Hassane El-Khoury
ON SEMICONDUCTORAbout Hassane El‑Khoury
President and Chief Executive Officer of onsemi since December 2020 and director since 2020; age 45. Prior CEO of Cypress Semiconductor with deep automotive and semiconductor operating experience and M&A execution background . Under his tenure, onsemi delivered 2024 revenue of $7.1B with GAAP gross margin of 45.4%, GAAP operating income of $1.8B, and free cash flow of $1.2B amid a downturn; strategic highlights included launch of the Treo BCD65 platform, next‑gen EliteSiC M3e MOSFETs, Trusted Foundry accreditation, and OEM partnerships (Volkswagen, Subaru) . Cumulative company TSR moved from 343 to 259 in 2024 (relative to a $100 base at YE19), reflecting sector pressure; revenue and net income trend during 2020–2024 shown below .
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue ($ millions) | 5,255 | 6,740 | 8,326 | 8,253 | 7,082 |
| Net Income ($ millions) | 236 | 1,010 | 1,902 | 2,184 | 1,573 |
| Company TSR (Value of $100) | 134 | 279 | 256 | 343 | 259 |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cypress Semiconductor Corp. | President, CEO & Director | 2016–2020 | Led turnaround and sale to Infineon; deep auto/industrial exposure |
| Cypress Semiconductor Corp. | EVP, Programmable Systems Division | 2012–2016 | Product leadership in PSoC/MCU portfolio |
| Cypress Semiconductor Corp. | Sr. Director, Automotive BU | 2010–2012 | Drove automotive design‑ins and revenue ramp |
| Cypress Semiconductor Corp. | Sr. Bus. Dev. Mgr.; Staff App Eng. | 2007–2010 | Business development and applications engineering |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Leia Inc. | Board member | Not disclosed | Private company; listed as other board experience |
| Sakuú Corporation | Board member | 2020–2023 | Advanced manufacturing/energy tech; prior service |
Fixed Compensation
| Component (CEO) | 2024 Target | Notes |
|---|---|---|
| Base Salary | $1,200,000 | Unchanged in 2024 |
| Target STI (cash) | $2,100,000 (175% of salary) | Corporate matrix + individual goals |
| Target LTI | $16,750,000 | 60% PBRSUs / 40% RSUs in 2024 |
| 2024 STI Paid | $0 | Committee exercised discretion to zero payout despite 2.9% corporate funding |
| 2025 Design Change | PBRSU mix raised to 70% for CEO | Increases at‑risk performance equity |
Multi‑year reported compensation (SEC SCT):
| Year | Salary ($) | Stock Awards ($) | Non‑Equity Incentive ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|
| 2024 | 1,200,000 | 29,889,669 | — | 41,509 | 31,131,178 |
| 2023 | 1,130,769 | 17,733,531 | 1,060,163 | 41,050 | 19,965,513 |
| 2022 | 984,615 | 12,557,026 | 2,938,191 | 39,870 | 16,519,702 |
Perquisites (2024 examples): car allowance $14,400; life insurance imputed income $1,150; basic life/AD&D premiums $1,380; financial planning $10,000; 401(k) company contributions $13,800 .
Performance Compensation
Short‑Term Incentive (STI) – 2024 Design and Outcome
| Metric | Threshold | Target (AOP) | Maximum | Actual 2024 | Corporate Multiplier |
|---|---|---|---|---|---|
| Revenue | $7.415B | $7.913B | $8.411B | $7.082B | |
| Non‑GAAP Operating Margin | 26.4% | 29.4% | 32.2% | 27.9% | 2.9% before discretion; zeroed to 0% payout |
Individual goal achievement for CEO: Financial goals 65.0% and strategic goals 94.26% → Final individual achievement 79.63%; Combined with 2.9% corporate multiplier → 2.31% pre‑discretion; Committee set payout to $0 .
Long‑Term Incentives (LTI) – 2024 Grants and Mechanics
| Component | CEO Target Value | Vehicles | Vesting | Key Metrics / Modifiers |
|---|---|---|---|---|
| Annual LTI | $16,750,000 | 60% PBRSUs; 40% RSUs | RSUs vest 1/3 annually; PBRSUs pay over 3 years | PBRSUs mix of financial (new product revenue %, non‑GAAP op margin) and strategic (SiC revenue, Treo funnel); financial portion subject to 1/2/3‑yr relative TSR modifier (50%–150%) |
| One‑time “Value Creation” PBRSUs | $8,375,000 target; 107,898 units at grant | 100% PBRSUs | Three installments over 5 years, first vests in year 3 (2027) | Relative TSR ≥65th percentile at 3/4/5‑yr can 2x each tranche; otherwise target; retention‑focused |
2024 PBRSU goal framework and first‑tranche result:
| Goal (2024 PBRSUs) | Weight | Threshold | Target | Stretch | 2024 Actual | First Tranche Payout |
|---|---|---|---|---|---|---|
| New Product Revenue % | 25.0% | 20% | 25% | 30% | 27.2% | 122% (pre‑TSR) |
| Non‑GAAP Operating Margin | 25.0% | 26.0% | 29.4% | 32.0% | 27.9% | 56% (pre‑TSR) |
| SiC Product Revenue | 16.7% | $961M | $1,104M | $1,248M | < $961M | 0% |
| Treo New Opportunity Funnel | 33.3% | $69M | $118M | $147M | > $147M | 200% |
| Relative TSR (1‑yr) | Modifier on financial goals | 50%–150% band | — | — | 43rd percentile | 100% multiplier (no change) |
| Combined First Tranche | — | — | — | — | — | 111% overall |
Forward tranches: 2026 and 2027 PBRSU tranches are projected to range 89%–133% depending on 2‑/3‑year relative TSR outcomes; realized levels will be certified at vesting .
Equity Ownership & Alignment
- Beneficial ownership: 616,790 shares; less than 1% of outstanding; company had 422,049,434 shares outstanding on the record date (≈0.15% based on disclosed figures) .
- 2024 stock vested for CEO: 311,124 shares; $23,953,118 realized value .
- Hedging and pledging: Strictly prohibited for insiders (no margin, no pledging; no derivatives/hedges) .
- Ownership guidelines: CEO must hold ≥6x base salary; all NEOs either in compliance or within the five‑year grace period at the record date .
- Pay‑versus‑performance: 2024 PEO CAP of $20.1M vs SCT total $31.1M; CAP tracks TSR over time .
Outstanding equity awards (CEO) at 12/31/2024:
| Grant Date | Award Type | Unvested Shares (#) | Market Value ($) | Unearned Perf. Shares (#) | Market/Payout Value ($) |
|---|---|---|---|---|---|
| 02/11/2022 | RSUs | 26,002 | 1,639,426 | — | — |
| 02/11/2022 | PBRSUs | 79,954 | 5,041,087 | — | — |
| 02/21/2023 | RSUs | 56,340 | 3,552,237 | — | — |
| 02/21/2023 | PBRSUs (tranche earned + future) | 87,800 | 5,535,766 | 36,656 | 2,311,146 |
| 02/21/2024 | RSUs | 86,318 | 5,442,350 | — | — |
| 02/21/2024 | 2024 PBRSUs | 105,438 | 6,647,879 | 57,616 | 3,632,684 |
| 02/21/2024 | Value Creation PBRSUs | 107,898 | 6,802,969 | 107,898 | 6,802,969 |
Notes: Dollar values reflect $63.05 closing price at 12/31/2024; PBRSU footnotes describe first‑tranche certification (111%) and future TSR‑modified tranches; Value Creation tranches start vesting in 2027 with 100%–200% payout based on relative TSR ≥65th percentile .
Employment Terms
| Provision | No CIC (Termination w/o Cause or Good Reason) | Double‑Trigger CIC (w/o Cause or Good Reason within 2 yrs) | Other |
|---|---|---|---|
| Cash Severance | 2x base salary | 2x base salary | — |
| STI | 1x target STI | 2x target STI | Death/disability: pro rata based on prior‑year actual |
| RSUs | Pro rata vesting | Full vesting | — |
| PBRSUs | Pro rata based on actual performance | Full vesting at target | — |
| Benefits | Medical continuation up to 2 yrs | Medical continuation up to 2 yrs | — |
| Outplacement | Up to $25,000 | Up to $25,000 | — |
| Triggers | No single‑trigger; double‑trigger only | No excise tax gross‑ups (policy) | — |
| Restrictive covenants | Non‑solicit 2 yrs; non‑compete 1 yr; confidentiality and non‑disparagement; severance conditioned on release | Same | — |
Illustrative potential payments (assumes 12/31/2024 event; $63.05 stock): Total package estimates include accelerated equity and benefits continuation.
| Scenario | Total ($) | Components (select) |
|---|---|---|
| Termination w/o Cause (No CIC) | 25,835,036 | Cash severance $2.4M; target STI $2.1M; accelerated equity $21.29M; benefits $42,408 |
| Double‑Trigger CIC | 40,030,346 | Cash severance $2.4M; target STI $4.2M; accelerated equity $33.39M; benefits $42,408 |
Board Governance
- Roles: CEO and director since 2020; member of the Executive Committee (not on Audit, HCC, or Governance & Sustainability committees) .
- Leadership structure: Independent Board Chair (Alan Campbell); roles of Chair and CEO are split; committees comprised entirely of independent directors; CEO is not independent by definition .
- Executive Committee: May exercise delegable Board powers between meetings with specified exclusions; met 2 times in 2024; members include the Chair, CEO and two directors .
- Attendance: Board met 6 times; all directors attended ≥75% of meetings in 2024 .
- Director pay: CEO receives no additional compensation for Board service .
Compensation Governance, Peer Group, Say‑on‑Pay
- Clawbacks: Dodd‑Frank compliant clawback plus broader conduct‑based clawback covering misconduct and material breaches (applies to incentive comp, including time‑based equity) .
- Hedging/pledging: Prohibited for insiders (short sales, derivatives, margin, pledging) .
- Stock ownership guidelines: CEO 6x salary; retention until in compliance; five‑year compliance window .
- Independent advisor: FW Cook serves as independent compensation consultant; HCC Committee determined independence; uses peer and survey data for program design .
- Compensation peer group (2024): Includes AMD, Analog Devices, Applied Materials, First Solar, Lam Research, Marvell, Microchip, Micron, Monolithic Power, NXP, Qorvo, Skyworks, Texas Instruments, Wolfspeed .
- Say‑on‑pay: ~92% approval at 2024 annual meeting, indicating strong shareholder support .
Related Party, Risk Indicators, and Policies
- Related party transactions: None requiring disclosure since January 1, 2024; independence determinations affirmed for non‑employee directors .
- No single‑trigger CIC payouts; no excise tax gross‑ups; robust clawbacks; double‑trigger equity vesting; mitigates pay‑for‑failure risk .
- Insider trading policy and equity grant timing controls in place; no options granted; equity in RSUs/PBRSUs; burn rates below peer norms (policy statement) .
Investment Implications
- Alignment and performance sensitivity: CEO pay is highly at‑risk (≈94% of 2024 target TDC variable) with increased PBRSU weighting to 70% in 2025, and a five‑year Value Creation PBRSU requiring ≥65th percentile TSR for max payout—clear linkage to relative returns and retention during industry downcycle .
- Near‑term selling pressure: Significant scheduled vesting (RSUs annually; PBRSU tranches in 2026–2027; Value Creation tranches starting 2027) could create periodic Form 4 flow, but hedging/pledging prohibitions and ownership guidelines support alignment; 2024 STI zeroed despite modest corporate funding underscores downside accountability .
- Retention and change‑in‑control economics: Reasonable double‑trigger protections (2x salary + 2x STI target; target‑level PBRSU vesting) and restrictive covenants reduce transition risk without shareholder‑unfriendly features (no single‑trigger; no gross‑ups) .
- Governance structure: Independent Chair, independent committees, and CEO not serving as Chair mitigate dual‑role risks; CEO serves on the Executive Committee (common), but oversight appears robust via committee independence and Board structure .
- Track record and execution: Despite 2024 revenue/margin softness and negative TSR vs 2023, onsemi achieved strong gross margins, substantial FCF, and strategic platform/SiC progress, supporting a long‑term thesis tied to auto/industrial electrification and AI/datacenter power needs; PBRSU outcomes (111% first tranche) reflect mixed but generally constructive execution vs goals .