Peter Lau
About Peter Lau
Peter J. Lau (age 45) is FARO’s President, Chief Executive Officer, and a director since July 2023; he holds a B.S. in Business Administration from Northeastern University and brings deep operating leadership from GE, Honeywell, Hubbell, and MSouth’s Catalyst Nutraceuticals board . Under his tenure, 2024 saw adjusted EBITDA of $39.6 million (+$36.9 million year over year), management free cash flow of $35.3 million, and non-GAAP gross margin expansion to 55.2%; total revenue was $342.4 million versus a $370.0 million target, and a $100 fixed investment in FARO shares ended 2024 valued at $50.35 in the Pay vs. Performance construct . FARO reported $31 million of cash from operations in 2024 and executed $10 million of buybacks; the company closed 2024 with $98.7 million cash and $72.3 million of debt (net cash $16.4 million) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Catalyst Nutraceuticals (MSouth PE portfolio) | Chief Executive Officer; continues as board member | Oct 2022 – Jul 2023 (CEO); ongoing board | Led portfolio company; continued board engagement |
| Hubbell Incorporated (Electrical segment) | President, Electrical segment | Aug 2020 – Sep 2022 | Drove operating execution and profitable growth |
| Honeywell | President, Fire Detection & Control; President, Global Security | Apr 2019 – Aug 2020; Jan 2018 – Apr 2019 | Executed operational improvements across safety/security businesses |
| Current, a GE company (and various GE roles since 2003) | CEO, International; other leadership roles | Sep 2015 – Jan 2018; since 2003 at GE | Business transformation toward software/solutions subscription model; supply chain and lean excellence |
External Roles
| Organization | Role | Years |
|---|---|---|
| Catalyst Nutraceuticals | Board member | Jul 2023 – present |
Fixed Compensation
| Component | 2024 | Notes |
|---|---|---|
| Base salary | $600,000 | Set between 25th–50th percentile of peer group at hire; no increase in 2024 |
| Target bonus % | 100% of base salary | CEO STIP target |
| Actual bonus paid (STIP) | $438,000 | Company payout multiplier of 73% applied to target |
| All other compensation (benefits) | $13,626 | Life and disability insurance premiums and 401(k) match |
Performance Compensation
Short-Term Incentive Plan (STIP) – FY2024
| Metric | Weight | Threshold | Target | Maximum | Actual | Payout multiplier |
|---|---|---|---|---|---|---|
| Revenue | 33.3% | $350.0m | $370.0m | $400.0m | $342.4m | 0% |
| Management Free Cash Flow | 33.3% | $21.0m | $34.0m | $50.5m | $35.3m | 108% |
| Pre-STIP Adjusted EBITDA | 33.3% | $29.0m | $42.0m | $61.5m | $44.1m | 111% |
| Company payout multiplier | — | — | — | — | — | 73% |
STIP payout mechanics: Company multiplier (capped at 200%) x individual STIP target .
Long-Term Incentives – Grants and Design
| Grant type | Grant date | Shares granted | Vesting | Performance curve |
|---|---|---|---|---|
| Time-based RSUs (TRSUs) | Mar 1, 2024 | 41,348 | 1/3 each on Mar 1, 2025/2026/2027 (continued service) | |
| Performance RSUs (PRSUs) | Mar 1, 2024 | 62,022 | Cliff vest Mar 1, 2027 based on 3-year Relative TSR vs Russell 2000 | |
| PRSU payout curve (positive TSR) | — | — | Threshold: 25th percentile = 25%; Target: 55th percentile = 100%; Max: 80th percentile = 200% | |
| PRSU payout curve (negative TSR) | — | — | Threshold/Target unchanged; Max capped at 100% |
Outstanding CEO awards at FY-end:
| Award | Unvested shares | Market value (12/31/2024) | Vesting date |
|---|---|---|---|
| 2023 TRSUs | 72,473 | $1,837,915 | Jul 24, 2024/2025/2026 (in thirds) |
| 2024 TRSUs | 41,348 | $1,048,585 | Mar 1, 2025/2026/2027 (in thirds) |
| 2023 PRSUs | 163,064 | $4,135,303 | Aug 2, 2026 (subject to performance) |
| 2024 PRSUs | 62,022 | $1,572,878 | Mar 1, 2027 (subject to performance) |
Stock vested in 2024: 36,236 shares; value realized $615,287; 10,647 shares withheld for taxes .
CEO LTIP mix and targets: 40% time-based RSUs, 60% PRSUs; 2024 target LTIP equity split consistent with pay-for-performance philosophy .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 29,319 shares (<1% of outstanding) as of Mar 21, 2025 |
| Shares outstanding (record date) | 19,225,837 shares |
| Options held | None; FARO disclosed no executive stock options outstanding |
| Unvested equity (selected) | TRSUs: 72,473 (2023) and 41,348 (2024); PRSUs: 163,064 (2023) and 62,022 (2024) |
| Stock ownership guidelines | CEO: 6x base salary; others: 3x base; assessed annually; executives compliant or within phase-in by Dec 31, 2024 |
| Hedging/pledging | Prohibited for covered persons; no shares pledged by directors or executive officers |
| Insider trading compliance | Company reports timely Section 16 filings in 2024 except one director; no indication of delinquency for Mr. Lau |
Employment Terms
| Provision | Key terms |
|---|---|
| CEO appointment date | July 2023; director since 2023 |
| Change-in-control (CIC) cash | $1,800,000 (200% salary + target bonus), plus up to 12 months COBRA; double-trigger structure |
| Non-CIC involuntary cash | $1,200,000 (200% salary), plus up to 12 months COBRA |
| Equity on CIC | If awards not assumed, time-based equity vests; PRSUs deemed earned based on actual achievement to CIC date with pro rata; if assumed, unvested equity accelerates upon termination without Cause/for Good Reason within 12 months |
| Clawback policy | Adopted Oct 24, 2023; effective Dec 1, 2023; applies to incentive-based cash and equity; compliant with SEC/Nasdaq rules |
| Tax gross-ups | None on CIC benefits (explicit governance feature) |
Pay Versus Performance and Governance Context
- Say-on-Pay approval was >93% in 2024; the company maintained program design with strong pay-for-performance emphasis .
- 2024 performance highlights include adjusted EBITDA of $39.6 million, management free cash flow of $35.3 million, revenue of $342.4 million versus target, and non-GAAP gross margin of 55.2% .
- FARO’s Pay vs. Performance table shows the $100 fixed investment value at $50.35 for 2024 and company net loss of $9.1 million alongside adjusted EBITDA of $39.6 million, underscoring equity-linked compensation alignment .
Compensation Structure Analysis
- CEO cash vs. equity mix emphasizes long-term equity (approx. 66% of target TDC), with 60% PRSUs and 40% RSUs to reinforce TSR-linked alignment .
- No tax gross-ups, no single-trigger CIC vesting, and a robust clawback policy reflect shareholder-friendly governance .
- Equity grant timing and 30-day average price methodology mitigate short-term price effects; no use of material nonpublic information in grant timing .
Investment Implications
- Alignment: Heavy PRSU weighting tied to multi-year relative TSR, ownership guidelines at 6x salary, and prohibition of hedging/pledging indicate strong alignment and reduced governance risk .
- Execution vs. incentives: STIP funded at 73% on profitability and cash metrics despite revenue miss; balanced incentives avoid excessive risk-taking while rewarding cash discipline and EBITDA improvement .
- Vesting/selling pressure: 36,236 shares vested in 2024 for Mr. Lau (with tax withholding), and sizable scheduled tranches and PRSU cliffs in 2025–2027 could create periodic supply but are performance- and time-based, mitigating opportunistic selling risks .
- CIC economics: Double-trigger severance with performance-based equity treatment reduces windfall risk and keeps management focused on shareholder value in strategic events .