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Mattel Hints at Hefty Severance Pay for Barad

March 14, 2000|ABIGAIL GOLDMAN | TIMES STAFF WRITER

Mattel Inc. hinted at the cost of firing former Chief Executive Jill Barad, listing in its annual report a first-quarter charge of about $50 million to cover severance payments.

The company did not identify the recipients by name, or list specific amounts, but said that in addition to $75 million to $100 million in reorganizational charges, it also will incur "compensation expense . . . related to the recent departure of certain senior executives."

Barad resigned as Mattel's leader in January after a 20-year career at the El Segundo-based company, following more than $200 million in losses at Learning Co., an acquisition by Barad that was Mattel's most expensive, at $3.6 billion.

Also leaving Mattel in recent months was Chief Financial Officer Harry Pearce. Mattel has not disclosed the details of either executive's separation packages.

However, the company outlined some of the terms of Barad's employment agreement in previous filings with the Securities and Exchange Commission, including a pension worth $598,000 annually. The company also guaranteed Barad a separation package worth five times her average annual bonus over the past three years, plus five times her salary. In 1998, she earned $1.2 million in salary; for the three years she was at the company's helm, her bonuses averaged $400,000.

Upon resigning from the company, her agreement also called for forgiveness of a $3-million home loan the company granted her in 1994. That would put her severance package at at least $11 million.

Barad earned a total of $4.8 million in 1998, double her 1997 pay of $2.4 million excluding a special options grant, SEC documents show.

Wall Street analysts and investors began voicing their concerns over a too-rich pay package when Barad left the company.

Some of the grousing continued Monday, analysts said, although the stock rebounded from a seven-year low reached Friday, climbing $1.19, to $10.25, in New York Stock Exchange trading Monday.

The company has said it hopes to name Barad's replacement soon, but has not elaborated on its executive search.

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