---

1.	the election of three directors, Lynn Brubaker, Jeffrey A. Graves, Ph.D., and Simon Raab, Ph.D., to the Board of Directors, each to serve for a three-year term expiring at the Annual Meeting of Shareholders in 2021;

2.	the ratification of Grant Thornton LLP as our independent registered public accounting firm for 2018;

3.	a non-binding resolution to approve the compensation of our named executive officers;

4.	the approval of amendments to our 2014 Incentive Plan; and

5.	any other business that may properly come before the Annual Meeting or any postponements or adjournments of the Annual Meeting.

---

---

---

---

---

---

1.	the election of three directors, Lynn Brubaker, Jeffrey A. Graves, Ph.D., and Simon Raab, Ph.D., to the Board of Directors, each to serve for a three-year term expiring at the Annual Meeting of Shareholders in 2021;

2.	the ratification of Grant Thornton LLP as our independent registered public accounting firm for 2018;

3.	a non-binding resolution to approve the compensation of our named executive officers; and

4.	the approval of amendments to our 2014 Incentive Plan.

•	The Notice of 2018 Annual Meeting of Shareholders;

•	This Proxy Statement for the Annual Meeting; and

•	Our 2017 Annual Report, which includes our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on February 21, 2018 (the “Annual Report”).

---

•	View our proxy materials for the Annual Meeting; and

•	Instruct us to send future proxy materials to you by e-mail.

---

•	over the Internet, through the website shown on your Notice or proxy card;

•	by telephone, by calling toll-free 1-800-690-6903 in the United States from any touch-tone telephone and following the instructions; or

•	If you received a printed set of proxy materials, by mailing your signed proxy card in the postage paid envelope provided.

•	FOR the election of Lynn Brubaker, Jeffrey A. Graves, Ph.D., and Simon Raab, Ph.D. to the Board of Directors;

•	FOR the ratification of Grant Thornton LLP as our independent registered public accounting firm for 2018;

---

•	FOR the approval of the compensation of our named executive officers; and

•	FOR the approval of amendments to our 2014 Incentive Plan.

•	properly completing and signing another proxy card with a later date and returning the proxy card prior to the Annual Meeting;

•	voting again by telephone or the Internet until 11:59 pm, Eastern time, on May 10, 2018;

•	giving written notice of your revocation to FARO Technologies, Inc., Attention: Secretary, 250 Technology Park, Lake Mary, Florida 32746, prior to or at the Annual Meeting; or

•	voting in person at the Annual Meeting.

---

---

---

---

---

---

---

•	reviews and approves operating, organizational, financial and strategic plans;

•	reviews our operational, financial and strategic performance;

•	oversees and evaluates management’s systems for internal control, financial reporting and public disclosure;

•	oversees our global risk management;

•	establishes corporate governance standards;

•	selects, evaluates and compensates our executive officers, including the CEO;

•	oversees and evaluates senior management performance and compensation; and

•	plans for effective development and succession of the CEO and senior management.

---

---

•	provide oversight regarding our accounting and financial reporting process, system of internal control, external and internal audit process, and our process for monitoring compliance with laws and regulations;

•	review the independence and qualifications of our independent public accountants and our financial policies, control procedures and accounting staff;

•	review and make appropriate inquiry of financial performance and financial position, including comparison of actual to budgeted results;

•	appoint and oversee our independent public accountants;

•	oversee internal audit and compliance functions;

•	review and approve our financial statements and other regulatory filings; and

•	review transactions between the Company and any officer or director, any entity in which an officer or director of the Company has a material interest, or any other related person transactions.

•	reviewing our operational performance against certain predetermined metrics;

•	focusing on improving our short-term and long-term operating performance and continuously reviewing the metrics against which we measure our performance;

•	meeting with executives and department heads to review progress against operational goals; and

•	addressing operational risk management issues.

•	examination of management and leadership development and programs;

•	review of the design of incentive plans;

•	review and approval of senior management objectives;

•	evaluation of the performance of all officers at the senior executive team level;

•	making bonus and equity incentive award determinations in accordance with our short-term incentive plan and our long-term equity plan, respectively;

•

consultations with Pearl Meyer & Partners (“Pearl Meyer”), the compensation consultant to the Compensation Committee for 2017 board and executive compensation, and Compensia, Inc. (“Compensia”), the compensation consultant to the Compensation Committee for 2018 board and executive compensation, regarding, among other matters, updated market data and compensation trends generally and specific updated market data regarding compensation for the CEO and certain other named executives officers;

•	establishment of executive compensation for 2017 and 2018; and

---

•	addressing other compensation and employment matters, including specific review of the performance of our President and CEO.

•	ensuring that the philosophy and operation of our compensation program reinforce our culture and values, create a balance between risk and reward, attract, motivate and retain executives over the long-term and align their interests with those of our shareholders;

•	overseeing our long-term equity plans, including reviewing and approving changes in such plans, granting equity awards to officers at the Vice President level and above reporting to the President and CEO, as well as approving the total amount of equity grants below the Vice President level and related parameters of such grants;

•	advising on selection of certain executive officer positions;

•	establishing the terms of all executive severance and change in control benefits;

•	reviewing and approving on an annual basis long-term and short-term corporate objectives relevant to the CEO’s compensation, evaluating the CEO’s performance not less than semi-annually in light of those objectives and, without the input or participation of the CEO, approving the overall compensation levels for the CEO based on such evaluations;

•

reviewing and approving, with the input and recommendation of the CEO, the annual base salaries, annual incentive and other compensation arrangements of all other named executive officers and all other Senior Vice Presidents and Vice President level employees, including reviewing and approving on an annual basis long-term and short-term corporate objectives relevant to their performance evaluation and compensation, as well as approving the total amount of short-term incentives below the Vice President level and related parameters;

•	reviewing and monitoring all compensation and significant benefit plans that affect all employees and annually approving overall employee salary policies, as well as equity-based programs for all levels of employees;

•	monitoring compliance with requirements under the Sarbanes-Oxley Act of 2002 relating to 401(k) plans and loans to directors and officers and compliance with all other applicable laws affecting employee compensation and benefits;

•	reviewing and recommending any proposed changes in director compensation to the Board;

•	reviewing and discussing with management the Compensation Discussion and Analysis that is included in our proxy statement for our annual meeting of shareholders;

•	preparing the report of the Compensation Committee for inclusion in the proxy statement; and

•

engaging, on an as-needed basis, the services of outside experts in areas of compensation and benefits practices. Specifically, the Compensation Committee has engaged Compensia, a compensation expert, to informally update the Compensation Committee on an annual basis and from time to time on matters that have been delegated to the Compensation Committee and from time to time to provide a formal executive and director compensation study, including recommended best practices and median compensation at comparable companies.

---

•	each director must display high personal and professional ethics, integrity and values;

•	each director must have the ability to exercise sound business judgment and demonstrate basic financial literacy;

•	each director must be highly accomplished in his or her respective field, with broad experience and demonstrated senior level leadership in business, government, education, technology or public interest;

•	each director must have relevant expertise and experience, and be able to offer advice and guidance based on that expertise and experience;

•	each director must be independent of any particular constituency, be able to represent all shareholders of the Company and be committed to enhancing long-term shareholder value; and

•	each director must have sufficient time available to devote to activities of the Board and to enhance his or her knowledge of our business.

---

---

---

(1)	Includes cash retainers earned by each non-employee director during the year ended December 31, 2017.

(2)	Reflects the grant date fair value of restricted stock awards granted to our non-employee directors in 2017, determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation (“FASB ASC Topic 718”). The grant date fair value of the restricted stock awards is based upon the closing price of our common stock on the grant date.

(3)	As of December 31, 2017, our non-employee directors held the following aggregate number of shares of restricted stock (they did not hold any stock options):

---

(4)	Dr. Graves and Mr. Wasserman joined our Board on December 11, 2017 and each received a pro rata portion of the annual cash retainer paid to non-employee directors.

(a)

Payable 50% in cash and 50% in shares of restricted stock. Shares of restricted stock will be granted annually on the day following the annual meeting of shareholders, and the number of shares to be granted will be determined by dividing the dollar value of the retainer by the closing price of our common stock on the date of grant. The shares of restricted stock will vest on the day prior to the following year’s annual meeting date, subject to the Lead Director’s or non-employee Chairman’s, as applicable, continued membership on the Board as of such date.

(b)

Upon election to the Board, each non-employee director will receive shares of restricted stock with a value equal to $100,000, calculated by using the closing price of our common stock on the date of the non-employee director’s election to the Board. The initial restricted stock grant vests on the third anniversary of the grant date, subject to the non-employee director’s continued membership on the Board as of such date.

(c)

On the day following the annual meeting of shareholders, each director receives shares of restricted stock with a value equal to that indicated in the above chart, calculated by using the closing price of our common stock on the day following the annual meeting of shareholders. The annual restricted stock grant vests the day prior to the following year’s annual meeting date, subject to a director’s continued membership on the Board as of such date.

---

---

---

(1)	Amounts for 2017 and 2016 include the audit of financial statements, review of financial statements included in Quarterly Reports on Form 10-Q, audit of the effectiveness of our internal control over financial reporting and statutory audits required internationally.

(2)	Amounts for 2017 and 2016 include fees related to the audit of our employee benefit plan.

---

---

---

---

---

◦	FARO QuantumS FaroArm® - This introduction is certified to ISO 10360 - 12:2016. The QuantumS tests to the International Electrical Commission (IEC 60068-2) standards for shock, vibration and temperature stress relief of electro-mechanical or electronic equipment and devices.

◦	FARO FocusS 70 - This addition to the FARO Focus laser scanner portfolio provides industrial grade performance, which includes an Ingress Protection Rating for use in high particulate and wet weather conditions, high dynamic range imaging and extended temperature range.

◦	FARO FocusM 70 - This addition to the FARO Focus laser scanner portfolio provides an entry point for all professional users considering laser scanning in the Construction BIM-CIM and Public Safety Forensics markets.

◦	FARO VantageS and VantageE Laser Trackers - The VantageS is intended for short-to-long range measurement applications of up to 80 meters, while the VantageE supports short-to-medium range applications of up to 25 meters.

◦	FARO PointSense 18.0 Software Suite – This software platform delivers seamless integration into the latest 2018 AutoCAD® and Revit® (registered trademarks of Autodesk) design tools.

◦	FARO CAM2 Measure 10.5 – This software platform provides users with streamlined analysis and visual reporting. Workflow efficiencies are enhanced through programming data analysis to reduce required training time and minimize operator errors.

◦	FARO Zone – This platform enables investigators to move fluidly between two dimensional and 3D environments for public safety professionals. The application is used for presentations in courtroom exhibits, and enhances the ability of public safety professionals to plan for and respond to emergencies by creating accurate representations of real-world locations within local communities.

◦	FARO SCENE 7.0 – This software platform includes the quality and functionality of SCENE 6.2, such as automatic object recognition, scan registration and position. It adds additional functionality by enabling 3D scan data, whether it be from a single scan or multiple scans in process simultaneously, to be wirelessly transmitted directly to an onsite computer workstation in real time.

---

---

(1)

Effective upon his appointment as our President and Chief Executive Officer in December 2015, Dr. Raab’s base salary was set at $500,000 by the Compensation Committee. In February 2017, after evaluating Dr. Raab’s role as our President and Chief Executive Officer and as a Director and Chairman of the Board, the Compensation Committee approved an increase of Dr. Raab’s base salary to $750,000, while removing his eligibility to receive the director and

---

(2)	In December 2016, Mr. Seidel was promoted to our Chief Financial Officer role with a base salary of $265,000.

(3)	Ms. Hall’s and Mr. Arezone’s base salaries were increased effective February 2017, to align with their increased management responsibilities.

---

---

---

•	We do not offer newly-hired executives any “single-trigger” change-in-control cash severance features similar to a lump sum cash payment payable upon the occurrence of a change in control.

•	The Amended and Restated Change in Control Severance Policy does not provide an excise tax gross-up.

•	The 2014 Incentive Plan prohibits cash buyouts of stock options.

•	We maintain a compensation clawback policy, as further described on page 38 of this Compensation Discussion and Analysis.

•

We have a stock ownership policy for our non-employee directors and executive officers, as further described on pages 21 and 37-38 of this Proxy Statement, respectively. Among other things, this policy provides that our CEO must hold at least six times his base salary in Company common stock, our other executives must hold at least two times their respective base salaries in Company stock, and our non-employee directors must own Company stock with a value of at least $300,000.

•	Our Company policy prohibits hedging and pledging Company securities by our directors and executive officers.

•	The Compensation Committee has determined that the work of its current compensation consultant, Compensia, Inc. (“Compensia”) and its prior compensation consultant, Pearl Meyer & Partners (“Pearl Meyer”) has not raised any conflicts of interest.

•

The Compensation Committee has retained compensation consultants from time to time, including for formal executive and director compensation studies in 2010, 2012 and 2015. Such consultants are frequently consulted during the year on various matters and annually to informally update the Compensation Committee on matters that are relevant to the matters delegated to the committee under its charter.

•	Based on observations from the Compensation Committee’s previous independent compensation consultant Pearl Meyer, which were consistent with those shared by management and by certain investors who have communicated concerns to the Company with respect to such incentive programs, the Compensation Committee:

▪	adopted a simpler short-term cash incentive plan beginning in 2016, in which awards for executives could be earned based on achievement of financial performance goals for revenue and profitability, which amount would then be multiplied by an individual performance factor normalized at 1.0; and

▪	transitioned to a simpler long-term equity incentive program that granted time-based equity incentive awards consisting of stock options and restricted stock units, with the number of awards granted to each participant based on his or her targeted long-term equity incentive award percentage, multiplied by an individual performance factor normalized at 1.0.

•

consultations regarding, among other matters, (i) updated market data and compensation trends generally; (ii) specific updated market data regarding compensation for the CEO, Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer and Chief People Officer roles; (iii) high-level evaluation of our executive compensation program relative to best practices; and (iv) the views of various proxy advisory firms; and

---

•	assisting with the development of the Compensation Discussion and Analysis for the proxy statement filed in connection with our 2017 Annual Meeting of Shareholders.

•	consultations regarding, among other matters, (i) updated market data and compensation trends generally; (ii) specific updated market data regarding compensation for each of our executive officer roles; and (iii) high-level evaluation of our executive compensation program relative to best practices.

---

---

•	35% reduction after the age of 65;

•	an additional 25% of the original amount at the age of 70; and

•	an additional 15% of the original amount at the age of 75.

---

---

(1)	Salary adjustments, if any, are applied each year in March. Accordingly, the amounts in this column, which represent actual amounts earned in the applicable fiscal year, may differ from the base salary amounts discussed in the Compensation Discussion and Analysis.

(2)	The amounts shown in this column for 2016 represent the discretionary cash bonus awarded to the named executive officers for 2016 and paid in 2017, and for 2017 represent the discretionary cash bonus awarded to the named executive officer for 2017 and paid in 2018, as described in the Compensation Discussion and Analysis under “Executive Compensation Components—Short-Term Incentives.”

(3)

Reflects the grant date fair value of stock and option awards granted in the applicable year, determined in accordance with FASB ASC Topic 718. The assumptions used in the calculation of the grant date fair values of the option awards and RSUs are included in Note 13 (“Stock Compensation Plans”) to our audited financial statements for the fiscal year ended December 31, 2017, included in our Annual Report on Form 10-K filed with the SEC on February 21, 2018.

(4)	The amounts shown in this column reflect the named executive officer’s annual short-term incentive awards earned during the reported year but paid in the following year.

(5)	Includes for 2017:

(6)

The amounts shown for Dr. Raab include the following compensation he received for his service as the Chairman of the Board and as a member of the Board of Directors in 2016. In February 2017, after evaluating Dr. Raab’s role as our President and Chief Executive Officer and as a Director and Chairman of the Board, the Compensation Committee approved an increase of Dr. Raab’s base salary to $750,000, while removing his eligibility to receive the director and Chairman cash retainers and equity grants:

---

▪	the median of the annual total compensation of all employees of our company (other than our CEO) was $58,425; and

▪	the annual total compensation of our CEO, as presented in the Summary Compensation Table, was $2,464,725.

---

(1)	Reflects possible payout opportunities under our short-term cash incentive award program. Additional information about our short-term cash incentive award program is included in the Compensation Discussion and Analysis under “Executive Compensation Components.”

(2)	For named executive officers other than Dr. Raab, reflects time-based RSUs granted under the 2014 Incentive Plan, as described in the Compensation Discussion and Analysis.

(3)	Reflects time-based stock options granted under the 2014 Incentive Plan, as described in the Compensation Discussion and Analysis.

(4)	Determined pursuant to FASB ASC Topic 718. The assumptions used in the calculation of the grant date fair values of the option awards and RSUs are included in Note 13 (“Stock Compensation Plans”) to our audited financial statements for the fiscal year ended December 31, 2017, included in our Annual Report on Form 10-K filed with the SEC on February 21, 2018.

---

(1)	Based on the closing price of our common stock of $47.00 on December 29, 2017, the last trading day of the most recently completed fiscal year, as reported on Nasdaq.

(2)	The stock options vest in three equal annual installments beginning March 3, 2018.

(3)	The remaining 50% will vest on December 7, 2018, subject to his continued membership on the Board of Directors of the Company.

(4)	The stock options vest in three equal annual installments beginning March 2, 2017.

---

(5)	The stock options are earned and vest in three annual installments beginning in 2016 contingent on meeting certain performance targets described in the Company’s long-term incentive program in fiscal years 2015, 2016 and 2017.

(6)	The RSUs vest on March 2, 2019, provided that the executive is employed by the Company on the vesting date.

(7)	The RSUs vest on March 3, 2020, provided that the executive is employed by the Company on the vesting date.

(8)	These RSUs vest in three annual installments beginning in 2016, contingent on meeting certain performance targets described in the Company’s long-term incentive program in fiscal years 2015, 2016 and 2017.

(9)	The stock option vested in three equal annual installments beginning February 27, 2016.

(1)	Value realized represents the number of shares underlying the exercised option multiplied by the difference between the fair market value of the shares on the exercise date and the exercise price of the option.

(2)

For Dr. Raab, reflects shares of restricted stock granted in 2016 that vested in 2017. For the other named executive officers, reflects RSUs granted in 2014, 2015 and 2016 that vested in 2017. Value realized represents the closing price of our common stock on the 2017 vesting dates multiplied by the number of shares vested. Upon the vesting of the RSUs, 53 and 15 shares were withheld from Ms. Hall and Mr. Arezone's vested RSUs for taxes, respectively.

---

---

•	a lump sum cash payment equal to the sum of (i) his or her highest annual rate of base salary during the 12-month period immediately prior to his or her date of termination, plus (ii) the average of the annual cash bonus earned by him or her during our last three completed fiscal years;

•	if the executive has not received an annual cash bonus for the fiscal year in which his or her employment is terminated, a cash payment equal to a prorated portion of the average annual cash bonus earned by him or her during our last three completed fiscal years; and

•	continuation of group medical and life insurance coverage for the executive (and his or her eligible dependents) for 12 months following the date of termination.

---

(1)

Reflects an amount equal to (i) the executive’s base salary plus the average of the annual cash bonus earned by the executive during our last three completed fiscal years, payable in a lump sum, plus (ii) if the executive has not received an annual cash bonus for the fiscal year in which the termination occurs, a pro rata share of the average of the annual cash bonus earned by the executive during our last three completed fiscal years payable pursuant to the Policy.

(2)	Reflects for Messrs. Seidel, Arezone, and Gale, and Ms. Hall an amount equal to the executive’s base salary, payable in installments over 12 months pursuant to their respective employment agreements.

(3)	Reflects a payment equal to three times the executive’s annual base salary with a maximum of $750,000, pursuant to the terms of the Vice President and Above Life Insurance Plan.

(4)	Reflects a payment equal to one year of benefits, pursuant to the terms of the Executive Long-Term and Short-Term Disability Plan.

---

(5)

All outstanding and unvested RSUs granted to the named executive officers prior to 2016 become fully vested upon their death or disability pursuant to the 2014 Incentive Plan and their equity award agreements. In addition, for Messrs. Seidel, Arezone, and Gale and Ms. Hall, their outstanding and unvested stock options and RSUs will become fully vested and exercisable as of the date of their termination without Cause or for Good Reason pursuant to their employment agreements or if we have provided written notice of non-extension of the employment period set forth in their employment agreements. In the event of a change in control:

▪	for Messrs. Seidel, Arezone, and Gale and Ms. Hall, all outstanding and unvested stock options and RSUs will become fully vested and exercisable pursuant to their employment agreements; and

▪	for Dr. Raab, his outstanding and unvested stock options granted in 2016 will become fully vested and exercisable pursuant to such equity award agreement, and his outstanding and unvested stock options granted in 2017 will become fully vested and exercisable pursuant to the 2014 Incentive Plan if such options are not converted, assumed or substituted in connection with the change in control.

(6)	Reflects the value of continued coverage to the executive under our employee welfare benefit plans for 12 months based on 2017 rates for the applicable time period pursuant to the Policy.

---

(1)	Consists of the 2009 Equity Plan and the 2014 Incentive Plan.

(2)	We had 1,156,763 options outstanding as of December 31, 2017, all of which are included in column (a). We also had 237,938 RSUs outstanding as of December 31, 2017, which are included in column (a), and 19,554 shares of restricted stock, which are not included in column (a).

(3)	Calculation of weighted average exercise price of outstanding awards includes stock options but does not include RSUs that convert to shares of common stock for no consideration. Weighted average remaining life of stock options is 4.3 years.

(4)

Of such shares, all are available for issuance pursuant to grants of full-value awards. In addition to this amount, the number of shares available for issuance under the 2014 Incentive Plan includes any shares underlying awards outstanding under the 2009 Equity Plan and 2004 Equity Plan as of the effective date of the 2014 Incentive Plan that thereafter terminate or expire unexercised, or are canceled, forfeited or lapse for any reason.

(5)	We do not maintain any equity compensation plans that have not been approved by our shareholders.

---

•

Increase the maximum number of shares available for grant under the 2014 Incentive Plan by an additional 1,000,000 shares, from 1,974,543 shares to 2,974,543 shares, plus the number of shares (not to exceed 891,960) underlying awards outstanding under our 2009 Equity Incentive Plan as of May 29, 2014 that thereafter terminate or expire unexercised, or are cancelled, forfeited or lapse for any reason. Of the shares previously authorized, approximately 707,120 shares remained available for new grants as of March 20, 2018. The maximum number of shares of common stock available for the grant of awards under the 2014 Incentive Plan, as proposed to be amended (the “Amended Plan”), is subject to adjustment for corporate events such as recapitalizations, stock splits, stock dividends and other corporate events.

•	Utilize a fungible share pool design so that each share covered by a full-value award, such as a restricted stock, stock unit or performance award payable in our common stock, counts as 1.7 shares (rather than 1.0 shares) against the share reserve.

•	Make all dividends and dividend equivalents accrued pursuant to unvested full-value awards subject to the same restrictions as the underlying award and provide that such dividends or dividend equivalents may not be paid or distributed until the vesting provisions of the underlying full-value award are satisfied.

---

•

No repricing of stock options or SARs. The Amended Plan prohibits the repricing of stock options or stock appreciation rights (“SARs”) without shareholder approval. This prohibition includes reducing the exercise price or base price after the date of grant or replacing, regranting or canceling a stock option or SAR for cash or another award (including following a participant’s voluntary surrender of underwater stock options or SARs).

•	No discounted stock options or SARs. All stock options and SARs must have an exercise price or base price equal to or greater than the fair market value of the underlying stock on the date of grant.

•	No liberal change-in-control definition. The change-in-control definition contained in the Amended Plan is not a “liberal” definition that would be activated on mere shareholder approval of a transaction.

•	No award may be transferred for value. The Amended Plan prohibits the transfer of unexercised, unvested or restricted awards to independent third parties for value.

•	No dividends or dividend equivalents on unvested or unearned awards. The 2014 Incentive Plan currently provides that dividends and dividend equivalents on unvested but earned awards are paid as accrued. The Amended Plan prohibits the current payment of dividends or dividend equivalent rights on unearned or unvested awards.

•	Fungible share pool. The Amended Plan utilizes a fungible share pool design under which each share covered by a full-value award counts as 1.7 shares against the share reserve, thereby helping reduce the dilutive effects of the Amended Plan for our shareholders.

•

Minimum vesting. Subject to certain limited exceptions, full-value awards, options and SARs granted under the Amended Plan will either (i) be subject to a minimum vesting period of three years for employees (which may include graduated vesting within such three-year period), one year if the vesting is based on performance criteria other than continued service, or one year for non-employee directors or (ii) be granted solely in exchange for foregone cash compensation.

---

•	options to purchase shares of our common stock, which may be designated under the Code as non-statutory stock options (which may be granted to all participants) or incentive stock options (which be granted to officers and employees but not to non-employee directors);

•	stock appreciation rights, which give the holder the right to receive the difference (payable in cash or stock, as specified in the award agreement) between the fair market value per share of common stock on the date of exercise over the base price of the award (which cannot be less than the fair market value of the underlying stock as of the grant date);

•	restricted stock, which is subject to restrictions on transferability and subject to forfeiture on terms set by the Compensation Committee;

•	restricted or deferred stock units, which represent the right to receive shares of our common stock (or an equivalent value in cash or other property, as specified in the award agreement) in the future, based upon the attainment of stated vesting or performance criteria in the case of RSUs;

•	performance awards, which are awards payable in cash or stock upon the attainment of specified performance goals (any award that may be granted under the Amended Plan may be granted in the form of a performance award);

•	other stock-based awards in the discretion of the Compensation Committee, including unrestricted stock grants; and

•	any other right or interest related to stock or cash.

---

---

---

---

---

(1)	Includes 44,315 shares held by Xenon Research, Inc., over which Dr. Raab and his spouse have investment control, and 110,000 shares held by a revocable trust of which Dr. Raab is settlor and trustee. Also includes options to purchase (i) 42,599 shares at $29.98 per share, (ii) 34,737 shares at $39.05 and (iii) 36,083 shares at $34.55.

(2)	Includes 2,873 shares of restricted stock.

(3)	Includes 4,022 shares of restricted stock. Includes 490 shares held by Shanklin Investments in trust for Mr. Cole, who holds such shares in trust from Snow Powder Ridge Limited, a company owned by Mr. Cole, his wife and his children, 7,000 shares held by Snow Powder Ridge Limited., and 21,380 shares held by Seeonee Inc., over which Mr. Cole has investment control.

(4)	Includes 2,873 shares of restricted stock.

(5)	Includes 2,873 shares of restricted stock.

(6)	Includes 2,873 shares of restricted stock and 8,200 shares held by the Cornelius-Brubaker Trust.

(7)	Includes 2,020 shares of restricted stock.

(8)	Includes 2,020 shares of restricted stock.

(9)	Includes options to purchase (i) 26,252 shares at $38.57 per share, (ii) 3,552 shares at $57.54 per share, (iii) 4,610 shares at $59.97 per share, (iv) 17,090 shares at 33.05 per share and (v) 7,902 shares at $34.55 that are currently exercisable.

---

(10)	Includes options to purchase (i) 13,597 shares at $49.60 per share, (ii) 3,556 shares at $59.97 per share and (iii) 5,167 shares at $34.55 that are currently exercisable.

(11)	Includes options to purchase (i) 3,122 shares at $57.01 per share, (ii) 1,215 shares at $57.54 per share and (iii) 5,727 shares at $60.76 that are currently exercisable.

(12)	Includes options to purchase (i) 2,000 shares at $43.33 per share, (ii) 3,000 shares at $59.97 per share, (iii) 3,231 shares at $33.05 and (iv) 3,721 shares at $34.55 that are exercisable currently or within 60 days of March 16, 2018.

(13)	Includes options to purchase 220,403 shares that are exercisable currently or within 60 days of March 16, 2018. Also includes 267 shares of restricted stock.

(14)

The number of shares reported is based on the Schedule 13G/A filed with the SEC on February 27, 2018 by PRIMECAP Management Company, an investment advisor. The address of PRIMECAP Management Company is 177 E. Colorado Blvd., 11th Floor, Pasadena, CA 91105. According to the Schedule 13G/A, PRIMECAP Management Company has sole voting power with respect to 1,530,322 shares and sole dispositive power with respect to 1,780,500 shares.

(15)

The number of shares reported is based on the Schedule 13G/A filed with the SEC on January 19, 2018 by BlackRock, Inc., a parent holding company or control person. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. The Schedule 13G/A reports that BlackRock, Inc. has sole voting power with respect to 2,132,274 shares and sole dispositive power with respect to 2,168,887 shares. BlackRock, Inc. reported that the following of its subsidiaries acquired shares: BlackRock (Netherlands) B.V., BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Limited and BlackRock Investment Management, LLC, and reported that BlackRock Fund Advisors beneficially owns 5% or greater of the outstanding shares of our common stock.

(16)

The number of shares reported is based on the Schedule 13G/A filed with the SEC on February 9, 2018 by The Vanguard Group, Inc., an investment advisor. The Vanguard Group, Inc.’s address is 100 Vanguard Blvd., Malvern, PA 19355. According to the Schedule 13G/A, The Vanguard Group, Inc. has sole voting power with respect to 22,286 shares, sole dispositive power with respect to 1,565,213 shares, shared voting power with respect to 890 shares and shared dispositive power with respect to 21,366 shares. The Schedule 13G/A reports that Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 20,476 shares as a result of its serving as investment manager of collective trust accounts. The Schedule 13G/A also reports that Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 2,700 shares as a result of its serving as investment manager of Australian investment offerings.

(17)

The number of shares reported is based on the Schedule 13G filed with the SEC on February 12, 2018 by Barrow, Hanley, Mewhinney & Strauss, LLC, an investment advisor. The address of Barrow, Hanley, Mewhinney & Strauss, LLC is 2200 Ross Avenue, 31st Floor, Dallas, TX 75201-2761. The Schedule 13G reports that Barrow, Hanley, Mewhinney & Strauss, LLC has sole voting power with respect to 824,039 shares, shared voting power with respect to 378,800 shares and sole dispositive power with respect to 1,202,839 shares.

(18)

The number of shares reported is based on the Schedule 13G/A filed with the SEC on February 9, 2018 by Dimensional Fund Advisors LP, an investment advisor. The address of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, TX 78746. According to the Schedule 13G/A, Dimensional Fund Advisors LP has sole voting power with respect to 1,083,256 shares and sole dispositive power with respect to 1,134,721 shares.

---

•	Any person who is, or at any time since the beginning of our last fiscal year was, our executive officer or director or a nominee to become one of our directors;

•	Any shareholder beneficially owning in excess of 5% of our outstanding common stock;

•	Any immediate family member of any of the foregoing persons; or

•	Any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in which such person has a 10% or greater beneficial ownership interest.

•	The benefits to the Company from the proposed transaction;

•	The impact of the proposed transaction on the independence of the members of the Board, if applicable;

•	The availability of unrelated parties to perform similar work for a similar price in a similar timeframe;

•	The terms of the proposed transaction; and

•	The terms available to unrelated third parties or employees generally.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

•	revenue;

•	gross margin;

•	EBITDA;

---

•	return on equity;

•	return on investment;

•	return on capital employed;

•	return on net assets;

•	return on revenues;

•	operating income;

•	performance value added (as defined by the Committee at the time of selection);

•	pre-tax profits;

•	net income;

•	net income per Share;

•	working capital as a percent of net revenues;

•	net cash provided by operating activities;

•	market price per Share;

•	total shareholder return;

•	key operational measures, which shall be deemed to include new customer origination, customer penetration, customer satisfaction, employee safety, market share, plant utilization, cost containment, and cost structure reduction;

•	cash flow or cash flow per share;

•	net asset value or net asset value per share;

•	production volumes;

•	sales growth;

•	earnings per share;

•	cash from operations;

•	patent filings; and

•	product and technology developments and improvements.

---

---

---

---

---

---

---

---

---

---

---