Eugene Scherbakov
IPG PHOTONICSAbout Eugene Scherbakov
Eugene A. Scherbakov, Ph.D., age 77, is a director of IPG Photonics and former CEO, with board service since September 2000. He serves as Senior Advisor to the company since June 2024. Education includes an M.S. in Physics (Moscow Physics and Technology Institute), a Ph.D. in Quantum Electronics (Lebedev Physics Institute), and a Doctor of Science in Laser Physics (General Physics Institute, Russian Academy of Science) .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| IPG Photonics | Chief Executive Officer | May 2021 – June 4, 2024 | Led strategy; long tenure provided operational insight |
| IPG Photonics | Chief Operating Officer | Feb 2017 – May 2021 | Manufacturing/operations leadership |
| IPG Photonics | Senior Vice President – Europe | Feb 2013 – May 2021 | Regional leadership |
| IPG Laser GmbH (IPG German subsidiary) | Managing Director | Aug 2000 – June 2024 | Produced large volume of IPG products; technology development |
| IPG Laser | Technical Director | 1995 – Aug 2000 | Technical leadership |
| Russian Academy of Science (General Physics Institute) | Senior Scientist; Head of Optical Communications Lab | 1983 – 1995 | Fiber optics research; lab leadership |
External Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| IP Fibre Devices (UK) Ltd. (“IPFD”) | Sole Managing Director (controls voting/investment power for IPGP shares held by IPFD) | Current (as of 2025 proxy) | Economic interests include Gapontsev Trust I (48%), Samartsev (8%), Scherbakov (8%), Gapontsev Trust III (2%); others disclaim voting power |
The Board skills matrix does not indicate other public company board service for Scherbakov .
Board Governance
- Committee assignments: None; not a member or chair of Audit, Compensation, or NCGC .
- Independence: Not independent under Nasdaq rules (served as CEO within the prior three years) .
- Attendance: Board held 7 meetings in 2024; all incumbent directors attended at least 75% of aggregate Board and committee meetings .
- Board structure: Independent directors meet privately at least four times per year; John Peeler serves as Non-Executive Chair .
Fixed Compensation
| Component | 2024 Amount | Notes |
|---|---|---|
| Base Salary (CEO through June 4, 2024) | $315,202 | Salary approved in Euros; converted at 2024 average FX rate of 0.92 |
| Consulting Fees (Advisor Agreement) | $771,163 | Reported in “All Other Compensation” after transition to advisor on June 5, 2024 |
| Advisor Agreement Compensation | €1,240,000 (through Jun 5, 2025); €800,000 (Jun 6, 2025 – Jun 5, 2026); ~€400/month health insurance | Continues vesting of outstanding equity while providing services; remains a director without additional Board compensation |
| Perquisites and Other | $18,614 | Tax prep $3,000; dental insurance $569; auto in Germany $12,715; tax gross-ups $2,330 |
- Directors who are employees receive no additional Board compensation; Scherbakov remains on the Board without additional compensation for that service .
Performance Compensation
| Grant Type | Grant Date | Shares (#) | Grant-Date Fair Value ($) | Vesting | Performance Metrics |
|---|---|---|---|---|---|
| Performance Share Units (PSUs) | Feb 16, 2024 | Target 28,876 | $2,497,196 | Cliff vest in March 2027 (subject to achievement) | Organic revenue growth (25% weight) and adjusted operating margin (25% weight) over 2024–2026 |
| RSUs (service-based) | Feb 16, 2024 | 28,877 | $2,497,283 | Three annual installments starting March 1, 2025 | N/A (time-based) |
PSU performance framework and history:
- 2024 PSUs: annual performance measured over three-year period; payout range 0–200% of target; threshold lowered to 25% of target vs. 60% prior year .
- Historical payouts: 2021 OCF PSUs vested at 66.3% of target; 2021 relative TSR PSUs earned 0%; 2022 PSUs (organic revenue growth and adjusted operating margin) paid 0% in March 2025 (below threshold) .
Annual Incentive Plan (AIP) 2024 context:
- Original AIP targets: Net Sales $1,183M (target) and Adjusted EBIT $214M (target); revised in Aug 2024 to focus on 2H 2024 net sales with total payout capped at 62.5% of original target; actual 2H 2024 net sales $467M vs. revised target $428M .
- Scherbakov was not eligible for AIP/Revised AIP payout in 2024 (as disclosed in grants table notes) .
Other Directorships & Interlocks
| Entity | Relationship | Governance Note |
|---|---|---|
| IP Fibre Devices (UK) Ltd. (IPFD) | Sole Managing Director | Controls voting/investment power of 6,914,004 IPGP shares held by IPFD (16.2% of outstanding as of 3/31/2025) |
| Board composition | Natalia Pavlova (director) is spouse of SVP/Chief Scientist Igor Samartsev | Pavlova is not independent; NCGC formed a subcommittee (Meurice, Beecher, Kennedy) to handle nominations per Nasdaq rules |
Expertise & Qualifications
- Deep lasers/technology expertise; manufacturing and operations leadership; global business experience; executive leadership .
- Academic credentials in physics and laser science; extensive knowledge of fiber lasers, components, manufacturing processes .
Equity Ownership
| Metric | Amount | Detail |
|---|---|---|
| Shares Owned | 15,579,849 | Direct and indirect |
| Right to Acquire (60 days) | 49,611 | Options/RSUs/PSUs vesting within 60 days |
| Total Beneficial Ownership | 15,629,460 | 36.5% of outstanding (based on 42,729,426 shares as of 3/31/2025) |
| Significant Holder via IPFD | 6,914,004 | IPFD’s stake; Scherbakov has sole voting/investment power |
Outstanding equity awards at FY-end (12/31/2024; $72.72/share valuation basis):
| Instrument | Grant Date | Status | Quantity | Market/Payout Value ($) | Strike/Expiry |
|---|---|---|---|---|---|
| Stock Options | Feb 25, 2015 | Exercisable | 7,326 | N/A | $97.65; expires 2/25/2025 |
| Stock Options | Feb 18, 2016 | Exercisable | 7,592 | N/A | $81.89; expires 2/18/2026 |
| Stock Options | Feb 17, 2017 | Exercisable | 10,367 | N/A | $119.50; expires 2/17/2027 |
| Stock Options | Feb 22, 2018 | Exercisable | 13,744 | N/A | $239.72; expires 2/22/2028 |
| Stock Options | Feb 15, 2019 | Exercisable | 17,908 | N/A | $154.88; expires 2/15/2029 |
| RSUs | Feb 19, 2021 | Unvested | 1,310 | $95,263 | Time-based |
| RSUs | May 7, 2021 | Unvested | 1,267 | $92,136 | Time-based |
| RSUs | Feb 18, 2022 | Unvested | 6,091 | $442,938 | Time-based |
| RSUs | Feb 17, 2023 | Unvested | 11,225 | $816,282 | Time-based |
| PSUs | Feb 17, 2023 | Unearned (at threshold shown) | 10,101 | $734,545 | Performance-based |
| RSUs | Feb 16, 2024 | Unvested | 28,877 | $2,099,935 | Time-based |
| PSUs | Feb 16, 2024 | Unearned (at threshold shown) | 7,219 | $524,966 | Performance-based |
Director stock ownership guidelines:
- Non-employee directors expected to hold ≥5x annual cash Board retainer; unvested time-based RSUs count; all directors were in compliance as of Dec 31, 2024 .
Governance Assessment
- Independence and committees: Scherbakov is not independent (CEO within last three years) and holds no committee seats—limiting direct oversight roles on Audit/Compensation/NCGC .
- Ownership alignment: Very strong “skin in the game” (36.5% beneficial ownership), including sole control over voting/investment power of IPFD’s 16.2% stake—aligns interests with long-term value but concentrates control .
- Compensation structure and signals:
- 2024 total compensation $6.10M driven by equity grants (PSUs and RSUs) and advisor consulting fees; no AIP payout eligibility in 2024 .
- Advisor Agreement ensures continued vesting while advising through June 2026—retention/knowledge transfer positive; also represents ongoing financial relationship while serving on the Board without additional director pay .
- Minor perquisites and tax gross-ups were disclosed (modest amounts) .
- Performance rigor: PSU metrics tied to organic revenue growth and adjusted operating margin; historical PSU payouts include below-target outcomes (e.g., 0% vesting for 2022 PSUs; partial 66.3% vesting for 2021 OCF PSUs)—supports pay-for-performance narrative .
- Board engagement: Attendance disclosure indicates ≥75% participation; independent directors hold executive sessions regularly, led by a non-executive Chair .
- RED FLAGS:
- Concentrated control: Sole voting/investment power over a large shareholder (IPFD) while sitting on the Board may present perceived conflicts in certain decisions (e.g., capital allocation, governance matters) .
- Non-independence: Recent executive status limits committee participation and independent oversight role .
- Family/interlock considerations: Presence of significant stockholder/director Pavlova (spouse of an executive) required an independent Nominating Subcommittee—mitigates but underscores related-party proximity risk .
Overall: Significant equity alignment and deep operational expertise are positives for investor confidence; governance caution stems from non-independence, concentrated voting control via IPFD, and related-party proximity, all of which merit monitoring around board decisions, capital returns, and executive oversight .