LeapFrog 2006 Annual Report Download - page 139

COMPENSATION COMMITTEE
The Compensation Committee reviews and approves the overall compensation strategy and policies for
LeapFrog. The Compensation Committee reviews and approves corporate performance goals and objectives
relevant to the compensation of LeapFrog’s executive officers and other senior management; reviews and
approves the compensation and other terms of employment of LeapFrog’s Chief Executive Officer; recommends
to the board for approval the compensation and other terms of employment of the other executive officers;
administers LeapFrog’s stock option and purchase plans, stock bonus plans and other similar programs; and
reviews and recommends that the Compensation Discussion and Analysis section be included in this proxy
statement. The Compensation Committee may form and delegate authority to subcommittees, as appropriate.
Under this delegation authority, the Compensation Committee has formed a Non-Executive Officer Stock Award
Committee, currently made up of LeapFrog’s Chief Executive Officer, that may grant stock awards to employees
who are not executive officers (as such term is defined in Section 16 of the Securities Exchange Act of 1934, as
amended (the “1934 Act”), and Rule 16a-1 thereunder) of LeapFrog, provided that this committee is only
authorized to grant stock awards that meet the annual stock award grant guidelines approved by the
Compensation Committee, which sets forth the number of shares that may be granted to persons based on level
and the total number of shares that may be granted in any given year.
Our policy is that we will not time or select the grant dates for any stock options or stock-based awards in
coordination with the release by us of material non-public information, nor will we have any program, plan or
practice to do so. In addition, in February 2007, the Compensation Committee recommended and the Board
adopted specific written policies regarding the selection of grant dates for stock options and stock-based awards
made to the Company’s executive officers and employees. See “Compensation Discussion and Analysis—Stock
Award Grant Date Policy” for information relating to this policy.
The Compensation Committee reviews and considers evaluations and recommendations from the Chief
Executive Officer submitted to the Compensation Committee with respect to the compensation of other executive
officers. The Chief Executive Officer is not present during any deliberations or decisions concerning his
compensation. During the past fiscal year, the Compensation Committee engaged Towers Perrin as compensation
consultants. The Compensation Committee requested that Towers Perrin evaluate LeapFrog’s compensation
practices and assist in developing and implementing the executive compensation program and philosophy.
Towers Perrin developed a competitive peer group and performed analyses of competitive performance and
compensation levels. Towers Perrin also met individually with members of the Compensation Committee and
senior management to learn more about LeapFrog’s business operations and strategy, key performance metrics
and target goals and the labor markets in which we compete. Towers Perrin ultimately developed
recommendations that were reviewed and approved by the Compensation Committee. The specific tasks and
responsibilities in implementing the directive of the Compensation Committee are described in greater detail in
the Compensation Discussion and Analysis section of this proxy statement.
The Compensation Committee is currently comprised of three directors, Dr. Nagel (Chair) and Messrs. Fink
and Smith. 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 during our 2006 fiscal year. The Compensation Committee has adopted a written Compensation
Committee Charter that is posted on our website at www.leapfroginvestor.com.
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