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

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-02-28
Form: PRE 14A
Chunk 14
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 these trends, fiber-optic networking technology is becoming essential in all four of our target markets, as it is often the only economical way to deliver the desired bandwidth. Equity compensation is an important part of our employment value proposition as we try to attract, retain and reward our high-performing employees and as we compete with many technology companies for a limited pool of talent during the rapid adoption of AI.

Incentivizes, Retains and Motivates Talent . It is critical to our success that we incentivize, retain and motivate the best talent amidst a competitive labor market. Our equity-based compensation program has always been and will continue to be a key component in our ability to pay market-competitive compensation to our employees. We generally grant equity awards to key employees upon hire and on an annual basis thereafter, subject to satisfactory performance. Equity incentives link long-term performance and payouts through the value of our shares. These valuable aspects of equity compensation have made it a key element of our compensation strategy, and thus we grant equity compensation to multiple levels of our organization to provide opportunities to participate in ownership of the Company.

Aligns with Our Pay-for-Performance Compensation Philosophy . We believe that equity-based compensation is fundamentally performance-based. As the value of our stock appreciates, our employees receive greater compensation at the same time that our stockholders are receiving a greater return on their investment. Conversely, if the stock price does not appreciate following the grant of an equity award, then our employees would receive lower compensation pursuant to their awards.

Aligns Employee and Director Interests with Stockholder Interests . Providing our employees and non-employee directors with compensation in the form of equity incentives directly aligns the interests of those employees and non-employee directors with the interests of our stockholders. If the proposed amendment to the Amended and Restated 2021 Plan is approved by stockholders, we will be able to continue granting equity-based incentives that foster this alignment between our employees and non-employee directors and our stockholders. We believe that employees with a stake in the future success of our business are highly motivated to achieve long-term growth and are well-aligned with the interests of our other stockholders to increase stockholder value.

Avoids Significant Cash Expenditures That Could Impact the Business. As noted above, the ability to award long-term incentives that align employees with stockholders is a critical tool to attract and retain key talent. The absence of an available equity pool requires the Company to grant cash-based long-term incentives, which can be significantly more volatile with respect to the expense and