Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On January 11, 2017, Margaret H. Georgiadis was appointed as the Chief Executive Officer (CEO) of Mattel, Inc. (the
Company), effective as of February 8, 2017. In addition, effective as of February 8, 2017, (i) the size of the Board of Directors (the Board) was increased from ten to eleven members, (ii) Ms. Georgiadis
was elected as a new member of the Board, and (iii) Ms. Georgiadis was appointed to serve as the sole member of the Equity Grant Allocation Committee. In connection with the appointment of Ms. Georgiadis as CEO, effective as of
February 8, 2017, Christopher A. Sinclair will resign from his role as the Companys CEO and will serve as Executive Chairman of the Board.
Prior to joining Mattel, Ms. Georgiadis, age 52, served as President, Americas at Google Inc., a global technology company, since
September 2011. Ms. Georgiadis was the Chief Operating Officer of Groupon, Inc., a global online local marketplace, from April 2011 through September 2011. Before joining Groupon, she served as Vice President, Global Sales Operations at Google
from October 2009 to April 2011. From January 2009 through September 2009, Ms. Georgiadis was a principal at Synetro Capital LLC, a private investment firm, and has served as a director of Synetro Capital since October 2009. Previously she
served as Executive Vice President, Card Products and Chief Marketing Officer at Discover Financial Services from 2004 through 2008, and as a partner at McKinsey & Company (London and Chicago) from 1990 through 2004.
Ms. Georgiadis has been a member of the board of directors of Amyris, Inc. since December 2015. She has also been a member of the board
of directors of McDonalds Corporation since January 2015 and serves as a member of its audit and finance committees. She previously served as a director of The Jones Group Inc. from February 2009 through April 2014. Ms. Georgiadis also
has served as a director of the following
non-profit
entities: the Ad Council since July 2012 (Chair since July 2016), World Business Chicago since October 2014, Mobile Marketing Association since September
2016, and The Economic Club of Chicago since July 2013.
In connection with her appointment as CEO, the Company entered into an offer
letter with Ms. Georgiadis on January 11, 2017 (the Offer Letter), which provides for the following effective as of February 8, 2017: (i) an annual base salary of $1,500,000; (ii) a target annual cash incentive
opportunity under the Mattel Incentive Plan (MIP) of 150% of base salary, up to a maximum of 300% of base salary, with a minimum payout for 2017 of $1,500,000; (iii) a number of restricted stock units (RSUs), as part of a
new-hire
grant, equal to $5,500,000 divided by the average of the closing trading prices of the Companys common stock over the 20 consecutive trading days immediately prior to the grant date (the Average
Price); and (iv) a
new-hire
grant of a stock option to purchase a number of shares of Company common stock equal to $5,500,000 divided by a Black-Scholes value, determined using the Average Price.
The
new-hire
RSUs and stock option will vest as to 50% of the shares on the second anniversary of the grant date and as to the remaining 50% on the third anniversary of the grant date, subject to continued
service, and will vest in full in the event of a termination of Ms. Georgiadis employment by the Company without cause, by her for good reason, or due to her death or permanent disability. In the event of such termination of employment,
the
new-hire
stock option also will provide for extended exercisability of up to three years following such termination (or up to five years in the event of termination of employment due to death or permanent
disability).
In addition, in recognition of the value of equity compensation forfeited by
Ms. Georgiadis in connection with her resignation from her prior employer, the Compensation Committee of the Board (the Compensation Committee) approved a make-whole grant of a number of RSUs equal to $14,000,000 divided by the
Average Price, which will vest in equal installments monthly over the
one-year
period following the grant date, subject to continued service. The make-whole RSUs will vest in full in the event of a termination
of Ms. Georgiadis employment by the Company without cause, by her for good reason, or due to her death or permanent disability. The Offer Letter also provides that Ms. Georgiadis 2017 long-term incentive grant value will be
$8,250,000, delivered 33.3% in each of the following forms: performance-based RSUs under the Companys 2017-2019 Long-Term Incentive Program (LTIP), time-vesting RSUs and stock options, subject to the Compensation Committees
approval. In the event of a termination of Ms. Georgiadis employment by the Company without cause or by her for good reason (other than in connection with a change in control of the Company), the number of performance-based RSUs earned
under the 2017-2019 LTIP cycle will be determined based on actual achievement of the performance measures for the performance cycle (without pro ration).
The Offer Letter also provides that Ms. Georgiadis will be eligible for a monthly automobile allowance of $2,000 and financial
counseling services, as well as temporary accommodations, one round-trip airfare per week and expense reimbursement for incidentals through September 30, 2017 and certain other relocation benefits in connection with her relocation. The Company
has also agreed to reimburse Ms. Georgiadis for up to $10,000 in legal fees incurred by her in connection with the negotiation of the Offer Letter.
Ms. Georgiadis will be eligible to participate in the Mattel, Inc. Executive Severance Plan B, as modified by the terms of a
participation letter agreement between her and the Company (the Severance Plan). Under the Severance Plan, in the event of a termination of Ms. Georgiadis employment by the Company without cause, she will be entitled to:
(i) severance (to be paid in equal
bi-weekly
installments) equal to two times the sum of her base salary and target bonus opportunity for the year in which the termination of employment occurs;
(ii) an amount representing an annual incentive payout under the MIP based on actual performance, and prorated based on the number of months that she is employed during the performance period; (iii) payment of a monthly amount equivalent
to the then current COBRA premium for up to one year; (iv) accelerated vesting of all unvested stock options and extended exercise periods of up to three years following the termination date; (v) accelerated
pro-rata
vesting of unvested time-vesting RSUs, based on the number of months that she is employed during the vesting period; and (vi) outplacement services for up to two years not to exceed $50,000. In
the event of termination of Ms. Georgiadis employment by the Company without cause or a resignation for good reason, in either case, on or within the
two-year
period following a change of control of
the Company, she will be provided with: (i) a
lump-sum
severance payment equal to two times the sum of her annual base salary and target bonus opportunity for the year in which the termination of
employment occurs; (ii) an amount representing an annual incentive payout under the MIP based on her target annual incentive opportunity for the year in which the termination of employment occurs, and prorated based on the number of months that
she is employed during the performance period; (iii) accelerated vesting of all unvested stock options and extended exercise periods of up to three years following the termination date, and accelerated vesting of all unvested time-vesting RSUs;
(iv) payment of a monthly amount equivalent to the then current COBRA premium for up to two years; and (v) outplacement services for up to two years not to exceed $50,000.
The payments and benefits under the Severance Plan are conditioned on Ms. Georgiadis execution of a general release agreement
with the Company and, in certain circumstances, compliance with post-employment covenants to (i) protect the Companys confidential information; (ii) not accept employment with or provide services to a competitor or solicit the
Companys employees for one year after the termination date; and (iii) not disparage or otherwise impair the Companys reputation or goodwill or the commercial interests of the Company or any of the Companys affiliated entities
or its officers, directors, employees, stockholders, agents or products.
The foregoing descriptions are qualified in their entirety by reference to the Offer Letter and
Participation Letter Agreement under the Mattel, Inc. Executive Severance Plan B, copies of which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form
8-K
and incorporated herein by reference.
In connection with his service as Executive Chairman, on January 11, 2017, the following compensation package for Mr. Sinclair
was approved, effective as of February 8, 2017: (i) an annual base salary of $1,000,000 (reduced from his base salary as CEO of $1,500,000); (ii) a target annual cash incentive opportunity under the MIP of 100% of base salary (reduced from his
target opportunity as CEO of 150% of base salary); and (iii) a 2017 long-term incentive grant value of $3,000,000 (reduced from his 2016 long-term incentive grant value as CEO of $7,000,000), delivered 33.3% in each of the following forms:
performance-based RSUs under the 2017-2019 LTIP, time-vesting RSUs and stock options, subject to the Compensation Committees approval. Mr. Sinclairs 2017 stock option grant and time-vesting RSUs will vest in full on the date of the
Companys 2018 annual meeting of stockholders and, provided that he remains Executive Chairman at least until the 2018 annual meeting, the number of performance-based RSUs earned under the 2017-2019 LTIP cycle will be determined based on actual
achievement of the performance measures for the performance cycle (without pro ration). For the remainder of 2017, Mr. Sinclair will continue to be eligible for the other benefits provided to him as CEO, other than his monthly allowance of
$60,000 and the personal use of a private aircraft, which will cease effective as of April 1, 2017.