What changed in this filing

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Item 9A. Controls and Procedures

2022-02-07 compared with 2021-02-05 · 51 added, 26 removed, 336 unchanged (19% of the section changed)

19 unchanged sentences

Based on this assessment, management concluded that, as of December 31, 2021, our internal control over financial reporting was effective.

The effectiveness of Power Integrations’ internal control over financial reporting as of December 31, 2020, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears below.

The effectiveness of Power Integrations’ internal control over financial reporting as of December 31, 2021, has been audited by Deloitte & Touche LLP (PCAOB ID No.

34 ), an independent registered public accounting firm, as stated in their report which appears below.

Changes in Internal Control over Financial Reporting

6 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 5, 2021 expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph relating to the Company’s adoption of Accounting Standards Update (ASU) 2016-02, Leases (Topic 842).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 7, 2022 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

38 unchanged sentences

Net Revenue Component of the 2022 PSU Plan:

No payout will be made under the net revenue component of the 2021 PSU Plan if the Company’s 2021 actual net revenue does not exceed at least the established minimum amount of net revenue as set forth in the 2021 PSU Plan.

To the extent 2021 actual net revenue is above the minimum amount of net revenue, the payout increases linearly from zero at the minimum amount of net revenue as set forth in the 2021 PSU Plan up to 100% of the net revenue component of the target when actual net revenue equals target net revenue in the 2021 PSU Plan.

If 2021 actual net revenue is above the target amount of net revenue, then the payout for performance above target increases linearly from the target amount up to a maximum of 200% of the net revenue component of the target when actual net revenue equals or exceeds the established target to achieve the maximum payout under the net revenue component of the 2021 PSU Plan.

No payout will be made under the net revenue component of the 2022 PSU Plan if the Company’s 2022 actual net revenue or relative revenue growth does not exceed at least the established minimum amount as set forth in the 2022 PSU Plan.

To the extent 2022 actual net revenue or relative revenue growth is above the minimum amount, the payout increases linearly from zero at the minimum amount of net revenue or relative revenue growth as set forth in the 2022 PSU Plan up to 100% of the net revenue component of the target when actual net revenue equals target net revenue or relative revenue growth equals target relative revenue growth in the 2022 PSU Plan.

If 2022 actual net revenue or relative revenue growth is above the target amount of net revenue or relative revenue growth, then the payout for performance above target increases linearly from the target amount up to a maximum of 200% of the net revenue component of the target when actual net revenue or relative revenue growth equals or exceeds the established target to achieve the maximum payout under the net revenue component of the 2022 PSU Plan.

Non-GAAP Operating Income Component of the 2022 PSU Plan:

No payout will be made under the non-GAAP operating income component of the 2022 PSU Plan if the Company’s 2022 actual non-GAAP operating income does not exceed at least the established minimum amount of non-GAAP operating income as set forth in the 2022 PSU Plan.

To the extent 2021 actual non-GAAP operating income is above the minimum amount of non-GAAP operating income, the payout increases linearly from zero at the minimum amount of non-GAAP operating income as set forth in the 2021 PSU Plan up to 100% of the non-GAAP operating income component of the target when actual non-GAAP operating income equals target non-GAAP operating income in the 2021 PSU Plan.

If 2021 actual non-GAAP operating income is above the target amount of non-GAAP operating income, then

the payout for performance above target increases linearly from the target amount up to a maximum of 200% of the non-GAAP operating income component of the target when actual non-GAAP operating income equals or exceeds the established target to achieve the maximum payout under the non-GAAP operating income component of the 2021 PSU Plan.

To the extent 2022 actual non-GAAP operating income is above the minimum amount of non-GAAP operating income, the payout increases linearly from zero at the minimum amount of non-GAAP operating income as set forth in the 2022 PSU Plan up to 100% of the non-GAAP operating income component of the target when actual non-GAAP operating income equals target non-GAAP operating income in the 2022

If 2022 actual non-GAAP operating income is above the target amount of non-GAAP operating income, then the payout for performance above target increases linearly from the target amount up to a maximum of 200% of the non-GAAP operating income component of the target when actual non-GAAP operating income equals or exceeds the established target to achieve the maximum payout under the non-GAAP operating income component of the 2022 PSU Plan.

Strategic Goals Component of the 2022 PSU Plan:

14 unchanged sentences

Vice President, Product Development

Ben Sutherland

Vice President, Worldwide Sales

The actual number of shares subject to the performance stock units is twice the target level shown in the table above to enable the payout of up to 200% of the target amount if the actual net revenue, non-GAAP operating income and strategic goals achievement equal or exceed the established levels to achieve the maximum amount of the 2022 PSU Plan.

10 unchanged sentences

Vice President, Product Development

Ben Sutherland

Vice President, Worldwide Sales

The RSU grants will be effective on the grant date.

3 unchanged sentences

Each Officer, as described below, was granted long term performance stock units, referred to as “PRSUs,” which will vest (referred to as a “payout” below) based on Company revenue performance as against the 2022 PRSU Plan’s established three-year (years 2022, 2023 and 2024) compound annual growth rate (“CAGR”) of revenue as measured against a specified index of the analog semiconductor industry CAGR (the “Index”).

The level of performance of the Company’s three-year revenue CAGR as against the Index is intended to have a difficulty in attainment level consistent

with the Company’s 2020 PRSU Plan.

The portion of the performance stock units that will vest will be calculated based on the Company’s actual three-year revenue CAGR as compared to the Index and awarded in early 2024 upon approval by the Compensation Committee.

The level of performance of the Company’s three-year revenue CAGR as against the Index is intended to have a difficulty in attainment level consistent with the Company’s 2021 PRSU Plan.

The portion of the performance stock units that will vest will be calculated based

on the Company’s actual three-year revenue CAGR as compared to the Index and awarded in early 2025 upon approval by the Compensation Committee.

In the event of any mergers, acquisitions or divestitures, or any patent or other litigation settlements or judgments, during the performance period, the Company’s target three-year revenue CAGR as against the Index shall be adjusted based on a revised plan approved by the Board of Directors.

14 unchanged sentences

Vice President, Product Development

Ben Sutherland

Vice President, Worldwide Sales

The actual number of shares subject to the PRSUs is twice the target level shown in the table above to enable the payout of up to 200% of the target amount if actual net revenue equals or exceeds the established level to achieve the maximum amount of the 2022 PRSU Plan.

9 unchanged sentences

Vice President, Product Development

Ben Sutherland

Vice President, Worldwide Sales

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive Officers and Corporate Governance.

21 unchanged sentences

Information regarding principal auditor fees and services is set forth under “Principal Accountant Fees and Services” in the Proposal with the caption “Ratification of Selection of Independent Registered Public Accounting Firm” in the Proxy Statement, which information is incorporated herein by reference.

Exhibits, Financial Statement Schedules

Exhibits and Financial Statement Schedules

The financial statements required by Item 15(a) are included in Item 8 of this Annual Report on Form 10-K.

1 unchanged sentence

All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

Incorporation by Reference

Exhibit Description

Incorporation by Reference

Exhibit/Appendix

15 unchanged sentences

2007 Equity Incentive Plan, as amended and restated

Exhibit Description

Incorporation by Reference

Exhibit/Appendix

Forms of Option Agreements under the 2007 Equity Incentive Plan

Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement under the 2007 Equity Incentive Plan

Form of Performance Stock Unit Grant Notice and Performance Stock Unit Agreement (as used after to January 1, 2013) under the 2007 Equity Incentive Plan

Form of Long Term Performance Stock Unit Notice and Agreement under the 2007 Equity Incentive Plan

Power Integrations, Inc.

15 unchanged sentences

and OKI Semiconductor Co., Ltd., effective as of November 14, 2008

Exhibit Description

Incorporation by Reference

Exhibit/Appendix

Amendment Number Six to the Amended and Restated Wafer Supply Agreement between Power Integrations International, Ltd.

17 unchanged sentences

and Seiko Epson Corporation

Exhibit Description

Incorporation by Reference

Exhibit/Appendix

Amendment Number Five to Wafer Supply Agreement, effective as of November 2, 2015, by Power Integrations International Ltd.

12 unchanged sentences

Amendment Number Two to the Wafer Supply Agreement, effective as of December 1, 2018, between Power Integrations International, Ltd., and X-FAB Semiconductor Foundries GmbH (formerly X-FAB Semiconductor Foundries AG)

Amendment Number Three to the Amended and Restated Wafer Supply Agreement between Power Integrations International, Ltd.

And X-FAB Semiconductor Foundries AG, effective as of April 21, 2021

Credit Agreement, dated July 27, 2016, by and between Power Integrations Inc.

and Wells Fargo Bank, National Association

Exhibit Description

Incorporation by Reference

Exhibit/Appendix

First Amendment to Credit Agreement, dated April 30, 2018 by and between Power Integrations, Inc.

and Wells Fargo Bank, National Association

Second Amendment to Credit Agreement, dated June 7, 2021 by and between Power Integrations, Inc.

and Wells Fargo Bank, National Association

2019 Executive Officer Compensation Arrangements and 2019 Performance Based Incentive Plan

14 unchanged sentences

and Mike Matthews

Exhibit Description

Incorporation by Reference

Exhibit/Appendix

Amended and Restated Executive Officer Benefits Agreement, dated as of May 1, 2014, between Power Integrations, Inc.

2 unchanged sentences

ON Semiconductor Corporation Term Sheet

Amendment Number Ten to the Amended and Restated Wafer Supply Agreement,

between Power Integrations International, Ltd.

Amendment Number Ten to the Amended and Restated Wafer Supply Agreement, between Power Integrations International, Ltd.

and Lapis Semiconductor Co., Ltd.

3 unchanged sentences

(formerly OKI Semiconductor Co., Ltd.), effective as of December 20, 2019

Amendment Number Twelve to the Amended and Restated Wafer Supply Agreement, between Power Integrations International, Ltd.

and Lapis Semiconductor Co., Ltd.

(formerly OKI Semiconductor Co., Ltd.), effective as of September 17, 2020

Amendment Number Nine to Wafer Supply Agreement, effective as of November 1, 2017 by Power Integrations International Ltd.

7 unchanged sentences

and Radu Barsan

Exhibit Description

Incorporation by Reference

Exhibit/Appendix

Amendment to the Amended and Restated Executive Officer Benefits Agreement, dated as of June 1, 2020, between Power Integrations, Inc.

8 unchanged sentences

and Sunil Gupta

Executive Officer Benefits Agreement, dated as of June 14, 2021, between Power Integrations, Inc.

and Yang Chiah Yee

Amendment Number Ten to Wafer Supply Agreement, effective as of August 26, 2020 by Power Integrations International Ltd.

7 unchanged sentences

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit Description

Incorporation by Reference

Exhibit/Appendix

XBRL Instance Document

9 unchanged sentences

Portions of this exhibit have been omitted as being immaterial and would be competitively harmful if disclosed.

Portions of this exhibit have been omitted as being immaterial and is the type of information that Power Integrations, Inc.

treats as private or confidential .

Indicates a management contract or compensatory plan or arrangement.

37 unchanged sentences

February 4, 2022

/s/ JENNIFER LLOYD

Jennifer Lloyd

February 4, 2022

/s/ NECIP SAYINER

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures