LeapFrog 2011 Annual Report Download - page 131

In his position as Chairman, Mr. Chiasson has substantial authority to shape the work of the board of
directors. Even though he is not ‘‘independent’’ within the meaning of the NYSE listing standards, we believe
that his status as a non-management director performing this board leadership role will help to reinforce the
board’s independence from management in their oversight of our business and affairs. In addition, we believe
that having a non-management Chairman will serve to create an environment that is conducive to objective
evaluation and oversight of management’s performance and related compensation, increasing management
accountability and improving the ability of the board of directors to monitor whether management’s actions
are in our best interests and those of our stockholders. As a result, we believe the current leadership structure
of our board of directors contributes to its effectiveness as a whole and, as a result, is the most appropriate
structure for us at the present time. In addition, we believe Mr. Chiasson’s role in consulting with senior
management and members of the board of directors facilitates regular open and direct communication between
directors and our management, helping to coordinate the actions of management with direction provided by
the board of directors.
Thomas J. Kalinske, who served as our Chief Executive Officer from September 1997 to March 2002 and
again from February 2004 to July 2006, serves as the Vice Chairman of the Board and would generally
preside over any meetings and executive sessions of the board if Mr. Chiasson were not present. Mr. Kalinske
provides industry experience and his perspective as a former CEO of LeapFrog to management as part of his
Vice Chairman role.
Role of Board in Risk Oversight
One of the key functions of our board of directors is informed oversight of our risk management process.
The board of directors does not have a standing risk management committee, but rather administers this
oversight function directly through the board of directors as a whole, as well as through the audit committee,
which is responsible for discussing guidelines and policies to govern the process by which risk assessment and
management is undertaken. In addition, other standing committees of the board of directors address risks
inherent in their respective areas of oversight. It is the responsibility of the committee chairs to report findings
regarding material risk exposures to the board of directors as quickly as possible.
Our board of directors and board committees oversee risk, including operational risk, liquidity risk and
credit risk, in a variety of ways, including the following:
• The full board of directors engages in extensive discussion with our executive team on a regular
basis concerning the risks facing the Company and how best to manage them. Board of directors
meetings generally include detailed discussion among board members, management and professional
advisors regarding material risks we face as an enterprise, including operational and financial risks.
Our management provides information to the board of directors regarding our approach to material
risks, both at meetings and in regular informal discussions, and takes extensive guidance from the
board of directors in decision-making with respect to such matters.
• The board of directors and audit committee generally review the disclosures in our Annual Report
on Form 10-K, including the risk factors. The audit committee reviews the Annual Report on
Form 10-K in detail and also reviews and discusses with management the disclosures in our
Quarterly Reports on Form 10-Q and holds extensive discussions with management concerning
whether all material risks have been identified. The discussion also provides a mechanism by which
board members can evaluate and oversee our risk management practices, ask questions of our
executive team concerning material risks we face and how we plan to manage them, and guide
management’s actions with respect to such risk management.
• Our audit committee reviews and discusses at regular meetings throughout the year our risk
management policies and processes and material risk exposures, including financial risk exposures,
facing our business, in addition to monitoring our compliance with legal and regulatory
requirements. Audit committee meetings generally include extensive discussion between the
committee members and our internal and external auditors, legal advisors and operational leads
regarding the risks we face. The participants discuss in detail both the material risks identified by
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