Governance and Ethics

Corporate Governance

Oversight of Hasbro’s day-to-day operations lies with the executive team, headed by the Chief Executive Officer (CEO). Our Board of Directors, elected annually by shareholders, appoints and oversees Hasbro’s executive management and the conduct of our business. The Board is the ultimate decision-making body, except for matters reserved directly to our shareholders. Our CEO is a member, his dual role fostering strong communication between the Board and executive team.

We believe Hasbro was the first public company in the toy industry to elevate oversight of corporate social responsibility (CSR) to Board committee level. The Nominating, Governance, and Social Responsibility Committee deals with issues ranging from environmental sustainability and manufacturing ethics to diversity, philanthropy, and our obligations to our neighbors in communities around the world. Read more about the governance of CSR here.

Four other committees also assist the Board in its oversight of the business: Audit, Compensation, Executive, and Finance. Charters for all five committees can be read here.

The Board is guided by Hasbro’s Corporate Governance Principles. These give guidance in the following areas: Selection and Compensation of the Board; Board Leadership; Operation of the Board; Requirements of Board Service; Committee Matters; and Board Compensation. Read the principles in full here.

Our Board members, as well as all Hasbro employees and officers, are subject to the Hasbro Code of Conduct. This dates back to 1991 and is the cornerstone of our ethics policy, regulating many areas of our business and setting out ethical conduct and legal compliance requirements. Read more here.

In line with our Standards for Director Independence, 11 of our 13 Board members are independent. A list of Board members and their principal occupations is available here.

You can find more corporate governance information on our Investor Relations pages. Stakeholders, including employees, are encouraged to provide feedback to the Board by writing to c/o Presiding Director, Hasbro, Inc., P.O. Box 495, Pawtucket, Rhode Island 02860.

Executive Compensation

Two overarching principles form the basis for our executive compensation and retention program.

First, pay for performance is critical. We believe a large majority of an executive’s overall compensation should be at risk and based upon company performance. The executive team’s primary responsibility is to drive financial and business performance and create value for shareholders and other stakeholders. If Hasbro fails to achieve business and financial goals, the value of our total executive compensation package is significantly reduced. We implement this principle by using variable compensation elements, such as cash management incentive plan awards and equity awards. For example, under the 2010 cash management incentive plan, target payouts were lower than they otherwise would have been due to company’s achievement of only 92 percent of its target corporate performance.

Second, we primarily reward overall performance by Hasbro, or its major business units, and to a lesser extent reward individual executive performance. Our leadership believes this approach fosters teamwork and maximizes Hasbro’s overall performance. We put this principle into practice by heavily weighting the two most significant variable components of our executive compensation program - management incentive plan awards and equity awards - to achieving our corporate goals and good performance.

Hasbro’s Compensation Committee oversees this process. It structures compensation in ways that appropriately reward excellent past performance and maximize future performance without encouraging excessive risk taking or other executive behavior not in Hasbro’s best interests.

Read more in our 2010 proxy statement.