iRobot 2007 Annual Report Download - page 23

term shareholder value. These stock-based incentives are based on various factors primarily relating to the
responsibilities of the individual officer or employee, their past performance, anticipated future contributions
and prior option grants. In general, our compensation committee bases its decisions to grant stock-based
incentives on recommendations of management and the compensation committee’s analysis of peer group
compensation information, with the intention of keeping the executives’ overall compensation, including the
equity component of that compensation, at a competitive level with the comparator companies reviewed by the
committee in the technology and robotics industries. Our compensation committee also considers the number
of shares of common stock outstanding, the number of shares of common stock authorized for issuance under
its equity compensation plans, the number of options and shares held by the executive officer for whom an
award is being considered and the other elements of the officer’s compensation, as well as our compensation
objectives and policies described above. During fiscal year 2007, stock options and restricted stock awards
were granted to our named executive officers. As with the determination of base salaries and short term
incentive payments, the compensation committee exercises subjective judgment and discretion in view of the
above criteria.
Other Compensation
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 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. Executive officers receive higher life, accidental death
and dismemberment and disability insurance benefits than other employees. In addition, one executive officer
receives amounts allocable to use of our corporate apartment. We also enter into executive agreements with
our executive officers providing for certain severance benefits that may be triggered as a result of the
termination of such officer’s employment under certain circumstances. We offer no perquisites, other than the
use of our corporate apartment, that are not otherwise available to all of our employees.
Executive Agreements
We entered into executive agreements with each of our executive officers. The executive agreements
provide for severance payments equal to 50% of such officer’s annual base salary, as well as certain continued
health benefits, in the event that we terminate his or her employment other than for cause. In addition, these
executive agreements provide that if we experience a change in control and the employment of such officer is
terminated without cause, or if such officer terminates his or her employment for certain reasons including a
substantial reduction in salary or bonus or geographic movement during the one-year period following the
change in control, then all unvested stock options held by such officer become fully-vested and immediately
exercisable and such officer is entitled to severance payments equal to 100% of his or her annual base salary
and 50% of such officer’s annual bonus, as well as certain continued health benefits. The agreements also
provide that all options granted to each officer will have their vesting accelerated by 25% upon a change in
control. It was the belief of the compensation committee that these provisions were consistent with executive
severance arrangements that are customary for public companies at our stage of development and were
necessary in order to hire and/or retain the executives.
From time to time, the Company’s executive officers enter into stock restriction agreements upon the
exercise of their option grants.
We have entered into indemnification agreements with each of our executive officers and directors,
providing for indemnification against expenses and liabilities reasonably incurred in connection with their
service for us on our behalf.
On December 30, 2002, we entered into an independent contractor agreement with Dr. Rodney Brooks,
which shall continue until terminated by either party upon 60 days’ written notice. If we terminate the
agreement, Dr. Brooks will be entitled to twelve months severance.
19
Proxy Statement