LeapFrog 2012 Annual Report Download - page 124

with his or her level of responsibility. However, the compensation committee is careful (i) not to increase the
variable compensation component to such an extent so as to unduly increase the associated level of risk-taking
behavior by our executives and (ii) to select performance criteria for the variable compensation component
that aligns individual performance with long-term stockholder interest.
Risk Considerations
Members of our senior management, including the CEO, CFO and general counsel, along with members
of our human resources department, with oversight by the compensation committee, reviewed our
compensation programs and policies to determine whether the incentives provided by these programs and
policies were appropriate or had the potential to encourage excessive risk-taking by our employees. This
assessment was discussed at and in conjunction with board of directors and compensation committee meetings
held in February 2012, and at a special risk review session of the board of directors in July 2012.
Our risk assessment focused on the key terms of the Company’s equity compensation and variable cash
compensation programs, such as bonus plans. Our compensation programs were analyzed to determine
whether they introduced or encouraged excessive risk-taking or other behaviors that could have an adverse
impact on our business and whether existing risk mitigation features were sufficient in light of the overall
structure and composition of our compensation programs. In particular, the risk assessment focused on the
ability of participants to affect the level of the variable component of their compensation and the controls over
participant action and variable compensation. For more general information regarding the features of our
compensation plans and programs that have been identified as discouraging or potentially mitigating excessive
risk-taking behavior, see the information discussed under the heading ‘‘Compensation Committee’’ earlier in
this proxy statement.
The compensation committee determined that our compensation programs do not encourage excessive
risk-taking by our executives and instead encourage behaviors that support sustainable value generation.
Advisory Vote on Executive Compensation
At the time of our last advisory vote on executive compensation, at the 2011 annual meeting of
stockholders, three years was selected as the preferred frequency of future say-on-pay votes by over 90% of
the votes cast. Accordingly, our board of directors did not hold an advisory vote on the compensation paid to
our named executive officers in 2012. Consistent with the recommendation of the stockholders, the board of
directors currently plans on holding its next say-on-pay vote at our 2014 annual meeting of stockholders.
At our 2011 annual meeting of stockholders, our stockholders had the opportunity to provide an advisory
vote on the compensation paid to our named executive officers, or a ‘‘say-on-pay’’ vote. Over 99% of the
votes cast by our stockholders approved the compensation of our named executive officers, as disclosed in our
2011 proxy statement. Our board of directors and compensation committee reviewed these vote results and
determined that such results affirmed stockholder support of our overall approach to executive compensation
and thus we have not made any changes to our executive compensation program or related policies directly in
response to the vote results.
Elements of Executive Compensation
The compensation committee uses a mix of cash and equity compensation, along with severance, health,
and other benefits, to develop total compensation packages for our executives that meet our compensation
objectives. The elements of our executive compensation program are:
• Base salary;
• Performance-based and other bonuses;
• Equity incentive awards;
• Severance benefits; and
• Other benefits.
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