Company: AAOI
Filing Date: 2025-02-28
Form Type: PRE 14A
Source: 0001104659-25-019126
Chunk: 12

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-02-28
Form: PRE 14A
Chunk 12
---
 of shares available for future grants under the Company’s equity incentive plans plus the number of shares underlying any outstanding awards at target, divided by (b) the total number of shares outstanding. We recognize the dilutive impact of our equity compensation programs on our stockholders and continuously aim to balance this concern with competitive compensation practices, the need to attract and retain talent, and the long-term alignment of the interests of our employees with those of stockholders. The compensation committee has considered this potential dilution level in the context of competitive data from its peer group, and believes that the resulting dilution levels would be within industry standard ranges for companies within the fiber-optic networking industry.

5

TABLE OF CONTENTS

Why Stockholders Should Vote to Approve the Amended and Restated 2021 Plan**

The following is a list of some of the primary factors to be considered by stockholders in connection with approving the Amended and Restated 2021 Plan:

#### Governance Best Practices
The Amended and Restated 2021 Plan continues to incorporate the following corporate governance best practices that align our equity compensation program with the interests of our stockholders:

•

No evergreen provision . The Amended and Restated 2021 Plan does not contain an “evergreen” feature pursuant to which the shares authorized for issuance under the plan can be increased automatically without stockholder approval.

•

Clawback of awards . Awards granted under the Amended and Restated 2021 Plan are subject to recoupment under our Incentive Compensation Recovery Policy, which is described further on page 25, as well as any other recoupment arrangements or policies in effect at the time of grant.

•

No liberal definition of “change in control” . No change in control would be triggered by stockholder approval of a business combination transaction, the announcement or commencement of a tender offer or any board assessment that a change in control may be imminent.

•

No discounted stock options or stock appreciation rights . The Amended and Restated 2021 Plan requires that stock options and stock appreciation rights have an exercise price at or above the fair market value per share on the date of grant.

•

Prohibition on repricing . Repricing of stock options and stock appreciation rights without stockholder approval is prohibited under the Amended and Restated 2021 Plan.

•

No tax gross-ups . No participant is entitled under the Amended and Restated 2021 Plan to any tax gross-up payments for any excise tax pursuant to Section 280G or 4999 of the