LeapFrog 2007 Annual Report Download - page 160

basis upon the hiring of any new executive officers. In determining the total compensation package for a new
executive officer, the compensation committee reviews market data for the position, the experience and skills of
the candidate, total compensation at the candidate’s former employer, including any compensation that will be
forfeited upon departure from the candidate’s former employer. For its annual review of compensation, with
respect to determining base salaries, the compensation committee considers individual and company
performance, potential of the named executive officer to contribute to the long-term success of the company,
scope of responsibilities and experience, and competitive salary practices. Towers Perrin conducted for the
compensation committee a comprehensive study of executive compensation in 2006, and that data was updated
for 2007. The study indicated that the salaries we paid our named executive officers were generally at the median
competitive salary level. Given the overall performance of the company in 2006 and the comparative position of
our executives’ salaries relative to the external market, the compensation committee determined that no base
salary increases were warranted for our named executive officers in 2007.
Two of our named executive officers were hired in 2007, Mr. Pidel, our Executive Vice President,
International, and Ms. MacIntyre, our Executive Vice President, Product, Innovation and Marketing. Mr. Pidel
joined us in January 2007. In December 2006, the compensation committee approved our CEO’s
recommendation of a new-hire compensation package for Mr. Pidel that included a base salary of $250,000. The
recommendation reflected consideration of benchmarking data provided by Towers Perrin, input from Korn/
Ferry, the executive search firm assisting with the recruitment of candidates for the position, the need for
Mr. Pidel to relocate his family from Rhode Island to the San Francisco Bay Area and consideration of
Mr. Pidel’s total compensation at his then-current employer. The details of the other elements of Mr. Pidel’s
new-hire compensation package are discussed below. In February 2007, the compensation committee approved
our CEO’s recommendation of a new-hire compensation package for Ms. MacIntyre that included a base salary
of $275,000. The recommendation reflected consideration of benchmarking data provided by Towers Perrin,
input from Spencer Stuart, the executive search firm assisting with the recruitment of candidates for the position,
and consideration of Ms. MacIntyre’s compensation at her then-current employer. The details of the other
elements of Ms. MacIntyre’s new-hire compensation package are discussed below.
Because both Mr. Pidel and Ms. MacIntyre joined LeapFrog in 2007, they were not eligible to receive a
salary increase beyond their initial salary levels. In 2007, the base salaries for Messrs. Katz, Chiasson and Dodd
each were increased to adjust for the elimination by us of car allowances for our executive officers. For more
details, see the subsection below entitled “Other Benefits and Perquisites.”
Performance-Based Annual Bonus Awards. Annual performance bonuses are intended to motivate
executives to achieve LeapFrog’s short-term goals and are designed to reward company performance and
individual performance.
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