UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant  x

Filed by a Party other than the Registrant

Check the appropriate box:

Mattel, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

NOTICE OF ANNUAL MEETING

and

PROXY STATEMENT

Annual Meeting of Stockholders

The Sheraton Gateway Hotel Los Angeles Airport

6101 West Century Boulevard

Los Angeles, California 90045

May 18, 2007

29, 2008

MATTEL, INC.

333 Continental Boulevard

El Segundo, California 90245-5012

NOTICE OF THE 20072008 ANNUAL MEETING OF STOCKHOLDERS

The 20072008 Annual Meeting of Stockholders of Mattel, Inc., will be held on Friday,Thursday, May 18, 2007,29, 2008 at 9:00 a.m. (Los Angeles time), at the Sheraton Gateway Hotel Los Angeles Airport, 6101 West Century Boulevard, Los Angeles, CA 90045. We will consider and act on the following items of business at the Annual Meeting:

The Proxy Statement accompanying this Notice describes each of the items of business in more detail. The Board of Directors recommends a vote FOR each of the eleventwelve nominees for director named in the Proxy Statement, a vote FOR the proposalsproposal described above in itemsitem 2 through 4 and a vote AGAINST the proposalsproposal described above in items 5 through 8.item 3.

If you were a holder of record of Mattel common stock at the close of business on March 30, 2007,April 4, 2008, you are entitled to notice of and to vote at the Annual Meeting. A list of record holders of Mattel common stock entitled to vote at the Annual Meeting will be available for examination at Mattel’s offices at 333 Continental Boulevard, El Segundo, CA 90245-5012, for any purpose germane to the Annual Meeting, by any stockholder during normal business hours for ten days prior to the Annual Meeting.

The Sheraton Gateway Hotel Los Angeles Airport is accessible to those who require special assistance. If you require special assistance, please call the hotel at 310-642-1111.

By Order of the Board of Directors

Robert Normile Secretary

El Segundo, California

April 12, 2007

All stockholders are cordially invited to attend the Annual Meeting in person. If you plan to attend the Annual Meeting in person, please check the appropriate box on the proxy card and bring with you the items that are required pursuant to Mattel’s Admission Policy for the 20072008 Annual Meeting. A description of the Admission Policy can be found in the Proxy Statement under the heading “General Information—Admission Policy for Annual Meeting.” The Admission Policy is also printed on the Admission Policy card, which is enclosed with the Proxy Statement.

Whether or not you expect to attend the Annual Meeting, please vote as soon as possible in order that your stock will be represented at the Annual Meeting. You may vote in person or by proxy at the Annual Meeting or you may submit a proxy by mail, by telephone or via the Internet. You may obtain directions to the Sheraton Gateway Hotel Los Angeles Airport by calling the hotel at (310) 642-1111 or going to its website athttp://www.sheratonlosangeles.com/ maps/index.html. If you wish to vote by mail, please complete, date, sign and return the enclosed proxy card in the enclosed postage-prepaid envelope as soon as possible. If you wish to vote by telephone or via the Internet, please follow the instructions on the proxy card or voting information form with regard to telephone or Internet voting.

MATTEL, INC.

333 Continental Boulevard

El Segundo, California 90245-5012

PROXY STATEMENT

20072008 ANNUAL MEETING OF STOCKHOLDERS

To Be Held On May 18, 200729, 2008

TABLE OF CONTENTS

GENERAL INFORMATION

Mattel’s 20072008 Annual Meeting of Stockholders will be held on May 18, 2007,29, 2008, at 9:00 a.m. (Los Angeles time), at the Sheraton Gateway Hotel Los Angeles Airport, 6101 West Century Boulevard, Los Angeles, California 90045.

The Board of Directors of Mattel is soliciting proxies to be used at the Annual Meeting. This Proxy Statement and the form of proxy will be mailed or delivered to stockholders beginning on or about April 12, 2007.24, 2008.

Who Is Entitled to Vote

The Board of Directors has fixed March 30, 2007April 4, 2008 as the record date for the Annual Meeting. If you were a stockholder at the close of business on the record date, then you are entitled to receive notice of and to vote at the Annual Meeting.

As of the close of business on the record date, there were 394,492,623362,517,930 outstanding shares of Mattel common stock held by approximately 40,06238,260 holders of record. At the Annual Meeting, each share of common stock will be entitled to one vote.

How to Vote

YouIf you are the record holder of your stock, you may vote by submitting your proxy through the mail, or by telephone or Internet.

If you choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the enclosed postage-prepaid envelope. If the envelope is missing, please mail your completed proxy card to the following address: Proxy Services, c/o Computershare Trust Company, N.A., P.O. Box 43102,43078, Providence, RI 02940.

As an alternative to using your paper proxy card to vote, you may vote by telephone or over the Internet.

To vote by telephone, call the toll-free number on your proxy card.

To vote by Internet, go to the Web address stated on theyour proxy card.

If a bank, broker or other nominee was the record holder of your stock on the record date, you will be able to vote by following the instructions on the voting information form that you receive from your bank, broker or other nominee.

Quorum; How Votes Are Counted

In order for there to be a vote on any matter at the Annual Meeting, there must be a quorum. In order to have a quorum, the holders of a majority of the voting power of the shares of the stock entitled to vote at the Annual Meeting must be present in person or by properly executed proxy. In determining

whether we have a quorum at the Annual Meeting, we will count shares that are voted as well as abstentions and broker “non-votes.” However, on each proposal, other than Proposal 3, shares that abstain from voting on a proposal and broker non-votes will not be counted as either “for” or “against” votes on that proposal, and thus will not have any effect as to whether the proposal is approved. By contrast, abstentions and broker non-votes will count as votes “against” Proposal 3.

How the Election of Directors Works; CumulativeMajority Voting Standard

InAt our 2007 Annual Meeting, our stockholders approved an amendment to our Certificate of Incorporation to eliminate cumulative voting in the election of directors, stockholders are entitleddirectors. In connection with this amendment, the Board of Directors amended our Bylaws to elect eleven directors, withadopt a majority voting standard for the eleven candidates who receive the highest numberelection of “for” votes being elected. This is sometimes referred to as “plurality” voting.

In electing directors, you have the right to cumulate your votes and give one candidatedirectors. Under this standard, in any “uncontested election” (i.e., an election where the number of votes equal tonominees does not exceed the number of directors to be elected), each director will be elected (eleven) multiplied by the vote of a “majority of the votes cast,” meaning that the number of votes you are entitledcast “for” a director’s election must exceed 50% of the total votes cast with respect to that director’s election. In any “contested election” (i.e., an election where the number of nominees exceeds the number of directors to be elected), directors will be elected by the vote of a “plurality” of the votes cast, meaning that the nominees receiving the greatest number of votes “for” their election, up to the maximum number of directors to be elected at the meeting, will be elected. In the case of both contested and uncontested elections, “abstentions” and “withheld” votes will have no effect on a director’s election.

Under our majority voting bylaw, any nominee who fails to receive a majority of the votes cast for his or to distribute your votes among as many candidates as you see fit. You may cumulate your votes by giving instructionsher election in an uncontested election will not be elected. Under Delaware law, however, each director holds office until his or her successor is duly elected and qualified. For this reason, any nominee currently serving on the enclosed formBoard who fails to receive a majority of proxythe votes cast for his or her election in an uncontested election will not automatically cease to be a director, but will instead continue to serve on the Board as a “holdover director” until his or her successor is elected and qualified or until his or her earlier resignation or removal. To address this situation, our Bylaws provide that if any incumbent nominee is not elected at an annual meeting and no successor has been elected at the meeting, that director must tender his or her resignation to the Board promptly following the certification of the election results. The Governance and Social Responsibility Committee will make a recommendation to the Board as to howwhether or not to accept the votestendered resignation. Taking into account the Committee’s recommendation, the Board will decide whether to accept the resignation and will publicly announce its decision within 90 days from the date the election results are to be cumulatedcertified. Any director who tenders his or by voting in person at the Annual Meeting. When you sign your proxy card, you are giving the persons namedher resignation will not participate in the proxy card discretion to vote in favorrecommendation of any nominees forthe Committee or the decision of the Board of Directors andwith respect to cumulate votes, unless you give any specific voting instructions to the contrary. You may specificallywithhold authority to vote for onehis or more director nominees, in which case the proxy may be voted only for the other nominees. You may also give instructions on how votes are to be cumulated, which must then be followed. If you hold your shares through a broker and you wish to cumulate your votes or give other specific voting instructions, please follow the directions that your broker sends you or consult with your broker as to how to do so.her resignation.

As discussedThe Committee, in Proposal 3,making its recommendation, and the Board, of Directors is proposing to eliminate cumulative voting,in making its decision, may consider any factors or information that they consider appropriate and if cumulative voting is eliminated,relevant. If the Board intendsdeclines to amendaccept a director’s resignation, that director will continue to serve on the Bylaws to adopt a majority vote standard. The goalBoard until the next annual meeting of these changesstockholders and until his or her successor is that voting for directors will reflect the will of the majority of stockholders. If Proposal 3 is approved, this change will be effective for future annual meetings, but not for the 2007 Annual Meeting.elected and qualified, or until his or her earlier resignation or removal.

How Your Proxy Will Be Voted

If you sign and return your proxy card without instructions as to how it is to be voted, the proxy holders identified on the proxy card will vote your shares as follows:

If you indicate voting instructions on your proxy card, the proxy holders will follow your instructions in casting votes.

The Board of Directors does not know of any matters that will come before the Annual Meeting other than those described in the notice of the Annual Meeting. If any other matters are properly presented for consideration at the Annual Meeting, then the proxy holders will have discretion to vote on such matters as they see fit. This includes, among other things, considering any motion to adjourn the Annual Meeting to another time and/or place, including for the purposes of soliciting additional proxies for or against a given proposal.

How to Change Your Vote or Revoke Your Proxy

You may revoke your proxy at any time before it is voted. You may revoke your proxy by:

If you are mailing a written notice of revocation or a later proxy, send it to: Secretary, Mail Stop M1-1516, Mattel, Inc., 333 Continental Boulevard, El Segundo, CA 90245-5012. You may also hand deliver a written notice of revocation or a later proxy to Mattel at the Annual Meeting, at or before the taking of the vote.

If you hold your shares through a broker and have instructed the broker as to how to vote your shares, you must follow directions received from the broker in order to change your vote or to vote at the Annual Meeting.

Broker Voting and Broker Non-Votes

Mattel’s common stock is listed on the New York Stock Exchange (the “NYSE”) under the symbol “MAT.” The NYSE has rules that govern brokers who have record ownership of listed company stock held in brokerage accounts for their clients who beneficially own the shares. Under these rules, brokers who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on certain matters (“discretionary matters”) but do not have discretion to vote uninstructed shares as to certain other matters (“non-discretionary matters”). Mattel expects that the NYSE will evaluate the proposals to be voted on at the Annual Meeting to determine whether each proposal is a discretionary or non-discretionary matter. A broker may return a proxy card on behalf of a beneficial owner from whom the broker has not received instructions that casts a vote with regard to discretionary matters but expressly states that the broker is not voting as to non-discretionary matters. The broker’s inability to vote with respect to the non-discretionary matters is referred to as a “broker non-vote.” Broker non-votes will be counted for the purpose of determining the presence of a quorum, but will not be counted in determining the number of votes cast as to non-discretionary matters. Thus, on each proposal regarding a non-discretionary matter, (other than Proposal 3), broker non-votes will not have any effect as to whether a proposal regarding a non-discretionary matter is approved. Because approval of Proposal 3 requires the majority in voting power of the outstanding shares of common stock, broker non-votes will count as votes “against” Proposal 3.

Admission Policy for Annual Meeting

Mattel restricts admission to the Annual Meeting to stockholders of Mattel, family members accompanying stockholders of Mattel, persons holding executed proxies from stockholders who held Mattel stock as of the close of business on the record date, and invited guests of Mattel.

If you are a stockholder of Mattel, you must bring certain documents with you in order to be admitted to the Annual Meeting and in order to bring family members with you. The purpose of this requirement is to help us verify that you are actually a stockholder of Mattel. Please read the following rules carefully, because they specify the documents that you must bring with you to the Annual Meeting in order to be admitted. The items that you must bring with you differ depending upon whether or not you were a record holder of Mattel stock as of the close of business on March 30, 2007.April 4, 2008. A “record holder” of stock is someone whose shares of stock are registered in his or her name in the records of Mattel’s transfer agent. Many stockholders are not record holders because their shares of stock are registered in the name of their broker, bank or other nominee, and the broker, bank or other nominee is the record holder instead; this is sometimes referred to as holding shares in “street name.” If you are unsure as to whether you were a record holder of Mattel common stock as of the close of business on March 30, 2007,April 4, 2008, please call Mattel’s transfer agent, Computershare Trust Company, N.A., at 1-888-909-9922.

If you were a record holder of Mattel common stock as of the close of business on March 30, 2007April 4, 2008, then you must bring:

At the Annual Meeting, we will check your name for verification purposes against our list of record holders as of the close of business on March 30, 2007.April 4, 2008.

If a broker, bank or other nominee was the record holder of your shares of Mattel common stock as of the close of business on March 30, 2007,April 4, 2008, then you must bring:

Examples of proof of ownership include the following: (1) an original or a copy of the voting information form from your bank or broker with your name on it, (2) a letter from your bank or broker stating that you owned Mattel common stock as of the close of business on March 30, 2007,April 4, 2008, or (3) a brokerage account statement indicating that you owned Mattel common stock as of the close of business on March 30, 2007.April 4, 2008.

If you acquired your shares of Mattel common stock at any time after the close of the business on March 30, 2007April 4, 2008, you do not have the right to vote at the Annual Meeting, but you may attend it if you bring:

Examples of proof of ownership include the following:

If you are a proxy holder for a stockholder of Mattel who owned shares of Mattel common stock as of the close of business on March 30, 2007April 4, 2008, then you must bring:

You may not use cameras, recording equipment or other electronic devices during the Annual Meeting. Shares may be voted at the Annual Meeting only by (a) the record holder as of the close of business on March 30, 2007April 4, 2008 or (b) a person holding a valid proxy executed by such record holder.

Single Set of Disclosure Materials; “Householding”

To reduce the expense of delivering duplicate disclosure materials to our stockholders, we are taking advantage of “householding” rules that permit us to deliver a single copy of our annual report, proxy statement and any information statement to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. Each record stockholder will continue to receive a separate notice of meeting and proxy card or voting instruction card. Also, householding will not in any way affect dividend check mailings.

How to Obtain a Separate Set of Materials

If you share an address with another Mattel stockholder and your household received only one set of Mattel’s annual report and proxy statement, you may call Mattel’s transfer agent, Computershare Trust Company, N.A. at 1-888-909-9922, to request a separate copy of these materials at no cost to you. You may also write to Computershare Trust Company, N.A. at P.O. Box 43010, Providence, RI 02940.

How to Change Your “Householding” Status for the Future

If you would like to receive your own additional set of Mattel’s disclosure documents in the future, please follow the instructions given below. Similarly, if you share an address with another Mattel stockholder and together both of you would like to receive only a single set of Mattel’s

disclosure documents, please follow these instructions:

Important Information Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on May 29, 2008

This Notice of Annual Meeting and Proxy Statement and our Annual Report to Stockholders for the year ended December 31, 2007 are available at our investor relations website athttp://www.mattel.com (click on the “Investors and Media” tab followed by the “Financial Info/Annual Report/Proxy” tab).

PRINCIPAL STOCKHOLDERS

As of April 10, 2007,15, 2008, the only persons known by Mattel to own beneficially, or to be deemed to own beneficially, 5% or more of Mattel’s common stock were:

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth information regarding the beneficial ownership of Mattel common stock as of March 31, 2007,2008, by (1) each director and nominee for director, (2) the Chief Executive Officer, the Chief Financial Officer and each of the three other most highly compensated executive officers of Mattel as of December 31, 20062007 and (3) all current directors and executive officers of Mattel as a group.

stock that the following directors will obtain from vesting of restricted stock units within 60 days following March 31, 2007: Mr. Beard, 3,118;2008: Mr. Dolan, 1,059;2,059; Mr. Tully Friedman, 1,059;2,059; Mr. Ng, 1,000; Dr. Rich, 1,059;2,059; Mr. Sargent, 1,059;2,059; Mr. Sinclair, 1,059;2,059; Mr. Sullivan, 1,059; Mr. Vogelstein, 3,118;2,059; and Ms. White, 1,059.2,059.

(4)

Includes shares of common stock that the following executive officers hold through the Mattel stock fund of the Mattel, Inc. Personal Investment Plan (the “PIP”), a 401(k) plan: Mr. Farr, 10,418; and10,910; Mr. Neil Friedman, 3,114. Data concerning share ownership in the Mattel stock fund of the PIP was furnished by Mattel’s third party 401(k) plan administrator as of March 31, 2007.3,261, and Mr. Stockton, 3,902.

PROPOSALS

We have included eightthree proposals in this Proxy Statement. The first fourtwo proposals are proposals supported by the Board of Directors. The Board of Directors considered all of the proposals on January 26, 200730, 2008 and March 27, 2007,2008, and the Board of Directors’ recommendation on each proposal appears after the proposal.

PROPOSAL 1

ELECTION OF DIRECTORS

The Board of Directors currently consists of twelve members.

The Board of Directors has nominated eleventwelve nominees for election at the Annual Meeting, to serve until the next annual meeting of stockholders and until their respective successors have been duly elected and qualified.qualified, or until their earlier resignation or removal. All of the nominees are currently directors except for Mr. Scarborough. The Board of Directors Amended and Restated Guidelines on Corporate Governance provide that, after attaining the age of 72, a director will not stand for re-election to the Board at subsequent meetings of the stockholders. Mr. Beard, who has served as a director since 2000, and Mr. Vogelstein, who has served as a director since 1983, are each over the age of 72, and accordingly they will not stand for re-election to the Board of Directors and will not be candidates for election for the coming term. As a result, the Board of Directors has reduced the size of the Board to eleven members effective as of the election of directors at the Annual Meeting.directors.

If you sign and return your proxy card, unless you give instructions to the contrary, the proxy holders will cast your votes “for” the election of the nominees listed below. Also, unless you give instructions to the contrary, the proxy holders have the right to cumulate votes for directors as they see fit. If, before the Annual Meeting, any nominee becomes unavailable to serve, the Board of Directors may identify a substitute for such nominee and treat votes “for” the unavailable nominee as votes “for” the substitute. We presently believe that each of the nominees named below will be available to serve.

As discussed above in “General Information—How Voting for Directors Works; CumulativeMajority Voting,” the eleventwelve candidates who receive the highest numbervote of “for”a majority of the votes cast will be elected.elected, and each incumbent nominee who does not receive a majority of the votes cast will continue to serve on the Board of Directors as a “holdover” director until that director’s removal or resignation or until his or her successor is elected and qualified.

Mr. Eckert’s employment agreement with Mattel provides that Mr. Eckert shall have the position and title of Chairman of the Board, and Mattel’s Bylaws provide that the Chairman of the Board shall be a director of Mattel. Otherwise, no nominee has any arrangement or understanding with Mattel or, to Mattel’s knowledge, any other person or persons, pursuant to which any nominee was or is to be selected as a director or nominee. None of the nominees has any family relationship to any other nominee or to any executive officer of Mattel.

Information Concerning Nominees to the Board of Directors

The nominees for election as directors are listed below. All of the nominees are currently directors except for Mr. Scarborough.directors. Each nominee has furnished the information as to his or her beneficial ownership of common stock as of March 31, 20072008 and the nominee’s principal occupation(s). Each nominee has consented to being named in this Proxy Statement as a nominee for election as director and has agreed to serve as a director if elected.

Except as described below, each of the directors has served in the principal occupation or position indicated in the above table for at least the past five years.

Mr. Dolan has served as Chairman of America’s Choice, Inc. since October 2004. He served as Executive Vice President and Chief Financial Officer of Viacom Inc. from May 2004 to December 2006. Prior to that, he served as Senior Advisor to Kohlberg Kravis Roberts & Co. from October 2004 to May 2005. Prior to that, he served in the following positions with Young & Rubicam, Inc.: Chairman and Chief Executive Officer (2001 to 2003), Vice Chairman and Chief Operating Officer (2000 to 2001) and Vice Chairman and Chief Financial Officer (1996 to 2000).

Mr. Eckert has been Chairman of the Board of Directors and Chief Executive Officer since May 2000. He was formerly President and Chief Executive Officer of Kraft Foods, Inc., the largest packaged food company in North America, from October 1997 until May 2000. From 1995 to 1997, Mr. Eckert was Group Vice President of Kraft Foods, Inc. From 1993 to 1995, Mr. Eckert was President of the Oscar Mayer foods division of Kraft Foods, Inc. Mr. Eckert worked for Kraft Foods, Inc. for 23 years prior to joining Mattel.

Dr. Fergusson served as President of Vassar College from 1986 to June 2006. Prior to that, she served as Provost and Vice President for Academic Affairs at Bucknell University from 1982 to 1986. Prior to that, she held the following positions with the University of Massachusetts at Boston: Assistant Chancellor (1980 to 1982) and Associate Professor of Art (1975 to 1980)1982).

Mr. Friedman has served as Chairman and Chief Executive Officer of Friedman Fleischer & Lowe, LLC since April 1997. Prior to that, he was a founding partner of Hellman & Friedman, a private investment firm, for more than five years.

Mr. Ng has served as Chairman, Chief Executive Officer and President of East West Bancorp, Inc. and East West Bank since 1992. Prior to that, Mr. Ng was President of Seyen Investment, Inc. from 1990 to 1992, and prior to that Mr. Ng served for over a decade as a Certified Public Accountant with Deloitte & Touche LLP.

Mr. Prabhu has served as Executive Vice President and Chief Financial Officer of Starwood Hotels and Resorts Worldwide, Inc. since January 2004. Prior to joining Starwood, Mr. Prabhu served as Executive Vice President and Chief Financial Officer of Safeway, Inc. from September 2000 through December 2003.

Dr. Rich served as President, Chief Executive Officer and Director of the Los Angeles County Museum of Art (“LACMA”) from 1999 to 2005, and as President and Chief Executive Officer of LACMA from 1995 to 1999. Prior to that, she served as Executive Vice-Chancellor and Chief Operating Officer of the University of California, Los Angeles, from 1991 to 1995.

Mr. Sargent has served as Chairman of Staples, Inc. since March 2005 and as Chief Executive Officer of Staples, Inc. since 2002. He additionally served as President of Staples, Inc. from 1998 to 2005.

Mr. Scarborough has served as President and Chief Executive Officer of Avery Dennison Corporation since May 2005. From 2000 to May 2005, he was President and Chief Operating Officer of Avery Dennison Corporation.

Mr. Sinclair has served as Chairman of Scandent Holdings, a Mauritius-based information technology servicesinvestment company, since May 2002 and has served as Executive Chairman of Cambridge Solutions Corporation Ltd. since November 2005. He also served as a Managing Director of Manticore Partners, LLC, a venture capital advisory firm, from 2001 to 2004. Prior to that, he served as an Operating Partner of Pegasus Capital Advisors, LP, a private equity firm, from 2000 to 2002. Prior to that, he served as Chairman and Chief Executive Officer of Caribiner International, Inc. from 1999 to 2000. Prior to that, he served as President and Chief Executive Officer of Quality Food, Inc., Chairman and Chief Executive Officer of Pepsi-Cola Company and President and Chief Executive Officer of PepsiCo Foods & Beverages International and Pepsi-Cola International for more than five years.

Mr. Sullivan served as Chairman and Chief Executive Officer of The Clorox Company from 1992 to 2003 and retired in 2003 after 32 years with Clorox.

Ms. White founded the Horizon Institute of Technology in 2002. She also has served as President of Rural Sourcing, Inc., an information technology services provider, since 2003. Ms. White served as Executive Vice President, e-business and Chief Information Officer of Cardinal Health, Inc. from 1999 until February 2003. From 1996 to 1999, Ms. White was Senior Vice President and Chief Information Officer for Allegiance Corporation, which merged with Cardinal Health, Inc. in 1999.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTEFOR EACH OF THE NOMINEES FOR ELECTION AS DIRECTORS NAMED HEREIN.

THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Board Meetings

During 2006,2007, the Board of Directors held seveneight meetings. No director attended less than 75% of the aggregate of all Board of Directors meetings and all meetings held by any committee of the Board of Directors on which he or she served.

Mr. Eckert serves as Chairman of the Board and Chief Executive Officer of Mattel. For a description of Mr. Eckert’s compensation, see “Compensation Disclosure,Discussion and Analysis,” beginning at page 25.27. The remuneration of the other directors, who are all non-employee directors, is explained in “Director Compensation,” beginning at page 81.80.

Non-Employee Director Stock Ownership

The Board of Directors has adopted policies regarding non-employee director stock ownership and retention of shares purchased upon exercise of stock options.options or received upon vesting of restricted stock units. These policies state that, within five years after joining the Board, non-employee members of the Board should attain a target minimum level of stock ownership of three times the annual cash retainer (the annual cash retainer is currently $65,000). For this purpose, stock holdings are valued at the greater of actual cost or market value. Directors who have deferred any of their cash compensation into investments in Mattel stock equivalent accounts in any Mattel deferred compensation plan(s) receive credit for such amounts.

In addition, during their service on the Board, non-employee members of the Board are generally required:

Board Committees

Audit Committee

Mattel’s Audit Committee is chaired by Mr. BeardDolan and includes Mr. Dolan,Ng, Mr. Ng,Prabhu, Mr. Sinclair and Ms. White as members. In May 2007, Mr. Eugene P. Beard retired from the Board of Directors and left the Audit Committee. Mr. Prabhu joined the Audit Committee in September 2007. All of the members of the Committee are independent directors. During 2006,2007, the Audit Committee held 14twelve meetings.

The purpose of the Audit Committee is to provide assistance to the Board of Directors in fulfilling the Board’s oversight responsibilities regarding:

The Audit Committee has the sole authority to appoint or replace the independent registered public accounting firm. The Committee is directly responsible for the compensation and oversight of the work of the independent registered public accounting firm for the purpose of preparing or issuing an audit report or related work. The independent registered public accounting firm reports directly to the Committee.

The Audit Committee meets periodically, in separate executive sessions, with management, the senior internal auditing officer and the independent registered public accounting firm. The Committee may request any officer or employee of Mattel or Mattel’s outside counsel or independent registered public accounting firm to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. The Committee has the authority to retain independent legal, accounting or other advisors, to the extent it deems necessary or appropriate.

Additional duties and responsibilities of the Audit Committee are outlined in the Committee’s charter, and include the following:

Governance and Social Responsibility Committee

Mattel has a Governance and Social Responsibility Committee chaired by Mr. SullivanSinclair that includes Dr. Fergusson, Dr. Rich, Mr. Sargent, and Mr. SinclairScarborough as members. In May 2007, Mr. Sullivan and Ms. White as members.left the Governance and Social Responsibility Committee and Ms. Fergusson and Mr. Scarborough joined the Governance and Social Responsibility Committee. All of the members of the Committee are independent directors. During 2006,2007, the Governance and Social Responsibility Committee held five meetings.

The primary purposes of the Governance and Social Responsibility Committee are:

The Committee also works closely with the Chief Executive Officer and other members of Mattel’s management to assure that the company is governed effectively and smoothly, and has additional authority and responsibilities as specified in its charter.

Compensation Committee

Mattel has a Compensation Committee chaired by Mr. VogelsteinSullivan that includes Mr. Beard,Tully Friedman, Mr. Tully Friedman,Ng, Dr. Rich and Mr. SullivanMs. White as members. In May 2007, Mr. Eugene P. Beard and Mr. John L. Vogelstein retired from the Board of Directors and left the Compensation Committee, and Mr. Ng and Ms. White joined the Compensation Committee. All of the members of the Committee are independent directors, aredirectors. We intend that the members also qualify as “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code and are “non-employee directors” within the meaning of the SEC’s ruleRule 16b-3. During 2006,2007, the Compensation Committee held fiveeight meetings.

The purpose of the Compensation Committee is to develop, evaluate, and in certain instances approve or determine the compensation plans, polices, and programs of Mattel. The Committee has the authority to undertake and may exercise all of the powers of the Board of Directors with respect to the specific responsibilities listed in the Committee’s charter, including:

In performing its duties, the Compensation Committee reports and, as appropriate, makes recommendations to the Board regarding executive compensation policies and programs. The Compensation Committee also informs the non-management directors of the Board of its decisions regarding compensation for the CEO and other senior executives and, at times, refers its decisions to the Board for ratification.

The Compensation Committee has access to, and in its discretion may meet with, any officer or other employee of Mattel or its subsidiaries. The Committee meets at least once each calendar year without the Chief Executive Officer present. The Committee may utilizeuse the services of Mattel’s regular corporate legal counsel with respect to legal matters or, in its discretion, retain other legal counsel if it determines that such counsel is necessary or appropriate under the circumstances.

The Compensation Committee may, in its discretion, utilize the services ofuse a compensation consultant or other professional or expert to provide data and advice to the Compensation Committee regarding the compensation of executives of Mattel and to assist the Compensation Committee in performing its other responsibilities. The retention and, where appropriate, the termination of any such compensation consultant are at the Compensation Committee’s sole discretion, of the Committeeand such decisions are made without

the participation of any officer or other member of management of Mattel.Mattel management. The Compensation Committee, in its sole discretion, approves the fees to be paid to the compensation consultant and any other terms ofrelated to the engagement of the compensation consultant.consultant’s engagement.

The Hay Group served as the Compensation Committee’s consultant through August 2007 and continues to provide certain compensation-related consulting services to Mattel. At the suggestion of Messrs. Sullivan and Friedman, in August 2007, Messrs. Sullivan and Friedman each separately met with Mr. George Paulin, Chairman and Chief Executive Officer of Frederic W. Cook & Co., Inc. to discuss the possible retention of Frederic W. Cook & Co., Inc. as the Compensation Committee’s outside consultant. The Compensation Committee has retained The Hay Group asFrederic W. Cook & Co., Inc. in August 2007. Frederic W. Cook & Co., Inc. does not provide any additional services to Mattel or its independent compensation consultant since 2001. management.

In 2006,2007, the independent compensation consultant assisted the Compensation Committee on the following matters:

Other Board Committees

Mattel has an Executive Committee (formerly known as the “Executive/Finance Committee”) chaired by Mr. VogelsteinTully Friedman that includes Messrs. Dolan, Sinclair and Sullivan as members. In May 2007, Mr. Beard and Tully Friedman as members.Mr. Vogelstein retired from the Board of Directors and left the Executive Committee, and Mr. Dolan and Mr. Sullivan joined the Executive Committee. During 2006,2007, the Executive/FinanceExecutive Committee held no meetings. The Executive/FinanceExecutive Committee may exercise all the powers of the Board of Directors, subject to limitations of applicable law, between meetings of the Board of Directors.

Mattel has a Finance Committee (formerly known as the “Capital Allocation Committee”) chaired by Mr. VogelsteinTully Friedman that includes Mr. Beard, Dr. Fergusson, Mr. Tully FriedmanSargent and Mr. SargentSullivan as members. In May 2007, Mr. Vogelstein retired from the Board of Directors and left the Finance Committee, and Mr. Sullivan joined the Finance Committee. During 2006,2007, the Finance Committee held sixfour meetings. The Committee’s primary functions are to advise and make recommendations to the Board of Directors with regard to Mattel’s use of available capital, including but not limited to dividends to stockholders, mergers and acquisitions and stock repurchase programs.

Mattel has an Equity Grant Allocation Committee with Mr. Eckert as the sole member. The Equity Grant Allocation Committee’s primary function is to exercise the limited authority delegated to

the Committee by the Board of Directors and the Compensation Committee with regard to making grants pursuant to the 2005 Equity Compensation Plan. For more information on this Committee, see “Compensation Discussion and Analysis—Equity Compensation Grant Procedures,” beginning on page 37.

Mattel Children’s Foundation

Until May 2004, the members of Mattel’s Board of Directors also served as the members of the Mattel Children’s Foundation, a charitable organization incorporated as a non-profit public benefit corporation (the “Foundation”), and Mr. Tully Friedman, Ms. White and former Mattel director Ronald M. Loeb served as the Foundation’s Board of Directors. In May 2004, the governance structure of the Foundation was updated so that Mattel itself became the sole member of the Foundation, and nine employees of Mattel, none of whom are Mattel directors, were appointed as the Foundation’s Board of Directors. Thus, since May 2004, none of Mattel’s non-employee directors has served as either a member or a director of the Foundation.38.

Director Independence

The NYSE requires each NYSE-listed company to have a board of directors with at least a majority of independent directors. Generally, under the NYSE rules a director qualifies as independent

if the listed company’s board of directors affirmatively determines that he or she has no material relationship with the company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the company. The NYSE rules specify five categories of relationships between a director and a listed company that would make a director ineligible to be independent. Mattel’s Board of Directors has adopted Corporate Governance Guidelines that include provisions regarding director independence,independence. (A copy of the relevant provisions of the Corporate Governance Guidelines was included as set forth inAppendix Aan appendix to thisMattel’s 2007 Notice of Annual Meeting and Proxy Statement.Statement, dated April 12, 2007.) These provisions incorporate the NYSE’s five categories of relationships between a director and a listed company that would make a director ineligible to be independent.

In accordance with NYSE rules and Mattel’s Corporate Governance Guidelines, the Board of Directors has affirmatively determined that each of the following directors and Mr. Scarborough as a nominee for election as a director, has no material relationship with Mattel (either directly or as a partner, shareholder or officer of an organization that has a relationship with Mattel) and is independent within the meaning of both Mattel’s and the NYSE’s director independence standards, as currently in effect:

Eugene P. Beard

Michael J. Dolan

Dr. Frances D. Fergusson

Tully M. Friedman

Dominic Ng

Vasant M. Prabhu

Dr. Andrea L. Rich

Ronald L. Sargent

Dean A. Scarborough

Christopher A. Sinclair

G. Craig Sullivan

John L. Vogelstein

Kathy Brittain White

The persons listed above include (a) all of the current directors of Mattel, except the Chairman and Chief Executive Officer, and (b) all directors who are standing for election at the 20072008 Annual Meeting of Stockholders, except the Chairman and Chief Executive Officer, and (c) Mr. Scarborough, who is not currently a director but is a nominee for election at the 2007 Annual Meeting.Officer.

Furthermore, the Board of Directors has determined that each of the members of the Audit Committee, the Compensation Committee and the Governance and Social Responsibility Committee has no material relationship with Mattel (either directly or as a partner, shareholder or officer of an organization that has a relationship with Mattel) and is independent within the meaning of the director independence standards in the Corporate Governance Guidelines and the NYSE director independence standards (and in the case of the Audit Committee, SEC rules) applicable to members of such committees.

In making these determinations, the Board of Directors considered, among other things, the relationships described in the following threetwo paragraphs. The Board of Directors has determined that none of these relationships is material and that none of these relationships impairs the independence of any non-employee director.

The Board considered that, in the ordinary course of business, Mattel and its subsidiaries enter into transactions with Viacom Inc. or its subsidiaries, and Mr. Dolan served as an executive officer of Viacom Inc. through the end of 2006. The amounts paid to or received from Viacom Inc. and its subsidiaries in each of the last three fiscal years2004, 2005 and 2006 were below the threshold of 2% of consolidated gross

revenues as set forth in Mattel’s criteria for director independence. The Board also determined that these transactions were not otherwise material to Viacom Inc. or to Mattel and that Mr. Dolan did not have a material interest in the transactions. The Board therefore determined that these relationships do not impair Mr. Dolan’s independence as a director of Mattel or as a member of the Audit Committee.

The Board also considered that Mr. Eckert in his personal capacity invests in a private equity fund sponsored by Friedman Fleischer & Lowe, LLC (“FFL”), an investment firm in which Mr. Tully Friedman is a principal. The Board concluded that this investment,these investments, which doesdo not involve the payment of any material compensation to any director or to FFL and isare not material in amount to FFL, doesdo not adversely affect the independence of Mr. Friedman as a director of Mattel or a member of the Governance and Social ResponsibilityCompensation Committee. In addition, the Board considered that one or more directors that are not also officers of Mattel may from time to time invest in funds sponsored by FFL, but that no such investment would impact the independence of Mr. Friedman or any such investing director, because of the absence of any relationship between such investment and any member of management of Mattel.

The Board furthermore considered that, as described above under the heading “Mattel Children’s Foundation,” until May 2004, the members of Mattel’s Board of Directors also served as the members of the Foundation, which is a charitable organization incorporated as a non-profit public benefit corporation, and Mr. Tully Friedman and Ms. White served on the Foundation’s Board of Directors. In May 2004, the governance structure of the Foundation was updated so that Mattel itself became the sole member of the Foundation, and nine employees of Mattel were appointed as the Foundation’s Board of Directors. Since May 2004, none of Mattel’s non-employee directors has served as either a member or a director of the Foundation. Mattel provides all of the funding for the Foundation and contributed approximately $4.5 million, $5.1 million and $5.9 million to the Foundation in 2006, 2005 and 2004, respectively. The Board of Directors concluded that, since the Foundation is sponsored by Mattel, the relationships of Mattel’s non-employee directors with the Foundation are not the type of relationships that would impair their independence as directors of Mattel or as members of the Board’s Audit Committee, Compensation Committee or Governance and Social Responsibility Committee.

Presiding Independent Director at Executive Sessions of the Board

The independent directors of Mattel previouslyhave selected John L. VogelsteinMr. Tully M. Friedman as the independent director to preside at executive sessions of the independent members of the Board of Directors, during which no members of management are present. In connection with Mr. Vogelstein’s retirement from the Board, the independent directors have selected Tully M. Friedman as the new presiding independent director, effective upon Mr. Vogelstein’s retirement. The duties of the presiding independent director include all of the following:

The independent directors meet in executive session at least once every quarter.

Communications with the Board of Directors

The independent directors of Mattel have unanimously approved a process by which stockholders of Mattel and other interested persons may send communications to any of the following: (a) the Board of Directors, (b) any committee of the Board, (c) the presiding independent director, or (d) the independent directors. Such communications should be submitted in writing by mailing them to the relevant addressee at the following address:

[Addressee]

Mattel, Inc.—Secretary, Mail Stop M1-1516

333 Continental Blvd.

El Segundo, CA 90245-5012

Any such communications will be relayed to the Board members that appear as addressees, except that the following categories of communications will not be so relayed (but will be available to Board members upon request):

Policy Regarding Attendance of Directors at the Annual Meeting of Stockholders

Each member of Mattel’s Board of Directors is expected, but not required, to attend Mattel’s annual meeting of stockholders. There were eleven directors at the time of the 20062007 Annual Meeting of Stockholders, and tenall of themthe directors then in office attended the meeting.

Director Nominations Process

Mattel’s Corporate Governance Guidelines sets forth the process of selecting candidates for director positions and the role of the Governance and Social Responsibility Committee in identifying director qualifications and potential candidates.

The Guidelines provide that the full Board of Directors is responsible for selecting candidates for Board membership, and Board members are encouraged to suggest candidates for consideration. The Board delegates the screening process involved to the Chair.

Under the Guidelines, the Governance and Social Responsibility Committee is responsible for reviewing with the Board annually the skills and characteristics required of Board members, given the current make-up of the Board and the perceived needs of the Board at that time. This review includes an assessment of the talents, skills, areas of expertise, experience, diversity and independence of the

Board and its members. Any changes that may have occurred in any director’s responsibilities, as well as such other factors as may be determined by the Committee to be appropriate for review, are also considered.

The Governance and Social Responsibility Committee Charter also sets forth the process for identifying candidates, pursuant to which the Committee actively seeks individuals qualified to become Board members for recommendation to the Board. The Committee, with input from the Board Chair, screens candidates to fill vacancies on the Board; solicits recommendations from Board members as to such candidates; and considers recommendations for Board membership submitted by stockholders as described further below. Candidates whom the Committee expresses interest in pursuing meet

personally with at least two members of the Governance and Social Responsibility Committee before they are selected. The Committee recommends to the Board director nominees for each annual meeting of stockholders.

The Governance and Social Responsibility Committee has also adopted a Director Nominations Policy (a copy of which appearswas included asAppendix B an appendix to thisMattel’s 2007 Notice of Annual Meeting and Proxy Statement.Statement, dated April 12, 2007). The purposes of the Director Nominations Policy are:

The Governance and Social Responsibility Committee intends to review the Director Nominations Policy at least annually, and anticipates that modifications may be necessary from time to time as Mattel’s needs and circumstances evolve, and as applicable legal or listing standards change. The Governance and Social Responsibility Committee may amend the Director Nominations Policy at any time, in which case the most current version will be available in the “Corporate Governance”“Governance” section of Mattel’s corporate Web site.

Selection of nomineeNominee Mr. ScarboroughPrabhu

There is one nominee for election to Mattel’s Board this year who has not previously been elected by the stockholders to serve as a director. This nominee, Mr. Scarborough,Prabhu, was nominatedelected by the Board on March 27,July 9, 2007 and joined the Board effective September 1, 2007. The chair of the Governance and Social Responsibility Committee, retained a leading professional search firm, Korn/Ferry International, to help identify, evaluate and review potential nominees, and such firm identified andMr. Sinclair, recommended Mr. Scarborough.Prabhu to the Board.

Golden Parachute Policy

In 2005, a stockholder submitted a proposal to Mattel regarding “golden parachute vote provision,” which requested that the Board of Directors seek stockholder approval for future “golden parachute” severance packages for senior executives that exceed 299% of the sum of any executive’s base salary plus bonus. The proposal was included as Proposal 4 in Mattel’s 2005 Notice of Annual Meeting and Proxy Statement, dated April 13, 2005.

In 2006, following consideration of the vote received by the stockholder’s proposal at the 2005 Annual Meeting of Stockholders, and after discussion by the Compensation Committee and the Governance and Social Responsibility Committee, Mattel’s Board of Directors adopted a statement of policy on this topic, which appears asAppendix C to this Proxy Statement.

Related Party Transactions Policy

In 2007, Mattel’s Board of Directors adopted a Related Party Transactions Policy regarding the review, approval and ratification of any transaction required to be reported under Item 404(a) of the SEC’s Regulation S-K.topic. A copy of the Related Party TransactionsGolden Parachute Policy is attachedwas included in an appendix to thisMattel’s 2007 Notice of Annual Meeting and Proxy Statement, asExhibit D.dated April 12, 2007.

Corporate Governance Documentation; How to Obtain Copies

Mattel is committed to having solid standards of corporate governance. Current copies of the following materials related to Mattel’s corporate governance standards and practices are available publicly in the “Corporate Governance”“Governance” section of Mattel’s corporate Web site athttp://www.mattel.com:

A copy of any or all of these documents may also be obtained, free of charge, by mailing a request in writing to: Secretary, Mail Stop M1-1516, Mattel, Inc., 333 Continental Boulevard, El Segundo, CA 90245-5012.

Compensation Committee Interlocks and Insider Participation

During 2006,2007, Mr. Beard, Mr. Tully Friedman, Mr. Ng , Dr. Rich, Mr. Sullivan, and Mr. Vogelstein and Ms. White served on the Mattel Compensation Committee. (Mr. Friedman(In May 2007, Mr. Ng and Ms. White joined the Committee, in May 2006.and Mr. Beard and Mr. Vogelstein retired from the Board of Directors and left the Compensation Committee.) During 2006,2007, there were no interlocks with other companies within the meaning of the SEC’s proxy rules. None of the members of the Compensation Committee is or has been an officer or employee of Mattel or any of its subsidiaries.

REPORT OF THE AUDIT COMMITTEE

To the fullest extent permitted under applicable laws and regulations, the following Report of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission (“SEC”) or subject to Regulations 14A or 14C of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or the liabilities of Section 18 of the Exchange Act. To the fullest extent permitted under applicable laws and regulations, the Report of the Audit Committee shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent Mattel specifically incorporates it by reference.

The Audit Committee operates pursuant to a written charter adopted by the Board of Directors. In January 2006, the Board of Directors amended and restated the charter of the Audit Committee, a copy of which and may be found in the “Corporate Governance”“Governance” section of Mattel’s corporate Web site,http://www.mattel.com. A copy may also be obtained free of charge by mailing a request in writing to: Secretary, Mail Stop M1-1516, Mattel, Inc., 333 Continental Blvd., El Segundo, CA 90245-5012.

The Board of Directors has determined that each of the members of the Audit Committee meets the SEC and New York Stock Exchange (“NYSE”) independence requirements for members of audit committees.

The Board of Directors has further determined in its business judgment that each member of the Audit Committee is “financially literate,” as such term is used in the listing standards of the NYSE; and the Board has determined that Eugene P. Beard,Michael J. Dolan, the Chair of the Audit Committee, is an “audit committee financial expert” as such term is defined in Item 401(h) of Regulation S-K promulgated by the SEC. The Board has also determined that Mr. BeardDolan has “accounting or related financial management expertise,” as such term is used in the listing standards of the NYSE. In preparation for Mr. Beard’s retirement from the Board, the Board has also determined that Michael J. Dolan, who is expected to succeed Mr. Beard as the Chair of the Audit Committee, is an “audit committee financial expert” and has “accounting or related financial management expertise,” The Board has additionally determined that each of Dominic Ng, Vasant M. Prabhu, and Christopher A. Sinclair is an “audit committee financial expert” and has “accounting or related financial management expertise.”

The Audit Committee’s responsibility is to assist the Board of Directors in its oversight of :of:

(a) the quality and integrity of Mattel’s financial reports,reports;

(b) the independence, qualifications and performance of Mattel’s independent registered public accounting firm,firm;

(c) the performance of Mattel’s internal audit functionfunction; and

(d) the compliance by Mattel with legal and regulatory requirements.

Management of Mattel is responsible for Mattel’s consolidated financial statements as well as Mattel’s financial reporting process, disclosure controls and procedures, and internal control over financial reporting.

Mattel’s independent registered public accounting firm is responsible for performing an integrated audit of Mattel’s annual consolidated financial statements and of its internal control over financial reporting.

In this context, the Audit Committee has reviewed and discussed the audited financial statements of Mattel as of and for the year ended December 31, 20062007 and Management’s Report on Internal Control over Financial Reporting with management, the senior internal auditing officer of Mattel and

the independent registered public accounting firm. Management has confirmed to the Audit Committee that, as required by Section 404 of the Sarbanes-Oxley Act, management has evaluated the effectiveness of Mattel’s internal control over financial reporting using the framework inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission and concluded that it was effective at December 31, 2006.2007.

Mattel’s independent registered public accounting firm has expressed its opinion that:

(1) Mattel’s consolidated financial statements present fairly, in all material respects, its financial position as of December 31, 20062007 and 2005,2006, and its results of operations and cash flows for each of the three years in the period ended December 31, 20062007 in conformity with accounting principles generally accepted in the United States of America; and

(2) Mattel has maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006,2007, based on criteria established inInternal Control—Integrated Framework issued by COSO; andCOSO.

(3) management’s assessment, included in Management’s Report on Internal Control over Financial Reporting, is fairly stated, in all material respects.

In addition, Mattel’s Chief Executive Officer and Chief Financial Officer reviewed with the Audit Committee, prior to filing with the SEC, the certifications that were filed pursuant to the requirements of the Sarbanes-Oxley Act of 2002 and the disclosure controls and procedures management has adopted to support the certifications. The Audit Committee periodically meets in separate executive sessions with management, the senior internal auditing officer and the independent registered public accounting firm. Each of the independent registered public accounting firm, the senior internal auditing officer, the Chief Financial Officer and the General Counsel has unrestricted access to the Audit Committee.

The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61,Communication with Audit Committees, as amended and currently in effect, and Public Company Accounting Oversight Board Auditing Standard No. 2,5,An Audit of Internal Control overOver Financial Reporting Performed in ConjunctionThat Is Integrated with anAn Audit of Financial Statements. In addition, the Audit Committee has received written disclosures in a letter from the independent registered public accounting firm regarding their independence from Mattel, as required by Independence Standards Board Standard No. 1,Independence Discussions with Audit Committees, as currently in effect, and the Audit Committee has also discussed with the independent registered public accounting firm their independence from Mattel.

The Audit Committee has also considered whether the independent registered public accounting firm’s provision of non-audit services to Mattel is compatible with maintaining their independence from Mattel.

The members of the Audit Committee are not engaged in the accounting or auditing profession and, consequently, are not experts in matters involving accounting or auditing including in respect of auditor independence. As such, it is not the duty of the Audit Committee to plan or conduct audits or to determine that Mattel’s consolidated financial statements fairly present Mattel’s financial position, results of operations and cash flows and are in conformity with accounting principles generally accepted in the United States of America and applicable laws and regulations. Each member of the Audit Committee is entitled to rely on:

(i) the integrity of those persons within Mattel and of the professionals and experts (such as the independent registered public accounting firm) from which the Audit Committee receives information,information;

(ii) the accuracy of the financial and other information provided to the Audit Committee by such persons, professionals or experts absent actual knowledge to the contrary,contrary; and

(iii) representations made by management or the independent registered public accounting firm as to any information technology services of the type described in Rule 2-01(c)(4)(ii) of Regulation S-X and other non-audit services provided by the independent registered public accounting firm to Mattel.

Based on the reports and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Mattel’s Annual Report on Form 10-K for the year ended December 31, 2006,2007, for filing with the SEC.

AUDIT COMMITTEE

Eugene P. Beard (Chair)

Michael J. Dolan (Chair)

Dominic Ng

Vasant M. Prabhu

Christopher A. Sinclair

Kathy Brittain White

March 26, 20072008

COMPENSATION DISCLOSURE

This Proxy Statement is the first one that Mattel has provided under new rules that the Securities and Exchange Commission has issued governing the disclosure of compensation of executives and directors. Therefore, the sections that follow look quite different from the compensation disclosure sections in our 2006 annual proxy statement and earlier proxy statements. The most important differences include the following:

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee reviewed and discussed Mattel’s Compensation Discussion and Analysis with Mattel’s management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and Mattel’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006.2007.

COMPENSATION COMMITTEE

John L. VogelsteinG. Craig Sullivan (Chair)

Eugene P. Beard

Tully M. Friedman

Dominic Ng

Dr. Andrea L. Rich

G. Craig SullivanKathy Brittain White

March 26, 20072008

COMPENSATION DISCUSSION AND ANALYSIS

The compensation and benefits provided to our named executive officers (“NEOs”) for 2007 and 2006 are set forth in detail in the Summary Compensation Table and other tables, and the accompanying footnotes and narrative material. This Compensation Discussion and Analysis explains the purposes of our executive compensation and benefits program, each element of the program and explains each element.our decisions for 2007. Our executive compensation and benefits program is designed and administered under the direction and control of the Compensation Committee of our Board of Directors.

Executive Compensation Process

The Compensation Committee reviews and approves Mattel’s overall executive compensation strategy and policies and annually sets the compensation of executive officers. See the section entitled “Board Committees—Compensation Committee” on page 16. Mattel’s Chief Executive Officer (“CEO”) and members of Mattel’s Human Resources Department routinely participated in this process during 2007, as did the Compensation Committee’s outside compensation consultant. When appropriate, however, the Compensation Committee excuses management and the outside compensation consultant from certain portions of its meetings. As discussed further below, the Compensation Committee has consistently used a number of tools to evaluate whether the executive compensation program is achieving its objectives. These include benchmarking our compensation levels against peer companies and assessing the total compensation for each member of the Management Committee (comprised of the NEOs and three other executive officers) with the use of “tally sheets,” which provide a detailed snapshot of the total compensation paid to these executives.

In performing its duties, the Compensation Committee reports and, as appropriate, makes recommendations to the Board regarding executive compensation policies and programs. The Compensation Committee informs the non-management directors of the Board of its decisions regarding compensation for the CEO and other Management Committee members.

The Compensation Committee reviews, discusses and approves the annual cash compensation for the Management Committee, including base salaries and annual incentive compensation.

The Compensation Committee annually considers merit increases to base salaries for Management Committee members. The CEO typically provides the Compensation Committee with his insights regarding merit increases for each executive officer other than himself, while the CEO’s base salary is determined during a session without his presence. See “Compensation Discussion and Analysis—Elements of Executive Officer Compensation and Benefits” for additional discussion.

The Compensation Committee reviews, discusses and approves the proposed awards under the annual cash incentive plan for the current year and, if appropriate, under the long-term incentive plan, usually in March of each year. Mattel’s Human Resources Department assists in this review by presenting the proposed objectives, performance levels, performance measures, strategic initiatives, award levels, participation and costs under each arrangement. In March, the Compensation Committee also reviews and certifies the prior year’s results with regard to the annual performance goals that the Compensation Committee established at the beginning of the prior year pursuant to Mattel’s annual cash incentive plan. If a three-year cycle under the long-term incentive plan was also completed in the prior year, then in the same meeting the Compensation Committee will review and certify the results for such three-year cycle. See “Compensation Discussion and Analysis—Annual Cash Incentive” for

additional discussion regarding the annual cash incentive plan and “Compensation Discussion and Analysis—Long-Term Incentives” for a discussion regarding the long-term incentive plan. Representatives from the Human Resources Department typically present detailed information about proposed payouts based on the results of the prior year’s performance or the completed three-year performance cycle, as applicable, which information is reviewed by the Compensation Committee’s outside consultant and Mattel’s Audit Committee.

In addition, usually at its May meeting, the Compensation Committee conducts a competitive review of Mattel’s executive compensation programs, based on studies performed and presented by the Compensation Committee’s outside compensation consultant. The Compensation Committee also reviews, discusses and approves the annual equity grants to be made to employees, usually in May of each year. Mattel’s Human Resources Department reviews with the Compensation Committee the program’s objectives, background, grant process, award levels and proposed total pool of shares. Specific recommendations regarding the aggregate equity pool to be allocated to employees, the size of awards to be granted to employees at different levels and the recommended grants to be made to the Management Committee are presented to the Compensation Committee. The approved equity grants are made on a date in August specified by the Compensation Committee (usually the first trading day in August), with stock options having an exercise price equal to the closing price of our common stock on such date. See the “Compensation Discussion and Analysis—Equity Compensation” section below for additional discussion of equity granting procedures.

Typically in August or September of each year, the Compensation Committee reviews Mattel’s overall executive compensation program. As part of this review process, Mattel’s Human Resources Department prepares and reviews with the Compensation Committee comprehensive tally sheets illustrating the total compensation for the most recent two years for each member of the Management Committee, as well as past equity grants and potential future wealth accumulation at different Mattel stock prices and the pension benefits payable upon retirement. Also presented to the Compensation Committee are summaries of information regarding the severance benefits payable upon a termination of employment without cause, and the benefits payable in connection with a change of control. The Compensation Committee then discusses the tally sheets with its compensation consultant. The Compensation Committee also reviews with the Board at the next Board meeting the information presented and any decisions the Compensation Committee made.

The Compensation Committee uses the tally sheets for several purposes. The tally sheets provide the Compensation Committee with the information necessary to evaluate the total compensation picture, rather than viewing isolated incremental changes, and to validate its strategy as it relates to each executive’s total compensation. Total compensation includes total annual cash compensation (base salary and annual incentive bonus), total long-term incentive compensation and benefits and perquisites. Tally sheets are also a vehicle for the Compensation Committee to inform the Board as to the full executive compensation program. The Compensation Committee’s review of the tally sheets may lead to changes in certain elements of the total compensation if the Compensation Committee determines such changes are appropriate. In 2007, based on its review of the tally sheets, the Compensation Committee determined that Mattel’s executive compensation program was appropriate and no changes were necessary.

Executive Compensation Objectives

Executive Compensation Strategies and Principles:Objectives: Our executive compensation strategies have the following aims:program is designed to enable Mattel to:

In establishing and evaluating the effectiveness of executive compensation programs,Three basic principles guide the Compensation Committee is guided by three basic principles:in establishing our executive compensation program and evaluating its effectiveness:

Attraction and Retention of Executive Talent: We have long recognized that a critical component of our business strategy is to build and retain a team of highly talented senior executives, with the right structure for corporate and business unit responsibilities and the right individuals in key jobs. Mattel is a high-profile, successful marketing and manufacturing consumer goods company, and ascompany. As a consequence, Mattel’sour executives have often been targeted by other companies and executive recruiters. The loss ofLosing key executives deprives us of their services, forces us to expend time and money to replace them, and, if they join competitors, may allow competitors to take advantage of the executives’ special insight into our business and strategies. We realizeThe employment agreements entered into at the importancetime of compensation ashire, and the primary means by which we compete forvesting and retain talent in a highly competitive marketplace.recapture provisions of our incentive awards, are designed to meet our retention objective.

We have taken several measures to address these issues, using both incentives to remain with Mattel and disincentives to leave. These include:

officers who report directly to the Chief Executive Officer, including the other named executive officers.) These arrangements for our named executive officers are discussed in detail in the narrative discussion accompanying the compensation tables and in the section entitled “Potential Payments upon Termination or Change of Control.” They were critical to our ability to recruit our Chief Executive Officer, our Executive Vice President, Worldwide Operations, and our Executive Vice President, International. The agreements and letters have also assisted us to retain executives.

No single compensation arrangement can force an executive to continue working for Mattel or prevent an executive from leaving to work for a competitor. However, weWe believe that these arrangements, as well as the overall design of our compensation and benefits package, help to strengthen the mutual commitment and loyalty between Mattel and its key executive team.

Overall Compensation Levels: As discussed above, a key factor in our business success is attracting and retaining talented executives. We compete for thesetalented executives with other large global consumer companies in various industries. We, therefore, compare our total compensation levels to thoseexecutives of these other large global consumer companies, with the general intent to fall at or above

the market average,median, while offering competitive pay opportunities.opportunities as compared to our peer group.¹ However, we do not target a specific percentile for our overall executive compensation packages, and our actual compensation reflects individual and company performance, reflecting our pay-for-performance philosophy.

We evaluate the overall competitiveness and appropriateness of executive compensation annually, by looking at the executive’s total compensation package in deciding base salary,salaries, annual incentives,and long-term cash incentives, long-term equity plans,compensation and benefits and perquisites.

In November, 2007, Frederic W. Cook & Co., Inc. reviewed the then-current peer group and made a number of recommended changes. These changes included removing Colgate Palmolive Company and Revlon Inc. and adding Coach, Inc., Fortune Brands, Inc., The Hershey Company, Liz Claiborne, Inc., and Wm. Wrigley Jr. to the peer group. The new group of 19 peer companies did not have any impact on compensation paid for 2007 but was used in 2007 for evaluating compensation payable in 2008.

Each

To assist in making this evaluation, each year the Compensation Committee reviews tally sheets of the compensation and benefits of each member of our Management Committee. These tally sheets show the executives’Committee so as to be aware of total compensation for the most recent two years in detail and in total. They also show, for each executive, the pension benefits payable upon retirement, the severance benefits payable upon a termination of employment without cause, and the benefits payable in connection with a change of control. Finally, the tally sheets include a projection of the value each executive may receive from equity compensation. The Committee discusses the tally sheets with its independent compensation consultant and reviews them with the full Board of Directors.

levels within Mattel. In addition, the Compensation Committee’s independent compensation consultant annually analyzes and reports to the Compensation Committee on the competitive position of the target and actual compensation of each of the Management Committee members. In 2006,2007, this report included a review of each executive’s total cash compensation and overall total directcompensation,

showing both the current competitive positioning and the executive’s five-year historical compensation. For our Chief Executive Officer,CEO, our Chief Financial Officer (“CFO”) and our President, Mattel Brands, each compensation element of compensation was analyzed and compared to the compensation of their counterparts at the companies that make up our current comparator group. Our comparatorpeer group, is made upwhich we use to analyze the competitiveness of companies that are category leaders in the consumer products, apparel and fashion, foods, retail and recreation industries. The Compensation Committee’s independent consultant reviews the makeup of this group annually and advises the Committee about its appropriateness.

The consultant concluded that the targeted level of pay of most of the Management Committee members is competitive, falling in the third quartile for total direct compensation; and that our Chief Executive Officer’s cash compensation has been and remains competitive, but his equity and total direct compensation has been well below market for several years. After considering all of the information described above and the consultant’s recommendations, the Compensation Committee determined to increase our Chief Executive Officer’s equity grants to a market level, beginning in 2006. Specific information about our Chief Executive Officer’s 2006 equity grants is set forth in the Grants of Plan-Based Awards table and accompanying footnotes and narrative disclosure.program.

Stock Ownership Guidelines: The Compensation Committee believes that when our executives hold significant equity interests in Mattel, their interests are more closely aligned with those of stockholders. Moreover, a meaningful direct ownership stake by our leaders demonstrates to our investors a strong commitment to the company’s success. We, therefore, have had stock ownership guidelines for our named executive officersNEOs and other members of the Management Committee for more than a decade. The Compensation Committee had its independent compensation consultant review and discuss these guidelines at several meetings in 2006. At the conclusion of this detailed review process, the Compensation Committee determined to modify the guidelines in a number of ways that were recommended by its independent compensation consultant, and in certain respects made them more stringent than the consultant recommended.

The newcurrent guidelines are outlined below. The revisions are effective as of January 1, 2007, and Management Committee members have five years—until the later of December 31, 2011—2011 or five years from the date they become Management Committee members to meet the guidelines as revised.guidelines. The Compensation Committee monitors executives’ progress towards meeting the guidelines, and willmay take each executive’s progress into account in determining future equity grants.

Tax and Accounting Considerations: When it reviews compensation matters, the Compensation Committee considers the anticipated tax treatment of various payments and benefits to Mattel and, when relevant, to its executives.

The Compensation Committee considersAlthough Mattel has plans that permit the expected impactaward of deductible compensation under Internal Revenue Code Section 162(m) when it makes compensation decisions. Section 162(m) limits to $1,000,000, the amount of compensation to any one of our five top executive officers that Mattel may deduct each year. However, this limit does not apply to compensation that qualifies as “performance-based” or that is paid after the executive is no longer employed by Mattel. TheCompensation Committee does not necessarily limit executive compensation to the amount deductible under Internal Revenue Code Section 162(m).that provision. Rather, it considers the available alternatives and acts to preserve the deductibility of compensation to the extent reasonably practicable and to the extent consistent with its other compensation objectives. Further, the Compensation Committee chose to grant restricted stock units, rather than restricted stock, in part because of the unfavorable foreign tax consequences of restricted stock to employees in some non-U.S. jurisdictions where some of our grantees reside and work.

The required adoption of a new accounting standard (Financial Accounting Standard No. 123(R), “Share-Based Payment”) in 2006, under which at-the-money stock options as well as all other forms of equity compensation result in a charge to earnings, wasis taken into account by the Compensation Committee in determining to take a “portfolio” approach to equity grants, awarding both stock options and restricted stock units, beginning generally in 2006. Further, the Compensation Committee chose to grant restricted stock units, rather than restricted stock, because of the unfavorable foreign tax consequences of restricted stock in some non-U.S. jurisdictions where some of our grantees reside and work.units.

Elements of Executive Officer Compensation and Benefits

The components of our executive compensation programs are:

While the Compensation Committee reviews each of these compensation elements and the total compensation, in 2007, the Compensation Committee’s decisions regarding a particular element did not impact the other elements, other than to the extent that they affect total compensation.

Base Salary: Base salaries provide for stable compensation to executives, and allow us to attract competent executive talent, and maintain a stable management team. They alsoteam and provide a basis upon which executives may be rewarded for individual performance.

Each of our named executives officersNEOs has an employment agreement or letter discussed(discussed in more detailindetail in the narrative discussion accompanying the compensation tables and in the section entitled “Potential Payments upon Termination or Change of Control.” These arrangements setControl”), which sets a minimum base salaries that weresalary established by negotiation at the time the executives wereexecutive was first hired or first assumed theirhis or her present positions.position.

The Compensation Committee reviews executive officer salaries regularly, usually once every 12 months, and makes adjustments as warranted to reflect continued individual contributions, sustained performance and competitive market factors. Reviews took place at the January 2006 meeting, with adjustments effective as of February 27, 2006, and at the January 2007 meeting, with adjustments effective as of February 26, 2007.

Our human resources staff and the Compensation Committee’s independent compensation consulting firm established our current salary structure using a job evaluation methodology established by the consultant. Jobs were evaluated based on multiple factors, including knowledge and problem-solving requirements and accountability. Positions were categorized by job band and salary structures for minimum, midpoint, and maximum were established for each job band. Individual base salaries are established and periodically adjusted within this framework, and are targeted at or above market levels.

Base salaries for executives are initially determined by evaluating:

Increases to base salaries are driven primarily by individual performance and market competitive factors. Economic indicators suchfactors, as well as the Consumer Price Index are also considered. Individual contributions and performance are reviewed against totalcorporate merit budget. The annual compensation, rather than against base salary alone. The evaluation of individual performance is based on:

The results of this evaluation process are reportedAfter taking into consideration the factors above, the CEO evaluates whether any adjustments to our Chief Executive Officer, whoNEOs’ base salaries are warranted. The CEO then approvesmakes recommendations to the Compensation Committee for salary adjustments (if any) for the members of the Management Committee other than himself. After considering these recommendations, theCommittee. The Compensation Committee determines and approves the base salary amounts.amounts after consultation with its compensation consultant. In 2007, Mr. Stockton, our Executive Vice President, International, was the only one of our named executive officersNEOs whose base salary was adjusted, as a result ofin large part due to our growth in the 2007 review.international market. His annual base salary was initially increased from $675,000 to $700,000, and then as a result of his promotion from Executive Vice President, International to recognizePresident, International in November 2007, his performance andsalary was further increased to preserve internal pay equity.$750,000. For 2008, none of our NEOs’ base salaries were adjusted.

Our Chief Executive Officer’sCEO’s base salary, and any adjustments to such salary, is generally determined by the Compensation Committee after consultation with its independent compensation consultant. However, in accordance with its charter, the Compensation Committee may in its discretion, make this determination in conjunction with other independent directors of the Board and/or refer its determination to the full Board of Directors for ratification. Our Chief Executive Officer’sAlthough the Compensation Committee has periodically recommended increases to our CEO’s base salary, Mr. Eckert has declined such increases, and his base salary remains at the level established when he was hired in 2000.

Annual Cash Incentive: We provide our executive officers and certain other employees with the opportunity to earn annual cash incentive compensation as an incentive to achievefor achievement of our short-term business objectives each year and a reward for success in doing so. Annual incentive compensationindividual or shared corporate strategic objectives. This program is a key tool for implementing our “pay-for-performance” approach to executive compensation,philosophy, which emphasizes variable at-risk compensation that is dependent upon fullycontingent on meeting specific corporate and individual performance goals.

This element of our incentive compensation program:

The currentIn 2007, the vehicle for annual cash incentive compensation iswas the 2002 Mattel Incentive Plan, referred to as the MIP. This plan and the 2007 and 2006 bonuses under it are described in detail in the Summary Compensation table and Grants of Plan-Based Awards table and the accompanying footnotes and narrative disclosures.In Proposal 4disclosures. At the 2007 Annual Meeting of this Proxy Statement, we are askingStockholders, our stockholders to approve theapproved a new Mattel Incentive Plan which is substantially similar to the MIP and, if approved, will become the vehicle for annual cash incentive compensationbonuses payable in 2008 and future years.later.

The performance measures and goals for named executive officersNEOs in 2007 under the MIP arewere based on objective formulae or standards set by the Compensation Committee, in order to qualify forsatisfy the exception from Internal Revenue Code Section 162(m) for performance-based compensation. However, the“performance-based” compensation requirements. The Compensation Committee retainsreserves the discretionright to reduce the bonus for any named executive officer from the amount determined using the objective measures and goals, based upon any criteria that the Compensation Committeeit considers to be relevant. Generally, participants must remain employed with Mattel until the date that MIP bonuses are paid in order to receive their bonuses (if any). However, different rules apply in the case of certain terminations of employment under the employment agreements of four of our NEOs, and upon a change of control of Mattel. See below in the section entitled “Potential Payments Upon Termination or Change of Control” for more information.

Each year, management recommends specific corporate financial goals that are subject to the Compensation Committee’s review, comment and approval by the Compensation Committee.approval. No bonuses are paid to any member of our Management Committee unless the minimum corporate financial goal approved by the Committee is accomplished. If that goal is achieved, our Management Committee members earn bonuses under the MIP to the extent that financial and corporate strategic goals established by the Compensation Committee areis achieved. If performance is below the threshold level, there is no payout. If performance reaches the threshold level, bonuses are paid at 50% of the target levels. If performance achieves the target, bonuses are paid at 100% of the target level. Bonuses are paid at 150% of the target level

(200% (200% for our Chief Executive Officer)CEO) if performance reaches or exceeds the maximum level, which is deemed to be significantly in excess of the target. For performance between threshold and target or target and maximum, the amounts of bonuses are interpolatedadjusted accordingly.

The MIP goals for our named executive officersNEOs are based on the following performance measures:

In selecting theseThe MIP bonus opportunities in 2007 for Mr. Eckert, Mr. Debrowski and Mr. Farr were based 75% on the corporate goal and 25% on the achievement of objectively measurable corporate strategic initiatives. Mr. Friedman’s 2007 MIP bonus opportunity was based on four equally weighted goals: the corporate goal; the financial performance measures forof Mattel Girls and Boys Brands; the financial performance of Fisher-Price Brands; and achievement of objectively measurable corporate strategic initiatives. Mr. Stockton’s 2007 MIP we have been guided by these principles:

The performance goals established by the Compensation Committee include threshold, target and maximum levels, generating corresponding payouts based on percentages of base salary, with interpolation between the different levels.

objectively measurable corporate strategic initiatives. The corporate measure ofgoal was based on NOPAT less a capital charge applies to all Management Committee members, and is designed to encourage our entire executive team to achieve efficiencies and better decision-making. This corporate measure is proprietary to Mattel, and is derived from Mattel’s audited financial statements, including both the income statement and the balance sheet.charge. Financial performance measures for an executive’s specific business unit are used when appropriate to encourage a focus on business results that the executive can directly affect. The goals relating to financial performance of the Mattel Girls and Boys Brands business unit and Fisher-Price Brands business unit were each based on the respective business unit’s U.S. profit less an inventory charge, plus its international operating profit at planned overhead less an inventory charge. The goal relating to the International division was based on the International division’s operating profit less a working capital charge.

The specific numbers that make up the corporate and business-unit-specific performanceused with regard to these goals (other than NOPAT less a capital charge) involve confidential trade secrets or confidential commercial or financial information, the disclosure of which would result in competitive harm to Mattel. For the objectively measurable corporate strategic initiatives, the Compensation Committee established precise measures and determined the relative weight to be given to each measure, as well as rules as to how many of the measures needed to be achieved in order to reach threshold, target, and maximum levels.

The performance measures based on objectively measurable corporate strategic initiatives used under the MIP for 2007 represent Mattel’s strategic direction and key business objectives for the year. They are the same for all Management Committee members, thus serving our team approach to performance. The Compensation Committee establishes precise measures that must be achieved in order to reach the threshold, target, and maximum levels. The nature and detailsFor 2007, the maximum amounts that NEOs were eligible to receive under the MIP ranged from 90% to 150% of base salary, except for the corporate strategic initiatives, and the goals based on these performance measures, involve confidential trade secrets or confidential commercial or financial information, the disclosure of which would result in competitive harmCEO who could earn up to Mattel.200%.

At the time that they are set, all of the goals that the Compensation Committee establishes are substantially uncertain to be achieved. They are all aggressive goals designed to drive performance.

The threshold-level goals can be characterized as “stretch but attainable,” meaning that based on historical performance, although attainment of this performance level is uncertain, it can reasonably be anticipated that threshold performance may be achieved, while the target and maximum goals represent increasingly challenging and aggressive levels of performance.

In determining The following table describes the performance measures and award levels for each named executive officerhistory of payouts under the MIP for the Compensation Committee reviews competitive data regarding total executive compensation, relies uponlast three years.

For 2007, the adviceoverall actual MIP payout percentage was 103.4% of the Compensation Committee’s independent compensation consultant and exercises its business judgment. The award levels have remained consistent for the past several years, and are within the range of market practice. Our Chief Executive Officer’s award levels under the MIP have remained unchanged since he was first hired in 2000.

The Audit Committee of our Board of Directors reviews performance results, including the achievement oftarget payout, based on actual corporate level NOPAT less a capital charge of $221.7 million. For the NEOs, actual payouts for 2007 were: Mr. Eckert, $1,407,500 (which reflects 112.6% of his target payout); Mr. Farr, $424,560 (which reflects 97.6% of his target payout); Mr. Friedman, $549,600 (which reflects 68.7% of his target payout); Mr. Stockton, $279,900 (which reflects 62.2% of his target payout); and the Compensation Committee’s independent compensation consultant reviews the computationMr. Debrowski, $300,000 (which reflects 80.9% of bonus amountshis target payout). Actual payouts for Messrs. Eckert and Debrowski were less than what these executives earned based on those results. The Compensation Committee reviews the results and certifies achievement of the goals beforeactual performance. Amounts by which their payouts are made. While the Compensation Committee has the discretion under the MIP to decide to pay less than the amounts determined accordingwere reduced were redistributed to the pre-established formula, it has not exercised this discretion to date.

For 2006, allgeneral MIP goals were met at the maximum level, resulting in payouts of the maximum amounts. See the Summary Compensation Table for details.payout pool, excluding NEOs.

At its March 20072008 meeting, the Compensation Committee established the performance measures, goals and potential award levels for participants in the new MIP for the calendar year 2007.calendar-year 2008. The performance measures for our named executive officersNEOs are similar in nature tothe same as the performance measures for calendar year 2006,calendar-year 2007, and the award level amounts for 20072008 at the threshold, target and maximum levels, as percentages of each named executive officer’sNEO’s base salary, are the same as for 2006. See the Summary Compensation Table and the Grants of Plan-Based Awards table below.

Special Bonus: In March of 2006, Mr. Stockton, our Executive Vice President, International, also received a special bonus of $50,000. This bonus was recommended by our Chief Executive Officer, and approved by the Compensation Committee, to recognize and reward Mr. Stockton for his outstanding performance in carrying out the international integration of the consolidated Fisher-Price Brands and Mattel Brands groups, an important strategic objective that was not part of the goals established under the MIP bonus opportunity for 2005.2007.

Long-Term Cash Incentives:We provide our named executive officersNEOs and certain other senior executives with the opportunity to earn cash long-term incentive compensation, as an incentive to achieve our long-range financial objectives and a reward for success in doing so. We believe that it is crucial to Mattel’s success that executives maintain a long-term focus and be motivated to sustain growth in shareholder value. The long-term incentivefocus. This component of our overall compensation program complements the MIP’s annual incentive compensation component by rewarding growth in stockholder value that is sustained over several years and encouraging participants to focus on longer-term achievement.

TheThrough 2007, the vehicle for cash long-term incentive compensation iswas the Mattel, Inc. 2003 Long-Term Incentive Plan, referred to as the LTIP. The performance goals for named executive officersNEOs under the LTIP are based on objective formulae or standards set by the Compensation Committee, in order to qualify forsatisfy the exception from Internal Revenue Code Section 162(m) for performance-based

compensation. Any“performance-based” compensation requirements. For the 2005-2007 performance cycle, awards that are earned arewere paid in cash in the quarter following the end of the performance period. As discussed above, payments for performance cycles beginning on or after January 1, 2005 are subject to cancellation, reduction and recapture under certain circumstances.

At certain times in the past, we used four-year LTIP performance cycles, with two overlapping cycles outstanding at any given time. However, we have now transitioned to usingWe currently use successive three-year performance cycles with no overlap, which we find to be more consistent with our business planning. The last four-year cycle was for 2003-2006. Performance under this cycle did not meetPayouts, if any, are made at the threshold level, and accordingly noend of the three-year performance cycle. As a result, year-to-year comparisons of total incentive plan compensation may be distorted by the fact that the LTIP payments were made. A singleare made only once every three years. The performance cycle for 2005-2007 is now in effect.ended on December 31, 2007, and the Compensation Committee established a new performance cycle for the period beginning on January 1, 2008 and ending on December 31, 2010.

For LTIP performance cycles since 2000, the performance targets have been based on net operating profit after taxes, less a capital charge (referred to asthe corporate financial measure of NOPAT less a capital charge).charge. This financial measure is similar tothe same as the corporate measure used under the MIP,MIP.

For the 2008-2010 performance cycle under our new long-term incentive program, based on the recommendation of the outside compensation consultant, the Compensation Committee modified the long-term incentive performance targets that it had used since 2000, as described above, butwell as the form of the long-term incentive awards. Consistent with recent performance cycles, the performance goals for the performance cycle beginning in 2008 are based primarily on the corporate measure of NOPAT less a capital charge; however, to provide a link between incentive pay and market performance, the award is adjusted based on our total shareholder return during the performance cycle relative to reflect the longer-term focusperformance of the LTIP.S&P 500. Achievement of total shareholder return above or below the return of the S&P 500 will result in increases or decreases of earned awards, respectively. In addition, to further align executive’s and stockholders’ interests and to put long-term incentive program awards at risk for stock price performance, such awards were granted in the form of restricted stock units and will be paid in shares of Mattel common stock. Also, in order to improve the goal-setting and performance measurement process for the 2008-2010 performance cycle, the company measure of NOPAT less a capital charge will be measured against annual goals for each year in the performance cycle and averaged for the three-year cycle, instead of measuring cumulative three-year performance against a single three-year goal.

NOPAT less a capital charge takes into account both income statement and balance sheet performance. The capital charge represents the amount required to:

Both equity and debt are included in the performance measures for the LTIP so as to encourage efficiencies and better decision-making, without favoring any one capital deployment alternative over the others:others; cash accumulation, debt retirement, increased dividends or share repurchase all have an equal effect on capital for these purposes. LTIP participants are rewarded if we are able to realize net operating profitNOPAT in excess of the capital charge, indicating that we are generating after-tax profits that exceed the risk-adjusted rate of return requiredexpected by debt and equity holders.

In establishing the goals against which the company’sMattel’s actual NOPAT less a capital charge will be measured, the Compensation Committee reviews in detail the valuation principles and methods proposed by management, and its independent compensation consultant advises about the performance measures. The performance goals are subject to adjustment in the event of certain mergers and acquisitions.

The specific numbers that make up the corporate and business-unit-specific performance goals involve confidential trade secretsevents or confidential commercial or financial information, the disclosure of which would result in competitive harm to Mattel. At the time that they are set, the goals that the Compensation Committee establishes are substantially uncertain to be achieved. The threshold-level goals can be characterized as “stretch but attainable,” while the target and maximum goals represent increasingly challenging levels of performance.

The Compensation Committee establishes the level of each executive’s participation at threshold, target and maximum levels of achievement.transactions. When awarding long-term incentives,incentive opportunities and establishing payout levels, the Compensation Committee considers the executive’s level of responsibility, ability to influence performance, prior experience and historical award data, as well as market practices. In determining the LTIP performance measures and award levels for each executive, the Compensation Committee reviewspractices, including competitive data regarding total executive compensation. The Compensation Committee also considers the compensation relies upon theconsultant’s advice, of the Compensation Committee’s independent compensation consultant and exercises its business judgment.

Participants have the opportunity to earn payouts based on achievement of threshold, target and maximum goals. The Compensation Committee reviews the performance results and certifies achievementgoals are adopted at a point in time when it is substantially uncertain that any of the goals before payouts are made. In addition,will ultimately be achieved. As an example, the Compensation Committee reservesperformance goals for the right2003-2006 LTIP performance cycle were not achieved at the threshold level, and as a result, no

LTIP payment was made with regard to reducesuch period. For the amount payable to any executive,2005-2007 LTIP performance cycle, the LTIP payout percentage was 94.82% of the target payout, based on whatever factors it deems to be appropriate.cumulative NOPAT less a capital charge for the 2005-2007 performance cycle of $751.4 million.

For the NEOs, actual payouts for the 2005-2007 performance cycle, were: Mr. Eckert, $5,689,200; Mr. Farr, $1,422,300; Mr. Friedman, $2,370,500; Mr. Stockton, $1,422,300; and Mr. Debrowski, $1,422,300.

Equity Compensation: Mattel’s equity compensation plans allow the Compensation Committee to make grants and awards of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights and other stock-based awards. Since August 2006, the Compensation Committee has chosen to use a portfolio approach, granting both stock options and restricted stock units that vest over three years to executives. A specific number of shares for the total equity grant for each position is established based on the total compensation review, described above (see “Overall Compensation Levels”). For our named executive officers,NEOs through 2007, half of this total is granted as stock options and half as restricted stock units, based on a three-to-one ratio—in other words, with one restricted stock unitsunit being considered to represent the equivalent of an option on three shares.

The Compensation Committee has taken this portfolio approach to equity awards because each type of award serves a somewhat different purpose. With stock options, executives can realize value from increases in our stock price, thus aligning their interests with stockholder interests. Furthermore, if the stock price does increase, vesting over a three-year period helps to retain executives. However, if our stock price does not rise, then the options provide no value to executives. By contrast, while restricted stock units’ value does depend on our stock price, theytime-vested restricted stock units have some value regardless of whether our stock price increases or decreases. As a result, they help retain executives over the three-year vesting schedule, regardless of whether our stock price increases or decreases. Restricted stock units also have the benefit of causing less shareholder dilution than stock options that deliver comparable compensation. Thehave roughly equivalent compensation expense. Moreover, the holders of time-vested restricted stock units receive annual cash dividend equivalent payments, help executives feelwhich treats them like shareholders even before vesting of their units, further aligning executives’ interests with stockholders’ interests in receiving appropriate dividend payments, and helpinghelps to retain executives through the anticipation of year-end annual dividend equivalent payments.them. Thus, while both types of awards link our executives’ pay to shareholder value, options are a particularly goodeffective way to put significant value at risk in relation to increases in stockholder value, while restricted stock units are particularly effective as a retention tools.and ownership tool.

In making equity grants, the Compensation Committee considers the possible effect of Internal Revenue Code Section 162(m), noting that stock options are expected to be exempt from its deduction limits but that restricted stock units and dividend equivalent payments are not exempt if no performance conditions are attached to them. Because restricted stock units are considered to be primarily an incentive for executives to remain with Mattel, the Compensation Committee has historically chosen to make their vesting subject only to continued employment. In doing so, the Compensation Committee recognized that this could result in the loss of some of the income tax deductions that we would otherwise be entitled to take, but determined that this tax consideration was less important than structuring the awards in a way that serves their intended compensatory purpose.

As explained above, after considering a report by its independent compensation consultant on the competitiveness In 2008, as part of the total compensation of each member of our Management Committee,long-term incentive program described above in “Compensation Disclosure and Analysis—Long-Term Incentives”, the Compensation Committee determinedgranted performance-based restricted stock units, which are intended to increase our Chief Executive Officer’ssatisfy the Internal Revenue Code Section 162(m) “performance-based” compensation requirements.

In 2007, to ensure consistent and stable annual grant valuations and due to the then-current relatively high stock price, the Compensation Committee made lower equity grants to a market level, beginningour NEO than in 2006. The equity grants for our other named executive officers in 2006 remain consistent with our past practice and are within current market range. The specific grants made to our named executive officersNEOs in 20062007 and their vesting schedules are set forth in the Grants of Plan-Based Awards table and the footnotes and narrative disclosure toaccompanying that table.

Equity Compensation Grant Procedures: Like other public companies, we seek to ensure that our equity compensation grant procedures comply with evolving best practices, taking into account accounting, tax and regulatory requirements and standards. To this end, in 2006, management undertook a thorough review of our practices for regular annual grants as well as “off-cycle” grants, meaning grants other than regular annual grants, such as grants to employees who are newly hired or newly promoted. Based on this review, we adopted revised standards for documentation and record-keeping. Furthermore, management recommended certain enhancements to the process for annual and off-cycle equity grants, and the Compensation Committee and the Board of Directors took action.

Recommendations for approval by the EGAC of annual and off-cycle equity compensation grants are made in writing to the Senior Vice President, Human Resources and to the EGAC, and the EGAC must give its consent in writing on or before the grant date for any annual or off-cycle grant.

Any annual or off-cycle equity compensation grant that does not fit within the authority delegated by the Compensation Committee to the EGAC must be submitted to the Compensation Committee, and approved by the Compensation Committee, on or before the grant date for such grant.

Severance and Change inof Control Provisions: Mattel has entered into an employment agreement or letter with each of the named executive officers. The severance and change inof control provisions of theseour NEOs’ employment letters or agreements are described in detailindetail in the section entitled “Potential Payments upon Termination or Change of Control.” As noted above, Mattel has entered into these agreements to help us attract and retain the executives. In the case of our Chief Executive Officer, we negotiated and entered into his employment agreement at the time he was first hired. The agreement was critical to inducing him to leave his previous employer to work for Mattel. Similarly, the employment agreement with our Executive Vice President, Worldwide Operations, and the employment letter with our Executive Vice President, International, were entered into when they were hired, as means of attracting them to work for Mattel. The employment agreements with our Chief Financial Officer and our President, Mattel Brands, were entered into as a means of retaining them during a difficult period of management changes and company restructuring.

Each agreement or letter establishes the minimum terms and conditions of the executive’s duties, compensation and benefits, and provides that severance benefits appropriate to the executive’s positions will be paid if his employment is terminated prematurely by Mattel without cause, or (in the case of the employment agreements) by the executive in response to a breach of the agreement by Mattel (referred to as “good reason”“Good Reason”). In order toTo be entitled to severance benefits, the executive must execute a general

release of Mattel and comply with post-employment covenants to protect our confidential information and not to solicit our employees. We believe that these provisions help us to strengthen the mutual commitment and loyalty of Mattel and these important executives by ensuring that during employment and after it ends (whether at retirement or prematurely), the executives are treated fairly and appropriately. The employment agreements’ evergreen terms – terms—rolling three- or two-year terms—establish the understanding between Mattel and the executives that their employment will continue for the long term. Similarly, the employment letter with our Executive Vice President, International is in effect for an indefinite term.

Under his employment agreement, with Mattel, Mr. Friedman would have “Good Reason” to terminate his employment with Mattel if Mattel transferred him outside the greater New York New YorkCity area without his express written consent. In March 2007, Mr. Friedman gave his express written consent for transfer of his principal place of employment to the greater Los Angeles, California area, in exchange for (a) a payment in cash sufficient to provide him with $500,000 after taxes, to be paid to Mr. Friedman not later than 30 days after the close of escrow on his purchase of a residence in the Los Angeles area, and (b) monthly payments sufficient to provide him with $5,000 per month after taxes, to be paid monthly for 36 months beginning when escrow closes on his purchase of a residence in the Los Angeles area. The monthly payments will cease if Mr. Friedman does not remain employed by Mattel with his principal place of employment in the Los Angeles area. In considering this issue, the Compensation Committee received advice from its independent compensation consultant and took into account anticipated expenses associated with Mr. Friedman’s relocation and purchase of a residence in the Los Angeles area.area, which has a higher real estate market.

As discussed in the section entitled “The Board of Directors and Corporate Governance—Golden Parachute Policy” and in Appendix C,Policy,” Mattel has adopted a Golden Parachute Policy in response to a stockholder proposal in 2005. This policy generally limits severance benefits to senior executives to 299% of base salary and annual bonus, unless the arrangement is submitted to a stockholder vote. This policy does not apply to the employment agreements with our named executive officers,NEOs, because they were entered into before the policy was adopted.

The employment agreements contain only two change-of-control features: a provision that allows the executive to terminate employment during the 30-day period beginning six months after a change inof control and receive the same severance benefits as if he or she had been terminated without cause; and a provision to make the executives whole for any federal excise tax imposed on change-of-control payments, including severance payable after a change of control. The first feature is designed to provide an incentive for our executives to remain available to render services during the crucial six-month transition period following a change in control: even if their positions and compensation are changed in a way that might give them the right to terminate for good reason, they need not be concerned about whether to invoke that right, since they are assured that after six months, they will be able to resign with severance if they choose, without having to prove the existence of good reason. control.

The second feature is designed to ensure that our executives receive the benefits that we have determined to be appropriate, notwithstanding the possible imposition of the federalgolden parachute excise tax, which can have a disparate impact on similarly situated executives. Examples of this disparate impact include:

However, recognizing that holding executives harmless against this federalgolden parachute excise tax can be expensive for the company,Mattel, we have designed our provision to apply only if the value of the change-of-control payments is at least 110% of the amount below which the tax does not apply. See“Potential Payments upon Termination or Change of Control—Termination with Severance Following Change of Control” for more information about this excise tax provision in our employment agreements.

The other change-of-control benefits that are available to our named executive officersNEOs are provided by the terms of our various plans, and are available to all plan participants, regardless of whether they have employment agreements. The MIP provides that upon a change inof control, the current-year MIP bonuses are paid out immediately at the target level. Similarly, through 2007, the LTIP providesprovided that payments are made upon a change inof control at the target level for all pending cycles. If there is more than one cycle pending, the earliest cycle’s awards are paid in full, and the remainder areis pro-rated to reflect the portion of the applicable cycle that has elapsed through the date of the change inof control. Both plans allow Mattel to ensure that there is no duplication of these payments by severance payments under the employment agreements. These plan provisions have been put in place because we believe that a change in control would fundamentally affect

Through 2007, our financial performance in ways that are unpredictable, but may well distort incentive compensation for periods that are interrupted by the change in control. By closing out these cycles with payment of the awards at the target level, we can ensure that participants receive their incentive compensation for those periods at levels that represent normal performance (neither substandard nor outstanding), while allowing for appropriate and possibly different new incentives to be provided for periods after the change in control.

Our equity compensation plansgrants also contain change-of-control provisions, under which all outstanding unvested options and other awards, including restricted stock and restricted stock units, will vest upon a change inof control. In addition, option holders are guaranteed a minimum period of two years to exercise their options if their employment is terminated without cause during the first 18 months after the change inof control. As noted above, a principal purpose of providing executives with equity-based compensation is to align their interests with those of stockholders; we believe that this alignment is particularly important in the context of a proposed or actual change in control.stockholders. Vesting of equity awards upon a change inof control, and ensuring that option holders who lose their employment after the change have an adequate opportunity to realize value by exercising them, helps ensure that our executives and employees can realize the same benefits from a change inof control as stockholders. Absent these protections, the incentive to create stockholder value provided by equity awards would be diluted in the very circumstance in which it should be the most powerful.

The definition of “change in control”change of control that we use for these purposes is a standard definition. A change inof control is defined to include, generally:

Each of the first three events would result in a significant change in the stockholders or board of directors in charge of our business and employees, and the last would lead to the winding-up of our business. Thus, theThe occurrence of any of these events would introduce substantial uncertainty for our employees regarding their job security and the potential value of their incentive compensation. We therefore feel thatcompensation, and we believe these are appropriate events to trigger the special change-of-control protections discussed above.

Benefits Programs and Perquisites: Our named executive officersNEOs participate in the same broadly based benefit plans as our other U.S. employees. In addition, we provide certain executive benefits to promote tax efficiency, to replace benefit opportunities that are not available to executives because of regulatory limits and to align our compensation with market practices. These executive benefits are described below.

Our named executive officers and certain other members of our Management CommitteeNEOs are covered by the Mattel, Inc. 2005 Supplemental Executive Retirement Plan, known as the SERP. The SERP provides retirement benefits that are consistent with current competitive practices for senior executives. It was adopted in 2005 on the recommendation of the Compensation Committee’s independentcompensation consultant, who found that the retirement benefits then provided for senior executives under the predecessor Supplemental Executive Retirement Plan were well below market.the current and most prevalent market practice. See the Pension Benefits table and the accompanying footnotes and narrative disclosurefordisclosure for details on the SERP and its predecessor plan.

Our executive officers and certain other executives also participate in the Mattel, Inc. Deferred Compensation and PIP Excess Plan known as the DCPEP.(“DCPEP”). The DCPEP is a non-qualifiednonqualified deferred compensation plan that provides for deferral of compensation in excess of the amounts that are legally permitted to be deferred under the Mattel, Inc. Personal Investment Plan Mattel’s tax-qualified 401(k) savings plan. The DCPEP is provided because the benefits that Mattel can provide under the PIP are limited by the federal tax laws to a level that is not competitive for highly compensated employees.(“PIP”). Together, the tax-qualified savings plan and the DCPEP assist participants to set aside amounts as tax-deferred savings for their retirements. The amounts deferred under each participant’s DCPEP account are deemed invested in investments chosen by the participant from a range of choices, including (i) interest at a rate that is reset annually and is below 120% of the applicable federal long-term rate with compounding, (ii) deemed investment in Mattel common stock, and (iii) deemed investment in any of ten externally managed institutional funds. The participants’ accounts do not have any “above-market” earnings or preferential earnings as

defined in applicable SEC rules and regulations since the crediting rate investment option will always be set annually lower than the 120% of the applicable federal long-term rate, with compounding. The crediting rate is set in September of each year for the following year. Further, as to the other investment options, the rates of return track actual rates of return from Mattel common stock or externally managed institutional funds (such as equity and bond mutual funds), as applicable. See the Nonqualified Deferred Compensation table and the accompanying footnotes and narrative disclosurefordisclosure for details on the DCPEP.

We also provide the members of our Management Committee and other executives with limited perquisites that we consider to be appropriate in light of market practices. The perquisites we offer are representative of benefits offered by the companies with whom we compete for executive talent, and therefore offering these benefits serves the objective of attracting and retaining top executive talent. Some of the perquisites and benefits, like the personal use of corporate aircraft for our CEO and home security services, are provided for Mattel’s benefit notwithstanding the related personal benefit to the executive. The perquisites provided to our named executive officersNEOs in 2007 and 2006 are set forth in the Summary Compensation Table and the footnotes and narrative disclosure toaccompanying that table.

As describedindescribed in the narrative disclosure accompanying the Summary Compensation Table, under his employment agreement, our Chief Executive Officer, Mr. Eckert,CEO is permitted to make personal use of company aircraft for up to 60 hours per year while he serves as Chief Executive Officer,CEO, and we make him whole on the income taxes on the imputed income he receives as a result of this benefit. This provision was added to Mr. Eckert’s employment agreement by an amendment approved by the

Compensation Committee in early 2005. In deciding to enter into this amendment, the Compensation Committee considered that Mr. Eckert’s salary and annual incentive compensation opportunities had remained unchanged since he was hired in 2000; that Mr. Eckert’s personal travel schedule was extensive and frequent because of ongoing personal family obligations; and that this personal situation was expected to continue. The2000. At the time in 2005, the Compensation Committee reviewed a detailed financial analysis of the out-of-pocket costs and tax consequences to Mattel of providing this benefit, and was advised by its independent compensation consultant regarding the cost and prevalence of this type of perquisite for chief executive officers. The Compensation Committee then concluded that providing this benefit as part of Mr. Eckert’s compensation would minimize the disruptions and burdens of his personal travel and provide him with additional flexibility and time to attend to company business notwithstanding his personal travel schedule, and thereby would benefit Mattel and its stockholders.

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning total compensation earned or paid to our named executive officersNEOs for service in 2007 and 2006.

Footnotes to Summary Compensation Table:

the expense2007 row includes expenses for options granted in 2007 and 2006 as well as options granted to Mr. Eckert in 2004 and 2005, and the 2006 row in Column (f) includes expense for options granted in 2006 as well as options granted to Mr. Eckert in 2003,2005, 2004 and 2005.2003. All options granted to our other named executive officersNEOs in those years that were still unvested in December 2005 were vested on an accelerated basis. See the narrative disclosure to the Outstanding Equity Awards table below for more information about this accelerated vesting. The values for options are estimates using the same method as for our financial reporting, using a variation of the Black-Scholes pricing model. Under this model, the following weighted-average assumptions apply to the 2006 options: 4.9% risk-free rate; 5.10 year expected life; 2.8% dividend yield; 28.0% volatility factor. The following weighted-average assumptions apply to the 2007 options: 4.6% risk-free rate; 4.7 year expected life; 2.8% dividend; 22.6% volatility factor.

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Column (h), Change in Pension Value and Nonqualified Deferred Compensation Earnings, shows the increase in the pension benefits that the named executive officersNEOs have earned during 2007 and 2006, including those accrued under the Mattel, Inc. 2005 Supplemental Executive Retirement Plan, known as the SERP. This is determined by subtracting (1) the present value of each executive’s accrued benefits as of December 31, 2006 for 2007 and as of December 31, 2005 for 2006, from (2) the present value of their accrued benefits as of December 31, 2007 for 2007 and as of December 31, 2006 for 2006. The amounts described in clause (2) are shown in the Pension Benefits table below, and are computed in the manner explained in the narrative disclosure to the Pension Benefits table. The amounts described in clause (1) are also computed in this manner, but are based upon the executives’ service, compensation and age as of December 31, 2005.2006 for 2007 and as of December 31, 2005 for 2006. No amount is included in Column (h) with respect to nonqualified deferred compensation earnings, because there were no above-market earnings on non-qualifiednonqualified deferred compensation.

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Column (i), All Other Compensation, includes the following perquisites and other items of compensation provided to our NEOs in 2007:

In addition, Column (i) includes the following individual perquisites:

The following other items of compensation for each named executive officer are also included in Column (i):

The dollar amounts for each perquisite and each other item of compensation shown in Column (i), All Other Compensation, and in this footnote 5,(6), represent Mattel’s incremental cost of providing the perquisite to the named executive officerNEO in question, in each case without taking into account the value of any income tax deduction for which Mattel is eligible.

For purposes of calculating the incremental costs to Mattel of Mr. Eckert’s personal use of company aircraft, Mattel includes the hourly occupied charge, fuel surcharges, any applicable ground costs, any applicable catering costs, domestic passenger fees, and federal excise tax charges relating to his personal use of company aircraft. The related tax gross-up represents the amount paid by the company to make Mr. Eckert whole for the taxes he pays on imputed income for his personal use of company aircraft.

The incremental Incremental costs to Mattel for the other items were determined as follows:

Narrative Disclosure to Summary Compensation Table:

Employment Agreements

Some of the compensation reflected in this table is provided pursuant to employment agreements that we have entered into with Messrs. Eckert, Farr, Friedman and Debrowski and an employment letter that we have entered into with Mr. Stockton, in each case at the time the executive was hired or

promoted, and which have since been supplemented and amended. These contractual arrangements establish the minimum terms and conditions of the executives’ employment, which are summarized below. In addition, the following special provisions are contained in these individual agreements and letter agreements, as supplemented and amended:

Mr. Eckert’s employment agreement provides for the following terms and conditions of employment:

favorable than the terms offered to other senior executives of Mattel, in any group or executive life, disability insurance plan, medical and dental program, pension, profit sharing, 401(k) and similar benefit plans.

Pursuant to the employment agreement, which was first entered into in 2000, Mattel also provided Mr. Eckert certain one-time payments, guarantees and benefits to induce him to leave Kraft to serve as our Chief Executive Officer:

The employment agreements for Mr. Farr, Mr. Friedman and Mr. Debrowski, which were first entered into in 2000, contain the following terms of employment:

We entered into an employment letter with Mr. Stockton in connection with hiring him to serve as Mattel’s Executive Vice President, Worldwide Business Planning and Development. SinceFrom February 2003 to November 2007, Mr. Stockton has served as our Executive Vice President, International and since November 2007, he has served as our President, International. The employment letter with Mr. Stockton contains the following terms of employment:

In addition, Mr. Stockton’s employment letter, which was first entered into in 2000, provided for the following one-time benefits in connection with his hiring:

Equity Awards

The amount and terms of the stock awards and options that were granted in 20062007 are described in more detail in the Grants of Plan-Based Awards table and the footnotes and narrative disclosure toaccompanying that table.

Non-Equity Incentives

Column (g), Non-Equity Incentive Plan Compensation, shows the annual cash incentive payments earned under the MIP for 2007 and 2006 and paid in March 2007,amounts earned under the 2002 Mattel Incentive Plan, known asLTIP for the MIP.2005-2007 performance cycle.

On March 26, 2007, the Compensation Committee established performance goals and formulae for 2007. For 2007, the maximum amounts that NEOs were eligible to receive under the MIP ranged from 90% to 150% of base salary, except for the CEO, who could earn up to 200%. Certain employees of Mattel and its subsidiaries are eligible for annual cash incentive compensation under 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. In the first quarter of each year, Mattel’s Compensation Committee establishes the performance goals that must be achieved for that year in order for annual incentive payments to be made. The performance goals for our named executive officersNEOs are based on objective formulae or standards, as requiredin order to qualify forsatisfy the exception for performance-based compensation from the deduction limitations of Internal Revenue Code Section 162(m). “performance-based” compensation requirements. A detailed discussion of the MIP performance goals and formulae for 2007 are discussed in “Compensation Disclosure and Analysis—Annual Cash Incentive” beginning on page 33. For other employees, the Compensation Committee has the discretion to establish performance goals based on other standards, including individual performance goals and personal contributions to the business.

On March 16, 2005, the Compensation Committee established the performance goals for the LTIP performance cycle beginning on January 1, 2005 and ending on December 31, 2007. Executive officers and certain other employees of Mattel are eligible for long-term incentive compensation under 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 goals relating to its long-range financial goals and are paid in the quarter following the end of the performance cycle. For the 2005-2007 performance cycle, the Compensation Committee based the performance goals on NOPAT less a capital charge. At the time it established the performance goals, the Compensation Committee also established the level of each executive’s participation and threshold, target, and maximum levels for the performance criteria that had to be achieved before payments could be made under the LTIP at the threshold, target, and maximum payout levels. The performance goals for our NEOs are based on objective formulae or standards, in order to satisfy the Internal Revenue Code Section 162(m) “performance-based” compensation requirements.

Generally, participants must remain employed with Mattel until the date that MIP bonuses or LTIP payments are paid in order to be entitled to receive their bonuses or payments (if any). However, different rules apply in the case of certain terminations of employment under the employment agreements of four of our named executive officers,NEOs, and upon a change of control of Mattel. See below in the section entitled “Potential Payments Upon Termination or Change of Control”Control,” below, for more information.

On March 15, 2006, the Compensation Committee established performance goals and formulae for 2006 under the MIP. The 2006 MIP bonus opportunities for Mr. Eckert, Mr. Debrowski and Mr. Farr were based 75% on the corporate goal and 25% on the achievement of objectively measurable corporate strategic initiatives. Mr. Friedman’s 2006 opportunity was based on four equally weighted goals: the corporate goal; the financial performance of Mattel Girls and Boys Brands; the financial performance of Fisher-Price Brands; and achievement of objectively measurable corporate strategic initiatives. Mr. Stockton’s 2006 opportunity was based 25% on the corporate goal; 30% on the financial performance of the International division; 10% on the financial performance of Mattel Girls and Boys Brands; 10% on the financial performance of the Fisher-Price Brands; and 25% on the achievement of objectively measurable corporate strategic initiatives. The corporate goal was based on net operating profit, after taxes, less a capital charge (referred to as NOPAT less a capital charge), as more fully discussed in the Compensation Discussion and Analysis. The goals relating to financial performance of the Mattel Girls and Boys Brands business unit and Fisher-Price Brands business unit were each based on the business unit’s U.S. profit less an inventory charge, plus its international operating profit at planned overhead less an inventory charge. The goal relating to the International division was based on the International division’s operating profit less a working capital charge. The specific numbers used with regard to these goals involve confidential trade secrets or confidential

commercial or financial information, the disclosure of which would result in competitive harm to Mattel. For the objectively measurable corporate strategic initiatives, the Compensation Committee established precise measures and determined the relative weight to be given to each measure, as well as rules as to how many of the measures needed to be achieved in order to reach threshold, target and maximum levels. The objectively measurable corporate strategic initiatives, and the precise measures and weighting relating to these initiatives, involve confidential trade secrets or confidential commercial or financial information, the disclosure of would result in competitive harm to Mattel.

At the time they were set, all of the 2006 performance goals were substantially uncertain to be achieved. The goals were set at threshold, target and maximum levels. For 2006, the maximum amounts that named executive officers were eligible to receive under the MIP ranged from 90% to 200% of base salary. The actual amounts earned are shown in Column (g), Non-Equity Incentive Plan Compensation, above.

Pension and Deferred Compensation

Column (h), Change in Pension Value and Nonqualified Deferred Compensation Earnings, shows the increase from December 31, 2006 to December 31, 2007 for 2007 and from December 31, 2005 to December 31, 2006 for 2006, in the present value of the accumulated benefit of each named executive officerNEO under the applicable pension arrangements. These arrangements and benefits, and the methods and assumptions

we used to value them for purposes of the table above, are explained below in the Pension Benefits table and the footnotes and narrative disclosure to that table. As explained below, Mr. Eckert’s employment agreement provides for a minimum retirement benefit called the Age 60 Pension; this benefit did not increaseincreased from December 31, 2005,2006, to December 31, 2006,2007, resulting in a zero$541,823 value for Mr. Eckert in Column (h) of the table above.

Column (h) does not show any nonqualified deferred compensation earnings because Mattel’s nonqualified deferred compensation plan does not provide for above-market earnings. The benefits under that plan are shown in the Nonqualified Deferred Compensation Plans table and in the footnotes and narrative disclosure to that table.

GRANTS OF PLAN-BASED AWARDS

The following table shows information about the non-equity incentive awards and equity-based awards granted to our named executive officersNEOs in 2006.2007.

Footnotes to Grants of Plan-Based Awards Table:

upon the satisfaction of the conditions to vesting in that award, and upon the value of Mattel common stock at the time when the executive sells any stock received in settlement of the award. Thus, there is no assurance that the value, if any, eventually realized by the executive will correspond to the amount shown.

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Column (l), Grant Date Fair Market Value of Stock and Option Awards, shows estimates of the grant date fair value of the awards, calculated using the same method as for our financial reports.reporting. For options granted in 2007, this method is a variation of the Black-Scholes pricing model based on the following weighted-average assumptions: 4.9%4.6% risk-free rate; 5.14.7 year expected life; 2.8% dividend yield; 28.0%22.6% volatility factor; and the exercise price as set forth in the table above. For each restricted stock unit, the grant date fair value is equal to the closing price of a share of Mattel common stock on the grant date.

Narrative Disclosure to Grants of Plan-Based Awards Table:

Non-Equity Incentives

Mattel grants non-equity incentive plan awards under 2002 Mattel Incentive Plan, known as the MIP and the Mattel, Inc. 2003 Long-Term Incentive Plan, known as the LTIP. The MIP bonus opportunities for 20062007 are shown in the left-hand portion of the above table. See the Summary Compensation Table and the narrative disclosure to that table for more detailed information regarding the MIP, including the actual MIP amounts earned for 20062007 and the terms and conditions of the 20062007 awards. No new awards were made to our named executive officers under the LTIP in 2006.2007.

Equity Awards

Stock awards. The numbers of stock awards granted to our named executive officers in 20062007 are shown in Column (i), All Other Stock Awards, the corresponding grant dates are shown in Column (b), Grant Date, and the corresponding grant date fair market values are shown in Column (l), Grant Date Fair Market Value of Stock and Option Awards. The actual value, if any, that an executive may realize from a stock award is contingent upon the satisfaction of the conditions to vesting in that award, and upon the value of Mattel common stock at the time when the executive sells any stock received in settlement of the award. Thus, there is no assurance that the value, if any, eventually realized by the executive will correspond to the amount shown.

These stock awards were granted under the Mattel, Inc. 2005 Equity Compensation Plan, and take the form of restricted stock units with dividend equivalents. Each restricted stock unit represents a conditional right to obtain one share of our common stock. Except as noted below for Mr. Eckert, the terms and conditions of these restricted stock units granted to our named executive officersNEOs are the same as those for all other employees who received restricted stock unit grants in 2006,2007, as follows:

withheld to satisfy tax withholding requirements. Mattel has the right to elect to settle in cash, but does not anticipate doing so.

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

Option awards. The number of shares underlying the options granted to our named executive officersNEOs in 20062007 are shown in Column (j), All Other Option Awards, with the corresponding exercise prices shown in Column (k), Exercise or Base Price of Option Awards, and the corresponding grant dates in Column (b), Grant Date. The grant date fair market value of these options is shown in Column (l), Grant Date Fair Market Value of Stock and Option Awards. The actual value, if any, that an executive may realize from an option is contingent upon the satisfaction of the conditions to vesting in that award, and upon the excess of the stock price over the exercise price on the date the option is exercised. Thus, there is no assurance that the value, if any, eventually realized by the executive will correspond to the amount shown.

These options were granted under the Mattel, Inc. 2005 Equity Compensation Plan. The per-share exercise prices of these options represent the closing price of a share of our common stock in the New York Stock Exchange on the date of grant.grant date. Except as noted below, the terms and conditions of these options granted to our named executive officersNEOs are generally the same as those for all other employees who received option grants in 2006,2007, as follows:

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

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

OUTSTANDING EQUITY AWARDS AT 20062007 YEAR-END

The following table shows the outstanding equity-based awards that were held by our named executive officersNEOs as of December 31, 2006.2007.