LeapFrog 2009 Annual Report Download - page 133

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 Chair,
Mr. Fink, received a grant of 30,000 RSUs and the Chair of our audit committee, Mr. McKee, received a grant of
25,000 RSUs. The grants were recommended by our nominating and governance committee based primarily on a
competitive compensation review that showed LeapFrog’s director compensation fell short of the board’s target
of maintaining total director compensation at approximately the 75th percentile of similar companies. These
RSUs vest monthly over a three-year period, and, regardless of the vesting terms, the shares of Class A common
stock underlying the RSUs would not be delivered to a director until three months following the expiration or
termination of the director’s term on the board. The vesting of these RSUs would fully accelerate in the event of
a “change in control,” as defined in the NEDSAP. In 2008 and 2009, the board did not approve any further
awards of RSUs or other equity awards other than the standard annual option grants described above and the
interim option grants in May 2009 described below. (Messrs. Fink and Smith no longer hold outstanding RSUs
based on the termination of their service as directors in March 2009, but they received 23,333 shares and 15,555
shares, respectively, based on RSUs vested through the end of their continuous service. The continuous service of
Messrs. Fink and Smith under the terms of the NEDSAP terminated in June 2009 upon the expiration of a
consulting agreement with us.)
In May 2009, all of our continuing non-employee directors, as well as our new directors, Paul T. Marinelli
and Philip B. Simon, who joined us in March 2009, received interim grants of additional stock options under the
NEDSAP to enhance their equity compensation packages in order to maintain our board equity compensation at
competitive levels based on a study performed by Compensia, Inc., a compensation consultant retained by the
nominating and corporate governance committee and compensation committee to advise on director and
executive compensation issues. In accordance with our equity award grant policy, these options were granted as
of May 15, 2009, with an exercise price of $2.75 per share and a three-year vesting schedule. In addition, to
provide appropriate incentives to enhance stockholder value, these options were not exercisable unless and until
the average closing market price of our Class A common stock across all trading days during a consecutive
90-day period during the options’ term equaled or exceeded $4.00 per share. In March 2010, this price condition
was satisfied.
In March 2010, Jeffrey G. Katz ceased serving as our CEO and became a non-employee director. A
description of his compensation arrangements as a non-employee director is provided below in this proxy
statement under “Executive Compensation—Compensation Discussion & Analysis—Notes Regarding Summary
Compensation Table and Grants of Plan-Based Awards Table.”
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