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.


 

















(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