LeapFrog 2005 Annual Report Download - page 150

PROPOSAL TWO
AMENDMENT OF 2002 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN
LeapFrog’s 2002 Non-Employee Directors’ Stock Option Plan, or Director Plan, was initially adopted by
our board of directors on July 2, 2002 and approved by our stockholders on July 19, 2002. On March 27, 2006,
the board adopted an amendment and restatement of the Director Plan (and renamed the Director Plan as the
2002 Non-Employee Directors’ Stock Award Plan), subject to stockholder approval. In the event that this
proposal is not approved by the stockholders at our 2006 annual meeting of stockholders, the proposed
amendment and restatement of the Director Plan will not be effected and the Director Plan will remain in full
force and effect without such amendment and restatement.
The following summary description of the Director Plan, as proposed to be amended and restated, is
qualified in its entirety by reference to the full text of the Director Plan that is attached to this proxy statement as
Appendix B including all changes that this proposal would effect if approved by our stockholders at the annual
meeting.
Currently, the Director Plan grants to non-employee directors an initial grant of 30,000 shares of our
Class A common stock and annual grants of 15,000 shares of our Class A common stock; provided, however, 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. The proposed
amendment to the Director Plan would provide for other types of stock awards that may be issued under the
Director Plan. Specifically, the proposed amendment would provide LeapFrog with the ability to grant restricted
stock awards, restricted stock unit awards, stock appreciation rights and performance stock awards. Accordingly,
the proposed amendment would provide the board or a committee of the board with the discretion to provide that
initial and annual grants under the Director Plan will be made in the form of stock options or such other types of
stock awards. In addition, in the event that initial and annual grants are made in the form of stock awards other
than options, the proposed amendment would provide the board or a committee of the board with the authority to
determine the number of shares subject to such stock awards.
Currently, the aggregate number of shares of Class A common stock that may be issued pursuant to options
granted under the Director Plan is 750,000 shares. The proposed amendment would increase the number of
shares that may be issued pursuant to options and other stock awards under the Director Plan to 1,250,000 shares.
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and
entitled to vote at the meeting will be required to approve this Proposal Two. Abstentions will be counted toward
the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative
votes. Broker non-votes are counted towards a quorum, but are not counted for any purpose in determining
whether this matter has been approved.
DESCRIPTION OF DIRECTOR PLAN
The purpose of the Director Plan is to promote the long-term growth and financial success of LeapFrog. The
Director Plan is intended to secure for LeapFrog and its stockholders the benefits of long-term incentives
inherent in increased common stock ownership by members of the board who are not employees of LeapFrog. It
is intended that the Director Plan will induce and encourage highly experienced and qualified individuals to serve
on our board and assist LeapFrog in promoting a greater identity of interest between non-employee directors and
the stockholders of LeapFrog.
General. Our Director Plan provides for the automatic grant of stock awards to purchase shares of Class A
common stock to our six non-employee directors. The aggregate number of shares of Class A common stock that
may be issued pursuant to stock awards granted under the Director Plan, as amended, is 1,250,000 shares. If this
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