Company: AAOI
Filing Date: 2025-02-28
Form Type: PRE 14A
Source: 0001104659-25-019126
Chunk: 10

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-02-28
Form: PRE 14A
Chunk 10
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2021 Plan. The number of shares currently reserved for issuance under the Amended and Restated 2021 Plan is 8,147,762 shares. As of February 24, 2025, we had 130,661 shares remaining available for grants of new awards under the Amended and Restated 2021 Plan.

If stockholders approve this proposal, the Amended and Restated 2021 Plan will become effective as of the date of stockholder approval. If stockholders do not approve this proposal, the Amended and Restated 2021 Plan with the increase in the number of available shares thereunder and the increase in certain annual limits on the value of awards that may be granted thereunder will not take effect and the 2021 Plan will continue to be administered in its current form until 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