Share-Based Payments

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Mattel has various stock compensation plans, which are described in Part II, Item 8 "Financial Statements and Supplementary Data—Note 9 to the Consolidated Financial Statements—Share-Based Payments" in the 2023 Annual Report on Form 10-K. Under the Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan ("the Plan"), Mattel has the ability to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units ("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. Stock options are granted with exercise prices at the fair market value of Mattel's common stock on the applicable grant date and expire no later than ten years from the grant date. Stock options, RSUs, and performance awards generally provide for vesting over, or at the end of, a period of three years from the grant date.

On September 30, 2024, a one-time retention award of performance-based restricted stock units (the "Retention Performance Grant") was granted to Ynon Kreiz, Mattel's Chief Executive Officer, in order to incentivize retention and drive significant stock price performance and market outperformance. The Retention Performance Grant has targeted approximately 0.8 million performance-based restricted stock units granted under the Plan, which was determined based on a target value of $15.0 million divided by the closing price of Mattel's common stock on the grant date. The Retention Performance Grant is 100% performance-based, with 50% of the Retention Performance Grant subject to vesting based on the achievement of the stock price hurdles during the final three years of the five-year performance measurement period, and the remaining 50% of the Retention Performance Grant subject to vesting based on Mattel's relative Total Shareholder Return ("TSR") over the five-year performance measurement period.

No portion of the Retention Performance Grant will be earned unless Mattel achieves rigorous performance goals and Mr. Kreiz remains employed through the settlement date following the completion of a five-year vesting period from September 30, 2024 to September 30, 2029, subject to potential acceleration upon certain qualifying terminations of employment. The grant also allows for a maximum potential earnout of 200% of the targeted number of performance-based restricted stock units.

The fair value of the Retention Performance Grant has been estimated using a Monte Carlo valuation methodology. The Retention Performance Grant has an estimated grant-date fair value of $24.42 per unit and total estimated grant-date fair value of $19.2 million, which will be recognized on a straight-line basis over the service period.

Compensation expense, included within other selling and administrative expenses in the consolidated statements of operations, related to stock options, RSUs, and performance awards, was as follows:


	For the Three Months Ended				For the Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
	(In thousands)
Stock option compensation expense	$	716	$	1,077	$	2,515	$	5,673
RSU compensation expense	13,860		12,020		42,185		36,724
Performance award compensation expense	5,109		2,395		12,748		10,028
	$	19,685	$	15,492	$	57,448	$	52,425

As of September 30, 2024, total unrecognized compensation expense related to unvested share-based payments totaled $139.0 million and is expected to be recognized over a weighted-average period of 2.5 years.

Mattel uses treasury shares purchased under its share repurchase program to satisfy stock option exercises and the vesting of RSUs and performance awards. Cash received for stock option exercises, net of taxes, was $6.2 million and $26.0 million for the nine months ended September 30, 2024 and 2023, respectively.