LeapFrog 2013 Annual Report Download - page 136
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Please find page 136 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.cash award provisions of the LeapFrog 2011 Equity and Incentive Plan, or the 2011 Plan. The amount of
these bonuses is determined based on an assessment of the Company’s performance against pre-established
financial goals and each executive officer’s performance against his individual goals.
The following formula is used to calculate the performance-based bonuses awarded to each executive
officer, including each named executive officer.
Base Salary X Target Bonus Opportunity (as a percentage of base salary) X Bonus Factor
The target bonus opportunity for our named executive officers is expressed as a percentage of their base
salaries earned during the fiscal year. These target bonus opportunities are established in each executive
officer’s employment agreement or offer letter (or subsequent amendment) and are based on competitive
market practices for each individual’s position.
The Bonus Factor is calculated each year by the compensation committee based on the level of
achievement of the Company’s performance against pre-established financial goals and each executive officer’s
performance against his individual goals. The Bonus Factor can fall within a range of 0 − 180% for our chief
executive officer and 0 − 175% for our other named executive officers. The Bonus Factor has a higher range
for our chief executive officer because a higher percentage of his target bonus opportunity is based on
Company performance, which has a higher potential multiplying effect than individual performance objectives,
as described more fully below. Our chief executive officer’s bonus was more heavily weighted toward
corporate performance compared to our other named executive officers because the compensation committee
determined that our chief executive officer’s bonus should more closely track company performance against
objectives.
The following table shows how the formula is applied to determine the range of the potential
performance-based bonus awards under the formula for each named executive officer for 2013.
Name
Base Salary
Earned in
2013 X
Target Bonus
Opportunity
(% of Salary) X Bonus Factor =
Potential 2013
Performance-
Based Bonus
Mr. Barbour .............. $575,000 X 100% X 0 − 180% = $0 − 1,035,000
Mr. Arthur ............... $525,000 X 75% X 0 − 175% = $ 0 − 689,063
Mr. Adams ............... $196,314
(1)
X 50% X 0 − 175% = $ 0 − 171,775
Mr. Ahearn .............. $525,000 X 75% X 0 − 175% = $ 0 − 689,063
Mr. Dodd ................ $408,000 X 75% X 0 − 175% = $ 0 − 535,500
Mr. Spalding ............. $397,483
(2)
X 75% X 0 − 175% = $ 0 − 521,696
(1) Mr. Adam’s annual base salary is $350,000. The amount reported was the base salary earned by
Mr. Adams during his partial year of employment with LeapFrog in 2013, which began on June 10, 2013.
Actual bonuses are calculated based on the salary actually earned during the year.
(2) Assumes a conversion rate of US Dollars to Pounds Sterling of 1:1.656178.
Performance Objectives and the Bonus Factor
The Bonus Factor is calculated by adding the level of achievement of the different components of the
performance-based bonus objectives. In 2013, for each named executive officer, the bonus objectives consisted
of a Company performance component and an individual performance component. The allocation between
Company and individual performance was determined by the compensation committee based on its evaluation
of competitive market practices, its assessment of the amount of compensation that should be based on
Company performance versus individual performance and our objective of managing and mitigating excessive
risk-taking. The Company performance component was based on two financial measures, a Net Sales
component and an Operating Income component.
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