iRobot 2011 Annual Report Download - page 25

COMPENSATION AND OTHER INFORMATION
CONCERNING EXECUTIVE OFFICERS AND DIRECTORS
Compensation Discussion & Analysis
Overview
Our compensation philosophy is based on a desire to balance retention of executive talent with pay for
performance incentive compensation, which is designed to reward our named executive officers for continued
service and our sustained financial and operating performance. We believe that the compensation of our named
executive officers should align our executives’ interests with those of our stockholders and focus executive
behavior on the achievement of both near-term corporate targets as well as long-term business objectives and
strategies. It is the responsibility of the compensation committee of our board of directors to administer our
compensation practices to ensure that they are competitive and include incentives that are designed to
appropriately drive our performance, including our Adjusted EBITDA, revenue and individual objectives. Our
compensation committee reviews and approves all of our executive compensation policies, including executive
officer salaries, cash incentives and equity awards.
The Company performed well in 2011, with revenue increasing by 16% to $465 million and Adjusted
EBITDA increasing nearly 50% to $73 million (a reconciliation of Adjusted EBITDA to Net Income can be
found in Exhibit A to this proxy statement). Moreover, earnings per share of $1.44 for the fiscal year were up
50% from 2010. Based on this strong performance, our named executive officers were likewise appropriately
compensated, with bonuses earned at greater than 100% of targets. We believe our compensation philosophies, as
described below, have aligned executive compensation with Company performance.
Objectives of Our Compensation Programs
Our compensation programs for our executive officers are designed to achieve the following objectives:
• to provide competitive compensation that attracts, motivates and retains the best talent and the highest
caliber executives to help us to achieve our strategic objectives;
• to align management’s interest with our success;
• to connect a significant portion of the total potential cash compensation paid to executives to our
annual financial performance or the division, region or segment of our business for which an executive
has management responsibility by basing cash incentive compensation on corresponding financial
targets;
• to align management’s interest with the interests of stockholders through long-term equity
incentives; and
• to provide management with performance goals that are directly linked to our annual plan for growth
and profit.
We believe that the compensation of our named executive officers should reflect their success as a
management team, rather than as individuals, in attaining key operating objectives, such as improved Adjusted
EBITDA performance and revenue growth, as well as longer-term strategic objectives, such as invention, product
development and evaluation of potential acquisitions. We define Adjusted EBITDA as earnings before interest,
taxes, depreciation and amortization, merger and acquisition expenses, net intellectual property litigation-related
activity, restructuring-related expense and non-cash stock compensation.
We also believe that their compensation should not be based on the short-term performance of our stock,
whether favorable or unfavorable, but rather that the price of our stock will, in the long-term, reflect our
operating performance, and ultimately, the management of the company by our named executive officers. We
seek to have the long-term performance of our stock reflected in executive compensation through our equity
incentive programs.
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