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| MISSION STATEMENT |
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| Mattel’s (the “Company”) Board of Directors (the “Board”)
strives to ensure good corporate management and governance. It selects,
monitors, evaluates and supports the Chief Executive Officer and
oversees the development and pursuit of corporate policies and strategies.
It serves the Company’s stockholders through a strong commitment
to the effective and ethical management of the Company in a manner
which optimizes sustainable long-term profitability and is responsive
to the legitimate interests of other corporate constituencies, such
as employees, customers, suppliers and the communities in which the
Company operates. |
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| 1. |
Director Responsibilities |
| |
The basic responsibility of the directors is to exercise
their business judgment to act in what they reasonably believe
to be in the best interests of the Company and its shareholders.
In discharging that obligation, directors should be entitled
to rely on the honesty and integrity of the Company’s
senior executives and its independent advisors and auditors,
to the fullest extent permitted by law. The directors shall
also be entitled to have the Company purchase reasonable directors’ and
officers’ liability insurance on their behalf, to the
benefits of indemnification to the fullest extent permitted
by law and the Company’s charter, by-laws and any indemnification
agreements, and to exculpation as provided by state law and
the Company’s charter.
Directors are expected to attend Board meetings and meetings
of Committees on which they serve, and to spend the time needed
and meet as frequently as necessary to properly discharge their
responsibilities. Directors should prepare adequately for Board
and Committee meetings, including by reviewing materials sent
to them by Company management.
The Board and each Committee have the power to hire independent
legal, financial or other advisors as they may deem necessary,
without consulting or obtaining the approval of any officer
of the Company in advance.
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| 2. |
Selection of Chair and Chief Executive Officer |
| |
It is the sense of the Board that it should have maximum
flexibility to decide whether the offices of the Board Chair
and Chief Executive Officer shall be combined or separate and,
if separate, whether the Board Chair should be an independent
director or an employee. The Board believes that this issue
is part of the succession planning process and that it is in
the best interests of the Company for the Board to make a determination
whenever it elects a new Chief Executive Officer or appoints
a new Board Chair.
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| 3. |
Director to Preside Over Meetings of Independent Directors |
| |
Whenever the Board Chair is not an independent director,
the director to preside at one or more separate executive sessions
of the independent directors shall be selected by the independent
directors from among themselves, or by a procedure of selection
adopted by the independent directors. The Company shall disclose
in its proxy statement the identity of such presiding director,
if there is only one, or the procedure for selecting a presiding
director for each executive session. The Company shall also
disclose in the proxy statement how interested parties can
contact the presiding director, or the independent directors
as a group.
The duties of the independent presiding director shall include all of the following:
(a) Presides at all meetings of the Board at which the Board Chair is not present,
including executive sessions of the independent directors;
(b) Serves as a liaison between the Board Chair and the independent directors;
(c) Approves information sent to the Board;
(d) Approves meeting agendas for the Board;
(e) Approves schedules of meetings to assure that there is sufficient time for discussion
of all agenda items;
(f) Has the authority to call meetings of the independent directors; and
(g) If requested by major stockholders, ensures that he or she is available for consultation
and direct communication.
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| 4. |
Executive Sessions of Independent Directors |
| |
The independent directors of the Board shall meet in executive
session at least once every quarter. Among other things,
in these sessions, the independent directors will, as appropriate,
determine to:
(a) advise the Board Chair as to an appropriate schedule of
Board meetings, consistent with ensuring that the independent
directors can perform their duties responsibly while not interfering
with the flow of the Company’s operations;
(b) provide the Board Chair with input as to the preparation
of agendas for the Board and Committee meetings;
(c) advise the Board Chair as to the quality, quantity and
timeliness of the flow of information from the Company’s
management that is necessary for the independent directors
to effectively and responsibly perform their duties, and, while
recognizing that the Company’s management is responsible
for the preparation of materials for the Board, specifically
request the inclusion of certain materials;
(d) recommend to the Board Chair the retention of independent
consultants who report directly to the Board;
(e) review compliance with and implementation of the Company’s
governance policies; and
(f) evaluate the Chief Executive Officer’s performance
and meet with the Chief Executive Officer to discuss the Board’s
evaluation.
In addition, agendas for all Board meetings should provide
for two executive sessions, the first consisting of the independent
directors and the Chief Executive Officer without other members
of management being present, the second consisting of the independent
directors without the Chief Executive Officer or other management
personnel being present. The Board can then decide on an ad
hoc basis whether or not to take advantage of these additional
executive sessions. Of course, as appropriate, the independent
directors may invite any person to join in any portion of either
such executive session.
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| 5. |
Committees |
| |
The Committees of the Board include the following: Executive/Finance,
Audit, Governance and Social Responsibility, Capital Allocation,
Compensation and Pension. The purpose and responsibilities
of each of those Committees are specified in applicable Committee
charter or, for Committees without a written charter, in the
Board resolution pursuant to which that Committee was created
or reappointed. The Board has the flexibility to form new Committees
or disband existing Committees as it deems appropriate. However,
the Board shall at all times have an Audit Committee, a Compensation
Committee and a Governance and Social Responsibility Committee.
If the Board forms a new Committee, the Board shall, by resolution
or otherwise, specify in writing the responsibilities of that
Committee. In addition, the members of the Board serve as members
of the Mattel Children’s Foundation, who in that capacity
elect a Board of Directors for the Foundation.
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| 6. |
Assignment, Rotation and Qualification of Committee Members |
| |
Committee members shall be appointed by the Board upon recommendation
of the Governance and Social Responsibility Committee with consideration
of the desires of individual directors and the input of the
Board Chair.
It is the sense of the Board that consideration should be given
to rotating Committee members periodically, but the Board does
not feel that such a rotation should be mandated as a policy,
since there may be reasons at a given point in time to maintain
an individual director’s Committee membership for a longer
period or to shorten the period. Rotation of Committee members
may be initiated by the Board or the Governance and Social Responsibility Committee.
Each member of the Audit Committee, the
Governance and Social Responsibility Committee, and the Compensation Committee shall
be an independent director as defined by the New York Stock
Exchange, Federal Securities Laws and Regulations and other
applicable laws and regulations. In addition, the members of
the Audit Committee shall meet the independence and experience
requirements of the New York Stock Exchange, Section 10A(m)(3)
of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and the rules and regulations of the Securities
and Exchange Commission (the “Commission”). At
least one member of the Audit Committee shall be an Audit Committee
financial expert as defined by the Commission. Audit Committee
members shall not simultaneously serve on the Audit Committees
of more than two other public companies, unless the Board determines
that such simultaneous service would not impair the ability
of such member to serve effectively on the Audit Committee.
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| 7. |
Frequency and Length of Committee Meetings |
| |
Subject to the requirements of the applicable Committee charter
or Board resolutions creating the Committee, the Chair of each
Committee, in consultation with its members, shall determine
the frequency and length of the meetings of the Committee.
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| 8. |
Committee Charter and Agenda |
| |
Each of the Audit Committee, the Compensation Committee
and the Governance and Social Responsibility Committee shall
adopt
a charter which shall be submitted to the Board for ratification.
Each charter shall, among other things, set forth the purposes,
goals and responsibilities of the applicable Committee and
shall require an annual self-evaluation of the Committee’s
performance.
The Chair of each Committee, in collaboration with the appropriate
officers, will develop or approve an agenda for each meeting
of the Committee. The Committee Chair will, to the extent practicable,
cause the agenda to be distributed to the Committee members
prior to meetings and Committee members may request the addition
of items to the agenda.
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| 9. |
Selection of Agenda Items for Board Meetings |
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The Board Chair, in collaboration with the appropriate officers,
will establish the agenda for each Board meeting. Each Board
member is free to suggest the inclusion of items on the agenda
and is encouraged to raise at any Board meeting subjects that
are not on the agenda for that meeting.
At least one Board meeting every year will be at an appropriate
Company facility or at another suitable “off-site” location
during which the Board will review, with appropriate members
of management, long-term strategic plans and the principal
issues that the Company is likely to face in the future.
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| 10. |
Board Meeting Format; Board Materials Distributed in
Advance |
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The Board Chair will endeavor to promote, as a principal
element of the format of Board meetings, active dialogue among
Board members with respect to topics relating to the long-term
growth and development of the Company as well as policy-related
topics of more immediate relevance. This element will differ
in purpose and content from the reporting element of Board
meetings which is intended primarily for management to impart
information to the directors and allow them to ask questions
which they deem pertinent.
Information and data that are important to the directors’ understanding
of business to be conducted at a Board or Committee meeting
should, to the extent practicable, be distributed in writing
to the directors before the meeting, so that meeting time may
be conserved and discussion time focused on questions that
the directors have about the material. This material should
be succinct while still providing the desired information.
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| 11. |
Presentations |
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Directors are encouraged to request presentations on specific
subjects which they believe deserve a presentation to the Board.
Full discussion by Board members of subjects considered at
meetings is encouraged.
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| 12. |
Attendance of Management at Board Meetings |
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The Board Chair, in collaboration with the Chief Executive
Officer (if they are separate), will invite senior officers
to periodically attend Board meetings, with a view to creating
an ongoing dialogue between Board members and key management
personnel.
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| 13. |
Board Compensation Review and Stock Ownership |
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The form and amount of director compensation will be periodically
reviewed by, and shall be determined by, the Compensation Committee,
with the advice of the Chief Executive Officer, and with full
discussion by the Board. The Compensation Committee will consider
that directors’ independence may be jeopardized if director
compensation and perquisites exceed customary levels, if the
Company makes substantial charitable contributions to organizations
with which a director is affiliated (other than as a result
of such director’s affiliation with the Company, i.e.,
the Mattel Children’s Foundation), or if the Company
enters into consulting contracts with (or provides other indirect
forms of compensation to) a director or an organization with
which a director is affiliated.
The management shall report periodically to the Compensation
Committee the status of the Company’s compensation of
the independent directors in relation to other large U.S. companies.
Presently, approximately one-half of independent director compensation
is in the form of stock or stock options. This ratio should
be considered periodically at the request of the Compensation
Committee or the full Board.
The Board considers ownership of company stock by Board members
to be important to ensure the alignment of the directors’ interests
with those of the stockholders. Accordingly, within five years
after joining the Board, non-employee members of the Board
should attain a target minimum level of stock ownership. For
this purpose, stock holdings shall be valued at the greater
of actual cost or market value and the target minimum level
shall equal three times the annual cash retainer; and directors who have deferred any of their cash compensation into investments
in Company stock equivalent accounts in any Company deferred compensation
plan(s) shall receive credit for such amounts. In addition, during their service on the Board, each non-employee member of the Board must either hold his or her options to purchase shares of stock, or, if exercised, must hold the underlying shares of stock, until ceasing to be a member of the Board, and each non-employee member of the Board must hold shares received upon vesting of his or her restricted stock units (“RSU vesting”), until ceasing to be a member of the Board; provided, however, that a member of the Board may sell shares obtained in connection with a stock option exercise or RSU vesting if the transaction otherwise complies with the Company’s stock trading policies and one of the following applies:
(a) the stock option exercise or RSU vesting occurs within one year of the date on which the member will be retiring from the Board; or
(b) the shares are sold at the time of or otherwise in connection with the stock option exercise or RSU vesting, and the number of shares sold is limited to the amount necessary to generate sufficient funds to cover (i) the estimated amount of taxes that will be owed in connection with the stock option exercise or RSU vesting, (ii) any associated transaction costs and (iii) in the case of a stock option exercise, the exercise price.
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| 14. |
Size of the Board; Term of Office |
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It is the sense of the Board that a size of 10 to 12 is about
right. The Board, however, would be willing to go to a somewhat
larger size in order to accommodate the availability of one
or more outstanding candidates. Each director shall hold office
until the annual meeting of stockholders next succeeding his or
her election and until his or her successor is elected and
qualified, except as otherwise provided in the Company's bylaws
or required by law.
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| 15. |
Independent Directors |
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The Board will have a majority of directors who are independent,
as contemplated by the rules of the New York Stock Exchange.
The Board believes that as a matter of policy the Board should
consist primarily of independent directors, with the one exception
of the Chief Executive Officer.
The Company has adopted the following standards for determining
if a director is independent:
A director will not be considered independent if:
(i) he or she is an employee, or has an immediate family member
that is an executive officer, of the Company, until three years
after the end of such employment relationship, provided that
employment as an interim Board Chair or Chief Executive Officer
shall not disqualify a director from being considered independent
following that employment;
(ii) he or she receives, or has an immediate family member
that receives, more than $100,000 per year in direct compensation
from the Company, other than director and committee fees and
pension or other forms of deferred compensation for prior service
(provided such compensation is not contingent in any way on
continued service), until three years after he or she ceases
to receive more than $100,000 per year in such compensation,
provided that compensation received by a director for former
service as an interim Board Chair or Chief Executive Officer,
and compensation received by an immediate family member for
service as a non-executive employee of the Company, need not
be considered in determining independence under this test;
(iii) he or she is affiliated with or employed by, or has an
immediate family member that is affiliated with or employed
in a professional capacity by, a present or former internal
or external auditor of the Company, until three years after
the end of the affiliation or the employment or auditing relationship;
(iv) he or she is employed, or has an immediate family member
that is employed, as an executive officer of another company
where any of the Company’s present executives serve on
that other company’s compensation committee, until three
years after the end of such service or the employment relationship;
or
(v) he or she is an executive officer or an employee, or has
an immediate family member that is an executive officer, of
a company that makes payments to, or receives payments from,
the Company for property or services in an amount which, in
any single fiscal year, exceeds the greater of $1 million,
or 2% of such other company’s consolidated gross revenues,
until three years after falling below such threshold.
These standards shall be applied in a manner consistent with,
and the definition of “immediate family member” shall
be as set forth in, Section 303(A)(2)(b) of the rules of the
New York Stock Exchange (“Section 303(A)(2)(b)”).
A director that, under Section 303A(2)(b), is presumed not
to be independent, is not considered independent.
The Board
believes there is no current relationship between any non-employee
director and the Company that would be construed
in any way to compromise the independence of any Board member
being designated independent.
The ownership of stock in the
Company by directors is encouraged, as discussed above, and
the ownership of a substantial amount
of stock is not in itself a basis for a director to be considered
as not independent.
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| 16. |
Former Chief Executive Officer's Board Membership |
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It is the sense of the Board that, at the time the Chief
Executive Officer ceases to hold that office, he or she should
tender his or her resignation from the Board, although exceptions
may be appropriate. A former Chief Executive Officer serving
on the Board shall not be considered to be independent for
purposes of corporate governance; provided, however, that service
as interim Board Chair or interim Chief Executive Officer,
and any compensation for such service, shall not disqualify
a director from being considered independent after the period
of such service.
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| 17. |
Board Membership Criteria |
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The Governance and Social Responsibility Committee is responsible
for reviewing with the Board on an annual basis the appropriate
skills and characteristics required of Board members in the
context of the current make-up of the Board, and in accordance
with the guidelines established by the Committee. This review
shall include an assessment of the talent base, skills, areas
of expertise, experience, diversity and independence of the
Board and its members, and consideration of any changes that
may have occurred in any director’s responsibilities,
as well as such other factors as may be determined by the Committee
to be appropriate for review, all in the context of an assessment
of the perceived needs of the Board at that point in time.
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| 18. |
Selection of New Director Candidates |
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The Board itself should be responsible, in fact as well as
procedure, for selecting its own members. Board members are
encouraged to suggest candidates for consideration. The Board
delegates the screening process involved to the
Governance and Social Responsibility Committee with input from the Board Chair. Prior
to selection, each candidate will personally meet with at least
two members of the Governance and Social Responsibility Committee.
Nominations made by shareholders in accordance with the Company’s
bylaws and applicable law are referred to the
Governance and Social Responsibility Committee.
The invitation to join the Board should be extended on behalf
of the Board by the Chairs of the Board and the
Governance and Social Responsibility Committee.
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| 19. |
Assessing the Board’s Performance |
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The Board will conduct an annual self-evaluation to determine
whether it and its Committees are functioning effectively.
The Governance and Social Responsibility Committee will receive
comments from all directors and report annually to the Board
with an assessment of the Board’s and its Committees’ performance.
If the Governance and Social Responsibility Committee so desires,
it may be assisted by an independent consultant in making its
assessment. The assessment will focus on the Board’s
contribution to the Company and specifically focus on areas
in which the Board or management believes that the Board could
improve.
The Governance and Social Responsibility Committee should seek
to report this assessment annually at the same time as the
report on Board membership criteria.
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| 20. |
Change in a Director’s Primary Employment |
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If the nature of a director’s primary employment changes,
then he or she shall submit a resignation letter to the Governance and Social Responsibility Committee.
It is not the sense of the Board that a director who changes
the nature of his or her primary employment should necessarily
leave the Board. There should, however, be an opportunity for
the Board via the Governance and Social Responsibility Committee
to review the continued appropriateness of Board membership
under these circumstances.
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| 21. |
Term Limits |
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The Board does not believe it should establish term limits.
While term limits could help ensure that there are fresh ideas
and viewpoints available to the Board, they hold the disadvantage
of losing the contribution of directors who have been able
to develop, over a period of time, increasing insight into
the Company and its operations and, therefore, provide an increasing
contribution to the Board as a whole. In lieu of term limits,
it is important for the Governance and Social Responsibility Committee
to insure that all Board members are active contributors to
the governance process.
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| 22. |
Retirement Age |
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It is the sense of the Board that 72 is an appropriate retirement
age. Accordingly, upon attaining the age of 72, a director
shall not stand for re-election to the Board at subsequent
meetings of the stockholders of the Company.
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| 23. |
Formal Evaluation of the Chief Executive Officer |
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The Compensation Committee shall conduct an annual review
of the Chief Executive Officer’s performance, as set
forth in its charter. The independent directors shall review
and discuss with the Compensation Committee the Compensation
Committee’s report and shall discuss the evaluation with
the Chief Executive Officer.
The Chief Executive Officer is encouraged to submit to the
independent directors those criteria which he/she considers
to be the most relevant to evaluating his/her performance.
The evaluation should be based on objective criteria including
performance of the business, accomplishment of long-term strategic
objectives, development of management, etc.
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| 24. |
Management Development and Succession Planning |
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An annual report shall be made to the Board on succession
planning. The entire Board will work with the Governance and Social Responsibility
Committee to nominate and evaluate successors to
the Chief Executive Officer and/or Board Chair when a vacancy
occurs. The Chief Executive Officer and/or Board Chair will
make available his or her recommendations and evaluations of
potential successors, along with a review of any development
plans recommended for those individuals..
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| 25. |
Board Interaction with Institutional Investors, the Press,
Customers, Etc. |
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The Board believes that the management speaks for the Company.
The Company’s policies relating to SEC Regulation FD
require that only certain specified members of management communicate
with securities market professionals and/or investors in Company
securities with respect to the business or prospects of the
Company. Accordingly, individual Board members may, from time
to time, meet or otherwise communicate with various constituencies
that are involved with the Company, but only when requested
to do so by the Board Chair, the Chief Executive Officer or
the Chief Financial Officer.
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| 26. |
Director Access to Officers and Employees |
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Directors have full and free access to officers and employees
of the Company and to the Company’s independent auditors
and independent advisors. Any meetings that a director wishes
to initiate may be arranged through the Chief Executive Officer
or the Secretary or directly by the director. The directors
will use their judgment to ensure that any such contact is
not disruptive to the business operations of the Company and
will, to the extent not inappropriate, copy the Chief Executive
Officer on any written communications between a director and
an officer or employee of the Company.
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| 27. |
Director Orientation and Continuing Education |
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New directors participate in an orientation process, which
may address, for example, the Company's operations, performance,
strategic plans, significant business, financial, accounting,
legal and risk management issues, compliance programs, code
of business conduct and ethics, and corporate governance practices,
and includes introductions to members of the Company's
senior management and their respective responsibilities. All
directors are encouraged to participate in continuing education
programs to enhance skills and knowledge relevant to their
service as directors, and the Company pays the reasonable expenses
of attendance by directors at such programs.
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| 28. |
Changes in Guidelines |
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These Guidelines may be changed by the Board.
Changes should be made only upon a determination by the independent
directors in executive session that such change is in the best
interests of the Company and its shareholders and a recommendation
of such change to the full Board.
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| 29. |
Disclosure |
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These Guidelines, and the
charter of each of the Audit, Compensation, and
Governance and Social Responsibility Committees, shall be posted
to the Company's website.
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