ON ON Semiconductor

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To the Stockholders:

The 2020 Annual Meeting of Stockholders of ON Semiconductor Corporation will be held at its principal office, located at 5005 East McDowell Road, Phoenix, Arizona 85008, on Wednesday, May 20, 2020 at 8:00 a.m., local time, for the following purposes:

Items of Business

 

		To elect seven directors nominated by our Board of Directors
		To vote on an advisory (non-binding) resolution to approve executive compensation

		To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm
		To transact such other business as may properly come before the meeting and any adjournment or postponement of the meeting

The Board of Directors has fixed the close of business on March 23, 2020 as the record date for determination of stockholders entitled to notice of and to vote at the annual meeting or any adjournment or postponement thereof. For 10 days prior to the meeting, a list of stockholders entitled to vote at the meeting will be available for inspection in the office of the Law Department of ON Semiconductor Corporation, located at 5005 East McDowell Road, Phoenix, Arizona 85008, between the hours of 8:30 a.m. and 5:00 p.m., local time, each weekday. Such list will also be available at the annual meeting. Directions to the meeting location and related information may be found on our website at www.onsemi.com.

Your vote is very important to us. We are providing access to our proxy materials online under the U.S. Securities and Exchange Commission’s “notice and access” rules. As a result, we are mailing to many of our stockholders a notice instead of a paper copy of this proxy statement and our 2019 annual report to stockholders. The notice contains instructions on how to access documents online and how stockholders can receive a paper copy of our materials, including this proxy statement, our 2019 annual report to stockholders, and a proxy card. Those who do not receive a notice, including stockholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy by mail unless they have previously requested delivery of materials electronically.

We intend to hold our annual meeting in person. However, we are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described above) or may decide to hold the meeting in a different location, at a different time, and/or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on our proxy website (www.onsemi.com/annualdocs), as well as through a filing with the U.S. Securities and Exchange Commission, and we encourage you to check this website prior to the meeting if you plan to attend. As always, you are encouraged to vote your shares prior to the annual meeting.

Sincerely yours,

Keith D. Jackson

President and Chief Executive Officer

April 6, 2020

TABLE OF CONTENTS

Table of Contents

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5005 East McDowell Road Phoenix, Arizona 85008

PROXY STATEMENT

This proxy statement and the accompanying notice and proxy card are furnished in connection with the solicitation by the Board of Directors (the “Board” or “Board of Directors”) of ON Semiconductor Corporation (“we,” “ON Semiconductor,” or the “Company”) of proxies to be used at our annual meeting of stockholders to be held on Wednesday, May 20, 2020 at 8:00 a.m., local time, at our principal office, located at 5005 East McDowell Road, Phoenix, Arizona 85008, and at any adjournment or postponement thereof (the “Annual Meeting”). We made this proxy statement available to stockholders beginning on April 6, 2020.

Annual Meeting of Stockholders

Date and Time: Wednesday, May 20, 2020 at 8:00 a.m., local time

Location: 5005 East McDowell Road, Phoenix, Arizona 85008

Record Date: The Board of Directors has fixed the close of business on March 23, 2020 as the record date for determination of stockholders entitled to notice of and to vote at the Annual Meeting.

We intend to hold the Annual Meeting in person. However, we are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described above) or may decide to hold the Annual Meeting in a different location, at a different time, and/or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on our proxy website (www.onsemi.com/annualdocs), as well as through a filing with the U.S. Securities and Exchange Commission (the “Commission”), and we encourage you to check this website prior to the Annual Meeting if you plan to attend. As always, you are encouraged to vote your shares prior to the Annual Meeting.

Proxy Materials Are Available on the Internet

In accordance with the rules of the Commission, we are furnishing proxy materials to our stockholders primarily via the Internet instead of mailing printed copies of those materials to each stockholder. By doing so, we save costs and reduce the environmental impact of our Annual Meeting. Unless you elected to receive printed copies of the proxy materials in prior years, you will receive a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) by mail, or if you so elected, by electronic mail. The Internet Notice will tell you how to access and review the proxy materials and how to vote your shares after you have reviewed the proxy materials. If you received the Internet Notice by mail and would like to receive a printed copy of the proxy materials, you should follow the instructions included in the Internet Notice.

The Internet Notice is first being sent, and the proxy statement and form of proxy relating to the Annual Meeting are first being made available, to stockholders on or about April 6, 2020.

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PROXY STATEMENT

Voting Your Shares

Whether or not you plan to attend the Annual Meeting, the Board encourages you to vote your shares as more fully described in the proxy card and below.

If you are the “record holder” of your shares, meaning that you hold the shares in your own name and not through a bank or brokerage firm, you may vote in one of four ways:

If the shares you own are held in “street name” by a bank or brokerage firm, the bank or brokerage firm, as the record owner, will vote your shares according to your instructions. You will need to follow the directions your bank or brokerage firm provides you. Each share held by you is entitled to one vote.

Proof of Ownership Required for Attending Meeting in Person

You are entitled to attend the Annual Meeting only if you were a stockholder as of the close of business on March 23, 2020, the record date, or hold a valid proxy for the Annual Meeting. In order to be admitted to the Annual Meeting, management may also, in its sole discretion, require you to present any one or more of the following documents as proof of ownership of ON Semiconductor stock on the record date.

Management reserves the right not to admit anyone who refuses to comply with the above security procedures.

We intend to hold the Annual Meeting in person. However, we are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described above) or may decide to hold the Annual Meeting in a different location at a different time, and/or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on our proxy website (www.onsemi.com/annualdocs), as well as through a filing with the Commission, and we encourage you to check this website prior to the Annual Meeting if you plan to attend. As always, you are encouraged to vote your shares prior to the Annual Meeting.

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We are not aware of any other matters that will be brought before the stockholders for a vote. If other matters properly come before the Annual Meeting, all shares validly represented by proxies will be voted in accordance with the discretion of the appointed proxies.

Record Date and Quorum

The Board has fixed the close of business on March 23, 2020 as the record date for determination of stockholders entitled to notice of and to vote at the Annual Meeting. As of the record date, there were 409,451,363 shares of our common stock outstanding and entitled to vote at the Annual Meeting. The presence, in person or by proxy, of holders of a majority of the shares entitled to vote at the Annual Meeting will constitute a quorum. Abstentions, withheld votes, and broker non-votes are included in determining whether a quorum is present for the Annual Meeting. Abstentions include shares present in person but not voting and shares represented by proxy but with respect to which the holder has abstained. Broker non-votes occur when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power on that item and has not received instructions from the beneficial owner. Although brokers have discretionary power to vote your shares with respect to “routine” matters, they do not have discretionary power to vote your shares on “non-routine” matters. As discussed in more detail below, we believe the following proposals will be considered non-routine and, therefore, your broker will not be able to vote your shares with respect to these proposals unless the broker receives appropriate instructions from you: Proposal No. 1 (Election of Directors) and Proposal No. 2 (Advisory Resolution to Approve Executive Compensation).

Required Vote

Each Director standing for election at the Annual Meeting in Proposal No. 1 must be elected by a majority of the votes cast with respect to that Director’s election, meaning that the number of votes cast “for” the Director-nominee must exceed the number of votes cast “against” that Director-nominee. See “The Board of Directors and Corporate Governance — Majority Voting for Directors” below in this proxy statement. Abstentions and broker non-votes, as applicable, are not treated as votes cast and, therefore, will have no effect on Proposal No. 1. Any incumbent Director-nominee who is not elected by majority vote shall promptly tender his or her resignation to the Board. The Corporate Governance and Nominating Committee of the Board (the “Corporate Governance and Nominating Committee”), or such other Board committee designated by the Board, will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. In such a situation, the Board will act on the resignation, taking into account the committee’s recommendation, and publicly disclose its decision and, if the resignation is rejected, the rationale behind its decision, within 90 days from the date of the certification of the election results.

The affirmative vote of a majority of the votes duly cast on that item at the Annual Meeting is required to approve Proposal No. 2 (Advisory Resolution to Approve Executive Compensation) and Proposal No. 3 (Ratification of Appointment of Independent Registered Public Accounting Firm). Abstentions and broker non-votes, as applicable, are not treated as votes cast and, therefore, will have no effect on Proposal Nos. 2 and 3.

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PROXY STATEMENT

Your broker is NOT able to vote on your behalf in any director election without specific voting instructions from you. In addition, your broker is not able to vote on your behalf on Proposal No. 2. Accordingly, if your shares are held in “street name” and you cannot attend the Annual Meeting in person, we encourage you to vote your shares on all proposals by promptly instructing your broker as to how to vote on these matters so that your shares will be voted at the Annual Meeting.

Revocation of Proxies

You may revoke your proxy at any time before it is exercised by submitting to our Secretary a written notice of revocation or a properly executed proxy bearing a later date or by attending the Annual Meeting and voting in person.

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MANAGEMENT PROPOSALS

Proposal No. 1: Election of Directors

The Board focuses on retaining highly-qualified individuals that possess a collective balance of expertise, experience, and tenure. As such, the Board routinely assesses its size and composition and the skillsets of each Director to ensure an appropriate complement of perspectives and skills in light of the Company’s long-term strategy and the evolving nature of the Company’s product offerings and technology in the highly competitive semiconductor industry. Upon recommendation of the Corporate Governance and Nominating Committee, the Board has concluded that re-nominating each of the Director-nominees described below would strike the appropriate balance of perspectives and qualifications on the Board and align with the Company’s current and future business objectives.

The Board will continue to evaluate from time to time the addition to the Board of any potential Director candidate that may complement the knowledge, skills, and experience possessed by the Director-nominees to ensure that the composition of the Board appropriately reflects changes in the Company’s evolving business.

Procedures for Nomination and Election. Each Director stands for election annually. Once elected, Directors hold office until their successors are duly elected and qualified, or until the earlier of their death, resignation, or removal. Each Director-nominee will be nominated at the Annual Meeting to serve for a term expiring at the annual meeting in 2021, and each of the Director-nominees has agreed to serve as a Director if elected by the stockholders.

Independence Determination. The Board has determined that nine of ten members of our Board are independent according to the applicable rules of the Commission and the listing standards of The Nasdaq Global Select Market LLC (“Nasdaq”), including each of the following current Director-nominees: Atsushi Abe, Alan Campbell, Gilles Delfassy, Emmanuel T. Hernandez, Paul A. Mascarenas, and Christine Y. Yan. For more information on our Director nomination process and Board refreshment initiative, please refer to “The Board of Directors and Corporate Governance — Committees of the Board — Corporate Governance and Nominating Committee” section of this proxy statement.

Transactions and Relationships Considered in Independence Determinations. Consistent with Nasdaq listing standards, in making its independence determinations, the Board considered transactions occurring since the beginning of 2017 between the Company and the Directors, members of their immediate families, and entities associated with the Directors or members of their immediate families. The Board determined that no “categorical” bars to independence under Nasdaq listing standards applied to any of the non-employee Directors (“Outside Directors”). In making its determination that no relationships exist that, in the opinion of the Board, would impair the Outside Director’s independence, in addition to the transactions described in this proxy statement, the Board considered the following transactions, relationships, or arrangements: (i) the transactions, relationships, or arrangements under the headings “Relationships and Related Transactions — Related Party Transactions” and “Management Proposals — Proposal 1: Election of Directors” included in our annual meeting proxy statements filed with the Commission on March 29, 2019 and April 11, 2018; and (ii) the associations certain of our Outside Directors have with other companies, including other companies in the semiconductor industry, as disclosed in their biographies and discussed further below.

Under Commission rules for “related party transactions,” in situations where the Outside Director’s interest was only related to his or her service as a director of the other company, an indirect material interest does not exist for such Outside Director. In each other transaction where a determination was required, the Outside Director was determined not to have a direct or indirect material interest that would be deemed a “related party transaction” under Commission rules. Such determination included a consideration of any equity (or derivative rights) owned by the Outside Director in such other company.

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Management Proposals

In making independence determinations, the Board considered a category of transactions occurring since 2017 which involved the Company doing business with organizations in our industry that have an Outside Director serving in a board or management position. In each applicable instance, the amounts paid to and received from each company (and ON Semiconductor) were below the “categorical” bar to independence set forth in Nasdaq listing standards, which uses a threshold of 5% of consolidated revenue of the recipient entity. Each of the below commercial relationships arose during the ordinary course of business for ON Semiconductor and the other companies involved and were on terms and conditions available to similarly situated customers and suppliers. In particular, the Board considered the following transactions and relationships with respect to the independence of certain Outside Directors:

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Management Proposals

Nominations. Unless you withhold your vote or indicate otherwise on your proxy card, and except in a case of a broker non-vote, proxies will be voted FOR the election of the Director-nominees. The Board has no reason to believe that any of the following nominees for Director will be unable to serve. If, however, any one of them should become unavailable, the Board may reduce the size of the Board or designate a substitute nominee. If the Board designates a substitute nominee, shares represented by proxies will be voted for the substitute nominee.

Set forth below is information concerning our Director-nominees, including their business experience and outside public company directorships for at least the past five years. In the biographies and related information, we describe certain of the experiences, qualifications, attributes, or skills that caused the Board to determine that the person should serve as a Director as of the date of this proxy statement. In addition to the specific qualifications described below, we believe that each Director has the business acumen and sound judgment that we believe are required for the proper functioning of our Board and the integrity, honesty, and adherence to high ethical standards necessary to set the “tone at the top” for our Company. Most of our Directors also have significant other public company board experience that broadens their knowledge of board processes, issues, and solutions.

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Required Vote. To be elected, each of the Director-nominees must receive the affirmative vote of the majority of votes cast, meaning that the number of votes cast “for” a Director-nominee must exceed the number of votes cast “against” that Director-nominee. See “The Board of Directors and Corporate Governance — Majority Voting for Directors” below in this proxy statement. Abstentions and broker non-votes are not treated as votes cast and, therefore, will have no effect on the proposal to elect Directors.

The Board of Directors recommends a vote “for” election of each of the Director-nominees in Proposal No. 1.

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Management Proposals

Proposal No. 2: Advisory Resolution to Approve Executive Compensation

As required by Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are asking for stockholder approval of the compensation of our Named Executive Officers identified in the “Compensation Discussion and Analysis — Overview” section of this proxy statement (the “Named Executive Officers” or “NEOs”). The Board of Directors recommends that our stockholders approve such compensation by approving the following advisory resolution:

RESOLVED, that the stockholders of ON Semiconductor Corporation approve, on an advisory basis, the compensation of the Company’s Named Executive Officers identified in the Summary Compensation Table included in this proxy statement as such compensation is described pursuant to Item 402 of Regulation S-K in this proxy statement (which disclosure includes the Compensation Discussion and Analysis and the compensation tables and accompanying footnotes and narratives under the heading “Compensation of Executive Officers” in this proxy statement).

The principal objective of our compensation programs is to attract, retain, and motivate highly talented individuals who will deliver competitive financial returns to our stockholders and accomplish our short-term and long-term plans and goals. The Company seeks to accomplish this goal by rewarding performance, both individual and corporate, in a way that is aligned with the short- and long-term interests of the Company and its stockholders. Consistent with this philosophy, the majority of the total compensation opportunity for each of our Named Executive Officers is incentive-based, and a significant portion of such compensation is dependent upon the Company’s or the individual’s achievement of specified and predetermined financial goals. The Company believes that its executive compensation program satisfies the Company’s compensation objectives. We describe our compensation policies and programs in more detail below in this proxy statement, including in the Compensation Discussion and Analysis section of this proxy statement (the “CD&A”).

As an advisory vote, this proposal is not binding upon the Company. However, the Compensation Committee of the Board (the “Compensation Committee”), which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by stockholders. If there are a significant number of negative votes, we will seek to understand the concerns that influenced the voting and will consider whether any actions are necessary to address those concerns.

The Board has previously adopted a policy providing for an annual advisory vote to approve executive compensation. Unless the Board modifies its current policy, the next advisory vote will be at the 2021 annual meeting of stockholders.

Required Vote. The affirmative vote of a majority of the votes duly cast on this item is required to approve this proposal. Abstentions and broker non-votes are not treated as votes cast and, therefore, will have no effect on this proposal.

The Board of Directors recommends a vote “for” the advisory (non-binding) resolution to approve executive compensation in Proposal No. 2.

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Management Proposals

Proposal No. 3: Ratification of Appointment of Independent Registered Public Accounting Firm

The Audit Committee of the Board (the “Audit Committee”): (a) has appointed PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as the independent registered public accounting firm to (i) audit our consolidated financial statements for the year ending December 31, 2020, and (ii) render other services as required of them, including to report on the effectiveness of our internal control over financial reporting as of December 31, 2020; and (b) is seeking ratification of this appointment from the stockholders of the Company.

In determining whether to retain PricewaterhouseCoopers as our 2020 independent auditor, the Audit Committee considered, among other things:

Based on this evaluation, the Audit Committee believes that the retention of PricewaterhouseCoopers as our independent auditor for 2020 is in the best interest of the Company and our stockholders.

A representative of PricewaterhouseCoopers is expected to be present at the Annual Meeting. If present, the representative will have an opportunity to make a statement, if such representative desires to do so, and will be available to respond to appropriate questions by stockholders.

Stockholder ratification of the selection of PricewaterhouseCoopers as our independent registered public accounting firm is not required by the bylaws of the Company (the “Bylaws”) or otherwise. Nonetheless, the Audit Committee is submitting the selection of PricewaterhouseCoopers to the stockholders for ratification as a matter of good corporate practice and because the Audit Committee values stockholders’ views on our independent auditors.

If the stockholders fail to ratify the selection, the Audit Committee may reconsider the appointment of PricewaterhouseCoopers. Even if the selection is ratified, the Audit Committee, in its discretion, may appoint a different independent registered public accounting firm at any time during the year if it determines that such an appointment would be in our best interest and the best interest of our stockholders.

Required Vote. The affirmative vote of a majority of the votes duly cast on this item is required to approve this proposal. Abstentions are not treated as votes cast and, therefore, will have no effect on this proposal.

The Audit Committee and the Board of Directors recommend a vote “for” approval of Proposal No. 3.

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Audit and Related Fees

The Audit Committee reviews and approves audit and permissible non-audit services performed by PricewaterhouseCoopers, our independent registered public accounting firm, as well as the fees charged by PricewaterhouseCoopers for such services. In its review of non-audit services and fees and its appointment of PricewaterhouseCoopers as our independent registered public accounting firm, the Audit Committee considered whether the provision of such services is compatible with maintaining PricewaterhouseCoopers’ independence.

Fees Billed by PricewaterhouseCoopers. The table below sets forth the aggregate fees for audit and other services provided by PricewaterhouseCoopers for 2019 and 2018.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services. Under the Audit Committee charter, the Audit Committee must pre-approve all audit and permitted non-audit services (including the fees and terms thereof) to be performed by our independent registered public accounting firm, except for any de minimis non-audit services which are approved by the Audit Committee prior to the completion of the audit and which qualify for the de minimis exception under federal securities laws and regulations. The Audit Committee may delegate to one or more members of the Audit Committee the authority to grant pre-approvals of audit and permitted non-audit services, provided that such decisions shall be presented to the full Audit Committee at its next scheduled meeting.

The Audit Committee’s pre-approval policy (the “Pre-Approval Policy”) requires the Audit Committee to pre-approve certain audit, audit-related, tax, and other services to be performed by our independent registered public accounting firm. With certain exceptions, the term of pre-approval is 12 months from the date of pre-approval. The Audit Committee periodically revises the list of pre-approved services. The Audit Committee may delegate pre-approval authority to one or more of its members, who must report any pre-approval decisions to the full Audit Committee, but may not delegate such decisions to management. In granting any such pre-approvals, the Audit Committee considers the extent to which approved services could impact the independence of the auditor. With respect to each proposed pre-approved service, the auditor must provide the Audit Committee, upon request, with detailed back-up documentation regarding the specific services to be performed.

During 2019 and 2018, all audit and permissible non-audit services were pre-approved by the Audit Committee pursuant to the Pre-Approval Policy and its charter.

The Audit Committee has determined that the provision of services described above is compatible with maintaining PricewaterhouseCoopers’ independence.

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THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

In 2020, for the fifth consecutive year, the Company was named a World’s Most Ethical Company^® by the Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices. The designation recognizes organizations that align principle with action by working tirelessly to make integrity part of their corporate DNA. These efforts shape future industry standards by introducing tomorrow’s best practices today. The Company was one of only four companies honored in the Electronics and Semiconductors category in 2020, highlighting its leadership among global companies in ethical business standards and practices.

The Board met 11 times last year and the committees, including any special committees, of the Board held a total of 34 meetings. Each incumbent Director serving during 2019 attended at least 75% of the aggregate of all Board and applicable committee meetings held during his or her period of service in 2019. Although we do not currently have a policy with regard to Directors’ attendance at annual meetings of stockholders, all of our Directors attended the annual meeting of stockholders held on May 8, 2019 except for one director, who was unable to attend the meeting due to medical reasons.

Following the election of the Director-nominees at the Annual Meeting, our Board standing committees and membership will be as follows:

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The Board of Directors and Corporate Governance

Audit Committee. The Audit Committee, established pursuant to Section 3(a)(58)(A) of the Exchange Act, has a formal written charter, a copy of which is available on our website at www.onsemi.com. The adequacy of this charter is reviewed at least annually.

Our Audit Committee has the specific purpose under its charter to:

Among other things, the Audit Committee has the specific authority and responsibility under its charter to:

The Audit Committee has other specific responsibilities under its charter, including with respect to the pre-approval of auditing services and permitted non-audit services (including the fees and terms thereof) of our independent registered public accounting firm. The Audit Committee also has authority and responsibility, as provided in its charter, over various other financial statement and disclosure matters, other items associated with the Company’s independent registered public accounting firm, and additional events associated with the Company’s internal audit and compliance functions. In addition, the Audit Committee conducts an annual self-assessment. The Audit Committee regularly meets with the Company’s independent registered public accounting firm and, to the extent it deems necessary or appropriate, may retain independent legal, accounting, or other advisors with appropriate funding related thereto to be provided by the Company. See also “Audit Committee Report” below for more information on the Audit Committee. The Audit Committee met 11 times in 2019.

The Board has determined that each member of the Audit Committee during 2019 and current member is independent within the meaning of applicable Commission rules and the listing standards of Nasdaq and that each current member of the Audit Committee is financially competent under the current listing standards of

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The Board of Directors and Corporate Governance

Nasdaq. The Board has also determined that three independent Directors on the Audit Committee, including Director-nominees Alan Campbell and Emmanuel T. Hernandez, meet the qualifications of an “audit committee financial expert” in accordance with Commission rules and similar financial sophistication rules under Nasdaq listing standards. See “Proposal No. 1: Election of Directors” above for more information regarding Mr. Campbell’s and Mr. Hernandez’s experience.

Compensation Committee. The Compensation Committee has a formal written charter, a copy of which is available on our website at www.onsemi.com. The adequacy of this charter is reviewed at least annually.

Among other things, our Compensation Committee has the specific purpose under its charter to:

Among other things, our Compensation Committee has the specific authority and responsibility under its charter to:

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The Board of Directors and Corporate Governance

Pursuant to its charter, the Compensation Committee also prepares a report required by the rules of the Commission for inclusion in our proxy statement. This report is included in this proxy statement immediately following the CD&A.

The ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (the “Amended and Restated Plan”), together with the Amended and Restated Guidelines on the Delegation of Authority to the Chief Executive Officer to Make Certain Awards, contemplate that pursuant to a specific written delegation of authority by the Compensation Committee, the CEO may grant awards to individuals who are not subject to Section 16 of the Exchange Act to expedite the hiring process and retain talented employees. We describe the role of executive officers in determining or recommending the amount or form of executive compensation in the CD&A under “Processes and Procedures for Considering and Determining Executive Compensation — Role of Senior Management in Determining Executive Compensation.” The role that officers play in determining or recommending the amount or form of director compensation is generally consistent with that description.

The Compensation Committee has regularly and directly engaged a compensation consultant to assist in recommending the form and amount of executive and director compensation. In May 2012, the Compensation Committee engaged Pearl Meyer & Partners, LLC (“Pearl Meyer”) as its primary compensation consultant. The Compensation Committee has reviewed the performance of Pearl Meyer annually since that date. Among other things, with respect to our 2019 compensation programs, Pearl Meyer was requested to:

The Compensation Committee has considered the independence of Pearl Meyer in light of Commission rules and Nasdaq listing standards regarding compensation consultants and has concluded that Pearl Meyer’s work for the Compensation Committee has not raised any conflict of interest. Additional information regarding the Compensation Committee’s retention and use of its consultants can be found in the CD&A in “Processes and Procedures for Considering and Determining Executive Compensation — Role of Compensation Consultants” as well as other sections of the CD&A.

The Board has determined that each member of the Compensation Committee during 2019 and each current member of such Committee is independent within the meaning of applicable Commission rules and the listing standards of Nasdaq. The Compensation Committee met 7 times in 2019.

Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee has a formal written charter, a copy of which is available on our website at www.onsemi.com. The adequacy of this charter is reviewed at least annually.

Our Corporate Governance and Nominating Committee has the specific purpose under its charter to:

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The Board of Directors and Corporate Governance

Among other things, our Corporate Governance and Nominating Committee has the specific responsibility under its charter to:

As noted above, the Corporate Governance and Nominating Committee is required to develop and periodically review criteria for Director-nominees, which may include specific skills, experience, diversity, and other qualifications. We have no formal policy on the consideration of diversity in identifying Director-nominees, but we endeavor to have a board representing diverse experiences in areas that are relevant to the Company’s global activities. When the Corporate Governance and Nominating Committee considers diversity, it may consider diversity of experience, skills, and viewpoints, as well as traditional diversity concepts such as race or gender, as it deems appropriate. We value international business experience and, as such, our directorship mix reflects that emphasis.

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The Board of Directors and Corporate Governance

Among other matters, the Corporate Governance and Nominating Committee may consider the following nomination criteria regarding Board membership:

The Company’s goal is to assemble a Board that brings together a variety of perspectives and skills derived from high-quality business and professional experiences. In doing so, the Corporate Governance and Nominating Committee will also consider candidates with appropriate non-business backgrounds. Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serve on the Board for an extended period of time. See also “Corporate Governance Principles — Qualifications” for a further discussion about qualifications for our Board members. Other than the foregoing, there are no stated criteria for Director-nominees, although the Corporate Governance and Nominating Committee may also consider such other factors as it may deem to be in the best interests of the Company and its stockholders. The Corporate Governance and Nominating Committee believes that it is appropriate for more than one member of the Board to meet the criteria for an “audit committee financial expert,” as defined by Commission rules, and to have past employment experience in finance and accounting sufficient to meet the financial sophistication rules under Nasdaq listing standards. The Corporate Governance and Nominating Committee also believes it is appropriate for certain key members of the Company’s management to participate as members of the Board.

The Corporate Governance and Nominating Committee identifies nominees by first evaluating the willingness of current members of the Board to continue service on the Board. Current members of the Board with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination. If any member of the Board does not wish to continue in service, if the Corporate Governance and Nominating Committee decides not to re-nominate a member for re-election or determines to replace that Director, or if the Board considers increasing the size of the Board, the Board then identifies the desired skills and experience for a new nominee in light of the criteria above. Current members of the Board are polled for suggestions as to individuals meeting the criteria described above. The Corporate Governance and Nominating Committee may engage in research to identify qualified individuals, which may include engaging a professional search firm from time to time. In 2019, the Company did not retain a professional search firm to recommend Director-nominees. Pursuant to its charter, if a stockholder complies with the Director nomination procedures described in the Bylaws, the Corporate Governance and Nominating Committee will consider that nomination. In such case, it will evaluate the stockholder nomination in the same manner as it evaluates other nominees. For a description of the procedure for stockholder nominations, see “Miscellaneous Information — Stockholder Nominations and Proposals” below.

The Board has determined that each member of the Corporate Governance and Nominating Committee during 2019 and current member is independent within the meaning of applicable Commission rules and the listing standards of Nasdaq. The Corporate Governance and Nominating Committee met 5 times in 2019.

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Executive Committee. The Executive Committee of the Board (the “Executive Committee”) has a formal written charter, a copy of which is available on our website at www.onsemi.com. The Executive Committee has the specific purpose under its charter to exercise between meetings of the Board all the delegable powers and authority of the Board regarding the management of the business and affairs of the Company to the extent not expressly prohibited and not separately delegated to other committees of the Company, and subject to applicable restrictions and limitations.

As set forth in its charter, the Executive Committee does not have the power, among other things, to:

The Executive Committee met 7 times in 2019.

Science and Technology Committee. The Science and Technology Committee of the Board (the “Science and Technology Committee”) has a formal written charter. The adequacy of this charter is reviewed at least annually.

Our Science and Technology Committee has the specific purpose under its charter to advise the Board as to the scope, health, direction, quality, investment levels, and execution of the Company’s technology and innovation strategies. Among other things, our Science and Technology Committee has the specific responsibility under its charter to:

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The Science and Technology Committee will convene at least two times each year, with additional meetings as deemed appropriate. It has the authority to retain such outside advisors, including legal counsel or other experts, as it deems appropriate and to approve the fees and expenses of such advisors. The Science and Technology Committee met 4 times in 2019.

Other Committees. The Integration Oversight Committee of the Board (the “Integration Oversight Committee”) had been responsible for overseeing integration activities of acquisitions for which Board approval is required and any other acquisition for which the Board deems this level of oversight appropriate. The Integration Oversight Committee, whose members included Dr. Ostrander and Messrs. Abe, Campbell, and Delfassy, did not meet in 2019. In August 2019, the Board determined that the matters addressed by the Integration Oversight Committee were more appropriate for a full Board discussion and, accordingly, dissolved the Integration Oversight Committee.

The Board, from time to time, has deemed it desirable and in the best interest of the Company to form various special committees and other independent committees.

Full Board Self-Evaluation. The Board believes that having good governance principles and practices improves the effectiveness of the Board and correlates to the creation of stockholder value. To measure its own operation against such principles and practices and to identify and act on areas for improvement, the Board and its committees perform an annual self-evaluation. The Corporate Governance and Nominating Committee is charged with overseeing the self-evaluations, and in 2019, the Corporate Governance and Nominating Committee used the following process to conduct the Board’s self-evaluation:

In the Board self-evaluation process, topics and questions for 2019 were grouped into seven categories:

The Corporate Governance and Nominating Committee and the Board reconsider the tools, processes, topics, and questions for the self-evaluation as warranted, including consideration of whether to retain an independent third party to facilitate the Board’s self-evaluation. The Board and its committees may perform the annual self-evaluations using different tools and processes in future years.

Each of the Board’s committees also performs an annual self-evaluation to assist the committees and the Board in evaluating the performance and effectiveness of such committees, and in 2019, the self-evaluation of the committees generally followed the process used by the Board, except that results were sent to committee chairs (as opposed to the Chair of the Corporate Governance and Nominating Committee), and committee chairs led the discussions for their respective committees with the Board in executive session. The Integration Oversight Committee did not meet during 2019, and, accordingly, it did not perform a self-evaluation for the year.

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Director Peer Evaluations. We believe that our Board, the Company, and our stockholders benefit from the exchange of different ideas and perspectives. Consistent with that philosophy, we further believe that each of our Directors can and do benefit from candid feedback received from other Board members about his or her individual performance. Accordingly, we conduct periodic peer evaluations to obtain information about each Director’s performance, contributions, and effectiveness. These Director peer evaluations are critical tools that promote more authentic board collaboration, improve the skills and perspective of our Directors, and allow them to receive guidance from esteemed colleagues.

The Board of Directors and Corporate Governance

Director Compensation Program”). Under the Outside Director Compensation Program, which is described below, there were no year-over-year increases to Outside Director compensation.

Retainers. Under the Outside Director Compensation Program, the annual cash retainers remained constant with the retainers paid during the previous year and were as follows:

Annual cash retainers are paid quarterly in arrears and prorated based upon the period of time that an Outside Director has served on the Board or a committee of the Board, as applicable. No cash retainers for service on the Integration Oversight Committee were paid with respect to any period following the dissolution of the Integration Oversight Committee in August 2019, and retainers for all members of the Integration Oversight Committee were prorated accordingly.

Equity Compensation. Under the Outside Director Compensation Program, each Outside Director receives an annual award of fully-vested stock with a value equal to approximately $205,000, rounded up such that only whole shares are issued. The 2019 annual grant was based on the closing price of our stock on June 3, 2019 ($18.08), the grant date, and resulted in a grant of 11,339 shares to each person serving as an Outside Director on the grant date. The 2019 grants were made under the Amended and Restated Plan. Under the Outside Director Compensation Program, if an Outside Director is appointed after the date of the annual grant, the award amount is prorated based on the period of the year during which the Outside Director serves.

Other. We reimburse Outside Directors for reasonable expenses incurred to attend Board and Committee meetings and to perform other relevant Board duties. Employee Directors do not receive any additional compensation for their services as a member of the Board.

Majority Voting for Directors

Except as otherwise provided in the Bylaws, each Director is elected by the vote of the majority of the votes cast with respect to that Director’s election at any meeting for the election of Directors at which a quorum is present. However, if, as of the tenth day preceding the date we first deliver the notice of such meeting to our stockholders, the number of nominees exceeds the number of Directors to be elected (a “Contested Election”), the Directors shall be elected by the vote of a plurality of the votes cast. A majority of votes cast means that the number of votes cast “for” a Director’s election exceeds the number of votes cast “against” that Director’s election (with abstentions and broker non-votes not counted as a vote cast either “for” or “against” that Director’s election).

In the event an incumbent Director fails to receive a majority of the votes cast in an election that is not a Contested Election, the incumbent Director must promptly tender his or her resignation to the Board. The

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Corporate Governance and Nominating Committee, or such other committee designated by the Board for this purpose, shall make a recommendation to the Board as to whether to accept or reject the resignation of such incumbent Director, or whether other action should be taken. The Board must act on the resignation, taking into account such committee’s recommendation, and publicly disclose (by a press release and filing an appropriate disclosure with the Commission) its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision, within 90 days following certification of the election results. The Corporate Governance and Nominating Committee in making its recommendation and the Board in making its decision each may consider any factors and other information that it considers appropriate and relevant.

If the Board accepts a Director’s resignation pursuant to these provisions, or if a nominee for Director is not elected and the nominee is not an incumbent Director, then the resulting vacancy may be filled by vote of a majority of the Directors then in office pursuant to Article NINTH, Section 2 of our Certificate of Incorporation.

The Board of Directors and Corporate Governance

the trading black-out, the Insider Trading Policy also imposes a duty upon the Securities Compliance Officer to notify the CEO and our Chief Financial Officer (the “CFO”) of the black-out at or before the time it is imposed. Other specific risks are also addressed appropriately as and when they are identified. At least annually, the Board reviews how risk is being managed and reported to the Board and its committees, along with areas where the Board would like additional analysis or discussion.

The oversight and management of risk within the Company is guided through a continuously evolving and maturing ERM Program. The goal of the ERM Program is to systematically, consistently, and effectively identify, evaluate, prioritize, and manage key risks affecting the Company and to drive a culture of risk-aware decision-making across the enterprise. The ERM Program framework is designed to ensure that executive management and the Board of Directors have a thorough understanding of risks and opportunities associated with the execution of ON Semiconductor’s strategic plans within the business environment in which the Company operates. The ERM Program was formed and staffed following the appointment of a Chief Risk Officer in late 2014. The ERM Program staff trains and employs shared resources acting as “Risk Champions” across all functional areas within the Company. Risk Champions serve as subject matter experts and liaisons between the individual groups and ERM Program management. The Board and management regularly review the ERM Program framework, the Company’s risk appetite, and the top risks facing the Company. The CEO reports annually to the Board on the overall ERM Program status and development and more frequently as to the progress of ongoing enhancements to the ERM Program. During 2019, the Company continued and expanded its cross-functional scenario analysis activities, executing its third annual Emerging Risk Assessment session while also conducting risk assessment workshops across multiple functional areas within the Company. Risk assessments, risk reporting, executive risk surveys, table-top exercises, emerging risk scenario planning sessions, risk workshops, training, and tools development will continue throughout the upcoming year as the Company continues its efforts to implement ERM principles throughout the organization and promote a culture of risk-aware decision-making.

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Corporate Governance Principles

Our Corporate Governance Principles (the “Principles”), which were originally adopted by the Board in 2003 and last amended as of November 21, 2019, provide guidance for all types of corporate governance matters and are available on our website at www.onsemi.com. The Corporate Governance and Nominating Committee reviews the Principles annually and recommends amendments to the Board as appropriate.

Below is a summary of certain of our corporate governance practices, many of which are addressed in the Principles and our Bylaws:

Additionally, the Principles address the following items:

The Role of Board and Management. Our business is conducted by our employees and officers, under the direction of the CEO and the oversight of the Board, to enhance the long-term value of the Company for its stockholders. Both our Board and management recognize that the long-term interests of stockholders are advanced by responsibly addressing the concerns of other stakeholders and interested parties, including employees, recruits, customers, suppliers, creditors, ON Semiconductor communities, government officials, and the public at large.

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Functions of the Board. The Board has at least four regularly scheduled meetings per year at which it reviews and discusses reports by management on our performance, plans and prospects, and immediate issues facing the Company. The Board may choose to schedule additional meetings in accordance with our Bylaws. In addition to general oversight of management, the Board, acting directly or through its various committees, also performs specific functions, including, among other things: (i) selection, evaluation, and compensation of the CEO and other senior management and overseeing CEO succession planning; (ii) reviewing, monitoring, and, where appropriate, approving fundamental financial and business strategies and major corporate actions; (iii) providing oversight for the ERM Program, including the establishment of corporate risk appetite parameters and overseeing management’s implementation of processes for assessing and managing risks affecting the Company; (iv) ensuring that processes are in place for maintaining the integrity of the Company, financial statements, compliance with law and ethics, relationships with customers and suppliers, and relationships with other stakeholders; and (v) performing such other functions as are prescribed by law or our Bylaws.

Qualifications. Directors should possess the highest personal and professional ethics, integrity, and values, and be committed to serving on the Board for an extended period of time. They must also have an inquisitive and objective perspective, practical wisdom, and mature judgment. We endeavor to have a Board representing diverse experiences in areas that are relevant to the Company’s global activities. See “The Board of Directors and Corporate Governance — Committees of the Board — Corporate Governance and Nominating Committee” above for additional information regarding the qualifications we seek in our Directors.

Directors are expected to limit the number of boards of public or private companies on which they serve (including our Board, but excluding non-profits and subsidiaries of such companies) to no more than four for Outside Directors and no more than two for Directors holding management positions at the Company, taking into account a Director’s attendance, participation, and effectiveness on such boards. The number of audit committees on which the members of the Audit Committee may sit concurrently shall be reviewed from time to time by the Corporate Governance and Nominating Committee. In addition, after a Director reaches the age of 75, the Board shall not, under any circumstances, nominate such Director for re-election, and such Director shall not stand for re-election.

Independence of Directors. We will have, at a minimum, a sufficient number of independent Directors to comply at all times with relevant and applicable Commission, Nasdaq, and other rules and regulations.

Board Committees. See “The Board of Directors and Corporate Governance — Committees of the Board” above for information regarding committees established by the Board.

Self-Evaluation. See “The Board of Directors and Corporate Governance — Other Board Matters – Self Evaluation” above for information regarding the self-evaluation processes for the Board and its committees.

Compensation of the Board. The Compensation Committee has the responsibility for recommending to the Board compensation and benefits for Outside Directors. The Board has delegated responsibility for determining Outside Director compensation to the Compensation Committee, and such responsibility is codified in the Compensation Committee charter. In determining compensation and benefits for our Directors, the Compensation Committee is guided by three goals: (i) to fairly pay Outside Directors for work required in a public company of our size and scope; (ii) to align Outside Directors’ interests with the long-term interests of stockholders; and (iii) to structure the compensation in a way that is simple, transparent, and easy for stockholders to understand. Generally, the Compensation Committee believes that these goals are served by compensating Outside Directors with a balance of cash and equity-based awards. See “The Board of Directors and Corporate Governance — 2019 Compensation of Directors” above for additional information regarding how we compensate our Directors.

Directors’ and Officers’ Stock Ownership and Retention Guidelines. In order to align Directors’ and officers’ interests and objectives with those of our stockholders, and to further promote the Company’s

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longstanding commitment to sound corporate governance, the Company has established the following guidelines for Company stock ownership and retention:

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If compliance would create a severe hardship or for other good reasons, these guidelines may be waived for: (i) Outside Directors other than the Chair of the Board at the discretion of the Chair of the Board; and (ii) the Chair of the Board and officers, at the discretion of the Compensation Committee. It is expected that these instances will be rare.

Other Matters. The Principles include a discussion of Board size and selection, the determination of the Board agenda, the process available for reporting concerns to the Audit Committee relating to our accounting and auditing matters, access to senior management and independent advisors, and other matters typical of boards of directors of other publicly-traded semiconductor or peer companies.

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Ethics and Corporate Social Responsibility

We are committed to having and maintaining a strong and effective global ethics and corporate social responsibility (“CSR”) program. Our Corporate Governance and Nominating Committee has the responsibility under its charter to review and oversee matters related to ethics and CSR.

Ethics Program

We always strive to comply with the law and, in certain areas, we have adopted policies and practices that go beyond what the law requires in order to foster an ethical culture. To that end, we have established an ethics program (“Ethics Program”) designed to prevent and detect violations of the ON Semiconductor Corporation Code of Business Conduct (the “Code of Business Conduct”), other standards of conduct, and the law. A major goal of the Ethics Program is to promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.

Our Ethics Program guides our Directors, officers, and employees on areas of ethical risk, provides guidelines to help them recognize and deal with ethical issues, provides mechanisms to report unethical conduct, and helps enhance and formalize our culture of integrity, honesty, and accountability. Our Ethics Program also oversees our global Business Ethics Liaison (“BEL”) network, which provides critical support in education, training, and awareness on ethics matters. The BELs are important contacts for questions about the Code of Business Conduct or related policies as well as a reliable resource to report a suspected ethics breach or violation.

In this regard, we have established avenues for parties external to the Company to raise ethics and compliance concerns regarding our employees, Directors, and third parties doing business with the Company directly to the Vice President, Ethics and Corporate Social Responsibility or our Chief Compliance Officer. If you have a concern of this nature, you may report it anonymously (or on a non-anonymous basis) by:

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Corporate Social Responsibility

A foundational element of our approach to CSR is our commitment to transparency. In addition to the information contained in this proxy statement, we publish an annual report detailing our CSR initiatives, accomplishments, and objectives (“CSR Report”). Our most recent CSR Report is available on our website at www.onsemi.com.

Responsible Business Alliance. We are a full member of the Responsible Business Alliance (“RBA”), an industry organization comprised of electronics, retail, auto, and toy companies committed to supporting the rights and well-being of workers throughout global supply chains. We have adopted the RBA Code of Conduct covering labor, the environment, health and safety, ethics, and management systems (the “RBA Code”) within our own operations and we require our employees engaged in supply chain operations to adhere to the RBA Code.

Human Rights Policy and UN Global Compact. Our Human Rights Policy (the “Human Rights Policy”) formalizes our commitment to preserving and promoting the fundamental rights of others, as reflected in the RBA Code, the Universal Declaration of Human Rights, the United Nations (the “UN”) Guiding Principles on Business and Human Rights, and the UN Global Compact. The Human Rights Policy applies to all of our employees, joint ventures, major suppliers, and select service providers and contractors and to all of our products and services and relates to diversity and non-discrimination, anti-harassment, prevention of human trafficking and forced labor, child labor prevention, minimum wage and working hours, freedom of association, workplace safety, environmental stewardship, product responsibility, anti-corruption, and privacy. We communicate these principles to our suppliers, offer training, and periodically assess and audit compliance of our major suppliers. We also provide training to our employees and encourage them to report concerns and grievances. The Human Rights Policy is reviewed annually and updated as necessary. Most recently, in 2019, as part of our continuous effort to promote CSR, we became a signatory to the UN Global Compact. The UN Global Compact encourages collaboration between participating companies, UN agencies, labor groups, and societies and requires signatories to commit to 10 principles covering human rights, labor, the environment, anti-corruption, and related matters.

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Social Impact. We build trust with key external stakeholders by empowering people through technology and advancing social impact initiatives. One way in which ON Semiconductor has operationalized its mission of being socially responsible is through the Company’s Global Corporate Giving Program (the “GCG Program”). The GCG Program is administered by 30 committee members based in Asia, Europe, and North America who represent each of our sites globally and serve as program ambassadors. Through the GCG Program, we provide charitable organizations and educational institutions the opportunity to apply for grants. We evaluate applications and invest in programs based on the target population’s need, the clarity of stated objectives and goals, and the organization’s evaluation plan. Grantees receiving awards beyond a certain threshold are also required to share the success of their program and the impact of their work in the community through grant reporting. Below is a summary of the charitable contributions made during 2019 under the GCG Program:

ON Semiconductor’s role in the community involves more than monetary contributions. To encourage our employees to volunteer their time, talent, energy, and effort in the community, we also offer a paid employee volunteer program in North America. Through this program, employees may volunteer with organizations of their choosing for up to one day per year and are paid for doing so. Additionally, employees may also participate in Company-sponsored volunteer events during Company time. We also have a volunteer matching grant whereby the Company matches the hours donated by our employees through financial contributions to qualified charitable organizations or educational institutions.

ON Semiconductor Foundation. In February 2019, we established the ON Semiconductor Foundation (the “Foundation”), a nonprofit organization formed under the laws of the State of Arizona. In January 2020, it was designated as a tax-exempt organization pursuant to Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). Beginning in 2020, the Foundation began funding the GCG Program and related employee volunteer programs. Since its inception in 2016, we have donated more than $5 million in the form of grants and Company-matched employee donations under the GCG Program. The newly-formed Foundation presents an opportunity to better align the Company’s culture with its philanthropic efforts while

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helping to publicize and build a legacy of charitable grant giving and employee volunteerism in our communities where our employees work and where we do business. The Foundation, through its board of directors, will direct and oversee the giving of dollars that in previous years funded the GCG Program.

Recognition. Our performance and recognition in CSR is a testament to our commitment to corporate citizenship, environmental sustainability, supplier responsibility, diversity and inclusion, and social impact. Our recent accomplishments include the following:

We are honored to be recognized by Dow Jones, Barron’s, EcoVadis, ISS-Oekom, Corporate Knights (Clean 200), and Bloomberg, among other leaders in our industry and around the globe, and will continue our efforts to embed socially responsible practices in our business operations.

Environmental Sustainability. We are committed to a greener world. We keep sustainability at the forefront of our operations by enacting policies designed to reduce and minimize our carbon emissions, consumption of energy and water, chemical usage, and waste generation. We have invested in our goal of sustainability excellence by improving our engineering and administrative controls related to environmental pollution control, using state-of-the-art technology to treat air and industrial wastewater emissions, and offering extensive training to our employees who are charged with carrying out our sustainability objectives. In 2019, we implemented over 72 individual projects focused on energy conservation, waste reduction, chemical recycling, material optimization, and water conservation allowing the Company to save an estimated $10.8 million.

Supply Chain Responsibility. Actively managing our supply chain creates business value for ON Semiconductor and our customers by helping us reduce risks, improve product quality, achieve environmental and social goals, and raise the overall performance of our suppliers. At least every three years, we complete supplier audits or assessments on our major corporate or manufacturing site suppliers using the RBA Code standard. Additionally, we ask our major suppliers to sign a statement of commitment to the RBA Code and the ON Semiconductor Code of Business Conduct and offer expanded training and capacity-building programs with our suppliers. We actively collaborate with others and lead industry initiatives on key issues, such as advancing responsible minerals sourcing, addressing risks of forced and bonded labor, and improving transparency around climate and water impact in the global supply chain.

Diversity and Inclusion. Building an inclusive workforce, industry, and ecosystem is critical to helping us attract and retain the talent needed to advance innovation and drive our business forward. As a company, we celebrate differences and promote an inclusive environment by valuing the contributions of all employees, and

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we support the diversity of thinking that results from the differences in experiences, knowledge, culture, customs, and background of all of our employees. Diversity of thinking helps us continue to encourage the creativity and innovation necessary for ON Semiconductor to maintain a competitive advantage in the global marketplace. As part of our commitment to promote the importance of our racial and gender diversity, we link a portion of executive pay to certain performance measures related to the hiring and promotion of women and underrepresented minorities.

Code of Business Conduct

We have adopted our Code of Business Conduct for all of our Directors, officers, and employees, and we believe the Code of Business Conduct satisfies the standards promulgated by the Commission and Nasdaq. The Code of Business Conduct is available free of charge on our website at www.onsemi.com. To receive a paper copy of the Code of Business Conduct, you may also write to our Investor Relations Department, ON Semiconductor Corporation, 5005 East McDowell Road, M/D-C302, Phoenix, Arizona 85008, call our Investor Relations Department at (602) 244-3437, or email your request to investor@onsemi.com.

Legal Compliance

Working closely with the Internal Audit and Ethics and CSR departments, the Law Department implements and manages legal compliance programs designed to prevent and detect violations of the Code of Business Conduct, related standards of conduct, and the law by employees or third parties. Allegations of law or regulation are thoroughly investigated and remediated, as appropriate.

Our Audit Committee has compliance oversight responsibility, including obtaining reports from the Internal Audit Department and the Law Department regarding any known material non-compliance with the law, advising the Board with respect to the Company’s legal compliance policies and procedures, and discussing with the Law Department potentially material legal matters, including material inquiries received from regulators or government agencies. For more information on the Board’s oversight responsibilities, including its responsibility to oversee risk and our ERM Program, see the “The Board of Directors and Corporate Governance — Other Board Matters – The Board’s Role In Risk Oversight.”

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COMPENSATION DISCUSSION AND ANALYSIS

CD&A Table of Contents

Overview

The purpose of this CD&A is to provide material information about our compensation objectives and policies as well as explain and put into context the material elements of the disclosure that are contained in this proxy statement with respect to the compensation of our Named Executive Officers. For 2019, our Named Executive Officers were:

Executive Summary

2019 Business Highlights. Company highlights for the year ended December 31, 2019 are:

Significant 2019 Compensation Changes. We undertook the following actions in 2019 to increase the pay-for-performance elements of our Named Executive Officers’ compensation and drive alignment with longer-term results:

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Compensation Discussion and Analysis

Other 2019 Compensation Actions and Highlights. We undertook the following actions in 2019 relating to compensation for our Named Executive Officers:

The Committee believes that these changes and, in particular, the additional earning opportunity from the Upside PBRSUs, are consistent with market practices and will encourage management to accelerate the growth of the Company.

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Stockholder Approval of our Compensation Decisions. At the 2019 annual meeting of stockholders, the Company’s stockholders approved the advisory (non-binding) vote on executive compensation by 94.7% of the votes cast. The Compensation Committee considers this vote a validation of its approach to executive compensation and generally has continued its compensation processes and philosophy in making 2020 executive compensation decisions.

CEO Realizable Pay for Performance Relative to Peer Group

In the course of reviewing our overall executive compensation program for 2019, Pearl Meyer reviewed the relationship between realizable total direct compensation (“TDC”) and our performance for the three fiscal years ended December 31, 2016, December 31, 2017, and December 31, 2018. This time period was selected because it was most closely aligned with the compensation information available for our peer group companies over the corresponding period. For a discussion of our peer group companies, see “Processes

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Compensation Discussion and Analysis

and Procedures for Considering and Determining Executive Compensation — Use of Market Data” below in this CD&A.

This review was conducted to understand the degree of alignment between realizable TDC delivered to the CEO during the period and our performance relative to our peer group. For purposes of this review, Company performance is defined as TSR. Realizable TDC is defined as the sum of:

The chart below illustrates the percentile ranking of our 3-year TSR and the CEO’s realizable TDC. The CEO’s realizable TDC was within an “alignment corridor” representing a reasonable alignment in terms of TSR performance and magnitude of realizable pay. The Compensation Committee believes this demonstrates an appropriate alignment between our compensation program outcomes and Company performance.

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Compensation Discussion and Analysis

Compensation Philosophy and Guiding Principles

Our Compensation Committee is responsible for setting our compensation philosophy and guiding principles and for monitoring their effectiveness. The principal objective of our compensation programs is to attract, retain, and motivate highly talented individuals who will deliver competitive financial returns to our stockholders while accomplishing our short-term and long-term plans and goals. We believe that this philosophy should apply to all our employees, with a more significant level of variability and compensation generally at risk as an employee’s level of responsibility increases. Our compensation philosophy is focused on the following core principles:

Alignment with Stockholder Interests

Achieving corporate goals are a necessary condition for our executives to realize targeted levels of compensation, particularly with respect to variable pay and long-term incentives. We believe that basing a substantial component of compensation on corporate results and performance aligns employee interests with the interests of our stockholders. In addition, the use of stock-based incentives and stock ownership guidelines further aligns executives’ interests with those of our stockholders.

Pay for Performance

A significant portion of compensation is variable and directly linked to Company and individual performance—both to incentivize goal-oriented performance and to reward individual contributions to our performance.

Market or Peer Company Comparison

Our Compensation Committee, with the assistance of an independent compensation consultant, analyzes market compensation data in the design and implementation of our compensation programs. Our compensation programs must be competitive with those of our peer companies in order to retain our senior executives. As a general rule, we target the market median (50th percentile) for compensation and above the median for exceptional performance, although we may also deviate from the market median due to other factors. For a discussion of those other factors, see “Processes and Procedures for Considering and Determining Executive Compensation — Other Factors” below in this CD&A. The Company considers other semiconductor and high-technology companies as its market and generally utilizes survey or peer company data in these sectors to analyze the competitiveness of compensation design.

Retention

Our compensation program is designed to attract and retain highly talented individuals critical to our success by providing competitive total compensation with retentive features. For instance, our employment

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Compensation Discussion and Analysis

agreements with our Named Executive Officers contain certain severance and double-trigger change in control arrangements. In addition, our stock-based awards are designed to retain our officers and other employees, while also accomplishing our other compensation goals and objectives.

Purpose of Compensation

We design our compensation programs to retain valued employees and reward both corporate and individual performance. The goal of these programs is to promote stockholder value by delivering a competitive rewards package comprising base salary, short-term incentives, and long-term incentives. Taking into account base salary and short- and long-term incentives, but excluding other benefits described in the Summary Compensation Table below, approximately 90% of our CEO’s target TDC is incentive-based compensation. The target TDC of our other Named Executive Officers as a group is approximately 86% incentive-based compensation.

Short-term incentives in our compensation program are cash-based. Such incentives are intended to promote superior operational performance, disciplined cost management, and increased productivity and efficiency that contribute significantly to positive results for our stockholders. Long-term incentives in our compensation program are stock-based. The aim of the long-term incentives is to motivate long-term performance while promoting key employee retention. The long-term incentive grants also afford the officer the opportunity to increase stock ownership, which aligns the officer’s interest with that of our stockholders and assists the officer in complying with our stock ownership guidelines. For a description of our stock ownership guidelines, see “Other Matters Relating to Executive Compensation — Stock Ownership and Retention Guidelines for Officers” below in this CD&A.

While our emphasis in determining the total reward package for each Named Executive Officer is on performance incentives, we also provide elements that are not solely performance-based, including base salary, time-based equity awards, and limited perquisites. These elements assist in making our programs competitive and enable us to attract and retain talented executives. We consider peer group and market practices in determining the appropriate level of performance- and non-performance-based elements in our compensation programs.

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Compensation Discussion and Analysis

Compensation Discussion and Analysis

The senior officers also assist the Compensation Committee in determining the level of achievement of the performance targets underlying performance-based awards and incentives and provide other information specifically requested by the Compensation Committee from time to time. The senior officers also provide information to the compensation consultants, as appropriate, at the request of the Compensation Committee or such consultants, and work with such consultants to develop relevant information and proposals for executive compensation planning and implementation. With respect to the compensation of the CEO, the independent consultant works directly with the Compensation Committee. The CEO does not make recommendations on the level of his compensation, nor does any Named Executive Officer or any other member of management. Similarly, the Compensation Committee does not seek such recommendations or similar input from the CEO or others in management concerning the level of CEO compensation.

Use of Market Data. In general, the Compensation Committee targets the market median based on peer group or other survey data for total compensation of our executive officers. However, the Compensation Committee recognizes that critical skill sets, performance, retention concerns, or other considerations may justify pay levels above or below the median. The Compensation Committee also considers comparison data, among other things, in determining the individual elements of our compensation programs and in allocating between cash and non-cash compensation and between short-term and long-term incentive compensation. Although the peer company or other survey data is a starting point and a significant factor in the Compensation Committee’s compensation determinations, it is not the only factor. See “Other Factors” below in this CD&A.

The Compensation Committee used data provided in the Pearl Meyer report to assist in structuring the 2019 compensation packages for our Named Executive Officers. From time to time, we also use compensation survey data specific to the semiconductor industry obtained from third-party survey companies (e.g., AON/Radford) and not prepared specifically for us.

Based on a comparator group update prepared by Pearl Meyer in mid-2018, the Compensation Committee considered changes to the peer group in light of consolidation within the semiconductor industry and changes to the revenue and market capitalization of our peer group companies. Criteria used to screen the peer group included:

After considering these criteria, the Compensation Committee determined that the peer group identified in 2018 for 2019 compensation decisions (the “2019 Peer Group”) would consist of:

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In evaluating the competitiveness of compensation, the Pearl Meyer report compared the compensation of senior executives to that of their functional matches (e.g., CFO compensation is compared to the compensation of comparator company CFOs). The report included information on each executive’s competitive position for base salary, total cash compensation at target (base salary and target bonus), actual total cash compensation, long-term incentives (based on grant date fair value), and TDC at target and actual (base salary, bonus, and equity). In determining market data, Pearl Meyer utilized proxy statement data for the 2019 Peer Group, as well as data from three compensation surveys — the 2018 Radford Executive Survey, the 2018 Pearl Meyer Executive and Senior Management Survey, and the 2018 Equilar Compensation Survey. These surveys, which are primarily reflective of companies in the semiconductor industry, broader technology segments, and general industry are widely used and were not prepared specifically for the ON Semiconductor compensation analysis.

Among other things, the Pearl Meyer report summarized the following with respect to 2018 annual cash compensation for the Named Executive Officers (negative amounts mean that our compensation is below the competitive median and positive amounts mean that our compensation is above the competitive median). Data was aged 3.0% per year to January 1, 2019.

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The Pearl Meyer report also summarized the following with respect to long-term incentive and total target and actual direct compensation for the specified Named Executive Officers (negative amounts mean that our compensation is below the competitive median and positive amounts mean compensation is above the competitive median). Data was aged 3.0% per year to January 1, 2019.

Other Factors. In addition to the market data provided by the independent consultant, the Compensation Committee also assesses other factors when making compensation decisions. These include factors such as the executive’s individual responsibilities, skills, expertise, and value added through performance, as well as prior award accumulation. The performance of each officer is formally reviewed by management and shared with the Compensation Committee prior to the Compensation Committee’s annual determinations with respect to salary, target bonus adjustments, and long-term incentive awards. Our CEO presents the Compensation Committee with an individual performance overview for each executive officer, describing the officer’s accomplishments for the prior year, his or her strengths, areas of improvement, and development plans. The Compensation Committee separately reviews CEO performance based on, among other factors considered relevant, Company performance, including revenue growth, earnings growth, gross margin improvement, free cash flow, and earnings per share, and further considers downturns or volatility in general economic conditions.

The Compensation Committee considers each component of executive compensation in light of total compensation. In considering awards and other adjustments to the total compensation of each Named Executive Officer, the Compensation Committee also considers the value of previous compensation, including then-outstanding equity grants. On a quarterly basis, management also provides the Compensation Committee with information concerning expectations regarding the vesting of outstanding long-term incentive awards. The Compensation Committee uses this data to evaluate whether the officer’s compensation and existing incentive opportunities from prior awards reflects Company operating performance and stockholder value, as well as the particular officer’s performance, the extent to which they continue to motivate the officer, and whether adjustments are required to the program or an individual officer’s compensation. The Compensation Committee will also consider other external factors that it considers relevant, such as the financial condition of the Company and other issues facing the Company at the time.

The Compensation Committee also considers contractual commitments in determining or recommending executive pay. Each of the Named Executive Officers has entered into an employment agreement with us. The employment agreements generally provide for an initial level of annual salary, a target percentage of annual salary that can be earned pursuant to our short-term cash incentive plans, and limited perquisites. However, the employment agreements also provide for periodic review by the Board or Compensation Committee of the officer’s salary and target percentage for our short-term cash incentive plans. They also generally provide for certain payments in the event of termination of employment of the Named Executive Officer. The employment agreement of each Named Executive Officer is described below under the heading

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Compensation Discussion and Analysis

“Compensation of Executive Officers—Employment, Severance, and Change in Control Agreements and Arrangements” in this proxy statement. The terms of these arrangements were approved by the Compensation Committee or the Board after considering the aggregate of these obligations in the context of the desirability of hiring or retaining the applicable officer. In each case, the initial level of salary and target bonus percentage provided for in the employment agreements of the Named Executive Officers was less than or equal to the current salary and target bonus percentage of the Named Executive Officers. Therefore, contractual commitments did not play a significant role in compensation decisions for 2019.

When considering equity awards to our officers, including the Named Executive Officers, the Compensation Committee considers our equity availability and usage, the potential voting power dilution to our stockholders, and the projected impact on our earnings for the relevant years. The Company believes that its share usage and potential dilution have generally been conservative compared to peer group levels.

While the Compensation Committee considers internal pay equity in making compensation decisions, we do not have a policy requiring any set levels of internal pay differentiation. As previously discussed, we generally target the compensation levels among our executives to be competitive with the market. As compensation is competitively determined, the Compensation Committee believes that the differentiation between the pay of Mr. Jackson, our CEO, and the other Named Executive Officers is appropriate.

Risk Analysis. The Compensation Committee considers the potential for unacceptable risk-taking in its compensation design. The Compensation Committee performs periodic risk assessments with respect to its duties and actions. Before taking action on executive compensation, the Compensation Committee undertakes an express dialogue on pay for performance alignment and possible unintended consequences of excessive risk-taking by executives. In addition, the Compensation Committee annually reviews the risk mitigating factors in the design of our annual and long-term incentive plans.

We believe that the design of our executive compensation program does not unduly incentivize our executives to take actions that may conflict with our long-term best interests. Material risk in our compensation design is mitigated in several ways, including as follows:

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Compensation Discussion and Analysis

Elements of Our Compensation Program

Our compensation program is designed to provide a competitive total compensation package consistent with our performance in the marketplace and our desire to retain talented management. The 2019 compensation program for each of our executives includes:

While executives have more of their total compensation at risk than other employees, we believe that corporate and individual performance drive incentive compensation, and the principles that serve as the basis for executive compensation practices generally apply to the compensation plans for all employees.

Base Salary. The Compensation Committee approved base salary increases, effective July 16, 2019, as set forth below:

In making determinations regarding these salary increases, the Compensation Committee considered information from, and the analysis of, its consultant, Pearl Meyer, where available. Differences in salary among officers are based on market median data and other factors as described in this CD&A. The primary objectives for the base salary component were to:

The Compensation Committee also considered that following the adjustments, base salaries for the Named Executive Officers would vary from the market median in the following amounts: Mr. Jackson: +18%; Mr. Gutmann: +9%; Mr. Keeton: -7%; Mr. Rolls: +25%; and Mr. Schromm: -1%.

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Compensation Discussion and Analysis

Short-Term Cash Incentive Program. The primary objectives of the 2019 short-term cash incentive program were to:

The 2019 program included the following parameters: