Company: IPGP
Filing Date: 2025-04-07
Form Type: DEF 14A
Source: 0001111928-25-000054
Chunk: 35

Company: IPG PHOTONICS CORP
Filing Date: 2025-04-07
Form: DEF 14A
Chunk 35
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 Objective and Funding Mechanism/Determination
In February 2024, the Compensation Committee set the financial performance goals for the year based upon the best available information at the time. The goals were challenging and were expected to incentivize the NEOs to advance IPG’s strategic and operational priorities. The funding levels for the 2024 AIP, as originally set in February 2024, for the achievement of the performance criteria range from 0% to 267% of the target financial performance payout, depending on the achievement of such criteria. The following table sets forth the original threshold, targets and maximum financial performance levels under the AIP approved in February (the "Original AIP"):

|                    |     | Original AIP                     |     |       |     |                |     |                |
|                    |     | 2024 Financial Performance Goals |     |       |     |                |     |                |
| Financial Metric   |     | Threshold                        
 (50% funding)                    |     |       |     |         Target 
 (100% funding) |     |        Maximum 
 (267% funding) |
| Net Sales ($M)     |     |                                  |     | 1,065 |     |          1,183 |     |          1,302 |
| Adjusted EBIT ($M) |     |                                  |     |   144 |     |            214 |     |            265 |

In August 2024, the broader macroeconomic environment led the Board to revise expectations for fiscal 2024. As a result, the Committee undertook a review and determined that financial performance measures and targets in the Original AIP were no longer appropriate to incentivize management to create long-term stockholder value in light of macroeconomic uncertainty, which impacted industrial and e-mobility markets and were outside of management's control. This uncertainty weighed on demand, leading to substantially lower revenue compared to the Company's 2024 annual operating plan earlier approved by the Board. The Compensation Committee considered, among other factors, the challenging demand environment across the Company's key economic regions and that uncertainty across all major geographies was likely to weigh on demand for the remainder of the year. The Committee also considered independent third-party market data and purchasing managers indices which reflected lower levels of industrial purchasing across the Company’s principal markets. In light of the Board's revised expectations for performance for the remainder of 2024, and taking into account management’s strong financial and operational execution to date in the year, including cost reductions