LeapFrog 2015 Annual Report Download - page 144

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 the 2015 fiscal year. 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 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
• Our compensation programs are designed to encourage employees to remain focused on both
short-term and long-term goals through the use of performance-based bonuses, which generally
focus on annual performance goals, and equity awards, which typically vest over a number of years
and therefore encourage employees to focus on long-term performance.
The compensation committee monitors our compensation programs to evaluate, on a regular basis,
whether they provide an appropriate balance of incentives and whether they discourage employees from taking
unreasonable risks. Based on these assessments in March 2014, the board of directors and the compensation
committee concluded that our compensation policies and practices for our employees do not create risks that
are reasonably likely to have a material adverse effect on the Company.
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