Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On January 22, 2021, Bernard Gutmann informed the President and Chief Executive
Officer of ON Semiconductor Corporation (the "Corporation") that he intends to
retire as Executive Vice President, Chief Financial Officer and Treasurer of the
Corporation and Semiconductor Components Industries, LLC, a wholly-owned
subsidiary of the Corporation ("SCILLC"), effective as of February 16, 2021
immediately following the filing by the Corporation of its Annual Report on Form
10-K with the Securities and Exchange Commission. Mr. Gutmann has served the
Corporation for over twenty years, including as the Corporation's and SCILLC's
Chief Financial Officer since September 2012.
In connection with Mr. Gutmann's retirement, on January 24, 2021, the Board of
Directors (the "Board") of the Corporation approved the appointment of Thad
Trent as Executive Vice President, Chief Financial Officer and Treasurer of the
Corporation and SCILLC, effective as of February 16, 2021 immediately following
the filing by the Corporation of its Annual Report on Form 10-K with the
Securities and Exchange Commission. Mr. Trent, age 53, previously served as the
chief financial officer and executive vice president of finance & administration
at Cypress Semiconductor Corporation ("Cypress") between June 2014 and April
2020. Mr. Trent joined Cypress in 2005 and became a vice president of finance at
Cypress in 2010. Prior to serving as chief financial officer of Cypress, he led
the strategic planning functions for Cypress' business units and worldwide
operations and managed the financial reporting, accounting, and planning and
analysis functions for Cypress. Prior to joining Cypress, Mr. Trent held finance
leadership roles at publicly-traded companies Wind River Systems, a developer of
embedded systems software, and Wyle Electronics, a distributor of high-tech
electronic components, as well as two technology startups. Mr. Trent holds a
bachelor of science degree in business administration and finance from San Diego
State University.
There are no related party transactions between the Corporation
and Mr. Trent that would require disclosure under Item 404(a)
of Regulation S-K, nor are there any arrangements or understandings in
connection with Mr. Trent's appointment as Executive Vice President, Chief
Financial Officer and Treasurer, other than as set forth in this Current Report
on Form 8-K.
Employment Agreement
Compensation Arrangements. On January 24, 2021, the Board approved the entry
into an employment agreement (the "Agreement") by SCILLC with Mr. Trent upon the
commencement of Mr. Trent's employment with SCILLC on February 16, 2021 that
will provide for a base salary of $600,000 per year, subject to review by
Compensation Committee of the Board from time-to-time. The Agreement will
provide for Mr. Trent's participation in SCILLC's discretionary bonus program
with a target bonus amount of 100% of his base salary during the relevant
performance cycle, plus a potential additional amount as may be approved by the
Board and/or its Compensation Committee under the bonus program, in each case,
dependent upon receipt of the applicable approval from the Board and/or its
Compensation Committee and the performance of the Corporation
and/or Mr. Trent against the specified performance criteria. The Agreement will
further provide for (i) the election by Mr. Trent to receive either (x) a
$200,000 relocation bonus (in lieu of standard relocation benefits), or
(y) standard relocation benefits under the Corporation's executive relocation
policy with a $200,000 cap, and (ii) the other standard employee benefits that
SCILLC makes available to its executive officers, including a monthly car
allowance of $1,200 and reimbursement of up to $10,000 per year for actual
financial planning expenses, in each case, without any tax gross-ups. The
Agreement has no specified term of years.
Obligations Upon Certain Termination Events. Under the Agreement and subject to
its execution upon Mr. Trent's commencement of his employment on February 16,
2021, if SCILLC
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terminates Mr. Trent's employment without "cause," or Mr. Trent resigns for
"good reason" (as those terms are defined in the Agreement), SCILLC will pay
him: (i) a continuation of base salary for 78 weeks after the date of
termination, subject to the restrictions noted below, in accordance with
SCILLC's ordinary payroll practices; (ii) an amount equal to one times his
target bonus, if any, in effect for the then-current performance cycle (or 2
times the semi-annual amount if bonuses are paid by SCILLC semi-annually as of
the date of his termination); (iii) full vesting of any then-unvested new hire
RSUs (as defined below); and (iv) pro rata vesting of any then-unvested new hire
PBRSUs (as defined below) using a truncated performance period. Mr. Trent would
also be entitled to medical benefits for two years following termination and
outplacement assistance for a cost to SCILLC not to exceed $25,000, without any
tax gross-ups.
Obligations Upon Certain Termination Events Following a Change in Control. Under
the Agreement and subject to its execution upon Mr. Trent's commencement of his
employment on February 16, 2021, in the event that Mr. Trent's employment is
terminated by SCILLC without "cause" or by Mr. Trent for "good reason" upon or
within two years following a "change in control" (as defined in the Agreement),
SCILLC will pay him (i) a continuation of base salary for 78 weeks after the
date of termination, subject to the restrictions noted below, in accordance with
SCILLC's ordinary payroll practices; (ii) 1.5 times his target bonus, if any, in
effect for the then-current performance cycle (or three times the semi-annual
amount if bonuses are paid by SCILLC semi-annually as of the date of his
termination); (iii) full vesting of any then-unvested new hire RSUs (as defined
below); and (iv) full vesting at target of any then-unvested new hire PBRSUs (as
defined below). Mr. Trent would also be entitled to medical benefits for two
years following termination and outplacement assistance for a cost to SCILLC not
to exceed $25,000, without any tax gross-ups.
Obligations in Connection with Death or Disability. In the event
of Mr. Trent's death or disability, SCILLC would pay Mr. Trent a pro rata
portion of his bonus based on the prior cycle's performance bonus achievement.
General Release and Restrictive Covenants. In addition, the payment of all
severance benefits (including equity acceleration) to Mr. Trent pursuant to the
Agreement would be subject to him signing (and not revoking) a general release
and waiver (in substantially the form attached to the Agreement) and his
compliance with the following obligations:
(i) a restrictive covenant that prohibits Mr. Trent during the term of his
employment, and, unless Mr. Trent is terminated without "cause" or
resigns for "good reason" during his first year of employment (in which
case the covenant will terminate at the time of Mr. Trent's termination
of employment), for two years after the termination of his employment,
from soliciting any employee of SCILLC;
(ii) a restrictive covenant that prohibits Mr. Trent during the term of his
employment, and, unless Mr. Trent is terminated without "cause" or
resigns for "good reason" during his first year of employment (in which
case the covenant will terminate at the time of Mr. Trent's termination
of employment), for one year after the termination of his employment,
from competing with the Corporation by providing services to certain
companies on a specified competitor list; and
(iii) indefinite confidentiality and non-disparagement restrictive covenants.
In addition, Mr. Trent will be subject to the Corporation's Executive
Compensation Recovery Policy.
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New Hire Equity Awards
In connection with Mr. Trent's appointment as Executive Vice President, Chief
Financial Officer and Treasurer, the Compensation Committee of the Board has
approved the grant on February 16, 2021 following the commencement of his
employment of a new hire equity-based award to Mr. Trent under the ON
Semiconductor Corporation Amended and Restated Stock Incentive Plan ("Amended
and Restated SIP"). The grant will consist of time-based restricted stock units
("RSUs") with an estimated aggregate value of $1,650,000 and performance-based
restricted stock units ("PBRSUs") with an estimated aggregate value of
$3,850,000 (with the number of RSUs or PBRSUs to be granted, in each case, being
based on the closing market price of the Corporation's common stock on the
February 16, 2021 grant date).
The RSUs will vest annually on a pro rata basis over a three-year period
beginning on the first anniversary of the grant date. Additionally, the RSUs
will vest in full if Mr. Trent's employment is terminated without "cause" by
SCILLC (including a resignation by Mr. Trent for "good reason"). The RSUs will
be subject to additional terms and conditions under the Amended and Restated
SIP, as well as a separate agreement governing the RSUs.
The PBRSUs will vest at the end of a two-year performance period based on the
achievement of a relative total shareholder return (the "TSR") metric.
If Mr. Trent's employment is terminated by SCILLC without "cause" (including a
. . .
Item 7.01 Regulation FD Disclosure.
On January 28, 2021, the Corporation issued a press release announcing the
retirement of Mr. Gutmann and the approval of the hiring of Mr. Trent. A copy of
the press release is attached as Exhibit 99.1 hereto and is incorporated herein
by reference.
The information furnished herewith pursuant to Item 7.01 of this Current Report,
including Exhibit 99.1, shall not be deemed to be "filed" for the purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section. The information
in this Current Report shall not be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Exchange Act, whether made
before or after the date of this Current Report, regardless of any general
incorporation language in such filing, except as shall be expressly set forth by
specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
99.1 Press Release dated January 28, 2021
104 Cover Page Interactive Data File (embedded with Inline XBRL document)
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