LeapFrog 2010 Annual Report Download - page 150

• Provide annual bonus opportunities that motivate our executives to achieve or exceed established
operating goals and generate rewards that maintain their total compensation at competitive levels as
compared to similarly situated companies;
• Provide equity-based incentive compensation that motivates our executives over the long term to
respond to our business opportunities and challenges as stakeholders in our company;
• Target the key elements of executive compensation (base salary, annual bonus opportunity, and equity
incentive awards) to provide total compensation packages for our executives individually and as a
group at approximately the 50th percentile of similarly situated companies;
• Provide flexibility such that target compensation for individual executives may vary above or
below the median based on a variety of factors, such as the executive’s skill set relative to his or
her peers, experience and time in the executive’s position, the importance of the executive’s role
to us, the difficulty of replacement, the executive’s performance and internal pay equity
considerations; and
• Ensure our pay programs avoid incentives that might lead to excessive risk-taking.
Executive Compensation Decisions
Role of Compensation Committee and Management
Our compensation committee is responsible for the design, implementation, and oversight of our
executive compensation program. Generally, our CEO, CFO and the Senior Vice President, Human
Resources make recommendations to the compensation committee regarding the short-term and long-term
compensation for our named executive officers (other than with respect to compensation of our CEO) based
on their assessment of Company results, each executive’s contribution to these results, the executive’s
progress toward achieving his or her individual goals, and input from our Human Resources Department
regarding internal pay equity and the compensation consultant retained by the compensation committee to
provide information on competitive market practices. The compensation committee’s decisions regarding
our CEO’s compensation are based on its assessment of Company results, his contributions to these results,
and, to a lesser extent, his progress toward achieving his individual goals and information on competitive
market practices.
The authority to approve equity awards for our named executive officers has been delegated to the
performance compensation award subcommittee of the compensation committee. For more information about the
performance compensation award subcommittee, including its membership and functions, see “Board of
Directors and Corporate Governance—Committees of the Board—Compensation Committee” above.
Role of Compensation Consultant
The compensation committee has engaged Compensia, Inc., a national compensation consulting firm, to
provide advice and guidance on our executive compensation policies and practices and to provide relevant
information about the executive compensation practices of similarly situated companies. Compensia assists in the
preparation of compensation materials on executive compensation proposals in advance of compensation
committee meetings, including changes to compensation levels for our executives, the design of our equity
programs, and the design of our severance and change-in-control policies and other executive benefit programs.
In addition, Compensia reviews and advises the compensation committee on compensation materials relating to
executive compensation prepared by management for its consideration.
In addition, Compensia, under the direction of the compensation committee, conducts an annual review of
the competitiveness of our executive compensation program, including base salaries, annual bonuses, equity
awards, and other executive benefits, by analyzing the compensation practices of the companies in our
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