iRobot 2014 Annual Report Download - page 45

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PROPOSAL 3
APPROVAL OF THE iROBOT CORPORATION 2015 STOCK OPTION AND INCENTIVE PLAN
Proposal
The board of directors believes that stock options and other stock-based incentive awards can play an important role in the success
of iRobot by encouraging and enabling the employees, officers, non-employee directors and other key persons of the Company and its
subsidiaries upon whose judgment, initiative and efforts we largely depend for the successful conduct of our business to acquire a
proprietary interest in the Company. Our board of directors anticipates that providing these people with a direct stake in iRobot will
assure a closer identification of the interests of these individuals with those of the Company and its stockholders, thereby stimulating
their efforts on our behalf and strengthening their desire to remain with the Company.
On April 1, 2015, the board of directors adopted, subject to stockholder approval, the 2015 Plan. The 2015 Plan is designed to enhance
the flexibility to grant equity awards to our officers, employees, non-employee directors and other key persons and to ensure that we can
continue to grant equity awards to eligible recipients at levels determined to be appropriate by the board of directors and/or the compensation
committee. A copy of the 2015 Plan is attached as Annex A to this proxy statement and is incorporated herein by reference.
As of December 27, 2014, there were stock options to acquire 1,473,320 shares of common stock outstanding under our equity
compensation plans, with a weighted average exercise price of $22.89 and a weighted average remaining term of 3.87 years. In addition,
as of December 27, 2014, there were 880,138 unvested full value awards with time-based vesting and 29,717 unvested full value awards
with performance vesting outstanding under our equity compensation plans. Other than the foregoing, no awards under our equity
compensation plans were outstanding as of December 27, 2014.
Upon the approval of the 2015 Plan by our stockholders, no additional stock option or incentive-awards will be issued from the
Company’s existing equity award plans.
Summary of Material Features
The material features of the 2015 Plan are:
• The maximum number of shares of common stock available for awards under the 2015 Plan is 3,100,000 shares;
• The award of stock options (both incentive and non-qualified options), stock appreciation rights, restricted stock, restricted stock
units, unrestricted stock, performance shares, dividend equivalent rights and cash-based awards is permitted;
• Grants of “full-value” awards are deemed for purposes of determining the number of shares available for future grants under
the 2015 Plan as an award for 1.61 shares for each share of common stock subject to the award. Grants of stock options or stock
appreciation rights are deemed to be an award of one share for each share of common stock subject to the award;
• Shares tendered or held back for taxes or to pay the exercise price with respect to an award will not be added back to the reserved
pool under the 2015 Plan. Upon the exercise of a stock appreciation right that is settled in shares of common stock, the full
number of shares underlying the award will be charged to the reserved pool. Additionally, shares we reacquire on the open
market will not be added to the reserved pool;
• Stock options and stock appreciation rights will not be repriced in any manner without stockholder approval;
• Minimum vesting periods are required for stock options, stock appreciation rights, restricted stock, restricted stock units and
performance share awards;
• No more than 2,000,000 shares subject to awards may be awarded to our non-employee directors in any calendar year period,
no more than 2,500,000 shares subject to stock options or stock appreciation rights may be granted to any individual grantee
in any calendar year period, and no more than 5% of the shares reserved may be granted under the 2015 plan as unrestricted
stock awards;
• Any material amendment to the 2015 Plan is subject to approval by our stockholders; and
• The term of the 2015 Plan will expire on May 20, 2025, ten years from the date of the 2015 annual meeting.
Based solely on the closing price of our common stock as reported by the NASDAQ Global Market on April 9, 2015 and the maximum
number of shares that would have been available for awards as of such date under the 2015 Plan, the maximum aggregate market value
of the common stock that could potentially be issued under the 2015 Plan is approximately $103.8 million. The shares we issue under
the 2015 Plan will be authorized but unissued shares or shares of common stock that we reacquire. The shares of common stock underlying
any awards that are forfeited, canceled or otherwise terminated, other than by exercise, under the 2015 Plan and the Company’s 2005
Stock Option and Incentive Plan, as amended, will be added back to the shares of common stock available for issuance under the 2015
Plan. Shares tendered or held back upon exercise of a stock option or settlement of an award under the 2015 Plan to cover the exercise
price or tax withholding and shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the
stock appreciation right upon exercise thereof, will not be added back to the shares of common stock available for issuance under the
2015 Plan.
Proxy Statement