UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

December 9, 2009

IRIDEX CORPORATION

(Exact name of registrant as specified in its charter)

1212 Terra Bella Avenue

Mountain View, California 94043

(Address of principal executive offices, including zip code)

(650) 940-4700

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

2010 Employee Incentive Program

On December 9, 2009, the Board of Directors of IRIDEX Corporation (the “Company”) adopted a 2010 employee incentive payment program (the “2010 Incentive Program”). The 2010 Incentive Program was adopted to provide cash incentive payouts to all eligible employees based upon Company profitability and individual performance. Executive officers and all other employees in good standing, except for commissioned sales personnel, are eligible to participate in the 2010 Incentive Program.

Funding for the 2010 Incentive Program is triggered when the Company achieves a minimum threshold of annual Operating Income, as determined by the Company’s Board of Directors and based upon the Company’s audited results of operations for the fiscal year ending January 1, 2011 (the “Targeted Operating Income”). When the Company’s annual Operating Income, after accounting for the cost of the incentive payout pool, is equal to or greater than the Targeted Operating Income, ten percent (10%) of Operating Income before the amount of the incentive payout pool will be allocated to fund the 2010 Incentive Program. By way of example, if the Company has annual Operating Income of $1.5 million, the 2010 Incentive Program payout pool will be $150,000. Operating Income is defined as gross profits less operating expenses and therefore does not include other income or expenses or taxes.

The 2010 Incentive Program provides for profit sharing & bonus payouts. Profit sharing & bonus payouts under the 2010 Incentive Program are calculated formulaically for each employee based upon the following factors: (1) Operating Income achieved by the Company, (2) the employee’s salary, (3) the employee’s grade level, (4) the employee’s individual performance during the year and (5) the number of months of service the employee has provided to the Company during the year. The Compensation Committee of the Board of Directors will approve the profit sharing & bonus distributions determined by senior management.

2010 Incentive Program payouts will be paid following the end of the fiscal year through profit sharing and bonus payouts by March 15 of the following year.

(d) Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: December 15, 2009

EXHIBIT INDEX