Company: IPGP
Filing Date: 2025-04-07
Form Type: DEF 14A
Source: 0001111928-25-000054
Chunk: 73

Company: IPG PHOTONICS CORP
Filing Date: 2025-04-07
Form: DEF 14A
Chunk 73
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#### Certain Federal Income Tax Considerations
The following is a general description of the current U.S. federal income tax consequences to participants and the Company relating to stock options, stock appreciation rights, restricted stock, stock units, performance units, performance shares and cash awards under the 2025 Plan. The 2025 Plan is not qualified under Section 401(a) of the Code. This discussion only applies to U.S. citizens and/or residents and does not purport to cover all tax consequences relating to awards granted under the 2025 Plan. This description is intended for use by the Company’s stockholders in determining how to vote at the Company’s 2025 Annual Meeting of Stockholders and not as tax advice to persons who receive awards under the 2025 Plan.

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Proposal 3: Approval of the 2025 Incentive Compensation Plan

Non-Qualified Stock Options. A participant generally will not recognize income, and the Company will not be entitled to a federal income tax deduction, at the time of grant of a non-qualified stock option. When the stock option is exercised, the participant generally will recognize ordinary income equal to the difference, if any, between the aggregate exercise price paid and the fair market value, as of the date the stock option is exercised, of the shares received. The participant’s tax basis in shares acquired upon exercise will equal the exercise price paid plus the amount recognized by the participant as ordinary income. The Company generally will be entitled to a federal income tax deduction in the tax year in which the stock option is exercised, equal to the ordinary income recognized by the participant as described above. If the participant holds shares acquired through exercise of a non-qualified stock option for more than one year after the exercise of the stock option, the gain or loss realized upon the sale of those shares generally will be a long-term capital gain or loss. The participant’s holding period for shares acquired upon the exercise of a stock option will begin on the date of exercise.

Incentive Stock Options. A participant generally will not recognize income, and the Company will not be entitled to a federal income deduction, at the time of grant of an incentive stock option. If the incentive stock option is exercised during employment, or within three months thereafter (or one year in the case of a permanently and totally disabled employee), the participant generally will not recognize any income upon exercise and the Company will not be entitled to a federal income tax deduction. However, the excess of the fair market value of the shares acquired on the date of