Presiding over his first shareholders meeting, Robert Eckert was grilled for about an hour Wednesday by shareholders about Barad's deal, his own pay, and what he planned to do to restore the world's largest toy company to profitability.

``Welcome to hell week,'' one investor said before firing a question at the Eckert, named Mattel's chairman and chief executive officer last month.

Afterward, an upbeat Eckert described the sometimes testy meeting as ``a wonderful experience.''

``My principal objective right now is to learn as much as I can. This is their day to ask me questions,'' he said.

Eckert said he hoped to rebuild Mattel's profitability by strengthening the company's core brands, such as the Barbie and Hot Wheels lines, seek out top management talent and cut costs wherever possible. Such steps, he said, are similar to those he took to help boost sales of Kraft's products during his tenure as chairman and chief executive there.

Potential best sellers include an upcoming line of ``Harry Potter'' toys, based on the series of books about a young English boy's encounters with the supernatural. Mattel also holds rights to toys based on Disney's ``Dinosaurs'' and ''102 Dalmatians'' films, he said.

``No competitor comes close to having the brand power of Mattel,'' he said.

Investors praised Eckert for his poise and confidence, but complained that his answers were short on the kind of detail needed to reassure stockholders, whose shares traded at $14.69 on Wednesday, down 68 percent from a 10-year high of $46.75 reached in March 1998.

``I don't think people are satisfied,'' said Lorne Abramson, a principal with Spare, Kaplan, Bischel & Associates, a San Francisco money management firm that holds about 800,000 shares of Mattel. ``I think the board needs more accountability.''

Eckert was named Mattel's chairman and chief executive officer May 17. He replaced Barad, who was forced to resign in February after reporting the company's fourth consecutive quarterly loss. Barad also was under fire for the purchase of the Learning Co., the money-losing maker of Carmen Sandiego and other software titles. The $3.6 billion deal sent Mattel's balance sheet into the red and cost Barad her job.

Barad's strategy of moving into the business of selling high-tech, Internet-related toys was smart, but the choice of Learning Co. as the vehicle was a big mistake, Eckert told investors.

``It was the execution that was flawed,'' he said.

Mattel now is trying to sell Learning Co. After that is done, Eckert said, the company will develop a new strategy to position itself in the technology arena.

``It's clear consumers have become more adept at new technology. We need to capitalize on the opportunities that creates,'' he said.

Eckert defended Barad's severance plan, saying Mattel's board was bound to the deal by contract. He praised the board for quickly moving to change the company's management. His own contract, he said, was heavily weighted to the company's performance.

``The board insisted, and I agreed'' to such a structure, he said.

Eckert will receive a salary of $1.25 million and was given options to buy 3 million shares for $11.25 each, Mattel's price on the day he was hired. The package includes a bonus plan tied to Mattel's share price that could contribute as much as $8 million in three years.

For all of their frustration with Mattel's losses, investors rejected a proposal that would have eliminated bonuses and stock options for top executives and another that would have required two-thirds of Mattel directors be from outside the company.

The compensation measure was defeated by an 85 percent margin and the directors measure by 75 percent.

Shareholders approved a measure attacking the company's poison pill provision, which would make any hostile takeover efforts more difficult. The resolution asks the board to either drop the provision, or let shareholders vote on whether it should remain in place.

The resolution was sponsored by the American Federation of State, County and Municipal Employees. Pension funds serving the federation's members own about 15 million shares of Mattel stock.

[Posted 6/08/2000]