iRobot 2008 Annual Report Download - page 25

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 target cash
incentive compensation, 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.
On October 22, 2008, we entered into an employment separation agreement with Ms. Greiner, which
supersedes her executive agreement, and provides for the following, among other things: (i) separation pay
equal to one year’s base salary, (ii) health benefits coverage for up to four months, (iii) the opportunity to
receive a pro-rated cash incentive compensation for fiscal 2008, (iv) annual cash and equity awards pursuant
to the Company’s non-employee director compensation policy, (v) full acceleration of all of her currently
outstanding stock options, restricted stock awards and restricted stock units if Ms. Greiner ceases to serve as a
director of the Company and (vi) a general release by Ms. Greiner, in each case in the manner specified in the
employment separation agreement.
On April 30, 2008, we entered into a transitional services and departure agreement with Mr. Clear, which
supersedes his executive agreement, and provided for certain separation benefits through December 31, 2008
and acceleration of certain unvested stock options and restricted stock awards.
In 2008, salary was approximately 57.9%, 32.4%, 55.4%, 53.7%, 44.3%, 25.2% and 49.9% of the total
compensation for Messrs. Angle, Leahy, Dyer and Weinstein, Mses. Dean and Greiner, and Mr. Clear,
respectively. In 2007, salary was approximately 83.7%, 87.9%, 83.7%, and 86.9% of the total compensation
for Messrs. Angle and Dyer, Ms. Greiner, and Mr. Clear, respectively.
Cash Incentive Compensation
Our named executive officers are eligible to participate in our Senior Executive Incentive Compensation
Plan. Pursuant to this plan, we award our named executive officers cash incentive payments based on an
evaluation of the achievement against predetermined measurable financial and operational metrics in accor-
dance with the terms of the plan as adopted by the compensation committee. Target cash incentives for named
executive officers are generally targeted at the 50th percentile of similar cash incentives provided to officers in
peer companies reviewed by the compensation committee in the technology and robotics industries.
For each executive officer, except Mr. Leahy, 100% of his or her target bonus in 2008 was tied to a
company-wide revenue threshold. We had to achieve minimum revenue of approximately $300 million for any
portion of the bonus to be accrued, with bonus accrual increasing ratably until we achieve revenue of
approximately $311 million, at which 100% of the target bonus would have been accrued; provided, however,
that the payment of such bonus was conditioned on our pre-tax net income as a percentage of revenue for
fiscal 2008 remaining above a pre-determined threshold of 2%. The compensation committee chose revenue
achievement as a primary determinant of cash incentive compensation because it believed that, as a “growth
company,” we should reward meaningful revenue growth. The compensation committee conditioned the
payment of cash incentive compensation on the achievement of a minimum level of pre-tax net income as a
percentage of revenue because it believed that we must balance our growth with a disciplined increase in
profitability designed to allow us to achieve our more long-term financial goals.
We achieved our revenue threshold for 2008, but because we did not achieve the minimum level of pre-
tax net income, the executive officers, except Mr. Leahy, did not meet performance thresholds under the
formula driven portion of the 2008 Senior Executive Incentive Compensation Plan. Because Mr. Leahy joined
us in June 2008, after a substantial portion of the year had passed, the compensation committee provided that
his cash incentive compensation would be paid at 100% of his threshold, which was approximately 20.3% of
his total compensation. Nevertheless, based upon its discretion under the 2008 Senior Executive Incentive
Compensation Plan, the committee determined that cash incentive compensation should be paid based upon a
number of factors including the substantial achievement of the fundamental revenue target, the extraordinary
23
Proxy Statement