UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.    )

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Keith D. Jackson
President and
Chief Executive Officer

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To the Stockholders:

The Annual Meeting of Stockholders of ON Semiconductor Corporation will be held at our principal offices located at 5005 East McDowell Road, Phoenix, Arizona 85008 on Tuesday, May 18, 2010 at 8:30 a.m., local time, for the following purposes:

1. To elect two Class II Directors each for a three-year term expiring at the Annual Meeting of Stockholders to be held in 2013 or until his successor has been duly elected and qualified, or until the earlier of his death, resignation or removal;

2. To approve the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan;

3. To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the current year; and

4. To transact such other business as may properly come before the meeting and any adjournment or postponement of the meeting.

The Board of Directors has fixed the close of business on April 5, 2010, as the record date for determination of stockholders entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. For ten days prior to the Annual Meeting, a list of stockholders entitled to vote at the Annual Meeting will be available for inspection in the offices of ON Semiconductor Corporation, Law Department, 5005 E. McDowell Road, Phoenix, Arizona 85008 between the hours of 8:30 a.m. and 5:00 p.m., local time, each weekday. Such list will also be available at the Annual Meeting.

Your vote is very important to us. Please vote as soon as possible by signing, dating and returning the proxy card in the enclosed postage-paid envelope.

Sincerely yours,

April 9, 2010

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS MEETING TO BE HELD ON MAY 18, 2010.

The Company’s Proxy Statement for the 2010 Annual Meeting of Stockholders and its
Annual Report to Stockholders for the fiscal year ended December 31, 2009 are available at
www.onsemi.com/annualdocs.

TABLE OF CONTENTS

		Page
PROXY STATEMENT			1
MANAGEMENT PROPOSALS			3
Proposal 1: Election of Directors			3
Class II—Terms Expiring in 2010			4
Class III—Terms Expiring in 2011			5
Class I—Terms Expiring in 2012			6
Proposal 2: Approval of the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan			8
General			8
Summary of Plan Features			10
Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm			18
Audit and Related Fees			18
THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE			20
Committees of the Board			20
Compensation of Directors			26
Other Board Matters			28
Corporate Governance Principles			29
Code of Business Conduct			31
Compliance and Ethics Program			31
COMPENSATION DISCUSSION AND ANALYSIS			33
Overview			33
Processes and Procedures for Considering and Determining Executive Compensation			34
Elements of our Compensation Program			38
2009 Compensation Decisions			39
Other Elements Affecting Compensation			41
Impact of Taxation and Accounting Considerations on Executive Compensation			42
Other Matters Relating to Executive Compensation			43
COMPENSATION COMMITTEE REPORT			44

TABLE OF CONTENTS
(continued)

		Page
COMPENSATION OF EXECUTIVE OFFICERS			45
Summary Compensation Table			45
Grants of Plan-Based Awards Table			48
2009, 2008 and 2007 Awards of PBRSUs			49
Outstanding Equity Awards At Fiscal Year-End Table			52
Option Exercises and Stock Vested Table			53
Employment, Severance, and Change in Control Agreements and Arrangements			54
Potential Payments Upon Termination of Employment or Change of Control			60
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION			67
AUDIT COMMITTEE REPORT			68
EQUITY COMPENSATION PLAN INFORMATION			69
PRINCIPAL STOCKHOLDERS			71
SHARE OWNERSHIP OF DIRECTORS AND OFFICERS			73
RELATIONSHIPS AND RELATED TRANSACTIONS			74
Policies and Procedures			74
Related Party Transactions			74
SECTION 16(a) REPORTING COMPLIANCE			75
Section 16(a) Beneficial Ownership Reporting Compliance			75
MISCELLANEOUS INFORMATION			76
Solicitation of Proxies			76
Annual Report/Form 10-K			76
Other Business			76
Stockholder Communications with the Board of Directors			76
Stockholder Nominations and Proposals			76
APPENDIX A — ON SEMICONDUCTOR CORPORATION AMENDED AND RESTATED STOCK INCENTIVE PLAN			A-1

ON SEMICONDUCTOR CORPORATION
5005 E. McDowell Road
Phoenix, Arizona 85008

PROXY STATEMENT

This statement and the accompanying notice and proxy card are furnished in connection with the solicitation by the Board of Directors (“Board”) of ON Semiconductor Corporation (“we” or the “Company”) of proxies to be used at its annual meeting of stockholders to be held on Tuesday, May 18, 2010 at 8:30 a.m., local time, at our principal offices located at 5005 East McDowell Road, Phoenix, Arizona 85008 and at any adjournment or postponement thereof (“Annual Meeting”). Directions for attending the Annual Meeting may be found on our website at www.onsemi.com. This statement and the accompanying notice and proxy card are first being mailed to stockholders on or about April 9, 2010.

Whether or not you plan to attend the Annual Meeting, the Board encourages you to vote your shares as more fully described in the proxy card and below. You may vote in person by attending the Annual Meeting or by a validly designated proxy. If you or your proxy will not be attending the meeting, you may vote in one of three ways:

Vote by internet. The website address for internet voting is on your proxy card. Internet voting is available 24 hours a day;

Vote by telephone. The toll-free number for telephone voting is on your proxy card. Telephone voting is available 24 hours a day; or

Vote by mail. Mark, date, sign and mail promptly the enclosed proxy card (a postage-paid envelope is provided for mailing in the United States).

If you vote by telephone or internet, DO NOT mail your proxy card.

All shares represented by valid proxies will be voted as specified. If no specification is made, the proxies will be voted in favor of:

1. Election of two Class II Directors each for a three-year term expiring at the annual meeting of the Company’s stockholders to be held in 2013 or until his successor has been duly elected and qualified, or until the earlier of his death, resignation or removal;

2. To approve the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (“Amended and Restated Plan”); and

3. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the current year.

We are not aware of any other matters that will be brought before the stockholders for a vote. If other matters properly come before the Annual Meeting, all shares validly represented by proxies will be voted in accordance with the discretion of the appointed proxies.

Record Date and Quorum

The Board has fixed the close of business on April 5, 2010, as the record date for determination of stockholders entitled to notice of and to vote at the Annual Meeting. As of the record date, there were 429,426,738 shares of our common stock outstanding.

The presence, in person or by proxy, of holders of a majority of the shares entitled to vote at the Annual Meeting will constitute a quorum. Abstentions, withheld votes and broker non-votes are included in determining whether a quorum is present for the meeting. Abstentions include shares present in person but not voting and shares represented by proxy but with respect to which the holder has abstained. Broker non-votes occur when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power on that item and has not received instructions from the beneficial owner. Although brokers have discretionary power to vote your shares with respect to “routine” matters, they do not have discretionary power to vote your shares on “non-routine” matters. As discussed in more detail below, we believe the following proposals will be considered non-routine and therefore your broker will not be able to vote your shares with respect to these proposals unless the broker receives appropriate instructions from you: Proposal 1 (Election of Directors) and Proposal No. 2 (Approval of the Amended and Restated Plan). Broker non-votes will not be counted as either votes cast for or against a matter, but will be counted for purposes of determining a quorum for the meeting.

Required Vote

With respect to Proposal 1 (Election of Directors), a plurality of the votes at the Annual Meeting is required for the election of Directors. The two Director-nominees receiving the highest number of votes will be elected. Abstentions and broker non-votes are not treated as votes cast and, therefore, will have no effect on Proposal 1.

The affirmative vote of a majority of the votes duly cast on that item at the Annual Meeting is required to approve Proposals 2 (Approval of the Amended and Restated Plan) and 3 (Ratification of Appointment of Independent Registered Public Accounting Firm). Abstentions and broker non-votes are not treated as votes cast and, therefore, will have no effect on Proposals 2 and 3.

Recent changes to exchange rules eliminated broker discretionary voting with respect to the election of directors. Therefore, unlike in prior years, your broker is NOT able to vote on your behalf in any director election without specific voting instructions from you. In addition, your broker is not able to vote on your behalf on Proposal 2. Accordingly, we encourage you to vote your shares on Proposals 1 and 2 either by returning your proxy by internet, mail or telephone so that your shares will be voted at the meeting if you cannot attend in person.

Revocation of Proxies

You may revoke your proxy at any time before it is exercised by submitting to our Secretary a written notice of revocation or a properly executed proxy bearing a later date, or by attending the Annual Meeting and voting in person.

MANAGEMENT PROPOSALS

Proposal 1:
Election of Directors

The Board is currently divided into three classes of Directors. Directors hold office for staggered terms of three years or until their successors are duly elected and qualified, or until the earlier of their death, resignation or removal. One of the three classes is elected each year to succeed the Directors whose terms are expiring. Class II Directors will be elected at the Annual Meeting to serve for a term expiring at the annual meeting in the year 2013. Each of the nominees has agreed to serve as a director if elected by the shareholders. The Class III Directors’ terms will expire in 2011. The Class I Directors’ terms will expire in 2012.

The Board has determined that a majority of our Board is independent according to the applicable rules of the Securities and Exchange Commission (“Commission”) and the listing standards of the NASDAQ Global Select Market (“NASDAQ”), including each of the following current Directors and nominees: J. Daniel McCranie, Francis P. Barton, Curtis J. Crawford, Emmanuel T. Hernandez, Phillip D. Hester, Daryl Ostrander, and Robert H. Smith.

Transactions Considered in Independence Determinations. Consistent with NASDAQ listing standards, in making its independence determinations, the Board considered transactions occurring since the beginning of 2007 between the Company and entities associated with the independent directors or members of their immediate family. The Board determined that no “categorical” bars to independence under NASDAQ listing standards applied to any of the non-employee directors. In making its determination that no relationships exist that, in the opinion of the Board, would impair the director’s independence, the Board considered the following transactions, relationships or arrangements: (i) the transactions included below in this proxy statement under the heading “Relationships and Related Transactions — Related Party Transactions”; (ii) the transactions, relationships or arrangements under the headings “Relationships and Related Transactions — Related Party Transactions” and “Management Proposals — Proposal 1: Election of Directors” included in our annual meeting proxy statements filed with the Commission on April 4, 2008 and April 11, 2007; and (iii) the associations certain of our non-employee Directors have with other companies in the semiconductor industry, as disclosed in their biographies and discussed further below.

In connection with clause (iii) above, in making independence determinations, the Board considered a category of transactions occurring in 2009 which involved the Company doing business with a company in our industry that has a Company non-employee director serving in a board or management position.¹ In each instance, the amounts paid to and received from each company (and ON Semiconductor) were significantly below the “categorical” bar to independence set forth in the NASDAQ listing standards, which uses a threshold of 5% of consolidated revenues of such entity. Also, each of the below commercial relationships were in the ordinary course of business for ON Semiconductor and the other companies involved and were on terms and conditions available to similarly situated customers and suppliers. In particular, in 2009, the Board considered the following transactions and relationships with respect to the independence of certain non-employee directors:

•

With respect to the independence of Mr. McCranie and Mr. Smith, the Board considered the Company’s continued activity with Virage Logic Corporation (“Virage Logic”) relating primarily to the payment of maintenance, renewal and royalty fees under license agreements between the Company and Virage Logic dating back to 2007 and between AMIS Holdings, Inc. (“AMI”) and Virage Logic (prior to the Company’s acquisition of AMI). Mr. McCranie was the President and Chief Executive Officer of Virage Logic from January 2007 to October 2008, has been a director of Virage Logic since January 2007 and has served as the Executive Chairman of Virage Logic since October 2008. Mr. Smith is a director of Virage Logic and was in that position in 2007.

•

With respect to the independence of Mr. Hester, the Board considered sales to and purchases of supplies by National Instruments Corporation (“NIC”). Since December 2009, Mr. Hester has been the Senior Vice President of Research and Development of NIC.

•

With respect to the independence of Mr. Hernandez, the Board considered that Mr. Hernandez joined the Board of Directors of MEMC Electronic Materials, Inc. (“MEMC”) in May 2009. The Company purchases silicon wafers from MEMC.

Unless you withhold your vote or indicate otherwise on your proxy card and except in a case of a broker non-vote, proxies will be voted FOR the election of the nominees. The Board has no reason to believe that any of the following nominees will be unable to serve. If, however, any one of them should become unavailable, the Board may reduce the size of the Board or designate a substitute nominee. If the Board designates a substitute, shares represented by proxies will be voted for the substitute nominee.

Set forth below is information concerning our nominees and other directors, including their business experience and public company directorships for the past five years.

In each biography below, we describe certain of the experiences, qualifications, attributes or skills that caused the Board to determine that the person should serve as a director of the Company as of the date of this proxy statement. In addition to the specific qualifications described below, we believe that each director has the integrity, honesty and adherence to high ethical standards necessary to set the “tone at the top” for our Company. Each is possessed of the business acumen and sound judgment that we believe are required for the proper functioning of our Board. Most of our directors also have significant other public company board experience that broadens their knowledge of board processes, issues and solutions.

In Proposal I, you are asked to vote for each of the nominees for Class II directors listed below.

Class II — Terms Expiring in 2010

J. Daniel McCranie, 66. Mr. McCranie has served as the Chairman of the Board of Directors of ON Semiconductor Corporation since August 2002 and as a Director since November 2001. Since October 2008, Mr. McCranie has served as Executive Chairman of Virage Logic, a provider of application optimized semiconductor intellectual property platforms. Previously, Mr. McCranie served as President and Chief Executive Officer of Virage Logic from January 2007 to October 2008, Executive Chairman of Virage Logic from March 2006 to January 2007, and Chairman of the Board of Directors of Virage Logic from August 2003 to March 2006. Prior to joining Virage Logic, from 1993 until his retirement in 2001, Mr. McCranie was employed in various positions with Cypress Semiconductor Corporation, a supplier of diversified, broadline semiconductor products, focusing on the communications industry, lastly as its Executive Vice President, Marketing and Sales. From 1986 to 1993, Mr. McCranie was President, Chief Executive Officer and Chairman of SEEQ Technology, Inc., a manufacturer of semiconductor devices. Mr. McCranie currently serves and in the past five years has served on the boards of directors of Virage

Logic, Cypress Semiconductor Corporation and Actel Corporation, a designer and provider of field programmable gate arrays and programmable system chips.

Mr. McCranie has extensive experience in the semiconductor industry, including management experience as a chief executive officer of two publicly held semiconductor corporations, with the resulting knowledge and understanding that such a position entails. As a long-time member of our Board, Mr. McCranie has gained a deep understanding of the Company’s strengths and issues.

Emmanuel T. Hernandez, 54. Mr. Hernandez has served as a director of ON Semiconductor Corporation since November 2002. From April 2005 to November 2008, Mr. Hernandez served as the Chief Financial Officer of SunPower Corporation. He retired as Chief Financial Officer of SunPower Corporation in November 2008, but continued in a transition role at SunPower Corporation until January 2009. Prior to April 2005, Mr. Hernandez served for more than 11 years as the Executive Vice President of Finance and Administration and Chief Financial Officer for Cypress Semiconductor Corporation, having joined that company in 1993 as its Corporate Controller. Prior to that, Mr. Hernandez held various financial positions with National Semiconductor Corporation from 1976 through 1993. Mr. Hernandez currently serves on the board of directors of Aruba Networks, MEMC Electronic Materials, Inc. and EnStorage, Inc., a private company that develops flow battery/storage technology for the renewable energy industry. In addition, in the past five years, Mr. Hernandez has also served on the board of directors of Integration Associates.

Mr. Hernandez has extensive experience in the semiconductor industry. In addition, through his experience as chief financial officer of both a publicly held semiconductor company and a publicly held solar company, Mr. Hernandez has significant management experience and relevant knowledge of financial statement preparation and regulatory compliance. As a long time member of our Board, Mr. Hernandez has gained a deep understanding of the Company’s strengths and issues.

Required Vote

The two Class II Director-nominees receiving the highest number of votes will be elected. Abstentions and broker non-votes are not treated as votes cast and, therefore, will have no effect on the proposal to elect Directors.

The Board of Directors recommends a vote “for” approval of Proposal 1.

The individuals listed below are presently serving as Directors.

Class III — Terms Expiring in 2011

Keith D. Jackson, 54. Mr. Jackson was elected as a Director and appointed as President and Chief Executive Officer of ON Semiconductor Corporation in November 2002. Mr. Jackson has over 30 years of semiconductor industry experience. Before joining ON Semiconductor, he was with Fairchild Semiconductor Corporation, serving as Executive Vice President and General Manager, Analog, Mixed Signal, and Configurable Products Groups beginning in 1998, and, more recently, was head of its Integrated Circuits Group. From 1996 to 1998, he served as President and a member of the board of directors of Tritech Microelectronics in Singapore, a manufacturer of analog and mixed signal products. From 1986 to 1996, Mr. Jackson worked for National Semiconductor Corporation, most recently as Vice President and General Manager of the Analog and Mixed Signal division. He also held various positions at Texas Instruments Incorporated, including engineering and management positions, from 1973 to 1986. Mr. Jackson has served on the board of directors of the Semiconductor Industry Association since 2008.

Mr. Jackson is our chief executive officer and as such, offers the Board his extensive experience in the semiconductor industry and intimate and detailed understanding of the day to day working of our Company and the issues that it faces.

Francis P. Barton, 63. Mr. Barton has served as a director of ON Semiconductor Corporation since February 2008. From September 2005, Mr. Barton served as the Executive Vice President and Chief Financial Officer of UTStarcom, Inc., where he had been instrumental in overseeing UTStarcom’s improvements to cost structure, balance sheet and cash-flow. He retired as Chief Financial Officer of UTStarcom in August 2008. Prior to joining UTStarcom in September 2005, Mr. Barton was the Executive Vice President and Chief Financial Officer of Atmel Corporation, where he was responsible for the semiconductor company’s finance and administration. Mr. Barton was the Senior Vice President and Chief Financial Officer at Advanced Micro Devices, Inc. (“AMD”) from 1998 to 2000. Prior to that he was Vice President and Chief Financial Officer at Amdahl Corporation where he worked from 1996 to 1998. Mr. Barton worked at Digital Equipment Corporation in Maynard, Massachusetts, from 1974 to 1996 — beginning as a financial analyst and moving his way up through various financial roles to Vice President and Chief Financial Officer of the company’s personal computer division. Mr. Barton served on the board of directors of UTStarcom, Inc. until August 2008 when he retired from the board.

Mr. Barton has extensive experience in the semiconductor industry. In addition, through his experience as a chief financial officer of two publicly held semiconductor companies, Mr. Barton has significant management experience and relevant knowledge of financial statement preparation and regulatory compliance.

Phillip D. Hester, 54. Mr. Hester has served as a director of ON Semiconductor Corporation since August 2006. In December 2009, Mr. Hester was appointed as the Senior Vice President of Research and Development at NIC. From April 2008 to December 2009, Mr. Hester was an independent technology consultant. From 2005 to April 2008, he served as the Chief Technology Officer at AMD. Since approximately mid-2006 to April 2008, Mr. Hester had also been a Senior Vice President of AMD. From September 2005 to approximately mid-2006, Mr. Hester was a Vice President of AMD. In his positions with AMD, Mr. Hester was responsible for, among other things, setting the architectural and product strategies and plans for AMD’s microprocessor business. He also chaired the AMD Technology Council. Mr. Hester was a co-founder of Newisys, which is now a Sanmina-SCI company. From July 2000 to September 2005, Mr. Hester was the Chief Executive Officer of Newisys. Prior to July 2000, Mr. Hester spent 23 years at IBM serving in a variety of key leadership and executive technical roles. While at IBM, Mr. Hester led a number of system technology development efforts, including the RS/6000, and served as one of 15 members of the IBM Corporate Technology Council. Mr. Hester has over 30 years of system design and enterprise computing experience.

Mr. Hester has extensive experience in the semiconductor industry, including with technological issues, strategies, and design. He also has had management experience as a chief technology officer and as a chief executive officer.

Class I — Terms Expiring in 2012

Curtis J. Crawford, Ph.D., 62. Dr. Crawford has served as a director of ON Semiconductor Corporation since September 1999. Dr. Crawford served as ON Semiconductor’s Chairman of the Board from September 1999 until his resignation from that position in April 2002. Dr. Crawford is Founder, President and Chief Executive Officer of XCEO, Inc., a consulting firm specializing in leadership and corporate governance that provides mentoring and support for executives. Prior to founding XCEO, Inc., he was the President and Chief Executive Officer of Onix Microsystems, Inc., a developer and manufacturer of optically transparent switches for communication networks, from February 2002 to April 2003. From

1999 to March 2001, he was Chairman, and from 1998 to March 2001, he was President and Chief Executive Officer of Zilog, Inc., a semiconductor design, manufacturing and marketing company. From 1997 to 1998, Dr. Crawford was Group President of the Microelectronics Group and President of the Intellectual Property division of Lucent Technologies. From 1995 to 1997, he was President of the Microelectronics Group. From 1993 to 1995, Dr. Crawford was President of AT&T Microelectronics, a business unit of AT&T Corporation. From 1991 to 1993, he held the position of Vice President and Co-Chief Executive Officer of AT&T Microelectronics. From 1988 to 1991, he held the position of Vice President, Sales, Service and Support for AT&T Computer Systems. Prior to 1988, he served in various sales, marketing and executive management positions at various divisions of IBM. Dr. Crawford currently serves as a member of the board of trustees of DePaul University and as a member of the boards of directors of ITT Corp., and E.I. du Pont de Nemours. In the past five years, Dr. Crawford has also served on the board of directors for Agilysys, Inc. Dr. Crawford is the author of three books on leadership and corporate governance.

Dr. Crawford is a long-time member of the Board with the resulting in depth knowledge of the Company’s strengths and issues. He has extensive experience in the semiconductor industry. He not only has management and technology experience, including as a chief executive officer of a publicly held semiconductor company, but offers us his extensive knowledge of leadership and corporate governance.

Daryl Ostrander, 61. Mr. Ostrander has served as a director of ON Semiconductor Corporation since February 2009. Mr. Ostrander has 35 years of experience in the semiconductor industry with expertise in semiconductor manufacturing, semiconductor technology, and production implementation of new products. From 1981 to 2008, Mr. Ostrander was the Senior Vice President, Manufacturing and Technology for AMD, a global provider of microprocessor solutions for the computing, communications and consumer electronic markets. Since 2008, Mr. Ostrander has operated his own enterprise, Ostrander Holdings, LLC, which is a graphic design and publication business. On February 1, 2010, Mr. Ostrander became a director of RF Micron, Inc., a private startup company focused on the development of next generation Radio Frequency Identifier (RFID) micro chips for itemized tracking applications.

Mr. Ostrander has extensive experience in the semiconductor industry. In addition to his management experience in a publicly held semiconductor company and his entrepreneurial experience, his focus on manufacturing processes offers the Board a different view point.

Robert H. Smith, 73. Mr. Smith has served as a director of ON Semiconductor Corporation since February 2005. Mr. Smith is a retired officer and director of Novellus Systems Inc., where he served as Executive Vice President, Finance and Administration, and Chief Financial Officer. Mr. Smith also served on the board of directors of Novellus until his retirement in 2002. In 1994, prior to joining Novellus, Mr. Smith was the Chairman of the board of directors for Micro Component Technology Inc., a semiconductor test-equipment manufacturer. From 1986 through 1990, Mr. Smith served as the President of Maxwell Graphics Inc. From 1982 through 1986, Mr. Smith was the Chief Financial Officer for Maxwell Communications of North America Corp. and R.R. Donnelley and Sons. He had previously held executive positions with Honeywell, Inc., Memorex Corporation and Control Data Corporation. Mr. Smith currently serves on the boards of directors of Cirrus Logic, Inc., PLX Technology, Inc., Virage Logic and Epicor Software Corporation.

Mr. Smith has extensive experience in a variety of industries, including the semiconductor industry, and has management experience in various roles. His experience as a chief financial officer of a publicly held company also provides valuable knowledge of financial statement preparation and regulatory compliance.

Proposal 2:
Approval of the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan

General

As discussed in more detail in the Compensation Discussion and Analysis (the “CD&A”) of this proxy statement, the Company maintains an executive compensation program consisting of the following primary elements: base salary, annual cash incentive compensation, equity incentives, change in control and severance compensation and other benefits. In recent years, the Company has implemented its equity compensation element primarily through grants of stock options, and restricted stock units, including performance-based restricted stock units, under the ON Semiconductor Corporation 2000 Stock Incentive Plan (“SIP”). The term of the SIP expired on February 17, 2010, but continues to govern prior awards until all awards granted under the SIP have been exercised, forfeited, canceled, expired or otherwise terminated in accordance with the terms of such grants.

The Compensation Committee recommended to the Board that the Company amend, restate and continue the SIP. On March 23, 2010, the Board adopted, subject to shareholder approval, the ON Semiconductor Corporation Amended and Restated Stock Incentive Plan (the “Amended and Restated Plan”). The Amended and Restated Plan is designed to amend, restate and continue the SIP and to provide for the grant of incentive stock options, nonqualified stock options, restricted stock units, restricted stock, performance shares, performance share units, performance cash awards, stock appreciation rights (“SARs”), and stock grant awards. The Amended and Restated Plan also permits the grant of awards that qualify for the “performance-based compensation” exception to the $1,000,000 limitation on the deduction of compensation imposed by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

In preparing the Amended and Restated Plan that the Company proposes for shareholder approval, the Company has taken into consideration current “best practices” with respect to equity-based and incentive compensation plans. Some of the new features of the Amended and Restated Plan that are consistent with these “best practices” include the following:

•

Limitation on Repricing. The Amended and Restated Plan prohibits the direct and indirect repricing of previously granted options or SARs without prior shareholder approval.

•

No Discounted Options or SARs; Shortened Term The Amended and Restated Plan includes an express requirement that all options and SARs be issued with an exercise price that is not less than the fair market value of a share of Company stock on the grant date. In addition, the exercise period for an option or SAR may not exceed seven years rather than the more traditional ten year term.

•

Share Counting Procedures. The Amended and Restated Plan includes more common share counting provisions, which include an express requirement that shares of stock tendered to pay the exercise price of an option or tendered or withheld to satisfy a tax withholding obligation arising in connection with an award will not again be made available for grant or sale under the Amended and Restated Plan.

•

Fungible Design. The Amended and Restated Plan uses a fungible design that is intended to make the value of all awards equal. Using this fungible design, whenever the Company issues an Option or SAR, the Plan’s award pool is charged one share for each share subject to the Option or SAR. Whenever a full value award (such as a

restricted stock unit, restricted stock, performance share, performance share unit, or stock grant award) is issued, the award pool is charged with 1.58 shares for each share subject to the award.

•

No Evergreen Provision. The Amended and Restated Plan eliminates the evergreen provision contained in the SIP.2

•

Minimum Vesting Schedule for Full Value Awards. The Amended and Restated Plan imposes a minimum vesting schedule on full value awards such as restricted stock, restricted stock units, performance shares and performance share units. Full value awards that are subject to time-based vesting must have a vesting period of at least three years, while those that are subject to performance-based vesting must have a vesting period of at least one year. Full value awards may vest in increments during the applicable three-year or one-year vesting period. The Amended and Restated Plan includes a de minimis exception that allows for the grant of awards that are not subject to these vesting requirements, provided that the number of shares subject to these awards plus the number of shares subject to stock grant awards do not exceed 10% of the shares available under the Amended and Restated Plan.

•

Limitation on Discretion to Waive Restrictions on Full Value Awards. The Amended and Restated Plan permits the waiver of restrictions on vesting of full value awards such as restricted stock, restricted stock units, performance shares and performance share units only in the event of termination of employment due to death, disability, retirement or change in control.

The other major differences between the SIP and the Amended and Restated Plan include:

•

The Amended and Restated Plan expands and clarifies the types of awards that are allowed (for example, the Amended and Restated Plan allows awards of performance cash and stock grant awards) and deletes references to the “take ownership awards” that related to the initial public offering of the Company.

•

The Amended and Restated Plan includes a revised definition of “Change in Control” that no longer refers to a former major shareholder of the Company. The new Change in Control definition also is triggered only by the consummation of a plan or proposal for the liquidation or dissolution of the Company rather than the shareholder approval of such a plan or proposal. In order for a sale of assets to trigger a Change in Control, at least 85% of the gross value of all of the Company’s assets must be sold.

•

The Amended and Restated Plan includes provisions that address the application of Section 409A of the Code to the Amended and Restated Plan and that expand and clarify the provisions relating to performance-based awards in light of current rules and Internal Revenue Service guidance.

•

The Amended and Restated Plan includes modified provisions related to awards to non-U.S. participants.

•

The Amended and Restated Plan includes more detail as to when shareholder approval will be required for an amendment to the Amended and Restated Plan.

The Company has followed a responsible approach to equity-based compensation in the past. As shown in the following table, the Company’s three-year average annual burn rate has been 2.03%, well below the RiskMetrics Group burn rate threshold of 4.82% applied to our industry.

																		Weighted
																		Average				Burn Rate =
																		Number of				Total Granted /
																		Common				Common
		Options				RSUs/RSAs				PBRSUs								Shares				Shares
		Granted				Granted				Earned(a)				Total				Outstanding				Outstanding
2009(b)			460,500				610,702				2,538,001				3,609,203				420,846,840				0.86	%
2008(c)			7,517,955				2,063,691				568,150				10,149,796				379,019,936				2.68	%
2007			6,239,400				1,172,350				—				7,411,750				290,836,670				2.55	%
																		3 yr average					2.03	%

We provide further information with respect to awards outstanding under the SIP as of December 31, 2009 below in this proxy statement under the heading “Equity Compensation Plan Information.”

A summary of the material terms of the Amended and Restated Plan is set forth below. The summary is qualified by reference to the full text of the Amended and Restated Plan, which is attached to this proxy statement as Appendix A. Capitalized terms used but not defined have the meaning given to such terms in the Amended and Restated Plan.

Summary of Plan Features

Purpose. The Board believes that the Amended and Restated Plan will promote the success and enhance the long-term growth of the Company by aligning the interests of participants in the Amended and Restated Plan with those of Company shareholders and by providing those individuals with an incentive for outstanding performance to generate superior returns for Company shareholders. The Board also believes that the flexible terms and conditions of the Amended and Restated Plan, which permit the grant of various forms of equity awards with a variety of terms and conditions, allow the Company to attract, retain and motivate individuals upon whose judgment, interest and effort the successful conduct of the Company’s operation is largely dependent.

Administration. The Amended and Restated Plan provides that it will be administered by the Compensation Committee (the “Committee”). The Board, in its discretion, has the authority to designate another committee comprised of at least three members of the Board to administer the Plan. Each Committee member (or member of any applicable subcommittee of the Committee) must be (i) a “non-employee director” as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), if required to meet the conditions of exemption for awards under the Amended and Restated Plan from Section 16(b) of the Exchange Act, and (ii) an “outside director” as defined in Section 162(m) of the Code and the regulations issued thereunder. The Committee, by majority action, is authorized to interpret the Amended and Restated Plan, to prescribe, amend, and rescind rules and regulations relating to the Amended and Restated Plan, to provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company, and to make all other determinations necessary for the administration of the Amended and Restated Plan, to the extent they are not contrary to express provisions of the Amended and Restated Plan.

The Committee has the authority, without limitation, to determine (i) the participants who are entitled to receive awards under the Amended and Restated Plan; (ii) the types of awards; (iii) the times when awards shall be granted; (iv) the number of awards; (v) the purchase price or exercise price, if any; (vi) the period(s) during which such awards shall be exercisable (whether in whole or in part); (vii) the restrictions applicable to awards; (viii) the form of each award agreement; (ix) the other terms and provisions of any award; and (x) the schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an award and accelerations or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines. The Committee also has the authority to modify existing awards to the extent permitted under the Plan. The Committee does not have the authority to accelerate the vesting or waive the forfeiture of any awards that are intended to qualify for the performance-based compensation exception to the compensation deduction limitations of Section 162(m) of the Code. Neither the award agreement nor the other terms and provisions of any award must be identical for each participant.

Pursuant to specific written delegation promulgated from time to time by the Committee in accordance with applicable state law and subject to certain restrictions and limitations, the Company’s Chief Executive Officer (“CEO”) has the authority to grant awards to individuals to expedite the hiring process and retain talented employees. However, the CEO does not have the authority to grant awards to any of the Company’s executives who are “covered employees” as defined in Section 162(m) of the Code and the regulations issued thereunder or to executives who are subject to Section 16 of the Exchange Act.

Stock Subject to the Amended and Restated Plan. The aggregate number of shares of stock reserved and available for grant pursuant to the Amended and Restated Plan is 26.1 million.³ This 26.1 million share award pool will be increased by one share for each share subject to an option or SAR award under the SIP that either terminates, expires or lapses for any reason after February 17, 2010. The award pool also will be supplemented by 1.58 shares for each share that is subject to any full value award (restricted stock unit, restricted stock, performance share, performance share unit and stock grant awards) made under the SIP that either terminates, expires or lapses for any other reason after February 17, 2010. The maximum number of shares of stock that may be issued as incentive stock options under the Amended and Restated Plan shall be 6,000,000. Shares delivered pursuant to the Amended and Restated Plan may consist of authorized but unissued stock, treasury stock, or stock purchased on the open market. The amount of

stock reserved for grants pursuant to the Amended and Restated Plan is subject to adjustment in the event of certain changes in capital structure as described below under “Adjustment Provisions.”

As described above in the context of awards made pursuant to the SIP, if any award granted under the SIP or the Amended and Restated Plan terminates, expires, lapses for any reason, or is paid in cash, any stock subject to or surrendered for such award (or 1.58 shares for each share subject to a full value award) will again be stock available for the grant of an award under the Amended and Restated Plan. The exercise of a stock-settled SAR or broker-assisted “cashless” exercise of an option (or a portion thereof) will reduce the number of shares of stock available for issuance pursuant to the Amended and Restated Plan by the entire number of shares of stock subject to that SAR or option (or applicable portion thereof), even though a smaller number of shares of stock will be issued upon such an exercise. Also, shares of stock tendered to pay the exercise price of an option or tendered or withheld to satisfy a tax withholding obligation arising in connection with an award will not become available for grant or sale under the Amended and Restated Plan.

Subject to the adjustment provisions of the Amended and Restated Plan, the maximum number of shares of stock subject to any option or SAR that may be granted to any one participant who is a “covered employee,” as defined in Section 162(m) of the Code and the regulations issued thereunder, during a fiscal year is 2,500,000 shares.

Eligibility. All employees, officers, non-employee directors of, and certain consultants to, the Company or an affiliate are eligible to participate in the Amended and Restated Plan. As of March 23, 2010, there were approximately 13,350 employees, including officers, and non-employee directors eligible to participate in the Amended and Restated Plan, subject to limitations of local law, tax policy and custom in certain foreign countries. Subject to certain requirements, prospective members of the Board, employees or officers of, and consultants to, the Company or an affiliate to whom awards are granted in connection with written offers of an employment, consulting or advisory relationship with the Company or an affiliate, also may be granted awards by the Committee.

The Committee has the authority to establish additional terms, conditions, rules or procedures to accommodate the rules or laws of non-U.S. jurisdictions, to allow for tax-favored treatment of awards granted to participants who reside outside of the United States, or to otherwise provide for participation by participants who reside outside of the United States. The Committee also may approve any sub-plans, supplements to, or amendments, restatements or alternate versions of the Amended and Restated Plan as the Committee deems necessary to accomplish these purposes without affecting the terms of the Amended and Restated Plan as in effect for any other purpose, provided that these documents do not increase the share limitations set forth in the Amended and Restated Plan.

Awards Available Under the Amended and Restated Plan. The following types of awards may be granted pursuant to the Amended and Restated Plan: incentive stock options, nonqualified stock options, restricted stock units, restricted stock, performance shares, performance share units, performance cash awards, SARs, and stock grant awards. As of the time of the finalization of this proxy statement, no determination has been made as to the types or amounts of awards that will be granted to specific individuals under the Amended and Restated Plan.

Stock Options. The Committee may grant, among other things, incentive stock options and nonqualified stock options under the Amended and Restated Plan. Incentive stock options will be granted only to participants who are employees. The exercise price of all options granted under the Amended and Restated Plan will be at least 100% of the fair market value of the common stock on the Grant Date. The “Grant Date” as determined by the Committee will be the latest to occur of (i) the date as of which the Committee approves an award; (ii) the date on which an award to a prospective employee, officer, non-

employee director or consultant first becomes effective pursuant to the Amended and Restated Plan; or (iii) such other date as may be specified by the Committee in the award agreement. Stock options may be exercised as determined by the Committee, but no option may be exercised more than seven years from the date of grant. The Committee will determine the methods by which the exercise price of an option may be paid, the form of payment, including, without limitation, cash, promissory note, shares of stock held for longer than six months (through actual tender or by attestation), any net-issuance arrangement or other property acceptable to the Committee (including broker-assisted “cashless exercise” arrangements), and the methods by which shares of stock will be delivered or deemed delivered to participants. Special rules will apply to incentive stock options as provided in the Amended and Restated Plan. Unless otherwise provided in the award agreement, an option will lapse immediately if a participant’s employment or services is terminated for Cause, as defined in the Amended and Restated Plan. A participant will have no rights as a shareholder with respect to options until the shares of stock are actually issued in connection with the award.

Restricted Stock Units. The Committee may also grant restricted stock unit awards under the Amended and Restated Plan. A restricted stock unit award gives the participant the right to receive common stock or a cash payment equal to the fair market value of the common stock (determined as of a specified date) in the future, subject to certain restrictions and to the risk of forfeiture. Participants holding restricted stock units have no voting rights with respect to the shares of stock subject to their restricted stock unit award prior to the issuance of such shares pursuant to the award.

Restricted Stock. The Committee may also grant restricted stock under the Amended and Restated Plan. A restricted stock award gives the participant the right to receive a specified number of shares of common stock at a purchase price determined by the Committee (including and typically zero). Restrictions limit the participant’s ability to transfer the stock and subject the stock to a substantial risk of forfeiture until specific conditions or goals are met. The restrictions will lapse in accordance with a schedule or other conditions as determined by the Committee. As a general rule, if the participant terminates employment during the restriction period, the unvested restricted stock is forfeited. An award of restricted stock may include the right to vote the stock during the restriction period.

Performance Shares. The Committee may also grant performance share awards under the Amended and Restated Plan. A performance share award gives the participant the right to receive common stock if the participant achieves the performance goals specified by the Committee during a performance period specified by the Committee.

Performance Share Units. The Committee may also grant performance share unit awards under the Amended and Restated Plan. A performance share unit award gives the participant the right to receive common stock, a cash payment or a combination of stock and cash, contingent on achievement of certain performance goals specified by the Committee during a performance period specified by the Committee.

Performance Cash Awards. The Committee may also grant performance cash awards under the Amended and Restated Plan. A performance cash award gives the participant the right to receive a cash payment if certain performance goals specified by the Committee are satisfied during a performance period specified by the Committee.

Stock Appreciation Rights. The Committee may also grant SARs under the Amended and Restated Plan. A SAR gives the participant the right to share in the appreciation in value of one share of common stock. Appreciation is calculated as the excess, if any, of (i) the fair market value of a share of common stock on the date of exercise over (ii) the price fixed by the Committee on the Grant Date, which may not be less than the fair market value of a share of common stock on the Grant Date. Payment for SARs shall be made in stock. SARs are exercisable at such times and subject to such restrictions and conditions as the

Committee approves, provided that no SAR may be exercised more than seven years following the grant date.

Stock Grant Awards. The Committee may grant stock awards under the Amended and Restated Plan. A stock grant award gives the participant the right to receive, or the right to purchase at a predetermined price, shares of common stock free from vesting restrictions. A stock grant award may be granted or sold as consideration for past services, other consideration or in lieu of cash compensation due to any participant.

Performance Compensation Awards. When the Committee grants restricted stock, restricted stock units, performance shares, performance share units, performance cash awards and stock grant awards, it may designate the award as a “performance compensation award.” Performance compensation awards are designed to qualify for the “performance-based compensation” exception to the limitations on the deduction of compensation imposed by Section 162(m) of the Code. Section 162(m) of the Code only applies to “covered employees,” as that term is defined in Section 162(m) of the Code and the regulations issued thereunder. Therefore, only covered employees are eligible to receive awards that are designated as performance compensation awards. The Committee has complete discretion regarding whether to grant awards to covered employees that qualify for the “performance-based compensation” exception to Section 162(m) of the Code. Options and SARs granted pursuant to the Amended and Restated Plan should, by their terms, qualify for the “performance-based compensation” exception.

A covered employee is only entitled to receive payment for a performance compensation award for any given performance period to the extent that pre-established performance goals set by the Committee for the period are satisfied. These pre-established performance goals must be based on one or more of the performance criteria specified in Section 2.1(bb) of the Plan, a copy of which is attached to this Proxy Statement as Appendix A. Refer to Section 2.1(bb) for a complete list of the performance criteria. Some of the more significant performance criteria are the following: earnings before interest (income or expense), taxes, depreciation and amortization (“EBITDA”), earnings before interest (income or expense) and taxes (“EBIT”) pre- or after-tax net income, revenue, operating income, cash flow, operating cash flow, return on net assets, return on stockholders’ equity, return on assets, return on capital, stock price growth, shareholder returns, gross or net profit margin, earnings per share, price per share of stock and market share. The performance criteria may, but need not, be calculated in accordance with generally accepted accounting principles (“GAAP”) or any successor method to GAAP, including International Financial Reporting Standards. The performance criteria may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group, indices, or any other basket of companies.

With respect to any performance compensation award granted to a covered employee that qualifies for the “performance-based compensation” exception to the Section 162(m) limitation, the Committee has the discretion to select the length of the performance period, the type of performance compensation award to be issued, the kind and/or level of performance goal or goals and whether the performance goal or goals apply to the Company, an affiliate or any division or business unit of any of them, or to the individual participant or any group of participants. The Committee also has the discretion to evaluate the achievement of the performance goals in a manner that includes or excludes certain events that may occur during the performance period, as described in the Amended and Restated Plan. The Committee has the discretion to decrease the amount of compensation payable pursuant to any performance compensation award but may not increase the compensation payable pursuant to any performance compensation award. The Committee must certify in writing prior to the payment of any performance compensation award that the performance goals and any other material terms and conditions precedent to such payment have been satisfied.

The maximum amount of any performance compensation award that may be granted to a covered employee during any performance period is 2,500,000 shares of common stock. In addition, the maximum amount of cash payable under a performance compensation award to a covered employee for a performance period is the dollar amount determined by multiplying two million five hundred thousand (2,500,000) by the fair market value of one share of the Company’s stock as of the first day of the performance period.

Minimum Vesting Periods; Waiver of Restrictions. Full value awards, such as restricted stock, restricted stock units, performance shares and performance share units, are subject to minimum vesting periods. Full value awards that are subject to time-based vesting must have a vesting period of at least three years, while awards that are subject to performance-based vesting must have a vesting period of at least one year. These awards may vest in increments during the applicable vesting period. The Committee, in its discretion, may provide in the award agreement for any full value award that the award vests, in whole or in part, on the participant’s termination of employment due to death, disability, retirement or the occurrence of a change in control. The Committee may grant full value awards that are not subject to the minimum vesting requirements, provided that the number of shares of stock subject to these awards plus the number of shares of stock subject to stock grant awards do not exceed 10% of the shares of stock available for the grant of awards pursuant to the Amended and Restated Plan.

Restrictions. Except as described above, the Compensation Committee may impose such restrictions on any awards under the Amended and Restated Plan as it may deem advisable, including restrictions under applicable federal securities law, under the requirements of any stock exchange upon which the common stock is then listed and under any blue sky or state securities law applicable to the awards.

Change in Control. Upon a Change in Control (as that term is defined in the Amended and Restated Plan), the Board has the discretion to provide that all or part of outstanding options, SARs, and other awards shall become fully exercisable and all or part of the restrictions on outstanding awards shall lapse. Upon, or in anticipation of, such an event, the Committee may cause every award outstanding under the Amended and Restated Plan to terminate at a specific time in the future and shall give each participant the right to exercise awards during a period of time as the Committee, in its sole and absolute discretion, shall determine. We discuss some of our existing change in control arrangements under the “Compensation of Executive Officers — Employment, Severance, and Change in Control Agreements and Arrangements” below in this proxy statement.

Non-transferability. The Committee may, in it sole discretion, determine the right of a participant to transfer any award granted under the Amended and Restated Plan. Unless otherwise determined by the Committee, no award granted under the Amended and Restated Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or pursuant to a domestic relations order in favor of a spouse (that would otherwise qualify as a qualified domestic relations order as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, but for the fact that the order pertains to an award), or, if applicable, until the termination of any restricted or performance period as determined by the Committee.

A participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the participant and to receive any distribution with respect to any award upon the participant’s death. If no beneficiary has been designated or survives the participant, payment will be made to the person entitled thereto under the participant’s will or the laws of descent and distribution. Subject to the foregoing, a participant may change or revoke a beneficiary designation at any time provided the change or revocation is filed with the Committee.

Adjustment Provisions. If there is a change in the outstanding shares of common stock because of a stock dividend or split, recapitalization, merger, consolidation, combination, exchange of shares, or other similar corporate change, the aggregate number of shares of stock available under the Amended and Restated Plan and subject to each outstanding award, and its stated exercise price or the basis upon which the award is measured, will be adjusted by the Committee. Moreover, in the event of such transaction or event, the Committee, in its discretion, may provide in substitution for any or all outstanding awards under the Amended and Restated Plan such alternative consideration (including cash) as it, in good faith, may determine to be equitable under the circumstances and may require in connection therewith the surrender of all awards so replaced. Any adjustment to an incentive stock option shall be made consistent with the requirements of Section 424 of the Code. Further, with respect to any option or SAR that otherwise satisfies the requirements of the stock rights exception to Section 409A of the Code, any adjustment shall be made consistent with the requirements of the final regulations promulgated pursuant to Section 409A of the Code.

Amendment, Modification and Termination of Plan. Subject to the approval of the shareholders at the 2010 annual meeting, the effective date of the Amended and Restated Plan is March 23, 2010, the date it was approved by the Board. Subject to the Board’s right to amend or terminate the Amended and Restated Plan at any time, the Amended and Restated Plan will expire and no award may be granted under the Amended and Restated Plan after the tenth anniversary of the effective date unless the shareholders of the Company approve an extension of the Amended and Restated Plan. Any awards outstanding on the tenth anniversary of the effective date (or later expiration date approved by the Company’s shareholders) will remain in effect according to the terms of the award agreement and the Amended and Restated Plan.

The Board has discretion to terminate, amend or modify the Amended and Restated Plan at any time. Any such action of the Board is subject to the approval of the shareholders to the extent required by law, regulation or the rules of any exchange on which the common stock is listed, quoted or traded. To the extent permitted by law, the Board may delegate to the Committee or the CEO the authority to approve non-substantive amendments to the Amended and Restated Plan. Except as otherwise provided in the Amended and Restated Plan, the Board, CEO and the Committee may not do any of the following without shareholder approval: (i) reduce the purchase price or exercise price of any outstanding award, including any option or SAR; (ii) increase the number of shares available under the Amended and Restated Plan (except in connection with any adjustment made pursuant to the Adjustment Provisions described above); (iii) grant options with an exercise price that is below fair market value of a share of common stock on the grant date; (iv) reprice previously granted options or SARs; or (v) cancel any option or SAR in exchange for cash or any other award or in exchange for any option or SAR with an exercise price that is less than the exercise price for the original option or SAR.

The Amended and Restated Plan or any award agreement can also be amended to comply with Section 409A of the Code or to exclude or exempt the Amended and Restated Plan or any award from the requirements of Section 409A of the Code.

Tax Withholding. The Company will have the power to withhold, or require a participant to remit to the Company, an amount sufficient to satisfy federal, state, and local withholding tax requirements on any award under the Amended and Restated Plan. To the extent that alternative methods of withholding are available under applicable laws, the Company will have the power to choose among such methods.

Federal Income Tax Information. The following is a brief summary of certain of the federal income tax consequences of certain transactions under the Amended and Restated Plan based on federal income tax laws in effect on January 1, 2010. This summary is not intended to be exhaustive and does not describe state or local tax consequences.

As a general rule, a participant will not recognize taxable income with respect to any award at the time of grant. If a participant who receives a restricted stock grant makes the election permitted by Section 83(b) of the Code, the participant will recognize income on the award at the time of grant.

Upon exercise of a nonqualified stock option, the lapse of restrictions on restricted stock, or upon the payment of SARs, restricted stock units, performance shares, performance share units, performance cash awards, or stock grant awards, the participant will recognize ordinary taxable income in an amount equal to the difference between the amount paid for the award, if any, and the fair market value of the stock or amount received on the date of exercise, lapse of restriction or payment. The Company will be entitled to a concurrent income tax deduction equal to the ordinary income recognized by the participant.

A participant who is granted an incentive stock option will not recognize taxable income at the time of exercise. However, the excess of the stock’s fair market value over the option price could be subject to the alternative minimum tax in the year of exercise (assuming the stock received is not subject to a substantial risk of forfeiture or is transferable). If stock acquired upon exercise of an incentive stock option is held for a minimum of two years from the date of grant and one year from the date of exercise, the gain or loss (in an amount equal to the difference between the sales price and the exercise price) upon disposition of the stock will be treated as a long-term capital gain or loss, and the Company will not be entitled to any income tax deduction. If the holding period requirements are not met, the incentive stock option will not meet the requirements for this tax favored treatment and the tax consequences described for nonqualified stock options will apply.

The final regulations promulgated under Section 409A of the Code became effective as of January 1, 2009. If certain awards fail to comply with Section 409A, a participant must include in ordinary income all deferred compensation, if any, conferred by the award, pay interest from the date of the deferral and pay an additional 20% tax. The award agreement for any award that is subject to Section 409A may include provisions necessary for compliance as determined by the Committee. The Company intends (but cannot and does not guarantee) that awards granted under the Amended and Restated Plan will comply with the requirements of Section 409A or an exception thereto and intends to administer and interpret the Amended and Restated Plan in such a manner.

Special Rules Applicable to Officers. In limited circumstances where the sale of common stock that is received as the result of a grant of an award could subject an officer to suit under Section 16(b) of the Exchange Act, the tax consequences to the officer may differ from the tax consequences described above. In these circumstances, unless a special election has been made, the principal difference usually will be to postpone valuation and taxation of the stock received so long as the sale of the stock received could subject the officer or director to suit under Section 16(b) of the Exchange Act, but not longer than six months.

Tax Consequences to the Company or Its Affiliates. To the extent that a grantee recognizes ordinary income in the circumstances described above, the Company or the affiliate for which the employee performs services will be entitled to a corresponding deduction, provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code and is not subject to the $1 million deduction limit for certain executive compensation under Section 162(m) of the Code.

New Plan Benefits Table. Benefits under the Amended and Restated Plan will depend on the Committee’s actions and the fair market value of the Company’s stock at various future dates. Consequently, it is not possible to determine the future benefits that will be received by the Amended and Restated Plan participants.

Required Vote. The affirmative vote of a majority of the votes duly cast is required to approve this proposal. Abstentions and broker non-votes are not treated as votes cast and, therefore, will have no effect on the approval of this proposal.

The Board of Directors recommends a vote “for” approval of Proposal 2.

Proposal 3:
Ratification of Appointment of Independent Registered Public Accounting Firm

The Audit Committee of the Board has appointed PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as the independent registered public accounting firm (i) to audit our consolidated financial statements for the year ending December 31, 2010 and (ii) to render other services as required of them, including to report on the effectiveness of our internal control over financial reporting as of December 31, 2010, and is seeking ratification by the stockholders of this appointment.

A representative of PricewaterhouseCoopers is expected to be present at the Annual Meeting. The representative will have an opportunity to make a statement if such representative desires to do so, and will be available to respond to appropriate questions by stockholders.

Stockholder ratification of the selection of PricewaterhouseCoopers as our independent registered public accounting firm is not required by our bylaws or otherwise. Nonetheless, the Audit Committee is submitting the selection of PricewaterhouseCoopers to the stockholders for ratification as a matter of good corporate practice and because the Audit Committee values stockholders’ views on our independent auditors.

If the stockholders fail to ratify the election, the Audit Committee will reconsider the appointment of PricewaterhouseCoopers. Even if the selection is ratified, the Audit Committee, in its discretion, may appoint a different independent registered public accounting firm at any time during the year if it determines that such an appointment would be in our best interest and the best interest of our stockholders.

Required Vote. The affirmative vote of a majority of the votes duly cast on this item is required to approve this proposal. Abstentions and broker non-votes are not treated as votes cast and, therefore, will have no effect on this proposal.

The Audit Committee and the Board of Directors recommend a vote “for” approval of Proposal 3.

Audit and Related Fees

The Audit Committee reviews and approves audit and permissible non-audit services performed by PricewaterhouseCoopers, our independent registered public accounting firm, as well as the fees charged by PricewaterhouseCoopers for such services. In its review of non-audit services and fees and its appointment of PricewaterhouseCoopers as our independent registered public accounting firm, the Audit Committee considered whether the provision of such services is compatible with maintaining PricewaterhouseCoopers’ independence.

Fees Billed by PricewaterhouseCoopers. The table below sets forth the aggregate fees for audit and other services provided by PricewaterhouseCoopers for 2009 and 2008.

Fee Type		2009				2008
		(in millions)				(in millions)
Audit Fees (1)		$	2.1			$	3.3
Audit Related Fees		$	0.0			$	0.0
Tax Fees (2)		$	0.5			$	0.4
All Other Fees		$	0.0			$	0.0
Total Fees		$	2.6			$	3.7

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services. Under the Audit Committee charter, the Audit Committee must pre-approve all audit services and permitted non-auditing services (including the fees and terms thereof) to be performed by our independent registered public accounting firm, subject to the de minimus exceptions for non-audit services prescribed in the federal securities laws and regulations which are approved by the Audit Committee prior to the completion of the audit. The Audit Committee may delegate to one or more members of the Audit Committee authority to grant pre-approvals of audit and permitted non-audit services, provided that such decisions shall be presented to the full Audit Committee at its next scheduled meeting. During 2009 and 2008, all audit and permissible non-audit services were pre-approved by the Audit Committee pursuant to its charter.

The Audit Committee has determined that the provision of services described above is compatible with maintaining PricewaterhouseCoopers’ independence.

THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

The Board met seven times last year and the committees, including any special committees, of the Board held a total of 25 meetings. The Directors attended 100% of the total Board and committee meetings held in 2009. We do not currently have a policy with regard to Directors’ attendance at the Annual Meeting of Stockholders; however, five Directors, Messrs. McCranie, Jackson, Barton, Hernandez and Smith, attended the annual meeting of stockholders on May 20, 2009.

Committees of the Board

Our current Board committee membership is as follows:

Corporate
Governance and
Nominating				Compensation
Committee		Audit Committee		Committee		Executive Committee
J. Daniel McCranie*		Emmanuel T. Hernandez*		Robert H. Smith*		J. Daniel McCranie*
Curtis J. Crawford		Francis P. Barton		Curtis J. Crawford		Curtis J. Crawford
Phillip D. Hester		Curtis J. Crawford		J. Daniel McCranie		Phillip D. Hester
Daryl Ostrander**		J. Daniel McCranie				Keith D. Jackson
		Robert H. Smith

Audit Committee. The Audit Committee, established pursuant to Section 3(a)(58)(A) of the Exchange Act, has a formal written charter, a copy of which is available on our website at www.onsemi.com. The adequacy of this charter is reviewed at least annually.

Our Audit Committee has the specific purpose under its charter to:

•

monitor the integrity of our corporate financial reporting;

•

provide to the Board the results of its monitoring and recommendations derived therefrom;

•

outline to the Board changes made, or to be made, in internal accounting controls noted by the Audit Committee;

•

appoint, determine funding for, and oversee our independent auditors;

•

review the independence, qualifications and performance of our internal and independent auditors;

•

oversee that management has the processes in place to assure our compliance with all applicable corporate policies, and legal and regulatory requirements; and

•

provide such additional information and materials as it may deem necessary to make the Board aware of significant matters relating to the responsibilities of the Audit Committee that require the Board’s attention.

Among other things, the Audit Committee has the specific authority and responsibility under its charter to:

•

pursuant to the Commission’s rules, establish procedures for (i) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters;

•

review and oversee related party transactions to the extent required under applicable federal securities laws and related rules and regulations or NASDAQ rules, unless such transactions are submitted to another comparable independent body of the Board;

•

discuss with management our major financial risk exposures and the steps we have taken to monitor and control such exposures, including related risk assessment and risk management policies; and

•

prepare an annual report required by the rules of the Commission for inclusion in our proxy statement.

The Audit Committee has other specific responsibilities under its charter, including its policies and procedures for pre-approval of auditing services and permitted non-auditing services (including the fees and terms thereof) of our independent registered public accounting firm. The Audit Committee also has authority and responsibility, as provided in its charter, over various other financial statement and disclosure matters, other items associated with the Company’s independent registered public accounting firm, and additional events associated with the Company’s internal audit and compliance functions. To the extent it deems necessary or appropriate, the Audit Committee may retain independent legal, accounting or other advisors, with appropriate funding related thereto to be provided by the Company.

The Board has determined that each current member of the Audit Committee is independent within the meaning of applicable Commission rules and the listing standards of NASDAQ. The Board has also determined that each current member of the Audit Committee is financially competent under the current listing standards of NASDAQ. The Audit Committee includes at least one independent Director, Emmanuel T. Hernandez, who has been determined by the Board to meet the qualifications of an “audit committee financial expert” in accordance with Commission rules and similar financial sophistication rules under NASDAQ listing standards. See “Audit Committee Report” below for more information on this committee. The Audit Committee met nine times in 2009.

Compensation Committee. The Compensation Committee has a formal written charter, a copy of which is available on our website at www.onsemi.com. The adequacy of this charter is reviewed at least annually.

Among other things, our Compensation Committee has the specific purpose under its charter to:

•

discharge the Board’s responsibilities relating to the application of compensation policies and all elements of compensation of the CEO, other executive officers and any other employees whose total compensation is substantially similar to such other officers, and non-employee Directors (“Outside Directors”); and

•

administer the Company’s stock option and other equity-based plans, all other short-term and long-term incentive plans, and any deferred compensation programs of the Company.

Among other things, our Compensation Committee has the specific authority and responsibility under its charter to:

•

annually review and approve goals and objectives relevant to the compensation of each of our CEO and senior executives, evaluate each of our CEO and senior executive’s performance in light of those goals and objectives, establish the compensation level for each of our CEO and senior executives based on this evaluation, subject to any employment agreements that may be in effect (the CEO may not be present during deliberation or voting concerning the CEO’s compensation);

•

review the competitive position of, and recommend changes to, the plans, systems and practices of the Company relating to compensation and benefits;

•

review and approve or recommend to the Board for approval any employment agreement with the CEO and any senior executive;

•

periodically review and establish compensation for Outside Directors for service on our Board and its committees;

•

make recommendations to the Board with respect to equity-based plans and any equity compensation arrangements outside of such plans (pending stockholder approval where appropriate);

•

administer the stock option and other equity-based plans, all other short-term and long-term incentive plans, and any deferred compensation programs of the Company, and approve or review the designation of participants in the plans and the principles and procedures used in determining grants and awards under the plans;

•

retain or terminate any compensation consultants or other advisors to assist the Compensation Committee in evaluating compensation matters or in carrying out its responsibilities;

•

review insurance coverage for directors and officers and make recommendations to the board with respect to such insurance;

•

obtain or perform an annual evaluation of the Compensation Committee’s performance; and

•

consider and discuss with management whether compensation arrangements for Company employees incentivize unnecessary and excessive risk taking.

Pursuant to its charter, the Compensation Committee also prepares an annual report required by the rules of the Commission for inclusion in our proxy statement. This report is included below immediately following the CD&A. The SIP, as well as the Amended and Restated Plan, contemplates that pursuant to a specific written delegation of authority by the Compensation Committee, the CEO may grant awards to individuals who are not “Covered Employees” or subject to Section 16 of the Exchange Act to expedite the hiring process and retain talented employees.

The Compensation Committee has regularly engaged a compensation consultant to assist in recommending the form and amount of executive and director compensation. In 2008, the Compensation Committee engaged Meyercord & Associates, Inc. (the “Consultant”) to assist in recommending the form and amount of executive and director compensation. Additional information regarding the Compensation Committee’s retention of the Consultant can be found in “Compensation of Directors — Discussion of

Director Compensation” and in the CD&A in “Processes and Procedures for Considering and Determining Executive Compensation — Role of Compensation Consultants.”

The Board has determined that each current member of the Compensation Committee is independent within the meaning of applicable Commission rules and the listing standards of NASDAQ. The Compensation Committee met nine times in 2009.

Executive Committee. The Executive Committee has a formal written charter, a copy of which is available on our website at www.onsemi.com. The adequacy of this charter is reviewed at least annually.

Our Executive Committee has the specific purpose under its charter to:

•

exercise between meetings of the Board all the delegable powers and authority of the Board regarding the management of the business affairs of the Company to the extent not expressly prohibited and not separately delegated to other committees of the Company, and subject to applicable restrictions and limitations.

As set forth in its charter, the Executive Committee does not have the power, among other things, to:

•

amend or repeal any resolution of the Board which by its express terms is not so amendable or repealable;

•

appoint or remove the Chairman of the Board, the President or CEO; and

•

appoint other committees of the Board or the members of such committees or amend or revise their duties and responsibilities or their charters.

The Executive Committee met three times in 2009.

Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee has a formal written charter, a copy of which is available on our website at www.onsemi.com. The adequacy of this charter is reviewed at least annually.

Our Corporate Governance and Nominating Committee has the specific purpose under its charter to:

•

identify qualified individuals to become Board members;

•

determine the composition of the Board and its committees;

•

monitor the process to assess Board effectiveness;

•

develop and implement the Company’s corporate governance principles; and

•

review and make recommendations to the Board regarding other matters of corporate governance as requested by the Board or otherwise determined to be appropriate by the Corporate Governance and Nominating Committee.

Among other things, our Corporate Governance and Nominating Committee has the specific responsibility under its charter to:

•

develop and review criteria for director nominees, which may include without limitation specific skills, experience, other qualifications and diversity, and develop a process for the recommendation of director nominees by the Corporate Governance and Nominating Committee;

•

identify and recommend to the Board slates of director nominees for election or re-election at each annual meeting of the stockholders or for nomination to election to the Board when Board vacancies arise, consistent with the developed nomination criteria;

•

make recommendations to the Board regarding director retirement age and tenure;

•

make recommendations to the Board regarding size and composition of the Board;

•

review and make recommendations to the Board regarding committee assignments;

•

retain and terminate any search firm to be used to identify director candidates and approve fees and retention terms of any such search firm;

•

subject to applicable law, consider shareholder nominations, if a shareholder complies with our director nomination procedures described in the bylaws and applicable law;

•

develop and recommend to the Board a set of corporate governance principles applicable to the Company and continue to monitor and update such principles;

•

review activities of directors with the Company or other entities that may diminish such director’s effectiveness or be inconsistent with the criteria established for Board membership;

•

oversee the evaluations of the Board and its committees;

•

encourage and facilitate directors’ continuing education;

•

develop policies and procedures for recommendation to the Board related to the succession of the CEO and other key executives, including succession planning, and review such succession planning on at least an annual basis;

•

review the Company’s risk exposure relating to the foregoing functions and provide guidance to the Board regarding its risk oversight responsibilities; and

•

obtain or perform an annual evaluation of the Corporate Governance and Nominating Committee’s performance.

Among other matters, the Corporate Governance and Nominating Committee may consider the following nomination criteria regarding Board membership:

•

the appropriate size of the Board;

•

the needs of the Company with respect to the particular talents and experience of its Directors;

•

a nominee’s knowledge, skills and experience, including experience in finance, administration or public service, in light of prevailing business conditions, and the knowledge, skills and experience already possessed by other members of the Board;

•

a nominee’s familiarity with the semiconductor industry;

•

a nominee’s experience in political affairs;

•

a nominee’s experience with accounting rules and practices; and

•

the desire to balance the benefit of continuity with the periodic injection of the fresh perspectives provided by new Board members.

The Corporate Governance and Nominating Committee is required to develop and periodically review criteria for director nominees, which may include specific skills, experience, other qualifications and diversity. We have no formal policy on the consideration of diversity in identifying director nominees, but we endeavor to have a board representing diverse experiences and in areas that are relevant to the Company’s global activities. When the Committee considers diversity, it may consider diversity of experience, skills and viewpoints, as well as traditional diversity concepts such as race or gender, as it deems appropriate.

The Company’s goal is to assemble a Board that brings together a variety of perspectives and skills derived from high quality business and professional experiences. In doing so, the Corporate Governance and Nominating Committee will also consider candidates with appropriate non-business backgrounds. Other than the foregoing, there are no stated criteria for Director nominees, although the Corporate Governance and Nominating Committee may also consider such other factors as it may deem to be in the best interests of the Company and its stockholders. However, the Corporate Governance and Nominating Committee does believe it appropriate for at least one, and preferably, several, members of the Board to meet the criteria for an “audit committee financial expert,” as defined by Commission rules, and to have past employment experience in finance and accounting sufficient to meet the financial sophistication rules under NASDAQ listing standards. The Corporate Governance and Nominating Committee also believes it appropriate for certain key members of the Company’s management to participate as members of the Board. The Corporate Governance and Nominating Committee identifies nominees by first evaluating the willingness of current members of the Board to continue service on the Board. Current members of the Board with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination. If any member of the Board does not wish to continue in service or if the Corporate Governance and Nominating Committee decides not to re-nominate a member for re-election, the Board then identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Board are polled for suggestions as to individuals meeting the criteria described above. The Corporate Governance and Nominating Committee may engage in research to identify qualified individuals. For a description of the procedure for stockholder nominations, see “Miscellaneous Information — Stockholder Nominations and Proposals” below.

The Board has determined that each of the current members of the Corporate Governance and Nominating Committee is independent within the meaning of applicable Commission rules and the listing standards of NASDAQ. The Corporate Governance and Nominating Committee met four times in 2009.

Special and Other Committees. The Board, from time to time, has deemed it desirable and in the best interest of the Company to form various special committees and independent committees.

Compensation of Directors*

																		Change in
																		Pension Value
		Fees																and
		Earned												Non-Equity				Nonqualified
		or Paid				Stock				Option				Incentive Plan				Deferred				All Other
		in Cash				Awards				Awards				Compensation				Compensation				Compensation
Name		($) (1)				($) (2)				($) (3)				($)				Earnings ($)				($)				Total ($)
Francis P. Barton			69,000				106,499				0				0				0				0				175,499
Curtis J. Crawford			80,500				106,499				0				0				0				0				186,999
Emmanuel T. Hernandez			79,000				106,499				0				0				0				0				185,499
Phillip D. Hester			63,000				106,499				0				0				0				77,400	(6)			246,899
Keith D. Jackson (4)			0				0				0				0				0				0				0
J. Daniel McCranie			139,500				106,499				0				0				0				0				245,999
Daryl Ostrander (5)			61,427				106,499				40,600				0				0				0				208,526
Robert H. Smith			84,000				106,499				0				0				0				0				190,499

The following table sets forth the assumptions in our calculations of grant date fair value for options granted in fiscal 2009 to the below listed Director:

Aggregate

Expected

Risk-Free

Grant

Volatility

Life

Interest

Divided

Date Fair

Name

Grant Date

%

(Years)

Rate %

Yield ($)

Value ($)

Daryl Ostrander

3/2/2009

75.9

%

4.72

1.87

%

0

40,600

Discussion of Director Compensation. The Compensation Committee regularly reviews the compensation payable to Outside Directors, including in February 2009 and most recently in February 2010. See “The Board of Directors and Corporate Governance — Committees of the Board — Compensation Committee” for a description of the authority of the Compensation Committee. In reviewing our Board compensation practices, the Compensation Committee was advised by the Consultant.

The annual retainers payable to the members of our Board of Directors as of January 1, 2009, are set forth below. New Directors receive an option to purchase 20,000 shares of our common stock. An annual equity award is also determined each year in an amount allowing total Director compensation to be at or about the mid-point of our peer group, based on a study provided by a compensation consultant chosen and hired by the Compensation Committee. We will calculate the annual equity award by subtracting $76,500 (the cash compensation earned by a “baseline” board member who receives the annual retainer of $59,000 and also serves on both the audit and compensation committees) from the midpoint total compensation amount determined as described above, and dividing the resulting amount by the closing stock price on the date of grant. The grants were made under the SIP in the form of restricted stock that vests at or about the date of grant. Should a director be appointed after the date of the annual grant, the award amount will be prorated based on the period of the year during which the director serves.

On February 26, 2009, Mr. Ostrander joined the Board. For additional information regarding compensation paid to Mr. Ostrander, see our Form 8-K filed with the Securities and Exchange Commission on March 3, 2009.

Retainers. Under the Director compensation program in 2009, the annual cash retainers were:

•

to the Chairman of the Board, $114,000 per year;

•

to Outside Directors, $59,000 per year;

•

to the Chair of the Audit Committee, $20,000 per year;

•

to the non-Chair members of the Audit Committee, $10,000 per year;

•

to the Chair of the Compensation Committee, $15,000 per year;

•

to the non-Chair members of the Compensation Committee, $7,500 per year;

•

to the Chair of the Corporate Governance and Nominating Committee, $8,000 per year; and

•

to the non-Chair members of the Corporate Governance and Nominating Committee, $4,000 per year.

Annual cash retainers are paid quarterly in arrears.

Equity Compensation. Consistent with past practice, when an individual initially becomes a member of the Board, we grant him or her a stock option (or other comparable equity-based compensation) to purchase a certain number of shares of our common stock, with equal pro rata vesting over a three year period beginning on the first anniversary of the grant date, at an exercise price equal to the fair market value of the stock on the grant date, and subject to the terms of the applicable stock incentive plan and a relevant stock option grant agreement. Effective March 2, 2009, the Board granted to each of our Outside Directors their annual equity award in the form of 31,886 shares of restricted stock with immediate vesting.

Other. We reimbursed Outside Directors for reasonable expenses incurred to attend Board and Committee meetings and to perform other relevant Board duties. Employee Directors do not receive any additional compensation for their services as a member of the Board.

Other Board Matters

Board Leadership Structure. We currently separate the roles of CEO and Chairman of the Board to align the Chairman role with our independent directors and to further enhance the independence of the Board from management. Our Chairman works closely with our CEO to set the agenda for meetings, facilitate information flow between the Board and management, and to gain the benefit of the CEO’s Company-specific experience, knowledge and expertise.

The Board’s Role in Risk Oversight. The Board plays an ongoing and active role in the oversight of risk. In designing our compensation programs and structuring awards, the Compensation Committee considers the likelihood of undue risk taking and the impact that such compensation decisions may have on the Company’s risk profile. The Audit Committee charter requires the Audit Committee to discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies. The Corporate Governance and Nominating Committee charter also requires the Corporate Governance and Nominating Committee to review the Company’s risk exposure relating to its functions

and to provide guidance to the Board regarding its overall risk oversight responsibilities. The Chairman of the relevant Committee reports on risk discussions to the full Board to the extent appropriate.

Senior management regularly reports to the Board or the appropriate Committee of the Board on areas of material risk to the Company, which may include financial, legal and regulatory risks, and operational and strategic risks. We describe some of these reporting processes below. For example, the Board has semiannual strategy and planning meetings at which business plans and proposals for the Company and various units or groups within the Company are presented and discussed. Comprehensive risk analysis is a significant part of such planning. At quarterly Board meetings, our business unit heads, and the heads of certain administrative function groups, report to the Board or the appropriate Committee regarding status. These reports include risk evaluation and assessment as a matter of course. Internal audit presents quarterly reports to the Audit Committee that include analysis of financial and regulatory risk. Environmental risk reports are made quarterly to the Corporate Governance and Nominating Committee. Specific risks are addressed appropriately as and when they are identified.

Corporate Governance Principles

The ON Semiconductor Corporation Corporate Governance Principles were originally adopted by the Board in 2003 and last amended on August 13, 2008 (“Principles”). These Principles provide guidance for all types of corporate governance matters and are available on our website at www.onsemi.com. Among other matters, the Principles include the following items:

The Role of Board and Management. Our business is conducted by our employees, managers and officers, under the direction of the CEO and the oversight of the Board to enhance the long-term value of the Company for its stockholders. Both our Board and management realize that the long-term interests of stockholders are advanced by responsibly addressing the concerns of other stakeholders and interested parties, including employees, recruits, customers, suppliers, creditors, ON Semiconductor communities, government officials and the public at large.

Functions of the Board. The Board has at least four regularly scheduled meetings a year, and may choose to schedule additional meetings in accordance with our by-laws, at which it reviews and discusses reports by management on our performance. In addition to general oversight of management, the Board and its committees also perform specific functions, including, among other things: (i) selection, evaluation and compensation of the CEO and other senior management; (ii) reviewing and monitoring and, where appropriate, approving fundamental financial and business strategies and major corporate actions; (iii) assessing major risks facing the Company; and (iv) ensuring that processes are in place for maintaining the integrity of the Company for the benefit of its stakeholders.

Qualifications. Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the stockholders. They must also have an inquisitive and objective perspective, practical wisdom and mature judgment. We endeavor to have a board representing diverse experiences, and in areas that are relevant to the Company’s global activities. See “Management Proposals — Proposal 1: Election of Directors” above, regarding classification of Directors, and “The Board of Directors and Corporate Governance — Committees of the Board — Corporate Governance and Nominating Committee” above, regarding the qualifications we seek in our Directors. The Principles require that Directors shall limit the number of boards of public or private companies (excluding non-profits and subsidiaries) on which they serve to no more than four for non-management Directors (i.e., a Director not holding management positions at the Company) and no more than two for Directors holding management positions at the Company, taking into account a Director’s attendance, participation and effectiveness on these boards. Existing Directors at the time of adoption of this limitation in January of 2008 who exceeded these board limits were expected to develop and

implement a plan to reduce the number of boards upon which they serve within a reasonable timeframe in order to comply with these limitations. The number of audit committees on which the members of the Company’s Audit Committee may sit concurrently shall be reviewed annually by the Corporate Governance and Nominating Committee. In addition, once a Director reaches the age of 75 the Board shall not, under any circumstances, nominate such Director for re-election and such Director shall not stand for re-election.

Independence of Directors. We will seek to have, at a minimum, a sufficient number of independent Directors to comply at all times with relevant Commission, NASDAQ and other applicable rules and regulations.

Board Committees. See “The Board of Directors and Corporate Governance — Committees of the Board” above, for information regarding committees established by the Board.

Compensation of the Board. The Compensation Committee has the responsibility for recommending to the Board compensation and benefits for Outside Directors. In determining compensation and benefits, the Compensation Committee is guided by three goals: (i) compensation should fairly pay Directors for work required in a company of our size and scope; (ii) compensation should align Directors’ interests with the long-term interests of stockholders; and (iii) the structures of the compensation should be simple, transparent and easy for stockholders to understand. Generally, the Compensation Committee believes that these goals will be served by compensating Outside Directors with cash and/or equity-based awards.

Directors’ and Officers’ Stock Ownership Guidelines. In order to align Directors’ and officers’ interests and objectives with those of shareholders and further promote the Company’s longstanding commitment to sound corporate governance, the Company has also established guidelines for Company stock ownership. Directors who are not officers are required to hold Company stock in an amount equal to a minimum of two times the annual director retainer fee set for non-chair directors and subject to the terms and conditions set forth in the Principles. There is a transition period of four years from January 1, 2008 for then current Directors to achieve the guideline ownership. New Directors will be expected to meet the ownership requirement within four years of commencing service on the Board. If a Director fails to attain this stock ownership guideline within the specified four-year period, the Chairman of the Board will meet with the relevant Director to formulate an individualized and structured plan to ensure compliance. Notwithstanding the preceding, if the Director continues to fail to comply within the specified time period allotted within the individualized plan, the Director will not be eligible to stand for re-election at the next shareholder meeting at which that Director’s class is up for re-election. Stock that qualifies towards satisfaction of these stock ownership guidelines for Directors includes:

•

Shares purchased on the open market;

•

Shares obtained through exercises of stock options granted by the Company;

•

Vested stock units from RSUs (whether time-based or performance-based) or RSAs granted by the Company; and

•

Shares owned jointly with, or separately by, a spouse and/or minor children.

Officers of the Company and the Company’s subsidiary, SCI, are required to hold Company stock in an amount equal to a minimum of a multiple of base salary as follows: (i) CEO — three times annual base salary; (ii) Executive Vice Presidents — two times annual base salary; and (iii) Senior Vice Presidents — one times annual base salary. Officers subject to the guideline as of January 1, 2008 are expected to meet the ownership requirement within four years of such date and officers who become subject to the

guidelines after that date will have four years after they become subject to the requirements to meet the ownership requirement. For officers subject to the guideline as of January 1, 2008, the guideline is established using each person’s annual base salary on January 1, 2008 and the average closing price of the Company’s common stock as calculated under the guideline. For officers that become subject to the guideline after January 1, 2008, the individual guideline will be established based upon their annual base salary at the time they become subject to the guideline and the average closing price of the Company’s common stock as calculated under the guideline. Once established, an officer’s guideline will generally not change as a result of changes in the person’s annual base salary or fluctuations in the Company’s common stock price. Stock that qualifies towards satisfaction of these stock ownership guidelines for officers includes:

•

Shares purchased on the open market;

•

Shares obtained through exercises of stock options granted by the Company;

•

Vested stock units from RSUs (whether time-based or performance-based) granted by the Company;

•

Shares obtained through the 2000 Employee Stock Purchase Plan (“2000 ESPP”); and

•

Shares owned jointly with, or separately by, a spouse and/or minor children.

If an officer fails to meet these stock ownership guidelines within the specified four-year period, the CEO will meet with the relevant officer to formulate an individualized and structured plan to ensure compliance. These guidelines may be waived for Directors and officers, at the discretion of the Corporate Governance and Nominating Committee, if compliance would create severe hardship or for other good reasons. It is expected that these instances will be rare.

Other Matters. The Principles include a discussion of Board membership and selection, the annual self-examination by the Directors and determination of the Board agenda, the process available for reporting concerns to the Audit Committee relating to our accounting and auditing matters, compensation of the Board, and other matters typical of Boards of Directors of other publicly traded semiconductor or peer companies.

Code of Business Conduct

We have adopted a broad Code of Business Conduct (“Code of Conduct”) for Directors and employees. Within this Code of Conduct is a Financial Code of Ethics that applies to our CEO, Chief Financial Officer (“CFO”), Principal Accounting Officer or Controller, and other persons performing similar functions, as well as to our Directors and each member of our Finance Department. We believe that the Code of Conduct satisfies the standards promulgated by the Commission and NASDAQ. The Code of Conduct is available free of charge on our website at www.onsemi.com. To receive a copy, you may also write to our Investor Relations, ON Semiconductor Corporation, 5005 E. McDowell Road, M/D-C302 Phoenix, Arizona 85008, call our Investor Relations at (602) 244-3437, or email your request to investor@onsemi.com.

Compliance and Ethics Program

We have a Compliance and Ethics Program designed to prevent and detect violations of the Code of Conduct, other standards of conduct and the law. A major goal of the Compliance and Ethics Program is to promote an organizational culture that encourages ethical conduct and a commitment to compliance

with the law. In this regard, we have established avenues for parties external to the Company to raise compliance and ethics concerns to our Chief Compliance and Ethics Officer with respect to our employees, Directors and third parties doing business with the Company. If you have a concern of this nature, you may report it anonymously (or on a non-anonymous basis) by: (1) calling the Compliance and Ethics Hotline telephone number at 800-243-0186 from the U.S., Bermuda or Puerto Rico, or, if you are outside of these areas, calling (i) AT&T country access code +(800) 243-0186 if you are dialing from an analog telephone or (ii) AT&T country access code +##(800) 243-0186 if you are dialing from a digital telephone; if you are outside the U.S. you may also call (602) 244-3839; (2) mailing a note to George H. Cave, our Senior Vice President, General Counsel, Chief Compliance and Ethics Officer, and Secretary at ON Semiconductor Law Department, M/D-A700, 5005 E. McDowell Road, Phoenix, Arizona 85008; or (3) emailing a note to Mr. Cave at sonny.cave@onsemi.com.

COMPENSATION DISCUSSION AND ANALYSIS

Overview

The purpose of this CD&A is to provide material information about our compensation objectives and policies and to explain and put into context the material elements of the disclosure that follows in this proxy statement with respect to the compensation of our Named Executive Officers. We describe our Named Executive Officers and how they were determined in the section of this proxy statement entitled “Compensation of Executive Officers.”

2009 was a difficult year for us. In late 2008 and early 2009, when decisions were being made for 2009 compensation programs, we were significantly impacted by the general economic downturn and, in early 2009, we undertook a series of dramatic cost reduction initiatives and significantly revised our typical compensation design to preserve the ability to motivate and retain our personnel in that environment. These circumstances and decisions are explained in more detail below in this CD&A.

Compensation Philosophy and Guiding Principles. Our Compensation Committee is responsible for setting our compensation philosophy and guiding principles and for monitoring their effectiveness. The principal objective of our compensation programs is to attract, retain and motivate highly talented individuals who will deliver competitive financial returns to our stockholders in the short term, while also accomplishing our long-term plans and goals. We believe that this philosophy should apply to all our employees, with a more significant level of variability and compensation generally at risk as an employee’s level of responsibility increases. Our compensation philosophy is focused on the following core principles:

Market or Peer Company Comparison. Our Compensation Committee, with the assistance of outside consultants, analyzes market compensation data, giving the greatest weight to the data from our peer group of market competitors in the semiconductor and electronic sectors of the high technology field. Our compensation programs must be competitive with those of our peer companies in order to retain our senior executives. As a general rule, we target the market median for compensation and above the median for exceptional performance.

Pay for Performance. A portion of compensation should be tied to an individual’s performance, both to incentivize goal-oriented performance and to reward individual contributions to our performance.

Alignment with Stockholder Interests. In general, achieving acceptable and expected corporate results and performance are a necessary condition for our executives to realize targeted levels of compensation, particularly with respect to discretionary payments of variable pay and long-term incentives. We believe that basing a component of employee compensation on corporate results and performance aligns employee interests with stockholder interests. In addition, as a general rule, the use of stock incentives further aligns executives’ interests with those of our stockholders.

Retention. Ultimately, our compensation program must be designed to attract and retain highly talented individuals critical to our success by providing competitive total compensation with significant retention features. For instance, we enter into employment agreements with our Named Executive Officers and other senior executives, which typically contain severance and change of control arrangements. In addition, our stock-based awards are designed to retain our officers and other employees, while also accomplishing our other compensation goals and objectives.

Purpose of Compensation. Generally, we believe that our compensation program should be designed to reward performance, both individual and corporate. We attempt to deliver a competitive rewards package

comprised of base pay, variable pay, long-term incentives and other benefits. Even if a particular award is not performance-based per se, the Compensation Committee considers corporate and individual performance in making compensation decisions.

While our emphasis is normally on performance incentives, a competitive compensation program must also have elements that are not solely performance-based in order to be competitive in attracting and retaining talented executives. However, we generally attempt to set these elements at a level that is consistent with our performance objectives and peer group practices.

Annual incentives in our compensation program are principally cash-based. Annual incentives are intended to promote superior operational performance, disciplined cost management, and increased productivity and efficiency that contribute significantly to positive results for our shareholders. Long-term incentives in our compensation program are principally stock-based. The aim of the long-term incentives is to motivate long-term performance while promoting key employee retention. The long-term incentive grants also afford the officer the opportunity to increase stock ownership, which aligns the officer’s interest with that of our shareholders and assists the officer in complying with our mandatory stock ownership guidelines.

Historically, we provided long-term incentives primarily in the form of RSUs and options with time-based vesting. In 2008 and 2007, based on the implementation of advice from our consultants, we also granted certain PBRSUs. In 2009, based on the special circumstances facing the Company at the time, we granted only PBRSUs to our NEOs, as described below.

Processes and Procedures for Considering and Determining Executive Compensation

Among other responsibilities, our Compensation Committee is primarily responsible for monitoring, annually reviewing and approving the goals and objectives relevant to our compensation programs for our Named Executive Officers, including the CEO, and for establishing compensation for these officers. Our Board of Directors approves any employment agreement entered into with the CEO or other Named Executive Officers. In the material below, we describe the process used and principal factors considered by the Compensation Committee in setting 2009 executive compensation for the Named Executive Officers.

Role of Compensation Consultants. In determining compensation, the Compensation Committee considers information provided by outside consultants. The Compensation Committee retained Meyercord & Associates (the “Consultant”) in 2008 to, among other things, evaluate and report to the Compensation Committee on the competitiveness of the total remuneration program for our most senior executives. This engagement involved the review of base salary, annual incentives, equity incentives and total direct compensation in the context of the market. The Consultant presented this report to the Compensation Committee in November 2008. At the request of the Compensation Committee, from time to time, the Consultant also works with management on specific projects related to executive compensation for the Compensation Committee’s consideration. Ultimately, the Compensation Committee’s decisions about the executive compensation program, including the specific amounts paid to executive officers, are its own.

Role of Senior Officers in Determining Executive Compensation. The Compensation Committee made all compensation decisions related to our Named Executive Officer compensation in 2009. However, our CEO and other senior officers regularly provide information and recommendations to the Compensation Committee on the performance of the executive officers, the design, structure and components of our compensation programs and of specific grants, appropriate levels of compensation, including equity grants, and the targets for corporate and business unit performance or other goals for our incentive

programs and stock-based awards. The senior officers also assist the Committee in determining the level of achievement of the performance targets underlying performance-based awards and incentives and provide other information specifically requested by the Compensation Committee from time to time. The senior officers also provided information to the Consultant, as appropriate, at the request of the Compensation Committee or such consultant and worked with such consultant to develop proposals for executive compensation planning and implementation.

Use of Market Data. In setting 2009 compensation for our Named Executive Officers, the Compensation Committee used data provided by the Consultant to assist in structuring the compensation packages. In November 2008, the Consultant provided a report to the Compensation Committee on the competitiveness of the total remuneration program for our then fourteen most senior executives.

The Consultant compared the compensation of the top four executives, Messrs. Jackson, Colvin, Nelson and Mahoney, with matching positions in a compensation peer group. The compensation of Mr. Cave, our Senior Vice President, General Counsel, Chief Compliance & Ethics Officer and Secretary, was compared with the data in the Radford survey of all companies with revenues between $1 billion and $3 billion. There are approximately 78 companies in this survey in various industries. The report also included certain other comparative information used by the Company primarily as a market check.

The report included information on the executive’s competitive position for base salary, total cash at target (base pay and target bonus under the annual incentive program), as well as target bonus as a percentage of base salary, equity grants and total direct compensation (base pay, target bonus and equity grant value). In evaluating the competitiveness of compensation, the report compares senior executives to their functional matches (e.g., CFO is compared to comparator company CFOs), where available.

In 2008, the Compensation Committee approved a revised compensation peer group for purposes of compensation analysis. The 2008 peer group, used for 2009 compensation design, consisted of the following companies: Altera, Analog Devices, Atmel Corporation, Autodesk, Broadcom, Cypress Semiconductor, Fairchild Semiconductor International, Inc., Lam Research, LSI Logic Corporation, Marvel Technology, Maxim Integrated Products, National Semiconductor Corporation, Network Appliance, Novellus Systems Inc., Nvidia, SanDisk Corp, Spansion, Vishay Intertechnology Inc., and Xilinx Inc. The peer group companies represent companies in the technology field with whom the Company competes for talent and whose revenues and market cap are within a range comparable to that of the Company (generally one-half to two times that of the Company).

Officer		Salary		Incentive Target		Equity Grants
Mr. Jackson President and Chief Executive Officer		Salary was about 5% below market median.*		Incentive target was below market.		Equity grant in 2008 was at market.
Mr. Colvin Executive Vice President, Chief Financial Officer and Treasurer		Salary was at market median.*		Incentive target was below market.		Equity grants in past 2 years have been above market by design.

Based on the peer company data, the Consultant’s report concluded the following for the specified officers:

Officer		Salary		Incentive Target		Equity Grants
Mr. Nelson Executive Vice President, Chief Operating Officer and Chief Environmental Officer		Salary was below market, but market data is skewed by different job scopes.		Incentive target was below market.		Equity grants were about at market when job scope is taken into consideration.
Mr. Mahoney Executive Vice President, Sales and Marketing		Salary was at market median.*		Incentive target was below market.		Equity grants were above market.

The Consultant recommended increasing cash incentive targets as a percentage of salary for all such officers and reassessing equity grant numbers in early 2009.

In general, we target the market median based on the peer group data for each element of compensation, recognizing that critical skill sets or above median performance may justify pay levels above median. We also use that comparison data to determine how to allocate between cash and non-cash compensation and between short-term and long-term incentive compensation. However, the Compensation Committee also considers other factors in its compensation decisions.

Other Factors. The Compensation Committee takes into account the data provided by the Consultant and its recommendations as to competitiveness and the structure of compensation in determining compensation for the Named Executive Officers. For example, prior to approving awards, the Compensation Committee generally considers the implications of the awards in terms of variance from the 50th percentile in the comparison data. However, the Compensation Committee also focuses on the executive’s individual responsibilities, skills, expertise and value added through performance, prior award accumulation, and other factors, and applies these views in conjunction with the information provided by the Consultant. The performance of each officer is formally reviewed by management and shared with the Compensation Committee prior to the committee’s annual determinations with respect to salary adjustments and long-term incentive awards. Our CEO presents the Compensation Committee with an individual performance overview for each executive officer, describing the officer’s accomplishments for the prior year, his or her strengths, areas of improvement and development plans. The Compensation Committee separately reviews CEO performance based on, among other factors considered relevant, Company performance, primarily adjusted non-GAAP EBITDA, revenue growth, earnings growth, earnings per share, and total shareholder return.

The Compensation Committee considers each component of executive compensation in light of total compensation. In considering adjustments to the total compensation of each Named Executive Officer, the Compensation Committee also considers the value of previous compensation, including then outstanding equity grants. The Compensation Committee receives data for each executive officer prior to its annual determinations with respect to salary adjustments and long-term incentive awards. The data generally includes compensation information for at least the five preceding years (or the number of years the executive officer has been employed with the Company if less than five years), with total cash compensation, total long-term incentive, and total compensation values, as well as gains from option exercises and RSU (including PBRSU) vesting and the value of outstanding award opportunity. The Compensation Committee will also consider other external factors that it considers relevant, such as the financial condition of the Company and other issues facing us at the time.

The Compensation Committee considers contractual commitments in determining or recommending executive pay. Each of the Named Executive Officers has entered into an employment agreement with us.

The employment agreements generally provide for an initial level of annual salary, a target percentage of annual salary that can be earned pursuant to the annual incentive plans, and a certain level of perquisites. The employment agreements provide for periodic review by the Board or Compensation Committee of the officer’s salary and target percentage for the annual incentive plans. They also generally provide for certain payments in the event of termination of employment of the Named Executive Officer. The employment agreement of each Named Executive Officer is described below under the heading “Compensation of Executive Officers — Employment, Severance, and Change in Control Agreements and Arrangements” in this proxy statement. The terms of these arrangements were approved by the Compensation Committee and the Board after considering the aggregate of these obligations in the context of the desirability of hiring or retaining the applicable officer.

While the Compensation Committee considers internal pay equity in making compensation decisions, we do not have a policy requiring any set levels of internal pay differentiation. As previously discussed, we target the compensation levels among our executives to be competitive with the market. This accounts for most of the difference in compensation among our Named Executive Officers. During the past three years, total compensation for our CEO as calculated pursuant to SEC rules and disclosed in the Summary Compensation Table has been less than two times the compensation of the next highest paid executive officer. The Compensation Committee believes that this is an appropriate level of differentiation.

The Compensation Committee considers the potential for unacceptable risk taking in its compensation design. We believe that the design of our executive compensation program does not unduly incentivize our executives to take actions that may conflict with our long-term best interests. Material risk in our compensation design is mitigated in several ways, as follows:

•

Base salaries are intended to constitute a sufficient component of total compensation to discourage undue risk taking in the meeting of incentive goals.

•

Performance-based pay opportunities are designed with goals that are intended to result in long-term value to the shareholders.

•

Earnings goals and opportunity in our performance-based incentive programs are at levels intended to be attainable without the need to take inappropriate risks.

•

Bonus and incentive opportunities are capped so that the upside potential is not so large as to encourage detrimental risk taking.

•

Our stock-based incentives vest or are earned over a multi-year period, which provides long-term upside potential and downside risk.

•

Assuming achievement of at least a minimum level of performance, payouts under our performance-based plans result in some compensation at levels below full target achievement, rather than an “all-or-nothing” approach.

•

The stock components inherent in our long-term incentive program, combined with our stock ownership guidelines, align the interests of our executives with a goal of long-term appreciation of stockholder value.

•

Compensation is generally targeted to the median of the competitive consensus and compensation elements used by comparator companies are considered in compensation design, thereby avoiding unusually high pay opportunities relative to Company peers.

Elements of our Compensation Program

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

•

base salary, aimed at a competitive mid-market level;

•

semi-annual cash incentive awards tied to specific, quantifiable and objective performance measures, although as described below under “2009 Compensation Decisions,” this element of our compensation program was cancelled in 2009;

•

annual equity awards, based on corporate and individual performance;

•

severance and change of control agreements;

•

perquisites; and

•

other benefits plans and programs.

While executives have more of their total compensation at risk than other employees, the principles that serve as the basis for executive compensation practices generally apply to the compensation plans for all employees; namely, corporate and individual performance drive incentive compensation.

Base Salary. The Named Executive Officers have employment agreements that specify the initial level of salary to which they are entitled. Such employment agreements provide that this initial level of salary is subject to review by our Board of Directors or the Compensation Committee from time to time. The base salary that each Named Executive Officer received for fiscal 2009 is set forth in the Summary Compensation Table below in the column “Salary.”

As described below under “2009 Compensation Decisions,” we undertook numerous cost reduction measures in late 2008 and early 2009, resulting in a decrease in base salary for each of the Named Executive Officers. See “Compensation of Executive Officers — Summary Compensation Table” for the salary information on the Named Executive Officers.

Semi-Annual Cash Incentive Programs. In the past, we established semi-annual cash incentive award programs for our executive officers under our 2007 Executive Incentive Plan (“Executive Incentive Plan”), which allow us to plan for the future while adjusting to the rapidly changing semiconductor market. The purpose of the Executive Incentive Plan is to increase stockholder value by providing a tax deductible incentive for key executives to achieve our strategic and financial goals and to perform to the best of their abilities. However, the program was cancelled for 2009 due to the economic downturn and special considerations described below under “2009 Compensation Decisions.”

Other Information Regarding Cash Incentives. The Compensation Committee annually reviews the bonus component of executive incentive compensation and, in addition to bonuses paid under the Executive Incentive Plan, the Compensation Committee may approve payment of discretionary bonuses to the Named Executive Officers for performance or other reasons. During fiscal 2009, we did not pay any discretionary bonuses to our Named Executive Officers.

Long Term Incentives. Long term incentives for executives are entirely equity-based and are designed to reinforce the alignment of executive and stockholder interests. These rewards provide each individual

with a significant incentive to manage from the perspective of an owner. Our long term incentive grants in 2009 took the form of PBRSUs. The Compensation Committee grants long-term equity awards to our Named Executive Officers pursuant to our SIP.

Traditionally, our principal form of equity compensation consisted of non-qualified stock options. We had not issued RSUs prior to 2006 because historically option grants were given favorable accounting treatment and, given that option grants were extremely common in our industry, we had no compelling reason to look to other forms of equity compensation. This changed with the implementation of Statement of Financial Accounting Standards No. 123R, which altered the accounting treatment for stock options effective in 2006. Since the implementation of FAS 123R, our Company and many other public companies began issuing RSUs. While the value of the RSUs will fluctuate with changes in our stock price, RSUs will have some value in the long run, encouraging retention. To that extent, RSUs can provide greater compensation value than options, which can lose all value based on stock price decreases. Therefore, when using restricted stock or RSUs, we can issue fewer shares than in stock option grants, which will be less dilutive to our stockholders.

In February 2009, due to then current economic conditions and for primarily retention driven reasons as described below, we adjusted our traditional annual grants practice and issued PBRSUs (instead of options and time-based RSUs) to employees, including our Named Executive Officers.

2009 Compensation Decisions

In early 2009, due primarily to impacts from the severe global economic recession, we considered circumstances at the time and undertook a series of significant cost reduction initiatives for 2009, including the following:

•

We paid no bonuses in 2009 for the second half of our 2008 annual incentive plan since the threshold performance target for payout was not achieved.

•

We cancelled our 2009 annual incentive bonus programs.

•

We initiated forced work furloughs for our employees where permitted by local law. Unpaid time off required for executives exceeded that required for lower level employees. Generally, executives were required to take nine weeks of unpaid time off in 2009, one week of which was attributable to 2010 due to payroll cycles. These forced work furloughs resulted in a significant reduction of the salaries of executives in 2009.

•

There were no salary increases for 2009.

•

We adjusted our long-term equity awards program as described in more detail below.

The annual equity awards for 2009 were in the form of PBRSUs. The Committee obtained the advice of the Consultant on the design and structure of the new program. In designing the new program, the Committee considered recommendations that:

•

Given the uncertainty in the market, and the cost of expensing options believed to have little retention value for the Company or the employees, management was recommending using all PBRSUs for the 2009 annual grant. Management recommended a ratio of 1 PBRSU for 1.3 options due to the risk of forfeiture for failing to achieve performance results.

•

There was a concern regarding retention for the Company’s top performers and certain executives, given the factors outlined above, the low stock price, the low probability that certain previously granted PBRSUs would vest, and competitors’ recruiting techniques, including sign-on equity grants.

•

It should grant PBRSUs that would compensate to a certain extent for foregone annual long-term equity grants, base pay and bonus for certain executives, including the NEOs.

•

It should also grant PBRSUs as a multiple of base salary for certain executives, including the NEOs, for retention.

Among other things, the Committee also considered (1) what executive compensation actions other semiconductor and high-tech benchmark companies were taking in light of the global economic recession; (2) how employees were handling the Company’s aggressive cost-cutting measures; (3) anticipated expense savings and costs associated with adopting the recommended PBRSU grant program; (4) various alternatives for setting a baseline adjusted non-GAAP EBITDA measurement from which subsequent PBRSU vesting criteria would be compared; and (5) the impact of the program on equity grant burn rates. The Committee also reviewed several example calculations of how PBRSUs granted under the new recommended program would vest using various assumptions regarding future financial performance of the Company.

In designing the new program, the Committee determined that the performance metric for the new program should be adjusted non-GAAP EBITDA since this metric closely relates to operating cash generated by the Company, which the Compensation Committee believes is one of the better indicators of total shareholder return. Details of the awards, including the performance metrics are described under “Compensation of Executive Officers — 2009, 2008 and 2007 Awards of PBRSUs” in this proxy statement.

The Compensation Committee granted Mr. Jackson 1,686,609 PBRSUs, Mr. Colvin 900,707 PBRSUs, Mr. Mahoney 701,740 PBRSUs, Mr. Nelson 1,276,383 PBRSUs and Mr. Cave 378,223 PBRSUs. We disclose the awards of PBRSUs that were granted in 2009 to our Named Executive Officers in the Summary Compensation Table of this proxy statement. The Grants of Plan-Based Awards Table, Outstanding Equity Awards at Fiscal Year-End Table and Option Exercises and Stock Vested Table also contain information about our long-term incentive awards to Named Executive Officers.

In considering the number of PBRSUs to be awarded to each NEO, the Committee considered data with respect to the market median based on competitive information provided by the Consultant in its November 2008 report. They also considered special circumstances applicable to each executive. For example, Mr. Nelson’s award was increased based on the status of his total compensation package, expectations with respect to his existing long-term grants and his marketability to competitors.

Base salary and total cash compensation in 2009 were significantly below the peer group median as shown in available market data. Due to the competitive market place for executives with turn around experience in the semiconductor industry, to ensure that our executives remained with ON through this down cycle, and to drive total shareholder return and future growth, the Compensation Committee made PBRSU grants to the Named Executive Officers that reflected their performance versus their peer group. Assuming 100% attainment of PBRSU performance, which would drive total shareholder return, total direct compensation for each Named Executive Officer was: (i) for Mr. Jackson, approximately 121% of the peer group median or 103% of the peer group 75^th percentile; (ii) for Mr. Colvin, approximately 227% of the peer group median or 115% of the peer group 75^th percentile; (iii) for Mr. Nelson, approximately 98% of the peer group median or 97% of the peer group 75^th percentile; (iv) for Mr. Mahoney,

approximately 149% of the peer group median or 138% of the peer group 75^th percentile; and (v) for Mr. Cave, approximately 157% of the peer group median or 118% of the peer group 75^th percentile.

Actual results for the second quarter of 2009 were better than expected due to an unforeseen revenue recovery and several one-time actions by the Company including its significant cost reduction measures. Related to this, 100% of each quarterly tranche vested for each of the last three quarters of 2009.

In February 2010, the Compensation Committee made awards of PBRSUs pursuant to our normal annual equity grant program (the “2010 PBRSU awards”). We described these awards in our Form 8-K Report filed on February 18, 2010. Messrs. Jackson, Colvin, Nelson and Mahoney volunteered to not accept any 2010 PBRSU awards so that their grants could be redirected to other employees at the Company. The Compensation Committee considered the preceding along with each officer’s awards from prior years and other compensation data. In connection with this process, the Compensation Committee agreed with these officers and decided not to award them any 2010 PBRSU awards. Mr. Cave was awarded 70,000 2010 PBRSU awards. In accordance with its normal practice, in February 2010, the Compensation Committee reinstituted a newly-designed annual cash incentive program. We described this program in our Form 8-K Reports filed on February 9, 2010 and February 26, 2010.

Other Elements Affecting Compensation

Severance and Change in Control Agreements. Under the SIP and the Amended and Restated Plan, the Board of Directors has discretion to accelerate equity-based vesting upon a “change of control.” In addition, with respect to our Named Executive Officers, our outstanding option agreements and RSU agreements, including our PBRSU agreements, generally contain provisions causing the options or RSUs to vest either upon a termination of employment without cause, including, if applicable, a deemed termination good reason, within a two year period after a change of control. For a description of the severance and change of control provisions of the employment agreements for our Named Executive, see “Compensation of Executive Officers — Employment, Severance, and Change In Control Agreements and Arrangements” below in this proxy statement.

We believe that our severance benefits and change of control arrangements are consistent with the principal objectives of our compensation programs. To the extent a Named Executive Officer’s agreement contains severance benefits or a change of control provision, such benefit is predicated upon the Named Executive Officer being terminated “without cause” or resigning “for good reason,” as such terms are defined in their agreements. In addition, our severance benefits are subject to the Named Executive Officer signing a general release and waiver and complying with certain restrictive covenants, including non-solicitation, confidentiality and non-disparagement agreements, and, in most cases, non-competition or non-interference agreements, which serves the best interests of the Company and its stockholders.

We believe that our management has played a crucial role in making us a successful company and it sends an important signal to the market and potential employees that we are willing to protect our management with some guaranteed compensation in the event of a termination after a change of control. In addition, management may be less reluctant to resist change of control transactions that are in the best interests of our stockholders if they have the added security that comes with such change of control arrangements.

Perquisites. In March 2006, our then compensation consultant presented a report to the Compensation Committee on the perquisites we offer our executive officers. It compared our perquisites to those granted by over 300 other companies using data from two nationally published surveys. The report concluded that we provide minimal executive perquisites in comparison to other such companies. While we intend to continue the practice of limiting executive perquisites, based on the consultant’s recommendation, in

2006, we added the following two perquisites for certain executives holding the title of Senior Vice President or above: (i) reimbursement of up to $10,000 per year for financial planning services; and (ii) enhanced coverage for life insurance. Under our life insurance perquisite, each executive receives life insurance coverage of $1,000,000, which is $500,000 above the maximum allowed standard coverage of two-times base salary that is afforded to all employees. We believe these additions will help maintain the competitiveness of our compensation package vis-à-vis our peer companies. An executive officer holding a title of Senior Vice President or above also receives a car allowance of $1,200 per month. We also include a tax gross up for relocation and financial planning benefits.

We describe the perquisites paid in 2009 to each of the Named Executive Officers in the Summary Compensation Table of this proxy statement.

Other Benefit Plans and Programs. Executives are eligible to participate in benefit programs designed for all of the Company’s full-time employees. These programs include a tax qualified stock purchase plan, a 401(k) savings plan, and medical, dental, disability and life insurance programs.

Deferred Compensation. In view of the enactment of Section 409A of the Code, which imposed strict requirements on all deferred compensation plans and harsh penalties for compliance failures, we terminated our 1999 Executive Deferred Compensation Plan effective in 2005.

Impact of Taxation and Accounting Considerations on Executive Compensation

Our Compensation Committee attempts to establish executive officer compensation programs that will maximize our related income tax deductions to the extent that it determines that such actions are consistent with our compensation philosophy and in the best interests of our stockholders. The semi-annual cash bonus awards made under the Executive Incentive Plan are designed to qualify as “performance-based” compensation under Section 162(m) of the Code, as are certain of our equity awards under our SIP. Under Section 162(m), we may not receive a federal income tax deduction for compensation paid to our CEO or any of the four other most highly compensated executive officers in excess of $1 million in any one year. However, if we pay compensation that is “performance-based” under Section 162(m), we still can receive a federal income tax deduction for the compensation even if these executives are paid more than $1 million during a single year. We do not use the deduction as a justification for awarding compensation in excess of $1 million. However, to the extent that awards do exceed $1 million, we generally believe it is in the stockholders’ best interests to award compensation that will qualify as “performance-based” in order to take advantage of the deduction.

While the tax impact of any compensation arrangement is one factor to be considered, our Compensation Committee evaluates such impact in light of our overall compensation philosophy, and, from time to time, the Compensation Committee may award compensation that is not fully deductible if the Compensation Committee determines that such award is consistent with our philosophy. Based on our understanding of the regulations under Section 162(m), we believe that the full amount of compensation resulting from the exercise of options under our SIP and vesting of performance-based RSUs is deductible. Other than approximately $272,000 of Mr. Jackson’s compensation, we also believe that all of the compensation paid to the Named Executive Officers in 2009 was deductible. The Compensation Committee and the Board also take into account other tax and accounting consequences of its total compensation program and weigh these factors when setting total compensation and determining the individual elements of an officer’s compensation package.

Other Matters Relating to Executive Compensation

Hedging Transactions. We have a comprehensive Insider Trading Policy, which, among other things, provides that insiders shall not engage in short sales of, purchase on margin, or buy or sell puts, calls or other derivatives of our securities because of the potential conflict of interest or the perceptions created and the resulting possible impact on the market.

Equity Award Policy. In August 2006, we adopted an equity award grant date policy statement. Under the policy, equity grants under the SIP generally become effective on the first Monday (or next following trading day if the first Monday is not a trading day) of the next month following the date of Board, Committee or CEO approval of the grant. Options granted are priced at the closing market value on the date of grant.

Stock Ownership Guidelines for Officers. Under our Corporate Governance Guidelines, our officers are required to hold our common stock in an amount equal to a minimum of a multiple of base salary. There is a transition period to achieve the required ownership. All of our Named Executive Officers have either achieved the required ownership levels or are expected to achieve such levels within the prescribed time period. See “Board of Directors and Corporate Governance — Corporate Governance Principles — Directors’ and Officers’ Stock Ownership Guidelines” above.

COMPENSATION COMMITTEE REPORT⁴

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis prepared by management and included in the proxy statement for the 2010 Annual Meeting of Stockholders. Based on these reviews and discussions with management, the Compensation Committee recommended to the Board of Directors of the Company that the Compensation Discussion and Analysis be included in the proxy statement for the 2010 Annual Meeting of Stockholders for filing with the Securities and Exchange Commission.

This report is submitted by the Compensation Committee.

Robert H. Smith, Chairman
Curtis J. Crawford
J. Daniel McCranie

COMPENSATION OF EXECUTIVE OFFICERS

The following tables set forth information concerning compensation earned by, or paid for services provided to us and our subsidiaries for the periods indicated to: (i) all persons serving as our principal executive officer or as principal financial officer during 2009; (ii) the three most highly paid executive officers who were serving as executive officers at the end of 2009 other than the principal executive officer and the principal financial officer; and (iii) up to two additional individuals who would have been included except that the individual was not serving as an executive officer at the end of 2009 (“Named Executive Officers”).

Summary Compensation Table

(a)		(b)		(c)				(d)				(e)				(f)				(g)				(h)				(i)				(j)
																								Change in
																								Pension Value
																								and
																								Nonqualified
																				Non-Equity				Deferred
Name and												Stock				Option				Incentive Plan				Compensation				All Other
Principal				Salary								Awards				Awards				Compensation				Earnings				Compensation
Position		Year		($)				Bonus ($)				($) (1)				($) (2)				($) (3)				($) (4)				($) (5)				Total ($)
Keith D. Jackson,		2009			609,654				0				5,633,274				0				0				0				27,892				6,270,820
President and Chief		2008			687,775				0				0				3,060,000				133,722				0				27,786				3,909,283
Executive Officer		2007			625,275				0				3,653,120				1,493,280				388,809				0				26,337				6,186,821
Donald Colvin,		2009			350,481				0				3,008,361				0				0				0				29,684				3,388,526
Executive Vice		2008			400,057				0				786,500				612,000				52,428				0				28,923				1,879,908
President, Chief		2007			383,057				0				2,903,560				432,000				158,530				0				31,662				3,908,809
Financial Officer and Treasurer
Robert Mahoney,		2009			304,615				0				2,343,812				0				0				0				34,816				2,683,243
Executive Vice		2008			347,520				0				1,413,200				275,400				37,095				0				28,971				2,102,186
President, Sales		2007			327,520				34,434	(6)			322,280				324,000				133,138				0				29,038				1,170,410
and Marketing
W. John Nelson,		2009			315,000				0				4,263,119				0				0				0				29,963				4,608,082
Executive Vice		2008			370,000				0				1,413,200				367,200				46,184				0				27,374				2,223,958
President, Chief		2007			234,231				0				1,085,000				1,724,000				50,383				0				173,302				3,266,916
Operating Officer and Chief Environmental Officer (7)
George H. Cave,		2009			280,923				0				1,263,265				0				0				0				48,343				1,592,531
Senior Vice President,		2008			—				—				—				—				—				—				—				—
General Counsel,		2007			—				—				—				—				—				—				—				—
Chief Compliance & Ethics Officer and Secretary (8)

						Total				Fair Value				Aggregate Grant
						Number of				per Share				Date Fair Value
Name		Grant Date				Units				($)				($)
Keith D. Jackson			03/02/2009				1,686,609				3.34				5,633,274
			10/01/2007				145,000				12.55				1,819,750
Donald Colvin			03/02/2009				900,707				3.34				3,008,361
			06/02/2008				50,000				9.80				490,000
			10/01/2007				120,000				12.55				1,506,000
Robert Mahoney			03/02/2009				701,740				3.34				2,343,812
			06/02/2008				120,000				9.80				1,176,000
W. John Nelson			03/02/2009				1,276,383				3.34				4,263,119
			06/02/2008				120,000				9.80				1,176,000
George H. Cave			03/02/2009				378,223				3.34				1,263,265

														Risk-Free				Divided				Aggregate Grant
										Expected				Interest				Yield				Date Fair Value
Name		Grant Date				Volatility %				Life (Years)				Rate (%)				($)				($)
Keith D. Jackson			03/03/2008				56.3	%			5.20				2.8	%			0				3,060,000
			03/05/2007				41.1	%			4.20				4.5	%			0				1,493,280
Donald Colvin			03/03/2008				56.3	%			5.20				2.8	%			0				612,000
			03/05/2007				41.1	%			4.20				4.5	%			0				432,000
Robert Mahoney			03/03/2008				56.3	%			5.20				2.8	%			0				275,400
			03/05/2007				41.1	%			4.20				4.5	%			0				324,000
W. John Nelson			03/03/2008				56.3	%			5.20				2.8	%			0				367,200
			06/04/2007				41.4	%			4.16				4.9	%			0				1,724,000

Grants of Plan-Based Awards Table

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

(k)

(l)

All

Other

Stock

All

Grant

Awards:

Other

Date

Number

Options

Fair

Of

Awards:

Exercise

Value

Shares

Number

Of

Of

Estimated Possible Payouts

Estimated Future Payouts

Of

Of

Base Price

Stock

Under Non-Equity Incentive

Under Equity Incentive

Stock

Securities

Of

And

Plan Awards

Awards (2)

Of

Underlying

Option

Option

Grant

Approval

Threshold

Target

Maximum

Threshold

Target

Maximum

Units

Options

Awards

Awards

Name

Date

Date (1)

($)

($)

($)

(#)

(#)

(#)

(#)

(#)(3)

($/Sh)

($)(4)

Keith D. Jackson, President and Chief Executive Officer

03/02/2009

02/05/2009

—

—

—

70,276

—

1,686,609

—

—

—

5,633,274

Donald Colvin, Executive Vice President, Chief Financial Officer and Treasurer

03/02/2009

02/05/2009

—

—

—

37,530

—

900,707

—

—

—

3,008,361

Robert Mahoney, Executive Vice President, Sales and Marketing

03/02/2009

02/05/2009

—

—

—

29,240

—

701,740

—

—

—

2,343,812

W. John Nelson, Executive Vice President, Chief Operating Officer and Chief Environmental Officer

03/02/2009

02/05/2009

—

—

—

53,183

—

1,276,383

—

—

—

4,263,119

George H. Cave, Senior Vice President, General Counsel, Chief Compliance & Ethics Officer and Secretary

03/02/2009

02/05/2009

—

—

—

15,760

—

378,223

—

—

—

1,263,265

2009, 2008 and 2007 Awards of PBRSUs

2009 Awards of PBRSUs. Effective March 2, 2009, the Compensation Committee awarded PBRSUs to Named Executive Officers pursuant to the SIP. The objective of the awards was to drive employee and Company performance using a key performance metric, adjusted non-GAAP EBITDA. The Compensation Committee granted Mr. Jackson 1,686,609 PBRSUs, Mr. Colvin 900,707 PBRSUs, Mr. Mahoney 701,740 PBRSUs, Mr. Nelson 1,276,383 PBRSUs and Mr. Cave 378,223 PBRSUs.

Each PBRSU represents the right to receive one share of the Company’s common stock on the applicable vesting date. The PBRSUs may vest quarterly over a three-year (twelve quarter) period upon the achievement of a baseline non-GAAP EBITDA goal and certain percentage improvements over the baseline non-GAAP EBITDA goal (“Baseline Non-GAAP EBITDA”). Under the PBRSU agreement, “non-GAAP EBITDA” shall mean the Company’s earnings before interest (income or expense), taxes, depreciation, and amortization for the applicable quarter, is adjusted to exclude the following: (i) amortization of purchased intangible assets; (ii) in-process research and development expense; (iii) stock-based compensation expense from acquisitions; (iv) stock-based compensation expense determined in accordance with FASB ASC Topic 718 (formerly FAS 123R); (v) restructuring, asset impairments and other, net; (vi) gain (loss) on debt prepayment; (vii) goodwill impairment charge; (viii) cumulative effect of accounting change required by GAAP; (ix) extraordinary item; (x) expensing of the step up to fair market value of inventory from acquisitions; and (xi) divestiture related items. Non-GAAP EBITBA, as adjusted, shall specifically include merger and acquisition activity of the Company.

The Baseline Non-GAAP EBITDA amount of $25 million is the initial base target and the minimum threshold to trigger vesting in a quarter. This target will incrementally increase by 15% over Baseline Non-GAAP EBITDA each quarter (“Quarterly Target”), so that the Company’s non-GAAP EBITDA would have to increase to approximately 280% of Baseline Non-GAAP EBITDA in order for 100% of the eligible grant to vest over time. If Baseline Non-GAAP EBITDA is not met in a quarter, then 0% of the eligible grant will vest for that quarter. If the Baseline Non-GAAP EBITDA is met in a quarter but the Quarterly Target is not met for that quarter, then 50% of the eligible grant will vest for that quarter. If the Quarterly Target is met or exceeded for a quarter, then 100% of the eligible grant will vest for that quarter. Unvested PBRSUs remain eligible for vesting until the expiration of the grant, one day past the filing with the Commission of the twelfth quarter’s Form 10-Q following the first performance measurement period. PBRSUs that do not vest in a quarter because the Quarterly Target or Baseline Non-GAAP EBITDA is not met for the quarter carry forward and will fully vest in any quarter in which the original Quarterly Target or Baseline Non-GAAP EBITDA is met.

For the eligible employees who are senior vice presidents and above, if the eligible employee’s employment is terminated without cause (including for good reason) within two years following a change in control of the Company, any previously unvested PBRSUs will become vested. This also applies to the 2008 and 2007 awards of PBRSUs described below.

As of March 2, 2010, 421,653 of the PBRSUs for Mr. Jackson had vested, 225,177 of the PBRSUs for Mr. Colvin had vested, 175,437 of the PBRSUs for Mr. Mahoney had vested, 319,095 of the PBRSUs for Mr. Nelson had vested, and 94,557 of the PBRSUs for Mr. Cave had vested.

The Company has filed a form of award agreement for the 2009 PBRSUs as an exhibit to its reports filed under the Exchange Act.

2008 Awards of PBRSUs. In 2008, the Company awarded PBRSUs to certain of its Named Executive Officers in connection with the specific integration of acquisitions. Specifically, in June 2008, we granted awards of PBRSUs related to the integration of AMI, which was merged into the Company on March 17, 2008, to certain Named Executive Officers as follows: (i) 50,000 PBRSUs to Mr. Colvin; (ii) 120,000 to Mr. Mahoney; and (iii) 120,000 to Mr. Nelson.

Mr. Colvin’s award of PBRSUs was to vest as follows: (i) 35% of his units would vest if the Company accomplishes the required information technology changes related to a specific tax structure with respect to AMI on or before the end of the Company’s first quarter of 2009; and (ii) the remaining 65% of his units would vest upon the achievement of a range of total consolidated revenues and gross margin percentages on total consolidated revenues targets (subject to certain adjustments similar to the adjustments described for the 2009 PBRSUs above) on or prior to the end of the fiscal quarter in which the third anniversary of the effective date of the grant falls. In this regard, 30% of Mr. Colvin’s units would vest upon achievement of a base level of such revenues ($575 million) and gross margin (42%) targets in two consecutive quarters and an additional 35% of his units would vest upon achievement of a higher level of such revenues ($600 million) and gross margin (44%) targets in two consecutive quarters.

Messrs. Mahoney’s and Nelson’s awards were to vest upon the achievement of a range of total consolidated revenues and gross margin percentages on total consolidated revenues targets (subject to certain adjustments similar to the adjustments described for the 2009 PBRSUs above) on or prior to the end of the fiscal quarter in which the third anniversary of the effective date of the grant falls. 30% of Mr. Mahoney’s and Mr. Nelson’s units were to vest upon achievement of a base level of such revenues ($555 million) and gross margin (40%) targets in two consecutive quarters. The remaining 70% of their units (35% and 35%) would vest consistent with the targets for consolidated revenues and gross margin percentages set forth in the immediately preceding paragraph for Mr. Colvin.

As of March 2, 2010, 17,500 of the PBRSUs for Mr. Colvin had vested, 36,000 of the PBRSUs for Mr. Mahoney had vested, and 36,000 of the PBRSUs for Mr. Nelson had vested. The remaining PBRSUs for Messrs. Colvin, Mahoney, and Nelson are not expected to vest.

The Company has filed a form of award agreement for the 2008 PBRSUs as an exhibit to its reports filed under the Exchange Act.

2007 Awards of PBRSUs. In 2007, Messrs. Jackson and Colvin were granted retention awards, a portion of which were performance-based. 145,000 of Mr. Jackson’s grant and 120,000 of Mr. Colvin’s grant were PBRSUs. These units were to vest as follows:

Keith D. Jackson				Donald Colvin				Performance Criteria
	35,000				30,000			Product revenue of $400 million and gross margins on product revenue of at least 38% in 2 consecutive quarters
	50,000				40,000			Product revenue of $420 million and gross margins on product revenue of at least 40% in 2 consecutive quarters
	60,000				50,000			Product revenue of $440 million and gross margins on product revenue of at least 42% in 2 consecutive quarters

If the performance-based targets for the 60,000 and 50,000 unit grants were achieved for Messrs. Jackson and Colvin, respectively, all of the 145,000 units for Mr. Jackson and 120,000 units for Mr. Colvin were to vest immediately if not previously vested. However, if the minimum performance-based targets were not achieved, then no PBRSUs would vest. Subject to certain exceptions, vesting of the performance-based units was also subject to continued employment of Messrs. Jackson and Colvin, as the case may be, with the Company on the date of vesting.

As of March 2, 2010, all of the 2007 awards of PBRSUs for Messrs. Jackson and Colvin have vested.

The Company has filed a form of award agreement for the 2007 PBRSUs as an exhibit to its reports filed under the Exchange Act.

Outstanding Equity Awards At Fiscal Year-End Table

						Options																				Stock Awards
																																						Equity
																																						Incentive
														Equity																				Equity				Plan
														Incentive																Market				Incentive Plan				Awards:
														Plan												Number				Value Of				Awards:				Market Or
														Awards:												Of Shares				Shares Or				Number Of				Payout Value
						Number Of				Number Of				Number Of												Or Units				Units Of				Unearned				Of Unearned
						Securities				Securities				Securities												Of Stock				Stock				Shares, Units				Shares, Units
						Underlying				Underlying				Underlying												That				That				Or Other				Or Other
						Unexercised				Unexercised				Unexercised				Option				Option				Have Not				Have Not				Rights That				Rights That
						Options (#)				Options (#)				Unearned				Exercise				Expiration				Vested				Vested				Have Not				Have Not
Name		Grant				Exercisable				Unexercisable (1)				Options (#)				Price ($)				Date				(#)(2)				($)(3)				Vested (#)(4)				Vested ($)(3)
(a)		Date				(b)				(c)				(d)				(e)				(f)				(g)				(h)				(i)				(j)
Keith D. Jackson,			02/05/2004				75,000				0								7.02				02/05/2014
President and Chief Executive Officer			02/17/2005				10,000				0								4.80				02/17/2015
			03/23/2006				150,250				66,750								6.83				03/23/2016
			03/05/2007				207,400				207,400								9.21				03/05/2017				34,566				304,872
			10/01/2007																								60,000				529,200
			03/03/2008				250,000				750,000								5.93				03/03/2018
			03/02/2009																																1,405,507				12,396,572
Donald Colvin,			02/05/2004				150,000				0								7.02				02/05/2014
Executive Vice President,			02/17/2005				45,000				0								4.80				02/17/2015
Chief Financial Officer and Treasurer			03/23/2006				84,750				28,250								6.83				03/23/2016
			03/05/2007				60,000				60,000								9.21				03/05/2017				23,333				205,797
			10/01/2007																								50,000				441,000
			03/03/2008				50,000				150,000								5.93				03/03/2018				33,333				293,997
			06/02/2008																																32,500				286,650
			03/02/2009																																750,589				6,620,195
Robert Mahoney,			03/23/2006				10,212				10,212								6.83				03/23/2016
Executive Vice President, Sales and Marketing			07/03/2006				8,250				8,250								5.81				07/03/2016
			03/05/2007				45,000				45,000								9.21				03/05/2017				11,666				102,894
			03/03/2008				22,500				67,500								5.93				03/03/2018				26,666				235,194
			06/02/2008																																84,000				740,880
			03/02/2009																																584,782				5,157,777
W. John Nelson,			06/04/2007				200,000				200,000								10.85				06/04/2017				50,000				441,000
Executive Vice President,			03/03/2008				30,000				90,000								5.93				03/03/2018				26,666				235,194
Chief Operating Officer and			06/02/2008																																84,000				740,880
Chief Environmental Officer			03/02/2009																																1,063,653				9,381,419
George H. Cave,			04/28/2000				33,383				0								16.00				04/28/2010
Senior Vice President, General Counsel, Chief Compliance & Ethics Officer and Secretary			02/21/2001				15,000				0								6.13				02/21/2011
			02/05/2004				65,000				0								7.02				02/05/2014
			03/23/2006				20,000				15,000								6.83				03/23/2016
			03/05/2007				35,000				35,000								9.21				03/05/2017				6,000				52,290
			03/03/2008				5,000				45,000								5.93				03/03/2018				13,333				117,597
			06/02/2008																								8,000				70,560
			03/02/2009																																315,185				2,779,932