Mattel 2013 Annual Report Download - page 85

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During 1999, Mattel amended the Fisher-Price Pension Plan to convert it from a career-average plan to a cash
balance plan and applied for a determination letter from the IRS. In 2003 and 2011, Mattel further amended the
Fisher-Price Pension Plan to reflect changes in regulations and court cases associated with cash balance plans and
submitted applications for a determination letter to the IRS. Mattel received a favorable determination letter in
February 2012 and converted the Fisher-Price Pension Plan to a cash balance plan in July 2012. The Fisher-Price
Pension Plan was renamed the Mattel Cash Balance Plan in connection with the conversion. The plan conversion
resulted in a reduction in the benefit obligation of approximately $12 million, which was recognized in 2012.
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 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, 2013 and 2012 was $68.0 million and $55.9 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 $66.0 million and $54.3 million as of December 31, 2013 and 2012, 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 2013, 2012, and 2011, $65.0 million, $108.1 million, and $75.3
million, respectively, was charged to expense for awards under these plans.
Mattel had one long-term incentive program (“LTIP”) performance cycle in place for the time period
between 2011 and 2013, which was established by the Compensation Committee of the Board of Directors in
March 2011.
For the January 1, 2011—December 31, 2013 LTIP, Mattel granted performance-based restricted stock units
(“Performance RSUs”) under the Mattel, Inc. 2010 Equity and Long-Term Compensation Plan to officers and
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