LeapFrog 2011 Annual Report Download - page 147

Elements of Executive Compensation
The compensation committee uses a mix of cash and equity compensation, along with severance, health,
and other benefits, to develop total compensation packages for our executives that meet our compensation
objectives. The elements of our executive compensation program are:
• Base salary;
• Performance-based bonuses;
• Equity incentive awards;
• Severance benefits; and
• Other benefits and perquisites.
Base Salary
The compensation committee reviews and adjusts, as necessary or appropriate, the base salaries of our
executives on an annual basis, and makes decisions with respect to the base salaries of new executives at the
time of hire. In making its determinations, the compensation committee considers several factors, including
our overall financial performance, individual performance, the executive’s potential to contribute to our long-
term strategic goals, his or her scope of responsibilities and experience and competitive market practices for
base salary.
In April 2011, both Mr. Etnyre and Mr. Campbell received increases in their annual base salary of
$15,000. In both cases, the raise was intended to bring the base salary compensation of Messrs. Etnyre and
Campbell closer to the 50
th
percentile for base salary compensation for their position in our Peer Group. There
were no other base salary changes of our named executive officers in 2011.
Performance-Based Bonuses
We use performance-based bonuses to motivate our executives to achieve our short-term financial and
operational goals and to reward exceptional company and individual performance. In 2011, our bonus plan
was designed to encourage net sales growth and improve our operating income results, as described below.
Target Bonus Opportunity
For 2011, the target bonus opportunity for our named executive officers ranged from 65 − 100% of their
2011 base salaries (in each case subject to adjustment in the discretion of the board or compensation
committee as described below under the heading ‘‘Bonus Award Decisions’’). These target bonus opportunities
are established in each executive’s employment agreement or offer letter and are based on competitive market
practices for each individual’s position. The target bonus opportunity for Mr. Chiasson in 2011 was equal to
75% of his 2011 base salary. With respect to Mr. Barbour, it was equal to 100% of his 2011 base salary
(prorated for the portion of the year during which he was employed at LeapFrog) and was guaranteed for
2011 because he joined the Company once the 2011 product planning and development cycle was already well
under way. With respect to Messrs. Dodd and Chai, the target bonus opportunity was 75% of their 2011 base
salary. With respect to Messrs. Campbell and Etnyre, the target bonus opportunity in 2011 was increased from
50% to 65% of their 2011 base salaries to bring their annual bonus compensation closer to the 50
th
percentile
for annual bonus compensation for their position in our Peer Group.
Seventy percent of each executive’s target bonus opportunity was allocated to a Company performance
component and 30% was allocated to an individual performance component.
Bonus Components
Total Target
Bonus
Opportunity
Company Performance.......... 70%
Individual Performance ......... 30%
Total ...................... 100%
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