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Share-Based Payments | 12 Months Ended
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Dec. 31, 2023
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. In May 2015, Mattel's stockholders approved the Amended and Restated 2010 Equity and Long-Term Compensation Plan (the "Amended 2010 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. 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. 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. Nonqualified stock options generally vest and become exercisable contingent upon the grantees' continued employment or service with Mattel. In the event of a retirement, or an involuntary termination, of an employee that meets retirement provisions under the Amended 2010 Plan, 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. In the event of an involuntary termination, an employee has 90 days to exercise vested options. 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 that meets retirement provisions under the Amended 2010 Plan, or the death or disability of an employee, that occurs at least six months after the grant-date, RSUs become fully vested. Performance awards granted under the Amended 2010 Plan vest upon achievement of performance conditions at a settlement date determined by the Compensation Committee of the Board of Directors, which occurs in the first quarter subsequent the performance cycle. In the event of a retirement of an employee that meets retirement provisions under the Amended 2010 Plan, or the death or disability of an employee, that occurs in each case at least six months after the start date of the performance period, performance awards vest at the settlement date. In each case, vested performance awards are determined upon the achievement of performance conditions over the performance period, which is then prorated for the period of employment as a percentage of the performance period. An employee qualifies for retirement provisions under the Amended 2010 Plan if; aged 55 years or older with 5 or more years of service for grants prior to April 28, 2023, or aged 55 years or older with 10 or more years of service for grants on or after April 28, 2023, which includes Mattel's 2023 annual employee grant. The number of shares of common stock available for grant under the Amended 2010 Plan is subject to an aggregate limit as defined therein. At December 31, 2023, there were approximately 32 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 30 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 $83.3 million, $69.1 million, and $60.1 million during 2023, 2022, and 2021, respectively, which is included in other selling and administrative expenses in the consolidated statements of operations. The income tax benefit related to stock options, RSUs, and performance awards during 2023, 2022, and 2021 was approximately $10 million, $9 million and $7 million, respectively. As of December 31, 2023, total unrecognized compensation cost related to unvested share-based payments totaled $102.8 million and is expected to be recognized over a weighted-average period of 1.9 years. Stock Options Mattel recognized compensation expense of $6.7 million, $13.2 million, and $10.1 million for stock options during 2023, 2022, and 2021, respectively, which is included within other selling and administrative expenses in the consolidated statements of operations. The fair values of options granted have been estimated using the Black-Scholes valuation model. The expected life of stock 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. Expected dividend yield is based on the annual rate of dividends expected to be paid over the expected life. 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 2023, 2022, and 2021 was $8.91, $11.18, and $9.31 respectively. The following weighted-average valuation assumptions were used in determining the fair value of options granted:
| 2023 |  | 2022 |  | 2021
Expected life (in years) | 6.6 |  | 6.4 |  | 6.2
Risk-free interest rate | 3.5 | % |  | 3.1 | % |  | 0.8 | %
Volatility factor | 44.4 | % |  | 43.8 | % |  | 43.6 | %
Dividend yield | — | % |  | — | % |  | — | %
The following is a summary of stock option information and weighted-average exercise prices for Mattel's stock options:
| 2023 |  | 2022 |  | 2021
| 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 | 17,563 |  |  | $ | 21.73 |  |  | 19,678 |  |  | $ | 22.38 |  |  | 21,635 |  |  | $ | 22.10 |
Granted | 579 |  |  | 18.00 |  |  | 721 |  |  | 23.41 |  |  | 1,054 |  |  | 21.71 |
Exercised | (1,751) |  |  | 15.27 |  |  | (1,412) |  |  | 19.65 |  |  | (687) |  |  | 17.65 |
Forfeited | (146) |  |  | 18.59 |  |  | (104) |  |  | 18.13 |  |  | (72) |  |  | 14.00 |
Canceled | (4,503) |  |  | 27.57 |  |  | (1,320) |  |  | 34.94 |  |  | (2,252) |  |  | 21.10 |
Outstanding at December 31 | 11,742 |  |  | $ | 20.30 |  |  | 17,563 |  |  | $ | 21.73 |  |  | 19,678 |  |  | $ | 22.38 |
Exercisable at December 31 | 10,544 |  |  | $ | 20.25 |  |  | 15,531 |  |  | $ | 22.10 |  |  | 16,634 |  |  | $ | 23.68 |
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 was approximately $9 million, $8 million and $3 million, during 2023, 2022, and 2021, respectively. At December 31, 2023, options outstanding had an intrinsic value of approximately $26 million with a weighted-average remaining life of 4.4 years. At December 31, 2023, options exercisable had an intrinsic value of approximately $25 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, net of taxes during 2023 was approximately $27 million. At December 31, 2023, stock options vested and expected to vest totaled approximately 12 million shares, with an intrinsic value of approximately $26 million, weighted-average exercise price of $20.31, and weighted-average remaining life of 4.4 years. During 2023, approximately 1 million stock options vested. The total grant-date fair value of stock options vested during 2023, 2022, and 2021 was approximately $9 million, $9 million, and $15 million, respectively. Restricted Stock Units Compensation expense recognized related to grants of RSUs was $48.5 million, $37.7 million, and $27.3 million in 2023, 2022, and 2021, respectively, and was included within other selling and administrative expenses in the consolidated statements of operations. 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 vesting 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:
| 2023 |  | 2022 |  | 2021
| 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 | 4,503 |  |  | $ | 21.00 |  |  | 3,855 |  |  | $ | 17.03 |  |  | 3,986 |  |  | $ | 12.52 |
Granted | 3,479 |  |  | 18.24 |  |  | 2,728 |  |  | 23.20 |  |  | 2,167 |  |  | 21.77 |
Vested | (2,186) |  |  | 19.18 |  |  | (1,790) |  |  | 16.01 |  |  | (1,954) |  |  | 13.66 |
Forfeited | (622) |  |  | 19.91 |  |  | (290) |  |  | 19.77 |  |  | (344) |  |  | 13.72 |
Unvested at December 31 | 5,174 |  |  | $ | 20.04 |  |  | 4,503 |  |  | $ | 21.00 |  |  | 3,855 |  |  | $ | 17.03 |
At December 31, 2023, RSUs expected to vest totaled approximately 5 million shares, with a weighted-average grant-date fair value of $20.10. The total grant-date fair value of RSUs vested during 2023, 2022, and 2021 was approximately $42 million, $29 million, and $27 million, respectively. Performance Awards Compensation expense recognized related to grants of performance awards was $28.1 million, $18.2 million, and $22.7 million during 2023, 2022, and 2021, respectively. Mattel had four LTIP performance cycles in place during 2023, which were established by the Compensation Committee of the Board of Directors: (i) a January 1, 2020—December 31, 2022 ("2020 LTIP"), which was completed in the first quarter of 2023 (ii) a January 1, 2021—December 31, 2023 performance cycle ("2021 LTIP"), (ii) a January 1, 2022—December 31, 2024 performance cycle ("2022 LTIP"), and (iii) a January 1, 2023—December 31, 2025 performance cycle ("2023 LTIP"). Under the LTIP performance cycles in place in 2023, 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 of shares 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. Performance awards cliff-vest at the end of the requisite service period, which typically occurs in the first quarter subsequent to the end of the performance period. 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 2023, 2022, and 2021 was $19.44, $28.39, and $22.91 respectively. The following weighted-average valuation assumptions were used in determining the fair value of the market-related components of performance awards granted:
| 2023 |  | 2022 |  | 2021
Risk-free interest rate | 3.8 | % |  | 2.8 | % |  | 0.3 | %
Volatility factor | 35.6 | % |  | 43.4 | % |  | 50.1 | %
Dividend yield | — | % |  | — | % |  | — | %
The following is a summary of performance award information and weighted-average grant-date fair values for Mattel's performance awards:
| 2023 |  | 2022 |  | 2021
| 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 | 2,894 |  |  | $ | 18.77 |  |  | 3,347 |  |  | $ | 15.52 |  |  | 3,405 |  |  | $ | 13.79 |
Granted (a)(b) | 1,954 |  |  | 16.42 |  |  | 1,440 |  |  | 21.35 |  |  | 906 |  |  | 22.04 |
Vested | (2,189) |  |  | 11.93 |  |  | (1,823) |  |  | 14.89 |  |  | (884) |  |  | 15.63 |
Forfeited | (219) |  |  | 18.96 |  |  | (70) |  |  | 17.26 |  |  | (80) |  |  | 14.70 |
Unvested at December 31 | 2,440 |  |  | $ | 23.01 |  |  | 2,894 |  |  | $ | 18.77 |  |  | 3,347 |  |  | $ | 15.52 |
(a)During 2023, Mattel granted 1.2 million shares as part of its 2023 LTIP and issued 0.8 million incremental shares under the 2020 LTIP based on the final earnout of the 2020 performance cycle, which are included in the weighted average grant-date fair value. During 2022, Mattel granted 0.7 million shares as part of its 2022 LTIP and issued 0.8 million incremental shares under the 2019 LTIP based on the final earnout of the 2019 performance cycle, which are included in the weighted average grant-date fair value. During 2021, Mattel granted 0.8 million shares under the 2021 LTIP and issued 0.1 million incremental shares under the 2018 LTIP based on the final earnout of the 2018 performance cycle, which are included in the weighted average grant-date fair value. (b)The number of shares granted for the 2023 LTIP, the 2022 LTIP, and the 2021 LTIP, 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 2 million, 1 million, and 2 million for 2023, 2022, and 2021, respectively. At December 31, 2023, performance awards expected to vest totaled approximately 2 million shares, with a weighted-average grant-date fair value of $21.65. The total grant-date fair value of performance awards vested during 2023, 2022, and 2021 was approximately $26 million, $27 million, and $14 million, respectively.

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