LeapFrog 2003 Annual Report Download - page 119

common stock subject to the option on the date of the option grant. Options granted under the Director Plan vest in
equal monthly installments over a three year period in accordance with its terms. The term of options granted under
the Director Plan is ten years. In the event of a merger of LeapFrog with or into another corporation or a
consolidation, acquisition of assets or other change-in-control transaction involving LeapFrog, the vesting of each
option will accelerate and become fully vested and immediately exercisable, if, as of the completion of the
change-in-control transaction or within 12 months of such transaction, the non-employee director’s service
terminates; provided that such acceleration will not occur if the termination was a result of the non-employee
director’s resignation (other than any resignation contemplated by the terms of the change-in-control transaction or
required by LeapFrog or the acquiring entity pursuant to the change-in-control).
Under the terms of the Director Plan, during the fiscal year ended December 31, 2003, we granted an annual
option for 10,000 shares to each of Messrs. Berg, Fink, Maron and Resnick, Dr. Munitz and Ms. Simon at an
exercise price of $31.81 per share and upon his election to our board of directors an initial option to Mr. McKee
for 25,000 shares at an exercise price of $34.70. As of April 8, 2004, no options had been exercised under the
Director Plan.
As set forth in Proposal 3 of this proxy statement, we are seeing stockholder approval of an amendment to
the Director Plan such that a non-employee director who serves on our board of directors will receive an initial
option grant of 30,000 shares of our Class A common stock and an annual grant of 15,000 shares of our Class A
common stock, provided that a non-employee director who holds the position of Chairman of our board of
directors at the time of the annual grant will receive an annual grant of 25,000 shares in lieu of an annual grant of
15,000 shares.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Compensation Committee of the board of directors is composed of Dr. Munitz and
Messrs. Berg and Resnick. During the fiscal year ended December 31, 2003, none of these directors was an
officer or employee of LeapFrog or any of our subsidiaries, nor are any of these directors former officer of
LeapFrog or any of our subsidiaries.
None of our other executive officers or directors serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers serving on our board of directors
or compensation committee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires LeapFrog’s directors and
executive officers, and persons who own more than ten percent of a registered class of LeapFrog’s equity
securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of LeapFrog. Officers, directors and greater than ten percent stockholders are required
by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
To LeapFrog’s knowledge, based solely on a review of the copies of such reports furnished to us and written
representations that no other reports were required, during the fiscal year ended December 31, 2003, all
Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial
owners were complied with except that one report covering an aggregate of two transactions was filed late by Mr.
Mark Flowers; one report covering one transaction was filed late by Mr. Robert Lally; four reports covering an
aggregate of five transactions were filed late by Mr. L. James Marggraff; one report covering one transaction was
filed late by Mr. Paul Rioux; and one report covering an aggregate of 11 transactions was filed late by Mr.
Michael Wood.
PROXY
19