LeapFrog 2008 Annual Report Download - page 152

between the San Francisco and Los Angeles areas. For adjustments to his base salary and actual bonuses, please
see the Summary Compensation Table and the related footnotes below. In addition, Mr. Katz’s employment
agreement provided for the severance benefits described below under the heading “Potential Payments Upon
Termination or Change in Control” and grants of various stock awards described below under the Grants of Plan-
Based Awards in Fiscal 2008 table.
Effective July 6, 2006, Mr. Katz was granted the following awards of nonstatutory stock options (the
“Options”) to purchase shares of LeapFrog’s Class A Common Stock (“Common Stock”): (1) an option, pursuant
to our 2002 Equity Incentive Plan (the “Plan”), to purchase 1,200,000 shares of Common Stock at a per-share
exercise price of $10.30, which price was equal to the fair market value (as defined under the Plan) of a share of
Common Stock on the grant date; (2) an option pursuant to the Plan to purchase 800,000 shares of Common
Stock at a per-share exercise price of $13.33; (3) an option in the form of a special inducement grant outside the
Plan to purchase 150,000 shares of Common Stock at a per-share exercise price of $13.33; and (4) an option in
the form of a special inducement grant outside the Plan to purchase 500,000 shares of Common Stock at a
per-share exercise price of $16.67. Each of the options had a ten-year term and vested over a four-year period
with 25% of the shares subject to each of the options vesting upon Mr. Katz’s completion of one year of
continuous employment service and 1/48 of the shares vesting for each month of continuous service thereafter.
Each option granted under the Plan is subject to all terms and conditions set forth in the Plan and in a stock
option grant notice and stock option agreement substantially in the forms attached to the agreement, and each
option granted outside the Plan is governed by terms substantially similar to those of the Plan. Subsequently,
Mr. Katz tendered his options for cancellation in exchange for new lower-priced options under LeapFrog’s
option exchange program. On June 9, 2008 new options were granted on a value-for-value basis with premium
pricing and terms and conditions similar to the original grants. See accompanying footnotes to the Outstanding
Equity Awards at December 31, 2008 table.
Mr. Katz and the other named executive officers have vesting acceleration rights upon specific types of
termination or a change in control of LeapFrog. A summary of the materials terms governing these payments is
set forth in this proxy statement in the section entitled “Potential Payments Upon Termination or Change In
Control.”
Messrs. Pidel and Moon each departed from LeapFrog effective December 1, 2008 in connection with a
company-wide reduction in force. A summary of the material terms of their severance benefits is set forth in this
proxy statement in the section entitled “Potential Payments Upon Termination or Change in Control.”
A discussion of the 2008 option exchange program in which Messrs. Katz and Chiasson and Ms. MacIntyre
participated is contained in “Compensation Discussion and Analysis—Equity Incentive Awards—Stock Option
Exchange Program” above.
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