LeapFrog 2005 Annual Report Download - page 127

The Compensation Committee is currently comprised of four directors, Messrs. Wang (Chair), Fink, Smith and
Nagel. The board has determined that all members of LeapFrog’s Compensation Committee are independent (as
independence is defined in Section 303A.02 of the NYSE listing standards). The Compensation Committee met
four times in 2005. The Compensation Committee has adopted a written Compensation Committee Charter that
is posted on our website at www.leapfroginvestor.com.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee, or Governance Committee, of the board of
directors is responsible for identifying, reviewing and evaluating candidates to serve as directors on our board
(consistent with criteria approved by the board), reviewing and evaluating incumbent directors, recommending to
the board for selection candidates for election to the board of directors, making recommendations to the board
regarding the membership of the committees of the board, assessing the performance of management and the
board, reviewing the compensation paid to non-employee directors for their service on our board and its
committees, and developing a set of corporate governance principles for LeapFrog. Our Governance Committee
is currently comprised of three directors, Messrs. Fink (Chair), Smith and Katz. All members of the Governance
Committee are independent (as independence is defined in Section 303A.02 of the NYSE listing standards). The
Governance Committee met three times during the 2005 fiscal year. Our Governance Committee charter is
posted on our website at www.leapfroginvestor.com.
The Governance Committee believes that candidates for director should have certain minimum
qualifications, including being able to read and understand basic financial statements, being over 21 years of age
and having the highest personal integrity and ethics. The Governance Committee also considers such factors as
possessing relevant expertise upon which to be able to offer advice and guidance to management, having
sufficient time to devote to the affairs of LeapFrog, demonstrated excellence in his or her field, having the ability
to exercise sound business judgment and having the commitment to rigorously represent the long-term interests
of our stockholders. However, the Governance Committee retains the right to modify these qualifications from
time to time. Candidates for director nominees are reviewed in the context of the current composition of the
board, the operating requirements of LeapFrog and the long-term interests of stockholders. In conducting this
assessment, the Governance Committee considers diversity, age, skills, and such other factors as it deems
appropriate given the current needs of the board and LeapFrog, to maintain a balance of knowledge, experience
and capability. In the case of incumbent directors, the Nominating and Corporate Governance Committee
reviews such directors’ overall service to LeapFrog during their term, including the number of meetings attended,
level of participation, quality of performance, and any other relationships and transactions that might impair such
directors’ independence. In the case of new director candidates, the Governance Committee also determines
whether the nominee must be independent for NYSE purposes, which determination is based upon applicable
NYSE listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The
Governance Committee uses its network of contacts to compile a list of potential candidates, but may also
engage, if it deems appropriate, a professional search firm. The Governance Committee conducts any appropriate
and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the
function and needs of the board. The Governance Committee meets to discuss and consider such candidates’
qualifications and then selects a nominee for recommendation to the board by majority vote. In 2005, our board
engaged a third party to assist us in the process of identifying and evaluating director candidates. This third party
search firm identified Dr. Nagel as a potential candidate for our board of directors. Our Chairman of the board,
who is also the Chairman of the Governance Committee, identified Mr. Katz as a possible candidate for our
board. To date, LeapFrog has not received a timely director nominee from a stockholder or stockholders holding
more than 5% of our voting stock.
The Governance Committee will consider director candidates recommended by stockholders. The
Governance Committee does not intend to alter the manner in which it evaluates candidates, including the
minimum criteria set forth above, based on whether the candidate was recommended by a stockholder or not.
Stockholders who wish to recommend individuals for consideration by the Governance Committee to become
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