Document

DEF 14A 1 faro2022proxy.htm DEF 14A Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934 (Amendment No. ___)

Filed by the Registrant x

Filed by a Party other than the Registrant ¨

Check the appropriate box:


¨						Preliminary Proxy Statement

¨						Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x						Definitive Proxy Statement

¨						Definitive Additional Materials

¨						Soliciting Material Pursuant to §240.14a-12

FARO Technologies, Inc.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

Title of each class of securities to which transaction applies:

(2)

Aggregate number of securities to which transaction applies:

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate value of transaction:

(5)

Total fee paid:

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount previously paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

FARO TECHNOLOGIES, INC.

250 Technology Park

Lake Mary, Florida 32746

NOTICE OF 2022 ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 26, 2022

April 14, 2022

To our shareholders:

You are cordially invited to attend the 2022 Annual Meeting of Shareholders (the “Annual Meeting”) of FARO Technologies, Inc. (the “Company,” “FARO,” “we,” “us” or “our”) on May 26, 2022 at 9:00 a.m., Eastern Time. via a live webcast on the Internet at www.virtualshareholdermeeting.com/FARO2022. The Annual Meeting will again be held entirely online this year due to the ongoing public health impact of COVID-19. You will be able to attend and participate in the Annual Meeting online by visiting www.virtualshareholdermeeting.com/FARO2022, where you will be able to vote electronically and submit questions. You will not be able to attend the Annual Meeting in person. You will need the 16-digit control number included in your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials) to attend the Annual Meeting.

At the Annual Meeting, shareholders will vote on the following matters:

1.the election of three directors, Moonhie Chin, John Donofrio and Yuval Wasserman to the Board of Directors, each to serve for a three-year term expiring at the Annual Meeting of Shareholders in 2025;

2.the ratification of Grant Thornton LLP as our independent registered public accounting firm for 2022;

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

4.to approve the FARO Technologies, Inc. 2022 Equity Incentive Plan; and

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

Holders of record of FARO common stock at the close of business on March 25, 2022 are entitled to vote at the Annual Meeting.

FARO is pleased to be providing access to our proxy materials primarily by taking advantage of the Securities and Exchange Commission rule that allows issuers to furnish proxy materials to their shareholders over the Internet. On or about April 14, 2022, we will mail a Notice of Internet Availability of Proxy Materials (the “Notice”) to the majority of our shareholders, and on or about the same date, we will mail a printed copy of the proxy statement and a proxy card to shareholders who have requested to receive them. On the mailing date of the Notice, all shareholders will have the ability to access all of the proxy materials, including the proxy statement, on a website referred to in the Notice and the proxy statement. We believe this method allows us to provide you with the information you need more expeditiously, while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting.

Your vote is important, and it is important that your shares be represented at the Annual Meeting, no matter how many shares you own. Please promptly submit your proxy or voting instructions over the Internet or by telephone by following the instructions on the Notice and in the proxy statement so that your shares can be voted, regardless of whether you expect to attend the Annual Meeting online. If you received your proxy materials by mail, you may submit your proxy or voting instructions over the Internet or by telephone, or you may submit your proxy by marking, dating, signing and mailing the proxy card or voting instruction card using the postage paid envelope provided. If you attend the Annual Meeting online, you may withdraw your proxy and vote during the meeting electronically if you would like to do so.

Thank you for your continued support.

By Order of the Board of Directors,

Allen Muhich

Chief Financial Officer

2022 Proxy Statement Summary

The following is a summary of certain key disclosures in this Proxy Statement. This is only a summary, and it may not contain all of the information that is important to you. For more complete information, please review this Proxy Statement as well as our 2021 Annual Report on Form 10-K.

Annual Meeting of Shareholders


May 26, 2022, 9:00 a.m. Eastern Time									Record Date: March 25, 2022
www.virtualshareholdermeeting.com/FARO2022

Proposals to be Voted on and Board Voting Recommendations


Proposals			Recommendations

Elections of the following persons as directors:
• Moonhie Chin			FOR
• John Donofrio			FOR
• Yuval Wasserman			FOR
Ratification of Grant Thornton LLP as Auditors for 2022			FOR
Non-binding vote to approve the compensation of our named executive officers			FOR
Approval of the FARO Technologies, Inc. 2022 Equity Incentive Plan			FOR

TABLE OF CONTENTS


			Page
About the Meeting			2
Proposal 1: Election of Directors			8
Corporate Governance and Board Matters			12
2021 Director Compensation			23
Proposal 2: Ratification of Independent Registered Public Accounting Firm			26
Independent Public Accountants			27
Report of the Audit Committee			28
Proposal 3: Advisory Vote on Executive Compensation			29
Executive Officers			30
Executive Compensation			31
Proposal 4: Approval of the FARO Technologies, Inc. 2022 Equity Incentive Plan			51
Security Ownership of Certain Beneficial Owners and Management			57
Certain Relationships and Related Transactions			59
Delinquent Section 16(a) Reports			60
Other Matters to Come Before the Annual Meeting			61
Deadline for Receipt of 2022 Shareholder Proposals and Director Nominees			62
2021 Annual Report			63
Appendix A (Reconciliation of Non-GAAP Measures)			64
Appendix B (FARO Technologies, Inc. 2022 Equity Incentive Plan			67

FARO TECHNOLOGIES, INC.

250 Technology Park

Lake Mary, Florida 32746

PROXY STATEMENT FOR

2022 ANNUAL MEETING OF SHAREHOLDERS

This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the “Board of Directors” or the “Board”) of FARO Technologies, Inc. (“FARO,” the “Company,” “we,” “us” or “our”) for use at the 2022 Annual Meeting of Shareholders (the “Annual Meeting”), to be held on May 26, 2022 at 9:00 a.m., Eastern Time, via a live webcast on the Internet at www.virtualshareholdermeeting.com/FARO2022. The Annual Meeting will be held entirely online this year due to the ongoing public health impact of COVID-19. You will be able to attend and participate in the Annual Meeting online by visiting www.virtualshareholdermeeting.com/FARO2022, where you will be able to vote electronically and submit questions. You will not be able to attend the Annual Meeting in person. You will need the 16-digit control number included in your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials) to attend the Annual Meeting.

In accordance with the e-proxy rules adopted by the Securities and Exchange Commission (“SEC”), we are providing access to our proxy materials primarily by furnishing the proxy materials to our shareholders on the Internet, rather than mailing paper copies of the materials to each shareholder. On or about April 14, 2022, we will mail a Notice of Internet Availability of Proxy Materials (the “Notice”) to the majority of our shareholders, and on or about the same date, we will mail a printed copy of the Proxy Statement and a proxy card to shareholders who have requested to receive them. On the mailing date of the Notice, all shareholders will have the ability to access all of the proxy materials, including the Proxy Statement, on a website referred to in the Notice and this Proxy Statement. The Notice contains instructions on how to access and review the proxy materials, including the Proxy Statement and annual report to shareholders, over the Internet, how to request paper copies of the proxy materials and how shareholders can submit their proxies on the Internet. Brokerage firms and other nominees who hold shares on behalf of beneficial owners will be sending their own similar Notice.

Internet distribution of the proxy materials is designed to expedite receipt by shareholders, lower the cost of the Annual Meeting, and conserve natural resources. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice.

A list of shareholders entitled to vote at the Annual Meeting will be available for inspection by any shareholder at our principal executive offices at 250 Technology Park, Lake Mary, Florida 32746 for a period of ten days prior to the Annual Meeting. If you wish to inspect the list of shareholders prior to the Annual Meeting, please contact Nancy Setteducati at (407) 333-9911 to schedule an appointment. In addition, the shareholder list will be available during the Annual Meeting through the meeting website for those shareholders who choose to attend.

This Proxy Statement and our 2021 Annual Report, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, are available to shareholders at: www.proxyvote.com. Our 2021 Annual Report is not to be considered a part of these proxy materials or as having been incorporated by reference into this Proxy Statement.

ABOUT THE MEETING

What is the purpose of the Annual Meeting?

At the Annual Meeting, shareholders will vote on the following matters:

1.the election of three directors, Moonhie Chin, John Donofrio and Yuval Wasserman, to the Board of Directors, each to serve for a three-year term expiring at the annual meeting of shareholders in 2025;

2.the ratification of Grant Thornton LLP as our independent registered public accounting firm for 2022;

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

4.the approval of the FARO Technologies, Inc. 2022 Equity Incentive Plan.

Shareholders will also transact any other business that may properly come before the Annual Meeting. Once the business of the Annual Meeting is concluded, shareholders will have an opportunity to ask questions as time permits. Members of our management and representatives of Grant Thornton LLP, our independent registered public accounting firm, will be present to respond to appropriate questions from shareholders.

Why am I receiving these materials?

We have made these proxy materials available to you on the Internet or, upon your request, have delivered printed versions of these proxy materials to you by mail, in connection with our solicitation of proxies for use at the Annual Meeting. This Proxy Statement describes matters we would like you to vote on at the Annual Meeting. It also provides you with information about these matters so that you can make an informed decision. The Annual Meeting is scheduled to be held on May 26, 2022, at 9:00 a.m., Eastern Time. These proxy materials were first sent or made available to shareholders on or about April 14, 2022.

What is included in these proxy materials?

These proxy materials include:

•The Notice of 2022 Annual Meeting of Shareholders;

•This Proxy Statement for the Annual Meeting; and

•Our 2021 Annual Report, which includes our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 16, 2022 (the “Annual Report”).

If you requested printed versions of the proxy materials by mail, we will also include the proxy card or voting instruction form for the Annual Meeting.

Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

Pursuant to rules adopted by the SEC, we are using the Internet as the primary means of furnishing proxy materials to shareholders. Accordingly, we are sending a Notice to the majority of our shareholders. All shareholders will have the ability to access the proxy materials on the website referred to in the Notice or request a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or how to request a printed copy of the proxy materials may be found in the Notice. In addition, shareholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. We encourage shareholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our annual meetings and reduce our cost associated with the physical printing and mailing of materials.

I share an address with another shareholder, and we received only one Notice or one paper copy of the proxy materials. How can I obtain an additional copy of the proxy materials?

We have adopted an SEC-approved procedure called “householding.” Under this procedure, we may deliver a single copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to multiple shareholders who share the same address unless we have received contrary instructions from one or more of the shareholders. This procedure reduces the environmental impact of our annual meetings and reduces our printing and mailing costs. Shareholders who participate in householding will continue to receive separate proxy cards if they received a printed set of the proxy materials. Upon written or oral request, we will deliver promptly a separate copy of the Notice and, if applicable, this Proxy Statement and the Annual Report to any shareholder at a shared address to which we delivered a single copy of any of these documents.

To receive free of charge a separate copy of the Notice and, if applicable, this Proxy Statement or the Annual Report, or separate copies of any future notice, proxy statement or annual report, or if you are receiving multiple copies of the Notice, Proxy Statement and/or Annual Report and would like to receive only one copy, shareholders may write or call us at the following:

FARO TECHNOLOGIES, INC.

Attn: Nancy Setteducati

250 Technology Park

Lake Mary, Florida 32746

1-800-736-0234

How can I get electronic access to the proxy materials?

The Notice will provide you with instructions regarding how to use the Internet to:

•View our proxy materials for the Annual Meeting; and

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

Our proxy materials are also available at www.proxyvote.com. This website address is included for reference only. The information contained on, or accessible through, this website or our website is not incorporated by reference into this Proxy Statement.

Choosing to receive future proxy materials by e-mail will reduce the impact of our annual meetings on the environment and will save us the cost of printing and mailing documents to you. If you choose to receive future proxy materials by e-mail, you will receive an e-mail message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.

What is a proxy?

A proxy is your legal designation of another person, also referred to as a “proxy,” to vote your shares of stock on your behalf. The written document providing notice of the Annual Meeting and describing the matters to be considered and voted on is called a “proxy statement.” The document used to designate a proxy to vote your shares of stock is called a “proxy card.” Our Board has designated John Donofrio, Chairman of the Board, and Allen Muhich, Chief Financial Officer, as proxies for the Annual Meeting.

Who is entitled to vote?

Holders of our common stock outstanding as of the close of business on March 25, 2022 (the “Record Date”) are entitled to vote at the Annual Meeting. Each shareholder is entitled to one vote for each share of common stock such shareholder held on the Record Date.

If your shares are held by a bank or brokerage firm, you are considered the “beneficial owner” of shares held in “street name.” If your shares are held in street name, your bank or brokerage firm (the record holder of your shares) will forward a Notice or, if applicable, a printed set of these proxy materials, along with a voting instruction card, to you. As the beneficial owner, you have the right to direct your record holder how to vote your shares, and the record holder is required to vote your shares in accordance with your instructions. If you do not give instructions to your bank or brokerage firm, it will nevertheless be entitled to vote your shares with respect to “routine” items, but it will not be permitted to vote your shares with respect to “non-routine” items. In the case of a non-routine item, your shares will be considered “broker non-votes” on that proposal. Only Proposal 2, the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for 2022, is considered a routine matter on which brokers are permitted to vote shares held by them without instruction. If your shares are held through a broker, those shares will not be voted on Proposal 1, Proposal 3 or Proposal 4 unless you affirmatively provide the broker instructions on how to vote.

Who can attend the Annual Meeting?

All FARO shareholders, or individuals holding their duly appointed proxies, may attend the Annual Meeting online. Appointing a proxy in response to this solicitation will not affect a shareholder’s right to attend the Annual Meeting online. You will be able to vote your shares electronically during the meeting by logging in using the 16-digit control number included in your Notice of Internet Availability of the proxy materials, on your proxy card or on the voting instructions form accompanying these proxy materials.

Participation in the Virtual Annual Meeting

This year our Annual Meeting will be a completely virtual meeting. There will be no physical meeting location.

To participate in the virtual meeting, visit www.virtualshareholdermeeting.com/FARO2022 and enter the 16-digit control number included on your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials). You may begin to log into the meeting platform beginning at 8:45 a.m. Eastern Time on May 26, 2022. The meeting will begin promptly at 9:00 a.m. Eastern Time on May 26, 2022.

Stockholders will also have the opportunity to submit questions prior to the annual meeting at www.proxyvote.com by logging on with your control number or during the annual meeting through www.virtualshareholdermeeting.com/FARO2022. A technical support telephone number will be posted on the log-in page of www.virtualshareholdermeeting.com/FARO2022 that you can call if you encounter any difficulties accessing the virtual meeting during the check-in or during the meeting.

How do I vote?

If you own shares registered directly with our transfer agent on the close of business on the Record Date, you may vote:

•By Internet (before the Annual Meeting). You may vote over the Internet, by going to www.proxyvote.com. You will need the 16-digit control number included in your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials).

•By Telephone. You may vote by telephone, by calling toll-free 1-800-690-6903 in the United States from any touch-tone telephone and following the instructions. You will need the 16-digit control number included in your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials).

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

•During the Annual Meeting. You may vote during the annual meeting by going to www.virtualshareholdermeeting.com/FARO2022. You will need the 16-digit control number included in your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials). If you previously voted via the Internet (or by telephone or mail), you will not limit your right to vote online at the Annual Meeting.

If your shares are held in street name, your bank or brokerage firm will forward a Notice or, if applicable, a printed set of these proxy materials, as well as a voting instruction card, to you. Please follow the instructions on the Notice or voting instruction card to vote your shares. Your bank or brokerage firm may also allow you to vote by telephone or the Internet.

Beneficial owners of shares held in street name who wish to vote at the Annual Meeting will need to obtain a power of attorney or legal proxy from their record holder to do so.

How many shares must be present to hold the meeting?

A quorum of shareholders is necessary to hold a valid shareholders meeting and for shareholders to take action on a matter at the meeting. A majority of the 18,260,677 shares of common stock outstanding on the Record Date and entitled to be cast on any matter at the Annual Meeting must be represented, online or by proxy, to constitute a quorum for action on such matter at the Annual Meeting. If you vote, your shares will be included in the number of shares to establish the quorum. Shares that are voted “ABSTAIN,” properly executed proxy cards or voting instruction cards that are returned without voting instructions and shares treated as “broker non-votes” will be counted as present for the purpose of determining whether the quorum requirement is satisfied.

Once a share is represented at the Annual Meeting, it will be deemed present for quorum purposes throughout the Annual Meeting (including any adjournment or postponement of the Annual Meeting unless a new record date is or must be set for such adjournment or postponement).

If a quorum is not present at the scheduled time of the Annual Meeting, a majority of the shareholders who are present online or represented by proxy, at the meeting may adjourn the Annual Meeting to another date. The time and place of the adjourned meeting will be announced at the meeting at the time of adjournment, and no other notice will be given unless the Board of Directors fixes a new record date.

How are proxies voted?

All shares represented by valid proxies received prior to the taking of the vote at the Annual Meeting will be voted and, where a shareholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the shareholder’s instructions.

What is the effect of not voting?

If you are a registered shareholder and you submit a proxy but do not provide any voting instructions, your shares will be voted:

•FOR the election of Moonhie Chin, John Donofrio and Yuval Wasserman to the Board of Directors;

•FOR the ratification of Grant Thornton LLP as our independent registered public accounting firm for 2022;

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

•FOR the approval of the FARO Technologies, Inc. 2022 Equity Incentive Plan.

If you are a registered shareholder and you do not vote, your non-voted shares will not count toward the quorum requirement for the Annual Meeting or any proposal considered at the Annual Meeting. If a quorum is obtained, your non-voted shares will not affect the outcome of any proposal.

If you own shares in street name and do not instruct your bank or brokerage firm how to vote your shares, your bank, broker, or other holder of record may not vote your shares on non-routine matters such as Proposal 1—Election of Directors, Proposal 3—Advisory Vote on Executive Compensation and Proposal 4—Approval of the FARO Technologies, Inc. 2022 Equity Incentive Plan, and your shares will be considered broker non-votes on those proposals. However, it may vote your shares in its discretion on routine proposals such as Proposal 2—Ratification of Independent Registered Public Accounting Firm.

Abstentions (or “Withhold” votes for the election of directors) and broker non-votes will not affect the outcome of any proposals considered at the Annual Meeting.

Can I change my vote after I return my proxy card or vote by telephone or the Internet?

Yes. If you are a registered shareholder, even after you have submitted your proxy, you can change your vote by:

•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 25, 2022;

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

•voting online during the Annual Meeting.

Your presence online at the Annual Meeting will not in itself revoke your proxy; you must vote during the Annual Meeting electronically to revoke your proxy. Unless properly changed or revoked, the shares represented by proxies received prior to the Annual Meeting will be voted at the Annual Meeting.

If you hold your shares in street name, the above options for changing your vote do not apply, and you must instead follow the instructions received from your bank or broker to change your vote.

What are the Board’s recommendations on the proposals?

The Board recommends that you vote your shares as follows:

Proposal 1—FOR the election of the three nominees for director, Moonhie Chin, John Donofrio and Yuval Wasserman, each with a three-year term expiring at the annual meeting of shareholders in 2025;

Proposal 2—FOR the ratification of Grant Thornton LLP as our independent registered public accounting firm for 2022;

Proposal 3—FOR the approval of the compensation of our named executive officers; and

Proposal 4—FOR the approval of the FARO Technologies, Inc. 2022 Equity Incentive Plan.

What vote is required to elect the director nominees?

The affirmative vote of a plurality of the votes cast is required for the election of directors, which means that the two nominees for director receiving the greatest number of votes will be elected. If you vote “Withhold” with respect to one or more nominees, your shares will not be voted with respect to the person or persons indicated, although they will be counted for purposes of determining whether there is a quorum. Broker non-votes will have no impact on the outcome of the election of directors.

What happens if a nominee is unable to stand for election?

If a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have voted “Withhold” with respect to the original nominee.

How many votes are required to ratify the appointment of the Company’s independent registered public accounting firm?

The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for 2022 requires the affirmative vote of a majority of the votes cast by the shareholders. Abstentions will have no impact on the outcome of this matter. Because this matter is a routine proposal, there will be no broker non-votes associated with this proposal.

How many votes are required to approve the non-binding resolution on the compensation of the Company’s named executive officers?

The approval of the non-binding resolution to approve the compensation of our named executive officers requires the affirmative vote of a majority of the votes cast by the shareholders. Abstentions and broker non-votes will have no impact on the outcome of this matter.

How many votes are required to approve the FARO Technologies, Inc. 2022 Equity Incentive Plan?

The approval of FARO Technologies, Inc. 2022 Equity Incentive Plan requires the affirmative vote of a majority of the votes cast by the shareholders. Abstentions and broker non-votes will have no impact on the outcome of this matter.

Are there any other items to be discussed during the Annual Meeting?

We are not aware of any other matters that you will be asked to vote on at the Annual Meeting. If other matters are properly brought before the Annual Meeting and you have returned a proxy card, with or without voting instructions, or have voted by telephone or the Internet, the proxy holders will use their discretion in voting your shares on these matters as they may arise.

Who will count the vote?

The Carideo Group will count the vote and will serve as the inspector of election.

Who pays to prepare, mail, and solicit the proxies?

Proxies may be solicited by personal meeting, Internet, e-mail, advertisement, telephone, and facsimile machine, as well as by use of the mails. Solicitations may be made by our directors, officers, and other employees, none of whom will receive additional compensation for such solicitations. In addition, arrangements will be made, as appropriate, with banks, brokerage houses, and other custodians, nominees or fiduciaries to forward soliciting materials to the beneficial owners of our common stock, and we will reimburse such persons for their out-of-pocket expenses incurred in providing those services.

Where can I find the voting results of the Annual Meeting?

Preliminary voting results will be announced at the Annual Meeting. Final voting results will be tallied by the inspector of election after the taking of the vote at the Annual Meeting. We will publish the final voting results in a Current Report on Form 8-K, which we are required to file with the SEC within four business days following the Annual Meeting.

Will I receive a copy of the Annual Report?

You may obtain a copy of the Annual Report by writing to our Investor Relations department at 250 Technology Park, Lake Mary, Florida 32746, by calling 1-800-736-0234, by e-mailing our Investor Relations department at InvestorRelations@faro.com or by accessing www.proxyvote.com. Our Annual Report is not incorporated by reference into this Proxy Statement and is not considered proxy soliciting material.

Where can I find Corporate Governance materials for the Company?

Our Amended and Restated Articles of Incorporation, Amended and Restated Bylaws (the “Bylaws”), Code of Ethics for Senior Financial Officers, Global Ethics Policy and Corporate Governance Guidelines and the charters for the Audit Committee, the Talent, Development and Compensation Committee and the Nominating, Governance and Sustainability Committee of the Board of Directors are published on our website at www.faro.com/about-faro/leadership-and-governance. We are not including the information contained on or accessible through our website as a part of, or incorporating such information by reference into, this Proxy Statement.

How can I contact the members of the Board?

Shareholders may communicate with the full Board or individual directors by submitting such communications in writing to FARO Technologies, Inc., Attention: Board of Directors (or the individual director(s)), 250 Technology Park, Lake Mary, Florida 32746. Communications should be sent by overnight or certified mail, return receipt requested. Such communications will be delivered directly to the Board or the individual director(s), as designated on such communication. However, we reserve the right not to forward to Board members any abusive, threatening or otherwise inappropriate materials.

PROPOSAL 1

ELECTION OF DIRECTORS

THE BOARD OF DIRECTORS RECOMMENDS THAT OUR SHAREHOLDERS VOTE “FOR” THE ELECTION OF EACH OF MOONHIE CHIN, JOHN DONOFRIO AND YUVAL WASSERMAN TO THE BOARD OF DIRECTORS.

The Board is divided into three classes, as nearly equal as possible, with one class of directors elected each year for a three-year term. Each director’s term is subject to the election and qualification of his or her respective successor, or such director’s earlier death, resignation or removal. The Board currently consists of eight members.

The three nominees for director, Moonhie Chin, John Donofrio and Yuval Wasserman, are currently directors of the Company and are proposed to be elected at the Annual Meeting to serve until the 2025 annual meeting of shareholders. The remaining five directors, whose terms do not expire at the Annual Meeting, will continue to serve as members of the Board for the terms set forth below.

Directors are elected by a plurality of the votes cast, meaning that the three nominees receiving the highest number of affirmative votes cast for the election of directors at the Annual Meeting will be elected as directors. Shares may not be voted cumulatively, and proxies cannot be voted for a greater number of persons than the number of nominees named. If you received a printed set of proxy materials, shares voted by the accompanying proxy card will be voted “FOR” Moonhie Chin, John Donofrio and Yuval Wasserman, unless the proxy card is marked to withhold authority. If you vote “Withhold” with respect to one or more nominees, your shares will not be voted with respect to the person or persons indicated. Broker non-votes on the election of directors will have no impact on the outcome of the election. We have a director resignation policy for those director nominees who receive more “withhold” than “for” votes in uncontested elections, which requires such director nominees to tender their resignation to the Board following certification of the shareholder vote. The Nominating, Governance and Sustainability Committee will then act to determine whether to accept the director’s resignation and submit such recommendation for prompt consideration by the Board.

The names, ages, and principal occupations for at least the past five years of each of the nominees and directors whose terms will continue after the Annual Meeting, and the names of any other public companies of which each has served as a director during the past five years are set forth below. There are no family relationships between any of our directors or executive officers.

Nominees for Election at the Annual Meeting


Name	Age	Director Since	Term Expires	Position
Moonhie Chin	64	2021	2022	Director and Nominee
John Donofrio	60	2008	2022	Director and Nominee
Yuval Wasserman	67	2017	2022	Director and Nominee

Moonhie Chin has served as a director of the Company since October 2021. Ms. Chin was employed at Autodesk from 1989 to 2019 and held multiple leadership positions including, most recently, Senior Vice President of Digital Platform and Experience. Autodesk is a global leader in design, construction, and entertainment software with millions of customers. Her expertise extends to general management, business model transformation from perpetual license to subscription, digital platforms, extracting business insights from advanced analytics, global multi-channel models, global customer support and operations, strategic planning, and corporate governance. Prior to joining Autodesk, she worked for the General Electric Company which she joined after completing her B.S. at the Columbia University School of Engineering and Applied Sciences. Ms. Chin earned her M.S. in Manufacturing Management from the Rensselaer Polytechnic Institute.

The Board believes that Ms. Chin’s qualifications to sit on our Board include her strong experience and skills in general management, business model transformation from perpetual license to subscription, digital platforms, extracting business insights from advanced analytics, global multi-channel models, global customer support and operations, strategic planning, and corporate governance.

John Donofrio has served as a director of the Company since January 2008, served as Lead Director from May 2018 until April 5, 2019, and has served as independent Chairman of the Board since April 5, 2019. Mr. Donofrio currently serves as Executive Vice President and General Counsel of Johnson Controls International plc (“Johnson Controls”), a global diversified and multi-industrial leader. Mr. Donofrio is also a member of the Board of Trustees of the Medical College of Wisconsin. Before joining Johnson Controls in November 2017, Mr. Donofrio was Vice President, General Counsel and Secretary of Mars, Incorporated (“Mars”), a global food manufacturer, from October 2013 until November 2017. Before joining Mars in October

2013, Mr. Donofrio was Executive Vice President, General Counsel and Secretary for The Shaw Group Inc., a global engineering and construction company, from October 2009 until February 2013 and Senior Vice President, General Counsel and Chief Compliance Officer at Visteon Corporation (“Visteon”), a global automotive supplier, from 2005 until October 2009. Before joining Visteon, Mr. Donofrio was with Honeywell International (or its predecessor company AlliedSignal Inc.) from 1996 until 2005. At Honeywell International, Mr. Donofrio was Vice President for Intellectual Property and later also served as Vice President and General Counsel for Honeywell Aerospace. Previously he was a Partner at Kirkland & Ellis LLP, where he worked from 1989 through 1996. Before joining Kirkland & Ellis LLP, Mr. Donofrio was a law clerk at the U.S. Court of Appeals for the Federal Circuit and he worked as a Patent Examiner at the U.S. Patent and Trademark Office.

The Board believes that Mr. Donofrio’s qualifications to sit on our Board include his strong experience and skills in legal, risk management, intellectual property protection and licensing, corporate governance, manufacturing, and government regulation.

Yuval Wasserman has served as a director of the Company since December 2017. Currently, Mr. Wasserman serves as a Director on the board of Ichor Holdings, Ltd, a leader in the design, engineering and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment. Mr. Wasserman served as President and Chief Executive Officer and a director of Advanced Energy Industries, Inc., a leading manufacturer of power conversion products that transform electrical power into various usable forms, from October 2014 until his retirement date of March 1, 2021. Mr. Wasserman previously served as President of Advanced Energy Industries’ Thin Films Business Unit from August 2011 to October 2014 and Executive Vice President and Chief Operating Officer from April 2009 to August 2011. He previously held roles at Advanced Energy Industries of Executive Vice President, Sales, Marketing and Service from October 2007 to April 2009, and Senior Vice President, Sales, Marketing and Service from August 2007 to October 2007. Prior to joining Advanced Energy Industries, Mr. Wasserman served as the President, and later as Chief Executive Officer, of Tevet Process Controls Technologies, Inc., a semiconductor metrology company, from May 2002 to July 2007. Prior to that, he held senior executive and general management positions at Boxer Cross, a metrology company acquired by Applied Materials, Inc., Fusion Systems, a plasma strip company that is a division of Axcelis Technologies, Inc., and AG Associates, a semiconductor capital equipment company focused on rapid thermal processing. Mr. Wasserman started his career at National Semiconductor, Inc., where he held various engineering and management positions. Mr. Wasserman served as a director of Syncroness, Inc. from 2010 to 2017.

The Board believes that Mr. Wasserman’s qualifications to sit on our Board include his strong experience and skills in senior operations and engineering management, executive and financial management, and research and development management.

Directors Whose Terms Will Continue After the Annual Meeting


Name	Age	Director Since	Term Expires	Position
Michael D. Burger	63	2019	2023	Director
Stephen R. Cole	70	2000	2023	Director
Alex Davern	55	2021	2023	Director
Lynn Brubaker	64	2009	2024	Director
Jeroen van Rotterdam	57	2021	2024	Director

Michael D. Burger was appointed as our President and CEO on June 17, 2019. Prior to joining the Company, Mr. Burger was President and Chief Executive Officer and a member of the board of directors of Electro Scientific Industries, Inc., a leading supplier of innovative laser-based microfabrication solutions for industries reliant on microtechnologies, from October 2016 to February 2019, when it was acquired by MKS Instruments, Inc. Prior to joining Electro Scientific Industries, Inc., Mr. Burger was President and Chief Executive Officer of Cascade Microtech, Inc., a manufacturer of advanced wafer probing, thermal and reliability solutions for the electrical measurement and testing of high performance semiconductor devices, from July 2010 to June 2016. From April 2007 to February 2010, Mr. Burger served as the President and Chief Executive Officer and as a member of the board of directors of Merix Corporation (“Merix”), a printed circuit board manufacturer. Mr. Burger also served as a member of the Board of Directors of ViaSystems Group, Inc. from February 2010 after it acquired Merix until May 2015. From November 2004 until joining Merix, Mr. Burger served as President of the Components Business of Flextronics Corporation. From 1999 to November 2004, Mr. Burger was employed by ZiLOG, Inc., a supplier of devices for embedded control and communications applications. From May 2002 until November 2004, Mr. Burger served as ZiLOG's President and a member of its board of directors. Mr. Burger holds a B.S. degree in Electrical Engineering

from New Mexico State University and a certificate from the Stanford University International Executive Management Program.

The Board believes that Mr. Burger’s qualifications to sit on our Board include his strong experience and skills in executive management, technology, manufacturing, international operations, sales and marketing management, and research and development management.

Stephen R. Cole has been a director of the Company since 2000 and served as Lead Director from 2005 until May 2018. Since May 2013, Mr. Cole has been President of Seeonee Inc., a financial valuation advisory firm. From 1975 until June 2010, Mr. Cole was President and Founding Partner of Cole & Partners, a Toronto, Canada based mergers and acquisition and corporate finance advisory service company. In June 2010, Cole & Partners was sold to Duff & Phelps Corporation and from that time to May 2013, Mr. Cole was President of Duff & Phelps Canada Limited. Mr. Cole is a Fellow of the Institute of Chartered Accountants of Ontario, Fellow of the Canadian Chartered Institute of Business Valuators, Senior Member of the American Society of Appraisers and Full Member of the ADR Institute of Canada, Inc. He serves as lead director of The Westaim Corporation, a TSX Venture Exchange listed company where he also serves as a member of the audit committee and chairman of the compensation committee. Previously, Mr. Cole was a director of H. Paulin & Co. Limited, a TSX-listed company, where he also served as chairman of the audit committee. Mr. Cole has also held or currently holds positions as an advisory committee member or director of various private companies and charitable and professional organizations.

The Board believes that Mr. Cole’s qualifications to sit on our Board include his strong experience and skills in mergers and acquisitions, financial management, corporate finance, financial reporting, accounting, oversight of financial performance, and corporate governance.

Alex Davern has served as a director of the Company since October 2021. Mr. Davern is also currently a member of the Board of Directors of National Instruments Corporation ("NI"), Cirrus Logic, Inc., and ESI-Group. Mr. Davern has worked at NI between February 1994 and May 2020, and during his career at NI, has served in numerous leadership positions, including as Chief Financial Officer, Chief Operating Officer, and Chief Executive Officer. NI is an Austin-based public company that supplies measurement and automation products used by engineers and scientists in a wide range of industries. Prior to joining NI, Mr. Davern worked both in Europe and in the United States for the international accounting firm, Price Waterhouse, LLP. Since 2020, he also has a part time teaching position at the University of Texas McCombs School of Business. Mr. Davern received his bachelor's degree in Commerce and a diploma in professional accounting from University College in Dublin, Ireland.

The Board believes that Mr. Davern's qualifications to sit on our Board include his strong experience and skills in financial management, financial reporting, accounting, oversight of financial performance, operational management and corporate governance.

Lynn Brubaker has served as a director of the Company since July 2009. Ms. Brubaker is a seasoned executive with over 35 years of experience in aviation and aerospace in a variety of executive, operations, sales, marketing, customer support and independent consultant roles. She has over 20 years of board experience and over fifteen years of experience advising high technology, international, multi-industry and global companies. Since 2005, Ms. Brubaker has had an advisory practice focused on strategy and business development. She is currently a director of QinetiQ Group plc, a London Stock Exchange–listed leading research and technology company. Ms. Brubaker previously served on the Board of Directors of Hexcel Corporation, a New York Stock Exchange-listed company in leading advanced materials and technology, Nordam Group, a private aerospace company in high technology manufacturing and repair, and Force Protection, Inc., a developer and manufacturer of military survivability technology listed on the Nasdaq Stock Market (“Nasdaq”) from March 2011 until its merger with an affiliate of General Dynamics Corporation in December 2011. Ms. Brubaker spent 10 years at Honeywell International, Inc., retiring as Vice President and General Manager—Commercial Aerospace for Honeywell International, a position she held from 1999 to 2005. Prior to Honeywell International, Ms. Brubaker held a variety of management positions with McDonnell Douglas Corporation, Northwest Airlines Corporation, and ComAir Limited. Ms. Brubaker currently serves on the board of a variety of private companies and other business organizations.

The Board believes that Ms. Brubaker’s qualifications to sit on our Board include her strong experience and skills in sales and marketing management, executive management, technology, business development, international operations, manufacturing, financial reporting, and audit, the talent, development and compensation and the nominating, governance and sustainability committee matters.

Jeroen van Rotterdam has served as a director of the Company since March 2021. Since September 2016 to December 2020, Mr. van Rotterdam served as Executive Vice President of Cloud, R&D, and Global Security for Citrix Systems, Inc ("Citrix"), a server, application and desktop virtualization, networking, software as a service (SaaS), and cloud

computing technologies company. Prior to Citrix, Mr. van Rotterdam served as Chief Technology Officer, Vice President and Distinguished Engineer for DELL EMC’s ("EMC") Enterprise Content Division from July 2007 to September 2016. In the period of 1996 to 2007, Mr. van Rotterdam was Chief Executive Officer of X-Hive Corporation, a company he founded, which was acquired by EMC Corporation in 2007. Mr. van Rotterdam is the (co)author of more than 50 patents in various stages with the US Patent Office.

The Board believes that Mr. van Rotterdam's qualifications to sit on our Board include his strong experience and skills in server, application and desktop virtualization, networking, software as a service (SaaS), and cloud computing technologies.

Board Planning

As the Company executes its transformational strategy, with an emphasis on software-enabled solutions, the Company expects to make further Board additions over time.

CORPORATE GOVERNANCE

SHAREHOLDER ENGAGEMENT AND COMMUNICATIONS

At FARO, we believe that corporate governance includes frequent, clear, and honest communication with our shareholders. We actively engage with a portion of our shareholders, including our top institutional investors, to discuss topics of interest including, among other things, our operating performance, corporate governance, and environmental and social matters. We do this as part of our commitment to be responsive to our shareholders and to listen to our shareholders' insights into emerging issues which include feedback on our efforts. More information about investor relations is available on our website at www.faro.com/about-faro/investor-relations. Information on our Shareholder Engagement and Communications efforts, are available through our website, and are not part of or incorporated by reference into this Proxy Statement.

Shareholders may contact our Board of Directors about genuine issues or questions by sending a letter to the following address: c/o FARO Technologies, Inc. 250 Technology Park, Lake Mary, Florida, 32746, Attention: Board of Directors (or the individual director(s)). Communication should be sent by overnight or certified mail, with return receipt requested. The letter should be specific and include the addressee or addressees to be contacted, the topic of the communication, and the number of shares of our stock that are owned of record (if a record holder) or beneficially. We reserve the right not to forward communication to Board members containing any abusive, threatening or otherwise inappropriate materials.

BOARD MATTERS

Role and Risk Oversight of the Board of Directors

The Board provides general oversight and direction for the Company, monitors our performance and also acts as an advisor and counselor to senior management. In particular, the Board performs the following functions (the “Oversight Functions”):

•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;

•review regular updates on cybersecurity risk management which include reviewing risk environment and cybersecurity program;

•establishes corporate governance standards;

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

•oversees and evaluates senior management performance and compensation;

•reviews and discusses with management matters related to human capital management, including FARO's commitments and progress on inclusion and diversity and employee engagement; and

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

In its oversight of our global risk management, the Board has adopted a risk oversight framework in which it reviews the overall risk exposure of the Company in the form of a risk universe and discusses with management our risk assessment, including management’s role to identify, monitor, control and report risk exposure. In addition, the Board reviews all major risks that could materially adversely affect the Company, including external, strategic, operational, financial, organizational, cybersecurity and compliance risks. In addition, our risk assessment has also been from time to time the subject of discussion among the independent members of the Board during their executive sessions, without the presence of Company management.

Each Board committee is also responsible for reviewing our risk exposure with respect to the respective committee’s areas of responsibility, discussing such risks with Company management, and reporting significant risks to the Board. Each Board committee is comprised of the group of independent Board members that best contribute to the Oversight Functions.

The Audit Committee focuses on significant risks associated with financial exposures. The Talent, Development and Compensation Committee particularly reviews risks related to our compensation policies and practices as well as other organizational exposures. The Nominating, Governance and Sustainability Committee focuses on risks relating to our corporate governance structure and practices.

Leadership Structure of the Board of Directors

The Board has the flexibility to establish a leadership structure that works best for the Company at a particular time and reviews that structure periodically. At times during our past, the positions of Chairman of the Board and President and CEO have been held by two different people and, at other times, the positions have been combined and held by the same person. Currently, John Donofrio is our independent Chairman of the Board. Subject to his election and effective as of immediately following the Annual Meeting, Yuval Wasserman will serve as our next independent Chairman of the Board. The Board believes that having an independent Chairman of the Board allows our CEO, Mr. Burger, to concentrate on overseeing the management of our business while Mr. Donofrio provides leadership and oversight of the functioning of the Board. Because we currently have an independent Chairman of the Board, there is currently no Lead Director.

The Chairman of the Board, in addition to setting board meeting agendas and chairing board meetings, facilitates information flow and communication between the independent directors and Company management; coordinates the activities of the other independent directors; together with the Talent, Development and Compensation Committee and the Board, evaluates the performance of the President and CEO; recommends the retention of Board consultants; has the authority to call meetings of the independent directors; if requested by significant shareholders, ensures that he is available for consultation and direct communication; and performs such other duties and responsibilities as the Board of Directors from time to time determines.

Executive sessions of independent directors are held at each regularly scheduled Board meeting for a discussion of relevant subjects, including the Oversight Functions. The Chairman of the Board, with input from the independent directors, prepares the agenda for executive sessions of the independent directors, although all independent directors are encouraged to raise any matters for discussion. The Chairman of the Board presides over the executive sessions of the independent directors.

We believe that our current Board structure appropriately ensures that an independent director serves in a Board leadership position, acting as a liaison between the Board and Company management and allowing the Board to better perform its Oversight Functions. The current Board structure allows our President and CEO to focus on the day-to-day operations of the Company and also permits the independent directors to discuss and address risk management with Company management in Board meetings, as well as separate from management in executive session. The Board evaluates its leadership structure from time to time and changes it as circumstances warrant.

Director Independence

We are required to comply with Nasdaq’s listing standards, including its corporate governance rules. Nasdaq rules require the Board to be comprised of a majority of independent directors, as that term is defined by the Nasdaq Stock Market Rules.

The Board has affirmatively determined that Lynn Brubaker, Stephen R. Cole, John Donofrio, Moonhie Chin, Alex Davern, Yuval Wasserman, and Jeroen van Rotterdam are independent directors, as defined by the Nasdaq Stock Market Rules. The Board has determined that Mr. Burger is the only director who is not independent, because he is the President and CEO of the Company. In addition, none of our directors are a party to any agreement or arrangement that would require disclosure pursuant to Nasdaq Rule 5250(b)(3).

Board Meetings and Committees

The Board of Directors held six meetings during 2021. Each of our directors then in office attended all of the applicable regular meetings of the Board and of the committees on which he or she served during 2021. In addition, the independent directors met in executive session without the presence of management at each regular Board meeting in 2021 and when deemed appropriate at other meetings of the Board and of the committees. While we have not adopted a formal policy regarding Board attendance at annual shareholder meetings, we encourage each of our Board members to attend the annual shareholder meetings in person. With the exception of the 2020 and 2021 annual meetings, all of our directors attended the Company's annual meeting of shareholders in person.

The Board of Directors has three standing committees: an Audit Committee, a Talent, Development and Compensation Committee, and a Nominating, Governance and Sustainability Committee. Each committee previously was comprised of all of our independent Board members but effective at the Annual Meeting, each committee's composition will be revised to appoint specific directors to specific committees.

The table below shows current membership for each of the standing Board committees:

Audit
Committee

Talent, Development and Compensation Committee

Nominating, Governance and Sustainability Committee

Lynn Brubaker
Moonhie Chin
Stephen R. Cole*
Alex Davern
John Donofrio
Yuval Wasserman
Jeroen van Rotterdam

Lynn Brubaker
Moonhie Chin
Stephen R. Cole
Alex Davern
John Donofrio
Yuval Wasserman*
Jeroen van Rotterdam

Lynn Brubaker*
Moonhie Chin
Stephen R. Cole
Alex Davern
John Donofrio
Yuval Wasserman
Jeroen van Rotterdam



*			Committee Chair

Audit Committee

The Audit Committee held five meetings during 2021. In addition to its formal meetings, the Audit Committee Chairman and other members of the committee met frequently throughout 2021 and in the first quarter of 2022 with and without the presence of management, and also met with our external and internal auditors without the presence of management. At all regular meetings during 2021, members of the Audit Committee met in executive session, without the presence of management, and met separately, either in-person or telephonically, with our external and internal auditors.

The Board has determined that each of the Audit Committee members is independent as defined in Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Nasdaq rules, including rules specifically governing audit committee members. The Board also has determined that Messrs. Davern and Cole are “audit committee financial experts” as defined under Item 407(d)(5) of Regulation S-K.

The Audit Committee acts under the terms of a written charter that is available on our website at www.faro.com/about-faro/leadership-and-governance. The Audit Committee’s responsibilities, discussed in detail in the charter, include, among other duties, the responsibility to:

•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, oversee and compensate our independent public accountants;

•oversee internal audit and compliance functions; including the implementation and effectiveness of the Company's Code of Ethics;

•at least annually, discuss with management and the external auditors significant risks and exposures and the plans to minimize such risks; request that management and the external auditors provide updates to the Committee as appropriate;

•establish procedures for receiving anonymous reports of potential misconduct, including violations of law or the company’s Code of Ethics, and concerns regarding accounting, internal accounting controls, or audit matters;

•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.

Talent, Development and Compensation Committee

The Talent, Development and Compensation Committee ("TDCC") held five meetings during 2021. In addition to its formal meetings, the TDCC Chairman and other members of the committee met frequently throughout 2021 among themselves without the presence of management, as well as with the TDCC’s consultant and our President and CEO. Areas of consideration at these various meetings included but were not limited to:

•oversight of executive leadership development and programs;

•review of employee engagement survey results and related action plans;

•review of the design of incentive plans;

•review and approval of executive management annual objectives;

•evaluation of the performance of all officers at the 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 Compensia, Inc. (“Compensia”), the compensation consultant to the TDCC, regarding, among other matters, updated market data and compensation trends generally and specific updated market data regarding compensation for named executives officers;

•establishment of overall executive compensation for 2021; and

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

Each of the TDCC members qualifies as independent for TDCC membership, as defined in the Nasdaq rules, as a non-employee director, as defined under Rule 16b-3 of the Exchange Act, and as an outside director, as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

The TDCC acts under the terms of a written charter that is available on our website at www.faro.com/about-faro/leadership-and-governance. As discussed in its charter, the TDCC reviews our executive compensation policies and programs and endeavors to ensure they are aligned and implemented in accordance with our overall strategy, including enhancement of shareholder value. Although the TDCC annually reviews and determines the President and CEO’s compensation, it works with the President and CEO in evaluating the performance of all other employees at the Vice President level and above reporting directly to the President and CEO and in reviewing and approving annually all compensation programs and awards (including setting the base compensation for the upcoming year and approving bonus and equity incentive awards) for all such other employees at the Vice President level and above reporting directly to the President and CEO. The TDCC maintains final authority in the determination of individual executive compensation packages to ensure compliance with our compensation policy objectives.

The TDCC’s duties and responsibilities include, among other things:

•overseeing the philosophy and operation of our compensation program that 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 global long-term equity plan and short-term incentive plan, including reviewing and approving changes in such plans;

•advising on selection of certain executive officer positions;

•establishing the terms of all executive employment agreements and employment related policies, including severance and change-in-control provisions;

•evaluating compliance with the stock ownership requirements established by the Nominating, Governance and Sustainability Committee for the members of the Board and our executive officers;

•reviewing and approving on an annual basis, the annual base salary, short-term and long-term incentive targets and awards and other compensation arrangements of the President and CEO;

•reviewing and approving on an annual basis, with the input and recommendation of the President and CEO, the annual base salaries, short-term and long-term incentive targets and awards and other compensation arrangements of all other named executive officers and all other employees at the Vice President level and above reporting directly to the President and CEO;

•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;

•Oversee, review and evaluate the Company’s human development strategy and programs, including recruitment, retention, succession planning (other than with respect to the Chief Executive Officer), talent management and development, diversity, health and welfare, and related programs;

•reviewing and discussing with management the Compensation Discussion and Analysis that is included in our proxy statement for our annual meeting of shareholders and preparing the report of the TDCC 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 TDCC has engaged Compensia, a compensation expert, to informally update the TDCC on an annual basis and from time to time on matters that have been delegated to the TDCC.

The TDCC may delegate its authority to grant awards under the 2014 Incentive Plan to our executive officers. The TDCC has delegated its authority to our President and CEO, subject to the management level, aggregate amount and the parameters discussed below, to grant stock-based awards under the 2014 Incentive Plan to newly hired employees, to current employees in connection with a promotion, and to employees recognized for performance under an established Company employee award program. The grants by our President and CEO are subject to the following parameters, among others, established by the TDCC: (i) the President and CEO may not grant awards to (a) employees who are subject to the short-swing profit rules of Section 16 of the Exchange Act, or (b) employees who at the grant date are “covered employees,” or are reasonably anticipated to become “covered employees,” as defined in Section 162(m) of the Code, during the term of the award; (ii) any award granted by the President and CEO will be subject to all of the terms and conditions of the 2014 Incentive Plan; and (iii) the President and CEO must make a written report to the TDCC at the end of each quarter that sets forth any and all awards granted by him during the preceding quarter.

As earlier noted, the TDCC has the authority to retain consultants and to obtain advice and assistance from external legal, accounting and other advisors at our expense. Since October 2017, the TDCC has engaged Compensia to advise it on compensation matters. In performing its services, Compensia reports to and is instructed by the TDCC. For more information regarding Compensia’s services, see “2021 Director Compensation,” beginning on page 23 of this Proxy Statement and “Executive Compensation—Compensation Discussion and Analysis,” beginning on page 31 of this Proxy Statement.

Nominating, Governance and Sustainability Committee

The Nominating, Governance and Sustainability Committee met five times in 2021. Each of the Nominating, Governance and Sustainability Committee members is independent under the Nasdaq rules.

The Nominating, Governance and Sustainability Committee is responsible for developing, evaluating and implementing our corporate governance policies and overseeing responsibilities relating to the Company's sustainability strategy. The Nominating, Governance and Sustainability Committee is also responsible for selecting and recommending for Board approval director nominees and the members and chair of each of the Board committees. Current members of the Board are considered for re-election unless they have notified the Company that they do not wish to stand for re-election. The Nominating, Governance and Sustainability Committee considers candidates for the Board recommended by current members of the Board or members of management. In addition, the Committee may, to the extent it deems appropriate, retain a professional search firm and other advisors to identify potential nominees for director.

The Nominating, Governance and Sustainability Committee’s duties and responsibilities include, among other things:

•review annually the company's corporate governance principles and recommends changes to the Board as appropriate which may include trends or changes in corporate governance laws, regulations and practices that may be applicable to the Company;

•reviews and makes recommendations to the Board with respect to the Board's and each committee's size, leadership structure, composition and functions;

•annually assess the experience, tenure, skills, qualifications and attributes of the Board, in the context of the perceived needs of the Board at that time, and to add or replace directors as the Committee deems advisable;

•conduct appropriate inquiries regarding the reputation, judgment, and character of prospective director nominees, including review of any legal proceedings involving the nominee and professional or financial relationships that might pose a conflict of interest and further conduct appropriate inquiries into the background, experience, qualifications, attributes and skills of prospective director nominees, including review of any current or previous directorships held by prospective director nominees at public companies;

•establish procedures for shareholders to recommend director nominees for the Committee's consideration in accordance with the Company's Bylaws;

•establish written criteria for evaluating prospective director nominees, which shall include consideration of background, experience, qualifications, attributes, skills, reputation, judgment, character and contribution to the diversity of the Board and evaluate all prospective director nominees, including those nominated by shareholders, in accordance with these written criteria;

•oversee an annual self-evaluation of the Board and each standing committee of the Board, including the Committee, to determine whether they are functioning effectively;

•oversee succession planning of the Company's Chief Executive Officer, including transitional leadership in the event of an unplanned vacancy; and

•oversees the Company's program for environmental (including climate change), social and other sustainability matters in coordination with the other committees of the Board and, as appropriate, makes recommendations on such matters to the Board;

The Nominating, Governance and Sustainability Committee also will consider director candidates recommended by eligible shareholders. Shareholders may recommend director nominees for consideration by the Nominating, Governance and Sustainability Committee by writing to the Nominating, Governance and Sustainability Committee, Attention: Chairman, 250 Technology Park, Lake Mary, Florida 32746, and providing appropriate biographical information concerning each proposed nominee. Candidates proposed by shareholders for nomination are evaluated using the same criteria as candidates initially proposed by the Nominating, Governance and Sustainability Committee.

The following minimum qualifications must be met by a director nominee to be recommended by the Nominating, Governance and Sustainability Committee:

•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.

In identifying potential Board nominees and evaluating candidates for the Board, the Nominating, Governance and Sustainability Committee considers the nominee’s experience, skills and qualifications. Diversity is an important criteria to the Nominating, Governance and Sustainability Committee, in accordance with our Corporate Governance Guidelines, when identifying potential Board nominees and evaluating Board candidates, including in the context of providing diversity in business perspectives, gender, ethnicity, education, experience and leadership qualities.

Annually, the Nominating, Governance and Sustainability Committee reviews the composition of the Board to assess whether it reflects the appropriate experience, tenure, skills and qualifications expected of Board members, as well as a variety of complementary experiences and backgrounds, sufficient to provide sound and prudent guidance, particularly in the areas of senior leadership, operations, finance, technology and governance. The Nominating, Governance and Sustainability Committee assesses the effectiveness of diversity within the Board every year as part of this annual assessment. If, as a result of the assessment, the Nominating, Governance and Sustainability Committee determines that adding or replacing a director is advisable, the Nominating, Governance and Sustainability Committee initiates a search for a suitable candidate to fulfill the Board’s needs. In addition, our Corporate Governance Guidelines provide that any director who undergoes a change of occupation must notify the Chairman of the Board and the Chairman of the Nominating, Governance and Sustainability Committee of the change and offer to submit his or her resignation. The Board, through the Nominating, Governance and Sustainability Committee, shall review the continued appropriateness of Board membership under the changed circumstances and shall determine whether to accept or reject the offer of resignation.

A shareholder who wishes to nominate a person for election to the Board of Directors must submit written notice to the Company, Attention: Secretary, 250 Technology Park, Lake Mary, Florida 32746. Under our Bylaws, we must receive the written nomination for an annual meeting not less than 90 days and not more than 120 days prior to the first anniversary of the previous year’s annual meeting of shareholders, or, if no annual meeting was held the previous year or the date of the current year’s annual meeting is advanced more than 30 days before or delayed more than 60 days after the anniversary date, we must receive the written nomination not more than 120 days prior to the current year’s annual meeting and not less than the later of 90 days prior to the annual meeting or ten days following the day on which public announcement of the date of the annual meeting is first made. For a special meeting, we must receive the written nomination not less than the later of 90 days prior to the special meeting or ten days following the day on which public announcement of the date of the special meeting is first made. Under the Bylaws, the nomination must include (i) all information relating to the candidate that is required to be disclosed in solicitations of proxies for an election of directors, or is otherwise required, in each case pursuant to Regulation 14A of the Exchange Act, including the nominee’s consent to be named in the proxy statement as a nominee and to serving as a director if elected, (ii) a description of (a) all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and (b) any other material relationships, between the shareholder and any beneficial owner on whose behalf the director nomination is made, and their respective affiliates and associates or others acting in concert with the shareholder or beneficial owner, on the one hand, and each candidate and his or her respective affiliates and associates, or others acting in concert with the candidate, on the other hand, including all information required under Item 404 of Regulation S–K if the shareholder and any beneficial owner on whose behalf the nomination is made, or any affiliate or associate of or person acting in concert with the shareholder or beneficial owner, were the “registrant” for purposes of that rule and the candidate was a director or executive officer of such registrant, and (iii) as to the shareholder and any beneficial owner on whose behalf the director nomination is made, (a) their names and addresses, (b) the class and number of shares of our stock beneficially owned by them, (c) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock) has been made, an effect or intent of which is to mitigate loss to or manage risk of stock price changes for, or to increase the voting power of, the shareholder or the beneficial owner with respect to any share of our stock, and (d) a representation as to whether the shareholder or any beneficial owner on whose behalf the nomination is made intends, or is or intends to be part of a group that intends, to deliver a proxy statement or form of proxy to at least the percentage of our shareholders required to elect the nominee or otherwise to solicit proxies from shareholders in support of the nomination. We may require any proposed nominee to furnish such other information as may reasonably be required to determine his or her eligibility to serve as an independent director or that could be material to a reasonable shareholder’s understanding of the nominee’s independence.

To comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company's nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 27, 2023.

GOVERNANCE, SUSTAINABILITY & STRATEGY

The Nominating, Governance and Sustainability Committee is responsible for the oversight of our environmental, social, and sustainability matters. In addition, our Chief Executive Officer oversees a committee of senior executives that steer the setting of our purpose, strategies, policies, and goals concerning environmental, social and sustainability topics. We are committed to sustainable business principles, and are making strategic decisions that adhere to our mission and values. Among other things, this means supporting the United Nations Global Compact and its underlying principles around the environment, workforce, anti-corruption, and human rights. The structure of the management of our Environmental, Social and Governance (“ESG”) working groups is presented below:

In 2021, we appointed a Chief Sustainability Officer demonstrating our commitment and responsibility to sustainability. Additionally, we completed our first company-wide ESG materiality assessment to strategically identify ESG topics that are most important our stakeholders. The results of our 2021 assessment identified key objectives and empowered us to set milestones and targets as part of the design of our strategy. We will continue to conduct materiality assessments on an annual basis and update and refine our ESG strategy to reflect industry, economic or regulatory changes.

DIVERSITY, EQUITY & INCLUSION

FARO believes in the benefits workforce diversity can provide. Innovation is critical for any technology company and we believe that it benefits through the creative thinking that happens when people with different perspectives and backgrounds come together. We believe diverse teams can better relate to the many and varied needs of our customers. We promote a culture of inclusion where individual differences are valued which also allows us to attract the very best talent and further encourage our people to reach their full potential.

We are passionate about providing our employees with a positive and safe work environment that is free of discrimination, harassment, and workplace violence. Our people programs promote diverse hiring, which enables our leaders to hire based on merit and strive to remove biases related to age, race, gender, religion, sexual orientation, and other attributes that are unrelated to job performance. We encourage our employees to embrace different ideas, strengths, interests and cultural backgrounds, and encourage all employees and partners to act as allies in support of each other. We are focused on ensuring all benefit and employment-related decisions are in compliance with established equal employment opportunity statutes and without regard to religion, national origin, age, gender, race, color, ancestry, sexual orientation, disability, marital status, citizenship, pregnancy, medical condition or any other protected class status, as defined by local, state or federal laws.

In support of this commitment, we established our Diversity, Equity, and Inclusion (“DEI”) champions comprised of FARO team members from around the globe at various levels of the organization to be responsible for the development, implementation and oversight of our DEI action plan. To foster a sense of inclusion, we strive to ensure employees can provide regular feedback through various channels which include surveys, meetings and direct communication. Employees receive

workforce engagement surveys at least semi-annually with our average participation rate in 2021 being greater than 70%. We also implemented our “pulse” program in 2021 where executive leadership engages with our employees through virtual meetings. These meetings allow for opportunities for cross-departmental discussions, increased leadership visibility, relationship development, and a better understanding of our corporate culture at all levels of the organization. Employees also have the ability to provide input or report concerns both directly to their HR partner or anonymously through our confidential hotline.

Our commitment to diversity, inclusion, and fair and equal representation of underrepresented or minority community groups is demonstrated throughout all levels of the organization:

•30% of our non-employee Board of Director members are comprised of women, including a female chair of our Nominating, Governance and Sustainability Committee;

•One of our non-employee directors is from an underrepresented group;

•38% of our Executive Leadership team is comprised of women;

•50% of our US workforce is comprised of underrepresented or minority groups, including women; and

•45% of our US team members who hold leadership roles (manager or above) are comprised of underrepresented or minority groups, including women.

We are committed to respecting human rights in alignment with the United Nation’s Guiding Principles on Business and Human Rights. We strive to comply with human rights laws and regulations globally and where we may have a local law conflict, we work within the laws of the country whilst maintaining the underlying principles of human rights standards. We encourage all employees and partners to act as allies in support of each other.

ENVIRONMENTAL SUSTAINABILITY

We embrace our responsibility and commitment to minimize the impact of our operations on others. For us, sustainability is about reducing our energy usage, protecting workers, partnering with suppliers that subscribe to our supplier code of conduct, and maintaining relationships with others to share sustainable solutions for a better world. Using 2019 as a baseline, we are committed to 25% reduction in CO2 emissions by 2025. We are well on our way to achieving this target, beginning with our 2021 announcement to consolidate and outsource our manufacturing operations. We selected Sanmina Corporation, a US based Fortune-500 Electronic Manufacturing Service (EMS) provider, who maintains robust sustainability and environmental practices, including memberships with Responsible Business Alliance (“RBA”) and Conflict-Free Sourcing Initiative (“CFSI”), as well as commitments to 40% reduced carbon emissions by 2030 and net-zero by 2050. With this transition, we will be able to collaborate with Sanmina’s initiative to show reductions in Scope 1, Scope 2 and Scope 3 emissions. In addition, we are in the process of enhancing our internal policies and programs related to supply chain management, travel, water usage, and recycling to maximize our overall environmental impact.

INNOVATION AND SUSTAINABLE PRODUCT OFFERINGS

We believe one of the primary ways FARO will be able to maximize support of an environmentally and economically sustainable future will be through use of innovation and technology. As such, in addition to efforts strengthening our own internal sustainability program, one of our key strategic sustainability initiatives focuses on the development of our hardware, software and service offerings to include workflow applications designed to assist our customer in achieving and exceeding their own environmental sustainability goals. These product offerings are expected to be announced in 2022 and 2023, which combine the use of FARO measurement technology and data analytics that should result in improvements in:

•Reduced carbon emissions (Scope 1 and Scope 2);

•Reduced scrap and waste;

•Improved job completion rates; and

•Improved production efficiency and yield.

SOCIAL IMPACT

We are enthusiastic about opportunities to support the betterment of our communities. In 2021 we announced our partnership with George Mason University’s Forensic Science Program to advance forensic science research. Through this partnership, we are providing $300,000 of equipment to establish the world’s first FARO-certified forensic science laboratory. With this equipment, students will receive state-of-the-art training in forensic science technology, and have the opportunity to work alongside law enforcement and government partners such as the George Mason University Police, Fairfax County Police, Fairfax City Police, the US Army and others.

Also in 2021, we implemented formal social commitment programs in the United States and Germany. The overall focus of this initiative is to support STEM education in underrepresented minority communities, which includes mentoring programs, development of technical curriculum, and sponsorships. In 2021, we donated $50,000 in support of these programs and developed partnership with local charitable organization and educational institutions. Programs we supported include the Foundation for Seminole County Public Schools, Cyber Mentors, Germany’s largest online STEM platform for girls, and the Public Education Foundation’s Grants for Great Ideas.

We acknowledge and celebrate days of importance across the globe and support individual volunteerism. In 2022, we added Martin Luther King (“MLK”) holiday as a recognized FARO US holiday and developed a calendar of celebrated days of importance such as International Women’s Day and Earth Day.

GOVERNANCE AND OVERSIGHT

We publish our corporate governance guidelines, board committee charters, company code of ethics and corporate responsibility documents on our website at www.faro.com/about-faro/leadership-and-governance, including our articles of incorporation, bylaws, committee charters, company code of ethics, conflict minerals policy and supplier code of conduct. These documents serve as a framework to assist our Board of Directors in the exercise of its governance responsibilities, among other matters. Our Code of Ethics provides guidelines for business conduct and applies to members of our Board of Directors, our executive officers, employees, contractors, consultants, and others working on our behalf. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our code of conduct by posting such information on our website at the address specified above.

As sustainability has grown to be a key strategic initiative for FARO, we have made various commitments to be delivered throughout 2022 and 2023 aimed at increasing visibility and oversight of our program and activities. Most notable is our commitment to issue our first annual Corporate Social Responsibility (“CSR”) report in 2022, which will outline our program values, goals and metrics as well as provide additional details around our materiality assessments, partnerships, and governance standards. We are actively expanding our corporate training population and publication of our corporate policies to include a full suite of topics within the sustainability landscape. We have committed to further development of our Environmental, Social and Governance website which will house our annual CSR reports as well as published policies, program highlights and promotional materials related to our sustainable product and service offerings.

Board Member Demographics

As of the date of this filing, April 14, 2022, the demographic background of the 8 members on our Board of Directors is as follows:


Board Diversity Matrix (As of April 14, 2022)
Total Number of Directors	8
	Female	Male	Non-Binary	Did Not Disclose Gender
Part I. Gender Identity
Directors	2	6	—	—
Part II. Demographic Background
African American or Black	—	—	—	—
Alaskan Native or Native American	—	—	—	—
Asian	1	—	—	—
Hispanic or Latinx	—	—	—	—
Native Hawaiian or Pacific Islander	—	—	—	—
White	1	6	—	—
Two or More Races or Ethnicities	—	—	—	—
LGBTQ+	—
Undisclosed	—

As this is the first time our diversity statistics are being presented, comparative prior year statistics are not presented.

TDCC Interlocks and Insider Participation

During 2021, Lynn Brubaker, Stephen R. Cole, John Donofrio, Alex Davern, Moonhie Chin, Jeroen van Rotterdam and Yuval Wasserman served as members of the TDCC. None of the TDCC members was, during 2021 or formerly, an officer or employee of the Company or any of its subsidiaries or had any relationship requiring disclosure under Item 404 of Regulation S-K. During 2021, none of our executive officers served as a member of the board of directors or TDCC of any entity that had one or more executive officers serving as a member of our Board of Directors or TDCC.

Code of Business Conduct and Ethics

The Board of Directors has adopted a Code of Ethics, entitled “Code of Ethics for Senior Financial Officers,” that is applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. The Board of Directors has also adopted a Global Ethics Policy applicable to all of our employees. The Code of Ethics for Senior Financial Officers and the Global Ethics Policy are available at no cost on our website at www.faro.com/about-faro/leadership-and-governance or by submitting a written request to FARO Technologies, Inc., Attention: Secretary, 250 Technology Park, Lake Mary, Florida 32746.

2021 DIRECTOR COMPENSATION

The following table sets forth information regarding the compensation earned by each of our non-employee directors during the year ended December 31, 2021. See the Summary Compensation Table contained within “Executive Compensation—Compensation Discussion and Analysis,” beginning on page 31 of this Proxy Statement for the compensation earned by Mr. Burger for his service as both Director and President and CEO during 2021.


Name	Fees Earned or Paid in Cash ($) (1)	Stock Awards ($) (2) (3)	Total ($)
Lynn Brubaker	73,750	99,981	173,731
John E. Caldwell(4)	29,172	—	29,172
Stephen R. Cole	—	175,832	175,832
John Donofrio	123,750	139,928	263,678
Jeffrey A. Graves, Ph.D.(4)	26,046	—	26,046
Yuval Wasserman	—	172,594	172,594
Jeroen van Rotterdam	45,625	199,965	245,590
Alex Davern(5)	15,000	99,954	114,954
Moonhie Chin(5)	15,000	99,954	114,954

(1)Includes cash retainers earned by each non-employee director during the year ended December 31, 2021. Mr. Caldwell and Dr. Graves both concluded their roles as Directors at the end of the 2021 Annual Meeting of Shareholders and as such received prorated cash retainers for their shortened length of service. Mr. van Rotterdam, Mr. Davern and Ms. Chin joined the Board of Directors on March 17, 2021, October 1, 2021, and October 1, 2021, respectively, and as such they have received prorated cash retainers for their shortened length of service.

(2)Reflects the grant date fair value of restricted stock units or deferred stock units granted to our non-employee directors in 2021, determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation (“FASB ASC Topic 718”). Mr. Cole and Mr. Wasserman both elected to convert all of their respective annual cash retainer fees and chair fees into deferred stock units, which represented a total grant date fair value of $75,852 and $72,613, respectively, in accordance with the 2018 Non-Employee Director Deferred Compensation Plan. Mr. van Rotterdam, Mr. Davern, and Ms. Chin all received their initial equity grants, which represented a total grant date fair value of $99,984, $99,954, and $99,954, respectively, as they joined the Board of Directors on March 17, 2021, October 1, 2021, and October 1, 2021, respectively. Mr. Caldwell and Dr. Graves both concluded their roles as Directors at the end of the 2021 Annual Meeting of Shareholders and as such did not receive the annual restricted stock unit grant on June 1, 2021. Mr. Davern and Ms. Chin joined the Board of Directors subsequent to the June 1, 2021 grant date and as such also did not receive the annual restricted stock unit grant.

(3)As of December 31, 2021, our non-employee directors held the following aggregate number of shares of unvested restricted stock units:


Name						Unvested Restricted Stock Units (#)
Lynn Brubaker						1,329
John E. Caldwell						—
Stephen R. Cole						1,329
John Donofrio						1,860
Jeffrey A. Graves, Ph.D.						—
Yuval Wasserman						1,329
Jeroen van Rotterdam						2,393
Alex Davern						1,483
Moonhie Chin						1,483

The following table shows the restricted stock units awarded to each non-employee director then in office on June 1, 2021, and the aggregate grant date fair value for each award:


Name	Restricted Stock Units (#)	Full Grant Date Fair Value of Award ($)
Lynn Brubaker	1,329	99,981
John E. Caldwell(2)	—	—
Stephen R. Cole	1,329	99,981
John Donofrio	1,860	139,928
Jeffrey A. Graves, Ph.D.(2)	—	—
Yuval Wasserman	1,329	99,981
Jeroen van Rotterdam	1,329	99,981
Alex Davern(1)	—	—
Moonhie Chin(1)	—	—

(1)Non-employee director who joined the Board of Directors subsequent to the June 1, 2021 annual grant date and as such, did not receive a grant as part of this annual grant cycle. Each non-employee director receives an initial equity grant upon joining the Board of Directors as mentioned above.

(2)Non-employee director who concluded their term with the Board of Directors before the June 1, 2021 annual grant date and as such, did not receive a grant as part of this annual grant cycle.

The grant date fair values of the awards shown above are calculated by multiplying the number of shares of restricted stock by the closing price of our common stock on the grant date ($75.23 per share on June 1, 2021).

Terms of Director Compensation Program

We use a combination of cash and equity compensation to attract and retain qualified candidates to serve on the Board, as detailed in the table below. In setting director compensation, we consider Board compensation benchmarks provided by our third party compensation consultant, Compensia. Our Director Compensation Program was amended on July 1, 2021.

The actual aggregate cost of Board compensation in 2021 was $1,064,763. The following table sets forth each component of our Board compensation prior to the amendment that was effective July 1, 2021:


Annual Cash Retainer:	$	40,000
Additional Annual Retainers:
Nominating, Governance and Sustainability Committee Chairperson	$	10,000
Audit Committee Chairperson	$	20,000
Talent, Development, and Compensation Committee Chairperson	$	15,000
Nominating, Governance and Sustainability Committee Non-Chair Member	$	5,000
Audit Committee Non-Chair Member	$	10,000
Talent, Development, and Compensation Committee Non-Chair Member	$	7,500
Non-Employee Chairman	$	100,000	(a)
Initial Equity Grant	$	100,000	(b)
Annual Equity Grant	$	100,000	(c)

(a)Payable 50% in cash and 50% in restricted stock units. Restricted stock units are granted annually on the day following the annual meeting of shareholders, and the number of restricted stock units to be granted are determined by dividing the dollar value of the retainer by the closing price of our common stock on the date of grant. The restricted stock units 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 receives restricted stock units 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 unit 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 restricted stock units 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 unit 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.

The following table sets forth each component of our Board compensation following the amendment that was effective July 1, 2021:


Annual Cash Retainer:	$	60,000
Additional Annual Retainers:
Nominating, Governance and Sustainability Committee Chairperson	$	20,000
Audit Committee Chairperson	$	20,000
Talent, Development, and Compensation Committee Chairperson	$	20,000
Non-Employee Chairman	$	75,000
Initial Equity Grant	$	100,000	(a)
Annual Equity Grant	$	175,000	(b)

(a)Upon election to the Board, each non-employee director receives restricted stock units 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 unit 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.

(b)On the day following the annual meeting of shareholders, each director receives restricted stock units 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 unit 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.

Mandatory Board of Director Stock Ownership and Holding Periods

Our non-employee directors are subject to minimum share ownership guidelines. Within two years after joining the Board, each non-employee director is required to own shares of our common stock with a value equal to at least $300,000. The ownership requirement may be satisfied through (i) holdings of equity awards granted by us, the values of which are calculated based on the higher of (a) the then-current value of the equity awards on the date of determining compliance with the minimum share ownership guidelines and (b) the grant date fair value of the equity awards, and/or (ii) shares of common stock purchased by the non-employee director independently, the values of which are calculated based on the closing price of our common stock on the purchase date. Also, each non-employee director must hold shares of our common stock acquired pursuant to the exercise of stock options or vesting of restricted stock for one year after exercise or vesting, as applicable, or until his or her retirement, whichever is earlier; provided that non-employee directors may sell shares to the extent necessary to satisfy tax obligations arising from the vesting of their restricted stock awards. As of December 31, 2021, all of our directors either met, exceeded, or will meet or exceed the minimum share ownership requirement by their mandated deadlines.

Director Deferred Compensation Plan

In October 2018, the TDCC adopted the FARO Technologies, Inc. 2018 Non-Employee Director Deferred Compensation Plan (the “Deferred Compensation Plan”). This plan encourages our directors to hold a substantial portion of their compensation in the form of equity, which can only be monetized at the end of their tenure on the Board or in other limited circumstances.

Prior to the first day of each calendar year, each non-employee director may (i) elect to convert all of his or her annual cash retainer fees as well as any annual committee and chair fees other than reimbursements otherwise payable to him or her by the Company into deferred stock units, and (ii) elect to receive all of his or her annual equity grant received during the calendar year in the form of restricted stock units, or defer payment of all such restricted stock units granted to the non-employee director in the calendar year. Each deferred stock unit represents the right to receive one share of our common stock no later than 60 business days following the date the non-employee director incurs a separation of service from the Company, or, in limited circumstances upon a change in control of the Company, cash equal to the fair market value of one share of our common stock on the date of the change in control, pursuant to the 2014 Incentive Plan and the Deferred Compensation Plan.

PROPOSAL 2

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

THE BOARD OF DIRECTORS RECOMMENDS THAT OUR SHAREHOLDERS VOTE “FOR” PROPOSAL 2, THE RATIFICATION OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022.

The Sarbanes-Oxley Act of 2002 requires the Audit Committee to be directly responsible for the appointment, compensation and oversight of the audit work of our independent registered public accounting firm. Grant Thornton LLP has audited our financial statements since 2004. The Audit Committee has appointed Grant Thornton LLP as our independent registered public accounting firm for 2022.

Representatives of Grant Thornton LLP will be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions of shareholders.

Shareholders are not required to ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm. However, we are submitting the ratification to our shareholders as a matter of good corporate practice. If our shareholders fail to ratify the appointment of Grant Thornton LLP, the Audit Committee may reconsider the retention of Grant Thornton LLP. Even if the selection of Grant Thornton LLP is ratified, the Audit Committee in its discretion may select a different independent accounting firm at any time during the year if it determines that such change would be in the best interests of the Company and our shareholders.

The affirmative vote of a majority of the votes cast is necessary for approval of the ratification of Grant Thornton LLP. Abstentions will have no impact on the ratification of our independent registered public accounting firm. Because this matter is a routine proposal, there will be no broker non-votes associated with this proposal.

INDEPENDENT PUBLIC ACCOUNTANTS

The following table presents fees for professional audit services rendered by Grant Thornton LLP for the audit of our financial statements for the years ended December 31, 2021 and 2020, and fees for other services rendered by Grant Thornton LLP during those periods.


	2021		2020
Audit fees (1)	$	1,187,343	$	1,772,279
Audit-related fees (2)	32,860		32,100
Tax fees	—		—
All other fees	—		—
Total fees	$	1,220,203	$	1,804,379

(1)Amounts for 2021 and 2020 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 2021 and 2020 include fees related to the audit of our employee benefit plan.

The Audit Committee has concluded that the provision of the audit and permitted non-audit services by Grant Thornton LLP in 2021 and 2020 is consistent with maintaining the independence of Grant Thornton LLP.

Pursuant to the Audit Committee charter, the Audit Committee pre-approved all services provided by Grant Thornton LLP. The Audit Committee has established pre-approval policies and procedures with respect to audit and permitted non-audit services to be provided by our independent auditors. Pursuant to these policies and procedures, the Audit Committee may form and delegate authority to subcommittees consisting of one or more members, when appropriate, to grant such pre-approvals, provided that decisions of such subcommittee(s) to grant pre-approvals are presented to the full Audit Committee at its next scheduled meeting. The Audit Committee’s pre-approval policies do not permit the delegation of the Audit Committee’s responsibilities to management.

REPORT OF THE AUDIT COMMITTEE

Under the Audit Committee charter, the Audit Committee is responsible for overseeing the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the system of internal control over financial reporting and the financial reporting process. The independent accountants have the responsibility to express an opinion on the financial statements based on an audit conducted in accordance with generally accepted auditing standards. The Audit Committee has, among other things, the responsibility to monitor and oversee these processes.

The Audit Committee has:

(1) reviewed and discussed the Company’s audited financial statements with management;

(2) discussed with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; and

(3) received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence.

The Audit Committee also considered the impact of non-audit services on the auditor’s independence.

The Audit Committee reviewed with the independent accountants the overall scope and specific plans for its audit. Without management present, the Committee met with the independent accountants to review the results of their examinations, their evaluation of the Company’s internal control over financial reporting, and the overall quality of the Company’s accounting and financial reporting. The Audit Committee reviewed and discussed the Company’s audited financial statements with the independent accountants.

Based on the review and discussions described above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the SEC.

Audit Committee:

Stephen R. Cole, Audit Committee Member (Chair)

Lynn Brubaker, Audit Committee Member

John Donofrio, Audit Committee Member

Yuval Wasserman, Audit Committee Member

Jeroen van Rotterdam, Audit Committee Member

Alex Davern, Audit Committee Member

Moonhie Chin, Audit Committee Member

PROPOSAL 3

ADVISORY VOTE ON EXECUTIVE COMPENSATION

THE BOARD OF DIRECTORS RECOMMENDS THAT OUR SHAREHOLDERS VOTE “FOR” PROPOSAL 3, THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

Section 14A of the Exchange Act provides shareholders with the opportunity to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers. This advisory vote is commonly known as “Say-on-Pay.” Accordingly, the Board of Directors is asking our shareholders to indicate their support for the compensation of our named executive officers, as disclosed in this Proxy Statement. Consistent with the results of the most recent non-binding advisory vote in 2017 regarding the frequency of the “Say-on-Pay” vote, we currently intend to conduct this advisory vote annually.

This proposal is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our executive compensation program and practices. The TDCC endeavors to ensure that the philosophy and operation of our compensation program reinforces our culture and values, creates a balance between risk and reward, attracts, motivates, and retains executives over the long-term and aligns their interests with those of our shareholders. The TDCC strives to provide total compensation relating to the President and CEO, the other named executive officers and all other employees at the Vice President level and above reporting directly to the President and CEO, that is fair, reasonable and achieves the objective described above. Our executive compensation program includes a significant performance-based component, in the form of a short-term annual incentive award, as well as a substantial emphasis on “at-risk,” equity-based long-term incentives. Please read the Compensation Discussion and Analysis, together with the related compensation tables and narrative disclosure below, for a detailed explanation of our executive compensation program and practices.

At our annual meetings of shareholders held in May 2019, May 2020 and May 2021, approximately 96%, 98% and 98%, respectively, of the votes cast on the Say-on-Pay proposal at each of those meetings were voted in favor of the proposal. In 2019, the TDCC developed, with the advice of Compensia, Mr. Burger's compensation arrangements and terms as our new President and CEO. For more information regarding the changes made to our executive compensation program, see “Executive Compensation—Compensation Discussion and Analysis—Consideration of Prior Year Say-on-Pay Vote,” beginning on page 33 of this Proxy Statement.

The Board is asking our shareholders to vote “FOR” the following non-binding resolution:

“Resolved, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis and the related compensation tables and narrative disclosure, in the Proxy Statement is hereby approved on an advisory basis.”

The approval of this proposal requires the affirmative vote of a majority of the votes cast by the shareholders. Abstentions and broker non-votes will have no impact on the outcome of this matter. As an advisory vote, the result will not be binding on the Board; however, the TDCC, which is comprised solely of independent directors, will consider the outcome of the vote when evaluating the effectiveness of our compensation policies and practices.

EXECUTIVE OFFICERS

The following table provides information regarding our executive officers as of March 25, 2022:

Name

Age

Principal Position

Michael D. Burger

President and Chief Executive Officer

Allen Muhich

Chief Financial Officer

Kevin Beadle

Senior Vice President of Sales

Michael D. Burger was appointed as our President and Chief Executive Officer ("CEO") on June 17, 2019. Prior to joining the Company, Mr. Burger was President and Chief Executive Officer and a member of the board of directors of Electro Scientific Industries, Inc., a leading supplier of innovative laser-based microfabrication solutions for industries reliant on microtechnologies, from October 2016 to February 2019, when it was acquired by MKS Instruments, Inc. Prior to joining Electro Scientific Industries, Inc., Mr. Burger was President and Chief Executive Officer of Cascade Microtech, Inc., a manufacturer of advanced wafer probing, thermal and reliability solutions for the electrical measurement and testing of high performance semiconductor devices, from July 2010 to June 2016. From April 2007 to February 2010, Mr. Burger served as the President and Chief Executive Officer and as a member of the board of directors of Merix Corporation (“Merix”), a printed circuit board manufacturer. Mr. Burger also served as a member of the Board of Directors of ViaSystems Group, Inc. from February 2010 after it acquired Merix until May 2015. From November 2004 until joining Merix, Mr. Burger served as President of the Components Business of Flextronics Corporation. From 1999 to November 2004, Mr. Burger was employed by ZiLOG, Inc., a supplier of devices for embedded control and communications applications. From May 2002 until November 2004, Mr. Burger served as ZiLOG's President and a member of its board of directors. Mr. Burger holds a B.S. degree in Electrical Engineering from New Mexico State University and a certificate from the Stanford University International Executive Management Program.

Allen Muhich has served as our Chief Financial Officer since July 2019. Prior to joining the Company,

Mr. Muhich served as Vice President, Chief Financial Officer and Corporate Secretary of Electro Scientific Industries, Inc., a leading supplier of innovative laser-based microfabrication solutions for industries reliant on microtechnologies, from December 2017 to February 2019, when it was acquired by MKS Instruments, Inc. Prior to joining Electro Scientific Industries, Inc., Mr. Muhich was Chief Financial Officer of ID Experts, a provider of identity protection services, from February 2016 to

November 2017, as well as Chief Operating Officer from January 2017 to November 2017. Prior to that, Mr. Muhich served as Chief Financial Officer of Smarsh, Inc., a provider of cloud-based archiving solutions, from March 2015 to February 2016, as Chief Financial Officer and Vice President of Finance of Radisys Corporation, a leading provider of open telecom solutions, from May 2011 to March 2015, as Vice President of Finance and Corporate Controller at Merix Corporation, a global manufacturer of the printed circuit boards from September 2006 to May 2010, and spent the previous 15 years in financial

management in the office printing business at Tektronix, Inc. and Xerox Corporation. Mr. Muhich holds a B.A. degree in Accounting from Western Washington University.

Kevin Beadle has served as our Senior Vice President of Sales since December 2019. Prior to joining the Company, Mr. Beadle served as the President of Silicon IP and Secure Protocols for Inside Secure, a company that specializes in security solutions for mobile and connected devices, providing software, silicon IP, tools and know-how needed to protect customers’ transactions, content, applications, and communications from January 2017 to November 2019 and also served as the Vice President of Americas from January 2014 to December 2016. Prior to joining Inside Secure in 2014, Mr. Beadle held leadership and management positions at Fairchild Semiconductor, Wolfson Microelectronics, and Intel Corporation. Mr. Beadle holds a B.A. degree in Engineering Science from the University of Texas and an Executive MBA Degree from Stanford University.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The TDCC oversees, among other things, the development of our executive compensation programs, policies and practices. This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation program for 2021. The guiding principles and fundamental objectives of the executive compensation program are as follows:

•align our senior leadership team's interests with interests of our shareholders by establishing clear performance goals that are quantifiable and focused on our success while balancing both short-term and long-term objectives;

•attract, retain and motivate our senior leadership team by providing competitive compensation arrangements;

•provide operational, financial and strategic objectives to each member on our senior leadership team; and

•recognize company performance in addition to individual performance.

Following this CD&A, you will find a series of tables and narrative disclosures containing specific data about compensation earned in 2021 by the following individuals, whom we refer to as our named executive officers:


Name			Title
Michael D. Burger			President and Chief Executive Officer (“CEO”)
Allen Muhich			Chief Financial Officer
Kevin Beadle			Senior Vice President of Sales
Katrona Tyrrell			Former Chief People Officer, Senior Vice President, Human Resources

Changes in Executive Leadership

Effective June 28, 2021, Katrona Tyrrell resigned from her position as Chief People Officer, Senior Vice President, Human Resources.

Executive Summary

Strategy

In February 2020, we outlined our new strategy with the primary objective of realizing profitable revenue growth that would ultimately drive increased long-term shareholder value. Our Board of Directors approved a global restructuring plan (the “Restructuring Plan”), which supports our strategic plan and broadly relies on the following key tenants:

•Create a reduced cost structure that would enable us to realize our financial success model of 20% adjusted EBITDA, on a relatively flat 2019 revenue, by targeting $40 million in annualized savings;

•Enable revenue growth through long-term product differentiation by better understanding our customer needs and delivering hardware and software solutions that solve their problems better than our competitors; and

•A focus on customers in our large and growing targeted markets, namely 3D Metrology, Architecture, Engineering & Construction and Public Safety Analytics.

During 2021, we made significant progress in these key tenants. We have continued to globalize administrative processes which allowed the elimination of redundant resources. On July 15, 2021, we entered into a manufacturing services agreement (the “Agreement”) with Sanmina Corporation (“Sanmina”), in connection with the Restructuring Plan. Under the Agreement, Sanmina will provide manufacturing services for the Company’s measurement device products currently manufactured at the Company’s Lake Mary, Florida, Exton, Pennsylvania, and Stuttgart, Germany manufacturing sites. A phased transition to a Sanmina production facility is expected to be completed by the end of the second quarter of 2022 as part of our cost reduction initiative. Our initiative to contract with third party manufacturer, Sanmina, and outsource our manufacturing processes will enable our organization to shift our focus towards continuing to drive key product innovation to better serve our markets. Currently, we have achieved $39.6 million in annualized Non-GAAP savings that were realized by the end of 2021 which included the decrease of total headcount by approximately 500 employees since the start of the Restructuring Plan. In connection with the implementation of our Restructuring Plan, we recorded a pre-tax charge of approximately $7.4 million in 2021, which primarily consisted of severance and related benefits, professional fees and other related charges and costs. The Company expects to pay approximately $4 million in 2022, primarily consisting of severance and related benefits.

We also made meaningful progress toward our objective of growing revenue in our target markets. Since our launch of our new Quantum Max ScanArm in July of 2021, we have continued to receive positive customer feedback and wide acceptance for the tool across all geographic regions. As a result, fourth quarter volumes increased 43% sequentially as customers realized greater value from the speed, accuracy and versatility of the Quantum Max, which increases their productivity in metrology grade scanning applications. We are beginning to see signs of accelerated legacy tool replacement, as well as customers new to FARO, embracing our differentiated solution. We view this as a positive indicator and validates our strategy of early customer engagement to better understand their needs, leading to differentiated solutions that generate higher customer value and additional product demand. In the fourth quarter of 2021, we continued to see strong demand for our photogrammetry based solution, which we acquired through the HoloBuilder acquisition in June of 2021. HoloBuilder's unique workflow, which combines hardware agnostic image capture, artificial intelligence-based task automation, and an intuitive time-phased image viewer has wide-ranging applications across a broad set of markets. HoloBuilder is delivered via a Software as a Service ("SaaS") business model. We are initially focusing on construction and facilities management markets, but we expect to broaden our focus as capabilities in this area continue to expand and mature.

Company Performance in 2021

In 2021, we recorded $337.8 million in total sales in 2021, an increase of 11.2% over 2020. Adjusted EBITDA* was $23.8 million in 2021, or 7.0% of sales, compared to Adjusted EBITDA* of $9.9 million, or 3.3% of sales, in 2020. We maintained cash and cash equivalents of $122.0 million and no debt as of December 31, 2021.

*Note: Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of adjusted EBITDA to the most directly comparable GAAP financial measure is provided in Appendix A to this proxy statement.

Total Shareholder Return

Our one-year Total Shareholder Return (“TSR”) as of December 31, 2021 was -0.9%, which fell behind our industry group, peer group, and the Russell 2000 index. Our three-year TSR as of December 31, 2021 of 72.3% was above the Russell 2000 Index and below our industry group and peer group. For a discussion of the companies in our peer group, see “Review of Peer Group Practices” below. We use the Global Industry Classification Standard (GICS) Subcode 4520 (Technology Hardware and Equipment) developed by Standard & Poor’s Financial Services LLC and MSCI Inc. as our industry group.

Consideration of Say-On-Pay Advisory Vote

At our 2021 annual meeting of shareholders, approximately 98% of the votes cast on the annual say-on-pay vote were voted in favor of the proposal. The TDCC believes that this level of affirmative votes conveyed our shareholders' support of the TDCC's decisions and our existing executive compensation programs. The TDCC reviewed the final vote results and has not made any material changes to our executive compensation programs or policies as a result of the vote.

Overview of 2021 Compensation

The primary components of our 2021 executive compensation for the named executive officers and, their objectives are set forth in the table below. In determining the amount to pay each executive officer, the TDCC considered various factors, including market data, individual roles and responsibilities, and individual performance.


Component	Description	Objective
Base Salary	Fixed cash compensation; reviewed annually	Provide base compensation amount aligned with market
Short-Term Incentives	Variable cash compensation based on performance against annual goals	Provides incentive and motivation for achievement of key objectives
Performance-Based Restricted Stock Units	Variable compensation with payout in shares based upon total shareholder return (relative performance to the Russell 2000 Index) over a three-year performance period	Aligns executive interest with long-term shareholder value creation
Time-Based Restricted Stock Units	Variable compensation with payout in shares subject to annual vesting over a three-year time period	Provides retention and aligns executive interest with long-term shareholder value creation

Executive Compensation Objectives and Philosophy

The TDCC endeavors to ensure the philosophy and operation of our compensation program reinforces our culture and values, creates a balance between risk and reward, attracts, motivates, and retains executives over the long-term and aligns their interests with those of our shareholders. The TDCC strives to provide total compensation to the President and CEO, the other named executive officers and all other employees at the Vice President level and above reporting directly to the President and CEO that is consistent with market conditions and achieves the objective described above. Our executive compensation program includes a significant performance-based component in the form of “at-risk,” equity-based long-term incentives, which in 2021 took the form of a combination of time-based restricted stock units (“TRSUs”) and performance-based restricted stock units (“PRSUs”).

The TDCC has responsibility for establishing, implementing and monitoring adherence with our compensation philosophy. For more information regarding the TDCC’s duties and responsibilities, see pages 14 through 16 of this Proxy Statement.

Compensation Governance Highlights

The TDCC and Company management are mindful of evolving practices in executive compensation and corporate governance. The following policies and practices we maintain are:

•The long-term incentive equity awards granted to our named executive officers include a performance-based equity component representing 50% of the granted value.

•We do not offer newly hired executives “single-trigger” change-in-control cash severance features payable solely upon the occurrence of a change in control.

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

•The 2014 Incentive Plan and the proposed 2022 Equity Incentive Plan prohibits cash buyouts of stock options.

•We maintain a compensation clawback policy, as further described on page 39 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 25 and 39 of this Proxy Statement, respectively.

•Our Company's Insider Trading Policy prohibits hedging and pledging of Company securities by our directors and executive officers.

•The TDCC has determined that the work of its current compensation consultant, Compensia, has not raised any conflicts of interest.

The TDCC has retained compensation consultants from time to time, including for formal director compensation studies in 2015 and 2021 and a formal executive compensation studies in 2018, 2019, and 2021. Such consultants are frequently consulted during the year on various matters and annually to informally update the TDCC on matters delegated to the committee under its charter.

Executive Compensation Components

Base Salary

When setting base salaries, the TDCC considers the Company's overall financial performance and outlook, the compensation levels of comparable positions within our peer group, and each executive’s experience, expertise, level of responsibility, seniority, leadership qualities, professional advancement, individual accomplishment, and other significant contributions to our success. When setting the salaries for the executive officers other than the President and CEO, the TDCC also considers the President and CEO’s recommendations and the prior performance review conducted by the President and CEO. The base salaries of certain of our named executive officers are as follows:


Name	2021 Base Salary		% Increase (Decrease) from 2020
Mr. Burger(1)	$	700,000	-%
Mr. Muhich(1)	$	382,130	-%
Mr. Beadle(1)	$	310,000	-%
Ms. Tyrrell(1)	$	298,981	-%

(1) In February 2021, the TDCC determined to leave executives' salary unchanged.

Short-Term Incentives

Annual short-term cash incentive opportunities are expressed as a percentage of each participant’s base salary. The target award opportunity for Mr. Burger, Mr. Muhich, Mr. Beadle and Ms. Tyrrell in 2021 was 100%, 65%, 60% and 40% of their respective base salaries. As Ms. Tyrrell's employment was terminated during 2021, she was not eligible for a short-term cash incentive payout for 2021.

The TDCC retains the discretion to adjust the annual incentives upward or downward on a subjective basis to ensure an equitable result. The TDCC did not exercise its discretion to adjust the annual incentives upward or downward for 2021.

In accordance with its standard practice, at the beginning of 2021, the TDCC determined that revenue and adjusted EBITDA, each at a 50% weighting, would be the metrics used for determining awards under the Company’s short-term incentive plan (“STIP”), which provides an annual cash incentive to the Company’s management team, including its executive officers. Threshold, target and maximum levels for each metric were established based on the Company’s 2021 annual operating plan.

Company Financial Performance to Goals. The TDCC reviewed and approved the 2021 financial performance targets and 2021 actual performance results, each of which is set forth below ($ in millions):


	Threshold	Target	Maximum	Actual	Weighting
Revenue	$312.6	$347.3	$400.0	$335.2	50%
Pre-STIP Adjusted EBITDA	$23.7	$48.0	$79.6	$30.0	50%

The 2021 STIP that was approved with the Board's approval of the Company's 2021 budget in February 2021, included payouts equal to 25% of the target at threshold, 100% at target, and 200% at maximum of the target award opportunity for each named executive officer. Accordingly, financial performance achievement at threshold, target and maximum levels, weighted 50% on revenue and 50% on adjusted EBITDA, would result in payouts equal to 12.5%, 50% and 100%, respectively, of the target award.

Aggregate Performance Results. As a result of our 2021 performance plan goals, the short-term incentive award earned by each named executive officer was 59.0% of such executive’s short-term incentive award target. The payout represents a 74% achievement of our Revenue goal and 44% achievement for the Adjusted EBITDA performance goal calculated using the linear interpolation relationship between payout thresholds. Neither EBITDA or revenue target performance goals were achieved, resulting in a total % payout below 100% reflecting the pay for performance plan design.

Long-Term Incentives

Grants to executives of equity incentive compensation are determined by the TDCC and are designed to align a portion of the executive compensation package with the long-term interests of our shareholders. The long-term equity incentive awards granted in 2021 to Messrs. Burger, Muhich, Beadle and Ms. Tyrrell considered the advice of its compensation consultant, Compensia. As a result, the TDCC determined the mix and vesting of equity awards granted to our named executive officers in 2021 as follows: (1) 50% of the value of the equity awards was in the form of PRSUs, which vest at the end of three years based upon the Company's relative total shareholder return ("TSR") compared to the TSR of the companies in the Russell 2000 Growth Index and pre-established thresholds; and (2) 50% of the value of the equity awards was in the form of TRSUs that vest in equal installments over three years. The TDCC typically grants fair value of the equity incentive awards to approximate the median of our peer group, with adjustments as necessary for the individual executive due to retention concerns and performance.

Grant Policy. We have adopted an equity award grant policy to (i) grant equity incentives for current employees annually on the later to occur of (a) the date the award is approved and (b) the second business day following the filing of our Annual Report on Form 10-K, which usually occurs in late February or early March of each year, and (ii) grant equity incentives for newly hired individuals granted on the first day of the month following the later of their respective date of hire or the date the award was approved. The annual grant of equity incentive awards is made without regard to the timing of the release of any other material information that may not be contained in the annual earnings release, as well as without regard to whether possible positive or negative information is contained in the annual earnings release.

2021 Annual Grants. The TDCC established the following target long-term equity award values based on recommendations from Compensia, our compensation consultant, and market data for the 2021 grants for Messrs. Burger, Muhich, Beadle and Ms. Tyrrell. The TDCC for each executive also establishes long-term equity award values based upon the executive's 2020 performance and retention considerations. TRSUs granted in 2021 to executives as part of the annual equity grant program are earned and vest in three annual installments, provided that the grantee is employed by us on the vesting date. The PRSUs will be earned based on how our total shareholder return, or TSR, compares to the TSR of the Russell 2000 Growth Index during the performance period from February 19, 2021 to February 19, 2024 (the “Relative TSR”). Up to 200% of the target number of performance-based RSUs granted may be earned based on our Relative TSR during the performance period.

The following TRSUs and PRSUs were granted in relation to the 2021 annual equity grant:


Name	Grant Date	TRSUs	PRSUs
Mr. Burger	2/19/2021	11,930	11,931
Mr. Muhich	2/19/2021	3,660	3,661
Mr. Beadle	2/19/2021	1,899	1,900
Ms. Tyrrell	2/19/2021	1,621	1,621

Role of the Compensation Consultant

The TDCC has the authority to retain consultants and to obtain advice and assistance from other external legal, accounting or other advisors, at the Company's expense. The TDCC engaged Compensia as its compensation consultant with respect to the 2018 through 2021 board and executive compensation. In this role, the designated compensation consultant reports to and is instructed by the TDCC. Compensia provides no other services to the Company. The TDCC has the sole authority to approve the fees and other terms and conditions of any engagement with its independent advisor. The TDCC annually considers the independence of its designated compensation consultant relative to the six factors prescribed by the Securities and Exchange Commission (the “SEC”) and the Nasdaq Stock Market (“Nasdaq”), and has concluded that the work of Compensia as the TDCC’s compensation consultant does not raise any conflict of interest.

During 2021, Compensia’s services to the TDCC were primarily with respect to consultations regarding, among other matters, (i) updated market data and compensation trends for new executive hires; (ii) updated market data and compensation trends generally; (iii) specific updated market data regarding compensation for each of our executive officer roles; and (iv) a high-level evaluation of our executive compensation program relative to best practices.

In the years when a full competitive review of our compensation programs is not done, the TDCC retains the compensation consultant to informally update the TDCC on matters that have been delegated to the TDCC under its charter.

Role of the President and CEO in Compensation Decisions

The President and CEO reviews and evaluates, on both an annual and mid-year basis, the employees who report directly to him, including the other named executive officers. The President and CEO also reviews and evaluates the

recommendations made with respect to other executive officers and recommends any modifications that he deems appropriate. The President and CEO reviews his overall findings with the TDCC, including his review of the employees who report directly to him, and then recommends to the TDCC equity and non-equity awards and annual compensation adjustments for all executive officers, other than himself.

Review of Peer Group Practices

The TDCC reviews and analyzes the executive compensation program using a Peer Group representative of companies of similar size and revenue to determine whether it provides reasonable compensation at appropriate levels when compared to market. The TDCC periodically engages an independent compensation consultant, Compensia, for this analysis and review. The most recent comprehensive competitive market study conducted by Compensia was completed in the fourth quarter of 2021 which resulted in a change to the peer group composition to reflect our shift into software-driven markets which will be used to make executive compensation decisions in 2022.

With respect to making its 2021 compensation decisions, the following companies were included in the peer group:

Company

Ticker

Industry Description

3D Systems

DDD

Technology Hardware, Storage & Peripherals

8x8, Inc.

EGHT

Application Software

A10 Networks Inc.

ATEN

Systems Software

American Software, Inc.

AMSWA

Application Software

Avid Technology, Inc.

AVID

Technology Hardware, Storage & Peripherals

Axcelis Technologies, Inc.

ACLS

Semiconductor Equipment

Cerence, Inc.

CRNC

Application Software

CTS Corporation

CTS

Electronic Manufacturing Services

FormFactor, Inc.

FORM

Semiconductor Equipment

InterDigital, Inc.

IDCC

Application Software

Knowles Corporation

Electronic Components

Momentive Global Inc.

MNTV

Application Software

Novanta Inc.

NOVT

Electronic Equipment and Instruments

PROS Holdings, Inc.

PRO

Application Software

Rogers Corporation

ROG

Electronic Components

SPS Commerce, Inc.

SPSC

Application Software

Thermon Group Holdings, Inc.

THR

Electrical Components and Equipment

Upland Software, Inc.

UPLD

Application Software

Veeco Instruments Inc.

VECO

Semiconductor Equipment

Vicor Corporation

VICR

Electrical Components and Equipment

Zuora, Inc.

ZUO

Systems Software

These companies were selected based on a variety of criteria, with a focus on being reasonably comparable to the Company in terms of industry focus, global operational scope, revenue size, and market value.

When setting compensation levels, the TDCC reviews and considers the competitive market information obtained from these studies and intends for total direct compensation (base salary, annual incentive awards and the grant date fair value of long-term equity awards) to approximate the median of the peer group. The peer group data, however, is not determinative of the executives’ compensation; instead, the TDCC uses the peer group data as one of many inputs in its deliberations, which also include discussions of economic and industry conditions, current and anticipated Company performance, individual executive performance and potential performance, and internal pay equity. In considering these and other factors, the TDCC does not seek to specifically weight each factor but rather considers them in the aggregate and exercises judgment.

Employment Agreements and Amended and Restated Change in Control Severance Policy

Employment Agreements. We have entered into an employment agreement with Mr. Burger that provides for severance benefits. As described in greater detail under “Potential Payments Upon Termination or Change in Control” on pages 46 through 49 of this Proxy Statement, pursuant to this employment agreement, Mr. Burger is entitled to severance benefits in the event of the termination of his employment by us other than for cause or disability, by our providing written notice of non-extension of the employment period set forth in the agreement or resignation by Mr. Burger for good reason. Severance protection plays an important role in attracting, motivating and retaining highly talented executives.

Amended and Restated Change in Control Severance Policy. Mr. Burger is also covered by our Amended and Restated Change in Control Severance Policy, or the CIC Policy, with the additional provision set forth in his employment agreement

that if the target amount of Mr. Burger’s annual cash bonus for the year in which a qualifying termination (as defined in CIC Policy) takes place is greater than the aggregate of (i) the bonus amount (as defined in the CIC Policy) and (ii) the pro-rated bonus amount provided for in the Policy, then he will receive such target amount in lieu of the bonus amounts described in clauses (i) and (ii) above. In addition, if during the period of time beginning with a change in control (as defined in the CIC Policy) and ending 12 months following such change in control, the Company terminates Mr. Burger’s employment other than for cause or his employment terminates due to his resignation for good reason, as of the date of such termination, (a) any outstanding and unvested stock options held by him will become fully exercisable, (b) any outstanding time-vesting, stock-based awards held by him will become fully vested and payable and (c) any outstanding performance-vesting stock-based awards will become fully vested and payable at the greater of actual performance or target.

Executive Severance Plan. On February 14, 2019, the Board adopted the FARO Technologies, Inc. Executive Severance Plan (the “Executive Severance Plan”), which provides eligible employees at the senior vice president level or above who are not otherwise covered by an individual employment agreement that provides severance benefits in the event they are involuntarily terminated by us other than for cause or as a result of his or her death or disability. This plan was adopted to formalize severance benefits for those eligible employees. Mr. Muhich and Mr. Beadle are participants in the Executive Severance Plan. Ms. Tyrrell was a participant in the Executive Severance Plan up until her termination in 2021.

Policies Regarding Termination and/or Change-in-Control Benefits Payable to New Hires. It is the TDCC’s intention that it will provide change-in-control protection to newly-hired executives in the form of (i) acceleration of vesting for outstanding equity awards under the Company's 2014 Incentive Plan, and (ii) severance benefits under the CIC Policy. The TDCC recognizes, however, that in the context of a change-in-control transaction, certain payments, such as retention bonuses, may be advisable. Accordingly, the TDCC retains the discretion to enter into such arrangements in the event of an actual change-in-control transaction.

Executive Benefits and Perquisites

We provide limited perquisites and personal benefits to our named executive officers, including, among other items, relocation and temporary housing expense benefits for newly hired executive officers. We do not provide pension arrangements, post-retirement health coverage, or similar benefits for our executives.

The named executive officers participate in our Vice President and Above Life Insurance Plan (the “Life Insurance Plan”) and Executive Long-Term and Short-Term Disability Plans. Under the Life Insurance Plan, we pay all required premiums for life insurance on executive officers, which includes the named executive officers. The named executive officers also have a life insurance benefit of three (3) times their annual salary up to a maximum benefit of $750,000. After age 65, benefits are reduced as follows:

•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.

Our Long-Term Disability Plan is intended to replace a reasonable amount of an executive officer’s income upon disability. The plan provides a total benefit in the event of a qualifying disability of up to 60% of pre-disability income, with a maximum benefit of $15,000 per month paid up until the age of 65 or longer (depending on when the participant becomes disabled). Further, the Company offers additional individual disability insurance ("IDI") that provides incremental benefit above the aforementioned maximum benefit of the Company's Long-Term Disability Plan to 66.67% of an enrolled executive's pre-tax base salary, up to a combined total maximum monthly benefit of $30,000 per month.

The named executive officers also participate in various health and welfare programs generally available to all employees. All employees, including named executive officers, who participate in our 401(k) plan are eligible to receive a 100% match on the first 1% of compensation deferred and a 50% match on each additional dollar of compensation deferred, up to a maximum of 6% of their compensation, not to exceed the maximum allowed by the Internal Revenue Service.

Corporate Tax and Accounting Considerations

Historically, Section 162(m) of the Code generally disallowed a tax deduction to public companies for compensation over $1,000,000 paid to their chief executive officer and the three other highest paid executive officers, other than the chief financial officer. Qualifying performance-based compensation was not subject to the deduction limit if certain requirements were met. With the passage of the U.S. Tax Cuts and Jobs Act of 2017, Section 162(m) was amended to repeal the performance-based compensation exemption from the deduction limit and to include compensation paid to chief financial officers, effective for taxable years beginning after December 31, 2017. As a result, compensation paid in 2018 and later years to our named executive officers in excess of $1 million is not deductible unless it qualifies for transitional relief applicable to certain binding, written performance-based compensation arrangements that were in place as of November 2, 2017. The TDCC considers tax deductibility when making executive compensation decisions, but reserves the right to award compensation that is not fully tax deductible when viewed as necessary to accomplish other compensation program objectives. The TDCC believes that our shareholders’ interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some compensation may result in non-deductible compensation expense.

Stock Ownership Guidelines

The TDCC has adopted stock ownership guidelines to directly align the interests of executive officers with the interests of our shareholders. Under these guidelines, the President and CEO is required to own stock having a value equal to six times his annual base salary and the other executive officers are required to own stock having a value equal to two times their annual base salary. The ownership requirement may be satisfied through holdings of (i) equity awards granted by the Company, the values of which are calculated based on the higher of (a) the grant date fair value of the equity awards or (b) the then-current value of the equity awards on the date compliance is determined, and/or (ii) shares of common stock purchased by the executive independently, the values of which are calculated based on the closing price of our common stock on the purchase date. Each executive officer must comply with the minimum ownership requirements within five years after he or she becomes subject to the policy or the executive will be precluded from subsequent sales and transfer of shares and options awarded to the executive under our equity incentive plans. The TDCC periodically reviews the status of each executive’s equity holdings relative to our stock ownership guidelines. Our current executive officers are in compliance with the policy.

Compensation Clawback Policy

In April 2011, the TDCC adopted a clawback policy with respect to the performance-based compensation awarded to our executive officers. The clawback policy requires that, in the event of a restatement of our financial statements that reduces the amount of performance-based compensation an executive officer would have received under the restated results, and if a court determines that an executive officer engaged in fraud or intentional illegal conduct that materially contributed to the need for the restatement, an independent committee of the Board must seek, subject to certain exceptions, to recover from that executive officer the after-tax difference between the performance-based compensation actually awarded to the officer and the amount the officer would have received under the restated financials.

Insider Trading Policy

Our Insider Trading Policy prohibits hedging and pledging of Company securities by our directors and executive officers. None of our directors or executive officers have any shares that are pledged to third parties. Under FARO’s Insider Trading Policy, all directors, officers and employees of the Company and their respective household members (collectively, “Covered Persons”), including any entities influenced or controlled by a Covered Person, are prohibited from engaging in short sales or hedging transactions involving FARO securities, including forward sale or purchase contracts, equity swaps or exchange funds. Covered Persons are also prohibited from engaging in puts, calls or other options or derivative instruments involving FARO securities. Further, we do not allow Covered Persons to pledge FARO securities at any time, which includes having FARO stock in a margin account or using FARO stocks as collateral for a loan.

Talent, Development & Compensation Committee Report

The TDCC has the overall responsibility of evaluating the performance and determining the compensation of the President and CEO and approving the compensation structure for the Company’s other executive officers. In fulfilling its responsibilities, the TDCC has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussion, the TDCC recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for the 2022 Annual Meeting of Shareholders for filing with the SEC, and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 16, 2022.

Talent Development & Compensation Committee:

Yuval Wasserman, TDCC Member (Chair)

Lynn Brubaker, TDCC Member

Stephen R. Cole, TDCC Member

John Donofrio, TDCC Member

Jeroen van Rotterdam, TDCC Member

Alex Davern, TDCC Member

Moonhie Chin, TDCC Member

Summary Compensation Table

The following table sets forth information concerning compensation paid to or earned by our named executive officers for the years ended December 31, 2021, and, if applicable, December 31, 2020 and December 31, 2019.


Name and Principal Position	Year	Salary ($)(1)	Bonus ($)(2)	Stock Awards ($)(3)(7)	Non-Equity Incentive Plan Compensation ($)(4)	All Other Compensation ($)(5)	Total ($)
Michael D. Burger	2021	700,000	—	2,837,935	413,000	12,064	3,962,999
President and Chief Executive Officer	2020	700,000	—	2,299,778	480,900	26,778	3,507,456
	2019	350,000	500,000	3,653,082	377,808	77,529	4,958,419

Allen Muhich	2021	382,130	—	870,750	146,547	1,914	1,401,341
Chief Financial Officer	2020	376,223	—	689,847	170,640	14,477	1,251,187
	2019	144,119	200,000	1,150,197	104,388	7,360	1,606,064

Kevin Beadle	2021	310,000	—	451,861	109,740	8,056	879,657
Senior Vice President of Sales	2020	310,000	—	356,403	127,782	11,454	805,639

Katrona Tyrrell	2021	170,765	40,000	310,256	—	309,545	830,566
Former Chief People Officer (6)	2020	294,359	—	395,310	82,160	11,475	783,304
	2019	288,347	—	283,302	—	8,483	580,132

(1)Salary adjustments, if any, are applied each year in March. In 2021, as a result of a peer based compensation review performed by the TDCC, no executives received base salary adjustments. Ms. Tyrrell resigned from her position as Chief People Officer, Senior Vice President, Human Resources on June 28, 2021. Accordingly, the amounts in this column, which represent actual amounts earned in the applicable year, may differ from the base salary amounts discussed in the Compensation Discussion and Analysis.

(2)The amounts shown in this column for 2019 represent sign-on bonuses paid to the applicable named executive officer. The amount shown for Ms. Tyrrell in this column for 2021 represents a spot bonus paid in accordance with her Transition Agreement.

(3)Reflects the grant date fair value of stock 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 PRSUs are included in Note 13 (“Stock Compensation Plans”) to our audited financial statements for the year ended December 31, 2021 and December 31, 2020, included in our Annual Report on Form 10-K respectively filed with the SEC on February 16, 2022 and February 17, 2021. For 2021, the amounts reported in this table include the grant date fair value of the PRSUs, assuming probable achievement. Assuming maximum achievement, the grant date fair value of these awards for each of Mr. Burger, Mr. Muhich, Mr. Beadle and Ms. Tyrrell would have been $2,200,076, $675,088, $350,360 and $298,912 respectively. For 2020, the amounts reported in this table include the grant date fair value of the PRSUs, assuming probable achievement. Assuming maximum achievement, the grant date fair value of these awards for each of Mr. Burger, Mr. Muhich, Mr. Beadle and Ms. Tyrrell would have been $2,000,029, $599,972, $309,942 and $343,830, respectively. For 2019, the amounts reported in this table include the grant date fair value of the PRSUs, assuming probable achievement. Assuming maximum achievement, the grant date fair value of these awards for each of Mr. Burger, Mr. Muhich and Ms. Tyrrell would have been $2,999,997, $999,991 and $238,724, respectively.

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

(5)Includes for 2021:


	Short-Term Disability Premiums ($)	Long-Term Disability Premiums ($)	Life Insurance Premiums ($)	401(k) Match ($)	Relocation Costs ($)	Severance Benefits ($)		Total ($)
Mr. Burger	684	420	810	10,150	—	—		12,064
Mr. Muhich	684	420	810	—	—	—	12,064	1,914
Mr. Beadle	684	420	810	6,142	—	—		8,056
Ms. Tyrrell	395	242	467	9,460	—	298,981		309,545

(6)The amount shown for Ms. Tyrrell for 2021 in the Stock Awards column includes a reduction of $75,331 in the fair value of RSUs granted to Ms. Tyrrell in 2019, 2020, and 2021 that were modified to completely vest in 2021 pursuant to her Transition Agreement. Further, the amounts shown for Ms. Tyrrell for 2021 in the All Other Compensation column includes a severance benefit of $298,981 of which $137,991 was paid in 2021.

(7)The increase in executive stock awards from 2020 to 2021 resulted from additional stock award granted in alignment with market target values. Per our plan design, 50% of executive stock compensation is delivered through PRSUs which are directly tied to TSR performance. As TSR performance in 2021 has underperformed peers, the actual 2021 PRSU grant value as of April 14, 2022 was valued at $0, which demonstrates our pay for performance plan design. Executive base compensation and target bonus remains unchanged.

Chief Executive Officer Pay Ratio

We are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Burger, our President and CEO:

For 2021, our last completed year:

▪the median of the annual total compensation of all employees for our Company (other than our President and CEO) was $57,631; and

▪the annual total compensation of our President and CEO, was $3,962,999.

Based on this information for 2021, we estimate that the ratio of our President and CEO’s annual total compensation to the annual total compensation of our median employee was 69:1. Our pay ratio estimate has been calculated in a manner consistent with Item 402(u) of Regulation S-K.

The median employee was identified by reviewing the base salary and wages paid during the 12-month period ending December 31, 2021 to all of our employees, excluding our current President and Chief Executive Officer, who was employed by the Company in that capacity for the full year ended December 31, 2021. All of our employees as of December 31, 2021 were included, whether employed on a full-time, part-time or seasonal basis. Adjustments were made to annualize the compensation of our employees who were not employed by the Company for the entire year.

After identifying the median employee based on base salary and wages, we then determined that median employee’s 2021 annual total compensation, including any equity grants, perquisites and other benefits, using the same methodology used to determine the annual total compensation of our President and CEO for purposes of the Summary Compensation Table. The total compensation of our median employee was determined to be $57,631. This total compensation amount for our median employee was then compared to the total compensation of our current President and CEO, from the amount disclosed above in the Summary Compensation Table. The elements included in the President and CEO's total compensation are fully discussed above in the footnotes to the Summary Compensation Table. For the year ended December 31, 2021, the total compensation for our President and CEO, Mr. Burger, was $3,962,999, as reported in the “Total” column of the Summary Compensation Table on page 40.

2021 Grants of Plan-Based Awards

The following table summarizes grants of plan-based awards made to each of the named executive officers during 2021:


Name	Grant Date	Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1)			Estimated Future Payouts Under Equity Incentive Plan Awards (2)			All Other Stock Awards: Number of Shares of Stock or Units (#)(3)	Grant Date Fair Value of Stock ($)(4)

		Threshold ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)
Mr. Burger	—	175,000	700,000	1,400,000
	2/19/2021							11,930	1,099,946
	2/19/2021				2,982	11,931	23,862		1,737,989
Mr. Muhich	—	62,096	248,385	496,770
	2/19/2021							3,660	337,452
	2/19/2021				915	3,661	7,322		533,298
Mr. Beadle	—	46,500	186,000	372,000
	2/19/2021							1,899	175,088
	2/19/2021				475	1,900	3,800		276,773
Ms. Tyrrell		29,898	119,593	239,186
	2/19/2021							1621	149,456
	2/19/2021				405	1,621	3,242		236,131

(1)Reflects possible payout opportunities under our short-term cash incentive award program. These amounts are annualized possible payout opportunities. Ms. Tyrrell resigned from her position as Chief People Officer, Senior Vice President, Human Resources on June 28, 2021 as such, she was not eligible to earn a payout under the short-term cash incentive award program. Additional information about our short-term cash incentive award program are included in the Compensation Discussion and Analysis under “Executive Compensation Components—Short-Term Incentives.”

(2)For the named executive officers reflects possible payout opportunities of performance-based RSUs granted under the 2014 Incentive Plan, as described in the Compensation Discussion and Analysis under “Long-Term Incentives.”

(3)Reflects time-based RSUs 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 PRSUs and TRSUs are included in Note 13 (“Stock Compensation Plans”) to our audited financial statements for the year ended December 31, 2021, included in our Annual Report on Form 10-K filed with the SEC on February 16, 2022.

Outstanding Equity Awards at 2021 Fiscal Year-End

The following table sets forth information on outstanding stock awards held by the named executive officers as of December 31, 2021.


	Stock Awards
Name	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)(1)	Equity Incentive Plan Awards: Number of Unearned Shares or Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan: Market or Payout Value of Unearned Shares or Units or Other Rights That Have Not Vested ($) (1)
Mr. Burger	10,421	(2)	729,678	—	—
	10,780	(3)	754,816	—	—
	11,930	(4)	835,339	—	—

SEC Form DEF 14A filed by FARO Technologies Inc.