iRobot 2007 Annual Report Download - page 20

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With the input of our human resources department and compensation consultants, the chief executive
officer makes recommendations to the compensation committee regarding base salary levels, target incentive
awards, performance goals for incentive compensation and equity awards for named executive officers, other
than Mr. Angle. In conjunction with the annual performance review of each named executive officer in January
of each year, the compensation committee carefully considers the recommendations of the chief executive
officer when making decisions on setting base salary, bonus payments under the prior year’s incentive
compensation plan, target amounts and performance goals for the current year’s incentive compensation plan,
and any other special adjustments or bonuses. In addition, the compensation committee similarly determines
equity incentive awards, if any, for each named executive officer.
Our compensation plans are developed, in part, by utilizing publicly available compensation data and
subscription compensation survey data for national and regional companies in the technology, defense,
household durables and robotics industries. We believe that the practices of this group of companies provide
us with appropriate compensation benchmarks, because these companies have similar organizational structures
and tend to compete with us to attract executives and other employees. For benchmarking executive
compensation, we typically review the compensation data we have collected from the complete group of
companies, as well as a subset of the data from companies with revenues, numbers of employees and market
capitalizations similar to our profile.
With respect to 2007 base salary and cash incentive compensation, we reviewed companies with similar-
sized revenues of greater than $85 million and less than $350 million and market capitalizations of between
$240 million to $1.2 billion, in particular Argon ST, Inc., Cognex Corporation, Directed Electronics, Inc.,
Dolby Laboratories. Inc., DTS, Inc., Faro Technologies, Inc., GSI Group, Inc., II-VI Inc., L-1 Identity
Solutions, Inc., LoJack Corporation, Newport Corporation, Orbital Sciences Corporation, Syntax-Brillian
Corporation, United Industrial Corporation and Universal Electronics Inc. The compensation committee had
also engaged a consultant, Watson Wyatt Worldwide, to help us evaluate peer companies for cash compensa-
tion purposes and to help us analyze applicable compensation data and to help us determine appropriate
compensation levels for our named executive officers.
With respect to 2007 long-term incentives, we reviewed companies with similar-sized revenues of greater
than $100 million and less than $400 million, focusing on U.S.-based public companies in the consumer
electronics and defense industries. These peer companies include Cobra Electronics Corporation, Directed
Electronics, Inc., Genesis Microchip, Incorporated, LoJack Corporation, Mad Catz Interactive, Inc., Rockford
Corporation, Syntax-Brillian Corporation, TiVo Inc., Universal Electronics Inc., AeroVironment, Inc., Argon
ST, Inc., Axsys Techonologies, Inc., Ducommun Incorporated, Force Protection, Inc. HEICO Corporation,
Herley Industries, Inc., Integral Systems, Inc. and Sparton Corporation. The compensation committee had also
engaged a consultant, DolmatConnell & Partners, to help us evaluate peer companies for long-term incentive
compensation purposes and to help us analyze applicable compensation data and to help us determine
appropriate long-term compensation levels for our named executive officers.
We will annually reassess the relevance of our peer group and make changes when judged 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 levels for our executive officers in fiscal 2007,
the compensation committee considered many factors in addition to benchmarking described above, including,
but not limited to:
• the scope and strategic impact of the executive officer’s responsibilities;
• our past business and segment performance and future expectations;
• our long-term goals and strategies;
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