LeapFrog Executive Resigns Amid Probe
Educational toymaker LeapFrog Enterprises Inc. said Tuesday that a top company executive had resigned as a result of an internal investigation related to a commission paid to a sales representative.
Bob Lally, president of LeapFrog SchoolHouse and executive vice president of the company’s Education and Training Group, resigned “as the result of a mutual decision,” a statement from Emeryville, Calif.-based LeapFrog said. The company said Lally’s departure was related to a commission paid on a transaction of less than $1 million but didn’t provide further details.
The investigation and resignation comes after October reports in the Baltimore Sun questioned the relationship between a public school official in Maryland and a LeapFrog saleswoman who sold the district $1 million in software.
The paper reported that at the time the Prince George’s County public schools bought the software from LeapFrog, school district head Andre J. Hornsby, 51, didn’t disclose to the school board that he was living with LeapFrog employee Sienna Owens, 26, and that she was his girlfriend. Lally, who was Owens’ superior, told the Sun that Owens was not involved in the sale to the county schools.
“Although we are disappointed and saddened by this development, we take our code of conduct very seriously and believe we have expeditiously addressed this event,” said LeapFrog Chief Executive Tom Kalinske. The company said its investigation would continue.
Jessie Woolley-Wilson, vice president of marketing for LeapFrog SchoolHouse division, will succeed Lally, who couldn’t be reached for comment Tuesday.
The resignation is yet another blow to LeapFrog, which has seen its stock plummet almost 47% this year as profit has fallen and sales of its LeapPad laptop game have declined because of competing products.
For the third quarter, the company’s profit slid 40% to $20.2 million from a year earlier as expenses rose. That’s a sharp turnaround from a year earlier, when the company was riding high with a yearly profit increase of 73% to $73 million and sales increase of 28% to $680 million.
LeapFrog, the creator of various interactive children’s toys, was founded in 1995 and received backing from financier Michael Milken and Oracle Corp. Chief Executive Larry Ellison.
Tuesday’s news came after the stock market closed. LeapFrog stock was up 24 cents at $14.14 on the New York Stock Exchange. It was little changed in after-hours trading.
