UPDATE: Mattel Brings Severance Plan In Line With Peers
Mattel Inc. (MAT) will bring its executive-severance plan in
line with current practices, eliminating individual contracts for
executives under the chief executive.
As a result, the toy maker won't renew contracts for three top
executives - Chief Financial Officer Kevin Farr, President of
Mattel Brands Neil Friedman and Executive Vice President of
Worldwide Operations Thomas Debrowski - after their pacts expire in
2011 and 2012, the toy maker said in a Securities and Exchange
However, the world's largest toymaker said it expects the three
men to remain employed with the company beyond those expiration
dates. All three men have worked to tie the company's toy lineup to
potential blockbuster movies such as 2008's movie release of Speed
Shares of Mattel closed down 4.65%, or 76 cents, to $15.60,
erasing Wednesday's minor gains of 1.9%. Shares of the company have
risen 23% in the last three months.
Wedbush Morgan analysts Chris White said the company's
announcement is "business as usual" and doesn't imply that the
company will release the three executives following the contract
"I think that it's an archaic policy to have senior executives
employed by long-term employment contracts, especially in this
economy," said White. He added that the company's employment
practices were outdated and Thursday's announcement is its effort
to streamline its practices with its peers.
The news come as Mattel and rival toymakers are looking to
rebound from the worst holiday shopping season in recent years,
with mainstays seeing sales slump and international sales,
previously relied upon to offset plateauing U.S. sales, sagging as
well. In April, Mattel reported a wider first-quarter loss as
revenue decreased worldwide.
Under the new plan, executives terminated without cause or
leaving for "good reason" will get a severance package based on
their recent compensation packages. Other benefits include full
vesting of all stock options granted after the executive's
eligibility date under the plan for up to three years and up to two
years of health-insurance coverage.
Mattel has spent much of this year celebrating Barbie's 50th
birthday and forever-young presence. They built her a real Malibu
dream house, gave her a Facebook page and even had her tweeting on
Twitter, all of which analysts said helped deliver the toy's
strongest quarter in years. The company celebrated the doll's
ever-evolving style at New York Fashion Week in February.
The toy industry, like the retail sector, has been hit by
consumers who are clenching their wallets and pinching pennies due
to high costs for food and gasoline. Analysts for the most part
have remained cautious on toy companies, although chief executives
of toy companies have stressed that the industry, based on their
survival of the Great Depression, have continued to perform well in
A company representative wasn't available for comment.
-By Aja Carmichael, Dow Jones Newswires; 212-416-2187;
(John Kell contributed to this report.)