Mattel Paid Top Executive $11.9 Million in 2002
Mattel Inc. showered its top executive with $11.9 million in salary and bonuses last year, more than five times his 2001 compensation, according to documents filed Wednesday with the Securities and Exchange Commission.
The El Segundo toy maker also said that activist investor Ralph Whitworth, whose Relational Investors firm holds more than 6.4 million shares or 1.5% of Mattel, will not seek re-election to the board.
The bulk of Mattel Chairman and Chief Executive Robert Eckert’s compensation was an $8-million bonus as part of a long-term incentive plan, which measured performance from most of 2000 through 2002 based on net operating profit after taxes.
The former head of Philip Morris Cos.’ Kraft Foods Inc. also was awarded a $2.5-million annual bonus, up from just more than $800,000 a year earlier. Eckert’s base salary of $1.3 million was unchanged from 2001.
Mattel also granted the 48-year-old Eckert 375,000 stock options, which have a current value of $2.6 million.
The nation’s largest toy maker has enjoyed a strong rebound since Eckert took the helm in 2000. He has refocused the company on its core brands of Barbie dolls and Hot Wheels toy cars and has cut costs.
The company’s shares surged 11.3% last year and net operating profit after taxes rose 26%, to $486.9 million. Mattel’s net profit fell 23%, to $230 million, because of a $252-million after-tax charge.
Eckert’s 2002 package included $127,500 in additional compensation for taxes on Mattel-provided life insurance and other benefits.
Under Mattel’s proposed long-term incentive plan, to be voted on by shareholders at the company’s annual meeting next month, Eckert will be eligible for up to a $12-million bonus based on Mattel’s performance from 2003 through 2006.
Whitworth, in an interview Wednesday, said he is leaving the board because he has confidence in Eckert’s leadership and wants to devote his attention to other investment opportunities.
Relational Investors buys shares in distressed companies, works from the inside to improve their prospects and then sells once the shares rebound. The fund, which began buying Mattel when it hovered near $12, has made about $90 million on the stock.
Mattel shares rose 25 cents Wednesday to $22.60 on the New York Stock Exchange.
“We haven’t made a decision about what to do with our position. At this point we continue to hold it and that’s our current intention,” Whitworth said. “It says a lot more about our investment style than it does about our view of the company’s prospects.
“We think the company has good upside from here and continue to be very high on the company, in particular the management team.”
Mattel’s three division leaders in 2002 -- Matt Bousquette, head of the boys and entertainment divisions; Adrienne Fontanella, head of the girls division; and Neil Friedman, the head of Fisher-Price baby and toddler toys -- each received $3 million under the long-term incentive plan, the filing said. Chief Financial Officer Kevin Farr was awarded $2 million.
