LeapFrog 2010 Annual Report Download - page 137

management the disclosures in our Quarterly Reports on Form 10-Q, including updated risk factors, and
holds extensive discussions with management concerning whether all material risks have been identified.
The discussion also provides a mechanism by which board members can evaluate and oversee our risk
management practices, ask questions of our executive team concerning material risks we face and how we
plan to manage them, and guide management’s actions with respect to such risk management.
• Our audit committee reviews and discusses at regular meetings throughout the year our risk
management policies and processes and material risk exposures, including financial risk exposures,
facing our business, in addition to monitoring our compliance with legal and regulatory requirements.
Audit committee meetings generally include extensive discussion between the committee members and
our internal and external auditors, legal advisors and operational leads regarding the risks we face. The
participants discuss in detail both the material risks identified by these parties in their capacities as
advisors to or leaders of LeapFrog, and how we plan to address them. In addition, such reviews include
evaluating the effectiveness of our risk management processes and how to improve them if and when
necessary.
• Our internal audit department and any internal audit consulting firm reports directly to the audit
committee of the board of directors on the adequacy and effectiveness of our system of internal control
and risk management systems. The audit committee guides management and board decisions
concerning financial and operational matters based on the reports regarding risk management priorities.
This information is delivered to the audit committee during the regular portion of the meeting and in a
separate discussion among our audit committee members, internal audit representatives and external
auditors during executive sessions of the audit committee.
• Our compensation committee reviews our compensation programs with our management and external
compensation consultants, and, in approving such programs, considers whether and to what extent they
have a potential to encourage excessive risk taking by our employees, including our executives. In
addition, the committee monitors these programs to evaluate on a regular basis whether the programs
provide an appropriate balance of incentives and do not encourage employees to take unreasonable risks.
• Our nominating and corporate governance committee monitors the effectiveness of our corporate
governance guidelines, including whether they are successful in preventing illegal acts or improper
liability-creating conduct. The committee also helps ensure that we are prepared to deal with risks and
crises by evaluating the individual capabilities of the directors, nominating directors with risk
management experience, and considering the time each director and nominee has to devote to the
company. The committee also works with our management to establish orientation programs for new
directors and succession plans for key executive officers.
COMMITTEES OF THE BOARD
In 2010, our board of directors had three standing committees: an audit committee, a compensation
committee, and a nominating and corporate governance committee. The following table provides membership
and meeting information for each of the board committees in 2010:
Member of our board of directors in 2010 Audit Compensation
Nominating and
Corporate
Governance
Paul T. Marinelli .............................................. X
Stanley E. Maron .............................................. X X X
E. Stanton McKee, Jr. .......................................... X* X
David C. Nagel ............................................... X*
Philip B. Simon ............................................... X
Caden Wang ................................................. X X X*
Total meetings in fiscal 2010(1) .................................. 6 9 4
* Committee chair in 2010
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