DEF: onsemi Sets 2026 Annual Meeting Agenda, Details 2025 Performance

ON Semiconductor Corporation announces its 2026 Annual Meeting of Stockholders agenda, highlighting 2025 financial and strategic performance, executive compensation, and director elections.

Summary

• The 2026 Annual Meeting of Stockholders is scheduled for Thursday, May 14, 2026, at 8:00 a.m. local time in Scottsdale, Arizona.
• Stockholders of record as of March 17, 2026, are entitled to notice of and to vote at the annual meeting.
• Key proposals include the election of seven directors, an advisory (non-binding) resolution to approve named executive officer compensation, and the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2026.
• A stockholder proposal requesting simple majority voting on all matters will also be presented, for which the Board makes no recommendation.
• For fiscal year 2025, onsemi reported revenue of $6.0 billion, with automotive and industrial end-markets representing almost 80% of total revenue.
• Aerospace, defense, and security revenue grew 70% year-over-year in 2025.
• The company generated $1.8 billion of cash from operations and $1.4 billion of free cash flow, achieving a record-high free cash flow margin of 24%.
• 100% of annual free cash flow was returned to stockholders through share repurchases.
• GAAP operating income was $84.2 million, and non-GAAP operating income was $1.1 billion.
• GAAP gross margin stood at 33.1%, while non-GAAP gross margin was 38.4%.
• GAAP diluted EPS was $0.29, and non-GAAP diluted EPS was $2.35.
• Strategic highlights included strong growth of the Treo platform, introduction of vertical GaN (vGaN) technology, completion of the SiC Junction Field-Effect Transistor business acquisition, and new partnerships with Schaeffler, Nvidia, Innoscience, and GlobalFoundries.
• CEO Hassane El-Khoury voluntarily waived his potential payout under the 2025 Short-Term Incentive (STI) program due to company restructuring efforts.
• Payouts for other Named Executive Officers (NEOs) under the 2025 STI program ranged from 44-61% of target, influenced by a Corporate Multiplier of 72.7% due to company performance below target levels.
• The first tranche payout for 2025 Performance-Based Restricted Stock Units (PBRSUs) was 69% for the CEO and 73% for other NEOs, significantly reduced by a 50% adjustment due to relative Total Stockholder Return (TSR) being at the 6th percentile among peers.
• Payouts on previously granted 2023 and 2024 PBRSUs were also reduced by 50% based on relative TSR performance for their respective periods.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing as mixed-to-negative, with strong cash flow generation and strategic advancements offset by significant year-over-year declines in revenue and operating income, coupled with poor relative TSR performance impacting executive compensation.

Positives

• Generated strong cash from operations of $1.8 billion and $1.4 billion in free cash flow, achieving a record-high free cash flow margin of 24%.
• Returned 100% of annual free cash flow to stockholders through share repurchases.
• Achieved 70% year-over-year revenue growth in the aerospace, defense, and security end-market.
• Successfully grew the Treo platform, doubling the number of products year-over-year.
• Introduced vertical GaN (vGaN) technology and began sampling to early-access customers, demonstrating innovation.
• Completed the acquisition of the SiC Junction Field-Effect Transistor business and gained traction in the AI data center market.
• Formed strategic partnerships with Schaeffler (EliteSiC-based plug-in hybrid electric vehicle platform) and Nvidia (800 VDC power solutions), and collaborations with Innoscience (vGaN power devices) and GlobalFoundries (GaN power devices).
• Maintains robust corporate governance practices, including an independent Board Chair, annual Board and committee self-evaluations, stockholder proxy access, and strong stock ownership guidelines for executives and directors.
• Implemented a conduct-based clawback policy in addition to the Dodd-Frank policy, enhancing accountability.
• Prohibits hedging and pledging of company stock by insiders.
• Received Science-based Target Initiative (SBTi) validation for near-term targets in December 2024, reinforcing commitment to reduce greenhouse gas (GHG) emissions.
• Committed to achieving net zero emissions by 2040, ahead of the Paris Agreement timeline.
• Recognized for ESG performance by Barrons (100 Most Sustainable Companies for eighth consecutive year), EcoVadis (Silver score), ISS (Prime designation), MSCI (A rating), and Sustainalytics (strong ESG risk management).

Negatives

• 2025 revenue of $6.0 billion represents a 13.1% decrease compared to 2024 revenue of $7.082 billion.
• Non-GAAP operating margin of 18.7% in 2025 is an 860 basis point decrease from 2024's 27.3%.
• GAAP operating income of $84.2 million and GAAP diluted EPS of $0.29 are significantly lower than non-GAAP figures, indicating substantial adjustments.
• The Corporate Multiplier for the 2025 Short-Term Incentive (STI) program was 72.7%, falling below the 100% target due to revenue and non-GAAP operating margin results below target levels.
• CEO Hassane El-Khoury voluntarily waived his entire 2025 STI payout due to prevailing market conditions and company restructuring efforts.
• Other Named Executive Officers (NEOs) received 2025 STI payouts ranging from 44-61% of target, reflecting underperformance against set goals.
• The company's relative Total Stockholder Return (TSR) for 2025 was at the 6th percentile among its peers, leading to a 50% reduction in the first tranche payout of 2025 Performance-Based Restricted Stock Units (PBRSUs) tied to financial metrics.
• Payouts on previously granted 2023 and 2024 PBRSUs were also reduced by 50% due to poor relative TSR performance for their respective periods.
• The company noted continued uncertain market conditions and slowing demand in key sectors, leading to depressed manufacturing utilization.

Risks

• Forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results or events to differ materially from those anticipated.
• Factors that could cause actual results to differ materially are described in more detail under the heading 'Risk Factors' in the annual report on Form 10-K for the year ended December 31, 2025.
• The company faces cybersecurity threats, breaches, and vulnerabilities, which are key components of its long-term strategy and risk management.
• There is a potential for unacceptable risk-taking in compensation design, though the company states its program is designed to mitigate this.

Future Outlook

The company anticipates that the slowdown in its key sectors will persist, and manufacturing utilization will remain depressed amid market uncertainty. It has set a long-term goal of achieving net zero emissions by 2040, with near-term Science Based Targets validated. Starting in 2026, the company will utilize a normalized non-GAAP effective tax rate of 15%. Future payouts for the second and third tranches of 2025 Performance-Based Restricted Stock Units (PBRSUs) will be adjusted based on the company's twoand three-year relative Total Stockholder Return (TSR) performance.

Management Comments

• Hassane El-Khoury, President and CEO, advised the Human Capital and Compensation Committee that he would forgo any potential payout under the 2025 Short-Term Incentive program, citing prevailing market conditions and the company's recent Total Stockholder Return performance and restructuring efforts.
• The Board believes that the separation of the CEO and Chair roles currently best serves the interests of the company and its stockholders by clearly allocating responsibilities between the two roles.
• The Human Capital and Compensation Committee believes that the design and outcomes of the 2025 executive compensation program were directly tied to the company's performance and advanced its strategic priorities for 2025 and beyond.

Industry Context

StockSavvy.ai notes that onsemi operates in the highly competitive semiconductor industry, focusing on intelligent power and sensing technologies for automotive, industrial, and AI data center markets. The company's strategic moves, such as the acquisition of the SiC JFET business and partnerships with industry leaders like Nvidia and Schaeffler, align with the broader industry trend towards electrification, energy efficiency, and AI integration. The reported slowdown in key sectors and reduced demand reflect a challenging macroeconomic environment impacting the semiconductor industry, which has led to conservative financial targets and adjustments in executive compensation.

Comparison to Industry Standards

• The company's 2025 relative Total Stockholder Return (TSR) was at the 6th percentile among its peers, indicating significant underperformance compared to competitors like Ambarella Inc., Maxlinear Inc., Rohm Co., Ltd., ams AG, Melexis N.V., Semtech Corporation, Analog Devices, Inc., Microchip Technology Incorporated, Sensata Technologies Holding plc, Broadcom Inc., MKS Instruments, Inc., Silicon Laboratories Inc., Cirrus Logic, Inc., Monolithic Power Systems, Inc., Skyworks Solutions, Inc., Diodes Incorporated, Murata Manufacturing Co., Ltd., STMicroelectronics N.V., Infineon Technologies AG, NXP Semiconductors N.V., Synaptics Incorporated, Knowles Corporation, Parade Technologies, Ltd., Texas Instruments Incorporated, Power Integrations, Inc., Vishay Intertechnology, Inc., Lattice Semiconductor Corporation, Qorvo, Inc., Littelfuse, Inc., Realtek Semiconductor Corp., Macom Technology Solutions Holdings, Inc., Marvell Technology, Inc., and Renesas Electronics Corporation.
• The executive compensation peer group (2025 Peer Group) includes Advanced Micro Devices, Inc., Micron Technology, Inc., Analog Devices, Inc., Monolithic Power Systems, Inc., Applied Materials, Inc., NXP Semiconductors N.V., First Solar, Inc., Qorvo, Inc., Lam Research Corporation, Skyworks Solutions, Inc., Marvell Technology, Inc., Texas Instruments Incorporated, Microchip Technology Incorporated, and Wolfspeed, Inc. (though Wolfspeed was excluded from TSR calculation for 2025). The company's revenue and earnings before interest, taxes, depreciation and amortization approximated the peer group median, while its market capitalization was at about the 25th percentile, suggesting a smaller valuation relative to its operational size within this peer set.
• The company's burn rates for equity-based compensation are 'well below the typical market practice for our peer group,' indicating a conservative approach to share dilution compared to industry standards.

Management Changes

Corporate Governance

Related Party Transactions

• No related party transactions required to be reported under SEC rules have occurred since January 1, 2025.

Stakeholder Impact

• **Shareholders**: Directly impacted by share repurchases (positive), declining revenue and operating income (negative), and poor relative Total Stockholder Return (TSR) (negative). They will vote on key proposals, including director elections and executive compensation, and may benefit from the potential adoption of simple majority voting if the stockholder proposal is approved.
• **Employees**: Affected by company restructuring efforts (implied by the CEO's STI waiver). They benefit from competitive compensation programs, a 401(k) savings plan, an Employee Stock Purchase Plan (ESPP), and other general benefits. The company's commitment to human capital policies and ethical conduct aims to foster a positive work environment.
• **Customers**: Expected to benefit from new product introductions (e.g., Treo platform, vGaN technology) and strategic partnerships (e.g., with Schaeffler, Nvidia), which aim to solve complex challenges in electrification, energy efficiency, safety, and automation.
• **Suppliers**: Key suppliers are required to complete annual assessments and sign conformance statements to the Responsible Business Alliance (RBA) Code of Conduct and the onsemi Code of Business Conduct, promoting responsible supply chain practices and ethical sourcing.
• **Creditors**: The company's strong cash flow generation ($1.8 billion from operations, $1.4 billion free cash flow) and commitment to financial discipline are positive for creditors, indicating a healthy ability to service debt.

Next Steps

• Hold the 2026 Annual Meeting of Stockholders on May 14, 2026, to vote on director elections, executive compensation, auditor ratification, and a stockholder proposal.
• The Board will consider the stockholder proposal on simple majority voting and potentially initiate an amendment process if approved.
• Publish the next annual Sustainability Report in June 2026.
• The Human Capital and Compensation Committee will continue to consider feedback from stockholder engagements and say-on-pay results for future compensation program design.
• The second and third tranches of 2025 Performance-Based Restricted Stock Units (PBRSUs) are scheduled to vest in February 2027 and February 2028, respectively, with payouts adjusted by twoand three-year relative Total Stockholder Return (TSR).
• The third tranche of 2024 PBRSUs will vest in February 2027, adjusted by three-year relative TSR.

Key Dates

Recommendation

While onsemi demonstrates strong cash flow generation and strategic advancements in key growth areas like SiC and GaN, the significant year-over-year decline in revenue and operating income, coupled with poor relative Total Stockholder Return (TSR) performance compared to peers, indicates operational challenges and market headwinds. The voluntary waiver of the CEO's Short-Term Incentive (STI) and reduced executive payouts reflect these difficulties. The company is executing on strategic initiatives and returning capital to shareholders, but the financial underperformance and competitive landscape suggest a 'hold' position until there is clearer evidence of a turnaround in top-line growth and improved relative market performance.

Keywords

Semiconductor, Power solutions, Intelligent sensing, Automotive, Industrial, AI data center, SEC filing, Proxy statement, Corporate governance, Executive compensation, Financial performance, ESG, Sustainability, Silicon carbide (SiC), Gallium nitride (GaN), Share repurchases, Risk management