The University of Arizona Alumnus / Spring 2008
Memo from the Boss - Robert A. Eckert
Chairman of the Board and Chief Executive Officer - Mattel
Eckert, a 1976 business graduate, was the face of the Mattel company when word broke that the paint on Mattel toys manufactured in China contained unacceptably high levels of lead. More than a million were recalled worldwide, including Mattel products.
National and international press gave both Eckert and Mattel high marks for candor and decisive action in the wake of the discovery and the subsequent recalls.
Eckert is chairman of the board and chief executive officer of Mattel. He joined the company in May 2000 after heading Kraft Foods. Eckert and his wife, Kathie, have four children.
Eckert visited the UA in February this year to speak about managing a crisis. Just before his talk we asked him to tell us about how he first learned about the lead problem and what he immediately did about it. We also asked about executive compensation, his life, and got the scoop on Mattel’s next hit.
I didn’t know what the initials CEO stood for
When I started in business, I didn’t know what the initials CEO stood for. My father is a 90-year-old retired dentist. We didn’t talk about business around the dinner table. I could tell you a lot about teeth.
I decided to study business. My family has been very fortunate and blessed and I have had a nice career. It wasn’t from being overly ambitious. My view is, if you work hard and do the best you can, things will take care of themselves. I’ve been fortunate that they have.
My wife and I were public-school kids. We both went through the public education system, through our bachelor’s degrees. She went to the University of Massachusetts. I went to The University of Arizona. Education is the most important thing to us. I believe we have the duty of giving back to education.
I have a friend whose goal is to make more money so he can give more money back to his alma mater. I admire that.
“We have a problem”
I first learned about the lead problem on Friday, the 13th of July 2007. The head of quality assurance and the head of operations came into my office and said, “We have a problem.”
We had failed a routine paint test for a retail customer in Europe.
Lead paint is something we’ve been testing for decades and never had a failure. That’s what made it new, big, and a crisis.
We do have a crisis plan. We know who’s responsible for what all around the world and can immediately go into action. The first action is fact-finding. What is the scope of the problem? We knew we had “a toy” that didn’t pass a test. Where was that toy made? When was it made? What other toys were made at that place? And, in this case, where did the paint come from that went on that toy? And go find the paint. It’s a little bit like a doctor treating a patient. You hear the first symptom, and then you want to dig to discover what the root cause of the problem is and deal with that.
We make about half a billion toys a year.
Unfortunately, not every toy is perfect.
My experience is, if you’re straight with people, open and honest, explain to them what went wrong, and more importantly, how you plan to prevent that from occurring again, they’ll forgive you and move on.
A meeting with the Senator
I met with Sen. Richard Durbin late on a Friday afternoon in his office in Chicago. I give him a lot of credit because he sat down in our very first meeting and wanted to hear and really understand the entire story. Our discussion culminated in the senator holding hearings and I participated in those hearings.
His view is that there is a role for government in the safety of products, including toys. I personally agree. At the same time, government doesn’t make products, and government isn’t ultimately responsible. We in business need to be responsible for what we do. But there should be government oversight of consumer products.
Executive compensation
There is discussion about executive compensation. There are clearly people on the outside end of this thing who are overpaid for what they’ve delivered to any constituency, including shareholders. It’s very public and it’s not right. There are other people who are underpaid, but that’s their and their board’s choice.
This is the responsibility of the board of directors and its compensation committee. In the vast majority of companies, they do their job and try to do it well. But, as in all things, you’ll get some people out there who are doing things that just aren’t right and they paint a bad picture.
The market works. If someone is too far off in excess land, maybe the next CEO isn’t overpaid.
I don’t think people appreciate that the life of a CEO typically is pretty short. It’s somewhat analogous to an athletics coach. There are some people who really deliver and get paid really well and you feel good about it. There are others who don’t deliver a winning team and they’re getting paid a lot. Then OK, it’s time to change coaches.
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