LeapFrog 2006 Annual Report Download - page 153
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stockholder return measure as a program component. The Compensation Committee also adjusted the
annual financial measures for 2006 to include operating profit (as opposed to net income), revenue and
operating cash flow (adjusted for current accounts receivable). If the level of performance goals achieved
during a performance period was less or more than the specified target level, participants would be awarded
a percentage (up to a maximum of 200%) of shares subject to the awards. However, since 2004, we did not
achieve any of the pre-established minimum financial measures and no performance shares have vested or
been paid out to participants. The disclosures in this table and footnote related to performance shares should
be viewed in light of the recent discontinuation of the program and no possibility that any performance
shares will be earned.
(2) Options vest over a four-year period, with 25% vesting on the one-year anniversary of the grant date and the
remainder vesting in thirty-six equal monthly installments.
(3) As provided in the 2002 Equity Incentive Plan, we grant options to purchase our common stock at an
exercise price equal to the closing market price of our common stock on the trading day immediately
preceding the date of grant. This long-standing practice allows the Compensation Committee to grant
options to participants at a known exercise price.
(4) In connection with his employment with us as Chief Executive Officer and President, Mr. Katz was granted
an option for 1,200,000 shares and an option for 800,000 shares, both of which were granted under the 2002
Equity Incentive Plan, and an option for 150,000 shares and an option for 500,000 shares, both of which
were granted outside the 2002 Equity Incentive Plan as an inducement to employment.
(5) Restricted stock units are granted under the 2002 Equity Incentive Plan and vest 25% on each of the four
subsequent anniversaries of the grant date.
46