David Kuo
Senior Vice President, Chief Legal Officer, Chief Compliance Officer and Corporate Secretary at AAOI
Executive
About David Kuo
David C. Kuo, 42, is Senior Vice President, Chief Legal Officer (since May 2023), Chief Compliance Officer (since August 2013), and Corporate Secretary (since November 2012) at Applied Optoelectronics, Inc. (AAOI). He holds a J.D. from South Texas College of Law and a BBA in Real Estate from Baylor University . During his tenure as CLO, AAOI delivered strong shareholder returns with company TSR of 162.63 in 2023 and 310.27 in 2024, while 2024 net income was a loss of $194,415 thousand and Non-GAAP EBITDA was a loss of $30,216 thousand .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Applied Optoelectronics, Inc. | Assistant General Counsel | 2009–2013 | Supported legal matters and regulatory compliance during growth phase . |
| Applied Optoelectronics, Inc. | Asia Legal Manager | 2011–2013 | Led regional legal operations; supported cross-border compliance . |
| Applied Optoelectronics, Inc. | Vice President & General Counsel | 2013–2023 | Oversaw legal, governance, compliance through multi-year restructuring and growth cycles . |
| Applied Optoelectronics, Inc. | Corporate Secretary | 2012–Present | Board governance, disclosure controls, shareholder meeting administration . |
| Applied Optoelectronics, Inc. | Chief Compliance Officer | 2013–Present | Built and enforced compliance program and policies including clawback and insider-trading controls . |
| Applied Optoelectronics, Inc. | Senior Vice President & Chief Legal Officer | 2023–Present | Executive leadership of legal, governance, and compliance across global operations . |
External Roles
No external directorships or public company board roles disclosed in AAOI’s proxy materials for David Kuo .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary (paid) ($) | $258,686 | $268,296 | $311,736 |
| Target Bonus (% of base) | 50.0% | 45.83% | 50.0% |
| Actual Annual Cash Bonus ($) | $130,453 | $137,003 | $90,974 |
Notes:
- 2024 base salary rate set at $291,117 (effective March 1, 2024) with 12% increase vs. 2023 benchmark; paid amount differs due to PTO payouts and timing .
- 2024 bonus payout reflects 62.5% aggregate achievement on corporate goals .
Performance Compensation
2024 Annual Cash Incentive Design and Outcomes
| Metric | Weighting | Target Definition | Threshold | Target | Maximum | 2024 Actual | Payout Contribution |
|---|---|---|---|---|---|---|---|
| Non-GAAP EBITDA | 50% | Losses not to exceed defined thresholds | ≤ $8.0M loss | ≤ $2.0M loss | Break-even/profit | Losses > $8.0M | 0% (of this metric) |
| New Customer Orders | 50% | Minimum $1.0M PO from “new customers” | 1 new customer | 2 new customers | 3 new customers | Achieved 3+ new customers | 125% (of this metric) |
| Aggregate Weighted Achievement | — | Weighted sum | — | — | — | 62.5% overall | 62.5% |
Resulting payout for Kuo: $90,974 based on his $145,559 target bonus and 62.5% achievement .
2024 Long-Term Incentive (RSUs and PSUs)
| Metric | Weighting | Performance Period | Target Structure | Payout Curve | Vesting |
|---|---|---|---|---|---|
| Relative TSR vs. 2024 Peer Group | 50% of PSUs | 3 years ending Apr 29, 2027 | Percentile vs. peers | 25th→25%; 50th→100%; 75th→200% (straight-line) | PSUs earned per curve; settle at period end |
| Stock Price Hurdle | 50% of PSUs | 3 years ending Apr 29, 2027 | Threshold $13.87 (5% CAGR); Target $15.95 (10% CAGR); Max $20.70 (20% CAGR) | 0–200% per hurdle | PSUs earned to extent hurdle met |
| Time-based RSUs | 50% of total LTI value | 4 years | Service-based | — | Quarterly vesting over 4 years starting Jan 21, 2024 |
2024 grants to Kuo:
- Time-vesting RSUs: 19,747 units; grant-date fair value $201,814 .
- Performance-vesting RSUs (PSUs): Target 19,747 units; threshold 4,936; maximum 39,494; grant-date fair value $323,752 .
Historical PSU realization:
- 2021–2024 PSU cycle earned at 200% of target for all NEOs; Kuo earned 50,568 PSUs; due to share pool limits, portion settled in cash per plan terms .
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Total Beneficial Ownership (shares) | 36,633 (includes 24,787 common + 11,846 RSUs vesting within 60 days) |
| Ownership as % of Shares Outstanding | <1% (“*” per table methodology; base of 55,321,915 shares) |
| Unvested RSUs at 12/31/2024 | 16,045 |
| Outstanding PSUs at 12/31/2024 (target) | 19,747 |
| Stock Ownership Guidelines | Senior Vice President: 2x annual base salary |
| Compliance Status | All executives and directors are in compliance as of filing; PSUs/unexercised options clarified as not counting toward guidelines (Feb 2025 amendment) |
| Hedging/Pledging | Prohibited (short sales, derivatives, hedging, pledging, margin accounts) |
AAOI currently grants RSUs/PSUs and does not grant new stock options to employees, including NEOs .
Employment Terms
| Provision | Outside Change of Control | Within Change of Control (Double Trigger) |
|---|---|---|
| Severance Cash | 50% of base salary + 50% of target bonus + $15,000 cash stipend | 1x base salary + 1x target bonus + $15,000 cash stipend |
| Equity Treatment | No automatic acceleration | Accelerated vesting of awards; TSR PSUs vest at greater of actual or target after performance period; price-hurdle PSUs vest to extent earned; RSUs accelerate if not assumed |
| Non-Compete & Other Conditions | 12-month non-compete; confidentiality; mutual non-disparagement; release required | |
| Clawback Policy | Executive incentive compensation recoupment adopted in 2023 per SEC/Nasdaq rules | |
| Tax Gross-Up | None for Kuo; only CEO has potential 280G gross-up |
Potential payout illustrations (12/31/2024 assumptions):
- Termination without cause/good reason (outside CoC): $233,338 cash + equity not accelerated .
- Termination within CoC: $12,121,821 total (includes cash and accelerated equity per assumptions described) .
Compensation Structure Analysis
- Increased at-risk pay: Kuo’s 2024 target bonus restored to 50% of base (from 45.83% in 2023), and 50% of LTI in PSUs with multi-year TSR and price hurdles, strengthening pay-for-performance alignment .
- Quarterly RSU vesting: Regular vesting cadence supports retention but creates periodic vesting events; RSUs vest quarterly over four years .
- No options, no hedging/pledging: Equity risk is primarily RSUs/PSUs; hedging/pledging prohibited, improving alignment .
- Clawback and ownership guidelines: 2x salary guideline for SVPs; firmwide compliance; clawback policy in place .
- Related party transactions: None reported in 2024–2025 period; robust audit committee oversight process .
Performance & Track Record
| Company Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Company TSR (Index $) | 71.63 | 43.27 | 15.91 | 162.63 | 310.27 |
| Peer Group TSR (Index $) | 142.68 | 215.25 | 178.07 | 178.88 | 123.89 |
| Net Income ($ thousands) | (58,452) | (54,162) | (66,397) | (56,048) | (194,415) |
| Non-GAAP EBITDA ($ thousands) | (3,212) | (8,413) | (18,501) | (364) | (30,216) |
Kuo’s legal and compliance leadership coincides with adoption of enhanced clawback and ownership policies (2023–2025) and strong TSR outcomes in 2023–2024, despite continued GAAP losses and negative Non-GAAP EBITDA .
Say-on-Pay & Shareholder Feedback
- Say-on-pay approval: 90.17% at the 2024 annual meeting, indicating broad investor support for NEO compensation design .
- Ongoing engagement: Board cites interest in disclosures on succession and governance; maintains classified board with lead independent director structure .
Equity Compensation Detail (Kuo)
| Award | Grant Date | Shares | Vesting / Performance Terms | Grant-Date Fair Value |
|---|---|---|---|---|
| RSUs | Apr 29, 2024 | 19,747 | Quarterly over 4 years from Jan 21, 2024 | $201,814 |
| PSUs (Target) | Apr 29, 2024 | 19,747 (Threshold 4,936; Max 39,494) | 3-year TSR vs peer group and stock price hurdles; 0–200% payout | $323,752 |
| PSU Earned (2011–2024 cycle) | Earned 2024 | 50,568 | Earned at 200% of target; partially settled in cash due to share pool limits | N/A |
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited by policy (reduces misalignment risk) .
- Tax gross-ups: None for Kuo; CEO-only gross-up under 280G reduces broader gross-up exposure .
- Related party transactions: None reported in period (reduces conflict risk) .
- Option repricing: Not indicated; AAOI not granting options currently .
Compensation Peer Group (Context for PSU TSR)
Peer group used for 2024 TSR performance includes A10 Networks, ACM Research, CEVA, Clearfield, Comtech Telecommunications, indie Semiconductor, NETGEAR, OneSpan, Semtech, SkyWater Technology, Vishay Precision Group, and others; PSU TSR is measured vs. this set .
Investment Implications
- Alignment and retention: Kuo’s package ties 50% of 2024 LTI to rigorous 3-year TSR and stock price hurdles and maintains quarterly RSU vesting—supporting retention while aligning incentives with shareholder value creation .
- Ownership and liquidity: Beneficial ownership is modest (<1%), with meaningful unvested RSUs/PSUs outstanding; RSU quarterly vesting implies regular vesting events but hedging/pledging prohibitions and ownership guidelines mitigate misalignment risks .
- Change-of-control economics: Double-trigger protections plus full target bonus and equity acceleration create strong retention through corporate events; absence of 280G gross-up for Kuo limits shareholder-unfriendly payouts .
- Governance quality: Clawback policy, independent compensation committee, and high say-on-pay approval suggest shareholder-acceptable pay practices, though continuing negative GAAP and Non-GAAP EBITDA warrants monitoring of performance target calibration and payout outcomes .