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Mattel Chairman's Pay Package Worth Up to $20 Million in 3 Years


Newly appointed Mattel Inc. Chairman and Chief Executive Robert A. Eckert will earn $1.25 million in annual salary, bonuses at least equal that amount during his first year, and a host of other payments and perks that could exceed $20 million during the next three years.

Included in the package is a bonus plan tied to Mattel's share price that could contribute as much as $8 million in that time. Eckert also will receive options to purchase 3 million Mattel shares at $11.25 each--the stock's price the day he was hired.

Key elements of the 45-year-old executive's pay package were detailed Thursday in a Securities and Exchange Commission filing. A final pay agreement has yet to be negotiated.

"The only thing that looks a little rich is the range of the bonus on top of the stock options," said toy industry analyst Sean McGowan of Gerard Klauer Mattison in New York. "But you have to pay up to get quality people."

Eckert's pay package will receive careful scrutiny from shareholders in the wake of the announcement in late April that Mattel is paying former Chief Executive Jill Barad a severance package that exceeds $40 million.

Barad's deal sparked a shareholder lawsuit and prompted one Wall Street analyst to describe the severance package as "outrageous with a capital 'O.' " Disgruntled shareholders argue that the board wrongly rewarded Barad because Mattel's share price fell by 56% during her three-year tenure.

Eckert, the former head of Philip Morris Co.'s Kraft Foods Inc. unit, will receive a $2.8-million signing bonus--an amount he forfeited by leaving Kraft--and a $5.5-million loan that will be forgiven if he's still on the job in three years. Twenty-five percent of the options--750,000 shares--vest immediately, meaning that he's already up $1.9 million based on Mattel's closing price of $13.81 on Thursday. That amount would grow dramatically if Mattel's stock rebounds as his options vest.

In addition to health, retirement and profit-sharing programs, Mattel agreed to give Eckert a company car and pay for certain club memberships. Mattel will pay costs of relocating Eckert and his family to California from Illinois and compensate him for stock forfeited when he left Kraft by issuing 685,468 shares of restricted Mattel stock. Those shares were worth $7.7 million the day Eckert started at Mattel.

In a Barron's magazine interview published Monday, Eckert said, "I'm not in this job for the salary. The board insisted and I absolutely concurred with the notion that my personal financial stake is tied to the shareholders." Eckert also maintained he would "make more money if the stock goes up than I will getting fired."

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