Form of 2022 Hasbro, Inc. Performance Rewards Program

1.0Background

1.1    Performance Rewards Program (“PRP”)

1.2    Purpose

The Company has established this PRP for the purpose of providing annual incentive compensation to those employees who contribute significantly to the growth and success of the Company’s business; to attract and retain, in the employ of the Company, individuals of outstanding ability; and to align the interests of employees with the interest of the Company’s shareholders.

1.3     General Guideline

No employee has any legal entitlement to participate in the PRP or to receive an incentive award under the PRP.

    

1.4    Scope

The PRP is applicable to eligible employees of the Company.

    1.5    Eligibility

Management shall determine, in its sole discretion, those employees whose duties and responsibilities contribute significantly to the growth and success of the Company’s

business and are eligible to participate in the PRP. Eligibility to participate in the PRP does not guarantee the receipt of an incentive award under the PRP. Unless otherwise required by law or determined by management, if an employee is eligible to participate in the PRP and/or any other annual incentive (or similar) plan implemented from time to time by the Company, such employee may only participate in one plan at the same time, as determined by the Company in its sole discretion.

Eligible employees will be assigned to the Corporate Plan or a Business Area Plan for an employee’s applicable Business Area, in each case at the Company’s sole discretion. Eligible employees selected to participate in either the Corporate Plan or one of the Business Area Plans are referred to herein as “participants.”

2.0    Incentive Award Levels

    2.1    Target Incentive Award

        Except as otherwise determined by the Company, target incentive awards are expressed as a percentage of earned salary for the PRP year. For purposes of this PRP, earned salary means all base compensation for the participant for the fiscal year, which base compensation shall include all base compensation amounts deferred into the Company’s retirement savings plan (but excluding any matching or Company contributions made to such plan on the participant’s behalf), the Company’s Non-Qualified Deferred Compensation Plan and/or any similar successor plans for the fiscal year and excludes, where allowed by law, any bonus or other benefits, other than base compensation, for the fiscal year. By design, the target incentive awards are the award levels that PRP participants are eligible to earn when they, the Company or their applicable Business Area achieve their financial goals and objectives. Target incentive awards may be determined by job level, previously determined percentage of base salary, or a previously determined fixed percentage or amount. Target incentive awards may also vary by region or Business Area.

    

    2.2    Maximum Incentive Award

Under the PRP, the maximum incentive award for participants below job level 80 is 200% of the target incentive award. The maximum incentive award for employees in a job level 80 or above is 300% of the target incentive award.

3.0Measures of Performance

•PRP funding for the Corporate Plan is based 100% on Company performance.

•PRP funding for each of the Business Area Plans is based 80% on the applicable Business Area performance and 20% on Company performance.

    3.1    Establishing Company or Business Area Performance Metrics and Targets

        In the first quarter of the PRP year, the Company’s senior management will establish performance metrics and the level of target performance for the year associated with each of the performance metrics for the Corporate Plan and the various Business Area Plans. Those performance metrics and target levels are reviewed and approved by the Company’s Chief Executive Officer (“CEO”) and, with respect to the Corporate Plan, by the Company’s Board of Directors (“Board”) or the Compensation Committee of the Board (the “Compensation Committee”).

    3.2    Company Performance Metrics

Company performance is measured by Net Revenue, Operating Profit Margin and Free Cash Flow. Company performance is determined by individually assessing performance against goals for each metric, applying the performance scale, weighting each metric and summing the total.

    The weightings and definitions of the Company metrics are:

    3.3    Business Area Performance Metrics

Each Business Area will assess performance based on Net Revenue and Operating Profit Margin specific to the respective Business Area. Business Area performance is determined by individually assessing performance against goals for each metric, applying the performance scale, weighting each metric and summing the total.

    The weightings and definitions for the metrics for each Business Area Plan are:

4.0Development of Funding Pools

After the end of the fiscal year, the actual performance for the Company and each of the Business Areas will be calculated (based on the Company’s and the respective Business Area’s performance against the target goals established for each performance metric as of fiscal year-end) and approved by the Company’s Chief Financial Officer.

The performance scales for the metrics for the Corporate Plan and Business Area Plans, as applicable, are as follows:

Revenue Performance Scale:

        Performance % of Target    Funding Pool Scale %    

                < 85%                                    0%                        

                85%                                        50%                      Threshold performance

                100%                                     100%                     Target performance

                ≥115%                                   200%                     Maximum performance

                               

                Operating Profit Margin Performance Scale:

          Performance % of Target     Funding Pool Scale %    

                < 80%                                    0%                       

                80%                                        50%                      Threshold performance

                100%                                     100%                     Target performance

                ≥125%                                   200%                     Maximum performance

Free Cash Flow Performance Scale:

        Performance % of Target    Funding Pool Scale %    

                < 80%                                    0%                       

                80%                                        50%                      Threshold performance

                100%                                     100%                     Target performance

                ≥125%                                   200%                     Maximum performance

In the event that achievement for a performance metric is between threshold performance and target performance or between target performance and maximum performance, the applicable funding pool scale percentage will be determined by linear interpolation between threshold performance and target performance or between target performance and maximum performance, as applicable.

In the case of the Corporate Plan, the applicable performance metric must achieve threshold performance or no award is payable under that metric before the performance scale is applied to the applicable metric. The failure of one metric to achieve threshold performance does not impact the other metrics; provided, however, that for funding to occur at least one metric must achieve threshold performance. In the case of the Business Area Plans, both performance metrics must achieve at least threshold performance or no award is payable for the Business Area component of the respective Business Area Plan.

The payout attributable to each performance metric will be weighted and added to arrive at the overall achievement which determines the funding pool.

An illustrative example of the development of a funding pool for the Corporate Plan and the Company component of the Business Area Plans is as follows:

If the Company achieves Net Revenue of 100% of target (which results in 100% funding) and Operating Profit Margin of 80% of target (which results in 50% funding) but Free Cash Flow does not reach threshold performance, then the aggregate weighted achievement for the Corporate Plan would be 60%, calculated as follows:

    

In this scenario, the Company component for each of the respective Business Area Plans would be 12%, calculated as follows:

Illustrative examples of the development of a funding pool for the Business Area component of a Business Area Plan are as follows:

If the applicable Business Area achieves Revenue of 100% of target (which results in 100% funding) and Business Area Operating Profit Margin of 65% of target (which is below the 80% threshold), the Business Area component of the respective Business Area Plan will not fund (0% funding). In this scenario, the funding pool, if any, will be determined solely by the Company component of the Business Area Plans.   

                         or

If the applicable Business Area achieves Revenue of 100% of target (which results in 100% funding), and Operating Profit Margin of 80% of target (which results in a 50% funding), the aggregate weighted achievement for the Business Area component of the respective Business Area Plan would be 75%, calculated as follows:

Once all Business Area results have been calculated, the funding pool of each respective Business Area component is developed. The Business Area component funding pool for each of the Business Areas (weighted at 80%), combined with the Company component funding pool (weighted at 20%), will equal the aggregate of the PRP funding pool for the respective Business Area Plan.

4.1    Funding Pools

The Company calculates the Corporate Plan funding pool based on the Company’s performance through the end of the fiscal year against the applicable performance targets (“Corporate Plan Funding Pool”). The Company calculates the funding pool for the Business Area Plans based on the Company’s performance and the performance of each Business Area through the end of the fiscal year against the applicable performance targets for the respective Business Area (the “Business Area Funding Pool” refers to the aggregate pool for all Business Area Plans and, together with the Corporate Plan Funding Pool, is referred to hereinafter as the “Funding Pool”).

Although the CEO and the Compensation Committee reserve the right to alter the Funding Pool after year end, but prior to the actual payment of awards to participants in the PRP, it is expected that such discretion will only be exercised in rare or extreme circumstances, and that generally the Funding Pool, as it has been computed, will be paid (absent any affirmative exercise of this discretion) to the participants in the PRP collectively following the end of the fiscal year.

4.2    High Performer Pool

    Following the end of the year, but prior to the payment of all awards under the PRP, management of the Company, in its sole discretion, may determine it appropriate to reward high-performing Company employees through an additional funding pool (the “High Performer Pool”). Funding of the High Performer Pool is determined by the achievement of the Company’s Operating Profit, overall Company or reporting segment performance and affordability. The aggregate amount of the High Performer Pool is subject to Compensation Committee approval.

    

    4.3    Total Awards Under the PRP

The aggregate of all incentive awards under the PRP shall consist of the sum of the Funding Pool and the High Performer Pool.

4.4.    Management Review

Payment of any incentive award to an employee is subject to management’s review. For purposes of the PRP, management has the ability to review the proposed payout of any incentive award under the PRP to an eligible employee and to determine whether such proposed incentive award should be adjusted based on the participant’s performance, contributions to the organization, or any other factor not prohibited by applicable law. In completing this review, management has the option of providing a zero value incentive award to the employee regardless of Company or Business Area performance. For participants that do not receive an incentive award or that receive a reduced incentive award, the portion of such employee’s potential incentive award that might have been reflected in the Funding Pool will remain in the Funding Pool and be allocated to other PRP participants in the manner determined by management.

5.0    Removals, Transfers, Terminations, Promotions and Hiring Eligibility

    Except to the extent applicable legal requirements or the terms of an employment agreement mandate a different result, the following scenarios will be addressed under the PRP in the manner set forth below.

    5.1    Participants whose employment with the Company is terminated because of retirement or disability:

    5.2    Participants whose employment with the Company is terminated because

        of death:

    5.3    Participants who resign for any reason after the close of the PRP year, but prior to the distribution of incentive awards for such year, will not receive an incentive award. For any such employee, the portion of such person’s potential incentive award that might have been reflected in the Funding Pool will remain in the Funding Pool and be allocated to PRP participants in the manner determined by management.

    5.4    Participants who are discharged from the employ of the Company or any

        of its subsidiaries for cause or for any offense involving moral turpitude or

an offense involving breach of the fiduciary duty owed by the individual to the Company will not be entitled to an incentive award for any PRP year. For any such employee, the portion of such person’s potential incentive award that might have been reflected in the Funding Pool will remain in the Funding Pool and be allocated to PRP participants in the manner determined by management.

    5.5    Participants who are discharged from the employ of the Company or any of its subsidiaries due to any reason other than the ones enumerated above, including, without limitation, employees who are discharged due to job elimination:

            

    5.6    Participants under statutory or contractual notices as may be required by applicable law:

    5.7    Participants transferred during the PRP year from one division of the Company to another where such transfer results in the participant being assigned to different plans during the same PRP year (e.g., from the Corporate Plan to a Business Area Plan; from a Business Area Plan to the Corporate Plan; or from a Business Area Plan to a different Business Area Plan), will be eligible to receive an incentive award (subject to achievement of the requisite performance) through the plan associated with such employee’s position at the end of the PRP year, but the award amount may be based on the performance of the respective plans associated with the employee’s positions during the same PRP year, in such amount and in such manner as determined in the sole discretionary of the Chief Human Resource Officer.

    5.8    Employees hired during the PRP year must be actively employed on or before October 1st or another date designated by the Chief Human Resource Officer of the PRP year to participate in the PRP for that PRP year. Incentive awards will be made based upon the employee's earned salary during the period of their employment with the Company during the PRP year.

        

    5.9    The eligibility for an incentive award under the PRP for employees who remain employed with the Company during the PRP year but whose change in employment status through promotion or reclassification affects their level of participation:

    5.10    The eligibility for an incentive award under the PRP for employees who remain employed with the Company during the PRP year but whose change in employment status through demotion affects their level of participation will be determined in the sole discretion of the Chief Human Resource Officer.

6.0    Administration of the PRP

    6.1    Amendments to the PRP (Contingency Clause)

The CEO and the Compensation Committee reserve the right to interpret, amend, modify, or terminate the PRP in accordance with changing conditions at any time in their sole discretion.

    6.2    Incentive Award Distribution

        Incentive awards, when payable, shall be paid as near to the close of the Company’s fiscal year as may be feasible. In furtherance of the preceding sentence, any incentive awards under the PRP will be paid no later than the date allowable to ensure tax deductibility in the year of accrual, which in the case of the United States is two and a half months after the fiscal year end. Participants in the PRP must be employed at the time of award distribution in order to receive an incentive award, except as otherwise provided herein.

No individual has the right to receive an incentive award until it has been approved and distributed in accordance with the provisions of the PRP.

    6.3    Non-Assignment of Awards

        Participants eligible to receive incentive awards shall not have any right to pledge, assign, or otherwise dispose of any unpaid or projected awards.

    6.4    Deferral of Awards

Participants eligible to defer incentive awards through the Deferred Compensation Program (DCP) may elect to do so during the annual DCP enrollment.

6.5 Clawback of Awards

By accepting any incentive award under the Plan, the participant hereby acknowledges and agrees that any incentive compensation the participant is awarded is subject to the Hasbro, Inc. Clawback Policy, as it may be amended from time to

time by the Board.  Such acknowledgement and agreement is a material condition to receiving any incentive award under the Plan, which would not have been awarded to the participant otherwise. 

6.6    Stock Ownership