Mattel 2006 Annual Report Download - page 94

pound sterling, Euro, and Mexican peso against the US dollar being partially offset by losses from the weakening
of the Indonesian rupiah against the US dollar.
The components of accumulated other comprehensive loss are as follows (in thousands):
December 31,
2006 2005
Currency translation adjustments .......................................... $(168,927) $(238,559)
Minimum pension liability adjustments, net of tax ............................ (47,250) (68,715)
Net unrealized (loss) gain on derivative instruments, net of tax .................. (6,541) 4,246
Adjustment for initial adoption of SFAS No. 158, net of tax ..................... (54,143) —
$(276,861) $(303,028)
Note 7—Share-Based Payments
Mattel Stock Option Plans
In May 2005, Mattel’s stockholders approved the Mattel, Inc. 2005 Equity Compensation Plan (the “2005
Plan”). Upon approval of the 2005 Plan, Mattel terminated its Amended and Restated 1996 Stock Option Plan
(the “1996 Plan”) and its 1999 Stock Option Plan (the “1999 Plan”), except with regard to grants then
outstanding under the 1996 Plan and the 1999 Plan. Restricted stock awards made under the 1996 Plan continue
to vest pursuant to the terms of their respective grant agreements. Outstanding stock option grants under plans
that have expired or have been terminated continue to be exercisable under the terms of their respective grant
agreements. All such stock options expire no later than ten years from the date of grant and generally provide for
vesting over a period of three years from the date of grant. Except as discussed below (“Stock Option Review”),
stock options generally were granted with exercise prices equal to the fair market value of Mattel’s common
stock on the date of grant, although there are a few outstanding stock options that were granted with an exercise
price in excess of the fair market value of Mattel’s common stock on the date of grant, as to which vesting was
dependent upon Mattel’s common stock achieving a specified fair market value during a specified time period.
Options were granted to non-employee members of Mattel’s Board of Directors under the 1996 Plan with
exercise prices equal to the fair market value of Mattel’s common stock on the date of grant; such options expire
no later than ten years from the date of grant and vest over a period of four years from the date of grant.
Under the 2005 Plan, Mattel has the ability to grant nonqualified stock options, incentive stock options,
stock appreciation rights, restricted stock, RSUs, dividend equivalent rights and shares of common stock to
officers, employees, and other persons providing services to Mattel. Generally, options vest and become
exercisable contingent upon the grantees’ continued employment with Mattel. In the event of a retirement of an
employee aged 55 years or greater with 5 or more years of service that occurs at least 6 months after the grant
date, nonqualified stock options become fully vested. A similar provision exists for non-employee directors.
Nonqualified stock options are granted at not less than 100% of the fair market value of Mattel’s common stock
on the date of grant, expire no later than ten years from the date of grant and vest on a schedule determined by
the Compensation Committee of the Board of Directors, generally during a period of three years from the date of
grant. RSUs granted under the 2005 Plan are generally accompanied by dividend equivalent rights and generally
vest over a period of three years from the date of grant. The 2005 Plan also contains provisions regarding grants
of equity compensation to the non-employee members of the Board of Directors. Pursuant to these provisions,
the Compensation Committee has approved grants to non-employee members of the Board of Directors that
consist of a mix of nonqualified stock options and restricted stock units; such stock options and restricted stock
units vest over a period of three years from the date of grant, and such stock options have exercise prices equal to
the fair market value of Mattel’s common stock on the date of grant and expire no later than ten years from the
date of grant. The 2005 Plan expires on May 18, 2015, except as to any grants then outstanding.
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