Power Integrations Inc

This advisory proposal asks stockholders to approve, on a non-binding basis, the executive compensation disclosed in the proxy (CD&A, tables and narrative). Management frames its program as market‑competitive and heavily performance‑based, with a mix of salary, short‑term PSUs and long‑term PRSUs/RSUs, and a clawback policy; the Talent and Compensation Committee used an independent consultant (Aon) and engaged in stockholder outreach after the 2025 Say‑on‑Pay vote. The Board emphasizes that a substantial portion of pay is at‑risk and tied to net revenue, non‑GAAP operating income and strategic goals (for 2025), and that 2026 program changes increase performance weighting and refine metrics. Historical outcomes are cited (e.g., 2025 short‑term payout of 76.8% of target; no vesting for 2023–2025 PRSUs) to demonstrate pay‑for‑performance alignment and consequences for unmet targets. Management also highlights compensation governance features (independent committee administration, no tax gross‑ups, no repricing without stockholder approval, and limits on director awards). The advisory vote is non‑binding, but the Board and Compensation Committee state they will consider results in future compensation decisions. Given recent leadership transition and program changes, the vote provides investors a signal on whether the Board’s revisions and executive pay mix sufficiently address prior stockholder concerns. The proposal is routine for modern public companies; approval supports management’s stated compensation approach and enables continuity in incentive plan implementation.

This management proposal seeks shareholder approval to increase the 2016 Plan share reserve by 2,000,000 shares (to 9,000,000) to ensure sufficient shares for annual and long‑term equity grants across the organization. Management justifies the request by citing a broad‑based equity program (roughly half of awards go to non‑executive employees), historically low utilization and burn rates relative to peers (2025 and three‑year utilization at or below the 25th percentile of peers), and reliance on equity to align employee incentives with shareholder value while conserving cash. The Amended 2016 Plan preserves stockholder protections the company emphasizes—no evergreen, no repricing without stockholder approval, no liberal recycling, administration by an independent committee, limits on director awards, and no dividends on unvested awards—intended to mitigate dilution concerns. Management states the requested increase equals roughly 3.6% dilution based on shares outstanding at the record date and expects the reserve to cover roughly one to two years of grant activity, though actual longevity depends on hiring pace, stock price and grant practices. The Talent and Compensation Committee indicates it benchmarks grants to market peers and employs an independent consultant in equity decisions; director and shareholder governance protections are highlighted. Approval will permit continued use of equity for retention and performance incentives; rejection would constrain equity grant capacity and could force increased cash compensation or materially impair recruitment/retention and incentive alignment. The Board recommends a FOR vote, arguing the proposal balances dilution control with operational needs for equity incentives.

The proponent (John Chevedden) demands a binding policy that the roles of Chairman and CEO be held by separate individuals and that the Chairman be an independent director, arguing independent Chairs improve oversight, reduce conflicts, and strengthen accountability; the submission cites prior 45% support and company performance/valuation concerns to argue urgency. Management counters that the Board already has an independent Chairman (appointed February 2026), that the Lead Independent Director structure and other governance mechanisms provide effective independent oversight, and that imposing a mandatory structural rule would reduce the Board’s flexibility to adopt the optimal leadership model depending on circumstances. Company‑specific context: the firm has recently completed a CEO succession, separated CEO and Chair roles, strengthened compensation governance, and engaged in investor outreach; seven of nine directors are independent and all key committees are independent. The governance tradeoff here is between removing discretion (to provide a bright‑line governance safeguard) and preserving board flexibility to respond to company circumstances and transitions; investors should weigh the prior year 45% support (significant but non‑majority) alongside the Board’s executed changes (separation of roles and an independent Chair). If governance is the primary investor concern, the proposal offers a clear structural remedy; if the investor view is that the Board has already addressed those concerns through recent actions, the proposal may be seen as redundant and unnecessarily prescriptive.