Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 6, 2012, the Compensation Committee of the Board approved the executive compensation program for fiscal 2013 which included base salary, variable cash compensation based on achievement of performance goals, variable cash compensation awarded at the discretion of the Compensation Committee and equity grants. With respect to annual base salaries, effective November 1, 2012, Scott Howarth's salary is $335,000, John Cobb's salary is $276,000, James Han's salary is $276,000, K.Y. Han's salary is $266,000 and Jimmy Lee's salary is $200,000. Under the variable compensation plan approved by the Compensation Committee, payments are to be based 20% on total revenue, 30% on ISSI's operating income for fiscal 2013, 10% on revenue from new products, 10% on revenue from analog products, 10% on revenue from NOR Flash products and 20% is discretionary. For purposes of the variable compensation plan, the Compensation Committee established a target for ISSI performance in each of these areas (other than discretionary). ISSI's performance in each area (other than discretionary) must be at least 75% of the target (65% for operating income) before a payout is made in such area and the maximum amount payable for performance in each area is 125% of the target (except for discretionary, which has a maximum of 100%). At the targeted level of performance, the bonus amount allocated to Mr. Howarth was $280,000, the amount allocated to Mr. Cobb was $200,000, the amount allocated to Mr. James Han was $220,000 and the amount allocated to Mr. K.Y. Han was $220,000. Due to his continued reduced time status, Mr. Lee was not allocated any bonus amounts for fiscal 2013. The Compensation Committee also approved grants of the stock options and restricted stock units under the Company's 2007 Incentive Compensation Plan to the above executive officers.

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