LeapFrog 2012 Annual Report Download - page 130

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share granted. After June 2012, we deduct one share from the pool of shares available for issuance under the
plan for each RSU granted. All awards to our named executive officers were made prior to June 2012.
The timing of equity awards is determined by the compensation committee based on its view, from time
to time, regarding the sufficiency of executive equity holdings for purposes of retention and motivation. Our
policy provides that the exercise price of each stock option is to be equal to the closing market price of our
Class A common stock on the date of grant.
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. In addition, we have specific written
policies regarding the establishment of grant dates for stock options and other stock awards made to our
executive officers and employees designed to minimize the risk associated with the timing of granting stock
options or other stock awards.
2012 Equity Awards
The following table indicates the initial hire and annual grants of equity awards made to our named
executive officers in 2012.
Annual Grants to Existing
Named Executive Officers
Initial Grants to
Newly-Hired Named
Executive Officers
Name
Stock
Option RSUs
Stock
Option RSUs
Mr. Barbour
(1)
.............................. 260,000 130,000 — —
Mr. Arthur
(2)
............................... — — 300,000 100,000
Mr. Etnyre
(1)
............................... 60,000 40,000 — —
Mr. Ahearn
(2)
............................... — — 300,000 100,000
Mr. Spalding
(1)
.............................. 60,000 40,000 — —
(1) Stock options vest in 48 equal consecutive installments on the monthly anniversary of the grant date.
RSUs vest on the 1
st
,2
nd
,3
rd
and 4
th
yearly anniversaries of the grant date.
(2) With respect to the stock option, 25% of the shares subject to the stock option vest 12 months after the
start date, and 1/36 of the remaining shares subject to the option vest each month thereafter, for
36 consecutive months. RSUs vest on the 1
st
,2
nd
,3
rd
and 4
th
yearly anniversaries of the hire date.
The compensation committee granted the above equity awards to Messrs. Barbour, Etnyre and Spalding
in February 2012 as part of its overall compensation assessment for the year. The compensation committee
believed that these awards were reasonable and necessary to sustain the principles of our compensation
philosophy of providing equity-based incentive compensation that motivates our executives over the long term
and maintaining unvested equity value as a percentage of base salary at a sufficient level to provide a
significant retention motivation.
In July 2012, in connection with their employment as our chief financial officer and chief marketing
officer, respectively, Messrs. Arthur and Ahearn were granted the above stock option and RSU award. In
determining the size of these awards, the compensation committee drew upon a competitive compensation
analysis prepared by Compensia and other sources of equity compensation data relevant to their respective
positions. The compensation committee also took into account, in Mr. Ahearn’s case, his depth of experience
leading significant marketing operations and, in Mr. Arthur’s case, his depth of experience leading significant
financial operations. The compensation committee also considered the compensation of Messrs. Ahearn and
Arthur at their respective then-current employers. The compensation committee also sought to provide awards
having terms consistent with the executive compensation philosophy set forth above.
Severance Benefits
Our named executive officers are eligible to receive payments and benefits in certain circumstances in the
event of their termination of employment. These payments and benefits are intended to minimize distraction
and risk of departure of our executives in the event of a potential change-in-control transaction involving the
Company and align our severance payments and benefits for our executives with competitive practice.
38