Company: AAOI
Filing Date: 2025-02-28
Form Type: PRE 14A
Source: 0001104659-25-019126
Chunk: 32

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-02-28
Form: PRE 14A
Chunk 32
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 stock ownership guidelines for our executive officers to align their interest with those of our stockholders. 
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Governance of Executive Compensation Program Role of the Compensation Committee The compensation committee has the primary responsibility of developing, implementing and overseeing our executive and incentive compensation policies and programs. While the compensation committee reports its decisions to and takes into account the feedback of the Board, the compensation committee generally makes the final decisions regarding the compensation of our Chief Executive Officer and NEOs. Compensation-Setting Process The compensation committee determines the target total direct compensation opportunities for our executive officers, including our NEOs. In any given year, the compensation committee considers some or all of the following factors: • the financial and operational objectives established by the Board for the year at issue; • the anticipated role that officer will play in the coming year in achieving those objectives and the cost and difficulty of replacing that individual; • internal pay equity among our executive officers; • each individual executive officer’s skills, experience, qualifications and role relative to other similarly-situated executives at the companies in our compensation peer group; • the annual performance review for each executive officer, including contributions to our overall performance, demonstrated leadership and significant individual achievements; • our financial performance relative to our peers; • the compensation practices of our compensation peer group and the positioning of each executive officer’s compensation as compared to our peer group; and • the recommendations provided by our CEO with respect to the compensation of our other executive officers. These factors provide a framework, with no single factor being determinative in setting pay levels. Role of Our Officers The compensation committee relies on the observations and information provided by our executive officers. Our Chief Executive Officer provides evaluations of the performance of the other executive officers and makes recommendations regarding changes to executive officer compensation (other than for himself), the broader Company-wide cash incentive plan, and budgets for equity awards. Our Chief Financial Officer provides information and recommendations regarding our annual corporate operating budget and the related performance goals for our equity and cash incentive programs. Our in-house legal team, including our Chief Legal Officer, provides additional guidance as requested by the compensation committee. Finally, the benefits committee, consisting of members of our human resources, legal, and accounting departments, provides guidance to the compensation committee on broad-based health, welfare and retirement benefit plans and

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proposed changes to those plans. Our officers recuse themselves from discussions and recommendations regarding their own compensation. Role of Compensation Consultant The compensation committee retained Aon