On January 10, 2013, PMC-Sierra, Inc. ("PMC" or the "Company") entered into a letter agreement (the "Agreement") with Relational Investors LLC ("Relational"). Under the Agreement, PMC has agreed to appoint Kirt Karros or Ralph Whitworth to PMC's Board of Directors (the "Board") and the Compensation Committee of the Board if requested by Relational between August 1, 2013 and thirty (30) days prior to the expiration of the notice period specified in the Company's advance notice bylaw related to nominations of directors at the Company's 2014 Annual Meeting of Stockholders. Should Mr. Karros or Mr. Whitworth join PMC's Board, PMC agrees to re-nominate him at PMC's 2014 Annual Meeting of Stockholders for a one-year term. PMC's obligations to appoint and re-nominate Mr. Karros or Mr. Whitworth if requested by Relational are conditioned upon Relational continuing to hold at least 9 million shares of PMC common stock.

Relational has agreed that during the term of the Agreement, it will not submit any nominations for election to the Board or stockholder proposals at the 2013 Annual Meeting of Stockholders (the "2013 Annual Meeting") or any subsequent annual meeting. Relational also has agreed to vote in accordance with the Board's recommendation with respect to any routine matters and the advisory vote on executive compensation at PMC's 2013 Annual Meeting.

In addition, Relational has committed to certain standstill provisions which include, among others, that Relational will not (a) make, participate in or encourage a solicitation of proxies, (b) initiate or encourage any stockholder proposals, (c) seek representation on, or nominate any candidate for, the Board (other than Mr. Karros or Mr. Whitworth as described above), (d) act alone or in concert with others to seek to control the management or Board of PMC, or (e) own more than 12% of the Voting Securities (as such term is defined in the Agreement).

The Agreement terminates on July 1, 2014. However, if Mr. Karros or Mr. Whitworth is appointed to the Board, then the Agreement shall terminate on the later of (a) 30 days before the last day of the notice period specified in PMC's advance notice bylaw related to director nominations for the 2015 Annual Meeting of Stockholders (the "2015 Annual Meeting") or (b) the date that Mr. Karros or Mr. Whitworth is no longer serving on the Board. In addition, if Mr. Karros or Mr. Whitworth is appointed to the Board and the Board determines not to nominate the appointee for reelection at the 2015 Annual Meeting or at any subsequent annual meeting, PMC must notify the appointee and Relational of this determination not less than 30 days before the last day of the notice period specified in PMC's advance notice bylaw related to director nominations for the applicable annual meeting.

The foregoing summary of the Agreement is not complete and is subject to, and qualified in its entirety by the full text of the Agreement, which is attached as Exhibit 99.1 and incorporated herein by reference.

On January 10, 2013, PMC issued a press release relating to the Agreement, which is attached as Exhibit 99.2 and is incorporated herein by reference.

(d) Exhibits.

Exhibit No.   Description

99.1          Letter Agreement dated January 10, 2013 between PMC-Sierra,
              Inc. and Relational Investors LLC

99.2          Press Release of PMC-Sierra Inc. dated January 10, 2013