The instructions on the Exercise Manager exercise create page says:


In order that the final exercise works correctly and carries the correct format with a clean image we strongly advise here that the image you upload is a PNG format (with transparent background), is no larger than 100kb in file size and is EXACTLY 200 pixels wide by 70 pixels deep.


In fact, it is the to pixels deep (or height) that is critical, as this is the height of the banner where the logo sits. So if you have a round logo, or one that needs to stay 'in proportion', then 70 pixels x 70 pixels will look best.