LeapFrog 2012 Annual Report Download - page 125

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Base Salary
The compensation committee reviews and adjusts, as necessary or appropriate, the base salaries of our
executives, including our named executive officers, 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.
There were no base salary changes for our named executive officers in 2012.
Performance-Based and Other Bonuses
We use performance-based cash bonuses to drive achievement of key business results and to recognize
individuals based on their contribution to those results. These bonuses are granted under the provisions of the
LeapFrog 2011 Equity and Incentive Plan, or the 2011 Plan. The amount of these bonuses is determined based
on a combination of the Company’s performance against pre-established financial goals and each executive’s
performance against individual goals.
The following formula is used to calculate the performance-based bonuses awarded to each executive,
including each named executive officer.
Base Salary X Target Percentage of Base Salary X Performance Multiplier (0-150%)
The target bonus percentage for our named executive officers is a percentage of their base salaries earned
during the fiscal year. These target bonus percentages are established in each executive’s employment
agreement or offer letter (or amendment) and are based on competitive market practices for each
individual’s position.
The Performance Multiplier is calculated by the compensation committee based on the level of
achievement of the Company’s performance against pre-established financial goals and each executive’s
performance against his or her individual goals. The Performance Multiplier can fall within a range of
0 − 150% and is based on the goals described below.
The following table shows how the formula is applied to determine the range of the potential
performance-based bonus awards under the formula for each named executive officer for 2012.
Name
Base Salary
Earned in
2012 X
Bonus Target
(Percentage of
Salary) X
Performance
Multiplier
Potential 2012
Performance-
Based Bonus
Mr. Barbour ............. $575,000 X 100% X 0 − 150% = $0 − 862,500
Mr. Arthur .............. $240,625
(1)
X 75% X 0 − 150% = $0 − 270,703
Mr. Etnyre .............. $188,596
(2)
X 65% X 0 − 150% = $0 − 183,881
Mr. Ahearn ............. $284,375
(3)
X 75% X 0 − 150% = $0 − 319,922
Mr. Dodd ............... $408,000 X 75% X 0 − 150% = $0 − 459,000
Mr. Spalding ............ $310,782
(4)
X 50% X 0 − 150% = $0 − 233,087
(1) Mr. Arthur’s annual base salary is $525,000. The amount reported was the base salary earned by
Mr. Arthur during his partial year of employment with LeapFrog in 2012, which began on July 16, 2012.
(2) The amount reported was Mr. Etnyre’s base salary earned through August 6, 2012. Pursuant to the terms
of his separation agreement, Mr. Etnyre was eligible to receive a prorated portion of his annual bonus
through August 6, 2012.
(3) Mr. Ahearn’s annual base salary is $525,000. The amount reported was the base salary earned by
Mr. Ahearn during his partial year of employment with LeapFrog in 2012, which began on June 18,
2012.
(4) Assumes a conversion rate of Pounds Sterling to US Dollars of 1:1.5539.
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