iRobot 2014 Annual Report Download - page 27

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21
Compensation Comparisons
Developing a peer group for compensation comparison purposes is not an easy task for our Company. Each year we watch
as industry analysts and proxy advisory firms, who struggle to understand our business, also struggle to find reasonable industry
comparisons for compensation peer group purposes. We do not have any “true” robotic comparator companies that are publicly-
traded, stand-alone, U.S.-based or size-appropriate. We believe our mix of technology and technology/consumer products peer
group firms is appropriate for compensation and performance comparison purposes, but our peer group firms differ substantially
from the peer groups used by proxy advisory firms. These firms tend to compare us to organizations in the Consumer Durables
industry such as home builders, retailers and furniture distributors/manufacturers (i.e., companies with little to no technology
attributes to their respective products). These differences in peer group firms used to determine alignment of pay and performance
result in substantial differences in Company performance and how compensation is valued and delivered to executives.
Technology and technology/consumer products companies perform and pay differently from home builders, retailers and furniture
distributors/manufacturers. The compensation committee takes all of these unique dynamics into account annually when
reviewing our peer group firms and our compensation practices.
The following selection criteria, developed in conjunction with the compensation committee, which are thoroughly reviewed
and adjusted (as needed), were used to develop the comparative peer group used in assessing the competitiveness of our executive
compensation for purposes of fiscal 2014 compensation actions:
• Companies with revenues within a similar range and generally similar market capitalization;
• Companies within comparable industries that focus on high-tech products (e.g., information technology, consumer
durables, consumer services, aerospace/defense, capital goods, electronics equipment, instruments and components,
healthcare technology, computers and peripherals, networking equipment and computer hardware);
• Companies with highly-engineered products and complex technologies with multiple industry applications;
• Technology companies whose products contain both hardware and software components; and
• Companies with moderate to high sales growth and opportunity.
• Other secondary criteria also considered include:
• Companies classified as “disruptive innovation;”
• Companies with products with brand recognition and/or disposable income “luxury” goods; and
• Companies with moderate margins and levels of research and development expense.
As a result of our selection criteria used for 2014, Leapfrog Enterprises, Inc., SeaChange International, Inc., and Voxx
International Corp. were removed from the peer group for 2014, and 3D Systems Corp., Logitech International SA, Maxwell
Technologies Inc., and Trimble Navigation Ltd. were added to the 2014 peer group. The resulting peer group consisted of the
following 16 companies:
3D Systems Corp. Mercury Systems, Inc.
Accuray Incorporated Netgear, Inc.
AeroVironment, Inc. Orbital Sciences Corporation
American Science and Engineering, Inc. Plantronics, Inc.
Bruker Corporation Synaptics Incorporated
Cognex Corporation Tivo, Inc.
Logitech International SA Trimble Navigation Ltd..
Maxwell Technologies Inc. Universal Electronics, Inc.
These 16 companies, at the time of the analysis, had median annual revenues of $454 million and a median market
capitalization of $1.15 billion, compared to our annual trailing four quarters revenue of $500 million and market capitalization of
$1.14 billion at the time of the analysis.
We annually reassess the relevance of our peer group and make changes when appropriate. We believe that the use of
benchmarking is an important factor in remaining competitive with our peers and furthering our objective of attracting, motivating
and retaining highly-qualified personnel.
The compensation committee reviews all components of compensation for named executive officers. In accordance with its
charter, the compensation committee also, among other responsibilities, administers our incentive compensation plan, and reviews
and makes recommendations to management on company-wide compensation programs and practices. In setting compensation
Proxy Statement