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PROXY STATEMENT

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PERCEPTRON, INC.

20142015 ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD AT 9:00 A.M. ON NOVEMBER 11, 201410, 2015

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INTRODUCTIONintroduction

This Proxy Statement and the accompanying Notice of the 20142015 Annual Meeting of Shareholders, 20142015 Annual Report and proxy card are furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Perceptron, Inc., a Michigan corporation (the “Company”). The proxies are being solicited for use at the 20142015 Annual Meeting of Shareholders (“Annual Meeting”) to be held at the Company’s corporate offices on Tuesday, November 11, 2014,10, 2015, at 9:00 a.m., local time, and at any adjournment of that meeting. The Company’s corporate offices are located at 47827 Halyard Drive, Plymouth, Michigan 48170, and the Company’s telephone number is (734) 414-6100. The Company expects that this Proxy Statement and the accompanying materials will be first sent or given to shareholders on or about October 15, 2014.2, 2015.

Only shareholders of record of the Company’s Common Stock, $0.01 par value (the “Common Stock”) at the close of business on September 19, 201418, 2015 (the “Record Date”) will be entitled to notice of and to vote at the Annual Meeting or any adjournments thereof. Shareholders of record on the Record Date are entitled to one vote per share on any matter that may properly come before the Annual Meeting. As of the Record Date, there were 9,151,9569,352,628 shares of Common Stock outstanding and entitled to vote. The Company has no other class of stock outstanding. The presence, either in person or by properly executed proxy, of the holders of a majority of the outstanding shares of Common Stock is necessary to constitute a quorum at the Annual Meeting. See “Share Ownership of Management and Certain Shareholders” for a description of the beneficial ownership of the Common Stock.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on November 11, 2014.10, 2015.

·The Notice of the 2014 Annual Meeting of Shareholders, Proxy Statement and our 2014 Annual Report are available at http://www.astproxyportal.com/ast/05067/.  The Notice of the 2014 Annual Meeting of Shareholders, Proxy Statement, our 2014 Annual Report and form of proxy were distributed via mail and made available via the Internet to shareholders on or about October 15, 2014.

Directors, officers and other employees of the Company may solicit, without additional compensation, proxies by any appropriate means, including personal interview, mail, telephone, courier service and facsimile transmissions. Although the Company does not anticipate retaining a proxy solicitation firm to aid in solicitation of Proxies from its shareholders, if such a firm is retained, it would be paid customary fees and would be reimbursed for out-of-pocket expenses. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries which are record holders of the Company’s Common Stock to forward proxy soliciting material to the beneficial owners of such shares and the Company will reimburse such record holders for their reasonable expenses incurred in connection therewith. The cost of soliciting proxies, including the preparation, assembling and mailing of the Notice of the 20142015 Annual Meeting of Shareholders, the Proxy Statement, the 20142015 Annual Report and the accompanying proxy card, as well as the cost of forwarding such material to the beneficial owners of Common Stock, will be borne by the Company. Only one Notice of the 20142015 Annual Meeting of Shareholders, Proxy Statement and Annual Report, as applicable, will be delivered to multiple shareholders sharing an address unless the Company has received contrary instructions from one or more of the shareholders. Upon written or oral request from a shareholder who shares an address with another shareholder, the Company shall deliver a separate copy of the Notice of the 20142015 Annual Meeting of Shareholders, Proxy Statement and 2015 Annual Report. Shareholders can call or write the Company for a separate notice, annual report or proxy statement for the 20142015 Annual Meeting or for a future meeting of shareholders at (734) 414-6100 or 47827 Halyard Drive, Plymouth, MI 48170-2461. Similarly, those shareholders who share an address and wish to receive only one copy of the notice, annual report or proxy statement when they are receiving multiple copies can also call or write the Company at the number and address given above.

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the NASDAQ Global Market on the grant date (the first day of the month in which the quarterly payment date for directors’ fees falls). We will issue share certificates for all shares of Common Stock purchased in a calendar year by December 15th15th of such year unless a director requests to receive his or her share certificate at any time during the year by sending written notice to the Company.

CORPORATE GOVERNANCE

Board Leadership Structure and Board and Committee Information

The Company’s Board consists of sevensix independent directors, including the Chairman of the Board, Mr. Marz, and one management director, Mr. Armstrong. The Board is responsible for direction of the overall affairs of the Company. The Board has established three standing committees, being the Audit Committee, the Management Development, Compensation and Stock Option Committee (the “Management Development Committee”) and the Nominating and Corporate Governance Committee (the “Nominating Committee”), as further detailed below. Each of the committees is comprised solely of independent directors, and each committee has a different chair. The Company believes that it is beneficial to have a non-executive Chairman who is responsible for leading the Board. The Company also believes that a predominantly independent Board, mixed with the experience of its management director, constitutes a leadership structure that is most appropriate for the Company and its shareholders at this time because it supports strategy development and execution and facilitates information flow between senior management and the Board. The Board retains the authority to modify this structure to best address the Company’s unique circumstances as and when appropriate.

Our directors are elected to serve until their successors are elected. The Board, and each committee thereof, meets formally from time to time and also takes action by consent resolutions. During the fiscal year ended June 30, 2014,2015, the Board met a total of eightsix times. All of the current directors who are standing for re-election attended at least 75% of the total meetings of the Board, and of any committee on which they served, held during the period in fiscal 20142015 in which they served as directors or members of any such committees. Our policy is that each director is strongly encouraged to attend the Annual Meeting of Shareholders if reasonably possible. All of the directors attended the 20132014 Annual Meeting of Shareholders in person.

Chairman. Mr. Marz has been elected by the directors to serve as non-executive Chairman of the Board. The Chairman provides leadership to enhance the Board’s effectiveness, presides over meetings of the directors, and serves as liaison between the Board and management. The Chairman is responsible for determining when to hold executive sessions held by the independent directors.

The Board has delegated certain authority to an Audit Committee, a Management Development Committee and a Nominating Committee to assist it in executing its duties. The Board has adopted charters for each of these Committees. The charters are available on our website at www.perceptron.com.www.perceptron.com. The Board determined that all of the directors, other than Mr. Armstrong, are “independent directors” as defined in Marketplace Rule 4200(a)(15) of The NASDAQ Stock Market, Inc. (“NASDAQ”).

The composition and principal functions of each Committee are as follows:

Audit Committee.Committee. The Audit Committee is currently comprised of three outside members of the Board: Messrs. Neely, who serves as Chairman, Dabrowski and Oswald.  Mr. Neely has served as the Chairman of the Audit Committee since January 2014.  Mr. Oswald served as Chairman from October 2013 to January 2014.  James Ratigan served as Chairman from July 2013 to October 2013 until he resigned from the Board. The Board determined that all of the members of the Audit Committee are independent as required by the rules of the Securities and Exchange Commission (“SEC”) and NASDAQ listing standards for audit committee members. In addition, the Board determined that Mr. Neely qualified as an “audit committee financial expert” as defined by applicable SEC rules and that each of the Audit Committee members satisfies all other qualifications for Audit Committee members set forth in the applicable NASDAQ rules. The Audit Committee held fivesix meetings in fiscal 2014.2015.

On November 18, 20093, 2014 the Board approved and adopted the Audit Committee’s revised charter. The Audit Committee’s primary responsibilities include the following:

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Management Development, Compensation and Stock Option Committee.Committee. The Management Development Committee is currently comprised of three outside members of the Board: Messrs. DeCocco, who serves as Chairman, Dabrowski and Smith. The Board determined that all members of the Management Development Committee are independent as required by the NASDAQ listing standards for compensation committees responsible for determining compensation of executive officers. The committee held fourfive meetings in fiscal 2014.2015.

On May 21, 2013,November 11, 2014, the Board approved and adopted the Management Development Committee’s revised charter. The Management Development Committee’s primary responsibilities include the following:

ElevenNine employees are currently under the purview of the Management Development Committee, including all of the executive officers named in the Summary Compensation Table included herein. Mr. Armstrong participates in meetings of the Management Development Committee and makes recommendations with respect to the annual compensation of employees under the Committee’s purview. The Management Development Committee reviews and approves the compensation of employees under its purview other than Mr. Armstrong. The Management Development Committee separately determines the compensation of Mr. Armstrong in executive session. Pursuant to its charter, the Management Development Committee is authorized to retain its own compensation consultants and outside legal, accounting, and other advisers at the Company’s expense. Such consultants and advisers report directly to the Management Development Committee and the committee has the sole authority to hire and fire any compensation consultants or advisers. The Management Development Committee does not delegate its authority to such consultants or advisers. In fiscal 2014,2015, the Management Development Committee engaged the services of Rahmberg, Stover and Associates, LLC (“Rahmberg”), a compensation consulting firm, and has considered such

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firm’s input in evaluating compensation trends and best practices, identifying peer group companies and benchmarking compensation data, developing its short and long term executive incentive plans and other aspects of administering the Company’s executive compensation program and equity compensation programs. Rahmberg serves at the discretion of the Management Development Committee.

Nominating and Corporate Governance Committee. The Nominating Committee is currently comprised of three outside members of the Board: Messrs. Beattie,Oswald, who serves as the Chairman, DeCocco and Oswald.Smith. Until November 11, 2014, the members of the Nominating Committee were Messrs. Beattie, DeCocco and Oswald, with Mr. Beattie serving as Chairman. The Board determined that all members of the Nominating Committee are independent as required by the NASDAQ listing standards for nominating committee members. The committee held fivethree meetings in fiscal 2014.2015.

On November 12, 2007, the Board approved and adopted the Nominating Committee’s revised charter. The Nominating Committee’s primary responsibilities include the following:

The Nominating Committee may use various methods to identify director candidates, including recommendations from existing Board members, management, shareholders, professionals and other sources outside the Company, which could include third party search firms. The Nominating Committee will evaluate and screen the list of potential nominees and narrow the list to individuals they believe best satisfy the needs of the Company, with a strong preference given to the continuation of the current Board members. The Nominating Committee will conduct interviews and gather additional information concerning the individuals, as they deem appropriate. Based on the foregoing, the Nominating Committee will recommend to the Board the number of members of the Board to be elected at the next annual meeting of shareholders of the Company and the persons to be nominated for election to the Board. Director candidates need not possess any specific minimum qualifications. Rather, a candidate’s suitability for nomination and election to the Board will be evaluated in light of the portfolio of skills, experience, perspective and background required for the effective functioning of the Board. While the Company does not have a formal written diversity policy, the Nominating Committee considers diversity of director nominees in terms of background, experience, skill set and expertise in matters relating to the Company’s business in an effort to promote balanced deliberation and consideration of matters presented to the Board. Among the desired qualities that the Nominating Committee will consider are: (i) high ethical character; (ii) practical intelligence and judgment, an inquiring mind and a good range of problem solving skills; (iii) independence; (iv) ability to work in a collaborative culture; (v) high-level leadership experience and personal achievement; (vi) sufficient personal commitment and time to devote to responsibilities as a director; and (vii) capacity and desire to represent the balanced best interests of the shareholders as a whole. In addition, while not a requirement, the Nominating Committee will take into consideration a director’s age after he or she reaches 75 and tenure of any director who has served on the Board for more than ten years.

The Nominating Committee will consider candidates recommended by shareholders using the same procedures and standards utilized for evaluating candidates recommended by other sources except that the Nominating Committee will not consider a director nominee proposed by a shareholder if (i) the shareholder does not submit the required information timely (see “Shareholder Proposals and Nominees for 2015 Annual Meeting – Shareholder Nominees”);timely; (ii) the shareholder or group of shareholders proposing the director nominee do not beneficially own, in the aggregate, more than 5% of the Company’s Common Stock, with the Common Stock used to satisfy this requirement owned for at least one year prior to the date of the recommendation, or (iii) the shareholder proposes as the nominee himself or herself, or an affiliate or affiliated party. See “Shareholder Proposals and Nominees for

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Beneficial Ownership by Directors and Executive Officers

The following table sets forth information with respect to beneficial ownership of the Common Stock by each of our directors and director nominees, the persons named in the Summary Compensation Table and by all our directors and executive officers as a group as of September 19, 2014,18, 2015, unless otherwise indicated. The information as to each person has been furnished by such person and, except as where otherwise indicated, each person has sole voting power and sole investment power with respect to all shares beneficially owned by such person.

* Less than 1% of class

(1)To the best of the Company’s knowledge, based on information reported by such directors and officers or contained in the Company’s shareholder records.

(2)Serves as a member of the Board of the Company.

(3)Includes options to purchase 35,000 shares of Common Stock, which are presently exercisable or which are exercisable within 60 days of September 19, 2014.

(4)Includes options to purchase 24,000 shares of Common Stock, which are presently exercisable or which are exercisable within 60 days of September 19, 2014.

(5)Includes options to purchase 35,000 shares of Common Stock, which are presently exercisable or which are exercisable within 60 days of September 19, 2014.

(6)Includes options to purchase 77,000 shares of Common Stock, which are presently exercisable or which are exercisable within 60 days of September 19, 2014.

(7)Includes options to purchase 35,000 shares of Common Stock, which are presently exercisable or which are exercisable within 60 days of September 19, 2014.

(8)Includes options to purchase 24,000 shares of Common Stock, which are presently exercisable or which are exercisable within 60 days of September 19, 2014.

(9)Includes options to purchase 63,250 shares of Common Stock, which are presently exercisable or which are exercisable within 60 days of September 19, 2014.

(10)Includes options to purchase 12,500 shares of Common Stock, which are presently exercisable or which are exercisable within 60 days of September 19, 2014.  Ms. Smith served as Acting Chief Financial Officer from December 31, 2013 to February 17, 2014.

(11)Harry T. Rittenour resigned as President and Chief Executive Officer on November 4, 2013.

(12)John H. Lowry, III resigned as Vice President – Finance and Chief Financial Officer on December 31, 2013.

(13)Includes options to purchase 293,250 shares of Common Stock, which are presently exercisable or which are exercisable within 60 days of September 19, 2014.

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·Long-term incentives represented by stock-based awards;

·Employee benefits; and

·Severance and change in control benefits.

Our compensation philosophy at all levels of the organization emphasizes performance-based compensation. This is particularly true of our executive compensation program, which has been designed to link executive compensation to Company performance through at-risk compensation opportunities, providing significant reward to executives who contribute to our success. A significant portion of our NEOs and other executives’ potential annual cash compensation is tied to our revenue and profitability goals. We provide long-term incentives to our team through periodic stock awards. Through stock awards to our NEOs and other executives, we have tied a significant portion of their future compensation potential to the creation of long-term shareholder value. Further, we believe that stock-based incentives for team members, in addition to providing an incentive for their continued employment, more closely align their interests with those of the Company and its shareholders. During fiscal 2015, we continued our emphasis on performance based compensation and providing long-term incentives. For instance, in fiscal 2015, we increased the vesting requirements on our restricted stock grants from grants vesting in one year to grants vesting in three equal increments over three years.

Our approach to NEO base salaries is to ensure that they are competitive so that they are effective in attracting and retaining a high quality executive team. Similarly, in designing our employee benefit programs and severance and change in control benefits, we strive to offer benefits consistent with the general practice of comparable companies.

We believe that compensation should be simple, straightforward and easily understood by the recipients. As a result, our incentive compensation programs have generally been tied to a limited number of key Company-wide performance metrics that can be objectively measured. In fiscal 2015, we also tied a portion of short term cash incentives to the achievement of personal objectives tied to the Company’s strategic objectives.

We have announced and are implementing a new corporate strategy designed to leverage our leading technologies and market position to accelerate the next evolution of growth of the Company as well as increase diversification across industries. The four components of our strategy are: profitable growth in core markets; broaden and extend our technical leadership; pursue prudent market diversification, and maintain operational excellence and fiscal discipline.

In the coming years, we will continue to revise and refine our executive and non-executive compensation programs to properly motivate our executives and team to implement this strategy. We will directly reward them for growth on a Company-wide basis, as well as for achieving goals and objectives within their control that drive the implementation of the strategy.

Equity Ownership Guidelines. In fiscal 2015, we determined to implement equity ownership guidelines for our executive team. We are in the process of implementing these guidelines. As currently contemplated, the guidelines would encourage our executive team to hold Company Common Stock with a value at least equal to their annual base salary.

The Role of the Management Development Committee and Chief Executive Officer in the Compensation Process.Process. The Management Development Committee is responsible for the planning, review and administration of our executive compensation program and stock-based executive compensation programs. During the fiscal year ended June 30, 2014,2015, all members of this Committee were non-employee directors of the Company. The Management Development Committee generally meets in conjunction with regularly scheduled Board meetings, although occasionally the Committee meets between Board meetings at the request of the Chief Executive Officer to deal with more immediate executive compensation matters.

The Management Development Committee generally reviews the components of executive compensation on an annual basis to determine whether there should be any adjustments in base salary, to establish the annual cash profit sharingincentive plan, to establish a long term equity incentive plan, to determine if other stock-based incentives should be granted and to review the terms of our other executive compensation programs. Each year the Chief Executive Officer presents an evaluation of the performance of the NEOs and other executive team members to the Management Development Committee. Based upon this evaluation, the Chief Executive Officer makes recommendations to the Management Development Committee regarding compensation for the NEOs and other executives, other than himself. The Chief Executive Officer may make recommendations regarding changes in a particular NEO or other executive’s compensation more frequently than annually as a result of changes in circumstances, such as the assumption of increased executive level responsibilities. When setting each element of executive compensation, the Management Development Committee also receives a numeric summary of the elements of all of the executives’ compensation packages since their date of employment.  The Management Development Committee considers the recommendations of the Chief Executive Officer, as well as the other information provided to them by the Company, and then establishes compensation for the NEOs and other executives, either annually or periodically as the need arises.

The Management Development Committee independently assesses the performance of the Chief Executive Officer. Based upon that assessment, the performance of the Company and the Management Development

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Committee’s decisions regarding the compensation of the other NEOs and executives, the Management Development Committee independently establishes the compensation of the Chief Executive Officer, without any recommendations from or participation by the Chief Executive Officer in that process.

The Management Development Committee has not established a set percentage relationship between the size of the Chief Executive Officer’s compensation package as compared to the other NEOs. However, historically one of the factors considered by the Management Development Committee in setting the Chief Executive Officer’s compensation is the level of compensation awarded to the other NEOs for each element of compensation.

The base salary, annual cash profit sharing incentive opportunity, stock-based incentives and other compensation terms for new executive officers are established by the Management Development Committee based upon the executive’s qualifications, position and level of responsibility as compared with our other executives, our profitability and other factors, such as assessments of individual performance and market practices, and, in the case of executive officers other than the Chief Executive Officer, upon the recommendation of the Chief Executive Officer.

The Chief Executive Officer typically proposes the terms of an annual profit sharingcash incentive plan and equity incentive plan to the Management Development Committee for consideration. The Committee revises the planplans as it deems appropriate and approves the final plan,plans, usually in the first quarter of the fiscal year.

The Management Development Committee generally reviews all elements of compensation as a whole in establishing executive compensation. It does not have a pre-set formula for the proper mix of the elements, other than the annual cash profit sharing incentive.incentive and equity incentive plans. In the case of our annual profit sharingcash incentive and equity incentive plans, each of our team members, including the NEOs and other executives has a set target percentage of his or her base salary that can be earned as an annual cash profit sharingincentive and an equity incentive for achievement of Company-wide performance metrics.

The Role of Risk Assessment in Compensation Planning. As part of its process of developing and implementing the Company’s compensation programs for both executive and non-executive team members, the Management Development Committee considers whether the programs being proposed have the potential to create risks that could have a material adverse effect on the Company. The Management Development Committee believes that the Company’s compensation programs have been structured with an appropriate balance between providing strong compensation-related incentives to the team to drive revenue and profit growth, without encouraging them to take excessive risks to achieve growth. For instance, while the Company uses performance-based compensation at all levels of its compensation program, base salary still represents the largest single portion of all team members’ cash compensation. This encourages team members to take appropriate risks to achieve established goals, but tempered by the need to maintain the Company’s long-term established business assets and value. Further, Company revenue and operating income targets used in the annual profit sharing non-equity planincentive plans are based upon the Company’s operating budget for the fiscal year generally developed by the executives and the team and approved by the Company’s Board of Directors. By setting targets in this fashion, the Management Development Committee strives to set realistic targets to drive reasonably achievable growth. In addition, the amount that can be earned by the executives and the team under this plan are capped at a percentage of the team member’s base salary, discouraging risk taking to achieve performance levels significantly above the expected levels of performance.

Key Elements of Compensation for Fiscal 20142015

Base Salary. The Management Development Committee recognizes the importance of a competitive compensation structure in retaining and attracting valuable senior executives. Executive salary levels are reviewed and established annually. The salaries received by our executives generally reflect their levels of responsibility, our profitability and other factors, such as assessments of individual performance and market practices.

In connection with Mr. Armstrong’s appointmentChung’s promotion as President and Chief Executive Officer of the Company in November 2013,a senior vice president during fiscal 2015, the Management Development Committee set hisincreased Mr. Chung’s base salary at $350,000,by 6.0%. No increases in base salary were approved for Mr. Armstrong or the same as his predecessor and consistent with competitive market pay considerations.

In connection with Mr. Marchiando’s appointment as Vice President and Chief Financial Officerother executive officers of the Company in February 2014,during fiscal 2015, with the Management Development Committee set his base salary at $220,000, an increasedeferring consideration of 3.3% from his predecessor and consistent with competitive market pay considerations.

Insuch increases until fiscal 2014, the Management Development Committee approved a 5.9% increase in Mr. Hoefing’s base salary (5.1% on an annualized basis since his last increase in fiscal 2013), in recognition of the increased responsibilities assumed by Mr. Hoefing with the change in senior management implemented in fiscal 2014.  The

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size of the increase also was based upon the Management Development Committee’s view of Mr. Hoefing’s contribution during the prior fiscal year to the achievement of our business plan.

Pursuant to Management Development Committee approval, Ms. Smith’s base salary was increased temporarily from $139,500 to $213,000, Mr. Lowry’s base salary prior to his retirement, in recognition of the additional services provided by her as Acting Chief Financial Officer from January 1, 2014 to February 17, 2014.

Messrs. Rittenour and Lowry did not receive a base salary increase in fiscal 2014 due to their pending retirements.2016.

Annual Profit Sharing/Non-Equity Incentive Plan. Our executive officersexecutives and director-level team members are eligible for annual cash profit sharing incentive opportunities. Generally, at the beginning of each fiscal year, the Management Development Committee develops a profit sharingcash incentive plan applicable to all team members, including the Chief Executive Officer of the Company, the other NEOs and our other executives.executives and director-level team members.

In the case of our annual cash profit sharing incentive, each of our executives and director-level team members, including the NEOs, and other executives, has a set target percentage of their base salary that can be earned as an annual cash profit sharing incentive for achievement of Company-wide performance metrics.metrics and individual strategic goals.

For fiscal 2014,2015, the Management Development Committee adopted the 2014 AnnualFiscal 2015 Executive Short Term Incentive Compensation Plan, (the “2014 Annual Incentive Plan”), which applied to Mr. Armstrong, the other NEOs, our other executives and director-level team members, andmembers. Under the Fiscal Year 2014 Profit Sharing Plan (the “2014 Profit Sharing Plan”), which applied to all eligible team members of the Company, other than those included in the 2014 Annual Incentive Plan.  Under the 2014 Annual2015 Executive Short Term Incentive Plan, the Company’s director-level team members, officers and NEOsparticipants could earn annual incentive cash compensation based upon performance against pre-established Company financial targets.  The financial targets included progressive threshold, target and maximum level incentiveindividual strategic objectives.

The amount of the award of any cash incentives under the AnnualFiscal 2015 Executive Short Term Incentive Plan for fiscal 20142015 performance was based on the Company’s achievement of specified results with respect to corporateCompany revenue and operating income and revenue targets for fiscal 2014.  However, no2015, as well as the achievement of individual strategic objectives. The weightings of these targets for fiscal 2015 were as follows:

The financial targets include progressive threshold (85% of target), target and maximum (115% of target) level incentive performance objectives.

An annual incentive cash compensation payouts were payablepayout can be made under the AnnualFiscal 2015 Executive Short Term Incentive Plan unless the Company’s income from continuing operations exceeded aif either financial target equals or exceeds 85% of its specified minimum trigger point.

Ifperformance threshold point or at least 85% of the threshold, target or maximum financial performanceindividual strategic objectives were met and the Company’s income from continuing operations trigger point was exceeded, participants would receive a cash incentive payment under the 2014 Annual Incentive Plan, with theare achieved. The specific amount that such participant receives is dependent on company financial performance, a scaled payout factor, theirmultiplier (75% at threshold, 100% at target and 150% at maximum) applied to his or her predetermined participation level, a discretionary multiplier (80% to 120%), the participant’s base salary and theirhis or her predetermined participation level stated as a percentage of base salary.salary (50% for Mr. Armstrong and 40% for the other NEOs).

The amount that could have been received by our President and Chief Executive OfficerMr. Armstrong under the AnnualFiscal 2015 Executive Short Term Incentive Plan ranged from 0% (assuming the threshold objectives were not met) to 90% (assuming the maximum objectives were met) of base salary, with a cash incentive amount of 50% of base salary if both of the target financial performance objectives are met, the individual strategic objectives are met and 50%a 100% discretionary multiplier is used. For each of the other NEOs, the amount such officers could have received under the Fiscal 2015 Executive Short Term Incentive Plan ranged from 0% (assuming the threshold objectives were not met) to 72% (assuming the maximum objectives were met) of base salary, with a threshold cash incentive amount of 19.5% of base salary.  For each of the other named executive officers, the amount such officers could have received under the 2014 Annual Incentive Plan ranged from 0% to 40% of base salary withif both of the target financial performance objectives are met, the individual strategic objectives were met and a threshold case incentive amount of 15.6% of base salary.100% discretionary multiplier is used.

UnderParticipating team members under the Fiscal 2015 Executive Short Term Incentive Plan had to be employed on or before December 31, 2014 Profit Sharing Plan, mostin order to be eligible, except that executives who joined the Company, in connection with acquisitions that closed after December 31, 2014 were permitted to participate in the plan. Participating team members hired between July 1, 2014 and December 31, 2014, and those hired in connection with acquisitions closing thereafter, were eligible for a pro-rata portion of their individual participation level. Participating team members had to be employed by the Company at the date of the Company’s team members belowpayments in fiscal 2016, except as otherwise provided under any severance agreement applicable to the directorparticipant. See “Compensation of Executive Officers – Potential Payments Upon Termination or Change in Control.” The Management Development Committee reserved the right to increase, decrease or eliminate any payout under the Fiscal 2015 Executive Short Term Incentive Plan for any participant, including to provide for no payout even if the financial performance targets or strategic objectives were achieved by the participant.

Our fiscal 2015 adjusted revenue and operating income for purposes of the Fiscal 2015 Executive Short Term Incentive Plan were approximately 105% and 52%, respectively, of the target thresholds. Accordingly, a cash incentive was earned for the revenue target, but not for the operating income target. Because adjusted revenue was above the target level, could earn a profit sharingscaled payout multiplier of approximately 117% applied for the portion of the cash paymentincentive based upon pre-established financial targets.revenue. Because the executive officers also achieved their individual strategic goals, the Management Development Committee approved the use of a scaled payout multiplier of 120% for the portion of their cash incentive based upon strategic goals. The financial targets include threshold, targetManagement Development Committee approved the use of a discretionary multiplier of 100% for the executive officers. In calculating our fiscal 2015 adjusted revenue and maximum level bonus objectivesoperating income for team members.  The amountpurposes of the awardFiscal 2015 Executive Short Term Incentive Plan, the Management Development Committee determined that it was appropriate to exclude from the calculations revenue and operating income from the two companies acquired by the Company in fiscal 2015 from their date of acquisition, expenses incurred by the Company during fiscal 2015 in connection with completing these acquisitions and fiscal 2015 bonus accruals.

Cash payments to Mr. Armstrong and the other NEO at June 30, 2015 under the Fiscal 2015 Executive Short Term Incentive Plan totaled approximately 36% and 28% of their average base salary for fiscal 2015, respectively. Two of our NEOs terminated their employment prior to June 30, 2015 and so did not receive any cash payments under the Profit SharingFiscal 2015 Executive Short Term Incentive Plan.

The Management Development Committee also awarded discretionary cash spot bonuses to members of the executive team, including to Mr. Armstrong and the other NEOs, in October 2014 in recognition of the significant efforts undertaken to develop and implement several strategic projects, including development of a comprehensive mergers and acquisitions strategy, new executive compensation plans and a new five year strategic and financial plan.

Long Term Equity Incentive Plan. Our executives and director-level team members are eligible for equity incentive opportunities. Generally, at the beginning of each fiscal year, the Management Development Committee develops an equity incentive plan applicable to the Chief Executive Officer of the Company, the other NEOs and our other executives and director-level team members.

For fiscal 2015, the Management Development Committee adopted the Fiscal 2015 Executive Long Term Incentive Plan, which applied to Mr. Armstrong, the other NEOs, our other executives and director-level team members. Under the Fiscal 2015 Executive Long Term Incentive Plan, each of our executives and director-level team members, including the NEOs, had a set target percentage of their base salary that could be earned in the form of a restricted stock award of Common Stock or an option to purchase Common Stock, as determined by the Management Development Committee, based upon an earned award denominated in dollars for performance against pre-established Company-wide financial targets.

The number of stock options shares awarded under the Fiscal 2015 Executive Long Term Incentive Plan for fiscal 20142015 performance was based on the Company’s achievement of specified results with respect to corporateCompany revenue and operating income targets for fiscal 2014.  However, no profit sharing payouts2015. The weightings of these targets for fiscal 2015 were payableas follows:

The financial targets include progressive threshold (85% of target), target and maximum (115% of target) level incentive performance objectives.

An incentive equity compensation payout can be made under the 2014 Profit SharingFiscal 2015 Executive Long Term Incentive Plan unlessif either financial target equals or exceeds 85% of its specified minimum threshold point. The specific number of shares of restricted stock or stock options that such participant receives is determined by dividing a dollar amount dependent on Company financial performance, a scaled payout multiplier (75% to 150%) applied to his or her predetermined participation level, a discretionary multiplier (50% to 200%), the Company’s income from continuing operations exceeded a threshold level.

Team memberparticipant’s base salary and his or her predetermined participation levels werelevel stated as a percentage of base salary.  There was a capsalary (40% for Mr. Armstrong and 25% for the other NEOs), by (i) the closing price of the Common Stock on the amountNASDAQ Stock Market’s Global Market on the equity award date in fiscal 2016, in the case of restricted stock awards, or (ii) the value of an option share on the grant date, determined using a Black Scholes option-pricing model valuation, in the case of stock option grants.

Under the Fiscal 2015 Executive Long Term Incentive Plan, the grant date value of the profit sharing cash paymentequity award that could be earned.  Any profit sharing pool would have been distributed pro-rata accordingreceived by Mr. Armstrong ranged from 0% (assuming the threshold objectives were not met) to each team member’s predetermined participation level.

Participating team members under120% (assuming the 2014 Annualmaximum objectives were met) of base salary, with a grant date value of 40% of base salary if both of the target financial performance objectives are met and a discretionary multiplier of 100% is used. Under the Fiscal 2015 Executive Long Term Incentive Plan, and 2014 Profit Sharing Plan had tothe grant date value of the equity award that could be employed on or before December 31, 2013 in order to be eligible.  Those hired between July 1, 2013 and December 31, 2013 are eligible for a pro-rata portion of their individual participation level.  Participating team members must be employedreceived by the Company atCompany’s other NEOs ranged from 0% (assuming the threshold objectives were not met) to 75% (assuming the maximum objectives were met) of base salary, with a grant date value of 25% of base salary if both of the payments in fiscal 2015.

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Because our fiscal 2014 operating income and revenue were not above the applicable operating income and revenue financial target thresholds, no cash bonuses were paid in fiscal 2014 to Mr. Armstrong, the other NEOs, other executives, director-level or other eligible team members under these plans.

No discretionary cash bonuses were paid to Mr. Armstrong or the other executive officers in fiscal 2014.

Annual Equity Incentive Plan.  Under the 2014 Annual Incentive Plan, Mr. Armstrong, the other NEOs, other executives and director-level team members could have earned restricted stock awards of the Company’s Common Stock based upon achievement of two personal goals that were aligned with the Company’s strategic objectives.

The personal goals included three discrete incentive objectives which if satisfied would have entitled (i) NEOs and other executives to receive awards of 200, 500 or 1,500 shares of restricted stock and (ii) director-level team members to receive awards of 100, 250 or 750 shares of restricted stock, respectively, from the Company upon the achievement of each goal.  The grants would vest on the one year anniversary of their grant date provided the participants remained employed with the Company on that date.100% is used.

After completion of fiscal 2014,2015, the Management Development Committee determined the extent to which the specified goals relating to the personal goalsfinancial targets were achieved, and determined the number of restricted sharesdiscretionary multiplier to be awarded.  Allused and the type of equity award to be used.

Participating team members under the Fiscal 2015 Executive Long Term Incentive Plan had to be employed on or before December 31, 2014 in order to be eligible, except that executives who joined the Company in connection with acquisitions that closed after December 31, 2014 were permitted to participate in the plan. Participating team members hired between July 1, 2014 and December 31, 2014, and those hired in connection with acquisitions closing thereafter, were eligible for a pro-rata portion of their individual participation level. Participating team members had to be employed by the Company at the date of the participantspayments in fiscal 2016, except as otherwise provided under any severance agreement applicable to the 2014 Annualparticipant. See “Compensation of Executive Officers – Potential Payments Upon Termination or Change in Control.” The Management Development Committee reserved the right to increase, decrease or eliminate any payout under the Fiscal 2015 Executive Long Term Incentive Plan achieved some or allfor any participant, even if the financial performance targets were achieved.

Our fiscal 2015 adjusted revenue and operating income for purposes of their personal goalsthe Fiscal 2015 Executive Long Term Incentive Plan were approximately 105% and so became eligible52%, respectively, of the target thresholds. Accordingly, an equity award was earned for grantsthe revenue target, but not for the operating income target. Because adjusted revenue was above the target level, a scaled payout multiplier of restricted stock underapproximately 117% applied for the 2004 Stockportion of the equity incentive based upon revenue. The Management Development Committee approved the use of a discretionary multiplier of 200% for the executive officers. In calculating our fiscal 2015 adjusted revenue and operating income for purposes of the Fiscal 2015 Executive Long Term Incentive Plan, the Management Development Committee determined that it was appropriate to exclude from the calculations revenue and operating income from the two companies acquired by the Company in fiscal 2014.2015 from their date of acquisitions, expenses incurred by the Company during fiscal 2015 in connection with completing these acquisitions and fiscal 2015 bonus accruals.

Messrs. Armstrong and Ms. Smiththe other current NEO were each awarded 3,000 restricted shares as they each achieved both of their personal goals.  Mr. Hoefing was awarded 2,000 restricted sharesstock options under the 2015 Executive Long Term Incentive Plan based upon histhe level of achievement of his personal goals.the financial targets and the application of the scaled payout multiplier and the discretionary multiplier as described above, representing an equity incentive equal to approximately 46% and 29% of Mr. Marchiando was not eligible to participate inArmstrong and the 2014 Stock Incentive Plan because he did not joinother NEO’s average base salary for fiscal 2015, respectively. The stock option awards become exercisable one-third on each anniversary of the grant date, provided the participant remains employed with the Company until February 2014.on each of the relevant vesting dates. Due to their retirements,resignations prior to June 30, 2015, no restricted sharesequity incentives were awarded to Messrs. Rittenour or Lowry.  The “Stock Awards” column of the Summary Compensation Table contained under “Compensation of Executive Officers – Summary Compensation Table” sets forth the compensation cost incurred during fiscal 2014 for restricted stock awards to NEOsHoefing and Marchiando under the Company’s 2014 AnnualFiscal 2015 Executive Long Term Incentive Plan.

Stock-Based Incentives. The 2004 Stock Plan permits the Management Development Committee to grant stock appreciation rights, restricted stock, restricted stock units, performance share awards and deferred stock units, in addition to incentive and non-qualified stock options.

Mr. Armstrong was granted options under the 2004 Stock Plan to purchase 100,000 shares of Common Stock when he was appointed President and Chief Executive Officer in November 2013.  The option grant was consistent with2013 and in November 2014, on the levelfirst anniversary of options granted to others when they were appointedhis hire date, as the Company’s president.required by his offer letter. In addition, as part of his offer letter, subject to and conditioned upon the future approval of the Management Development Committee, Mr. Armstrong will be awarded an option to purchase an additional 100,000 shares of Common Stock in eachthis year on the anniversary of the next two yearshis hire date so long as he remains employed as the Company’s President and Chief Executive Officer on those dates.

In March 2014, Mr. Marchiando was granted options to purchase 25,000 shares of Common Stock upon his joining the Company as Vice President – Finance and Chief Financial Officer, which is consistent with the level of options granted to other executive officers when they joined the Company.

During fiscal 2014, Mr. Hoefing and Ms. Smith were granted options under the 2004 Stock Plan to purchase 15,000 and 4,000 shares, respectively, of Common Stock.that date. The Management Development Committee Team believedbelieves that anthis additional option grant to Mr. Hoefing and Ms. Smith wasArmstrong is appropriate to continue to more closely align theirhis interests with those of our shareholders.

Options granted to Messrs.Mr. Armstrong Hoefing and Marchiando and Ms. Smithto date become exercisable in four equal annual installments, beginning one year from their date of initial grant, at an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant. The options expire ten years from the date of grant, or if earlier, one year after the executive’s death or permanent disability or three months after the executive’s termination of employment. In addition, any portion of these options that is not exercisable becomes exercisable immediately upon a Change in Control of the Company as described under “Compensation of Executive Officers – Potential Payments Upon Termination or Change in Control.” All of the options granted were non-qualified stock options.

No otherThe Management Development Committee does not have a set time of the year in which it makes discretionary equity awards under the 2004 Stock Plan, nor does it make such awards every year.

In October 2014, the Management Development Committee made a restricted stock grants were madeaward of 10,100 shares to Mr. Armstrong orand restricted stock awards of between 2,500 and 6,800 shares to the other executive officersNEOs. These awards were made in recognition of the level of effort made by Mr. Armstrong and the other NEOs in the implementation of the Company’s new corporate strategy and as retention awards. One-third of the restricted stock award vests and risk of forfeitures and other restrictions lapse on such shares on each anniversary of the date of grant if the executive’s services or employment have not terminated on or prior to such date. Messrs. Hoefing and Marchiando’s restricted stock awards were forfeited upon their termination of employment during fiscal 2014.  2015. These restricted stock awards become immediately vested and risk of forfeiture and other restrictions lapse in the event of a change in control as described under “Compensation of Executive Officers – Potential Payments Upon Termination or Change in Control.”

In September 2015, the Management Development Committee made stock option grants under the 2004 Stock Plan to purchase 24,000 and 16,000 shares of Common Stock to Messrs. Armstrong and Chung, respectively. These awards were made in recognition of the level of effort made by Messrs. Armstrong and Chung in connection with the identification, negotiation, closing and integration of the acquisitions of Coord3 s.r.l. and Next Metrology Software s.r.o during fiscal 2015. These options were issued on September 29, 2015, with an exercise price equal to the closing market price on that date. These options become exercisable in three equal annual installments, beginning one year from their date of initial grant, at an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant. The options expire ten years from the date of grant, or if earlier, one year after the executive’s death or permanent disability or three months after the executive’s termination of employment. In addition, any portion of these options that is not exercisable becomes exercisable immediately upon a Change in Control of the Company as described under “Compensation of Executive Officers – Potential Payments Upon Termination or Change in Control.” All of the options granted were non-qualified stock options.

Under the terms of the 2014 AnnualFiscal 2015 Executive Long Term Incentive Plan, Messrs.Mr. Armstrong and Hoefing and Ms. Smithother NEOs became eligible for an

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Employee Benefits. We believe it is important to the retention of our team members that we maintain a competitive benefit package at all levels within the Company. Further, we believe a well-designed employee benefit program further promotes the creation of value for our shareholders by enhancing job productivity by encouraging our team members to maintain a healthy lifestyle and providing a reasonable level of financial support in the event of an illness, injury or death.

All of our team members, including the NEOs and our other executives, receive customary benefits such as medical, dental and vision plans, short and long-term disability and group life insurance. In addition, the NEOs and certain other executives receive enhanced life insurance (in lieu of group life) and supplemental long-term executive disability benefits, commensurate with their higher compensation levels.

We also maintain a 401(k) Profit Sharing Plan (the “401(k) Plan”) in which all team members employed in the United States, including the NEOs and our other executives, are eligible to participate on the same basis. All team members are eligible to contribute up to 75% of their salaries on a pre-tax basis to the 401(k) Plan. For calendar year 2014,2015, the annual maximum contribution limit was $17,500is $18,000 for employees under 50 years of age and $23,000$24,000 for employees 50 years of age or older. In addition, the Board of Directors may authorize the Company, from time to time, to match a portion of the team members’ contributions to the 401(k) Plan. During fiscal 2015, 2014 and 2013, the Company matched 50% of each team member’s voluntary contributions to the 401(k) Plan up to the annual maximum contribution limit set forth above, including those made by the NEOs and our other executives.

To facilitate the performance of their management responsibilities, we provide certain key employees selected perquisites and other personal benefits, such as either a company paidan automobile lease and related expenses orexpense allowance and relocation benefits, such as temporary housing and reimbursements of travel costs prior to relocation, to key employees when they join us.  In addition, we may occasionally approve the payment of special personal benefits on behalf of the President and Chief Executive Officer, such as those reported on the Summary Compensation Table under “Compensation of Executive Officers – Summary Compensation Table,” when we believe that the payment will benefit the Company by facilitating the President’s performance of his duties.

Severance Agreements.  In fiscal 2005, the The Board, upon recommendation of the Management Development Committee, authorized the implementation of formal severance agreements for the Company’s executive officers.officers beginning in fiscal 2005. The terms of the severance agreements are described under “Compensation of Executive Officers – Potential Payments Upon Termination or Change in Control.” The Board determined it appropriate to formalize the Company’s general severance policies and practices for its executive team and at the same time institute enhanced severance arrangements payable in the event of a termination of the executive’s employment following a Changechange in Controlcontrol of the Company. The Board and Management Development Committee believe that the enhanced severance arrangements are necessary in order to provide executives with the appropriate incentives to act in the best interests of the Company and its shareholders, without concern for their own personal interests, and to provide for continuity of management during the pendency of a transaction that could result in a Changechange in Controlcontrol of the Company. The Management Development Committee, in developing its recommendations to the Board, consulted with an outside compensation consultant hired by the Committee and the Company’s outside legal counsel. Based upon the foregoing, the Management Development Committee believes that the severance agreements contain terms and conditions which are comparable to those used by other companies that are similar in size to the Company.

The NEOs have all entered into our standard executive agreement not to compete, restricting the executive’s right to compete with us for the longer of twelve months following the termination of employment or the period post-termination during which we are required to make payments to the executive, and standard employee proprietary information and inventions agreement, containing confidentiality provisions and a two-year post-termination restriction on soliciting our employees. We have the right to cease all further payments under the NEO’s severance agreement in the event that the NEO violates the executive non-competition agreement. The NEOs must sign a standard release to receive payments under the severance agreements, including standard non-disparagement provisions.

Payments under the severance agreements, when aggregated with any other “parachute payments” (defined under Internal Revenue Code of 1986, as amended (the “Code”), Section 280G as compensation that becomes payable or accelerated due to a Change in Control) payable under any of our other plans, agreements or policies, are capped so as to not be treated as “excess parachute payments” under Code Sections 280G and 4999. See “Compensation of Executive Officers – Compensation Discussion and Analysis – Golden Parachute Excise Tax” below for a further discussion of our policy with respect to golden parachute amounts.

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Fiscal 2014 Retirements.  During fiscal 2014, Mr. Rittenour retired as President and Chief Executive Officer of the Company and Mr. Lowry retired as Vice President and Chief Financial Officer of the Company.  Mr. Rittenour’s severance agreement did not provide for any payments to him upon retirement.  In order to support an orderly transition following the retirement of Mr. Rittenour and engagement of Mr. Armstrong as President and Chief Executive Officer, the Company entered into a consulting agreement with Mr. Rittenour.  The terms of the consulting agreement entered into with Mr. Rittenour in connection with his retirement are described under “Compensation of Executive Officers – Potential Payments Upon Termination or Change in Control” below.  Mr. Lowry’s severance agreement did not provide for any payments to him upon retirement and no other agreement was entered into with him upon his retirement.

Deductibility of Executive Compensation. Code Section 162(m) restricts the deductibility of executive compensation paid to the chief executive officer and any of the three most highly compensated executive officers (other than the chief financial officer) at the end of the fiscal year to the extent such compensation (including gains from the exercise of certain stock options) exceeds $1,000,000 in any year. There are exceptions to the limitation for performance-based compensation that is based on nondiscretionary, pre-established performance measures.

Our Board established certain restrictions on the granting of options under the 2004 Stock Plan so that compensation realized in connection with the stock-based grants under the 2004 Stock Plan wouldcould be structured to be exempt from the restrictions on deductibility under Section 162(m). The 2004 Stock Plan permits the issuance of restricted stock that is subject to certain specified performance based vesting requirements and so exempt from the restriction on deductibility under Section 162(m).  In addition, to comply with such exemptions,For instance, the 2004 Stock Plan restricts stock grants to any participant in any fiscal year as follows: (i) up to 200,000 shares of Common Stock may be subject to stock option grants, (ii) up to 200,000 shares of Common Stock may be subject to stock appreciation right grants, (iii) up to 200,000 shares of Common Stock may be subject to restricted stock awards, (iv) up to 200,000 shares of Common Stock may be subject to restricted stock units and (v) up to 200,000 shares of Common Stock may be subject to performance share awards. It is important to note that while these restrictions allow the Management Development Committee continuing discretion in establishing executive officer compensation, they do limit such discretion by restricting the size of stock awards which the Management Development Committee may grant to any single individual. The permitted size of the stock awards to a single individual was established based on the determination of the maximum number of shares which would be required to be granted in any fiscal year to retain or attract a chief executive officer of the Company. The stock option grants under the 2004 Stock Plan have been designed to be exempt from the restrictions on deductibility under Section 162(m). While the restricted stock awards under the 2004 Stock Plan, to date, have not been designed to be exempt from the restrictions on deductibility under Section 162(m), they have been small enough in number and so not likely to result in payments to any executive officer in any year which would be subject to such restrictions.

We do not believe that other components of our compensation program are likely to result in payments to any executive officer in any year which would be subject to the restriction on deductibility under Section 162(m). Accordingly, we believe that we have taken appropriate actions to preserve the deductibility of most of the annual performance bonuses and long-term performance incentive awards the Management Development Committee is likely to award in any given year. We will continue to evaluate the advisability of qualifying future executive compensation programs for deductibility under the Code.

The Management Development Committee recognizes the need to retain flexibility to make compensation decisions that may not meet Section 162(m) standards to enable us to attract, retain and motivate highly qualified executives. It has the authority to approve non-deductible compensation in appropriate circumstances. Also, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the related regulations and guidance, no assurance can be given that compensation intended by us to satisfy the requirements for deductibility under Section 162(m) will in fact do so.

Stock Awards Expense. We are required under FASB ASC Topic 718 to record compensation expense associated with stock awards to our employees, including the NEOs, as more fully discussed in Note 89 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014.2015. As discussed above, the Management Development Committee does consider the impact of FASB ASC Topic 718 in determining to use grants of non-qualified stock options and restricted stock as our principal long-term incentive program for the executive team. Further, the Management Development Committee does consider the amount of compensation expense required to be recorded in determining the size of stock option grants and

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restricted stock awards to the Chief Executive Officer and the aggregate grants and awards made to the remainder of the executive team and team members generally.

Golden Parachute Excise Tax. Code Section 280G imposes tax penalties on golden parachute payments associated with a Change in Control of the Company to the extent they exceed a specified level. These penalties include a 20% excise tax on executives receiving these excess payments and the elimination of our tax deduction for these excess payments. Payments under our severance agreements and from the acceleration of the exercisability of our stock options and vesting of our restricted stock in the event of a Change in Control of the Company are potentially subject to these tax penalties. Currently, payments under our severance agreements are capped at an amount that will not trigger the excise tax. There is no similar limitation on the acceleration of the exercisability of stock options and vesting of restricted stock since we believe it is unlikely that the acceleration of options and vesting of restricted stock alone would cause an executive to exceed the specified level. The Management Development Committee recognizes the need to retain flexibility to make compensation decisions that may cause payments to executives to exceed the levels specified in Code Section 280G to enable us to attract, retain and motivate highly qualified executives. It therefore has the authority to approve compensation that would exceed the specified level or to remove the cap contained in the severance agreements in appropriate circumstances.

Deferred Compensation. We have also structured our executive compensation program with the intention that it complies with or be exempt from Code Section 409A which may impose additional taxes on our executives for certain types of deferred compensation that are not in compliance with or exempt from Code Section 409A.

Because the Company’s policy is to either comply with or exempt payments from Code Section 409A, it does not generally assume responsibility for any additional tax, interest, or penalties under Code Section 409A, although it has the authority to do so in appropriate circumstances. Also, because of ambiguities and uncertainties as to the application and interpretation of Code Section 409A and the related regulations and guidance, no assurance can be given that compensation intended by us to comply with or be exempt from Code Section 409A will in fact do so.

Report of the Management Development, Compensation and Stock Option Committee

The Management Development, Compensation and Stock Option Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Consideration of Last Year’s Advisory Shareholder Vote on Executive Compensation

At the 20132014 Annual Meeting of Shareholders, approximately 98.9% of the90.1% of the votes cast by the shareholders were voted to approve the compensation of the Company’s named executive officers as discussed and disclosed in the 20132014 Proxy Statement. The Board and the Management Development Committee appreciate and value the views of our shareholders. In considering the results of this advisory vote on executive compensation, the Management Development Committee concluded that the compensation paid to our named executive officers and the Company’s overall pay practices enjoy shareholder support and did not make any material changes to the executive compensation program in response to the shareholder vote.

Going forward, future advisory votes on executive compensation will serve as an additional tool to guide the Board and the Management Development Committee in evaluating the alignment of the Company’s executive compensation program with the interests of the Company and its shareholders. Shareholders may communicate with the Board, the Management Development Committee or individual directors regarding the Company’s executive compensation program by submitting such communications in writing to Perceptron, Inc., Attention: Board of Directors (or the Management Development Committee or the individual director(s)), 47827 Halyard Drive, Plymouth, Michigan 48170. Communications should be sent by overnight or certified mail, return receipt requested. Such communications will be delivered directly to the Board, the Management Development Committee or the individual director(s), as designated on such communication.

At the 2013 Annual Meeting of Shareholders, our shareholders expressed a preference that advisory votes on executive compensation be held on an annual basis. Consistent with this preference, the Board determined to

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implement an advisory vote on executive compensation on an annual basis until the next required vote on the frequency of shareholder votes on the compensation of executive officers.

Summary Compensation Table

The following table sets forth certain information as to compensation paid by us for services rendered in all capacities to the Company and its subsidiaries during fiscal 2015, 2014 and 2013 and 2012(except as otherwise noted) to (i) person’spersons serving as our Chief Executive Officer at any time during fiscal 2014, 2013 and 2012,2015, (ii) person’spersons serving as our Chief Financial Officer at any time during fiscal 2014, 2013 and 2012, and2015, (iii) our other executive officer as of June 30, 20142015 (as to compensation paid by us for services rendered in all capacities to the Company during fiscal 2015); and (iv) persons serving as our executive officers at any time during fiscal 2015, who were not serving as our executive officers as of June 30, 2015, whose total compensation exceeded $100,000 in fiscal 2015 (collectively, the “named executive officers” or “NEOs”). Please see the Compensation Discussion and Analysis for additional detail regarding the Company’s compensation philosophy, practices and fiscal 20142015 compensation decisions.

SUMMARY COMPENSATION TABLE

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(1)Represents the full grant date fair value associated with stock options awarded prior to the end of such fiscal year calculated in accordance with FASB ASC Topic 718, excluding any forfeiture reserves recorded for these awards. There can be no assurance that the FASB ASC Topic 718 option award amounts shown above will ever be realized. The assumptions we used to calculate these amounts are included in Note 8 to our audited consolidated financial statements included in our Annual Report on Form 10-K for fiscal 2014.

(2)No profit sharing payments were earned under our 2014 Annual Incentive Plan.  As discussed under “Compensation of Executive Officers – Compensation Discussion and Analysis – Key Elements of Compensation for Fiscal 2014 – Annual Profit Sharing/Non-Equity Incentive Plan,” the plan provides for annual profit sharing payments based on annual financial performance goals for fiscal 2014 which were not achieved.

(3)“All Other Compensation” in fiscal 2014 is comprised of (i) reimbursements for temporary housing and other living expenses for Mr. Armstrong in Michigan totaling $8,388 and personal commuting expenses in the amount of $16,144, (ii) contributions made by us to the accounts of the NEOs under our 401(k) Plan with respect to fiscal 2014 as follows: Mr. Hoefing $11,500; Ms. Smith $11,500; Mr. Rittenour $4,423; and Mr. Lowry $2,400, (iii) the dollar value of any life insurance premiums we paid in fiscal 2014 with respect to term life insurance for the benefit of the named executives, (iv) the dollar value of any supplemental executive disability insurance premiums we paid in fiscal 2014 for the benefit of the named executives, (v) the dollar

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__________________

value of personal charter travel expenses in the amount of $25,969 for the benefit of Mr. Rittenour, (vi) payment of consulting fees through June 30, 2014 to Mr. Rittenour totaling $233,328, (vii) continuation of health benefits for Mr. Rittenour until December 31, 2014, (viii) the dollar value of a monthly automobile allowance to the NEOs, and (ix) the aggregate incremental cost to the Company in fiscal 2014 for personal and business use by Messrs. Hoefing and Lowry of a company leased automobile including insurance, gasoline and maintenance expenses.  SEC rules require automobile related costs of commuting and other uses not directly and integrally related to our business to be disclosed as compensation to the executive.  Because we do not track automobile use in this way, the automobile related costs included in the table for Messrs. Hoefing and Lowry represent 100 percent of our actual expenditures for both personal and business use of the leased automobiles.

(4)Represents the full grant date fair value associated with restricted stock awards under our 2014 Annual Incentive Plan made during the applicable fiscal year calculated in accordance with FASB ASC Topic 718, excluding any forfeiture reserves recorded for those awards.  As discussed under “Compensation of Executive Officers – Compensation Discussion and Analysis – Key Elements of Compensation for Fiscal 2014 – Annual Equity Incentive Plan,” the restricted stock awards are earned based on an individual’s achievement of performance goals during fiscal 2014 with a subsequent one year service vesting after the issuance date.  The full grant date fair value was determined assuming achievement of the performance goals was at target levels.  Compensation expense related to the restricted stock awards for fiscal 2014 is based on the closing price of the Company’s Common Stock on November 12, 2013, the date of grant, multiplied by the number of restricted stock awards expected to be issued and is amortized over the combined performance and service periods.  Pursuant to the 2014 Annual Incentive Plan, Messrs. Armstrong, and Hoefing and Ms. Smith received a grant of 3,000, 2,000 and 3,000 shares, respectively, of restricted stock under the 2004 Stock Plan on October 13, 2014, based upon their level of achievement of their personal goals. Risk of forfeiture and other restrictions will lapse on those shares on October 13, 2015 if Messrs. Armstrong and Hoefing’s and Ms. Smith’s services or employment have not terminated on or prior to such date.  Mr. Marchiando was not eligible for an award of restricted stock for fiscal 2014.

(5)Represents the full grant date fair value associated with restricted stock awards under our 2013 Annual Incentive Plan made during the applicable fiscal year calculated in accordance with FASB ASC Topic 718, excluding any forfeiture reserves recorded for those awards.  The restricted stock awards were earned based on an individual’s achievement of performance goals during fiscal 2013 with a subsequent one year service vesting after the issuance date.  The full grant date fair value was determined assuming achievement of the performance goals was at target levels.  Compensation expense related to the restricted stock awards is based on the closing price of the Company’s Common Stock on November 13, 2012, the date of grant, multiplied by the number of restricted stock awards expected to be issued and is amortized over the combined performance and service periods.  Pursuant to the 2013 Annual Incentive Plan, Mr. Hoefing received a grant of 3,000 shares of restricted stock under the 2004 Stock Plan on August 27, 2013 based upon his level of achievement of his personal goals.  Risk of forfeiture and other restrictions lapsed on those shares on August 27, 2014.  Messrs. Rittenour and Lowry did not receive an award of restricted stock in August 2013.

(6)Special discretionary bonuses were paid to Messrs. Rittenour and Lowry in recognition of the successful divestiture of the Company’s former Commercial Products Business Unit in August 2012.

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Executive Officers – Potential Payments Upon Termination or Change in Control.”  These options expire ten years from their date of grant or, if earlier, one year after the optionee’s death or permanent disability or three months after the optionee’s termination of employment.

(5)Represents the full grant date fair value associated with restricted stock awards under our 2014 Annual Incentive Plan made during the applicable fiscal year calculated in accordance with FASB ASC Topic 718, excluding any forfeiture reserves recorded for those awards.  As discussed under “Compensation of Executive Officers – Compensation Discussion and Analysis – Key Elements of Compensation for Fiscal 2014 – Annual Equity Incentive Plan,” the restricted stock awards are earned based on an individual’s achievement of performance goals during fiscal 2014 with a subsequent one year service vesting after the issuance date.  The full grant date fair value was determined assuming achievement of the performance goals was at target levels.  Compensation expense related to the restricted stock awards for fiscal 2014 is based on the closing price of the Company’s Common Stock on November 12, 2013, the date of grant, multiplied by the number of restricted stock awards expected to be issued and is amortized over the combined performance and service periods.

(6)All awards under the 2004 Stock Plan are granted upon approval of the Management Development Committee.  During fiscal 2014, the Management Development Committee granted stock option awards under the 2004 Stock Plan.  Stock option awards made in fiscal 2014 became effective (the “Grant Date”) on the first business day of the month following the month in which the grant was approved by the Management Development Committee, or, in the case of Mr. Armstrong, the first business day of the month following his date of employment.  The exercise price of the option award was set at the closing sales price of the Common Stock on the NASDAQ Global Market on the Grant Date.

(7)Represents the full grant date fair value associated with stock options awarded prior to the end of such fiscal year calculated in accordance with FASB ASC Topic 718, excluding any forfeiture reserves recorded for these awards. There can be no assurance that the FASB ASC Topic 718 option award amounts shown above will ever be realized. The assumptions we used to calculate these amounts are included in Note 8 to our audited consolidated financial statements included in our Annual Report on Form 10-K for fiscal 2014.

Employment Agreements

None of our executive officers, other than Mr. Armstrong, has an employment agreement with us, other than the agreements discussed under “Compensation of Executive Officers – Potential Payments Upon Termination or Change in Control.”

Pursuant to his offer letter, Mr. Armstrong will receivereceives an annual base salary of $350,000 and will participateparticipates in the Company’s Annual Incentive Compensation Plan.annual incentive compensation plans. Mr. Armstrong is entitled to receive health, welfare, auto and other benefits generally available to senior management of the Company, as well asand received reimbursement for reasonable relocation costs, such as temporary housing, travel expenses and moving costs.costs through July 2014. In addition to stock options and restricted stock granted to Mr. Armstrong in fiscal 2014 and 2015, subject to and conditioned upon the future approval of the Board’s Management Development Committee, on the first and second anniversaries of the 2013 grant date,December 1, 2015, if Mr. Armstrong continues to be employed by the Company as President and Chief Executive Officer at those dates,that date, he will be granted non-qualified stock options to purchase 100,000 shares of the Company’s Common Stock. As part of the offer letter, Mr. Armstrong is to be appointed to the Company’s Board of Directors so long as he serves as President and Chief Executive Officer.

For a description of material modifications to stock options held by Mr. Rittenour in connection with his termination of employment with us, see “Compensation of Executive Officers – Potential Payments Upon Termination or Change in Control.”

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Outstanding Equity Awards at Fiscal Year-End

The following table provides information with respect to unexercised options and unearned shares held by the NEOs as of June 30, 2014.2015.

OUTSTANDING EQUITY AWARDS AT 20142015 FISCAL YEAR-END