LeapFrog 2010 Annual Report Download - page 164

Employment Arrangements
Our named executive officers are employed at will. In recent years, only the individual serving as our chief
executive officer has had an employment agreement with the Company.
Jeffrey G. Katz
Mr. Katz, our CEO until March 2010, had an employment agreement (the “Katz Employment Agreement”)
which was negotiated and approved by our board of directors when he joined the Company as our CEO in 2006.
The Katz Employment Agreement provided for an annual base salary of $600,000 and a sign-on bonus of
$300,000. Mr. Katz was eligible under the agreement to receive an annual bonus based on his achievement of
certain individual performance objectives and corporate financial performance measures established by our board
of directors, at the target bonus opportunity level of 100% of his annual base salary and at a maximum 200% of
his annual base salary for exemplary performance pursuant to stretch-level objectives. For the first year of
Mr. Katz’s employment, until he established a permanent residency in the San Francisco Bay area, we
reimbursed him for reasonable expenses incurred in commuting between the San Francisco and Los Angeles
areas. For adjustments to his base salary and actual bonuses, please see the “Summary Compensation Table” and
the related footnotes.
In March 2010, Mr. Katz stepped down as our CEO and President and became a non-employee director until
his resignation in March 2011. In connection with his transition from an employee to a non-employee director,
we entered into an employment resignation and transition agreement with Mr. Katz (the “Katz Transition
Agreement”) concerning his compensation, including the treatment of his outstanding equity awards and the
handling of his transition under his employment agreement. Under the Katz Transition Agreement, Mr. Katz
received compensation on the same terms as other non-employee directors, except that he did not receive the
automatic initial stock option ordinarily received by new non-employee directors. His transition was treated, for
purposes of the severance provisions in his employment agreement, as a resignation without good reason and,
accordingly, no severance benefits were triggered by the transition. For the actual compensation paid to Mr. Katz
during the year, please see the “Summary Compensation Table” and the related footnotes.
Under the terms of the Katz Transition Agreement, all of the options previously granted to Mr. Katz (other
than his option to purchase 929,000 shares of our Class A common stock granted May 15, 2009, or the May
Option, discussed below) ceased vesting as of his resignation date on February 28, 2010, and any unvested shares
subject to those options were forfeited. As of Mr. Katz’s resignation date, 940,025 shares covered by those
options were vested and will continue to be exercisable until April 28, 2011 (subject to any other terms regarding
expiration in our 2002 Equity Incentive Plan). With respect to the May Option, 25% of the shares were subject to
a $4.00 average closing price condition. As that condition was satisfied in March 2010, 232,250 shares vested on
May 15, 2010 and will continue to be exercisable until March 2, 2012. The remaining 75% of the shares subject
to the May Option were forfeited.
William B. Chiasson
Mr. Chiasson, our CEO from March 2010 until March 2011, had an employment agreement which was
negotiated and approved by our board of directors when he joined the Company as our CEO in March 2010. In
addition to being our CEO, Mr. Chiasson also served as our President from March 2010 until September 2010
when Mr. Dodd was appointed President and Chief Operating Officer. Mr. Chiasson’s employment agreement
provided for an annual base salary of $450,000 and an annual performance-based bonus for each Company fiscal
year beginning with fiscal year 2010, with a target of 75%, and maximum of 150%, of his base salary for such
fiscal year. The employment agreement also provided for an option to purchase shares of the Company’s
common stock and a grant of restricted stock units. On March 15, 2010, pursuant to the terms of his employment
agreement, Mr. Chiasson was granted (i) an option to purchase 150,000 shares of our Class A common stock at
an exercise price of $6.32 per share, and (ii) a restricted stock unit award covering 150,000 shares of our Class A
common stock. The stock option was scheduled to vest in 48 equal monthly installments beginning on March 1,
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