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Share-Based Payments | 12 Months Ended
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Dec. 31, 2020
Share-based Payment Arrangement [Abstract] |
Share-Based Payments | Share-Based Payments Mattel Stock Plans The 2010 Equity and Long-Term Compensation Plan was approved by Mattel's stockholders in May 2010 (the "2010 Plan"). Upon approval of the 2010 Plan, Mattel terminated its 2005 Equity Compensation Plan (the "2005 Plan"), except with respect to grants then outstanding under the 2005 Plan. All restricted stock unit ("RSU") awards made under the 2005 Plan have vested. Outstanding stock option grants under the 2005 Plan that have not expired or have not been terminated continue to be exercisable under the terms of their respective grant agreements. In May 2015, Mattel’s stockholders approved the Amended and Restated 2010 Equity and Long-Term Compensation Plan (the "Amended 2010 Plan"). The terms of the Amended 2010 Plan are substantially similar to the terms of the 2010 Plan and the 2005 Plan. Under the Amended 2010 Plan, Mattel has the ability to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, RSUs, performance RSUs ("performance awards"), dividend equivalent rights, and shares of common stock to officers, employees, non-employee directors, and consultants providing services to Mattel. Generally, options vest and become exercisable contingent upon the grantees’ continued employment or service with Mattel. Nonqualified stock options are granted with an exercise price not less than 100% of the fair market value of Mattel’s common stock on the date of grant, expire no later than 10 years from the date of grant, and vest on a schedule determined by the Compensation Committee of the Board of Directors, generally over a period of three years from the date of grant. In the event of a retirement of an employee aged 55 years or older with five or more years of service, or the death or disability of an employee, that occurs in each case at least six months after the grant date, nonqualified stock options become fully vested. Time-vesting RSUs granted under the Amended 2010 Plan vest on a schedule determined by the Compensation Committee of the Board of Directors, generally over a period of three years from the date of grant. In the event of the involuntary termination of an employee aged 55 years or older with five or more years of service, or the death or disability of an employee, that occurs at least six months after the grant date, RSUs become fully vested. The Amended 2010 Plan also contains provisions regarding grants of equity compensation to the non-employee members of the Board of Directors. The Amended 2010 Plan expires on March 26, 2025, except as to any grants then outstanding. The number of shares of common stock available for grant under the Amended 2010 Plan is subject to an aggregate limit of the sum of (i) 114.5 million shares, (ii) the number of shares that remained available for issuance under the 2005 Plan on May 12, 2010, and (iii) any shares subject to awards outstanding under the 2005 Plan that on or after May 12, 2010 are forfeited or otherwise terminate or expire without the issuance of shares to the holder of the award. The Amended 2010 Plan is further subject to detailed share-counting rules. As a result of such share-counting rules, full-value grants such as grants of restricted stock or RSUs count against shares remaining available for grant at a higher rate than grants of stock options and stock appreciation rights. For grants prior to March 1, 2019, each stock option or stock appreciation right grant is treated as using one available share for each share actually subject to such grant, whereas each restricted stock or RSU grant is treated as using three available shares for each share actually subject to such full-value grant. For grants on or after March 1, 2019 through March 1, 2020, each stock option or stock appreciation right grant is treated as using one available share for each share actually subject to such grant, whereas each restricted stock or RSU grant is treated as using two and seven tenths available shares for each share actually subject to such full-value grant. For grants on or after March 2, 2020, each stock option or stock appreciation right grant is treated as using one available share for each share actually subject to such grant, whereas each restricted stock or RSU grant is treated as using two and thirty-five hundredths available shares for each share actually subject to such full-value grant. At December 31, 2020, there were approximately 29 million shares available for grant under the Amended 2010 Plan if target performance goals are achieved under Mattel's long-term incentive programs ("LTIPs"), and approximately 23 million shares available if maximum performance goals are achieved under the LTIPs. Mattel recognized total share-based compensation expense related to stock options, RSUs, and performance awards of $60.2 million, $56.0 million, and $48.9 million during 2020, 2019, and 2018, respectively, which is included in other selling and administrative expenses in the consolidated statements of operations. As of December 31, 2020, total unrecognized compensation cost related to unvested share-based payments totaled $77.7 million and is expected to be recognized over a weighted-average period of 1.9 years. Stock Options Mattel recognized compensation expense of $11.6 million, $11.3 million, and $8.4 million for stock options during 2020, 2019, and 2018, respectively, which is included within other selling and administrative expenses in the consolidated statements of operations. There was no current year income tax benefit related to stock options during 2020, 2019 or 2018 as future tax benefits related to stock options were fully offset by a valuation allowance. In 2018, Mattel granted market-based options under the Amended 2010 Plan to certain senior executives in connection with its April 26, 2018—April 26, 2021 and May 31, 2018—May 31, 2021 performance cycles. These performance options are earned at the initial target number of options granted based on achievement of a certain threshold of Mattel’s total shareholder return ("TSR") for the three-year performance cycle relative to the TSR realized by companies comprising the S&P 500 as of the first day of the performance cycle. If this threshold is not met at the end of the three-year cycle, no shares are earned. For the performance options granted during 2018 that remain outstanding at December 31, 2018, the range of possible outcomes is that between zero and 1.3 million shares could be earned. The fair value of these performance options has been estimated at the grant dates using a Monte Carlo valuation methodology, and the weighted-average grant-date fair value of performance options granted during 2018 was $4.21. The fair values of all other options granted have been estimated using the Black-Scholes valuation model. The expected life of the options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience. Expected stock price volatility is based on the historical volatility of Mattel’s stock for a period approximating the expected life, the expected dividend yield is based on Mattel’s most recent actual annual dividend payout, and the risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues approximating the expected life. The weighted-average grant-date fair value of options granted during 2020, 2019, and 2018 was $4.60, $5.09, and $5.46 respectively. The following weighted-average assumptions were used in determining the fair value of options granted:
| 2020 |  | 2019 |  | 2018
Expected life (in years) | 5.9 |  | 5.5 |  | 5.1
Risk-free interest rate | 0.3 | % |  | 1.7 | % |  | 2.8 | %
Volatility factor | 43.7 | % |  | 38.1 | % |  | 33.6 | %
Dividend yield | — | % |  | — | % |  | — | %
The following is a summary of stock option information and weighted-average exercise prices for Mattel’s stock options:
| 2020 |  | 2019 |  | 2018
| Shares |  | Weighted Average Exercise Price |  | Shares |  | Weighted Average Exercise Price |  | Shares |  | Weighted Average Exercise Price
| (In thousands, except weighted-average exercise prices)
Outstanding at January 1 | 22,510 |  |  | $ | 24.22 |  |  | 22,020 |  |  | $ | 25.47 |  |  | 25,233 |  |  | $ | 26.56 |
Granted | 2,241 |  |  | 11.23 |  |  | 2,342 |  |  | 13.54 |  |  | 3,379 |  |  | 15.41 |
Exercised | (4) |  |  | 15.02 |  |  | — |  |  | — |  |  | — |  |  | — |
Forfeited | (294) |  |  | 14.38 |  |  | (266) |  |  | 17.64 |  |  | (4,209) |  |  | 23.06 |
Canceled | (2,818) |  |  | 31.22 |  |  | (1,586) |  |  | 26.79 |  |  | (2,383) |  |  | 26.99 |
Outstanding at December 31 | 21,635 |  |  | $ | 22.10 |  |  | 22,510 |  |  | $ | 24.22 |  |  | 22,020 |  |  | $ | 25.47 |
Exercisable at December 31 | 16,356 |  |  | $ | 25.01 |  |  | 16,576 |  |  | $ | 27.32 |  |  | 16,051 |  |  | $ | 28.10 |
The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value of options exercised during 2020 was not material and there were no stock option exercises during 2019 and 2018. At December 31, 2020, options outstanding had an intrinsic value of $30 million with a weighted-average remaining life of 5.0 years. At December 31, 2020, options exercisable had an intrinsic value of $7.0 million, with a weighted-average remaining life of 3.9 years. Mattel uses treasury shares purchased under its share repurchase program to satisfy stock option exercises. Cash received from stock options exercised during 2020 was not material. At December 31, 2020, stock options vested and expected to vest totaled 21.1 million shares, with an intrinsic value of $27.5 million, weighted-average exercise price of $22.33, and weighted-average remaining life of 4.9 years. During 2020, approximately 3 million stock options vested. The total grant-date fair value of stock options vested during 2020, 2019, and 2018 was approximately $11 million, $8 million, and $12 million, respectively. Restricted Stock Units Compensation expense recognized related to grants of RSUs was $28.6 million, $33.6 million, and $37.5 million in 2020, 2019, and 2018, respectively, and was included within other selling and administrative expenses in the consolidated statements of operations. There was no current year income tax benefit related to RSUs during 2020, 2019, and 2018 as future tax benefits related to stock options were fully offset by a valuation allowance. RSUs are valued at the market value on the date of grant, adjusted by the present value of the expected dividends for RSUs that are not entitled to a dividend during the vest period. The expense for RSUs is evenly attributed to the periods in which the restrictions lapse, which is generally three years from the date of grant. The following is a summary of RSU information and weighted-average grant-date fair values for Mattel’s RSUs:
| 2020 |  | 2019 |  | 2018
| Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
| (In thousands, except weighted-average grant-date fair values)
Unvested at January 1 | 3,864 |  |  | $ | 15.19 |  |  | 4,721 |  |  | $ | 17.22 |  |  | 4,898 |  |  | $ | 21.95 |
Granted | 2,548 |  |  | 11.18 |  |  | 1,687 |  |  | 13.28 |  |  | 3,345 |  |  | 15.71 |
Vested | (1,970) |  |  | 15.58 |  |  | (1,997) |  |  | 18.02 |  |  | (2,048) |  |  | 21.02 |
Forfeited | (456) |  |  | 14.45 |  |  | (547) |  |  | 16.48 |  |  | (1,474) |  |  | 20.18 |
Unvested at December 31 | 3,986 |  |  | $ | 12.52 |  |  | 3,864 |  |  | $ | 15.19 |  |  | 4,721 |  |  | $ | 17.22 |
At December 31, 2020, RSUs expected to vest totaled approximately 3.5 million shares, with a weighted-average grant-date fair value of $12.59. The total grant-date fair value of RSUs vested during 2020, 2019, and 2018 was approximately $31 million, $36 million, and $43 million, respectively. Performance Awards Compensation expense recognized related to grants of performance awards was $19.9 million, $11.0 million, and $3.0 million during 2020, 2019, and 2018, respectively. There was no current year income tax benefit related to performance awards during 2020, 2019, and 2018 as future tax benefits related to performance awards were fully offset by a valuation allowance. Mattel had three LTIP performance cycles in place during 2020, which were established by the Compensation Committee of the Board of Directors: (i) a January 1, 2018—December 31, 2020 performance cycle, (ii) a January 1, 2019—December 31, 2021 performance cycle, and (iii) a January 1, 2020—December 31, 2022 performance cycle. Under the LTIP performance cycles in place in 2020, officers and key employees may earn shares of Mattel's common stock based on attaining certain cumulative three-year performance targets, which are subject to approvals of the Compensation Committee of the Board of Directors. The ultimate amount earned for these LTIP awards may vary from 0% to 200% of the target number of shares, depending on the cumulative results achieved. Mattel determines the fair value of the performance-related components of its performance awards based on the closing market price of Mattel's common stock on the date of grant and determines the fair value of the market-related components of its performance awards based on the Monte Carlo valuation methodology. With respect to performance awards, which generally vest over three years, Mattel recognizes compensation expense on a straight-line basis over the requisite service period, provided that certain cumulative three-year performance targets and other vesting criteria are met. The weighted-average grant-date fair value of performance awards granted during 2020, 2019, and 2018 was $11.93, $14.89, and $15.08 respectively. The following weighted-average assumptions were used in determining the fair value of performance awards granted:
| 2020 |  | 2019 |  | 2018
Risk-free interest rate | 0.1 | % |  | 1.7 | % |  | 2.5 | %
Volatility factor | 52.7 | % |  | 47.0 | % |  | 39.3 | %
Dividend yield | — | % |  | — | % |  | — | %
The following is a summary of performance award information and weighted-average grant-date fair values for Mattel’s performance awards:
| 2020 |  | 2019 |  | 2018
| Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
| (In thousands, except weighted-average grant-date fair values)
Unvested at January 1 | 2,217 |  |  | $ | 15.45 |  |  | 1,283 |  |  | $ | 19.48 |  |  | 694 |  |  | $ | 25.56 |
Granted (a) | 1,461 |  |  | 11.93 |  |  | 1,206 |  |  | 14.89 |  |  | 1,217 |  |  | 15.08 |
Vested | (95) |  |  | 17.97 |  |  | — |  |  | — |  |  | — |  |  | — |
Forfeited | (74) |  |  | 15.65 |  |  | (71) |  |  | 15.74 |  |  | (628) |  |  | 17.67 |
Canceled | (104) |  |  | 17.97 |  |  | (201) |  |  | 37.70 |  |  | — |  |  | — |
Unvested at December 31 | 3,405 |  |  | $ | 13.79 |  |  | 2,217 |  |  | $ | 15.45 |  |  | 1,283 |  |  | $ | 19.48 |
(a)The number of shares subject to performance awards represents the aggregate target numbers of shares that may be issued pursuant to the award over its full term. The aggregate number of shares subject to performance awards that would be issued if performance goals are achieved at the maximum number of shares are approximately 3 million, 2 million, and 2 million for 2020, 2019, and 2018, respectively. At December 31, 2020, performance awards expected to vest totaled approximately 4 million shares, with a weighted-average grant-date fair value of $13.93. The total grant-date fair value of performance awards vested during 2020 was approximately $2 million. No performance awards vested during 2019 and 2018.

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