Company: AOSL
Filing Date: 2025-09-18
Form Type: DEF 14A
Source: 0001387467-25-000054
Chunk: 71

Company: ALPHA & OMEGA SEMICONDUCTOR Ltd
Filing Date: 2025-09-18
Form: DEF 14A
Chunk 71
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Long Term Equity Incentive Awards

Our equity award program is the primary vehicle for offering long-term incentives to our named executive officers and providing an inducement for long-term retention. Equity compensation represents a significant component of the total compensation package we provide to each of our named executive officers. We believe this is appropriate because it aligns the interests of our named executive officers with those of our shareholders and focuses their attention on the creation of shareholder value in the form of stock price appreciation. The Compensation Committee may use both options and restricted share units as part of the Company’s long-term incentive program for named executive officers, although in recent years, only restricted share units have been awarded to the named executive officers. The Company believes that there are several advantages of using restricted share units including ongoing concerns over the dilutive effect of option grants on the Company’s outstanding shares, the Company’s desire to have a more direct correlation between the compensation expense it must record for financial accounting purposes and the actual value delivered to executive officers, and the fact that the incentive and retention value of a restricted share unit award is less affected by market volatility than options.

We grant both time-based restricted share units that vest based on continued service and, performance-based restricted share units that vest based on the level of attainment of Company performance goals and continued service. The Compensation Committee believes that including performance-based restricted share units as part of our equity-based compensation program strengthens the executive’s focus on the Company’s financial performance and shareholder value creation and performance-based restricted share units now generally represent 50% each executive officers’ equity awards.

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For 2018, the performance-based restricted share unit awards granted to our named executive officers included market performance restricted share units that vest based on our long-term stock price performance with a multiplier based on revenue growth and a subsequent service period, which further focus our executives on long-term stock price appreciation.

Our Compensation Committee reviews our equity compensation program annually and may, at its discretion, grant additional equity awards to existing named executive officers consistent with our named executive officer compensation objectives. In determining the size of those additional grants, our Compensation Committee typically takes into account the recommendations of our Chief Executive Officer, data provided by (and recommendation of) Compensia and its own subjective assessment of the named executive officer’s performance and the retention value of his or her existing equity awards.

Any options granted to our employees, including executive officers, and to our directors are granted with a per share exercise price equal to the closing price of