The Compensation Committee (the "Committee") of the Board of Directors of IPG Photonics Corporation (the "Company") has taken the actions described below relating to the compensation of the "named executive officers," as such term is defined in Item 402(a)(3) of Regulation S-K, of the Company as of December 31, 2007 and certain other executive officers of the Company.

On December 19, 2008, the Committee approved increases in base salaries and determined performance measures and target incentive payouts for 2009 for the named executive officers and other executive officers. The new base salaries are effective January 1, 2009.

In accordance with the employment agreements with such executive officers, the Committee reviewed each executive's performance and base salary annually, in light of conpetitive data, the Company's performance, and executive's performance, and determined to increase the salaries as set forth below. The table below sets forth the base salaries effective January 1, 2009 for each named executive officer and the other executive officers:

                                 Old Base      New Base
Name and Title                    Salary        Salary
Valentin P. Gapontsev,
Ph.D., Chief                     $380,000      $395,000
Executive Officer and
Chairman of the Board
Eugene Shcherbakov, Ph.D.,
Managing Director of IPG        EUR246,960    EUR257,000
Laser GmbH and Director
Timothy P.V. Mammen, Chief
Financial Officer and Vice       $283,500      $295,000
President
Angelo P. Lopresti, General
Counsel, Secretary and Vice      $283,500      $295,000
President
Alexander Ovtchinnikov,
Ph.D., Vice President-           $252,000      $275,000
Telecommunications Products
William S. Shiner, Vice
President-Indirect Markets       $252,000      $262,000
George H. BuAbbud, Ph.D.,
Vice                             $252,000      $262,000
President-Telecommunications
Products

Employees of the Company who are at least at the level of vice president or director are eligible to receive awards under the Company's Executive Short-Term Incentive Plan (the "STIP"). On December 19, 2008, the Committee identified two financial performance measures for 2009, net sales and earnings before interest and taxes (excluding equity-based compensation expenses and certain legal expenses), as determined under the STIP, and assigned a 50% weighting factor to each performance measure. Upon the achievement of the objectives for both financial performance measures determined by the Committee, the Chief Executive Officer could receive a cash incentive payment ranging from 14% (upon achievement of both minimum levels of performance) to 84% (upon achievement of both top levels of performance) of base salary, and other participants in the STIP could receive a cash incentive payment ranging from 9% (upon achievement of both minimum levels of performance) to 56% (upon achievement of both top levels of performance) of base salary. If performance exceeds the top targets, then additional amounts could be paid under the STIP, subject to maximum payouts adopted under the 2009 STIP. The financial objectives are the same for all executive officers. No payments for the financial measures would be made if the minimum objectives established by the Committee in 2009 are not met. In addition, the Committee approved a cash incentive payment of up to 19% for the Chief Executive Officer and up to 9% for other executives based upon a review of the individual performance and achievements of the respective executives in 2009.