Document:

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:

  	
   3/12/08Exhibit 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

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