Mike Chen
Director at AAOI
Board
About Mike Chen
Min-Chu (Mike) Chen, Ph.D., age 75, is an independent director of Applied Optoelectronics (AAOI) serving since 2013, currently a Class III director nominated for a new term through 2028 . He holds a Ph.D. in Ocean Engineering from Oregon State University and a B.S. in Naval Architecture from National Ocean University, with a background spanning energy, petrochemical equipment, IIoT technology, and public company board service (PCTEL, Inc.) . He chairs AAOI’s Compensation Committee and serves on the Audit Committee, bringing executive compensation oversight and financial literacy to the board .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Exxon | Senior Research Engineer, Drilling & Completion Division | Prior employment (dates not specified beyond “previously employed”) | Energy R&D experience applicable to capex and operations |
| Transocean | Senior Engineer | Prior employment (dates not specified beyond “previously employed”) | Offshore engineering background; operational rigor |
| SilverPAC, Inc. | Chief Executive Officer | Sep 2008 – Apr 2010 | Consumer electronics leadership; product/market oversight |
| U.S. Flow Control Group Pte. Ltd. | Asia Pacific Director | 2011 – 2018 | Regional operations; supply chain and equipment services |
| Shandong SicerKline Advanced Material Co., Ltd. | Vice Chairman of the Board | 2016 – 2023 | Advanced materials governance and industrial scaling |
| PCTEL, Inc. (Nasdaq: PCTI) | Director (public company) | Mar 1994 – Jun 2022 | Long-tenured public board service; telecom hardware perspective |
External Roles
| Organization | Role | Tenure | Focus/Notes |
|---|---|---|---|
| EverRich Capital Inc. | Partner and Director | Since 2001 | Financial consulting; capital markets perspective |
| C&C International Services, Inc. | Executive Director | Since May 2010 | Petrochemical equipment services and marketing |
| EABO Information Technology (Shanghai), Co. Ltd. | Co‑founder and Executive Director | Since 2018 | IIoT technology platform; industrial digitalization |
| KidTech, Inc. | Co‑founder and Director | Since May 2023 | Personalized pediatric healthcare solutions |
Board Governance
- Independence: Board determined all current directors other than CEO Thompson Lin are independent under Nasdaq and Exchange Act Rule 10A‑3; Chen is independent .
- Committee assignments:
- Compensation Committee: Chair (with members Che‑Wei Lin and William H. Yeh) .
- Audit Committee: Member (Richard B. Black, Chair; members Cynthia DeLaney and Mike Chen) .
- Board/committee activity: Board met 5 times in 2024; Audit Committee held 5 meetings; Compensation Committee held 6; Nominating & Corporate Governance Committee held 1 .
- Attendance: Each director attended at least 75% of Board and applicable committee meetings during 2024 .
- Lead Independent Director: William H. Yeh (executive session chair; agenda and schedule approval; independent director liaison; available for shareholder consultation) .
- Executive sessions: Non‑management directors meet without management; policy to hold sessions excluding the CEO .
Fixed Compensation
| 2024 Director Compensation (Non‑Employee) | Value (USD) |
|---|---|
| Cash fees earned (committee/meeting/retainer) | $73,132 |
| Stock awards (RSUs grant-date fair value) | $149,995 |
| Total | $223,127 |
| RSUs outstanding as of 12/31/2024 | 8,242 units |
| 2024 board equity grant date | June 21, 2024 |
| RSU vesting schedule (directors) | Equal monthly vesting over 12 months |
Board compensation structure changes (2024 vs 2023):
- Annual cash retainer: $50,000 in 2024 vs $45,000 in 2023 .
- Annual equity retainer: $150,000 in 2024 vs $115,000 in 2023 .
- Committee fees:
- Audit Chair $20,000; Member $10,000 (unchanged) .
- Compensation Chair $15,500 (up from $15,000); Member $8,000 (up from $7,000) .
- Nominating Chair $10,000; Member $5,000 (unchanged) .
Performance Compensation
As Compensation Committee Chair, Chen oversees AAOI’s pay‑for‑performance program for executives. 2024 short‑term cash incentives were based on Non‑GAAP EBITDA and New Customer Orders; PSUs vest on relative TSR and a stock price hurdle over three years.
| 2024 Annual Cash Incentive Targets | Weight | Minimum | Reduced | Target | Maximum | 2024 Achievement | Weighted Achievement |
|---|---|---|---|---|---|---|---|
| Non‑GAAP EBITDA | 50% | Losses ≤ $8.0M | Losses ≤ $5.0M | Losses ≤ $2.0M | Breakeven/profit | >$8.0M loss | 0% |
| New Customer Orders | 50% | N/A | ≥1 new customer at $1.0M PO | ≥2 new customers at $1.0M PO | ≥3 new customers at $1.0M PO | ≥3 new customers achieved | 62.5% |
| Aggregate payout vs. target | — | — | — | 50% | 125% | — | 62.5% |
PSU performance curves (2024 grants; three-year period ending Apr 29, 2027):
- Relative TSR vs 2024 peer group: 25th percentile=25% earned; 50th=100%; 75th=200% (straight‑line interpolation) .
- Stock price hurdle: < $11.98=0%; $13.87 (5% CAGR)=25%; $15.95 (10% CAGR)=100%; $20.70 (20% CAGR)=200% .
Say‑on‑Pay outcome: 90.17% approval at 2024 Annual Meeting; committee interpreted support as alignment of plan design/governance with shareholder interests .
Other Directorships & Interlocks
| Company | Public/Private | Role | Potential Interlock/Conflict |
|---|---|---|---|
| PCTEL, Inc. (PCTI) | Public | Director (1994–2022) | No AAOI related‑party transactions disclosed |
| EverRich Capital Inc. | Private | Partner & Director (since 2001) | No AAOI related‑party transactions disclosed |
| C&C International Services, Inc. | Private | Executive Director (since 2010) | No AAOI related‑party transactions disclosed |
| EABO Information Technology (Shanghai), Co. Ltd. | Private | Co‑founder & Executive Director (since 2018) | No AAOI related‑party transactions disclosed |
| KidTech, Inc. | Private | Co‑founder & Director (since 2023) | No AAOI related‑party transactions disclosed |
- Related Party Transactions: Company policy requires Audit Committee review; no related person transactions >$120,000 since the beginning of fiscal 2024 reported .
Expertise & Qualifications
- Executive compensation oversight and governance as Compensation Committee Chair; familiarity with independent consultant engagement (Aon) and peer benchmarking .
- Financial literacy for Audit Committee service; audit committee responsibilities include internal controls, auditor oversight, and related‑party transaction review .
- Technical and operational background across energy, petrochemical equipment, IIoT, and consumer electronics; public board experience (PCTEL) .
Equity Ownership
| Metric | Value |
|---|---|
| Beneficial ownership (shares) | 180,054 |
| Ownership % of outstanding | <1% (asterisk in table denotes <1%) |
| RSUs outstanding (director grant) | 8,242 as of 12/31/2024 |
| Shares outstanding at record date | 55,321,915 |
| Director stock ownership guideline | ≥3x annual cash retainer |
| Compliance status | All directors in compliance as of filing |
| Hedging/pledging of company stock | Prohibited by insider trading policy |
Governance Assessment
-
Strengths:
- Independent chair of Compensation Committee with robust chartered responsibilities; use of independent advisor (Aon) and documented benchmarking/process disciplines .
- Audit Committee membership ensures financial oversight; committee meets regularly and oversees controls, auditors, whistleblower systems, and related‑party reviews .
- High shareholder support on Say‑on‑Pay (90.17%) indicating investor confidence in pay‑for‑performance program overseen by the committee .
- Director ownership guidelines and compliance; prohibition on hedging/pledging; RSU director grants vest monthly over 12 months, aligning incentives without leverage .
- No related‑party transactions reported for directors; reduces conflict risk .
-
Watch items / RED FLAGS:
- Classified board structure maintained; can signal entrenchment risk despite stated rationale for stability and continuity .
- CEO employment agreement includes potential 280G tax gross‑up in change‑of‑control scenarios; shareholder‑unfriendly feature even if limited to CEO .
- Equity plan dilution management requires ongoing oversight; share reserve increases and potential dilution discussed (plan includes director compensation cap and clawback, which mitigates) .
-
Overall implication: Chen’s dual role (Compensation Chair, Audit member) positions him at the center of incentive design, risk oversight, and financial governance. The documented processes, independence, and investor support are positives; ongoing monitoring of structural items (classified board, CEO gross‑up) is warranted for governance quality .