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

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-03-10
Form: DEF 14A
Chunk 10
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 ​ | ​ | ​ | ​              | ​ | 7.10% | ​ | ​ |
| Three-year average | ​ | ​ | ​                | ​ |         ​ | ​ | ​ | ​ | ​                                               | ​ |          ​ | ​ | ​ | ​ | ​              | ​ | 6.20% | ​ | ​ |

Our three-year burn rate was negatively affected by declines in our stock price and, as we have seen recent increases in our stock price — and if these recent increases hold — we anticipate a corresponding improvement in our burn rate. We have carefully managed our burn rate to limit the dilutive impact to our stockholders of equity compensation, and we will continue to do so. In addition to gross burn rate, the compensation committee considered our annual net burn rate from the Company’s equity incentive plans in approving the amendment to the Amended and Restated 2021 Plan. The Company measures annual dilution as the total number of shares subject to equity awards granted during the year less cancellations and other shares returned to the reserve, divided by total common shares outstanding at the end of the year. The Company’s annual dilution (or annual net burn rate) under the Amended and Restated 2021 Plan for 2024 was 1.79%. Dilution If the amendment to the Amended and Restated 2021 Plan is approved, the Company’s total potential dilution from the shares available for issuance under its equity incentive plans would increase from 7.65% as of December 31, 2024 to 10.97%. Total potential dilution is calculated as the total of (a) the number 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.

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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 stock