Stefan Murry
Chief Financial Officer and Chief Strategy Officer at AAOI
Executive
About Stefan Murry
Stefan J. Murry, Ph.D., is Applied Optoelectronics’ Chief Financial Officer (since August 2014) and Chief Strategy Officer (since December 2012). He previously served as VP of Sales & Marketing (2004–2012), Director of Sales & Marketing (2000–2004), and Senior Engineer (1997–2000). Earlier, he was a Research Associate (1991–1999) and Mission Control Specialist (1992–1997) at the Space Vacuum Epitaxy Center in Houston. He holds a B.S. and M.S. in Physics and a Ph.D. in Electrical Engineering from the University of Houston; age 52; has been issued multiple optoelectronics-related patents . Company pay-vs-performance data show 2024 cumulative TSR value of $310.27 on a $100 base, with net income of $(194,415) thousand and Non-GAAP EBITDA of $(30,216) thousand; 2023 and 2022 TSR values were $162.63 and $15.91, respectively . The 2021–2024 PSU program paid at 200% of target, reflecting maximum payout under plan design (settled partly in cash due to share pool limits) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Applied Optoelectronics, Inc. | Chief Financial Officer | Aug 2014–present | Senior financial leadership, budgeting, capital allocation; also informs performance goal-setting for incentive programs . |
| Applied Optoelectronics, Inc. | Chief Strategy Officer | Dec 2012–present | Corporate strategy; inputs on operating budget and incentive goal-setting . |
| Applied Optoelectronics, Inc. | VP Sales & Marketing; Director Sales & Marketing; Senior Engineer | 1997–2012 | Commercial leadership and product/device packaging roles underpin execution track record . |
| Space Vacuum Epitaxy Center (Houston, TX) | Research Associate; Mission Control Specialist | 1991–1999 | Early technical and operations experience in advanced materials/optoelectronics contexts . |
External Roles
No external public company directorships disclosed in the proxy filing for Dr. Murry .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 384,095 | 400,564 | 454,179 |
| Target Bonus (% of Salary) | — | 45.83% | 50% |
| Target Cash Bonus ($) | — | — | 212,154 |
| Actual Cash Bonus ($) | 193,794 | 199,684 | 132,596 |
| All Other Compensation ($) | 13,732 | 37,611 | 39,451 |
| Total Reported Compensation ($) | 924,043 | 2,323,710 | 1,383,050 |
Notes:
- In 2024 the committee restored target bonus percentages to prior levels (CFO from 45.83% to 50%) given improved financial position and 50th-percentile market positioning .
- Company-wide 2024 annual bonus paid at ~62.5% of target based on performance (see next section) .
Performance Compensation
Annual Cash Incentive (2024)
| Metric | Weight | Threshold | Target | Maximum | 2024 Achievement | Weighted Achievement | Payout vs Target |
|---|---|---|---|---|---|---|---|
| Non-GAAP EBITDA | 50% | Losses ≤ $8.0M | Losses ≤ $2.0M | Breakeven ($0) or profitability | Below minimum (> $8.0M loss) | 0% | 0% component |
| New Customer Orders | 50% | N/A | 2 customers | 3 customers | ≥3 customers | 62.5% | 125% component scaling |
| Aggregate Payout | — | — | 100% | 125% | — | 62.5% | 62.5% of target (CFO actual: $132,596 on $212,154 target) |
- Most important financial measures linking pay to performance: Non-GAAP EBITDA and Relative TSR (as shown in the pay-vs-performance disclosure) .
Long-Term Equity (2024 Grants; Granted April 29, 2024)
| Instrument | Grant Date | Structure | Shares/Targets | Vesting/Performance | Grant Date FV ($) |
|---|---|---|---|---|---|
| Time-Vesting RSUs | Apr 29, 2024 | 50% of annual LTI | 28,436 units | Quarterly over 4 years, service-based | 290,616 |
| Performance-Vesting RSUs (PSUs) | Apr 29, 2024 | 50% of annual LTI | Target 28,436; Threshold 7,109; Max 56,872 | 50% Relative TSR vs peer group (25th/50th/75th percentile = 25%/100%/200% payout); 50% 3-year stock-price hurdle with thresholds $13.87 (25%), $15.95 (100%), $20.70 (200%); performance period ends Apr 29, 2027 | 466,208 |
- Equity grant sizing for 2024 at CFO: $360k time-based RSUs and $360k target PSUs (total $720k at target) .
- Company currently does not grant stock options to employees/NEOs .
Outstanding Equity Awards (as of Dec 31, 2024)
| Grant Year | Non-vested RSUs (#) | Market Value ($) | Unearned PSUs at Target (#) | Market/Payout Value ($) |
|---|---|---|---|---|
| 2021 | 8,297 | 305,827 | — | — |
| 2021 | 3,744 | 138,004 | — | — |
| 2022 | 24,415 | 899,937 | 78,125 | 2,879,688 |
| 2023 | 70,063 | 2,582,522 | 124,555 | 4,591,097 |
| 2024 | 23,105 | 851,650 | 28,436 | 1,048,151 |
- Market values use $36.86 (12/31/2024 close) .
- 2021–2024 PSU cycle earned at 200%; remainder settled partly in cash due to share pool limits .
2024 Stock Vested
| Named Executive | Shares Vested (#) | Value on Vesting ($) |
|---|---|---|
| Stefan J. Murry | 130,367 | 1,674,295 |
No option exercises in 2024 for Murry; company currently does not grant options .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (as of Apr 17, 2025) | 105,710 shares; includes 85,913 common shares + 19,797 RSUs vesting within 60 days; excludes PSUs . |
| Ownership % of Outstanding | Below 1% of 55,321,915 shares outstanding . |
| Near-term Vesting Overhang | 19,797 RSUs vest within 60 days (potential supply) . |
| 2024 Vested Shares | 130,367 shares vested; $1.67M realized value . |
| Stock Ownership Guidelines | CFO required to hold shares equal to 2x base salary; all executives in compliance; Feb 2025 amendment clarifies unexercised options and unvested PSUs do not count . |
| Hedging/Pledging Policy | Prohibits hedging and pledging, including margin accounts and derivatives . |
Employment Terms
Key Agreement Economics
- Severance (outside Change of Control): Lump-sum equal to 50% of base salary + 50% of full target bonus + $15,000 stipend; requires release; 12-month non-compete; mutual non-disparagement .
- Double-Trigger (Change of Control): If terminated for Good Reason or without Cause within CoC period: 1x base salary + 1x full target bonus + $15,000 stipend + full acceleration of equity awards (with extended option exercise for those who have options; options not currently granted), paid in lump sum; CEO has 280G tax gross-up, but no other executives (including CFO) have gross-up rights .
- Clawback: Executive incentive compensation recovery policy adopted in 2023 per SEC/Nasdaq rules .
Illustrative Potential Payments (Assuming Event on Dec 31, 2024)
| Scenario | Cash (Salary+Bonus) | Other Cash | Accelerated Equity | Tax Gross-up | Total |
|---|---|---|---|---|---|
| Termination Without Cause/Good Reason (outside CoC) | 318,231 | 15,000 | — | — | 333,231 |
| Termination Without Cause/Good Reason (within CoC) | 591,001 | 15,000 | 18,996,188 | — | 19,602,189 |
| Death or Disability | — | — | 17,556,344 | — | 17,556,344 |
| Retirement | — | — | 12,470,424 | — | 12,470,424 |
| Change of Control – Awards Not Assumed | — | — | 17,248,365 | — | 17,248,365 |
Acceleration assumptions reflect plan mechanics (e.g., maximum for certain stock-price/TSR tranches per footnotes) .
Compensation Structure Analysis
- Mix and risk: Significant portion of compensation is at-risk via annual bonus and PSUs; 2024 restored bonus targets to market median and increased equity slightly to motivate retention/performance .
- Shift to RSUs/PSUs: Company does not currently use stock options; LTI delivered as 50% time RSUs and 50% PSUs with 3-year rigor (relative TSR and stock-price hurdles) .
- Pay-for-performance outcomes: 2024 annual plan paid 62.5% of target (EBITDA below minimum; new customer orders at maximum), demonstrating downside linkage on financial underperformance .
- Shareholder alignment: 2021–2024 PSU cycle paid at 200% (maximum), aligning rewards with TSR/stock price outcomes over the cycle; partial cash settlement due to share pool capacity, a potential overhang management action .
- Governance safeguards: Independent compensation committee; independent consultant (Aon); clawback policy; say-on-pay approval of 90.17% in 2024 .
- Shareholder-friendly features: No hedging/pledging; no special executive retirement programs; limited perqs; no dividends on unvested RSUs .
Performance & Track Record Indicators
| Year | Company TSR Value of $100 | Peer Group TSR Value of $100 | Net Income ($000s) | Non-GAAP EBITDA ($000s) |
|---|---|---|---|---|
| 2020 | 71.63 | 137.07 | (58,452) | (3,212) |
| 2021 | 43.27 | 169.88 | (54,162) | (8,413) |
| 2022 | 15.91 | 109.42 | (66,397) | (18,501) |
| 2023 | 162.63 | 102.83 | (56,048) | (364) |
| 2024 | 310.27 | 123.89 | (194,415) | (30,216) |
Notes:
- Non-GAAP EBITDA identified by the company as a key performance measure linking pay to performance; relative TSR used in PSU design .
- 2024 bonus design placed 50% weight on Non-GAAP EBITDA and 50% on new customer orders; payout 62.5% overall .
Compensation Peer Group (Benchmarking)
- 2024 peer group updated for size/industry after a significant increase in valuation, revenues, and headcount; includes communications equipment and similar tech hardware companies (e.g., A10 Networks, Semtech, Photronics, Cohu, Clearfield, Digi International, etc.) .
- Peer group TSR used in pay-vs-performance and PSU relative TSR measurement .
Equity Ownership & Governance Policies
- Stock ownership guidelines: CFO at 2x salary; all executives currently compliant; 2025 amendment clarifies that unexercised options and unvested PSUs do not count .
- Prohibitions: Hedging and pledging (including puts/calls, collars, margin pledges) prohibited by insider trading policy .
- Clawback: Implemented per SEC/Nasdaq in 2023 .
Employment Terms — Additional Provisions
- Non-compete: 12 months post-termination; confidentiality and mutual non-disparagement required for severance .
- Severance form: Lump-sum payments; double-trigger equity acceleration upon qualifying CoC termination .
- No 280G tax gross-up for CFO; only CEO has potential gross-up .
Investment Implications
- Alignment vs. overhang: Murry’s pay design is highly performance-linked (PSUs with TSR/price hurdles) and ownership requirements are in force with no pledging permitted—strong alignment; however, large outstanding PSUs and ongoing quarterly RSU vesting (130k shares vested in 2024; 19,797 RSUs vest within 60 days) introduce periodic supply that can create modest selling pressure around vesting events .
- Retention risk: Double-trigger CoC terms with full equity acceleration and 1x salary+bonus provide meaningful protection; outside CoC severance is 0.5x salary+bonus, which is moderate—combined with meaningful unvested equity suggests balanced retention incentives absent a transaction .
- Pay-for-performance integrity: 2024 annual bonus cut to 62.5% where EBITDA underperformed, evidencing downside sensitivity; maximum payout on the 2021–2024 PSU cycle underscores strong shareholder return/price outcomes over that period and potential realized wealth, which could reduce future retention risk unless equity opportunities remain compelling .
- Governance quality: High say-on-pay (90.17%), independent committee/consultant, and clawback mitigate governance red flags; no hedging/pledging reduces alignment risk; no CFO 280G gross-up .
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