iRobot 2014 Annual Report Download - page 33

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our annual awards at the beginning of each year and using the prior year’s performance to size our awards, there could be a
possible disconnect with our awards relative to our performance in the year of grant.
Other Benefits and Perquisites
We also have various broad-based employee benefit plans. Our executive officers participate in these plans on the same
terms as other eligible employees, subject to any legal limits on the amounts that may be contributed by or paid to executive
officers under these plans. We offer a 401(k) plan, which allows our employees to invest in a wide array of funds on a pre-tax
basis. We do not provide pension arrangements or post-retirement health coverage for our named executive officers or other
employees. We also maintain insurance and other benefit plans for our employees. We offer no perquisites that are not otherwise
available to all of our employees.
Stock Ownership Guidelines
We introduced equity ownership guidelines in 2011 to further align the interests of our senior management and directors with
those of our stockholders. Under the guidelines, executives are expected to hold common stock in an amount equal to a multiple of
their base salary as determined by their position. The guidelines range from two times base salary to six times base salary for our
chief executive officer. In addition, under the guidelines, our directors are expected to hold common stock in an amount equal to
six times their current board retainer fee. For purposes of these guidelines, stock ownership includes shares for which the executive
or director has direct or indirect ownership or control, including restricted stock and in-the-money vested stock options, but does
not include unvested restricted stock units or unvested stock options. Executives and directors are expected to meet their ownership
guidelines within five years of becoming subject to the guidelines. All executives and directors are currently meeting or are
working to achieve these guidelines within the five year time period.
Hedging/Pledging Policy
Since 2005, we have had a written insider trading policy that prohibits holding Company securities as collateral in a margin
account, any hedging transactions and prohibits pledging of Company securities as collateral for a loan unless the pledge has been
approved by the compensation committee of the board of directors. To date, no such approval has been requested or given.
Executive Agreements
We have entered into executive agreements with each of our named executive officers. The executive agreements provide for
severance payments equal to 50% of such officer's annual base salary at the highest annualized rate in effect during the one-year
period immediately prior to termination, payable in six equal monthly installments, as well as monthly premium payments for
continued health, dental and vision benefits for up to six months following termination, in the event that we terminate his or her
employment other than for cause, as defined in the executive agreements. In addition, these executive agreements provide that if
we experience a change in control, as defined in the executive agreements, and the employment of such officer is terminated by the
Company without cause at any time within the period beginning on the date that is 45 days prior to the date of the public
announcement of the execution of a definitive agreement for a change in control and ending on the first anniversary of the effective
date of the change in control, or if such officer terminates his or her employment for good reason, as defined in the executive
agreements, during the one-year period following the change in control, then all unvested equity held by such officer becomes
fully-vested and immediately exercisable and such officer is entitled to severance payments equal to 200% of his or her annual
base salary, at the highest annualized rate in effect during the period immediately prior to the effective date of the change in control
and the date of termination of employment, and 200% of such officer's highest target cash incentive with respect to the year prior
to the year in which the change in control occurred and ending in the year in which the officer’s employment is terminated, each
payable in 24 equal monthly installments, as well as monthly premium payments for continued health, dental and vision benefits
for up to 24 months following termination. There are no tax gross-up payables under the executive agreements.
It is the belief of the compensation committee that these provisions are consistent with executive severance arrangements
that are customary for public companies at our stage of development and are necessary in order to hire and/or retain our key talent.
Proxy Statement