Stephen Berman
JAKKS PACIFICAbout Stephen Berman
Stephen G. Berman (age 60) is JAKKS Pacific’s Chairman (since Oct. 23, 2015), Chief Executive Officer (since Apr. 1, 2010), President (since Jan. 1, 1999) and a director/co‑founder (since Jan. 1995) . Under his leadership, 2024 net sales were $691.0M and net income was $34.2M . Over 2022–2024, a fixed $100 investment in JAKKS appreciated to $277.07 by year‑end 2024 (Pay vs Performance TSR table), while reported net income moved from $91.1M (2022) to $38.1M (2023) to $34.2M (2024) . The Board initiated a quarterly dividend of $0.25 per share announced Feb. 20, 2025, signaling capital return alongside ongoing operations .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| JAKKS Pacific, Inc. | Chairman | 2015–present | Combined Chair/CEO governance; management’s perspective in Board deliberations |
| JAKKS Pacific, Inc. | Chief Executive Officer | 2010–present | Led strategy, licensing, and operational execution |
| JAKKS Pacific, Inc. | President | 1999–present | Executive leadership across product/market expansion |
| JAKKS Pacific, Inc. | Director; Secretary | 1995–present | Co‑founder; Board continuity |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| THQ International, Inc. (subsidiary of THQ) | VP & Managing Director | 1991–1995 | Category expertise and distributor relationships preceding JAKKS |
| Balanced Approach, Inc. | President & Owner | 1988–1991 | Entrepreneurial operating background |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 1,741,267 | 1,800,000 | 1,826,042 |
| Actual Cash Bonus Paid ($) | 5,548,203 | 5,171,940 | 2,943,219 |
| Stock Awards – Grant Date Fair Value ($) | 5,726,466 | 3,499,994 | 3,500,004 |
| All Other Comp ($) | 71,478 | 50,441 | 30,806 |
| Total ($) | 13,087,414 | 10,522,375 | 8,300,071 |
- Bonus opportunity range up to 300% of base salary under the employment agreement (for 2025–2026 and earlier amendments) .
Performance Compensation
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Annual cash incentive design: Historically Net Revenue and EBITDA (50/50) determined the annual performance bonus; since at least 2022 the company states cash bonus performance has been based exclusively on adjusted EBITDA; in 2025 a separate market‑based (stock price) RSU program was added . For 2024, Berman earned 100% of the cash‑payable bonus on EBITDA; in 2023 he earned 100% on TSR and EBITDA and 50% on Net Revenue per the agreement mechanics; no discretionary cash bonuses were awarded in 2022–2024 .
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Long‑term equity performance mix: In the 2016 modification, 40% of the annual equity grant vests over time; 60% cliff‑vests on 3‑year performance with measures: TSR vs Russell 2000 (50%), Net Revenue growth vs peer group (25%), and EBITDA growth vs peer group (25%) . From 2025, added four‑year RSU tranches vesting only if 180‑day Average VWAP meets $45.00, $52.50, and $60.00 price hurdles; unearned tranches forfeit at term .
Detailed metrics summary:
| Metric | Weighting | Target construct | 2024 outcome/payout | Vesting mechanics |
|---|---|---|---|---|
| Adjusted EBITDA (annual cash bonus) | 100% since at least 2022 per CD&A | Compensation Committee annual goals | Earned 100% of cash‑payable bonus on EBITDA in 2024 | Cash bonus in year earned |
| TSR vs Russell 2000 (LT equity) | 50% of performance RSUs | Relative percentile vs index | Not specifically quantified for 2024; 2023 narrative indicates 100% for TSR for cash‑payable component | 3‑year cliff vest if conditions met |
| Net Revenue growth vs peers (LT equity) | 25% | Peer‑relative growth | 2023/2024 partials noted for Mr. Kimble; Berman’s specifics not itemized | 3‑year cliff |
| EBITDA growth vs peers (LT equity) | 25% | Peer‑relative growth | Not separately quantified for Berman in 2024 | 3‑year cliff |
| Stock price hurdles (LT equity, 2025) | Three tranches | 180‑day Avg VWAP ≥ $45/$52.50/$60 | New structure; forfeits if not met within term | Vest on hurdle date within four years |
Equity Ownership & Alignment
| Item | Amount | As of | Notes |
|---|---|---|---|
| Beneficial ownership (shares) | 307,042 | Apr. 23, 2025 | 2.8% of outstanding (11,146,230 shares) |
| Ownership % | 2.8% | Apr. 23, 2025 | SEC methodology; excludes RSUs per footnote |
| Unvested RSUs (count) | 508,371 | Dec. 31, 2024 | Market value $14,310,644 at $28.15/share; vest annually until 2027 |
| 2024 shares vested | 81,760 | 2024 | Realized value $2,906,568 |
- Footnote indicates an aggregate 523,766 unvested RSUs excluded from beneficial ownership at the 2025 record date; minimum stock ownership provisions may restrict transfer of certain shares .
- Company emphasizes full‑value RSUs vs options in recent years; no recent option grants and no listed options outstanding for Berman in 2024 .
Ownership policy and pledging:
- The proxy references Board‑adopted minimum stock ownership provisions that may restrict transfers (footnote to Berman’s beneficial ownership), but does not disclose any pledging by Berman; the Board adopted a Dodd‑Frank‑compliant clawback policy effective Dec. 1, 2023 .
Employment Terms
| Term | Provision | Detail |
|---|---|---|
| Agreement term | Extended Feb. 18, 2025 through Mar. 31, 2029 | Amendment added stock‑price‑hurdle RSUs and certain post‑termination health coverage in defined cases |
| Base salary escalator | Annual minimum increase | At least +$25,000 per year (amendment history and 2023 reset to $1.8M) |
| Annual equity grant | Lesser of $3.5M value or % of outstanding shares | Recent terms: up to 2.25% of outs. shares; vests in 3 equal installments; subject to plan share availability |
| Annual cash bonus | Up to 300% of base salary | Performance measures historically Net Revenue and EBITDA (50/50); CD&A says EBITDA‑only since at least 2022 |
| Market‑based RSUs (2025) | 3 tranches | Vest if 180‑day Avg VWAP ≥ $45 / $52.50 / $60 within four years; else forfeit |
| Severance (no cause / good reason) | Cash + equity | “Good Reason”/No‑cause severance showed base pay of $3,652,083 and RSUs of $14,310,644 at 12/31/24 scenario |
| Change‑in‑Control (double trigger) | 2.99× “base amount” + benefits | If terminated without cause or quits for good reason within 2 years post‑CoC; illustrative cash payout $22,807,520 plus RSUs $14,310,644 (12/31/24 model) |
| 280G treatment | Best‑net approach (no gross‑up) | Receives full CoC benefits even if excise tax applies if net after‑tax exceeds cutback alternative |
| Clawback | Adopted 12/1/2023 | Recovery of incentive‑based comp upon accounting restatement (3‑year lookback) |
| Perquisites | Auto allowance, 401(k) match, life insurance | Disclosed perquisites; e.g., 2024 “All Other” $30,806 for Berman |
Board Governance
- Board service: Director since 1995; Class I director with term expiring at the 2027 annual meeting .
- Roles: Combined Chairman (since 2015) and CEO structure; Board holds executive sessions of non‑management and independent directors at least twice per year; at least one such meeting occurred in 2024 .
- Independence and committees: Majority of directors are independent under Nasdaq rules; Berman is management and does not serve on Audit, Compensation, Nominating, or Cybersecurity committees .
- Attendance: From Jan. 1, 2024–Dec. 31, 2024, all directors met at least 75% attendance for Board and committee meetings .
Committee structure and advisors:
- Compensation Committee chaired by Alexander Shoghi; advisors have included Willis Towers Watson, Frederic W. Cook & Co., and Lipis Consulting; the committee conducts independence assessments per Rule 10C‑1 .
- In response to shareholder feedback post‑2024 meeting, the committee added explicit stock‑price hurdles to long‑term RSUs in 1Q25 to strengthen pay‑for‑performance alignment .
Say‑on‑Pay and shareholder feedback:
- 2024 say‑on‑pay passed with a majority of votes cast; in 2025 the committee implemented market‑based RSU hurdles ($45/$52.50/$60) to further align with feedback .
Director Compensation (context)
- Non‑employee director cash retainer: $100,000 annually; committee membership +$5,000; Audit Chair +$15,000; other committee chairs +$10,000; minimum director shareholding equals 2× average stipend from prior two years (illustrative $218,958 in 2025) .
Performance & Track Record
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Sales ($M) | 796.2 | 711.6 | 691.0 |
| Net Income ($M) | 91.1 | 38.1 | 34.2 |
| Value of $100 Investment (TSR index) | 172.15 | 349.90 | 277.07 |
- Mix/segment notes: 2024 Toys/Consumer Products $570.0M (-1.8% YoY) and Costumes $121.0M (-7.6% YoY) against a backdrop of lower royalty guarantee shortfalls and mix improvements; SG&A increased on media, R&D, and compensation .
- Capital allocation: Redeemed Series A preferred (Mar. 11, 2024), reduced derivative liability, and announced a quarterly dividend (Feb. 20, 2025) .
Compensation Structure Analysis
- Cash vs. equity mix is shifting toward explicit performance linkage: 2025 added stock‑price RSU hurdles—vesting only upon sustained price thresholds, increasing at‑risk equity and deferring realizable comp until value creation is evident .
- Equity grants capped by plan share availability; grants set as lesser of fixed dollar value ($3.5M) or a percentage of shares outstanding, mitigating dilution risk .
- Discretionary cash bonuses have not been used (2022–2024), reducing pay discretion risk .
- Clawback policy in place (Dec. 1, 2023), enhancing downside accountability .
Vesting Schedules and Potential Selling Pressure
- Time‑vest RSUs from annual grants vest in equal installments through 2027; 508,371 unvested units at year‑end 2024 had a $14.31M value at $28.15, implying potential annual delivery and associated tax‑withholding‑related sales around vest dates .
- 2024 vested shares: 81,760 ($2.91M realized), indicating ongoing delivery cadence that could create episodic liquidity/selling needs .
- 2025 market‑hurdle RSUs could release larger tranches upon sustained price thresholds ($45/$52.50/$60 180‑day Avg VWAP), potentially creating supply overhang at those trigger points; forfeiture if unmet preserves alignment .
Compensation Peer Group and Consultants
- Company transitioned away from using a fixed peer group in recent years, focusing more on performance vs. benchmarks; compensation consultants (WTW, FWC, LCI) have advised the committee .
Risk Indicators & Red Flags
- Double‑trigger CoC protection at 2.99× base amount plus continued benefits (illustrative $22.8M cash modeled at 12/31/24), plus accelerated RSUs—material parachute that could influence transaction dynamics; best‑net 280G approach (no gross‑up) partially mitigates governance concern .
- Combined Chair/CEO structure necessitates strong independent director oversight; Board holds executive sessions and maintains majority independence, including committee independence .
- Related‑party risk: Significant supplier Meisheng (historic) no longer has a Board designee; inventory/tooling spend with Meisheng remains material at $98.4M in 2024; ownership <10% as of 12/31/24 .
Employment & Contracts Summary Table (select economics as modeled at 12/31/24)
| Scenario | Cash Severance ($) | RSUs Acceleration / Value ($) | Notes |
|---|---|---|---|
| Good Reason / No‑Cause | 3,652,083 | 14,310,644 | Definitions per agreement |
| CoC + Involuntary Termination (double trigger) | 22,807,520 | 14,310,644 | 2.99× base amount; best‑net 280G |
Board Service History, Committees, and Dual‑Role Implications
- Service history: Director since 1995; Chair since 2015; CEO since 2010; President since 1999 .
- Committee roles: Berman does not sit on Audit, Compensation, Nominating or Cybersecurity committees; committee leadership is independent (e.g., Audit & Compensation chaired by Alexander Shoghi) .
- Dual‑role implications: Combined Chair/CEO may concentrate authority; mitigants include majority‑independent board, independent committees, and independent director executive sessions, with at least one independent‑only session held in 2024 .
Investment Implications
- Pay-for-performance alignment is tightening: 2025 market‑based RSU hurdles should better correlate realized equity with sustained share performance; short‑term cash remains tied to EBITDA, which the company has emphasized since at least 2022 .
- Potential supply overhang: Large unvested RSU balance (+ price‑trigger RSUs) suggests periodic stock deliveries at vest/hurdle dates could add selling pressure, particularly around $45/$52.50/$60 Avg VWAP milestones .
- Retention and transaction dynamics: Long term through 2029 with sizable double‑trigger CoC economics (2.99× base amount) supports continuity but may influence strategic optionality; absence of excise tax gross‑ups is shareholder‑friendlier than legacy gross‑up structures .
- Governance watch‑items: Combined Chair/CEO places a premium on committee independence and engagement; say‑on‑pay majority support, consultant use, and clawback adoption reduce governance risk, but continued monitoring of performance goal rigor (EBITDA vs multi‑metric) is warranted .