LeapFrog 2013 Annual Report Download - page 122
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Please find page 122 of the 2013 LeapFrog annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.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. The
compensation committee has authority to form and delegate authority to subcommittees, as appropriate.
The compensation committee reviews and considers evaluations and recommendations from our CEO
submitted to the compensation committee and the compensation consultant engaged by the committee with
respect to the compensation of our other executive officers. The compensation committee reviews and
considers market data provided by the compensation consultant 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 Compensia evaluate the Company’s compensation policies and
practices and assist in developing and implementing our executive compensation program and philosophy.
Compensia developed a compensation peer group and performed analyses of the competitive performance
and compensation levels of the companies in the peer group. Having been previously engaged by the
compensation committee, Compensia is familiar with the Company’s business operations and strategy, key
performance measures and target goals and the labor markets in which we compete. Compensia provided peer
and market compensation data that were reviewed and considered as part of the pay decisions made by the
compensation committee for 2013. The specific tasks and responsibilities in implementing the directive of the
compensation committee are described in greater detail under the heading ‘‘Compensation Discussion and
Analysis’’ below in this proxy statement.
Compensia (including its affiliates) did not perform any services for the Company or any of our affiliates
other than compensation consulting services related to determining or recommending the form or amount of
executive and director compensation, advising on the design and implementation of incentive plans and
providing information on industry and compensation peer group pay practices, which services were provided
directly to the compensation committee.
Among other considerations in administering our compensation programs, the compensation committee
considers whether and to what extent such programs have a potential to encourage excessive risk-taking by
our employees, including our executive officers. Specific features of our compensation program and plans
identified by the compensation committee as discouraging or potentially mitigating excessive risk-taking
behavior include:
• Annual base salary, which is fixed compensation, constitutes the primary component of
compensation for all employees, including for sales personnel, and a significant component of
compensation for our named executive officers;
• Performance-based bonuses are primarily designed to reward corporate performance, rather than
purely individual performance;
• In general, employees, including sales personnel, earn annual base salaries and are eligible for
bonuses based on individual sales performance and Company performance rather than being paid on
a commission basis;
• Our internal controls over financial reporting and the measurement and calculation of compensation
goals, such as corporate performance measures, and other financial, operational, and compliance
policies and practices are designed to prevent compensation programs from being susceptible to
manipulation by any employee; and
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