Ex-CEO Given $40-Million Exit Deal by Mattel
Toy icon Barbie once complained that “math class is tough,” but her former boss is proving adept with a calculator.
Troubled toy maker Mattel Inc. disclosed Friday that it paid former Chief Executive Jill Barad a severance package exceeding $40 million.
The payout, disclosed in the company’s annual proxy statement filed Friday with the Securities and Exchange Commission, comes as the El Segundo-based firm is bleeding red ink and its stock price hovers near historical lows.
Barad’s tally could grow if her as-yet unnamed successor is able to reverse the company’s fortunes, and its stock price rebounds.
Big companies defend such packages as necessary to attract top talent to high-risk CEO jobs, but critics lambaste them as no-lose propositions for executives.
“This is the kind of stuff that headlines are made of,” said Robin A. Ferracone, the head of Los Angeles-based SCA Consulting, which advises companies on compensation and other issues. “It’s a very significant package to say goodbye.”
Wall Street analysts also were critical.
“When they first announced the number, I thought it was outrageous with a capital ‘O,’ ” said toy industry analyst Sean McGowan of Gerard Klauer Mattison in New York. “Now I think it’s more outrageous with a capital ‘M,’ as in more.”
Mattel management declined to comment on Friday’s filing. In a conference call with analysts earlier this month, interim Chief Executive Ronald Loeb defended Barad’s payout.
“We’ve acted very ethically in doing what we did,” he said. “Our real focus was getting on with business and getting as many diversions as possible behind us.”
In its SEC filing, Mattel said it will pay Barad $26.4 million in cash--five times her base salary plus maximum bonuses. The company also will waive the balance of a low-interest $3-million home loan it gave Barad in 1994, and forgive a $4.2-million loan made in 1997.
Barad won’t have to worry about taxes on the forgiven loans, because Mattel also is paying $3.3 million in state and federal assessments on those transactions.
In addition, Mattel will pay Barad $709,000 a year for life in retirement benefits; allow her to keep some of Mattel’s office equipment; sell Barad her company car for a “nominal sum”; and sell her undisclosed pieces of artwork at prices that Mattel paid.
The company also agreed to provide Barad with health insurance, memberships at various clubs, “outplacement services” and financial counseling until she gets another job.
Mattel also declared all of Barad’s stock options to be fully vested, giving her 6.4 million shares. However, the exercise price on the bulk of those shares ranges from $42.31 to $44.87, far higher than Mattel’s Friday closing price of $12.31. More than 2.3 million shares are exercisable at $15.76 to $26.62, which could yield Barad more money if her successors turn the company around.
Barad, 46, resigned in early February after three years as the company’s chief executive. She earned the top post after a storied 21-year-career in which she helped build Barbie from a $320-million U.S. doll business in 1985 to a $2-billion global brand by 1998.
During Barad’s final year, however, the company suffered a string of increasingly harsh reversals that turned Mattel’s once-mighty profits into losses and pummeled its stock price.
Mattel is reeling from nearly $300 million in losses incurred last year by Learning Co., the creator of “Carmen Sandiego” and other children’s software. Mattel, which paid nearly $3.6 billion for the company in 1998, said this month that it has put Learning Co. up for sale.
Mattel warned investors of the severance package in March, when the company said it would take a charge of as much as $50 million for payouts to former executives.
Details of former Mattel President Ned Mansour’s severance package also were spelled out in Mattel’s proxy. The 51-year-old Mansour, who resigned last month, received $3.8 million--three times his annual salary plus bonus payments--and an additional $2 million from the company’s long-term incentive plan.
The company also declared all of Mansour’s stock options to be fully vested, giving him 1.96 million shares that can exercised. However, the exercise price of the bulk of those shares ranges from $42.23 to $44.87. More than 800,000 shares are exercisable at prices that range from $16.16 to $25.75.
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Times staff writer Stuart Silverstein contributed to this report.
