LeapFrog 2009 Annual Report Download - page 132

Discussion of Director Compensation
For 2009, each of our non-employee directors received 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.
• Each non-employee director who served as Presiding Director of the board received an annual retainer
of $10,000.
• Each non-employee director who served as a member of the audit committee received an annual
retainer of $10,000, provided that the Chair of the 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 Chair of the compensation committee, nominating and
corporate governance committee, or any other committee created by our board of directors received an
annual retainer of $5,000.
• Each non-employee director who served as a member of the performance compensation award
subcommittee of our compensation committee received an annual retainer of $5,000.
In cases where a director served for a part of the year in a capacity entitling him to a retainer, the retainer
was pro-rated to reflect his period of service in that capacity. Retainers are generally paid out in quarterly
installments in arrears. In the fiscal year ended December 31, 2009, the total cash compensation paid to
non-employee directors was $477,457. The members of our board of directors are also eligible for
reimbursement of their expenses incurred in attending board meetings.
The NEDSAP, as adopted in 2002 and amended in 2006, provided only for automatic stock option grants to
our non-employee directors. In April 2009, the board adopted an amendment and restatement of our directors’
plan to permit discretionary grants of awards under the NEDSAP. The NEDSAP, 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 NEDSAP 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 NEDSAP provides that the
initial grant will be an option to purchase 30,000 shares of our Class A common stock and the annual grant will
be 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 Chair of our board of directors at the time of the annual grant will receive an
annual grant of an option to purchase 25,000 shares in lieu of an annual grant of an option to purchase 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. Also, with the amendment of the NEDSAP in April 2009, the board or relevant board committee may, in
its discretion, grant additional stock awards to non-employee directors at any time under the NEDSAP.
The exercise price of stock options granted under the NEDSAP is 100% of the fair market value of the
Class A common stock subject to the option on the date of the option grant. Options granted under the NEDSAP
vest in equal monthly installments over a three-year period in accordance with their terms (and the board may
impose restrictions or conditions to vesting as it deems appropriate). The term of NEDSAP options is 10 years
unless earlier terminated based on termination of continuous service or other conditions. 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 options granted under the NEDSAP 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).
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