Mattel 2014 Annual Report Download - page 88

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 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, allowing 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, 2014 and 2013 was $73.6 million and $68.0 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 in the consolidated statements of operations. 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 $67.6 million and $66.0 million as of December 31, 2014 and 2013, 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 are subject to certain approvals of the Compensation
Committee of the Board of Directors. For 2014, 2013, and 2012, $25.2 million, $65.0 million, and $108.1
million, respectively, was charged to expense for awards under these plans.
Mattel had two long-term incentive program (“LTIP”) performance cycles in place for the time period
between 2012 and 2014: (i) a January 1, 2011—December 31, 2013 performance cycle, which was established by
the Compensation Committee of the Board of Directors in March 2011, and (ii) a January 1, 2014—
December 31, 2016 performance cycle, which was established by the Compensation Committee of the Board of
Directors in March 2014.
For the January 1, 2011—December 31, 2013 LTIP performance cycle, Mattel granted performance-based
restricted stock units (“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 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
and a net sales performance measure (“the 2011-2013 performance-related components”), and (ii) Mattel’s total
stock 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 2011-2013 market-related component”), adjusted
for dividends declared during the three-year performance cycle. The Performance RSUs also had dividend
equivalent rights that were converted to shares of Mattel common stock when the underlying Performance RSUs
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