LeapFrog 2007 Annual Report Download - page 157

EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Overview
The Compensation Discussion and Analysis provides information about the overall objectives of our
executive compensation program and each element of compensation that we provide to our named executive
officers. For purposes of this proxy statement, our “named executive officers” are our President and Chief
Executive Officer (CEO), our Chief Financial Officer (CFO) and our three other most highly compensated
executive officers during the most recently completed year, as reflected in the Summary Compensation Table
below. The compensation philosophy discussed here is applicable to all of our named executive officers.
Executive Compensation Program Philosophy
Our compensation philosophy is to provide total compensation packages that reasonably, equitably and
responsibly meet the following objectives:
• Motivate and reward outstanding company performance and to a lesser extent individual performance.
• Attract and retain talented employees who are motivated to perform at a high level and to contribute
significantly to the achievement of our goals.
• Align the efforts of our employees with the interests of our stockholders over the long term.
• Effectively manage the total cost of executive compensation to the company.
Our compensation philosophy is based upon the following key principles:
• Providing a balanced mix of cash and equity-based compensation that we believe is suitable to
motivate executives to achieve company goals while aligning their short- and long-term interests with
those of our stockholders.
• Ensuring that a significant portion of each executive’s compensation is variable or “at risk,” subject
primarily to the performance of the company overall and secondarily to an individual’s performance
toward short- and long-term goal achievement.
• Paying base salaries that are competitive with levels in effect at companies with which we compete for
talent.
• Providing annual bonus opportunities intended to motivate executives and employees to achieve or
exceed established operating goals and to generate rewards that maintain total compensation at
competitive levels.
• Providing equity-based incentives for executives and other key employees to ensure they are motivated
over the long term to respond to our business opportunities and challenges as owners and not just as
employees.
• Targeting the key elements of executive compensation (base salary, annual bonus opportunity and
equity incentives) to provide compensation packages for our executive officers individually and as a
group at approximately the 50th percentile of similarly situated companies.
• Providing flexibility such that target compensation for individual executive officers may vary above or
below the median based on a variety of factors, such as the executive’s skill set relative to peers,
experience and time in position, the criticality to us of the role, the difficulty of replacement and the
individual’s performance.
• Enabling executives and employees to accumulate savings toward retirement through our company-
wide 401(k) plan.
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