LeapFrog 2010 Annual Report Download - page 124

Eligible Participants: Employees, directors and consultants.
Shares Authorized: • 6,000,000 new shares, plus
• the number of unissued and available shares under the Prior Plan as of
the effective date of the 2011 EIP, plus
• any Returning Shares.
Fungible Share Reserve The number of shares available for issuance under the 2011 EIP is reduced
by (i) one share for each share of common stock issued pursuant to a stock
option or stock appreciation right under the 2011 Plan with a strike price of at
least 100% of the fair market value of the underlying common stock on the
date of grant, and (ii) two (2) shares for each share of common stock issued
pursuant to a restricted stock award, restricted stock unit award, performance
stock award, or other non-option stock award granted under the 2011 EIP.
Award Types: (i) incentive stock options, (ii) nonstatutory stock options, (iii) stock
appreciation rights (“SARs”), (iv) restricted stock awards, (v) RSUs, (vi)
performance stock awards, (vii) performance cash awards, and (viii) other
stock awards.
162(m) Limits: Section 162(m) of the Tax Code requires, among other things, that the
maximum number of shares awarded to an individual under a stock awards,
or the maximum value of any cash award, must be approved by stockholders
in order for the awards granted under the plan to be eligible for treatment as
performance-based compensation that will not be subject to the $1 million
limitation on tax deductibility for compensation paid to certain specified
senior executives. Accordingly, the 2011 EIP limits awards granted under the
plan to an individual participant in any calendar year to:
(1) No more than 3.5 million shares subject to stock options or SARs (or
other stock awards whose value is determined by reference to an increase
over an exercise or strike price) to an individual participant;
(2) No more than 3.5 million shares subject to performance-based restricted
stock or RSU awards to an individual participant; and
(3) No more than $1 million subject to performance cash awards to an
individual participant.
These limits are greater than the number of shares or cash subject to any
particular award that we have granted to any individual in the past.
Vesting: Determined by the compensation committee or the board of directors.
Not Permitted: (1) Granting stock options or SARs at a price below the fair market value of
LeapFrog Series A common stock on the date of grant.
(2) Repricing or reducing the exercise price of a stock option or SAR without
stockholder approval.
Eligibility
Only employees (including officers), consultants and non-employee directors of LeapFrog and its affiliates
are eligible to receive awards under the 2011 EIP. Pursuant to applicable tax law, we may only grant incentive
stock options to our employees (including officers) and employees of our affiliates. The compensation
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