LeapFrog 2011 Annual Report Download - page 129

TRANSACTIONS WITH RELATED PERSONS
Related-Person Transactions Policy and Procedures
Our board has approved a written policy regarding transactions with related persons that sets forth our
policies and procedures regarding the identification, review, consideration and approval or ratification of
‘‘related-persons transactions.’’ For purposes of our policy only, a ‘‘related-person transaction’’ is a transaction,
arrangement or relationship (or any series of similar transactions, arrangements or relationships) involving an
amount that exceeds $120,000 in which LeapFrog and any ‘‘related person’’ (as defined below) are
participants. Transactions involving compensation for services provided to LeapFrog as an employee, director,
consultant or similar capacity by a related person are not covered by this policy. A related person is any
executive officer, director, or more than 5% stockholder of LeapFrog (as determined by the combined voting
power of all classes of stock), including any of their immediate family members, and any entity owned or
controlled by such persons.
Under the policy, where a transaction has been identified as a related-person transaction, management
must present information regarding the proposed related-person transaction to our board of directors for
consideration and approval or ratification. The presentation must include a description of, among other things,
the material facts, the interests, direct and indirect, of the related persons, the benefits to LeapFrog of the
transaction and whether any alternative transactions were available. In considering related-person transactions,
the board takes into account the relevant available facts and circumstances including, but not limited to (a) the
risks, costs and benefits to LeapFrog, (b) the impact on a director’s independence if the related person is a
director, immediate family member of a director or an entity with which a director is affiliated, (c) the terms
of the transaction, (d) the availability of other sources for comparable services or products and (e) the terms
available to or from, as the case may be, unrelated third parties or to or from employees generally. If a
director has an interest in the proposed transaction, the director must recuse himself or herself from the
deliberations and approval. The policy requires that, in determining whether to approve, ratify or reject a
related-person transaction, the board must look at, in light of known circumstances, whether the transaction is
in, or is not inconsistent with, the best interests of LeapFrog and its stockholders, as the board determines in
the good faith exercise of its discretion.
Certain Related-Person Transactions
Mollusk Holdings is an entity controlled by Lawrence J. Ellison, Chief Executive Officer of Oracle
Corporation. As of March 31, 2012, Mr. Ellison may be deemed to have had or shared the power to direct the
voting and disposition and, therefore, to have beneficial ownership, of 6,717,893 shares of our Class B
common stock, and 1,890,000 shares of our Class A common stock, which together represents approximately
41.4% of the combined voting power of our Class A common stock and Class B common stock. According to
a Schedule 13G filed with the SEC on February 10, 2012, Mr. Ellison beneficially owned as of that date
approximately 22.5% of Oracle Corporation’s outstanding common stock. In 2011, we purchased software
products and support services from Oracle Corporation and its affiliated entities totaling approximately
$2.7 million. For a more complete discussion of Mr. Ellison’s beneficial ownership of our Class A common
stock, see ‘‘Security Ownership of Certain Beneficial Owners and Management.’’
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