LeapFrog 2009 Annual Report Download - page 143

• Provide equity-based incentives that motivate our executives over the long term to respond to our
business opportunities and challenges as stakeholders in our company.
• Target the key elements of executive compensation (base salary, annual bonus opportunity, and equity
incentive awards) to provide total compensation packages for our executives individually and as a
group at approximately the 50th percentile of similarly situated companies.
• Provide flexibility such that target compensation for individual executives may vary above or below
the median based on a variety of factors, such as the executive’s skill set relative to his or her peers,
experience and time in position, the criticality of the role to us, the difficulty of replacement, the
executive’s performance and internal pay equity considerations.
• Enable our executives to accumulate retirement savings through our company-wide Section 401(k)
plan.
• Ensure our pay programs avoid incentives that might lead to excessive risk-taking.
Executive Compensation Decisions
Role of Compensation Committee and Management
Our compensation committee is responsible for the design, implementation, and oversight of our executive
compensation program. Generally, our CEO, CFO and the Vice President, Human Resources make
recommendations to the compensation committee regarding the short-term and long-term compensation for our
named executive officers (other than with respect to compensation of our CEO) based on their assessment of
company results, each executive’s contributions to these results, his or her progress toward achieving his or her
individual goals, and input from our Human Resources Department and the compensation consultant retained by
the compensation committee to provide information on competitive market practices. The compensation
committee’s decisions regarding our CEO’s compensation are based on its assessment of company results, his
contributions to these results, and his progress toward achieving his or her individual goals, and market data.
The authority to approve equity awards for the named executive officers has been delegated to the
performance compensation award subcommittee. For more information about the performance compensation
award subcommittee, including its membership and functions, see “Board of Directors and Corporate
Governance—Committees of the Board—Compensation Committee” above.
Role of Compensation Consultant
The compensation committee has engaged Compensia, Inc., a national compensation consulting firm, to
provide it with advice and guidance on our executive compensation policies and practices and to provide relevant
information about the executive compensation practices of similarly situated companies. Compensia assists in the
preparation of compensation materials on executive compensation proposals in advance of compensation
committee meetings, including changes to compensation levels for our executives, the design of our equity
programs, and the design of our severance and change-in-control policies and other executive benefit programs.
In addition, Compensia reviews and advises the compensation committee on compensation materials relating to
executive compensation prepared by management for its consideration.
In addition, our compensation consultant, under the direction of the compensation committee, conducts an
annual review of the competitiveness of our executive compensation program, including base salaries, annual
bonuses, equity awards, and other executive benefits, by analyzing the compensation practices of the companies
in our compensation peer group (as described below), as well as data from third-party compensation surveys. The
compensation committee uses the results of this analysis to assess the competitiveness of our executives’ total
compensation packages and to determine whether each element of compensation packages is properly aligned
with reasonable and responsible practices in our industry and geographic marketplace.
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