Exhibit 10.2


 


March 6, 2008


 


Linda J.
Pahl


 


Dear Linda:


 


I would like to extend to
you the company’s appreciation for the extra efforts you are making in
connection with the company’s reconstruction and upcoming restatement of
financial statements, while the company manages through its current
transition.   While I cannot foresee how
long this situation will last, our current expectation is that we may ask you
to provide these extra efforts until at least June 2, 2008.


 


As a consequence of these
additional responsibilities, the company would like to extend to you the
following additional incentives:


 


1.               Bonus: 
You will receive a bonus payment of $100,000, if you are still an employee
in good standing with IR on June 2, 2008, or if your employment is terminated
by the company for any reason other than cause prior to June 2, 2008, in
each case conditioned upon the company completing its pending financial
restatement by that time.


 


2.               Separation Payment:  If your employment is terminated following June 2,
2008 for any reason other than by the company for cause, then you will be
entitled to an enhanced severance payment equal to one year’s base pay, in lieu
of any other severance benefit from the company.


 


3.               Quarterly Incentive
Bonus:  Your quarterly incentive bonus of
$25,000 shall be increased to $35,000 effective February 1, 2008.  The quarterly incentive bonus shall be
pro-rated for any partial quarter served as the company’s acting chief
financial officer.


 


4.               Change in Chief Financial
Officer Position:  If prior to your
employment termination, the company shall appoint another person to serve as
the company’s chief financial officer, the company would appoint you to the
position of Senior Vice President — Finance in lieu of any return to your
position in effect prior to your service as the company’s acting chief
financial officer during the transition period, and in lieu of any other
position within the company’s finance department.


 


5.               Following your service as the
company’s acting chief financial officer, your service, at your option would
become that of a part-time employee for a minimum of ninety days to assist in
any transition, with enough part-time service to ensure coverage under the
company’s health and dental benefit programs during such period.  Following such ninety day period, either
party could terminate such service upon 30 days written notice.  Compensation as a part time employee would be
established at the beginning of the service period by good faith agreement of
the parties to approximate a reduction in pay and regular bonus commensurate
with the reduction in time and duties for the part-time service.


 


If
you become entitled to a payment under Section 1 or 2, 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 Internal
Revenue Code, the amount otherwise payable to you pursuant to these Sections 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.


 


As always, your employment is at will and
can be terminated by either party at any time, for any reason, with or without
cause.  International Rectifier reserves
the right to change the terms and conditions, including job titles and
reporting responsibilities of anyone’s employment at any time.  Any compensation under this letter would be
subject to normal withholding and taxes.


 


Separately, you and the
company have entered into a Severance Agreement, dated as of October 29,
2007 (“Severance Agreement”), pursuant to which you would be provided certain
benefits in the event of a termination of your employment in the event of
employment termination related to a change in control on certain terms and conditions
as set forth in the Severance Agreement.


 


The parties agree that
this letter does not  supersede the terms
and benefits set forth in the Severance Agreement, except as follows: (i) the Severance
Agreement is amended effective as of March 1, 2008 to provide that your
changes in position set forth in Sections 4 and 5 above do not and shall not
constitute a “Change in Control” under Section 1(e) of the Severance
Agreement nor shall they constitute “Good Reason” under Section 1(m) of
the Severance Agreement, (ii) you waive any and all rights you may have
otherwise had to benefits under the Severance Agreement as a result of the
change in your title/position as set forth in Section 4 and 5, and (ii) under no circumstances
shall you be entitled to receive benefits under this letter and the Severance
Agreement in connection with any termination of your employment, with the
effect that  you will only be able to
claim benefits under the terms of the Severance Agreement and not this letter
for events that may give rise to benefits under both this letter and the
Severance Agreement.


 


The Severance Agreement
is amended to the extent inconsistent herewith.


 


Please let me know if you
have any questions.


 


Sincerely,


 


Donald R. Dancer


Executive Vice President &
Chief Administrative Officer


 


	
  Accepted:

  
	
   

  
	
   

  
	
  LINDA J. PAHL