Mattel 2012 Annual Report Download - page 88

(“the 2008—2010 performance-related component”), and (ii) Mattel’s total stockholder return (“TSR”) for the
three-year performance cycle relative to the TSR realized by companies comprising the S&P 500 as of the first
day of the performance cycle (“the 2008—2010 market-related component”). For the January 1, 2008—
December 31, 2010 LTIP, 1.3 million shares were earned relating to the performance-related component and
0.7 million shares were earned relating to the market-related component, resulting in a total of 2.0 million shares
that vested in February 2011.
For the January 1, 2008—December 31, 2010 LTIP, the weighted average grant date fair value of the
performance-related and market-related components of the Performance RSUs were $22.02 and $3.99 per share,
respectively, for 2010. During 2010, $17.7 million was charged to expense relating to the 2008—2010
performance-related component as the 2010 actual results exceeded the 2010 performance threshold.
Additionally, during 2010, Mattel recognized share-based compensation expense of $1.9 million for the market-
related component.
For the January 1, 2011—December 31, 2013 LTIP, Mattel granted Performance RSUs under the Mattel, Inc.
2010 Equity and Long-Term Compensation Plan to officers and certain employees providing services to Mattel.
Performance RSUs granted under this program are 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 and a net sales performance measure (“the 2011—2013 performance-related components”),
and (ii) Mattel’s TSR for the three-year performance cycle relative to the TSR realized by companies comprising
the S&P 500 as of the first day of the performance cycle (“the 2011—2013 market-related component”), adjusted
for dividends declared during the three-year performance cycle. For the 2011—2013 performance-related
components, the range of possible outcomes is that between zero and 0.5 million shares that can be earned for each
of the three years during the three-year performance cycle. For the 2011—2013 market-related component, the
possible outcomes range from an upward adjustment of 0.5 million shares to a downward adjustment of 0.5 million
shares to the results of the performance-related components over the three-year performance cycle.
For the January 1, 2011—December 31, 2013 LTIP, the weighted average grant date fair value of the
performance-related and market-related components of the Performance RSUs were $32.87 and $4.55 per share,
respectively, for 2012, and $24.67 and $4.22 per share, respectively, for 2011. During 2012, $12.4 million was charged
to expense relating to the performance-related components as the 2012 actual results exceeded the 2012 performance
threshold. During 2011, $7.1 million was charged to expense relating to the performance-related components as the
2011 actual results exceeded the 2011 performance threshold. Additionally, during 2012 and 2011, Mattel recognized
share-based compensation expense of $1.8 million and $1.2 million, respectively, for the market-related component.
The fair values of the 2008—2010 performance-related components were based on the closing stock price of
Mattel’s common stock on each of the grant dates, reduced by the present value of estimated dividends to be paid
during the applicable performance periods as the awards were not credited with dividend equivalents for actual
dividends paid on Mattel’s common stock. The fair values of the 2011—2013 performance-related components
were based on the closing stock prices of Mattel’s common stock on each of the grant dates. The fair values of
the market-related components were estimated at the grant dates using a Monte Carlo valuation methodology.
Share-based compensation is recognized as expense over the three-year performance cycle using a straight-line
expense attribution approach reduced for estimated forfeitures.
Note 5—Seasonal Financing and Debt
Seasonal Financing
In November 2011, Mattel issued $300.0 million of unsecured 2.50% senior notes (“2.50% Senior Notes”)
due November 1, 2016 and $300.0 million of unsecured 5.45% senior notes (“5.45% Senior Notes”) due
November 1, 2041 (collectively, “2011 Senior Notes”). Interest on the 2011 Senior Notes is payable semi-
annually on May 1 and November 1 of each year, which began May 1, 2012. Mattel may redeem all or part of the
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