Company: AAOI
Filing Date: 2025-03-10
Form Type: DEF 14A
Source: 0001104659-25-022149
Chunk: 9

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-03-10
Form: DEF 14A
Chunk 9
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 its expiration on June 3, 2031 (or until such time as the shares available for issuance thereunder have been depleted, whichever occurs first). If the Amended and Restated 2021 Plan share reserve is depleted, we will be unable to maintain our current equity grant practices and, therefore, we will be at a significant competitive disadvantage in attracting, motivating and retaining talented individuals who contribute to our success. We will also be compelled to replace equity incentive awards with cash awards, which may not align the interests of our executives and employees with those of our stockholders as effectively as equity incentive awards and may not allow us to remain competitive in the marketplace for executive talent and for other key individuals. Information Regarding Overhang, Burn Rate, and Dilution Our Board and compensation committee considered a number of factors in determining the number of additional shares to reserve for issuance under the Amended and Restated 2021 Plan, including stockholder feedback, the costs of the Amended and Restated 2021 Plan, the number of shares remaining under the Amended and Restated 2021 Plan, our estimate of the number of shares needed for future awards, our overhang, our burn rate and our potential dilution. The Board continuously strives to balance these considerations with our need to compete for talent using practices that are prevalent in the market, including providing appropriate levels of long-term equity incentive compensation. We believe that the number of shares being requested for issuance under the Amended and Restated 2021 Plan will last approximately one to two years. We anticipate making future requests for additional increases in the share reserve periodically (and ahead of potential share reserve depletion) so that we can continue to enable our stockholders to have an opportunity to participate in the decision-making and allow them to routinely evaluate the Amended and Restated 2021 Plan’s continued effectiveness. The duration of the share reserve is based on several assumptions, including that our grant practices under the Amended and Restated 2021 Plan will be consistent with our historical practices and usage, and is dependent on a number of other factors that are difficult to predict or beyond our control, such as changes in business conditions, our compensation programs and our stock price, that could alter this projection and our expectations. 4

TABLE OF CONTENTS

Overhang The following table sets forth certain information about the Amended and Restated 2021 Plan as of February 24, 2025:

| ​ | Number of new shares proposed to be authorized under the Amended and Restated 202