Ex-Executive to Receive $6.9 Million From Mattel

Toy maker Mattel Inc. will pay its deposed Barbie and Hot Wheels chief $6.9 million in severance, the company said in a regulatory filing Wednesday.

Matthew Bousquette, the former president of Mattel Brands, will get $5.4 million -- three times his annual salary -- as required by his employment agreement, as well as a consulting fee of $750,000 a year through the end of 2007.

The 17-year Mattel veteran resigned in October, a week before it was reported that weak Barbie sales dragged third-quarter profit down 12%, sending the stock to its lowest point in almost five years. Barbie’s poor performance marked two years of declining sales for Mattel’s biggest property.

Compensation expert Graef “Bud” Crystal said Bousquette’s employment agreement was particularly generous for a non-chief executive.

Even more striking, he said, was the consulting arrangement.

“Why would you provide a consulting agreement for someone you just threw out?” Crystal asked. “If he’s so valuable, why don’t you keep him on -- then you get his services without paying an extra $750,000. He’s getting more through 2007 than if he had stayed.”

Executives at Mattel, which closes for the holidays, could not be reached for comment.

The issue of lavish severance is a sensitive one for El Segundo-based Mattel. Former Chief Executive Jill Barad, who was drummed out in 2000 after Mattel’s stock plummeted 56% during her three years on the job, left with a $50-million payout.

That reward for a failed performance, alongside others such as Michael Ovitz’s $140-million windfall from Walt Disney Co. after 15 months as Disney’s president, ushered in a wave of shareholder outrage that culminated in an overhaul of laws governing executive compensation packages.

Bousquette’s parting deal, although far less lucrative than those of some companies’ leaders, still provides for numerous troubling perks, Crystal said.

In addition to the often standard health benefits and outplacement services, Bousquette’s employment agreement also calls for the company to pay for financial counseling, tax preparation services and country club dues. It also entitles him to a leased car and the right to buy that car for a “nominal sum.”