Mattel Inc. cut Chief Executive Robert Eckert's cash pay 23% last year as sales languished and profit plunged at the El Segundo-based maker of Barbie dolls and other toys.
Eckert, who ranks among California's most highly compensated executives, also saw the normally generous flow of other compensation cut to a trickle in 2005, according to a company filing with regulators.
Despite the cuts, shareholder activists said the company's pay-for-performance standards still fell short, largely because Mattel had guaranteed Eckert generous retirement payments having little to do with performance.
"An initial read says they are cutting his pay because he didn't meet performance goals -- but on a closer look you realize that his retirement compensation insulates him from the risk that shareholders bear," said Brandon Rees, assistant director of investment for the AFL-CIO.
"Eckert stands to receive millions of dollars in post-retirement pay for the rest of his life," Rees said. "That guarantee makes him inherently less concerned about his current compensation."
The company, which declined to comment, said in its filing that it boosted executive pensions to retain talented officers.
Mattel's board might be missing the point, some compensation consultants said.
"You want to make sure that you retain the right kind of people, not just everybody," said David Leach, managing principal at Executive Compensation Group in Los Angeles.
Eckert received $1.25 million in salary in 2005 -- the same salary he has earned since he started in 2000. But his bonus of $468,750 was about half of what he received the prior year. His total cash pay in 2005: $1.72 million, down from $2.23 million in 2004.
The company also granted Eckert 375,000 stock options, valued at $1.68 million in 2005. Mattel granted Eckert the same number of options in 2004, which then were worth an estimated $3 million. Eckert's unexercised options now are valued at $13.7 million.
Eckert's other compensation, including additional life insurance coverage, payments to his deferred compensation plan and as many as 60 hours of personal use of the corporate jet amounted to $251,000.
That was down significantly from past years, when Eckert's compensation included $12 million in loans forgiven by Mattel, which also paid his tax obligation on that forgiven debt.
