LeapFrog 2009 Annual Report Download - page 160

options were vested as of Mr. Katz’s resignation date and will continue to be exercisable until February 28, 2011
(subject to any other terms regarding expiration in our 2002 Equity Incentive Plan) without regard to Mr. Katz’s
service as a member of our board following his resignation. With respect to the May Option, 25% of the shares
were subject to the $4.00 average closing price condition (as described in more detail in footnote 3 to the “Grants
of Plan Based Awards in Fiscal 2009” table). As that condition was satisfied in March 2010, the eligible portion
of the May Option will vest on May 15, 2010, though it will remain subject to the following exercisability terms:
• It may not be exercised until Mr. Katz has completed one year of service as Executive Chairman,
except in case of a change in control or Mr. Katz’s resignation as Executive Chairman at the board’s
request but without cause prior to completing one year of service.
• If it has become exercisable based on Mr. Katz’s completion of one year of service as Executive
Chairman, it will remain exercisable during the period of his service on the board and, regardless of his
service on the board, for one year following the termination of his service as Executive Chairman.
The remaining 75% of the shares subject to the May Option have been forfeited.
In connection with Mr. Chiasson’s appointment to the positions of President and Chief Executive Officer, he
entered into a new employment agreement with us. Under the agreement, Mr. Chiasson’s annual salary was
increased to $450,000 and he will be eligible to earn an annual performance-based bonus for each LeapFrog
fiscal year beginning with fiscal 2010, with a target of 75%, and maximum of 150%, of his base salary for such
fiscal year. The amount of his bonuses will be determined by the board based upon his personal performance and
our company performance, pursuant to objectives and other metrics established by the board or compensation
committee. In addition, on March 15, 2010, in accordance with his new employment agreement, Mr. Chiasson
was granted (i) an option to purchase 150,000 shares of our Class A common stock at an exercise price of $6.32
per share, and (ii) 150,000 restricted stock units. The stock option will vest in 48 equal monthly installments
beginning on March 1, 2010, and one-half of the restricted stock units will vest on March 1, 2011, with the other
half vesting in 12 equal monthly installments beginning on April 1, 2011, in each case subject to Mr. Chiasson’s
continued service to us. The vesting of Mr. Chiasson’s equity awards is subject to acceleration in the event of a
change in control. In addition, if we terminate Mr. Chiasson’s employment without “cause” or if Mr. Chiasson
terminates his employment for “good reason,” as such terms are defined by agreement, we will be obligated to
make severance payments equal to 12 months (24 months if in connection with a change in control of the
company) base salary and target bonus. See “Potential Payments Upon Termination or Change In Control” for
more details regarding Mr. Chiasson’s termination and change-in-control benefits under the employment
agreement and the Severance Plan. Mr. Chiasson will also be eligible for all standard benefits available to our
other executives.
All of the other named executive officers are eligible for vesting acceleration rights and other severance
benefits upon specific types of termination or a change in control of LeapFrog. A summary of the materials terms
governing these payments is set forth below in the section entitled “Potential Payments Upon Termination or
Change In Control.” Mr. Wong and Ms. MacIntyre received severance benefits upon signing a release agreement
in the first quarter of 2010, also as further described in that section.
All of our named executive officers participated in our 2009 option exchange program. Please see
“Compensation Discussion and Analysis—Elements of Executive Compensation—Equity Incentive Awards—
Stock Option Exchange Program” for description of the option exchange program.
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