Slide 1: Hasbro, Let Wizards Go. The Alta Fox Path to 100%+ Upside
ALTA FOX CAPITAL Hasbro, Let Wizards Go. The Alta Fox Path to 100%+ Upside #FreeTheWizards 2/17/22 FreeTheWizards.com
Slide 2: Disclaimer
Disclaimer . Alta Fox Capital Management, LLC (“Alta Fox”) (“AFC”) is an investment adviser to funds (“Funds”) in the business of buying and selling securities and other financial instruments. . Confidentiality; Not To Be Disseminated - The information set forth in this presentation is being furnish
Slide 3: Alta Fox Capital Management, LLC | Background
Alta Fox Capital Management, LLC | Background Alta Fox Capital Management, LLC is a Fort Worth, TX-based boutique investment manager founded by Connor Haley in April of 2018. Connor Haley | Managing Partner, Portfolio Manager Connor Haley founded Alta Fox Capital Management, LLC in 2018 and is respo
Slide 4: Hasbro Overview
Hasbro Overview 5 Executive Summary 6-8 Results of the “Brand Blueprint” Strategy 9-10 Main Thesis Points 11 We believe Wizards of the Coast is an exceptionally high-quality business with strong network effects, pricing power, and a long growth runway 12-26 Wizards of the Coast overview 13-14 Wizard
Slide 5: Hasbro, Inc. (HAS) | Business Overview
Hasbro, Inc. (HAS) | Business Overview We believe that Hasbro is essentially a holding company that supports three distinct underlying business lines: ¢ Hasbro’s legacy Consumer Products division c Produced its first toy in 1942 co Key owned franchise intellectual property (“IP”) include: My Little
Slide 6: Executive Summary (1/3)
Executive Summary (1/3) 1) 2) 3) 4) We believe HAS can trade to >$200/share by 2024 (base case), representing >100% upside from the current price. In our view, Hasbro’s stock trades like a slow-growth consumer toy business, but the majority of its value is in a poorly disclosed segment, WOTC, which
Slide 7: Executive Summary (2/3)
Executive Summary (2/3) * Based on its current stock price! and Alta Fox’s conservative fair value estimate of the Consumer & Entertainment WOTC EBITDA divisions (“RemainCo”), investors are only paying 11.8x FY23 EBITDA to own WOTC. 50% (as % of HAS Total) * Alta Fox believes that if WOTC were to re
Slide 8: Executive Summary (3/3)
Executive Summary (3/3) It appears that the market still perceives and values Hasbro as a slow growth toy company, yet its consumer (toy) business accounts for only 22% of Alta Fox’s estimate of intrinsic value. Our view is that Hasbro is now a “Wizards of the Coast” business that also happens to ma
Slide 9: Flaws in the Company Narrative
Flaws in the Company Narrative * Hasbro touts the narrative that it is reinvesting in Magic: The Gathering (“MTG”) / Dungeons & Dragons (“D&D”, and collectively, “core WOTC IP”) by producing entertainment content for core WOTC IP. This seems to be part of Hasbro’s failed “Brand Blueprint” strategy t
Slide 10: Results of the “Brand Blueprint” Strategy
Results of the “Brand Blueprint” Strategy Hasbro Total Shareholder Return Analysis 5-year TSR | 4-vear TSR | 3-year TSR | 2-year TSR | 1-vear TSR Hasbro Annualized Return 2.7% 2.4% 7.0% 2.8% 11.6% S&P 500 Index Annualized Return 15.8% 15.1% 19.2% 16.8% 15.4% Underperformance -94.6% -65.7% -47.1% -31
Slide 11: Thesis | Overview
Thesis | Overview Alta Fox believes Hasbro should immediately pursue a tax-free spin-off of WOTC which will maximize shareholder value, lead to improvements in capital allocation at both WOTC and the remaining company and will result in 100%+ upside over the next three years. Alta Fox believes: 1. W
Slide 12: We believe WOTC is an exceptionally high-quality business
We believe WOTC is an exceptionally high-quality business with strong network effects, pricing power, and a long growth runway
Slide 13: Wizards of the Coast | Overview (1/2)
Wizards of the Coast | Overview (1/2) e We believe WOTC is an exceptionally high- quality business with strong network effects, pricing power, and a long growth runway. + Magic: The Gathering (“MTG”) and Dungeons & Dragons (“D&D”) make up the vast majority of WOTC sales (Alta Fox estimates ~90%) % o
Slide 14: Wizards of the Coast | Overview (2/2)
Wizards of the Coast | Overview (2/2) @ We believe WOTC is an exceptionally high- quality business with strong network effects, pricing power, and a long growth runway. * MTGand D&D are evergreen high margin cash flow machines with nearly 30 & 50 year histories, respectively, as variable cost of goo
Slide 15: WOTC | MTG - Financial Profile (1/2)
WOTC | MTG - Financial Profile (1/2) @ We believe WOTC is an exceptionally high- quality business with strong network effects, pricing power, and a long growth runway. * Hasbro bought WOTC in 1999. For over 20 years, HAS refused to publicly disclose WOTC revenue or EBITDA. This finally changed in 20
Slide 16: WOTC | MTG - Financial Profile (2/2)
WOTC | MTG - Financial Profile (2/2) * Chris Cocks, President of WOTC, recently disclosed in November 2021 at a Jefferies conference that WOTC has seen @ We believe WOTC is an exceptionally high- quality business with strong network effects, pricing power, and a long growth runway. revenues grow ata
Slide 17: WOTC | MTG - Introduction to Arena
WOTC | MTG - Introduction to Arena 6... believe WOTC is an exceptionally high- quality business with strong network effects, pricing power, and a long growth runway. Arena has laid the foundation for the next decade of MTG growth, with record active player counts and revenues still to come. Arena is
Slide 18: WOTC | MTG - In the Context of Sports Cards
WOTC | MTG - In the Context of Sports Cards Oiriewvarcinenconomivnge quality business with strong network effects, pricing power, and a long growth runway. For those less familiar with MTG, a useful comparison is the following: MTG’s core business model is a much higher quality version of the busine
Slide 19: WOTC | MTG - Network Effects (1/2)
WOTC | MTG - Network Effects (1/2) 6.. believe WOTC is an exceptionally high- quality business with strong network effects, |__ pricing power, and a long growth runway. * Today, over 50M people have played MTG despite the game only growing through word of mouth and limited marketing (no TV show or p
Slide 20: WOTC | MTG - Network Effects (2/2)
WOTC | MTG - Network Effects (2/2) @ We believe WOTC is an exceptionally high- quality business with strong network effects, ¢ Inour view, MTG’s network effects have never been stronger (supported by the rise of the internet, proliferation of content creation, and the launch of Arena). o Tools like
Slide 21: WOTC | MTG - Pricing Power
WOTC | MTG _ Pricing Power (i) We believe WOTC is an exceptionally high- quality business with strong network effects, pricing power, and a long growth runway. * We believe MTG is its own pseudo-monopoly market and has no direct competition. * Strong inelastic customer demand is present with every n
Slide 22: WOTC | MTG - Secular Growth Franchise (1/4)
WOTC | MTG - Secular Growth Franchise (1/4) sic worci an ecaptony nr quality business with strong network effects, pricing power, and a long growth runway. MTG has a “built-in” customer acquisition funnel as card games geared towards children (Pokémon & Yu-Gi- Oh) and casual users (Hearthstone) ofte
Slide 23: WOTC | MTG - Secular Growth Franchise (2/4)
WOTC | MTG - Secular Growth Franchise (2/4) sic worcianecaptony nr quality business with strong network effects, pricing power, and a long growth runway. We believe investors have missed just how sticky and underpenetrated Arena still is today and, moreover, there is meaningful low hanging fruit tha
Slide 24: WOTC | MTG - Secular Growth Franchise (3/4)
WOTC | MTG - Secular Growth Franchise (3/4) sic worci an ecaptony nr quality business with strong network effects, pricing power, and a long growth runway. Alta Fox’s research suggests that Arena ARPUs are significantly higher than paper ARPUs. Paper MTG ARPU Analysis: Digital MTG Arena ARPU Analysi
Slide 25: WOTC | MTG - Secular Growth Franchise (4/4)
WOTC | MTG - Secular Growth Franchise (4/4) sic worci an ecaptony nr quality business with strong network effects, |__ pricing power, and a long growth runway. We believe that Arena is still in early innings of penetration within the “legacy MTG TAM,’ let alone the broader video game TAM. * At the M
Slide 26: WOTC | Summary of Alta Fox’s View
, . WOTC | Summary of Alta Fox’s View Orion nscepiomiy ne quality business with strong network effects, pricing power, and a long growth runway. WOTC is the crown jewel asset within Hasbro whose full value will be apparent when it is spun off. We believe: * WOTC is an exceptionally high-quality busi
Slide 27: WOTC is significantly undervalued by the market within Hasbro
We believe WOTC is significantly undervalued by the market within Hasbro due to poor disclosure and investor messaging. This has made it difficult for both buy side and sell-side analysts to fully appreciate WOTC’s business quality and intrinsic value.
Slide 28: WOTC | Significantly Undervalued Within HAS
WOTC | Significantly Undervalued Within HAS Own is significantly undervalued within Hasbro due to poor disclosure and investor messaging * Based on Hasbro’s current trading price, investors are conservatively paying 11.8x EBITDA to own WOTC today when capitalizing the RemainCo using Mattel _ ” . WOT
Slide 29: WOTC | No Credit From The Market (1/2)
WOTC | No Credit From The Market (1/2) Orc vorcnaganeans undervalued within Hasbro due to poor — disclosure and investor messaging Why is the market not giving WOTC the credit it is due? We believe the Board’s poor financial transparency with investors has resulted in low consolidated multiples bein
Slide 30: WOTC | No Credit From The Market (2/2)
WOTC | No Credit From The Market (2/2) Orc vorcnaganeans undervalued within Hasbro due to poor disclosure and investor messaging We believe WOTC’s business quality is vastly superior to that of video game developers given WOTC’s more consistent revenue growth, structurally higher profitability, and
Slide 31: WOTC | Compared to Games Workshop (1/2)
We believe WOTC is significantly WOTC | Compared to Games Workshop (1/2) ° undervalued within Hasbro due to poor disclosure and investor messaging ¢ Asan independent entity, we believe WOTC could unlock tremendous value in i i “ a i GAW LN Equity ings public markets. In our view, Games Workshop (“GA
Slide 32: WOTC | Compared to Games Workshop (2/2)
WOTC | Compared to Games Workshop (2/2) 0 rinonnapncnn undervalued within Hasbro due to poor disclosure and investor messaging We believe GAW’s average multiple of 20x NTM EBITDA is the floor for WOTC’s valuation, while the ceiling could be as high as 30-40x EBITDA * GAW has grown revenues at a 9% C
Slide 33: WOTC | Compared to Formula One
WOTC | Compared to Formula One 2 We believe WOTC is significantly undervalued within Hasbro due to poor disclosure and investor messaging * Through MTG, WOTC has essentially owned its own sports league that has existed since the 1990s. Rather than indirectly making Se SEE eo money through players mo
Slide 34: WOTC | Closer To A High-Quality SaaS Company
WOTC | Closer To A High-Quality SaaS Company® We believe WOTC is significantly undervalued within Hasbro due to poor disclosure and investor messaging Former Senior Game Designer of WOTC: “Hasbro is very much an East coast manufacturing company which was unfortunate because WOTC is much closer to a
Slide 35: WOTC | What Are The Best Comps?
WOTC | What Are The Best Comps? 2 We believe WOTC is significantly undervalued within Hasbro due to poor disclosure and investor messaging Consumer and Technology companies with growth and profitability profiles similar to WOTC trade at ~26x NTM EBITDA multiples * Alta Fox ran a screen for companies
Slide 36: WOTC | Comps - SaaS Rule of 40 Valuation
We believe WOTC is significantly undervalued within Hasbro due to poor disclosure and investor messaging WOTC | Comps - SaaS Rule of 40 Valuation * WOTC is performing at a 50-60% Rule of 40 (revenue growth rate + EBITDA margin): SaaS Comps EV/NTM Rev vs Rule of 401 o Low double digit topline growth
Slide 37: WOTC | Spectrum of Comps (1/2)
WOTC | Spectrum of Comps (1/2) e We believe WOTC is significantly undervalued within Hasbro due to poor disclosure and investor messaging We believe WOTC is a unique asset that has no perfect comparable. Below we lay out a spectrum of what we believe the universe of comps is for WOTC and color coat
Slide 38: WOTC | Spectrum of Comps (2/2)
WOTC | Spectrum of Comps (2/2) We believe WOTC is significantly undervalued within Hasbro due to poor disclosure and investor messaging WOTC outperforms the peer group across most growth and profitability metrics, yet, within Hasbro, trades at a ~50% implied discount to both Current NTM EV/EBITDA me
Slide 39: WOTC | What is This Crown Jewel Asset Worth?
WOTC | What is This Crown Jewel Asset Worth? Ono significantly undervalued within Hasbro due to poor disclosure and investor messaging ¢ We view 20x NTM EBITDA, GAW’s average 2-year multiple, as the floor for WOTC’s fair valuation. ¢ As WOTC executes on its digital initiatives, we believe its multip
Slide 40: Why Does This Opportunity Exist?
Why Does This Opportunity Exist? Ono significantly undervalued within Hasbro due to poor disclosure and investor messaging ¢ In our view, this opportunity exists due to: 14 sell-side analysts o Poor disclosure surrounding WOTC has caused investors to Lb gloss over Hasbro and has resulted in consolid
Slide 41: The SEC Has Also Taken Issue with Poor Disclosure of WOTC
The SEC Has Also Taken Issue with Poor Disclosure of worc® We believe WOTC is significantly undervalued within Hasbro due to poor disclosure and investor messaging * InSeptember 2020, the SEC sent a letter to Hasbro requesting more disclosure surrounding MTG Arena. * It was later revealed that for f
Slide 42: HAS | Fair Value Scenario Analysis Overview
HAS | Fair Value Scenario Analysis Overview We believe WOTC is significantly undervalued within Hasbro due to poor Alta Fox Price Target Jun-24 Jun-24 Jun-24 FY2024e FY2024e FY2024e WOTC EBITDA $737 $924 $1,213 WOTCEBITDAMultiple 850X827. WOTCEV $11,060 $21,242 $32,740 WOTC value per HAS Share $77.7
Slide 43: HAS | Bear Case Valuation
HAS | Bear Case Valuation We believe WOTC is significantly undervalued within Hasbro due to poor HAS SOTP 2019 2020-2021. 2022 —2023E__—2024E Rev 761 907 1,287 1345 (1,453 1,569 viy% 19% 42% 5% 8% 8% EBITDA 313 " aaa” 606 [ sei " 654 " 737 viv % 42% 3696 856 12% 13% margin % 411% 49.0% 47.1% 43.2% 4
Slide 44: HAS | Base Case Valuation
HAS | Base Case Valuation We believe WOTC is significantly undervalued within Hasbro due to poor 2022E 2023 2024€ HAS SOTP 2019 20202021 Rev vy % EBITDA wy % margin % EBITDA Multiple 761 3907 19% 313 aaa 42% 411% 49.0% 1,373 1,579 1347 1% 15% 17% f ea " 742 " 924 2% 19% 24% 45.2% 47.0% 50.0% viy% ma
Slide 45: HAS | Bull Case Valuation
HAS | Bull Case Valuation 2) We believe WOTC is significantly undervalued within Hasbro due to poor or 2019 2029 __202) 20028 _2008¢ _20046 disclosure and investor messaging Rev 761 907 1,287 14374796 .2,246. Key Assumptions wy 3% 19% 42% 12% 25% 25% EBITDA 313 7 aaa" 606 ff 75" 934 1213 . viv% 42%
Slide 46: Alta Fox Estimates vs. Consensus
Alta Fox Estimates vs. Consensus 2 We believe WOTC is significantly undervalued within Hasbro due to poor Alta Fox Consolidated Estimates vs. Consensus disclosure and investor messaging 2022E 2023E 2024E . , . . . woe AFC Base Case * The sell-side’s consolidated estimates implicitly assume the bear
Slide 47: We Believe FY22-24 WOTC Guidance Is Conservative
We believe FY22-24 WOTC Guidance Is Conservative 2 We believe WOTC is significantly undervalued within Hasbro due to poor — disclosure and investor messaging Hasbro announced WOTC compound annual revenue growth rate guidance of high-single to low-double-digit growth from FY22-24. We believe this out
Slide 48: HAS | Base Case Sensitivity Analysis for WOTC
HAS | Base Case Sensitivity Analysis for WOTC O iwnoenamnnonn undervalued within Hasbro due to poor disclosure and investor messaging Even under a variety of valuation scenarios for WOTC ranging from more conservative to more aggressive (while assuming RemainCo trades at 10.0x EBITDA), the conclusio
Slide 49: Recap: WOTC is Significantly Undervalued
Recap: WOTC is Significantly Undervalued a significantly undervalued within Hasbro due to poor disclosure and investor messaging With Alta Fox’s involvement and active push to unlock value at Hasbro, we believe investing at today’s prices yields investors a highly attractive risk/reward opportunity.
Slide 50: WOTC’s core franchises have been run as cash cows
We believe WOTC’s core franchises have been run as cash cows despite them being Hasbro’s primary growth verticals. This is reflected in a Board that, in our view, continues to make questionable capital allocation decisions and is poorly suited to running WOTC.
Slide 51: WOTC: Run as Cash Cow by Board of Directors
WOTC: Run as Cash Cow by Board of Directors © cniccicnwstesaranworines cash cow and reinvests its cash flow into +— funding highly speculative investments Despite WOTC’s ~50% contribution to Hasbro’s earnings, significant growth profile, and top percentile unit economics, the Board continues to rede
Slide 52: Case Study: Entertainment One Acquisition (1/3)
Case Study: Entertainment One Acquisition (1/3) Orc tisiros vostro worciees cash cow and reinvests its cash flow into +— funding highly speculative investments * In what Alta Fox believes was both the defining moment and the greatest failure of the “Brand Blueprint” ; ae strategy, Hasbro acquired En
Slide 53: Case Study: Entertainment One Acquisition (2/3)
Case Study: Entertainment One Acquisition (2/3) © believe Hasbro’s Board runs WOTC like a cash cow and reinvests its cash flow into +— funding highly speculative investments Hasbro spent the equivalent of nearly ten years of Wizards cash flow on eOne, diverting capital from stronger reinvestment opp
Slide 54: Case Study: Entertainment One Acquisition (3/3)
Case Study: Entertainment One Acquisition (3/3) * Management’s 2023 guidance, the first year in which synergies from eOne will be fully baked into RemainCo Profit & Loss, implies that Hasbro’s Board has overseen billions in shareholder value destruction at RemainCo from 2019 to 2023 in pursuit of it
Slide 55: Case Study: Power Rangers Acquisition (1/2)
Case Study: Power Rangers Acquisition (1/2) 6.. believe Hasbro’s Board runs WOTC like a Hasbro acquired the Power Rangers IP in June 2018 from Saban Brands, the creator of Power Rangers. The transaction was valued at $534 million, which included the issuance of $270 million of HAS common stock (~3.1
Slide 56: Case Study: Power Rangers Acquisition (2/2)
Case Study: Power Rangers Acquisition (2/2) © believe Hasbro’s Board runs WOTC like a cash cow and reinvests its cash flow into -— Alta Fox believes the $534M acquisition of Power Rangers was significantly value-destructive and a prime example of the Board’s poor capital allocation strategy. * Despi
Slide 57: Case Study: Backflip Studios Acquisition
Case Study: Backflip Studios (“Backflip”) Acquisition OB. Hasbro's Board runs WOTC like a cash cow and reinvests its cash flow into -— funding highly speculative investments Hasbro bought 70% of Backflip for $112M in 2013, which, at the time, was doing nearly $100M in sales,! but became loss-making
Slide 58: WOTC Failed Non-Core Bets Overseen by Board (1/3)
WOTC Failed Non-Core Bets Overseen by Board (1/ 3) Divine Hasbro's Board runs WOTC like a cash cow and reinvests its cash flow into -— funding highly speculative investments Despite Hasbro’s apparent failure to show success with Backflip, the Board has pushed WOTC to also develop non-core video game
Slide 59: WOTC Failed Non-Core Bets Overseen by Board (2/3)
WOTC Failed Non-Core Bets Overseen by Board (2/ 3) Divine Hasbro's Board runs WOTC like a cash cow and reinvests its cash flow into -— funding highly speculative investments Investors only need to look to Glassdoor to see more former employee testimonials confirming Alta Fox’s view: WOTC’s developme
Slide 60: WOTC Failed Non-Core Bets Overseen by Board (3/3)
WOTC Failed Non-Core Bets Overseen by Board (3/3) believe Hasbro’s Board runs WOTC like a cash cow and reinvests its cash flow into -— funding highly speculative investments * Magic: Legends was marketed as a massive multiplayer online RPG (MMORPG) which WOTC had developed in partnership with Crypti
Slide 61: G.I. Joe AAA Video Game Investment Leaves Us Baffled
G.I. Joe AAA Video Game Investment Leaves Us Baffled O55 Hasbro's Board runs WOTC Ifke a cash cow and reinvests its cash flow into +— * Toadd fuel to the fire, in September 2021 WOTC announced it would be making a AAA G.I. Joe fing Migily speculative Investments Action Adventure Game? in another one
Slide 62: WOTC Distractions: G.I. Joe is Just One of Many
WOTC Distractions: G.I. Joe is Just One of Many 3 oe Hasbro's Board runs WOTC like a cash cow and reinvests its cash flow into +— funding highly speculative investments Alta Fox views WOTC resources spent on developing video games or Trading Card Games (“TCGs”) for non-WOTC Hasbro IP as a colossal f
Slide 63: WOTC Distractions: Lack of Focus Has Hurt MTG Players
WOTC Distractions: Lack of Focus Has Hurt MTG Players Oona Hasbro's Board runs WOTC like a cash cow and reinvests its cash flow into +— funding highly speculative investments We believe the Board’s obsession with Hasbro’s lower quality Consumer business has plagued WOTC’s ability to invest in the lo
Slide 64: Summary of Board's Lack of WOTC Prioritization
Summary of Board's Lack of WOTC Prioritization © cniccicnwstesaranworines We believe the Board has poorly allocated capital into speculative investments with disastrous results. In our view, they have overemphasized Hasbro’s Consumer business and underemphasized WOTC. Investment Date Price Paid / %
Slide 65: AFC Base Case Margin Forecasts Are Conservative
AFC Base Case Margin Forecasts Are Conservative © cniccicnwstesaranworines AFC Base Case WOTC EBITDA margin forecasts are conservative to reflect reckless Board spending and poor capital allocation. cash cow and reinvests its cash flow into +— funding highly speculative investments * Considering the
Slide 66: Hasbro’s Current Capital Allocation Strategy
Hasbro’s Current Capital Allocation Strategy © believe Hasbro’s Board runs WOTC like a cash cow and reinvests its cash flow into +— In our view, Hasbro’s current capital allocation strategy is suitable only to funding highly speculative investments the RemainCo, not to WOTC. We believe this further
Slide 67: Where Should WOTC Be Deploying its Cash Flow?
Where Should WOTC Be Deploying its Cash Flow? Oo insistent woreines cash cow and reinvests its cash flow into +— funding highly speculative investments We take the view of WOTC's existing customers! that WOTC should be investing the majority of its cashflow into improving the game experience for its
Slide 68: We Believe the Board Is Not Suited to Run WOTC (1/3)
We Believe the Board Is Not Suited to Run WOTC (1/3) Ooi tastarstoaravansworetnes cash cow and reinvests its cash flow into funding highly speculative investments * Jt appears the current Hasbro Board is exclusively filled with consumer & entertainment experience and lacks gaming experience most rel
Slide 69: We Believe the Board Is Not Suited to Run WOTC (2/3)
We Believe the Board Is Not Suited to Run WOTC (2/3) 6.. believe Hasbro’s Board runs WOTC like a cash cow and reinvests its cash flow into +— funding highly speculative investments The current Consumer & Entertainment focused composition of the Board, in our view: WOTC as % of Total Hasbro EBITDA (A
Slide 70: We Believe the Board Is Not Suited to Run WOTC (3/3)
We Believe the Board Is Not Suited to Run WOTC (3/3) 6... Hasbro's Board runs WOTC like a cash cow and reinvests its cash flow into +— funding highly speculative investments + Itappears that WOTC, the most valuable business segment, is not adequately represented on what is already a bloated Board. *
Slide 71: Misaligned Incentives (1/5): Lower Executive Comp Targets Yet Improve Expected Payout
Misaligned Incentives (1/5): Lower Executive Comp 3 . : Targets Yet Imp rove Expected Payout e believe Hasbro’s Board runs WOTC like a cash cow and reinvests its cash flow into -— funding highly speculative investments * Under the current Board’s tenure, we believe the executive compensation payout
Slide 72: Misaligned Incentives (2/5): Poorly Designed Executive Compensation Structure
Misaligned Incentives (2/5): Poorly Designed Executive © believe Hasbro’s Board runs WOTC like a cash cow and reinvests its cash flow into Compensation Structure We believe Hasbro’s current executive compensation structure is misaligned funding highly speculative investments with shareholders’ inter
Slide 73: Misaligned Incentives (3/5): Peer Boards Far Outclass Hasbro Directors
Misaligned Incentives (3/5): Peer Boards Far Outclass 3 Hasbro Directors in Focus on Shareholder Return Cee ee ae en vere | Hasbro's peers demonstrate significantly more focus on shareholder return, both funding highly speculative investments in their communication with investors and underlying comp
Slide 74: Misaligned Incentives (4/5): Board Members Have Only Sold Hasbro Stock
Misaligned Incentives (4/5): Board Members Have Only 3 Sold Hasbro Sto ck We believe Hasbro’s Board runs WOTC like a cash cow and reinvests its cash flow into +— funding highly speculative investments ¢ None of the current Board Hasbro Board members have a long history of selling down stock members
Slide 75: Misaligned Incentives (5/5): Significant Underperformance Under Board Tenure
Misaligned Incentives (5/5): Significant Underperformance Under Board Tenure © believe Hasbro’s Board runs WOTC like a cash cow and reinvests its cash flow into +— funding highly speculative investments Despite WOTC’s phenomenal growth over the last five years, Hasbro’s stock price has significantly
Slide 76: Board Doubles Down on “Brand Blueprint” Strategy (1/4)
Hasbro’s Board Continues to Double Down on its o. Underperforming “Brand Blueprint” Strategy (1/4) ¢ believe Hasbro's Board runs WOTC like a cash cow and reinvests its cash flow into -— funding highly speculative investments * On January 5, 2022, Hasbro announced the appointment of Chris Cocks, Pres
Slide 77: Board Doubles Down on “Brand Blueprint” Strategy (2/4)
Hasbro’s Board Continues to Double Down on its o. Underperforming “Brand Blueprint” Strategy (2/4) believe Hasbro's Board runs WOTCHke cash cow and reinvests its cash flow into +— funding highly speculative investments WSJ NEWS EXCLUSIVE | BUSINESS Mattel Wins Disney Princess Toy Deal, Joining Elsa
Slide 78: Board Doubles Down on “Brand Blueprint” Strategy (3/4)
Hasbro’s Board Continues to Double Down on its o. Underperforming “Brand Blueprint” Strategy (3/4) e believe Hasbro's Board runs WOTC like a cash cow and reinvests its cash flow into -— * Despite investing more than $5B over the last four years into its Consumer business, Hasbro’s funding highly spe
Slide 79: Board Doubles Down on “Brand Blueprint” Strategy (4/4)
Hasbro’s Board Continues to Double Down on its o. Underperforming “Brand Blueprint” Strategy (4/4) believe Hasbro's Board runs WOTCHke cash cow and reinvests its cash flow into +— « Why has the execution of the “Brand Blueprint” strategy failed in our view? funding highly speculative investments o L
Slide 80: It Pays to Be a Hasbro Director
It Pays to Be a Hasbro Director 6.. believe Hasbro’s Board runs WOTC like a cash cow and reinvests its cash flow into +— funding highly speculative investments Hasbro Directors are paid an average of $350,000 per year, significantly more than their peers at Mattel, despite poor absolute and relative
Slide 81: We Believe WOTC Needs to be a Standalone Business
Slide 82: As a standalone entity, WOTC’s growth and margin profile would improve
Slide 83: Standalone WOTC Tracks the Alta Fox Bull Case
Slide 84: WOTC Reinvestment Opportunities
Slide 85: WOTC Core IPs are still in Early Innings of Growth
Slide 86: The Consumer & Entertainment RemainCo features strong IP
Slide 87: RemainCo (Consumer + Entertainment) Overview
Slide 88: AFC View of eOne Acquisition
Slide 89: Hasbro Owns a Portfolio of Iconic Brands
Slide 90: Hasbro Consumer Segment vs. Mattel
Slide 91: What Is Hasbro IP Worth To a Content Buyer?
Slide 92: Case Study: Peppa Pig and PJ Mask
Slide 93: Hasbro’s Entertainment Segment Valuation
Slide 94: Focus on ROIC Would Improve RemainCo TSR
Slide 95: RemainCo is High Quality and also Benefits from a Spin-off
Slide 96: Alta Fox Nominees
Slide 97: Alta Fox Board Nominees
Slide 98: Conclusion (1/2)
Slide 99: Conclusion (2/2)
Slide 100: Contact Information