iRobot 2010 Annual Report Download - page 29

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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 200% of his or her annual base salary
and 200% of such officer’s annual bonus, as well as certain continued health benefits.
It is the belief of the compensation committee that these provisions are 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.
Tax Deductibility of Executive Compensation
In general, under Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, we
cannot deduct, for federal income tax purposes, compensation in excess of $1,000,000 paid to certain executive
officers. This deduction limitation does not apply, however, to compensation that constitutes “qualified
performance-based compensation” within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder. We have considered the limitations on deductions imposed by Section 162(m) of the
Code and it is our present intention, for so long as it is consistent with our overall compensation objective, to
structure executive compensation to minimize application of the deduction limitations of Section 162(m) of the
Code.
Risk Oversight of Compensation Programs
The compensation committee believes that our compensation program for executive officers is not
structured to be reasonably likely to present a material adverse risk to us based on the following factors:
• Our compensation program for executive officers is designed to provide a balanced mix of cash and
equity, annual and longer-term incentives, and performance targets.
• The base salary portion of compensation is designed to provide a steady income regardless of our stock
price performance so that executives do not feel pressured to focus primarily on stock price
performance to the detriment of other important business metrics.
• Our stock option grants, restricted stock awards and restricted stock unit grants generally vest over four
years and, in the case of stock options, are only valuable if our stock price increases over time.
• Maximum payout levels for the cash incentive compensation are capped.
25
Proxy Statement