Mattel gives friendly investor a board seat to head off proxy fight

A major Mattel shareholder is planning to challenge the company through a proxy fight with the aim of steering Mattel towards a potential sale, according to sources familiar with the situation. Southeastern Asset Management is currently evaluating whether to nominate new directors at Mattel as part of their proxy fight. The activist investor has been urging the company to sell itself for months, citing double-digit sales declines in key segments like Fisher-Price and concerns over profit margins.

The situation intensified after Mattel CEO Ynon Kreiz's departure to join Skydance, causing Mattel shares to fall by 5% in response to his successor, former Condé Nast CEO Roger Lynch. However, the stock recovered after a Wall Street Journal report revealed takeover interest from Authentic Brands Group. While Southeastern's plans might shift, no decision has been finalized, and it's improbable that the activist could gain full control over Mattel's board.

A proxy fight would still serve as a vote of confidence in the company's future direction. As per Mattel's bylaws, an investor can nominate a maximum of two directors, with limited exceptions. Additionally, another significant Mattel shareholder, Ariel Investments, has communicated to other investors that they believe change is necessary at Mattel, citing Ariel founder John Rogers' belief that the company should sell itself.

This stance is unusual for a shareholder known for typically being management-friendly. Mattel responded in a statement, affirming their engagement with all shareholders but declined to provide further details. Neither Ariel nor Southeastern commented on the matter.