Exhibit 10.4
2006 IROBOT INCENTIVE COMPENSATION PLAN
METRICS AND HOW THE PLAN WORKS
The 2006 iRobot Incentive Compensation Plan (the "Plan" or "ICP") is funded when
iRobot meets key metrics that demonstrate we have achieved our objectives. The
summary below describes the metrics, the weightings for each metric and the
funding formula.
The Company-wide metrics apply to incentives for all employees. The Home Robots
and G&I metrics are used to determine employee incentives in those divisions,
and Corporate metrics are used to determine employee incentives in the Corporate
group.
COMPANY-WIDE
40%
Funding Threshold &
Weighting Metric Funding Formula below 100% Funding
Objective At Objective Funding Formula above Objective
[REDACTED]% Revenue $[REDACTED] is the $[REDACTED] For every [REDACTED]% pt increase in
funding threshold. revenue over threshold there is a
Funding increases [REDACTED]% pt increase in funding
ratably between until $[REDACTED] is attained
$[REDACTED] and (funding is [REDACTED]%). At
$[REDACTED] $[REDACTED] for every [REDACTED]% pt
increase in revenue, there is a
[REDACTED]% pt increase in funding.
[REDACTED]% Sarbanes- Discretionary based on 404 Certification N/A
Oxley - 404 Board
Certification
HOME ROBOTS DIVISION
60%
Weighting Metric Funding Threshold & Funding 100% Funding Funding Formula above
Formula below Objective At Objective Objective
[REDACTED]% Gross profit At [REDACTED]% gross profit, [REDACTED]% Funding will increase
% (1) [REDACTED]% of the Funding ratably above [REDACTED]% up
for this metric will be to [REDACTED]% or
paid. Funding increases ratably [REDACTED]% funding.
between [REDACTED]% and
[REDACTED]%
[REDACTED]% Contribution At $[REDACTED] contribution, $[REDACTED] Funding will increase
$ (2) [REDACTED]% of the Funding ratably above $[REDACTED] to
for this metric will be $[REDACTED] or [REDACTED]%
paid. Funding increases ratably payout.
between $[REDACTED] and
$[REDACTED].
[REDACTED]% Product In 2006, [REDACTED] NA
Quality
[REDACTED]% Product In 2006, [REDACTED] NA
Development
[REDACTED]% Invention In 2006, [REDACTED] NA
2006 Incentive Compensation Plan
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G&I DIVISION
60%
Weighting Metric Funding Threshold & 100% Funding Funding Formula above Objective
Funding Formula below At Objective
Objective
[REDACTED]% Total gross At [REDACTED]% gross [REDACTED]% Funding will increase ratably above
profit (1) profit, [REDACTED]% of [REDACTED]% up to [REDACTED]% or
the Funding for this [REDACTED]% payout.
metric will be paid.
Funding increases
ratably between
[REDACTED]% and
[REDACTED]%.
[REDACTED]% Contribution At $[REDACTED], $[REDACTED] Funding will increase ratably above
(2) [REDACTED]% of the $[REDACTED] to $[REDACTED] or
funding for this metric [REDACTED]% payout.
will be paid. Funding
increases ratably
between $[REDACTED] and
$[REDACTED].
[REDACTED]% Product Quality In 2006, [REDACTED] NA
[REDACTED]% Product In 2006, [REDACTED] NA
Development
[REDACTED]% Invention In 2006, [REDACTED] NA
CORPORATE GROUP
60%
Weighting Metric Funding Threshold & 100% Funding Funding Formula above Objective
Funding Formula below At Objective
Objective
[REDACTED]% Gross profit % Divisional funding is Divisional Divisional funding is based on
(1) based on the average funding is based the average funding of the Home
funding of the Home on the average Robots and G&I divisions.
Robots and G&I funding of the
divisions. Home Robots and
G&I divisions.
[REDACTED]% Operating At $[REDACTED] Funding will increase ratably
Margin $ (3) $[REDACTED]contribution, above $[REDACTED] to $[REDACTED]
[REDACTED]% of the or [REDACTED]% payout.
funding for this metric
will be paid. Funding
increases ratably
between $[REDACTED] and
$[REDACTED].
[REDACTED]% Expense Control At $[REDACTED], $[REDACTED] NA
[REDACTED]% of the
funding for this metric
will paid; between
$[REDACTED] and
$[REDACTED] funding
will increase ratably
2006 Incentive Compensation Plan
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(1) Gross profit % is defined as total revenue less total cost of revenues
including product cost, contract cost and overhead as a percent of revenue.
(2) Contribution is defined as division gross profit dollars less total division
operating expenses.
(3) Operating margin dollars is defined as gross profit less operating expenses,
before interest income, stock based compensation expense and income taxes.
PLAN ADMINISTRATION
Eligibility - Regular, full-time iRobot employees hired before September 30,
2006, are eligible to participate in the 2006 Incentive Compensation Plan.
Regular Pay - Awards are calculated using regular pay (base salary for exempt
employees or hourly rate x forty hours for nonexempt employees) earned during
the year.
Hires in 2006 - Employees hired during 2006 fiscal year (on or before September
30, 2006) will receive awards calculated using their regular pay earned during
the year. Employees hired on or after October 1, 2006, are not eligible for a
2006 award.
Leaves of Absence - Employees who have taken a leave of absence during the year
will receive awards calculated using their regular pay earned during the year.
Transfers between Divisions - All employees have been assigned to a division and
the divisional portion of the award is calculated based on that assignment. If
an employee transfers between divisions during the year, their bonus will be
handled on a case-by-case basis.
Award Payout - Awards are paid in March 2007, and you must be an active iRobot
employee in good standing on the date of the incentive payout to receive an
award.
The Incentive Compensation Plan and its funding are subject to approval by the
Board of Directors. All decisions regarding administration of the Plan, with the
exception of those applying to Top Management, are at the sole discretion of the
Company's Top Management.
iRobot reserves the right in its absolute discretion to abolish the Plan at any
time or to alter the terms and conditions under which incentive compensation
will be paid. Such discretion may be exercised any time during 2006 or in 2007
prior to payment of incentive compensation. No participant shall have any vested
right to receive any compensation hereunder until actual delivery of such
compensation.
SPECIAL PROVISION APPLYING TO TOP MANAGEMENT
ICP bonuses to the Top Management employees (CEO, Chairman, CFO, EVP Home
Robots, EVP G&I Robots, General Counsel, and VP HR) and the CTO are contingent
on the Company achieving a FY06 EPS of $[REDACTED]; to the extent that ICP
bonuses to the top management employees and the CTO would reduce the Company's
FY06 EPS below $[REDACTED], those ICP bonuses shall be reduced accordingly.
2006 Incentive Compensation Plan
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