Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On January 10, 2013, the board of directors of Proto Labs, Inc. (the "Company") approved the Company's 2013 annual incentive bonus program (the "Program") in which all employees other than commissioned sales people participate. The Program provides that bonus payouts under the Program will be a function of revenue growth and adjusted operating income ("AOI") during 2013. For these purposes, AOI is defined as operating income before stock based compensation expense.

The Program contains revenue and AOI objectives for the Company as a whole and for each of its major geographic business units (the United States, the European Union and Japan). A participant's bonus payout will be determined by multiplying his or her target payout amount (which is specified by our compensation committee as a percentage of the individual's annual base salary) by both the applicable revenue and AOI payout factors (the "Bonus Payout"). The revenue payout factor is zero for 2013 revenue below specified threshold amounts for the Company and each of its business units, is 50% at those threshold amounts, and increases (with no maximum) in amounts specified by the compensation committee to the degree revenue exceeds the respective threshold amounts. The AOI factor is zero for AOI (expressed as a percentage of revenue) below specified threshold amounts for the Company and each of its business units, and increases on a linear basis to 100% for AOI at or above specified maximum amounts. A multiplier in the range of 0.9 to 1.1 will be applied to increase or decrease the Bonus Payout based on the success of the Company in achieving its strategic objectives for 2013.

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