LeapFrog 2011 Annual Report Download - page 120

Awards
The 2011 EIP allows the grant of stock options, stock appreciation rights, restricted stock awards,
restricted stock unit awards, performance stock awards, performance cash awards and other stock awards.
Subject to plan limits, the compensation committee has the discretionary authority to determine the size of
awards to employees, however the committee has adopted a series of equity award guidelines designed to
manage the usage of the pool of shares available for future. The use of performance-based awards will be
considered in the context of our total compensation program and the significant level of pay-for-performance
requirements already incorporated into our compensation practices.
Shares Authorized and Share Reserve
The share reserve of the 2011 EIP consists of 2.7 million newly authorized shares, plus 10,183,697 shares
which were part of the share reserve on the effective date, and any Returning Shares (as defined in the 2011
EIP), up to a maximum of 4,867,831 shares. The number of shares available for issuance under the 2011 EIP
is reduced by one share for each share of common stock issued pursuant to all stock awards granted under the
2011 EIP.
Vesting and Exercise of Awards
The exercise price of stock options and SARs granted under the 2011 EIP may not be less than the fair
market value of the common stock on the date of grant. The term of any stock option or SAR may not be
longer than 10 years. For other types of awards under the 2011 EIP, the compensation committee will
determine the vesting and exercisability (or settlement) terms for each award, including the establishment of
any performance vesting criteria.
Eligibility Under Section 162(m)
Stockholder approval of the amendment to the 2011 EIP is designed to constitute approval of the plan’s
material features for purposes of Section 162(m) of the Tax Code. Awards may, but need not, include
performance criteria that satisfy Section 162(m). To the extent that awards are intended to qualify as
‘‘performance-based compensation’’ under Section 162(m), the performance criteria will be based on stock
price appreciation (in the case of options or SARs) or on one or more of the other factors set forth in
Section 13(kk) of the 2011 EIP (which may be adjusted as provided in the plan), applied on a Company-wide
basis, with respect to one or more business units, divisions, affiliates, or business segments, and in either
absolute terms or relative to the performance of one or more comparable companies or the performance of one
or more relevant indices, in each case as specified by the compensation committee in the award.
Transferability
Awards granted under the 2011 EIP are transferable only by will or the laws of descent and distribution,
or to the extent otherwise determined by the compensation committee. The compensation committee has sole
discretion to permit the transfer of an award.
Administration
The compensation committee, which is made up of a majority of independent directors, has been
delegated the authority by the board of directors to administer our equity compensation plans and will
administer the 2011 EIP. The compensation committee, or a subcommittee thereof, will select the employees
who receive awards, when and how the awards are granted, what type or combination of types of awards to
be granted, the provisions of each award granted and the number of shares granted. The compensation
committee may interpret the 2011 EIP and awards granted under it and establish, amend and revoke any rules
relating to the 2011 EIP. The compensation committee may delegate to a committee of one or more directors
the ability to grant awards and take certain other actions with respect to participants who are not executive
officers, and may delegate certain administrative or ministerial functions under the 2011 EIP to an officer or
officers. The compensation committee has delegated authority to a committee consisting of the Chief
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