North America, Inc. Advanced Tactical Systems Advocate Healthcare AECOM Technology Corporation AEGON USA —Commonwealth General
Aeronix, Inc. AET Inc. Ltd. Aetna,AFC Enterprises, Inc.
AFLAC Incorporated AgFirst Farm Credit Bank AGL Resources AGL Resources – Sequent Energy Management Agnesian HealthCare AgriBank, FCB Agropur Cooperative —Schroeder Milk– Cheese & Ingredient Agropur Cooperative – Natrel USA AgStar Financial Services ACA Agusta Westland Philadelphia Corporation Ahlstrom USA Ahold USA, Inc. Ahold USA, Inc. – Giant, Carlisle Division Ahold USA, Inc. – Giant, Landover Division Ahold USA, Inc. – Stop & Shop, New York Metro Division Ahold USA, Inc. – Stop & Shop, Northeast Division Aimco Aimia Proprietary Loyalty US Inc. AIPSO Air Liquide Airtron Akzo Nobel, Inc AlegentAlbemarle Corporation
Alcoa, Inc. Alexian Brother Health System Alfa Laval, Inc. Allegheny Technologies Inc.
Alliance Data Systems Alliance Data Systems – Epsilon Alliance Data Systems – Retail Alliant Energy Corporation Alliant Techsystems Allianz SE – Allianz Life Insurance Company of North America Allied World AssuranceAllianz SE – Fireman’s Fund Insurance Company Inc. US
Allina Health System Allstate Insurance Company Ally Financial, Inc. ALSAC/St. Jude Children’s Research Hospital Alstom Power USAlta Resources
Altarum InstituteAltana ACTEGA Kelstar, Inc.
Altana ACTEGA WIT, Inc. Altana BYK USA, Inc. Altana BYK-Gardner USA Altana ECKART America Corp. Altana ELANTAS PDG, Inc. Alter Trading Corporation Alticor Altria Group, Inc. AmerenAlyeska Pipeline Service Company
AMCOL International Corporation AMCOL International Corporation – AMCOL Health & Beauty Solutions, Inc. AMCOL International Corporation – American Colloid Company AMCOL International Corporation – Ameri-CoCarriers, Inc. / Ameri-Co Logistics, Inc. AMCOL International Corporation – CETCO AMCOL International Corporation – Nanocor Inc. Amcor Rigid Plastics Amer Sports Winter & Outdoor American Cancer SocietyAirlines, Inc. American Capital, Ltd. American Century Investments American Century Investments – CA American College of Emergency Physicians American Commercial Lines American Commercial Lines – Jeffboat American Dental Association American Dental Association – California Dental Association American Dental Partners, Inc. American Enterprise Group, Inc. American Express Company American Family Insurance American Financial Group, Inc. American Financial Group, Inc. – Great American Financial Resources, Inc. American Financial Group, Inc. – Great American Insurance Group American Greetings American Heart Association American Home Mortgage Servicing, Inc.
American Institute of Physics
American International Group, Inc. American Medical Association AMERIGROUP CorporationAmerican Tower
AmeriPride Services Inc.American Transmission Company
American University Ameriprise Financial AmerisourceBergen Corporation Ameristar Casinos, Inc.AmerisourceBergen Corporation – Drug Corporation
Ameron InternationalAmerisourceBergen Corporation – Consulting Services
AmerisourceBergen Corporation – Specialty Group Amerisure Mutual Insurance Company Amherst H. Wilder Foundation AMN Healthcare,Amtrak
Andrews Kurth LLP Ann, Inc. AMR Corporation
Amway
Andersen Corporation
Ann, Inc. – Ann Taylor Stores Corporation Anne Arundel Medical Center
Apartment Investment and Management Co.
Apex Systems, Inc. APL Ltd.Apollo Group
Apple & Eve, LLCApollo Group – College for Financial Planning
Applied Signal TechnologyApollo Group – Institute for Professional Development
Apollo Group – University of Phoenix Apollo Group – Western International University ARAMARK Corporation Arch Coal, Inc.ARAMARK Corporation – Business & Industry Facility Services
ArchstoneARAMARK Corporation – Healthcare
ARAMARK Corporation – Higher Education ARAMARK Corporation – Sports and Entertainment Arbella Insurance Group Arby’s Restaurant Group Argo Group International Holdings, Ltd. Argonne National Laboratory Arkansas Blue Cross Blue Shield Arlington County Government Armstrong World Industries, Inc.
Arnold and Porter, LLP Arrow Electronics, Inc. Arrow Electronics, Inc. – ECS Arrow Electronics, Inc. – Global Components ARTEL, Inc. Arthrex, Arvest Bank Inc.
Asahi Kasei Plastics N.A.North America, Inc. Ascom (Schweiz) AGAscena Retail Group, Inc.
Ascension Health Alliance – Ascension Health ASM America, Inc. Associated Banc-Corp Association of American Medical CollegesAssociated British Foods plc – AB Mauri Food, Inc.
Associated British Foods plc – ACH Food Companies Astoria Financial Corporation – Astoria Federal Savings Asurion AT&T Inc. A-TEK, Inc.Atento
Atkins North America AtlantiCare AtlantiCare – ARMC Atlantic City Campus Atlas Van Lines, Inc. Atria Senior Living Group Aurora Health Care Aurora Health Care – Aurora Advanced Health Care Aurora Health Care – Aurora Clinical Laboratories Auto Club Group Auto Club Group – Executive Automatic Data Processing, (ADP)Inc. Automatic Data Processing, Inc. – AVS Division Automatic Data Processing, Inc. – Dealer Services Automatic Data Processing, Inc. ��� Employer Services Automatic Data Processing, Inc. – Employer Services, MAS Division Automatic Data Processing, Inc. – Employer Services, NA Division Automatic Data Processing, Inc. – ES International Automatic Data Processing, Inc. – TS Division Automobile Club of Southern California AutoNation, Inc. AutoZone, Inc. AvalonBay Communities, Inc. Avis Budget Group, Inc. Aviva USA Avnet, Inc.
Avon Products, Inc. AXA Equitable Axcess FinancialAxis Communications, Inc.
AZZ Inc. B&H PhotoAZZ Inc. – Atkinson
Babson CollegeAZZ Inc. – Aztec Tubular Products
AZZ Inc. – Central Electric BAE Systems,AZZ Inc. Land– CGIT
AZZ Inc. – Nuclear Logistics AZZ Inc. – Rig-A-Lite AZZ Inc. – The Calvert Company Bacardi U.S.A., Inc. Bain & ArmamentsCompany Baker Hughes, Inc. Ball Corporation Ball Corporation – Ball Food & Household Product Division, Americas Ball Corporation – Metal Beverage Packaging Division Banco Popular North America Bank of the WestBang & Olufsen America, Inc.
Banner Health Bare Escentuals Barilla America Inc. Barry CellebautCallebaut USA, LLC Bart & Associates, Inc. BASF Corporation Batesville Casket CompanyBattelle Memorial Institute
BattelleBaxter International – Baxter Healthcare Corporation of Puerto Rico, Inc.
Baxter International Inc. Baylor College of Medicine Baylor Health Care System Baylor Health Care System – Baylor All Saints Medical Center Baylor Health Care System – Baylor Jack and Jane Hamilton Heart and Vascular Hospital Baylor Health Care System – Baylor Medical Center at Carrollton Baylor Health Care System – Baylor Medical Center at Garland Baylor Health Care System – Baylor Medical Center at Grapevine Baylor Health Care System – Baylor Medical Center at Irving Baylor Health Care System – Baylor Medical Center at Waxahachie Baylor Health Care System – Baylor University Medical Center Baylor Health Care System – Health Texas Provider Network Baylor Health Care System – The Heart Hospital Baylor – Plano Baystate Health, Inc. Beam Inc. Bechtel Corporation BetchtelBechtel Plant Machinery, Inc.
Belden, Inc. Belk, Inc. Belo Corp Bentley UniversityBerlitz Corporation
Berkadia Commercial Mortgage LLC
Berkshire Health Systems
Bible League InternationalBest Vendors
Big Lots, Inc. Bill & Melinda Gates Foundation BI-LO, LLCBioMarin Pharmaceutical, Inc.
BJC HealthCare BJ’s Wholesale Club, Inc.BJC HealthCare – Barnes-Jewish Hospital
BJC HealthCare – BJC Behavioral Health BJC HealthCare – Christian Hospital BJC HealthCare – Missouri Baptist Medical Center BJC HealthCare – Physicians Group, LC BJC HealthCare – St. Louis Children’s Hospital Black & Veatch Corporation BloodSource
BlueCrossBlue Cross & Blue Shield of Rhode Island
Blue Cross and Blue Shield of Massachusetts Blue Cross and Blue Shield of North Carolina Blue Cross and of Idaho Health Services, Inc. D-1B-1
BlueCross BlueShield of Kansas City BlueCross BlueShield of Louisiana BlueCross BlueShield of South Carolina BlueCross of Northeastern Pennsylvania BMW Manufacturing Co.,AG – BMW Financial Services NA, LLC BMW AG – BMW of North America, LLC Boart LongyearBNSF Railway Company
Boehringer Ingelheim Pharmaceuticals,Board of Governors of the Federal Reserve System
Board of Governors of the Federal Reserve System – Federal Reserve Information Technology Boddie Noell Enterprises, Inc. Boeing Employees Credit Union (BECU) Boise Cascade, LLCBon Appetit Management Company
Boise Inc.Borden Dairy Company
BOK Financial, Inc.Boston Children’s Hospital
Boston College Boston Medical Center HealthNet Plan Bovis Lend LeaseBoston University
Boy Scouts of America Brady Corporation Branch Banking & Trust Company Brandes Investment Partners, L.P.Bremer Financial Corporation
Bremer Financial Corporation – Bremer Bank NA, Saint Cloud Bremer Financial Corporation – Bremer Bank NA, Twin Cities Bridgepoint Education, Inc. Brightstar Corporation Bristow Group Broadridge Financial Solutions, Inc. Broadridge Financial Solutions, Inc. – Investor Communication Solutions Broadridge Financial Solutions, Inc. – Securities Processing Solutions Broan-Nutone Storage Solutions Lp Brookdale Senior Living, Inc. Brookfield Renewable Energy Partners, LP USA Brookhaven National Laboratory Brookstone, Inc.
Broward Health Brown and Caldwell Brown-Forman Corporation BRP US, Inc.
Bryan Cave LLP BSH Home Appliances Corporation BSH Home Appliances Corporation – Corporate Buckeye Partners, L.P. Buckingham Asset Management, LLCBunge Latin America
Buffets,Bunge Product Lines
Burgess & Niple, Inc. Burger King Corporation
Burlington Coat Factory
C&S Wholesale GrocersBuro Happold Consulting Engineers PC
Cablevision SystemsSystem Corporation CACI International, Inc. California Casualty Management Company California Dental Association
California Hospital Association California ISO California Pizza Kitchen
Calpine Corporation Cambia Health Solutions Cameron International Cameron International – Drilling and Production Systems Cameron International – Process and Compression Systems Cameron International – Valves & Measurement Campari America Campbell Soup Company Campus Crusade for ChristCampbell Soup Company – North America Foodservice
Campbell Soup Company – Pepperidge Farm Canadian Pacific US Canon Business Process Services, Inc. Canteen Vending Capella Education Company Capital BlueCross Capital One Financial Corp. Capsule Tech, Inc. Cardinal Health, Inc. Career Education Corporation
CareFirst BlueCross BlueShield CareFusion Corporation
Cargill, Inc. Caribou Coffee Company Carlson Carlson – Carlson Wagonlit Travel Carlson – Hotels Worldwide Carlson – Restaurants Worldwide CarMax, Inc. Carmeuse North America Carnegie Mellon University Carolinas Healthcare System Carpenter Technology Corporation Cascade Engineering
Casey Family Programs Catalyst Group Caterpillar, Inc. Catholic Charities Health and Human Services Catholic Financial Life Catholic Health Initiatives Catholic Health Initiatives – CHI Nebraska Catholic Health Initiatives – Franciscan Health System Catholic Health Initiatives – Good Samaritan Hospital Catholic Health Initiatives – Memorial Health Care System Catholic Health Initiatives – Mercy Health Network Catholic Health Initiatives – Mercy Medical Center Roseburg Catholic Health Initiatives – Mercy Medical Center Williston Catholic Health Initiatives – St. Elizabeth Regional Medical Center Catholic Health Initiatives – St. Catherine Hospital Catholic Health Initiatives – St. Clare’s Health System Catholic Health Initiatives – St. Francis Healthcare WestCampus CB Richard Ellis Group, Inc.Catholic Health Initiatives – St. Francis Medical Center
CDI Corporation, Inc.Catholic Health Initiatives – St. Joseph Health System
Catholic Health Initiatives – St. Joseph Regional Health Network Catholic Health Initiatives – St. Joseph’s Area Health Services Catholic Health Initiatives – St. Joseph’s Hospital & Health Center Catholic Health Initiatives – St. Mary’s Community Hospital Catholic Health Initiatives – St. Vincent Health System Catholic Health Initiatives – Unity Family Healthcare Catholic Health Initiatives – Villa Nazareth CDM Smith, Inc. CDS Global, Inc. Celanese CelesticaCelanese – Acetate, LLC
Celanese – Celanese International Corporation Celanese – Celanese Ltd. Celanese – CNA Holdings, LLC Celanese – EVA performance Plymers Corporation Celanese – Global Relocation, LLC Celanese – Nutrinova, Inc. Celanese – Ticona Polymers Inc. Celgard, LLC Cemex, Inc. US Cengage Learning Centegra Health System Centene Corporation CenterPoint Energy Central Georgia Health System Central Vermont Public ServiceGeorgia Health System – Central Georgia Rehabilitation Hospital Central Georgia Health System – The Medical Center of Central Georgia Centura Health CGI Technologies and Solutions, Inc.Centura Health – Avista Adventist Hospital
Centura Health – Centura Health At Home Centura Health – Littleton Adventist Hospital Centura Health – Mercy Regional Medical Center Centura Health – Parker Adventist Hospital Centura Health – Porter Adventist Hospital Centura Health – St. Anthony’s Central Hospital Centura Health – St. Anthony’s North Hospital Centura Health – St. Anthony’s Summit Medical Center Centura Health – St. Mary Corwin Hospital Centura Health – St. Thomas More Hospital CEVA Logistics Americas CH2M Hill CHC Helicopter SA – US Checkpoint Systems Inc. Chelan County Public Utility DistrictCheckpoint Systems Inc. – Merchandise Visibility
Chicago Transit AuthorityCheckpoint Systems Inc. – North America
Chickasaw Nation, Division of CommerceCheckpoint Systems Inc. – SMS Worldwide
Chico’s FAS,Chemetall US Inc.
Chemtura Corporation Children’s Healthcare of Atlanta Children’s Hospital and Health SystemLos Angeles Children’s Hospital of Orange County Children’s Hospital of Wisconsin Children’s Hospitals and Clinics of Minnesota Children’s Medical Center of Dallas Children’s National Medical Center
Chipotle Mexican Grill Chiquita Brands International, Inc. Choctaw Nation of Oklahoma Choctaw Nation of Oklahoma-Choctaw Defense Choice Hotels International, Inc. Christina Care Health SystemChristopher & Banks
CHRISTUS Health Chrysler Financial Services Americas, LLCCHRISTUS Health – Ark-La-Tex
CHRISTUS Health – Central Louisiana CHRISTUS Health – CHRISTUS Spohn CHS Inc. CHS Inc. – Agriculture CHS Inc. – Business Solutions CHS Inc. – Energy Chumash Casino Resort Church & Dwight Co., Inc. CIGNA Corporation CIGNA Corporation – CIGNA Group Insurance & Dental CIGNA Corporation – CIGNA Healthcare Cimarex Energy Co. Cincinnati Children’s Hospital Medical Center Cinetic Automation
Cinetic Landis Corp.
Cinetic Sorting Corp.
Circle K Stores, Inc.Cintas Corporation
Cirque du Soleil, Las Vegas Citi —Citco Technology Management, Inc.
Citigroup Inc. – Citi North America, Operations & Technology Citigroup Inc. – CitiFinancial/One Main Financial Citizens Energy Group Citizens Property Insurance Corporation Citizens Republic Bancorp, Inc.
City and County of Denver City of CharlotteFort Worth City of Garland City of Hope City of Houston Clarkston Consulting
Classified Ventures, LLC Clean Earth,Clemens Family Corporation
Clemens Family Corporation – Clemens Food Group Clement Pappas and Company, Inc. Cleco CorporationClemson University
Cleveland Brothers Equipment Co., Inc. Cleveland Clinic Clifton Gunderson LLPCleveland Clinic – Hillcrest Hospital
Cleveland Clinic – Medina Hospital Cloud Peak Energy Resources CME Group, Inc. CNA
CNA Financial Corporation CNH America LLC CNO Financial Group, Inc. Coats North America CoBank, ACB
Coca-Cola Bottling Co. Consolidated Coinstar, Inc. Colgate-Palmolive CompanyCointstar, Inc. – Coin and Entertainment Services
Coinstar, Inc. – DVD Services College of DuPage College of William & Mary
Collin County Colonial Pipeline Company Colorado Springs Utilities Columbia University Columbian Chemicals Company Columbian Chemicals Company – Hickok KS Plant Columbian Chemicals Company – North America Region Columbian Chemicals Company – North Bend Plant Columbus McKinnon Corporation Comcast Corporation Comcast Corporation – Comcast Cable Communications Comcast Corporation – Universal Orlando Resort Commonwealth Health Corporation– Altadis, Inc. Community Health Network Compass Bank Compass Group North America Computershare ConAgra Foods, Inc. Concept Solutions, LLC Connecticut Children’s Medical Center CONSOL Energy, Inc. Constellation Brands, Inc. ConsumersConstellation Brands, Inc. – Constellation Wines North America
Consumer Union of United States, Inc. Convergys Corporation Cooper University HospitalCon-way, Inc.
Con-way, Inc. – Con-way Freight Con-way, Inc. – Con-way Truckload Con-way, Inc. – Menlo Worldwide Logistics Cook Children’s Health Care System CoreLogic, Inc. Cornell University D-2
Corning, Inc. Corning, Inc. – Corning Cable Systems Corning, Inc. – Display Technologies Corning, Inc. – Environmental Technologies Corning, Inc. – Life Sciences Corning, Inc. – Optical Fiber Corning, Inc. – Specialty & Ophthalmic Materials Corrections Corporation of America Cost Plus, Inc. Country FinancialCoughlan Companies, Inc.
Covance,Coughlan Companies, Inc. – Capstone
B-2
Covenant Health CoventryCovenant Health Care,– Covenant HomeCare
Covenant Health – Covenant Medical Management Covenant Health – Fort Loudoun Medical Center Covenant Health – Fort Sanders Perinatal Center Covenant Health – Fort Sanders Regional Medical Center Covenant Health – Fort Sanders West Covenant Health – Knoxville Heart Group Covenant Health – LeConte Medical Center Covenant Health – Methodist Medical Center Covenant Health – Morristown-Hamblen Health System Covenant Health – Parkwest Medical Center Covenant Health – Roane Medical Center Covenant Health – Thompson Cancer Survival Center Covington & Burling LLP Cox Enterprises, Inc. Cox Enterprises, Inc. – AutoTrader.com Cox Enterprises, Inc. – Cox Broadcasting Cox Enterprises, Inc. – Cox Communications, Inc. Cox Enterprises, Inc. – Cox Media Group Cox Enterprises, Inc. – Cox Radio, Inc. Cox Enterprises, Inc. – Cox Target Media Cox Enterprises, Inc. – Manheim CPS Energy Cracker Barrel Old Country Store, Inc. Cranston Print Works Company
Crayola LLC Credit Acceptance Corporation Credit Suisse AG
Cree, Inc. Crothall Healthcare Crowe Horwath LLP Crowley Maritime Corporation Crowley Maritime Corporation – Crowley Liner Services, Inc. – Latin America Crowley Maritime Corporation – Crowley Liner Services, Inc., Puerto Rico & Caribbean Crowley Maritime Corporation – Crowley Logistics, Inc. Crowley Maritime Corporation – Petroleum Distribution & Contracts Services Crowley Maritime Corporation – Petroleum Services Crowley Maritime Corporation – Technical Services Crown Castle International Corporation Crum & Forster
CSA International CSL Behring CSL International, Inc. Cubic Corporation Cubic Corporation – Cubic Applications, Inc. Cubic Corporation – Cubic Defense Applications, Inc. Cubic Corporation – Cubic Defense Applications, Inc., Simulation Systems Division Cubic Corporation – Cubic Transportation System, Inc. Cullen/Frost Bankers, Inc. Cummins, Inc. Cummins, Inc. – Components Cummins, Inc. – Distribution Business Cummins, Inc. – Engine Business Cummins, Inc. – Power Generation CUNA Mutual Group Curtiss-Wright Corp – Curtiss-Wright Controls, Inc., Embedded Computing Systems, Modular Solutions Curtiss-Wright Corporation Curtiss-Wright Corporation – Curtiss-Wright Controls, Inc. Curtiss-Wright Corporation – Curtiss-Wright Controls, Inc., Flight Systems Curtiss-Wright Corporation – Curtiss-Wright Controls, Inc., Integrated Sensing Curtiss-Wright Corporation – Curtiss-Wright Flow Control Corporation Curtiss-Wright Corporation – Curtiss-Wright Flow Control Corporation, Electro-Mechanical Systems Curtiss-Wright Corporation – Curtiss-Wright Flow Control Corporation, Marine and Power Products Curtiss-Wright Corporation – Curtiss-Wright Flow Control Corporation, Nuclear Group Curtiss-Wright Corporation – Curtiss-Wright Flow Control Corporation, Oil & Gas Systems Curtiss – Wright Corporation – Surface Technologies CVR Energy, Inc. – Coffeyville Resources Nitrogen Fertilizers, LLC CVR Energy, Inc. – CVR Refining, LP CVS/Caremark Daiichi Sankyo, Inc. Daimler AG – Daimler Trucks North America, LLC Daimler AG – Daimler Trucks North America, LLC – Detroit Diesel Daimler AG – Daimler Trucks North America, LLC – Freightliner Custom Chassis Corporation Daimler AG – Daimler Trucks North America, LLC – Thomas Built Bus Daimler AG – Mercedes Benz US International Daimler AG – Mercedes-Benz Financial Services USA LLC Daimler AG – Mercedes-Benz Research & Development North America, Inc. Daimler AG – Mercedes-Benz USA Dairy Management, Inc. Dairy Management, Inc. – U.S. Dairy Export Council Dallas Central Appraisal District Dallas County Community College DistrictDana Holding Corporation
Danaher MotionCorporation Danfoss, USLLC Darden Restaurants, Inc. Darden Restaurants, Inc. – Bahama Breeze Darden Restaurants, Inc. – Capital Grill Darden Restaurants, Inc. – Eddie V’s Darden Restaurants, Inc. – LongHorn Darden Restaurants, Inc. – Olive Garden Darden Restaurants, Inc. – Red Lobster Darden Restaurants, Inc. – Seasons 52 Darden Restaurants, Inc. – Specialty Group Darden Restaurants, Inc. – Yard House Dassault Falcon Jet Corporation Data Center, Inc.Davis + Henderson US
Data RecognitionDawn Food Products
DCS Corporation DCP Midstream, LLC
Dean Foods Company Dean Foods Company – Fresh Dairy Direct Dean Foods Company – WhiteWave Foods Deckers Outdoor Corporation – E-Commerce Deere & Company Deere & Company – John Deere Credit DeKalb Medical Center, Inc. Del Monte Foods Company Del Monte Foods Company – Consumer Products Del Monte Foods Company – Pet Products Delhaize America Shared Services Group, LLC Delhaize America Shared Services Group, LLC – Bottom Dollar Foods Delhaize America Shared Services Group, LLC – Food Lion, LLC Delhaize America Shared Services Group, LLC– Hannaford Bros. Co. Delhaize America Shares Services Group, LLC – Harveys Supermarket Delhaize America Shared Services Group, LLC – Sweetbay Supermarket Deloitte Services LP Delta Dental of Michigan, Ohio, and IndianaAir Lines, Inc. Deluxe CorpCorporation Demand Media, Inc. Demand Media, Inc. – eNom Demand Media, Inc. – Pluck / CoveritLive Denny’s Corporation Denso Manufacturing Tennessee, Inc. Denver Health & Hospital Authority Denver Public Schools Department of Defense DePaul University Det Norske Veritas USA Detroit Medical Center Detroit Medical Center – Children’s Hospital of Michigan Detroit Medical Center – Harper University Hospital Detroit Medical Center – Huron Valley Sinai Hospital Deutsche Post DHLBank Securities Inc. Devon Energy DeVry, Inc. Dex One CorporationDFC Global Corp
DHL Express – USA DHL Regional Services, Inc. Diamond Innovations Inc. Diebold, IncorporationInc. DineEquity,Diesel Usa
Dignity Health Dignity Health – Arroyo Grande Community Hospital Dignity Health – California Hospital Medical Center Dignity Health – Chandler Regional Medical Center Dignity Health – Dominican Hospital Dignity Health – French Hospital Medical Center Dignity Health – Glendale Memorial Hospital and Health Center Dignity Health – Marian Medical Center Dignity Health – Mercy Gilbert Medical Center Dignity Health – Mercy Hospitals of Bakersfield – Truxton Campus Dignity Health – Mercy Medical Center – Mt. Shasta Dignity Health – Mercy Medical Center Merced Dignity Health – Mercy Medical Center Redding Dignity Health – Sequoia Hospital Dignity Health – St. Bernardine Medical Center Dignity Health – St. Elizabeth Community Hospital Dignity Health – St. John’s Regional Medical Center Dignity Health – St. Joseph’s Hospital and Medical Center Dignity Health – St. Joseph’s Medical Center Dignity Health – St. Mary’s Medical Center – Long Beach Dignity Health – St. Mary’s Medical Center – San Francisco Dignity Health – St. Rose Dominican Hospitals – Sienna Campus Dignity Health – Woodland Healthcare Direct Energy Direct Supply, Inc. Direct Supply, Inc. – Equipment & Furnishings DIRECTV, Inc. Discover Financial Services Inc. DISH Network Corp Diversey Inc.
DLA Piper US, LLP DNB Dockwise Engineering Services Dockwise USA Dockwise USA – OKI Doherty Employment Group Dole Food Company, Inc.Packaged Foods, LLC Dollar General Corporation Dollar Thrifty Automotive Group
Dollar Tree, Inc. Dominion Resources, Inc. Dominion Resources, Inc. – Dominion Energy Dominion Resources, Inc. – Dominion Generation Dominion Resources, Inc. – Dominion Virginia Power Domino’s Pizza, Inc. Domtar Corporation
Doosan Infracore International, Inc. Dorsey & Whitney LLP Dr. Pepper Snapple GroupDover Corporation
Draka USA —Dover Corporation – Dover Communications Technologies
Dresser-Rand GroupDover Corporation – Dover Energy
Dover Corporation – Dover Engineered Systems Dover Corporation = Dover Printing & Identification Drummond Company, Inc. DS Waters of America, Inc. DSI Underground Systems, Inc. DST Systems, Inc. DST Systems, Inc. – Argus Health Systems, Inc. DST Systems, Inc. – DST Health Solutions DST Systems, Inc.-DST Output, LLC DSW, Inc. Duke Energy Commercial Enterprises Inc. Duke Energy Corporation Duke Energy Corporation – Carolinas, LLC Duke Energy Corporation – Progress Energy, Inc. Dunkin’ Brands, Inc. Duquesne Light Holding,Dunnhumby USA Inc.
DUREZ Corporation DynCorp International, Inc. DYWIDAG-Systems International USA Inc. Early Warning ServicesE.I. du Pont de Nemours and Company
EchoStarEagle Manufacturing, LLC
Eastern Main Healthcare Systems Eastman Chemical Company Eaton Corporation ECCO Group Ecolab ECONET, Inc. ED&F Mann Holdings,ECONET, Inc. – Aloecorp, Inc.
ECONET, Inc. – Unigen, Inc. ECONET, Inc. – Univera, Inc. Edelman Edison Mission Energy Education Management Corporation Educational Testing Service (ETS) Edward Hospital & Health Services
B-3
Edward Jones Edwards Lifesciences, LLC El Paso Corporation
Electro Rent CorporationElectric Reliability Counsel of Texas, Inc. (ERCOT, Inc.)
Elizabeth Arden, Inc. EmblemHealth EMCOR Group, Inc. Emdeon Corporation
Employers Mutual Casualty Company EMS Development Corp Enerflex Ltd. – Gas Drive USA Enerflex Ltd. Energen Corporation Energen Corporation – Alabama Gas Corporation Energy Future Holdings Corporation Energy Future Holdings Corporation – Luminant Energy Future Holdings Corporation – TXU Energy EnergySolutions EnergySolutions – Government Customer Group EnPro Industries, Inc. EnPro Industries, Inc. – CPI EnPro Industries, Inc. – Fairbanks Morse Engine EnPro Industries, Inc. – Garlock Sealing Technologies EnPro Industries, Inc. – GGB Bearing Technology EnPro Industries, Inc. – Stemco EnPro Industries, Inc. – Technetics ENSCO International, Inc.plc ENSCO plc – North & South America Business Unit Entergy Entergy – Non-Regulated Entergy - Regulated Enterprise Products Partners L.P. Entertainment Publications LLC
Envestnet, Inc.
EOG Resources, Inc. EP Energy, LLC Equifax, Inc. Equity Office Properties Equity Residential Erie Insurance Group Ernst & Young, LLP ESL Federal Credit Union ESS Support Services - Alaska Essentia Health Essentia Health – St. Joseph’s Medical Center Essilor of America Estee Lauder Companies,Eurest
EverBank Exel ExelAEM ExelChem Energy Exel Consumer Exel Direct, Inc. Esurance Insurance Services,Exel Life Science & Healthcare
Exel Power Packaging Exel Retail Sector Exel TASL Sector Exelis, Inc. EverBank
Excellus BlueCross BlueShieldExelis, Inc. - Aerostructures
Excel, a DP-DHL CompanyExelis, Inc. – Exelis Electronic Systems
Exelis, Inc. – Exelis Geospatial Systems Exelis, Inc. – Exelis Information Systems Exelis, Inc. – Exelis Mission Systems Exelis, Inc. – Exelis Mission Systems - Executive Exelis, Inc. – Night Vision & Communications Systems Exelon Corporation Exempla Healthcare, Inc.
Exeter Hospital Experian Group Express Scripts, Inc. Exterran Holdings, Inc. F. Hoffman La-Roche, Ltd. – Roche Diagnostics Corporation Faegre Baker Daniels Fairmont Raffles Hotels International Fairmont Raffles Hotels International – Fairmont Hotels & Benson, LLPResorts FairPoint Communications Fairview Health Services Fairview Health Services – Southwest Care System Faithful+Gould Fannie Mae Farm Credit Bank of Texas Farm Credit of New Mexico Farm Credit West Farmers Insurance Group Farmland Foods, Inc. FBL Financial Group, Inc. Federal Home Loan Bank of Atlanta Federal Home Loan Bank of Cincinnati Federal Home Loan Bank of Dallas
Federal Reserve Bank of Atlanta Federal Reserve Bank of Boston Federal Reserve Bank of Chicago Federal Reserve Bank of Cleveland Federal Reserve Bank of Dallas Federal Reserve Bank of Minneapolis Federal Reserve Bank of New York Federal Reserve Bank of Philadelphia Federal Reserve Bank of RichmondSan Francisco Federal Reserve Bank of St. Louis Federal-Mogul Corporation Federal Investors FedEx Corporation FedEx Corporation - FedEx Express FedEx Corporation - FedEx Freight, Inc. FedEx Corporation - FedEx Office FedEx Corporation - FedEx Services FedEx Corporation - FedEx SupplyChain FedEx Corporation – FedEx Trade Networks Fenwal, Inc. Fenwick & West, LLP Ferguson Enterprises, Inc. Ferrellgas Ferrero USA Ferrovial Festo US Fidelis Care of New York Fidelity National Information Services Fifth Third Bancorp FINRA Fireman’s Fund Insurance CompanyFINCA International
D-3
First American Corporation First Commonwealth Financial Corporation
First American Financial BankCorporation – First American Trust First Midwest Bank,Interstate BancSystem, Inc. First National Bank of Omaha First Solar, Inc. First-Citizens Bank & Trust Company FirstEnergy Corporation
FirstGroup America Fiserv Inc. Fiskars Brands, Inc. Fives Group – Cinetic Automation Fives Group – Cinetic Landis Corp. Fives Group – Cinetic Sorting Corp. Fives Group – Fives North American Combustion, Inc. Fives Group – Fives, Inc. Fives Group – North American Construction Services, ltd. Fletcher Allen Health Care Flightline Systems FLIK International Florida Blue Flowserve Corporation Fluor Corporation Foamex Innovations Operating CompanyFluor Corporation – Energy & Chemicals
Fluor Corporation – Fluor Government Group Fluor Corporation – Global Services Fluor Corporation – Industrial & Infrastructure Fluor Corporation – Power FM Global FMR, LLC Focus on the Family Foodbuy, LLC Foot Locker, Inc. Forest City Enterprises, Inc. Fox Networks GroupForest Laboratories, Inc.
Forest Laboratories, Inc. – Forest Pharmaceuticals, Inc. Fortune Brands Home & Security, Inc. Fortune Brands Home & Security, Inc. – MasterBrand Cabinets, Inc. Fortune Brands Home & Security, Inc. – Moen Incorporated Fortune Brands Home & Security, Inc. – Therma-Tru Foster Pultry Farms Franklin International Franklin Templeton Investments Fred Hutchinson Cancer Research Center Freedom Communications, Inc.Freeman Companies
Freeman Companies – Alford Media Freeport McMoRan Copper and Gold, Inc.Freeman Companies – Freeman AV
Freeman Companies – Freeman Expo Hall Fremont Group Fresenius Medical Care NA Fresenius Medical Care NA – Fresenius Medical Services Fresenius Medical Care NA – Physician Practice Services Fresenius Medical Care NA – Renal Therapies Group Fresenius Medical Care North America Friedkin Companies, Inc. Friedkin Companies, Inc. – Friedkin Aviation, Inc. Friedkin Companies, Inc. – Gulf States Financial Services Friedkin Companies, Inc. – Gulf States Marketing, Inc. Friedkin Companies, Inc. – Gulf States Toyota Friedkin Companies, Inc. – US AutoLogistics, LLC FrieslandCampina USA LP Froedtert & Community Health F-Secure, Inc. North AmericaFroedtert Health – Froedtert Hospital
Froedtert Health Menomonee Falls Clinic Fuel Tech, Inc. Furniture Brands International G&K Services, Inc. Gambro, Inc. GameStop Corp. Gamfi AGL US Gardner Denver, Inc. Gardner Denver, Inc. – Air-Relief, Inc. Gardner Denver, Inc. – Emco Wheaton Gardner Denver, Inc. – Gardner Denver Water Jetting Gardner Denver, Inc. – Nash Division Gardner Denver, Inc. – Oberdorfer Pumps Gardner Denver, Inc. – TCM Investments, Inc. Gartner, Inc. GATX Corporation Gazette Communications
GEICO Geisinger Health System Geisinger Health System – Geisinger Health Plan GELITA USA GENCO GENCO – GTL GenCorp. Inc. GenCorp, Inc. – Aerojet General Corporation GenCorp, Inc. – Easton Development Company LLC General Dynamics Corporation – General Dynamics Information Technology (GDIT) General Dynamics Corporation – General Dynamics Information Technology (GDIT), Civil & Homeland Security General Dynamics Corporation – General Dynamics Information Technology (GDIT), Intelligence Solutions General Dynamics Corporation – General Dynamics Information Technology (GDIT), Navy & Air Force Systems General Dynamics Corporation – General Dynamics Information Technology (GDIT), NHSD General Dynamics Corporation – Gulfstream Aerospace Corp. General Growth Properties, Inc. General Mills, Inc,Inc. General Motors General Motors – General Motors Financial Company, Inc. General Nutrition, Inc. Generali USA Life Reassurance CompanyGeneral Nutrition, Inc. – Anderson
GenOn EnergyGeneral Nutrition, Inc. – Leetsdale
General Nutrition, Inc. – Phoenix Gentiva Health Services Gentiva Health Services – Home Health Gentiva Health Services – Hospice Genuine Parts Genworth Financial, Inc. Geodis Supply Chain Optimisation George Washington University Georgetown University Georgia Institute of Technology Georgia Regents Medical Center Georgia Technology Authority GeoVera Holdings, Inc. Gerdau Long Steel North America GibralterGiant Eagle, Inc.
Gibraltar Industries, Inc. Gibraltar Industries, Inc. – Air Vent, Inc. Gibraltar Industries, Inc. – Alabama Metal Industries Corp. Gibraltar Industries, Inc. – Appleton Supply Co. Gibraltar Industries, Inc. – Construction Metals, Inc. Gibraltar Industries, Inc. – Dot Metal Products Gibraltar Industries, Inc. – DS Brown Gibraltar Industries, Inc. – Florence Gibraltar Industries, Inc. – Noll/NorWesco Gibraltar Industries, Inc. – Pacific Award Metals Gibraltar Industries, Inc. – Seismic Energy Products Gibraltar Industries, Inc. – Solar Group Gibraltar Industries, Inc. – Southwestern Metals Giesecke & Devrient US GKN America Corporation GKN America Corporation – GKN Aerospace, Chemotronics, Inc. GKN America Corporation – GKN Aerospace North America, Inc. GKN America Corporation – GKN Aerospace, Integrated Aerostructures GKN America Corporation – GKN Aerospace, Transparency Systems, Inc. GKN America Corporation – GKN Driveline GKN America Corporation – GKN Driveline North America, Inc. GKN America Corporation – GKN Land Systems GKN America Corporation – GKN Land Systems Power Management Division GKN America Corporation – GKN Sinter Metals, Inc. B-4
GKN America Corporation – GKN Sinter Metals, Inc., GKN Sinter Metals North America LLC GKN America Corporation – Hoeganaes Corporation Glaston America, Inc. Glatfelter Global Payments,Glatfelter – Composite Fibers
Flatfelter – Speciality Papers GOJO Industries, Inc. Golden Horizons LLC Goodrich CorporationGolden Horizons LLC – AlixaRx
Golden Horizons LLC – Golden Innovations, AEGIS Golden Horizons LLC – Golden Innovations, Asera Care, LLC Golden Horizons LLC – Golden Living LLC Government Employees Health Association, Inc. Graco Inc. Grady Health System Graham Packaging Company Inc. Grange Mutual Casualty Company Granite Construction, Inc. Grant Thornton LLP Great American Financial Resources, Inc.
Greater Harris County 9-1-1 Emergency Network
Greater Orlando Aviation Authority Great-West Life & Annuity Green Mountain Coffee Roasters, Inc. Green Mountain Coffee Roasters, Inc. – Keurig Business Unit Green Mountain Coffee Roasters, Inc. – Specialty Coffee Business Unit Greenheck Fan Corporation GreenStone Farm Credit Services Greer Laboratories Inc.
Greif, Inc.
Grinnell Mutual Reinsurance Company Group Health Cooperative GROWMARK, Inc. GTSIGrundfos Pumps Corporation
Guerbet, LLC Guess?, Inc. Gulfstream Aerospace
H&R Block, Inc. H.J. Heinz Company H.J. Heinz Company – Heinz North America H. Lee Moffitt Cancer Center & Research Institute H.B. Fuller Company Haldex, Inc. Halliburton Company Hamilton Safe Company Hancock Holding Company Hancock Holding Company – Hancock Bank Hancock Holding Company – Whitney Bank Hanesbrands, Inc. HarbourVest Partners, LLC Harden Healthcare Harlan Laboratories, Inc. Harley-Davidson, Inc. Harleysville Insurance
Harris Associates L.P. Harris County Hospital DistrictAuditor’s Office Harris Health System Harris Teeter Supermarkets, Inc. Harsco Corporation Harsco Corporation – Industrial Harsco Corporation – Infrastructure Harsco Corporation – Metals & Minerals Harsco Corporation – Rail Hartford HealthCare Corporation Harvard Pilgrim Health Care Harvard University Harvard Vanguard MedicalMedial Associates Hasbro, Inc. Hastings Mutual Insurance Company Hatch Associates Consultants, Inc. Hawaiian Electric Company HCA HD Supply, Inc. Health Care Service Corporation Health Care Service Corporation – BlueCross BlueShield of Texas Health First, Inc. Health Net, Inc. Health New EnglandNet, Inc. – Health Net Federal Services Health Net, Inc. – Health Net of Arizona Health Net, Inc. – Health Net of California Health Net, Inc. – Health Net of Oregon Health Net, Inc. – Health Net Pharmaceutical Services HealthEast Care System HealthNow New York, Inc. HealthPartners HealthSpring,HealthSouth Corporation
Healthways, Inc. Heartland Regional Medical Center
H-E-B HendrickHeidrick & Struggles International, Inc.
Heineken USA, Inc. Heli-One American Support, LLC Hella Inc. Hella, Inc. – Hella Corporate Center USA, Inc. (HCCU) Hella Inc. – Hella Electronics Corporation (HEC) Helmerich & Payne, Inc. Hempel (USA), Inc. Hendrick Medical Center Henkel CorporationHenniges Automotive
Henry Ford Health System Henry Ford Health System – Henry Ford Hospital Henry Ford Health System – Macomb Hospital, Clinton Township Henry Ford Health System – West Bloomfield Hospital Henry Ford Health System – Wyandotte Hospital Henry Schein Henry Schein – Dental Specialties Group Henry Schein – Global Animal Health Henry Schein – Global Dental Group Henry Schein – U.S, Dental Herbalife Ltd. Herman Miller, Inc. High Liner Foods (USA) Inc. Highlights for Children HighmarkHighlights for Children – Zaner-Bloser
HighMount Exploration & Production LLCHillshire Brands Company
Hilti North America Hilton HotelWorldwide Corporation Hilton Worldwide Corporation – Hilton Grand Vacations Hilton Worldwide Corporation – Hilton Hotels Americas Hines Interests, LLP Hitachi Computer Products (America), Inc. Hitachi Consulting Corporation HNI Corporation HNI Corporation – Allsteel HNI Corporation – Gunlocke HNI Corporation – Hearth & Home Technologies HNI Corporation – HNI International HNI Corporation – HON Company HNI Corporation – Paoli HNTB Companies Hoag HospitalHNTB Companies – Central
HNTB Companies – Design Build HNTB Companies – Great Lakes HNTB Companies – Infrastructure HNTB Companies – Northeast HNTB Companies – Southeast HNTB Companies – West Holcim (US), Inc. Holland America Line Holy Spirit HospitalHollyFrontier Corporation
Home Box Office Honeywell International, Inc. Horizon Blue Cross Blue Shield of NJNew Jersey Hormel Foods Corporation
Hospital Sisters Health System Hostess Brands, Inc.
Hot Topic, Inc. Houghton Mifflin Company Houston Independent School Hovnanian Enterprises, Inc.
HSBC-North America District
HSN, Inc. Hu-Friedy Manufacturing Company Inc. Humana, Inc.
Hunt Consolidated
Hunter Douglas Inc. Hunter Industries Huntington Bancshares IncorporatedInc. Hunton & Williams, LLP Huron Consulting Group
Husky Injection Molding Systems Ltd. — US–US Hyatt Hotels Corporation
Hyundai Information ServiceHydraMaster North America
Idaho Power CompanyHypertherm
Hyundai Motor Co., Ltd – Hyundai Information Services North America Hyundai Motor Co. Ltd, – Hyundai Motor America Ibarra Group, LLC ICL ICL Industrial Products IDEXX Laboratories IKEA Distribution Services, Inc. Illinois Municipal Retirement FundMutual Life Insurance Company IMC,Illinois Tool Works
Illinois Tool Works – All Other Illinois Tool Works – Construction Products Illinois Tool Works – Decorative Surfaces Illinois Tool Works – Food Equipment Illinois Tool Works – Industrial Packaging Illinois Tool Works – Polymer & Fluids Illinois Tool Works – Power Systems & Electronics Illinois Tool Works – Transportation IMG Worldwide IMG Worldwide – IMG College IMG Worldwide – IMG Consulting IMG Worldwide – IMG Media IMG Worldwide – IMG Sports & Entertainment IMI, plc – Control Components Inc. (CCI) IMI, plc – DCI Marketing, Inc. IMI, plc – IMI Cornelius, Inc. IMS Health IMS Health – Global Pharma Solutions IMS Health – Healthcare Value Solutions IMS Health – Management Consulting IMS Health – United States INC Research, LLC Independence Blue Cross Independent Health Association,Independence Blue Cross – AmeriHealth Administrators
Independence Blue Cross – AmeriHealth New Jersey Independence Blue Cross – CompServices Inc. INDUS Corporation
InfogroupIndiana Farm Bureau Insurance
ING North AmericaAmerican Insurance Corporation —– US Financial Services Ingersoll-Rand Company Limited Ingersoll-Rand Company Limited – Climate Solutions Ingersoll-Rand Company Limited – Industrial Technologies Ingersoll-Rand Company – Residential Solutions Ingersoll-Rand Company – Security Technologies Ingram Industries, Inc. Ingram Micro, Inc. Ingram Micro, Inc. – Latin America Ingram Micro, Inc. – North America Ingredion, Inc. Insight Enterprises, Inc. Insperity Intelsat Global Services Corporation
InterContinential Hotels Group Americas Interface Solutions
Intermountain Health Care, Inc. – Medical Group Intermountain Health Care, Inc. – SelectHealth, Inc. Intermountain Health Care, Inc. – Southwest Regional Cancer Clinic Intermountain Health Care, Inc. – Urban Central Region Intermountain Health Care, Inc. – Urban South Region Intermountain Healthcare, Inc. Intermountain Healthcare, Inc. – Dixie Regional Medical Center Intermountain Healthcare, Inc. – Intermountain Homecare Intermountain Healthcare, Inc. – Intermountain Medical Center Intermountain Healthcare, Inc. – McKay-Dee Hospital Intermountain Healthcare, Inc. – Primary Children’s Hospital Intermountain Healthcare, Inc. – Utah Valley Regional Medical Center International Game TechnologyDairy Queen, Inc. D-4
International Imaging Materials, Inc. International Paper Company Interval InternationalIntertek Group plc US
Intrepid PotashInteva Products, LLC
Invensys Controls Invensys Operations Management
Invesco Ltd Investment Company Institute Iron Mountain, IncorporatedInc. Iron Mountain, Inc. – North America ITC Holdings Corp. Itochu International, Inc. North America ITT Systems CorporationEducational Services, Inc. J.C. Penney Company, Inc. J. Paul Getty Trust J.D. Irving, Limited – Irving Tissue Company Irving, Limited – Irving Tissue Company J.R. Simplot Company J.R. Simplot Company – Aribusiness Group J.R. Simplot Company – Food Group J.R. Simplot Company – Land & Livestock Jabil Circuit, Inc. Jack in the Box , Inc.
Jackson Health System Jackson Hewitt Tax Service, Inc.Health System – Jackson North Medical Center Jackson Health System – Jackson South Community Hospital Jacobs Engineering Group, Inc,Inc. Jaquar Land Rover North America, LLC James Avery Craftsman, Inc. James Hardie Industries SEplc Janus Capital GroupJames Hardie Industries plc – James Hardie Building Products
Jefferson County Public SchoolsJames Hardie Industries plc – James Hardie Building Products, Building Products USA
James Hardie Industries plc – James Hardie Building Products, Research & Development USA JetBlue Airways JM Family Enterprises
Jockey International,John B. Sanfilippo & Son, Inc.
John Hancock Financial Services, Inc. John Wiley & Sons, Inc. John Hopkins HealthCare, LLC Johns Manville Johnson Controls, Inc. Johnson Electric North America, Inc. Johnson Financial Group Johnsonville Sausage, LLC Jones Lang LaSalle JP Morgan Chase Asset ManagementJones Lang LaSalle – Americas
JT International USA, Inc.JTI Leaf Services US, LLC
Judicial Council of California Kao Brands CompanyKaiser Permanente
Kaiser Permanente – Colorado Region B-5
Kaiser Permanente – Georgia Region Kaiser Permanente – Hawaii Region Kaiser Permanente – Mid-Atlantic Region, Non Hospital Facilities Kaiser Permanente – Northern California Region Kaiser Permanente – Northern California Region, Non Hospital Facilities Kaiser Permanente – Northwest Region, Non Hospital Facilities Kaiser Permanente – Ohio Region Kaiser Permanente – Southern California Region Kansas City Southern Railway Kao Specialties Americas LLCUSA, Inc. KAR Auction Services,Kaplan, Inc.
Kaplan, Inc. – Kaplan Higher Education Group Kaplan, Inc. – President for Kaplan Higher Education Campuses KBR, Inc. KBR, Inc. – Downstream Keane,KBR, Inc. – Gas Monetization
KBR, Inc. – Hydrocarbons KBR, Inc. – Minerals KBR, Inc. – North American Government and Logistics KBR, Inc. – Operations KBR, Inc. – Power & Industrial KBR, Inc. – Services KBR, Inc. – Technology KBR, Inc. – Upstream, Oil & Gas KBR, Inc. – Ventures Kellogg Company Kellogg Company – Frozen Foods Kellogg Company – Kashi Kellogg Company – Morning Foods Kellogg Company – North America Kellogg Company – Snacks Kellogg Company – US Kelly Services, Inc. Kelsey-Seybold Clinic Kemper A Unitrin BusinessHome Service Companies Kemper Preferred Kent State University Kentucky Higher Education Student Loan Corporation Keste, LLC Kewaunee Scientific Corporation KeyCorp Keystone Foods, LLC Keystone Foods, LLC – USA Proteins Kforce Inc. Kia Motors America, Inc. KIK Customs Products Kimberly-Clark Corporation Kimberly-Clark Corporation – Consumer Kimberly-Clark Corporation – Health Care Kimberly-Clark Corporation – K-C Professionals Kimberly-Clark Corporation – Kimberly-Clark International Kindred Healthcare, Inc. Kindred Healthcare, Inc. – Home Health/Hospice Kindred Healthcare, Inc. – Hospital Division Kindred Healthcare, Inc. – Nursing Center Division Kindred Healthcare, Inc. – RehabCare Division Kiwanis International, Inc. Klein Tools, Inc. Knowledge Learning CorporationUniverse Knoxville Utilities Board Kohler Company Kohler Company – Ann Sacks Kohler Company – Baker Kohler Company – Engines Kohler Company – Global Faucets Kohler Company – Global Power Group Kohler Company – Hospitality & Real Estate Group Kohler Company – Interiors Group Kohler Company – Kallista Kohler Company – Kitchen & Bath Kohler Company – Kohler Rental Power Kohler Company – Mark David Kohler Company – McGuire Furniture Company Kohler Company – Plumbing Americas Kohler Company – Power Systems Business Kohler Company – Robern Kohl’s Corporation Kone, Inc. (USK) Kuehne + Nagel – North America Kuehne + Nagel – US Konecranes, Inc.
Kyocera America, Inc.Kum & Go L.C.
L.L. Bean, Inc. Laboratory Corporation of America Lancaster General Land O’Lakes, Inc. Latham & Watkins LLPLand O’Lakes, Inc. – Dairy Food Division
Land O’Lakes, Inc. – Feed Division Land O’Lakes, Inc. – WinField Solutions LANXESS Corporation Us LANXESS Sybron Chemicals Inc. Laureate Education, Inc. Laureate Education, Inc. – College of Santa Fe Laureate Education, Inc. – Kendall College Laureate Education, Inc. – Laureate Global Products and Services Laureate Education, Inc. – Walden University Lawson Products, Inc. Learning Care Group, Inc.LCRATransmission Services Corporation
Legacy Health Legal & General America, Inc. LEGO Brand Retail,Systems, Inc. LEGO Systems,Lehigh Valley Health Network
Leica Geosystems Lend Lease Lennox International, Inc. Lennox International, Inc. – Advanced Distributor Products Lennox International, Inc. – Allied Air Lennox International, Inc. – LI Residential Lennox International, Inc. – NAS Lennox International, Inc. North America Commercial Lennox International, Inc. – Refrigeration (WWR) Lennox International, Inc. – Residential H&C Lenovo Leo Burnett Worldwide, Inc.- Arc Worldwide Leo Burnett Worldiwde, Inc. – Leo Burnett USA Leprino Foods Company Level 3 Communications LG&E and KU Energy LLC Electronics USA, Inc. Lhoist North America Liberty Mutual Group Liberty Mutual Group – Commercial Markets Liberty Mutual Group – Global Specialty Liberty Mutual Group – Liberty International Liberty Mutual Group – Personal Markets Lieberman Research Worldwide LifeBridge HealthLifetime Healthcare Companies, Inc.
Lifetime Healthcare Companies, Inc. – Excellus BlueCross BluShield Lifetime Healthcare Companies, Inc. – Lifetime Care Lifetime Healthcare Companies, Inc. – MedAmerica Lifetouch, Inc. Lifetouch, Inc. – Lifetouch Church Directories (LCD) Lifetouch, Inc. – Lifetouch National School Studios (LNSS) Lifetouch, Inc. – Lifetouch Portrait Studio (LPS) Limited Brands, Inc. Limited Brands, Inc. – Bath And Body Works Limited Brands, Inc. – Henri Benzel Limited Brands, Inc. – La Senza Limited Brands, Inc. – Mast Global Limited Brands, Inc. – Victoria’s Secret Linamar North Carolina, Inc. Lincoln Financial Group Link-Belt Construction Equipment CompanyLions Club International
Livingston International Inc. LM Wind Power Group – LM Wind Power Blades (AR) Inc. Loews CorporationLM Wind Power Group – LM Wind Power Blades (ND), Inc.
Logan’s Roadhouse, Inc. Lonza North America Inc. Loparex, LLC LORD Corporation Lorillard Inc.
Los Angeles Community College District Los Angeles Unified School District Louis Vuitton North America Inc. Louisiana-Pacific Corporation
Lower Colorado River Authority LSG Lufthansa Service Holding AG Lufthansa Airlines
lululernon athletic usaSky Chefs Inc.
Luxottica Retail US M&T Bank CorporationM*Modal, Inc.
Macy’s, Inc. Macy’s Inc. – Bloomingdale’s Macy’s, Inc. – Macy’s Corporate Services, Inc. Macy’s Inc. – Macy’s Credit & Customer Services Macy’s Inc. – Macy’s Logistics and Operations (MLO) Macy’s, Inc. – Macy’s Systems and Technology Maersk Agency U.S.A., Inc. Maersk Line Limited Madison Square Garden Maersk, Inc.
Magellan Health Services Magellan Midstream Holdings, LP Magna Donnelly CorporationMagellan Midstream Holdings, LP – Pipeline/Terminal Division
Magellan Midstream Holdings, LP – Transportation Magnesium Products of America Inc. Main Line Health, Inc. MANN+HUMMEL USA,Main Line Health, Inc. – Bryn Mawr Hospital
Mannatech,Main Line Health, Inc. – Bryn Mawr Rehabilitation Hospital
Manpower,Main Line Health, Inc. – Paoli Hospital
Main Line Health, Inc. – Riddle Memorial Hospital Main Line Health, Inc. – The Lankenau Hospital ManpowerGroup MAPFRE U.S.A. Corp. Maricopa Integrated Health Systems Maritz, Inc.
Markem-ImajeSystem
Marriott International, Inc. Marriott International, Inc. – The Ritz-Carlton Mars North America —Mars FoodsInformation Services Mars, Incorporated – Wm. Wrigley Jr. Company Mars, Incorporated – Wm. Wrigley Jr. Company – Mars Global Services Mars, Incorporated – Wm. Wrigley Jr. Company _ US Marsh
Marsh & McLennan Companies, Inc. – Marsh Marshall & Ilsley Corporation
Marshfield Clinic Martek Biosciences CorporationMary Kay, Inc.
Mary Kay, Inc. – US Division Maryland Procurement Office
Masco Corporation —Decorative Architectural Group, Behr Processing CorporationMary Washington Healthcare
Massachusetts Institute of Technology MassMutual Life Insurance Company MasterCard, Incorporated Mattel, Inc.
Maxum PetroleumMasterion Corporation
Masterion Corporation – Materion Brush, Inc. Masterion Corporation – Materion Technical Materials, Inc. Matrix Medial Network Matson, Inc. Matson, Inc. – Matson Logistics MAVEA, LLC Mayo Foundation Mayo Foundation – Mayo Clinic, Jacksonville May Foundation – Mayo Clinic, Scottsdale McCain Foods USA, Inc. McCormick & Company, Inc. McCormick & Company, Inc. – Consumer Products Group McCormick & Company, Inc. – Industrial Group McDermott International, Inc. McDonald’s Corporation MCG Health,McGladrey, LLP
McLane Company MDU Resources Group, Inc. MDU Resources Group, Inc. – Fidelity Exploration & Production Company MDU Resources Group, Inc. – Montana Dakota Utilities MDU Resources Group, Inc. – WBI Energy, Inc. Mead Johnson Nutrition Co. MeadWestvaco Corporation MeadWestvaco Corporation – Calmar MeadWestvaco Corporation – Coated Board MeadWestvaco Corporation – Community Development & Land Management MeadWestvaco Corporation – Consumer Packaging Group MeadWestvaco Corporation – Slatersville, LLC MeadWestvaco Corporation – South Carolina LLC MeadWestvaco Corporation –Texas, L.P. MeadWestvaco Corporation – Virginia Corporation Measurement Systems Mechanics Bank Mecklenburg County Government Medical College of Wisconsin Medical Mutual of OhioMedivators, Inc.
MediCorp Health SystemMednax
MedPlus,Medspace, Inc.
MedStar Health Medtronic, Inc. MEGA Brands America, Inc. Memorial HealthcareSloan-Kettering Cancer Center MemorialCare Health System Mercedes-Benz Financial Services USA LLCMemorialCare Health System – Long Beach Memorial Medical Center
Mercedes-Benz USAMemorialCare Health System – Orange Coast Memorial Medical Center
MemorialCare Health System – Saddleback Memorial Medical Center Mercury Insurance Group Mercy Corps Meredith Corporation Meredith Corporation – Local Media Group Meredith Corporation – MXM Meredith Corporation – National Media Group Meritor, Inc. B-6
Meritor, Inc. – Aftermarket Meritor, Inc. – Industrial Meritor, Inc. – Truck Merrill Corporation Metal Technologies,Metalsa Structural Products, Inc.
Metalsa-Roanoke, Inc. Methodist Health System MetLife, Inc. Metropolitan TransitWashington Airports Authority MFS Investment ManagementMetsa Board Americas Corporation
Michael Baker Corporation Michaels Stores, Inc.Michelman
Micro-Edge.LLC MillerCoors LLC Mine Safety Appliances Company Mitsubishi Motors Credit of America, Inc. D-5
Mills-Peninsula Health ServicesMitsubishi Motors North America, Inc.
Mitsui & Co. (USA), Inc. Modern Woodmen of America Modine Manufacturing Company Modine Manufacturing Company – Asia Modine Manufacturing Company – Commercial Products Group Modine Manufacturing Company – North America Moet Hennessy USA Molex Molex – Commercial Products Division Molex – Integrated Products Division Molex – Sales & Marketing Division Molina Healthcare, Inc. Molson Coors Brewing Company Moneris SolutionsMomentive Specialty Chemicals, Inc.
MoneyGram International, Inc.
Montefiore Medical CenterMoore & Van Allen, PLLC
Morgan, Lewis & Bockius LLP Morrison & Foerster, LLP Morrison Healthcare Food Services Morrison Senior Living Mortgage Guaranty Insurance CorporationCorp Motion Picture Industry Pension &Mountain States Health PlansAlliance
MRI Software LLC MTS Systems Corporation Mueller Water ProductsMTS Systems Corporation – Sensors
MTS Systems Corporation – Test Division Munich Reinsurance America, Inc. Munsters Corporation Mutual Ofof Omaha Mutual of Omaha –Mutual of Omaha Bank MWH Global, Inc. MWI Veterinary Supply, Inc.
Nalco Holding Company
Nash-Finch Company
National Association of Home Builders National Basketball Association National Church Residences National FuturesChurch Residences – NCR Health Care Division National Church Residences – NCR Housing Division National Future Association National Interstate Insurance Company National Louis University National Nail Corp. National Rural Telecommunications Cooperative National Rural Utilities Cooperative National-Louis University Finance Corporation (NRUCFC)
Nationwide Children’s Hospital Nationwide Mutual Insurance Company Nature’s Sunshine Products Nautilus, Inc.Nature’s Sunshine Products – Synergy Worldwide
Navigant Consulting, Inc.Naval Systems Division
Navistar Inc.International Corporation Navy Exchange Service Command (NEXCOM) Navy Federal Credit Union NBTY, Inc. NCCI Holdings, Inc. NCH Corporation Neighborhood Health Plan of Rhode IslandNCR Corporation
Neiman Marcus Group Neiman Marcus Group – Bergdorf Goodman Neiman Marcus Group – Last Call Stores Neiman Marcus Group – Neiman Marcus Direct Neiman Marcus Group – Neiman Marcus Stores Nemak USA Inc. Nestlé USA, Inc. Nestlé USA, Inc. – Beverage Division Nestlé USA, Inc. – Confections & Snacks Division Nestlé USA, Inc. – Direct Store Delivery Division Nestlé USA, Inc. – Nespresso USA, Inc. Nestlé USA, Inc. – Nestlé Dryer’s Ice Cream Nestlé USA, Inc. – Nestlé Prepared Foods Company Nestlé USA, Inc. – Nestlé Professionals Nestlé USA, Inc. – Nestlé Sales Nestlé USA, Inc. – Pizza Division NetJets, Inc. NetJets, Inc. – NetJets Aviation, Inc. NetJets, Inc. – NetJets Sales, Inc. Netorian, LLC Nevada Property 1 LLC New Balance Athletic Shoe, Inc. New York Community Bancorp, Inc. New York Life Insurance Company New York Life Insurance Company – Direct New York Life Insurance Company – Insurance New York Life Insurance Company – Long Term-Care Insurance Division New York Life Insurance Company – New York Life Advanced Markets Network New York Life Insurance Company – New York Life Investment Management LLC New York Life Insurance Company – Other New York Life Insurance Company – Wealth Management New York Power Authority New York Presbyterian Healthcare System New York University Newell Rubbermaid, Inc. Newfield Exploration Company NewPage Group, Inc. New York Presbyterian Healthcare SystemNexans AmerCable Incorporated
Nexans Energy USA, Inc. Nexans USA Nexans USA, Inc., The Valley Group Nexen Petroleum USA, Inc. NextEra Energy, Inc. Niagara Bottling, LLC Nilfisk-Advance Industrial Vacuum Nilfisk-Advance Technologies Nilfisk-Advance, Inc. NiSource Inc. NJM Insurance GroupNiSource Inc. – Columbia Gas of Ohio
NiSource Inc. – Columbia Gas Transmission, LLC NiSource Inc. – Energy USA NiSource Inc. – NiSource Gas Transmission & Storage NiSource Inc. – NiSource Midstream Services, LLC NiSource Inc. – Northern Indiana Public Service Company Noble Corporation Norfolk Southern Corporation North American Hoganas Inc. Northeast Georgia Health System, Inc. Northern Arizona University Northern Trust Corporation NorthShore University HealthSystem Northwestern Mutual
Northwestern University
Norton Healthcare Novant Health, Inc. Novartis
Novo Nordisk, Inc. Novus International,Novozymes BioAg, Inc.
Novozymes North America, Inc. Novozymes US – Biologicals NRG Energy, Inc. Nuclear Sensors & Process Instrumentation Nuplex Resins Nutricia North America NYU Langone Medical Center O’Reilly Auto Parts, Inc. Oak Ridge Associated Universities Oakland County Oakwood Healthcare, Inc. Océ Business Services
Ocean Spray Cranberries, Inc. Ocean Systems OCI Chemical Corporation OCI Enterprises, Inc. OCI Solar Power Office Depot, Inc. OfficeMax, IncorporatedInc. OGE Energy CorporationCorp. OGE Energy Corp. – Enogex Oglethorpe Power Corporation OhioHealth Oil State Industries, Inc. — Arlington
Old Dominion Electric Cooperative Old Dominion University Research Foundation Old National Bancorp O’Melveny & Myers LLP Omnicare, Inc. OneAmerica Financial Partners,Omnicare, Inc. ��� Long Term Care
Omnicare, Inc. – Specialty OMNOVA Solutions, Inc. OMNOVA Solutions, Inc. – Engineered Surfaces OMNOVA Solutions, Inc. – Performance Chemicals Omya, Inc. OneBeacon Insurance Opus Bank
Orange County Government Group, Ltd.
Orange County’s Credit Union Orbital Sciences Corporation Orica USA Inc. Orrick, Herrington & Sutcliffe, LLP OSI Industries, LLC OSI Industries, LLC – Oakland Facility OSI Industries, LLC – West Chicago Facility OSI Industries, LLC – West Jordan Facility Owens Corning Owens Illinois North America Owens-Illinois, Inc. PACCAR – Dynacraft PACCAR – ITD PACCAR – Kenworth Truck Company PACCAR – PACCAR Engine Company PACCAR – PACCAR Financial PACCAR – Parts PACCAR – Peterbilt Motors Company PACCAR – Technical Center PACCAR – Winch PACCAR, Inc. Pacific Life InsuranceGas & Electric Company Pacific Pulmonary Services PacifiCorp Packaging Corporation of America PallPackaging Corporation of America – Containerboard
Palmetto HealthPackaging Corporation of America – Corrugated
Palos Community Hospital Pandora Holding US Panduit Corporation Panduit Corporation – Network Systems Division Panduit Corporation – Raceways Division Panduit Corporation – Rack Systems Division Panduit Corporation – Wiring Components Division Panduit Corporation – Wiring ID Products Division Papa John’s International, Inc. Paramount Pictures Park Nicollet Health Services Parker Hannifin Corporation Parker Hannifin Corporation – Aerospace Group Parker Hannifin Corporation – Climate and Industrial Controls Group Parker Hannifin Corporation – Industrial Parkland Health & Hospital System Parkview Health Parsons Brinckerhoff Parsons Corporation Parsons Corporation – Parsons Environment & Infrastructure Group Inc. Parsons Corporation – Parsons Government Services Inc. Parsons Corporation – Transportation Group Partners HealthCare Pason Systems – 3PS, Inc. Pason Systems USA Corp. Pason Systems USA Corp. – Pason Offshore Patterson Companies Patton Boggs LLPPatterson Companies – Patterson Dental
Paychex, Inc.Patterson Companies – Patterson Medical
Patterson Companies – Webster Veterinary Payless ShoeSource Peabody Energy Corporation PeaceHealth PeaceHealth – Lower Columbia Religion PeaceHealth – Oregon Region PeaceHealth – Whatcom Region Pearson Education Pearson Education – Curriculum Pearson Education –Higher Ed Professional Pearson Education – Pearson NCS, Assessments & Information Pearson Education – Pearson VUE Peet’s Coffee & Tea Penske Truck LeasingPenn National Insurance
Pennsylvania Higher Education Authority Agency Pentagon Federal Credit Union Pentair, Inc. Pentair, Inc. – Aquatic Systems Pentair, Inc. – Flow Technologies Pentair, Inc. – Process Technologies Pentair, Inc. – Technical Products Pentair, Inc. – Water Purification People’s United Bank People’s United Bank – People’s Capital and Leasing Corporation People’s United Bank – People’s Securities, Inc. People’s United Bank – People’s United Equipment Financing Corp People’s United Bank – People’s United Insurance Agency Perfetti Van Melle USA Performance Food Group Performance Food Group – AFFLINK Performance Food Group – CDC, Tennessee Performance Food Group – Roma Food Performance Food Group – Vistar Performance Food Group – West Creek – Broadline Corp. Performant Financial Corporation Perrigo Company PETCO Animal Supplies Inc. Pharmavite, LLCPeter Kiewit Sons, Inc.
Pfizer, Inc. B-7
PharMerica, Inc. Phelps Dodge International Corporation PHH ArvalCorporation PhillipsPhiladelphia Insurance Companies
Philip Morris International, Inc. Philip Morris International, Inc. – PMI Global Brands, Inc. Philip Morris International, Inc. – PMI Global Services, Inc. Philips North America Philips North America – Consumer Lifestyles Philips North America – Healthcare Philips North America – Lighting Phillips-Van Heusen Corporation Phillips-Van Heusen Corporation – Calvin Klein Phillips-Van Heusen Corporation – Dress Shirt Phillips-Van Heusen Corporation – GH Bass Phillips-Van Heusen Corporation – Izod Retail Phillips-Van Heusen Corporation – PVH Sportswear Phillips-Van Heusen Corporation – Tommy Hilfiger Phillips-Van Heusen Corporation – Van Heusen Retail Phoenix Companies Phoenix Companies –Saybrus Partners, Inc. Piaggio Group Americas Pier 1 Imports, Inc. Pinnacle Entertainment, Inc.Pierre Fabre
Pinnacle West CapitalPilot Corporation of America
Pioneer Natural Resources USA, Inc. Piper Jaffray Companies PJM Interconnection Plains Exploration & Production Company PlainsCapital Corporation Plante & Moran, PLLC Plum Creek Timber Company, Inc. PNM Resources, Inc.
Polaris Industries, Inc. Policy StudiesPolyOne Corporation
PolyOne Corporation – Distribution PolyOne Corporation – Geon PolyOne Corporation – Glasforms, Inc. Polymer TechnologiesPolyOne Corporation – Global Color, Additives and Inks
PolyOne Corporation – Global Specialty Engineered Materials PolyOne Corporation – GLS PolyOne Corporation – Performance Products & Solutions PolyOne Corporation – Producer Services PolyOne Corporation – Specialty Coatings & Resins PolyPeptide Laboratories, Inc. PolyPeptide Laboratories San Diego Port Authority of Allegheny County Port of Portland Port of Seattle Powerwave Technology,Portfolio Recovery Associates, Inc.
Post Holdings Inc. PPD, Inc. PPG Industries, Inc. PPL Corporation PPL Corporation –LG&E and KU Energy, LLC PQ Corporation Praxair, Inc. Praxair, Inc. – Hydrogen-carbon-Monoxide (HyCO) Praxair, Inc. – North American Industrial Gases Praxair, Inc. – Praxair Distribution, Inc. Praxair, Inc. – Praxair Surface Technologies Preformed Line Products Company Premera Blue Cross Presbyterian Healthcare Services
Pressure Chemical Co.Press Ganey Associates, Incorporated
Prime Therapeutics LLC Principal Financial Group Printpack, Inc. PrivateBancorp, Inc. ProBuild Holdings, Inc. Progressive Corporation ProLogic Protective Life Corporation D-6Protective Life Corporation – Asset Protection Division
Protective Life Corporation – Life & Annuity DivisionProvidence Health & Services Prudential Financial, Inc.
PSC — Environmental Services Division
PSCU Financial Services Public Company Accounting Oversight Board
Public Service Enterprise Group, Inc. Public Service Enterprise Group, Inc. – PSEG Energy Holdings, LLC Public Service Enterprise Group, Inc. – PSEG Energy Resources and Trading, LLC Public Service Enterprise Group, Inc. – PSEG Fossil Public Service Enterprise Group, Inc. – PSEG Nuclear Public Service Enterprise Group, Inc. – PSEG Power, LLC Public Service Enterprise Group, Inc. – PSEG Services Corporation Public Service Enterprise Group, Inc. – Public Service Electric and Gas Company Publix Super Markets, Inc. Publix Super Markets, Inc. – Atlanta Region Publix Super Markets, Inc. – Jacksonville Region Publix Super Markets, Inc. – Lakeland Region Publix Super Markets, Inc. – Miami Region Puget Sound Energy PulteGroup, Inc. PZ Cussons Beauty QBE The Americas QTI HumanQEP Resources, Inc.
Qualcomm, Inc.Inc
Quest Diagnostics Questar Corporation QVC, Inc.Questar Corporation – Questar Pipeline Company
Qwest Communications International, Inc.
Rack Room ShoesQVC, Inc.
Radian Group Radio One, Inc. Ralcorp Holdings, Inc.Rakuten LinkShare Corporation
Raley’s RAND Corporation Random House, Inc. Random House, Inc. – Children’s Publishing Group Random House, Inc. – Crown Publishing Group Random House, Inc. – Knopf Publishing Group Random House, Inc. – Random House Publishing Group Random House, Inc. – Smashing Ideas Raymond James Financial RBC Bank
RBCRaymond James Financial – Capital Markets
Raymond James Financial – Eagle Asset Management Raymond James Financial – Fixed Income Capital Markets Raymond James Financial – Private Client Group Raymond James Financial – Raymond James Bank RBC Wealth Management Reckitt Benckiser, Inc. Recreational Equipment,Red Bull North America
Red Robin Gourment Burgers, Inc. Redcats USA — OneStopPlus.comReebok International, Ltd.
Reed Elsevier – Elsevier Reed Elsevier – LexisNexis Group – US Corporate and Federal Markets Regency Centers Corporation Regeneron Pharmaceuticals, Inc. Regions Financial Corporation Reichhold, Inc. Reinsurance Group ofRemington Arms Company, LLC
Remy Cointreau USA, Inc. Renesas Electronics America Inc. Renaissance Learning,Republic National Distributing Company
Restaurants Associates Revlon, Inc. Republic Underwriters Insurance CompanyRexnord Corp.
Rexel Holdings USARexnord Corp. – Aerospace
Rexnord Corp. – Bearing Rexnord Corp. – Chain & Conveying Equipment Rexnord Corp. – Coupling Rexnord Corp. – Flat Top Rexnord Corp. – Gear Rexnord Corp. – Specialty Components Rexnord Corp. – Water Management Rexnord Corp. – Water Treatment Reynolds American, Inc. Reynolds American, Inc. – R.J. Reynolds Tobacco Co. Reynolds American, Inc. – RAI Services Co. Rheem Manufacturing Company, Inc. Rhein Chemie Corporation Rich Products Corporation Rich Products Corporation – Arlington Rich Products Corporation – Brownsville Rich Products Corporation – Brunswick Rich Products Corporation – Burlington Rich Products Corporation – Eagan Rich Products Corporation – Fresno Rich Products Corporation – Gallatin Rich Products Corporation – Grandview Rich Products Corporation – Hilliard Rich Products Corporation – Jon Donaire Rich Products Corporation – Murfreesboro Rich Products Corporation – New Britain Rich Products Corporation – Niles Rich Products Corporation – Vineland Rich Products Corporation – Waycross Ricoh Americas Corporation Ridgewood Savings BankRitchie Bros. Auctioneers
Rio Tinto plc US
Rite Aid Corporation Riviana Foods, Inc. RLI Insurance Company Robins, Kaplan, Miller & Ciresi, LLP Roche Diagnostics US
Rockwell Automation, Inc. Rockwell Collins, Inc. Rollins, Inc.Rogers Corporation
Roper St. Francis Healthcare Roundy’s Supermarkets, Inc. Rowan Companies, Inc. RR Donnelley & Sons RSC Holdings Inc.
RSM McGladrey
Rush University Medical Center Russell Reynolds Associates Inc. Ryder Systems, Inc. Ryder Systems, Inc. – Fleet Management Solutions Ryder Systems, Inc. – Supply Chain Solutions S&C ElectronicElectric Company S&C Electric Company – Executive S.C. Johnson & Son, Inc. SABMiller Latin America Sabre Holdings Corporation Safety-Kleen Systems,Sabre Holdings Corporation – Sabre Airline Solutions
Sabre Holdings Corporation – Sabre Travel Network Sabre Holdings Corporation – Travelocity Sage North America Sage North America – Sage Payment Solutions, Inc. SAI Global
SAIF Corporation Saint Raphael Healthcare System
Saks, Inc. Samsung Telecommunications America San Antonio Federal Credit Union San Antonio Water System Sandvik Coromant company Sandvik, Inc. Sapient Corporation
Sara Lee CorpSauer-Danfoss
Sauer-Danfoss – Controls Sauer-Danfoss – Hydrostatics Sauer-Danfoss – Stand Alone Business Savannah River Nuclear Savannah River Remediation LLC
Solutions, LLC Save the Children Federation,Sazerac Company, Inc.
SC JohnsonSazerac Company, Inc. �� Barton Brands of California
Sazerac Company, Inc. – Barton Brands of Kentucky Sazerac Company, Inc. – Barton Brands of Maryland Sazerac Company, Inc. – Buffalo Trace Distillery Sazerac Company, Inc. – The Glenmore Distillery SBA Communications Corporation SCA Americas SCANA Corporation SCANA Corporation – Carolina Gas Transmission Corporation SCANA Corporation – PSNC Energy SCANA Corporation – SC Electric Gas Scandinavian Tobacco Group A/S – Cigars International, Inc. Scandinavian Tobacco Group A/S – General Cigar Company Scandinavian Tobacco Group Lane Ltd. SCF Arizona Schlumberger Limited – Schlumberger Oilfield Services Schneider ElectronicElectric North America Schneider National, Inc. Scholle Corporation Schwarz Supply SourceScholle Corporation – Scholle Chemical
Scholle Corporation – Scholle Packaging SchoolsFirst Federal Credit Union Schrader International, Inc. Schrader International, Inc. – Schrader electronics Inc. Schulte Roth & Zebel, LLP Science Applications International Corporation (SAIC) Scottrade Inc. Scripps Health Scripps Health – Scripps Clinic Scripps Health – Scripps Green Hospital Scripps Health – Scripps Memorial Hospital Encinitas Scripps Health – Scripps Memorial Hospital La Jolla Scripps Health – Scripps Mercy Hospital Chula Visa Scripps Health – Scripps Mercy Hospital San Diego Scripps Networks Interactive, Inc. Scripps Networks Interactive, Inc – Scripps Networks SCS Engineers Sea Star Line, LLCSCS Engineers – Bellevue
SearlesSCS Engineers – BT Squared
SCS Engineers – Construction SCS Engineers – Dallas SCS Engineers – Long Beach SCS Engineers – Midwest SCS Engineers – OM&M SCS Engineers – Reston SCS Engineers – SCS Energy SCS Engineers – SCS Tracer SCS Engineers – Tampa SCS Engineers – Valley MineralsCottage Seadrill American, Inc. Seaport Canaveral Sears Holdings Corporation Seattle Children’s Hospital Secure Intelligence Systems Division Securian Financial Group Select Properties, Ltd.
B-8
Selective Insurance Company of America Sensata Technologies, Inc.Sentara Healthcare
Sentara Healthcare Sentry Insurance – Sentara Norfolk General Hospital
Sephora USA Service Corporation International
Severn Trent Services SGD North America Sharp HealthCare Shearman & Sterling LLP Shure Incorporated
Sidley Austin, LLP Siemens AG USCorporation Sigma Foods Inc. Simon Property Group Sinclair Broadcast Group, Inc. SIRVA,Sitel Worldwide Corporation
SK C&C USA Inc. Sitel
SKF USA, Inc. Skilled Healthcare, LLCSkyjack Inc.
SLM Corporation SMART Technologies Corporation Smiths Medical, ASDInc. SMSC Gaming Enterprises Society InsuranceSnyder’s-Lance, Inc.
Sodexo USA
Solera Holdings, Inc. Solera Holdings, Inc. – Claims Services Group Solo Cup Company SolutiaSony electronics, Inc.
Southeastern Freight LinesSOTECH
Southern California Regional Rail AuthoritySothebys
SourceHOV, LLC Southern Company Southern Company – Alabama Power Company Southern Company – Georgia Power Southern Company – Gulf Power Company Southern Company – Mississippi Power Company Southern Company – Southern Nuclear Operating Co. SouthernLINC Wireless Southwest Airlines Co. Southwestern Energy Company Spartan Light Metal Products, Inc. Spartan Stores, Inc. Spectra Energy Corp. Spectrum Brands Holdings, Inc. Spectrum Health SystemBrands, Inc. – Russell Hobbs Spin MasterSpectrum Brands, Inc.
Spirax Sarco, Inc.
Springleaf Financial Services – United Industries
SPX Corporation SSAB Americas – SSAB Alabama, Inc. SSAB Americas – SSAB Enterprises, LLC SSAB Americas – SSAB Iowa, Inc. St. Agnes Medical Center St. Cloud Hospital St. Elizabeth Healthcare St. Jude Children’s Research HosptialHospital St. Luke’s Episcopal Health System St. Luke’s Health System St. VincentLuke’s Health System – Anderson County Hospital St. Luke’s Health System – Cushing Memorial Hospital St. Luke’s Health System – Hedrick Medical Center St. Luke’s Health System – Kansas City St. Luke’s Health System – Physician Specialists St. Luke’s Health System – St. Luke’s Cardiovascular Consultants St. Luke’s Health System – St. Luke’s East, Lee’s Summit St. Luke’s Health System – St. Luke’s Home Care and Hospice St. Luke’s Health System – St. Luke’s Hospital of Kansas City St. Luke’s Health System – St. Luke’s Medical Group St. Luke’s Health System – St. Luke’s Northland Hospital St. Luke’s Health System – St. Luke’s South Hospital St. Luke’s Health System – Wright Memorial Hospital Stampin’ Up!, Inc. StanCorp Financial Group
Stanford University Stanford University Medical Center– Stanford Hospital and Clinics Stanford University – Stanford Hospital and Clinics – Lucile Packard Children’s Hospital Stanley Healthcare Stantec Inc. Staples, Inc. Star Management Services Starwood Vacation Ownership State Farm Insurance State Personnel Administrationof Georgia Department of Administrative Services State Teachers Retirement System of Ohio Steelcase, Inc. — Steelcase, Inc. – Designtex Company STERIS Corporation STG, Inc. Storck USA L.P. Straumann USA Stryker CorporationSubaru of Indiana Automotive Inc.
Suburban Propane Partners, LP Sumitomo Electric – Carbide Manufacturing, Inc. Sun Life Financial – MFS Investment Management Sun Life Financial – Sun Life Financial (US) Sunoco,SunCoke Energy, Inc.
Sunrise Medical (US) LLCSunoco Logistics Partners, LP
SunTrust Banks,Sunoco, Inc.
SuperValu Supply Chain Associates, LLC
D-7
Susquehanna Bancshares, Inc.Sutter Health
Sutter Health Swagelok Company
Swedish – Mills-Peninsula Health Services
Sykes Enterprises, IncorporatedSwarovski North America Ltd.
SymcorSwissport USA, Inc.
Swissport USA, Inc. – Hallmark Aviation Services Swissport USA, Inc. – Swissport Cargo Services Swissport USA, Inc. – Swissport Fueling, Inc. Symetra Financial Symetra Financial – Group Insurance Symetra Financial – Life & Annuities Syncreon Synovus Financial Corporation Synovus Financial Corporation – Globalt, Inc. Synovus Financial Corporation – Synovus Mortgage Corp. Synovus Financial Corporation – Synovus Securities Synovus Financial Corporation – Synovus Trust Sypris Solutions, Inc. Sypris Solutions, Inc. – Sypris Electronics Sypris Solutions, Inc. – Sypris Technologies T. Rowe Price Group, Inc. Taminco, Inc. Target Corporation Taubman Centers,Taylor Morrison, Inc.
Tax Analysts
TD Ameritrade Holdings Corp.
TDS TelecomTaylor Morrison, Inc. – Darling Homes
TE Connectivity Technology Credit Union TECO Energy, Inc. TECO-Westinghouse Motor CompanyTelephone & Data Systems, Inc. – TDS Telecom
Teknion LLCTelephone & Data Systems, Inc. – U.S. Cellular
TeleTech Holdings, Inc.
Tellabs Temple-Inland, Inc.
Tenaris, Inc. USA Tenet Healthcare Corporation Tenova Core, Inc. Tenova Mining & Minerals USA, Inc. Tesoro Corporation Teva Pharmaceutical USA,Tetra Laval Group – DeLaval, Inc.
Texas Association of School BoardsTetra Laval Group – DeLaval, Inc. – West Agro Inc.
Tetra Laval Group – Tetra Pak International S.A. Texas Industries, Inc. Texas Industries, Inc. – Aggregates Texas Industries, Inc. – CAC Texas Industries, Inc. – Consumer Products Texas Mutual Insurance Company Texas State University-San Marcos TextainerTextron Inc.
Textron Inc. – Bell Helicopter The Allstate Corporation
The American National Bank of TexasTextron Inc. – Textron Systems
The AmeriHealth MercyCaritas Family of Companies The Boeing CompanyAmeriHealth Caritas Family of Companies – AmeriHealth Caritas Pennsylvania The Boston Consulting GroupAmeriHealth Caritas Family of Companies – Arbor Health Plan The AmeriHealth Caritas Family of Companies – Community Behavioral HealthCare Network of PA The AmeriHealth Caritas Family of Companies – Florida True Health, Inc. The AmeriHealth Caritas Family of Companies – MDwise Hoosier Alliance The AmeriHealth Caritas Family of Companies – PerformRX The AmeriHealth Caritas Family of Companies – Select Health of south Carolina, Inc. The Bon-Ton Stores, Inc. The Capital Group Companies The Carson Companies The Casey Group, Inc.
The Children’s Hospital of Philadelphia The Children’s Mercy Hospital The Chubb Corporation The Chubb Corporation – commercial Insurance The Church of Jesus Christ of Latter-day Saints The Coca-Cola Company The Coca-Cola Company – North America Group The Dannon Company, Inc. The Doe Run Company The Donna KarenDolan Company LLC The E.W. Scripps Company The E.W. Scripps Company – Abilene Reporter-News The E.W. Scripps Company – Anderson Independent-Mail The E.W. Scripps Company – Evansville courier & Press The E.W. Scripps Company – KGTV – TV The E.W. Scripps Company – KJRH – TV The E.W. Scripps Company – KMGH – TV The E.W. Scripps Company – KNXV – TV The E.W. Scripps Company – KSHB – TV The E.W. Scripps Company – Newspaper, Corpus Christi Caller-Times The E.W. Scripps Company – Newspaper, Knoxville News Sentinel The E.W. Scripps Company – Newspaper, Naples Daily News The E.W. Scripps Company – Newspaper, The Commercial Appeal The E.W. Scripps Company – Newspaper, Treasure Coast Newspaper The E.W. Scripps Company – Newspaper, Ventura County Star The E.W. Scripps Company – Redding Record Searchlight The E.W. Scripps Company – San Angelo Standard-Times The E.W. Scripps Company – The Kitsap Sun (Bremerton) The E.W. Scripps Company – WCPO – TV The E.W. Scripps Company – WEWS – TV The E.W. Scripps Company – WFTS – TV The E.W. Scripps Company – Wichita Falls Times Record News The E.W. Scripps Company – WPTV – TV The E.W. Scripps Company – WRTV – TV The E.W. Scripps Company – WXYZ – TV The Employers Association The Estee Lauder Companies Inc. The Florida Aquarium, Inc. The Ford Foundation The Frost National Bank The Hanover Insurance Group, Inc.Golden 1 Credit Union
The Hershey Company The Irvine Company The J.M. Smucker Company
The Johns Hopkins Hospital The Johns Hopkins University The Johns Hopkins University – Applied Physics Laboratory The Joint Commission The Kroger CompanyMain Street America Group The McGraw-Hill CompaniesMedical University of South Carolina Hospital Authority The Methodist Hospital System The MITRE Corporation The Mosaic Company The Mosaic Company – Phosphates The Mosaic Company – Potash The Motorists Insurance Group The National Academies The Nebraska Medical Center The New York Times Company The Nielsen Company The NPDNORDAM Group Inc. The Ohio State UniversityNORDAM Group – NORDAM Interiors & Structures Division The NORDAM Group – NORDAM Nacelle & Thrust Reverser Systems Division The NORDAM Group – NORDAM Repair Division The NORDAM Group – NORDAM Transparency Division The Northwestern Mutual Life Insurance Company The Ohio State University MedicalWexner medical Center The Options Clearing Corporation The Outsource Group The Pampered Chef Ltd The Pantry, Inc. The Pennsylvania State University —– Penn State Milton S. Hershey Medical Center The Regence GroupPolyclinic The Schwan Food Company The Schwan Food Company – Schwan’s Food Service, Inc. The Schwan Food Company – Schwan’s Consumer Brands, Inc. The Schwan Food Company – Schwan’s Home Service, Inc. The ServiceMaster Company The ServiceMaster Company – American Home Shield The ServiceMaster Company – Merry Maids The ServiceMaster Company – ServiceMaster Clean The ServiceMaster Company – Terminix The ServiceMaster Company – TruGreen LawnCare The Sherwin-Williams Company The Sherwin-Williams Company – Consumer Group, Diversified Brands Division The Sherwin-Williams Company – Global Finishes B-9
The Sherwin-Williams Company – Global Group, Auto Division The Sherwin-Williams Company – Latin America Coatings The Sherwin-Williams Company – Paint Stores Group The Sherwin-Williams Company – Paint Stores Group, Eastern Division The Sherwin-Williams Company – Paint Stores Group, Midwestern Division The Sherwin-Williams Company – Paint Stores Group, Southeastern Division The Sherwin-Williams Company – Paint Stores Group, Southwestern Division The Sherwin-Williams Company – Product Finishes Division The Sherwin-Williams Company – Protective & Marine Coatings The Sports Authority The Sundt Companies, Inc. The Sundt Companies, Inc. – Concrete Division The Sundt Companies, Inc. – Sundt Construction, Inc. Federal Division The Sundt Companies, Inc. – Sundt Construction, Inc. Northern California The Sundt Companies, Inc. – Sundt Construction, Inc., Heavy Civil Division The Sundt Companies, Inc. – Sundt Construction, Southwest District The Sundt Companies, Inc. – Texas Division The Talbots, Inc. The TJX Companies, Inc. The Toro CompanyTJX Companies, Inc. – Home Goods The TJX Companies, Inc. – Marmaxx Group The Travelers Companies, Inc. The University of Alabama at Birmingham The University of Arizona Health Network The University of Chicago Medical Center The University of Kansas Hospital The University of Texas System The University of Texas System – The University of Texas Medical Branch at Galveston The University of Texas System – University of Texas at Dallas The University of Texas System – University of Texas Health Science Center at Dallas The University of Texas System – University of Texas Health Science Center at San Antonio The University of Texas System – University of Texas Southwestern Medical Center The Vanguard Group, Inc. The W.C. Bradley Co.
The Walt Disney Company The Washington PostWalt Disney Company Newspaper Publishing– Disney ABC Television The Weather ChannelWalt Disney Company – Disney Consumer Products The Walt Disney Company – ESPN The Walt Disney Company – Walt Disney Parks & Resorts, LLC The Walt Disney Company – Walt Disney Studios The Washington Post The Wendy’s Company The Williams Companies, Inc. The Yankee Candle Company,Williams Companies, Inc. – Laser Northeast Gathering company, LLC Think Mutual BankThe Woodbridge Group
Thirty-One GiftsThomas & Betts Corporation
Thomas Jefferson University Hospital Thrivent Financial Forfor Lutherans TIAA-CREFThyssenKrupp AG
Tim Hortons USA Inc.ThyssenKrupp Elevator
TI Automotive Tiffany & Co. Time Warner Cable Time Warner, Inc. —– Time, Inc. TMEIC Corporation TMK IPSCO Toll BothersBrothers Tomkins Corporation – Gates Corporation Toray Plastics (America),Toshiba Corporation – Landis+Gyr
Toshiba Corporation – Westinghouse Electric Company Totem Ocean Trailer Express, Inc. Touchpoint Support Services, LLC Toyota Industrial Equipment Manufacturing,Motor Sales, U.S.A., Inc. Toys R Us, Inc. Tractor Supply Company Transamerica Transocean, Inc. Treofan America, LLCTredegar Corporation
Trimac Transportation ServicesTredegar Corporation – The William L. Bonnell Company
Tredegar Corporation – Tredegar Film Products Trelleborg Coated Systems U.S., Inc. Trelleborg Sealing Solutions U.S., Inc. TrelleborgVibracoustic Trinity Health Trinity Industries, Inc. TriWest Healthcare Alliance
Troy Corporation
Truman Medical Centers
Trustmark Companies TSYS Core
TTX Company Tufts University
Tupperware Brands Corporation Turner Broadcasting System, Inc.
Tween Brands, Inc.
Tyco International — SimplexGrinnellFire & Security U.S. Food ServiceBank ULTA Salon, Cosmetics & Fragrance, Inc. UMB Financial Corporation UNC Health Care System Under Armour, Inc. Under Armour, Inc. – Under Armour Retails Sales Undersea Sensor Systems Unified Grocers, Unilver U.S. Inc.
Union Tank Car Company United Natural Foods, Inc. United Parcel Service United Parcel Service – Air Cargo United Services Automobile AssociationRentals, Inc. United States Enrichment Corporation (USE) United States Enrichment Corporation (USE) – American Centrifuge United States Enrichment Corporation (USE) – American Centrifuge Oak Ridge United States Enrichment Corporation (USE) – Gaseous Diffusion United States Olympic Committee United States Steel Corporation United Stationers Supply Company United Subcontractors, Inc. United Technologies Corporation United Technologies Corporation – Climate, Controls & Security United Technologies Corporation – Otis Elevator Company United Technologies Corporation – Power United Technologies Corporation – Pratt & Whitney United Technologies Corporation – Sikorsky Aircraft United Technologies Corporation – UTC Aerospace Systems United Technologies Corporation – UTC Research United Water UnitedHealth Group UniversityUniversal Health Services, Inc.
University at Buffalo University Health SystemsMedical Center of Eastern CarolinaSouthern Nevada
University of Alabama at BirminghamCalifornia University of Arkansas for Medical SciencesCalifornia – Berkeley D-8
University of California – Davis University of California – Irvine University of California – Los Angeles University of California – Merced University of California – Riverside University of California – San Diego University of California – San Francisco University of California – Santa Barbara University of California – Santa Cruz University of Central Florida University of Colorado Hospital University of Florida University of Houston University of Illinois at Chicago University of Maryland, Medical CenterBaltimore University of Miami University of Michigan University of Mississippi Medical CenterMinnesota - Duluth University of Notre Dame University of Pennsylvania University of Pittsburgh Medical Center University of Southern CaliforniaSt Thomas
University of Virginia Health SystemMedical Center UNUM Group UPM-Kymmene, Inc.
Uponor, Inc. URS Corporation Infrastructure and Environment Division
US BancorpTower USANA Health Sciences Utah Transit Authority Vail Resorts,UTi Worldwide Inc.
Utica National Insurance Group Valero Energy Corporation Valley National Bank ValueOptions Vangent,Vanderbilt University
Vantiv, Inc. Vectren Corporation Velocity Technology Solutions, Inc. Ventura Foods, LLC Veolia Water North America Veolia Water North America – Central LLC Veolia Water North America – Industrial Group Veolia Water North America – Northeast LLC Veolia Water North America – West LLC Verisign Inc. Verizon Communications Vermeer Corporation Veyance Technologies Inc.VF Corporation
ViadVF Corporation – 7 for All Mankind
VF Corporation – Action Sports Americas VF Corporation – Contemporary Brands VF Corporation – Eagle Creek VF Corporation – Imagewear VF Corporation – Jansport Americas VF Corporation – Jeanswear VF Corporation – Lucy VF Corporation – Nautica Enterprises VF Corporation – Outdoor VF Corporation – Reef VF Corporation – Smartwool VF Corporation – Splendid/Ella Moss VF Corporation – Sportswear VF Corporation – The North Face VF Corporation – Timberland VF Corporation – Vans VF Corporation – VF Outlet Vinson & Elkins, LLP Viper North America Virginia State BarCommonwealth University Health System (VCUHS) Vistar CorporateVirginia Mason Medical Center
Visa, Inc. Visa, Inc. – CyberSource Visa, Inc. – Debt Processing Services Visa, Inc. – Inovant Visa, Inc. – PlaySpan Vision Service Plan – Eyefinity Vision Service Plan – Marchon Eyewear Vision Service Plan – VSP Optics Group Vision Service Plan – VSP Vision Care Vision Service Plan Global Visteon Corporation Vita-Mix Corporation VITAS Healthcare Corporation Vitera Healthcare Solutions Vivint, Inc. Volex Inc Volkswagen AG – Audi of America, Inc. Volkswagen AG – Volkswagen Credit, Inc. Volkswagen AG – Volkswagen Group of America, Inc. Volkswagen AG – Volkswagen of America, Inc. Volvo Group North America Volvo Group North America – Construction Equipment Volvo Group North America – Government Sales Volvo Group North America – Group Truck Operations Volvo Group North America – Group Trucks Sales & Marketing Volvo Group North America – Group Trucks Technology Volvo Group North America – Penta Volvo Group North America – Volvo Buses Volvo Group North America – Volvo Financial Services Volvo Group North America – Volvo Group Business Services Volvo Group North America – Volvo Information Technology Vonage Holdings Corporation VSP Global
Vulcan Materials Company VWNAInc
VWR International W. L.W.J. Bradley
W.L. Gore & Associates, Inc. W.L. Gore & Associates, Inc. – Medical Products Division W.W. Grainger, Inc. WABSO Compressor Manufacturing Company WABCO North America Waddell & Reed Wake County Government Financial, Inc.
Walgreen CompanyCo. Washington Hospital CenterWal-Mart Stores, Inc.
Walter USA, Inc. Washington Metropolitan Area Transit Authority Waste Management, Inc.Webster Financial Corporation
Webster Financial Corporation – HSA Bank Wegmans Food Markets, Inc. Weil, Gotshal & Manges, LLP Weill Cornell Medical College Weir SPM WellCare Health Plans, Inc. WellPoint, Inc. Wells Enterprises, Inc. Wells Fargo & Company WellSpan Health WellStar Health System Weltman, Weinberg & Reis Co., LPA
Wendy’s/Arby’s Group,WESCO International, Inc.
West Penn Allegheny Health System West Penn Allegheny Health System – Allegheny General Hospital & Suburban Campus West Penn Allegheny Health System – Canonsburg General Hospital West Penn Allegheny Health System – Forbes Regional Campus West Penn Allegheny Health System – The Western & Southern Financial GroupPennsylvania Hospital West Penn Allegheny Health System – Physicians Organization Western Digital Western Union
Westfield Insurance Westinghouse Electric Company
Westlake Chemical Corporation
Weston Solutions, Inc. B-10
Weston Solutions, Inc. – Central Division Weston Solutions, Inc. – Client Business Teams Division Weston Solutions, Inc. – Global Division Weston Solutions, Inc. – Mid-Atlantic Division Weston Solutions, Inc. – National Accounts Weston Solutions, Inc. – Northeast Division Weston Solutions, Inc. – Pacific Division Weston Solutions, Inc. – Service Lines Division Weston Solutions, Inc. – South Division Westwood College WGL Holdings, Inc. Wheaton College – Washington Gas
Wheaton Franciscan Healthcare Wheels, Inc.Wheaton Franciscan Healthcare – All Saints Healthcare
Wheaton Franciscan Healthcare – Covenant Medical Center Wheaton Franciscan Healthcare – Marianjoy Rehabilitation Hospital Wheaton Franciscan Healthcare – St. Joseph Hospital Whip Mix Corporation Whirlpool Corporation Whole Foods Market, Inc. William Blair & Company, LLC William Marsh Rice University Wisconsin Court SystemWilliams-Sonoma, Inc.
Wm. Wrigley Jr. CompanyWilmer Cutler Pickering Hale and Dorr, LLP
Winston Industries, LLC Wipro Technologies Wolfgang Puck Catering Wolters Kluwer NA Wood Group ESP, Inc.Wolters Kluwer NA – Corporate Legal Services
Wolters Kluwer NA – Financial & Compliance Wolters Kluwer NA – Health Wolters Kluwer NA – Small Firm Services Wolters Kluwer NA – Tax and Accounting Wolters Kluwer NA – WK Health Clinical Solutions Wolters Kluwer NA – WK Health Professional Education Wolters Kluwer NA – WK Medical Research World Vision Wyndham Worldwide Wyndham Worldwide – Exchange and Rentals Wyndham Worldwide – Wyndham Hotel Group Wyndham Worldwide – Wyndham Vacation Ownership Xcel Energy Inc. XL AmericaGroup plc XL Group plc – Insurance XL Group plc – Insurance US XL Group plc – Marine and Offshore Energy XL Group plc – Reinsurance XL Group plc – Reinsurance US Xylem Inc. Xylem Inc. – Applied Water Solutions Yale-New Haven Health System Yamaha Corporation of America
Yellow Pages Group USA Yeshiva University YMCA of the USA Zale Corporation Zebra Technologies CorporationZedi, Inc. – Southern Flow
Zimmer Holdings, Inc. Zimmer Holdings, Inc. – Zimmer Dental Zimmer Holdings, Inc. – Zimmer Orthobiologics Zimmer Holdings, Inc. – Zimmer Orthopedic Surgical Products, Dover Zimmer Holdings, Inc. – Zimmer Spine Zimmer Holdings, Inc. – Zimmer Trabecular Metal Technology Zions Bancorporation Zions Bancorporation – Amegy Bank Zions Bancorporation – California Bank and Trust Zions Bancorporation – National Bank of Arizona Zions Bancorporation – Nevada State Bank Zions Bancorporation – Vectra Bank Colorado Zions Bancorporation – Zions First National Bank Zodiac Seats US, LLC Zoro Tools Inc. Zumtobel US Zurich North America Zywave D-9B-11
Appendix EC Towers Watson 20112013 Executive Compensation Databank 3M A.O. Smith Abbott Laboratories
AbitibiBowaterAbbVie
Accenture ACH Food Acuity Brands
Adecco Aerojet AGCO Agilent Technologies Agrium Aimia Air Liquide Air Products and Chemicals Alcoa Alcon Laboratories
Alexander & Baldwin Alliant Techsystems American Crystal Sugar American Sugar Refining AMERIGROUPAmericas Styrenics
AmerisourceBergen AMETEK Amgen Ann Taylor StoresAMR
AOLAMSTED Industries
APLAmway
Appleton PapersAnsell
Applied MaterialsAptarGroup
ARAMARK Arby’s Restaurant Group Archer Daniels Midland Arkema Armstrong World Industries Arrow Electronics Ashland AstraZeneca AT&T Automatic Data Processing Avaya Avery Dennison Avis Budget Group Avon Products Axiall Corporation BAE Systems Ball Barnes Group Battelle Memorial InstituteBarrick Gold of North America
Baxter International Bayer AG Bayer Business & Technology Services Bayer CropScience Beckman CoulterBayer HealthCare
BeloBD – Becton Dickinson
BemisBeam
Bechtel Systems & Infrastructure Benjamin Moore Best Buy Big Lots BoeingBiogen Idec
Black Box Boise Boise Cascade Booz Allen Hamilton BorgWarner Boston Scientific Bovis Lend Lease
Brady Bristol-Myers Squibb Broadridge Financial Solutions
Brown-Forman
Bucyrus International
Bunge Burlington Northern Santa Fe Bush Brothers CACATechnologies
Caesar’s Entertainment Calgon Carbon Cameron International
Cardinal Health Cargill Carlson Companies CarMax Carmeuse North America Group Carnival Carpenter Technology CaterpillarCarriage Services
CDICatalent Pharma Solutions
CBS Celestica Celegene CEVA Logistics CF Industries CGI Technologies & Solutions
ChattemCH2M Hill
Chemtura Chiquita Brands
Choice Hotels InternationalChristensen Farms
Chrysler CHS Cisco Systems Clear Channel Communications Cliffs Natural Resources COACHCloud Peak Energy
CNH Coach Coca-Cola Coca-Cola Enterprises
Coinstar Colgate-Palmolive Columbia Sportswear Comcast Commercial Metals Compass Group ConAgra Foods Continental Automotive Systems
ConvaTec
Convergys Cooper Industries CoreLogicStandard Automotive
Corning Cott Corporation Covance Covidien CSRCSX
CSXCumberland Gulf Group
Curtiss-Wright CVS Caremark Cytec Daiichi Sankyo Daimler Trucks North America Dannon
Darden Restaurants Dassault Systems
Day & Zimmermann Dean Foods Deckers OutdoorDeere & Company
Dell Delta Air Lines
Deluxe Dentsply Dex One
Diageo North America Dollar Tree Stores
Domtar
Donaldson Company Dow Corning Dr Pepper Snapple DSM Nutritional Products DuPont E.W. Scripps Eastman Chemical Eastman Kodak
Eaton eBay Ecolab Eli Lilly EMC EMD Millipore Endo PharmaceuticalsEmerson Electric
EnCana Oil & Gas USA Engility Corporation EnPro Industries Equifax Equity Office Properties Ericsson ESRI Estee Lauder Evergreen PackagingEsterline Technologies
Exel Exelis Expedia Experian Americas Express Scripts Fair IsaacExterran
Federal-Mogul Fidelity National Information ServicesFirst Data
Fiserv FluorFlowserve
Ford FortuneFourtune Brands Home & Security
Freeport-McMoRan Copper & Gold Frontier Communications Fujitsu Limited G&K Services GAF Materials Gap Gartner Gates Gavilon GenCorp General Atomics General Dynamics General Mills General Motors GenzymeGerdau Long Steel North America
Gilead Sciences GlaxoSmithKline Goodman Manufacturing GoodrichGoodyear Tire & Rubber
Google Graco GreifGreen Mountain Coffee Roasters
Grupo Ferrovial GSI Commerce
GTECH H.B. Fuller Hanesbrands Harland Clarke Harley-Davidson
Harman International Industries HasbroHarsco
Haynes InternationalHasbro
HBO HD Supply Headway TechnologiesHenry Schein
Herman Miller Hershey Hertz Hewlett-Packard
Hexcel Hilton Worldwide Hitachi Data Systems HNI HNTB E-1
Hoffmann-La Roche Holcim
Home Depot Honeywell
Hormel Foods Hostess BrandsHost Hotels & Resorts
Houghton Mifflin Harcourt Publishing Hunt Consolidated Huron Consulting Group
Husky Injection Molding Systems Hyatt Hotels
IBM IDEXX Laboratories IKON Office Solutions
Illinois Tool Works IMS Health
Ingersoll RandIngersoll-Rand
Intel Intercontinental Hotels Group International Automotive Components International Flavors & Fragrances International PaperGame Technology Interpublic Group
Intrepid PotashInternational Paper
Invensys Controls ION Geophysical Irvine Company ITT
ITT Mission SystemsCorporation J.M. Smucker J.R. Simplot Jabil Circuit Jack in the BoxJacobs Engineering
JetBlue Airways JM Family EnterprisesJohns-Manville
John-Manville
JohnJohnson & Johnson
Johnson Controls Kaman Industrial Technologies
Kansas City Southern
Kao Brands
KBR Kellogg Kelly Services Kennametal Kewaunee Scientific Corporation Keystone Foods Kimberly-Clark Kinetic ConceptsKimco Realty
Kinross Gold Koch Industries Kofax Kohler Komatsu AmericaKyocera Corporation
L-3 Communications Land O’Lakes Leggett and Platt Lehigh Hanson Lend Lease Leprino Foods Level 3 Communications Lexmark International
Life Technologies LindeLifetouch
Lockheed MartinLincoln Electric
Lorillard Tobacco Lubrizol
Lyondell ChemicalLyondellBaselll
Magellan Midstream Partners ManTech InternationalMakino
Manitowoc Marriott International Martin Marietta Materials Mary Kay Masco Mattel Matthews International McClatchyMcDermott International
McDonald’s McGraw-Hill
McKesson MDC Holdings
MeadWestvaco Media General Medicines CompanyMedtronic
MedtronicMenasha Corporation
Merck & Co. Micron Technology Microsoft Milacron Mitsubishi Power System AmericasMillerCoors
Millicom International Cellular Mine Safety Appliances Molnlycke Heath Care Molson Coors Brewing Molycorp Momentive Specialty Chemicals Monsanto
Mosaic Motorola MobilityMTS Systems
Motorola SolutionsNash-Finch
Murphy Oil
MWH GlobalNavigant Consulting
Navistar International NBTY NCR Neoris USA Nestlé USA Newell Rubbermaid Newmont Mining NewPage Nissan North America Nokia Noranda Aluminum
Norfolk Southern NovartisNOVA Chemicals
Novartis Consumer Health Novo Nordisk Pharmaceuticals Nypro Occidental Petroleum Office Depot Omgeo Omnicare OMNOVA Solutions Orange Business Services Oshkosh Overhead Door
C-1
Owens Corning Owens-Illinois Oxford IndustriesInstruments America Pall Corporation Panasonic of North America Parker Hannifin Parsons Corporation PepsiCo Performance Food Group PerkinElmerPfizer
PfizerPHH
PHI Pitney Bowes Plexus Plum Creek Timber Polaris Industries Polymer Group PolyOne Potash PPG Industries Praxair ProBuild Holdings
Pulte HomesGroup Purdue Pharma QUALCOMMQualcomm
Quest Diagnostics Quintiles R.R. Donnelley Ralcorp Holdings
Reader’s Digest
Realogy
Reddy IceRayonier
Regal-Beloit Regency CentersRegeneron Pharmaceuticals
Rent-A-CenterRevlon
Research in MotionReynolds Packaging
Ricardo
Rio TintoRicoh Americas
Roche Diagnostics Rockwell Automation Rockwell Collins Rolls-Royce North America Rowan Companies Ryder System Safety-Kleen SystemsS.C. Johnson & Son
Sage Software SAIC Sanofi-AventisSanofi
SCA AmericasSAS Institute
Schreiber Foods Schwan’s Scotts Miracle-Gro Scripps Networks Interactive
Seagate Technology Sealed Air Serco ServiceMaster Company ShawCor Sherwin-Williams Siemens AGShire
Sigma-Aldrich Smith & Nephew
Snap-On Sodexo Sonoco Products Space Systems LoralSony Electronics
Southwest Airlines Spirit AeroSystems SprintNextelSprint Nextel
SPX SRA InternationalSSAB
StantecSt. Jude Medical
Staples Starbucks StarTek Coffee Company
Starwood Hotels & Resorts Statoil Steelcase Stryker Sulzer Pumps US
SunGard Data Systems
Sunoco
Sunovion Pharmaceuticals
SuperValu Stores
SwagelokSuburban Propane
Syngenta Crop Protection Takeda PharmaceuticalTarget
Taubman Centers TE Connectivity Tektronix
Temple-InlandTeleTech Holdings
Teradata Terex Tetra Tech Texas Instruments Textron Thermo Fisher Scientific ThomasThomson Reuters
Tiffany & BettsCo. Time Warner Time Warner Cable Timken
T-Mobile USA Toro Total System ServicesService (TSYS) TravelportToyota Motor Engineering & Manufacturing
Trident SeafoodsNorth America
Transocean Trinity Industries Tronox TRW Automotive E-2
Tupperware Tyson Foods
U.S. Foodservice Brands
Underwriters Laboratories Unilever United States Union Pacific
Unisys United Rentals United States Cellular United States Steel United States Technologies URS Energy & ConstructionUPS
USG
UTi WorldwideURS
Valero Energy Vangent
Verde RealtyVentura Foods
Verizon Vertex Pharmaceuticals Viacom Vision Service PlanViad
Visteon Vulcan Materials VWR International W.R. Grace W.W. Grainger Wal-Mart Stores Walt Disney Waste Management Wendy’s/Arby’sWendy’s Group
West Pharmaceutical Services Westinghouse Electric Weyerhaeuser Whirlpool Wilsonart International
Winnebago Industries Wm. Wrigley Jr.Worthington Industries
Wyndham Worldwide Xerium Technologies Xerox YRC WorldwideXilinx
Yum! Brands Zimmer E-3C-2
| | | | | | | | | | | | | | | | | | | | | | | | | | |  
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Electronic Voting Instructions | | | | | | | | | | | | Electronic Voting Instructions
| | | | | | | | | | | | You can vote by Internet or telephone! | | | | | | | | | | | | Available 24 hours a day, 7 days a week! | | | | | | | | | | | | Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. | | | | | | | | | | | | VALIDATION DETAILS ARE LOCATED BELOW IN THE SHADED TITLE BAR. | | | | | | | | | | | | Proxies submitted by the Internet or telephone must be received by 12:00 a.m. Eastern Daylight Time, on May 23, 2013.21, 2015. | | | | | 
| | Vote by Internet | | | | • | | Go towww.investorvote.com/HAS | | | | • | | Or scan the QR code with your smartphone | | | | • | | Follow the steps outlined on the secure website |
| | | | | | | | | | | | | | | 
| | Vote by Internet | | | | | | | | | | | | | | • Go towww.investorvote.com/HAS
| | | | | | | | | | | | | | | | | | | • Or scan the QR code with your smartphone
| | | | | | | | | | | | | | | | | | | • Follow the steps outlined on the secure websitetelephone
| | | Using ablack inkpen, mark your votes with anXas shown in this example. Please do not write outside the designated areas.
| | x | | | | | | | | | | Vote by telephone•
| | • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
| Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. | | | | | • | | Follow the instructions provided by the recorded message |
| | | Annual Meeting Proxy Cardq IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
| |  |
| | | | | | | q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
| | |
| | | | | | | | | | | | | A | | Election of Directors For Terms Expiring in 20142016 — The Board of Directors recommends a voteFOR all of the nominees listed. | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. Nominees: | | For | | Withhold | | | | For | | Withhold | | | | For | | Withhold | | | | + | | | 01 - Basil L. Anderson | | ¨ | | ¨ | | 02 - Alan R. Batkin | | ¨ | | ¨ | | ¨03 - Kenneth A. Bronfin
| | 03 - Frank J. Biondi, Jr.¨
| | ¨ | | ¨
| | | | | | | | | | | | | | | | | 04 - Kenneth A. BronfinMichael R. Burns | | ¨ | | ¨ | | 05 - John M. Connors, Jr.Lisa Gersh | | ¨ | | ¨ | | 06 - Michael W.O. GarrettBrian D. Goldner | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | 07 - Lisa GershAlan G. Hassenfeld | | ¨ | | ¨ | | 08 - Brian D. GoldnerTracy A. Leinbach | | ¨ | | ¨ | | 09 - JackEdward M. GreenbergPhilip | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | 10 - Alan G. HassenfeldRichard S. Stoddart | | ¨ | | ¨ | | 11 - Tracy A. LeinbachLinda K. Zecher | | ¨ | | ¨ | | 12 - Edward M. Philip | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | 13 - Alfred J. Verrecchia | | ¨ | | ¨ | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | B | | B
| | Proposals — The Board of Directors recommends a voteFOR Proposals 2 and 3 and 4 anda voteAGAINST Proposal 5.Proposals 4, 5, and 6. | | |
| | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | | | | | | 2. | | The adoption, on an advisory basis, of a resolution approving the compensation of the Named Executive Officers of Hasbro, Inc., as described in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of the 20132015 Proxy Statement. | | ¨ | | ¨ | | ¨ | | 5. To consider and vote upon a shareholder proposal entitled “Supplier Sustainability Reporting.”
| | ¨
| | ¨
| | ¨
| | | | | | | | | | 3. | | 3. Approval of Amendments to the Restated 2003 Stock Incentive Performance Plan.
| | ¨
| | ¨
| | ¨
| | 6. To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.
| | | 4. Ratification of the selection of KPMG LLP as Hasbro, Inc.’s independent registered public accounting firm for fiscal 2013.
2015. | | ¨ | | ¨ | | ¨ |
| | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | 4. | | Shareholder Proposal: Proxy Access | | ¨ | | ¨ | | ¨ | | | | | | | 5. | | Shareholder Proposal: Post-Termination Holding Period for Portion of Equity Held by Senior Executives | | ¨ | | ¨ | | ¨ | | | | | | | 6. | | Shareholder Proposal: Limitation on Vesting of Equity Held by Senior Executives Following a Change in Control | | ¨ | | ¨ | | ¨ |
IF VOTING BY MAIL, YOUMUST COMPLETE SECTIONS A, B AND D ON BOTH SIDES OF THIS CARD.  021UUD
Dear Fellow Shareholders: You are cordially invited to attend the 2015 Annual Meeting of Shareholders of Hasbro, Inc. to be held at 11:00 a.m., EDT on Thursday, May 21, 2015, at 1027 Newport Avenue, Pawtucket, Rhode Island. The accompanying Notice of Annual Meeting and Proxy Statement contain detailed information as to the formal business to be transacted at the meeting. Your Vote Matters. Whether or not you plan to attend the 2015 Annual Meeting, it is important that your shares be voted. Please follow the instructions on the other side of this proxy card. You may, of course, attend the 2015 Annual Meeting and vote in person, even if you have previously voted. I am looking forward to seeing you there. Sincerely, Alfred J. Verrecchia Chairman of the Board q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q | | | | | ¢
| |  | | + |
01MCBD
| | | Dear Fellow Shareholders:
| You are cordially invited to attend the 2013 Annual Meeting of Shareholders of Hasbro, Inc. to be held at 11:00 a.m., EDT on Thursday, May 23, 2013, at 1027 Newport Avenue, Pawtucket, Rhode Island. The accompanying Notice of Annual Meeting and Proxy Statement contain detailed information as to the formal business to be transacted at the meeting.
| Your Vote Matters. Whether or not you plan to attend the 2013 Annual Meeting, it is important that your shares be voted. Please follow the instructions on the other side of this proxy card. You may, of course, attend the 2013 Annual Meeting and vote in person, even if you have previously voted. I am looking forward to seeing you there.
| Sincerely,
| Alfred J. Verrecchia
Chairman of the Board
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| q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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| | | HASBRO, INC. 1027 Newport Avenue, Pawtucket, RI 0286202861 Annual Meeting of Shareholders – May 23, 201321, 2015 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS | | + |
| The undersigned acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement of Hasbro, Inc. (the “Company”) and hereby appoints BRIAN D. GOLDNER and ALFRED J. VERRECCHIA and each of them, with full power of substitution to each of them, as attorneys and proxies to appear and vote all of the shares of Common Stock standing in the name of the undersigned at the Annual Meeting of Shareholders of the Company to be held on May 23, 2013
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The undersigned acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement of Hasbro, Inc. (the “Company”) and hereby appoints BRIAN D. GOLDNER and ALFRED J. VERRECCHIA and each of them, with full power of substitution to each of them, as attorneys and proxies to appear and vote all of the shares of Common Stock standing in the name of the undersigned at the Annual Meeting of Shareholders of the Company to be held on May 21, 2015 at 11:00 a.m., EDT at 1027 Newport Avenue, Pawtucket, Rhode Island, and at any adjournment or postponement thereof. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED “FOR” THE NOMINEES LISTED IN PROPOSAL 1, “FOR” PROPOSALS 2 AND 3, AND “AGAINST” PROPOSALS 4, 5, AND 6, AND IN SUPPORT OF MANAGEMENT ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. PLEASE MARK ON REVERSE SIDE AND SIGN AND DATE BELOW AND PROMPTLY MAIL IN THE ENCLOSED ENVELOPE. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED “FOR” THE NOMINEES LISTED IN PROPOSAL 1, “FOR” PROPOSALS 2, 3 AND 4, “AGAINST” PROPOSAL 5, AND IN SUPPORT OF MANAGEMENT ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
PLEASE MARK ON REVERSE SIDE AND SIGN AND DATE BELOW AND PROMPTLY MAIL IN THE ENCLOSED ENVELOPE.
CONTINUED ON REVERSE SIDE AND TO BE SIGNED BELOW. YOUR VOTE IS IMPORTANT |
| | | | | C | | Non-Voting Items
| | | Change of Address— Please print new address below.
| | | | | | | D | | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
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| | | | C | | Non-Voting Items | Change of Address— Please print new address below. | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | D | | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | | | | |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
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