Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On April 17, 2018, Ynon Kreiz was appointed as the Chief Executive Officer (CEO) of Mattel, Inc. (Mattel or the
Company), effective as of April 26, 2018 (the Transition Date). In addition, effective as of the Transition Date, (i) the size of the Board of Directors (the Board) will be decreased from eleven to ten
members and (ii) Mr. Kreiz will be appointed to serve as the sole member of the Equity Grant Allocation Committee. In connection with the appointment of Mr. Kreiz as CEO, effective as of the Transition Date, Margaret H.
Georgiadis will resign from her role as the Companys CEO and as a director of the Board. Ms. Georgiadis will serve as an Executive Advisor to the CEO of the Company until May 10, 2018. In connection with her resignation, Ms.
Georgiadis is not entitled to any separation payments or benefits.
Mr. Kreiz has been a director of Mattel since June 13, 2017. As previously
announced, the Board appointed Mr. Kreiz as Chairman of the Board effective upon his election to the Board at the 2018 Annual Meeting of Stockholders, and following such election, Mr. Kreiz will serve as the Chairman and CEO of the
Company.
Mr. Kreiz, 53, served as Chief Executive Officer of Maker Studios, Inc. (Maker Studios), a global digital media and content
network company that was acquired by The Walt Disney Company, from May 2013 to January 2015, and served as Chairman of its Board from June 2012 to May 2014. Before joining Maker Studios, from June 2008 to June 2011, Mr. Kreiz was Chairman and
Chief Executive Officer of Endemol Group, one of the worlds leading television production companies. Prior to Endemol Group, Mr. Kreiz served as a General Partner at Balderton Capital (formerly Benchmark Capital Europe) and was
co-founder,
Chairman and Chief Executive Officer of Fox Kids Europe N.V., a childrens entertainment company. Mr. Kreiz has served as a director of Warner Music Group Corp. since May 2015 and a member of
its audit committee since April 2016. He also currently serves as Chairman of the Board of Showmax and is on the Board of Advisors of UCLAs Anderson Graduate School of Management.
In connection with his appointment as CEO, the Company entered into an offer letter with Mr. Kreiz on April 19, 2018 (the Offer
Letter), which provides for the following: (i) an annual base salary of $1,500,000; (ii) a target annual cash incentive opportunity under the Mattel Incentive Plan (MIP) of 150% of base salary, up to a maximum of 300% of base
salary (provided that Mr. Kreizs 2018 MIP award will be prorated based on the number of days between April 26, 2018 and December 31, 2018 relative to the performance period); and (iii) a grant of a number stock options, as
part of a
new-hire
grant, equal to $5,000,000 divided by a Black-Scholes value determined using the average of the closing trading prices of the Companys common stock over the 20 consecutive trading days
immediately prior to the grant date of April 30, 2018. The
new-hire
stock option will vest in full on April 26, 2021 subject to the Company achieving a relative total shareholder return over such
period that is equal to or greater than the 65
th
percentile, as compared to the S&P 500 Index at the end of such period and his continued employment with the Company. The new hire stock option
grant will vest in full in the event of a termination of Mr. Kreizs employment by the Company without cause or due to his death or permanent
disability. In the event of such termination of employment, the
new-hire
stock option also will remain exercisable for up to three years following such
termination (or up to five years in the event of termination of employment due to death or permanent disability).
The Offer Letter also provides that
Mr. Kreizs 2018 long-term incentive grant value will be $8,250,000, delivered 33.3% in each of the following forms: performance-based restricted stock units (RSUs) under the Companys 2018-2020 Long-Term Incentive
Program, time-vesting RSUs and stock options, subject to the Compensation Committee of the Boards approval.
The Offer Letter also provides that
Mr. Kreiz will be eligible for a monthly automobile allowance of $2,000 and financial counseling services, and that the Company will reimburse Mr. Kreiz for up to $10,000 in legal fees incurred by him in connection with the
negotiation of the Offer Letter.
Mr. Kreiz will be eligible to participate in the Mattel, Inc. Executive Severance Plan B, as modified by the
terms of a participation letter agreement between him and the Company (the Severance Plan). Under the Severance Plan, in the event of a termination of Mr. Kreizs employment by the Company without cause, he will be entitled to:
(i) severance (to be paid in equal
bi-weekly
installments) equal to two times the sum of his base salary and target bonus opportunity for the year in which the termination of employment occurs;
(ii) an amount representing an annual incentive payout under the MIP based on actual performance, and prorated based on the number of months that he is employed during the performance period; (iii) payment of a monthly amount equivalent to
the then current COBRA premium for up to one year; (iv) accelerated vesting of all unvested stock options and extended exercise periods of up to three years following the termination date; (v) accelerated
pro-rata
vesting of unvested time-vesting RSUs, based on the number of months that he is employed during the vesting period; and (vi) outplacement services for up to two years not to exceed $50,000. In
the event of termination of Mr. Kreizs employment by the Company without cause or a resignation for good reason, in either case, on or within the
two-year
period following a change of control of the
Company, he will be provided with: (i) a
lump-sum
severance payment equal to two times the sum of his annual base salary and target bonus opportunity for the year in which the termination of employment
occurs; (ii) an amount representing an annual incentive payout under the MIP based on his target annual incentive opportunity for the year in which the termination of employment occurs, and prorated based on the number of months that he is
employed during the performance period; (iii) accelerated vesting of all unvested stock options and extended exercise periods of up to three years following the termination date, and accelerated vesting of all unvested time-vesting RSUs;
(iv) payment of a monthly amount equivalent to the then current COBRA premium for up to two years; and (v) outplacement services for up to two years not to exceed $50,000.
The payments and benefits under the Severance Plan are conditioned on Mr. Kreizs execution of a general release agreement with the Company
and, in certain circumstances, compliance with post-employment covenants to (i) protect the Companys confidential information; (ii) not accept employment with or provide services to a competitor or solicit the Companys
employees for one year after the termination date; and (iii) not disparage or otherwise impair the Companys reputation or goodwill or the commercial interests of the Company or any of the Companys affiliated entities or its
officers, directors, employees, stockholders, agents or products.
The foregoing descriptions are qualified in their entirety by reference to the Offer Letter and Participation
Letter Agreement under the Mattel, Inc. Executive Severance Plan B, copies of which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form
8-K
and incorporated herein by reference.