LeapFrog 2013 Annual Report Download - page 135
Download and view the complete annual report
Please find page 135 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.behavior by our executive officers 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 chief executive officer, chief financial officer 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 our board of directors and compensation
committee meetings held in February 2013, and at a special risk review session of our board of directors in
July 2013.
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 executive officers and other employees and instead encourage behaviors that support
sustainable value generation.
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 bonuses;
• Equity awards;
• Severance benefits; and
• Other benefits.
Base Salary
The compensation committee reviews and adjusts, as necessary or appropriate, the base salaries of our
executive officers, including our named executive officers, on an annual basis, and makes decisions with
respect to the base salaries of new executive officers at the time of hire. In making its determinations, the
compensation committee considers several factors, including our overall financial performance, individual
performance, the executive officer’s potential to contribute to our long-term strategic goals, his or her scope of
responsibilities and experience and competitive market practices for base salary.
In February 2013, Mr. Spalding received an increase in his annual base salary of £40,000 ($66,247,
assuming a conversion of 1:1.656178). The compensation committee determined that this adjustment was
appropriate after reviewing the Peer Group for base salaries for individuals in comparable positions. There
were no other base salary changes of our named executive officers in 2013.
Performance-Based Bonuses
We use performance-based cash bonuses to drive achievement of key business results and to recognize
individuals based on their contribution to those results. These bonuses are awarded under the performance
37