LeapFrog 2010 Annual Report Download - page 147

Discussion of Director Compensation
For 2010, each of our non-employee directors received a cash meeting fee of $1,500 for each board of
directors and board committee meeting attended, even if the meetings occurred on the same day. In addition to
this meeting fee, each non-employee director received the following annual retainer fees:
• Each non-employee director received an annual retainer of $30,000;
• Each non-employee director who served as a member of the audit committee received an annual
retainer of $10,000, and the Chair of the audit committee received an annual retainer of $20,000 (in
lieu of the annual retainer of $10,000);
• Each non-employee director who served as the Chair of the compensation committee and nominating
and corporate governance committee received an annual retainer of $5,000; and
• Each non-employee director who served as a member of the performance compensation award
subcommittee of our compensation committee received an annual retainer of $5,000.
In cases where a director served for a part of the year in a capacity entitling him to a retainer, the retainer
was pro-rated to reflect his period of service in that capacity. Retainers are generally paid out in quarterly
installments in arrears. In the fiscal year ended December 31, 2010, the total cash compensation paid to
non-employee directors was $563,539. The members of our board of directors are also eligible for
reimbursement of their expenses incurred in attending board meetings.
The Non-Employee Director Stock Award Plan, adopted in 2002 (the “NEDSAP”), provides both for
automatic annual stock option grants to our non-employee directors as well as discretionary equity awards. The
NEDSAP provides for an initial stock award upon being elected to our board of directors and annual stock
awards on July 1 of each year (or the next business day if that date is a legal holiday or falls on a weekend day).
Our board of directors or a committee of the board of directors has the discretion to provide that initial and
annual awards under the NEDSAP will be made in the form of stock options, restricted stock awards, restricted
stock unit awards, stock appreciation rights or performance stock awards. If equity awards are made in the form
of stock options, the NEDSAP provides that the initial award will be an option to purchase 30,000 shares of our
Class A common stock and the annual award will be an option to purchase 15,000 shares of our Class A common
stock; provided, however, that a non-employee director who holds the position of Chair of our board of directors
at the time of the annual award will receive an annual award of an option to purchase 25,000 shares of our
Class A common stock. In the event that initial and annual stock awards are made in a form other than options,
our board of directors or a committee of the board of directors has the authority to determine the number of
shares subject to such stock awards. In addition, the board of directors or relevant board committee may, in its
discretion, grant additional stock awards to non-employee directors at any time under the NEDSAP.
The exercise price of stock options granted under the NEDSAP is 100% of the fair market value of the
Class A common stock subject to the option on the date of the option grant. Options granted under the NEDSAP
vest in equal monthly installments over a three-year period in accordance with their terms (and our board of
directors may impose restrictions or conditions to vesting as it deems appropriate). The term of NEDSAP options
is 10 years unless earlier terminated based on termination of continuous service or other conditions. In the event
of a merger of LeapFrog with or into another corporation or a consolidation, acquisition of assets or other
change-in-control transaction involving LeapFrog, the vesting of options granted under the NEDSAP will
accelerate and become fully vested and immediately exercisable, if, as of the completion of the change-in-control
transaction or within 12 months of such transaction, the non-employee director’s service terminates; provided
that such acceleration will not occur if the termination was a result of the non-employee director’s resignation
(other than any resignation contemplated by the terms of the change-in-control transaction or required by
LeapFrog or the acquiring entity pursuant to the change in control).
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