Schedule 14a information


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NameSchedule 14a information
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A typeSchedule
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Alan G. Hassenfeld................ 35,000 2000-2002 0 35,000 70,000

Alfred J. Verrecchia.............. 25,000 2000-2002 0 25,000 50,000

Brian Goldner..................... -- -- -- -- --

Harold P. Gordon.................. 25,000 2000-2002 0 25,000 50,000

E. David Wilson................... 20,000 2000-2002 0 20,000 40,000
---------------
(a) The awards will only deliver a benefit to the employee if certain

performance goals are met. Performance goals are based on the Company's

revenue growth and growth in earnings per share during the three year period

2000-2002, as modified by the price of the Common Stock at the end of 2002

for the years 2000-2002. If the performance goals are met, the targeted

awards will be made in the form of restricted stock to be granted in 2003,

one third of which would vest in one year and the remainder in two years.

The 2000 and 2001 goals were not met.
* * *
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The following table shows the estimated annual benefits payable upon

retirement in specified remuneration and years of service classifications under

the Company's Pension Plan (the "Pension Plan") and under the Supplemental Plan:
PENSION PLAN TABLE

ESTIMATED ANNUAL RETIREMENT BENEFIT BY YEARS OF SERVICE CLASSIFICATION(2)

AVERAGE ---------------------------------------------------------------------------

COMPENSATION(1) 10 15 20 25 30 35(3)

--------------- ---------- ---------- ---------- ---------- ---------- ----------
$ 200,000 $ 33,333 $ 50,000 $ 66,667 $ 83,333 $100,000 $100,000

400,000 66,667 100,000 133,333 166,667 200,000 200,000

800,000 133,333 200,000 266,667 333,333 400,000 400,000

1,200,000 200,000 300,000 400,000 500,000 600,000 600,000

1,600,000 266,666 400,000 533,333 666,667 800,000 800,000

1,800,000 400,000 450,000 600,000 750,000 900,000 900,000
---------------

(1) Covered compensation under the Pension Plan and the Supplemental Plan

includes total salaries and bonuses (as set forth in the Summary

Compensation Table) for the five highest consecutive years during the ten

years preceding retirement ("Average Compensation").
(2) Estimated retirement benefit amounts shown are prior to reduction by an

Internal Revenue Service designated amount keyed to a participant's Social

Security entitlement. Amounts shown are computed on the single straight-life

annuity option. Early retirement, which is permitted up to 10 years prior to

the normal retirement date, and other payment options will reduce the annual

benefit amount shown. Payments from the Supplemental Plan, which is

unfunded, are not subject to provisions of the Code that limit benefits

under the Pension Plan. As set forth in the above table and subject to the

foregoing, the retirement benefit after thirty years of credited service is

generally 50% of Average Compensation.
(3) For purposes of determining annual benefits under the Pension Plan and the

Supplemental Plan prior to 2000, credited years of service cannot exceed 30.

Effective January 1, 2000, the Company amended the Pension Plan to provide

for a lump sum benefit determined primarily on the basis of Average

Compensation and actual years of service (including years of service in

excess of 30 years). The lump-sum benefit is reduced if payment is made

before age 55. Until 2007, employees will receive the higher of the benefits

provided by such amendment and as described in the above table.
The following table sets forth, as to the five named individuals, their

years of credited service under the Pension Plan and the Supplemental Plan:

CREDITED YEARS

OF SERVICE

--------------
Alan G. Hassenfeld.......................................... 33

Alfred J. Verrecchia........................................ 36

Brian Goldner............................................... 2

Harold P. Gordon............................................ 7

E. David Wilson............................................. 21
CHANGE OF CONTROL AND EMPLOYMENT AGREEMENTS
The agreements summarized below (or the form thereof) have been filed with

the Securities and Exchange Commission as exhibits to the Company's periodic

filings and such summaries do not purport to be complete and are qualified in

their entirety by reference to such agreements.
Change of Control Agreements. Ten senior executives, including all of the

above-named individuals, are parties to employment agreements, as amended (the

"Change of Control Agreements") with the Company. The Change of Control

Agreements come into effect only upon a "Change of Control," as defined therein,

and continue for three years after such date (the "Employment Period"). If,

during the Employment Period, an executive's employment with the Company is

involuntarily terminated other than for "Cause," the executive is
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entitled to the executive's (a) average annual salary for the five years

preceding the Change of Control (or such lesser number of actual years employed)

plus (b) the greater of (x) the target bonus during the year of termination and

(y) the average annual bonus for the five years preceding the Change of Control

(or such lesser number of actual years employed), in each case multiplied by

three.
The executive would also be entitled to an amount equal to the shortfall

between the actuarial benefit payable to the executive under the Company's

retirement plans as a result of the early termination and the amount the

executive would have received if the executive had continued in the employ of

the Company for the remainder of the Employment Period. In addition, the

executive and the executive's family would be entitled to the continuation of

medical, welfare, life insurance, disability and other benefits for at least the

remainder of the Employment Period. If the executive is subject to the payment

of excise tax under Section 4999 of the Code, the Company will pay such

executive an additional amount so as to place the executive in the same

after-tax position such executive would have been in had such excise tax not

applied.
In addition, the Change of Control Agreements permit an executive to

terminate the executive's employment for "Good Reason" at any time or for any

reason during a 30-day period immediately following the first anniversary of the

Change of Control and receive the above-described severance benefits. "Good

Reason" includes diminution of the executive's responsibilities or compensation,

relocation or purported termination otherwise than as expressly permitted by the

Change of Control Agreements. Under certain circumstances, certain payments by

the Company pursuant to the Change of Control Agreements may not be deductible

for federal income tax purposes pursuant to Section 280G of the Code.
A "Change of Control" is defined as the occurrence of certain events,

including acquisition by a third party of 20% or more of the Company's

outstanding voting securities, a change in the majority of the Board,

consummation of a reorganization, merger, consolidation, substantial asset sale

involving, or shareholder approval of a liquidation or dissolution of, the

Company subject, in each case, to certain exceptions. "Cause" is defined (for

purposes of the Agreements, as demonstrably willful or deliberate violations of

the executive's responsibilities which are committed in bad faith or without

reasonable belief that such violations are in the best interests of the Company,

which are unremedied after notice, or conviction of the executive of a felony

involving moral turpitude. The Change of Control Agreements were amended as of

March 10, 2000 to provide that the executive's target bonus be taken into

account in computing benefits, to change the definition of a "Change of Control"

to be "consummation" of a reorganization, merger, consolidation or sale of

substantially all of the assets of the Company rather than "shareholder

approval" thereof and to make other conforming and clarifying changes in the

Change of Control Agreements, the forms of which were originally approved in

1989.
Employment Agreements. The Company and Mr. Goldner entered into an Amended

and Restated Employment Agreement, effective as of October 31, 2001 (the

"Agreement"), pursuant to which Mr. Goldner agreed to serve as President, U.S.

Toys of the Company, and to fulfill such other duties and responsibilities as

are assigned to him, for a term expiring on June 30, 2004 (the "Term"). Mr.

Goldner's base salary was set at $525,000 per annum until March 19, 2002, at

which time the base salary would be adjusted to $550,000 per annum. Mr. Goldner

had previously been paid a sign-on bonus of $250,000. Mr. Goldner is also

eligible to participate in the other benefit plans and programs available to

senior executives and employees generally. The Agreement provided that if Mr.

Goldner voluntarily left the employ of the Company, or was terminated by the

Company for Cause (as defined in the Agreement), prior to March 18, 2002, he

would repay to the Company $125,000 of the sign-on bonus.
The Agreement provides that during its term Mr. Goldner will be eligible to

receive a management incentive plan bonus based on a target of 50% of his base

salary for the applicable year. Mr. Goldner received a management incentive plan

bonus of $250,000 for 2000. The Agreement provides that if Mr. Goldner

voluntarily terminates his employment with the Company between March 19, 2002

and March 18, 2003, he will repay to the Company one third of his 2000

management incentive plan bonus.
The options and restricted stock set forth on the "Summary Compensation"

and "Options Grants" tables were granted to Mr. Goldner pursuant to the previous

employment agreement between him and Tiger Electronics, Ltd. ("Tiger"), now a

division of the Company, and both his stock option and restricted stock

agreements provide, pursuant to the Agreement, that if he is involuntarily

terminated other than for Cause and

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not because of a Change in Control (as defined in the Agreement), all unvested

options and restricted stock would vest and all repayment obligations by Mr.

Goldner discussed above would terminate. The Agreement further provides that if

Mr. Goldner is terminated by the Company without Cause and not because of a

Change in Control, Mr. Goldner shall be entitled to the greater of (a) his base

salary payable at the times that Mr. Goldner's salary would have been paid if he

had remained in the employ of the Company for the remainder of the Term or (b)

twenty-four months of base salary.
Pursuant to the Agreement and his previous employment agreement with Tiger,

Mr. Goldner received relocation assistance, a relocation bonus equal to 40% of

his base salary, mortgage buy-down benefits, and a Change of Control Agreement

in the form described above, and agreed to one-year post-employment non-compete

and non-solicitation obligations. If Mr. Goldner voluntarily leaves the employ

of the Company or is terminated for Cause prior to July 1, 2002, he must repay

the relocation bonus.
The Company and Mr. Gordon entered into an amended and restated employment

agreement, effective October 15, 2001 (the "Agreement"), pursuant to which Mr.

Gordon agreed to serve as Vice Chairman of the Company, and to fulfill such

other duties and responsibilities as are reasonably assigned to him, for a term

expiring on June 30, 2002 (the "Extended Term"). Mr. Gordon's base salary was

set at $584,000 per year during the Extended Term. The Agreement provided that

Mr. Gordon was eligible to receive a management incentive bonus for 2001 based

on a target of 60% of Mr. Gordon's base salary, modified up or down based upon

the 2001 financial performance rating for the Company approved by the

Compensation and Stock Option Committee. The Agreement also provides that during

the Extended Term Mr. Gordon will be eligible to participate in the other

benefit plans and programs available to senior executives and employees

generally.
The Agreement provides that effective July 1, 2002 (or upon an earlier

termination date, if applicable) Mr. Gordon will receive retirement benefits

under the Company's Pension Plan and Supplemental Plan on the same basis as

other senior executives of the Company. During his lifetime, Mr. Gordon will

also receive a monthly annuity beginning upon the later of the date of his

termination of employment with the Company or reaching age 65. The annual amount

of the annuity is set at 3.33% of Mr. Gordon's Final Average Pay (as defined in

the Agreement) multiplied by the number of full years Mr. Gordon has been

employed by the Company upon the termination of his employment. The foregoing

annuity amount will be reduced by the sum of benefits payable to Mr. Gordon

under the Pension Plan, the Supplemental Plan and U.S. Social Security.
Pursuant to the Agreement, the Company will maintain a key executive life

insurance policy on Mr. Gordon in an amount sufficient to pay Mr. Gordon a life

annuity benefit of $225,000 per year beginning upon the later of the termination

of Mr. Gordon's employment or Mr. Gordon reaching age 65. If Mr. Gordon dies

before the commencement of the life insurance annuity payments, his beneficiary

would receive a lump sum death benefit of $1,500,000 and none of the other life

insurance annuity payments would be payable. If he dies after the life insurance

annuity payments begin but before the receipt of 240 months of payments, the

balance of said 240 months of payments will be made to his beneficiary. If the

underlying value of such insurance policy is insufficient to pay such annuity

payments, the Company shall pay such amounts from its general assets.
Provided Mr. Gordon is not terminated for Cause (as defined in the

Agreement) prior to the end of the Extended Term, all of Mr. Gordon's previously

unvested stock options are accelerated to July 1, 2002 and Mr. Gordon is granted

an extended period following termination of his employment to exercise his stock

options.
Pursuant to the Agreement Mr. Gordon agreed to one-year post-employment

non-compete and non-solicitation obligations.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Stock Option Committee of the Board as

of the 2001 fiscal year end were Carl Spielvogel (Chair), Alan R. Batkin, Norma

T. Pace and Eli J. Segal. Marie Josee Kravis also served on the Compensation and

Stock Option Committee for part of 2001. None of the members of the Compensation
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