Exhibit 10.60
     Beginning in 2009, initial and annual grants will be made to outside
directors primarily under the Power Integrations 2007 Equity Incentive Plan (the
“2007 Plan”) as follows (the “Directors Equity Compensation Program”):
     1. Each current participant and each individual who would be eligible to
participate in the 1997 Outside Directors Stock Option Plan shall be a
participant in the Directors Equity Compensation Program;
     2. There will be no change to the vesting schedules or exercise prices of
outstanding options;
     3. On the first trading day of July in each year (the “Regular Grant
Date”), if a continuing eligible director (other than a new director) holds
options pursuant to which 8,000 or more shares would vest during the period
commencing with the 25th month and ending with the 36th month following the
Regular Grant Date (the “Third Year”), he/she would not receive a new option
grant under the 2007 Plan on that day;
     4. On the Regular Grant Date of each year, if a continuing eligible
director (other than a new director) holds options pursuant to which less than
8,000 shares (or no shares) would vest during the Third Year, he/she would
receive an option under the 2007 Plan to purchase 8,000 shares less the number
of such shares. Such shares would vest monthly during the Third Year;
     5. A new eligible director would receive under the 2007 Plan (or, if
determined by the Committee, under the 1997 Outside Directors Stock Option
Plan):
(a) On the first trading day of the month following commencement of service, an
option to purchase the number of shares of common stock equal to: the fraction
of a year (determined by reference to the number of months) between the date of
the director’s appointment to the Board of Directors and the next July 1,
multiplied by 8,000. The number of shares of common stock subject to such option
would be rounded down to the next whole share. Such shares would vest on such
next July 1.
(b) On the first trading day of July following commencement of service, an
option to purchase 24,000 shares vesting monthly over the three year period
commencing on the Regular Grant Date.
     6. The exercise price per share for the options to be granted under the
Directors Equity Compensation Program shall be the Fair Market Value of a share
of the Company’s Common Stock on the grant date as determined in accordance with
the Option Agreements; and
     7. The Directors Equity Compensation Program shall remain in effect at the
discretion of the Board or the Compensation Committee.