- Proxy Statement (definitive) (DEF 14A) (2024)

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Washington, D.C. 20549


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- Proxy Statement (definitive) (DEF 14A) (1)



Dear Stockholder:

You are cordially invited to attend the Annual Meeting ofStockholders (the “Annual Meeting”) of ImmersionCorporation, which will be held at the Techmart Network MeetingCenter, 5201 Great America Parkway, SantaClara, California95054, on June4, 2010, at 9:30a.m.Californiatime.

Please review the Proxy Statement and Annual Report and vote viathe Internet, by telephone or using your Proxy Card.TheProxy Statement and Annual Report are both available athttp://ir.immersion.com/annual-proxy.cfm.

It is important that your shares be represented and voted at theAnnual Meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUALMEETING, PLEASE COMPLETE, SIGN, DATE, AND PROMPTLY RETURN YOURPROXY TODAY. Returning the proxy does NOT deprive you of yourright to attend the Annual Meeting. If you decide to attend theAnnual Meeting and wish to change your proxy vote, you may do soautomatically by voting in person at the meeting.

On behalf of the Board of Directors, I would like to express ourappreciation for your continued support for and interest in theaffairs of your company. We look forward to seeing you at theAnnual Meeting.


- Proxy Statement (definitive) (DEF 14A) (2)


Chairman of the Board

Important Notice Regarding the Availability of ProxyMaterials For The Stockholder Meeting To Be Held on June4,2010.

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801 Fox Lane
SanJose, California 95131

To Be Held June4, 2010

The Annual Meeting of Stockholders (the “AnnualMeeting”) of Immersion Corporation will be held at theTechmart Network Meeting Center, 5201 Great America Parkway,SantaClara, California 95054, on June4, 2010, at9:30a.m.California time for the following purposes:

1.To elect one (1)ClassII director to holdoffice for a three-year term and until his successor is electedand qualified;

2.To ratify the appointment of Deloitte& ToucheLLP as the Company’s independent registered publicaccounting firm for the fiscal year ending December31,2010;and

3.To transact such other business as may properly comebefore the meeting or any adjournments or postponements thereof.

Only stockholders of record at the close of business onApril12, 2010 are entitled to notice of, and to vote at,the Annual Meeting and at any adjournments or postponementsthereof. A list of such stockholders will be available forinspection by any stockholder, for any purpose relating to themeeting, at our headquarters located at 801 Fox Lane,SanJose, California 95131 during ordinary business hoursfor theten-dayperiod prior to the Annual Meeting.


- Proxy Statement (definitive) (DEF 14A) (3)


Chairman of the Board

SanJose, California

April29, 2010






Purpose of Meeting


Voting Rights and Solicitation of Proxies


ProposalNo 1. Election of Director


Corporate Governance


Executive Compensation


Compensation Committee Report


Compensation Committee Interlocks and InsiderParticipation


Related Person Transactions


ProposalNo 2. Ratification of Appointmentof Independent Registered Public Accounting Firm


Audit Committee Report


Principal Stockholders and Stock Ownership byManagement


Equity Compensation Plan Information


Section16(a) Beneficial Ownership ReportingCompliance


Stockholder Proposals for 2011 Annual Meeting


Other Matters

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801 Fox Lane
SanJose, California 95131


To Be Held June4, 2010

These proxy materials are furnished in connection with thesolicitation of proxies by the Board of Directors (the“Board”) of Immersion Corporation, a Delawarecorporation (“Immersion”, “we” or“us”), for the Annual Meeting of Stockholders to beheld at the Techmart Network Meeting Center, 5201 Great AmericaParkway, SantaClara, California 95054, on June4,2010, at 9:30a.m.California time, and at anyadjournment or postponement of the Annual Meeting. These proxymaterials were first sent or given to stockholders on or aboutApril29, 2010.


The specific proposals to be considered and acted upon at theAnnual Meeting are summarized in the accompanying Notice ofAnnual Meeting of Stockholders. Each proposal is described inmore detail in this Proxy Statement.


On April12, 2010, the record date for determination ofstockholders entitled to vote at the Annual Meeting, there were28,092,458shares of common stock outstanding (excludes2,786,563 treasury shares). Each stockholder of record onApril12, 2010 is entitled to one vote for each share ofcommon stock held by such stockholder. Shares of common stockmay not be voted cumulatively in the election of directors. Allvotes will be tabulated by the inspector of elections appointedfor the meeting, who will separately tabulate affirmative andnegative votes, abstentions, and broker non-votes.


Our bylaws provide that the holders of a majority of all of theshares of our common stock, issued and outstanding and entitledto vote at the Annual Meeting, present in person or by proxy,shall constitute a quorum for the transaction of business at theAnnual Meeting, unless or except to the extent that the presenceof a larger number may be required by law. Abstentions andbroker non-votes will be counted as present for the purpose ofdetermining the presence of a quorum. If a quorum shall fail toattend the Annual Meeting, the chairman of the Annual Meeting orthe holders of a majority of the shares of our common stockentitled to vote who are present, in person or by proxy, mayadjourn the meeting to another place, date, or time.


Generally, stockholder approval of a matter, other than theelection of directors, requires the affirmative vote of amajority of the shares cast (in person or by proxy) at theAnnual Meeting. Directors are elected by a plurality of thevotes cast (in person or by proxy). Other than for the electionof directors, shares voted to abstain on a matter will betreated as votes cast and will have the same effect as“no” votes. Broker non-votes are not counted as votescast on a matter in determining the number of affirmative votesrequired for approval of the matter, but are counted as presentfor quorum purposes. The term “broker non-votes”refers to shares held by a broker in street name, which arepresent by proxy but are not voted on a matter pursuant to rulesprohibiting brokers from voting on non-routine matters withoutinstructions from the beneficial owner of the shares. Theratification of the appointment of the independent registeredpublic accounting firm is generally considered to be a routinematter on which brokers may vote without instructions frombeneficial owners.


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Whether or not you are able to attend the Annual Meeting, youare urged to complete and return the enclosed proxy, which issolicited by the Board, and which will be voted as you direct onyour proxy when properly completed. In the event no directionsare specified, such proxies will be voted as follows:(i)FOR ProposalNo.1, the election of the Boardnominee named in this Proxy Statement or otherwise nominated asdescribed in this Proxy Statement; (ii)FORProposalNo.2, the ratification of the independentregistered public accounting firm; and (iii)in thediscretion of the proxy holders as to other matters that mayproperly come before the Annual Meeting. You may also revoke orchange your proxy at any time before the Annual Meeting. To dothis, send a written notice of revocation or another signedproxy with a later date before the beginning of the AnnualMeeting to the Corporate Secretary, at our principal executiveoffice, located at 801 Fox Lane, SanJose, California95131. You may also automatically revoke your proxy by attendingthe Annual Meeting and voting in person. All shares representedby a valid proxy received prior to the Annual Meeting will bevoted.

Solicitationof Proxies

The cost of solicitation of proxies will be borne by us, and inaddition to soliciting stockholders by mail through its regularemployees, we may request banks, brokers, and other custodians,nominees, and fiduciaries to solicit their customers who havestock registered in the names of a nominee and, if so, willreimburse such banks, brokers, and other custodians, nominees,and fiduciaries for their reasonableout-of-pocketcosts. Solicitation by our officers and employees may also bemade of some stockholders in person or by telephone, letter,facsimile or electronically following the original solicitation.



Pursuant to our current Certificate of Incorporation (the“Certificate of Incorporation”), the Board is dividedinto three classes— ClassI,II,andIII directors. Each director is elected for athree-year term of office, with one class of directors beingelected at each annual meeting of stockholders. Each directorholds office until his or her successor is elected and qualifiedor until his or her earlier death, resignation, or removal. Inaccordance with the Certificate of Incorporation, theClassII director is to be elected at the 2010 AnnualMeeting, ClassIII directors are to be elected at theannual meeting in 2011, and ClassI directors are to beelected at the annual meeting in 2012.

At the 2010 Annual Meeting, one ClassII director is to beelected to the Board to serve until the annual meeting ofstockholders to be held in 2013 and until his successor has beenelected and qualified, or until his earlier death, resignation,or removal.


The Board’s nominee for election as a ClassIIdirector is David Sugish*ta. Shares represented by all proxiesreceived by the Board and not so marked as to withhold authorityto vote for Mr.Sugish*ta (by writingMr.Sugish*ta’s name where indicated on the proxy)will be voted (unless Mr.Sugish*ta is unable or unwillingto serve) FOR the election of Mr.Sugish*ta. The Boardknows of no reason why Mr.Sugish*ta would be unable orunwilling to serve.


Mr.Sugish*ta has served as the non-executive Chairman ofthe Board of Atmel Corporation since August 2006 and as adirector of Atmel since February 2004. In addition,Mr.Sugish*ta is Chairman of both the Audit Committee andthe Corporate Governance and Nominating Committee of Atmel.Mr.Sugish*ta also serves as a director and Chairman of theAudit Committee for Ditech Networks, Inc. Mr.Sugish*tapreviously served on the board of directors of Micro ComponentTechnology, Inc. from 1994 to 2009. Since 2000,Mr.Sugish*ta has taken


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various short-term assignments including Executive VicePresident of Special Projects at Peregrine Systems from December2003 to July 2004 and Executive Vice President/Chief FinancialOfficer at SONICblue, Inc. from January 2002 to April 2002.Prior to 2000, Mr.Sugish*ta held various senior financialmanagement positions at Synopsys (Senior Vice President/ChiefFinancial Officer) from 1997 to 2000; Actel (Senior VicePresident/Chief Financial Officer) from 1995 to 1997; MicroComponent Technology (Senior Vice President/Chief FinancialOfficer) from 1994 to 1995; Applied Materials (VicePresident/Corporate Controller) from 1991 to 1994; and NationalSemiconductor (Vice President/Finance) from 1978 to 1991.Mr.Sugish*ta holds a B.S. degree in businessadministration from SanJose State University and an M.B.A.from SantaClara University.

Mr.Sugish*ta brings to the Board over two decades ofexperience as a financial executive officer and member of theboards of directors of public high technology companies,specifically in the semiconductor industry, which is animportant vertical market for our company, as well as many yearsof service on public company boards, including as chairman, andservice on audit and nomination and corporate governancecommittees.

The information below sets forth the current members of theBoard:

Class of




Principal Occupation


Anne DeGheest

55IFounder and Principal, Medstars2007

Jack Saltich

66IChairman and Chief Executive Officer, Vitex Systems, Inc.2002

Victor Viegas

53IChief Executive Officer, Immersion Corporation2002

Robert Van Naarden

63IIPresident and Chief Executive Officer, Delta Thermo Energy, Inc;General Partner, BVB Capital Group2002

John Hodgman

55IIISenior Vice President and Chief Financial Officer, InterMune,Inc.2002

Emily Liggett

54IIIChief Executive Officer, Nova Torque, Inc.2006

DirectorsServing for a Term Expiring at the 2011 Annual Meeting ofStockholders (ClassIII Directors):


Mr.Hodgman has served as a member of the Board sinceJanuary 2002. Since August 2006, Mr.Hodgman has served asSenior Vice President and Chief Financial Officer of InterMune,Inc., a biotechnology company focused on pulmonology andhepatology therapies. From August 1999 to November 2008,Mr.Hodgman served as Chairman of the Board of Cygnus,Inc., a medical company focused on the development,manufacturing, and commercialization of new and improved glucosemonitoring devices. He served as President and Chief ExecutiveOfficer of Cygnus from August 1998 through December 2005. Healso served as President of Cygnus Diagnostics from May 1995 toAugust 1998, where he was responsible for the commercializationefforts for the GlucoWatch biographer glucose monitor.Mr.Hodgman joined Cygnus in August 1994 as Vice President,Finance and Chief Financial Officer. Additionally, from June2005 through October 2005, Mr.Hodgman served as Presidentand Chief Executive Officer of Aerogen, Inc., where he directedthe merger with Nektar Corporation. Mr.Hodgman also serveson the Board of Directors of AVI BioPharma, Inc., where heserves as chairman of its audit committee. Previously,Mr.Hodgman served on the board of directors for Aerogen,Inc., Alpha Innotech, Inc. and Inflazyme Pharmaceuticals.Mr.Hodgman holds a B.S. from Brigham Young University andan M.B.A. from the University of Utah.

Mr.Hodgman brings to the Board his in-depth financialbackground as well as his experience in the medical field,particularly as the medical vertical remains an important marketfocus for our company.


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Ms.Liggett has served as a member of the Board sinceFebruary 2006. Since March 2009, Ms.Liggett has served asChief Executive Officer of Nova Torque, Inc., a cleantechcompany focused on the development of high performance electricmotor technology. From April 2004 to May 2007, Ms.Liggettserved as President and Chief Executive Officer of Apexon, Inc.,a provider of supply performance management software formanufacturers. From November 2002 through August 2003, she wasinterim President and Chief Executive Officer of CapstoneTurbine Corporation. From June 1984 through April 2002,Ms.Liggett served at Raychem Corp., later Tyco Corp.Ms.Liggett was Managing Director of Tyco Ventures whereshe led venture and resource investments. Before Tyco’sacquisition of Raychem in 1999, Ms.Liggett worked for15years at Raychem in sales, marketing, operations, anddivision management positions. She was President and ChiefExecutive Officer of Raychem’s subsidiary, EloTouchSystems, a leading worldwide manufacturer of touchscreens,and DivisionManager of Raychem’s Telecommunicationsand Energy Division. Ms.Liggett holds an M.B.A. and anM.S. in engineering from Stanford University and a B.S. inengineering from Purdue University.

Ms.Liggett’s brings to the Board her prior experienceas a public company Chief Executive Officer and as ChiefExecutive Officer of a touchscreen company, which is animportant market focus for our company.

DirectorsServing for a Term Expiring at the 2012 Annual Meeting ofStockholders (ClassI Directors):


Ms.DeGheest has served as a member of the Board sinceFebruary 2007. Since August 1986, Ms.DeGheest has servedas founder and a principal of MedStars, an investment andexecutive management firm. In November 1998, Ms.DeGheestfounded and served as President and Chief Executive Officer ofmedpool.com, ane-commercehospital procurement company until September 2002. From Marchthrough November 1998, Ms.DeGheest was an entrepreneur inresidence at Institutional Venture Partners, a venture capitalfirm. From September 1979 through March 1997, Ms.DeGheestserved in various sales and marketing roles at OmniCellTechnologies, Nellcor and Raychem. Ms.DeGheest holds anM.S. in general engineering and business from the University ofBrussels, Belgium and a M.B.A. from Harvard University.

Ms.DeGheest’s medical background provides a usefulperspective to the Board, particularly as the medical verticalremains an important market focus for our company.


Mr.Saltich has served as Chairman of the Board sinceFebruary 2009 and as member of the Board since January 2002.Mr.Saltich also served as Lead Independent Director fromOctober 2007 to February 2009. Since February 2006,Mr.Saltich has served as the Chairman and Chief ExecutiveOfficer of Vitex Systems, Inc., a developer of transparentultra-thin barrier films for use in the manufacture ofnext-generation flat panel displays. From July 1999 to August2005, he served as the President and Chief Executive Officer ofThree-Five Systems, Inc., a technology company specializing inthe design, development, and manufacturing of customer displaysand display systems. Three-Five Systems, Inc. filed a voluntarypetition for bankruptcy under Chapter11 of theU.S.Bankruptcy Code on September8, 2005. From 1993to 1999 Mr.Saltich served as a Vice President withAdvanced Micro Devices, where his last position was GeneralManager of AMD’s European Microelectronics Center inDresden, Germany. Mr.Saltich also serves on the Board ofDirectors of Leadis Technology, Ramtron InternationalCorporation as a member of the audit committee and the chair ofthe compensation committee, and Atmel Corporation as a member ofthe audit committee and the chair of the compensation committee.He also serves on the Manufacturing Advisory Board for CypressSemiconductor Corporation. Mr.Saltich received both a B.S.and an M.S. in electrical engineering from the University ofIllinois.

Mr.Saltich brings to the Board extensive experience withintwo key areas for Immersion— display systems andcapacitive touch solutions, as well as many years of service onpublic company boards, including as chairman as well as hisservice on audit and compensation committees.


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Mr.Viegas was named our Chief Executive Officer in April2010, he has served as our Interim Chief Executive Officer sinceOctober 2009 and as a member of the Board of Directors sinceOctober 2002. Mr.Viegas was our Chief Executive Officerfrom October 2002 through April 2008, and President fromFebruary 2002 through April 2008. Mr.Viegas was alsoChairman of the Board of Directors from October 2007 to February2009. Mr.Viegas also served as Chief Financial Officeruntil February 2005, having joined the Company in August 1999 asChief Financial Officer, Vice President, Finance. From June 1996to August 1999, he served as Vice President, Finance andAdministration and Chief Financial Officer of MacrovisionCorporation, a developer and licensor of video and software copyprotection technologies. From October 1986 to June 1996, heserved as Vice President of Finance and Chief Financial Officerof Balco Incorporated, a manufacturer of advanced automotiveservice equipment. He holds a B.S. in Accounting and an M.B.A.from SantaClara University. Mr.Viegas is also aCertified Public Accountant in the State of California, oninactive status.

Mr.Viegas’day-to-dayexperience managing our business as Chief Executive Officergives him useful insights into our Company’s challenges,opportunities and operations.


If a quorum is present and voting, the nomination forClassII director receiving the greatest number of voteswill be elected as ClassII director. Abstentions andbroker non-votes have no effect on the vote.



Board ofDirectors

Independenceof Directors

In accordance with the standards for independence set forth inNasdaq Marketplace Rule5605, our Board has determinedthat, except for Mr.Viegas, as our Chief ExecutiveOfficer, each of the members of our Board has no relationshipthat would interfere with the exercise of independent judgmentin carrying out the responsibilities of a director and isotherwise “independent” in accordance with theapplicable listing standards of the Nasdaq Stock Market(“Nasdaq”) as currently in effect.


The Board has determined that having an independent directorserve as Chairman of the Board is in our best interests andthose of our stockholders. Mr.Saltich, a non-executivedirector, serves as our Chairman of the Board and presides overmeetings of the stockholders, the Board and the non-executivemembers of our Board and holds such other powers and carries outsuch other duties as are customarily carried out by the Chairmanof our Board. This structure ensures a greater role for theindependent directors in the oversight of our company and activeparticipation of the independent directors in setting agendasand establishing priorities and procedures for the work of theBoard. Generally, every regular meeting of our Board includes ameeting of our independent non-executive directors withoutmanagement present.

Committees;Meeting Attendance

The Board has a standing Audit Committee, CompensationCommittee, and a Nominating/Corporate Governance Committee. In2009, the Board held twelve meetings, the Audit Committee heldeleven meetings, the Compensation Committee held five meetings,and the Nominating/Corporate Governance Committee held oneformal meeting and a number of informal telephonic sessions. In2009, each of the directors attended at least 75% of themeetings of the Board and any committees of the Board on whichhe or she serves.


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DirectorAttendance at Annual Meetings

We make every effort to schedule our annual meeting ofstockholders at a time and date to accommodate attendance bydirectors, taking into account the directors’ schedules.All directors are encouraged to attend the annual meeting ofstockholders. Two non-employee directors attended our 2009annual meeting of stockholders.


The Board is actively involved in oversight of risks that couldaffect the Company. This oversight is conducted primarilythrough the Audit Committee, but the full Board has retainedresponsibility for general oversight of risks. The Boardsatisfies this responsibility through full reports by eachcommittee chair regarding the committee’s considerationsand actions, as well as through regular reports directly fromofficers responsible for oversight of particular risks.

CorporateGovernance and Board Committees

The Board has adopted a Code of Business Conduct and Ethics thatoutlines the principles of legal and ethical business conduct.The code, which is applicable to all of our directors,employees, and officers, is available on our Web site atwww.immersion.com/corpgov. Any substantive amendment or waiverof this code may be made only by the Board upon a recommendationof the Audit Committee and will be disclosed on our Web site.

The Board has also adopted a written charter for each of theAudit, Compensation, and Nominating/Corporate GovernanceCommittees. Each charter is available on our Web site atwww.immersion.com/corpgov.


The Audit Committee retains our independent registered publicaccounting firm, reviews the scope of audit and pre-approvespermissible non-audit services by our independent registeredpublic accounting firm, reviews the accounting principles andauditing practices and procedures to be used for our financialstatements, reviews the results of those audits, annuallyreviews the audit committee charter, and reviews related partytransactions. The members of the Audit Committee areMessrs.Hodgman and Saltich and Ms.Liggett.Mr.Hodgman is the Chair of the Audit Committee. The Boardhas determined that each member of the Audit Committee meets theindependence criteria set forth in the applicable rules ofNasdaq and the SEC for audit committee membership. In addition,the Board has determined that all members of the Audit Committeepossess the level of financial literacy required by applicableNasdaq and SEC rules and that in accordance withsection407 of the Sarbanes-Oxley Act of 2002, at least onemember of the Audit Committee, Mr.Hodgman, is qualified asan “audit committee financial expert,” as defined inthe rules of the SEC. Additional information regarding the AuditCommittee is set forth in the Report of the Audit Committeeimmediately following ProposalNo.2.


The Compensation Committee’s responsibilities include:overseeing our general compensation structure, policies andprograms, and assessing whether our compensation structureestablishes appropriate incentives for management and employeesand properly aligns executive compensation with stockholderinterests and expected business performance; makingrecommendations to the Board with respect to and administrationof our equity-based compensation plans, including our equityincentive plans and employee stock purchase plan; reviewing andapproving compensation packages for our executive officers;reviewing and approving employment and retention agreements andseverance arrangements for executive officers, includingchange-in-controlprovisions, plans or agreements; and reviewing the compensationof directors for service on the Board of Directors and itscommittees and recommending changes in compensation to the Boardof Directors. Other than the delegation to the Chief ExecutiveOfficer of the authority to grant awards under certain equityplans pursuant to guidelines set by the Board, the CompensationCommittee has not delegated any of its duties under its charter.Regarding most compensation matters, including executive anddirector compensation, management provides recommendations tothe Compensation Committee.


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The members of the Compensation Committee areMessrs.Saltich, Hodgman and Van Naarden. Mr.Saltichis the Chair of the Compensation Committee. The Board hasdetermined that each member of the Compensation Committee meetsthe independence criteria set forth in the applicable Nasdaqrules. A report of the Compensation Committee is set forthbelow. The Board has not yet determined whether the compositionof the Compensation Committee will change after Mr.VanNaarden’s term expires.

Nominating/CorporateGovernance Committee

The Nominating/Corporate Governance Committee identifies,evaluates and recommends candidates for Board positions to theBoard and recommends to the Board policies on Board andcommittee composition and criteria for Board membership. TheNominating/Corporate Governance Committee also recommends to theBoard, and reviews on a periodic basis, our succession plan,including policies and principles for selection and successionof the Chief Executive Officer in the event of an emergency orthe resignation or retirement of our Chief Executive Officer. Inaddition, the Nominating/Corporate Governance Committeeperiodically reviews policies and the compliance of seniorexecutives with respect to these policies. TheNominating/Corporate Governance Committee also reviews ourcompliance with corporate governance listing requirements ofNasdaq and assists the Board in developing criteria for theannual evaluation of the Chief Executive Officer, director andcommittee performance. The members of the Nominating/CorporateGovernance Committee are Ms.DeGheest and Ms.Liggett.Ms.Liggett is the Chair of the Nominating/CorporateGovernance Committee. Each member of the Nominating/CorporateGovernance Committee is independent for purposes of Nasdaq rules.

The Nominating/Corporate Governance Committee evaluates alldirectors whose terms will expire at the next annual meeting ofstockholders and are willing to continue in service in order todetermine whether to recommend to the Board such directors forelection at the annual meeting. The Nominating/CorporateGovernance Committee considers the following factors in any suchevaluation:

•the appropriate size of the Board and its committees;
•the perceived needs of the Board for particular skills,background, and business experience;
•the relevant skills, background, reputation, and businessexperience of nominees compared to the skills, background,reputation, and business experience already possessed by othermembers of the Board;
•nominees’ independence from management;
•applicable regulatory and listing requirements, includingindependence requirements and legal considerations, such asantitrust compliance;
•the benefits of a constructive working relationship amongdirectors;and
•the desire to balance the considerable benefit of continuitywith the periodic injection of the fresh perspective provided bynew members.

The Nominating/Corporate Governance also focuses on issues ofdiversity, such as diversity of gender, race and nationalorigin, education, professional experience and differences inviewpoints and skills. The Nominating/Corporate Governance doesnot have a formal policy with respect to diversity; however, theBoard and the Nominating/Corporate Governance believe that it isessential that the Board members represent diverse viewpoints.The Nominating/Corporate Governance Committee’s goal is toassemble a Board that brings to the company a variety ofperspectives and skills derived from high quality business andprofessional experience. Directors should possess the highestpersonal and professional ethics, integrity, and values, and becommitted to representing the best interests of ourstockholders. They must also have an inquisitive and objectiveperspective and mature judgment. Director candidates must havesufficient time available in the judgment of theNominating/Corporate Governance Committee to perform all Boardand committee responsibilities. Board members are expected toprepare for, attend, and participate in all Board and applicablecommittee meetings.

Other than the foregoing, there are no stated minimum criteriafor director nominees, although the Nominating/CorporateGovernance Committee may also consider such other factors as itmay deem, from time to time, are in the best interests ofImmersion and its stockholders. The Nominating/CorporateGovernance Committee


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believes that to comply with The Nasdaq Stock Market and SECrules, at least one member of the Board meets the criteria foran “audit committee financial expert,” and at least amajority of the members of the Board meet the definition of“independent” director. The Nominating/CorporateGovernance Committee also believes it appropriate for one ormore key members of management to participate as members of theBoard.

The Nominating/Corporate Governance Committee will consider thecriteria and policies set forth above in determining if theBoard requires additional candidates for director. TheNominating/Corporate Governance Committee will considercandidates for directors proposed by directors or management,may poll directors and management for suggestions, or conductresearch to identify possible candidates, and may engage, if theNominating/Corporate Governance Committee believes it isappropriate, a third party search firm to assist in identifyingqualified candidates. All such candidates will be evaluatedagainst the criteria and pursuant to the policies and proceduresset forth above. All director nominees, including incumbents,must submit a completed form of directors’ andofficers’ questionnaire as part of the nominating process.The evaluation process may also include interviews andadditional background and reference checks for non-incumbentnominees at the discretion of the Nominating/CorporateGovernance Committee.

The Nominating/Corporate Governance Committee will also evaluateany recommendation for director nominee proposed by astockholder, provided that such recommendation is sent inwriting to the Corporate Secretary at 801 Fox Lane,SanJose, California 95131 at least 120days prior tothe anniversary of the date proxy statements were mailed tostockholders in connection with the prior year’s annualmeeting of stockholders. The recommendation must also containthe following information:

•the candidate’s name, age, contact information, and presentprincipal occupation or employment;and
•a description of the candidate’s qualifications, skills,background, and business experience during, at a minimum, thelast five years, includinghis/herprincipal occupation and employment and the name and principalbusiness of any corporation or other organization in which thecandidate was employed or served as a director.

The Nominating/Corporate Governance Committee will evaluate anycandidates recommended by stockholders against the same criteriaand pursuant to the same policies and procedures applicable tothe evaluation of all other proposed candidates, includingincumbents, and will select the nominees that in theNominating/Corporate Governance Committee’s judgment bestsuit the needs of the Board at that time. However, if theNominating/Corporate Governance Committee determines that arecommendation does not satisfy the above-describedrequirements, the Committee will not consider suchrecommendation.

As an alternative for stockholders to recommend directornominees to the Nominating/Corporate Governance Committee, astockholder may nominate directors for consideration at anannual or special meeting pursuant to the methods prescribed inour bylaws, as summarized below. Any stockholder entitled tovote in the election of directors generally may nominate one ormore persons for election as directors at a meeting only iftimely notice of such stockholder’s intent to make suchnomination or nominations has been given in writing to ourCorporate Secretary. To be timely, notice of astockholder’s nomination for a director to be elected at anannual meeting shall be received at our principal executiveoffices not less than 120days in advance of the date thatthe proxy statement was released to stockholders in connectionwith the previous year’s annual meeting of stockholders,except that if no annual meeting was held in the previous yearor the date of the annual meeting has been changed by more than30days from the date contemplated at the time of theprevious year’s proxy statement, to be timely, such noticemust be received not later than the close of business on thetenth day following the day on which the date of the annualmeeting was announced; provided, however, that in the event thatthe number of directors to be elected at an annual meeting isincreased, and there is no public announcement by us naming thenominees for the additional directorships at least 130daysprior to the first anniversary of the date that our proxystatement was released to stockholders in connection with theprevious year’s annual meeting, a stockholder’s noticeshall be considered timely, but only with respect to nomineesfor the additional directorships, if it shall be delivered tothe Corporate Secretary at our principal executive offices notlater than the close of business on the 10thday followingthe day on which such public announcement is first made by us.In no event shall the public announcement of an adjournment orpostponement of an annual meeting commence a new time period (orextend any time period) for the giving of a stockholder’snotice as described above.


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In the event of a nomination for director to be elected at aspecial meeting, notice by the stockholders, to be timely, shallbe delivered to the Corporate Secretary not earlier than the90thday prior to such special meeting and not later thanthe close of business on the later of the 70thday prior tosuch special meeting or the 10thday following the day onwhich public announcement is first made of the date of thespecial meeting and of the nominees proposed by the Board to beelected at such meeting. In no event shall the publicannouncement of an adjournment or postponement of a specialmeeting commence a new time period (or extend any time period)for the giving of a stockholder’s notice as described above.

Each such notice shall set forth: (a)the name and addressof the stockholder who intends to make the nomination, of thebeneficial owner, if any, on whose behalf the nomination isbeing made and of the person or persons to be nominated;(b)a representation that the stockholder is a holder ofrecord of stock of Immersion entitled to vote for the electionof directors on the date of such notice and intends to appear inperson or by proxy at the meeting to nominate the person orpersons specified in the notice; (c)a description of allarrangements or understandings between the stockholder and eachnominee and any other person or persons (naming such person orpersons) pursuant to which the nomination or nominations are tobe made by the stockholder; (d)such other informationregarding each nominee proposed by such stockholder as would berequired to be included in a proxy statement filed pursuant tothe proxy rules of the SEC had the nominee been nominated orintended to be nominated by the Board; and (e)the consentof each nominee to serve as a director of Immersion if soelected.

If the Chair of the meeting for the election of directorsdetermines that a nomination of any candidate for election as adirector at such meeting was not made in accordance with theapplicable provisions of our bylaws, such nomination shall bevoid.

Communicationsby Stockholders with Directors

Stockholders may communicate with any and all directors bytransmitting correspondence by mail, facsimile, ore-mail,addressed as follows: Board or individual director,c/oCorporateSecretary, 801 Fox Lane, SanJose, California 95131; Fax:(408)350-8761;E-mailAddress: corporate.secretary@immersion.com. The CorporateSecretary will maintain a log of such communications andtransmit as soon as practicable such communications to theidentified director addressee(s), unless there are safety orsecurity concerns that mitigate against further transmission ofthe communication, as determined by the Corporate Secretary. TheBoard or individual directors so addressed will be advised ofany communication withheld for safety or security reasons assoon as practicable.


CompensationDiscussion and Analysis

Our compensation programs are designed to align compensationwith our annual and long-term business objectives andperformance, enabling us to attract, retain, and rewardexecutive officers and other key employees who contribute to ourlong-term success and motivate executive officers to enhancelong-term stockholder value. We also strive to design programsto position Immersion competitively among the companies againstwhich we recruit and compete for talent. We recognize thatcompensation programs must be understandable to be effective andthat program administration and decision making must be fair andequitable. We also consider the financial obligations created byour compensation programs and design them to be cost effective.To meet these objectives, the principal components of executivecompensation in 2009 consisted of base salary, short-term cashincentive awards, and long-term equity incentive awards.

The Compensation Committee reviews and recommends to the Boardfor approval all compensation programs (including equitycompensation) applicable to our executive officers anddirectors, our overall strategy for employee compensation, andthe specific compensation of our Chief Executive Officer andother executive officers. The committee has the sole authorityto select, retain, and terminate special counsel and otherexperts (including compensation consultants), as the committeedeems appropriate.


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CompensationActions for 2009

We underwent significant management changes in 2009. OnJanuary9, 2009, we consolidated our Touch InterfaceProduct, Gaming and Mobility business units into one businessunit referred to as the Touch line of business. In connectionwith the consolidation, we appointed Craig Vachon as Senior VicePresident and General Manager of our Touch line of business,effective January12, 2009. On July31, 2009, StephenAmbler resigned from his position as Chief Financial Officer andVice President, Finance with the Company. On August7,2009, Daniel Chavez resigned from his position as Senior VicePresident and General Manager of the Medical line of business.On October21, 2009, Mr.Richardson resigned from hisposition as Chief Executive Officer and President of the Companyand Mr.Viegas was appointed as Interim Chief ExecutiveOfficer. On October28, 2009, Henry Hirvela was appointedas Interim Chief Financial Officer of the Company.

The Compensation Committee’s recommendations regardingexecutive compensation in 2009 took into account thesemanagement changes as well as our performance, the currentglobal economic recession and the widespread concern overexecutive pay. As the macro-economic climate declined andaffected our financial results, the Board, at the recommendationof the committee, took action in early 2009, freezing executivesalaries at 2008 rates and instead chose to incentivize theexecutive team with long-term incentives, which is discussedfurther below. Further, in March 2009, Mr.Richardson,recognizing the need to reduce costs in the challenging businessenvironment, voluntarily reduced his base salary by 12% and allother executive officer base salaries were reduced by 5%.

Roleof Executive Officers and Consultants in CompensationDecisions

While the Compensation Committee determines our overallcompensation philosophy, the Board sets the compensation for ourChief Executive Officer and the committee sets the compensationof the other executive officers and looks to the Chief ExecutiveOfficer to make recommendations to the committee with respect toboth overall guidelines and specific compensation decisions. OurChief Executive Officer also provides the Board and theCompensation Committee with his perspective on the performanceof our executive officers as part of the determination of theindividual portion payable under the Executive Incentive Plans(as described below) and the annual personnel review as well asa self-assessment of his own performance. The Board establishescompensation levels for our Chief Executive Officer, and ourChief Executive Officer is not present during any of thesediscussions. Our Chief Executive Officer recommends to thecommittee specific compensation amounts for executive officersother than himself, and the committee considers thoserecommendations and information provided by its compensationconsultant concerning peer group comparisons and industry trendsand makes the ultimate compensation decisions. Our ChiefExecutive Officer, Vice President of Human Resources, and VicePresident of Legal regularly attend the CompensationCommittee’s meetings to provide perspectives on thecompetitive landscape and the needs of the business, informationregarding Immersion’s performance, and technical advice.Members of the committee also participate in the Board’sannual review of the Chief Executive Officer’s performanceand its setting of annual performance goals, in each case led byour lead independent director or independent chairman of theboard. See “Board Structure” above for further details.

In July 2008, the Compensation Committee retained Compensia todevelop compensation guiding principles, to conduct a totaldirect compensation review for our executive officers relativeto market norms, to assess the pay and performance relationshipof our executive compensation program on an absolute basis andrelative to peers and to identify gaps, improvements,opportunities and to offer recommendations to ensure the payprogram is aligned with competitive practices, our businessstrategy and both the individual and company performance. Inaddition, Compensia evaluated our equity use as compared tocurrent competitive levels and developed a proposed long-termincentive strategy. These compensation consultants reporteddirectly to the committee, and the committee had the sole powerto terminate or replace these consultants at any time. As partof its engagement, the Compensation Committee directed thecompensation consultants to work with our Vice President ofHuman Resources and other members of management to obtaininformation necessary for it to form its recommendations andevaluate management’s recommendations. The consultants alsomet with the committee during certain of the committee’smeetings and in executive session, where no members ofmanagement were present, and with the committee chair and othermembers of the committee outside of the meetings. Finally, the


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committee used the consultant to assess Mr.Viegas’salary and equity position and vesting schedule upon hisappointment as Interim Chief Executive Officer in October 2009.


In October 2008, Compensia presented its executive compensationreview to the Board, which included an analysis of ourcompensation components relative to market peers. In performingthis analysis, Compensia evaluated our executive compensationrelative to companies of similar size and revenue to Immersionin both the technology and medical device sectors. The companiescomprising this group were:


ActiveIdentity Corporation

CEVA, Inc.DivX, Inc.

DTS, Inc.

MIPS Technologies, Inc.OpenTV Corporation

QuickLogic Corporation

SRS Labs

MedicalDevice Peers

Abiomed, Inc.

Accuray, Inc.ATS Medical, Inc.

Biolase Technology, Inc.

Bovie Medical CorporationConceptus, Inc.

Hansen Medical, Inc.

iCAD, Inc.IRIDEX Corporation

LeMaitre Vascular, Inc.

OraSure Technologies, Inc.Somanetics Corporation

STAAR Surgical Company

Thermage, Inc.VNUS Medical Technologies, Inc.

In making its annual compensation decisions in February 2009with respect to the executive officers that were in place, thecommittee evaluated our executive compensation relative to thesecompanies, giving a 50% weighting to each group. These peergroups, as well as their respective weightings, will be reviewedannually by the committee to ensure that the comparators arereasonable from a business and size perspective.

Elementsof Compensation/Executive Compensation Practices

For 2009, the principal components of executive compensationconsisted of base salary, short-term cash incentive awards,stock options, and restricted stock units. Our executiveofficers are also eligible to participate in our health andbenefits plans, retirement savings plans, flexible spendingaccounts and our employee stock purchase plan, which aregenerally available to all of our employees. In addition, wehave included a discussion of the perquisites available to ourChief Executive Officer. Although the Compensation Committee hasnot established a fixed policy for the allocation between cashand equity compensation or short-term and long-termcompensation, the committee, as part of its evaluation of thecompensation of our executive officers, reviews not only theindividual elements of compensation, but also totalcompensation. In general, compensation of executive officers isweighted towards equity incentives, as the committee wants thesenior leadership team to have and maintain a long-termperspective on the company’s affairs.


Base salary is the fixed portion of executive pay and is set toreward individuals’ current contributions to the companyand compensate them for their expectedday-to-dayperformance. Starting in October 2008, our pay positioningstrategy was to target annual base salary ranges of theexecutive group as a whole at the median level relative to ourpeer group of technology and medical device companies of similarsize and revenue as identified by Compensia. In February 2009,the Compensation Committee reviewed each executiveofficer’s salary for 2009. Although our executive salariesas a whole generally ranged from 25th to 50th percentilerelative to our peer group of technology and medical devicecompanies of similar size and revenue, in light of the financialuncertainties caused by the global macro-economic recession andcredit crisis, the committee decided to freeze 2009 salaries forexecutive officers, including our Chief Executive Officer, at2008 levels. Further, in March 2009, the Chief Executive Officervoluntarily reduced his base salary by 12% and reduced all otherexecutive officers’ salaries by 5% in an effort to manageexpenses in the uncertain economic environment. The executiveofficers’ salaries were


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reinstated in October 2009. In October 2009, the CompensationCommittee engaged Compensia to evaluate Mr.Viegas’salary as Interim Chief Executive Officer and determined that itfell within the median level of the peer group discussed above.Our Interim Chief Financial Officer was brought on as aconsultant to assist us while we searched for a permanent ChiefFinancial Officer. As such, the Interim Chief Financial Officeris compensated for services provided based on a daily rate asnegotiated by the Compensation Committee.

Short-termCash Incentive Awards

Executive Incentive Plans.The ExecutiveIncentive Plans are cash incentive programs designed to alignexecutive compensation with annual performance and to enableImmersion to attract, retain, and reward individuals whocontribute to Immersion’s success and motivate them toenhance the value of Immersion. The Compensation Committeebelieves that incentive payouts should be tightly linked toImmersion’s performance, with individual compensationdifferentiated based on individual performance. As a result,funding and payouts under the Executive Incentive Plans aredependent and based on Immersion’s performance andindividual performance.

The committee, with input from the Chief Executive Officer forall executive officers other than the Chief Executive Officer,establishes (1)performance measures based on businesscriteria and target levels of performance and (2)a formulafor calculating a participant’s award based on actualperformance compared to the pre-established performance goals.Performance measures may be based on a wide variety of businessmetrics.

The following table outlines the performance measures for the2009 Executive Incentive Plans for each Named Executive Officerwith a 2009 Executive Incentive Plan and the committee’srationale for selecting those performance measures:


Executive Officer

Performance Measures


Clent Richardson

•100% determined by a matrix of varying levels ofGAAP adjusted revenue and GAAP adjusted operating profit (loss)achieved in 2009, with minimum amounts below which no paymentswould occur and maximum amounts at which the Named ExecutiveOfficer would earn 200% of this portion of the ExecutiveIncentive Plan.

•The committee believes these financial measures arethe best measures of short- and intermediate-term results forthe company given that they are publicly announced, widelyfollowed, and can be influenced by management in the short tointermediate term.

Stephen Ambler

•50% determined by a matrix of varying levels of GAAPadjusted revenue and GAAP adjusted operating profit (loss)achieved in 2009, with minimum amounts below which no paymentswould occur and maximum amounts at which the Named ExecutiveOfficer would earn 200% of this portion of the ExecutiveIncentive Plan.

•The committee believes these financial measures arethe best measures of short- and intermediate-term results forthe company given that they are publicly announced, widelyfollowed, and can be influenced by management in the short tointermediate term.


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Executive Officer

Performance Measures


•50% determined by achievement of certain managementobjectives.

•The committee believes the use of individualizedmanagement objectives focuses individuals on achieving certainstrategic objectives of the company further increasing long-termstockholder value.

Craig Vachon/Daniel Chavez

•37.5% determined by a matrix of varying levels ofGAAP adjusted revenue and GAAP adjusted operating profit (loss)achieved in 2009, with minimum amounts below which no paymentswould occur and maximum amounts at which the Named ExecutiveOfficer would earn 200% of this portion of the ExecutiveIncentive Plan.

•The committee believes these financial measures arethe best measures of short- and intermediate-term results forthe company given that they are publicly announced, widelyfollowed, and can be influenced by management in the short tointermediate term.

•37.5% determined by a matrix of varying levels ofGAAP adjusted revenue for the Touch or Medical line of business(as applicable) and GAAP adjusted operating profit (loss)achieved for the Touch or Medical (as applicable) line ofbusiness in 2009, with minimum amounts below which no paymentswould occur and maximum amounts at which the Named ExecutiveOfficer would earn 200% of this portion of the ExecutiveIncentive Plan.

•The committee believes these financial measures arethe best measures of short- and intermediate-term results forthe company given that they are publicly announced, widelyfollowed, and can be influenced by management in the short tointermediate term.

•25% determined by achievement of certain managementobjectives.

•The committee believes the use of individualizedmanagement objectives focuses individuals on achieving certainstrategic objectives of the company further increasing long-termstockholder value.


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The GAAP adjusted revenue and GAAP adjusted operating profit(loss) matrix for Immersion for 2009 was as follows:

Revenue / Operating Profit (Loss) Targets












For purposes of the Executive Incentive Plans, GAAP adjustedrevenue means revenue recognized by Immersion for the applicableperiod in accordance with GAAP and as reported in our auditedfinancial statements and operating profit (loss) is operatingprofit (loss) less corporate support costs, litigation expenses,intangible amortization, and excluding non cash stockcompensation expenses. The amount by which a Named ExecutiveOfficer is paid any amounts under the Executive Incentive Planis determined based on our actual performance measured againstthe targets set forth above as well as the achievements of themanagement objectives weighted as described above. In addition,the Board of Directors determines a performance weighting to beapplied to the Executive’s initial incentive paymentcalculation, which weighting is based on the Executive’soverall annual performance as determined by the Board. Theweighting factor typically ranges between 0.80 and 1.20, whichfactor is then multiplied by the executive’s initialpayment calculation to determine the executive’s incentivepayment.

For 2009, the committee determined that the financialperformance metrics were the only appropriate metric for theChief Executive Officer’s Executive Incentive Plan andthus, 100% of Mr.Richardson’s Executive IncentivePlan for 2009 was based on financial metrics, although thecommittee established a list of management objectives forMr.Richardson as well. The committee determined that itwill continue to use management objectives for all otherexecutives other than the Chief Executive Officer, whichobjectives will include certain corporate initiatives forspecific executives with control over the achievement of suchcorporate initiatives. In addition, the committee has alsodetermined that it is more appropriate for the discretionarymultiplier to be applied only to the management objectiveportion of the Executive Incentive Plans, rather than theoverall Executive Incentive Plan.

Mr.Viegas did not receive a bonus for 2009 due to hisrecent hiring as Interim Chief Executive Officer.Messrs.Richardson, Ambler and Chavez did not receive abonus for 2009 due to their departures. Mr.Hirvela was noteligible to receive a bonus, as he was hired in an interimcapacity and compensated at a daily rate. Mr.Vachonreceived a bonus of $66,844 for 2009, representing 62.5%achievement of the Touch line of business operational goals ofrevenue of at least $18.44million and line of businessGAAP operating loss prior to restructuring costs and prior totaking account of executive incentive plan payment amounts nogreater than $6.51million and 100% fulfillment of hismanagement objectives. A weighting factor of 1.0 based on theBoard’s discretionary determination that Mr.Vachonand the other executive team members were performing adequately.

EquityIncentive Awards

In July 2008, Compensia performed its total direct executivecompensation review and although the value of the grants placedImmersion in the 50th percentile compared to the technology andmedical device peer groups, it was determined that unvestedexecutive option holdings were providing minimal retention valuebecause in most cases the value of the unvested option holdingswere found to be lower than the executive’s base salaryamounts. Additionally, many of the outstanding stock options hadexercise prices significantly below the current market price ofour common stock. In addition, our option burn rate over thelast three years was found to be at or above the 75th percentilecompared to the peer groups.

As a result, for 2009, the committee decided to target awardvalues at the 75th percentile relative to its peer groups andutilize restricted stock units in addition to stock options toincrease the retention value for the executive officers as wellto reduce the burn rate. As a result, in 2009, our ChiefFinancial Officer received a mix of stock option grants andrestricted stock units. Because our Senior Vice President andGeneral Managers of our lines of businesses had recentlyreceived their new hire grant, the Compensation Committeedetermined that their equity position satisfied the target awardvalues and they did not receive any further grants. Thecommittee chose to further


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incentivize Mr.Richardson with a sizeable option grant in2009 with an extended vesting period of five years with most ofthe shares vesting in the later years. After consulting withCompensia, the committee determined that a sizeable equity grantin 2009 with significant back-loaded vesting in lieu of smallergrants over the next few years was the proper incentive to keepMr.Richardson focused on long-term business objectives andfurther concentrates more of Mr.Richardson’s overallcompensation toward long-term equity incentives. In determiningMr.Viegas’ grant as Interim Chief Executive Officerin October 2009, the Compensation Committee consulted withCompensia and determined that the size and vesting of this grantwas consistent with the targets previously established by theCompensation Committee. Because of the structure of hiscompensation arrangement, namely a cash daily rate,Mr.Hirvela did not receive any equity awards.

Severanceand Change in Control Payments

We have, from time to time, entered into offer letters oremployment agreements that contain certain benefits payable, incertain situations, upon termination or change in control. Allsuch benefits extended to our executive officers are approved bythe Compensation Committee in order to be competitive in ourhiring and retention of executive officers, in comparison withcompanies with which we compete for talent. All such agreementswith the Named Executive Officers are described in“Potential Payments upon Termination or Change inControl”elsewhere in this Proxy Statement.

We have entered into retention and change in control agreementswith our executive officers with the goal of retaining suchexecutive officers during the pendency of a proposed change ofcontrol transaction, and in order to align the interests of theexecutive officers with our stockholders in the event of achange in control. We believe that a proposed or actual changein control transaction can adversely impact the morale ofofficers and create uncertainty regarding their continuedemployment. Without the benefits under the Change in ControlAgreements, executive officers may be tempted to leave ouremployment prior to the closing of the change in control,especially if they do not wish to remain with the entity afterthe transaction closes, and any such departures could jeopardizethe consummation of the transaction or our interests if thetransaction does not close and we remain independent. TheCompensation Committee believes that these benefits thereforeserve to enhance stockholder value in the transaction, and alignthe executive officers’ interests with those of theCompany’s stockholders in change in control transactions. Adescription of the terms and conditions of such Change inControl Agreements is set forth in“Potential Paymentsupon Termination or Change in Control”elsewhere inthis Proxy Statement.


We provide certain executive officers with perquisites and otherpersonal benefits that the Compensation Committee believes arereasonable and consistent with our overall compensation programsand philosophy. These benefits are provided in order to enableus to attract and retain these executives. The committeeperiodically reviews the levels of these benefits provided toour executive officers. These benefits include participation inour health and benefits plans, retirement savings plans,flexible spending accounts and our employee stock purchase plan,which are generally available to all of our employees. Inaddition, we also reimbursed Mr.Richardson for hiscommuting expenses. As part of his fees for his consultancy, wealso paid for Mr.Hirvela’s commuting expenses,housing and car rental expenses during the term of hisengagement. As set forth in the Summary Compensation Tablebelow, in 2009 the value of all perquisites provided toMr.Richardson was $46,409, the value ofMr.Hirvela’s perquisites paid on his behalf was$19,672 and the value of all perquisites provided to all otherofficers was of a nominal amount.

EquityCompensation Grant Practices

We do not have any program, plan, or practice to select equitycompensation (including stock option) grant dates incoordination with the release of material non-publicinformation, nor do we time the release of information for thepurpose of affecting value. For all stock options, employeeshave ten years from the date of the grant to exercise vestedoptions, assuming they remain an employee of or service providerto Immersion or its subsidiaries and subject to any requirementsof local law.

New Hire Grants.New hire grants of equitycompensation are made to eligible employees in connection withthe commencement of employment. New hire grants become effectiveon and are priced as of the tenth business day of the monthfollowing the month of hire. These grants generally become fullyvested after four years,


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with 1/4thof the grant vesting on the first anniversary ofthe date of commencement of employment and 1/48thof thegrant vesting monthly thereafter. Grants to individuals of50,000shares or less, not to exceed an aggregate of150,000shares in any fiscal quarter, are made by the ChiefExecutive Officer pursuant to the delegation of power by theCompensation Committee. Such grants must be granted on the tenthbusiness day of each month for individuals who were employees asof the last day of the previous month. All other grants are madeby the committee.

Annual Grants.In the past, annual stockoption grants have been awarded at the regularly scheduled Boardmeeting held in February and are effective and priced at theclosing market price on the second business day after therelease of our year-end operating results release. We selectedthis date to allow Immersion to close its financial statementsfor the prior year, announce results for the prior year, andfinalize the performance ratings of employees prior to thedetermination of the awards. Annual stock option grants awardedto executives are priced and granted to executives on the samedate and at the same price that they are priced and granted tothe rest of our employees receiving annual grants and typicallyhave the same four-year vesting schedule.

Going forward, as a result of the equity compensation reviewperformed by Compensia in July 2008, we moved to a modelpursuant to which only 60% of the employee population willreceive annual grants and these grants will be in the form ofrestricted stock units. These grants will also be awarded at theregularly scheduled Board meeting held in February and will bemade on the second business day after the release of ouryear-end earnings release. Unlike the stock option grants, thesegrants will typically vest as to1/3rdofshares on an annual basis assuming continued service and subjectto any requirements of local law.

Impact ofAccounting and Tax Requirements on Compensation

We are limited by Section162(m) of the Internal RevenueCode of 1986 to a deduction for federal income tax purposes ofup to $1,000,000 of compensation paid to our Named ExecutiveOfficers in a taxable year. Compensation above $1,000,000 may bededucted if, by meeting certain technical requirements, it canbe classified as “performance-based compensation.” Thestock options and restricted stock unit awards granted under our2007 Equity Incentive Plan are intended to be treated undercurrent federal tax law as performance-based compensation exemptfrom limitation on deductibility. Although the CompensationCommittee uses the requirements of Section162(m) as aguideline, deductibility is not the sole factor it considers inassessing the appropriate levels and types of executivecompensation and it will elect to forego deductibility when thecommittee believes it to be in the best interests of the companyand its stockholders.

In addition to considering the tax consequences, the committeeconsiders the accounting consequences of, including the impactof the Financial Accounting Standard Board’s AccountingStandards Codification Topic 718 (ASC 718), in its decisions indetermining the forms of different awards and generally attemptsto keep the value of awards equivalent regardless of type.


We believe that risks arising from our compensation policies andpractices for our employees are not reasonably likely to have amaterial adverse effect on the Company. In addition, theCompensation Committee believes that the mix and design of theelements of executive compensation do not encourage managementto assume excessive risks.

The Compensation Committee reviewed the elements of executivecompensation to determine whether any portion of executivecompensation encouraged excessive risk taking and concluded:

•weighting towards long-term incentive compensation discouragesshort-term risk taking;
•goals are appropriately set to avoid targets that, if notachieved, result in a large percentage loss of compensation;
•incentive awards are capped by the CompensationCommittee;and
•as a technology company, the Company does not face the samelevel of risks associated with compensation for employees atfinancial services (traders and instruments with a high degreeof risk).

Furthermore, as described in our Compensation Discussion andAnalysis, compensation decisions include subjectiveconsiderations, which restrain the influence of formulae orobjective factors on excessive risk taking.


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In evaluating the individual components of overall compensationfor each of our executive officers, the Compensation Committeereviews not only the individual elements of compensation, butalso total compensation. Through the compensation programsdescribed above, a significant portion of the compensationawarded to our executive officers is contingent upon individualand Immersion’s performance. The committee remainscommitted to this philosophy ofpay-for-performanceand will continue to review executive compensation programs toensure that the interests of our stockholders are served.


We, the Compensation Committee of the Board of Directors ofImmersion, have reviewed and discussed the CompensationDiscussion and Analysis contained in this Proxy Statement withmanagement. Based on such review and discussion, we haverecommended to the Board of Directors that the CompensationDiscussion and Analysis be included in this Proxy Statement.

Jack Saltich, Chair
John Hodgman
Robert Van Naarden

2009Summary Compensation Table

The following table sets forth information concerning thecompensation earned during the years ended December31,2009, 2008 and 2007 by our current Chief Executive Officer, ourformer Chief Executive Officer, our current Interim ChiefFinancial Officer, our former Chief Financial Officer and ourother most highly compensated executive officers (collectively,the “Named Executive Officers”)

Incentive Plan
All Other

Name & Principal Position

YearSalary ($)Bonus ($)($)($)($)Total($)

Victor Viegas


Chief Executive




Clent Richardson


Former President and Chief Executive Officer(2)


Henry Hirvela


Interim Chief Financial Officer(3)

Stephen Ambler


Former Chief Financial


Officer and Vice President, Finance(4)


Craig Vachon


Senior Vice President and General Manager of Touch line ofbusiness(5)


Daniel Chavez


Former Senior Vice President and General Manager of Medical lineof business(6)



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(1)Mr.Viegas became Interim Chief Executive Officer onOctober21, 2009.
(2)Mr.Richardson resigned from his position as President andChief Executive Officer and member of the Board onOctober21, 2009.
(3)Mr.Hirvela was appointed Interim Chief Financial Officeron October28, 2009.
(4)Mr.Ambler resigned from his position as Chief FinancialOfficer and Vice President, Finance on July31, 2009.
(5)Mr.Vachon was appointed Senior Vice President and GeneralManager of the Touch Line of Business effective January12,2009.
(6)Mr.Chavez resigned from his position as Senior VicePresident and General Manager of the Medical Line of Business onAugust7, 2009.
(7)The amounts in this column represent the fair value of theawards on the date of grant, computed in accordance withASC718. See note10 of the notes to our consolidatedfinancial statements contained in our Annual Report on Form10-Kfor2009 for a discussion of our assumptions in determining theASC718 values.
(8)Consists of bonus awards under our Executive Incentive Plans.
(9)Consists of severance payments of $196,154 and COBRA payments of$13,433 in 2008 and severance payments of $132,692 and COBRApayments of $8,461 in 2009 pursuant to the Resignation Agreementand General Release of Claims dated April24, 2008, betweenMr.Viegas and us. Additionally, 2009, consists of Board ofDirector Fees of $8,516 earned by Mr.Viegas while he was anon-employee member of the Board of Directors.
(10)Consists of severance payments of $487,500, COBRA payments of$3,829 and perquisites of $46,409 for travel and commutingreimbursem*nt.
(11)Consists of travel and commuting reimbursem*nt.
(12)Consists of severance payments of $104,817 and COBRA payments of$8,762.
(13)Includes severance payments of $59,000.

2009Grants of Plan-Based Awards

The following table sets forth information concerning each grantof an award made to a Named Executive Officer during the yearended December31, 2009:

All Other
Grant Date
Estimated Future Payouts
All other
Exercise or
Fair Value
Under Non-Equity Incentive Plan
Stock Awards:
Base Price
of Stock
Awards(1)(2)Number of
Number of Securities
of Option
Shares of
Option Awards


Grant Date($)($)($)Stock or UnitsOptions(#)($/sh)($)

Victor Viegas


Clent Richardson


Henry Hirvela


Stephen Ambler


Craig Vachon


Daniel Chavez

(1)These awards were made pursuant to the 2009 Executive IncentivePlans.
(2)Mr.Viegas and Mr.Hirvela were not eligible forNon-Equity Incentive Plan Awards during 2009.
(3)Represents award granted to Mr.Viegas while he was anon-employee member of the Board of Directors


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The following table sets forth information concerning the valueof exercisable and unexercisable options held as ofDecember31, 2009 by the Named Executive Officers:


Option AwardsStock Awards
Number of Securities
Number of Shares or
Market Value of
Units of Stock that
Shares or Units of
Unexercised Options(1)Option
Have Not
Stock that Have Not
(#)(#)Price ($/sh)Date(#)($)

Victor Viegas


Clent Richardson


Henry Hirvela


Stephen Ambler


Craig Vachon


Daniel Chavez

(1)Except as otherwise indicated, options vest as to 25% of theshares on the one year anniversary of the vesting commencementdate and the remaining vest at a monthly rate of oneforty-eighth.
(2)Based on the closing price of our common stock of $4.58 pershare on the Nasdaq Global Market on December31, 2009.
(3)Vested as to 25% of the shares on June5, 2007.
(4)Vested as to 25% of the shares on February27, 2009.
(5)Vested as to 100% of the shares on March4, 2010.
(6)Vests monthly commencing on October21, 2009
(7)Vested as to 25% of the shares on September29, 2009.
(8)Vests as to 25% of the shares on January13, 2010.

OptionExercises In 2009 Fiscal Year

There were no stock option exercises by our Named ExecutiveOfficers during the year ended December31, 2009.


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PotentialPayments upon Termination or Change in Control

We have entered into the following agreements with each of ourNamed Executive Officers that provide for severance benefits,and for additional benefits in connection with a change incontrol of Immersion:


Effective October20, 2009, Mr.Viegas became ourInterim Chief Executive Officer. In connection with hisappointment, we entered into an employment agreement withMr.Viegas. Mr.Viegas will receive an annual basesalary of $350,000 and will be eligible beginning fiscal 2010 toreceive an annual bonus of up to 60% of his base salary.Mr.Viegas will also be granted an option to purchase600,000shares of common stock, with an exercise priceequal to the fair market value of Immersion’s common stockon the date of grant. This option will vest as to 1/48thofthe shares and ratably on a monthly basis over the subsequent48months.

If the employment of Mr.Viegas is terminated without“Cause,” as defined in the agreement or resigns for“Constructive Reason,” as defined in the agreement, hewould be entitled to receive, as severance, a payment equal to12months of his base salary and health insurance premiumpayments for 12months. In addition, Mr.Viegas willalso be entitled to immediate vesting of 70% of his thenunvested equity awards held by him.

In the event that Mr.Viegas is terminated without Cause orresigns for Constructive Reason, within three months of, orwithin 1year following, a “Change of Control,”as defined in the agreement, Mr.Viegas will be entitled toreceive a lump sum severance payment equal to 12monthsbase salary and health insurance premium payments for12months. In addition, Mr.Viegas will also beentitled to immediate vesting of 70% of his then unvested equityawards held by him.

Payment of the foregoing benefits will be conditioned uponMr.Viegas’ execution of a general release of claims.


Effective April20, 2009, we entered into an Amended andRestated Retention and Ownership Change Event Agreement withMr.Richardson which provides for the payment of severanceand health insurance premiums upon the occurrence of certainevents. The agreement provides that if Mr.Richardson isterminated without “Cause,” as defined in theagreement or resigns for “Good Reason,” as defined inthe agreement, he would be entitled to receive, as severance,base salary for a period of 18months following the date oftermination, payable within 10 business days of termination andsubject to compliance with Section409A of the InternalRevenue Code. In addition, the agreement providesMr.Richardson shall be entitled to continued payment ofhealth insurance premiums for 18months.

In the event that Mr.Richardson is terminated withoutCause or resigns for Good Reason, within three months of, orwithin 1year following, an “Ownership ChangeEvent,” as defined in the agreement, the agreement providesMr.Richardson will be entitled to receive a lump sumseverance payment equal to 24months base salary, payablewithin 10 business days of termination and subject to compliancewith Section409A of the Internal Revenue Code. Inaddition, the agreement provides Mr.Richardson shall beentitled to continued payment of health insurance premiums for24months. The agreement also provides Mr.Richardsonwill be entitled to immediate vesting of all of his thenunvested stock and stock options and a six monthpost-termination exercise period with respect to stock optionsthen held by him

On October20, 2009, we entered into a Separation Agreementand General Release of claims with Mr.Richardson (the“Separation Agreement”). Pursuant to the SeparationAgreement, Mr.Richardson received a payment of $487,500,representing approximately 18months of his base salaryprior to the March 2009company-wide salary reduction. Weare required to pay Mr.Richardson’s COBRA healthinsurance premiums for up to 18months, and he was entitledto receive up to $10,000 in reimbursem*nt for documentedexpenses related to moving and the cancellation of his apartmentlease and car lease. In the event an Ownership Change Event (asdefined in the Retention Agreement) was consummated within three(3)months following October20, 2009 (the“Termination Date”), we would have been required topay Mr.Richardson a lump sum payment equal to six(6)months’ of his annual base salary in effect as ofthe Termination Date within thirty (30)days of the


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consummation of such Ownership Change Event, and vesting as toone hundred percent (100%) of his then outstanding equity awardsupon consummation of such Ownership Change Event.Mr.Richardson entered into a general release of claims infavor of us. Mr.Richardson also agreed not to solicit ouremployees for a period of one year.


Effective April22, 2009, we entered into an Amended andRestated Retention and Ownership Change Event Agreement withMr.Ambler which provides for the payment of severance andhealth insurance premiums upon the occurrence of certain events.The agreement provides that if Mr.Ambler is terminatedwithout “Cause”, he would be entitled to receive, asseverance, base salary for a period of 12months followingthe date of termination, payable within 10 business days oftermination and subject to compliance with Section409A ofthe Internal Revenue Code. In addition, the agreement providesMr.Ambler shall be entitled to continued payment of healthinsurance premiums for 12months.

In the event that Mr.Ambler is terminated without Cause orresigns for “Good Reason” within three months of, orwithin 1year following, an “Ownership ChangeEvent” the agreement provides Mr.Ambler will beentitled to receive a lump sum severance payment equal to12months base salary, payable within 10 business days oftermination and subject to compliance with Section409A ofthe Internal Revenue Code. In addition, the agreement providesMr.Ambler shall be entitled to continued payment of healthinsurance premiums for 12months.

On July31, 2009, Stephen M. Ambler, our former ChiefFinancial Officer and Vice-President, Finance resigned from hisemployment with us and we entered into a separation agreementwith him. We agreed to pay Mr.Ambler approximately$105,000, representing six months of his current base salary. Inaddition, we agreed to pay him six months of COBRA payments andto extend the exercise period of his currently-vested stockoptions.


In connection with the appointment of Mr.Daniel Chavez asSenior Vice President of the Medical line of business, weentered into an offer of employment with Mr.Chavez datedNovember25, 2008. Pursuant to the letter, Mr.Chavezwas employed as Senior Vice President and General Manager of theMedical Line of Business at a salary of $245,000 per annum, andreceived a sign-on bonus in the amount of $25,000, which bonusmust be reimbursed to us on a pro rata basis in the eventMr.Chavez voluntarily terminates his employment prior toDecember1, 2009. The agreement provides Mr.Chavezparticipates in the 2009 executive bonus plan with a targetannual bonus amount of $147,000. The agreement providesMr.Chavez is also eligible for one year of relocationassistance, including taxgrossed-uppayment of moving costs, fees related to closing costs, up to60days of temporary housing, travel expenses for two househunting trips and a $15,000 discretionary move bonus forincidental costs. The agreement provides in the event thatMr.Chavez terminates his employment within the first yearof his actual move date, Mr.Chavez will be required torepay all or part of these relocation payments. Mr.Chavezwas also granted an option to purchase 175,000shares ofour common stock pursuant to our 2008 Employment InducementAward Plan. This option vests over four years at the rate of 25%on the one year anniversary of the commencement of employment,and thereafter in equal monthly installments at the rate of1/48thper month over the remaining 36months.

We also entered into a retention and ownership change eventagreement with Mr.Chavez. The agreement provides for thepayment of severance and health insurance premiums upon theoccurrence of certain events. In the event that his employmentis terminated without cause, Mr.Chavez will be entitled toreceive a lump sum severance payment equal to 6months basesalary and payments of health insurance premiums for the earlierof 6months or the date on which Mr.Chavez firstbecomes eligible to obtain other group health insurancecoverage. In the event that Mr.Chavez’s employment isterminated without cause, or is terminated by him with goodreason, in either case, in connection with an ownership changeevent of Immersion, the agreement provides Mr.Chavez willalso be entitled to receive a lump sum severance payment equalto 12months base salary and payments of health insurancepremiums for the earlier of 12months or the date on whichMr.Chavez first becomes eligible to obtain other grouphealth insurance coverage. The agreement provides payment of theforegoing benefits will be conditioned uponMr.Chavez’s execution of a general release of claims.


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Mr.Chavez received a severance payment of three monthsbase salary, or $59,000, when he resigned but he did not receiveany additional payments or acceleration or vesting of equityawards.


We entered into an offer of employment with Mr.Vachondated September7, 2008, pursuant to which he was initiallyemployed as Vice President and General Manager of Mobility at asalary of $230,000 and a sign on bonus in the amount of $25,000,which bonus must be reimbursed to us on a pro rata basis in theevent Mr.Vachon voluntarily terminates his employmentprior to September29, 2009. Mr.Vachon participatedin the 2008 executive bonus plan with a target annual bonusamount of $138,000, of which $25,000 is guaranteed and whichamount has been paid; this bonus must be reimbursed on a prorata basis to us in the event Mr.Vachon voluntarilyterminates his employment prior to September29, 2009.Mr.Vachon is eligible for housing assistance for the firstsix months of his employment. During the first three monthperiod, he was entitled to reimbursem*nt of actual andreasonable expenses incurred for lodging and meal expenses, andfor the second three month period, we are paying $2,000 permonth to off-set living expenses. On October14, 2008,Mr.Vachon received an option to purchase150,000shares of our common stock pursuant to the 2008Employment Inducement Award Plan. This option will vest overfour years at the rate of 25% on the one year anniversary of thecommencement of employment, and thereafter in equal monthlyinstallments at the rate of 1/48thper month over theremaining 36months.

In connection with Mr.Vachon’s appointment to SeniorVice President and General Manager of the Touch line ofbusiness, he received an option to purchase 50,000sharesof our common stock pursuant to the 2007 Equity Incentive Plan.This option will vest over four years at the rate of 25% onJanuary9, 2010, and thereafter in equal monthlyinstallments at the rate of 1/48th per month over the remaining36months.

We also entered into a retention and ownership change eventagreement (the “Retention Agreement”) withMr.Vachon. The Retention Agreement provides for thepayment of severance and health insurance premiums upon theoccurrence of certain events. In the event that his employmentis terminated without cause, Mr.Vachon will be entitled toreceive a lump sum severance payment equal to 6months basesalary and payments of health insurance premiums for the earlierof 6months or the date on which Mr.Vachon firstbecomes eligible to obtain other group health insurancecoverage. In the event that Mr.Vachon’s employment isterminated without cause, or is terminated by him with goodreason, in either case, in connection with an ownership changeevent of Immersion, then Mr.Vachon will also be entitledto receive a lump sum severance payment equal to 12monthsbase salary and payments of health insurance premiums for theearlier of 12months or the date on which Mr.Vachonfirst becomes eligible to obtain other group health insurancecoverage. Payment of the foregoing benefits will be conditionedupon Mr.Vachon’s execution of a general release ofclaims.

The table below shows the potential value for each NamedExecutive Officer employed by Immersion as of December31,2009 under various termination of employment related scenarios,assuming that the triggering event for such value transferoccurred on December31, 2009.


Victor ViegasCraig Vachon

Termination without cause


Termination without cause or resignation for constructive reason


Termination without cause or resignation for constructive reasonoccurs due to a change in control

Dollar amounts include potential severance payout, potentialCOBRA payments and potential equity award acceleration based onthe fair market value on December31, 2009 less theexercise price.


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The following table sets forth information concerning thecompensation earned during 2009 by each person who served as adirector during the year ended December31, 2009:

Fees Earned or
Awards (3)


Paid in Cash (2)($)(3) (5)($)(4)($)($)

Anne DeGheest


John Hodgman


Emily Liggett


Jack Saltich


Robert Van Naarden


Victor Viegas(1)

(1)In 2009, Mr.Richardson and Mr.Viegas were our onlyemployee directors and they did not receive any additionalcompensation for their services as members of our Board ofDirectors while they were employees. Amounts included forMr.Viegas were earned while he was a non-employee memberof the Board of Directors.
(2)Consists of meeting fees for service as members of the Board ofDirectors. Fees earned by directors vary depending on the numberof Board meetings attended by the director, the number ofcommittees on which the director served, the number of committeemeetings attended by the director, and whether the director wasChair of the Board or certain committees. SeeCashCompensationbelow for more information.
(3)Represents the grant date fair value of stock options orrestricted stock, as applicable, granted in 2009 in accordancewith ASC718, disregarding for this purposes the estimateof forfeitures related to service-based vesting conditions. Fora discussion of assumptions used to calculate the ASC718grant date fair value, refer to Note10 (Stock-basedCompensation) to our consolidated financial statements includedin our Annual Report onForm10-Kfor the year ended December31, 2009. SeeStock Optionsbelow for more information.
(4)For each member of our Board of Directors who was not anemployee at the time of grant, below is the grant date fairvalue of each equity award granted in 2009 computed inaccordance with ASC 718 and the aggregate number shares subjectto equity awards outstanding on December31, 2009.Assumptions used in the calculation of the grant date fair valueare included in Note 10 (Stock-based Compensation) to ourconsolidated financial statements included in our Annual ReportonForm10-Kfor the year ended December31, 2009.
Option Awards
Option Awards
Aggregate Grant
Outstanding at
Granted in 2009
Date Fair Value
December31, 2009



Anne DeGheest


John Hodgman


Emily Liggett


Jack Saltich


Robert Van Naarden


Victor Viegas

(5)For each member of our Board of Directors who was not anemployee at the time of grant, below is the grant date fairvalue of each restricted stock award granted in 2009 computed inaccordance with ASC718 and the aggregate number ofrestricted stock awards outstanding on December31, 2009.Assumptions used in the


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calculation of the grant date fair value are included inNote10 (Stock-based Compensation) to our consolidatedfinancial statements included in our Annual Report onForm10-Kfor the year ended December31, 2009.
Aggregate Grant
Awards Outstanding
Granted in 2009
Date Fair Value
at December31, 2009



Anne DeGheest


John Hodgman


Emily Liggett


Jack Saltich


Robert Van Naarden


Victor Viegas



In 2009, non-employee directors each received retainer fees of$25,000 per year, typically paid in quarterly installments onthe date of each quarterly Board meeting and payable only in theevent they attend such Board meeting. In addition, the Chairmanof the Board received an additional retainer fee of $10,000 peryear. The Chair of the Audit Committee received a $10,000 annualcommittee fee, the Chair of the Compensation Committee receiveda $7,000 annual committee fee, and the Chair of theNominating/Corporate Governance Committee received a $3,000annual committee fee. Non-employee directors who are members ofthe Audit and Compensation Committees received $3,000 annualcommittee fees and non-employee directors of theNominating/Corporate Governance Committee received $2,000 annualcommittee fees. These annual committee fees are typically paidquarterly on the date of the quarterly Board meetings. Directorsare entitled to reimbursem*nt of reasonable travel expenses theyincur in connection with attending Board and committee meetings.In March 2009, in light of the financial uncertainties caused bythe global macro-economic recession and credit crisis, theretainer fee for each non-employee director was reduced by 12%.The fee was reinstated to the prior amount in December 2009effective for fiscal 2010.


Non-employee directors are granted an option to purchase40,000shares of common stock under our 2007 Plan on thedate the director joins the Board. This initial option, likethose received by all other individuals joining Immersion, isgranted with an effective date of the tenth business day of themonth following the month the director joins the Board. In 2009,following a review with its independent compensation consultantCompensia, the annual grants to non-employee directors were setat 4,500shares of restricted stock and options to purchase8,500shares. Subject to continued service, 100% of theoptions and restricted stock vest on the first anniversary oftheir grant date. Options granted to non-employee directorsaccelerate in full and become completely vested upon a change ofcontrol. For options that would otherwise be granted prior toour release of results of operations, the effective date of suchoption grants is the second business day after our earningsrelease and the exercise price per share equals the closingprice per share on the Nasdaq Global Market on the effectivedate of the option grants; the exercise price per share for allother options equals the closing price per share on the NasdaqGlobal Market on the tenth business day of the month followingthe month in which the option was granted. Each option has orwill have a maximum term of ten years, subject to earliertermination should the optionee cease to serve as a member ofthe Board of Directors.


None of the individuals serving on the Compensation Committeewas at any time during 2009, or at any other time, an officer oremployee of Immersion. No executive officer of Immersion servesas a member of the Board of Directors or compensation committeeof any entity that has one or more executive officers serving asa member of our Board or the Compensation Committee.


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In accordance with our Audit Committee charter, our AuditCommittee is responsible for reviewing and approving the termsand conditions of any related party transactions. Review of anyrelated party transaction would include reviewing each suchtransaction for potential conflicts of interests and otherimproprieties. Except as described elsewhere in this ProxyStatement, including in “Executive Compensation”above, or in “Other Transactions” below, sinceJanuary1, 2009, there has not been, nor is there currentlyproposed, any transaction or series of similar transactions, towhich Immersion is or was a party, in which the amount involvedexceeds $120,000 and in which any of its directors, executiveofficers, or holders of more than 5% of our capital stock had orwill have a direct or indirect material interest.

In addition to indemnification provisions in our bylaws, we haveentered into agreements to indemnify our directors and executiveofficers. These agreements provide for indemnification of ourdirectors and executive officers for some types of expenses,including attorney’s fees, judgments, fines, and settlementamounts incurred by persons in any action or proceeding,including any action by or in the right of Immersion, arisingout of their services as our director or executive officer. Webelieve that these provisions and agreements are necessary toattract and retain qualified persons as directors and executiveofficers.




We are asking the stockholders to ratify the AuditCommittee’s engagement of Deloitte& Touche LLPas our independent registered public accounting firm for thefiscal year ending December31, 2010, and in the event thestockholders fail to ratify the appointment, the Audit Committeewill reconsider its engagement. Even if the engagement isratified, the Audit Committee, in its discretion, may direct theengagement of a different independent registered publicaccounting firm at any time during the year if the AuditCommittee feels that such a change would be in the best interestof our company and our stockholders. Representatives ofDeloitte& Touche LLP are expected to be present atthe Annual Meeting, will have the opportunity to make astatement if they desire to do so, and will be available torespond to appropriate questions.

Deloitte& Touche LLP has been the independentregistered public accounting firm that audits our financialstatements since 1997. In accordance with standing policy,Deloitte& Touche LLP periodically changes thepersonnel who work on the audit. We have no current consultingagreements with Deloitte& Touche LLP.

The following table sets forth the aggregate fees billed to usfor the fiscal years ended December31, 2009 and 2008 byour principal accounting firm, Deloitte& Touche LLP,the member firms of Deloitte Touche Tohmatsu, and theirrespective affiliates:


Audit Fees(1)


Audit Related Fees(2)


Tax Fees(3)

Tax Compliance/Preparation


Other Tax Services


Total Tax Fees


All Other Fees(4)


Total Fees

(1)Audit fees consist of fees billed, or expected to be billed, forprofessional services rendered for the audits of ourconsolidated financial statements and the effectiveness of ourinternal controls over financial reporting, along with reviewsof interim condensed consolidated financial statements includedin quarterly reports, services that are normally provided byDeloitte& Touche LLP in connection with statutory andregulatory filings or


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engagements, and attestation services. Additionally, in 2009,Deloitte& Touche LLP provided additional audit andprofessional services in conjunction with Immersion’srestatement of its 200810-Kand Q1200910-Q.
(2)Audit-related fees consist of fees billed for assurance andrelated services that are reasonably related to the performanceof the audit or review of our consolidated financial statementsand are not reported under “Audit Fees.”
(3)Tax fees consist of tax compliance/preparation and other taxservices. Tax compliance/preparation consists of fees billed fortax return preparation, claims for refunds, and tax paymentplanning services related to federal, state, and internationaltaxes. Other tax services consist of fees billed for servicesincluding tax advice, tax strategy, and other miscellaneous taxconsulting and planning. For the fiscal year endedDecember31, 2009 and 2008, our domestic tax returns werehandled by PriceWaterhouseCoopers.
(4)All other fees consist of fees for all other services other thanthose reported above. The Company’s intent is to minimizeservices in this category.

The Audit Committee has determined that all services performedby Deloitte& Touche LLP are compatible withmaintaining the independence of Deloitte& Touche LLP.In addition, since the effective date of the SEC rules statingthat an independent public accounting firm is not independent ofan audit client if the services it provides to the client arenot appropriately approved, the Audit Committee has approved,and will continue to pre-approve all audit and permissiblenon-audit services provided by the independent registered publicaccounting firm. These services may include audit services,audit-related services, tax services, and other services.

The Audit Committee has adopted a policy for the pre-approval ofservices provided by the independent registered publicaccounting firm, pursuant to which it may pre-approve certainaudit fees, audit-related fees, tax fees, and fees for otherservices. Under the policy, the Audit Committee may alsodelegate authority to pre-approve certain specified audit orpermissible non-audit services to one or more of its members. Amember to whom pre-approval authority has been delegated mustreport his pre-approval decisions, if any, to the AuditCommittee at its next meeting. Unless the Audit Committeedetermines otherwise, the term for any service pre-approved by amember to whom pre-approval authority has been delegated istwelve months.


Stockholder ratification of the selection ofDeloitte& Touche LLP as the independent registeredpublic accounting firm is not required by our bylaws orotherwise. The Board, however, is submitting the selection ofDeloitte& Touche LLP to the stockholders forratification as a matter of good corporate practice. If thestockholders fail to ratify the selection, the Audit Committeeand the Board will reconsider whether or not to retainDeloitte& Touche LLP. Even if the selection isratified, the Audit Committee and the Board in their discretionmay direct the appointment of a different independent registeredpublic accounting firm at any time during the year if theydetermine that such a change would be in the best interests ofImmersion and our stockholders.

Approval of this proposal requires the affirmative vote of amajority of the votes cast at the annual meeting ofstockholders, as well as the presence of a quorum representing amajority of all outstanding shares, either in person or byproxy. Abstentions will be treated as votes cast and will havethe same effect as a “no” vote. Broker non-votes willeach be counted as present for purposes of determining thepresence of a quorum but will not have any effect on the outcomeof the proposal.



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This report of the audit committee is required by theSecurities and Exchange Commission, and is not “solicitingmaterial,” is not to be deemed “filed” with theSecurities and Exchange Commission and is not to be incorporatedby reference in any filing of Immersion under the Securities Actof 1933, as amended, or the Securities Exchange Act of 1934, asamended, whether made before or after the date hereof andirrespective of any general incorporation language in anyfiling.

Under the guidance of a written charter adopted by the Board,the purpose of the Audit Committee is to retain an independentregistered public accounting firm, to make such examinations asare necessary to monitor the corporate financial reporting ofthe our internal and external audits and its subsidiaries, toprovide to the Board the results of its examinations andrecommendations derived therefrom, to outline to the Board theimprovements made, or to be made, in internal accountingcontrols, and to provide the Board such additional informationand materials as it may deem necessary to make the Board awareof significant financial matters that require the attention ofthe Board.

Management is primarily responsible for the system of internalcontrols and the financial reporting process. The independentregistered public accounting firm is responsible for expressingan opinion on the financial statements based on an auditconducted in accordance with generally accepted auditingstandards. The Audit Committee is responsible for monitoring andoverseeing these processes.

In this context and in connection with the audited financialstatements contained in our Annual Report onForm10-Kfor fiscal 2009, the Audit Committee:

•reviewed and discussed the audited financial statements withmanagement;
•discussed with Deloitte& Touche LLP, with and withoutmanagement present, the matters required to be discussed underStatement of Auditing Standards No.114, as amended,(AICPA,Professional Standards, Vol. 1, AUsection380), as adopted by the Public Company AccountingOversight Board in Rule3200T;
•received the written disclosures and the letter fromDeloitte& Touche LLP required by the applicablerequirements of the Public Company Accounting Oversight Boardregarding the independent accountant’s communications withthe audit committee concerning independence; discussed with theindependent registered public accounting firm its independence;and concluded that the nonaudit services performed byDeloitte& Touche LLP are compatible with maintainingits independence;and
•based on the foregoing reviews and discussions, recommended tothe Board that the audited financial statements be included inour 2009 Annual Report onForm10-Kfor the fiscal year ended December31, 2009 filed with theSEC.

John Hodgman, Chair
Emily Liggett
Jack Saltich


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The following table sets forth as of April14, 2010,certain information with respect to the beneficial ownership ofour common stock by (1)each stockholder who is known by usto be the beneficial owner of more than 5% of our outstandingshares of common stock, (2)each of our directors and thenominee for director, (3)the Named Executive Officers, and(4)all directors and executive officers as a group.Beneficial ownership has been determined in accordance withRule13d-3under the Exchange Act. Under this rule, certain shares may bedeemed to be beneficially owned by more than one person (if, forexample, persons share the power to vote or the power to disposeof the shares). In addition, shares are deemed to bebeneficially owned by a person if the person has the right toacquire shares (for example, upon exercise of an option) within60days of the date as of which the information isprovided; in computing the percentage ownership of any person,the amount of shares outstanding is deemed to include the amountof shares beneficially owned by such person (and only suchperson) by reason of such acquisition rights. As a result, thepercentage of outstanding shares of any person as shown in thefollowing table does not necessarily reflect the person’sactual voting power at any particular date.

Subject to
Amount and
Nature of
Included in
Percent of

Beneficial Owner


ValueAct SmallCap Master Fund, L.P.(4)


Funds affiliated with Ramius LLC(5)


Black Rock Inc.(6)


Executive Officers, Directors and Nominee for Director

Victor Viegas


Henry Hirvela


Craig Vachon


Daniel Chavez


Clent Richardson


Stephen Ambler


Anne DeGheest(7)


John Hodgman


Emily Liggett


Jack Saltich(8)


Robert Van Naarden


David Sugish*ta


All executive officers and directors as a group(8persons)(9)

*Less than 1% of the outstanding shares of common stock.
(1)Except as indicated in the footnotes to this table and pursuantto applicable community property laws, the persons named in thetable have sole voting and investment power with respect to allshares of common stock. To our knowledge, and except asindicated in the footnotes to this table, the entities named inthe table have sole voting and investment power with respect toall shares of common stock shown as beneficially owned by them.Except as otherwise indicated, the address of each of thepersons in this table is as follows:c/oImmersionCorporation, 801 Fox Lane, SanJose, California 95131.
(2)Only shares issuable upon exercise of options within60days of April14, 2010 are included for purposes ofdetermining beneficial ownership.
(3)Calculated on the basis of 28,093,364shares of commonstock outstanding as of April14, 2010, provided that anyadditional shares of common stock that a stockholder has theright to acquire within 60days after April14, 2010are deemed to be outstanding for the purpose of calculating thatstockholder’s percentage of beneficial ownership.


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(4)Based solely on a Schedule13D filed with the SEC onApril14, 2009, ValueAct SmallCap Master Fund, L.P., VASmallCap Partners, LLC, ValueAct SmallCap Management, L.P.,ValueAct SmallCap Management, LLC and David Lockwood have sharedvoting and dispositive power with respect to the shares. Theaddress of ValueAct is 435 Pacific Avenue, Fourth Floor,SanFrancisco, CA 94133.
(5)Based solely on information provided by Ramius LLC in itsSchedule13D, as amended, filed with the SEC onFebruary5, 2010. According to the Schedule13D,1,999,214shares are held by Ramius Value and OpportunityMaster FundLTD (“Value and Opportunity MasterFund”), 1,119,986shares are held by RCG PB, LTD.(“RCG PB”), 601,316shares are held by RamiusEnterprise Master FundLtd, a Cayman Islands exemptedcompany (“Enterprise Master Fund”), and469,484shares are held by Ramius Navigation MasterFundLtd, a Cayman Islands exempted company(“Navigation Master Fund”). Ramius Advisors, LLC, aDelaware limited liability company (“RamiusAdvisors”), serves as the investment advisor of EnterpriseMaster Fund, Navigation Master Fund, and RCG PB; RCG StarboardAdvisors, LLC, a Delaware limited liability company (“RCGStarboard Advisors”), serves as the investment manager ofValue and Opportunity Master Fund; Ramius LLC, a Delawarelimited liability company (“Ramius”), serves as thesole member of each of RCG Starboard Advisors and RamiusAdvisors; C4S& Co., L.L.C., a Delaware limitedliability company (“C4S”), who serves as managingmember of Ramius. The managing members of C4S& Co.,L.L.C. are Peter A. Cohen, Morgan B. Stark, Thomas W. Straussand Jeffrey M. Solomon. The address of these entities andpersons is 599 Lexington Avenue, 20th Floor, New York, NY 10022.
(6)Based solely on a Schedule13G filed with the SEC onJanuary29, 2010. The address of Black Rock Inc. is 55 East52nd Street, New York, New York 10055.
(7)20,000shares are held in the DeGheest Living Trust datedJune8, 2005.
(8)10,000shares are held in the Saltich Trustdated12/17/1991.
(9)Total includes executive officers and directors as ofApril14, 2010. Includes 1,132,934shares subject tooptions that are currently exercisable or will becomeexercisable within 60days after April14, 2010beneficially owned by executive officers and directors.


The following table provides information as of December31,2009 concerning our equity compensation plans:

Number of Shares
Number of
Shares to be
Available for
Number of
Issued Upon
Future Issuance
Shares to be
Settlement of
Under Equity
Issued Upon
Average Exercise
Exercise of
Price of
Plans (Excluding
Shares Reflected in
Awards/Units (c)
Column (a)) (c)

Plan Category(1)

(a)(#)(b) ($/sh)(#)(#)

Equity compensation plans approved by stockholders(2)


Equity compensation plans not approved by stockholders(5)



(1)The table does not include information for equity compensationplans assumed by the Company in business combinations. As partof the business combination with Immersion Medical in fiscal2000, we assumed Immersion Medical’s 1995B and 1998 stockoption plans. A total of 216,337shares of common stock arereserved for issuance under these plans. The majority of theoptions outstanding under these plans cliff vest on theanniversary of the grant date over a five-year period. The 1998Plan provides, in certain instances, for accelerated vesting ofthe options upon a change of control. All of the options expire10years from the date of the grant. As part of thebusiness combination with Virtual Technologies, Inc.(“VTI”) in fiscal 2000, the Company assumed VTI’s1997 stock option plan. A total of 50,000shares of commonstock are reserved for


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issuance to employees (incentive stock options) andnon-employees (nonstatutory stock options) under this plan. Theoptions expire 10years from the date of the grant. Themajority of the options outstanding under this plan cliff veston the anniversary of the grant date over a five-year period.The plan provided that in the event of a merger of the Companywith or into another corporation, each outstanding option orstock purchase right under the plan must be assumed, or anequivalent option or right substituted, by the successorcorporation or an affiliate. The number of shares to be issuedupon exercise of outstanding options under plans assumed inbusiness combinations at December31, 2009 was 482,085 andthe weighted average exercise price was $19.71.
(2)Consists of two plans: the Immersion Corporation 1997 StockOption Plan and the 2007 Plan.
(3)Includes shares issued pursuant restricted stock awards.
(4)Includes 571,811shares available for future issuance underthe Employee Stock Purchase Plan.
(5)As of December31, 2009, we had reserved an aggregate of2,217,913shares of common stock for issuance pursuant tothe 2008 Employment Inducement Award Plan to provide for thegranting of a nonstatutory stock option with an exercise priceequal to the fair market value of our common stock on the dateof grant. Each option granted pursuant to the 2008 EmploymentInducement Award Plan has a10-yeartermand vests at the rate of 1/4 of the shares on the firstanniversary of the date of grant and 1/48 of the shares monthlythereafter.


Section16(a) of the Securities Exchange Act of 1934, asamended (the “Exchange Act”), requires our executiveofficers, directors, and persons who beneficially own more than10% of our common stock to file initial reports of ownership andreports of changes in ownership with the SEC. These persons arerequired by SEC regulations to furnish us with copies of allSection16(a) forms filed by such persons.

Based solely on our review of the forms furnished to it andwritten representations from certain reporting persons, webelieve that except as noted below all filing requirementsapplicable to its executive officers, directors, and persons whobeneficially own more than 10% of our common stock were compliedwith during the fiscal year ended December31, 2009. AForm4 for a purchase of 2,000shares by Emily Liggettwas filed approximately ten days late due to an administrativeerror.


Stockholder proposals may be included in our proxy materials foran annual meeting so long as they are provided to us on a timelybasis and satisfy the other conditions set forth in applicableSEC rules. For a stockholder proposal to be included in ourproxy materials for the 2011 Annual Meeting of Stockholders, theproposal must be received at our principal executive offices,addressed to the Corporate Secretary, not later thanDecember31, 2010. Stockholder business that is notintended for inclusion in our proxy materials may be broughtbefore the Annual Meeting so long as we receive notice of theproposal as specified by our Bylaws, addressed to the CorporateSecretary at our principal executive offices, not later thanDecember31, 2010.

It is important that your stock be represented at the meeting,regardless of the number of shares that you hold. You are,therefore, urged to execute and return, at your earliestconvenience, the accompanying Proxy Card in the enclosedenvelope.


The Board knows of no other matters to be presented forstockholder action at the Annual Meeting. However, if othermatters do properly come before the Annual Meeting or anyadjournments or postponements thereof, the Board intends thatthe persons named in the proxies will vote upon such matters inaccordance with their discretion.


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- Proxy Statement (definitive) (DEF 14A) (4)

Using ablack inkpen, mark your votes with an X as shown inthis example. Please do not write outside the designated areas.


Electronic Voting Instructions

You can vote byInternet or telephone!

Available 24 hours a day, 7days a week!

Instead of mailing yourproxy, you may choose one of thetwo voting methods outlined belowto vote your proxy.


Proxies submitted by the Internetor telephone must be received by1:00 a.m., Central Time, on June4,2010.

Vote by Internet

•Log on to the Internet and go to
•Follow the steps outlined onthe secured website.

Vote by telephone

•Call toll free1-800-652-VOTE (8683)within the USA,US territories &Canada any time on a touchtone telephone. There isNO CHARGE to you for thecall.
•Follow the instructions provided by the recorded message.

Annual Meeting Proxy Card

- Proxy Statement (definitive) (DEF 14A) (5)





Election of Directors — The Board of Directors recommends a voteFORthelisted nominee.
1.Proposal to elect as director David Sugish*ta to serve for a three-year term as ClassIIdirector.
01 - David Sugish*taoo


Issue — The Board of Directors recommends a voteFORthe followingproposal.

2. Proposal to ratify the appointment of Deloitte & Touche LLPas Immersion’s independent registered public accountingfirm for the year ending December31, 2010.



Non-Voting Items
Change of Address— Please print new address below.Meeting Attendance
Mark box to the rightif you plan to attendthe Annual Meeting.o


Authorized Signatures — Sign Here — This section must be completed for your instructions to be executed.

This Proxy should be marked, dated and signed by the stockholder(s) exactly as his orher name appears hereon, and returned promptly in the enclosed envelope. Persons signing ina fiduciary capacity should so indicate. If shares are held by joint tenants or ascommunity property, all such stockholders should sign.

Date(mm/dd/yyyy) — Please print date below.

Signature 1— Please keep signature within the box.Signature 2— Please keep signature within the box.


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- Proxy Statement (definitive) (DEF 14A) (6)


to be held on June4, 2010

This Proxy is solicited on behalf of the Board of Directors

The undersigned stockholder of IMMERSION CORPORATION, a Delaware corporation (the“Company”), hereby acknowledges receipt of the Notice ofAnnual Meeting of Stockholders and Proxy Statement, each dated April29, 2010, and herebyappoints Victor Viegas and Amie Peters, or either of them,proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in thename of the undersigned, to represent the undersigned at theAnnual Meeting of Stockholders of IMMERSION CORPORATION to be held on Friday, June4, 2010,at 9:30 a.m., local time, at the Techmart Network Meeting Center, 5201 Great AmericaParkway, Santa Clara, California 95054, and for any adjournment or adjournments thereof, andto vote all shares of common stock, which the undersigned would be entitled to vote if thenand there personally present, on the matters set forth on the reverse side. Under Delawarelaw and the Company’s bylaws, no business shall be transacted at an annual meeting otherthan the matters stated in the accompanying Notice of Meeting, which matters are set forthon the reverse side. However, should any other matter or matters properly come before theAnnual Meeting, or any adjournment or adjournments thereof, it is the intention of the proxyholders named above to vote the shares they represent upon such other matter or matters attheir discretion.


Please mark, sign, date and return the proxy card promptly, using the enclosed return-addressedpostage-paid envelope.


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