LeapFrog 2011 Annual Report Download - page 135

Compensation Committee
The compensation committee has the authority to review and approve the overall compensation strategy
and policies for LeapFrog. This role includes review and approval of corporate performance goals and
objectives relevant to the compensation of our executive officers and other senior management, and the
compensation and other terms of employment of our CEO. In addition, the compensation committee
administers LeapFrog’s equity incentive and stock purchase plans and other similar programs. It also reviews
and recommends that the Compensation Discussion and Analysis section be included in this proxy statement.
The compensation committee has authority to form and delegate authority to subcommittees, as appropriate.
The performance compensation award subcommittee of the compensation committee was established to
provide greater assurance that equity compensation awards would, if intended to do so, fit within the
appropriate exemptions from the ‘‘short-swing profits trading’’ rules of the Exchange Act and the deduction
limits of Section 162(m) of the Internal Revenue Code. The performance compensation award subcommittee
is authorized to approve and grant equity awards to employees who are not within the discretionary award
authority of the non-executive officer stock award committee, as well as any other equity awards or
performance-based compensation awards deemed appropriate by the compensation committee or the full board
of directors. The performance compensation award subcommittee is currently composed of Messrs. Nagel,
McKee and Maron, each of whom our board of directors has determined to be an independent director
within the meaning of Rule 303A of the NYSE, a non-employee director within the meaning of Exchange Act
Rule 16b-3 and an outside director under the regulations promulgated under Section 162(m) of the Internal
Revenue Code.
Our board of directors has also established a non-executive officer stock award committee, the sole
member of which is our CEO, Mr. Barbour. This committee may grant equity awards to employees who
are not executive officers (as that term is defined in Section 16 of the Exchange Act and Exchange Act
Rule 16a-1) of the Company, provided that this committee is authorized to grant only stock awards that meet
the annual stock award grant guidelines approved by the compensation committee. These guidelines set forth
the number of shares that may be granted to persons based on level and the total number of shares that may
be granted in any given year.
Our policy is that we will not time or select the grant dates for any stock options or other stock awards
in coordination with our release of material non-public information, nor will we have any program, plan or
practice to do so. In addition, we have specific written policies regarding the selection of grant dates for stock
options and other stock awards made to our executive officers and employees. See the section entitled
‘‘Executive Compensation — Compensation Discussion and Analysis — Elements of Executive Compensation
— Stock Award Grant Date Policy’’ in this proxy statement for more information relating to this policy.
The compensation committee reviews and considers evaluations and recommendations from our CEO
submitted to the compensation committee and compensation consultants engaged by the committee with
respect to the compensation of other executive officers. The compensation committee reviews and considers
evaluations and recommendations from compensation consultants engaged by the committee and from our
board of directors with respect to the compensation of our CEO. Our CEO is not present during any
deliberations or decisions concerning his compensation.
The compensation committee is authorized under its charter to obtain, at the expense of the Company,
advice and assistance from internal and external legal, accounting or other advisors and consultants that the
compensation committee considers necessary or appropriate in the performance of its duties. During the past
fiscal year, the compensation committee directly engaged Compensia Inc. as its compensation consultant. The
compensation committee requested that the compensation consultant evaluate LeapFrog’s compensation
practices and assist in developing and implementing our executive compensation program and philosophy.
Compensia developed a competitive peer group and performed analyses of competitive performance and
compensation levels. Having been previously engaged by the committee, Compensia is familiar with
LeapFrog’s business operations and strategy, key performance metrics and target goals and the labor markets
in which we compete. Compensia developed recommendations that were reviewed and approved by the
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