Mattel 2014 Annual Report Download - page 89

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were earned and paid in shares of Mattel common stock. For the January 1, 2011—December 31, 2013 LTIP
performance cycle, 1.0 million shares were earned relating to the 2011-2013 performance-related components,
0.5 million shares were earned relating to the 2011-2013 market-related component, and 0.1 million shares were
earned related to dividend equivalent rights, resulting in a total of 1.6 million shares that vested in February
2014.
For the January 1, 2011—December 31, 2013 LTIP performance cycle, the weighted average grant date fair
value of the 2011-2013 performance-related and 2011-2013 market-related components of the Performance
RSUs were $42.30 and $4.59 per share, respectively, for 2013, and $32.87 and $4.55 per share, respectively, for
2012. During 2013 and 2012, $10.0 million and $12.4 million, respectively, was charged to expense relating to
the 2011-2013 performance-related components. Additionally, during 2013 and 2012, Mattel recognized share-
based compensation expense of $1.4 million and $1.8 million, respectively, for the 2011-2013 market-related
component.
For the January 1, 2014—December 31, 2016 LTIP performance cycle, Mattel also granted 2014-2016
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 also 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 2014-2016 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 2014-2016 market-related component”), adjusted for dividends declared during the
three-year performance cycle. The Performance RSUs also have dividend equivalent rights that are converted to
shares of Mattel common stock only when and to the extent the underlying Performance RSUs are earned and
paid in shares of Mattel common stock. For the 2014-2016 performance-related components, the range of
possible outcomes is that between zero and 0.5 million shares can be earned for each year during the performance
cycle. For the 2014-2016 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, 2014—December 31, 2016 LTIP performance cycle, the weighted average grant date fair
value of the performance-related and market-related components of the Performance RSUs were $39.03 and
$(3.57) per share, respectively, for 2014. During 2014, actual results did not meet minimum performance
thresholds, as such no shares were earned and no expense was recognized related to the 2014-2016 performance-
related component. During 2014, no share-based compensation expense was recorded related to the 2014-2016
market-related component.
The fair values of the 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 component were estimated at the
grant dates using a Monte Carlo valuation methodology.
Note 5—Seasonal Financing and Debt
Seasonal Financing
Mattel maintains and periodically amends or replaces its domestic unsecured committed revolving credit
facility with a commercial bank group. The facility is used as a back-up to Mattel’s commercial paper program,
which is used as the primary source of financing for the seasonal working capital requirements of its domestic
subsidiaries. The agreement governing the credit facility was amended and restated on March 11, 2013 to, among
other things, (i) extend the maturity date of the credit facility to March 12, 2018, (ii) increase aggregate
commitments under the credit facility to $1.60 billion, with an “accordion feature,” which allows Mattel to
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