<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MATTEL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF MATTEL] MATTEL TOYS
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JOHN W. AMERMAN MATTEL, INC.
Chairman and Chief Executive Officer 333 Continental Boulevard
El Segundo, CA 90245-5012
Telephone 310 252 2000
March 22, 1995
To Our Stockholders:
On behalf of the Board of Directors, I am pleased to invite you to the Annual
Meeting of Stockholders of Mattel, Inc. to be held May 10, 1995 at 10:00 a.m.,
local time, in the Manhattan Ballroom of the Radisson Plaza Hotel, 1400
Parkview Avenue, Manhattan Beach, California. I look forward to greeting you
personally and reporting on the progress of your company.
The items of business to be acted on during the meeting are listed in the
Notice of Annual Meeting of Stockholders and are described more fully in the
Proxy Statement. The formal business of the meeting will also include a report
on operations followed by a question and discussion period.
To ensure that your shares will be represented, I urge you to vote, date,
sign and mail the enclosed proxy in the envelope which is provided whether or
not you expect to be present. You may, of course, attend the Annual Meeting and
vote in person even if you have previously returned your proxy card.
I hope to see you at the meeting.
Sincerely,
/s/ JOHN W. AMERMAN
John W. Amerman
Chairman and Chief Executive Officer
<PAGE>
MATTEL, INC.
333 CONTINENTAL BOULEVARD
EL SEGUNDO, CALIFORNIA 90245
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 1995
The Annual Meeting of the Stockholders of MATTEL, INC. will be held
Wednesday, May 10, 1995 at 10:00 a.m., local time, in the Manhattan Ballroom of
the Radisson Plaza Hotel, 1400 Parkview Avenue, Manhattan Beach, California, to
consider and act upon the following matters:
1. The election of directors;
2. The approval of an amendment to the Mattel 1990 Stock Option Plan to
permit additional grants and issuances pursuant to the Plan;
3. The ratification of the selection of Price Waterhouse LLP as the
Company's independent accountants for the year ending December 31, 1995;
and
4. Such other business as may properly come before the meeting or any
adjournment or postponement thereof.
Shares represented by properly executed proxies hereby solicited by the Board
of Directors of Mattel will be voted in accordance with instructions specified
therein. It is the intention of the Board of Directors that shares represented
by proxies which are not limited to the contrary will be voted in favor of the
election as directors of the persons named in the accompanying Proxy Statement,
for proposals 2 and 3 and on other matters as recommended by the Board.
The Board of Directors has fixed the close of business on March 14, 1995 as
the record date for determination of stockholders entitled to receive notice
of, and to vote at, the meeting and any adjournment thereof.
By Order of the Board of Directors
Ned Mansour
Secretary
El Segundo, California
March 22, 1995
IT IS DESIRABLE THAT AS LARGE A PROPORTION AS POSSIBLE OF THE STOCKHOLDERS'
INTEREST BE REPRESENTED AT THE MEETING. THEREFORE, IF YOU ARE UNABLE TO BE
PRESENT IN PERSON OR OTHERWISE REPRESENTED AT THE MEETING, YOU ARE REQUESTED TO
SIGN AND RETURN THE ENCLOSED PROXY IN ORDER THAT YOUR STOCK WILL BE
REPRESENTED.
<PAGE>
MATTEL, INC.
333 Continental Boulevard
El Segundo, California 90245
----------------
PROXY STATEMENT
1995 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 1995
----------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Mattel, Inc., a Delaware
corporation ("Mattel" or the "Company"), for use at the Annual Meeting of
Stockholders (the "Meeting"), to be held at 10:00 a.m., local time, Wednesday,
May 10, 1995 in the Manhattan Ballroom of the Radisson Plaza Hotel, 1400
Parkview Avenue, Manhattan Beach, California, and at any adjournment or
postponement of such meeting. This Proxy Statement and the form of proxy to be
utilized at the Meeting were mailed or delivered to the stockholders of Mattel
on or about March 22, 1995.
RECORD DATE AND VOTING
The Board has fixed the close of business on March 14, 1995 as the record
date (the "Record Date") for the determination of the holders of Common Stock,
$1.00 par value per share (the "Common Stock"), and Convertible Preference
Stock, Series F, $0.01 par value per share (the "Series F Stock"), entitled to
vote at the Meeting and any adjournment or postponement thereof. As of the
Record Date, there were outstanding 221,103,614 shares of Common Stock and
864,293 shares of Series F Stock.
QUORUM, CUMULATIVE VOTING AND VOTING REQUIREMENTS
The holders of record of a majority of the outstanding shares of Common Stock
and Series F Stock will constitute a quorum for the transaction of business at
the Meeting. As to all matters, each stockholder is entitled to one vote for
each share of Common Stock and .854 votes for each share of Series F Stock
(which represents the number of shares of Common Stock into which each share of
Series F Stock is currently convertible) he or she holds. The holders of such
shares vote together as a single class. Abstentions and broker non-votes
(shares held by a broker or nominee which are represented at the Meeting, but
with respect to which such broker or nominee is not empowered to vote on a
particular proposal) are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. In the election of
directors, the holders of the Common Stock and Series F Stock are entitled to
elect eleven directors with the eleven candidates who receive the highest
number of affirmative votes being elected. Votes against a candidate and votes
withheld have no legal effect. In electing directors, stockholders have the
unconditional right to cumulate their votes and give one candidate the number
of votes equal to the number of directors to be elected multiplied by the
number of votes per share of stock held in their name or to distribute such
votes among as many candidates as they see fit. Stockholders may cumulate their
votes by writing the name or names of the nominee or nominees with respect to
whom they are withholding their votes in the space provided on the proxy card
and the shares voted will be cumulated in the manner described above and voted
for the remaining candidate or spread equally, adjusted to whole votes, among
the remaining candidates. In matters other than the election of directors,
abstentions have the effect of votes against a proposal in tabulations of the
votes cast on proposals presented to stockholders, whereas broker non-votes do
not have any effect for purposes of determining whether a proposal has been
approved.
All proxies which are properly completed, signed and returned prior to the
Meeting will be voted. Any proxy given by a stockholder may be revoked at any
time before it is exercised by filing with the Secretary of the Company an
instrument revoking it, by delivering a duly executed proxy bearing a later
date or by the stockholder attending the Meeting and expressing a desire to
vote his or her shares in person.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial ownership
of Mattel's Common Stock as of February 15, 1995 by (i) each director and
nominee for director, (ii) the Chairman and Chief Executive Officer and each of
the four other most highly compensated executive officers of Mattel and (iii)
all directors and executive officers of Mattel as a group:
<TABLE>
<CAPTION>
NAME OF BENEFICIAL AMOUNT AND NATURE
OWNER POSITION WITH THE COMPANY OF BENEFICIAL OWNERSHIP(1)
------------------ ------------------------- --------------------------
<S> <C> <C>
John W. Amerman Chairman & Chief Exec. Officer 1,318,086(2)
Jill E. Barad President, COO & a Director 658,533(2)
Dr. Harold Brown Director 35,156
James A. Eskridge President, Fisher-Price, Inc. & a Director 583,847(2)
Tully M. Friedman Director 13,026(3)
Joseph C. Gandolfo President, Mattel Operations, Inc. 369,295(2)
Ronald M. Loeb Director 67,038
Edward H. Malone Director 1,300
Edward N. Ney Director 10,785
William D. Rollnick Director 223,657
John L. Vogelstein Director 457,500
Lindsey F. Williams President, Mattel Int'l & a Director 695,860(2)(4)
All Executive Officers
and Directors as a group (17 persons) 4,576,597(5)
</TABLE>
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(1) Except as set forth below, the directors and officers named above have sole
voting power and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, subject to community property
laws where applicable, and no director or executive officer named above
owns or controls or may be deemed to beneficially own or control 1% or more
of any class of capital stock of the Company.
(2) Includes shares of Common Stock which the following officers and directors
have the right to acquire by exercise of options within 60 days following
February 15, 1995: Amerman 693,086; Barad 418,907; Eskridge 386,681;
Gandolfo 367,733; and Williams 387,658.
(3) Includes 12,500 shares of Common Stock which Mr. Friedman has the right to
acquire by exercise of options within 60 days following February 15, 1995.
(4) Includes 46,875 shares of Common Stock held in a trust of which Mr.
Williams is trustee for the benefit of his children and as to which he
disclaims beneficial ownership.
(5) The amount stated includes an aggregate of 2,391,689 shares of Common Stock
which may be acquired upon the exercise of options within 60 days following
February 15, 1995 and represents approximately 2% of the outstanding shares
of Common Stock.
PROPOSAL 1
ELECTION OF DIRECTORS
Eleven directors are to be elected at the Meeting to serve until the next
Annual Meeting of Stockholders and until their respective successors have been
elected and qualified. In the absence of instructions to the contrary, proxies
will be voted in favor of the election of the persons listed below. In the
event that any nominee for election as director should become unavailable to
serve, it is intended that votes will be cast, pursuant to the enclosed proxy,
for such substitute nominee as may be nominated by the Company. Management has
no present knowledge that any of the persons named will be unavailable to
serve.
2
<PAGE>
No arrangement or understanding exists between any nominee and any other
person or persons pursuant to which any nominee was or is to be selected as a
director or nominee. None of the nominees has any family relationship to any
other nominee or to any executive officer of the Company.
INFORMATION CONCERNING INCUMBENT DIRECTORS AND NOMINEES TO BOARD OF DIRECTORS
Information is set forth below concerning the incumbent directors, all of
whom are also nominees for election as directors, and the year in which each
director was first elected as a director of the Company. Each nominee has
furnished the information as to his or her beneficial ownership of Common Stock
as of February 15, 1995 and, if not employed by the Company, the nominee's
principal occupation. Each nominee has consented to being named in this Proxy
Statement as a nominee for director and has agreed to serve as a director if
elected.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME OR POSITION AGE SINCE
---- -------------------- --- --------
<C> <S> <C> <C>
John W. Amerman............. Chairman of the Board and Chief 63 1985
Executive Officer
(also a Director of Unocal,
Inc.)
Jill E. Barad............... President and Chief Operating 43 1991
Officer (also a
Director of BankAmerica
Corporation and Reebok
International Ltd.)
Dr. Harold Brown............ Senior Managing Director of E.M. 67 1991
Warburg, Pincus & Co., Inc.;
Counselor, Center for Strategic
and International Studies (also
a Director of International
Business Machines Corporation,
CBS Inc., Cummins Engine Company,
Alumax, Inc., Philip Morris
Companies, Inc. and Evergreen
Holdings, Inc.)
James A. Eskridge........... President of Fisher-Price, Inc. 52 1993
(also a Director of
NeXstar, Inc.)
Tully M. Friedman........... Co-Managing Partner of Hellman & 53 1984
Friedman, a private investment
firm (also a Director of
American President Companies,
Levi Strauss Associates, Inc.,
McKesson Corporation,
MobileMedia and General Cellular
Corporation)
Ronald M. Loeb.............. Partner in the law firm of Irell 62 1970
& Manella
Edward H. Malone............ Retired Vice President of General 70 1984
Electric Co. (also a Director of
Allegheny Power System, Inc.,
General Re Corporation and a
Trustee of the Fidelity group of
mutual funds)
Edward N. Ney............... Chairman, Board of Advisors, 69 1993
Burson-Marsteller (also a
Director of American Barrick,
Fortune Bank and The Horsham
Corporation)
William D. Rollnick......... Chairman and a Director of 63 1984
Genstar Rental Electronics, Inc.
John L. Vogelstein.......... Vice Chairman of the Board, 60 1983
President and Director of E.M.
Warburg, Pincus & Co., Inc.
(also a Director of ADVO, Inc.,
Aegis Group plc, Magma Copper
Company, LCI International and
Value Health, Inc.)
Lindsey F. Williams......... President, Mattel International 58 1991
</TABLE>
3
<PAGE>
Except as set forth below, each of the directors has served in the capacity
indicated in the table for at least the past five years. Ms. Barad has served
in the capacity indicated since August 1992. Prior to that, she served as an
executive officer of Mattel for more than five years. Mr. Eskridge has served
in the capacity indicated since November 1993. Prior to that, he was Executive
Vice President-Chief Financial Officer of Mattel from December 1988 through
November 1993. Mr. Ney has served in the capacity indicated since 1992. From
March 1989 through July 1992 he was U.S. Ambassador to Canada.
THE BOARD OF DIRECTORS
MEETINGS AND REMUNERATION
During 1994, the Board held five meetings, and no director attended less than
75% of the aggregate of all Board meetings and of all meetings held by any
committee of the Board on which he or she served, except for Mr. Friedman.
Non-employee members of the Board receive an annual retainer of $30,000 per
year. Each Committee Chairman receives an annual fee of $4,000 per year and
each non-employee committee member receives $1,500 per committee meeting
attended. Directors may elect to defer all or part of their directors' fees
under an arrangement which provides for the investment of such fees in Common
Stock equivalents or in interest-bearing accounts. The distribution of such
deferred amounts may be in a lump sum or installments over a period of years
commencing on or after the individual ceases to be a director of Mattel.
COMMITTEES
Mattel has an Audit Committee chaired by Mr. Rollnick and including Messrs.
Friedman, Loeb and Vogelstein as members. During 1994, the Committee held six
meetings. The primary functions which the Audit Committee performs are to
review periodic financial statements and certain financial information before
publication; discuss the scope of the independent accountants' engagement and
review the independent accountants' performance, reports and fees; review the
scope and adequacy of Mattel's financial controls, internal audit plans and the
findings of internal audit examinations; and recommend the selection of
independent accountants.
Mattel's Executive/Finance Committee, chaired by Mr. Vogelstein and including
Messrs. Amerman, Friedman, Malone and Rollnick as members, also functions as a
Nominating Committee. During 1994, the Executive/Finance Committee held three
meetings. The Executive/Finance Committee has all the powers of the Board of
Directors subject to limitations of applicable law. Sitting as a Nominating
Committee, its primary functions are to submit to the Board for consideration
nominees for membership to be presented to the stockholders for their election
at the Annual Meeting of Stockholders; solicit recommendations and select
persons as candidates to fill vacancies on the Board; and present to the Board
its recommendations for committee assignments. The Committee will consider
nominee recommendations by the stockholders. The names of any such nominee
should be sent to the Secretary, Mattel, Inc., 333 Continental Boulevard, El
Segundo, California 90245-5012.
Mattel has a Compensation/Options Committee chaired by Mr. Vogelstein and
including Messrs. Malone and Rollnick as members. During 1994, the
Compensation/Options Committee held seven meetings. Its primary functions are
to review compensation levels of members of management; evaluate the
performance of management and consider management succession and related
matters; and develop and administer the various incentive plans, including the
Company's stock option plan and incentive compensation plans.
4
<PAGE>
REPORT OF THE COMPENSATION/OPTIONS COMMITTEE
The following Report of the Compensation/Options Committee and the
Performance Graph shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission (the "Commission") or
subject to Regulations 14A or 14C of the Commission or the liabilities of
Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"). Such
Report and Performance Graph shall not be deemed incorporated by reference into
any filing under the Securities Act of 1933 or the Exchange Act,
notwithstanding any general incorporation by reference of this Proxy Statement
into any other document.
GENERAL
The Compensation/Options Committee (the "Committee"), a committee composed
entirely of directors who have never served as officers of the Company,
develops and administers the Company's various incentive and stock plans,
reviews compensation levels of members of management, evaluates the performance
of management and considers management succession and related matters. In
evaluating the performance of members of management, the Committee consults
with the Chief Executive Officer except when reviewing his performance, in
which case the Committee meets independently. The Committee reviews with the
Board in detail all aspects of compensation for the senior executives,
including the five individuals named in the Summary Compensation Table (the
"Compensation Table"). The Committee met seven times during 1994.
STATEMENT ON PHILOSOPHY OF EXECUTIVE COMPENSATION
In establishing and evaluating the effectiveness of compensation programs for
executive officers, as well as other employees of the Company, the Committee is
guided by three basic principles:
. The Company must offer competitive salaries to be able to attract and
retain highly-qualified and experienced executives and other management
personnel;
. Executive cash compensation in excess of base salaries should be tied to
Company and individual performance; and
. The financial interests of the Company's senior executives should be
aligned with the financial interests of the stockholders, primarily
through stock option grants, restricted stock and the Long-Term Incentive
Plan.
IMPLEMENTATION OF PHILOSOPHY
The Company has retained the services of Hewitt Associates, a compensation
consulting firm, to assist the Committee in connection with the performance of
its various duties, including developing compensation plans to achieve this
policy. Hewitt Associates has been retained by the Company in this capacity
since 1987. Hewitt Associates also provides data and advice to the Committee
with respect to the compensation paid to senior officers of the Company.
Hewitt Associates has reviewed the compensation plans in which each of the
officers named in the Compensation Table participate and has reported to the
Committee that the plans meet the objectives of motivating the officers to
continue to achieve the superior stockholder return the Company has
experienced. In Hewitt Associates' opinion, the plans also achieve the
objective of attracting and retaining qualified officers.
BASE SALARY
Base salaries for the Chief Executive Officer and other executive officers
are established at levels considered appropriate in light of the duties and
scope of responsibilities of each officer's position. Salaries are reviewed
periodically (typically once every two years) and adjusted as warranted to
reflect sustained individual performance. The Committee measures individual
performance and contribution against total annual compensation, including
incentive awards, rather than base salary alone.
5
<PAGE>
MANAGEMENT INCENTIVE PLAN
Under the Company's Management Incentive Plan ("MIP"), incentive compensation
is earned based on current year's performance as compared to business and
financial goals for the year. These annual goals are established by the
Committee at the beginning of the period and include Cash Flow Return on
Investment ("CFROI") and operating profit, weighted 33% and 67%, respectively.
CFROI is a measure of the cash flow generated by the Company's assets and is
based on a formula developed by an independent financial consultant. This
formula is related to the economic performance of a company, and an increase in
CFROI is strongly correlated to improvement in stock price. In determining
individual awards under the MIP, the Committee also considers individual
accomplishments. The maximum annual amounts that the Chief Executive Officer
and the four other officers named in the Compensation Table are eligible to
receive under the MIP ranges from 75% to 100% of base salary. In 1994, the
Company reported record sales and earnings for the sixth consecutive year, and
CFROI and operating profit each exceeded financial plan levels. During 1994,
payments under the MIP were made to Messrs. Amerman, Eskridge, Gandalfo and
Williams and Ms. Barad of $833,150, $425,000, $300,000, $370,000, and $635,800,
respectively.
LONG-TERM INCENTIVE PLAN
The individuals listed in the Compensation Table participate in the Company's
Long-Term Incentive Plan (the "LTIP"). Awards under the LTIP are based on
Mattel's financial performance over a three-year performance cycle with
performance targets that relate to the long-range financial goals of the
Company. The performance targets used to determine awards under the LTIP are
based primarily on CFROI, sales growth and income before taxes, weighted 50%,
25% and 25%, respectively. Prior to April 1 of the first year of the three-year
performance period, the Committee establishes, in writing, the level of each
executive's participation and target levels for the performance criteria which
must be achieved before incentive payments are awarded. Payments of performance
awards for achieving interim performance objectives are determined at the end
of each annual performance period. Each interim award is paid in two equal
annual installments commencing in the first quarter of the following year with
the second payment being at risk and subject to achieving the following year's
goals. Individual participation is established by the Committee at levels
considered appropriate in light of the duties and scope of responsibilities of
each officer's position. During the three-year period covered by the
Compensation Table, Mattel's Common Stock price, adjusted for stock splits,
increased from $14.13 to $20.10, a 42% increase. Payments under the LTIP were
made during 1994 for awards granted in 1993 to Messrs. Amerman, Eskridge,
Gandolfo and Williams and Ms. Barad of $621,810, $379,995, $310,905, $379,995
and $518,175, respectively.
EQUITY-BASED INCENTIVE COMPENSATION
The 1990 Stock Option Plan authorizes the Committee to make grants and awards
of stock options, stock appreciation rights, restricted stock and other stock-
based awards. Stock options are granted with an exercise price equal to the
market price of Mattel's Common Stock on the date of grant and generally vest
over four years. This approach is designed to motivate management to increase
stockholder value over the long-term since the full benefit of the compensation
package cannot be realized unless stock price appreciation occurs over a number
of years. In determining the number of options awarded, the Committee considers
competitive practices, the duties and scope of responsibilities of each
officer's position and the amount and terms of options already held by
management.
The Committee believes that significant equity interests in the Company held
by the Company's management more closely align the interests of stockholders
and management. In light of this belief and effective January 1, 1995, the
Company established stock ownership guidelines for senior management. Those
executives to whom the guidelines apply will have up to five years to attain
target minimum levels of stock ownership, based on an ascending scale
commensurate with their level in the Company. Compliance with these guidelines
will be monitored by the Committee and, while not mandatory, will be taken into
consideration at the time future stock option grants are made.
6
<PAGE>
In 1991, Messrs. Amerman, Eskridge and Williams and Ms. Barad were awarded
certain stock appreciation rights (each a "SAR"), pursuant to the 1990 Stock
Option Plan. Mr. Gandolfo received a grant of SARs in February of 1993 which
were the subject of a previous grant made in 1991 to a former senior officer.
These SARs entitled the grantees to certain future cash payments based upon the
appreciation of the Company's Common Stock. In February 1994, the Committee
made the determination to request that such executives agree to the
cancellation of their SARs after substantial appreciation in the price of
Common Stock, and corresponding increase in the value of the SARs, which
resulted in the recognition of significant charges against Mattel's earnings.
To avoid any future charges against earnings, the value of the SARs was capped
by the Company on February 10, 1994 based on the market value of Common Stock
on such date. Accordingly, in exchange for cancellation of their SARs, Messrs.
Amerman, Eskridge, Gandolfo and Williams and Ms. Barad will be entitled to cash
payments of $2,262,000, $1,809,500, $1,809,500, $1,809,500 and $1,809,500,
respectively, on each of March 15, 1995 and March 15, 1996 (representing the
current value of the SARs), and received options to purchase 685,000, 548,750,
548,750, 548,750 and 548,750 shares of Common Stock, respectively (representing
the potential for future appreciation of the SARs). The cash payments are
contingent upon the officer's employment by Mattel on those respective dates.
The options vest and become exercisable in two equal installments on March 15,
1995 and March 15, 1996.
In 1994, Ms. Barad and Mr. Eskridge were also granted options to purchase
437,500 and 312,500 shares of Common Stock, respectively. These options are
exercisable at $22.30 per share (fair market value on the date of grant), vest
in four equal installments commencing one year and one day after the date of
grant, and are conditioned upon stockholder approval of an amendment increasing
the number of shares of Common Stock available for issuance under the 1990
Stock Option Plan. The primary basis for the Committee's granting of such
options to Ms. Barad and Mr. Eskridge was to recognize them as key leaders of
the Company and to provide them with strong incentive to increase Mattel's
value during the term of the options. The Committee relied on a survey
conducted by Hewitt Associates in determining the range of the number of
options to grant. The survey consisted of twenty-one companies whose 1993
revenues ranged from $583.0 million to $25.0 billion. The survey also served to
identify competitive practices used to motivate and retain senior management.
Two of the companies in the survey, Brunswick Corporation and The Walt Disney
Company, are included in the Recreation Products Group utilized in the
Performance Graph following this Report.
INTERNAL REVENUE CODE SECTION 162(M)
As one of the factors in its review of compensation matters, the Committee
considers the anticipated tax treatment to the Company and to the executives of
various payments and benefits. The deductibility of some types of compensation
payments depends upon the timing of an executive's vesting or exercise of
previously granted rights. Furthermore, interpretations of and changes in the
tax laws and other factors beyond the Committee's control also affect the
deductibility of compensation. For these and other reasons, the Committee will
not necessarily limit executive compensation to that deductible under Section
162 (m) of the Internal Revenue Code. The Committee will consider various
alternatives to preserving the deductibility of compensation payments and
benefits to the extent reasonably practicable and to the extent consistent with
its other compensation objectives.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In 1994, Mr. Amerman received total cash payments of $1,783,164 in salary and
short-term bonus. The Committee considers this level of compensation
appropriate in light of Mr. Amerman's leadership of the world's largest toy
company. Mr. Amerman's employment agreement with Mattel establishes a minimum
base salary and the minimum benefits to which he is entitled under the
compensation plans available to Mattel's executive officers. The Committee
typically reviews Mr. Amerman's base salary every two years. His base salary
was not reviewed in 1994 and, consequently, did not change from the previous
year.
7
<PAGE>
In 1994, Mr. Amerman was also granted options to purchase 625,000 shares of
Common Stock. These options are exercisable at $22.30 per share (fair market
value on the date of grant), vest in three equal annual installments commencing
one year and one day after the date of grant, and are conditioned upon
stockholder approval of an amendment increasing the number of shares of Common
Stock available for issuance under the 1990 Stock Option Plan. The primary
basis for the Committee's granting of such options to Mr. Amerman was to
provide him with a strong incentive to increase Mattel's value during the
remainder of his employment and beyond and to ensure a successful transition
upon his departure. In determining the range of the number of options to grant
Mr. Amerman, the Committee relied on the survey of Hewitt Associates discussed
above.
In setting Mr. Amerman's 1994 compensation, the Committee relied heavily on
its assessment of his short-term performance and long-term ability and
dedication to enhance Mattel's value. In the short-term, Mattel reported record
sales and earnings in 1994. In the long-term, over the seven years of
Mr. Amerman's service as Chief Executive Officer, Mattel's market value has
increased by approximately $4 billion, and in the last six of those years,
Mattel reported record sales and earnings. This long-term performance is
further highlighted on the seven year Performance Graph following this Report,
which compares the total return of the Common Stock during Mr. Amerman's tenure
as CEO to the total return over such period of the S&P 500 and the Recreation
Products Group. Accordingly, Mr. Amerman's total compensation for 1994 was
based on both short-term performance and the long-term success of the Company
under his leadership.
COMPENSATION/OPTIONS COMMITTEE
John L. Vogelstein (Chairman)
Edward H. Malone
William D. Rollnick
8
<PAGE>
PERFORMANCE GRAPH
MATTEL, INC.
Comparison of Seven Year Cumulative Total Return*
Mattel, Inc., S&P 500, and Recreation Products Group 1988 to 1994
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period MATTEL, S&P RECREATION
(Fiscal Year Covered) INC. 500 INDEX PRODUCTS GROUP
- --------------------- ------- --------- --------------
<S> <C> <C> <C>
Measurement Pt- 1988 $138.2 $116.6 $110.5
FYE 1989 $287.3 $153.6 $132.9
FYE 1990 $294.1 $148.8 $118.9
FYE 1991 $608.9 $194.1 $146.3
FYE 1992 $704.9 $208.9 $184.9
FYE 1993 $774.3 $230.0 $227.4
FYE 1994 $888.5 $233.0 $206.0
</TABLE>
* Annual Return assumes reinvestment of dividends. Cumulative Total Return
assumes an initial investment of $100.
Recreation Products Group includes the Dow Jones Recreational Toys and Other
Recreational Groups which include the following companies: Acclaim
Entertainment, Inc., Brunswick Corp., The Walt Disney Company, Eastman Kodak
Co., Electronic Arts, Inc., Hasbro Inc., International Game Technology Corp.,
King World Productions, Inc., Outboard Marine Corp. and Polaroid Corp.
9
<PAGE>
The following table sets forth information concerning total compensation
earned or paid to the Chief Executive Officer and the four most highly
compensated executive officers of the Company who served in such capacities on
December 31, 1994 (the "named executive officers") for service rendered to the
Company during each of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------------- --------
SECURITIES LTIP ALL OTHER
NAME AND BONUS UNDERLYING PAYOUT COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($)(1) OPTIONS(#)(2) ($)(1) ($)(3)
------------------ ---- --------- --------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
John W. Amerman......... 1994 950,014 833,150 1,310,000 621,810 125,919
Chairman and 1993 828,759 1,425,000 445,313 300,000 106,053
Chief Exec. Officer 1992 812,306 600,000 -0- -0- 101,455
Jill E. Barad........... 1994 725,010 635,800 986,250 518,175 59,650
President and Chief 1993 628,237 1,070,000 343,750 250,000 35,329
Operating Officer 1992 535,384 450,000 -0- -0- 44,343
James A. Eskridge....... 1994 555,786 425,000 861,250 379,995 57,796
President of 1993 421,667 690,000 273,438 183,333 44,720
Fisher-Price, Inc. 1992 406,154 275,000 -0- -0- 38,640
Joseph C. Gandolfo...... 1994 390,000 300,000 548,750 310,905 42,523
President 1993 357,450 560,000 359,375 150,000 36,128
Mattel Operations, Inc. 1992 315,385 200,000 35,153 -0- 33,396
Lindsey F. Williams..... 1994 500,006 370,000 548,750 379,995 61,191
President 1993 468,958 775,000 218,750 183,333 55,905
Mattel International 1992 456,922 225,000 -0- -0- 53,841
</TABLE>
- --------
(1) Amounts were earned in the years indicated. The annual bonus is generally
paid in the first quarter of the following year and long-term incentive
plan payouts are based on one-third of the three-year target amount and
paid in two equal annual installments commencing in the first quarter of
the following year with the second payment being at risk and subject to
achieving second year goals. Bonus amounts for 1993 include retention award
payments to Messrs. Amerman, Eskridge, Gandolfo and Williams and Ms. Barad
in the amounts of $600,000, $350,000, $300,000, $400,000 and $450,000,
respectively.
(2) Adjusted for five-for-four stock split payable as a stock dividend declared
January 6, 1995.
(3) Consists of the taxable portion of premiums on Company-provided life
insurance for Messrs. Amerman, Eskridge, Gandolfo and Williams and
Ms. Barad in the amounts of $21,417, $4,140, $3,523, $6,385 and $2,072,
respectively, and contributions to the Company's Personal Investment Plan
and PIP Excess Plan to the named individuals in the amounts of $104,501,
$53,656, $39,000, $54,806 and $57,578, respectively.
10
<PAGE>
The following table sets forth certain information relating to options and
SARs granted to the named executive officers in the 1994 fiscal year.
OPTION/SAR GRANTS TABLE
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE ($)(4)
---- ------------ ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
John W. Amerman......... 685,000(1) 16 19.70 2/10/04 6,212,950
625,000(2) 14 22.30 8/25/04 6,793,750
Jill E. Barad........... 548,750(1) 12 19.70 2/10/04 4,977,163
437,500(3) 10 22.30 8/25/04 4,755,625
James A. Eskridge....... 548,750(1) 12 19.70 2/10/04 4,977,163
312,500(3) 7 22.30 8/25/04 3,396,875
Joseph C. Gandolfo...... 548,750(1) 12 19.70 2/10/04 4,977,163
Lindsey F. Williams..... 548,750(1) 12 19.70 2/10/04 4,977,163
</TABLE>
- --------
(1) Options were granted at fair market value on the date of grant and vest in
two equal installments on March 15, 1995 and March 15, 1996. Adjusted for
five-for-four stock split payable as a stock dividend declared January 6,
1995. Potential realizable value calculated using a variation of the Black-
Scholes option pricing method based on the following assumptions: 5.97%
risk free rate; 10 year option term; 1.22% dividend yield; 30.235%
volatility; and $19.70 exercise price.
(2) Options were granted at fair market value on the date of grant, were for a
term of ten years, vest in three equal annual installments commencing one
year and one day after the date of grant, and are conditioned upon
stockholder approval of an amendment increasing the number of shares of
Common Stock available for issuance under the 1990 Stock Option Plan.
Adjusted for five-for-four stock split payable as a stock dividend declared
January 6, 1995. Potential realizable value calculated using a variation of
the Black-Scholes option pricing method based on the following assumptions:
7.24% risk free rate; 10 year option term; 1.08% dividend yield; 27.008%
volatility; and $22.30 exercise price.
(3) Options were granted at fair market value on the date of grant, were for a
term of ten years, vest in four equal annual installments commencing one
year and one day after the date of grant and are conditioned upon
stockholder approval of an amendment increasing the number of shares of
Common Stock available for issuance under the 1990 Stock Option Plan.
Adjusted for five-for-four stock split payable as a stock dividend declared
January 6, 1995. Potential realizable value calculated using a variation of
the Black-Scholes option pricing method based on the following assumptions:
7.24% risk free rate; 10 year option term; 1.08% dividend yield; 27.008%
volatility; and $22.30 exercise price.
(4) The actual value, if any, an executive may realize will depend upon the
excess of the stock price over the exercise price on the date the option is
exercised, so there is no assurance that the value realized by the
executive will be at or near the amount shown.
11
<PAGE>
The following table shows exercises and values of options and SARs held by
the named executive officers.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT FY-END SARS AT FY-END
SHARES ACQUIRED VALUE ------------------------- -------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- --------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Amerman......... 337,535 5,152,774 228,516 1,717,225 1,851,131 2,587,519
Jill E. Barad........... 203,858 2,727,102 46,876 1,302,655 120,940 2,046,128
James A. Eskridge....... 73,243 1,077,387 83,009 1,124,921 442,367 1,821,018
Joseph C. Gandolfo...... 54,025 870,913 84,570 660,078 683,616 562,514
Lindsey F. Williams..... 173,584 2,128,598 31,251 771,405 80,628 1,661,753
</TABLE>
- --------
(1) Adjusted for five-for-four stock split payable as a stock dividend declared
January 6, 1995. The value of underlying securities is determined at
exercise date or year-end, as the case may be, minus the exercise price or
base price of "in-the-money" options.
RETIREMENT PLANS
The Company adopted the Mattel, Inc. Supplemental Executive Retirement Plan
(the "SERP") effective April 1, 1994. Under the SERP, a vested participant
shall be entitled to a yearly benefit for fifteen years beginning at age sixty
based on (i) Final Average Compensation, (the average annual compensation
during the final three years of employment), and (ii) years of service, (up to
a maximum of fifteen). A participant vests upon completing five years of
service and attaining age fifty-five. The compensation used in determining
Final Average Compensation under the SERP is the participant's base salary plus
bonus paid under the Company's Management Incentive Plan. At December 31, 1994,
Final Average Compensation under the SERP for Messrs. Amerman, Eskridge,
Gandolfo and Williams and Ms. Barad was $1,600,000, $771,389, $580,000,
$776,111 and $1,152,500, respectively, and the years of credited service with
the Company were 15, 6, 4, 26 and 14, respectively. The SERP benefit is
computed as a straight-life annuity and is not reduced for Social Security.
The following table shows the estimated annual benefit that would be payable
to participants in the SERP at age sixty.
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL RETIREMENT BENEFITS RETIRING AT AGE 60
----------------------------------------------------------
FINAL AVERAGE
COMPENSATION 5 YEARS OF SERVICE 10 YEARS OF SERVICE 15 YEARS OF SERVICE
------------- ------------------ ------------------- -------------------
<S> <C> <C> <C>
$ 400,000 $ 33,333 $ 66,667 $100,000
500,000 41,667 83,333 125,000
600,000 50,000 100,000 150,000
700,000 58,333 116,667 175,000
800,000 66,667 133,333 200,000
900,000 75,000 150,000 225,000
1,000,000 83,333 166,667 250,000
1,250,000 104,167 208,333 312,500
1,500,000 125,000 250,000 375,000
1,750,000 145,833 291,667 437,500
</TABLE>
The Company adopted the Mattel, Inc. Supplemental Executive Retirement Plan
(the "Old SERP") effective October 1, 1990. Under the Old SERP, a vested
participant shall be entitled to a yearly benefit for
12
<PAGE>
fifteen years equal to (i) 10% of Compensation, (the average monthly base
compensation for the final twelve months of employment), plus (ii) 1.5% of
Compensation for each year of service after attaining age fifty; provided,
however, that a participant's total benefit may not exceed 30% of Compensation.
Participants must be at least fifty years of age with five years of service to
receive benefits. Compensation under the Old SERP is the participant's base
salary and is identical to the compensation disclosed as "Salary" in the
Summary Compensation Table. The estimated annual amount payable upon retirement
at age sixty-four to Messrs. Amerman, Eskridge, Gandolfo and Williams and Ms.
Barad based on their current Compensation would be $285,000, $172,500,
$117,000, $150,000 and $217,500, respectively. The Old SERP benefit is computed
as a straight-life annuity and is not reduced for Social Security.
Participants in both the SERP and the Old SERP may receive benefits under
only one plan and must elect from which plan to receive benefits prior to
retirement.
EMPLOYMENT AGREEMENTS
Mattel has entered into employment agreements with the executive officers
named in the Summary Compensation Table in order to assure the continued
service of such persons. Such agreements generally provide a three-year term of
employment of the executives, five in the case of each of Mr. Amerman and Ms.
Barad, for salaries at the amounts set forth in the Summary Compensation Table
and for participation in various incentive and employee benefit plans as may be
in effect from time to time with respect to executives employed by Mattel at
the executive's level. The termination date of each agreement is automatically
extended by one month on the first day of each month during the period of
employment. The agreements do not provide for payments in the event of a change
of control of the Company but do provide for payments due under the agreements
if the executives' employment is terminated by the Company for its convenience
and without cause or if there is a material change in the executives' duties
and responsibilities as described in the agreements.
CERTAIN TRANSACTIONS
The law firm of Irell & Manella, of which Mr. Loeb is a partner, provided
legal services to the Company during 1994.
During 1994, the Company made payments in the aggregate of $556,000 to
Electronic Catalogue Network ("ECN") for the production of a BARBIE infomercial
and royalties based on resulting product sales. Thomas Barad, the husband of
Jill Barad, Mattel's President and Chief Operating Officer, and a director of
the Company, beneficially owns a 50% interest in ECN.
On November 1, 1994, Mattel loaned $3.0 million at 4.12% per annum, (the
short-term applicable federal rate for the month of September 1994), to Ms.
Barad for the purchase of a home pursuant to the terms of her employment
agreement. The loan is secured by a first deed of trust on the home and is
payable in full on November 1, 1997.
PROPOSAL 2
AMENDMENT TO MATTEL 1990 STOCK OPTION PLAN
During 1994, the Compensation/Options Committee of Board approved, subject to
stockholder approval, an amendment (the "Amendment") to Mattel's 1990 Stock
Option Plan (the "Plan") increasing the number of shares of Common Stock which
may be the subject of Awards (as defined below) granted pursuant to the Plan.
The Board recommends that the stockholders vote to approve the Amendment for
the reasons indicated below.
13
<PAGE>
SUMMARY OF THE PLAN
The Plan, which was approved by the Mattel stockholders in May 1990, provides
for the award of, among other things, stock options, stock appreciation rights,
restricted stock or cash. Employees of Mattel who are eligible for such awards
(collectively, "Awards") include those who hold positions of responsibility and
whose performance, in the judgment of the Compensation/Options Committee or the
management of Mattel, can have a significant effect on the success of Mattel.
The Compensation/Options Committee administers the Plan and selects the
employees to receive Awards under the Plan (each such employee, a
"Participant"). By its terms, the Plan will terminate in May 1999 unless
terminated earlier by Mattel's Board of Directors, although outstanding options
will continue to survive by their terms.
The Plan currently provides that up to 1% of Mattel's outstanding Capital
Stock (as such term is defined in the Plan) as determined on December 31 of the
preceding year will be available for Awards granted wholly or partly in stock
under the Plan during each calendar year in which the Plan is in effect. Any
Capital Stock not so used, as well as any unused portion of the percentage
limit in any prior calendar year, shall be carried forward and available for
Awards in future years. The maximum number of shares which may be awarded to an
individual during a calendar year is limited to 1.0 million. Under the terms of
the Plan, the purchase price of the stock covered by each option awarded may
not be less than 100% of the fair market value of the Common Stock on the date
the option is granted. Payments in respect of stock appreciation rights (made
in either cash, Capital Stock or both) are equal to the excess of the fair
market value (or other specified valuation) of a specified number of shares of
Capital Stock on the date the stock appreciation right is exercised over the
fair market value (or other specified valuation) on the date of grant of the
stock appreciation right. Awards are subject to such restrictions and
conditions as may be established by the Compensation/Options Committee.
Additionally, the Plan allows, with the approval of the Compensation/Options
Committee, the deferral of payments, either in the form of installments or a
future lump sum payment.
If the employment of a Participant terminates, other than pursuant to
retirement, death, disability or resignation deemed to be in the best interests
of the Company, all of such Participant's unexercised, deferred and unpaid
Awards, in general, are canceled immediately, subject to a thirty day grace
period, unless the relevant Award agreement provides otherwise. Further, the
Compensation/Options Committee may cancel any unexpired, unpaid, or deferred
Awards at any time if the Participant is not in compliance with all applicable
provisions of the Plan (which include certain restrictions on competition with
Mattel, certain confidentiality obligations and certain other obligations of
the Participant) or of the agreement pursuant to which such Awards were
granted.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the federal income tax consequences of
stock options and restricted stock awards under the Plan:
(a) Upon the exercise of a non-qualified stock option, the optionee will
realize ordinary income for federal income tax purposes in an amount equal
to the excess of the fair market value of the shares purchased over the
option price. The tax basis for the stock so acquired will be the option
price plus the taxable excess. At the time the optionee makes an election
to exercise a non-qualified stock option, Mattel is entitled to an income
tax deduction equal to the amount of income recognized by the optionee.
(b) An optionee will not realize federal taxable income upon the exercise
of an incentive stock option. If the optionee does not dispose of the stock
acquired within one year after its receipt (and two years after the option
was granted), the gain or loss realized on the subsequent disposition of
the stock will be treated as capital gain or loss. If the stock is disposed
of prior to that time, the optionee will realize ordinary income in an
amount equal to the excess of the sale price of the stock over the option
price. Mattel is generally not entitled to an income tax deduction with
respect to the grant or exercise of an incentive stock option or the
disposition of the option stock by the optionee. However, if the optionee
disposes of the option stock prior to the required holding period, a
deduction is available to Mattel to the extent of the income realized by
the optionee on the date of the early disposition.
14
<PAGE>
(c) The recipient of a restricted stock award will have no taxable income
for federal income tax purposes on the receipt of an award. The recipient
will realize taxable income for federal income tax purposes for the year in
which the restrictions expire or are removed in an amount equal to the
difference between the recipient's cost of the stock and the fair market
value thereof on the day the restriction expired or was removed. As an
alternative, the recipient has the right to elect to include in taxable
income in the year the award is made an amount equal to the excess of the
fair market value of such shares on the date of the award over the cost of
such shares. At the time the recipient of a restricted stock award
recognizes income, Mattel is entitled to an income tax deduction equal to
the amount of income recognized by the recipient of the award. However,
income related to restricted stock received by a "covered employee" could
be subject to the $1.0 million deduction limitation imposed by Section
162(m) of the Internal Revenue Code, unless the exemption from the
deduction limitation for performance based compensation is available.
PLAN AMENDMENT PROPOSAL
During 1994, the Compensation/Options Committee approved, subject to
stockholder approval, an amendment to the Plan increasing above the 1%
limitation set forth in the Plan the amount of Capital Stock that may be the
subject of Awards granted wholly or partly in stock in 1994 by 1,375,000 shares
of Capital Stock.
The Compensation/Options Committee believes that the proposed increase in the
number of Awards that may be granted wholly or partly in stock pursuant to the
Plan is advisable because such Awards are important factors in attracting,
retaining and rewarding executives and other selected employees. More
specifically, the primary basis for the Committee's granting of such options to
Messrs. Amerman and Eskridge and Ms. Barad was to recognize them as key leaders
of the Company, to provide them with strong incentive to increase Mattel's
value during the term of the options and to ensure a successful transition upon
Mr. Amerman's departure from the Company.
The Compensation/Options Committee believes that the current and future
availability under the Plan is inadequate. During 1994, options to purchase
3,042,500 shares of Common Stock were issued under the Plan, leaving a balance
of 98,414 additional shares of Capital Stock which could be the subject of
Awards granted wholly or partly in stock under the Plan during the year ending
December 31, 1994. Additional availability is necessary to offset a substantial
increase in the number of Participants in the Plan and to accommodate larger
grants under the Plan. The number of optionholders under the Plan increased
from 207 in 1992 to 421 in 1995, resulting primarily from the addition of
eligible employees following the acquisitions of Fisher-Price, Inc., Kransco
and J.W. Spear.
The Compensation/Options Committee has approved the award of 625,000, 312,500
and 437,500 options in excess of the shares available under the Plan at the
time of grant to Messrs. Amerman and Eskridge and Ms. Barad, respectively. The
options granted to Mr. Amerman were granted at fair market value on the date of
grant, ($22.30 as adjusted for the five-for-four stock split), for a term of
ten years and vest in three equal annual installments commencing one year and
one day after the date of grant. The options granted toMr. Eskridge and Ms.
Barad are identical to those granted to Mr. Amerman except they vest in four
equal annual installments. As of February 15, 1995, the closing price of the
Company's Common Stock as reported on the New York Stock Exchange was $22.875.
The Company has not granted any additional Awards which would not be permitted
pursuant to the existing terms of the Plan if the Amendment is not approved by
the Company's stockholders. If the Amendment is not approved by the
stockholders, the conditional option grants to Messrs. Amerman and Eskridge and
Ms. Barad will be canceled. Approval of the Amendment will require the
affirmative vote of a majority of the voting power of all the outstanding
shares of Common Stock and Series F Stock present or represented and entitled
to vote at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PLAN AMENDMENT PROPOSAL.
---
15
<PAGE>
PROPOSAL 3
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP has served as the Company's independent accountants
since their appointment for fiscal 1975. The Board of Directors, on the
unanimous recommendation of the Audit Committee, has selected Price Waterhouse
LLP as Mattel's independent accountants for the year ending December 31, 1995.
Representatives of Price Waterhouse LLP are expected to be present at the
meeting to respond to questions and will have an opportunity to make a
statement if they desire to do so.
All services provided to Mattel by Price Waterhouse LLP were approved by the
Audit Committee which also considered the possible effect on the independence
of Price Waterhouse LLP by rendering such services.
Audit services of Price Waterhouse LLP for 1994 included the examination of
the consolidated financial statements, services related to filings with the
Commission, and the performance of limited reviews of Mattel's quarterly
unaudited financial information.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
---
SELECTION OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR
THE YEAR ENDING DECEMBER 31, 1995.
PRINCIPAL STOCKHOLDERS
As of February 15, 1995, the only persons known by the Company to own
beneficially or that may be deemed to own beneficially more than 5% of any
class of its voting stock were:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------- ------------------- -------------------- --------
<S> <C> <C> <C>
Series F Stock The Trustees of the 864,293 100%
International Games Employee
Stock Ownership Trust
c/o Standard Bank & Trust Co.
Hickory Hills, IL 60457
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and certain of its officers, and persons who own more than 10 percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Commission.
Officers, directors and greater than 10 percent stockholders are required to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the year ended
December 31, 1994, all filing requirements applicable to its officers,
directors and greater than 10 percent beneficial owners were complied with,
except for Messrs. Vogelstein and Brown who, due to an administrative error,
filed a report one month late disclosing an aggregate of eight sales of Common
Stock by E.M. Warburg, Pincus & Co., Inc.
16
<PAGE>
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this Proxy Statement, the Board of Directors knows of no
other business that will be presented by management for consideration at the
Meeting. If any other business properly comes before the Meeting, the proxy
holders intend to vote the proxies as recommended by the Board.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Stockholder proposals intended to be presented at the 1996 Annual Meeting of
Stockholders must be received by the Company not later than November 23, 1995.
Such proposals should be addressed to the Secretary of the Company.
ANNUAL REPORT (FORM 10-K)
THE COMPANY UNDERTAKES, ON WRITTEN REQUEST AND WITHOUT CHARGE, TO PROVIDE
EACH PERSON FROM WHOM THE ACCOMPANYING PROXY IS SOLICITED WITH A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES. COPIES OF EXHIBITS NOT INCLUDED IN THE FORM 10-K ARE
ALSO AVAILABLE, ON WRITTEN REQUEST, AT THE COMPANY'S COST THEREFOR. REQUESTS
SHOULD BE ADDRESSED TO MATTEL, INC., 333 CONTINENTAL BOULEVARD, EL SEGUNDO,
CALIFORNIA 90245-5012, ATTENTION: SECRETARY.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by Mattel. It is contemplated
that proxies will be solicited principally through the use of the mail, but
officers and regular employees of Mattel may solicit proxies personally or by
telephone, telegraph or special letter. Such officers and employees shall
receive no additional compensation in connection with such efforts.
In addition, the Company has retained Georgeson & Co., Inc. to assist in
connection with the solicitation of proxies from stockholders whose shares are
held in nominee name by various brokerage firms. The cost of such solicitation
is estimated to be $8,000 plus out-of-pocket costs and expenses.
Mattel will reimburse banks, brokerage houses and other custodians, nominees
and fiduciaries for their reasonable expenses in forwarding proxy materials to
the beneficial owners of the shares held by them.
By Order of the Board of Directors
Ned Mansour
Secretary
El Segundo, California
March 22, 1995
17
<PAGE>
EXHIBIT A
AMENDMENT TO
MATTEL 1990 STOCK OPTION PLAN
WHEREAS, Mattel, Inc. (the "Company") has properly adopted, effective as of
May 10, 1989, and currently maintains the Mattel 1990 Stock Option Plan (the
"Plan") for the purpose of promoting the long-term success of the Company;
WHEREAS, the Company now desires to amend the Plan to increase the number of
shares of Capital Stock that may be awarded pursuant to the Plan; and
WHEREAS, the Company, by action of its Board of Directors, has reserved the
right to amend the Plan pursuant to Section 11 thereof, subject in certain
instances to the approval of a majority of the Company's shareholders.
NOW, THEREFORE, pursuant to the authority granted to the Company, the Plan is
hereby amended as follows:
1. AMENDMENT TO SECTION 4.
Section 4 of the Plan is hereby amended in its entirety by substituting the
following therefor:
"Up to 1% of the outstanding Capital Stock as determined on December 31
of the preceding year shall be available for Awards granted wholly or
partly in stock during each calendar year in which the Plan is in
effect; provided, however, an additional 3,000,000 and 1,375,000 shares
-----------------
of Capital Stock (collectively, the "Additional Awards") shall be
available for such Awards for the years 1993 and 1994, respectively.
From time to time, the Board of Directors and appropriate officers of
the Company shall take whatever actions are necessary to file required
documents with governmental authorities and stock exchanges to make
shares of Capital Stock available for issuance pursuant to Awards.
Capital Stock related to Awards that are forfeited, terminated, expire
unexercised, settled in cash in lieu of stock or in such manner, that
all or some of the Capital Stock covered by an Award are not issued to
a Participant, or are exchanged for Awards that do not involve Capital
Stock, shall immediately become available for Awards. Any Capital Stock
not so used, as well as any unused portion of the percentage limit in
any calendar year or of the Additional Award Shares, shall be carried
forward and available for Awards in succeeding calendar years."
2. EFFECTIVE DATE.
This Amendment shall become effective upon its adoption by the Company's
Board of Directors (the "Effective Date"), subject, however, to the approval of
a majority of the shareholders of the Company at a meeting held to take such
action at which a quorum is present in person or by proxy and entitled to vote.
3. CONSTRUCTION OF AMENDMENT.
All of the provisions of this Amendment shall be deemed to be and construed
as part of the Plan as of the Effective Date.
4. THE PLAN.
Except as provided herein, the Plan shall continue in full force and effect.
Unless otherwise defined herein, defined terms used but not defined herein
shall have the meaning ascribed to them in the Plan.
A-1
<PAGE>
MATTEL, INC.
P
R PROXY SOLICITED BY THE BOARD OF DIRECTORS
O ANNUAL MEETING OF STOCKHOLDERS MAY 10, 1995
X
Y
JOHN W. AMERMAN, NED MANSOUR and JOHN L. VOGELSTEIN, or any of them,
each with power of substitution, are hereby appointed proxies to represent
and vote as designated hereon all shares of Common Stock of Mattel, Inc.
which the undersigned would be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held in the Manhattan Ballroom of the
Radisson Plaza Hotel, 1400 Parkview Avenue, Manhattan Beach, California, at
10:00 a.m. on the 10th day of May, 1995, or any adjournment or postponement
thereof, with all powers the undersigned would possess if personally
present.
Election of all Directors listed below:
NOMINEES:
John W. Amerman, Jill E. Barad, Harold Brown, James A. Eskridge,
Tully M. Friedman, Ronald M. Loeb, Edward H. Malone, Edward N.
Ney, William D. Rollnick, John L. Vogelstein and Lindsey F.
Williams.
SEE REVERSE SIDE. If you wish to vote in accordance with the Board of
Directors' recommendations, just sign on the reverse side. You need not
mark any boxes.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
<PAGE>
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
---
1. ELECTION OF DIRECTORS (named on reverse).
FOR WITHHELD
[_] [_]
MARK HERE
FOR ADDRESS
CHANGE AND [_]
NOTE BELOW
- ---------------------------------------
For all nominees except as noted above.
FOR AGAINST ABSTAIN
2. APPROVAL OF AN AMENDMENT TO THE MATTEL 1990 [_] [_] [_]
STOCK OPTION PLAN.
3. RATIFICATON OF THE SELECTION OF PRICE WATER- [_] [_] [_]
HOUSE LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS.
4. TO CONSIDER AND ACT UPON SUCH OTHER BUSINESS
MATTERS OR PROPOSALS AS MAY PROPERLY COME
BEFORE THE MEETING.
Please sign exactly as your name appears hereon. Joint owners
should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
Signature: Date
----------------------------- ----------------
Signature: Date
----------------------------- ----------------
PLEASE MARK, SIGN, DATE AND RETURN THIS FORM OF WRITTEN CONSENT PROMPTLY,
USING THE ENCLOSED ENVELOPE.
