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This excerpt taken from the HAS DEF 14A filed Apr 8, 2008. Executive
Summary of 2007 Policies and Compensation
The Company is a worldwide leader in children’s and family
leisure-time and entertainment products and services, including
the design, manufacture and marketing of games, toys and
children’s consumer electronic products. As a family
entertainment company, the Company looks at a broad range of
consumer products, entertainment and general industry companies
as business competitors, including in the hiring and retention
of employees and executives. In the 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 package.
The Company utilizes two overarching principles in structuring
its executive compensation program.
First, a significant portion of an executive’s overall
compensation opportunity should be at risk and based upon the
performance of the Company. The Company believes that the
primary responsibility of the Company’s executive team is
to drive the performance of the Company and create value for the
Company’s shareholders and other stakeholders. As a result,
if the Company fails to achieve its financial goals,
and/or if
the Company’s share price does not rise, significant
portions of the total executive compensation package should not
be, and are not, realized. The Company implements this principle
by using variable compensation elements, such as management
incentive plan awards and equity awards, as a major component of
the total executive compensation package.
Second, the Company seeks predominately to reward overall
performance by the Company, or its major business units, and
only to a lesser extent to reward individual executive
performance. The Company believes this is appropriate to foster
an environment of team work and to maximize 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, namely
management incentive plan awards and equity awards, are most
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heavily weighted to achievement of Company goals and Company
performance. The incentive plan awards reward achievement of
stated Company and business unit financial metrics, with
individual performance playing a smaller role. Equity awards
also reward achievement of Company goals and Company stock price
appreciation.
Consistent with these principles, and in light of the
Company’s record performance in fiscal 2007, which was the
seventh year in a row of strong performance by the Company, the
executive officers of the Company received significant value for
2007 from the variable elements of their compensation packages,
including the management incentive awards and long-term equity
awards.
For fiscal 2007, the Company reported $333 million in net
earnings, an increase of over $100 million from the
reported net earnings for fiscal 2006. 2007 was the third
consecutive year of record net earnings for the Company. In
addition, fiscal 2007 represented the seventh consecutive year
of growth in the Company’s earnings per share before the
cumulative effect of accounting changes. In 2007, the
Company’s worldwide net revenues increased 22% to
$3.8 billion and the Company generated $601.8 million
in operating cash flow. This performance in 2007 was achieved
against a backdrop of difficult economic and retail challenges.
The Company’s excellent performance over the last several
years has had a significant impact on the realization of value
from the variable components of the Company’s executive
compensation package at the end of a fiscal year. The Committee
continues to structure the Company’s compensation program
in a way it believes appropriately rewards excellent performance
and maximizes future performance.
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