Company: AAOI
Filing Date: 2025-02-28
Form Type: PRE 14A
Source: 0001104659-25-019126
Chunk: 29

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-02-28
Form: PRE 14A
Chunk 29
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Us are earned are rigorous and challenging. The compensation committee views the inclusion of a metric that includes relative TSR as critical because it ties executive officer compensation with the creation of stockholder value and aligns the interests of executive officers with those of the Company and its stockholders. By measuring our stock performance relative to peers, it mitigates the impact of macroeconomic factors, both positive and negative, that affect the industry and/or stock price performance and are beyond the control of management. Additionally, it provides rewards that are more directly aligned with performance through different economic cycles. The other 50% of our CEO’s long-term incentive equity grant was in the form of restricted stock units (“RSUs”), which drives longer-term retention. The proportion of total compensation that was variable and at-risk and the other performance-based metrics further enhanced the link between pay and performance for the CEO and NEOs in 2024 and strengthened the alignment of the interests of the executive officers with those of our stockholders. • Short-Term Annual Cash Incentive: Rigorous, Pre-Set Annual Operational Goals. At the beginning of 2024, we established annual cash incentive plan targets for achieving certain operational milestones (“2024 Targets”) as outlined below. We believe the 2024 Targets were rigorous, aggressive and challenging, attainable only by demonstrated commitment and strong performance by the management team. The 2024 Targets took into account the relevant opportunities and risks, including the significant continuing headwinds we were facing. • Target 1 “Non-GAAP EBITDA” . Non-GAAP EBITDA is our GAAP operating income (loss) as defined under generally accepted account principles, excluding amortization of intangible assets, share-based compensation expense, non-recurring expenses (income), unrealized foreign exchange gain (loss), non-recurring tax expenses (benefits), expenses associated with discontinued products, non-cash expenses associated with discontinued products, depreciation expense, and interest income (expense). The 2024 Non-GAAP EBITDA target was Non-GAAP EBITDA losses to not exceed $2,000,000. In 2024, the Company did not reach the minimum to receive this Target 1 bonus. • Target 2 “New Customer Order” . The Company’s success and growth is dependent on the ability to diversify the customer base and obtain significant market share from new customers. “New Customers” is defined as any customer which the Company has received less than $500,000 in total revenue in fiscal year 2023. The