LeapFrog 2011 Annual Report Download - page 158

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.
William B. Chiasson
Mr. Chiasson, our CEO until March 2011, had an employment agreement which was negotiated and
approved by our board of directors when he was appointed as the Company’s CEO in March 2010.
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 with a target of 75%, and maximum of 150%, of his
base salary for such fiscal year. The employment agreement also provided for him to receive an option to
purchase 150,000 shares of the Company’s common stock and a restricted stock unit award covering
150,000 shares of common stock. The stock option was to vest in 48 equal monthly installments beginning on
March 1, 2010, and one-half of the restricted stock unit award vested on March 1, 2011, with the other half to
vest in 12 equal monthly installments beginning on April 1, 2011.
In March 2011, Mr. Chiasson stepped down as our CEO and became a non-employee director and the
chairman of our board of directors. In connection with his transition from an employee to a non-employee
director, we entered into an employment resignation and transition agreement with Mr. Chiasson, or the
Transition Agreement, pursuant to which we agreed to pay Mr. Chiasson (i) all accrued salary and all accrued
and unused vacation benefits and (ii) $787,500, in 12 equal monthly installments. These amounts were
determined in accordance with the terms of Mr. Chiasson’s employment agreement. In addition,
Mr. Chiasson’s outstanding equity awards continued to vest until March 15, 2011 and the stock options are
exercisable for one year following the date his service as a member of the board of directors terminates.
Pursuant to the terms of the Transition Agreement, the parties agreed to release each other from any and all
claims that they may have against each other. For the actual compensation paid to Mr. Chiasson during the
year, please see the ‘‘Summary Compensation Table’’ and the related footnotes.
John Barbour
Mr. Barbour joined the Company as our Chief Executive Officer in March 2011. He has an employment
agreement with the Company which was negotiated and approved by our board of directors at that time.
Mr. Barbour’s employment agreement provides for an annual base salary for Mr. Barbour in the amount of
$575,000 and an annual performance-based target bonus of $575,000 per year. Mr. Barbour was guaranteed an
incentive compensation payment for 2011 that was equal to 100% of his base salary, prorated based on the
portion of the calendar year in which he was employed by the Company. Mr. Barbour is eligible to receive an
additional bonus for exemplary performance pursuant to stretch-level objectives to be determined by our board
of directors in its discretion. In addition, Mr. Barbour was entitled to receive travel and temporary housing
assistance in the amount of $150,000, payable in quarterly installments, and certain relocation benefits.
Mr. Barbour’s employment agreement also provided for him to receive a grant of a non-qualified stock
options to purchase 850,000 shares of the Class A common stock, and a restricted stock unit award covering
150,000 shares of Common Stock. These equity awards provide that one-fourth (1/4) of the shares subject to
the each award vest (and, in the case of the RSU, be delivered) upon completion of one year of continuous
employment service, and one forty-eighth of the shares subject to each award vest (and, in the case of the
RSUs, be delivered) upon completion of each month of continuous employment service thereafter.
Pursuant to their employment agreements, both Mr. Chiasson and Mr. Barbour were eligible for vesting
acceleration rights and other severance payments and benefits upon certain terminations of employment or in
connection with a change in control of the Company. A summary of these arrangements is set forth below in
the section entitled ‘‘Potential Payments Upon Termination or Change In Control.’’
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