Exhibit 10.1

POWER INTEGRATIONS, INC.
2016 INCENTIVE AWARD PLAN
(AS APPROVED BY THE BOARD OF DIRECTORS ON MARCH 13, 2019)
(APPROVED BY THE STOCKHOLDERS ON MAY 22, 2019)

1.
General.

(a)Eligible Award Recipients. Employees, Directors and Consultants are eligible
to receive Awards.
(b)Available Awards. The Plan provides for the grant of the following types of
Awards: (i) Restricted Stock Unit Awards; (ii) Performance Stock Unit Awards;
and (iii) Performance Cash Awards. For the avoidance of doubt, no other forms of
equity-based awards, including but not limited to stock options and stock
appreciation rights, may be granted under the Plan.
(c)Purpose. The Plan, through the granting of Awards, is intended to help the
Company secure and retain the services of eligible Award recipients and provide
incentives for such persons to exert maximum efforts for the success of the
Company and any Affiliate.
2.Administration.
(a)Administration by Board. The Board will administer the Plan. The Board may
delegate administration of the Plan to a Committee or Committees, as provided in
Section 2(c).
(b)Powers of Board. The Board will have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i)To determine (A) who will be granted Awards; (B) when and how each Award will
be granted; (C) what type of Award will be granted; (D) the provisions of each
Award (which need not be identical), including when a person will be permitted
to receive cash or Common Stock under the Award; (E) the number of shares of
Common Stock subject to, or the cash value of, an Award; and (F) the Fair Market
Value applicable to an Award.
(ii)To construe and interpret the Plan and Awards granted under it, and to
establish, amend and revoke rules and regulations for administration of the Plan
and Awards. The Board, in the exercise of these powers, may correct any defect,
omission or inconsistency in the Plan or in any Award Agreement or in the
written terms of a Performance Cash Award, in a manner and to the extent it will
deem necessary or expedient to make the Plan or Award fully effective.
(iii)To settle all controversies regarding the Plan and Awards granted under it.
(iv)To accelerate, in whole or in part, the time at which an Award may vest (or
at which cash or shares of Common Stock may be issued).
(v)To suspend or terminate the Plan at any time. Except as otherwise provided in
the Plan or an Award Agreement, suspension or termination of the Plan will not
impair a Participant’s rights under his or her then-outstanding Award without
his or her written consent except as provided in subsection (viii) below.
(vi)To amend the Plan in any respect the Board deems necessary or advisable,
including, without limitation, to make the Plan or Awards granted under the Plan
exempt from or compliant with the requirements for nonqualified deferred
compensation under Section 409A of the Code, subject to the limitations, if any,
of applicable law. However, if required by applicable law or listing
requirements, and except as provided in Section 8(a) relating to Capitalization
Adjustments, the Company will seek stockholder approval of any amendment of the
Plan that (A) materially increases the number of shares of Common Stock
available for issuance under the Plan; (B) materially expands the class of
individuals eligible to receive Awards under the Plan; (C) materially increases
the benefits accruing to Participants under the Plan, (D) materially reduces the
price at which shares of Common Stock may be issued under the Plan;
(E) materially extends the term of the Plan; or (F) materially expands the types
of Awards available for issuance under the Plan. Except as provided in the Plan
(including Section 2(b)(viii)) or an Award Agreement, no amendment of the Plan
will impair a Participant’s rights under an outstanding Award without the
Participant’s written consent.
(vii)To submit any amendment to the Plan for stockholder approval, including,
but not limited to, amendments to the Plan intended to satisfy the requirements
of (A) Section 162(m) of the Code regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
Covered Employees; or (B) Rule 16b-3.
(viii)To approve forms of Award Agreements for use under the Plan and to amend
the terms of any one or more Awards, including, but not limited to, amendments
to provide terms more favorable to the Participant than previously provided in
the Award Agreement, subject to any specified limits in the Plan that are not
subject to Board discretion; provided, however,

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that a Participant’s rights under any Award will not be impaired by any such
amendment unless (A) the Company requests the consent of the affected
Participant; and (B) such Participant consents in writing. Notwithstanding the
foregoing, (1) a Participant’s rights will not be deemed to have been impaired
by any such amendment if the Board, in its sole discretion, determines that the
amendment, taken as a whole, does not materially impair the Participant’s
rights, and (2) subject to the limitations of applicable law, if any, the Board
may amend the terms of any one or more Awards without the affected Participant’s
consent (A)  to clarify the manner of exemption from, or to bring the Award into
compliance with, Section 409A of the Code; or (B) to comply with other
applicable laws or listing requirements.
(ix)Generally, to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company and
that are not in conflict with the provisions of the Plan or Awards.
(x)To adopt such procedures and sub-plans as are necessary or appropriate to
permit participation in the Plan by Employees, Directors or Consultants who are
foreign nationals or employed outside the United States (provided that Board
approval will not be necessary for immaterial modifications to the Plan or any
Award Agreement that are required for compliance with the laws of the relevant
foreign jurisdiction).
(c)Delegation to Committee.
(i)General. The Board may delegate some or all of the administration of the Plan
to a Committee or Committees. If administration of the Plan is delegated to a
Committee, the Committee will have, in connection with the administration of the
Plan, the powers theretofore possessed by the Board that have been delegated to
the Committee, including the power to delegate to a subcommittee of the
Committee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board will thereafter be to the
Committee or subcommittee, as applicable). Any delegation of administrative
powers will be reflected in resolutions, not inconsistent with the provisions of
the Plan, adopted from time to time by the Board or Committee (as applicable).
The Committee may, at any time, abolish the subcommittee and/or revest in the
Committee any powers delegated to the subcommittee. The Board may retain the
authority to concurrently administer the Plan with the Committee and may, at any
time, revest in the Board some or all of the powers previously delegated.
(ii)Section 162(m) and Rule 16b-3 Compliance. The Committee may consist solely
of two (2) or more Outside Directors, in accordance with Section 162(m) of the
Code, or solely of two (2) or more Non-Employee Directors, in accordance with
Rule 16b-3.
(d)Delegation to an Officer. The Board may delegate to one or more Officers the
authority to do one or both of the following (i) designate Employees who are not
Officers to be recipients of Awards and the terms of such Awards, in each case
to the extent permitted by applicable law; and (ii) determine the number of
shares of Common Stock to be subject to such Awards granted to such Employees;
provided, however, that the Board resolutions regarding such delegation will
specify the total number of shares of Common Stock that may be subject to the
Awards granted by such Officer and that such Officer may not grant an Award to
himself or herself. Any such Awards will be granted using the relevant form of
Award Agreement most recently approved for use by the Committee or the Board,
unless otherwise provided in the resolutions approving the delegation authority.
The Board may not delegate authority to an Officer who is acting solely in the
capacity of an Officer (and not also as a Director) to determine the Fair Market
Value pursuant to Section 12(x) below.
(e)Effect of Board’s Decision. All determinations, interpretations and
constructions made by the Board in good faith will not be subject to review by
any person and will be final, binding and conclusive on all persons.
3.Shares Subject to the Plan.
(a)Share Reserve.
(i)Subject to Section 8(a) relating to Capitalization Adjustments, the aggregate
number of shares of Common Stock that may be issued pursuant to Awards from and
after the Effective Date will not exceed two million five hundred thousand
(2,500,000) shares (the “Share Reserve”).
(ii)For clarity, the Share Reserve in this Section 3(a) is a limitation on the
number of shares of Common Stock that may be issued pursuant to the Plan.
Accordingly, this Section 3(a) does not limit the granting of Awards except as
provided in the Plan. Shares may be issued in connection with a merger or
acquisition as permitted by NASDAQ Listing Rule 5635(c) or, if applicable, NYSE
Listed Company Manual Section 303A.08, AMEX Company Guide Section 711 or other
applicable rule, and such issuance will not reduce the number of shares
available for issuance under the Plan.
(b)Reversion of Shares to the Share Reserve. If any shares of Common Stock
issued pursuant to an Award are forfeited back to the Company because of the
failure to meet a contingency or condition required to vest such shares in the
Participant, then the shares that are forfeited will revert to and again become
available for issuance under the Plan. If any shares of Common Stock subject to
an Award are not delivered to a Participant because such shares are withheld for
the payment of taxes, the number of shares subject to the Award that are not
delivered to the Participant shall not remain available for subsequent issuance
under the Plan.

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(c)Section 162(m) Limitations. Subject to the Share Reserve and Section 8(a)
relating to Capitalization Adjustments, to the extent required to comply with
Section 162(m) of the Code, the following limitations will apply.
(i)A maximum of two hundred fifty thousand (250,000) shares of Common Stock
subject to Performance Stock Unit Awards may be granted to any one Participant
during any one fiscal year; and
(ii)A maximum of ten million dollars ($10,000,000) may be granted as a
Performance Cash Award to any one Participant during any one fiscal year.
(d)Limitation on Grants to Non-Employee Directors. The maximum number of shares
subject to Awards granted under this Plan or otherwise during a single fiscal
year to any Non-Employee Director, taken together with any cash fees paid to
such Non-Employee Director during the fiscal year, will not exceed three hundred
thousand dollars ($300,000) in total value (calculating the value of any such
Awards based on the grant date fair value of such Stock Awards for financial
reporting purposes).
(e)Source of Shares. The stock issuable under the Plan will be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Company on the open market or otherwise.
4.Eligibility.
Awards may be granted to Employees, Directors and Consultants; provided,
however, that Awards may not be granted to Employees, Directors and Consultants
who are providing Continuous Service only to any “parent” of the Company, as
such term is defined in Rule 405, unless (i) the stock underlying such Awards is
treated as “service recipient stock” under Section 409A of the Code (for
example, because the Awards are granted pursuant to a corporate transaction such
as a spin off transaction) or (ii) the Company, in consultation with its legal
counsel, has determined that such Awards are otherwise exempt from (or,
alternatively, comply with) the distribution requirements of Section 409A of the
Code.
5.Provisions of Awards
(a)Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement will
be in such form and will contain such terms and conditions as the Board deems
appropriate. The terms and conditions of Restricted Stock Unit Award Agreements
may change from time to time, and the terms and conditions of separate
Restricted Stock Unit Award Agreements need not be identical. Each Restricted
Stock Unit Award Agreement will conform to (through incorporation of the
provisions hereof by reference in the Agreement or otherwise) the substance of
each of the following provisions:
(i)Consideration. At the time of grant of a Restricted Stock Unit Award, the
Board will determine the consideration, if any, to be paid by the Participant
upon delivery of each share of Common Stock subject to the Restricted Stock Unit
Award. The consideration to be paid (if any) by the Participant for each share
of Common Stock subject to a Restricted Stock Unit Award may be paid in any form
of legal consideration that may be acceptable to the Board, in its sole
discretion, and permissible under applicable law.
(ii)Vesting. At the time of the grant of a Restricted Stock Unit Award, the
Board may impose such restrictions on or conditions to the vesting of the
Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.
(iii)Payment. A Restricted Stock Unit Award may be settled by the delivery of
shares of Common Stock, their cash equivalent, any combination thereof or in any
other form of consideration, as determined by the Board and contained in the
Restricted Stock Unit Award Agreement.
(iv)Additional Restrictions. At the time of the grant of a Restricted Stock Unit
Award, the Board, as it deems appropriate, may impose such restrictions or
conditions that delay the delivery of the shares of Common Stock (or their cash
equivalent) subject to a Restricted Stock Unit Award to a time after the vesting
of such Restricted Stock Unit Award.
(v)Dividend Equivalents. Dividend equivalents may be credited in respect of
shares of Common Stock covered by a Restricted Stock Unit Award, as determined
by the Board and contained in the Restricted Stock Unit Award Agreement. At the
sole discretion of the Board, such dividend equivalents may be converted into
additional shares of Common Stock covered by the Restricted Stock Unit Award in
such manner as determined by the Board. Any additional shares covered by the
Restricted Stock Unit Award credited by reason of such dividend equivalents will
be subject to all of the same terms and conditions of the underlying Restricted
Stock Unit Award Agreement to which they relate.
(vi)Termination of Participant’s Continuous Service. Except as otherwise
provided in the applicable Restricted Stock Unit Award Agreement, such portion
of the Restricted Stock Unit Award that has not vested will be forfeited upon
the Participant’s termination of Continuous Service.
(b)Performance Awards.
(i)Performance Stock Unit Awards. A Performance Stock Unit Award is a Restricted
Stock Unit Award that is granted or vests contingent upon the attainment during
a Performance Period of certain Performance Goals. A Performance

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Stock Unit Award may, but need not, require the Participant’s completion of a
specified period of Continuous Service. The length of any Performance Period,
the Performance Goals to be achieved during the Performance Period, and the
measure of whether and to what degree such Performance Goals have been attained
will be conclusively determined by the Committee (or, if not required for
compliance with Section 162(m) of the Code, the Board), in its sole discretion.
In addition, to the extent permitted by applicable law and the applicable Award
Agreement, the Board or Committee may determine that cash may be used in payment
of Performance Stock Unit Awards.
(ii)Performance Cash Awards. A Performance Cash Award is a cash award that is
payable contingent upon the attainment during a Performance Period of certain
Performance Goals. A Performance Cash Award may also require the Participant’s
completion of a specified period of Continuous Service. At the time of grant of
a Performance Cash Award, the length of any Performance Period, the Performance
Goals to be achieved during the Performance Period, and the measure of whether
and to what degree such Performance Goals have been attained will be
conclusively determined by the Committee (or, if not required for compliance
with Section 162(m) of the Code, the Board), in its sole discretion.
(iii)Discretion. The Board or Committee retains the discretion to reduce or
eliminate the compensation or economic benefit due upon attainment of
Performance Goals and to define the manner of calculating the Performance
Criteria it selects to use for a Performance Period.
(iv)Section 162(m) Compliance. Unless otherwise permitted in compliance with
Section 162(m) of the Code with respect to an Award intended to qualify as
“performance-based compensation” thereunder, the Committee will establish the
Performance Goals applicable to, and the formula for calculating the amount
payable under, the Award no later than the earlier of (A) the date ninety (90)
days after the commencement of the applicable Performance Period, and (B) the
date on which twenty-five percent (25%) of the Performance Period has elapsed,
and in any event at a time when the achievement of the applicable Performance
Goals remains substantially uncertain. Prior to the payment of any compensation
under an Award intended to qualify as “performance-based compensation” under
Section 162(m) of the Code, the Committee will certify the extent to which any
Performance Goals and any other material terms under such Award have been
satisfied (other than in cases where the Performance Goals relate solely to the
increase in the value of the Common Stock). Notwithstanding satisfaction or any
completion of any Performance Goals, shares subject to Awards, cash or other
benefits granted, issued, retainable and/or vested under an Award on account of
satisfaction of such Performance Goals may be reduced by the Committee on the
basis of any further considerations as the Committee, in its sole discretion,
will determine.
6.Covenants of the Company.
(a)Availability of Shares. The Company will keep available at all times the
number of shares of Common Stock reasonably required to satisfy then-outstanding
Awards.
(b)Securities Law Compliance. The Company will seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan the authority
required to grant Awards and to issue and sell shares of Common Stock upon
settlement of the Awards; provided, however, that this undertaking will not
require the Company to register under the Securities Act the Plan, any Award or
any Common Stock issued or issuable pursuant to any such Award. If, after
reasonable efforts and at a reasonable cost, the Company is unable to obtain
from any such regulatory commission or agency the authority that counsel for the
Company deems necessary for the lawful issuance and sale of Common Stock under
the Plan, the Company will be relieved from any liability for failure to issue
and sell Common Stock upon settlement of such Awards unless and until such
authority is obtained. A Participant will not be eligible for the grant of an
Award or the subsequent issuance of cash or Common Stock pursuant to the Award
if such grant or issuance would be in violation of any applicable securities
law.
(c)No Obligation to Notify or Minimize Taxes. The Company will have no duty or
obligation to warn or otherwise advise such holder of a pending termination or
expiration of an Award. The Company has no duty or obligation to minimize the
tax consequences of an Award to the holder of such Award.
7.Miscellaneous.
(a)Corporate Action Constituting Grant of Awards. Corporate action constituting
a grant by the Company of an Award to any Participant will be deemed completed
as of the date of such corporate action, unless otherwise determined by the
Board, regardless of when the instrument, certificate, or letter evidencing the
Award is communicated to, or actually received or accepted by, the Participant.
In the event that the corporate records (e.g., Board consents, resolutions or
minutes) documenting the corporate action constituting the grant contain terms
(e.g., vesting schedule or number of shares) that are inconsistent with those in
the Award Agreement or related grant documents as a result of a clerical error
in the papering of the Award Agreement or related grant documents, the corporate
records will control and the Participant will have no legally binding right to
the incorrect term in the Award Agreement or related grant documents.
(b)Stockholder Rights. No Participant will be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares of Common Stock
subject to an Award unless and until (i) such Participant has satisfied all
requirements

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for the issuance of shares of Common Stock under the Award pursuant to its
terms, and (ii) the issuance of the Common Stock subject to such Award has been
entered into the books and records of the Company.
(c)No Employment or Other Service Rights. Nothing in the Plan, any Award
Agreement or any other instrument executed thereunder or in connection with any
Award granted pursuant thereto will confer upon any Participant any right to
continue to serve the Company or an Affiliate in the capacity in effect at the
time the Award was granted or will affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without notice
and with or without cause, (ii) the service of a Consultant pursuant to the
terms of such Consultant’s agreement with the Company or an Affiliate, or (iii)
the service of a Director pursuant to the bylaws of the Company or an Affiliate,
and any applicable provisions of the corporate law of the state in which the
Company or the Affiliate is incorporated, as the case may be.
(d)Change in Time Commitment. In the event a Participant’s regular level of time
commitment in the performance of his or her services for the Company and any
Affiliates is reduced (for example, and without limitation, if the Participant
is an Employee of the Company and the Employee has a change in status from a
full-time Employee to a part-time Employee) after the date of grant of any Award
to the Participant, the Board has the right in its sole discretion to (x) make a
corresponding reduction in the number of shares or cash amount subject to any
portion of such Award that is scheduled to vest or become payable after the date
of such change in time commitment, and (y) in lieu of or in combination with
such a reduction, extend the vesting or payment schedule applicable to such
Award. In the event of any such reduction, the Participant will have no right
with respect to any portion of the Award that is so reduced or extended.
(e)Investment Assurances. The Company may require a Participant, as a condition
of acquiring Common Stock under any Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
accepting the Award; and (ii) to give written assurances satisfactory to the
Company stating that the Participant is acquiring Common Stock subject to the
Award for the Participant’s own account and not with any present intention of
selling or otherwise distributing the Common Stock. The foregoing requirements,
and any assurances given pursuant to such requirements, will be inoperative if
(A) the issuance of the shares upon the acquisition of Common Stock under the
Award has been registered under a then currently effective registration
statement under the Securities Act, or (B) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.
(f)Withholding Obligations. Unless prohibited by the terms of an Award
Agreement, the Company may, in its sole discretion, satisfy any federal, state
or local tax withholding obligation relating to an Award by any of the following
means or by a combination of such means: (i) causing the Participant to tender a
cash payment; (ii) withholding shares of Common Stock from the shares of Common
Stock issued or otherwise issuable to the Participant in connection with the
Award; provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law (or
such lesser amount as may be necessary to avoid classification of the Award as a
liability for financial accounting purposes); (iii) withholding cash from an
Award settled in cash; (iv) withholding payment from any amounts otherwise
payable to the Participant; or (v) by such other method as may be set forth in
the Award Agreement.
(g)Electronic Delivery. Any reference herein to a “written” agreement or
document will include any agreement or document delivered electronically, filed
publicly at www.sec.gov (or any successor website thereto) or posted on the
Company’s intranet (or other shared electronic medium controlled by the Company
to which the Participant has access).
(h)Deferrals. To the extent permitted by applicable law, the Board, in its sole
discretion, may determine that the delivery of Common Stock or the payment of
cash, upon the vesting or settlement of all or a portion of any Award may be
deferred and may establish programs and procedures for deferral elections to be
made by Participants. Deferrals by Participants will be made in accordance with
Section 409A of the Code. Consistent with Section 409A of the Code, the Board
may provide for distributions while a Participant is still an employee or
otherwise providing services to the Company. The Board is authorized to make
deferrals of Awards and determine when, and in what annual percentages,
Participants may receive payments, including lump sum payments, following the
Participant’s termination of Continuous Service, and implement such other terms
and conditions consistent with the provisions of the Plan and in accordance with
applicable law.
(i)Compliance with Section 409A. To the extent that the Board determines that
any Award granted hereunder is subject to Section 409A of the Code, the Award
Agreement evidencing such Award shall incorporate the terms and conditions
necessary to avoid the consequences specified in Section 409A(a)(1) of the Code.
To the extent applicable, the Plan and Award Agreements shall be interpreted in
accordance with Section 409A of the Code. Notwithstanding anything to the
contrary in this Plan (and unless the Award Agreement specifically provides
otherwise), if the shares of Common Stock are publicly traded and a Participant
holding an Award that constitutes “deferred compensation” under Section 409A of
the Code is a “specified employee”

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for purposes of Section 409A of the Code, no distribution or payment of any
amount shall be made upon a “separation from service” before a date that is
six (6) months following the date of such Participant’s “separation from
service” (as defined in Section 409A of the Code without regard to alternative
definitions thereunder) or, if earlier, the date of the Participant’s death.
(j)Clawback/Recovery. All Awards granted under the Plan will be subject to
recoupment in accordance with any clawback policy that the Company is required
to adopt pursuant to the listing standards of any national securities exchange
or association on which the Company’s securities are listed or as is otherwise
required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or
other applicable law. In addition, the Board may impose such other clawback,
recovery or recoupment provisions in an Award Agreement as the Board determines
necessary or appropriate, including but not limited to a reacquisition right in
respect of previously acquired shares of Common Stock or other cash or property
upon the occurrence of Cause. No recovery of compensation under such a clawback
policy will be an event giving rise to a right to resign for “good reason” or
“constructive termination” (or similar term) under any agreement with the
Company.
8.Adjustments upon Changes in Common Stock; Other Corporate Events.
(a)Capitalization Adjustments. In the event of a Capitalization Adjustment, the
Board will appropriately and proportionately adjust: (i) the class(es) and
maximum number of securities subject to the Plan pursuant to Section 3(a)(i),
(ii) the class(es) and maximum number of securities that may be awarded to any
person pursuant to Section 3(c), and (iii) the class(es) and number of
securities and price per share of stock subject to outstanding Awards. The Board
will make such adjustments, and its determination will be final, binding and
conclusive.
(b)Dissolution. Except as otherwise provided in the Award Agreement, in the
event of a Dissolution of the Company, all outstanding Awards (other than Awards
consisting of vested and outstanding shares of Common Stock not subject to a
forfeiture condition or the Company’s right of repurchase) will terminate
immediately prior to the completion of such Dissolution, and the shares of
Common Stock subject to the Company’s repurchase rights or subject to a
forfeiture condition may be repurchased or reacquired by the Company
notwithstanding the fact that the holder of such Award is providing Continuous
Service, provided, however, that the Board may, in its sole discretion, cause
some or all Awards to become fully vested and/or no longer subject to repurchase
or forfeiture (to the extent such Awards have not previously expired or
terminated) before the Dissolution is completed but contingent on its
completion.
(c)Transactions. The following provisions will apply to Awards in the event of a
Transaction unless otherwise provided in the Award Agreement or any other
written agreement between the Company or any Affiliate and the Participant or
unless otherwise expressly provided by the Board at the time of grant of an
Award. In the event of a Transaction, then, notwithstanding any other provision
of the Plan, the Board may take one or more of the following actions with
respect to Awards, contingent upon the closing or completion of the Transaction:
(i)arrange for the surviving corporation or acquiring corporation (or the
surviving or acquiring corporation’s parent company) to assume or continue the
Award or to substitute a similar Award for the Award (including, but not limited
to, an award to acquire the same consideration paid to the stockholders of the
Company pursuant to the Transaction);
(ii)arrange for the assignment of any reacquisition or repurchase rights held by
the Company in respect of Common Stock issued pursuant to the Award to the
surviving corporation or acquiring corporation (or the surviving or acquiring
corporation’s parent company);
(iii)accelerate the vesting, in whole or in part, of the Award to a date prior
to the effective time of such Transaction as the Board determines (or, if the
Board does not determine such a date, to the date that is five (5) days prior to
the effective date of the Transaction);
(iv)arrange for the lapse, in whole or in part, of any reacquisition or
repurchase rights held by the Company with respect to the Award;
(v)cancel or arrange for the cancellation of the Award, to the extent not vested
prior to the effective time of the Transaction, in exchange for such cash
consideration or no consideration, as the Board, in its sole discretion, may
consider appropriate; and
(vi)make a payment, in such form as may be determined by the Board equal to the
value of the property the Participant would have received upon the settlement of
the Award immediately prior to the effective time of the Transaction. Payments
under this provision may be delayed to the same extent that payment of
consideration to the holders of the Common Stock in connection with the
Transaction is delayed as a result of escrows, earn outs, holdbacks or any other
contingencies.
The Board need not take the same action or actions with respect to all Awards or
portions thereof or with respect to all Participants. The Board may take
different actions with respect to the vested and unvested portions of an Award.
(d)Change in Control. An Award may be subject to additional acceleration of
vesting upon or after a qualifying termination that occurs in connection with a
Change in Control as may be provided in the Award Agreement for such Award or as

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may be provided in any other written agreement between the Company or any
Affiliate and the Participant, but in the absence of such provision, no such
acceleration will occur.
9.Plan Term; Earlier Termination or Suspension of the Plan.
(a)Suspension and Termination. The Board may suspend or terminate the Plan at
any time. Unless sooner terminated, the Plan shall automatically terminate on
the day before the tenth (10th) anniversary of the earlier of (i) the date the
Plan is adopted by the Board, or (ii) the date the Plan is approved by the
stockholders of the Company. No Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b)No Impairment of Rights. Suspension or termination of the Plan will not
impair rights and obligations under any Award granted while the Plan is in
effect except with the written consent of the affected Participant or as
otherwise permitted in the Plan.
10.
Effective Date of Plan.

This Plan will become effective on the Effective Date.
11.
Choice of Law.

The laws of the State of Delaware will govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to that
state’s conflict of laws rules.
12.
Definitions. As used in the Plan, the following definitions will apply to the
capitalized terms indicated below:

(a)“Affiliate” means, at the time of determination, any “parent” or “subsidiary”
of the Company as such terms are defined in Rule 405. The Board will have the
authority to determine the time or times at which “parent” or “subsidiary”
status is determined within the foregoing definition.
(b)“Award” means a grant of Restricted Stock Units or Performance Stock Units.
(c)“Award Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of an Award.
(d)“Board” means the Board of Directors of the Company.
(e)“Capitalization Adjustment” means any change that is made in, or other events
that occur with respect to, the Common Stock subject to the Plan or subject to
any Award after the Effective Date without the receipt of consideration by the
Company through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, large
nonrecurring cash dividend, stock split, reverse stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or any similar equity restructuring transaction, as that term is used
in Statement of Financial Accounting Standards Board Accounting Standards
Codification Topic 718 (or any successor thereto). Notwithstanding the
foregoing, the conversion of any convertible securities of the Company will not
be treated as a Capitalization Adjustment.
(f)“Cause” will have the meaning ascribed to such term in any written agreement
between the Participant and the Company defining such term and, in the absence
of such agreement, such term means, with respect to a Participant, the
occurrence of any of the following events: (i) such Participant’s failure to
substantially perform his or her duties with the Company or an Affiliate; (ii)
such Participant’s failure to substantially follow and comply with the specific
and lawful directives of the Board or any officer of the Company or an Affiliate
to whom such Participant directly or indirectly reports; (iii) such
Participant’s commission of an act of fraud or dishonesty resulting in actual
economic, financial or reputational injury to the Company or an Affiliate; (iv)
such Participant’s engagement in illegal conduct, gross misconduct or an act of
moral turpitude, involving economic, financial or reputational injury to the
Company or an Affiliate; (v) such Participant’s material violation of any
material written policy, guideline, code, handbook or similar document governing
the conduct of directors, officers or employees of the Company or its Affiliates
resulting in actual economic, financial or reputational injury to the Company or
an Affiliate; (vi) such Participant’s intentional, material violation of any
contract or agreement between the Participant and the Company or of any
statutory duty owed to the Company; or (vii) such Participant’s unauthorized use
or disclosure of the Company’s confidential information or trade secrets. The
determination that a termination of the Participant’s Continuous Service is
either for Cause or without Cause will be made by the Company, in its sole
discretion. Any determination by the Company that the Continuous Service of a
Participant was terminated with or without Cause for the purposes of outstanding
Awards held by such Participant will have no effect upon any determination of
the rights or obligations of the Company or such Participant for any other
purpose.
(g)“Change in Control” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:
(i)any Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities other than

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by virtue of a merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control will not be deemed to occur (A) on account of the
acquisition of securities of the Company directly from the Company, (B) on
account of the acquisition of securities of the Company by an investor, any
affiliate thereof or any other Exchange Act Person that acquires the Company’s
securities in a transaction or series of related transactions the primary
purpose of which is to obtain financing for the Company through the issuance of
equity securities, or (C) solely because the level of Ownership held by any
Exchange Act Person (the “Subject Person”) exceeds the designated percentage
threshold of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the number of
shares outstanding, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the Subject Person
becomes the Owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control will be deemed to
occur;
(ii)there is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately after the
consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership of the
outstanding voting securities of the Company immediately prior to such
transaction;
(iii)there is consummated a sale, lease, exclusive license or other disposition
of all or substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries
to an Entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are Owned by stockholders of the Company in
substantially the same proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such sale, lease, license or
other disposition; or
(iv)individuals who, on the date the Plan is adopted by the Board, are members
of the Board (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the members of the Board; provided, however, that if the
appointment or election (or nomination for election) of any new Board member was
approved or recommended by a majority vote of the members of the Incumbent Board
then still in office, such new member will, for purposes of this Plan, be
considered as a member of the Incumbent Board.
Notwithstanding the foregoing definition or any other provision of this Plan,
the term Change in Control will not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company.
(h)“Code” means the Internal Revenue Code of 1986, as amended, including any
applicable regulations and guidance thereunder.
(i)“Committee” means a committee of one or more Directors to whom authority has
been delegated by the Board in accordance with Section 2(c).
(j)“Common Stock” means the common stock of the Company.
(k)“Company” means Power Integrations, Inc., a Delaware corporation.
(l)“Consultant” means any person, including an advisor, who is (i) engaged by
the Company or an Affiliate to render consulting or advisory services and is
compensated for such services, or (ii) serving as a member of the board of
directors of an Affiliate and is compensated for such services. However, service
solely as a Director, or payment of a fee for such service, will not cause a
Director to be considered a “Consultant” for purposes of the Plan.
Notwithstanding the foregoing, a person is treated as a Consultant under this
Plan only if a Form S-8 Registration Statement under the Securities Act is
available to register either the offer or the sale of the Company’s securities
to such person.
(m)“Continuous Service” means that the Participant’s service with the Company or
an Affiliate, whether as an Employee, Director or Consultant, is not interrupted
or terminated. A change in the capacity in which the Participant renders service
to the Company or an Affiliate as an Employee, Director or Consultant or a
change in the Entity for which the Participant renders such service, provided
that there is no interruption or termination of the Participant’s service with
the Company or an Affiliate, will not terminate a Participant’s Continuous
Service; provided, however, that if the Entity for which a Participant is
rendering services ceases to qualify as an Affiliate, as determined by the
Board, in its sole discretion, such Participant’s Continuous Service will be
considered to have terminated on the date such Entity ceases to qualify as an
Affiliate. For example, a change in status from an Employee of the Company to a
Consultant of an Affiliate or to a Director will not constitute an interruption
of Continuous Service. To the extent permitted by law, the Board or the chief
executive officer of the Company, in that party’s sole discretion, may determine
whether Continuous Service will be considered interrupted in the case of (i) any
leave of absence approved by the Board or chief executive officer, including
sick leave, military leave or any other personal leave, or (ii) transfers

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between the Company, an Affiliate, or their successors. Notwithstanding the
foregoing, a leave of absence will be treated as Continuous Service for purposes
of vesting in an Award only to such extent as may be provided in the Company’s
leave of absence policy, in the written terms of any leave of absence agreement
or policy applicable to the Participant, or as otherwise required by law.
(n)“Corporate Transaction” means the consummation, in a single transaction or in
a series of related transactions, of any one or more of the following events:
(i)a sale or other disposition of all or substantially all, as determined by the
Board, in its sole discretion, of the consolidated assets of the Company and its
Subsidiaries;
(ii)a sale or other disposition of more than fifty percent (50%) of the
outstanding securities of the Company;
(iii)a merger, consolidation or similar transaction following which the Company
is not the surviving corporation; or
(iv)a merger, consolidation or similar transaction following which the Company
is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of securities, cash or
otherwise.
(o)“Covered Employee” will have the meaning provided in Section 162(m)(3) of the
Code.
(p)“Director” means a member of the Board.
(q)“Disability” means, with respect to a Participant, the inability of such
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last for a continuous
period of not less than twelve (12) months, as provided in Sections 22(e)(3) and
409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis
of such medical evidence as the Board deems warranted under the circumstances.
(r)“Dissolution” means when the Company, after having executed a certificate of
dissolution with the State of Delaware, has completely wound up its affairs.
Conversion of the Company into a Limited Liability Company (or any other pass-
through entity) will not be considered a “Dissolution” for purposes of the Plan.
(s)“Effective Date” means the effective date of this Plan document, which is the
date of the annual meeting of stockholders of the Company held in 2016, provided
this Plan is approved by the Company’s stockholders at such meeting.
(t)“Employee” means any person employed by the Company or an Affiliate. However,
service solely as a Director, or payment of a fee for such services, will not
cause a Director to be considered an “Employee” for purposes of the Plan.
(u)“Entity” means a corporation, partnership, limited liability company or other
entity.
(v)“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
(w)“Exchange Act Person” means any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange
Act Person” will not include (i) the Company or any Subsidiary of the Company,
(ii) any employee benefit plan of the Company or any Subsidiary of the Company
or any trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any Subsidiary of the Company, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, (iv)
an Entity Owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their Ownership of stock of the Company;
or (v) any natural person, Entity or “group” (within the meaning of Section
13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the
Owner, directly or indirectly, of securities of the Company representing more
than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities.
(x)“Fair Market Value” means, as of any date, the value of the Common Stock
determined as follows:
(i)If the Common Stock is listed on any established stock exchange or traded on
any established market, the Fair Market Value of a share of Common Stock will
be, unless otherwise determined by the Board, the closing sales price for such
stock as quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in the Common Stock) on the date of determination, as
reported in a source the Board deems reliable.
(ii)Unless otherwise provided by the Board, if there is no closing sales price
for the Common Stock on the date of determination, then the Fair Market Value
will be the closing selling price on the last preceding date for which such
quotation exists.

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(iii)In the absence of such markets for the Common Stock, the Fair Market Value
will be determined by the Board in good faith and in a manner that complies with
Sections 409A and 422 of the Code.
(y) “Non-Employee Director” means a Director who either (i) is not a current
employee or officer of the Company or an Affiliate, does not receive
compensation, either directly or indirectly, from the Company or an Affiliate
for services rendered as a consultant or in any capacity other than as a
Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
(“Regulation S-K”)), does not possess an interest in any other transaction for
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
“non-employee director” for purposes of Rule 16b-3.
(z) “Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act.
(aa)“Outside Director” means a Director who either (i) is not a current employee
of the Company or an “affiliated corporation” (within the meaning of Treasury
Regulations promulgated under Section 162(m) of the Code), is not a former
employee of the Company or an “affiliated corporation” who receives compensation
for prior services (other than benefits under a tax-qualified retirement plan)
during the taxable year, has not been an officer of the Company or an
“affiliated corporation,” and does not receive remuneration from the Company or
an “affiliated corporation,” either directly or indirectly, in any capacity
other than as a Director, or (ii) is otherwise considered an “outside director”
for purposes of Section 162(m) of the Code.
(bb)    “Own,” “Owned,” “Owner,” “Ownership” A person or Entity will be deemed
to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership”
of securities if such person or Entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.
(cc)    “Participant” means a person to whom an Award is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding Award.
(dd)    “Performance Cash Award” means an award of cash granted pursuant to the
terms and conditions of Section 5(b)(ii).
(ee)    “Performance Criteria” means the one or more criteria that the Committee
will select for purposes of establishing the Performance Goals for a Performance
Period. The Performance Criteria that will be used to establish such Performance
Goals may be based on any one of, or combination of, the following: (i) earnings
(including earnings per share and net earnings); (ii) earnings before interest,
taxes and depreciation; (iii) earnings before interest, taxes, depreciation and
amortization; (iv) total stockholder return; (v) return on equity or average
stockholder’s equity; (vi) return on assets, investment, or capital employed;
(vii) stock price; (viii) margin (including gross or operating margin); (ix)
income (before or after taxes); (x) operating income; (xi) operating income
after taxes; (xii) pre-tax profit; (xiii) operating cash flow; (xiv) orders,
sales or revenue targets; (xv) increases in revenue or product revenue; (xvi)
expenses and cost reduction goals; (xvii) improvement in or attainment of
working capital levels; (xviii) economic value added (or an equivalent metric);
(xix) market share; (xx) cash flow; (xxi) cash flow per share; (xxii) share
price performance; (xxiii) debt reduction; (xxiv) implementation or completion
of projects or processes; (xxv) customer satisfaction; (xxvi) stockholders’
equity; (xxvii) capital expenditures; (xxviii) debt levels; (xxix) operating
profit or net operating profit; (xxx) workforce diversity; (xxxi) growth of net
income or operating income; (xxxii) billings; (xxxiii) quality measures; and
(xxxiv) to the extent that an Award is not intended to comply with Section
162(m) of the Code, other measures of performance selected by the Board or
Committee.
(ff)    “Performance Goals” means, for a Performance Period, the one or more
goals established by the Committee or Board for the Performance Period based
upon the Performance Criteria. Performance Goals may be based on a Company-wide
basis, with respect to one or more business units, divisions, Affiliates, or
business segments, and in either absolute terms or relative to the performance
of one or more comparable companies or the performance of one or more relevant
indices. Unless specified otherwise by the Board or Committee (i) in the Award
Agreement at the time the Award is granted or (ii) in such other document
setting forth the Performance Goals at the time the Performance Goals are
established, the Board or Committee will appropriately make adjustments in the
method of calculating the attainment of Performance Goals for a Performance
Period as follows: (1) to exclude restructuring and/or other nonrecurring
charges; (2) to exclude exchange rate effects; (3) to exclude the effects of
changes to generally accepted accounting principles; (4) to exclude the effects
of any statutory adjustments to corporate tax rates; (5) to exclude the dilutive
effects of acquisitions or joint ventures; (6) to assume that any business
divested by the Company achieved performance objectives at maximum levels during
the balance of a Performance Period following such divestiture; (7) to exclude
the effect of any change in the outstanding shares of common stock of the
Company by reason of any stock dividend or split, stock repurchase,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of shares or other similar corporate change, or any distributions to
common stockholders other than regular cash dividends; (8) to exclude the
effects of stock based compensation and the award of bonuses under the Company’s
bonus plans; (9) to exclude costs incurred in connection with potential
acquisitions or divestitures that are required to be expensed under generally
accepted accounting principles; (10)

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to exclude the goodwill and intangible asset impairment charges that are
required to be recorded under generally accepted accounting principles and (11)
to exclude the effect of any other unusual, non-recurring gain or loss or any
other adjustment made to arrive at the Company’s non-GAAP financial information
as presented in the Company’s SEC filings. For all Awards intended to qualify as
performance-based compensation under Section 162(m) of the Code, such
determinations shall be made within the time prescribed by, and otherwise in
compliance with, Section 162(m) of the Code.
(gg)    “Performance Period” means the period of time selected by the Board or
Committee over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participant’s right to and the payment
of an Award or a Performance Cash Award. Performance Periods may be of varying
and overlapping duration, at the sole discretion of the Board or Committee.
(hh)    “Performance Stock Unit Award” means an Award granted under the terms
and conditions of Section 5(b)(i).
(ii)    “Plan” means this Power Integrations, Inc. 2016 Incentive Award Plan.
(jj)    “Restricted Stock Unit Award” means a right to receive shares of Common
Stock which is granted pursuant to the terms and conditions of Section 5(a).
(kk)    “Restricted Stock Unit Award Agreement” means a written agreement
between the Company and a holder of a Restricted Stock Unit Award evidencing the
terms and conditions of a Restricted Stock Unit Award grant. Each Restricted
Stock Unit Award Agreement will be subject to the terms and conditions of the
Plan.
(ll)    “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.
(mm)    “Rule 405” means Rule 405 promulgated under the Securities Act.
(nn)    “Rule 701” means Rule 701 promulgated under the Securities Act.
(oo)    “Securities Act” means the Securities Act of 1933, as amended.
(pp)    “Subsidiary” means, with respect to the Company, (i) any corporation of
which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other class or
classes of such corporation will have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, Owned
by the Company, and (ii) any partnership, limited liability company or other
entity in which the Company has a direct or indirect interest (whether in the
form of voting or participation in profits or capital contribution) of more than
fifty percent (50%).
(qq)    “Transaction” means a Corporate Transaction or a Change in Control.