Mattel 2012 Annual Report Download - page 87

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Defined Contribution Retirement Plans
Domestic employees are eligible to participate in a 401(k) savings plan, the Mattel, Inc. Personal Investment
Plan (the “Plan”), sponsored by Mattel, which is a funded defined contribution plan intended to comply with
ERISA’s requirements. Contributions to the Plan include voluntary contributions by eligible employees and
employer automatic and matching contributions by Mattel. The Plan allows employees to allocate both their
voluntary contributions and their employer automatic and matching contributions to a variety of investment
funds, including a fund that is fully invested in Mattel common stock (the “Mattel Stock Fund”). Employees are
not required to allocate any of their Plan account balance to the Mattel Stock Fund, which allows employees to
limit or eliminate their exposure to market changes in Mattel’s stock price. Furthermore, the Plan limits the
percentage of the employee’s total account balance that may be allocated to the Mattel Stock Fund to 25%.
Employees may generally reallocate their account balances on a daily basis. However, pursuant to Mattel’s
insider trading policy, employees classified as insiders and restricted personnel under Mattel’s insider trading
policy are limited to certain periods in which they may make allocations into or out of the Mattel Stock Fund.
Certain non-US employees participate in other defined contribution retirement plans with varying vesting
and contribution provisions.
Deferred Compensation and Excess Benefit Plans
Mattel maintains a deferred compensation plan that permits certain officers and key employees to elect to
defer portions of their compensation. The deferred compensation plan, together with certain contributions made
by Mattel and participating employees to an excess benefit plan, earns various rates of return. The liability for
these plans as of December 31, 2012 and 2011 was $55.9 million and $51.6 million, respectively, and is included
in other noncurrent liabilities in the consolidated balance sheets. Changes in the market value of the participant-
selected investment options are recorded as retirement plan expense within other selling and administrative
expenses. Separately, Mattel has purchased group trust-owned life insurance contracts designed to assist in
funding these programs. The cash surrender value of these policies, valued at $54.3 million and $59.7 million as
of December 31, 2012 and 2011, respectively, are held in an irrevocable grantor trust, the assets of which are
subject to the claims of Mattel’s creditors and are included in other noncurrent assets in the consolidated balance
sheets.
Incentive Compensation Plans
Mattel has annual incentive compensation plans under which officers and key employees may earn incentive
compensation based on Mattel’s performance and subject to certain approvals of the Compensation Committee of
the Board of Directors. For 2012, 2011, and 2010, $108.1 million, $75.3 million, and $106.7 million,
respectively, was charged to expense for awards under these plans.
Mattel has had two long-term incentive program (“LTIP”) performance cycles in place for the time period
between 2010 and 2012: (i) a January 1, 2008—December 31, 2010 performance cycle, which was established by
the Compensation Committee of the Board of Directors in March 2008, and (ii) a January 1, 2011—
December 31, 2013 performance cycle, which was established by the Compensation Committee of the Board of
Directors in March 2011.
For the January 1, 2008—December 31, 2010 LTIP, Mattel granted performance-based restricted stock units
(“Performance RSUs”) under the Mattel, Inc. 2005 Equity Compensation Plan to officers and certain employees
providing services to Mattel. Performance RSUs are units that may become payable in shares of Mattel’s
common stock at the end of the three-year performance cycle. The Performance RSUs granted under this
performance cycle were earned based on an initial target number with the final number of Performance RSUs
payable being determined based on the product of the initial target number of Performance RSUs multiplied by a
performance factor based on measurements of Mattel’s performance with respect to: (i) annual operating result
targets for each year in the performance cycle using a net operating profit after taxes less capital charge measure
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