01—Abstract
Summary
Summary of the 8-K filed March 4, 2024. Cited figures are marked; the original filing is the authoritative source.
ON Semiconductor Corporation's Form 8-K filed March 4, 2024 reports an executive compensation arrangement rather than financial results.
Effective February 28, 2024, its subsidiary Semiconductor Components Industries, LLC (SCILLC) entered into its standard Executive Vice President/Group President employment agreement with Simon Keeton, Group President and General Manager of the Power Solutions Group. The agreement replaces his prior agreement dated January 1, 2019, has no specified term of years, and sets an annual base salary of $600,000a and an annual target bonus of 100% of base salary, both subject to review by the Human Capital and Compensation Committee of the board. Severance terms are set out in the filing.
On a termination without cause or resignation for good reason, Mr. Keeton would receive one year of base salary continuation, one times his target annual bonus, pro-rata vesting of outstanding performance-based restricted stock units, two years of employer-paid COBRA coverage, and outplacement assistance up to $25,000b. If such a termination occurs within two years after a change in control, the payments increase to 1.2 times base salary and 1.2 times target bonus, with full vesting of performance-based and time-based restricted stock units. The agreement includes a "best net" provision for Section 280G excise tax, and payments are made without tax gross-ups.
Severance is conditioned on a general release and on compliance with non-solicitation (two years), non-competition (one year), and confidentiality covenants. The filing is limited to this executive agreement. It lists the form of employment agreement as Exhibit 10.1 and the cover page interactive data file as Exhibit 104.
02—Key points
Key Highlights
- Simon Keeton, Group President and General Manager of the Power Solutions Group, entered into the standard EVP/Group President employment agreement effective February 28, 2024.
- Base salary is $600,000 per year, with an annual target bonus of 100% of base salary, both subject to committee review.
- The new agreement supersedes Mr. Keeton's prior employment agreement dated January 1, 2019, and has no specified term of years.
- Without-cause or good-reason termination provides one year of base salary continuation, one times target bonus, and pro-rata PBRSU vesting, plus two years of COBRA coverage and up to $25,000 in outplacement assistance.
- Termination within two years after a change in control raises the salary and bonus multiples to 1.2 times and provides full vesting of PBRSUs (at target or actual performance) and time-based RSUs.
- The agreement includes a "best net" Section 280G provision and no tax gross-ups; severance requires a release and restrictive covenants (two-year non-solicitation, one-year non-compete).
- The form of agreement has been used for Executive Vice Presidents since 2021 and is filed as Exhibit 10.1.
03—Questions
Frequently Asked Questions
What is the new employment agreement with Simon Keeton?
Effective February 28, 2024, SCILLC, a wholly-owned subsidiary of ON Semiconductor, entered into its standard EVP/Group President employment agreement with Mr. Keeton, Group President and General Manager of the Power Solutions Group. It replaces his January 1, 2019 agreement and has no specified term of years.
What are Mr. Keeton's base salary and bonus opportunity?
The agreement provides an annual base salary of $600,000 and an annual target bonus opportunity of 100% of base salary. Both are subject to review and adjustment by the Human Capital and Compensation Committee of the board.
What severance would Mr. Keeton receive if terminated without cause or resigning for good reason?
He would receive one year of base salary continuation, an amount equal to one times his target annual bonus, and pro-rata vesting of outstanding unvested PBRSUs. SCILLC would also cover employer COBRA premiums for two years and provide outplacement assistance up to $25,000. Receipt requires a general release and compliance with restrictive covenants.
How do change-in-control protections differ?
If a qualifying termination occurs within two years after a change in control, Mr. Keeton would receive 1.2 times his base salary and 1.2 times his target bonus, full vesting of outstanding unvested PBRSUs at target (or actual performance if the period has ended), and full vesting of time-based RSUs. A best-net provision applies to Section 280G excise taxes, and no tax gross-ups are provided.
Where can investors find the full terms of the agreement?
The filing states that the summary is qualified in its entirety by the form of agreement, filed as Exhibit 10.1 to this Form 8-K and incorporated by reference.
04—Continue