iRobot 2010 Annual Report Download - page 26

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light of our overall compensation program, are within our target of providing total compensation at the market
median.
Cash Incentive Compensation
The compensation committee believes that some portion of overall cash compensation for executive
officers should be “at risk,” i.e., contingent upon successful achievement of significant financial and business
objectives and implementation of our business strategy. For our named executive officers, including our chief
executive officer, the granting of cash incentive payments is based on an evaluation of achievement against
predetermined financial and operational metrics in accordance with our Senior Executive Incentive Compensa-
tion Plan that was 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. The amount of
cash incentives paid to the named executive officers, however, is subject to the discretion of the compensation
committee based on its assessment of our performance in general or the achievement of specific goals.
For fiscal 2010, the target bonus awards under our Senior Executive Incentive Compensation Plan for
each of our named executive officers, as a percentage of base salary earned during the fiscal year, were 85%
for our chief executive officer, 65% for our chief financial officer, 65% for our chief operating officer, and
65% for the president of our home robots division. Because our senior vice president, human resources joined
us late in the year, he was not eligible to participate in the Senior Executive Incentive Compensation Plan.
These target payout amounts were set at levels the compensation committee determined were appropriate in
order to achieve our objective of retaining those executives who perform at or above the levels necessary for
us to achieve our business plan, which, among other things, involved growing our company in a cost-effective
way.
We designed our Senior Executive Incentive Compensation Plan to focus our executives on achieving key
corporate financial objectives and strategic milestones, and to reward substantial achievement of these
company financial objectives and strategic milestones. The 2010 performance goals and cash incentive
payment criteria established by the compensation committee under our Senior Executive Incentive Compensa-
tion Plan were designed to require significant effort and operational success on the part of us and our named
executive officers for achievement.
While the Senior Executive Incentive Compensation Plan is designed to provide cash incentive payments
based upon objectively determinable formulas that tie cash incentive payments to specific financial goals and
strategic milestones, the compensation committee retains the discretion to adjust cash incentive payments
under the Senior Executive Incentive Compensation Plan based upon additional factors.
For each executive officer, 100% of his target cash incentive compensation in 2010 was tied to key
financial and operating performance measures.
For our chief executive officer and chief financial officer 75% of the target cash incentive was tied to
achieving an Adjusted EBITDA, excluding cash incentive compensation expense, of $38.0 million, with the
ability to earn 150% of the target cash incentive for this element by achieving an Adjusted EBITDA, excluding
cash incentive compensation expense, of $47.5 million. In addition, 15% of the target cash incentive was tied
to achieving operating cash flow of $25.7 million, with the ability to earn 150% of the target cash incentive
for this element by achieving an operating cash flow of $32.1 million. Finally, 10% of the target cash incentive
was tied to achieving revenue of $363.5 million, with the ability to earn 150% of the target cash incentive for
this element by achieving revenue of $454.4 million.
For our president, home robots, his target cash incentive had two elements:
• 50% of his target cash incentive was tied to achieving an Adjusted EBITDA, excluding cash incentive
compensation expense, of $38.0 million, with the ability to earn 150% of the target cash incentive for
this element by achieving an Adjusted EBITDA, excluding cash incentive compensation expense, of
$47.5 million.
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