iRobot 2014 Annual Report Download - page 32

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The Company’s and compensation committee’s goals for selecting metrics for the PSU component of the long-term incentive
program include:
• Alignment with business strategy;
• Alignment with stockholder interest in improving long-term business fundamentals;
• Correlation with total stockholder return; and
• Complementary to our short-term incentive metrics.
After a thoughtful process and consideration of various metrics, the compensation committee determined that operating
income percent (with a threshold requirement for a minimum amount of revenue growth) was the optimal initial metric for our
performance share unit component. We believe operating income percent is an excellent measure of the underlying profitability of
the enterprise and it has historical correlation with total stockholder return. Operating income percent is also a regularly reported
financial measure, is understood by our investor base, and can be reasonably forecasted over the relevant performance period. We
believe operating income percent in our long-term incentives coupled with the revenue component of our short-term incentives
provides strong executive focus on important short- and long-term business drivers.
While this single metric was chosen for the initial implementation of the new performance share unit component in 2014, in
future years, other metrics may be selected to further optimize and align the incentives of management with our business strategy.
For the PSUs granted in 2014, the number of shares actually earned at the end of the three year period will range from 0% to
100% of the target number of PSUs granted based on the Company’s performance against three year operating income goals. In
addition, while all vesting of earned PSUs occurs on the third anniversary of the date of grant, achievement of cumulative
intermediate targets for 2014, 2015 and/or 2016 will allow PSUs to be deemed earned but not yet vested for the intermediate
periods. Achievement of the cumulative target will allow all shares subject to the PSUs to be earned regardless of the achievement
of the intermediate 2014, 2015 and 2016 targets.
Unvested awards are not eligible to receive any dividends or voting rights until the point at which any shares are earned and
vested.
The following table outlines the threshold, target and maximum 3 year performance goals for our new PSU plan for the
2014-2016 cycle.
2014 - 2016
PSU Performance Cycle
Operating Income Percent
Threshold Target Maximum Actual Performance Achieved
Actual Payout
Level
Achieved
2014 8.0% 8.0% 8.0% 9.5% 100%
2015 9.0% 9.0% 9.0% —% —%
2016 10.0% 10.0% 10.0% —% —%
Cumulative 9.1% 9.1% 9.1% —% —%
For 2014, one-third of the awarded PSUs were deemed earned if the Company achieved a minimum 8.0% operating income
as a percentage of revenue and at least $545 million in total revenue. In 2014, the Company achieved 9.5% in operating income as
a percentage of revenue and $557 million in revenue. Accordingly, one-third of the total number of PSUs awarded were earned but
have not yet vested. Specifically, the named-executive officers earned the following restricted share units with respect to 2014:
2014-2016 PSUs Granted & Earned
PSUs Granted 2014 Earned PSUs (1) 2015 Earned PSUs (1) 2016 Earned PSUs Total PSUs Earned to Date
Colin M. Angle 13,550 4,516 — — 4,516
Alison Dean 4,467 1,489 — — 1,489
Russell J. Campanello 4,308 1,436 — — 1,436
Paolo Pirjanian 4,925 1,641 — — 1,641
Also, the Company determines the value of its annual equity awards early in the year (usually in March). Annual awards are
sized relative to Company and individual performance for the prior year as is a typical practice for many companies. By granting