MATTEL MANAGEMENT INCENTIVE PLAN
ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE
This Management Incentive Plan is established by Mattel, Inc. for the
purpose of focusing management on growth in earnings and asset management and
linking compensation to the business performance of Mattel, Inc. The Plan is
effective as of January 1, 1993.
2.1 Code. "Code" shall mean the Internal Revenue Code of 1986 and the
regulations promulgated thereunder.
2.2 Committee. "Committee" shall mean the Committee described in Section
2.3 Company. "Company" shall mean Mattel, Inc. and its participating
2.4 Covered Employee.
(a) "Covered Employee" means any individual who is, on the last day
of the Company's taxable year:
(i) The Chief Executive Officer; or
(ii) Among the four highest compensated
individuals (other than the Chief Executive Officer).
(b) The determination as to which individuals are Covered Employees
is determined in accordance with the rules of the Securities and Exchange
Commission, except that an individual will not be a Covered Employee unless
he or she is employed by the Company on the last day of its taxable year.
2.5 Outside Director.
(a) Whether a director is an "Outside Director," will be determined
under Code Section 162(m). An individual will constitute an "Outside
Director" only if he or she:
(i) Is not a current employee of the Company;
(ii) Is not a former employee of the Company who receives
compensation for prior services (other than benefits under a
tax-qualified retirement plan);
(iii) Has not been an officer of the Company; and
(iv) Does not receive any remuneration from the Company,
either directly or indirectly, in any capacity other than as a
director. Remuneration will be considered to be paid to a director if
amounts are paid to an entity:
(A) In which the director holds more than 50% of
the ownership interest;
(B) Which employs the director; or
(C) Of which the director holds at least 5% but
not more than 50% of the ownership interests.
(b) Payments will not be taken into account for purposes of
Clauses (B) and (C) of Paragraph (a)(iv) above if the total amounts
paid by the Company during the preceding year did not exceed the
lesser of $60,000 or 5% of the recipient's income.
(c) For purposes of this Section 2.5, "Company" shall
include the other members of the affiliated group of corporations,
within the meaning of Code Section 1504.
2.6 Participant. "Participant" shall mean an employee of the Company (or
of a subsidiary) that has been selected to participate in the Plan.
2.7 Plan. "Plan" shall mean the Mattel, Inc. Management Incentive Plan.
ELIGIBILITY AND BENEFITS
3.1 Separate Standards.
(a) The Committee may elect to establish separate standards for
purposes of determining eligibility to participate and benefits for each
year. These standards shall be set forth in minutes of the Committee.
(b) These standards shall be drafted and implemented in a manner
consistent with Code Section 162(m).
3.2 No Discretion.
(a) The Committee has the discretion to modify the Plan to take into
account the effect of unforeseen or extraordinary events or accounting
(b) Notwithstanding the provisions of Paragraph (a), the Committee
shall not have any discretion to increase the benefits payable to any
Participant who is a Covered Employee, to the extent precluded by Code
3.3 Shareholder Approval. Notwithstanding the above, effective for
payments that are deductible in years beginning on or after January 1, 1994, no
payments to Covered Employees may be made under the Plan unless and until:
(a) The shareholders of the Company approve the Plan in a separate
vote, with affirmative votes being cast by the majority of the voting
(i) For this purpose, abstentions are not counted unless
applicable law provides otherwise.
(ii) Shareholder approval must be obtained every five (5)
(b) The Committee certifies in writing that the performance goals and
any other material terms were satisfied. This requirement may be satisfied
by means of a certificate in approved minutes of the Committee.
PAYMENT OF BENEFITS
4.1 Designation of Beneficiary. In the event of the death of a Participant
prior to the date on which the Participant's benefit is paid, the benefit (if
any) shall be paid to the Participant's surviving spouse. If the Participant
does not have a surviving spouse, the benefit (if any) will be paid to his or
4.2 Payees under Legal Disability. If the Committee reasonably believes
that any payee is legally incapable of giving a valid receipt and discharge for
any payment due him or her, the Committee may have the payment (if any) made to
the person (or persons or institution) whom it reasonably believes is caring for
or supporting such payee. Any such payment shall be a payment for the benefit of
the payee and shall be a complete discharge of any liability under the Plan to
4.3 Payment of Benefits. All payments under the Plan shall be delivered in
person or mailed to the last address of the Participant (or, in the case of the
death of the Participant (if applicable), to that of his or her surviving
spouse). Each Participant shall be responsible for furnishing the Committee with
his or her current address.
4.4 Entitlement to Benefits. Nothing contained in this Article IV shall
give a Participant greater rights to benefits than under the provisions of the
benefit formulae contained in the minutes of the Committee. Specifically, if the
formula provides that a Participant's benefit is forfeited upon termination of
employment (whether by reason of death, disability, or otherwise), no benefits
will become payable by reason of the operation of this Article IV.
5.1 Committee. Authority to administer the Plan shall be vested in the
Compensation/Options Committee of the Board of Directors of Mattel, Inc.
("Committee"). Only Outside Directors may be members of the Committee, and the
Committee must have at least two members.
5.2 Administrative Powers. The Committee shall have all powers necessary
to administer the Plan. In addition to any powers and authority conferred on the
Committee elsewhere in the Plan or by law, the Committee shall have the
following powers and authority:
(a) To designate agents to carry out responsibilities relating to the
(b) To administer, interpret, and answer all questions which may
arise under this Plan. The determinations by the Committee will be binding
upon all parties, to the maximum extent permitted by law;
(c) To establish rules and procedures for the conduct of its business
and for the administration of the Plan; and
(d) To perform or cause to be performed such further acts as it may
deem necessary or appropriate in the administration of the Plan.
(a) To the maximum extent permitted by law, the Company shall
indemnify each member of the Committee and of the Board of Directors of the
Company against expenses (including any amount paid in settlement)
reasonably incurred by him or her in connection with any claims against him
or her by reason of the performance of his or her duties under the Plan.
This indemnity shall not apply if the individual:
(i) Acted fraudulently or in bad faith in the performance
of his or her duties; or
(ii) Fails to assist the Company in defending against the
(b) The Company shall have the right to select counsel and to control
the prosecution or defense of the suit.
(c) The Company shall not be required to indemnify any person for any
amount incurred through settlement of any action unless the Company
consents in writing to the settlement.
6.1 Amendment and Termination. The Company expects the Plan to be
permanent, but since future conditions affecting the Company cannot be
anticipated or foreseen, the Company reserves the right to amend, modify, or
terminate the Plan at any time by action of its Board of Directors.
6.2 Benefits Not Alienable. Benefits under the Plan may not be assigned or
alienated, whether voluntarily or involuntarily.
6.3 No Enlargement of Employee Rights. Nothing contained in the Plan shall
be deemed to give a participant the right to be retained in the employ of the
Company or to interfere with the right of the Company to discharge any
Participant at any time.
6.4 Governing Law. All legal questions pertaining to the Plan shall be
determined in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, Mattel, Inc. has caused this instrument to be executed.
By: /s/ E. Joseph McKay
Its: Senior Vice President, Human Resources
Date: January 1, 1994