Mattel 2014 Annual Report Download - page 95

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Compensation Committee of the Board of Directors, generally during a period of three years from the date of
grant. In the event of a retirement of an employee aged 55 years or older with 5 or more years of service, or the
death or disability of an employee, that occurs in each case at least 6 months after the grant date, nonqualified
stock options become fully vested. Similar provisions exist for non-employee directors. Time-vesting RSUs
granted under the 2010 Plan are generally accompanied by dividend equivalent rights and generally vest over a
period of three years from the date of grant. In the event of the involuntary termination of an employee aged 55
years or older with 5 or more years of service, or the death or disability of an employee, that occurs at least 6
months after the grant date, RSUs become fully vested. The 2010 Plan also contains provisions regarding grants
of equity compensation to the non-employee members of the Board of Directors. The 2010 Plan expires on
March 25, 2020, except as to any grants then outstanding.
The number of shares of common stock available for grant under the 2010 Plan is subject to an aggregate
limit of the sum of (i) 48 million shares, (ii) the number of shares that remained available for issuance under the
2005 Plan on May 12, 2010, and (iii) any shares subject to awards outstanding under the 2005 Plan that on or
after May 12, 2010 are forfeited or otherwise terminate or expire without the issuance of shares to the holder of
the award. The 2010 Plan is further subject to detailed share-counting rules. As a result of such share-counting
rules, full-value grants such as grants of restricted stock or RSUs count against shares remaining available for
grant at a higher rate than grants of stock options and stock appreciation rights. Each stock option or stock
appreciation right grant is treated as using one available share for each share actually subject to such grant,
whereas each restricted stock or RSU grant is treated as using three available shares for each share actually
subject to such full-value grant. At December 31, 2014, there were approximately 15 million shares of common
stock available for grant remaining under the 2010 Plan.
As of December 31, 2014, total unrecognized compensation cost related to unvested share-based payments
totaled $87.7 million and is expected to be recognized over a weighted-average period of 1.8 years.
Stock Options
Mattel recognized compensation expense of $12.5 million, $12.1 million, and $13.8 million for stock
options during 2014, 2013, and 2012, respectively, which is included within other selling and administrative
expenses in the consolidated statements of operations. Income tax benefits related to stock option compensation
expense recognized in the consolidated statements of operations during 2014, 2013, and 2012 totaled $3.5
million, $3.8 million, and $4.5 million, respectively.
The fair value of options granted has been estimated using the Black-Scholes valuation model. The expected
life of the options used in this calculation is the period of time the options are expected to be outstanding and has
been determined based on historical exercise experience. Expected stock price volatility is based on the historical
volatility of Mattel’s stock for a period approximating the expected life, the expected dividend yield is based on
Mattel’s most recent actual annual dividend payout, and the risk-free interest rate is based on the implied yield
available on US Treasury zero-coupon issues approximating the expected life. The weighted average grant date
fair value of options granted during 2014, 2013, and 2012 was $4.57, $8.80, and $7.32, respectively. The
following weighted average assumptions were used in determining the fair value of options granted:
2014 2013 2012
Expected life (in years) ................................................ 4.9 4.9 5.0
Risk-free interest rate .................................................. 1.6% 1.5% 0.7%
Volatility factor ...................................................... 23.7% 31.8% 35.0%
Dividend yield ....................................................... 4.3% 3.4% 3.6%
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