ON SEMICONDUCTOR CORPON
ON SEMICONDUCTOR CORP Stock Compensation Disclosure
Note 11: Share-Based Compensation
Total share-based compensation expense related to the Company's RSUs, stock grant awards and ESPP was recorded within the Consolidated Statements of Operations and Comprehensive Income as follows (in millions):
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenue | $ | 27.0 | $ | 24.6 | $ | 18.1 | |||||||||||
| Research and development | 27.5 | 24.7 | 20.5 | ||||||||||||||
| Selling and marketing | 20.8 | 21.3 | 18.6 | ||||||||||||||
| General and administrative | 69.0 | 65.5 | 63.9 | ||||||||||||||
| Share-based compensation expense | 144.3 | 136.1 | 121.1 | ||||||||||||||
| Income tax benefit | (30.3) | (28.6) | (25.4) | ||||||||||||||
| Share-based compensation expense, net of taxes | $ | 114.0 | $ | 107.5 | $ | 95.7 | |||||||||||
As of December 31, 2025, total unrecognized share-based compensation expense, net of estimated forfeitures, related to non-vested RSUs with service, performance and market conditions was $153.0 million, which is expected to be recognized over a weighted-average period of 1.7 years. Upon vesting of RSUs, stock grant awards or completion of a purchase under the ESPP, the Company issues new shares of common stock.
Share-Based Compensation Information
The fair value per unit of each RSU and stock grant award is determined on the grant date. Share-based compensation expense is based on awards ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The annualized pre-vesting forfeitures for RSUs were estimated to be approximately 8% for the years ended December 31, 2025, 2024 and 2023.
Plan and Award Descriptions
On March 23, 2010, the Company adopted the Amended and Restated SIP which has been subsequently amended over the years primarily to increase the number of shares of common stock subject to all awards. Generally, RSUs granted under the Amended and Restated SIP vest ratably over three years for awards with service conditions and over , , or five years for awards with performance or market conditions, or a combination thereof, and are settled in shares of the Company's common stock upon vesting. Generally, upon the termination of an RSU holder's employment, all unvested RSUs will immediately cancel, except under circumstances where the service condition has been fulfilled.
On May 20, 2021, the Company's stockholders approved certain amendments to the Amended and Restated SIP to extend the expiration date from 2022 to 2031 and to increase the number of shares of common stock subject to all awards by 22.5 million to 109.5 million. As of December 31, 2025, there was an aggregate of 28.5 million shares of common stock available for grant under the Amended and Restated SIP.
Restricted Stock Units
A summary of activity of RSUs during the year ended December 31, 2025 was as follows (number of shares in millions):
| Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
| Nonvested shares of RSUs at December 31, 2024 | 3.5 | $ | 76.27 | ||||||||
| Granted | 3.4 | $ | 47.00 | ||||||||
| Achieved | 0.2 | $ | 73.27 | ||||||||
| Released | (1.7) | $ | 73.88 | ||||||||
| Forfeited | (0.4) | $ | 67.35 | ||||||||
| Nonvested shares of RSUs at December 31, 2025 | 5.0 | ||||||||||
The RSUs awarded during 2025 include RSUs that vest upon satisfaction of service conditions and 1.0 million RSUs granted to certain officers and employees of the Company that vest upon the achievement of certain performance criteria and market conditions. The number of units expected to vest is evaluated each reporting period and compensation expense is recognized for those units for which achievement of the performance criteria is considered probable. Compensation expense for RSUs with market conditions is recognized based on the grant date fair value irrespective of the achievement of the condition. The fair values of the vested awards are based on the stock price as of the vesting dates, and during the years ended December 31, 2025, 2024 and 2023 totaled $83.6 million, $142.9 million and $202.6 million, respectively.
As of December 31, 2025, unrecognized compensation expense, net of estimated forfeitures related to non-vested RSUs granted under the Amended and Restated SIP with service, performance and market conditions, was $109.2 million, $12.1 million and $31.7 million, respectively. For RSUs with time-based service conditions, expense is being recognized over the vesting period; for RSUs with performance criteria, expense is recognized over the period when the performance criteria is expected to be achieved; for RSUs with market conditions, expense is recognized over the period in which the condition is assessed irrespective of whether it would be achieved or not. Unrecognized compensation cost for awards with certain performance criteria that are not expected to be achieved is not included here. Total compensation expense related to service-based, performance-based and market-based RSUs was $137.6 million for the year ended December 31, 2025, which included $82.1 million for RSUs with time-based service conditions that were granted in 2025 and prior that are expected to vest.
Employee Stock Purchase Plan
On February 17, 2000, the Company adopted the ESPP. During the years ended December 31, 2025, 2024 and 2023, employees purchased approximately 0.6 million, 0.4 million and 0.4 million shares, respectively, under the ESPP. On May 20, 2021, the stockholders approved an amendment to the ESPP, which increased the number of shares available to be issued pursuant to the ESPP by 6.0 million to 34.5 million. As of December 31, 2025, there were approximately 6.3 million shares available for issuance under the ESPP. Total compensation expense related to the ESPP for the year ended December 31, 2025 was $6.7 million.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 9, 2026 | Showing above |
| 2024 | Feb 10, 2025 | |
| 2023 | Feb 5, 2024 | |
| 2022 | Feb 6, 2023 | |
| 2021 | Feb 14, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 24, 2016 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.