Company: AAOI
Filing Date: 2025-04-18
Form Type: PRE 14A
Source: 0001104659-25-036344
Chunk: 31

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-04-18
Form: PRE 14A
Chunk 31
---
       ​ | ​ | ​ | ​ | ​                                     | ​ |       50% | ​ | ​ | ​ | ​                              | ​ |       50% | ​ | ​ | ​ | ​        | ​ |         ​ | ​ | ​ |

• 50% of CEO and Other NEO Long-Term Incentive Compensation is Performance-Based: Rigorous, Pre-Set Three-Year Financial Goals . In addition, 50% of our CEO’s and other NEOs’ target long-term incentive annual equity grant was in the form of performance restricted stock units (“PSUs”). The PSUs are based 50% on a relative TSR goal and 50% on the attainment of a stock price hurdle, both measured over a three-year performance period. The threshold levels of performance that must be met before any PSUs are earned are rigorous and challenging. The compensation committee views the inclusion of a metric that includes relative TSR as critical because it ties executive officer compensation with the creation of stockholder value and aligns the interests of executive officers with those of the Company and its stockholders. By measuring our stock performance relative to peers, it mitigates the impact of macroeconomic factors, both positive and negative, that affect the industry and/or stock price performance and are beyond the control of management. Additionally, it provides rewards that are more directly aligned with performance through different economic cycles. The other 50% of our CEO’s long-term incentive equity grant was in the form of restricted stock units (“RSUs”), which drives longer-term retention. The proportion of total compensation that was variable and at-risk and the other performance-based metrics further enhanced the link between pay and performance for the CEO and NEOs in 2024 and strengthened the alignment of the interests of the executive officers with those of our stockholders. • Short-Term Annual Cash Incentive: Rigorous, Pre-Set Annual Operational Goals. At the beginning of 2024, we established annual cash incentive plan targets for achieving certain operational milestones (“2024 Targets”) as outlined below. We believe the 2024 Targets were rigorous, aggressive, and challenging, attainable only by demonstrated commitment and strong performance by the management team. The 2024 Targets took into account the relevant opportunities and risks, including the significant continuing headwinds we were facing. • Target 1 “Non-GAAP EBITDA” . Non-GAAP EBITDA is our GAAP operating income (loss) as defined under generally accepted account principles, excluding amortization of intangible assets, share-based