LeapFrog 2006 Annual Report Download - page 148

common stock is issued for each share of RSU vested. RSUs vest 25% on each of the four subsequent
anniversaries of the grant date.
As previously discussed, the Compensation Committee had been in the practice of granting restricted stock
and RSUs to some of our Section 16 officers for recruiting and retention purposes on a case-by-case basis. In
2006, the Compensation Committee generally awarded RSUs only to employees below the level of vice president
and to award stock options to those at or above the level of vice president. The last grant of an RSU to a
Section 16 officer was made in March 2006, when the Compensation Committee awarded 20,000 RSUs to
Mr. Chiasson for retention purposes and because he was the only Section 16 officer who did not hold any
restricted stock or RSUs.
Stock Option Grant Date Policy
Our policy is that we will not time or select the grant dates of 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 February 2007, the Compensation Committee recommended to the board, and the board
subsequently adopted, the following specific policies regarding the grant dates of stock options and stock-based
awards, which we refer to as awards, made to our executive officers and employees:
• Grants to Section 16 Officers: The grant date of all awards to Section 16 officers shall be the 15th day
of the month subsequent to the month in which such award is approved by the Board (or the next
succeeding business day that the NYSE is open). If the approval is made after the completion of the
most recent fiscal quarter but prior to the announcement of the results of such quarter, then the grant
date will be delayed until the next trading day after completion of the first full trading day following
announcement of such quarterly results. The exercise price of all awards will equal the closing price of
our common stock on the date immediately preceding the grant date.
• Grants to Non-Section 16 Officers: New hire stock awards approved by the Non-Executive Officer
Stock Award Committee, or NEOSAC, which is a committee formed by the board, to persons below
the level of Section 16 Officer that have actually commenced employment during a given month will
become effective as of the 15th day of the subsequent month, regardless of whether our trading window
is open or closed. Non-initial stock awards approved by the NEOSAC to persons below the level of
Section 16 Officer will be granted effective upon the 15th day of the month following the month of
approval by the NEOSAC.
Severance Benefits. Upon termination of employment, most of our Section 16 officers are entitled to
receive severance payments under their employment offer letters. In determining whether to approve and setting
the terms of such severance arrangements, the Compensation Committee recognizes that executives, especially
highly ranking executives, often face challenges securing new employment following termination. In addition, in
general, severance benefits are a component of compensation packages that are competitive with those of our
Compensation Peer Group. The Compensation Committee reviews and determines the severance benefits we
provide to our Section 16 officers. Information regarding the severance benefits to which our named executive
officers are eligible is provided under the heading “Potential Payments Upon Termination or Change-in-Control”
beginning on page 50.
Other Benefits and Perquisites. The Compensation Committee reviews and determines the other benefits
we provide to certain Section 16 officers. We provided reimbursement of life insurance premiums on behalf of
Mr. Kalinske as part of a negotiated employment agreement. In addition, housing costs in the San Francisco Bay
Area cause us to offer relocation reimbursements and mortgage interest differential payments for newly hired
executives who need to relocate to the area in connection with commencement of employment with us. For the
named executive officers, the value of these benefits is described in the Summary Compensation Table and the
related footnotes beginning on page 43.
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