LeapFrog 2010 Annual Report Download - page 125

committee, or a subcommittee thereof, determines who will participate in the 2011 EIP and the terms of those
grants. Although we have designed the 2011 EIP to allow awards to our directors in order to preserve flexibility
for the compensation committee in making its decisions regarding equity-based compensation, we anticipate that
we will continue to grant awards to our non-employee directors under the NEDSAP.
Awards
The 2011 EIP allows the grant of stock options, stock appreciation rights, restricted stock awards, restricted
stock unit awards, performance stock awards, performance cash awards and other stock awards. Subject to plan
limits, the compensation committee has the discretionary authority to determine the size of awards to employees,
however the committee has adopted a series of equity award guidelines designed to manage the usage of the pool
of shares available for future. The use of performance-based awards will be considered in the context of our total
compensation program and the significant level of pay-for-performance requirements already incorporated into
our compensation practices.
Vesting and Exercise of Awards
The exercise price of stock options and SARs granted under the 2011 EIP may not be less than the fair
market value of the common stock on the date of grant. The term of any stock option or SAR may not be longer
than 10 years. For other types of awards under the 2011 EIP, the compensation committee will determine the
vesting and exercisability (or settlement) terms for each award, including the establishment of any performance
vesting criteria.
Eligibility Under Section 162(m)
Stockholder approval of the 2011 EIP is designed to constitute approval of the plan’s material features for
purposes of Section 162(m) of the Tax Code. Awards may, but need not, include performance criteria that satisfy
Section 162(m). To the extent that awards are intended to qualify as “performance-based compensation” under
Section 162(m), the performance criteria will be based on stock price appreciation (in the case of options or
SARs) or on one or more of the other factors set forth in Section 13(kk) of the 2011 EIP (which may be adjusted
as provided in the plan), applied on a Company-wide basis, with respect to one or more business units, divisions,
affiliates, or business segments, and in either absolute terms or relative to the performance of one or more
comparable companies or the performance of one or more relevant indices, in each case as specified by the
compensation committee in the award.
Transferability
Awards granted under the 2011 EIP are transferable only by will or the laws of descent and distribution, or
to the extent otherwise determined by the compensation committee. The compensation committee has sole
discretion to permit the transfer of an award.
Administration
The compensation committee, which is made up of a majority of independent directors, has been delegated
the authority by the board of directors to administer our equity compensation plans and will administer the 2011
EIP. The compensation committee, or a subcommittee thereof, will select the employees who receive awards,
when and how the awards are granted, what type or combination of types of awards to be granted, the provisions
of each award granted and the number of shares granted. The compensation committee may interpret the 2011
EIP and awards granted under it and establish, amend and revoke any rules relating to the 2011 EIP. The
compensation committee may delegate to a committee of one or more directors the ability to grant awards and
take certain other actions with respect to participants who are not executive officers, and may delegate certain
administrative or ministerial functions under the 2011 EIP to an officer or officers. The compensation committee
has delegated authority to a committee consisting of the Chief Executive Officer (“NEOSAC”) to grant awards to
non-executive employees within limits and a budget pre-approved by the compensation committee.
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