LeapFrog 2010 Annual Report Download - page 158

executive’s important role in the Company’s critical holiday season and 2011 fiscal year planning. The October
and November equity awards were made for retention purposes and, with respect to Mr. Dodd, in tandem with
his promotion to President and Chief Operating Officer.
Severance Benefits
Our named executive officers, with the exception of Messrs. Katz and Chiasson, were eligible to receive
payments and benefits under our Executive Management Severance and Change-in-Control Plan, or the
Severance Plan.
The Severance Plan is intended to achieve three objectives:
• minimize distraction and risk of departure of our executives and other members of senior management
in the event of a potential change-in-control transaction involving the Company;
• provide consistency in benefits among our executives and other members of senior management; and
• align our severance payments and benefits for our executives and other members of senior management
with competitive practice.
Under the terms of the Severance Plan, each of our named executive officers (other than Messrs. Katz and
Chiasson) was eligible to receive payments and benefits if we terminated his employment “without cause” or if
he resigned for “good reason.” In these situations, the Severance Plan provides for the continued payment of base
salary for a period of 12 months (paid in semi-monthly installments) and COBRA benefits for a period of 12
months. In the event that the termination of employment occurs during the period beginning three months before
and ending 12 months after a change in control of our company, the Severance Plan provides for a lump sum
cash payment consisting of an amount equal to 24 months of base salary and an amount equal to 200% of his or
her target bonus, COBRA benefits for a period of 24 months and acceleration of vesting of all outstanding
unvested stock awards. None of our named executive officers is eligible to receive any tax “gross-up” or other
tax payment under the Severance Plan.
In determining the amounts payable under the Severance Plan, the compensation committee took into
consideration the severance practices of the companies in our Peer Group. In addition, the compensation
committee considered the multi-year nature of our turnaround plan and the historic and anticipated continued
volatility of our stock price and operating results.
For more information about the terms and conditions of the Severance Plan, as well as the definitions of
“cause” and “good reason,” and a discussion of the severance benefits for Messrs. Katz and Chiasson, see
“Potential Payments upon Termination or Change in Control” below.
Other Benefits and Perquisites
We offer our executives various benefits, including healthcare coverage and the opportunity to participate in
our Section 401(k) plan and employee stock purchase plan, on the same general conditions as are made available
to all our full-time employees. We do not offer our executives or other employees guaranteed retirement or
pension benefits.
In view of the high cost of housing in the San Francisco Bay Area relative to other parts of the country, we
have, in the past, offered newly-hired executives reimbursement of relocation expenses and mortgage interest
differential payments, where appropriate. Typically, the amount and duration of these payments is negotiated and
set forth in the new executive’s employment agreement or offer letter. As a result of relocating from Texas to the
San Francisco Bay Area, Mr. Campbell receives a monthly housing stipend of $3,500. The stipend payment
began on May 1, 2010 and will continue for two years. In 2010, Mr. Campbell received monthly housing
stipends in the aggregate amount of $28,000. In 2010, we also paid $10,413 in moving expenses on
Mr. Campbell’s behalf which were taxable to him.
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