LeapFrog 2013 Annual Report Download - page 141
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Please find page 141 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.In August 2013, in connection with his transition from President of LeapFrog to advisor to the CEO,
Mr. Dodd was granted the stock option and RSU award described above. In determining the size of this
award, the compensation committee considered the amount of remaining, unvested equity held by Mr. Dodd
and sought to provide an incentive for his staying to provide for an orderly transition for our supply chain and
engineering functions.
The compensation committee approved the equity awards granted to the remaining named executive
officers in February 2013 as part of its overall compensation assessment for the year. We believe in
maintaining a strong pay-for-performance relationship for our named executive officers and providing equity
grants that constitute a significant portion of the total compensation opportunities of our named executive
officers strengthens the pay-for-performance relationship. In addition, the equity grants assure that a significant
portion of the total target direct compensation opportunities for our named executive officers is equity-based
and ‘‘at risk’’ based on corporate performance. The compensation committee believes that this practice aligns
the interests of our executive officers and stockholders. Finally, the grants maintain unvested equity value of
as a percentage of base salary for our named executive officers at a sufficient level to provide a significant
retention motivation.
Severance Benefits
Our named executive officers are eligible to receive payments and benefits in certain circumstances in the
event of their termination of employment, including in connection with a change-in-control of LeapFrog.
These payments and benefits are intended to provide assurances of specified benefits upon certain terminations
of employment and to minimize distraction and risk of departure of our named executive officers in the event
of a potential change-in-control transaction involving the Company. In addition, this aligns our severance
payments and benefits for them with competitive practice.
Each of our named executive officers is eligible to receive payments and benefits if we terminate his
employment ‘‘without cause.’’ In addition, each of our named executive officers except Messrs. Spalding and
Dodd are eligible to receive payments and benefits if he resigns for ‘‘good reason.’’ In determining amounts
payable under these severance arrangements, the compensation committee took into consideration market data,
including the severance practices of the companies in our Peer Group.
For more information about the terms and conditions of our severance arrangements, see ‘‘Potential
Payments Upon Termination or Change in Control,’’ below.
Other Benefits
We offer our executive officers various other benefits, including healthcare coverage and the opportunity
to participate in our Section 401(k) plan and employee stock purchase plan, on the same general terms and
conditions as are made available to all our regular, full-time employees. We do not offer our U.S. executive
officers, or other U.S. employees, guaranteed retirement or pension benefits. However, in the absence of
Section 401(k) plans in the United Kingdom, or UK, we contribute a percentage of the salary of our UK
employees to individual private pension plans after three months of service on their behalf. Pursuant to the
terms of Mr. Spalding’s employment agreement, we contribute 10% of his salary to an individual private
pension on his behalf. For more information about how this applies to our UK-based executive officer, Mr.
Spalding, see ‘‘Employment Agreements — Christopher Spalding’’ below.
In view of the high cost of housing in the San Francisco Bay Area relative to other parts of the country
and to attract talented executives, we offer newly-hired executives reimbursement of relocation expenses and
mortgage interest differential payments, where appropriate. Typically, the amount and duration of these
payments is negotiated and set forth in the new executive’s employment agreement or offer letter. In 2013, we
extended these benefits to Messrs. Adams, Ahearn and Arthur under the terms of their respective employment
offer letters and to Mr. Barbour under the terms of his employment agreement. The table below summarizes
payments made to these executive officers in this regard during 2013.
Name
Amount Paid
in 2013
Mr. Adams .................................................. $18,000
Mr. Ahearn .................................................. $62,500
Mr. Arthur ................................................... $60,000
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