Exhibit 10.1

 

March 6, 2008

 

Donald R. Dancer

 

Re:                             Compensation Agreement and Severance Agreement

 

Dear Don:

 

                Reference is made to that certain Compensation Agreement between
you and International Rectifier Corporation (the “Company”), dated as of
October 29, 2007 (the “Compensation Agreement”) and that certain Severance
Agreement between you and the Company dated as of October 29, 2007 (the
“Severance Agreement” and collectively with the Compensation Agreement, the
“Agreements”)).  The purpose of this letter agreement is to supplement and amend
the terms of the Compensation Agreement and to amend the Severance Agreement,
effective as of March 1, 2008, as follows:

 

Compensation Agreement

 

(1)  Change in Title/Position.  The Compensation Agreement is hereby amended to
provide that effective as of March 1, 2008, your title is Executive Vice
President, Chief Administrative Officer and you have the duties and authorities
that are commensurate with such positions.  You additionally retain on an
interim basis your titles of General Counsel and Secretary, and the Board
retains the right, in its sole discretion, to reassign the titles of General
Counsel and Secretary and the duties and authorities commensurate with such
positions to other persons.  As of March 1, 2008, you no longer serve as the
Company’s Chief Executive Officer.

 

(2)  Equity Awards.  Subject to the discretion of the Company’s Compensation
Committee, you will be entitled to receive equity awards on a basis that is
consistent with the level and terms of equity awards provided to other executive
officers of the Company.  For purposes of clarity, any such equity award would
be in addition to, and not in lieu of, the stock options and RSU Award (as
defined in the Compensation Agreement) set forth in paragraphs 5 and 6 of the
Compensation Agreement.

 

(3)  Retention Payments.  In addition to your base salary, annual bonus
opportunity and the special cash bonus you became entitled to receive on
March 1, 2008 under the Compensation Agreement, you will also receive: (i) a
one-time cash retention payment of $600,000 if you are employed by the Company
on September 1, 2008 (payable within ten (10) business days thereafter) and
(ii) a one-time cash retention payment of $400,000 if you are employed by the
Company on March 1, 2009 (payable within ten (10) business days thereafter)
(collectively, the “Retention Bonuses”).

 

Notwithstanding the foregoing, if your employment is terminated by the Company
without Cause (as defined in the Separation Agreement) before either or both of
the Retention Bonuses become payable, you will receive a cash lump sum payment
equal to the then-unpaid portion of the Retention Bonuses (payable within ten
(10) business days after the date of your termination of employment).

 

In addition, if you terminate your employment for any reason before either or
both of the Retention Bonuses become payable, you will receive a cash lump sum
payment of a portion of the Retention Bonuses as follows: if your employment
terminates before September 1, 2008, you will receive an amount equal to
$600,000 multiplied by a fraction, the numerator of which is the number of days
you worked from March 1, 2008 to your termination date and the denominator of
which is 184.

 

(4)  Special Severance Payment.    If your employment by the Company is
terminated for any reason other than by the Company with Cause and such
termination does not constitute a Qualifying Termination that gives rise to your
entitlement to benefits under Section 2 of the Separation Agreement, you will
receive (i) a cash amount equal to the sum of one times your annual Base Pay and
that year’s Target Bonus, and (ii) the Employee Benefits described in
Section 2(c) of the Separation Agreement but with an Employee Benefits
Continuation Period of 12 months from the date of your employment termination. 
With respect to any stock options that are vested as of the date of your
employment termination, you will have the later of (i) one year following your
employment termination date, and (ii) the date that is 90 days after the Company
is again current in its financial statement reporting obligations under
Section 13 of the Securities Exchange Act of 1934 for the purposes of the
exercise of stock options under the Company’s stock option plan, after which
time any and all of your stock options that you have not exercised shall
terminate and be of no further force and effect; provided however, your vested
stock options shall be subject to all other terms and conditions of the plan and
other documents under which the options were originally granted, including,
without limitation, early termination upon the first to occur of (i) the maximum
year term of such options upon grant or (ii) a change of control of the Company,
in each case on the terms provided for under the applicable option plan and
option agreement.    You will only be entitled to receive the benefits described
in this paragraph upon a termination of employment upon your execution and
delivery to the Company of a release agreement in the form set forth in
Section 2(p) of the Separation Agreement. (For purposes of this paragraph, the
terms Cause, Qualifying Termination, Base Pay, Target Bonus, Employee Benefits
and Employee Benefits Continuation Period have the meanings set forth in the
Separation Agreement.)

 

If, however, your employment by the Company is terminated for any reason other
than by the Company with Cause and such termination constitutes a Qualifying
Termination that gives rise to your entitlement to benefits under Section 2 of
the Separation Agreement, you will only be entitled to the benefits provided
under the Separation Agreement and will not be entitled to any additional
severance under this paragraph 4.

 

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(5)  Section 409A.  If you become entitled to a payment under either the third
grammatical paragraph of Section 3 above or the first grammatical paragraph of
Section 4 above, the payment will be made to you on (or within ten (10) business
days after) the date of your “separation from service” with the Company (within
the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the
optional alternative definitions available thereunder).  However, if you are a
“specified employee” of the Company for purposes of Section 409A of the Code,
the amount otherwise payable to you pursuant to this paragraph in connection
with your separation from service shall not be paid until the date that is six
months and one day after the date you have a separation from service with the
Company (or, if earlier, the date of your death), and shall be paid (without
interest) on or within ten (10) business days after that date, to the extent
such six-month delay is required to avoid the imputation of any tax, penalty, or
interest under Section 409A of the Code.

 

Separation Agreement

 

(1)  Definition of Change in Control and Good Reason.  The Separation Agreement
is hereby amended effective as of March 1, 2008 to provide that your changes in
position and title set forth above do not and shall not constitute a “Change in
Control” under Section 1(e) of the Separation Agreement nor shall they
constitute “Good Reason” under Section 1(m) of the Separation Agreement.

 

(2)  Waiver.  You expressly waive any and all rights you may have otherwise had
to benefits under the Separation Agreement as a result of the change in your
title as set forth herein and you expressly acknowledge and agree that the
benefits and promises set forth herein constitute adequate consideration for
your agreement to waive any such rights thereunder.

 

                This letter agreement does not modify any other terms of the
Agreements except as expressly set forth above.

 

                If this letter agreement accurately sets forth our agreement
with respect to the foregoing matters, please indicate your acceptance by
signing this letter below and returning it to me.  A duplicate copy of this
letter agreement is included for your records.

 

International Rectifier Corporation

 

 

By:

 

 

Print Name:

 Lawrence A. Michlovich

 

Title:

 Vice President & Assistant Secretary

 

Accepted and Agreed:

 

 

 

 

 

Donald R. Dancer

 

Date:

 3/12/08

 

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