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ONNN » Topics » Compensation Philosophy and Guiding Principles

This excerpt taken from the ONNN DEF 14A filed Apr 12, 2005.

Compensation Philosophy and Guiding Principles

 

Our general compensation philosophy is based on the principle that total compensation (including short- and long-term incentives) should be based first on our corporate performance (as measured by key financial and operating metrics) and secondly on individual performance (measured against objective performance standards). Incentive plans are designed and selected on the basis of their alignment with the larger goals of the Company and interests of our stockholders. Equity compensation remains a key component of executive compensation and is, we believe, the best way to ensure long term alignment of the decisions and behaviors of executives with the interests of our broader stockholder community.

 

We utilize a market-based approach in our determination of individual compensation. We regularly compare our compensation packages with those companies with whom we directly compete as well as a broader group of companies with whom we compete for talent, both within and outside of the semiconductor industry (our “peer companies”). When analyzing compensation data from peer companies, we give the greatest weight to the data from our market competitors in the semiconductor and electronics sectors of the high technology field. We seek alignment with the commonly accepted compensation practices in our industry.

1 Pursuant to Item 402(a)(9) of Regulation S-K promulgated by the Commission, neither the “Compensation Committee Report” nor the material set forth in “Performance Graph—Stock Price Performance Graph” shall be deemed to be filed with the Commission for purposes of the Securities Exchange Act of 1934 (“Exchange Act’) nor shall such report or such material be deemed to be incorporated by reference in any past or future filing by the Company under the Exchange Act or the Securities Act of 1933 (“Securities Act”).

 

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Our compensation plans are designed to provide a competitive total compensation package consistent with our performance in the marketplace. The compensation program for each of our executives includes:

 

  •   base pay, at a competitive mid-market level when compared to peers;

 

  •   semi-annual cash incentive opportunity tied to specific, quantifiable and objective performance measures based on a combination of corporate financial measures and individual goals;

 

  •   annual equity awards, based on corporate and individual performance; and

 

  •   other benefits, allowances and/or deferral programs.

 

Our executive long term incentive plans are entirely equity-based. This reinforces our objectives of sustaining long-term performance and retaining critical executive talent while ensuring our practices are aligned with stockholder objectives.

 

While our executives have more of their total compensation at risk than other employees, the principles which serve as the basis for our executive compensation practices apply to the compensation plans for all employees—corporate and individual performance drive compensation. It is noteworthy that the same corporate metrics that determine executive incentive opportunities are utilized throughout the corporation for our employees’ semi-annual bonus program. This reinforces alignment toward common goals in support of our overall business strategies.

 

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