LeapFrog 2010 Annual Report Download - page 141

Compensation Committee
The compensation committee has the authority to review and approve the overall compensation strategy and
policies for LeapFrog. This role includes review and approval of corporate performance goals and objectives
relevant to the compensation of our executive officers and other senior management, and the compensation and
other terms of employment of our CEO. In addition, the compensation committee administers LeapFrog’s equity
incentive and stock purchase plans and other similar programs. It also reviews and recommends that the
Compensation Discussion and Analysis section be included in this proxy statement. The compensation
committee has authority to form and delegate authority to subcommittees, as appropriate.
The performance compensation award subcommittee of the compensation committee was established to
provide greater assurance that equity compensation awards would, if intended to do so, fit within the appropriate
exemptions from the “short-swing profits trading” rules of the Exchange Act and the deduction limits of
Section 162(m) of the Tax Code. The performance compensation award subcommittee is authorized to approve
and grant equity awards to employees who are not within the discretionary award authority of the non-executive
officer stock award committee, as well as any other equity awards or performance-based compensation awards
deemed appropriate by the compensation committee or the full board of directors. The performance
compensation award subcommittee is currently composed of Messrs. Nagel, McKee and Wang, each of whom
our board of directors has determined to be an independent director within the meaning of Rule 303A of the New
York Stock Exchange, a non-employee director within the meaning of Exchange Act Rule 16b-3 and an outside
director under the rules promulgated under Section 162(m) of the Tax Code.
Our board of directors has also established a non-executive officer stock award committee, the sole member
of which is currently our CEO, Mr. Barbour. This committee may grant equity awards to employees who are not
executive officers (as that term is defined in Section 16 of the Exchange Act and Exchange Act Rule 16a-1) of
the Company, provided that this committee is authorized to grant only stock awards that meet the annual stock
award grant guidelines approved by the compensation committee. These guidelines set forth the number of shares
that may be granted to persons based on level and the total number of shares that may be granted in any given
year.
Our policy is that we will not time or select the grant dates for any stock options or other stock awards in
coordination with the release by the Company of material non-public information, nor will we have any program,
plan or practice to do so. In addition, we have specific written policies regarding the selection of grant dates for
stock options and other stock awards made to our executive officers and employees. See the section entitled
“Executive Compensation—Compensation Discussion and Analysis—Elements of Executive Compensation—
Stock Award Grant Date Policy” in this proxy statement for more information relating to this policy.
The compensation committee reviews and considers evaluations and recommendations from our CEO
submitted to the compensation committee with respect to the compensation of other executive officers. The
compensation committee reviews and considers evaluations and recommendations from compensation
consultants engaged by the committee and from our board of directors with respect to the compensation of our
CEO. Our CEO is not present during any deliberations or decisions concerning his compensation.
The compensation committee is authorized under its charter to obtain, at the expense of the Company,
advice and assistance from internal and external legal, accounting or other advisors and consultants that the
compensation committee considers necessary or appropriate in the performance of its duties. During the past
fiscal year, the compensation committee directly engaged Compensia Inc. as its compensation consultant. The
compensation committee requested that the compensation consultant evaluate LeapFrog’s compensation
practices and assist in developing and implementing our executive compensation program and philosophy.
Compensia developed a competitive peer group and performed analyses of competitive performance and
compensation levels. Compensia also met with members of the compensation committee and senior management
to learn more about LeapFrog’s business operations and strategy, key performance metrics and target goals and
the labor markets in which we compete. Compensia developed recommendations that were reviewed and
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