LeapFrog 2010 Annual Report Download - page 142

approved by the compensation committee for 2010. The specific tasks and responsibilities in implementing the
directive of the compensation committee are described in greater detail under the heading “Compensation
Discussion and Analysis” later in this proxy statement.
Compensia (including its affiliates) did not perform any services for the Company or any of our affiliates
other than compensation consulting services related to determining or recommending the form or amount of
executive and director compensation, designing and implementing incentive plans and providing information on
industry and peer group pay practices, which services were provided directly to the compensation committee and,
in the case of the analysis of our director compensation arrangements, the nominating and corporate governance
committee, which is tasked with reviewing non-employee director compensation.
Among other considerations in administering our compensation programs, the compensation committee
considers whether and to what extent such programs have a potential to encourage excessive risk-taking by our
employees, including our executive officers. Specific features of our compensation plans and programs identified
by the compensation committee as discouraging or potentially mitigating excessive risk-taking behavior include:
• Annual base salary, which is fixed compensation, constitutes the primary component of compensation
for all employees, including for sales personnel and executives.
• Performance-based bonuses are primarily designed to reward corporate performance, rather than purely
individual performance.
• In general, employees, including sales personnel, earn annual salaries and are eligible for bonuses
based on individual sales performance and company performance rather than being paid on a
commission basis.
• Our internal controls over financial reporting and the measurement and calculation of compensation
goals, such as corporate performance measures, and other financial, operational, and compliance
policies and practices are designed to prevent compensation programs from being susceptible to
manipulation by any employee.
• Our compensation programs are designed to encourage employees to remain focused on both short-
term and long-term goals through the use of performance-based bonuses, which focus on annual and/or
quarterly performance goals, and equity awards, which typically vest over a number of years and
therefore encourage employees to focus on long-term performance.
The compensation committee monitors our compensation programs to evaluate, on a regular basis, whether
they provide an appropriate balance of incentives and whether they encourage employees to take unreasonable
risks. Based on these assessments in February 2010, we and the compensation committee concluded that our
compensation policies and practices for our employees do not create risks that are reasonably likely to have a
material adverse effect on the Company.
The compensation committee is currently composed of five directors, Dr. Nagel (Chair) and Messrs. Maron,
McKee, Simon and Wang. Our board of directors has determined that all members of the compensation
committee are independent (as independence is defined in the NYSE listing standards), except, as permitted by
NYSE listing standards for “controlled companies,” for Mr. Simon, President of Lawrence Investments. The
compensation committee met nine times during 2010. The compensation committee has adopted a written charter
that is posted on our website at www.leapfroginvestor.com under the heading “Corporate Governance.”
Compensation Committee Interlocks and Insider Participation
As noted above, in 2010, Dr. Nagel and Messrs. Maron, McKee, Simon and Wang served on our
compensation committee. During the fiscal year ended December 31, 2010, none of these directors was an officer
or employee of LeapFrog or any of our subsidiaries, nor are any of these directors former officers of LeapFrog or
any of our subsidiaries.
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