Exhibit 10.35

 

 

Certain Compensation Arrangements with Named Executive Officers

 

As of December 31, 2004, our named executive officers, as such term is defined
in Item 402(a)(3) of Regulation S-K of the Securities and Exchange Act of 1934
as amended, were:

 

Named Executive Officer

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Title

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Thomas J. Kalinske

  

Chief Executive Officer (1)

Michael C. Wood

  

Chief Executive Officer (2)

Jerome J. Perez

  

President

Paul A. Rioux

  

Vice-Chairman

G. Frederick Forsyth

  

Chief Operating Officer (3)

Timothy M. Bender

  

President, Worldwide Consumer Group

 

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  (1) Mr. Kalinske has served as our Chief Executive Officer since February
2004.

  (2) Mr. Wood resigned as our Chief Executive Officer and became our Chief
Vision and Creative Officer in February 2004. In September 2004, Mr. Wood
resigned as our Chief Vision and Creative Officer.

  (3) Mr. Forsyth resigned as our Chief Operating Officer in February 2005.

 

To the extent compensation arrangements with these named executive officers are
not described in exhibits filed or incorporated by reference in this Form 10-K,
the following is a summary of the compensation arrangements between LeapFrog and
its named executive officers as of March 1, 2005.

 

Salary and Bonus

 

The annual salary and bonus for Messrs. Kalinske, Perez and Rioux, are as set
forth in the employment agreements between each of these named executive
officers and LeapFrog. Messrs. Kalinske and Perez each voluntarily waived their
right to receive the 2004 guaranteed bonus to which they are entitled under
their employment agreements with LeapFrog.

 

Under the terms of his employment agreement effective as of November 1, 2003,
Mr. Bender’s annual salary and bonus were initially set at $260,000 and $90,000,
respectively, with our board of directors or any committee thereof having the
ability to approve higher amounts. As of March 1, 2005, Mr. Bender is receiving
an annual salary of $300,000. In addition, Mr. Bender was eligible to receive a
bonus of up to 50% of his 2004 annual salary for his service to LeapFrog in
2004.

 

Under the terms of his employment agreement effective as of January 1, 2002, Mr.
Wood’s annual salary was initially set at $265,000. The Compensation Committee
of our board of directors approved salary increases for Mr. Wood’s annual salary
such that since July 2003, he was paid an annual salary of $281,200. Pursuant to
the terms of his employment agreement, Mr. Wood was eligible to receive an
annual bonus of up to $135,000.

 

Performance Share Grants

 

In April 2004, the Compensation Committee of our board of directors approved an
amendment to our 2002 Equity Incentive Plan to allow for a performance share
program that provides the opportunity for certain designated participants to
receive shares of LeapFrog’s common stock based on formulas tied to certain
pre-established financial performance goals that are established for each
performance period by the Compensation Committee. At the beginning of each
performance period, each designated participant is assigned a “Target Award”
that sets forth the number of shares of LeapFrog’s common stock that will be
awarded to the participant if the pre-established financial performance goals
are met during the performance period. If the level of such performance goals
that is achieved during the performance period is less or more than the
specified target level, participants will be awarded a percentage (from 25% to
200%) of shares subject to the Target Awards; provided, however, that if a
specified minimum level of performance goals is not achieved during the
performance period, participants will not receive any shares. In April 2004, the
following named executive officers were granted the right to participate in the
performance share program for the 2004 through 2006 performance period. The
named executive officers will earn one-third of their Target Awards for each
year that the annual performance goals are met during the 2004 through 2006
performance period. The named executive officers will be issued the number of
shares earned during the 2004 through 2006 performance period on or about
December 31, 2006.

 

Named Executive Officer

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Target Awards for the 2004 through

2006 Performance Period

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Thomas J. Kalinske

  

95,600 shares

Jerome J. Perez

  

20,000 shares

G. Frederick Forsyth

  

22,000 shares

Timothy M. Bender

  

43,000 shares

 

As the company did not meet the 2004 performance goals set by the Compensation
Committee of our board of directors, the named executive officers did not
receive a grant of shares under the performance share program for the 2004
period. Should the company meet the performance goals established by the
Compensation Committee of our board of directors in 2005 and 2006, the named
executive officers will each receive two-thirds of their Target Awards set forth
in the above table, such shares to be granted on or about December 31, 2006,
subject to adjustment if the level of performance goals that is achieved during
the performance period is less or more than the specified target level, as
described above. For the 2005 period, the company’s net income, operating cash
flow, revenue, and total shareholder return are the performance measures that
will be used to determine whether the performance goals have been achieved.