LeapFrog 2008 Annual Report Download - page 125

Discussion of Director Compensation
Each of our non-employee directors receives a cash meeting fee of $1,500 for each board of directors and
committee meeting attended, even if the meetings occurred on the same day. In addition to this meeting fee, each
non-employee director received the following annual retainer fees:
• Each non-employee director received an annual retainer of $30,000, provided that a non-employee
director who held the position of Chairman of our board received an annual retainer of $60,000 in lieu
of an annual retainer of $30,000.
• Each non-employee director who served as a member of our audit committee received an annual
retainer of $10,000, provided that the Chairman of our audit committee received an annual retainer of
$20,000 in lieu of an annual retainer of $10,000.
• Each non-employee director who served as the Chairman of our compensation committee, nominating
and corporate governance committee, and any other committee created by our board of directors
received an additional annual retainer of $5,000.
In the fiscal year ended December 31, 2008, the total cash compensation paid to non-employee directors
was $474,750. The members of our board of directors are also eligible for reimbursement of their expenses
incurred in attending board meetings.
The 2002 Non-Employee Directors’ Stock Option Plan, or Director Plan, provided for automatic stock
option grants to our non-employee directors. In March 2006, the board adopted an amendment and restatement of
the Director Plan (and renamed it the 2002 Non-Employee Directors’ Stock Award Plan), which was approved
by our stockholders at the 2006 annual meeting of stockholders.
The Director Plan, as amended and restated, provides for an initial stock award upon being elected to the
board and annual stock awards on July 1 of each year (or the next business day if that date is a legal holiday or
falls on a weekend day). The board or a committee of the board has the discretion to provide that initial and
annual grants under the Director Plan will be made in the form of stock options, restricted stock awards,
restricted stock unit awards, stock appreciation rights or performance stock awards. If equity grants are made in
the form of stock options, the Director Plan provides that the initial grant is an option to purchase 30,000 shares
of our Class A common stock and the annual grant is an option to purchase 15,000 shares of our Class A
common stock; provided, however, that a non-employee director who holds the position of Chairman of our
board of directors at the time of the annual grant will receive an annual grant of 25,000 shares in lieu of an
annual grant of 15,000 shares. In the event that initial and annual grants are made in the form of stock awards
other than options, the board or a committee of the board has the authority to determine the number of shares
subject to such stock awards. No other stock awards may be granted at any time under the Director Plan.
With respect to stock option awards, the exercise price of options granted under the Director Plan is 100%
of the fair market value of the common stock subject to the option on the date of the option grant. Options
granted under the Director Plan vest in equal monthly installments over a three-year period in accordance with its
terms. The term of options granted under the Director Plan is ten years. In the event of a merger of LeapFrog
with or into another corporation or a consolidation, acquisition of assets or other change-in-control transaction
involving LeapFrog, the vesting of each option will accelerate and become fully vested and immediately
exercisable, if, as of the completion of the change-in-control transaction or within 12 months of such transaction,
the non-employee director’s service terminates; provided that such acceleration will not occur if the termination
was a result of the non-employee director’s resignation (other than any resignation contemplated by the terms of
the change-in-control transaction or required by LeapFrog or the acquiring entity pursuant to the change in
control).
In February 2007, the board unanimously approved a grant of 20,000 restricted stock units, or RSUs, to
directors that had not been employed by LeapFrog in the past three years, except that our former board
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