LeapFrog 2006 Annual Report Download - page 123

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PROPOSAL THREE
STOCKHOLDER PROPOSAL
William Steiner, 112 Abbotsford Gate, Piermont, NY 10968, a beneficial owner of 3,500 shares of
LeapFrog Class A common stock, has notified us that he intends to present the following proposal at the meeting:
Stockholder Proposal
MAXIMIZE VALUE RESOLUTION
Resolved that the shareholders of LeapFrog Enterprises, Inc. Corporation urge the LeapFrog
Enterprises, Inc. Board of Directors to arrange for the prompt sale of LeapFrog Enterprises, Inc. to the highest
bidder.
Supporting Statement
The purpose of the Maximize Value Resolution is to give all LeapFrog Enterprises, Inc. shareholders the
opportunity to send a message to the LeapFrog Enterprises, Inc. Board that they should support the prompt sale
of LeapFrog Enterprises, Inc. to the highest bidder. I believe a strong and or majority vote by the shareholders
would indicate to the board the displeasure felt by the shareholders of the shareholder returns over many years
and the drastic action that should be taken. Even if it is approved by the majority of the LeapFrog Enterprises,
Inc. shares represented and entitled to vote at the annual meeting, the Maximize Value Resolution will not be
binding on the LeapFrog Enterprises, Inc. Board. The proponent however believes that if this resolution receives
substantial support from the shareholders, the board may choose to carry out the request set for in the resolution:
The prompt auction of LeapFrog Enterprises, Inc. should be accomplished by any appropriate process the
board chooses to adopt including a sale to the highest bidder whether in cash, stock, or a combination of both.
The proponent further believes that if the resolution is adopted, the management and the board will interpret
such adoption as a message from the company’s stockholders that it is no longer acceptable for the board to
continue with its current management plan and strategies.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION
LeapFrog’s Statement in Opposition to Proposal Three
The board of directors believes this proposal does not serve the best interests of LeapFrog or its
stockholders and would not maximize value to the stockholders. Accordingly, the board of directors recommends
a vote AGAINST this proposal.
Consistent with its fiduciary duties, the board of directors has sought to manage the company’s affairs in a
manner it believes to be in the best interests of the company and its stockholders. The board has continuously
analyzed the strategic alternatives for the company as part of fulfilling its fiduciary obligations. In late 2006, we
completed a full strategic review of our business and developed a plan that is designed to improve our financial
performance and create sustained growth and profitability over the long term. As part of this review, we modified
the operational structure of our business and changed a significant portion of our executive and senior leadership
team, including hiring Jeffrey G. Katz as our Chief Executive Officer and President. The board of directors
believes that the value of our new strategic business plan and the future prospects of the company would not be
realized by “the prompt sale of LeapFrog Enterprises, Inc. to the highest bidder.”
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