Mattel (MAT)

Equity Awards

Time-vested stock awards. The number of time-vested RSUs granted to our NEOs in 2008 is shown in Column (i), “All Other Stock Awards,” the corresponding grant dates are shown in Column (b), “Grant Date,” and the corresponding grant date fair market values are shown in Column (l), “Grant

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Date Fair Market Value of Stock and Option Awards.” The actual value, if any, that an executive may realize from an RSU is contingent upon the satisfaction of the conditions to vesting in that award, and upon the value of Mattel common stock at the time when the executive sells any stock received in settlement of the award. Thus, there is no assurance that the value, if any, eventually realized by the executive will correspond to the amount shown.

These time-vested RSUs were granted under the 2005 Equity Plan with dividend equivalent rights. Except as noted below for Mr. Eckert, the terms and conditions of these RSUs granted to our NEOs are the same as those for all other employees who received RSU grants in 2008, as follows:

As required by Mr. Eckert’s employment agreement, his RSUs have a different provision for termination of employment: all unvested units will vest upon his termination at any time before the third anniversary of the grant date, if the termination occurs because of his death or disability, or is a termination by Mattel without cause, by him for good reason, or by him during the 30-day period beginning six months after a change of control. In addition, the settlement of his units in connection with a termination of employment will be delayed by six months, if required under the federal tax law governing nonqualified deferred compensation.

Performance-based stock awards. The threshold, target and maximum level award opportunities under the current LTIP three-year cycle for each NEO, which includes the market-related component that may increase or decrease the actual awards by up to 50% of the target award, are shown in Columns (f), (g) and (h), “Estimated Future Payouts Under Equity Incentive Plan Awards.” These awards were granted under the 2005 Equity Plan in the form of performance-based RSUs. Consistent with Mattel’s recent performance cycles, the performance goals for the 2008 – 2010 performance cycle are based primarily on the company financial measure of NOPAT less a capital charge, measured against the average of the annual performance goals for each year in the performance cycle (the performance-related component). Company performance goals for each of the three years of the performance cycle are established annually at the beginning of each year. At the end of the 2008 – 2010 performance cycle, the average percentage of targeted performance shares earned annually (between 0% and 150% of targeted amounts) during the performance cycle may be adjusted, upwards

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or downwards by up to 50%, based on Mattel’s total shareholder return during the performance cycle relative to the performance of the S&P 500 as of January 1, 2008 (the market-related component). The performance-based RSUs vest only upon the achievement of the goals after the end of the three-year cycle. The following provisions apply to the awards in the event of termination of employment:

Option awards. The number of shares underlying the stock options granted to our NEOs in 2008 is shown in Column (j), “All Other Option Awards,” with the corresponding exercise prices shown in Column (k), “Exercise or Base Price of Option Awards,” and the corresponding grant dates in Column (b), “Grant Date.” The grant date fair market value of these options is shown in Column (l), “Grant Date Fair Market Value of Stock and Option Awards.” The actual value, if any, that an executive may realize from an option is contingent upon the satisfaction of the conditions to vesting in that award, and upon the excess of the stock price over the exercise price on the date the option is exercised. Thus, there is no assurance that the value, if any, eventually realized by the executive will correspond to the amount shown.

These options were granted under the 2005 Equity Plan. The per-share exercise prices of these options represent the closing price of a share of our common stock in the New York Stock Exchange on the grant date. Except as noted below, the terms and conditions of these options granted to our NEOs are generally the same as those for all other employees who received option grants in 2008, as follows:

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As required by their employment agreements, the options granted to Messrs. Eckert, Farr, Friedman and Debrowski have different provisions for termination of employment. Mr. Eckert’s options will vest in full, and remain exercisable until the end of their original term, if his employment is terminated as a result of his death or disability, by Mattel without cause, by him for good reason or by him during the 30-day period beginning six months after a change of control. Messrs. Farr’s, Friedman’s and Debrowski’s options will vest in full if their employment is terminated by Mattel without cause, by the executive for good reason or by the Executive during the 30-day period beginning six months after a change of control. In such a case, Mr. Farr’s options granted after March 30, 2000 will also remain exercisable for a minimum of two years.

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Equity Awards

Stock awards. The numbers of stock awards granted to our named executive officers in 2007 are shown in Column (i), All Other Stock Awards, the corresponding grant dates are shown in Column (b), Grant Date, and the corresponding grant date fair market values are shown in Column (l), Grant Date Fair Market Value of Stock and Option Awards. The actual value, if any, that an executive may realize from a stock award is contingent upon the satisfaction of the conditions to vesting in that award, and upon the value of Mattel common stock at the time when the executive sells any stock received in settlement of the award. Thus, there is no assurance that the value, if any, eventually realized by the executive will correspond to the amount shown.

These stock awards were granted under the Mattel, Inc. 2005 Equity Compensation Plan, and take the form of restricted stock units with dividend equivalents. Each restricted stock unit represents a conditional right to obtain one share of our common stock. Except as noted below for Mr. Eckert, the terms and conditions of these restricted stock units granted to our NEOs are the same as those for all other employees who received restricted stock unit grants in 2007, as follows:

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As required by Mr. Eckert’s employment agreement, his restricted stock units have a different provision for termination of employment: all unvested units will vest upon his termination at any time before the third anniversary of the grant date, if the termination occurs because of his death or disability, or is a termination by Mattel without cause, by him for Good Reason, or by him during the 30-day period beginning six months after a change of control. In addition, the settlement of his units in connection with a termination of employment will be delayed by six months, if required under the federal tax law governing nonqualified deferred compensation.

Option awards. The number of shares underlying the options granted to our NEOs in 2007 are shown in Column (j), All Other Option Awards, with the corresponding exercise prices shown in Column (k), Exercise or Base Price of Option Awards, and the corresponding grant dates in Column (b), Grant Date. The grant date fair market value of these options is shown in Column (l), Grant Date Fair Market Value of Stock and Option Awards. The actual value, if any, that an executive may realize from an option is contingent upon the satisfaction of the conditions to vesting in that award, and upon the excess of the stock price over the exercise price on the date the option is exercised. Thus, there is no assurance that the value, if any, eventually realized by the executive will correspond to the amount shown.

These options were granted under the Mattel, Inc. 2005 Equity Compensation Plan. The per-share exercise prices of these options represent the closing price of a share of our common stock in the New York Stock Exchange on the grant date. Except as noted below, the terms and conditions of these options granted to our NEOs are generally the same as those for all other employees who received option grants in 2007, as follows:

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As required by their employment agreements, the options granted to Messrs. Eckert, Farr Friedman and Debrowski have different provisions for termination of employment. Mr. Eckert’s options will vest in full, and remain exercisable until the end of their original term, if his employment is terminated as a result of his death or disability, by Mattel without cause, by him for Good Reason or by him during the 30-day period beginning six months after a change of control. Mr. Farr’s, Mr. Friedman’s and Mr. Debrowski’s options will vest in full if their employment is terminated by Mattel without cause, by the executive for Good Reason or by the Executive during the 30-day period beginning six months after a change of control. In such a case, Mr. Farr’s options will also remain exercisable for a minimum of two years.

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Equity Awards

Stock awards. The numbers of stock awards granted to our named executive officers in 2006 are shown in Column (i), All Other Stock Awards, the corresponding grant dates are shown in Column (b), Grant Date, and the corresponding grant date fair market values are shown in Column (l), Grant Date Fair Market Value of Stock and Option Awards. The actual value, if any, that an executive may realize from a stock award is contingent upon the satisfaction of the conditions to vesting in that award, and upon the value of Mattel common stock at the time when the executive sells any stock received in settlement of the award. Thus, there is no assurance that the value, if any, eventually realized by the executive will correspond to the amount shown.

These stock awards were granted under the Mattel, Inc. 2005 Equity Compensation Plan, and take the form of restricted stock units with dividend equivalents. Each restricted stock unit represents a conditional right to obtain one share of our common stock. Except as noted below for Mr. Eckert, the terms and conditions of these restricted stock units granted to our named executive officers are the same as those for all other employees who received restricted stock unit grants in 2006, as follows:

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As required by Mr. Eckert’s employment agreement, his restricted stock units have a different provision for termination of employment: all unvested units will vest upon his termination at any time before the third anniversary of the grant date, if the termination occurs because of his death or disability, or is a termination by Mattel without cause, by him for good reason, or by him during the 30-day period beginning six months after a change of control. In addition, the settlement of his units in connection with a termination of employment will be delayed by six months, if required under the federal tax law governing nonqualified deferred compensation.

Option awards. The number of shares underlying the options granted to our named executive officers in 2006 are shown in Column (j), All Other Option Awards, with the corresponding exercise prices shown in Column (k), Exercise or Base Price of Option Awards, and the corresponding grant dates in Column (b), Grant Date. The grant date fair market value of these options is shown in Column (l), Grant Date Fair Market Value of Stock and Option Awards. The actual value, if any, that an executive may realize from an option is contingent upon the satisfaction of the conditions to vesting in that award, and upon the excess of the stock price over the exercise price on the date the option is exercised. Thus, there is no assurance that the value, if any, eventually realized by the executive will correspond to the amount shown.

These options were granted under the Mattel, Inc. 2005 Equity Compensation Plan. The per-share exercise prices of these options represent the closing price of a share of our common stock in the New York Stock Exchange on the date of grant. Except as noted below, the terms and conditions of these options granted to our named executive officers are generally the same as those for all other employees who received option grants in 2006, as follows:

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As required by their employment agreements, the options granted to Messrs. Eckert, Farr, Friedman and Debrowski have different provisions for termination of employment. Mr. Eckert’s options will vest in full, and remain exercisable until the end of their original term, if his employment is terminated as a result of his death or disability, by Mattel without cause, by him for good reason, or by him during the 30-day period beginning six months after a change of control. Mr. Farr’s, Mr. Friedman’s and Mr. Debrowski’s options will vest in full if their employment is terminated by Mattel without cause, by the executive for good reason, or by the Executive during the 30-day period beginning six months after a change of control. In such a case, Mr. Farr’s options will also remain exercisable for a minimum of two years.

Amounts shown are estimates of the grant date fair value of the options calculated using the same method as for our financial reports, which is a variation of the Black-Scholes pricing model based on the following weighted-average assumptions: 5.1 year expected life; 2.8% dividend yield; 4.9% risk-free rate; 28.0% volatility factor; and the exercise price as set forth in the table above. The actual value, if any, that an executive may realize will depend upon the excess of the stock price over the exercise price on the date the option is exercised, so there is no assurance that the value realized by the executive will be at or near the amount shown. Our Compensation Committee approved these grants on May 10, 2006, establishing August 1, 2006 as the grant date. A discussion of our procedures for granting stock options appears in the Compensation Discussion and Analysis.

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