GSI Group (GSIG)

2007 Executive Compensation:

The amounts and detail paid to NEOs under 2007 executive compensation plans are detailed in the compensation tables that follow this section. This section should be read in conjunction with the Executive Compensation Program Elements section above.

2007 NEO salaries were set based on performance, scope of responsibility and experience, tenure and peer pay data. Base salaries generally fell around the mean paid by peers in comparable positions based on the Radford executive compensation survey data, where that data was available for the position in question. Base salary is not contingent upon overall Company-wide financial performance, although projected financial performance can affect the timing or amount of any subsequent salary increases.

2007 NEO cash incentive plan bonuses were paid based on the achievement of financial and individual performance against MBOs. 2007 bonus plans were heavily weighted towards financial performance, accounting for 70% of the bonus opportunity. The 2007 cash incentive bonus financial goal was $30 Million of operating income. Operating income was defined as income before interest income/(expense), other income/(expense) and foreign currency gains and losses. The Committee also excluded restructuring charges associated with a move of manufacturing assets and personnel from the Company’s UK facilities to its China facilities. No points were awarded for operating income under $27 Million. Points were awarded on a linear interpolation scale between $27 Million and $30 Million, and the ability to earn points above $30 Million was uncapped. The Company’s 2007 audited financial statements reported just under $29.3 Million in adjusted operating income, resulting in a weighted score of 54% for financial goals. The remaining 30% of the available cash incentive bonus opportunity was based on individual MBOs, with the Committee retaining the discretion to increase MBO bonuses for exceptional individual performance. Executives that had principal responsibility for a product group were given MBOs that were heavily skewed towards product group financial and market share performance. Executives without direct product line responsibility were given non-financial MBOs that advanced their particular areas of responsibility. The Committee exercised its bonus award discretion for one NEO in 2007 based on operating unit financial performance. All NEOs also earned a one-time $100,000 retention bonus for remaining with the company through the CEO transition (see Management Retention Agreements above).

The Company’s 2007 long term incentive plan (“LTIP”) granted restricted stock to NEOs per Committee approval. The 2007 grants were 50% time-based and 50% performance-based restricted stock grants. The time-based grants vest equally over three years, beginning with the first anniversary of the grant, which is consistent with the Committee’s belief that time-based grants are intended to incentivize participants for continuing service to the Company, and to insure that individuals develop an ownership interest in the Company. The 2007 performance-based share grants were dependent on meeting an operating profit goal based on the 2007 audited results. Earned awards vest one-third annually over three years, beginning with the year in which the award is earned. Operating profit was calculated exclusive of amortization charges associated with acquisitions, acquired in-process R&D and non-recurring restructuring charges. The Committee retained discretion to adjust operating profit targets in the event of a business disposition, but did not invoke its discretion during 2007 The Plan provided for full vesting at 9.3% operating profit, no vesting at or under 8.5%, and an earn-out cap of 10.5% (or 88% of total base share grant). In 2007, the Company reported an operating profit of 9.2% based on audited results and therefore NEOs earned 88% of their performance-based grant, and vested the first one-third of their awards on March 26, 2008. NEOs also vested the second tranche of their 2006 LTIP awards.

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Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference to the Company’s 2008 Proxy Statement which is to be filed with the SEC pursuant to Regulation 14A on or about April 14, 2008, including specifically the “Compensation Committee Report”.

Item 11. Executive Compensation

The information required by this Item is
incorporated herein by reference to the Company’s 2008 Proxy Statement which is to be filed with the SEC pursuant to Regulation 14A on or about April 14, 2008, including specifically the “Compensation Committee Report”.

Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference to the Company’s 2007 Proxy Statement which is to be filed with the SEC pursuant to Regulation 14A on or about April 17, 2007, including specifically the “Compensation Committee Report”.

EXECUTIVE COMPENSATION

The following table, presented in accordance with the rules of the United States Securities and Exchange Commission, sets forth information with respect to the compensation earned during the fiscal years ended December 31, 2005, 2004 and 2003 by the Company’s Chief Executive Officer and the four other most highly compensated executive officers of the Company who received annual compensation in excess of $100,000 (collectively, with the Chief Executive Officer, the “Named Executive Officers”).

Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference to the Company’s 2006 Proxy Statement which is to be filed with the SEC pursuant to Regulation 14A on or about April 17, 2006.

Equity Compensation Plan Information—The information required by this Item is incorporated herein by reference to the Company’s 2006 Proxy Statement which is to be filed with the SEC pursuant to Regulation 14A on or about April 17, 2006.

EXECUTIVE COMPENSATION