What changed in this filing

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Item 9A. Controls and Procedures

2023-02-07 compared with 2022-02-07 · 37 added, 114 removed, 273 unchanged (36% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Management is required to evaluate our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Management is required to evaluate our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act.

Disclosure controls and procedures are controls and other procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

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To the extent that components of our internal control over financial reporting are included within our disclosure controls and procedures, they are included in the scope of our periodic controls evaluation.

Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of the end of the period covered by this report.

Management’s Report on Internal Control Over Financial Reporting

41 unchanged sentences

Other Information.

Compensation Matters

On February 2, 2022, the Compensation Committee of the Board of Directors of Power Integrations, Inc.

(the “Company”) took the following compensation actions with respect to the Company’s chief executive officer, chief financial officer, and other “named executive officers” as defined in Rule 402 of SEC Regulation S-K (collectively, the “Officers”).

2022 Performance-based Incentive Plan

Approved the 2022 Performance-based Incentive Plan (the “2022 PSU Plan”) as follows:

Each Officer, as described below, was granted performance stock units, referred to as “PSUs,” which will vest (referred to as a “payout” below) based on Company performance as against the 2022 PSU Plan’s established net revenue targets, non-GAAP operating income targets and strategic goals, each as established by the Compensation Committee.

The 2022 target net revenue and non-GAAP operating income levels are intended to have difficulty in attainment levels consistent with the Company’s 2021 PSU Plan.

The portion of the performance stock units granted under the 2022 PSU Plan that will vest will be calculated independently for each of its net revenue, non-GAAP operating income and strategic goals components.

“Net revenue” is as set forth in the Company’s annual report for 2022 to be filed with the Securities and Exchange Commission (“SEC”).

“Non-GAAP operating income” means operating income for 2022 determined in accordance with GAAP but excluding the following items:

(i) stock-based compensation expenses recorded under Accounting Standards Codification 718;

(ii) amortization of acquisition-related intangible assets, and the fair-value write-up of acquired inventory;

(iii) any other mergers and acquisitions related expenses;

and (iv) any other adjustment made to arrive at the Company’s non-GAAP financial information as presented in the Company’s SEC filings.

Further, in the event of any mergers, acquisitions or divestitures, or any patent or other litigation settlements or judgments, during the performance period, the net revenue and non-GAAP operating income targets shall be adjusted based on a revised plan approved by the Board of Directors.

The strategic goals component is made up of five different strategic goals for the Company.

Weighting of the target components is as follows:

Non-GAAP operating income

Strategic goals

Net Revenue Component of the 2022 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 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:

Each of the five goals in the strategic goals component of the 2022 PSU Plan is assigned a weighting percentage, which percentages range from 2% to 18%, and which collectively add up to 30%.

If the Company’s 2022 actual achievement of a goal does not exceed at least the established minimum requirement for a particular goal, then no amount is earned for that goal.

To the extent 2022 actual performance for a goal is better than the established minimum for the goal, then the payout increases linearly from zero at the minimum amount of performance as set forth in the 2022 PSU Plan up to 100% of the amount for that goal when actual performance equals target performance for that goal in the 2022 PSU Plan.

To the extent 2022 actual performance for a goal is better than the established target for the goal, then the payout for performance above target increases linearly from the target amount actual performance, up to a maximum of 200% for the specific goal when actual performance equals or exceeds the established target to achieve the maximum payout under the specific goal as set forth in the 2022 PSU Plan.

2022 Target Performance Stock Units

Approved the 2022 target performance stock units for the Officers as follows:

Executive Officer

2022 Target PSUs

Balu Balakrishnan

President and Chief Executive Officer

Sandeep Nayyar

Chief Financial Officer

Vice President, Technology

David “Mike” Matthews

Vice President, Product Development

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.

2022 Restricted Stock Unit Grants

Approved restricted stock units, referred to as “RSUs,” grants to the following Officers:

Executive Officer

2022 RSU Grants

Balu Balakrishnan

President and Chief Executive Officer

Sandeep Nayyar

Chief Financial Officer

Vice President, Technology

David “Mike” Matthews

Vice President, Product Development

The RSU grants will be effective on the grant date.

Twenty-five percent (25%) of the RSUs vest on the one-year anniversary of the vesting commencement date (as specified in the Officers’ RSU award agreements), and an additional twenty-five percent (25%) of the RSUs vest annually over the next three (3) years thereafter, subject to the respective Officer’s continuous service.

2022 Long-term Performance-Based Incentive Plan

Approved the 2022 Long-term Performance-Based Incentive Plan (“2022 PRSU Plan”) as follows:

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 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.

No payout will be made in early 2025 under the 2022 PRSU Plan if the Company’s actual three-year revenue CAGR does not exceed at least the established minimum amount as measured against the Index as set forth in the 2022 PRSU Plan.

To the extent the Company’s actual three-year revenue CAGR exceeds at least the established minimum amount as measured against the Index as set forth in the 2022 PRSU Plan, the payout increases linearly from zero at the minimum CAGR performance level as measured against the Index as set forth in the 2022 PRSU Plan up to 100% when the Company’s actual three-year revenue CAGR equals the target at the specified level as set forth in the 2022 PRSU Plan.

If the Company’s actual three-year revenue CAGR exceeds the target, then the payout for performance above target increases linearly from the target amount up to a maximum of 200% of the target when the Company’s actual three-year revenue CAGR equals or exceeds the established amount to achieve the maximum payout as set forth in the 2022 PRSU Plan.

Except to the extent provided in the executive officer benefits agreements between the Company and each Officer, each Officer must be employed by the Company through the end of the performance period to receive stock pursuant to the PRSUs under the 2022 PRSU Plan.

2022 Target PRSUs

Approved the target 2022 PRSUs for the Officers as follows:

Executive Officer

2022 Target PRSUs

Balu Balakrishnan

President and Chief Executive Officer

Sandeep Nayyar

Chief Financial Officer

Vice President, Technology

David “Mike” Matthews

Vice President, Product Development

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.

2022 Salaries

Approved the 2022 salaries for the Officers, to be effective at the end of March 2022, as follows:

Executive Officer

Balu Balakrishnan

President and Chief Executive Officer

Sandeep Nayyar

Chief Financial Officer

Vice President, Technology

David “Mike” Matthews

Vice President, Product Development

Appointment of New Director

On February 3, 2023, the Board of Directors (the “Board”) of Power Integrations, Inc.

appointed Ravi Vig to serve as a director beginning on April 1, 2023.

Vig’s appointment was recommended to the Board by the Nominating and Governance Committee of the Board.

Vig served as president and CEO and on the board of directors of Allegro MicroSystems, Inc., a global leader in power and sensing semiconductors, until his retirement in June 2022.

During his 38-year career at Allegro and its parent company, Sanken North America, Mr.

Vig served in a succession of roles including leadership of Allegro’s sensor business unit and its business-development organization before becoming CEO of Allegro in 2017.

Vig serves as a member of the board of directors of Anokiwave, a privately held, fabless semiconductor company, and is a member of the board of trustees for the Committee for Economic Development of the Conference Board.

Vig holds a bachelor’s degree in electrical engineering from Rutgers University, an MS in electrical engineering from Dartmouth College, an MBA from Southern New Hampshire University, and a leadership certificate from Yale University’s Graduate School of Management.

Upon commencement of services to the Board, and in consideration of services to us as a director, Mr.

Vig will be granted an equity award in the form of restricted stock units of our common stock (the "Initial Grant") under the Power Integrations 2016 Incentive Award Plan (the “2016 Plan”) with an aggregate fair value of approximately $30,000.

The Initial Grant will vest on the date of our 2023 annual meeting of stockholders (currently scheduled for May 19, 2023), provided Mr.

Vig is still serving as a director on that date.

Notwithstanding the foregoing, the Initial Grant would be deemed fully vested upon the occurrence of a "Change of Control,"

as such term is defined in the 2016 Plan.

Beginning on July 1, 2023, Mr.

Vig will receive annual equity compensation pursuant to the Directors Equity Compensation Program consistent with our other non-employee directors, which is a grant of restricted stock units, under the 2016 Plan, with an aggregate value of $120,000, which would vest in full effective immediately prior to the commencement of our first annual meeting of stockholders in the year following the year of the grant date, provided that he is still providing services to the Company as a director and provided, further, that 100% of the shares subject to such equity award would be deemed fully vested upon the occurrence of a Change of Control.

As a non-employee director, Mr.

Vig will also receive $11,250 per quarter for service on the Board.

We intend to enter into an indemnity agreement with Mr.

Vig that is in the form of indemnity agreements executed by other members of the Board.

Transition of Mike Matthews from Vice President, Product Development to Chief Technology Officer

On February 6, 2023, Mike Matthews, our Vice President, Product Development, assumed a new role as Chief Technology Officer.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

128 unchanged sentences

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

and Ben Sutherland

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

and Sandeep Nayyar

1 unchanged sentence

and Mike Matthews

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

and Radu Barsan

Exhibit Description

1 unchanged sentence

Exhibit/Appendix

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

and Radu Barsan

ON Semiconductor Corporation Settlement Agreement

9 unchanged sentences

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

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

Power Integrations International, Ltd.

And Lapis Semiconductor Co., Ltd.

(formerly OKI Semiconductor Co., Ltd.), effective as of February 17, 2022

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

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

and Ben Sutherland

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

and Mike Matthews

7 unchanged sentences

and Yang Chiah Yee

Executive Officer Benefits Agreement, dated as of August 1, 2022, between Power Integrations, Inc.

and Sunil Gupta

Executive Officer Benefits Agreement, dated as of August 1, 2022, 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.

6 unchanged sentences

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

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

Exhibit Description

1 unchanged sentence

Exhibit/Appendix

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

XBRL Instance Document

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Form 10-K Summary

Not provided.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Balu Balakrishnan and Sandeep Nayyar his or her true and lawful attorney-in-fact and agent, with full power of substitution and, for him or her and in his or her name, place and stead, in any and all capacities to sign any and all amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

February 7, 2022

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED AS OF THE 7 TH DAY OF FEBRUARY 2023.

/s/ BALU BALAKRISHNAN

2 unchanged sentences

(Principal Executive Officer)

February 7, 2022

/s/ SANDEEP NAYYAR

2 unchanged sentences

(Principal Financial and Principal Accounting Officer)

February 4, 2022

/s/ WILLIAM GEORGE

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Director and Chairman of the Board

February 4, 2022

/s/ WENDY ARIENZO

Wendy Arienzo

February 6, 2022

/s/ NICHOLAS E.

February 4, 2022

/s/ ANITA GANTI

February 4, 2022

/s/ BALAKRISHNAN S.

Balakrishnan S.

February 4, 2022

/s/ JENNIFER LLOYD

Jennifer Lloyd

February 4, 2022

/s/ NECIP SAYINER

Necip Sayiner

February 4, 2022

/s/ STEVEN J.

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