LeapFrog 2013 Annual Report Download - page 133
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equity incentive awards) to provide total compensation packages for our executive officers
individually and as a group at approximately the 50
th
percentile of our direct peers (as identified
below);
• Provide flexibility such that target compensation for individual executive officers may vary above or
below the median based on a variety of factors, such as the executive officer’s skill set relative to
his or her peers, experience and time in his or her position, the importance of the executive officer’s
role to us, the difficulty of replacement, the executive officer’s performance and internal pay equity
considerations; and
• Ensure our compensation plans and arrangements avoid incentives that might lead to excessive
risk-taking.
Executive Compensation Considerations
Role of Compensation Committee and Management
Our compensation committee is responsible for the design, implementation, and oversight of our
executive compensation program. Generally, our Chief Executive Officer makes recommendations to the
compensation committee regarding the short-term and long-term compensation for our executive officers,
including our named executive officers (other than with respect to his own compensation). These
recommendations are based on his assessment of our financial and operational results, each executive officer’s
contribution to these results, the executive officer’s progress toward achieving his or her individual goals, and
input from the compensation consultant retained by the compensation committee to provide information on
competitive market practices. The compensation committee’s decisions regarding our Chief Executive Officer’s
compensation are based on its assessment of our financial and operational results, his contributions to these
results, and, to a lesser extent, his progress toward achieving his individual goals, and information on
competitive market practices.
Role of Compensation Consultant
The compensation committee engaged Compensia, Inc., or Compensia, a national compensation
consulting firm, to provide advice and guidance on our executive compensation policies and practices and to
provide relevant information about the executive compensation practices of similarly situated companies.
Compensia assisted in the preparation of compensation materials on executive compensation proposals in
advance of compensation committee meetings, including changes to compensation levels for our executive
officers, the design of our equity programs and other executive benefit programs. In addition, Compensia
reviewed and advised the compensation committee on compensation materials relating to executive
compensation prepared by management for its consideration.
As part of our annual executive compensation review process, Compensia, under the direction of the
compensation committee, conducted a review of the competitiveness of our executive compensation program,
including base salaries, annual bonus opportunities, equity awards, and other executive benefits, by analyzing
the compensation practices of the companies in our compensation peer group (as described below), as well as
data from third-party compensation surveys. The compensation committee used the results of this analysis to
assess the competitiveness and risks of our executive officers’ total compensation packages.
Based on the consideration of the various factors as set forth in the rules of the SEC, the compensation
committee does not believe that its relationship with Compensia and the work of Compensia on behalf of the
compensation committee has raised any conflict of interest.
Use of Competitive Data
To monitor the competitiveness of our executive officers’ compensation, the compensation committee uses
a compensation peer group that reflects the pay of executives in comparable positions at similarly situated
companies. Typically, this compensation peer group, or the Peer Group, is composed of a cross-section of
direct competitors, as well as companies in relevant industries with a focus on software, educational and
leisure products. The Peer Group consists of both ‘‘direct peers’’ and ‘‘industry reference peers.’’
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