8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report:

March 18, 2005

MATTEL, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-05647	95-1567322
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)

333 Continental Boulevard, El Segundo, California	90245-5012
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code

(310) 252-2000

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 – Registrant’s Business and Operations

Item 1.01. Entry into a Material Definitive Agreement.

On March 16, 2005, the Compensation Committee of the Board of Directors of Mattel, Inc. (the “Compensation Committee”) met and took the following actions, among others:

(a) established performance goals for 2005 under the 2002 Mattel Incentive Plan;

(b) established a 2005-2007 performance cycle under, and made an amendment to, the Mattel, Inc. 2003 Long-Term Incentive Plan;

(c) approved a 2005 Equity Compensation Plan to be submitted for approval to Mattel’s stockholders in the 2005 Proxy Statement;

(d) approved changes in non-employee director compensation;

(e) approved the Mattel, Inc. 2005 Supplemental Executive Retirement Plan;

(f) approved a grant of restricted stock to a named executive officer; and

(g) approved an amendment to the employment agreement of Mattel’s Chairman and Chief Executive Officer.

Each of these items is discussed below.

Performance Goals for 2005 under the 2002 Mattel Incentive Plan.

Certain employees of Mattel and its subsidiaries are eligible for annual cash incentive compensation under the 2002 Mattel Incentive Plan (the “MIP”). The performance objectives used to determine payments under the MIP may be based on one or more of a variety of different financial business criteria with respect to (1) Mattel, (2) Mattel’s worldwide operations, regional operations, country specific operations and/or subsidiaries, business units, affiliates, corporations, divisions, groups, functions or employees and/or (3) Mattel’s brands, groups of brands or specific brands. Each year, Mattel’s Compensation Committee establishes specific targets that must be achieved before incentive payments are paid, as well as maximum levels for participants, which provide a ceiling on the total amount payable. The performance objectives for named executive officers are based on objective formulae or standards, as required to qualify for the exception from Internal Revenue Code Section 162(m) for performance-based compensation. For other employees, the Compensation Committee has the discretion to establish performance objectives based on other standards, including individual performance objectives, business and personal contributions and management discretion.

On March 16, 2005, the Compensation Committee established performance goals and formulae for fiscal year 2005 under the MIP. These goals and formulae are based on the following criteria for the following named executive officers: (a) the overall corporate financial performance of Mattel and achievement of objectively measurable strategic initiatives, for each of the following officers: Robert A. Eckert, Chairman and Chief Executive Officer; Kevin M. Farr, Chief Financial Officer; and Thomas A. Debrowski, Executive Vice President, Worldwide Operations; and (b) the overall corporate financial performance of Mattel, the financial performance of the executive’s respective business unit and achievement of objectively measurable strategic initiatives, for each of the following officers: Matthew C. Bousquette, President, Mattel Brands; and Neil B. Friedman, President, Fisher-Price Brands.

At the time they were set, all of the 2005 performance goals were substantially uncertain to be achieved. The goals were set at threshold, target and maximum levels. The performance goals with respect to the overall corporate financial performance of Mattel are based upon net operating profit after taxes less a capital charge. The performance goals with regard to the financial performance of each business unit are based on the business unit’s U.S. operating profit less an inventory charge and the business unit’s international operating profit at planned overhead less an inventory charge. The specific numbers used with regard to these performance goals are highly sensitive and confidential. With regard to the objectively measurable strategic initiatives, which are highly sensitive and confidential in nature, the Compensation Committee established several sets of precise measures and determined the relative weight given to each set, and the Compensation Committee established rules as to how many of the precise measures needed to be achieved within each set in order to reach the threshold, target and maximum levels. For 2005, the maximum amounts that named executive officers are eligible to receive under the MIP range from 90% to 200% of base salary; in determining these amounts, the Compensation Committee reviewed competitive data regarding annual incentive levels, relied upon the advice of the Compensation Committee’s independent compensation consultant and exercised its business judgment.

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2005-2007 Performance Cycle under the Mattel 2003 Long-Term Incentive Plan.

Executive officers and certain other employees of Mattel are eligible for long-term incentive compensation under the Mattel, Inc. 2003 Long-Term Incentive Plan (the “LTIP”), which was approved by Mattel’s stockholders in 2003. Awards under the LTIP are based on Mattel’s financial performance over the cycle relative to performance targets relating to its long-range financial goals and are paid in the quarter following the end of the performance cycle. On March 16, 2005, the Compensation Committee established the performance targets for the January 1, 2005 - December 31, 2007 performance cycle. For the 2005 - 2007 performance cycle, the Compensation Committee based the performance targets on net operating profit after taxes less a capital charge. The specific numbers used with regard to these performance targets are highly sensitive and confidential. On March 16, 2005, the Compensation Committee established the level of each executive’s participation and threshold, target and maximum levels for the performance criteria that have to be achieved before payments will be made under the LTIP at the threshold, target and maximum payout levels. These performance criteria included criteria for (a) a cumulative payment based on cumulative financial performance over the entire 2005 - 2007 performance cycle; and (b) if there is no cumulative payment, a payment at a reduced rate based upon financial performance during fiscal year 2007. At the time that they were set, the goals that the Compensation Committee established were substantially uncertain to be achieved. The following table summarizes the participation of Mattel’s named executive officers in the 2005 - 2007 LTIP cycle. In determining the participation levels set forth in the table, the Compensation Committee reviewed competitive data regarding total executive compensation, relied upon the advice of the Compensation Committee’s independent compensation consultant and exercised its business judgment.

Named Executive Officers	Number of Shares, Units or Other Rights (#)	Performance or Other Period Until Maturation or Payout	Estimated Future Payouts under Non-Stock Price-Based Plans
			Threshold ($)	Target ($)	Maximum ($)
Robert A. Eckert	—	12/31/07	3,000,000	6,000,000	12,000,000
Matthew C. Bousquette	—	12/31/07	1,250,000	2,500,000	5,000,000
Thomas A. Debrowski	—	12/31/07	750,000	1,500,000	3,000,000
Kevin M. Farr	—	12/31/07	750,000	1,500,000	3,000,000
Neil B. Friedman	—	12/31/07	1,250,000	2,500,000	5,000,000

On March 16, 2005, the Compensation Committee also amended the LTIP to provide that awards and payments under the LTIP for performance cycles beginning on or after January 1, 2005 will be subject to cancellation, reduction and recapture under certain circumstances, as more fully described in Amendment No. 1 to the LTIP, which is filed herewith as Exhibit 99.1.

Mattel, Inc. 2005 Equity Compensation Plan.

At its meeting on March 16, 2005, the Compensation Committee approved a Mattel, Inc. 2005 Equity Compensation Plan (the “2005 Equity Plan”), subject to stockholder approval, and recommended that the 2005 Equity Plan be submitted to Mattel’s stockholders for their approval at the 2005 Annual Meeting of Stockholders. Mattel’s 2005 Notice of Annual Meeting and Proxy Statement will contain a proposal and information concerning the 2005 Equity Plan, including the text of the 2005 Equity Plan. Mattel currently anticipates, subject to approval of the 2005 Equity Plan by the stockholders and approval of grants thereunder by the Compensation Committee, that there may be an annual grant of equity compensation to employees during 2005, and that such grant may consist of a mix of non-qualified stock options and either restricted stock units with dividend equivalents or restricted stock.

Non-Employee Director Compensation.

At its meeting on March 16, 2005, the Compensation Committee received input from its independent compensation consultant with regard to the compensation of Mattel’s non-employee directors. The independent compensation consultant presented recommendations to the Compensation Committee with regard to adjustments to non-employee director compensation to reflect current competitive market conditions. After discussing these recommendations with the consultant, changes were approved to non-employee director compensation. Specifically, the annual retainer paid to non-employee directors for service on the Mattel Board of Directors was increased from $40,000 per year to $50,000 per year. Also, consistent with the anticipated new approach for equity compensation of employees under the 2005 Equity Plan, the Compensation Committee’s independent compensation consultant made recommendations with regard to equity

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compensation of non-employee directors under the 2005 Equity Plan. Subject to approval of the 2005 Equity Plan by Mattel’s stockholders, changes were made to non-employee director compensation consistent with the consultant’s recommendations, shifting from the use of non-qualified stock options to the use of a mix of non-qualified stock options and either restricted stock units with dividend equivalents or restricted stock. Additional information about the new approach for non-employee director equity compensation will be provided in Mattel’s 2005 Proxy Statement. A summary of non-employee director compensation is filed herewith as Exhibit 99.2, and this description of non-employee director compensation is qualified in its entirety by reference to such summary.

Mattel, Inc. 2005 Supplemental Executive Retirement Plan.

The Compensation Committee also took the following actions regarding supplemental executive retirement benefits at its meeting on March 16, 2005:

In late 2004, as part of the American Jobs Creation Act, the federal income tax law governing non-qualified deferred compensation arrangements was significantly revised. Benefits provided under the Mattel, Inc. Amended and Restated Supplemental Executive Retirement Plan, as amended (the “SERP”) that are not considered to have been earned and vested as of December 31, 2004, would be subject to the new law. The SERP was originally adopted by Mattel effective May 1, 1996, and amended effective November 4, 1999.

In response to this tax law change, on March 16, 2005, the Compensation Committee approved freezing the SERP as of December 31, 2004, in order to ensure that SERP benefits that are not subject to the new tax law continue to be provided under the terms of the SERP as in effect when it was frozen, without adverse tax consequences for the participants. At the same time, the Compensation Committee approved the Mattel, Inc. 2005 Supplemental Executive Retirement Plan (the “2005 SERP”). The 2005 SERP provides for supplemental retirement benefits that are subject to the new tax law, on terms and conditions intended to comply with the new tax law.

The 2005 SERP has two purposes: to help retain selected key Mattel executives by providing them with retirement benefits more consistent with current competitive practices than those provided under the SERP; and for SERP participants who are not eligible for these enhanced benefits, to provide continued benefit accruals under the formula of the SERP, but on terms and conditions that comply with the requirements of the new tax law. The latter benefits are referred to as “Part A Benefits” and the enhanced benefits are referred to as “Part B Benefits.” Participants who receive Part B Benefits generally will receive neither benefits under the SERP nor Part A Benefits under the 2005 SERP.

All participants in the SERP who are employed with Mattel as of January 1, 2005, are automatically participants in the 2005 SERP with Part A Benefits, including Mattel’s named executive officers, Mr. Eckert, Mr. Bousquette, Mr. Debrowski, Mr. Farr and Mr. Neil Friedman. Mattel’s Chief Executive Officer has the authority to designate additional employees as participants eligible for Part A Benefits, and to designate the employees who will be eligible for Part B Benefits and any special requirements that they must meet to receive Part B Benefits. It is anticipated that approximately ten executive officers will be designated to receive Part B Benefits, including all of the above-listed named executive officers.

As under the SERP, in order to receive benefits under the 2005 SERP, a participant must complete five years of service and attain age 55, except that death and disability benefits are paid if the participant dies or becomes disabled after attaining age 45 (subject to offset for long-term disability benefits, in the case of Part B Benefits).

The SERP benefit and the Part A Benefits under the 2005 SERP are computed as a yearly benefit for the participant’s lifetime beginning at age 60 equal to (1) 25% of the participant’s average annual compensation multiplied by (2) a fraction, not in excess of one, equal to the number of months of service credited to the participant divided by 180. The benefit of a participant with more than 15 years of service is increased by 0.1666% for each month of credited service after 15 years, up to a maximum total percentage of 35%. The benefit of a participant whose employment terminates after age 55 but before age 60 is reduced by 0.4167% for each month by which the participant’s age at commencement is less than 60. For these purposes, final average compensation includes the participant’s base salary, bonuses paid under the MIP and its predecessor, and special achievement bonuses, during the final three years of employment. As noted above, the portion of this benefit (if any) that is not subject to the new tax law will be paid under the SERP, and the remainder will be paid under the 2005 SERP.

Part B Benefits under the 2005 SERP will be computed as a yearly benefit for the participant’s lifetime beginning at age 60 equal to (1) 60% of the participant’s final average compensation multiplied by (2) a fraction, not in excess of one, equal to the number of months of service credited to the participant divided by 180, less (3) offsets for employer contributions to the participant’s accounts under the Mattel, Inc. Personal Investment Plan and the Mattel, Inc. Deferred

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Compensation and PIP Excess Plan and for any benefits to which the participant is entitled under The Fisher-Price Pension Plan and The Fisher-Price Section 415 Excess Benefit Plan. The benefit of a participant whose employment terminates after age 55 but before age 60 is reduced by 0.4167% for each month by which the participant’s age at termination is less than 60. For these purposes, final average compensation includes the participant’s base salary, bonuses paid under the MIP and its predecessor, and special achievement bonuses that the Compensation Committee designates to be taken into account for these purposes, during the 36 consecutive months, out of the last 120 consecutive months of employment, during which these amounts are the highest.

Both the SERP and the 2005 SERP are unfunded.

In taking the above-described actions with regard to the SERP and the 2005 SERP, the Compensation Committee received input from the Compensation Committee’s independent compensation consultant, including information about competitive compensation practices, and exercised its business judgment.

The text of the SERP, as originally adopted effective May 1, 1996, has been filed as Exhibit 10.2 to Mattel’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 and has been re-filed as Exhibit 10.37 to Mattel’s Annual Report on Form 10-K for the year ended December 31, 2001 (filed March 28, 2002). Amendment No. 1 to the SERP, adopted effective November 4, 1999, has been filed as Exhibit 10.22 to Mattel’s Annual Report on 10-K for the year ended December 31, 1999 (filed March 10, 2000). The text of the 2005 SERP is filed herewith as Exhibit 99.5. This summary description of the SERP and the 2005 SERP is qualified in its entirety by reference to such documents.

Grant of Restricted Stock to Named Executive Officer.

On March 16, 2005, a grant of 7,500 shares of restricted stock was made to Matthew C. Bousquette, who is a named executive officer and serves as President, Mattel Brands. The grant was made pursuant to the Amended and Restated Mattel, Inc. 1996 Stock Option Plan. The restricted stock grant vests in full on March 16, 2006, which is the first anniversary of the grant date. In authorizing the grant of restricted stock to Mr. Bousquette, the Compensation Committee noted that the executive’s business unit presented challenges as to which Mr. Bousquette’s leadership will be critical over the next year, and determined in its business judgment, with input from the Compensation Committee’s independent compensation consultant, that the award of restricted stock would provide an appropriate compensation enhancement with regard to that period. The form of Grant Agreement used for the restricted stock grant to Mr. Bousquette is filed herewith as Exhibit 99.6, and this description of the this grant is qualified in its entirety by reference to the form of Grant Agreement.

Amendment to Employment Agreement of Robert A. Eckert.

On March 16, 2005, the Compensation Committee approved an amendment to the Executive Employment Agreement dated October 18, 2000 between Mattel and Robert A. Eckert, Mattel’s Chairman and Chief Executive Officer. The amendment grants Mr. Eckert the use of company aircraft for personal use up to 60 hours per year while he serves as Chief Executive Officer, and an amount adequate to pay his income taxes on the amount of imputed income he receives as a result of this benefit and the payment of his taxes. In determining to grant this benefit to Mr. Eckert, the Compensation Committee was advised by its independent compensation consultant and took note of Mr. Eckert’s personal travel schedule, which in recent years has been extensive, due to personal family obligations that will continue to result in frequent air travel. The Compensation Committee reviewed a detailed financial analysis of the out-of-pocket costs and tax consequences to Mattel of providing this benefit. The Compensation Committee believes providing this benefit as part of Mr. Eckert’s compensation will benefit Mattel and its shareholders by minimizing the disruptions and burdens of Mr. Eckert’s personal travel. The foregoing summary of the amendment is qualified in its entirety by reference to the amendment, a copy of which is filed as Exhibit 99.7 herewith.

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Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(a) Financial statements of businesses acquired: None

(b) Pro forma financial information: None

(c) Exhibits:

Exhibit No.	Exhibit Description	Incorporated by Reference
		Form	File No.	Exhibit(s)	Filing Date
99.1*	Amendment No. 1 to Mattel, Inc. 2003 Long-Term Incentive Plan
99.2*	Mattel, Inc. Summary of Compensation of the Non-Employee Members of the Board of Directors
99.3	Mattel, Inc. Amended & Restated Supplemental Executive Retirement Plan as of May 1, 1996	10-K	001-05647	10.37	March 28, 2002
99.4	Amendment No. 1 to Mattel, Inc. Amended & Restated Supplemental Executive Retirement Plan	10-K	001-05647	10.22	March 10, 2000
99.5*	Mattel, Inc. 2005 Supplemental Executive Retirement Plan
99.6*	Form of Grant Agreement for a Restricted Stock Grant under the Mattel, Inc. 1996 Stock Option Plan
99.7*	Amendment to Executive Employment Agreement between Mattel and Robert A. Eckert dated March 18, 2005

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MATTEL, INC. Registrant
By:	/s/    ROBERT NORMILE
	Robert Normile Senior Vice President, General Counsel and Secretary

Date: March 18, 2005

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EX-99.1

EXHIBIT 99.1

AMENDMENT NO. 1 TO

MATTEL, INC. 2003 LONG-TERM INCENTIVE PLAN

The Mattel, Inc. 2003 Long-Term Incentive Plan (the “Plan”) is hereby amended, effective as of January 1, 2005, as set forth below. Capitalized terms used and not defined in this Amendment No. 1 shall have the meanings given to them in the Plan.

1. A new Article IX is added to the Plan, as set forth below.

ARTICLE IX

Cancellation, Reduction and Recapture

9.1 Purposes. The Plan is intended to align the Participants’ long-term interests with the long-term interests of the Company and its Affiliates and Subsidiaries. If a Participant engages in certain activities discussed below, either during employment with the Company and its Affiliates and Subsidiaries or after such employment terminates for any reason, the Participant is acting contrary to the long-term interests of the Company and its Affiliates and Subsidiaries. Accordingly, the Company may (1) cancel any or all of an Award on or before the date of payment or settlement (“Cancellation”), (2) reduce or eliminate the payout to which a Participant would otherwise be entitled pursuant to an Award (to the extent not previously paid or settled) (“Reduction”), or (3) after an Award has been paid or settled, recapture any cash amounts or Common Stock (whether restricted or unrestricted) paid or delivered to the Participant in settlement of the Award, or any proceeds from the Participant’s sale of any such Common Stock (such recapture being referred to as a “Recapture” and such cash amounts, Common Stock and proceeds being referred to collectively as the “Proceeds” of the Award), as more fully described below.

9.2 Intellectual Property; Confidentiality. Each Participant shall comply with any agreement or undertaking regarding inventions, intellectual property rights, and/or proprietary or confidential information or material that the Participant signed or otherwise agreed to in favor of the Company or any of its Affiliates or Subsidiaries.

9.3 Activities Against the Company’s Interest. The Company believes that if a Participant engages in any of following activities in, or directed into, any State, possession or territory of the United States of America or any country in which the Company or any of its Affiliates or Subsidiaries operates, sells products or does business, then the Participant is acting contrary to the long-term interests of the Company and its Subsidiaries and Affiliates: (1) rendering services to or otherwise directly or indirectly engaging in or assisting, any organization or business that is or is working to become competitive with the Company and/or any of its Affiliates and Subsidiaries; or (2) soliciting any non-administrative employee of the Company and/or any of its Affiliates and Subsidiaries to

terminate employment with the Company or its Affiliate or Subsidiary, as applicable, or to perform services for any organization or business that is or is working to become competitive with the Company and/or any of its Affiliates or Subsidiaries. The activities described in this Section 9.3 are collectively referred to as “Activities Against the Company’s Interest.”

9.4 Enforcement. If the Company determines, in its sole and absolute discretion, that

(a) a Participant has violated any of the requirements set forth in Section 9.2 above or

(b) at any time during his or her employment with the Company or any of its Subsidiaries or Affiliates or within three years after termination of such employment, a Participant has engaged in any Activities Against the Company’s Interest

(the date on which such violation or activity first occurred being referred to as the “Trigger Date”), then the Company may, in its sole and absolute discretion, impose a Cancellation, Reduction and/or Recapture of any of the Participant’s Awards or the Proceeds thereof that had not yet been paid or settled as of the Trigger Date and/or a Recapture of any or all of the Proceeds of any or all of the Participant’s Awards that were paid or settled on or before the Trigger Date, provided that such payment or settlement did not occur more than 12 months before the Trigger Date. Within ten days after receiving notice from the Company that Recapture is being imposed on any Award(s), a Participant shall deliver to the Company the Proceeds of such Award(s). It shall not be a basis for Cancellation, Reduction or Recapture if after a Participant’s employment with the Company and its Affiliates and Subsidiaries, the Participant purchases, as an investment or otherwise, stock or other securities of such an organization or business, so long as (i) such stock or other securities are listed upon a recognized securities exchange or traded over-the-counter, and (ii) such investment does not represent more than a five percent equity interest in the organization or business.

9.5 Certification of Compliance. Upon delivery of cash or Common Stock pursuant to an Award, a Participant shall, if requested by the Company, certify on a form acceptable to the Company that he or she is in compliance with the terms and conditions of the Plan and shall state the name and address of the Participant’s then-current employer or any entity for which the Participant performs business services and the Participant’s title, and shall identify any organization or business in which the Participant owns a greater-than-five-percent equity interest.

9.6 Company Discretion. Notwithstanding the foregoing provisions, the Company has sole and absolute discretion not to require Cancellation, Reduction and Recapture, and its determination not to require Cancellation, Reduction or Recapture with respect to any particular Award or any particular act by a particular Participant shall not in any way reduce or eliminate the Company’s authority to require Cancellation, Reduction or Recapture with respect to any other Participant, Award or act.

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9.7 No Prohibition of Competition. Nothing in this Article IX shall be construed to impose obligations on Participants to refrain from engaging in lawful competition with the Company after the termination of employment.

9.8 Exercise of Company Authority. All administrative and discretionary authority given to the Company under this Article IX shall be exercised by the most senior human resources executive of the Company or such other person or committee (including without limitation the Committee) as the Committee may designate from time to time pursuant to its authority under Sections 3.3, 5.2 and 5.3 of the Plan.

9.9 Enforceability and Validity. Notwithstanding any provision of this Article IX, if any provision of this Article IX is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law. Furthermore, if any provision of this Article IX is illegal under any applicable law, such provision shall be null and void to the extent necessary to comply with applicable law.

9.10 Effect of Change in Control. Notwithstanding the foregoing, this Article IX shall not be applicable to a Participant from and after a termination of the Participant’s employment by the Company and its Affiliates and Subsidiaries within the 18-month period after a Change in Control.

9.11 Effectiveness of Article IX. The provisions set forth in this Article IX shall apply only with respect to Awards for Performance Periods and Performance Subperiods beginning on or after January 1, 2005.

IN WITNESS WHEREOF, the Company has caused this Amendment to the Plan to be executed, effective as of January 1, 2005.

MATTEL, INC.
By:	/s/ Alan Kaye
Name:	Alan Kaye
Title:	Senior Vice President,
	Human Resources
Dated:	March 16, 2005

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EX-99.2

EXHIBIT 99.2

MATTEL, INC.

SUMMARY OF COMPENSATION OF

THE NON–EMPLOYEE MEMBERS OF THE

BOARD OF DIRECTORS

REMUNERATION

Annual Cash Retainer:

Non-employee members of the Board receive a cash retainer of $50,000 per year.

• Retainer payable annually, upon election or re-election to the Board at the Annual Meeting of Stockholders.

• Pursuant to the Mattel 1996 Stock Option Plan,¹ Directors may elect in advance to receive all or a portion of the annual retainer in Mattel common stock. If no election is made, the Director will receive the entire retainer in cash.

• The number of shares will be based on the fair market value of Mattel common stock on the date of election or re-election to the Board.

• If an election is made, it will be irrevocable with respect to the year for which it is made, and it will remain in force for subsequent years unless the Director makes a different election with respect to a later year.²

Committee Chair Retainer:

Each non-employee Committee Chair receives a cash retainer per year:

• Audit - $20,000

• Compensation - $15,000

• Other Committees - $10,000

• Retainer payable annually, upon appointment or re-appointment as Committee Chair.

¹ There will be a similar provision in the proposed Mattel, Inc. 2005 Equity Compensation Plan. See “Equity Compensation” below.

² In any event, if a Director elects to receive payment in stock or to defer fees into the stock equivalent account, the Director must not be aware of any material non-public information concerning Mattel at the time the Director makes or changes such an election.

Mattel, Inc.

Board of Directors – Compensation Summary

Board Fees:

• Non-employee members receive $2,000 per Board meeting attended³

• Fees payable quarterly in arrears.

Committee Fees:

Each non-employee Committee member receives:

• Audit - $3,000 per meeting attended³

• Compensation and Governance & Social Responsibility- $2,000 per meeting attended³

• Other Committees - $1,500 per meeting attended³

• Fees payable quarterly in arrears.

EQUITY COMPENSATION

A. UNDER THE MATTEL 1996 STOCK OPTION PLAN

Equity compensation, in the form of stock options, is currently granted to non-employee Directors pursuant to the 1996 Stock Option Plan.

Initial Grant:

Pursuant to the Mattel 1996 Stock Option Plan, each new non-employee member of the Board, on the date he or she joins the Board, is granted an option to purchase 15,000 shares of Common Stock. The option has an exercise price per share equal to the fair market value on the date of grant and is immediately vested in full.

Annual Grant:

Pursuant to the Mattel 1996 Stock Option Plan, upon the date of each re-election to the Board, each non-employee member of the Board is granted an option to purchase 12,000 shares of Common Stock. The option has an exercise price per share equal to the fair market value on the date of the grant. The option vests annually over four years at the rate of 25% per year, beginning on the first anniversary of the date of grant.

³ The full amount will be paid for attendance in person or by videoconference. Attendance by telephone will be compensated at a reduced rate of $1,000 per meeting; provided, however, that if the meeting was scheduled as a telephonic meeting, the full amount will be paid for attendance by telephone.

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Mattel, Inc.

Board of Directors – Compensation Summary

B. UNDER THE MATTEL, INC. 2005 EQUITY COMPENSATION PLAN

Subject to the approval of Mattel’s stockholders, effective as of the date of Mattel’s 2005 Annual Meeting of Stockholders, equity compensation will be granted to non-employee Directors pursuant to the Mattel, Inc. 2005 Equity Compensation Plan (the “2005 Plan”). If the stockholders approve the 2005 Plan, the 2005 Plan will replace the Mattel 1996 Stock Option Plan; the annual grant for 2005 and subsequent years will be pursuant to the 2005 Plan; and initial grants for non-employee Directors joining the Board on or after the date of the 2005 Annual Meeting of Stockholders will be pursuant to the 2005 Plan.

Initial Grant:

Pursuant to the 2005 Plan and resolutions adopted by the Compensation Committee, each new non-employee member of the Board, on the date he or she joins the Board, will be granted (1) an option to purchase 7,500 shares of Common Stock, with an exercise price per share equal to the fair market value on the date of grant and immediate vesting in full; and (2) 2,500 restricted stock units with dividend equivalents. For restricted stock units and dividend equivalents, vesting will occur 100% on the third anniversary of the date of grant.⁴

Annual Grant:

Pursuant to the 2005 Plan and resolutions adopted by the Compensation Committee, upon the date of each re-election to the Board, each non-employee Director will be granted (1) an option to purchase 6,000 shares of Common Stock, with an exercise price per share equal to the fair market value on the date of grant and with vesting over three years (33%, 33% and 34% vesting on the first, second and third anniversaries of the date of grant, respectively); and (2) 2,000 restricted stock units with dividend equivalents. The vesting schedule with regard to restricted stock units and dividend equivalents will be as follows: for the annual grant occurring on the date of the 2005 Annual Meeting of Stockholders, vesting will occur 50% on the second anniversary of the date of grant and 50% on the third anniversary of the date of grant; for subsequent annual grants, vesting will occur 100% on the third anniversary of the date of grant.⁴

⁴ If Mattel identifies a problem with granting restricted stock units (for example, if issues arise with regard to Section 409A of the Internal Revenue Code as a result of regulations interpreting Section 409A), then restricted stock may be granted instead of restricted stock units with dividend equivalents. The vesting schedule would be the same.

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Mattel, Inc.

Board of Directors – Compensation Summary

All of the above-described grants under the 2005 Plan are subject in their entirety to stockholder approval of the 2005 Plan and the provisions of the 2005 Plan.

STOCK OWNERSHIP

The Board has, as part of its Guidelines on Corporate Governance, adopted policies regarding (i) non-employee Director stock ownership and (ii) non-employee Director retention of shares obtained in exercises of stock options. These policies are set forth in the Mattel, Inc. Board of Directors Amended and Restated Guidelines on Corporate Governance.

DEFERRED COMPENSATION

Non-employee Directors may elect in advance to defer all or part of the cash Directors’ fees under the Mattel, Inc. Deferred Compensation Plan for Non-Employee Directors, which provides for the deferred amounts to be deemed invested either in an interest-bearing account or a stock equivalent account. Elections to defer compensation during a given calendar year may be made during the last open trading window of the preceding calendar year; provided that a new Director may make such an election within 30 days after joining the Board for compensation earned after the election is made. If an election is made, it will remain in force for subsequent years unless the Director later makes a different election.² A participating non-employee Director may elect to take the distribution of such deferred amounts in a lump sum or installments over a period of years after the individual ceases to be a Director of Mattel. If a deferral election is made without any specific election between interest-bearing or stock equivalent accounts, such deferral will be invested in an interest-bearing account.

Mattel anticipates that during the year 2005 Mattel will take steps to ensure that deferred compensation for directors complies with Section 409A of the Internal Revenue Code, as enacted by the American Jobs Creation Act of 2004. These steps may include amending the Mattel, Inc. Deferred Compensation Plan for Non-Employee Directors or adopting a successor plan for deferrals that are subject to Section 409A.

² In any event, if a Director elects to receive payment in stock or to defer fees into the stock equivalent account, the Director must not be aware of any material non-public information concerning Mattel at the time the Director makes or changes such an election.

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Mattel, Inc.

Board of Directors – Compensation Summary

LIABILITY INSURANCE

Directors are provided with liability insurance under a directors, officers and corporate liability insurance policy.

EXPENSE REIMBURSEMENT AND TRAVEL

Mattel will pay all appropriate expenses for Directors’ travel on Board business. In most cases, and based on the Director’s preference, Mattel will handle any travel arrangements, book airline and hotel reservations and cover billings. If the Director prefers, Mattel will reimburse any travel expenses, including first class air travel, taxis, airport limousines, tips, etc. Directors are permitted to use aircraft leased by Mattel for purposes of travel on Board business.

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EX-99.5

EXHIBIT 99.5

MATTEL, INC.

2005 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Effective as of January 1, 2005

TABLE OF CONTENTS

			Page
ARTICLE I	NAME, HISTORY AND PLAN PURPOSES		1
	1.1	Name and History	1
	1.2	Plan Purposes	1
ARTICLE II	DEFINITIONS		1
	2.1	Actuarial Equivalent or Actuarial Equivalence	1
	2.2	Administrator	2
	2.3	Beneficiary	2
	2.4	Benefits	2
	2.5	Benefit Offset Amount	2
	2.6	Board of Directors	2
	2.7	Cause	2
	2.8	CEO	2
	2.9	Change in Control	2
	2.10	Change in Control Acceleration Event	4
	2.11	Code	4
	2.12	Company	4
	2.13	Compensation	4
	2.14	Compensation Committee	5
	2.15	Determination Date	5
	2.16	Disability	5
	2.17	Effective Date	5
	2.18	Eligible Employee	5
	2.19	Employee	5
	2.20	Employer	5
	2.21	Employer PIP Contribution Amount	5
	2.22	ERISA	5
	2.23	Final Average Compensation	5
	2.24	Fisher-Price Pension Amount	6
	2.25	Forfeiture	6
	2.26	HR Officer	6
	2.27	Individual Agreement	6
	2.28	Involuntary Termination	6
	2.29	Month of Service	6
	2.30	Part A Benefits	6
	2.31	Part B Benefits	6
	2.32	Part B Eligibility Requirements	6
	2.33	Participant	6
	2.34	Payment Date	6
	2.35	Plan	7
	2.36	PIP	7
	2.37	Prior Plan	7

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	2.38	Prior Plan Participants	7
	2.39	Recapture	7
	2.40	Related Company	7
	2.41	Service	7
	2.42	Termination	7
ARTICLE III	ELIGIBILITY AND PARTICIPATION		7
	3.1	Eligibility to Participate	7
	3.2	Termination of Participation in Plan	8
ARTICLE IV	FUNDING OF BENEFITS		8
	4.1	Funded Status of Benefits	8
	4.2	Rights of Participants	8
	4.3	No Participant Contributions	8
ARTICLE V	BENEFITS		8
	5.1	Part A Benefits	8
	5.2	Part B Benefits	9
	5.3	Conditions	9
	5.4	Reduction of Part B Benefit	9
	5.5	Forfeiture of Benefits	9
	5.6	Forfeitures and Recapture	10
	5.7	Change in Control	11
ARTICLE VI	PAYMENT OF BENEFITS		12
	6.1	In-Service Withdrawals Prohibited	12
	6.2	Loans	12
	6.3	Commencement of Benefits	12
	6.4	Normal Form of Distribution	12
	6.5	Optional Forms of Distributions	12
	6.6	Lump Sums	13
	6.7	Death Benefits	13
	6.8	Disability	13
	6.9	Designation of Beneficiary	14
	6.10	Delivery of Payments	14
	6.11	Payees Under Legal Disability	14
	6.12	Withholding for Taxes	14
ARTICLE VII	OPERATION AND ADMINISTRATION OF THE PLAN		15
	7.1	Appointment of Administrator	15
	7.2	Administrator’s Powers	15
	7.3	Reporting and Disclosure	15
	7.4	Notices and Communications	15
	7.5	Indemnification	16
ARTICLE VIII	APPLICATION FOR BENEFITS		16
	8.1	Application for Benefits	16

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	8.2	Content of Denial	16
	8.3	Appeals	17
	8.4	Exhaustion of Remedies	17
ARTICLE IX	MISCELLANEOUS MATTERS		18
	9.1	Amendment or Termination	18
	9.2	Effect of Merger of Company	18
	9.3	No Enlargement of Employee Rights	18
	9.4	Restrictions Against Alienation	19
	9.5	Employment Agreements	19
	9.6	Interpretation	19

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ARTICLE I

NAME, HISTORY AND PLAN PURPOSES

1.1 Name and History.

(a) The Company (as defined below) hereby establishes and adopts the Mattel, Inc. 2005 Supplemental Executive Retirement Plan (the “Plan”), effective as of January 1, 2005 (the “Effective Date”). The Plan and the benefits provided hereunder are subject to Code Section 409A. (References to Code Sections herein refer to sections of the Code, as defined below.)

(b) The Company also maintains the Mattel, Inc. Amended and Restated Supplemental Executive Retirement Plan, dated as of May 1, 1996, as amended by Amendment No. 1 dated as of November 4, 1999 (as so amended, (the “Prior Plan”). In response to the enactment of Section 409A of the Code, the Prior Plan was frozen as of December 31, 2004, so that the benefits payable under the Prior Plan are limited to those that are not subject to Section 409A of the Code. One of the purposes of this Plan is to continue to provide benefits (“Part A Benefits”) to certain Participants (as defined below) that would have been payable under the Prior Plan, if the Prior Plan had not been frozen, with an offset for benefits payable under the Prior Plan, and subject to such changes as are required because Part A Benefits are subject to Code Section 409A.

1.2 Plan Purposes.

(a) The purpose of the Plan is to enable to the Company and Related Companies to attract and retain highly qualified executives and to align their long-term interests with those of the Company. The Plan provides (a) Part A Benefits as described in Section 1.1(b) above, (b) benefits (“Part B Benefits”) to Participants who meet the requirements for such benefits set forth below in the Plan (and to their Beneficiaries, as defined below), and (c) death and disability benefits as set forth in Sections 6.7 and 6.8. All such benefits (collectively, “Benefits”) are subject to Code Section 409A.

(b) The Plan is established for the purpose of providing pension benefits to a select group of executives or highly compensated employees. The benefits under the Plan shall be funded solely out of the general assets of the Company. Accordingly, it is intended that the Plan be exempt from the requirements of Parts II, III, and IV of Title I of ERISA pursuant to Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA. It is expressly intended that ERISA preempt the application of state laws to this Plan, to the maximum extent permitted by Section 514 of ERISA.

ARTICLE II

DEFINITIONS

Whenever the following terms are used in this Plan, they shall have the meaning set forth in this Article II.

2.1 Actuarial Equivalent or Actuarial Equivalence. “Actuarial Equivalent” or “Actuarial Equivalence” shall mean the actuarial equivalent or actuarial equivalence, as the context requires, of lump sums and other forms of benefit payments, and for purposes converting Benefit Offset Amounts to single life annuity form, using the mortality table prescribed in

Revenue Ruling 2001-62, and an interest rate equal to 6.5 percent, or such other mortality table and/or interest rate as the Company’s Chief Financial Officer and the HR Officer may from time to time jointly determine.

2.2 Administrator. “Administrator” shall mean the individual designated to serve as such pursuant to Article VII.

2.3 Beneficiary. “Beneficiary” shall mean the person or persons designated under Section 6.6 to receive the benefit payable in the event of the death of a Participant.

2.4 Benefits. “Benefits” shall have the meaning given in Section 1.2(a).

2.5 Benefit Offset Amount. “Benefit Offset Amount” for a Participant shall mean the sum of the Participant’s Employer PIP Contribution Amount and Fisher-Price Pension Amount, if any.

2.6 Board of Directors. “Board of Directors” shall mean the Board of Directors of the Company.

2.7 Cause. “Cause” shall mean (a) ”Cause” as defined in the Participant’s Individual Agreement, or (b) if the Participant does not have an Individual Agreement or if it does not define “Cause,” (i) an act or acts of dishonesty on the Participant’s part; (ii) a material violation by the Participant of the Participant’s obligations to the Company or a Related Company; (iii) conduct by the participant that involves moral turpitude or constitutes a felony; or (iv) fraudulent conduct by the Participant in connection with the business or affairs of the Company or a Related Company, regardless of whether said conduct is designed to defraud the Company, a Related Company or others.

2.8 CEO. “CEO” shall mean the Chief Executive Officer of the Company (or any officer serving in a substantially similar capacity if there is no Chief Executive Officer).

2.9 Change in Control. “Change in Control” shall mean:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company or any corporation controlled by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (D) any acquisition by a Person of 20% of either the Outstanding Company Common Stock or the Outstanding Company Voting Securities as a

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result of an acquisition of common stock of the Company by the Company which, by reducing the number of shares of common stock of the Company outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more of either the Outstanding Company Common Stock or the Outstanding Company Voting Securities; provided, however, that if a Person shall become the beneficial owner of 20% or more of either the Outstanding Company Common Stock or the Outstanding Company Voting Securities by reason of a share acquisition by the Company as described above and shall, after such share acquisition by the Company, become the beneficial owner of any additional shares of common stock of the Company, then such acquisition shall constitute a Change in Control or (E) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2.7; or

(b) Individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors; or

(c) Consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding share of common stock of the corporation resulting from such Business Combination or the combined voting power of the

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then-outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

2.10 Change in Control Acceleration Event. “Change in Control Acceleration Event” shall mean an event described in Code Section 409A(a)(2)(A)(v) that is, or in connection with which there occurs, a Change in Control.

2.11 Code. “Code” shall mean the Internal Revenue Code of 1986, as amended, the Treasury Regulations thereunder and other relevant interpretive guidance issued by the Internal Revenue Service or the Treasury Department. Reference to any specific section of the Code shall be deemed to include such regulations and guidance, as well as any successor provision of the Code.

2.12 Company. “Company” shall mean Mattel, Inc., and its successors and assigns.

2.13 Compensation. “Compensation” shall mean a Participant’s Base Salary, Short-Term Bonus and SERP-Eligible Special Achievement Bonus, as determined on the basis of the calendar year, in accordance with the following rules.

(a) “Base Salary” shall mean the full salary and wages paid by an Employer by reason of services performed by an Employee, subject however to the following special rules:

(i) Except as specified in clause (ii) below, fringe benefits and contributions by the Employer to and benefits under any employee benefit shall not be taken into account in determining Compensation;

(ii) Amounts deducted pursuant to authorization by an Employee or pursuant to requirements of law shall be included in Compensation;

(iii) Amounts deferred by the Employee pursuant to non-qualified deferred compensation plans, at the time they would have been paid, absent the deferral, regardless of whether such amounts are includable in the Employee’s gross income for his or her current taxable year; shall be taken into account in determining Compensation; and

(iv) Amounts included in any Employee’s gross income with respect to fringe benefits, including but not limited to car allowances, life insurance and financial planning, shall not be taken into account in determining Compensation.

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(b) “SERP-Eligible Special Achievement Bonus” shall mean any cash amount paid during the year at the discretion of the Compensation Committee that is designated by the Compensation Committee as such.

(c) “Short-Term Bonus” shall mean the amount paid during the year under the Mattel, Inc. Management Incentive Plan, the 2002 Mattel Incentive Plan, or any successor annual cash incentive plan.

2.14 Compensation Committee. “Compensation Committee” shall mean the Compensation Committee of the Board of Directors.

2.15 Determination Date. “Determination Date” shall mean the earlier of (i) the date of the Participant’s Termination or (ii) the date the Participant is no longer an Employee.

2.16 Disability. A Participant will be deemed to be “Disabled” (and therefore will be considered to have a Termination on account of “Disability”) if (i) he or she is “disabled” as defined in Section 409A(a)(2)(C) of the Code, and (ii) there has been a determination that the Participant is permanently disabled and entitled to benefits under the applicable group long-term disability plan of the Company or, if there is no such applicable plan, under a government plan or program applicable to the Participant.

2.17 Effective Date. “Effective Date” shall have the meaning given in Section 1.1(a).

2.18 Eligible Employee. “Eligible Employee” shall mean an Employee who is an executive or highly compensated employee within the meaning of ERISA.

2.19 Employee. “Employee” shall mean each person qualifying as a common-law employee of the Company or of a Related Company and scheduled to work full-time (at least 40 hours per week).

2.20 Employer. “Employer” shall mean the Company and any Related Company by which a Participant is employed.

2.21 Employer PIP Contribution Amount. “Employer PIP Contribution Amount” for any Participant shall mean the annual amount produced by converting (a) the lump-sum amount equal to the sum of all contributions by the Employer (including without limitation any automatic and matching contributions) the Participant’s accounts under the PIP, the Mattel, Inc. Deferred Compensation and PIP Excess Plan, and any successor plan to either of them, increased by interest from the date of contribution through the Determination Date, at the rate earned under the Stable Asset Fund (or any successor thereto) under the PIP, during that period, into (b) a single life annuity, payable monthly, that is the Actuarial Equivalent, as of the Determination Date, of such lump-sum amount.

2.22 ERISA. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

2.23 Final Average Compensation. “Final Average Compensation” shall mean the annual average of the Participant’s Compensation for the period of 36 consecutive months, out of

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the period of 120 consecutive months ending on the date of the Participant’s Termination, for which the Participant’s Compensation was highest.

2.24 Fisher-Price Pension Amount. “Fisher-Price Pension Amount” for any Participant who is entitled to any benefits under the Fisher-Price Pension Plan and the Fisher-Price Section 415 Excess Plan shall mean the aggregate annual amount of such benefits, expressed as a single life annuity payable at the same times as the Participant’s Part B Benefit (and to the extent that any such benefits are not actually so expressed and payable, they shall be converted in the manner that preserves the Actuarial Equivalence, as of the Determination Date, of such benefits and the Fisher-Price Pension Amount).

2.25 Forfeiture. “Forfeiture” shall have the meaning given in Section 5.6(a).

2.26 HR Officer. “HR Officer” shall mean the most senior human resources executive of the Company.

2.27 Individual Agreement. “Individual Agreement” of a Participant shall mean any individual employment or severance agreement between an Employer and the Participant.

2.28 Involuntary Termination. “Involuntary Termination” of a Participant shall mean the Participant’s Termination that (i) occurs by action of the Employer without Cause, (ii) is expressly defined in the Participant’s Individual Agreement as an Involuntary Termination for purposes of this Plan, (iii) occurs by action of the Participant and, under the Participant’s Individual Agreement, either (A) is considered to be for “Good Reason” as defined in that Individual Agreement or (B) has the same consequences as a termination by the Employer without Cause or by the Participant for Good Reason because it occurs during the 30-day period beginning six months after an event that is a “Change in Control,” as defined in that Individual Agreement.

2.29 Month of Service. “Month of Service” shall mean a one-month period of Service (stated in terms of calendar months with credit given for the actual time served during partial months and not counted as full months).

2.30 Part A Benefits. “Part A Benefits” shall have the meaning given in Section 1.1(b).

2.31 Part B Benefits. “Part B Benefits” shall have the meaning given in Section 1.2(a).

2.32 Part B Eligibility Requirements. “Part B Eligibility Requirements” shall mean the requirements that a Participant must satisfy in order to be eligible to receive a Part B Benefit.

2.33 Participant. “Participant” shall mean any Employee who becomes a Participant in accordance with Article III.

2.34 Payment Date. “Payment Date” shall mean (i) in the case of a Participant whose Termination occurs as a result of his or her death or Disability, the date of such Termination, or (ii) in all other cases, the date that is six months after the Participant’s Termination (determined in accordance with Section 409A(2)(B)(i) of the Code).

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2.35 Plan. “Plan” shall have the meaning given in Section 1.1(a).

2.36 PIP. “PIP” means the Mattel, Inc. Personal Investment Plan.

2.37 Prior Plan. “Prior Plan” shall have the meaning given in Section 1.1(a).

2.38 Prior Plan Participants. “Prior Plan Participant” shall mean an individual who was, as of December 31, 2004, a participant in the Prior Plan.

2.39 Recapture. “Recapture” shall have the meaning given in Section 5.6(a).

2.40 Related Company. “Related Company” shall mean any corporation or other entity controlled by, controlling or under common control with, the Company.

2.41 Service. “Service” shall mean the period of time (stated in terms of Months of Service) during which the employment relation between the Participant and an Employer has been maintained, and shall include periods of paid absence (not to exceed six months) and unpaid leave of absence (not to exceed six months) granted by the Employer (including leaves approved for military service or for birth or adoption of a child). Periods of service as a consultant, independent contractor or part-time employee (scheduled to work less than forty hours per week) shall not count as Service. An Employee shall, if approved by the Compensation Committee, receive credit for service with a Related Company upon becoming a Participant hereunder, with credit measured from the date such Related Company was acquired, and may receive credit for periods of employment with prior employers, but only at the discretion of the Compensation Committee.

2.42 Termination. “Termination” shall mean an Employee’s “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code. Notwithstanding the foregoing, and subject to the provisions of Section 2.21, an Employee shall not be considered to have incurred a Termination by means of a leave of absence that is approved by the Company or a Related Company (whichever is applicable).

ARTICLE III

ELIGIBILITY AND PARTICIPATION

3.1 Eligibility to Participate.

(a) Each Prior Plan Participant who is an Eligible Employee as of the Effective Date shall automatically be a Participant eligible for a Part A Benefit as of the Effective Date.

(b) Prior Plan Participants may be designated as eligible for Part B Benefits, and other Eligible Employees may be designated as Participants eligible for Part A and/or Part B Benefits. Each such designation shall indicate the Participant’s Part B Eligibility Requirements, if any. Such designations shall be made by the CEO in his or her sole discretion; except that any such designation of the CEO shall be made by the Compensation Committee.

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3.2 Termination of Participation in Plan.

(a) A Participant may be designated as no longer eligible for Part A Benefits and/or Part B Benefits by the Compensation Committee in its sole discretion, or, in the case of a Participant other than the CEO, by the CEO in his or her sole discretion, effective as of the date such designation is made or a later date specified therein. From and after such designation, notwithstanding any other provision of this Plan, for purposes of determining the affected Participant’s Part A Benefit or Part B Benefit, as applicable, the Participant’s Final Average Compensation and Months of Service shall be determined as if his or her Termination had occurred on the date such designation is effective, and his or her age on the date of his or her actual Termination shall be deemed, for purposes of Sections 5.4, 6.7 and 6.8, to equal the lesser of his or her actual age on that date or 55.

(b) In the event that it is determined that allowing any individual to continue participating in the Plan could cause the Plan to violate ERISA, the Committee may elect to pay the entire present value of the Participant’s vested benefit to him or her in a lump-sum distribution as soon as administratively possible, unless prohibited by Code Section 409A. The amount of the lump-sum distribution shall be the Actuarial Equivalent of the Participant’s vested benefit.

ARTICLE IV

FUNDING OF BENEFITS

4.1 Funded Status of Benefits. Benefits shall not be funded, but shall be payable out of the general assets of the Company (or a Related Company) when due.

4.2 Rights of Participants.

(a) No Participant shall have a preferred claim on, or a beneficial ownership interest in, any assets of the Company (or a Related Company) prior to the time such assets are paid to him or her in the form of a Benefit.

(b) All rights created under the Plan shall be unsecured contractual rights of Participants against the Company or a Related Company. However, nothing in this document shall in any way diminish any rights of a Participant to pursue his or her rights as a general creditor of Company or a Related Company with respect to his or her benefits under the Plan.

4.3 No Participant Contributions. No Participant contributions to the Plan are permitted.

ARTICLE V

BENEFITS

5.1 Part A Benefits. A Participant who is eligible for a Part A Benefit (or the Beneficiary of such a Participant in the case of the Participant’s death) shall receive a Part A Benefit in the case of the Participant’s Termination without being entitled to receive a Part B Benefit, subject to Sections 5.5 and 5.6. The Part A Benefit payable to the Participant (or his or her Beneficiary) shall be such that the sum of the Part A Benefit plus the benefits payable to the

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Participant (or Beneficiary) under the Prior Plan equal the benefits that would have been payable to him or her under the Prior Plan, if the Prior Plan had not been frozen, determined by expressing all such benefits as the Actuarial Equivalent of the actual benefits payable under the Prior Plan. Notwithstanding any other provision of this Plan, in no event shall a Participant or Beneficiary receive both Part A and Part B Benefits.

5.2 Part B Benefits. A Participant’s Part B Benefit, subject to the conditions, limitations, elections and reductions set forth below, shall be payable monthly, in an annual amount, determined as of the Participant’s Determination Date, and expressed as a single life annuity, equal to:

(a) 60% of the Participant’s Final Average Compensation, determined as of the Determination Date, less

(b) the sum of the Participant’s Benefit Offset Amounts.

5.3 Conditions. The following conditions must be met in order for a Participant who is eligible for a Part B Benefit (or the Beneficiary thereof) to receive a Part B Benefit:

(a) The Participant or Beneficiary, as applicable, must provide a written waiver, on such forms, and at such time or times, as the Company may from time to time prescribe, of all rights to receive benefits under the Prior Plan.

(b) The Participant’s Termination must occur on or after the date on which the Participant has first attained age 55 and completed 60 Months of Service.

(c) The Participant must satisfy any applicable Part B Eligibility Requirements; provided, that unless otherwise specified in connection with the establishment of the Participant’s Part B Eligibility Requirements, they shall be waived in the event of the Participant’s Involuntary Termination.

5.4 Reduction of Part B Benefit. The Part B Benefit of a Participant whose Termination occurs before the Participant has completed 180 Months of Service, other than as a result of the Participant’s death or Disability upon or after attaining age 45, shall be the amount computed as set forth in Section 5.2, multiplied by a fraction, the numerator of which is the number of Months of Service completed by the Participant, and the denominator of which is 180. The Part B Benefit of a Participant whose Termination occurs on or after the date on which the Participant attains age 55 and before the Participant attains age 60 shall be reduced, after any applicable reduction pursuant to the preceding sentence, by 0.4167% for each month by which the Participant’s age at Termination is less than age 60.

5.5 Forfeiture of Benefits. Notwithstanding the foregoing provisions of this Plan, a Participant and his or her Beneficiary shall not be entitled to any Benefit from and after any date on which (i) the Participant’s employment with the Company or a Related Company is terminated for Cause or (ii) the Company determines to impose a Forfeiture as set forth in Section 5.6.

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5.6 Forfeitures and Recapture.

(a) Benefits under the Plan are intended to align the Participants’ long-term interests with the long-term interests of the Company and the Related Companies. If a Participant engages in certain activities discussed below, either during employment with the Employer or after such employment terminates for any reason, the Participant is acting contrary to the long-term interests of the Company and the Related Companies. Accordingly, the Company may determine that a participant and his or her Beneficiary shall forfeit their rights to any as-yet-unpaid Benefit (“Forfeiture”) and/or may decide to recapture any amounts previously paid to the Participant or Beneficiary (“Recapture”), as more fully described below.

(b) Each Participant shall comply with any agreement or undertaking regarding inventions, intellectual property rights, and/or proprietary or confidential information or material that the Participant signed or otherwise agreed to in favor of the Company or any Related Company.

(c) The Company believes that if a Participant engages in any of following activities in, or directed into, any State, possession or territory of the United States of America or any country in which the Company or any Related Company operates, sells products or does business, then the Participant is acting contrary to the long-term interests of the Company and the Related Companies: (1) rendering services to or otherwise directly or indirectly engaging in or assisting, any organization or business that is or is working to become competitive with the Company and/or any of the Related Companies; or (2) soliciting any non-administrative employee of the Company and/or any Related Company to terminate employment with the Company or such Related Company, as applicable, or to perform services for any organization or business that is or is working to become competitive with the Company and/or any Related Company. The activities described in this Section 5.6(c) are collectively referred to as “Activities Against the Company’s Interest.”

(d) If the Company determines, in its sole and absolute discretion, that

(i) a Participant has violated any of the requirements of Section 5.6(b) or

(ii) at any time during his or her employment with the Employer, or within three years after his or her Termination, or at any time while receiving any Benefit, a Participant has engaged in any Activities Against the Company’s Interest

(the date on which such violation or activity first occurred being referred to as the “Trigger Date”), then the Company may, in its sole and absolute discretion, impose a Forfeiture of any of the Participant’s as-yet-unpaid Benefits and/or a Recapture of any or all Benefit payments made to the Participant, provided that such payments were made no earlier than 24 months before the Trigger Date. Within ten days after receiving notice from the Company that Recapture is being imposed as to any Benefit payment, the Participant shall pay to the Company the amount of the Benefit payment subject to the Recapture. It shall not be a basis for Forfeiture or Recapture if after a Participant’s Termination, the Participant purchases, as an investment or otherwise, stock or other securities of such an organization or business, so long as (i) such stock or other securities are listed upon a recognized securities exchange or traded over-the-counter, and (ii)

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such investment does not represent more than a five percent equity interest in the organization or business.

(e) Upon Termination, and thereafter upon the request of the Administrator or the Company, the Participant shall certify on a form acceptable to the Company that he or she is in compliance with the terms and conditions of the Plan and shall state the name and address of the Participant’s then-current employer or any entity for which the Participant performs business services and the Participant’s title, and shall identify any organization or business in which the Participant owns a greater-than-five-percent equity interest.

(f) Notwithstanding the foregoing provisions of this Section 5.6, the Company has sole and absolute discretion not to require Forfeiture and/or Recapture, and its determination not to require Forfeiture and/or Recapture with respect to any particular act by or payment to a particular Participant shall not in any way reduce or eliminate the Company’s authority to require Forfeiture and/or Recapture with respect to any other act, payment or Participant.

(g) Nothing in this Section 5.6 shall be construed to impose obligations on any Participant to refrain from engaging in lawful competition with the Company or any Related Company after his or her Termination.

(h) All administrative and discretionary authority given to the Company under this Section 5.6 shall be exercised by the HR Officer or such other person or committee (including without limitation the Committee or the Administrator) as the Committee may designate from time to time.

(i) Notwithstanding any provision of this Section 5.6, if any provision of this Section 5.6 is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law. Furthermore, if any provision of this Section 5.6 is illegal under any applicable law, such provision shall be null and void to the extent necessary to comply with applicable law.

5.7 Change in Control.

(a) Notwithstanding any other provision of this Plan, upon a Change in Control, the requirements of Sections 5.3(b) and 5.3(c) shall cease to apply to those Participants who are employed by the Company or a Related Company on the date of the Change in Control, and Section 5.6 shall cease to apply to any Participants whose Terminations occur within the period of 18 months following the Change in Control.

(b) If the Board of Directors determines, by resolution adopted before the date of a specified Change in Control Acceleration Event, to apply this Section 5.7(b), then this Plan shall terminate effective immediately after the Change of Control Acceleration Date, and all benefits payable to all Participants (determined after the application of Section 5.7(a) above), shall become payable promptly following such termination, in the form of a lump-sum payment equal to the Actuarial Equivalent of the Participant’s vested benefit, reduced by the amount (if any) of

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the benefit that has already been paid to the Participant. The provisions of this Section 5.7(b) shall apply to all Participants, regardless of whether they are currently receiving benefits under the Plan, have terminated employment, but have not yet commenced receiving benefits, or are still employed by the Company or a Related Company.

ARTICLE VI

PAYMENT OF BENEFITS

6.1 In-Service Withdrawals Prohibited. Participants are not entitled to receive their benefits prior to Termination.

6.2 Loans. Participants may not borrow funds from the Plan.

6.3 Commencement of Benefits. A Participant’s Benefit shall be paid or begin to be paid as soon as administratively practicable after the Participant’s Payment Date or such later date as the Participant may elect in accordance with Section 6.5 below.

6.4 Normal Form of Distribution. Unless a Participant elects otherwise as provided in Section 6.5, he or she shall receive his or her Benefits for his or her life only in the form of a single life annuity paid in monthly installments.

6.5 Optional Forms of Distributions. A Participant may elect, at any time prior to Termination or by such earlier time as may be required by the Code Section 409A, to receive his or her Benefit at a time later than his or her Payment Date and/or to receive the Actuarial Equivalent of his or her Benefit in one of the following optional period-certain and life benefit forms:

(a) 15-year certain—A benefit paid in the form of monthly installments over a period of 15 years. If a Participant dies after receiving his or her first payment, the designated Beneficiary shall be entitled to such payments, if any, that remain to be made following the date of death.

(b) 10-year certain—A benefit paid in the form of monthly installments over a period of 10 years. If a Participant dies after receiving his or her first payment, the designated Beneficiary shall be entitled to such payments, if any, that remain to be made following the date of death.

(c) 100% Joint and Survivor Annuity—A benefit which is payable for the life of the Participant and upon the Participant’s death, if such Participant is survived by the spouse to whom such Participant was married at the annuity starting date, for the life of such spouse, in an amount equal to 100% of the benefit payable to such Participant. The benefit payable to such spouse shall not be terminated on account of such spouse’s subsequent remarriage.

(d) 50% Joint and Survivor Annuity—A benefit which is Payable for the life of the Participant and upon the Participant’s death, if such Participant is survived by the spouse to whom such Participant was married at the annuity starting date, for the life of such spouse, in an amount equal to 50% of the benefit payable to such Participant. The

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benefit payable to such spouse shall not be terminated on account of such spouse’s subsequent remarriage. Participants shall be permitted to make any such elections and to change any such elections after they are made only at such times and to the extent permitted by Code Section 409A.

6.6 Lump Sums. Except as provided in Section 5.7, Participants shall not be entitled to be paid their benefits in the form of lump-sum distributions. Notwithstanding the preceding sentence and Sections 6.7 and 6.8, if the Actuarial Equivalent of the amount payable to a Participant or Beneficiary is fifty thousand dollars ($50,000) or less, it will automatically be paid in the form of a lump-sum distribution.

6.7 Death Benefits.

(a) If a Participant dies while employed by the Company or a Related Company after having attained age 45 and completed 60 Months of Service, but before having attained age 55, then subject to Sections 5.3(a) and 5.6, the Participant’s Beneficiary shall be entitled to a monthly benefit for 15 years, commencing on the date as soon as practicable after the Participant’s death, in an amount equal to 55% of the Participant’s Part A Benefit computed under Section 5.1 or Part B Benefit computed under Section 5.2, as applicable; provided, however, that for every month of age over age 45 attained by the Participant, the amount paid shall be increased by .1667% per Month of Service completed by the Participant.

(b) If a Participant dies while employed by the Company or a Related Company after having attained age 55 and completed 60 Months of Service, then subject to Sections 5.3(a) and 5.6, the Participant’s Beneficiary shall be entitled to a monthly benefit for 15 years, commencing on the date of death in an amount equal to 100% of the Participant’s Part A Benefit computed under Section 5.1 or Part B Benefit computed under Section 5.2, as applicable; provided, however, that for each month by which the first payment precedes the date upon which the Participant would have attained age 60, the amount paid shall be reduced by 0.4167%.

(c) If a Participant dies after Termination, then subject to Section 5.6, his or her surviving Beneficiary shall be entitled to the payments hereunder, if any, that remain to be made during that portion of the original payout period (selected by the Participant in accordance herewith) following the date of death.

(d) A designated Beneficiary entitled to any retirement death benefit under this Section 6.4 may elect to receive Actuarial Equivalent installments for ten years; provided, that any such election may be made only to the extent, and at the times and subject to the conditions, permitted under Code Section 409A.

6.8 Disability. If a Participant becomes Disabled at any time after having attained age 45 and completed 60 Months of Service, then such Participant shall, in lieu of any other Benefit, be entitled to a benefit under this Section 6.8. Such disability benefit shall be equal to 55% of the amount of the Participant’s Benefit calculated under Section 5.1 or 5.2, as applicable, but increased by .1667% per Month of Service for every month of the Participant’s age in excess of 45 year but less than 60 years. Such disability benefit shall be payable as a single life annuity or, to the extent permitted under Section 6.5, a joint and survivor annuity (but not any other form of

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benefit), in each case commencing on the final day of the twenty-fourth month of Disability, without regard to the age of the Participant at the time of the Disability. Notwithstanding the foregoing, each monthly payment of such disability benefit shall be reduced (but not below zero) by the amount of all disability benefit payments (if any) that the Participant receives for the same month under all applicable group long-term disability plans of the Employer.

6.9 Designation of Beneficiary. In the event benefits are payable under the Plan on behalf of a deceased Participant who has a surviving spouse, the remaining benefits will be paid to another Beneficiary only if the spouse consents in writing to such designation. If there is no designated Beneficiary or surviving spouse, the benefits will be paid to the Participant’s estate.

6.10 Delivery of Payments. All payments under the Plan shall be delivered in person or mailed to the last address of the Participant (or, in the case of the death of the Participant, to the last address of his or her Beneficiary). Each Participant shall be responsible for furnishing the Administrator with his or her current address and his or her current facsimile number (if any), and the name and current address of his or her Beneficiary, and such Beneficiary’s current facsimile number (if any).

6.11 Payees Under Legal Disability.

(a) Every person receiving or claiming benefits under the Plan shall be conclusively presumed to be mentally competent and of age until the Administrator receives written notice, in a form and manner acceptable to it, that such person is incompetent or a minor, and that a guardian, conservator, statutory committee, or other person legally vested with the care of his or her estate has been appointed. In the event that the Administrator finds that any person to whom a benefit is payable under the Plan is unable to properly care for his or her affairs, or is a minor, then any payment due (unless a prior claim therefor shall have been made by a duly appointed legal representative) may be paid to the spouse, a child, a parent, or a brother or sister, or to any person deemed by the Administrator to have incurred expense for such person otherwise entitled to payment.

(b) In the event a guardian, conservator or statutory committee of the estate of any person receiving or claiming benefits under the Plan shall be appointed by a court of competent jurisdiction, payment shall be made to such guardian, conservator or statutory committee, provided that proper proof of appointment is furnished in a form and manner suitable to the Administrator.

(c) Any payment made under the provisions of this Section 6.9 and otherwise in compliance with the Plan shall be a complete discharge of liability therefor under the Plan.

6.12 Withholding for Taxes. Any payments out of the Plan shall be reported to the applicable taxing authorities and may be subject to withholding for taxes as may be required by any applicable federal, state or other law.

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ARTICLE VII

OPERATION AND ADMINISTRATION OF THE PLAN

7.1 Appointment of Administrator. The Administrator (who may, but need not, be a Participant) shall be appointed by the Compensation Committee.

7.2 Administrator’s Powers. The Administrator shall have all powers, in his or her sole discretion, necessary to supervise the administration of the Plan and control its operations. In addition to any powers and authority conferred on the Administrator elsewhere in the Plan or by law, the Administrator may exercise the following powers and authority, in his or her sole discretion:

(a) To designate agents to carry out responsibilities relating to the Plan;

(b) To employ such legal, actuarial, accounting, clerical, and other assistance as it may deem appropriate in carrying out the provisions of this Plan;

(c) To establish rules and procedures from time to time for the conduct of the Administrator’s business and the administration of this Plan;

(d) To administer, interpret, and apply this Plan and to decide all questions which may arise under this Plan; and

(e) To perform or cause to be performed such further acts as he or she may deem to be necessary, appropriate, or convenient in the administration of the Plan.

All actions and determinations by the Administrator shall be binding upon all parties, to the maximum extent permitted by law.

7.3 Reporting and Disclosure. The Company (and not the Administrator) shall be responsible for the reporting and disclosure of information required to be reported or disclosed pursuant to ERISA or any other applicable law.

7.4 Notices and Communications.

(a) All applications, notices, designations, elections, and other communications from Participants shall be in writing, on forms prescribed by the Administrator. These documents shall be mailed or delivered to the office designated by the Administrator, and shall be deemed to have been given when received by such office.

(b) Each notice, report, remittance, statement, or other communication directed to a Participant or Beneficiary shall be in writing and may be delivered in person or by mail. An item shall be deemed to have been delivered and received by the Participant (i) three days after the date when it is deposited in the United States Mail with postage prepaid, (ii) one day after the date when it is sent by overnight delivery, courier or hand delivery service to the Participant or Beneficiary, and (iii) on the date on which it is sent by facsimile (with confirmation) to the Participant or Beneficiary, in each case at his or her last address or last facsimile number (as applicable) of record with the Administrator.

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7.5 Indemnification.

(a) To the maximum extent permitted by law, the Company shall indemnify each member of the Board of Directors and of the Compensation Committee, the Administrator, and every other Employee with duties under the Plan, against expenses (including any amount paid in settlement) reasonably incurred by him or her in connection with any claims against him or her by reason of the performance of his or her duties under the Plan. The foregoing right of indemnification shall not apply with respect to matters as to which the individual acted fraudulently or in bad faith. Furthermore, the Company shall not be obligated to indemnify any person for any amount incurred through any settlement or compromise of any action unless the Company consents in writing to the settlement or compromise.

(b) The Company shall have the right to select counsel and to control the prosecution or defense of each matter in which indemnification under this Section 7.6 is sought or applies.

ARTICLE VIII

APPLICATION FOR BENEFITS

8.1 Application for Benefits.

(a) The Administrator may require any person claiming benefits under the Plan (a “Claimant”) to submit an application therefor, together with such other documents and information as the Administrator may require.

(b) Within 90 days following receipt of the application and all necessary documents and information, the Administrator’s authorized delegate reviewing the claim shall furnish the Claimant with written notice of the decision rendered with respect to the application.

(c) Should special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the expiration of the initial 90-day period.

(i) The notice shall indicate:

(A) the special circumstances requiring an extension of time, and

(B) the date by which a final decision is expected to be rendered.

(ii) In no event shall the period of the extension exceed 90 days from the end of the initial 90-day period.

8.2 Content of Denial. In the case of a denial of the Claimant’s claim for benefits, the written notice shall set forth:

(a) The specific reasons for the denial;

(b) References to the Plan provisions upon which the denial is based;

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(c) A description of any additional information or material necessary for perfection of the application (together with an explanation of why the material or information is necessary); and

(d) An explanation of the Plan’s claims review procedure.

8.3 Appeals.

(a) A Claimant may appeal a denial of his or her claim by following the appeal procedures set forth in this Section 8.3. Such appeal shall be made to and determined by the most senior human resources executive of the Company or such other person or committee (including without limitation the Committee or the Administrator) as the Committee may designate from time to time

(b) The appeal must be made, in writing, as follows:

(i) if the claim is expressly rejected, within 65 days after the date of notice of the decision with respect to the application; or

(ii) if the claim has neither been approved nor denied within the applicable period provided in Section 8.1 above, within 65 days after the expiration of the period.

(c) The Claimant may review all pertinent documents and submit issues and comments in writing in connection with the appeal.

(d) The decision regarding each appeal shall be made promptly, and not later than 60 days after the decision-maker’s receipt of a request for review, unless special circumstances require an extension of time for processing. In such a case, a decision shall be rendered as soon as possible, but not later than 120 days after receipt of the request for review.

(e) The decision on review shall:

(i) be in writing;

(ii) include specific reasons for the decision;

(iii) be written in a manner designed to be understood by the Claimant; and

(iv) contain specific references to the pertinent Plan provisions upon which the decision is based.

8.4 Exhaustion of Remedies. No legal action for benefits under the Plan may be brought unless and until the Claimant has exhausted his or her remedies under this Article VIII.

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ARTICLE IX

MISCELLANEOUS MATTERS

9.1 Amendment or Termination.

(a) Except as otherwise provided in this Section 9.1, the Compensation Committee may amend or terminate the Plan at any time by an instrument in writing executed in the name of the Company.

(b) Subject to Section 9.1(d) below, no amendment may be adopted that would (i) reduce the dollar value of a Participant’s vested benefit, (ii) eliminate a form of benefit payment, or (iii) delay the date on which a Participant’s vested benefit becomes payable, without the consent of the affected Participants; provided, that a reduction in a Participant’s benefit resulting from a change in the mortality table or interest rate used in determining Actuarial Equivalence as permitted by Section 2.1 shall not require the Participant’s consent.

(c) After the occurrence of a Change in Control, no amendment may be adopted that would affect Section 2.8, Section 5.7, this Section 9.1 or Section 9.6(d) of the Plan in a manner adverse to any Participant without that Participant’s written consent.

(d) In the event of the termination of the Plan, all Participants who are employed by the Company or a Related Company on the date of termination shall become fully vested. However, termination of the Plan will not accelerate the date on which benefits become payable under the Plan, except as provided in Section 5.7.

(e) Notwithstanding any other provision of the Plan, the Plan may be amended at any time and in any manner that the Compensation Committee determines, in its sole and absolute discretion, to be necessary to ensure that the Plan and all benefits thereunder comply with the requirements of Section 409A of the Code.

9.2 Effect of Merger of Company.

(a) In the event of a consolidation, merger, sale, liquidation, or other transfer of substantially all of the operating assets of the Company to any other company, the ultimate successor or successors to the business of the Company shall automatically be deemed to have elected to continue this Plan in full force and effect, in the same manner as if the Plan had been adopted by resolution of its board of directors.

(b) The presumption set forth in Section 9.2(a) above shall not apply if the successor, by resolution of its board of directors, elects not to so continue this Plan in effect. In such a case, the Plan shall terminate as of the effective date set forth in the board resolution.

9.3 No Enlargement of Employee Rights.

(a) This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company (or a Related Company) and any Employee, or to be consideration for, or an inducement to, or a condition of, the employment of any Employee.

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(b) Nothing contained in the Plan shall be deemed to give any Employee the right to be retained in the employ of the Company (or a Related Company) or to interfere with the right of the Company (or a Related Company) to discharge any Employee at any time.

9.4 Restrictions Against Alienation. A Participant’s benefit under the Plan may not be assigned or alienated, either voluntarily or involuntarily. However, the preceding sentence will not preclude the Plan from reducing a Participant’s benefit by the amount he or she owes to the Company or a Related Company. Such a reduction will apply whether the benefit is payable to the Participant or to his or her Beneficiary.

9.5 Employment Agreements. In the case of a Participant whose terms of employment with the Company or a Related Company are subject to the provisions of an employment agreement, to the extent that the terms of the employment contract provide the Participant with greater benefits than would otherwise be determined under the provisions of the Plan, the terms of the employment contract shall prevail, to the extent set forth in a written agreement between the Company and to the Participant dated on or after the Effective Date.

9.6 Interpretation.

(a) Article and Section headings are for reference only and shall not be deemed to be part of the substance of this instrument or to enlarge or limit the contents of any Article or Section.

(b) Unless the context clearly indicates otherwise, masculine gender shall include the feminine, the singular shall include the plural, and the plural shall include the singular.

(c) In the case of any ambiguity, the Plan shall be construed in such a manner so as to comply with the provisions of ERISA, including the fact that it is intended that the Plan be exempt from the requirements of Parts II, III, and IV of Title I of ERISA pursuant to Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA.

(d) It is the Company’s intention that the Plan and all benefits provided hereunder comply in all respects with the requirements of Code Section 409A, and the Plan shall be interpreted and administered accordingly. Any provision of the Plan that does not so comply shall be deemed reformed to the extent possible to so comply without increasing the cost of the Plan to the Company, and to the extent such reformation is not possible, such provision shall be void. Any action pursuant to, or interpretation of, the Plan or any benefits hereunder, that does not so comply shall be void.

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IN WITNESS WHEREOF, Mattel, Inc. has caused this instrument to be executed by its duly authorized officer, effective as of January 1, 2005.

MATTEL, INC.
By:	/s/ Alan Kaye
Name:	Alan Kaye
Title:	Senior Vice President, Human Resources
Dated:	3-17-05

:

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EX-99.6

EXHIBIT 99.6

Grant Agreement for a

Restricted Stock Grant under the

Mattel 1996 Stock Option Plan

This is a Grant Agreement between Mattel, Inc. (the “Company”) and the individual (the “Holder”) named in the Notice of Grant of Restricted Stock (the “Notice”) attached hereto as the cover page of this Grant Agreement.

Recitals

The Company has adopted the Mattel 1996 Stock Option Plan (the “Plan”) for the granting to selected employees of awards based on shares of Common Stock of the Company. In accordance with the terms of the Plan, the Committee has approved the execution of this Grant Agreement between the Company and the Holder. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Plan.

Restricted Stock

1. Grant. The Company grants to the Holder the number of shares of Common Stock set forth in the Notice (the “Shares”), subject to forfeiture and to the restrictions set forth in Section 2 below during the period (the “Restricted Period”) beginning on the effective date of the grant (the “Grant Date”), as specified in the Notice, and ending as provided below in this Grant Agreement. The Company and the Holder acknowledge that the Shares (a) are being granted hereunder in exchange for the Holder’s agreement to provide services to the Company after the Grant Date, for which the Holder will otherwise not be fully compensated, and which the Company deems to have a value at least equal to the aggregate par value of the Shares, and (b) will be forfeited by the Holder if the Holder’s employment terminates before they vest, and are subject to cancellation if the Holder engages in certain conduct detrimental to the Company, as more fully set forth in this Grant Agreement and the Plan.

2. Restrictions. During the Restricted Period, the Holder may not assign or alienate his or her interest in the Shares. Otherwise, the Holder shall have all of the rights of a stockholder of the Company with respect to the Shares during the Restricted Period, including the right to vote the shares and to receive any dividends and distributions with respect thereto; provided, that the Committee may determine that the Holder will not receive a dividend or distribution made in connection with an event described in Section 18 of the Plan (whether or not an adjustment under Section 18 of the Plan is made to the Shares in connection with that event); and provided, further, that any dividend or distribution in the form of Common Stock or other property other than cash shall be held subject to the same restrictions and other terms and conditions as the Shares.

3. Normal Vesting. The Restricted Period shall end and the Shares shall vest on the first anniversary of the Grant Date, unless the Holder’s Severance has previously occurred, and subject to Section 6 below.

4. Consequences of Severance. The following are the consequences for the Shares of the Holder’s Severance before the first anniversary of the Grant Date:

i. If the Severance occurs because of the Holder’s death, then the Restricted Period shall end and the Shares shall vest on the date of death, and ownership of the Shares shall be transferred to the Holder’s beneficiary or beneficiaries (as designated in the manner determined by the Committee), or if no beneficiary is so designated or if no beneficiary survives the Holder, then the Holder’s administrator, executor, personal representative, or other person to whom the Shares are transferred by means of the Holder’s will or the laws of descent and distribution (such beneficiary, beneficiaries or other person(s), the “Holder’s Heir”).

ii. If the Severance occurs because of the Holder’s becoming Disabled, the Restricted Period shall end and the Shares shall vest on the date of Severance, subject to Section 6 below.

iii. If the Severance is for any other reason, the Shares shall be forfeited on the date of Severance.

5. Consequences of Vesting; Tax Withholding. As soon as practicable after the Shares vest, the Company shall (i) issue or cause to be delivered to the Holder (or the Holder’s Heir, as applicable) one or more unlegended stock certificates representing the Shares that have vested, or (ii) cause the restrictions associated with the book entry for the Shares to be removed; provided, that the Company shall withhold therefrom Shares having a Fair Market Value, on the date of vesting, equal to the amount necessary to satisfy the minimum required withholding of federal, state and local taxes (but rounding up to the nearest whole number of Shares).

6. Cancellation of Grants. The Holder specifically acknowledges that notwithstanding any other provision of this Grant Agreement, this Option is subject to the provisions of Section 20 of the Plan, entitled “Cancellation of Grants,” which can cause the forfeiture of the Shares, before or after the end of the Restricted Period. As an additional condition to the vesting of the Shares other than upon the Holder’s death, the Holder shall certify on a form provided by the Committee that he or she is in compliance with the terms and conditions of the Plan, including Section 20 thereof, entitled “Cancellation of Grants,” as of the last day of the Restricted Period.

7. Assignability. Except as may be effected by designation of a beneficiary or beneficiaries in such manner as may be determined by the Committee in its sole discretion, or as may be effected by will or other testamentary disposition or by the laws

2

of descent and distribution, any attempt to assign the Shares before they vest shall be of no effect.

8. Certain Corporate Transactions. In the event of certain corporate transactions, the Shares shall be subject to adjustment as provided in Section 18 of the Plan. In the event of a Change in Control, the Shares and this Grant Agreement shall be subject to the provisions of Section 19 of the Plan.

9. No Additional Rights. Neither the granting of the Shares nor their vesting shall (a) confer upon the Holder any right to continue in the employ of the Company, (b) interfere in any way with the rights of the Company or a Subsidiary to terminate such employment at any time for any reason, with or without Cause, or (c) interfere with the right of the Company or a Subsidiary to undertake any lawful corporate action. The Holder acknowledges that he or she is an “employee at will.” The provisions of this Section 10 are subject to the terms of any employment agreement between the Holder and the Company (or a Subsidiary).

10. Compliance with Plan. The Shares and this Grant Agreement are subject to, and the Company and the Holder agree to be bound by, all of the terms and conditions of the Plan as it shall be amended from time to time, which are incorporated herein by reference. No amendment to the Plan shall adversely affect the Shares or this Grant Agreement without the consent of the Holder. In the case of a conflict between the terms of the Plan and this Grant Agreement, the terms of the Plan shall govern.

11. Governing Law. The interpretation, performance and enforcement of this Option shall be governed by the laws of the State of Delaware without regard to principles of conflicts of laws.

3

EX-99.7

Exhibit 99.7

March 18, 2005

Mr. Robert A. Eckert

Chairman and Chief Executive Officer

Mattel, Inc.

333 Continental Boulevard

El Segundo, California 90245-5012

Re:        Amendment to Your Employment Agreement

Dear Bob:

Pursuant to action taken by Mattel’s Compensation Committee on March 16, 2005, this letter agreement constitutes an amendment to your Executive Employment Agreement (the “Employment Agreement”) with Mattel.

Section 3 (k) of your Employment Agreement is hereby amended and restated in its entirety as follows:

“(k) Fringe Benefits. During the Term, the Executive shall be entitled to fringe benefits at a level at or above those available to other senior executives of Mattel, including a leased automobile, car and driver (at his disposal whenever required by him), personal and home security, and related expenses, as well as first class travel expenses while traveling on Company business, the use of a company-issued gasoline credit card, club memberships and related expenses, and financial counseling and tax preparation services in accordance with the policies of Mattel as in effect from time to time with respect to senior executives employed by Mattel. In addition, Executive shall be entitled to the use of company-owned aircraft for personal use up to sixty (60) hours per year, to the extent available, while he serves as chief executive officer of the Company. In the event the Company ceases to own an interest in aircraft during the Term, the Company shall provide instead for charter flights arranged by the Company at its expense on equivalent aircraft. The Company shall make cash payments to the Executive in the amounts necessary to make him whole for all applicable federal, state and local income, social security, employment and similar taxes (collectively, “Taxes”) imposed on him as a result of his use of the company aircraft (or charter flights, as applicable) pursuant to the foregoing, as well as for all Taxes on such cash payments. For purposes of computing these cash payments, it shall be assumed that the Taxes are imposed at the highest marginal rate applicable to the Executive.”

I would appreciate it if you would sign, date and return a copy of this letter agreement to me. As such, it will constitute a written amendment to your Employment Agreement.

Sincerely yours,
MATTEL, INC.
By:	/s/ Alan Kaye
	Alan Kaye, Senior Vice President
	Human Resources

Agreed to and accepted by:
/s/ Robert A. Eckert	Dated as of March 18, 2005
Robert A. Eckert