DEF 14A of Applied Optoelectronics, Inc., Apr 26, 2024

DEF 14A of Applied Optoelectronics, Inc.

Filed Apr 26, 2024 · FY20230001104659-24-052897

Open on EDGAR

  1. PROPOSAL NO. 1 ELECTION OF DIRECTORS

    PROPOSAL NO. 1 ELECTION OF DIRECTORS We have a classified Board consisting of two Class I directors, two Class II directors and three Class III directors. At each annual meeting of stockholders, directors are elected for a term of three years to succeed those directors whose terms expire at such annual meeting date. There are no arrangements or understandings between any director and any other person pursuant to which he or she is or was to be selected as a director of the Company. The term of the Class II directors, William H. Yeh and Cynthia (Cindy) DeLaney, will expire on the date of the upcoming Annual Meeting. Accordingly, two persons are to be elected to serve as Class II directors of the Board at the Annual Meeting. The Board’s nominees for election by the stockholders to those two positions are the current Class II members of the Board, William H. Yeh and Cynthia (Cindy) DeLaney. If elected, each nominee will serve as a director until our annual meeting of stockholders in 2027 and until their respective successors are duly elected and qualified. If any of the director nominees declines to serve or becomes unavailable for any reason (although we know of no reason to anticipate that this will occur), or if a vacancy occurs before the election, the proxies may be voted for such substitute nominees as we may designate. The proxies cannot vote for more than two persons. The two nominees for Class II director receiving the highest number of “FOR” votes will be elected as Class II directors. We believe that each of our directors has demonstrated business acumen, ethical integrity and an ability to exercise sound judgment as well as a commitment of service to us and our Board. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF WILLIAM H. YEH AND CYNTHIA (CINDY) DELANEY AS CLASS II DIRECTORS. Biographical information concerning each of our directors, including the nominees, is set forth below. Also set forth below are the specific experience, qualifications, attributes or skills that led our nominating and corporate governance committee to conclude that each person should serve as a director.

  2. PROPOSAL NO. 1 ELECTION OF DIRECTORS

    | Name | Age | Director Since | | Class I Directors Whose Terms Expire at the 2026 Annual Meeting of Stockholders: | | | | Che-Wei Lin | 60 | 2014 | | Elizabeth Loboa | 57 | 2020 | | Class II Directors Whose Terms Expire at this Annual Meeting: | | | | William H. Yeh | 71 | 2000 | | Cynthia (Cindy) DeLaney | 58 | 2021 | | Class III Directors Whose Terms Expire at the 2025 Annual Meeting of Stockholders: | | | | Chih-Hsiang (Thompson) Lin | 61 | 1997 | | Richard B. Black | 90 | 2001 | | Min-Chu (Mike) Chen | 74 | 2013 |

  3. Nominees for Election to a Three Year Term Expiring at the 2027 Annual Meeting of Stockholders

    Nominees for Election to a Three Year Term Expiring at the 2027 Annual Meeting of Stockholders William H. Yeh has served as the Chief Executive Officer and President of Golden Star Management, Inc., a real estate investment and management company, since 1997. In addition, since 2005, he has served as President of Pearlyeh Investments Inc., a real estate development and investment company. Since 2014, he has served as President of Stonemetal Capital, LLC, an equity financial company and as President of Pearl Yeh Charitable Foundation LLC, a charitable foundation focused on cultural exchange and education programs. He served as the Vice Chairman of Central Bancorp, Inc. (the holding company of United Central Bank, now Hanmi Bank) from 1997 to 2014. He served as an Advisor of Hanmi Bank for the Texas region from 2014 to 2019. Mr. Yeh received a BS degree from National Cheng Kung University in Taiwan and a MS degree from University of Houston — Clear Lake. The Board believes that Mr. Yeh is qualified to serve as a director based on his business and financial management and leadership experience, as well as his extensive knowledge of the Company and our industry from his years of service on our Board. Cynthia (Cindy) DeLaney has served as the Global Fuel Oil commodity trading manager for Shell Trading since January 2014. In this role, she manages Shell’s Global Fuel Oil Trading activities with primary trading offices in Singapore, Rotterdam and Houston, covering Asia, Europe, and the Americas, and other offices in cities such as Calgary, Dubai and Moscow. For the previous nine years (2005-2013), she managed the Americas Fuel Oil Trading team. Before her position as the Americas Trading Manager, Ms. DeLaney was a trader in fuel oil, VGO, gasoline and gasoline components (1999-2005). She has over 25 years’ experience as a trader and in technical aspects of the petrochemical/refining industry. In her role as the Global Trading Manager of Fuel Oil, Ms. DeLaney has increased the profitability of Shell’s global fuel oil trading business which grew steadily over her tenure. Since October 2016, Ms. DeLaney has served as a director and Vice President of Shell Trading US Company (STUSCo). She is also a member of the Executive group of the Houston Chapter of the Women’s Energy Network (WEN) which works to promote and develop women’s careers in Energy and STEM fields. Ms. DeLaney started her working career in 1991 as an Electrical Engineer at Arco Chemical Company (now Lyondell) in Houston. She moved from technical to commercial activities at Arco, eventually trading MTBE and gasoline components from Arco’s Newtown Square, Pennsylvania headquarters. In 1998, she moved to Koch Industries, in Houston, to trade MTBE before being hired in 1999 by Shell to trade gasoline, and then Fuel Oil and VGO. Ms. DeLaney has a B.S. in Electrical Engineering from Louisiana State University. The Board believes Ms. DeLaney is qualified to serve as a director based on her leadership experience and extensive experience in business.

  4. Directors Continuing in Office until the 2025 Annual Meeting of Stockholders

    Directors Continuing in Office until the 2025 Annual Meeting of Stockholders Chih-Hsiang (Thompson) Lin, Ph.D., founded Applied Optoelectronics, Inc. in February 1997 and has served as President and Chief Executive Officer since our inception. He currently serves as the Chairman of our Board, a position he has held since January 2014. He served as Chairman of our Board from May 2000 through September 2002, and again from June 2008 through October 2009. Since May 2015, Dr. Lin has served on the University of Missouri’s Chancellor’s Advisory Group and since November 2016 he has served as a chair on the University of Missouri’s Industrial Advisory Board for the College of Engineering. Dr. Lin also served as a research associate professor from 1998 to 2000 and as a senior research scientist from 1994 to 1998 at the University of Houston. Dr. Lin holds a BS degree in Nuclear Engineering from National Tsing Hua University in Taiwan and a MS degree and a Ph.D. in Electrical and Computer Engineering from University of Missouri — Columbia. The Board believes that Dr. Lin is qualified to serve as a director based on his extensive background in business management, technological expertise, his role as founder, President and Chief Executive Officer and his deep knowledge in our industry from years of service on our Board. Richard B. Black has served as the Chairman and Chief Executive Officer of ECRM, Incorporated, a worldwide supplier of laser-based imaging equipment, from 1983 until the company was acquired by Eastman KODAK Corp. in 2021. From 2014 to 2017, he also served as President and Chief Executive Officer and a director of CRON-ECRM LLC, a worldwide supplier of laser based imaging equipment. Beginning in 1989, Mr. Black was a director of Oak Technology, Inc., a manufacturer of semi-conductors for optical storage and laser printers, and then became President in 1998 and vice chairman of the board of directors in 1999 until its merger with Zoran, Inc. in 2003. Mr. Black has served as President and CEO of AM International from 1980 to 1982. He served as a Division President of Maremont Corporation, a manufacturer of auto parts and textile machinery, from 1967 to 1972, then as Maremont’s Executive Vice President and then President and CEO from 1972 to 1979. When Maremont was acquired by Alusuisse in 1979, he served as President and CEO of Alusuisse of America until 1981. He served as a director and chairman of the audit committee of GSI Group, a manufacturer of lasers, laser systems, semi-conductor equipment, from 1998 to 2012, and was its chairman of its board of directors from 2006 to 2012. Mr. Black served as a director and Chairman of the audit committee of Alliance Fiber Optics Products, Inc. (Nasdaq: AFOP) from 2002 until its acquisition by Corning in 2016. He serves as a director of TREX Enterprises, Inc., a defense technology company, a position he has held since 2000, and serves as director and Chairman of the Board of Directors of Hamillroad Software Ltd., a supplier of imaging software to the printing and packaging industries since January 2023. Mr. Black has served as trustee of the Institute for Advanced Study at Princeton since 1990, and became its Vice Chairman in 2006, and Trustee Emeritus since 2012. He has served as a trustee of the American Indian College Fund, Beloit College, and Bard College. At the University of Chicago, he serves on the Board of Governors of the University’s Smart Museum of Art and previously served on the Dean’s Council of the Physical Sciences Division. Mr. Black received a BS degree in Engineering from Texas A&M University, an MBA from Harvard University, and an honorary Ph.D. from Beloit College. The Board believes that Mr. Black is qualified to serve as a director based on his extensive business and financial management and leadership experience, and his service on other private company and publicly-held company’s boards of directors as both a chief executive officer and chairman of the audit committee. He brings to the Board expertise in the fields of general management, accounting and internal controls. Min-Chu (Mike) Chen, Ph.D., Since 2001, he has been a partner and member of the board of directors of EverRich Capital Inc., a financial consulting company. Since May 2010, he has served as executive director of C&C International Services, Inc., a petrochemical equipment services and marketing company. Dr. Chen is the co-founder and has served as executive director of EABO Information Technology (Shanghai), Co. Ltd., an IIoT technology platform company since 2018. Dr. Chen is the co-founder and has served as a director of KidTech, Inc., a Houston based personalized healthcare solution provider for children since May 2023. From March 1994 to June 2022, Dr. Chen served as a board member of PCTEL, Inc. (Nasdaq: PCTI). From September 2008 to April 2010, Dr. Chen served as the Chief Executive Officer of SilverPAC, Inc., a consumer electronics business. From 2011 to 2018, he served as the Asia Pacific Director for U.S. Flow Control Group Pte. Ltd., a petroleum equipment manufacturer and services company. From 2016 to 2023, he served as Vice Chairman of the board of directors of Shandong SicerKline Advanced Material Co., Ltd., a surface-etched silicon carbide and alumina mini-whisker manufacturing plant for ceramic applications. Dr. Chen was previously employed by Exxon as a Senior Research Engineer in the Drilling and Completion Division and as a Senior Engineer at Transocean. Dr. Chen received a Ph.D. in Ocean Engineering from Oregon State University and BS in Naval Architecture from National Ocean University. The Board believes that Dr. Chen is qualified to serve as a director based on his business management experience, his service on other private company boards of directors and his prior service on the board of a publicly-held company.

  5. Directors Continuing in Office until the 2026 Annual Meeting of Stockholders

    Directors Continuing in Office until the 2026 Annual Meeting of Stockholders Che-Wei Lin has served as a director on our Board since January 2014, and previously served as a director on our Board from December 2006 to October 2009. Since November 2007, Mr. Lin has served as the President of ASMedia Technology Inc., a chipset manufacturer. Since November 2009, Mr. Lin has also served as the Corporate Vice President of the Motherboard Business Unit of the Open Platform Business Group of ASUSTek Computer Inc., a computer hardware and electronics company. Mr. Lin was employed at VIA Technologies, Inc., a manufacturer of integrated circuits and motherboard chipsets, from 1993 to 2007 in various positions, including President of the Desktop Platform Business Unit, Vice President of the System Platform Division and Vice President of OEM and Chipset Product Marketing. Mr. Lin received a BS in Electrical Engineering from Fu Jen University in Taiwan and a MS in Electrical Engineering from the University of Missouri. The Board believes that Mr. Lin is qualified to serve as a director based on his business and financial management and leadership experience and his years of service on our Board. Elizabeth Loboa, Ph.D., Since 2020, Dr. Loboa has served as the Provost and Vice President for Academic Affairs at Southern Methodist University. From 2018 to 2020, Dr. Loboa served the University of Missouri System and the University of Missouri as Vice Chancellor for Strategic Partnerships, Dean and Ketcham Professor of the College of Engineering, University of Missouri System Review Committee for Excellence in Research and Creative Works, Council of Leaders, MU Engagement Council, Translational Precision Medicine Complex (TPMC, now called Roy Blunt NextGen Precision Health building) Academic and Research Programming Group, University of Missouri System Taskforce for Innovation, and served on the Board of Directors for the Missouri Innovation Center. She also held various leadership and service roles related to her profession. In 2018, she served as Coordinator of the Precision Medicine Summit for the University of Missouri System. In 2017, she served as Co-Chair of the University of Missouri Chancellor Search Committee. During her time as dean at University of Missouri, Dr. Loboa also served as adjunct professor in the Department of Biomedical Engineering at University of North Carolina-Chapel Hill and North Carolina State University. From 2003 to 2015, she served as Director of the Cell Mechanics Laboratory, Joint Department of Biomedical Engineering at University of North Carolina-Chapel Hill and North Carolina State University. From 2014 to 2015, she served as adjunct professor in the Departments of Biotechnology, Physiology and Fiber and Polymer Science at North Carolina State University and in the Department of Orthopaedics and Curriculum in Oral Biology at University of North Carolina-Chapel Hill. From 2014 to 2015, she served as Professor of the Joint Department of Biomedical Engineering at University of North Carolina-Chapel Hill and North Carolina State University and the Department of Materials Science and Engineering at North Carolina State University. She also served as Associate Chair of the Joint Department of Biomedical Engineering at University of North Carolina-Chapel Hill and North Carolina State University from 2013 to 2015. Dr. Loboa received a B.S. in Mechanical Engineering from the University of California, Davis, an M.S.E in Biomechanical Engineering from Stanford University, and a Ph.D. in Mechanical Engineering from Stanford University. The Board believes Dr. Loboa is qualified to serve as a director based on her leadership experience, extensive experience in academia and broad knowledge in biomedical engineering.

  6. 2023 CEO Target Total Direct Compensation

    | Executive | Base Salary ($) | Target Annual Incentive ($) | 2023 Target Long-Term Incentive: PSUs ($) | 2023 Long-Term Incentive: RSUs ($) | Total ($) | | Chih-Hsiang (Thompson) Lin | 563,795 | 516,812 | 1,000,000 | 1,000,000 | 3,080,607 | | % of Total | 18% | 17% | 32.5% | 32.5% | 100% | | % of Long Term Incentive | | | 50% | 50% | |

  7. Say-on-Pay Vote and Stockholder Engagement on Compensation

    | What We Heard | How We Responded | | Stockholders want to see clear explanation of how compensation committee looks at goals, targets, plans to see why the metric and target was set and how those translate to payouts. | We enhanced our explanation included in these materials for how the compensation committee determined metrics and targets for performance and how actual performance translated to payouts. | | Long-term incentive should be 50% performance based. | All our long-term incentives are awarded in the form of restricted stock units based on a fixed value that is split with 50% vesting based solely on continued service over time and 50% vesting based on achievement of pre-determined performance goals for a three-year period that involve a combination of total shareholder return, or “TSR”, and stock price appreciation metrics. | | Performance goals should not just automatically be tied to stock price; need to clearly explain priorities and how measuring success. | For 2021 the compensation committee worked with Aon to determine appropriate performance goals, which for 2021 include stock price, relative TSR and financial metrics tied to the Company’s operating plan. |

  8. Say-on-Pay Vote and Stockholder Engagement on Compensation

    | What We Heard | How We Responded | | Stockholders want to see clear disclosure and explanation of any discretion taken by the compensation committee. | Starting in 2021, the compensation committee has eliminated discretionary payments from our executive officer compensation program. | | Stockholders want to see 3-year time frame for performance metrics. | The compensation committee implemented a 3-year time frame for its performance-vesting restricted stock units. | | Stockholders want to see high level explanation of stockholder engagement and what actions were taken after the engagement. | This section and the “Stockholder Engagement” section above outline our stockholder engagement activities and the actions we have taken in response. |

  9. Elements of 2023 Compensation Program

    | Element | Fixed or Variable | Purpose | | Base Salary | Fixed | To attract and retain executives by offering fixed compensation that is competitive with market opportunities and that recognizes each executive’s position, role, responsibility and experience. | | Annual Cash Incentive | Variable | To attract and retain our executive officers consistent with market practice, to reward our executive officers for achievement of our corporate objectives, and to recognize outstanding individual contributions. | | Equity Awards | Variable | To align executives’ interests with the long-term interests of stockholders through equity-based compensation with performance-based and time-based vesting periods, and to promote the long-term retention of our executives and key management personnel. |

  10. Elements of 2023 Compensation Program

    | What We Do | What We Don’t Do | | ✓ Maintain an Independent Compensation Committee. The compensation committee consists solely of independent directors. | ✘ No Generous Perquisites. We provide only limited perquisites or personal benefits to our executive officers. | | ✓ Retain an Independent Compensation Advisor. The compensation committee engages its own compensation advisor to provide information and analysis regarding our executive and equity incentive compensation programs. | ✘ No Exclusive Executive Retirement Plans. We do not offer defined benefit pension arrangements and we do not provide retirement plans to our executive officers that are different from or in addition to those offered to our other employees. | | ✓ Annual Executive Compensation Review. The compensation committee annually reviews our compensation programs and compensation-related risks to ensure that our compensation programs do not encourage excessive or inappropriate risk-taking and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on us. | ✘ No Special Health or Welfare Benefits. Our executive officers participate in broad-based Company-sponsored health and welfare benefits programs on the same basis as our other full-time, salaried employees. | | ✓ Meaningful Amount of Compensation At-Risk. Our executive compensation program is designed so that a significant portion of compensation is “at risk” based on our performance to align the interests of our executive officers and stockholders. | ✘ No Hedging or Pledging of our Equity Securities. Our insider trading policy prohibits our executive officers, members of the Board and other employees from hedging or pledging our equity securities. | | ✓ Succession Planning. We review the risks associated with our key executive officer position to ensure adequate succession plans are in place. | ✘ No Dividends or Dividend Equivalents Payable on Unvested Equity Awards. We do not pay dividends or dividend equivalents on unvested restricted stock unit awards. | | ✓ Clawback Policy and Stock Ownership Guidelines. We have a clawback policy and stock ownership guidelines for our executive officers to align their interest with those of our shareholders. | |

  11. Governance of Executive Compensation Program

    Governance of Executive Compensation Program Role of the Compensation Committee The compensation committee has the primary responsibility of developing, implementing and overseeing our executive and incentive compensation policies and programs. While the compensation committee reports its decisions to and takes into account the feedback of the Board, the compensation committee generally makes the final decisions regarding the compensation of our Chief Executive Officer and named executive officers. Compensation-Setting Process The compensation committee determines the target total direct compensation opportunities for our executive officers, including our named executive officers. In any given year, the compensation committee considers some or all of the following factors: • the financial and operational objectives established by the Board for the year at issue; the anticipated role that officer will play in the coming year in achieving those objectives and the cost and difficulty of replacing that individual; internal pay equity among our executive officers; • each individual executive officer’s skills, experience, qualifications and role relative to other similarly-situated executives at the companies in our compensation peer group; • the annual performance review for each executive officer, including contributions to our overall performance, demonstrated leadership and significant individual achievements; • our financial performance relative to our peers; • the compensation practices of our compensation peer group and the positioning of each executive officer’s compensation as compared to our peer group; and • the recommendations provided by our CEO with respect to the compensation of our other executive officers. These factors provide a framework, with no single factor being determinative in setting pay levels. Role of Our Officers The compensation committee relies on the observations and information provided by our executive officers. Our Chief Executive Officer provides evaluations of the performance of the other executive officers and makes recommendations regarding changes to executive officer compensation (other than for himself), the broader Company-wide cash incentive plan, and budgets for equity awards. Our Chief Financial Officer provides information and recommendations regarding our annual corporate operating budget and the related performance goals for our equity and cash incentive programs. Our in-house legal team, including our Chief Legal Officer, provides additional guidance as requested by the compensation committee. Finally, the benefits committee, consisting of members of our human resources, legal, and accounting departments, provides guidance to the compensation committee on broad-based health, welfare and retirement benefit plans and proposed changes to those plans. Our officers recuse themselves from discussions and recommendations regarding their own compensation. Role of Compensation Consultant In 2020, the compensation committee retained Aon to assist with establishing an updated peer group for 2021 and to perform benchmarking for executive officer and director compensation. Aon reported directly to the compensation committee and to the compensation committee chair. While Aon coordinated with our management for data collection, including for obtaining the job descriptions for our executive officers, Aon did not provide any other compensation related services to us. The compensation committee evaluated Aon’s independence pursuant to the listing standards of Nasdaq and the relevant SEC rules and determined that no conflict of interest arose as a result of the work performed by Aon. Competitive Positioning For purposes of comparing the compensation of our named executive officers against the competitive market, the compensation committee periodically reviews and considers the compensation levels and practices of a group of peer companies. This compensation peer group consists of companies within the industry with a similar size profile in terms of revenue and market capitalization. The compensation committee established the following compensation peer group in 2020 to assist with the determination of compensation for our executive officers:

  12. Governance of Executive Compensation Program

    The compensation committee did not review or consider any updated information regarding peer group company compensation in determining compensation for our executive officers for 2023. In the second half of 2023, the compensation committee engaged a compensation consultant to update the peer group for consideration for establishing 2024 compensation.

  13. 2023 Compensation Decisions

    The preceding table shows the base salary changes that went into effect on March 1, 2023. Amounts for Mr. Yeh are paid in NTD (New Taiwan dollar) and RMB (Chinese Yuan Renminbi) but are disclosed in USD (United States dollar) based on the exchange rate in effect on December 29, 2023, and reflect the effect of fluctuations in the applicable exchange rates over time. The actual base salary amounts paid to our named executive officers in 2023 are set forth in the “2023 Summary Compensation Table” below. 2023 Annual Cash Bonuses We use annual cash incentive opportunities to attract and retain our executive officers consistent with market practice, to reward our executive officers for achievement of our corporate objectives, and to recognize outstanding contributions. The compensation committee eliminated discretionary cash bonuses from our executive officer compensation program starting in 2021. 2023 Target Annual Cash Bonus Opportunities In establishing the target annual cash bonus opportunities for 2023, the compensation committee considered the market information provided by Aon as well as the Company’s financial situation and opportunities, in order to allow the Company to conserve cash while still providing an adequate incentive to retain our critical leadership. In light of these considerations, the compensation committee made a slight reduction for the target percentages for the 2023 annual cash bonus as compared to 2022 to provide our named executive officers with an appropriate level of reward for achievement of target performance of our critical corporate objectives described below.

  14. 2023 Compensation Decisions

    | Named Executive Officer | Performance Below Threshold Level | Threshold Performance | Target Performance | Performance At or Above Maximum Level | | Chih-Hsiang (Thompson) Lin | 0 | 45.83% | 91.67% | 114.586% | | Stefan J. Murry | 0 | 22.92% | 45.83% | 57.33% | | Hung-Lun (Fred) Chang | 0 | 22.92% | 45.83% | 57.33% | | Shu-Hua (Joshua) Yeh | 0 | 22.92% | 45.83% | 57.33% | | David C. Kuo | 0 | 22.92% | 45.83% | 57.33% |

  15. 2023 Compensation Decisions

    2023 Corporate Performance Objectives For 2023 the compensation committee identified three quantitative performance metrics (“2023 Milestones”) deemed critical to the Company’s success and continuity in 2023. The committee believed that achieving the 2023 Milestones should be the focus of the management team and their short-term cash incentive plan should be directly measured as to their performance relating to these milestones. The compensation committee determined that no annual cash incentive would be earned with respect to a metric for performance below the threshold level (or target level for the third milestone) set forth below. The compensation committee set the threshold, target, and maximum performance levels (as applicable) for the corporate performance measures as follows:

  16. 2023 Compensation Decisions

    | Named Executive Officer | Target Cash Bonus Opportunity | Actual Cash Bonus Earned | Actual as Percentage of Target | | Chih-Hsiang (Thompson) Lin | $516,812 | $594,334 | 115.0% | | Stefan J. Murry | $173,638 | $199,684 | 115.0% | | Hung-Lun (Fred) Chang | $156,223 | $179,657 | 115.0% | | Shu-Hua (Joshua) Yeh | $156,024 | $174,445 | 115.0%(1) | | David C. Kuo | $119,133 | $137,003 | 115.0% |

  17. 2023 Compensation Decisions

    (1) Amounts for Mr. Yeh are paid in NTD and RMB, and the disclosed amounts reflect the effect of the applicable exchange rates. Equity Incentive Compensation We use equity incentive compensation to attract and retain our talent, to motivate them to achieve our corporate goals and to align their financial incentives with stockholder returns. Awards for 2023 Performance In 2023 the compensation committee granted awards of restricted stock units to the named executive officers, 50% of which vest quarterly over 4-year period based on continued service and the remaining 50% are earned with respect to a variable number of shares (between 0 and 200% of the target number of shares) based on the Company’s achievement of preset performance goals. The performance-vesting restricted stock units granted in 2023 will vest 50% based on achievement of specified levels of relative total stockholder return, or TSR, and 50% based on achievement of a specified stock price hurdle for a three-year performance period ending April 29, 2026. In establishing the appropriate level of equity to our executive officers, the compensation committee considered the market information provided by Aon as well as taking into account the Company’s 2023 financial outlook and opportunities. The goal is to provide an adequate equity incentive to motivate our critical leadership while aligning management interest with stockholder’s expectations. In light of these considerations, the compensation committee made some slight reductions of equity awards for certain named executive officers in 2023 as compared to 2022. In April 2023 the compensation committee approved the amounts for awards of restricted stock units to be granted to the named executive officers pursuant to this approach as follows:

  18. 2023 Compensation Decisions

    | Named Executive Officer | Time-Vesting Restricted Stock Units* | Target Amount Performance-Vesting Restricted Stock Units* | Total Value at Target Performance | | Chih-Hsiang (Thompson) Lin | $1,000,000 | $1,000,000 | $2,000,000 | | Stefan J. Murry | $350,000 | $350,000 | $700,000 | | Hung-Lun (Fred) Chang | $315,000 | $315,000 | $630,000 | | Shu-Hua (Joshua) Yeh | $270,000 | $270,000 | $540,000 | | David C. Kuo | $220,000 | $220,000 | $440,000 |

  19. Employment Agreements & Post-Employment Compensation

    Employment Agreements & Post-Employment Compensation We have entered into written agreements providing for at will employment with our CEO and each of our other named executive officers. These employment agreements provided for their initial base salary and target bonus opportunity, as well as severance eligibility in the event of qualifying terminations of employment, including a termination of employment following a change of control of the Company (a so-called “double-trigger” arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention value following a change of control of the Company and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction. We believe that having in place reasonable severance rights, particularly for terminations in connection with a change of control, allow us to attract and retain highly qualified executive officers, permit those officers to focus on the best interests of the Company without undue concern for their own financial position in a change of control, and reduce conflict at the time of a termination through a pre-negotiated package conditioned on signing a release of claims. For detailed descriptions of the post-employment compensation arrangements we maintained with our named executive officers for 2023, as well as an estimate of the potential payments and benefits payable under these arrangements, see “Potential Payments Upon Termination or Change of Control” below.

  20. 2023 Summary Compensation Table

    2023 Summary Compensation Table The following table presents summary information regarding the total compensation awarded to, earned by, and paid to our named executive officers for services rendered during the fiscal years ended December 31, 2023, 2022 and 2021, as applicable for the years that the individuals were deemed to be named executive officers.

  21. 2023 Summary Compensation Table

    | Name and Principal Position | Year | Salary(1)(6) | Bonus(2) | Stock Awards(3) | Non-Equity Incentive Plan Compensation(4) | All Other Compensation(5)(6) | Total | | Chih-Hsiang (Thompson) Lin President and Chief Executive Officer | 2023 | $596,747 | — | $4,816,714 | $594,334 | $41,675 | $6,049,470 | | | 2022 | $583,851 | — | $949,776 | $588,113 | $35,327 | $2,157,067 | | | 2021 | $570,370 | — | $2,915,291 | $146,987 | $26,359 | $3,659,008 | | Stefan J. Murry Chief Financial Officer and Chief Strategy Officer | 2023 | $400,564 | — | $1,685,852 | $199,684 | $37,611 | $2,323,710 | | | 2022 | $384,095 | — | $332,422 | $193,794 | $13,732 | $924,043 | | | 2021 | $373,160 | — | $1,020,336 | $48,438 | $11,414 | $1,453,348 | | Hung-Lun (Fred) Chang Senior Vice President and North America General Manager | 2023 | $350,169 | — | $1,517,260 | $179,657 | $11,566 | $2,051,968 | | | 2022 | $352,976 | — | $303,926 | $177,777 | $13,414 | $848,093 | | | 2021 | $342,945 | — | $932,892 | $44,432 | $11,109 | $1,331,378 | | Shu-Hua (Joshua) Yeh(7) Senior Vice President and Asia General Manager | 2023 | $334,706 | — | $1,300,510 | $174,445 | $17,013 | $1,826,674 | | | 2022 | $364,698 | — | $303,926 | $193,977 | $19,233 | $881,834 | | | 2021 | $354,057 | — | $932,892 | $44,501 | $19,537 | $1,350,987 | | David C. Kuo Senior Vice President, Chief Legal and Compliance Officer and Secretary | 2023 | $268,296 | — | $1,059,669 | $137,003 | $12,675 | $1,477,643 | | | 2022 | $258,686 | — | $189,952 | $130,453 | $12,898 | $591,989 | | | 2021 | $244,658 | — | $583,049 | $31,827 | $10,615 | $870,149 |

  22. 2023 Summary Compensation Table

    (1) Includes amounts earned but deferred at the election of the named executive officers under our 401(k) plan established under Section 401(k) of the Internal Revenue Code of 1986, as amended. Includes the following amounts paid in the year indicated for unused Paid Time Off: Dr. Lin — $32,952 (2023), $31,111 (2022), $31,111 (2021); Dr. Murry — $21,717 (2023), $19,820 (2022), $17,770 (2021); Dr. Chang — $9,318 (2023), $18,809 (2022), $16,928 (2021); and Mr. Kuo — $8,370 (2023), $13,473 (2022) and $11,121 (2021). (2) Amounts in this column reflect discretionary cash bonuses awarded by the compensation committee following its performance review of each named executive officer. Amounts for 2023 consist of the aggregate grant date fair value of the time-based restricted stock units plus the performance-based restricted stock units assuming target performance, both as granted by the compensation committee in June 2023 (aggregate grant fair value assuming maximum performance: Dr. Lin — $7,978,637; Dr. Murry — $2,792,523; Dr. Chang — $2,513,268; Mr. Yeh — $2,154,226; and Mr. Kuo — $1,755,293). Amounts for 2022 consist of the aggregate grant date fair value of the time-based restricted stock units plus the performance-based restricted stock units assuming target performance, both as granted by the compensation committee in June 2022 (aggregate grant fair value assuming maximum performance: Dr. Lin — $1,504,462; Dr. Murry — $526,563; Dr. Chang — $481,427; Mr. Yeh — $481,427; and Mr. Kuo — $300,890). Amounts for 2021 consist of the aggregate grant date fair value of the time-based restricted stock units plus the performance-based restricted stock units assuming target performance, both as granted by the compensation committee in June 2021 (aggregate grant date fair value assuming maximum performance: Dr. Lin — $4,719,333; Dr. Murry — $1,651,755; Dr. Chang — $1,510,185; Mr. Yeh — $1,510,185; and Mr. Kuo — $943,852). The amounts included for restricted stock units granted in 2023, 2022 and 2021 represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718, disregarding the estimate of time-based forfeitures. The assumptions used in calculating the grant date fair value of the restricted stock units are reported in Note B to the consolidated financial statements included in the Annual Report. The amounts reported in this column do not correspond to the actual economic value that may be received by the named executive officers for the restricted stock units. See the “2023 Grants of Plan-Based Awards” table below for additional information. Stock awards granted to Dr. Lin in June 2023 include a portion that exceeded the prior limitation on the value of awards that may be granted to any individual participant under our 2021 Equity Incentive Plan, and therefore remain subject to our obtaining the approval of our shareholders pursuant to Proposal No. 6 included in this Proxy Statement. To the extent shareholders do not approve Proposal No. 6, the portion of Dr. Lin’s stock awards that exceeded the prior limitation will be cancelled. Amounts in this column for 2023, 2022, and 2021 reflect amounts earned pursuant to our annual cash incentive plan based on the Company’s achievement of performance metrics and targets established by the compensation committee. The performance metrics and targets for these awards are described in the section titled “Compensation Discussion and Analysis” above. See the “2023 Grants of Plan-Based Awards” table below for additional information. (5) Includes life insurance premiums paid by us for the benefit of the named executive officers and the Company’s 401(k) matching contributions and mandatory foreign pension contribution made by the Company on behalf of the executive officers. The 401(k) matching contributions for each executive in the 2023 year were as follows: for each of Dr. Lin — $12,200, Dr. Murry — $12,200, Dr. Chang — $12,200 and Mr. Kuo — $11,535. The foreign pension contribution made by the Company on behalf of Mr. Yeh was $3,442. In addition, the cost of personal use of a Company provided car is included for Dr. Lin, with the amount determined based on the cost of the lease of the corporate car related to the proportion of mileage the car was driven for non-business trips. We also provided Mr. Yeh with a housing allowance for an apartment in Ningbo, China, given his responsibilities for managing operations in both China and Taiwan. The amount disclosed for Dr. Murry also includes $22,759.98 donated to a charitable organization for which Dr. Murry serves on the board of directors, consisting of $12,379.99 matching donation by the Company and $10,379.99 donated by Dr. Lin and other AOI employees, excluding Dr. Murry. (6) The amounts reported for 2021 have been restated to conform to the 2022 disclosure methodology. The amounts shown for Mr. Yeh for 2023 have been converted from NTD (New Taiwan dollars) and RMB (Chinese Yuan Renminbi), as applicable, to USD (United States dollars), using the exchange rate on December 29, 2023, which was 30.70 NTD = $1 USD and 7.11 RMB = $1 USD, respectively. The amounts shown for Mr. Yeh for 2022 have been converted from NTD (New Taiwan dollars) and RMB (Chinese Yuan Renminbi), as applicable, to USD (United States dollars), using the exchange rate on December 30, 2022, which was 30.64 NTD = $1 USD and 6.90 RMB = $1 USD, respectively. The amounts shown for Mr. Yeh for 2021 have been converted from NTD (New Taiwan dollars) and RMB (Chinese Yuan Renminbi), as applicable, to USD (United States dollars), using the exchange rate on December 31, 2021, which was 27.72 NTD = $1 USD and 6.36 RMB = $1 USD, respectively. Changes in Mr. Yeh’s compensation from year-to-year as reported in this table reflect the effect of fluctuations in the applicable exchange rates.

  23. 2023 Grants of Plan-Based Awards

    2023 Grants of Plan-Based Awards The following table presents information about grants of plan-based awards made to our named executive officers during the year ended December 31, 2023:

  24. 2023 Grants of Plan-Based Awards

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)(2) | | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3)(6) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($)(4) | | Named Executive Officer | Grant Date | Minimum ($) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Chih-Hsiang (Thompson) Lin | | 0 | 258,406 | 516,812 | 646,015 | | | | | | | | June 26, 2023 | | | | | | | | 355,871(5) | $1,654,800 | | | June 26, 2023 | | | | | 88,967 | 355,871 | 711,743 | | $3,161,914 | | Stefan J. Murry | | 0 | 86,819 | 173,638 | 217,047 | | | | | | | | June 26, 2023 | | | | | | | | 124,555(5) | $579,181 | | | June 26, 2023 | | | | | 31,138 | 124,555 | 249,110 | | $1,106,671 | | Hung-Lun (Fred) Chang | | 0 | 78,112 | 156,223 | 195,279 | | | | | | | | June 26, 2023 | | | | | | | | 112,099(5) | $521,260 | | | June 26, 2023 | | | | | 28,024 | 112,099 | 224,199 | | $996,000 | | Shu-Hua (Joshua) Yeh | | 0 | 78,012 | 156,024 | 195,031 | | | | | | | | June 26, 2023 | | | | | | | | 96,085(5) | $446,795 | | | June 26, 2023 | | | | | 24,021 | 96,085 | 192,170 | | $853,715 | | David C. Kuo | | 0 | 59,566 | 119,133 | 148,916 | | | | | | | | June 26, 2023 | | | | | | | | 78,291(5) | $364,053 | | | June 26, 2023 | | | | | 19,572 | 78,291 | 156,583 | | $695,616 |

  25. 2023 Grants of Plan-Based Awards

    (1) Amounts in these columns reflect cash bonus amounts that each named executive officer could have potentially earned under the annual cash incentive program for performance in 2023, based on the Company’s achievement of corporate performance metrics established by the compensation committee. For a description of the 2023 Cash Incentive Plan, see the section titled “Compensation Discussion and Analysis” above, and for a description of the cash bonus amounts that were earned and awarded under the annual cash incentive program, see the “2023 Summary Compensation Table” above. (2) The compensation committee selected three milestones as the performance metrics for purposes of the cash incentive plan. See the section titled “Compensation Discussion and Analysis” above for how these metrics are defined. (3) Amounts reflect awards of performance-based restricted stock units that will vest following the end of a three-year performance period based on achievement of stock price appreciation and relative TSR performance goals. (4) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718, disregarding the estimate of time-based forfeitures. The grant date fair value of the performance-based restricted stock units is based on the target number of shares. (5) Amounts reflect awards of time-based restricted stock units that will vest quarterly over a 4-year period commencing on January 21, 2023. Stock awards granted to Dr. Lin in June 2023 include a portion that exceeded the prior limitation on the value of awards that may be granted to any individual participant under our 2021 Equity Incentive Plan and therefore remain subject to our obtaining the approval of our shareholders pursuant to Proposal No. 6 included in this Proxy Statement. To the extent shareholders do not approve Proposal No. 6, the portion of Dr. Lin’s stock awards that exceeded the prior limitation will be cancelled.

  26. Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

    Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table For a more detailed discussion of the compensation included in the Summary Compensation Table and the Grants of Plan-Based Awards table, please see the section titled “Compensation Discussion and Analysis” above. Cash Bonuses Each named executive officer is eligible to earn an annual performance-based cash incentive based on achievement of Company goals, determined by our compensation committee at the beginning of each year. See the section entitled “Compensation Discussion and Analysis” above for the material terms of the 2023 program. Equity-based compensation Restricted stock units granted in 2021, 2022 and 2023 were granted pursuant to the Company’s 2021 Equity Incentive Plan, while restricted stock units granted in 2020 were granted under the Company’s 2013 Equity Incentive Plan. Each restricted stock unit represents the right to receive one share of common stock upon vesting. Such restricted stock units may be subject to acceleration in the event of our change of control (if not assumed or replaced) or the executive officer’s termination without cause, resignation for good reason, death or disability.

  27. Outstanding Equity Awards at 2023 Fiscal Year-End

    Outstanding Equity Awards at 2023 Fiscal Year-End The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2023.

  28. Outstanding Equity Awards at 2023 Fiscal Year-End

    | Name | Grant Year | Option Awards | | | | Stock Awards | | | | | | | Number of Shares Underlying Unexercised Options | | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | | | Exercisable | Unexercisable | | | | | | | | Chih-Hsiang (Thompson) Lin | 2020 | — | — | — | — | 11,670 | $225,464 | — | — | | | 2021 | — | — | — | — | 56,717 | $1,095,772 | — | — | | | 2021 | — | — | — | — | 55,310 | $1,068,589 | — | — | | | 2021 | — | — | — | — | — | — | 126,422 | $2,442,473 | | | 2022 | — | — | — | — | 125,558 | $2,425,781 | | | | | 2022 | — | — | — | — | — | — | 223,214 | $4,312,494 | | | 2023 | — | — | — | — | 289,146 | $5,586,301 | — | — | | | 2023 | — | — | — | — | — | — | 355,871 | $6,875,428 | | Stefan J. Murry | 2020 | — | — | — | — | 4,085 | $78,922 | — | — | | | 2021 | — | — | — | — | 18,717 | $361,612 | — | — | | | 2021 | — | — | — | — | 19,359 | $374,016 | — | — | | | 2021 | — | — | — | — | — | — | 44,247 | $854,852 | | | 2022 | — | — | — | — | 43,946 | $849,037 | — | — | | | 2022 | — | — | — | — | — | — | 78,125 | $1,509,375 | | | 2023 | — | — | — | — | 101,201 | $1,955,203 | — | — | | | 2023 | — | — | — | — | — | 124,555 | $2,406,403 | | | Hung-Lun (Fred) Chang | 2014 | 1,100(1) | — | $13.84 | 1/28/2024 | — | — | — | — | | | 2020 | — | — | — | — | 3,696 | $71,407 | — | — | | | 2021 | — | — | — | — | 18,694 | $361,168 | — | — | | | 2021 | — | — | — | — | 17,700 | $341,964 | — | — | | | 2021 | — | — | — | — | — | — | 40,455 | $781,591 | | | 2022 | — | — | — | — | 40,179 | $776,258 | — | — | | | 2022 | — | — | — | — | — | — | 71,428 | $1,379,989 | | | 2023 | — | — | — | — | 91,081 | $1,759,685 | — | — | | | 2023 | — | — | — | — | — | — | 112,099 | $2,165,753 | | Shu-Hua (Joshua) Yeh | 2020 | — | — | — | — | 3,918 | $75,696 | — | — | | | 2021 | — | — | — | — | 19,239 | $371,697 | — | — | | | 2021 | — | — | — | — | 17,700 | $341,964 | — | — | | | 2021 | — | — | — | — | — | — | 40,455 | $781,591 | | | 2022 | — | — | — | — | 40,179 | $776,258 | — | — | | | 2022 | — | — | — | — | — | — | 71,428 | $1,379,989 | | | 2023 | — | — | — | — | 78,070 | $1,508,312 | — | — | | | 2023 | — | — | — | — | — | — | 96,085 | $1,856,362 |

  29. Outstanding Equity Awards at 2023 Fiscal Year-End

    | Name | Grant Year | Option Awards | | | | Stock Awards | | | | | | | Number of Shares Underlying Unexercised Options | | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | | | Exercisable | Unexercisable | | | | | | | | David C. Kuo | 2020 | — | — | — | — | 2,404 | $46,445 | — | — | | | 2021 | — | — | — | — | 11,684 | $225,735 | — | — | | | 2021 | — | — | — | — | 11,062 | $213,718 | — | — | | | 2021 | — | — | — | — | — | — | 25,284 | $488,487 | | | 2022 | — | — | — | — | 25,112 | $485,164 | — | — | | | 2022 | — | — | — | — | — | — | 44,642 | $862,483 | | | 2023 | — | — | — | — | 63,612 | $1,228,984 | — | — | | | 2023 | — | — | — | — | — | — | 78,291 | $1,512,582 |

  30. Outstanding Equity Awards at 2023 Fiscal Year-End

    The amounts reported reflect shares of common stock underlying stock options granted in the specified calendar year under our 2013 Equity Incentive Plan (the “2013 Plan”). The stock options vested over a four-year period. (2) The amounts reported reflect restricted stock units granted in the specified calendar year under our 2013 Plan through 2020, and under our 2021 Equity Incentive Plan (the “2021 Plan”) starting in 2021, including restricted stock units granted in 2020, 2021, 2022, and 2023 in settlement of the awards approved by the compensation committee in the prior year that were denominated in dollars and to be settled in restricted stock units following achievement of the annual performance goals. The restricted stock units vest in substantially equal installments each quarter over a four-year period commencing in January of the specified calendar year, subject to continued service through each applicable vesting date. (3) The market value of the stock awards was calculated using the closing price of our common stock on December 29, 2023 (the last trading day of 2023) of $19.32. (4) The amounts reported reflect performance-vesting restricted stock units granted in the specified calendar year under our 2021 Plan based on achieving target performance goals, which would result in 100% of the subject shares vesting.

  31. 2023 Option Exercises and Stock Vested

    2023 Option Exercises and Stock Vested The following table sets forth information regarding stock options that were exercised and stock awards that vested for each of our named executive officers during 2023.

  32. 2023 Option Exercises and Stock Vested

    | Named Executive Officer | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Vesting ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | | Chih-Hsiang (Thompson) Lin | 97,348 | $531,850 | 251,189 | $1,248,353 | | Stefan J. Murry | 16,000 | $103,710 | 86,216 | $430,819 | | Hung-Lun (Fred) Chang | — | — | 79,625 | $397,370 | | Shu-Hua (Joshua) Yeh | 17,000 | $37,180 | 78,002 | $386,851 | | David C. Kuo | — | — | 51,656 | $258,821 |

  33. 2023 Option Exercises and Stock Vested

    (1) The value realized on exercise of stock option awards was calculated using the closing price of our common stock on the day prior to the applicable exercise date for each option less the exercise price applicable to the option. The amount shown does not reflect cash received. The value realized on vesting of stock awards was calculated using the closing price of our common stock on the applicable vesting date for each award. The amount shown does not reflect cash received.

  34. Potential Payments Upon Termination and Change of Control

    Potential Payments Upon Termination and Change of Control The following discussion reflects the payments and benefits that each of the named executive officers would have been eligible to receive in the event of certain terminations, assuming that each such termination occurred on December 29, 2023. Employment Agreements We maintain employment agreements with Dr. Lin, Dr. Murry, Dr. Chang, Mr. Yeh and Mr. Kuo. The employment agreement with Dr. Lin provides that, if our Board terminates his employment for any reason other than Cause or if he resigns for Good Reason outside of the Change of Control Period, each as defined below, he will be entitled to receive (i) a payment equal to one year’s base salary as in effect immediately prior to termination, (ii) a payment equal to his full target bonus as in effect immediately prior to termination and (iii) $15,000, (which may be used for benefit continuation under COBRA or for any other purpose), which amounts will be paid periodically in installments over the 12 months following his separation from service. The employment agreements with Dr. Murry, Dr. Chang, Mr. Yeh and Mr. Kuo, each provide that, if our Board terminates his employment for any reason other than Cause or if he resigns for Good Reason outside of the Change of Control Period (as defined below), he will be entitled to receive (i) a payment equal fifty percent (50%) of base salary as in effect immediately prior to termination, (ii) a payment equal to fifty percent (50%) of his full target bonus as in effect immediately prior to termination and (iii) $15,000, (which may be used for benefit continuation under COBRA or for any other purpose). The severance benefits that may arise as a result of a termination prior to a Change of Control will be paid in a lump sum. Dr. Lin, Dr. Murry, Dr. Chang, Mr. Yeh and Mr. Kuo, each have provisions in their employment agreements that provide for “double-trigger” severance. Specifically, if, within the Change of Control Period, the executive’s employment is terminated by the executive for Good Reason or by our Company other than for Cause, then in lieu of the severance benefits described in the preceding paragraph, the executive will be entitled to receive the following: (i) a lump sum payment equal to one year’s base salary as in effect immediately prior to termination; (ii) a lump sum payment equal to his full target bonus as in effect immediately prior to termination; (iii) $10,000 ($15,000 for Dr. Murry, Dr. Chang, Mr. Yeh and Mr. Kuo) which may be used for benefit continuation under COBRA or for any other purpose and (iv) accelerated vesting of the executive’s awards granted under any incentive share plan or equity incentive plan of the Company, with all vested options becoming exercisable for an extended period following termination of employment. For Dr. Murry, Dr. Chang, Mr. Yeh and Mr. Kuo, the severance benefits that may arise as a result of termination during the Change of Control Period will be paid in a lump sum. For Dr. Lin, the severance benefits that may arise as a result of termination within one year following a Change of Control will be paid in a lump sum. Additionally, Dr. Lin’s employment agreement provides him with a potential tax gross-up payment to make him whole for any excise taxes that he would owe resulting from the application of the excise tax provisions under Section 280G of the Internal Revenue Code of 1986. None of the other employment agreements with our executive officers provide any right to a tax gross-up. To receive the severance benefits described above, each executive must execute a release agreement in favor of the Company and its affiliates, which will include a reasonable agreement to cooperate for a period of six months following the employment termination date and a mutual non-disparagement clause. In consideration of the severance benefits described above, each executive has also agreed to be subject to a non-compete provision for a period of 12 months following his separation from service and to maintain the confidentiality of Company information. Each employment agreement generally defines “Cause” as, following written notice to the executive and the executive’s failure to cure such occurrence(s): (i) conviction or plea of nolo contendere to any felony offense or to a crime of moral turpitude; (ii) commission of willful misconduct or violation of law in connection with the performance of his duties, including (a) misappropriation of funds or property, (b) attempting to secure personally any profit in connection with any transaction entered into on behalf of our Company, or (c) making any material misrepresentation to our Board, our Company or its affiliates; (iii) material violation or failure to comply with our Company policy; (iv) material breach of the employment agreement; or (v) the willful and continued failure or neglect to substantially perform his duties with our Company. “Good Reason” is defined to include: (i) the executive’s assignment to duties inconsistent with his position or title; (ii) reduction in his base compensation, except as part of an overall cost reduction program that affects all senior executives and does not disproportionately affect the executive; (iii) any purported termination of the executive by our Company other than for disability or Cause or a voluntary resignation initiated by the executive, except for a voluntary termination for Good Reason; (iv) failure of any successor entity to our Company to expressly assume the employment agreement; and (v) material breach by our Company of the agreement. Each employment agreement generally provides that a “Change of Control” is deemed to occur if: (i) individuals who constitute the Board of our Company on the date of the employment agreement (“Incumbent Directors”) cease to constitute at least a majority of our Board; provided, that any individual whose election or nomination for election by the stockholders was approved by a majority of the then Incumbent Directors shall be considered an Incumbent Director, with certain exceptions; or (ii) the stockholders of our Company approve (1) any merger, consolidation or recapitalization of our Company or any sale of substantially all of its assets where (a) the stockholders of our Company prior to the transaction do not, immediately thereafter, own at least 51% of both the equity and voting power of the surviving entity or (b) the Incumbent Directors at the time of the approval of the transaction would not immediately thereafter constitute a majority of the Board of the surviving entity, or (2) any plan of liquidation or dissolution of our Company. Under the employment agreements, the “Change of Control Period” means: with respect to Dr. Lin, one year after a Change of Control and with respect to Dr. Murry, Dr. Chang, Mr. Yeh and Mr. Kuo, within six months prior to a Change of Control or within one year after a Change of Control. Restricted Stock Unit Awards The time-based restricted stock unit awards we have granted to our named executive officers provide for full acceleration upon a named executive officer’s termination of employment due to death or disability, as well as on a termination without cause or resignation for good cause during the Change of Control Period. In addition, if the acquiring entity in a Change of Control refuses to assume or replace outstanding time-based awards of any plan participant, that participant’s awards will become fully vested.

  35. Potential Payments Upon Termination and Change of Control

    The performance-based restricted stock unit awards we have granted to our named executive officers provide for different acceleration treatment based on the applicable performance goal. The portion of the awards that vests based on achievement of the relative TSR goal: upon termination of employment due to death or disability, will vest in full at the target level; for termination of employment in connection with a change of control, will vest following the end of the performance period with respect to the greater of actual or target performance (based on unreduced performance goals); for retirement, will vest following the end of the performance period with respect to a pro-rated amount based on actual performance; and upon other termination of employment, will be forfeited. The portion of the award that vests based on achievement of the stock price goal: upon termination of employment due to death or disability, will vest in full to the extent already earned; for termination of employment in connection with a change of control, will vest immediately to the extent already earned, and will vest following the end of the performance period to the extent earned at that time; for retirement, will vest following the end of the performance period to the extent earned; and upon other termination of employment, will be forfeited. The following table reflects the payments and benefits that each of the named executive officers would have been eligible to receive in the event of certain terminations or a Change of Control, assuming that each such event occurred on December 29, 2023. The acceleration of equity awards was calculated using the closing price of our common stock on December 29, 2023 (the last trading day of 2023) of $19.32. Amounts that could actually become due upon any termination cannot be known with certainty until the event occurs.

  36. Potential Payments Upon Termination and Change of Control

    | Name and Principal Position | Termination Without Cause or Resignation For Good Reason, Outside of the Change of Control Period ($)(1) | Termination Without Cause or Resignation For Good Reason, Within the Change of Control Period ($)(2) | Termination Due to Death or Disability ($)(3) | Termination Due to Retirement ($)(4) | Change of Control - Awards Not Assumed ($)(5) | | Chih-Hsiang (Thompson) Lin | | | | | | | Salary and Bonus | $1,080,607 | $1,080,607 | — | — | — | | Other Cash Payments | $15,000 | $10,000 | — | — | — | | Accelerated Equity | — | $37,662,717 | $30,847,513 | $19,725,197 | $31,654,980 | | Tax Gross-Up | — | $7,750,665 | — | — | | | Total | $1,095,607 | $46,503,989 | $30,847,513 | $19,725,197 | $31,654,980 | | Stefan J. Murry | | | | | | | Salary and Bonus | $276,243 | $552,485 | — | — | — | | Other Cash Payments | $15,000 | $15,000 | — | — | — | | Accelerated Equity | — | $13,160,069 | $10,774,745 | $6,903,814 | $11,057,361 | | Total | $291,243 | $13,727,554 | $10,774,745 | $6,903,814 | $11,057,361 | | Hung-Lun (Fred) Chang | | | | | | | Salary and Bonus | $248,537 | $497,074 | — | — | — | | Other Cash Payments | $15,000 | $15,000 | — | — | — | | Accelerated Equity | — | $11,965,188 | $9,801,501 | $6,751,328 | $10,061,810 | | Total | $263,537 | $12,477,262 | $9,801,501 | $6,751,328 | $10,061,810 | | Shu-Hua (Joshua) Yeh | | | | | | | Salary and Bonus | $247,568 | $495,136 | — | — | — | | Other Cash Payments | $15,000 | $15,000 | — | — | — | | Accelerated Equity | — | $11,109,8343 | $9,100,852 | $6,304,417 | $9,378,344 | | Total | $262,568 | $11,619,970 | $9,100,852 | $6,304,417 | $9,378,344 | | David C. Kuo | | | | | | | Salary and Bonus | $189,530 | $379,059 | — | — | — | | Other Cash Payments | $15,000 | $15,000 | — | — | — | | Accelerated Equity | — | $7,927,189 | $6,495,394 | $4,449,208 | $6,649,254 | | Total | $204,530 | $8,321,248 | $6,495,394 | $4,449,208 | $6,649,254 |

  37. Potential Payments Upon Termination and Change of Control

    Amounts shown in this column reflect the payments and benefits that the named executive officers would have been eligible to receive in the event of a termination without Cause or resignation for Good Reason on December 29, 2023 assuming that such date was not during the Change of Control Period. (2) Amounts shown in this column reflect the payments and benefits that the named executive officers would have been eligible to receive in the event of a termination without Cause or resignation for Good Reason on December 29, 2023 assuming that such date was during the Change of Control Period, which (1) with respect to Dr. Lin, means one year after a Change of Control and (2) with respect to Dr. Murry, Dr. Chang, Mr. Yeh and Mr. Kuo, means within six months prior to a Change of Control or within one year after a Change of Control. Amounts in this column assume that performance-vesting restricted stock units will vest at the maximum level for the portion subject to the 2021, 2022 and 2023 stock price goals and relative TSR goals. (3) Amounts shown in this column reflect the payments and benefits that the named executive officers would have been eligible to receive in the event of a termination due to death or disability on December 29, 2023, assuming that time-based restricted stock units vested in full (for death or disability) and assuming that performance-vesting restricted stock units will vest at the target level for the portion subject to the relative TSR goals and maximum for the portion subject to the 2021, 2022 and 2023 stock price goals. (4) Amounts shown in this column reflect the payments and benefits that the named executive officers would have been eligible to receive in the event of retirement on December 29, 2023, assuming that performance-vesting restricted stock units will vest at the maximum level for the portion subject to the 2021, 2022 and 2023 stock price goals and relative TSR goals. Amounts shown in this column reflect the payments and benefits that the named executive officers would have been eligible to receive in the event of a Change of Control transaction in which the successor company refused to assume or replace outstanding awards, resulting in the vesting in full of time-vesting restricted stock units and vesting of a prorated portion of performance-vesting restricted stock units based on actual results measured against the performance goals as of December 29, 2023.The amounts shown assume performance-vesting restricted stock units will vest at maximum for the portion subject to the 2021, 2022 and 2023 stock price goals and relative TSR goals.

  38. Pay vs. Performance

    Pay vs. Performance In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEOs and Company performance for the fiscal years listed below. The compensation committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.

  39. Pay vs. Performance

    | Year | Summary Compensation Table Total for Chih-Hsiang (Thompson) Lin(1) ($) | Compensation Actually Paid to Chih-Hsiang (Thompson) Lin(1)(2)(3) ($) | Average Summary Compensation Table Total for Non-PEO NEOs(1) ($) | Average Compensation Actually Paid to Non-PEO NEOs(1)(2)(3) ($) | Value of Initial Fixed $100 Investment based on:(4) | | Net Income ($ Thousands) | | | | | | | TSR ($) | Peer Group TSR ($) | | | 2023 | 6,049,470 | 38,409,964 | 1,923,067 | 11,430,710 | 162.63 | 178.88 | (56,048) | | 2022 | 2,157,067 | 456,994 | 811,490 | 311,906 | 15.91 | 178.07 | (66,397) | | 2021 | 3,659,008 | 2,725,556 | 1,251,466 | 988,822 | 43.27 | 215.25 | (54,162) | | 2020 | 2,476,271 | 2,242,974 | 899,965 | 870,688 | 71.63 | 142.68 | (58,452) |

  40. Pay vs. Performance

    Chih-Hsiang (Thompson) Lin was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are listed below.

  41. Pay vs. Performance

    | 2021 – 2023 | | Stefan J. Murry | | Hung-Lun (Fred) Chang | | Shu-Hua (Joshua) Yeh | | David C. Kuo |

  42. Pay vs. Performance

    The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. (3) Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the totals from the Stock Awards column set forth in the Summary Compensation Table.

  43. Pay vs. Performance

    | Year | Summary Compensation Table Total for Chih- Hsiang (Thompson) Lin ($) | Exclusion of Stock Awards for Chih-Hsiang (Thompson) Lin ($) | Inclusion of Equity Values for Chih-Hsiang (Thompson) Lin ($) | Compensation Actually Paid to Chih-Hsiang (Thompson) Lin ($) | | 2023 | 6,049,470 | (4,816,714) | 37,177,208 | 38,409,964 | | 2022 | 2,157,067 | (949,776) | (750,297) | 456,994 | | 2021 | 3,659,008 | (2,915,291) | 1,981,839 | 2,725,556 | | 2020 | 2,476,271 | (1,595,332) | 1,362,035 | 2,242,974 |

  44. Pay vs. Performance

    | Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Stock Awards for Non- PEO NEOs ($) | Average Inclusion of Equity Values for Non- PEO NEOs ($) | Average Compensation Actually Paid to Non- PEO NEOs ($) | | 2023 | 1,923,067 | (1,390,823) | 10,898,466 | 11,430,710 | | 2022 | 811,490 | (282,557) | (217,027) | 311,906 | | 2021 | 1,251,466 | (867,292) | 604,648 | 988,822 | | 2020 | 899,965 | (480,510) | 451,233 | 870,688 |

  45. Pay vs. Performance

    The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:

  46. Pay vs. Performance

    | Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Chih-Hsiang (Thompson) Lin ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Chih- Hsiang (Thompson) Lin ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Chih-Hsiang (Thompson) Lin ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Chih-Hsiang (Thompson) Lin ($) | Total – Inclusion of Equity Values for Chih-Hsiang (Thompson) Lin ($) | | 2023 | 19,272,269 | 16,949,393 | 433,047 | 522,499 | 37,177,208 | | 2022 | 971,794 | (1,471,585) | 88,308 | (338,814) | (750,297) | | 2021 | 2,106,831 | (462,209) | 331,884 | 5,333 | 1,981,839 | | 2020 | 1,291,035 | (296,981) | 383,351 | (15,370) | 1,362,035 |

  47. Pay vs. Performance

    | Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | Average Vesting- Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | Total – Average Inclusion of Equity Values for Non-PEO NEOs ($) | | 2023 | 5,570,051 | 5,047,041 | 125,040 | 156,334 | 10,898,466 | | 2022 | 289,108 | (437,780) | 26,271 | (94,626) | (217,027) | | 2021 | 629,586 | (125,328) | 99,736 | 654 | 604,648 | | 2020 | 390,003 | (51,818) | 115,801 | (2,753) | 451,233 |

  48. Pay vs. Performance

    The Peer Group TSR set forth in this table utilizes the peer companies used for compensation benchmarking purposes in 2020, which are summarized in our “Compensation Discussion and Analysis” section of this Proxy Statement, for the years reflected in the table above but excludes companies that had ceased to be publicly traded as of the end of each fiscal year.

  49. Pay vs. Performance

    | 2020 | 2021 | 2022 – 2023 | | Axcelis Technologies, Inc. ADTRAN Holdings, Inc. Alpha and Omega Semiconductor Limited Aviat Networks, Inc. Calix, Inc. CalAmp Corp. Casa Systems, Inc. Cohu, Inc. Digi International Inc. DSP Group, Inc. EMCORE Corporation Harmonic Inc. Inseego Corp. KVH Industries, Inc. NeoPhotonics Corporation Photronics, Inc. Ribbon Communications Inc. Xperi Inc. | Axcelis Technologies, Inc. ADTRAN Holdings, Inc. Alpha and Omega Semiconductor Limited Aviat Networks, Inc. Calix, Inc. CalAmp Corp. Casa Systems, Inc. Cohu, Inc. Digi International Inc. EMCORE Corporation Harmonic Inc. Inseego Corp. KVH Industries, Inc. NeoPhotonics Corporation Photronics, Inc. Ribbon Communications Inc. Xperi Inc. | Axcelis Technologies, Inc. ADTRAN Holdings, Inc. Alpha and Omega Semiconductor Limited Aviat Networks, Inc. Calix, Inc. CalAmp Corp. Casa Systems, Inc. Cohu, Inc. Digi International Inc. EMCORE Corporation Harmonic Inc. Inseego Corp. KVH Industries, Inc. Photronics, Inc. Ribbon Communications Inc. Xperi Inc. |

  50. Pay vs. Performance

    The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the compensation benchmarking peers, respectively. Historical stock performance is not necessarily indicative of future stock performance. We did not have a financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs in 2023.

  51. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Total Shareholder Return (“TSR”)

    Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and the Company’s and Peer Group’s cumulative TSR over the four most recently completed fiscal years.

  52. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income

    Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our net income during the two most recently completed fiscal years.

  53. 2023 Director Compensation

    2023 Director Compensation The table below sets forth, for each person who served as a non-employee director during 2023, information regarding compensation for service on our Board during 2023.

  54. 2023 Director Compensation

    | Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($) | | William H. Yeh | $62,000.00 | $190,301.25 | $252,301.25 | | Richard B. Black | $70,000.00 | $190,301.25 | $260,301.25 | | Min-Chu (Mike) Chen | $70,000.00 | $190,301.25 | $260,301.25 | | Cynthia (Cindy) DeLaney | $55,000.00 | $190,301.25 | $245,301.25 | | Che-Wei Lin | $52,000.00 | $190,301.25 | $242,301.25 | | Elizabeth Loboa | $50,000.00 | $190,301.25 | $240,301.25 |

  55. 2023 Director Compensation

    (1) Reflects the aggregate dollar amount of fees earned or paid in cash for services as a non-employee director, including committee membership fees, fees for serving as a committee chairperson, and board and committee meeting fees. (2) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of restricted stock unit awards granted in 2023. The assumptions used in calculating the grant date fair value of the restricted stock units are reported in Note B to the consolidated financial statements included in the Annual Report. The amounts reported in this column reflect the accounting cost for these restricted stock units and do not correspond to the actual economic value that may be received by the non-employee directors for the restricted stock units. As of December 31, 2023, each of the current non-employee directors held the following number of outstanding restricted stock units: Mr. Yeh, 20,463; Mr. Black, 20,463; Dr. Chen, 20,463; Ms. DeLaney, 20,463; Mr. Lin, 20,463 and Dr. Loboa, 20,463. For the year ended December 31, 2023, each of our non-employee directors received an annual retainer equal to $45,000. Non-employee directors who served as members of our audit committee, our compensation committee or our nominating and corporate governance committee received an additional $10,000, $7,000 or $5,000 prorated annual retainer, respectively. Non-employee directors who served as the chairman of our audit committee, chairman of our compensation committee, and chairman of our nominating and corporate governance committee, received an additional $10,000, $8,000 and $5,000 prorated annual retainer, respectively, in addition to the annual retainer for committee membership described in the preceding sentence. The cash retainers were paid quarterly. In addition, for 2023 each of our non-employee directors was awarded with a number of restricted stock units under the 2021 Plan calculated by dividing $115,000 by the prior 30-day average market closing price of our common stock on the date of grant. All restricted stock unit awards granted to our non-employee directors vest in equal monthly amounts over the first twelve months following the date of grant, subject to early termination in accordance with their terms. The grant of restricted stock unit awards was made following the election of directors at the annual meeting on June 8, 2023. Directors were also reimbursed for out-of-pocket expenses incurred in the course of their service on the Board or its committees. Dr. Lin did not receive any compensation from the Company other than compensation received for serving as an executive officer of the Company.