This excerpt taken from the LF DEF 14A filed Mar 26, 2007.
LeapFrogs Statement in Opposition to Proposal Three
The board of directors believes this proposal does not serve the best interests of LeapFrog or its stockholders and would not maximize value to the stockholders. Accordingly, the board of directors recommends a vote AGAINST this proposal.
Consistent with its fiduciary duties, the board of directors has sought to manage the companys affairs in a manner it believes to be in the best interests of the company and its stockholders. The board has continuously analyzed the strategic alternatives for the company as part of fulfilling its fiduciary obligations. In late 2006, we completed a full strategic review of our business and developed a plan that is designed to improve our financial performance and create sustained growth and profitability over the long term. As part of this review, we modified the operational structure of our business and changed a significant portion of our executive and senior leadership team, including hiring Jeffrey G. Katz as our Chief Executive Officer and President. The board of directors believes that the value of our new strategic business plan and the future prospects of the company would not be realized by the prompt sale of LeapFrog Enterprises, Inc. to the highest bidder.
The board of directors believes that our strategic business plan has the potential to create stockholder value which is unlikely to be appropriately valued in an auction in the manner contemplated by the proposed resolution, particularly as such an auction could create a forced sale atmosphere that could have the effect of reducing the perceived value of the company to a fire sale level. Moreover, even though approval of this proposal is not binding on the board of directors, the board believes that approval would work against increasing value for the stockholders by causing uncertainty regarding the future of the company and adversely affecting relationships with employees, customers and vendors. The potential adverse impact could lead to a reduction in sales and profits and, in turn, stockholder value.
Therefore, the board of directors believes that growth of the business through continued implementation of our strategic business plan and not a forced sale to the highest bidder is in the best interests of the company and its stockholders.