SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
[X]
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Filed by a Party other than
the Registrant [ ]
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Check the appropriate
box:
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[ ]
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Preliminary Proxy
Statement
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[ ]
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Soliciting Material Under Rule
14a-12
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[ ]
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Confidential, For Use of
the
Commission Only (as permitted
by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy
Statement
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[ ]
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Definitive Additional
Materials
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Texas Instruments Incorporated
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(Name of Registrant as
Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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Payment of Filing Fee (Check
the appropriate box):
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No fee required.
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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Title of each class of
securities to which transaction applies:
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other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
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Check box if any part of the fee is offset as provided by Exchange
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was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
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1)
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Amount previously
paid:
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Form, Schedule or Registration
Statement No.:
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Filing Party:
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Date Filed:
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Notice of annual meeting of
stockholders
April 19,
2012
Dear Stockholder:
You are cordially invited to attend
the 2012 annual meeting of stockholders on Thursday, April 19, 2012, at the
cafeteria on our property at 12500 TI Boulevard, Dallas, Texas, at 10:00 a.m.
(Dallas time). At the meeting we will consider and act upon the following
matters:
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the election of directors for the next
year,
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advisory approval of the companys executive
compensation,
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ratification of the appointment of Ernst
& Young LLP as the companys independent registered public accounting firm
for 2012, and
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such other matters as may properly come
before the meeting.
Stockholders of record at the close
of business on February 21, 2012, are entitled to vote at the annual
meeting.
We urge you to vote your shares as
promptly as possible by: (1) accessing the Internet website, (2) calling the
toll-free number or (3) signing, dating and mailing the enclosed
proxy.
Sincerely,
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Joseph F. Hubach
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Senior Vice
President,
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Secretary and
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General
Counsel
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Dallas, Texas
March 6,
2012
TEXAS
INSTRUMENTS
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2012 PROXY
STATEMENT
n
55
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Table of contents
Voting procedures
and quorum
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56
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Election of directors
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57
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Nominees for directorship
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57
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Director
nomination process
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58
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Board diversity and nominee
qualifications
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58
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Communications with the board
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60
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Corporate governance
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60
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Annual
meeting attendance
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60
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Director independence
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60
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Board organization
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61
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Board and committee meetings
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61
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Committees of the board
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61
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Board leadership structure
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63
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Risk
oversight by the board
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64
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Director
compensation
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64
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2011
director compensation
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65
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Executive
compensation
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67
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Proposal
regarding advisory approval of
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the
companys executive compensation
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67
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Compensation
discussion and analysis
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68
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Compensation
Committee report
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79
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2011 summary
compensation table
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79
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Grants of plan-based awards in
2011
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81
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Outstanding equity awards at fiscal
year-end 2011
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82
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2011
option exercises and stock vested
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85
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2011 pension benefits
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85
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2011
non-qualified deferred compensation
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87
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Potential payments upon termination
or
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change in
control
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88
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Audit Committee report
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93
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Proposal to
ratify appointment of independent
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registered public accounting
firm
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94
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Additional information
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95
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Voting securities
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95
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Security
ownership of certain beneficial owners
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95
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Security ownership of directors and
management
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96
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Related
person transactions
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97
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Compensation committee interlocks
and
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insider
participation
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98
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Cost of
solicitation
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98
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Stockholder proposals for 2013
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98
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Benefit
plan voting
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98
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Section 16(a) beneficial ownership
reporting
compliance
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99
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Telephone and Internet voting
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99
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Stockholders sharing the same
address
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99
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Electronic delivery of proxy materials
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99
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Proxy statement March 6,
2012
Executive offices
12500 TI BOULEVARD, DALLAS, TEXAS 75243
MAILING ADDRESS: P.O. BOX 660199, DALLAS, TEXAS
75266-0199
Voting procedures and
quorum
TIs board of directors
requests your proxy for the annual meeting of stockholders on April 19, 2012. If
you sign and return the enclosed proxy, or vote by telephone or on the Internet,
you authorize the persons named in the proxy to represent you and vote your
shares for the purposes mentioned in the notice of annual meeting. This proxy
statement and related proxy are being distributed on or about March 6, 2012. If
you come to the meeting, you can vote in person. If you dont come to the
meeting, your shares can be voted only if you have returned a properly signed
proxy or followed the telephone or Internet voting instructions, which can be
found on the enclosed proxy. If you sign and return your proxy but do not give
voting instructions, the shares represented by that proxy will be voted as
recommended by the board of directors. You can revoke your authorization at any
time before the shares are voted at the meeting.
A quorum of
stockholders is necessary to hold a valid meeting. If at least a majority of the
shares of TI stock issued and outstanding and entitled to vote are present in
person or by proxy, a quorum will exist. Abstentions and broker non-votes are
counted as present for purposes of establishing a quorum. Broker non-votes occur
when a beneficial owner who holds company stock through a broker does not
provide the broker with voting instructions as to any matter on which the broker
is not permitted to exercise its discretion and vote without specific
instruction.
Scheduled to be considered at the meeting
are the election of directors, an advisory vote regarding approval of the
companys executive compensation, and ratification of the appointment of our
independent registered public accounting firm. Each of these matters is
discussed elsewhere in this proxy statement.
Any other matter that may properly be
submitted at the meeting is approved if a majority of the votes present at the
meeting vote for the proposal. On such matters you may vote for, against
or abstain; abstentions and broker non-votes have the same effect as votes
against.
56
n
2012 PROXY
STATEMENT
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TEXAS INSTRUMENTS
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Election of
directors
Directors are elected at
the annual meeting to hold office until the next annual meeting and until their
successors are elected and qualified. The board of directors has designated the
following persons as nominees: RALPH W. BABB, JR., DANIEL A. CARP, CARRIE S.
COX, PAMELA H. PATSLEY, ROBERT E. SANCHEZ, WAYNE R. SANDERS, RUTH J. SIMMONS,
RICHARD K. TEMPLETON and CHRISTINE TODD WHITMAN. Stephen P. MacMillan, a highly
valued director since 2008, resigned from the board in February
2012.
If you
return a proxy that is not otherwise marked, your shares will be voted FOR each
of the nominees.
Directors must be elected by a
majority of the votes present at the meeting and entitled to be cast in the
election. You may vote for, against, or abstain. Abstentions have the same
effect as votes against. Broker non-votes are not counted as votes for or
against.
Nominees for
directorship
All of the nominees for directorship
are directors of the company. For a discussion of each nominees qualifications
to serve as a director of the company, please see pages 58-59. If any nominee
becomes unable to serve before the meeting, the people named as proxies may vote
for a substitute or the number of directors will be reduced
accordingly.
Directors
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RALPH W. BABB,
JR.
Age 63
Director since 2010
Member, Audit Committee
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WAYNE R. SANDERS
Age
64
Director since
1997
Member, Governance and
Stockholder
Relations Committee
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DANIEL A.
CARP
Age 63
Director since 1997
Member, Governance and Stockholder
Relations
Committee
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RUTH J. SIMMONS
Age
66
Director since
1999
Member, Compensation
Committee
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CARRIE S.
COX
Age 54
Director since 2004
Chair, Compensation Committee
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RICHARD K. TEMPLETON
Age
53
Chairman since 2008
and
director since 2003
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PAMELA H. PATSLEY
Age
55
Director since
2004
Lead Director; Chair, Audit
Committee
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CHRISTINE TODD WHITMAN
Age 65
Director since
2003
Chair, Governance and
Stockholder
Relations Committee
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ROBERT E. SANCHEZ
Age
46
Director since
2011
Member, Audit
Committee
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TEXAS INSTRUMENTS
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2012 PROXY
STATEMENT
n
57
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Director nomination
process
The board is responsible for
approving nominees for election as directors. To assist in this task, the board
has designated a standing committee, the Governance and Stockholder Relations
Committee (the G&SR Committee), which is responsible for reviewing and
recommending nominees to the board. The G&SR Committee is comprised solely
of independent directors as defined by the rules of The NASDAQ Stock Market
(NASDAQ) and the boards corporate governance guidelines. Our board of
directors has adopted a written charter for the G&SR Committee. It can be
found on our website at
www.ti.com/corporategovernance.
It is a long-standing policy of the board to consider
prospective board nominees recommended by stockholders. A stockholder who wishes
to recommend a prospective board nominee for the G&SR Committees
consideration can write to the Secretary of the G&SR Committee, Texas
Instruments Incorporated, P.O. Box 655936, MS 8658, Dallas, Texas 75265-5936.
The G&SR Committee will evaluate the stockholders prospective board nominee
in the same manner as it evaluates other nominees.
In evaluating prospective nominees, the G&SR
Committee looks for the following minimum qualifications, qualities and
skills:
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Outstanding achievement in the individuals
personal career.
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Breadth of experience.
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Soundness of judgment.
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Ability to make independent, analytical
inquiries.
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Ability to contribute to a diversity of
viewpoints among board members.
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Willingness and ability to devote the time
required to perform board activities adequately (in this regard, the G&SR
Committee
will consider the number of
other boards on which the individual serves as a director, and in particular
the boards policy that
directors should
not serve on the boards of more than three other public companies).
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Ability to represent the total corporate
interests of TI (a director will not be selected to, nor will he or she be
expected to,
represent the interests of
any particular group).
Stockholders, non-employee directors,
management and others may submit recommendations to the G&SR
Committee.
The board believes its current size is
within the desired range as stated in the boards corporate governance
guidelines.
Board diversity and nominee
qualifications
As indicated by the criteria above,
the board prefers a mix of background and experience among its members. The
board does not follow any ratio or formula to determine the appropriate mix.
Rather, it uses its judgment to identify nominees whose backgrounds, attributes
and experiences, taken as a whole, will contribute to the high standards of
board service at the company. The effectiveness of this approach is evidenced by
the directors participation in the insightful and robust yet collegial
deliberation that occurs at board and committee meetings and in shaping the
agendas for those meetings.
As it considered director nominees for
the 2012 annual meeting, the board kept in mind that the most important issues
it considers typically relate to the companys strategic direction; succession
planning for senior executive positions; the companys financial performance;
the challenges of running a large, complex enterprise, including the management
of its risks; major acquisitions and divestitures; and significant capital
investment and research and development (R&D) decisions. These issues arise
in the context of the companys operations, which primarily involve the
manufacture and sale of semiconductors all over the world into communications,
computing, industrial and consumer electronics end markets.
As described below, each of our director
nominees has achieved an extremely high level of success in his or her career,
whether at multi-billion dollar multinational corporate enterprises, major U.S.
universities or large governmental organizations. In these positions, each has
been directly involved in the challenges relating to setting the strategic
direction and managing the financial performance, personnel and processes of
large, complex organizations. Each has had exposure to effective leaders and has
developed the ability to judge leadership qualities. Seven of them have
experience in serving on the board of directors of at least one other major
corporation, and one has served in high political office, all of which provides
additional relevant experience on which each nominee can draw.
In concluding that each nominee should
serve as a director, the board relied on the specific experiences and attributes
listed below and on the direct personal knowledge, born of previous service on
the board, that each of the nominees brings insight and collegiality to board
deliberations.
Mr. Babb
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As chairman and CEO of Comerica Incorporated
and Comerica Bank (2002-present) and through a long career in banking,
has
gained first-hand experience in
managing large, complex institutions, as well as insight into financial
markets, which experience
is particularly
relevant to the company due to its global presence.
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As chief financial officer of Comerica
Incorporated and Comerica Bank (1995-2002), controller and later chief
financial officer of
Mercantile
Bancorporation (1978-1995), and auditor and later audit manager at the
accounting firm of Peat Marwick Mitchell &
Co. (1971-1978), gained extensive audit knowledge and experience in
audit- and financial control-related matters.
58
n
2012 PROXY
STATEMENT
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TEXAS INSTRUMENTS
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Mr. Carp
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As chairman and CEO (2000-2005) and president
(1997-2001, 2002-2003) of Eastman Kodak Company, gained first-hand
experience in managing a large, multinational
corporation focused on worldwide electronic consumer markets (which are
of relevance to the company), with ultimate
management responsibility for the corporations financial performance and
its
significant investments in capital and
R&D.
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As chairman of the board of directors of
Delta Air Lines (2007-present), a director of Norfolk Southern Corporation
(2006-present)
and a former director of
Liz Claiborne, Inc. (2006-2009), has helped oversee the strategy and
operations of major multinational
corporations in various industries, including some that are
capital-intensive.
Ms. Cox
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As CEO and a director of Humacyte, Inc.
(2010-present), executive vice president and president of Global
Pharmaceuticals
at Schering-Plough
Corporation (2003-2009) and executive vice president and president of Global
Prescription Business at
Pharmacia
Corporation (1997-2003), has gained first-hand experience in managing large,
multinational organizations focused
on
medical-related markets (which are of relevance to the company), with
responsibility for those organizations financial
performance and significant capital and R&D investments. Is also a
director of Cardinal Health, Inc. (2009-present) and Celgene
Corporation (2009-present).
Ms. Patsley
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As chairman and CEO (2009-present) of
MoneyGram International, Inc., senior executive vice president of First Data
Corporation
(2000-2007), and president and
CEO of Paymentech, Inc. (1991-2000), has gained first-hand experience managing
large,
multinational organizations,
including the application of technology in the financial services sector, with
ultimate management
responsibility for
their financial performance and significant capital investments.
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As Audit Committee chair at the company, a
member of the audit committee at Dr Pepper Snapple Group, Inc., chief
financial
officer of First USA, Inc.
(1987-1994), and a former auditor at KPMG Peat Marwick for almost six years
before joining First USA,
has developed a
keen appreciation for audit- and financial control-related issues.
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As a director of Dr Pepper Snapple Group,
Inc. (2008-present) and a former director of Molson Coors Brewing
Company
(2005-2009), has helped oversee
the strategy and operations of other major multinational
corporations.
Mr. Sanchez
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As president and chief operating officer (February
2012-present) and president, Global Fleet Management Solutions, of
Ryder System, Inc. (September 2010-February
2012), has gained first-hand experience in managing a large,
multinational,
transportation-related
organization, with responsibility for the organizations financial performance
and significant capital
investments.
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As executive vice president and chief
financial officer (October 2007 to September 2010) and as senior vice
president and chief
information officer
(2003-2005) of Ryder System, Inc., developed a keen appreciation for audit-
and financial control-related
issues and
gained first-hand experience with all technology-related functions of a large
multinational corporation focused on
transportation and logistics.
Mr. Sanders
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As chairman (1992-2003) and CEO (1991-2002)
of Kimberly-Clark Corporation, gained first-hand experience in managing
a
large, multinational consumer goods
corporation, with ultimate management responsibility for its financial
performance and its
significant capital
and R&D investments.
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As chairman of Dr Pepper Snapple Group, Inc.
(2008-present) and director of Belo Corporation (2003-present), has
helped
oversee the strategy and operations
of other large corporations.
Ms. Simmons
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As president of Brown University
(2001-present) and president of Smith College (1995-2001), has gained
first-hand experience
in managing large,
complex institutions, and has developed deep insight into the development and
training of professionals,
including
engineers, scientists and technologists, on whom the company relies for its
next generation of employees.
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As a former director of The Goldman Sachs
Group, Inc. (2000-2010) and Pfizer, Inc. (1997-2007), helped oversee the
strategy
and operations of other large
corporations.
Mr. Templeton
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As a 31-year veteran of the semiconductor
industry, serving the last 16 years at a senior level at the company,
including as
chairman since April 2008,
CEO since 2004 and director since 2003, has developed a deep knowledge of all
aspects of the
company and of the
semiconductor industry.
Ms. Whitman
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As Administrator of the Environmental
Protection Agency (2001-2003) and Governor of the state of New Jersey
(1994-2000),
gained first-hand experience
managing a large, complex organization and developed keen insight into the
workings of
government on the federal and
state level and how they might impact company operations.
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As a director of S.C. Johnson & Son, Inc.
(2003-present) and United Technologies Corp. (2003-present), has helped
oversee the
strategy and operations of
other large corporations.
TEXAS INSTRUMENTS
|
2012 PROXY
STATEMENT
n
59
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Communications with the
board
Stockholders and others who wish to
communicate with the board as a whole, or to individual directors, may write to
them at: P.O. Box 655936, MS 8658, Dallas, Texas 75265-5936. All communications
sent to this address will be shared with the board or the individual director,
if so addressed.
Corporate
governance
The board has a long-standing
commitment to responsible and effective corporate governance. The boards
corporate governance guidelines (which include the director independence
standards), the charters of each of the boards committees, TIs code of
business conduct and our code of ethics for
our chief executive officer and senior financial officers are available on our
website at
www.ti.com/corporategovernance.
Stockholders may request copies of these documents free of charge by writing to
Texas Instruments Incorporated, P.O. Box 660199, MS 8657, Dallas, Texas,
75266-0199, Attn: Investor Relations.
Annual meeting
attendance
It is a policy of the board to
encourage directors to attend each annual meeting of stockholders. Such
attendance allows for direct interaction between stockholders and board members.
In 2011, all directors attended TIs annual meeting of stockholders.
Director
independence
The board has determined that each of
our directors is independent except for Mr. Templeton. In connection with this
determination, information was reviewed regarding directors business and
charitable affiliations, immediate family members and their employers, and any
transactions or arrangements between the company and such persons or entities.
The board has adopted the following standards for determining
independence.
A.
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In no event will a director
be considered independent if:
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1.
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He or she is a current partner of or is employed by
the companys independent auditors; or
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2.
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An immediate family member of the director is (a) a
current partner of the companys independent auditors or (b) currently
employed by the companys independent auditors and personally works on the
companys audit.
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3.
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Within the current or preceding three fiscal years
he or she was, and remains at the time of the determination, an executive
officer or employee of an organization that (a) made payments to, or
received payments from, TI for property or services, (b) extended loans to
or received loans from, TI, or (c) received charitable contributions from
TI, in an amount or amounts which, in the aggregate in any single fiscal
year, exceeded the greater of $200,000 or 2 percent of the recipients
consolidated gross revenues for its last completed fiscal year (for
purposes of this standard, payments excludes payments arising solely
from investments in the companys securities and payments under
non-discretionary charitable contribution matching programs);
or
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4.
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Within the current or preceding three fiscal years
an immediate family member of the director was, and remains at the time of
the determination, an executive officer of an organization that (a) made
payments to, or received payments from, TI for property or services, (b)
extended loans to or received loans from TI, or (c) received charitable
contributions from TI, in an amount or amounts which, in the aggregate in
any single fiscal year, exceeded the greater of $200,000 or 2 percent of
the recipients consolidated gross revenues for its last completed fiscal
year (for purposes of this standard, payments excludes payments arising
solely from investments in the companys securities and payments under
non-discretionary charitable contribution matching programs).
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B.
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In no event will a director
be considered independent if, within the preceding three
years:
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1.
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He or she was employed by the company (except in
the capacity of interim chairman of the board, chief executive officer or
other executive officer, provided the interim employment did not last
longer than one year) or any of its subsidiaries;
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2.
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He or she received more than $120,000 during any
twelve-month period in direct compensation from TI (other than (a)
compensation for board or board committee service, (b) compensation
received for former service as an interim chairman of the board, chief
executive officer or other executive officer and (c) benefits under a
tax-qualified retirement plan, or non-discretionary
compensation);
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3.
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An immediate family member of the director was
employed as an executive officer by the company or any of its
subsidiaries;
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4.
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An immediate family member of the director received
more than $120,000 during any twelve-month period in direct compensation
from TI (excluding compensation as a non-executive officer employee of the
company);
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5.
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He or she was (but is no longer) a partner or
employee of the companys independent auditors and personally worked on
the companys audit within that time;
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6.
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An immediate family member of the director was (but
is no longer) a partner or employee of the companys independent auditors
and personally worked on the companys audit within that
time;
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60
n
2012 PROXY
STATEMENT
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TEXAS INSTRUMENTS
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7.
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He or she was an executive
officer of another company at which any of TIs current executive officers
at the same time served on that companys compensation committee;
or
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8.
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An immediate family member
of the director was an executive officer of another company at which any
of TIs current executive officers at the same time served on that
companys compensation committee.
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C.
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Audit Committee
members may not accept any consulting, advisory or other compensatory fee
from TI, other than in their capacity as members of the board or any board
committee. Compensatory fees do not include the receipt of fixed amounts
of compensation under a retirement plan (including deferred compensation)
for prior service with TI (provided that such compensation is not
contingent in any way on continued service).
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For any
other relationship, the determination of whether it would interfere with the
directors exercise of independent judgment in carrying out his or her
responsibilities, and consequently whether the director involved is independent,
will be made by directors who satisfy the independence criteria set forth in
this section.
For
purposes of these independence determinations, immediate family member will
have the same meaning as under NASDAQ rules.
Board organization
Board and committee
meetings
During 2011, the board held ten
meetings. The board has three standing committees described below. The
committees of the board collectively held 21 meetings in 2011. Each director
attended at least 82 percent of board and relevant committee meetings combined.
Overall attendance at board and committee meetings was approximately 93
percent.
Committees of the
board
Audit Committee
The Audit Committee is a separately designated standing
committee established in accordance with Section 3(a)(58)(A) of the Securities
Exchange Act of 1934, as amended. All members of the Audit Committee are
independent under NASDAQ rules and the boards corporate governance guidelines.
From January 1 to April 22, 2011, the committee members were Ms. Patsley
(Chair), Mr. Babb, Mr. David L. Boren (who retired from the board in April 2011)
and Mr. Carp. Mr. Sanchez joined the committee effective March 15, 2011. Since
April 22, the committee members have been Ms. Patsley (Chair), Mr. Babb and Mr.
Sanchez. The Audit Committee is generally responsible for:
-
Appointing, compensating, retaining and
overseeing TIs independent registered public accounting firm.
-
Reviewing the annual report of TIs
independent registered public accounting firm related to quality
control.
-
Reviewing TIs annual reports to the SEC,
including the financial statements and the Managements Discussion and
Analysis
portion of those reports, and
recommending appropriate action to the board.
-
Reviewing TIs audit plans.
-
Reviewing before issuance TIs news releases
regarding annual and interim financial results and discussing with
management
any related earnings guidance
that may be provided to analysts and rating agencies.
-
Discussing TIs audited financial statements
with management and the independent registered public accounting firm,
including
a discussion with the firm
regarding the matters required to be reviewed under applicable legal or
regulatory requirements.
-
Reviewing relationships between the
independent registered public accounting firm and TI.
-
Reviewing and discussing the adequacy of TIs
internal accounting controls and other factors affecting the integrity of
TIs
financial reports with management and
with the independent registered public accounting firm.
-
Creating and periodically reviewing TIs
whistleblower policy.
-
Reviewing TIs risk assessment and risk
management policies.
-
Reviewing TIs compliance and ethics
program.
-
Reviewing a report of compliance of
management and operating personnel with TIs code of business conduct,
including TIs
conflict of interest
policy.
-
Reviewing TIs non-employee-related insurance
programs.
-
Reviewing changes, if any, in major
accounting policies of the company.
-
Reviewing trends in accounting policy changes
that are relevant to the company.
-
Reviewing the companys policy regarding
investments and financial derivative products.
The board has determined that all members
of the Audit Committee are financially sophisticated, as the board has
interpreted such qualifications in its business judgment. In addition, the board
has designated Ms. Patsley as the audit committee financial expert as defined in
the Securities Exchange Act of 1934, as amended.
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The Audit Committee met seven times in 2011.
The Audit Committee holds regularly scheduled meetings and reports its
activities to the board. The committee also continued its long-standing practice
of meeting directly with our internal audit staff to discuss the audit plan and
to allow for direct interaction between Audit Committee members and our internal
auditors. Please see page 93 for a report of the committee.
Compensation
Committee
All members of the
Compensation Committee are independent. From January 1 to April 22, 2011, the
committee members were Ms. Cox (Chair), Mr. David R. Goode (who retired from the
board in April 2011) and Mr. MacMillan. From April 22, 2011, to February 17,
2012, the committee members were Ms. Cox (Chair), Mr. MacMillan and Ms. Simmons.
Since February 17, 2012, the committee members have been Ms. Cox (Chair) and Ms.
Simmons. The committee is responsible for:
-
Reviewing the performance of the CEO and
determining his compensation.
-
Setting the compensation of the companys
other executive officers.
-
Overseeing administration of employee benefit
plans.
-
Making recommendations to the board
regarding:
-
Institution and termination of, revisions
in and actions under employee benefit plans that (i) increase benefits only
for
officers of the company or
disproportionately increase benefits for officers of the company more than
other employees of the
company, (ii)
require or permit the issuance of the companys stock or (iii) the board
must approve.
-
Reservation of company stock for use as
awards of grants under plans or as contributions or sales to any trustee of
any
employee benefit plan.
-
Taking action as appropriate regarding the
institution and termination of, revisions in and actions under employee
benefit plans
that are not required to be
approved by the board.
The
Compensation Committee holds regularly scheduled meetings, reports its
activities to the board, and consults with the board before setting annual
executive compensation. During 2011, the committee met six times. Please see
page 79 for a report of the committee.
In performing its functions, the
committee is supported by the companys Human Resources organization. The
committee has the authority to retain any advisors it deems appropriate to carry
out its responsibilities. The committee retained Pearl Meyer & Partners as
its compensation consultant for the 2011 compensation cycle. The committee
instructed the consultant to advise it directly on executive compensation
philosophy, strategies, pay levels, decision-making processes and other matters
within the scope of the committees charter. Additionally, the committee
instructed the consultant to assist the companys Human Resources organization
in its support of the committee in these matters with such items as peer-group
assessment, analysis of the executive compensation market, and compensation
recommendations.
The Compensation Committee considers it
important that its compensation consultants objectivity not be compromised by
other business engagements with the company or its management. In support of
this belief, the committee has a policy on compensation consultants, a copy of
which may be found on www.ti.com/corporategovernance. During 2011, neither the
consultant nor any of its affiliates performed services for TI other than
pursuant to the engagement by the committee.
The Compensation Committee considers
executive compensation in a multistep process that involves the review of market
information, performance data and possible compensation levels over several
meetings leading to the annual determinations in January. Before setting
executive compensation, the committee reviews the total compensation and
benefits of the executive officers and considers the impact that their
retirement, or termination under various other scenarios, would have on their
compensation and benefits.
The CEO and the senior vice president
responsible for Human Resources, who is an executive officer, are regularly
invited to attend meetings of the committee. The CEO is excused from the meeting
during any deliberations or vote on his compensation. No executive officer
determines his or her own compensation or the compensation of any other
executive officer. As members of the board, the members of the committee receive
information concerning the performance of the company during the year and
interact with our management. During the committees deliberations on executive
compensation, the CEO gives the committee and the board an assessment of his own
performance during the year just ended. He also reviews the performance of the
other executive officers with the committee and makes recommendations regarding
their compensation. The senior vice president responsible for Human Resources
assists in the preparation of and reviews the compensation recommendations made
to the committee other than for her compensation.
The Compensation Committees charter
provides that it may delegate its power, authority and rights with respect to
TIs long-term incentive plans, employee stock purchase plan and employee
benefit plans to (i) one or more committees of the board established or
delegated authority for that purpose; or (ii) employees or committees of
employees except that no such delegation may be made with respect to
compensation of the companys executive officers.
Pursuant to that authority, the
Compensation Committee has delegated to a special committee established by the
board the authority to grant a limited number of stock options and restricted
stock units under the companys long-term incentive plans. The sole member of
the special committee is Mr. Templeton. The special committee has no authority
to grant, amend or terminate any form of compensation to TIs executive
officers. The Compensation Committee reviews the grant activity of the special
committee.
62
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Governance and Stockholder
Relations Committee
All members of
the G&SR Committee are independent. From January 1 to April 22, 2011, the
committee members were Ms. Simmons (Chair), Mr. Sanders and Ms. Whitman. Since
April 22, the committee members have been Ms. Whitman (Chair), Mr. Carp and Mr.
Sanders. The G&SR Committee is generally responsible for:
-
Making recommendations to the board
regarding:
-
The development and revision of our
corporate governance principles.
-
The size, composition and functioning of
the board and board committees.
-
Candidates to fill board positions.
-
Nominees to be designated for election as
directors.
-
Compensation of board members.
-
Organization and responsibilities of board
committees.
-
Succession planning by the company.
-
Issues of potential conflicts of interest
involving a board member raised under TIs conflict of interest
policy.
-
Election of executive officers of the
company.
-
Topics affecting the relationship between
the company and stockholders.
-
Public issues likely to affect the
company.
-
Responses to proposals submitted by
stockholders.
-
Reviewing:
-
Contribution policies of the company and of
the TI Foundation.
-
Revisions to TIs code of ethics.
-
Electing officers of the company other than
the executive officers.
-
Overseeing an annual evaluation of the board and the
committee.
The G&SR Committee met eight
times in 2011. The G&SR Committee holds regularly scheduled meetings and
reports its activities to the board. Please see page 58 for a discussion of
stockholder nominations and page 60 for a discussion of communications with the
board.
Board leadership
structure
The boards current leadership
structure combines the positions of chairman and CEO, and includes a lead
director who presides at executive sessions and performs the duties listed
below. The board believes that this structure, combined with its other practices
(such as (a) including on each board agenda an opportunity for the independent
directors to comment on and influence the proposed strategic agenda for future
meetings and (b) holding an executive session at each board meeting), allows it
to maintain the active engagement of independent directors and appropriate
oversight of management.
The
independent directors have elected Ms. Patsley to serve as lead director through
April 2013. Thereafter, the lead director will be elected by the independent
directors annually. The duties of the lead director are to:
-
Preside at all meetings of the board at which
the chairman is not present, including executive sessions of the
independent directors;
-
Serve as liaison between the chairman and the
independent directors;
-
Approve information sent to the board;
-
Approve meeting agendas for the board;
-
Approve meeting schedules to assure that
there is sufficient time for discussion of all agenda items; and
-
If requested by major shareholders, ensure
that he or she is available for consultation and direct
communication.
In addition, the lead director has
authority to call meetings of the independent
directors.
The
board, led by its G&SR Committee, regularly reviews the boards leadership
structure. The boards consideration is guided by two questions: would
stockholders be better served and would the board be more effective with a
different structure. The boards views are informed by a review of the practices
of other companies and insight into the preferences of top stockholders, as
gathered from face-to-face dialogue and review of published guidelines. The
board also considers how board roles and interactions would change if its
leadership structure changed. The boards goal is for each director to have an
equal stake in the boards actions and equal accountability to the corporation
and its stockholders.
The
board continues to believe that there is no uniform solution for a board
leadership structure. Indeed, the company has had varying board leadership
models over its history, at times separating the positions of chairman and CEO
and at times combining the two, and now utilizing a lead
director.
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Risk oversight by the
board
It is managements responsibility to
assess and manage the various risks TI faces. It is the boards responsibility
to oversee management in this effort. In exercising its oversight, the board has
allocated some areas of focus to its committees and has retained areas of focus
for itself, as more fully described below.
Management generally views the risks TI faces as falling into the
following categories: strategic, operational, financial and compliance. The
board as a whole has oversight responsibility for the companys strategic and
operational risks (e.g., major initiatives, competitive markets and products,
sales and marketing, and research and development). Throughout the year the CEO
discusses these risks with the board during strategy reviews that focus on a
particular business or function. In addition, at the end of the year, the CEO
provides a formal report on the top strategic and operational risks.
TIs Audit Committee has oversight responsibility for
financial risk (such as accounting, finance, internal controls and tax
strategy). Oversight responsibility for compliance risk is shared by the board
committees. For example, the Audit Committee oversees compliance with the
companys code of conduct and finance- and accounting-related laws and policies,
as well as the companys compliance program itself; the Compensation Committee
oversees compliance with the companys executive compensation plans and related
laws and policies; and the G&SR Committee oversees compliance with
governance-related laws and policies, including the companys corporate
governance guidelines.
The
Audit Committee oversees the companys approach to risk management as a whole.
It reviews the companys risk management process at least annually by means of a
presentation by the CFO.
The
boards leadership structure is consistent with the board and committees roles
in risk oversight. As discussed above, the board has found that its current
structure and practices are effective in fully engaging the independent
directors. Allocating various aspects of risk oversight among the committees
provides for similar engagement. Having the chairman and CEO review strategic
and operational risks with the board ensures that the director most
knowledgeable about the company, the industry in which it operates and the
competition and other challenges it faces shares those insights with the board,
providing for a thorough and efficient process.
Director
compensation
The G&SR Committee has
responsibility for reviewing and making recommendations to the board on
compensation for non-employee directors, with the board making the final
determination. The committee has no authority to delegate its responsibility
regarding director compensation. In carrying out this responsibility it is
supported by TIs Human Resources organization. The CEO, the senior vice
president responsible for Human Resources and the Secretary review the
recommendations made to the committee. The CEO also votes, as a member of the
board, on the compensation of non-employee directors.
The compensation arrangements in 2011 for the
non-employee directors were:
-
Annual retainer of $80,000 for board and
committee service.
-
Additional annual retainer of $30,000 for
service as chair of the Audit Committee; $20,000 for service as chair of
the
Compensation Committee; and $15,000
for service as chair of the Governance and Stockholder Relations
Committee.
-
Additional annual retainer of $25,000 for
service as the Lead Director.
-
Annual grant of a 10-year option to purchase
TI common stock pursuant to the terms of the Texas Instruments 2009
Director
Compensation Plan (Director
Plan), which was approved by stockholders in April 2009. The grant-date value
is approximately
$100,000, determined
using a Black-Scholes option-pricing model (subject to the boards ability to
adjust the grant downward).
These
non-qualified (NQ) options become exercisable in four equal annual
installments beginning on the first anniversary of the
grant and also will become fully exercisable in the
event of termination of service following a change in control (as defined in
the
Director Plan) of TI.
-
Annual grant of restricted stock units
pursuant to the Director Plan with a grant date value of approximately
$100,000 (subject to
the boards ability
to adjust the grant downward). The restricted stock units vest on the fourth
anniversary of their date of grant
and
upon a change in control as defined in the Director Plan. If a director is not
a member of the board on the fourth anniversary
of the grant, restricted stock units will nonetheless settle (i.e., the
shares will issue) on such anniversary date if the director
has completed eight years of service prior to
termination or the directors termination was due to death, disability or
ineligibility
to stand for re-election
under the companys by-laws. The director may defer settlement of the
restricted stock units at his or
her
election. Upon settlement, the director will receive one share of TI common
stock for each restricted stock unit. Dividend
equivalents are paid on the restricted stock units at the same rate as
dividends on TI common stock.
-
$1,000 per day compensation for other
activities designated by the chairman.
The board has determined that grants
of equity compensation to non-employee directors will be timed to occur when
grants are made to our U.S. employees in connection with the annual compensation
review process. Accordingly, equity grants to non-employee directors are made in
January. Please see the discussion regarding the timing of equity compensation
grants in the Compensation Discussion and Analysis on page 76.
64
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TEXAS INSTRUMENTS
|
Directors
are not paid a fee for meeting attendance, but we reimburse non-employee
directors for their travel, lodging and related expenses incurred in connection
with attending board, committee and stockholders meetings and other designated
TI events. In addition, non-employee directors may travel on company aircraft to
and from these meetings and other designated events. On occasion, directors
spouses are invited to attend board events; the spouses expenses incurred in
connection with attendance at those events are also reimbursed.
Under the Director Plan, some directors have chosen to
defer all or part of their cash compensation until they leave the board (or
certain other specified times). These deferred amounts were credited to either a
cash account or stock unit account. Cash accounts earn interest from TI at a
rate currently based on Moodys Seasoned Aaa Corporate Bonds. For 2011, that
rate was 4.54 percent. Stock unit accounts fluctuate in value with the
underlying shares of TI common stock, which will be issued after the deferral
period. Dividend equivalents are paid on these stock units. Directors may also
defer settlement of the restricted stock units they receive.
We have arrangements with certain customers whereby our
employees may purchase consumer products containing TI components at discounted
pricing. In addition, the TI Foundation has an educational and cultural matching
gift program. In both cases, directors are entitled to participate on the same
terms and conditions available to employees.
Non-employee directors are not eligible to participate in any
TI-sponsored pension plan.
2011 director
compensation
The following table shows the
compensation of all persons who were non-employee members of the board during
2011 for services in all capacities to TI in 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Non-qualified
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Deferred
|
|
All Other
|
|
|
|
|
|
Paid in
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
|
|
Name (1)
|
|
Cash($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)
|
|
Earnings (5)
|
|
($)(6)
|
|
Total ($)
|
R. W. Babb, Jr.
|
|
$
|
80,000
|
|
$
|
99,977
|
|
$
|
104,223
|
|
|
|
|
|
|
|
|
$
|
20
|
|
$
|
284,220
|
D. L.
Boren
|
|
$
|
26,668
|
|
$
|
99,977
|
|
$
|
104,223
|
|
|
|
|
|
|
|
|
$
|
21,761
|
|
$
|
252,629
|
D. A. Carp
|
|
$
|
80,000
|
|
$
|
99,977
|
|
$
|
104,223
|
|
|
|
|
|
|
|
|
$
|
8,531
|
|
$
|
292,731
|
C. S.
Cox
|
|
$
|
100,000
|
|
$
|
99,977
|
|
$
|
104,223
|
|
|
|
|
$
|
519
|
|
|
$
|
20
|
|
$
|
304,739
|
D. R. Goode
|
|
$
|
26,668
|
|
$
|
99,977
|
|
$
|
104,223
|
|
|
|
|
|
|
|
|
$
|
25,761
|
|
$
|
256,629
|
S. P.
MacMillan
|
|
$
|
80,000
|
|
$
|
99,977
|
|
$
|
104,223
|
|
|
|
|
|
|
|
|
$
|
10,020
|
|
$
|
294,220
|
P. H. Patsley
|
|
$
|
117,292
|
|
$
|
99,977
|
|
$
|
104,223
|
|
|
|
|
|
|
|
|
$
|
20
|
|
$
|
321,512
|
R. E.
Sanchez
|
|
$
|
63,656
|
|
$
|
67,800
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,020
|
|
$
|
141,476
|
W. R. Sanders
|
|
$
|
80,000
|
|
$
|
99,977
|
|
$
|
104,223
|
|
|
|
|
|
|
|
|
$
|
8,531
|
|
$
|
292,731
|
R. J.
Simmons
|
|
$
|
85,000
|
|
$
|
99,977
|
|
$
|
104,223
|
|
|
|
|
$
|
136
|
|
|
$
|
20
|
|
$
|
289,356
|
C. T. Whitman
|
|
$
|
90,000
|
|
$
|
99,977
|
|
$
|
104,223
|
|
|
|
|
|
|
|
|
$
|
20
|
|
$
|
294,220
|
(1)
|
Messrs. Boren and Goode reached the age of 70 by
the date of the 2011 annual meeting and therefore were ineligible under
the companys by-laws to stand for re-election at the meeting. They ceased
to be directors of the company on April 21, 2011. Mr. MacMillan resigned
effective February 17, 2012. Mr. Sanchez was elected to the board
effective March 15, 2011.
|
|
|
(2)
|
Includes amounts deferred at the directors
election.
|
|
|
(3)
|
Shown is the aggregate grant date fair value of
awards granted in 2011 calculated in accordance with Financial Accounting
Standards Board
Accounting
Standards Codification
TM
Topic 718,
Compensation-Stock Compensation
(ASC 718). The discussion of the assumptions used for purposes of
calculating the grant date fair value appears in note 5 of Exhibit 13 to
TIs annual report on Form 10-K for the year ended December 31,
2011.
|
|
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2012 PROXY
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The table below shows the aggregate
number of shares underlying outstanding restricted stock units held by the named
individuals as of December 31, 2011.
|
Restricted
|
|
Stock Units
|
Name
|
(in
Shares)
|
R. W. Babb, Jr.
|
|
4,887
|
|
D. L.
Boren
|
|
10,387
|
|
D. A. Carp
|
|
21,551
|
|
C. S.
Cox
|
|
14,887
|
|
D. R. Goode
|
|
12,554
|
|
S. P.
MacMillan
|
|
9,887
|
|
P. H. Patsley
|
|
12,387
|
|
R. E.
Sanchez
|
|
2,000
|
|
W. R. Sanders
|
|
19,987
|
|
R. J.
Simmons
|
|
20,887
|
|
C. T. Whitman
|
|
12,887
|
|
|
|
Each restricted
stock unit represents the right to receive one share of TI common stock.
For restricted stock units granted prior to 2007, shares are issued at the
time of mandatory retirement from the board (age 70) or upon the earlier
of termination of service from the board after completing eight years of
service or death or disability. For information regarding share issuances
under restricted stock units granted after 2006, please see the discussion
on page 64.
|
|
(4)
|
|
Shown is the
aggregate grant date fair value of awards granted in 2011 calculated in
accordance with ASC 718. The discussion of the assumptions used for
purposes of calculating the grant date fair value appears in note 5 of
Exhibit 13 to TIs annual report on Form 10-K for the year ended December
31, 2011.
|
|
|
|
The table below
shows the aggregate number of shares underlying outstanding stock options
held by the named individuals as of December 31,
2011.
|
|
Options
|
Name
|
(in
Shares)
|
R. W. Babb, Jr.
|
|
10,002
|
|
D. L.
Boren
|
|
61,002
|
|
D. A. Carp
|
|
93,002
|
|
C. S.
Cox
|
|
68,002
|
|
D. R. Goode
|
|
103,002
|
|
S. P.
MacMillan
|
|
24,002
|
|
P. H. Patsley
|
|
68,002
|
|
R. E.
Sanchez
|
|
|
|
W. R. Sanders
|
|
83,002
|
|
R. J.
Simmons
|
|
103,002
|
|
C. T. Whitman
|
|
83,002
|
|
|
|
The terms of
these options are as set forth on page 64 except that for options granted
before November 2006, the exercise price is the average of the high and
low price of the companys common stock on the date of grant, and for
options granted before 2010, the grant becomes fully exercisable upon a
change in control of TI.
|
|
(5)
|
|
SEC rules require
the disclosure of earnings on deferred compensation accounts to the extent
that the rate of interest exceeds a specified rate (Federal Rate), which
is 120 percent of the applicable federal long-term rate with compounding.
Under the terms of the Director Plan, deferred compensation cash accounts
earn interest at a rate based on Moodys Seasoned Aaa corporate
bonds. For 2011, this
interest rate exceeded the Federal Rate by 0.22 percentage points. Shown
is the amount of interest earned on the directors deferred compensation
accounts that was in excess of the Federal Rate.
|
|
66
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2012
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|
TEXAS INSTRUMENTS
|
(6)
|
|
Consists of (a) the annual
cost ($20 per director) of premiums for travel and accident insurance
policies, (b) contributions under the TI Foundation matching gift program
of $10,000, $14,000, $10,000, and $10,000 for Messrs. Boren, Goode,
MacMillan and Sanchez, respectively, and (c) for certain individuals,
costs related to the Director Award Program. Each director whose service
commenced prior to June 20, 2002, is eligible to participate in the
Director Award Program, a charitable donation program under which we will
contribute a total of $500,000 per eligible director to as many as three
educational institutions recommended by the director and approved by us.
The contributions are made following the directors death. Directors
receive no financial benefit from the program, and all charitable
deductions belong to the company. In accordance with SEC rules, we have
included the companys annual costs under the program in All Other
Compensation of the directors who participate. These costs include
third-party administrator fees for the program and premiums on life
insurance policies to fund the program. Messrs. Boren, Carp, Goode and
Sanders participate in this program. The cost attributable to each of
Messrs. Boren and Goode for their participation in the program was
$11,741. The cost attributable to each of Messrs. Carp and Sanders was
$8,511.
|
Executive
compensation
We are providing the
following advisory vote on named executive officer compensation as required by
Section 14A of the Securities Exchange Act.
At TIs 2011 annual meeting, a non-binding advisory
vote was taken on the frequency of future advisory votes regarding named
executive officer compensation. A majority of the shares cast on the matter were
in favor of holding such an advisory vote on an annual basis. As a result, TIs
board of directors decided to hold future advisory votes on named executive
compensation on an annual basis.
Proposal regarding advisory
approval of the companys executive compensation
The board asks the shareowners to
cast an advisory vote on the compensation of our named executive officers. The
named executive officers are the five executive officers, consisting of the
chief executive officer, chief financial officer and three other most highly
compensated executive officers, named in the compensation tables on pages
79-93.
Specifically, we ask the shareowners
to approve the following resolution:
RESOLVED, that the compensation paid to the companys
named executive officers, as disclosed in this proxy statement pursuant to the
Securities and Exchange Commissions compensation disclosure rules, including
the Compensation Discussion and Analysis, compensation tables and narrative
discussion on pages 68-93 of this proxy statement, is hereby approved.
We
encourage shareowners to review the Compensation Discussion and Analysis section
of the proxy statement, which follows. It discusses our executive compensation
policies and programs and explains the compensation decisions relating to the
named executive officers for 2011. We believe that the policies and programs
serve the interests of our shareowners and that the compensation received by the
named executive officers is commensurate with the performance and strategic
position of the company.
Although the outcome of this vote is not binding on the company or the
board, the Compensation Committee of the board will consider it when setting
future compensation for the executive officers.
The board of directors recommends
a vote FOR the resolution approving the named executive officer compensation for
2011, as disclosed in this proxy statement.
TEXAS INSTRUMENTS
|
2012
PROXY STATEMENT
n
67
|
Compensation discussion and
analysis
This section describes TIs
compensation program for executive officers. It will provide insight into the
following:
-
The elements of the 2011 compensation
program, why we selected them and how they relate to one another; and
-
How we determined the amount of compensation
for 2011.
Currently,
TI has 15 executive officers. These executives have the broadest job
responsibilities and policy-making authority in the company. We hold them
accountable for the companys performance and for maintaining a culture of
strong ethics. Details of compensation for our CEO, CFO and the three other
highest paid individuals who were executive officers in 2011 (collectively
called the named executive officers) can be found in the tables beginning on
page 79.
Executive summary
-
TIs compensation program is structured to
pay for performance and deliver rewards that encourage executives
to
think and act in both the short-
and long-term interests of our shareholders. The majority of total
compensation for
our executives
each year comes in the form of variable cash and equity compensation. Variable
cash is tied to the
short-term
performance of the company, and the value of equity is tied to the long-term
performance of the company. We
believe our compensation program holds our executive officers accountable for
the financial and competitive
performance of TI.
-
2011 Compensation Decisions for the
CEO:
-
Base pay was unchanged, in order to
maintain salary at a level slightly below the estimated median of the CEOs
in our pay
comparator group.
-
Total equity shares granted in January 2011
were 17 percent lower than in January 2010. The resulting grant date fair
value
was 28 percent higher than 2010,
reflective of a 50 percent higher stock price on the date of the 2011 grant
compared to the
2010 grant.
-
The bonus decision was based primarily on
the following performance results in 2011:
|
2011 Absolute
Performance
|
2011 Relative
Performance**
|
Revenue Growth: Total
TI
Revenue Growth without baseband*
|
|
-2%
3%
|
|
|
Below Median
Median
|
|
Profit from Operations as a % of
Revenue (PFO%)
|
|
22%
|
|
|
Above Median
|
|
Total Shareholder Return
(TSR)
|
|
-9%
|
|
|
Above Median
|
|
Year-on-Year Change in CEO Bonus
(2011
bonus compared to 2010)
|
10%
lower
|
*
|
|
Revenue growth for total TI,
excluding digital baseband, a product line for which TI has a publicly
stated exit plan.
|
**
|
|
Relative to semiconductor
competitors as outlined on page 73. Includes estimates and projections of
certain competitors financial results.
|
The committees strategy for setting
cash and non-cash compensation is described in the table that follows
immediately below. Its compensation decisions for the named executive officers
for 2011 are discussed on pages 71-76. Benefit programs in which the executive
officers participate are discussed on pages 77-78. Perquisites are discussed on
page 78.
68
n
2012
PROXY
STATEMENT
|
TEXAS INSTRUMENTS
|
Detailed discussion
Compensation philosophy and
elements
The Compensation Committee
of TIs board of directors is responsible for setting the compensation of all TI
executive officers. The committee consults with the other independent directors
and its compensation consultant, Pearl Meyer & Partners, before setting
annual compensation for the executives. The committee chair regularly reports on
committee actions at board meetings.
In a cyclical industry such as ours, in which market
conditions and therefore growth and profitability can change quickly, we do not
use pre-set formulas, thresholds or multiples to determine compensation awards.
The only exception to this is the profit sharing program, in which the executive
officers and most other TI employees participate (described in the table
below).
The primary elements of our executive
compensation program are as follows:
Near-term compensation, paid in
cash
Element
|
|
Purpose
|
|
Strategy
|
|
Terms
|
Base salary
|
|
Basic, least variable form of compensation
|
|
Pay slightly below market median in order to weight total
compensation to the performance-based elements described below in this
chart.
|
|
Paid twice monthly
|
|
Profit sharing
|
|
Broad-based program designed to emphasize that each employee
contributes to the companys profitability and can share in it
|
|
Pay according to a formula that focuses employees on a company
goal, and at a level that will affect behavior. Profit sharing is paid in
addition to any performance bonus awarded for the
year.
For the
last seven years, the formula has been based on company-level annual
operating profit margin. The formula was set by the TI board. The
committees practice has been not to adjust amounts earned under the
formula.
|
|
Payable in a single cash payment shortly after
the end of the performance year
As in
recent years, the formula for 2011 was:
-
Below 10% company-level annual operating
profit as a percentage of revenue (Margin): no profit sharing
-
At 10% Margin: profit sharing = 2% of base
salary
-
At Margin above 10%: profit sharing increases by
0.5% of base salary for each percentage point of Margin between 10% and
24%, and 1% of base salary for each percentage point of Margin above
24%. The maximum profit sharing is 20% of base salary.
In 2011, TI delivered
Margin of 22%. As a result, all eligible employees, including executive
officers, received profit sharing of 7.9% of base
salary.
|
TEXAS INSTRUMENTS
|
2012
PROXY STATEMENT
n
69
|
Element
|
|
Purpose
|
|
Strategy
|
|
Terms
|
Performance bonus
|
|
To motivate executives and reward them according to the
companys relative and absolute performance and the executives
individual
performance
|
|
Determined primarily on the basis of one-year
and three-year company performance on certain measures (revenue growth
percent, operating margin and total shareholder return
1
) as
compared to competitors and on our strategic progress in key markets and
with customers. These factors have been chosen to reflect our near-term
financial performance as well as our progress in building long-term
shareholder value.
The committee aims to pay total cash compensation (base
salary, profit sharing and bonus) appropriately above median if company
performance is above that of competitors, and pay total cash compensation
appropriately below the median if company performance is below
competitors.
The
committee does not rely on formulas or performance targets or thresholds.
Instead it uses its judgment based on its assessment of the factors
described above.
|
|
Determined by the committee and paid in a single payment
after the performance year
|
|
|
|
|
|
|
|
Long-term compensation, awarded in equity
|
|
Non-qualified stock options and restricted stock
units
|
|
Alignment with shareholders; long-term focus; retention,
particularly with respect to restricted stock units
|
|
We grant a combination of nonqualified (NQ) stock
options and restricted stock units, generally targeted at the median level
of equity compensation awarded to executives in similar positions at the
Comparator Group.
|
|
The terms and conditions of stock options and restricted
stock units are summarized on pages 84-85. The committees grant
procedures are described on page
76.
|
Our executive compensation program is
designed to encourage executive officers to pursue strategies that serve the
interests of the company and shareholders, and not to promote excessive
risk-taking by our executives. It is built on a foundation of sound corporate
governance and includes:
-
Executive officers do not have employment
contracts and are not guaranteed salary increases or bonus amounts.
-
We have never repriced stock options. We do
not grant reload options. We grant equity compensation with
double-trigger
change-in-control terms,
which accelerate the vesting of grants only if the grantee has been terminated
involuntarily within a
limited time after
a change in control of the company.
-
Bonus and equity compensation awards are
subject to clawback under the committees policy described on page 76.
-
We do not provide excessive perquisites.
Those few we do provide are designed to help executives remain focused on
their work
at TI or for personal safety.
We do not provide tax gross-ups for perquisites.
-
We do not guarantee a return or provide
above-market returns on compensation that has been deferred.
-
Pension benefits are calculated on salary and
bonus only; the proceeds earned on equity or other performance awards are
not
part of the pension
calculation.
____________________
1
|
|
Total shareholder return
refers to the percentage change in the value of a stockholders investment
in a company over the relevant time period, as determined by dividends
paid and the change in the companys share price during the period. See
page 74.
|
|
70
n
2012
PROXY
STATEMENT
|
TEXAS
INSTRUMENTS
|
Comparator
group
The Compensation Committee
considers the market level of compensation when setting the salary, bonuses and
equity compensation of the executive officers. The committee targets salary
slightly below market median in order to weight total compensation to
performance-based elements. To estimate the market level of pay, the committee
uses information provided by its compensation consultant and TIs Compensation
and Benefits organization about compensation paid to executives in similar
positions at a peer group of companies (the Comparator
Group).
The
committee sets the Comparator Group. In general, the Comparator Group companies
(1) are U.S.-based, (2) engage in the semiconductor business or other
electronics or information technology activities, (3) have executive positions
comparable in complexity to those of TI and (4) use forms of executive
compensation comparable to TIs.
Shown
in the table below is the Comparator Group used for the compensation decisions
for 2011 (base salary, equity compensation and bonus). The table compares the
group to TI in terms of revenue and market capitalization.
|
Revenue
|
|
Market Cap
|
|
|
|
|
Company
|
($
billion)***
|
|
($
billion)***
|
|
Fiscal Year
End
|
Intel Corporation
|
|
54.0
|
|
|
|
123.5
|
|
|
|
December
|
|
Cisco Systems,
Inc.
|
|
43.7
|
|
|
|
97.2
|
|
|
|
July
|
|
Google Inc.
|
|
37.9
|
|
|
|
209.2
|
|
|
|
December
|
|
Oracle
Corporation
|
|
36.7
|
|
|
|
128.9
|
|
|
|
May
|
|
Emerson Electric Co.
|
|
24.2
|
|
|
|
34.3
|
|
|
|
September
|
|
Xerox
Corporation
|
|
22.6
|
|
|
|
10.8
|
|
|
|
December
|
|
EMC Corporation
|
|
20.0
|
|
|
|
43.9
|
|
|
|
December
|
|
Computer
Sciences Corporation
|
|
16.2
|
|
|
|
3.7
|
|
|
|
March
|
|
QUALCOMM Corporation
|
|
15.0
|
|
|
|
92.3
|
|
|
|
September
|
|
TE Connectivity
Ltd.*
|
|
14.4
|
|
|
|
13.1
|
|
|
|
September
|
|
Texas Instruments Incorporated
|
|
13.7
|
|
|
|
33.3
|
|
|
|
December
|
|
eBay
Inc.
|
|
11.7
|
|
|
|
39.2
|
|
|
|
December
|
|
Seagate Technology
|
|
11.6
|
|
|
|
7.6
|
|
|
|
June
|
|
Applied
Materials, Inc.
|
|
10.5
|
|
|
|
14.0
|
|
|
|
October
|
|
Western Digital Corporation
|
|
9.3
|
|
|
|
7.2
|
|
|
|
June
|
|
Motorola Solutions, Inc.**
|
|
8.2
|
|
|
|
15.1
|
|
|
|
December
|
|
Broadcom Corporation
|
|
7.4
|
|
|
|
15.8
|
|
|
|
December
|
|
Yahoo! Inc.
|
|
5.0
|
|
|
|
20.0
|
|
|
|
December
|
|
Analog Devices, Inc.
|
|
3.0
|
|
|
|
10.7
|
|
|
|
October
|
|
|
|
75th Percentile
|
|
23.4
|
|
|
|
68.1
|
|
|
|
|
|
Median
|
|
14.4
|
|
|
|
20.0
|
|
|
|
|
|
25th Percentile
|
|
9.9
|
|
|
|
12.0
|
|
|
|
|
|
*
|
|
Formerly Tyco Electronics
Ltd. (renamed during 2011).
|
**
|
|
Formerly Motorola, Inc.
(renamed during 2011 after spin-off of the wireless
operations).
|
***
|
|
Trailing four-quarter
revenue as reported by Capital IQ on January 31, 2012. Market
capitalization as of December 31, 2011.
|
The committee set the Comparator
Group in July 2010 for the base salary and equity compensation decisions it made
in January 2011. For a discussion of the factors considered by the committee,
please see page 65 of the companys 2011 proxy
statement.
In
July 2011, the committee reviewed the Comparator Group in terms of industry,
revenue and market capitalization. In 2011, Motorolas wireless operations
separated from Motorola, Inc., which was renamed Motorola Solutions, Inc. The
committee decided Motorola Solutions was still comparable to TI for compensation
purposes and therefore retained it in the Comparator Group. The committee used
that Comparator Group for the bonus decisions in January 2012 relating to 2011
performance.
Analysis of compensation
determinations for 2011
Total compensation
Before
finalizing the compensation of the executive officers, the committee reviewed
all elements of compensation. The information included total cash compensation
(salary, profit sharing and projected bonus), the grant date fair value of
equity compensation, the impact that proposed compensation would have on other
compensation elements such as pension, and a summary of benefits that the
executives would receive under various termination scenarios. The review enabled
the committee to see how various compensation elements relate to one another and
what impact its decisions would have on the total earnings opportunity
TEXAS INSTRUMENTS
|
2012
PROXY STATEMENT
n
71
|
of the executives. In assessing the
information, the committee did not target a specific level of total compensation
or use a formula to allocate compensation to the various elements. Instead, it
used its judgment in assessing whether the total was consistent with the
objectives of the program. Based on this review, the committee determined that
the level of compensation was appropriate.
Base salary
The committee set the 2011 rate of base salary for the
named executive officers as follows:
Officer
|
|
2011 Annual Rate
|
|
Change from 2010 Annual
Rate
|
Mr. Templeton
|
|
$990,087
|
|
|
0%
|
|
Mr.
March
|
|
$565,008
|
|
|
6.6%
|
|
Mr. Lowe
|
|
$600,000
|
|
|
4.3%
|
|
Mr.
Ritchie
|
|
$550,020
|
|
|
16.9%
|
|
Mr. Crutcher
|
|
$485,004
|
|
|
14.1%
|
|
The committee set the 2011
base-salary rate for each of the named executive officers in January 2011. In
keeping with its strategy, the committee set the annual base-salary rates to be
below the estimated median level of salaries expected to be paid to similarly
situated executives of the Comparator Group in
2011.
The salary
differences between the named executive officers were driven primarily by the
market rate of pay for each officer, and not the application of a formula
designed to maintain a differential between the officers.
Equity
compensation
In 2011, the committee
awarded equity compensation to each of the named executive officers. The grants
are shown in the grants of plan-based awards in 2011 table on page 81. The grant
date fair value of the awards is reflected in that table and in the Stock
Awards and Option Awards columns of the summary compensation table on page
79. The table below is provided to assist the reader in comparing the number of
shares, grant date fair values and NQ Equivalent levels for each of the years
shown in the summary compensation table. NQ Equivalents are calculated by
treating each restricted stock unit as 3 NQ Equivalents and each option share as
1 NQ Equivalent. This 3:1 ratio approximates the relative accounting expense of
granting one restricted stock unit as compared with an option for one
share.
|
|
|
|
|
|
|
|
Restricted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
Stock Units
|
|
|
|
|
|
Grant Date
|
Officer
|
|
Year
|
|
(in Shares)
|
|
(in Shares)
|
|
NQ
Equivalents
|
|
Fair
Value*
|
Mr. Templeton
|
|
2011
|
|
|
450,000
|
|
|
|
150,000
|
|
|
|
900,000
|
|
|
|
$
|
9,883,575
|
|
|
|
2010
|
|
|
540,000
|
|
|
|
180,000
|
|
|
|
1,080,000
|
|
|
|
$
|
7,715,066
|
|
|
|
2009
|
|
|
664,461
|
|
|
|
221,487
|
|
|
|
1,328,922
|
|
|
|
$
|
6,919,254
|
|
|
Mr. March
|
|
2011
|
|
|
137,500
|
|
|
|
45,834
|
|
|
|
275,002
|
|
|
|
$
|
3,020,004
|
|
|
|
2010
|
|
|
161,250
|
|
|
|
53,751
|
|
|
|
322,503
|
|
|
|
$
|
2,303,828
|
|
|
|
2009
|
|
|
190,000
|
|
|
|
63,334
|
|
|
|
380,000
|
|
|
|
$
|
1,978,543
|
|
|
Mr. Lowe
|
|
2011
|
|
|
185,000
|
|
|
|
61,667
|
|
|
|
370,001
|
|
|
|
$
|
4,063,259
|
|
|
|
2010
|
|
|
277,500
|
|
|
|
92,501
|
|
|
|
555,003
|
|
|
|
$
|
3,964,709
|
|
|
|
2009
|
|
|
280,000
|
|
|
|
93,334
|
|
|
|
560,000
|
|
|
|
$
|
2,915,743
|
|
|
Mr. Ritchie
|
|
2011
|
|
|
162,500
|
|
|
|
54,167
|
|
|
|
325,001
|
|
|
|
$
|
3,569,080
|
|
|
|
2010
|
|
|
187,500
|
|
|
|
62,501
|
|
|
|
375,003
|
|
|
|
$
|
2,678,865
|
|
|
|
2009
|
|
|
250,000
|
|
|
|
83,334
|
|
|
|
500,000
|
|
|
|
$
|
2,603,343
|
|
|
Mr. Crutcher
|
|
2011
|
|
|
162,500
|
|
|
|
54,167
|
|
|
|
325,001
|
|
|
|
$
|
3,569,080
|
|
|
|
2010
|
|
|
|
|
|
|
100,000
|
**
|
|
|
300,000
|
**
|
|
|
$
|
2,498,000
|
**
|
*
|
|
See note 3 to the summary
compensation table on page 79 for information on how grant date fair value
was calculated.
|
**
|
|
Shown is the award made to
Mr. Crutcher in September 2010, when he became an executive officer. The
grants that he received before he became an executive officer, which were
made under procedures applicable to non-executive officers, are reflected
in the tables on pages 75 and 83.
|
For each of the named executive
officers, the committee made the 2011 awards shown above in January 2011. The
committees objective was to award to those officers equity compensation that
had a grant date fair value at approximately the median market level, in this
case the 40
th
to 60
th
percentile of the 3-year average of
equity compensation (including an estimate of amounts for 2011) granted by the
Comparator Group.
72
n
2012
PROXY
STATEMENT
|
TEXAS INSTRUMENTS
|
In assessing
the market level, the committee considered information presented by TIs
Compensation and Benefits organization (prepared using data provided by the
committees compensation consultant) on the estimated value of the awards
expected to be granted by the Comparator Group to similarly situated executives.
The award value was estimated using the same methodology used for financial
accounting.
For each officer, the committee set a
number of NQ Equivalents to achieve the desired grant value. The committee
decided to allocate the NQ Equivalents for each officer equally between
restricted stock units and options to give equal emphasis to promoting
retention, motivating the executive and aligning his interests with those of
shareholders.
Before approving the grants, the committee reviewed the amount of
unvested equity compensation held by the officers to assess its retention value.
In making this assessment, the committee used its judgment and did not apply any
formula, threshold or maximum. This review did not result in an increase or
decrease of the awards from the levels described above.
The exercise price of the options was the closing price
of TI stock on January 27, 2011, the third trading day after the company
released its annual and fourth quarter financial results for 2010. All grants
were made under the 2009 Texas Instruments Long-Term Incentive Plan (the 2009
Plan), which shareholders approved in April 2009. All grants have the terms
described on page 84.
The
differences in the equity awards between the named executive officers were
primarily the result of differences in the applicable estimated market level of
equity compensation for their positions, and not the application of any formula
designed to maintain differentials between the officers.
Bonus
In January 2012, the committee set the 2011 bonus
compensation for executive officers based on its assessment of 2011 performance.
In setting the bonuses, the committee used the following performance measures to
assess the company:
-
The
relative
one-year and three-year
performance of TI as compared with competitor companies, as measured by
-
revenue growth,
-
operating profit as a percentage of revenue,
-
total shareholder return; and
-
The
absolute
one-year and three-year
performance of TI on the above measures.
In addition, the committee considered
our strategic progress by reviewing how competitive we are in key markets with
our core products and technologies, as well as the strength of our relationships
with key customers.
One-year relative performance on the three measures and one-year
strategic progress were the primary considerations in the committees assessment
of the companys 2011 performance. In assessing performance, the committee did
not use formulas, thresholds or multiples. Because market conditions can quickly
change in our industry, thresholds established at the beginning of a year could
prove irrelevant by year-end. The committee believes its approach, which
assesses the companys relative performance in hindsight after year-end, gives
it the insight to most effectively and critically judge results and encouraged
executives to pursue strategies that serve the long-term interests of the
company and its shareholders.
In
the comparison of relative performance, the committee used the following
companies (the competitor companies):
2
Advanced Micro Devices,
Inc.
|
LSI Logic
Corporation
|
Altera Corporation
|
Marvell Technology Group
Ltd.
|
Atmel Corporation
|
Maxim Integrated Products,
Inc.
|
Analog Devices, Inc.
|
Microchip Technology
Incorporated
|
Broadcom Corporation
|
NXP Semiconductors
N.V.
|
Fairchild Semiconductor
International, Inc.
|
NVIDIA Corporation
|
Infineon Technologies
AG
|
ON Semiconductor
Corporation
|
Intel Corporation
|
QUALCOMM
Incorporated
|
Intersil Corporation
|
STMicroelectronics
N.V.
|
Linear Technology
Corporation
|
Xilinx,
Inc.
|
These companies include both
broad-based and niche suppliers that operate in our key markets or offer
technology that competes with our products. The committee considers annually
whether the list is still appropriate in terms of revenue, market capitalization
and changes in business activities of the companies. In July 2011, the committee
decided to remove National Semiconductor Corporation because of its pending
acquisition by TI and to add Atmel and NXP, which are TI competitors, to
increase the overall comparability of the group to
TI.
____________________
2
|
|
To the extent the companies
had not released financial results for the year or most recent quarter,
the committee based its evaluation on estimates and projections of the
companies financial results for 2011.
|
|
TEXAS INSTRUMENTS
|
2012
PROXY STATEMENT
n
73
|
Assessment of 2011
Performance
The committee spent
extensive time in December and January assessing TIs results and strategic
progress for 2011. The committee considered both quantitative and qualitative
data, and it applied judgment in its assessment. Overall, the committee
determined that TIs absolute performance was below that of the prior year, and
that its relative performance was mixed, surpassing most competitors listed in
the table above in operating profitability, total shareholder return and
strategic position, but below competitors in revenue
growth.
The
committee set the named executive officers bonus to be commensurate with this
performance, generally about 10 percent lower than that of 2010.
Below are details of the committees performance
assessment.
Revenue and margin
-
TI revenue declined 2 percent, which was
below the median growth rate of the competitor companies. However, TIs
revenue
included a $600 million decline in
revenue for wireless digital basebands, a product line for which TI has a
publicly stated
exit plan. Excluding
baseband revenue ($1.1 billion), TIs revenue grew 3 percent, the median as
compared with competitors. Revenue grew
in the companys core businesses of Analog and Embedded Processing, up 7
percent and 2 percent respectively, resulting in market share gains for each.
-
Operating profit margin was 22 percent. This
placed the company above median as compared with competitors. Return on
invested capital was 14 percent, above the
companys cost of capital.
-
Three-year metrics were 3 percent compounded
annual revenue growth and 24 percent average operating profit margin,
below
and above the median, respectively,
as compared with competitor companies.
Total shareholder return
(TSR)
-
TSR declined 9 percent, but was above the
median performance of competitor comparisons.
-
The company returned cash to stockholders
through stock repurchases of $2 billion, reducing outstanding shares by 2
percent
(net of stock issuances during the
year). The company also increased the quarterly dividend rate by 31 percent,
the ninth
increase in eight years.
-
Even accounting for the above stock
repurchases and dividend increases, the balance sheet remained robust, ending
the year
with cash and short-term
investments of almost $3 billion.
-
Three-year TSR increased 26 percent, near
median of competitor comparisons.
Strategic progress
-
The company completed a major step in
strengthening its Analog competitiveness with the acquisition of
National
Semiconductor, adding
thousands of new analog products to its existing portfolio and increasing the
companys manufacturing
capability with
the addition of two wafer fabs and an assembly/test facility. As a result,
half the companys revenue now comes
from
Analog sales and TI offers customers an unparalleled breadth of product
choices.
-
Also in reviewing strategic progress for
2011, the committee again noted that TI is focused on segments of the
semiconductor
market that have long-term
growth potential thanks to the many and increasing number of electronic
systems that require
Analog and Embedded
Processing technology. TIs positions, strategies, products and manufacturing
capacity give the company
a sustainable
advantage over competitors, as evidenced by market share gains in both in
2011.
Performance Summary
|
|
|
|
|
|
|
|
|
|
1-Year
|
|
3-Year
|
Revenue growth
|
|
-2
|
%
|
|
|
3%
|
|
CAGR
|
Operating
margin
|
|
22
|
%
|
|
|
24%
|
|
average
|
Return on invested capital (ROIC)
|
|
14
|
%
|
|
|
20%
|
|
average
|
Increase in
quarterly dividend rate
|
|
31
|
%
|
|
|
55%
|
|
|
Total shareholder return (TSR)
|
|
-9
|
%
|
|
|
26%
|
|
CAGR
|
CAGR = compound annual growth
rate
ROIC = operating margin x (1 tax
rate) / (assets non-debt liabilities)
One-year TSR % =
|
|
(adjusted closing price of the companys stock at
year-end 2011, divided by 2010 year-end adjusted closing price) minus 1.
The adjusted closing price is as shown under Historical Prices for the
companys stock on Yahoo Finance and reflects stock splits and
reinvestment of dividends.
|
Three-year TSR CAGR % =
|
|
(adjusted
closing price of the companys stock at year-end 2011, divided by 2008
year-end adjusted closing price)
1/3
minus 1. Adjusted closing
price is as described above.
|
74
n
2012
PROXY
STATEMENT
|
TEXAS INSTRUMENTS
|
Before setting the bonuses for the
named executive officers, the committee considered the officers individual
performance. The performance of the CEO was judged according to the performance
of the company. For the other officers, the committee considered the factors
described below in assessing individual performance. In making this assessment,
the committee did not apply any formula or performance
targets.
Mr.
March is the chief financial officer. The committee noted the financial
management of the company.
Mr.
Lowe is responsible for the companys analog semiconductor product lines. The
committee noted the financial performance of those product lines, including the
companys analog market share, and the position of the operations strategically
and with customers.
Mr.
Ritchie is responsible for the companys semiconductor manufacturing operations.
The committee noted the performance of those operations, including their
cost-competitiveness and inventory management.
Mr. Crutcher is responsible for the companys embedded
processing and custom product lines. The committee noted the financial
performance and strategic position of the product lines.
The bonuses awarded for 2011 performance are shown in the
table below. The differences in the amounts awarded to the named executive
officers were primarily the result of differences in the officers level of
responsibility and the applicable market level of total cash compensation
expected to be paid to similarly situated officers in the Comparator Group. The
increase in Mr. Crutchers bonus for 2011 as compared to 2010 reflects his first
full year at his current level of responsibility. The bonus of each named
executive officer was paid under the Executive Officer Performance Plan
described on pages 78 and 81.
Results of the compensation
decisions
Results of the compensation
decisions made by the committee relating to the named executive officers for
2011 are summarized in the following table. This table is provided as a
supplement to the summary compensation table on page 79 for investors who may
find it useful to see the data presented in this form. Although the committee
does not target a specific level of total compensation, it considers information
similar to that in the table to ensure that the sum of these elements is, in its
judgment, in a reasonable range. The principal differences between this table
and the summary compensation table are explained in footnote 3
below.
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation
|
|
|
|
|
|
|
|
|
Salary
|
|
|
|
|
|
|
|
|
|
(Grant Date
|
|
|
|
|
Officer
|
|
Year
|
|
(Annual Rate)
|
|
Profit
Sharing
|
|
Bonus
|
|
Fair Value)
|
|
Total
|
Mr. Templeton
|
|
2011
|
|
$
|
990,087
|
|
|
$
|
78,118
|
|
|
$
|
2,700,000
|
|
|
$
|
9,883,575
|
|
|
$
|
13,651,780
|
|
|
|
2010
|
|
$
|
990,087
|
|
|
$
|
171,094
|
|
|
$
|
3,000,000
|
|
|
$
|
7,715,066
|
|
|
$
|
11,876,247
|
|
|
|
2009
|
|
$
|
963,120
|
|
|
$
|
63,084
|
|
|
$
|
1,725,000
|
|
|
$
|
6,919,254
|
|
|
$
|
9,670,458
|
|
|
|
Mr. March
|
|
2011
|
|
$
|
565,008
|
|
|
$
|
44,349
|
|
|
$
|
875,000
|
|
|
$
|
3,020,004
|
|
|
$
|
4,504,361
|
|
|
|
2010
|
|
$
|
530,004
|
|
|
$
|
90,858
|
|
|
$
|
975,000
|
|
|
$
|
2,303,828
|
|
|
$
|
3,899,690
|
|
|
|
2009
|
|
$
|
465,000
|
|
|
$
|
30,458
|
|
|
$
|
575,000
|
|
|
$
|
1,978,543
|
|
|
$
|
3,049,001
|
|
|
|
Mr. Lowe
|
|
2011
|
|
$
|
600,000
|
|
|
$
|
47,176
|
|
|
$
|
1,225,000
|
|
|
$
|
4,063,259
|
|
|
$
|
5,935,435
|
|
|
|
2010
|
|
$
|
575,004
|
|
|
$
|
99,014
|
|
|
$
|
1,350,000
|
|
|
$
|
3,964,709
|
|
|
$
|
5,988,727
|
|
|
|
2009
|
|
$
|
535,020
|
|
|
$
|
35,044
|
|
|
$
|
775,000
|
|
|
$
|
2,915,743
|
|
|
$
|
4,260,807
|
|
|
|
Mr. Ritchie
|
|
2011
|
|
$
|
550,020
|
|
|
$
|
42,873
|
|
|
$
|
1,000,000
|
|
|
$
|
3,569,080
|
|
|
$
|
5,161,973
|
|
|
|
2010
|
|
$
|
470,400
|
|
|
$
|
81,151
|
|
|
$
|
1,100,000
|
|
|
$
|
2,678,865
|
|
|
$
|
4,330,416
|
|
|
|
2009
|
|
$
|
448,080
|
|
|
$
|
29,349
|
|
|
$
|
600,000
|
|
|
$
|
2,603,343
|
|
|
$
|
3,680,772
|
|
|
|
Mr. Crutcher
|
|
2011
|
|
$
|
485,004
|
|
|
$
|
37,873
|
|
|
$
|
925,000
|
|
|
$
|
3,569,080
|
|
|
$
|
5,016,957
|
|
|
|
2010
|
|
$
|
425,040
|
|
|
$
|
62,508
|
|
|
$
|
750,000
|
|
|
$
|
4,641,074
|
|
|
$
|
5,878,622
|
|
For Mr. Lowe, the Total is about
even for 2011 as compared to 2010. For Mr. Crutcher, the Total is lower for
2011 due to the restricted stock unit award he received in September 2010, when
he became an executive officer (reflected on pages 72 and 83). For the other
named executive officers, including Mr. Templeton, the Total was higher for
2011 due to the higher grant date fair value of their equity
compensation.
____________________
3
|
|
This table shows
the annual rate of base salary as set by the committee. In the summary
compensation table, the Salary column shows the actual salary paid in
the year. This table has separate columns for profit sharing and bonus. In
the summary compensation table, profit sharing and bonus are aggregated in
the column for Non-Equity Incentive Plan Compensation, in accordance
with SEC requirements. Please see notes 3 and 4 to the summary
compensation table for information about how grant date fair value was
calculated.
|
|
TEXAS INSTRUMENTS
|
2012
PROXY STATEMENT
n
75
|
The compensation decisions shown
above resulted in the following 2011 compensation mix for the named executive
officers:
*
|
Average data for the named
executive officers other than Mr. Templeton. Totals may not equal 100
percent, due to rounding.
|
Equity
dilution
The Compensation Committees
goal is to keep net annual dilution from equity compensation under 2 percent.
Net annual dilution means the number of shares under equity awards granted by
the committee each year to all employees (net of award forfeitures) as a
percentage of the shares of the companys outstanding common stock. Equity
awards granted in 2011 under the companys equity-compensation program resulted
in 0 percent net annual dilution.
Process for equity
grants
The Compensation Committee
makes grant decisions for equity compensation at its January meeting each year.
The dates on which these meetings occur are generally set three years in
advance. The January meetings of the board and the committee generally occur in
the week or two before we announce our financial results for the previous
quarter and year.
On occasion, the committee may grant stock options or restricted stock
units to executives at times other than January. For example, it has done so in
connection with job promotions and for purposes of retention.
We do not back-date stock options or restricted stock
units. We do not accelerate or delay the release of information due to plans for
making equity grants.
Under
the committees policy, if the committee meeting falls in the same month as the
release of the companys financial results, the grants approved at the meeting
will be made effective on the later of (i) the meeting day or (ii) the third
trading day after the release of results. Otherwise they will be made effective
on the day of committee action. The exercise price of stock options is the
closing price of TI stock on the effective date of the grant.
Recoupment
policy
The committee has a policy
concerning recoupment (clawback) of executive bonuses and equity compensation.
Under the policy, in the event of a material restatement of TIs financial
results due to misconduct, the committee will review the facts and circumstances
and take the actions it considers appropriate with respect to the compensation
of any executive officer whose fraud or willful misconduct contributed to the
need for such restatement. Such action may include (a) seeking reimbursement of
any bonus paid to such officer exceeding the amount that, in the judgment of the
committee, would have been paid had the financial results been properly reported
and (b) seeking to recover profits received by such officer during the twelve
months after the restated period under equity compensation awards. All
determinations by the committee with respect to this policy are final and
binding on all interested parties.
Most recent stockholder advisory
vote on executive compensation
In
April 2011, our shareholders cast an advisory vote on the companys executive
compensation decisions and policies as disclosed in the proxy statement issued
by the company in March 2011. Approximately 96 percent of the shares voted on
the matter were cast in support of the compensation decisions and policies as
disclosed. The committee considered this result and determined that it was not
necessary at this time to make any material changes to the companys
compensation policies and practices in response to the advisory vote.
76
n
2012
PROXY
STATEMENT
|
TEXAS INSTRUMENTS
|
Benefits
Reflecting the companys culture of respect and value for
all employees, the financial and health benefits received by executive officers
are the same as those received by other U.S. employees except for the few
benefits described under the sub-heading Other Benefits in the last paragraph of
this section.
Retirement
plans
The executive officers
participate in our retirement plans under the same rules that apply to other
U.S. employees. We maintain these plans to have a competitive benefits program
and for retention.
Like other established U.S. manufacturers, we have had a U.S. qualified
defined benefit pension plan for many years. At its origin, the plan was
designed to be consistent with those offered by other employers in the diverse
markets in which we operated, which at the time included consumer and defense
electronics as well as semiconductors and materials products. In order to limit
the cost of the plan, we closed the plan to new participants in 1997. We gave
U.S. employees as of November 1997 the choice to remain in the plan, or to have
their plan benefits frozen (i.e., no benefit increase attributable to years of
service or change in eligible earnings) and begin participating in an enhanced
defined contribution plan. Mr. Templeton and Mr. Crutcher chose not to remain in
the defined benefit plan. As a result, their benefits under that plan were
frozen in 1997 and they participate in the enhanced defined contribution plan.
The other named executive officers have continued their participation in the
defined benefit pension plan.
The Internal Revenue Code (IRC) imposes certain limits on the retirement
benefits that may be provided under a qualified plan. To maintain the desired
level of benefits, we have non-qualified defined benefit pension plans for
participants in the qualified pension plan. Under the non-qualified plans,
participants receive benefits that would ordinarily be paid under the qualified
pension plan but for the limitations under the IRC. For additional information
about the defined benefit plans, please see pages 85-87.
Employees accruing benefits in the qualified pension
plan, including the named executive officers other than Mr. Templeton and Mr.
Crutcher, also are eligible to participate in a qualified defined contribution
plan that provides employer matching contributions. The enhanced defined
contribution plan, in which Mr. Templeton and Mr. Crutcher participate, provides
for a fixed employer contribution plus an employer matching
contribution.
In general, if an employee who participates in the pension plan
(including an employee whose benefits are frozen as described above) dies after
having met the requirements for normal or early retirement, his or her
beneficiary will receive a benefit equal to the lump-sum amount that the
participant would have received if he or she had retired before death. In 2011,
having reached the age of 55 with at least 20 years of employment, Mr. Ritchie
met the requirements for early retirement under the pension plans. None of the
other named executive officers was retirement-eligible under the plans.
Because benefits under the qualified and non-qualified
defined benefit pension plans are calculated on the basis of eligible earnings
(salary and bonus), an increase in salary or bonus may result in an increase in
benefits under the plans. Salary or bonus increases for Mr. Templeton and Mr.
Crutcher do not result in greater benefits for them under the companys defined
benefit pension plans because their benefits under those plans were frozen in
1997. The committee considers the potential effect on the executives retirement
benefits when it sets salary and performance bonus levels.
Deferred
compensation
Any U.S. employee whose
base salary and management responsibility exceed a certain level may defer the
receipt of a portion of his or her salary, bonus and profit sharing. Rules of
the U.S. Department of Labor require that this plan be limited to a select group
of management or highly compensated employees. The plan allows employees to
defer the receipt of their compensation in a tax-efficient manner. Eligible
employees include, but are not limited to, the executive officers. We have the
plan to be competitive with the benefits packages offered by other
companies.
The executive officers deferred compensation account balances are
unsecured and all amounts remain part of the companys operating assets. The
value of the deferred amounts tracks the performance of investment alternatives
selected by the participant. These alternatives are a subset of those offered to
participants in the defined contribution plans described above. The company does
not guarantee any minimum return on the amounts deferred. In accordance with SEC
rules, no earnings on deferred compensation are shown in the summary
compensation table on page 79 for 2011 because no above-market rates were
earned on deferred amounts in 2011.
Employee stock purchase
plan
Our shareholders approved the TI
Employees 2005 Stock Purchase Plan in April 2005. Under the plan, all employees
in the U.S. and certain other countries may purchase a limited number of shares
of the companys common stock at a 15 percent discount. The plan is designed to
offer the broad-based employee population an opportunity to acquire an equity
interest in the company and thereby align their interests with those of
shareholders. Consistent with our general approach to benefit programs,
executive officers are also eligible to participate.
TEXAS INSTRUMENTS
|
2012 PROXY STATEMENT
n
77
|
Health-related
benefits
Executive officers are
eligible under the same plans as all other U.S. employees for medical, dental,
vision, disability and life insurance. These benefits are intended to be
competitive with benefits offered in the semiconductor industry.
Other benefits
Executive officers receive only a few benefits that are
not available to all other U.S. employees. Specifically, we promote sustained
good health by providing a company-paid physical for each executive officer, and
we encourage effective long-term financial planning by providing financial
counseling up to $8,000 per year for the CEO and $7,000 per year for the other
executive officers. The board of directors has determined that for security
reasons, it is in the companys interest to require the CEO to use company
aircraft for personal air travel. The company provides no tax gross-ups for
perquisites to any of the executive officers.
Compensation following employment
termination or change in control
None
of the executive officers has an employment contract. Executive officers are
eligible for benefits on the same terms as other U.S. employees upon termination
of employment or a change in control of the company. The current programs are
described under the heading Potential Payments upon Termination or Change in
Control beginning on page 88. None of the few additional benefits that the
executive officers receive continue after termination of employment, except the
amount described above for financial counseling is provided in the following
year in the event of retirement. The committee reviews the potential impact of
these programs before finalizing the annual compensation for the named executive
officers. The committee did not raise or lower compensation for 2011 based on
this review.
The Texas Instruments 2009 Long-Term Incentive Plan generally establishes
double-trigger change-in-control terms for grants made in 2010 and later years.
Under those terms, options become fully exercisable and shares are issued under
restricted stock unit awards (to the extent permitted by Section 409A of the
IRC) if the grantee is involuntarily terminated within 24 months after a change
in control of TI. These terms are intended to encourage employees to remain with
the company through a transaction while reducing employee uncertainty and
distraction in the period leading up to any such event.
Stock ownership guidelines and
policy against hedging
Our board of
directors has established stock ownership guidelines for executive officers. The
guideline for the CEO is four times base salary or 125,000 shares, whichever is
less. The guideline for other executive officers is three times base salary or
25,000 shares, whichever is less. Executive officers have five years from their
election as executive officers to reach these targets. Directly owned shares and
restricted stock units count toward satisfying the
guidelines.
Short sales of TI stock by our executive officers are prohibited. It is
against TI policy for any employee, including an executive officer, to engage in
trading in puts (options to sell at a fixed price on or before a certain
date), calls (similar options to buy), or other options or hedging techniques
on TI stock.
Consideration of tax and
accounting treatment of compensation
Section 162(m) of the IRC generally denies a deduction to any publicly
held corporation for compensation paid in a taxable year to the companys CEO
and four other highest compensated officers to the extent that the officers
compensation (other than qualified performance-based compensation) exceeds $1
million. The Compensation Committee considers the impact of this deductibility
limit on the compensation that it intends to award. The committee exercises its
discretion to award compensation that does not meet the requirements of Section
162(m) when applying the limits of Section 162(m) would frustrate or be
inconsistent with our compensation policies and/or when the value of the
foregone deduction would not be material. The committee has exercised this
discretion when awarding restricted stock units that vest over time, without
performance conditions to vesting. The committee believes it is in the best
interest of the company and its shareholders that restricted stock unit awards
provide for the retention of our executive officers in all market
conditions.
The Texas Instruments Executive Officer Performance Plan is intended to
ensure that performance bonuses under the plan are fully tax deductible under
Section 162(m). The plan, which shareholders approved in 2002, is further
described on page 81. The committees general policy is to award bonuses within
the plan, although the committee reserves the discretion to pay a bonus outside
the plan if it determines that it is in our shareholders best interest to do
so. The committee set the bonuses of the named executive officers for 2011
performance at the levels described on page 75. The bonuses were awarded within
the plan.
When setting equity compensation, the committee considers the estimated
cost for financial reporting purposes of equity compensation it intends to
grant. Its consideration of the estimated cost of grants made in 2011 is
discussed on pages 72-73 above.
78
n
2012 PROXY STATEMENT
|
TEXAS INSTRUMENTS
|
Compensation Committee
report
The Compensation Committee of
the board of directors has furnished the following
report:
The
committee has reviewed and discussed the Compensation Discussion and Analysis
(CD&A) with the companys management. Based on that review and discussion,
the committee has recommended to the board of directors that the CD&A be
included in the companys Annual Report on Form 10-K for 2011 and the companys
proxy statement for the 2012 annual meeting of stockholders.
Carrie S. Cox, Chair
|
|
Ruth J.
Simmons
|
2011 summary compensation
table
The table below shows the
compensation of the companys chief executive officer, chief financial officer
and each of the other three most highly compensated individuals who were
executive officers during 2011 (collectively called the named executive
officers) for services in all capacities to the company in 2011. For a
discussion of the amount of a named executive officers salary and bonus in
proportion to his total compensation, please see the Compensation Discussion and
Analysis on pages 68-78.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Non-qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Deferred
|
|
All Other
|
|
|
|
Name and
Principal
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
|
|
Position
|
|
Year
|
|
($)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
Earnings
($)(6)
|
|
($)(7)
|
|
Total ($)
|
Richard K. Templeton
|
|
2011
|
|
$
|
990,087
|
|
|
|
$
|
5,194,500
|
|
$
|
4,689,075
|
|
$
|
2,778,118
|
|
$
|
149,704
|
|
|
$
|
254,283
|
|
|
$
|
14,055,767
|
Chairman, President
|
|
2010
|
|
$
|
987,840
|
|
|
|
$
|
4,149,000
|
|
$
|
3,566,066
|
|
$
|
3,171,094
|
|
$
|
98,899
|
|
|
$
|
240,521
|
|
|
$
|
12,213,420
|
& Chief Executive
Officer
|
|
2009
|
|
$
|
963,120
|
|
|
|
$
|
3,311,231
|
|
$
|
3,608,023
|
|
$
|
1,788,084
|
|
$
|
49,566
|
|
|
$
|
145,633
|
|
|
$
|
9,865,657
|
|
Kevin P. March
|
|
2011
|
|
$
|
562,091
|
|
|
|
$
|
1,587,231
|
|
$
|
1,432,773
|
|
$
|
919,349
|
|
$
|
896,326
|
|
|
$
|
39,925
|
|
|
$
|
5,437,695
|
Senior Vice President
|
|
2010
|
|
$
|
524,587
|
|
|
|
$
|
1,238,961
|
|
$
|
1,064,867
|
|
$
|
1,065,858
|
|
$
|
558,705
|
|
|
$
|
19,995
|
|
|
$
|
4,472,973
|
& Chief Financial
Officer
|
|
2009
|
|
$
|
465,000
|
|
|
|
$
|
946,843
|
|
$
|
1,031,700
|
|
$
|
605,458
|
|
$
|
327,928
|
|
|
$
|
20,646
|
|
|
$
|
3,397,575
|
|
Gregg A. Lowe
|
|
2011
|
|
$
|
597,917
|
|
|
|
$
|
2,135,528
|
|
$
|
1,927,731
|
|
$
|
1,272,176
|
|
$
|
1,029,655
|
|
|
$
|
10,313
|
|
|
$
|
6,973,320
|
Senior Vice President
|
|
2010
|
|
$
|
571,672
|
|
|
|
$
|
2,132,148
|
|
$
|
1,832,561
|
|
$
|
1,449,014
|
|
$
|
596,660
|
|
|
$
|
15,927
|
|
|
$
|
6,597,982
|
|
|
2009
|
|
$
|
535,020
|
|
|
|
$
|
1,395,343
|
|
$
|
1,520,400
|
|
$
|
810,044
|
|
$
|
378,384
|
|
|
$
|
15,693
|
|
|
$
|
4,654,884
|
|
Kevin J. Ritchie
|
|
2011
|
|
$
|
543,385
|
|
|
|
$
|
1,875,803
|
|
$
|
1,693,277
|
|
$
|
1,042,873
|
|
$
|
1,143,408
|
|
|
$
|
13,855
|
|
|
$
|
6,312,601
|
Senior Vice President
|
|
2010
|
|
$
|
468,540
|
|
|
|
$
|
1,440,648
|
|
$
|
1,238,217
|
|
$
|
1,181,151
|
|
$
|
630,532
|
|
|
$
|
13,520
|
|
|
$
|
4,972,608
|
|
|
2009
|
|
$
|
448,080
|
|
|
|
$
|
1,245,843
|
|
$
|
1,357,500
|
|
$
|
629,349
|
|
$
|
418,897
|
|
|
$
|
11,506
|
|
|
$
|
4,111,175
|
|
Brian T. Crutcher (1)
|
|
2011
|
|
$
|
480,007
|
|
|
|
$
|
1,875,803
|
|
$
|
1,693,277
|
|
$
|
962,873
|
|
$
|
696
|
|
|
$
|
49,540
|
|
|
$
|
5,062,196
|
Senior Vice President
|
|
2010
|
|
$
|
360,903
|
|
|
|
$
|
3,650,500
|
|
$
|
990,574
|
|
$
|
812,508
|
|
$
|
402
|
|
|
$
|
30,468
|
|
|
$
|
5,845,355
|
(1)
|
|
Mr. Crutcher
became an executive officer in 2010.
|
|
(2)
|
|
Performance
bonuses for 2011 were paid under the Texas Instruments Executive Officer
Performance Plan. In accordance with SEC requirements, these amounts are
reported in the Non-Equity Incentive Plan Compensation
column.
|
|
(3)
|
|
Shown is the
aggregate grant date fair value of restricted stock unit (RSU) awards
calculated in accordance with ASC 718. The discussion of the assumptions
used for purposes of the valuation of the awards granted in 2011 appears
in note 5 of Exhibit 13 to TIs annual report on Form 10-K for the year
ended December 31, 2011. For a description of the grant terms, please see
pages 84-85. The discussion of the assumptions used for purposes of the
valuation of the awards granted in 2010 and 2009 appears respectively in
Exhibit 13 to TIs annual report on Form 10-K for the year ended December
31, 2010 (pages 11-14), and to TIs annual report on Form 10-K for the
year ended December 31, 2009 (pages 12-15).
|
|
(4)
|
|
Shown is the
aggregate grant date fair value of options calculated in accordance with
ASC 718. The discussion of the assumptions used for purposes of the
valuation of options granted in 2011 appears in note 5 of Exhibit 13 to
TIs annual report on Form 10-K for the year ended December 31, 2011. For
a description of the grant terms, please see page 84. The discussion of the
assumptions used for purposes of the valuation of the awards granted in
2010 and 2009 appears respectively in Exhibit 13 to TIs annual report on
Form 10-K for the year ended December 31, 2010 (pages 11-14), and to TIs
annual report on Form 10-K for the year ended December 31, 2009 (pages
12-15).
|
TEXAS INSTRUMENTS
|
2012
PROXY STATEMENT
n
79
|
(5)
|
|
Consists of
performance bonus and profit sharing for 2011. Please see page 75 of the
Compensation Discussion and Analysis for the amounts of bonus and profit
sharing paid to each of the named executive officers for
2011.
|
|
(6)
|
|
The company does
not pay above-market earnings on deferred compensation. Therefore, no
amounts are reported in this column for deferred compensation. The amounts
in this column represent the change in the actuarial value of the named
executive officers benefits under the qualified defined benefit pension
plan (TI Employees Pension Plan) and the non-qualified defined benefit
pension plans (TI Employees Non-Qualified Pension Plan and TI Employees
Non-Qualified Pension Plan II) from December 31, 2010, through December
31, 2011. This change in the actuarial value is the difference between
the 2010 and 2011 present value of the pension benefit accumulated as of
year-end by the named executive officer, assuming that benefit is not paid
until age 65. Mr. Templetons and Mr. Crutchers benefits under the
companys pension plans were frozen as of December 31, 1997.
|
|
(7)
|
|
In the interest
of transparency, the value of perquisites and other personal benefits is
provided in this column even if the amount is less than the reporting
threshold established by the SEC. The table below shows the value of
perquisites and other benefits for 2011.
|
|
|
|
|
|
|
|
|
Defined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution
|
|
Unused
|
|
Personal Use
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k)
|
|
Retirement
|
|
Vacation
|
|
of Company
|
|
Financial
|
|
Executive
|
Name
|
|
Insurance
|
|
Contribution
|
|
Plan (a)
|
|
Time (b)
|
|
Aircraft (c)
|
|
Counseling
|
|
Physical
|
R. K. Templeton
|
|
$250
|
|
$
|
9,800
|
|
|
$
|
86,502
|
|
|
$
|
26,275
|
|
$
|
123,456
|
|
|
$
|
8,000
|
|
|
|
|
|
K. P.
March
|
|
$250
|
|
$
|
4,900
|
|
|
|
N/A
|
|
|
$
|
31,647
|
|
|
|
|
|
$
|
629
|
|
|
$
|
2,499
|
|
G. A. Lowe
|
|
$250
|
|
$
|
4,900
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
$
|
5,163
|
|
|
|
|
|
K. J.
Ritchie
|
|
$250
|
|
$
|
4,900
|
|
|
|
N/A
|
|
|
$
|
7,056
|
|
|
|
|
|
$
|
1,649
|
|
|
|
|
|
B. T. Crutcher
|
|
$250
|
|
$
|
9,800
|
|
|
$
|
32,068
|
|
|
|
|
|
|
|
|
|
$
|
4,641
|
|
|
$
|
2,781
|
|
(a)
|
|
Consists of (i)
contributions under the companys enhanced defined contribution retirement
plan of $4,900, and (ii) an additional amount of $81,602 for Mr. Templeton
and $27,168 for Mr. Crutcher accrued by TI to offset IRC limitations on
amounts that could be contributed to the enhanced defined contribution
retirement plan, which amount is also shown in the Non-qualified Deferred
Compensation table on page 87.
|
|
(b)
|
|
Represents
payments for unused vacation time that could not be carried
forward.
|
|
(c)
|
|
The board of
directors has determined that for security reasons, it is in TIs interest
to require the chief executive officer to use the company aircraft for
personal air travel. The amount shown for Mr. Templeton is the incremental
cost of his personal use of aircraft. We valued this incremental cost
using a method that takes into account: landing, parking and flight
planning services expenses; crew travel expenses; supplies and catering
expenses; aircraft fuel and oil expenses per hour of flight;
communications costs; a portion of ongoing maintenance; and any customs,
foreign permit and similar fees. Because company aircraft are primarily
used for business travel, this methodology excludes the fixed costs, which
do not change based on usage, such as pilots salaries and the lease cost
of the company aircraft.
|
80
n
2012 PROXY STATEMENT
|
TEXAS INSTRUMENTS
|
Grants of plan-based awards in
2011
The following table shows the grants
of plan-based awards to the named executive officers in 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
or Base
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
Estimated Future Payouts
|
|
Number of
|
|
Number of
|
|
Price of
|
|
Grant Date
|
|
|
|
|
|
|
under Non-Equity Incentive
|
|
under Equity Incentive
|
|
Shares of
|
|
Securities
|
|
Option
|
|
Fair Value
|
|
|
|
|
Date of
|
|
Plan
Awards
|
|
Plan
Awards
|
|
Stock or
|
|
Underlying
|
|
Awards
|
|
of Stock
|
|
|
Grant
|
|
Committee
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
($/Sh)
|
|
and Option
|
Name
|
|
Date
|
|
Action
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)(2)
|
|
(#)(3)
|
|
(4)
|
|
Awards
(5)
|
R. K. Templeton
|
|
1/27/11 (1)
|
|
1/20/11
|
|
*
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
450,000
|
|
$
|
34.63
|
|
$
|
4,689,075
|
|
|
|
1/27/11 (1)
|
|
1/20/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
$
|
5,194,500
|
|
K. P.
March
|
|
1/27/11 (1)
|
|
1/20/11
|
|
*
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
137,500
|
|
$
|
34.63
|
|
$
|
1,432,773
|
|
|
|
1/27/11 (1)
|
|
1/20/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,834
|
|
|
|
|
|
|
$
|
1,587,231
|
|
G. A. Lowe
|
|
1/27/11 (1)
|
|
1/20/11
|
|
*
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
185,000
|
|
$
|
34.63
|
|
$
|
1,927,731
|
|
|
|
1/27/11 (1)
|
|
1/20/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,667
|
|
|
|
|
|
|
$
|
2,135,528
|
|
K. J.
Ritchie
|
|
1/27/11 (1)
|
|
1/20/11
|
|
*
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
162,500
|
|
$
|
34.63
|
|
$
|
1,693,277
|
|
|
|
1/27/11 (1)
|
|
1/20/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,167
|
|
|
|
|
|
|
$
|
1,875,803
|
|
B. T. Crutcher
|
|
1/27/11 (1)
|
|
1/20/11
|
|
*
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
162,500
|
|
$
|
34.63
|
|
$
|
1,693,277
|
|
|
|
1/27/11 (1)
|
|
1/20/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,167
|
|
|
|
|
|
|
$
|
1,875,803
|
|
*
|
|
TI did
not use formulas or pre-set thresholds or multiples to determine incentive
awards. Under the terms of the Executive Officer Performance Plan, each
named executive officer is eligible to receive a cash bonus equal to 0.5
percent of the companys consolidated income (as defined in the plan).
However, the Compensation Committee has the discretion to set bonuses at a
lower level if it decides it is appropriate to do so. The committee
decided to do so for 2011.
|
|
|
|
(1)
|
|
In accordance
with the grant policy of the Compensation Committee of the board
(described on page 76), the grants became effective on the third trading
day after the company released its financial results for the fourth
quarter and year 2010. The company released these results on January 24,
2011.
|
|
(2)
|
|
The stock awards
granted to the named executive officers in 2011 were RSU awards. These
awards were made under the companys 2009 Long-Term Incentive Plan. For
information on the terms and conditions of these RSU awards, please see
the discussion beginning on page 84.
|
|
(3)
|
|
The options were
granted under the companys 2009 Long-Term Incentive Plan. For information
on the terms and conditions of these options, please see the discussion on
page 84.
|
|
(4)
|
|
The exercise
price of the options is the closing price of TI common stock on January
27, 2011.
|
|
(5)
|
|
Shown is the
aggregate grant date fair value computed in accordance with ASC 718 for
stock and option awards in 2011. The discussion of the assumptions used
for purposes of the valuation appears in note 5 of Exhibit 13 to TIs
annual report on Form 10-K for the year ended December 31,
2011.
|
None of
the options or other equity awards granted to the named executive officers was
repriced or modified by the company.
For additional information regarding
TIs equity compensation grant practices, please see the Compensation Discussion
and Analysis on pages 70, 72-73 and 76.
TEXAS INSTRUMENTS
|
2012
PROXY STATEMENT
n
81
|
Outstanding equity awards at
fiscal year-end 2011
The following table shows the
outstanding equity awards for each of the named executive officers as of
December 31, 2011.
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Equity
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Incentive
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Plan Awards:
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Market or
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
Payout Value
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Market Value
|
|
Shares,
|
|
of Unearned
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
Number of
|
|
of Shares or
|
|
Units or
|
|
Shares, Units
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
Shares or
|
|
Units of Stock
|
|
Other
|
|
or Other
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Units of Stock
|
|
That Have Not
|
|
Rights That
|
|
Rights That
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
That Have Not
|
|
Vested
|
|
Have Not
|
|
Have Not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
($)(1)
|
|
Vested (#)
|
|
Vested
($)
|
R. K. Templeton
|
|
|
|
450,000
|
(2)
|
|
|
|
$
|
34.63
|
|
|
1/27/2021
|
|
150,000
|
(6)
|
|
$
|
4,366,500
|
|
|
|
|
|
|
|
135,000
|
|
405,000
|
(3)
|
|
|
|
$
|
23.05
|
|
|
1/28/2020
|
|
180,000
|
(7)
|
|
$
|
5,239,800
|
|
|
|
|
|
|
|
332,230
|
|
332,231
|
(4)
|
|
|
|
$
|
14.95
|
|
|
1/29/2019
|
|
221,487
|
(8)
|
|
$
|
6,447,487
|
|
|
|
|
|
|
|
202,500
|
|
67,500
|
(5)
|
|
|
|
$
|
29.79
|
|
|
1/25/2018
|
|
150,000
|
(9)
|
|
$
|
4,366,500
|
|
|
|
|
|
|
|
270,000
|
|
|
|
|
|
|
$
|
28.32
|
|
|
1/18/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
|
|
|
|
$
|
32.55
|
|
|
1/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
$
|
21.55
|
|
|
1/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700,000
|
|
|
|
|
|
|
$
|
32.39
|
|
|
1/14/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
375,000
|
|
|
|
|
|
|
$
|
16.25
|
|
|
2/20/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
625,000
|
|
|
|
|
|
|
$
|
16.11
|
|
|
1/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
K. P. March
|
|
|
|
137,500
|
(2)
|
|
|
|
$
|
34.63
|
|
|
1/27/2021
|
|
45,834
|
(6)
|
|
$
|
1,334,228
|
|
|
|
|
|
|
|
40,312
|
|
120,938
|
(3)
|
|
|
|
$
|
23.05
|
|
|
1/28/2020
|
|
53,751
|
(7)
|
|
$
|
1,564,692
|
|
|
|
|
|
|
|
95,000
|
|
95,000
|
(4)
|
|
|
|
$
|
14.95
|
|
|
1/29/2019
|
|
63,334
|
(8)
|
|
$
|
1,843,653
|
|
|
|
|
|
|
|
63,750
|
|
21,250
|
(5)
|
|
|
|
$
|
29.79
|
|
|
1/25/2018
|
|
35,000
|
(9)
|
|
$
|
1,018,850
|
|
|
|
|
|
|
|
85,000
|
|
|
|
|
|
|
$
|
28.32
|
|
|
1/18/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,000
|
|
|
|
|
|
|
$
|
32.55
|
|
|
1/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
|
|
|
|
$
|
21.55
|
|
|
1/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
|
|
|
|
$
|
32.39
|
|
|
1/14/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
G. A. Lowe
|
|
|
|
185,000
|
(2)
|
|
|
|
$
|
34.63
|
|
|
1/27/2021
|
|
61,667
|
(6)
|
|
$
|
1,795,126
|
|
|
|
|
|
|
|
69,375
|
|
208,125
|
(3)
|
|
|
|
$
|
23.05
|
|
|
1/28/2020
|
|
92,501
|
(7)
|
|
$
|
2,692,704
|
|
|
|
|
|
|
|
70,000
|
|
140,000
|
(4)
|
|
|
|
$
|
14.95
|
|
|
1/29/2019
|
|
93,334
|
(8)
|
|
$
|
2,716,953
|
|
|
|
|
|
|
|
75,000
|
|
25,000
|
(5)
|
|
|
|
$
|
29.79
|
|
|
1/25/2018
|
|
60,000
|
(9)
|
|
$
|
1,746,600
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
$
|
28.32
|
|
|
1/18/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
$
|
32.55
|
|
|
1/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
$
|
21.55
|
|
|
1/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
$
|
32.39
|
|
|
1/14/2014
|
|
|
|
|
|
|
|
|
|
|
|
82
n
2012 PROXY STATEMENT
|
TEXAS INSTRUMENTS
|
Outstanding equity awards at
fiscal year-end 2011 (contd)
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Equity
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Incentive
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Plan Awards:
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Market or
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
Payout Value
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Market Value
|
|
Shares,
|
|
of Unearned
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
Number of
|
|
of Shares or
|
|
Units or
|
|
Shares, Units
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
Shares or
|
|
Units of Stock
|
|
Other
|
|
or Other
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Units of Stock
|
|
That Have Not
|
|
Rights That
|
|
Rights That
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
That Have Not
|
|
Vested
|
|
Have Not
|
|
Have Not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
($)(1)
|
|
Vested (#)
|
|
Vested
($)
|
K. J. Ritchie
|
|
|
|
162,500
|
(2)
|
|
|
|
$
|
34.63
|
|
|
1/27/2021
|
|
54,167
|
(6)
|
|
$
|
1,576,801
|
|
|
|
|
|
|
|
46,875
|
|
140,625
|
(3)
|
|
|
|
$
|
23.05
|
|
|
1/28/2020
|
|
62,501
|
(7)
|
|
$
|
1,819,404
|
|
|
|
|
|
|
|
125,000
|
|
125,000
|
(4)
|
|
|
|
$
|
14.95
|
|
|
1/29/2019
|
|
83,334
|
(8)
|
|
$
|
2,425,853
|
|
|
|
|
|
|
|
75,000
|
|
25,000
|
(5)
|
|
|
|
$
|
29.79
|
|
|
1/25/2018
|
|
50,000
|
(9)
|
|
$
|
1,455,500
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
$
|
28.32
|
|
|
1/18/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
$
|
32.55
|
|
|
1/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
$
|
21.55
|
|
|
1/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
$
|
32.39
|
|
|
1/14/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
|
|
|
|
$
|
29.19
|
|
|
2/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
B. T. Crutcher
|
|
|
|
162,500
|
(2)
|
|
|
|
$
|
34.63
|
|
|
1/27/2021
|
|
54,167
|
(6)
|
|
$
|
1,576,801
|
|
|
|
|
|
|
|
37,500
|
|
112,500
|
(3)
|
|
|
|
$
|
23.05
|
|
|
1/28/2020
|
|
50,000
|
(7)
|
|
$
|
1,455,500
|
|
|
|
|
|
|
|
|
|
50,000
|
(4)
|
|
|
|
$
|
14.95
|
|
|
1/29/2019
|
|
33,334
|
(8)
|
|
$
|
970,353
|
|
|
|
|
|
|
|
22,500
|
|
7,500
|
(5)
|
|
|
|
$
|
29.79
|
|
|
1/25/2018
|
|
20,000
|
(9)
|
|
$
|
582,200
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
$
|
28.32
|
|
|
1/18/2017
|
|
100,000
|
(10)
|
|
$
|
2,911,000
|
|
|
|
|
|
|
|
8,000
|
|
|
|
|
|
|
$
|
32.55
|
|
|
1/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated by
multiplying the number of RSUs by the closing price of TIs common stock
on December 31, 2011 ($29.11).
|
|
(2)
|
|
One-quarter of
the shares became exercisable on January 27, 2012, and one-third of the
remaining shares become exercisable on each of January 27, 2013, January
27, 2014, and January 27, 2015.
|
|
(3)
|
|
One-third of the
shares became exercisable on January 28, 2012, and one-half of the
remaining shares become exercisable on each of January 28, 2013, and
January 28, 2014.
|
|
(4)
|
|
One-half of the
shares became exercisable on January 29, 2012, and the remaining one-half
become exercisable on January 29, 2013.
|
|
(5)
|
|
Became fully
exercisable on January 25, 2012.
|
|
(6)
|
|
Vesting date is
January 30, 2015.
|
|
(7)
|
|
Vesting date is
January 31, 2014.
|
|
(8)
|
|
Vesting date is
January 31, 2013.
|
|
(9)
|
|
Vested on January
31, 2012.
|
|
(10)
|
|
Vesting date is
October 31, 2014.
|
TEXAS INSTRUMENTS
|
2012
PROXY STATEMENT
n
83
|
The
Option Awards
shown in the table
above are non-qualified stock options, each of which represents the right to
purchase shares of TI common stock at the stated exercise price. For grants
before 2007, the exercise price is the average of the high and low price of TI
common stock on the grant date. For grants after 2006, the exercise price is the
closing price of TI common stock on the grant date. The term of each option is
10 years unless the option is terminated earlier pursuant to provisions
summarized in the chart below and in the paragraph following the chart. Options
vest (become exercisable) in increments of 25 percent per year beginning on the
first anniversary of the date of the grant. The chart below shows the
termination provisions relating to outstanding stock options as of December 31,
2011. The Compensation Committee of the board of directors established these
termination provisions to promote employee retention while offering competitive
terms.
|
|
Employment
|
|
Employment Termination
|
|
|
|
|
Employment
|
|
Termination (at Least
|
|
(at Least 6 Months after Grant)
|
|
|
|
Other
|
Termination Due to
|
|
6 Months after Grant)
|
|
with 20 Years of Credited
|
|
Employment
|
|
Circumstances
|
Death or Permanent
|
|
When Retirement
|
|
Service, but Not Retirement
|
|
Termination for
|
|
of Employment
|
Disability
|
|
Eligible
|
|
Eligible
|
|
Cause
|
|
Termination
|
Vesting continues;
option remains in
effect to end of
term
|
|
Vesting continues;
option
remains in effect to end
of term
|
|
Option remains in effect to the
end of
the term; for options granted on or after
February 20, 2003,
vesting does not
continue after employment termination
|
|
Option cancels
|
|
Option remains
exercisable
for
30 days
|
Options may be cancelled if the
grantee competes with TI during the two years after employment termination or
discloses TI trade secrets. In addition, for options received while the grantee
was an executive officer, the company may reclaim (or clawback) profits earned
under grants if the officer engages in such conduct. These provisions are
intended to strengthen retention and provide a reasonable remedy to TI in case
of competition or disclosure of our confidential
information.
Options granted after 2009 become fully vested if the grantee is
involuntarily terminated from employment with TI (other than for cause) within
24 months after a change in control of TI. Change in control is defined as
provided in the Texas Instruments 2009 Long-Term Incentive Plan and occurs upon
(1) acquisition of more than 50 percent of the voting stock or at least 80
percent of the assets of TI or (2) change of a majority of the board of
directors in a 12-month period unless a majority of the directors then in office
endorsed the appointment or election of the new directors (Plan definition).
These terms are intended to reduce employee uncertainty and distraction in the
period leading up to a change in control, if such an event were to occur. For
options granted before 2010, the stock option terms provide that upon a change
in control of TI, the option becomes fully vested to the extent it is then
outstanding; and if employment termination (except for cause) has occurred
within 30 days before the change in control, the change in control is deemed to
have occurred first. Change in control is defined in these pre-2010 options as
(1) acquisition of 20 percent of TI common stock other than through a
transaction approved by the board of directors, or (2) change of a majority of
the board of directors in a 24-month period unless a majority of the directors
then in office have elected or nominated the new directors (together, the
pre-2010 definition).
The
Stock Awards
in the table of
outstanding equity awards at fiscal year-end 2011 are RSU awards. Each RSU
represents the right to receive one share of TI common stock on a stated date
(the vesting date) unless the award is terminated earlier under terms
summarized below. In general, the vesting date is approximately four years after
the grant date. Each RSU includes the right to receive dividend equivalents,
which are paid annually in cash at a rate equal to the amount paid to
stockholders in dividends. The table below shows the termination provisions of
outstanding RSUs as of December 31, 2011.
|
|
|
|
Other Circumstances
|
Employment Termination
|
|
Employment Termination
|
|
of Employment
|
Due to Death or Permanent
Disability
|
|
When Retirement
Eligible
|
|
Termination
|
Vesting continues; shares are paid at
the scheduled vesting date
|
|
Grant stays in effect and pays out
shares at the scheduled vesting date. Number of shares reduced according
to the duration of employment over the vesting period*
|
|
Grant cancels; no shares are
issued
|
*
|
|
Calculated by
multiplying the number of RSUs by a fraction equal to the number of whole
365-day periods from the grant date to the employment termination date (or
first day of any bridge leave of absence leading to retirement), divided
by the number years in the vesting period.
|
These termination provisions are
intended to promote retention. All RSU awards contain cancellation and clawback
provisions like those described above for stock options. For awards granted
after 2009, the terms provide that, to the extent permitted by Section 409A of
the IRC, the award vests upon involuntary termination of TI employment within 24
months after a change in control. Change in control is the Plan definition. The
terms of earlier RSU awards provide for full vesting of the award upon a change
in control of TI. Change in control is the pre-2010 definition unless the grant
is subject to Section 409A, in which event the definition under Section 409A
applies. Section 409A defines a change in control as a change in the ownership
or effective control of a corporation or a change in the ownership of a
substantial portion of the assets of a corporation. These cancellation, clawback
and change-in-control terms are intended to conform RSU terms with those of
stock options (to the extent permitted by the IRC) and to achieve the objectives
described above in the discussion of stock options.
84
n
2012 PROXY STATEMENT
|
TEXAS INSTRUMENTS
|
In
addition to the Stock Awards shown in the outstanding equity awards at fiscal
year-end 2011 table above, Mr. Templeton holds an award of RSUs that was granted
in 1995. The award, for 120,000 shares of TI common stock, vested in 2000. Under
the award terms, the shares will be issued to Mr. Templeton in March of the year
after his termination of employment for any reason. These terms were designed to
provide a tax benefit to the company by postponing the related compensation
expense until it was likely to be fully deductible. In accordance with SEC
requirements, this award is reflected in the 2011 non-qualified deferred
compensation table on page 87.
2011 option exercises and stock
vested
The following table lists the number
of shares acquired and the value realized as a result of option exercises by the
named executive officers in 2011 and the value of any RSUs that vested in
2011.
|
Option
Awards
|
|
Stock
Awards
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Shares Acquired
|
|
Value Realized
|
|
Shares Acquired
|
|
Value Realized
|
Name
|
on Exercise
(#)
|
|
on Exercise
($)
|
|
on Vesting
(#)
|
|
on Vesting
($)
|
R. K. Templeton
|
|
835,000
|
|
|
$
|
6,198,050
|
|
|
|
150,000
|
|
|
$
|
5,140,500
|
|
K. P.
March
|
|
90,000
|
|
|
$
|
1,703,400
|
|
|
|
35,000
|
|
|
$
|
1,199,450
|
|
G. A. Lowe
|
|
70,000
|
|
|
$
|
310,800
|
|
|
|
60,000
|
|
|
$
|
2,056,200
|
|
K. J.
Ritchie
|
|
165,000
|
|
|
$
|
1,318,250
|
|
|
|
50,000
|
|
|
$
|
1,713,500
|
|
B. T. Crutcher
|
|
103,600
|
|
|
$
|
1,351,328
|
|
|
|
10,000
|
|
|
$
|
342,700
|
|
2011 pension
benefits
The following table shows the present
value as of December 31, 2011, of the benefit of the named executive officers
under our qualified defined benefit pension plan (TI Employees Pension Plan) and
non-qualified defined benefit pension plans (TI Employees Non-Qualified Pension
Plan (which governs amounts earned before 2005) and TI Employees Non-Qualified
Pension Plan II (which governs amounts earned after 2004)). In accordance with
SEC requirements, the amounts shown in the table do not reflect any named
executive officers retirement eligibility or any increase in benefits that may
result from the named executive officers continued employment after December
31, 2011.
|
|
|
|
|
|
|
|
|
|
|
Payments
|
|
|
|
|
|
|
|
Present
|
|
During
|
|
|
|
Number of
|
|
Value of
|
|
Last
|
|
|
|
Years Credited
|
|
Accumulated
|
|
Fiscal
|
Name
|
Plan Name
|
|
Service (#)
|
|
Benefit
($)(5)
|
|
Year ($)
|
R. K. Templeton (1)
|
TI Employees Pension Plan
|
|
16
|
(2)
|
|
|
$
|
496,801
|
|
|
|
|
TI Employees Non-Qualified Pension Plan
|
|
16
|
(2)
|
|
|
$
|
336,814
|
|
|
|
|
TI Employees Non-Qualified Pension Plan II
|
|
16
|
(4)
|
|
|
$
|
31,029
|
|
|
|
|
K. P. March
|
TI Employees Pension Plan
|
|
26
|
(2)
|
|
|
$
|
573,462
|
|
|
|
|
TI Employees Non-Qualified Pension Plan
|
|
19
|
(3)
|
|
|
$
|
202,132
|
|
|
|
|
TI Employees Non-Qualified Pension Plan II
|
|
26
|
(4)
|
|
|
$
|
2,388,487
|
|
|
|
|
G. A. Lowe
|
TI Employees Pension Plan
|
|
26
|
(2)
|
|
|
$
|
576,809
|
|
|
|
|
TI Employees Non-Qualified Pension Plan
|
|
19
|
(3)
|
|
|
$
|
305,673
|
|
|
|
|
TI Employees Non-Qualified Pension Plan II
|
|
26
|
(4)
|
|
|
$
|
2,639,864
|
|
|
|
|
K. J. Ritchie
|
TI Employees Pension Plan
|
|
32
|
(2)
|
|
|
$
|
931,854
|
|
|
|
|
TI Employees Non-Qualified Pension Plan
|
|
25
|
(3)
|
|
|
$
|
397,733
|
|
|
|
|
TI Employees Non-Qualified Pension Plan II
|
|
32
|
(4)
|
|
|
$
|
3,187,035
|
|
|
|
|
B. T. Crutcher (1)
|
TI Employees Pension Plan
|
|
0.9
|
(2)
|
|
|
$
|
2,929
|
|
|
|
(1)
|
|
In 1997, TIs
U.S. employees were given the choice between continuing to participate in
the defined benefit pension plans or participating in a new enhanced
defined contribution retirement plan. Messrs. Templeton and Crutcher chose
to participate in the defined contribution plan. Accordingly, their
accrued pension benefits under the qualified and non-qualified plans were
frozen (i.e., they will experience no increase attributable to years of
service or change in eligible earnings) as of December 31, 1997.
Contributions to the defined contribution plan for Mr. Templetons and Mr.
Crutchers benefits are included in the 2011 summary compensation
table.
|
TEXAS INSTRUMENTS
|
2012
PROXY STATEMENT
n
85
|
(2)
|
|
For each of the
named executive officers, credited service began on the date the officer
became eligible to participate in the plan. For Mr. Crutcher, eligibility
to participate began on the first day of the month following completion of
one year of employment. For each of the other named executive officers,
eligibility to participate began on the earlier of 18 months of
employment, or January 1 following the completion of one year of
employment. Accordingly, each of the named executive officers has been
employed by TI for longer than the years of credited service shown
above.
|
|
(3)
|
|
Credited service
began on the date the named executive officer became eligible to
participate in the TI Employees Pension Plan as described in note 2 above
and ceased at December 31, 2004.
|
|
(4)
|
|
Credited service
began on the date the named executive officer became eligible to
participate in the TI Employees Pension Plan as described in note 2
above.
|
|
(5)
|
|
The assumptions
and valuation methods used to calculate the present value of the
accumulated pension benefits shown are the same as those used by TI for
financial reporting purposes and are described in note 12 in Exhibit 13 to
TIs annual report on Form 10-K for the year ended December 31, 2011,
except that a named executive officers retirement is assumed (in
accordance with SEC rules) for purposes of this table to occur at age 65
and no assumption for termination prior to that date is used. The amount
of the lump sum benefit earned as of December 31, 2011, is determined
using either (i) the Pension Benefit Guaranty Corporation (PBGC) interest
assumption of 3.00 percent or (ii) the Pension Protection Act of 2006
(PPA) corporate bond yield interest assumption of 4.92 percent for the TI
Employees Pension Plan and 4.91 percent for the TI Employees Non-Qualified
Pension Plans, whichever rate produces the higher lump sum amount. A
discount rate assumption of 4.92 percent for the TI Employees Pension Plan
and 4.91 percent for the non-qualified pension plans was used to determine
the present value of each lump sum.
|
TI Employees Pension
Plan
The TI Employees Pension Plan is
a qualified defined benefit pension plan. Please see page 77 under the Benefits
heading of the Compensation Discussion and Analysis for a discussion of the
origin and purpose of the plan. Employees who joined the U.S. payroll after
November 30, 1997, are not eligible to participate in this
plan.
A
plan participant is eligible for normal retirement under the terms of the plan
if he is at least 65 years of age with one year of credited service. A
participant is eligible for early retirement if he is at least 55 years of age
with 20 years of employment or 60 years of age with five years of employment.
Mr. Ritchie is the only named executive officer who is currently eligible for
early or normal retirement.
A participant may request payment of his accrued benefit at termination
or any time thereafter. Participants may choose a lump sum payment or one of six
forms of annuity. In order of largest to smallest periodic payment, the forms of
annuity are: (i) single life annuity, (ii) 5-year certain and life annuity,
(iii) 10-year certain and life annuity, (iv) qualified joint and 50 percent
survivor annuity, (v) qualified joint and 75 percent survivor annuity, and (vi)
qualified joint and 100 percent survivor annuity. If the participant does not
request payment, he will begin to receive his benefit in April of the year after
he reaches the age of 70½ in the form of annuity required under the
IRC.
The pension formula for the qualified plan is intended to provide a
participant with an annual retirement benefit equal to 1.5 percent multiplied by
the product of (i) years of credited service and (ii) the average of the five
highest consecutive years of his base salary plus bonus up to a limit imposed by
the IRS, less a percentage (based on his year of birth, when he elects to retire
and his years of service with TI) of the amount of compensation on which his
Social Security benefit is based.
If an individual takes early retirement and chooses to begin receiving
his annual retirement benefit at that time, such benefit is reduced by an early
retirement factor. As a result, the annual benefit is lower than the one he
would have received at age 65.
If the participants employment terminates due to disability, the
participant may choose to receive his accrued benefit at any time prior to age
65. Alternatively, the participant may choose to defer receipt of the accrued
benefit until reaching age 65 and then take a disability benefit. The disability
benefit paid at age 65 is based on salary and bonus, years of credited service
the participant would have accrued to age 65 had he not become disabled and
disabled status.
The benefit payable in the event of death is based on salary and bonus,
years of credited service and age at the time of death, and may be in the form
of a lump sum or annuity at the election of the beneficiary. The earliest date
of payment is the first day of the second calendar month following the month of
death.
Leaves of absence, including a bridge to retirement, are credited to
years of service under the qualified pension plan. Please see the discussion of
leaves of absence on page 92 below.
TI Employees Non-Qualified Pension
Plans
TI has two non-qualified
pension plans: the TI Employees Non-Qualified Pension Plan (Plan I), which
governs amounts earned before 2005; and the TI Employees Non-Qualified Pension
Plan II (Plan II), which governs amounts earned after 2004. Each is a
non-qualified defined benefit pension plan. Please see page 77 under the
Benefits heading of the Compensation Discussion and Analysis for a discussion of
the purpose of the plans. As with the qualified defined benefit pension plan,
employees who joined the U.S. payroll after November 30, 1997, are not eligible
to participate in Plan I or Plan II. Eligibility for normal and early retirement
under these plans is the same as under the qualified plan (please see above).
Benefits are paid in a lump sum.
86
n
2012 PROXY STATEMENT
|
TEXAS INSTRUMENTS
|
A
participants benefits under Plan I and Plan II are calculated using the same
formula as described above for the TI Employees Pension Plan. However, the IRS
limit on the amount of compensation on which a qualified pension benefit may be
calculated does not apply. Additionally, the IRS limit on the amount of
qualified benefit the participant may receive does not apply to these plans.
Once this non-qualified benefit amount has been determined using the formula
described above, the individuals qualified benefit is subtracted from it. The
resulting difference is multiplied by an age-based factor to obtain the amount
of the lump sum benefit payable to an individual under the non-qualified
plans.
Amounts under Plan I will be distributed when payment of the
participants benefit under the qualified pension plan commences. Amounts under
Plan II will be distributed subject to the requirements of Section 409A of the
IRC. Because the named executive officers are among the 50 most highly
compensated officers of the company, Section 409A of the IRC requires that they
not receive any lump sum distribution payment under Plan II before the first day
of the seventh month following termination of employment.
If a participant terminates due to disability, amounts
under Plan I will be distributed when payment of the participants benefit under
the qualified plan commences. For amounts under Plan II, distribution is
governed by Section 409A of the IRC, and the disability benefit is reduced to
reflect the payment of the benefit prior to age 65.
In the event of death, payment under both plans is based
on salary and bonus, years of credited service and age at the time of death and
will be in the form of a lump sum. The earliest date of payment is the first day
of the second calendar month following the month of death.
Balances in the plans are unsecured obligations of the
company. For amounts under Plan I, in the event of a change in control, the
present value of the individuals benefit would be paid not later than the month
following the month in which the change in control occurred. For such amounts,
the pre-2010 definition of a change in control (please see page 84) applies. For
all amounts accrued under this plan, if a sale of substantially all of the
assets of the company occurred, the present value of the individuals benefit
would be distributed in a lump sum as soon as reasonably practicable following
the sale of assets. For amounts under Plan II, no distribution of benefits is
triggered by a change in control.
Leaves
of absence, including a bridge to retirement, are credited to years of service
under the non-qualified pension plans. For a discussion of leaves of absence,
please see page 92 below.
TI Employees Survivor Benefit
Plan
TIs qualified and non-qualified
pension plans provide that upon the death of a retirement-eligible employee, the
employees beneficiary receives a payment equal to half of the benefit to which
the employee would have been entitled under the pension plans had he retired
instead of died. We have a survivor benefit plan that pays the beneficiary a
lump sum that, when added to the reduced amounts the beneficiary receives under
the pension plans, equals the benefit the employee would have been entitled to
receive had he retired instead of died. Because Mr. Ritchie became eligible for
early retirement in August 2011, his beneficiary would be eligible for a benefit
under the survivor benefit plan if he were to die under those
circumstances.
2011 non-qualified deferred
compensation
The following table shows
contributions to the named executive officers deferred compensation account in
2011 and the aggregate amount of his deferred compensation as of December 31,
2011.
|
|
Executive
|
|
Registrant
|
|
|
|
|
|
|
Aggregate
|
|
Aggregate
|
|
|
Contributions
|
|
Contributions in
|
|
Aggregate Earnings in
|
|
Withdrawals/
|
|
Balance at Last
|
Name
|
|
in Last FY
($)
|
|
Last FY
($)(2)
|
|
Last FY ($)
|
|
Distributions
($)
|
|
FYE ($)(5)
|
R. K. Templeton
|
|
|
|
|
|
$
|
81,602
|
|
|
$
|
(349,055
|
)
(3)
|
|
|
$
|
67,200
|
(4)
|
|
$
|
4,918,712
|
(6)
|
K. P.
March
|
|
|
|
|
|
|
|
|
|
$
|
5
|
|
|
|
$
|
92,617
|
|
|
|
|
|
G. A. Lowe
|
|
|
|
|
|
|
|
|
|
$
|
22,755
|
|
|
|
|
|
|
|
$
|
841,741
|
|
K. J.
Ritchie
|
|
|
|
|
|
|
|
|
|
$
|
851
|
|
|
|
$
|
81,847
|
|
|
|
|
|
B. T. Crutcher
|
|
$
|
50,454
|
(1)
|
|
$
|
27,168
|
|
|
$
|
(2,043
|
)
|
|
|
|
|
|
|
$
|
234,306
|
|
(1)
|
|
Amount shown is a portion of
Mr. Crutchers profit sharing for 2010, which was paid in
2011.
|
|
(2)
|
|
Company matching
contributions pursuant to the defined contribution plan. These amounts are
included in the All Other Compensation column of the 2011 summary
compensation table on page 79.
|
|
(3)
|
|
Consists of: (a) $67,200 in
dividend equivalents paid under the 120,000-share 1995 RSU award discussed
on page 85, settlement of which has been deferred until after termination
of employment; (b) a $406,800 decrease in the value of the RSU award
(calculated by subtracting $3,900,000 (the value of the award at year-end
2010) from $3,493,200 (the value of the award at year-end 2011) (in both
cases, the number of RSUs is multiplied by the closing price of TI common
stock on the last trading date of the year)); and (c) a $9,455 loss in Mr.
Templetons deferred compensation account in 2011. Dividend equivalents
are paid at the same rate as dividends on the companys common
stock.
|
|
(4)
|
|
Dividend equivalents paid on
the RSUs discussed in note 3.
|
TEXAS INSTRUMENTS
|
2012
PROXY STATEMENT
n
87
|
(5)
|
|
Includes amounts
reported in the Summary Compensation Table in the current or prior-year
proxy statements as follows: Mr. Templeton, $2,479,013; Mr. Lowe,
$935,466; and Mr. Crutcher, $102,737.
|
|
(6)
|
|
Of this amount,
$3,493,200 is attributable to Mr. Templetons 1995 RSU award, calculated
as described in note 3. The remainder is the balance of his deferred
compensation account.
|
Please see page 77 under the Benefits
heading of the Compensation Discussion and Analysis for a discussion of the
purpose of the plan. An employees deferred compensation account contains
eligible compensation the employee has elected to defer and contributions by the
company that are in excess of the IRS limits on (i) contributions the company
may make to the enhanced defined contribution plan and (ii) matching
contributions the company may make related to compensation the executive officer
deferred into his deferred compensation
account.
Participants in the deferred compensation plan may choose to defer up to
(i) 25 percent of their base salary, (ii) 90 percent of their performance bonus,
and (iii) 90 percent of profit sharing. Elections to defer compensation must be
made in the calendar year prior to the year in which the compensation will be
earned.
The company has determined that the investment alternatives for deferred
compensation balances should generally be the same as the investment
alternatives available under the companys defined contribution plan. These
investment alternatives may be changed at any time. During 2011, participants
could choose to have their deferred compensation mirror the performance of one
or more of the following mutual funds, each of which is managed by a third party
(these alternatives are a subset of those offered to participants in the defined
contribution plans): Northern Trust Short Term Investment Fund, Northern Trust
Daily Aggregate Bond Fund Index, Northern Trust Russell 1000 Value Equity Index,
Northern Trust Russell 1000 Growth Equity Index, Northern Trust Russell 2000
Equity Index, Northern Trust S&P 400 Index Fund, Fidelity Puritan Fund,
BlackRock Equity Index Fund, BlackRock (EAFE) (Europe, Australia, Far East)
Equity Index Fund, BlackRock Lifepath Index 2020 Fund, BlackRock Lifepath Index
2030 Fund, BlackRock Lifepath Index 2040 Fund, BlackRock Lifepath Index 2050
Fund and the BlackRock Lifepath Index Retirement Fund. From among the available
investment alternatives, participants may change their instructions relating to
their deferred compensation daily. Earnings on a participants balance are
determined solely by the performance of the investments that the participant has
chosen for his plan balance. The company does not guarantee any minimum return
on investments. A third party administers the companys deferred compensation
program.
A participant may request distribution from the plan in the case of an
unforeseeable emergency. To obtain an unforeseeable emergency withdrawal, a
participant must meet the requirements of Section 409A of the IRC. Otherwise, a
participants balance is paid pursuant to his distribution election and is
subject to applicable IRC limitations.
Amounts contributed by the company, and amounts earned and deferred by
the participant for which there is a valid distribution election on file, will
be distributed in accordance with the participants election. Annually
participants may elect separate distribution dates for deferred compensation
attributable to a participants (i) bonus and profit sharing and (ii) salary.
Participants may elect that these distributions be in the form of a lump sum or
annual installments to be paid out over a period of five or ten consecutive
years. Amounts for which no valid distribution election is on file will be
distributed three years from the date of deferral.
In the event of the participants death, the earliest
date of payment is the first day of the second calendar month following the
month of death.
Like the balances under the non-qualified defined benefit pension plans,
deferred compensation balances are unsecured obligations of the company. For
amounts earned and deferred prior to 2010, a change in control does not trigger
a distribution under the plan. For amounts earned and deferred after 2009,
distribution occurs, to the extent permitted by Section 409A of the IRC, if the
participant is involuntarily terminated within 24 months after a change in
control. Change in control is the Plan definition.
Potential payments upon
termination or change in control
None of the named executive officers
has an employment contract with the company. They are eligible for benefits on
generally the same terms as other U.S. employees upon termination of employment
or change in control of the company. TI does not reimburse executive officers
for any income or excise taxes that are payable by the executive as a result of
payments relating to termination or change in control.
Termination
The following programs may result in payments to a named
executive officer whose employment terminates. Most of these programs have been
discussed above in the proxy statement. For a discussion of the impact of these
programs on the compensation decisions for 2011, please see the Compensation
Discussion and Analysis on page 78.
Bonus.
Our policies concerning bonus and the timing of payments
are described on page 70. Whether a bonus would be awarded, and in what amount,
to an executive officer whose employment has terminated would depend on the
circumstances of termination. It may be presumed that no bonus would be awarded
in the event of a termination for cause. If awarded, bonuses are paid by the
company.
88
n
2012 PROXY STATEMENT
|
TEXAS INSTRUMENTS
|
Qualified and non-qualified
defined benefit pension plans.
The
purposes of these plans are described on page 77. The formula for determining
benefits, the forms of benefit and the timing of payments are described on pages
85-87. The amounts disbursed under the qualified and non-qualified plans are
paid, respectively, by the TI Employees Pension Trust and the
company.
Survivor benefit plan.
The purpose of this plan is described on
page 87. The formula for determining the amount of benefit, the form of benefit
and the timing of payments are described on page 87. Amounts distributed are
paid by the TI Employees Health Benefit Trust.
Deferred compensation
plan.
The purpose of this plan is
described on page 77. The amounts payable under this program depend solely on
the performance of investments that the participant has chosen for his plan
balance. The timing of payments is discussed on page 88. Amounts distributed are
paid by the company.
Equity compensation.
Depending on the circumstances of
termination, grantees whose employment terminates may retain the right to
exercise previously granted stock options and receive shares under outstanding
RSU awards. Please see pages 84-85. RSU awards include a right to receive
dividend equivalents. The dividend equivalents are paid annually by the company
in a single cash payment after the last dividend payment of the year.
Profit sharing.
The purpose of this program, the formula for determining
payments and the timing of payments are described on page 69. Like other U.S.
employees, if a named executive officer remains employed through the end of the
year, he will receive any profit sharing paid for that year. In the event of
retirement or commencement of a bridge to retirement, any profit sharing will be
paid for the portion of the year worked before retirement or the beginning of
the bridge. In the event of termination due to disability or death, the officer
or his beneficiaries would receive any profit sharing paid for the year. Profit
sharing payments are made by the company.
Time bank.
Based on years of employment with the company, employees
accrue hours in a time bank. Time bank hours may be used for paid absences from
the office such as vacation and sick days. Employees receive a cash payment for
any time bank hours still outstanding on termination of employment. The amount
paid is calculated by applying the employees base salary rate in effect at the
time of termination to the number of hours remaining in the time bank. Time bank
payments are made in a lump sum by the company. They are ordinarily paid no
later than what would have been the employees next regular pay
cycle.
Perquisites.
Financial counseling is available to executive officers
in the year after retirement. Otherwise, no perquisites continue after
termination of employment.
The following tables indicate the
amounts for which each named executive officer would have been eligible if his
employment had terminated on December 31, 2011, as a result of disability,
death, involuntary termination for cause, resignation, retirement or involuntary
termination not for cause (excluding change in control).
Termination due to
disability
|
|
|
|
|
|
|
Non-
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified
|
|
Qualified
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
|
|
Defined
|
|
Defined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
Benefit
|
|
Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
Pension
|
|
Pension
|
|
|
|
|
|
|
Stock
|
|
Profit
|
|
Time
|
|
|
|
|
|
|
|
Plan
|
|
Plan
|
|
Plan II
|
|
Deferred
|
|
RSUs
|
|
Options
|
|
Sharing
|
|
Bank
|
|
|
|
Name
|
|
Bonus
|
|
(2)
|
|
(3)
|
|
(4)
|
|
Compensation
|
|
(5)
|
|
(6)
|
|
(7)
|
|
(8)
|
|
Total
|
Templeton
|
|
(1)
|
|
$
|
884,132
|
|
$
|
609,677
|
|
$
|
160,125
|
|
|
|
$
|
23,913,487
|
|
$
|
29,621,968
|
|
$
|
78,118
|
|
$
|
175,168
|
|
$
|
55,442,675
|
March
|
|
(1)
|
|
$
|
1,439,956
|
|
$
|
349,792
|
|
$
|
3,734,566
|
|
|
|
$
|
5,761,422
|
|
$
|
4,339,525
|
|
$
|
44,349
|
|
$
|
111,916
|
|
$
|
15,781,526
|
Lowe
|
|
(1)
|
|
$
|
1,834,009
|
|
$
|
654,107
|
|
$
|
3,370,517
|
|
|
|
$
|
8,951,383
|
|
$
|
5,490,250
|
|
$
|
47,176
|
|
$
|
95,307
|
|
$
|
20,442,749
|
Ritchie
|
|
(1)
|
|
$
|
1,879,930
|
|
$
|
926,549
|
|
$
|
4,594,758
|
|
|
|
$
|
7,277,558
|
|
$
|
5,511,250
|
|
$
|
42,873
|
|
$
|
108,945
|
|
$
|
20,341,863
|
Crutcher
|
|
(1)
|
|
$
|
10,045
|
|
|
|
|
|
|
|
|
|
$
|
7,495,854
|
|
$
|
1,640,700
|
|
$
|
37,873
|
|
$
|
32,669
|
|
$
|
9,217,141
|
(1)
|
|
Because the amount of a
bonus is subject to the Compensation Committees discretion considering
the facts and circumstances of the termination, it is not possible to
predict the amount, if any, the executive officer would have
received.
|
|
(2)
|
|
The amount shown is the lump
sum benefit payable at age 65 to the named executive officer in the event
of termination as of December 31, 2011, due to disability, assuming the
named executive officer does not request payment of his disability benefit
until age 65. The assumptions used in calculating these amounts are the
same as the age-65 lump-sum assumptions used for financial reporting
purposes for the companys audited financial statements for 2011 and are
described in note 5 to the 2011 pension benefits table on page
86.
|
|
(3)
|
|
The amount shown is the lump
sum benefit payable at age 65 to the named executive officers in the event
of termination due to disability. The assumptions used are the same as
those described in note 2 above.
|
|
TEXAS INSTRUMENTS
|
2012 PROXY
STATEMENT
n
89
|
(4)
|
|
The amount shown is the lump
sum benefit payable in the event of separation from service (as defined in
the plan) due to disability. The assumptions used are the same as those
described in note 2 above.
|
|
(5)
|
|
Calculated by multiplying
the number of outstanding RSUs by the closing price of TI common stock as
of December 31, 2011 ($29.11). Because the executive officer will retain
his RSU awards in the event of termination due to disability and they will
continue to vest according to their terms, all outstanding RSUs are
assumed to be vested for purposes of this table. Please see the
Outstanding Equity Awards at Fiscal Year-End 2011 table on pages 82-83 for
the number of unvested RSUs as of December 31, 2011, and page 85 for a
discussion of an additional outstanding RSU award held by Mr.
Templeton.
|
|
(6)
|
|
Calculated as the difference
between the grant price of all outstanding in-the-money options and the
closing price of TI common stock as of December 31, 2011 ($29.11),
multiplied by the number of shares under such options as of December 31,
2011.
|
|
(7)
|
|
Amounts earned in
2011.
|
|
(8)
|
|
Calculated by multiplying
the number of hours remaining in the named executive officers time bank
by the applicable base salary rate as of December 31,
2011.
|
Termination due to
death
|
|
|
|
|
|
|
Non-
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified
|
|
Qualified
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
|
|
Defined
|
|
Defined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
Benefit
|
|
Benefit
|
|
Survivor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
Pension
|
|
Pension
|
|
Benefit
|
|
Deferred
|
|
|
|
|
Stock
|
|
Profit
|
|
Time
|
|
|
|
|
|
|
|
Plan
|
|
Plan
|
|
Plan II
|
|
Plan
|
|
Compensation
|
|
RSUs
|
|
Options
|
|
Sharing
|
|
Bank
|
|
|
|
Name
|
|
Bonus
|
|
(2)
|
|
(2)
|
|
(2)
|
|
(3)
|
|
(4)
|
|
(5)
|
|
(6)
|
|
(7)
|
|
(8)
|
|
Total
|
Templeton
|
|
(1)
|
|
$
|
247,835
|
|
$
|
167,749
|
|
$
|
15,383
|
|
|
|
|
$
|
1,425,512
|
|
$
|
23,913,487
|
|
$
|
29,621,968
|
|
$
|
78,118
|
|
$
|
175,168
|
|
$
|
55,645,220
|
March
|
|
(1)
|
|
$
|
298,285
|
|
$
|
104,903
|
|
$
|
1,240,008
|
|
|
|
|
|
|
|
$
|
5,761,422
|
|
$
|
4,339,525
|
|
$
|
44,349
|
|
$
|
111,916
|
|
$
|
11,900,408
|
Lowe
|
|
(1)
|
|
$
|
300,470
|
|
$
|
159,201
|
|
$
|
1,371,581
|
|
|
|
|
$
|
841,741
|
|
$
|
8,951,383
|
|
$
|
5,490,250
|
|
$
|
47,176
|
|
$
|
95,307
|
|
$
|
17,257,109
|
Ritchie
|
|
(1)
|
|
$
|
666,713
|
|
$
|
276,859
|
|
$
|
2,217,366
|
|
$
|
3,131,552
|
|
|
|
|
$
|
7,277,558
|
|
$
|
5,511,250
|
|
$
|
42,873
|
|
$
|
108,945
|
|
$
|
19,233,116
|
Crutcher
|
|
(1)
|
|
$
|
1,516
|
|
|
|
|
|
|
|
|
|
|
$
|
234,306
|
|
$
|
7,495,854
|
|
$
|
1,640,700
|
|
$
|
37,873
|
|
$
|
32,669
|
|
$
|
9,442,918
|
(1)
|
|
See note 1 to the
Termination Due to Disability table.
|
|
(2)
|
|
Value of the benefit payable
in a lump sum to the executive officers beneficiary calculated as
required by the terms of the plan assuming the earliest possible payment
date. The plan provides that in the event of death, the beneficiary
receives 50 percent of the participants accrued benefit, reduced by the
age-applicable joint and 50 percent survivor factor.
|
|
(3)
|
|
Value of the benefit payable
in a lump sum to the executive officers beneficiary calculated as
required by the terms of the plan assuming the earliest possible payment
date.
|
|
(4)
|
|
Balance as of December 31,
2011, under the non-qualified deferred compensation plan.
|
|
(5)
|
|
Calculated by multiplying
the number of outstanding RSUs by the closing price of TI common stock as
of December 31, 2011 ($29.11). All outstanding RSUs are assumed to be
vested for purposes of this table. Please see the Outstanding Equity
Awards at Fiscal Year-End 2011 table on pages 82-83 for the number of
unvested RSUs as of December 31, 2011, and see page 85 for a discussion of
an additional outstanding RSU award held by Mr. Templeton.
|
|
(6)
|
|
See note 6 to the
Termination Due to Disability table.
|
|
(7)
|
|
Amounts earned in
2011.
|
|
(8)
|
|
See note 8 to the
Termination Due to Disability table.
|
|
90
n
2012 PROXY
STATEMENT
|
TEXAS
INSTRUMENTS
|
Involuntary termination for
cause
|
|
|
|
|
|
|
Non-
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified
|
|
Qualified
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
|
|
Defined
|
|
Defined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
Benefit
|
|
Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
Pension
|
|
Pension
|
|
|
|
|
|
|
|
|
|
Profit
|
|
Time
|
|
|
|
|
|
Bonus
|
|
Plan
|
|
Plan
|
|
Plan II
|
|
Deferred
|
|
|
|
|
|
Stock
|
|
Sharing
|
|
Bank
|
|
|
|
Name
|
|
(1)
|
|
(2)
|
|
(2)
|
|
(3)
|
|
Compensation
|
|
RSUs
|
|
Options
|
|
(5)
|
|
(6)
|
|
Total
|
Templeton
|
|
|
|
$
|
479,582
|
|
$
|
324,484
|
|
$
|
29,893
|
|
|
|
$
|
3,493,200
|
(4)
|
|
|
|
$
|
78,118
|
|
$
|
175,168
|
|
$
|
4,580,445
|
March
|
|
|
|
$
|
552,366
|
|
$
|
194,321
|
|
$
|
2,296,193
|
|
|
|
|
|
|
|
|
|
$
|
44,349
|
|
$
|
111,916
|
|
$
|
3,199,145
|
Lowe
|
|
|
|
$
|
561,717
|
|
$
|
296,977
|
|
$
|
2,564,760
|
|
|
|
|
|
|
|
|
|
$
|
47,176
|
|
$
|
95,307
|
|
$
|
3,565,937
|
Ritchie
|
|
|
|
$
|
1,327,229
|
|
$
|
550,900
|
|
$
|
4,414,361
|
|
|
|
|
|
|
|
|
|
$
|
42,873
|
|
$
|
108,945
|
|
$
|
6,444,308
|
Crutcher
|
|
|
|
$
|
3,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
37,873
|
|
$
|
32,669
|
|
$
|
73,553
|
(1)
|
|
It is presumed that in the
event of termination for cause no bonus would be awarded.
|
|
(2)
|
|
Lump sum value of the
December 31, 2011, accrued benefit calculated as required by the terms of
the plan assuming the earliest possible payment date.
|
|
(3)
|
|
Lump sum benefit payable at
separation of service (as defined by the plan) assuming the earliest
possible payment date.
|
|
(4)
|
|
Calculated by multiplying
120,000 vested RSUs by the closing price of the companys common stock as
of December 31, 2011 ($29.11).
|
|
(5)
|
|
Amounts earned in
2011.
|
|
(6)
|
|
See note 8 to the
Termination Due to Disability table.
|
Resignation; involuntary
termination (not for cause) excluding change in control
|
|
|
|
|
|
|
Non-
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified
|
|
Qualified
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
|
|
Defined
|
|
Defined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
Benefit
|
|
Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
Pension
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
Profit
|
|
Time
|
|
|
|
|
|
|
|
Plan
|
|
Plan
|
|
Plan II
|
|
Deferred
|
|
|
|
|
|
Stock
|
|
Sharing
|
|
Bank
|
|
|
|
Name
|
|
Bonus
|
|
(2)
|
|
(2)
|
|
(3)
|
|
Compensation
|
|
RSUs
|
|
Options
|
|
(8)
|
|
(9)
|
|
Total
|
Templeton
|
|
(1)
|
|
$
|
479,582
|
|
$
|
324,484
|
|
$
|
29,893
|
|
|
|
$
|
3,493,200
|
(4)
|
|
$
|
22,463,277
|
(6)
|
|
$
|
78,118
|
|
$
|
175,168
|
|
$
|
27,043,722
|
March
|
|
(1)
|
|
$
|
552,366
|
|
$
|
194,321
|
|
$
|
2,296,193
|
|
|
|
|
|
|
|
$
|
2,261,441
|
(6)
|
|
$
|
44,349
|
|
$
|
111,916
|
|
$
|
5,460,586
|
Lowe
|
|
(1)
|
|
$
|
561,717
|
|
$
|
296,977
|
|
$
|
2,564,760
|
|
|
|
|
|
|
|
$
|
2,246,613
|
(6)
|
|
$
|
47,176
|
|
$
|
95,307
|
|
$
|
5,812,550
|
Ritchie
|
|
(1)
|
|
$
|
1,327,229
|
|
$
|
550,900
|
|
$
|
4,414,361
|
|
|
|
$
|
2,759,453
|
(5)
|
|
$
|
5,511,250
|
(7)
|
|
$
|
42,873
|
|
$
|
108,945
|
|
$
|
14,715,011
|
Crutcher
|
|
(1)
|
|
$
|
3,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,950
|
(6)
|
|
$
|
37,873
|
|
$
|
32,669
|
|
$
|
324,503
|
(1)
|
|
See note 1 to the
Termination Due to Disability table.
|
|
(2)
|
|
See note 2 to the
Involuntary Termination for Cause table.
|
|
(3)
|
|
See note 3 to the
Involuntary Termination for Cause table.
|
|
(4)
|
|
See note 4 to the
Involuntary Termination for Cause table.
|
|
(5)
|
|
Because Mr. Ritchie became
eligible for early retirement in August 2011, calculated by multiplying
the number of outstanding RSUs held by Mr. Ritchie at such termination by
the closing price of TI common stock as of December 31, 2011. His RSU
grants stay in effect and pay out shares according to the vesting
schedule, although the number of shares is reduced according to the
duration of employment over the vesting period. See page 84 for additional
details.
|
|
(6)
|
|
Calculated as the difference
between the grant price of all exercisable in-the-money options and the
closing price of TI common stock as of December 31, 2011 ($29.11),
multiplied by the number of shares under such options as of December 31,
2011.
|
|
(7)
|
|
See note 6 to Termination
Due to Disability table.
|
|
(8)
|
|
Amounts earned in
2011.
|
|
(9)
|
|
See note 8 to the
Termination Due to Disability table.
|
|
TEXAS INSTRUMENTS
|
2012 PROXY
STATEMENT
n
91
|
In the case of a resignation pursuant
to a separation arrangement, an executive officer (like other employees above a
certain job grade level) will typically be offered a 12-month paid leave of
absence before termination, in exchange for a non-compete and non-solicitation
commitment and a release of claims against the company. The leave period will be
credited to years of service under the pension plans described above. During the
leave, the executive officers stock options will continue to become exercisable
and his RSUs will continue to vest. Amounts paid to an individual during a paid
leave of absence are not counted when calculating profit sharing and benefits
under the qualified and non-qualified pension plans. During a paid leave of
absence an individual does not continue to accrue time bank hours. He retains
medical and insurance benefits at essentially the same rates as active company
employees during the paid leave of absence
period.
In the
case of a separation arrangement in which the paid leave of absence expires when
the executive officer will be at least 50 years old and have at least 15 years
of employment with the company, the separation arrangement will typically
include an unpaid leave of absence, to commence at the end of the paid leave and
end when the executive officer has reached the earlier of age 55 with at least
20 years of employment or age 60 (bridge to retirement). The bridge to
retirement will be credited to years of service under the qualified and
non-qualified defined benefit plans described above. The executive officer will
not receive profit sharing or accrue time bank hours for the period he is on a
bridge to retirement, but he will retain medical and insurance benefits at
essentially the same rates as active company employees. Stock options will
continue to become exercisable and RSUs will remain in effect, but the number of
RSUs will be reduced as described in note * on page 84.
Involuntary termination (not for cause) after a change in
control of TI is discussed under the heading Change in control below.
Retirement
|
|
|
|
|
|
|
Non-
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified
|
|
Qualified
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
|
|
Defined
|
|
Defined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
Benefit
|
|
Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
Pension
|
|
Pension
|
|
|
|
|
|
|
Stock
|
|
Profit
|
|
Time
|
|
|
|
|
|
|
|
Plan
|
|
Plan
|
|
Plan II
|
|
Deferred
|
|
RSUs
|
|
Options
|
|
Sharing
|
|
Bank
|
|
|
|
Name
|
|
Bonus
|
|
(3)
|
|
(3)
|
|
(4)
|
|
Compensation
|
|
(5)
|
|
(6)
|
|
(7)
|
|
(8)
|
|
Total
|
Ritchie (1)
|
|
(2)
|
|
$
|
1,327,229
|
|
$
|
550,900
|
|
$
|
4,414,361
|
|
|
|
$
|
2,759,453
|
|
$
|
5,511,250
|
|
$
|
42,873
|
|
$
|
108,945
|
|
$
|
14,715,011
|
(1)
|
|
Mr. Ritchie was the only
named executive officer eligible to retire as of December 31, 2011.
Accordingly, no potential payments for the other named executive officers
are stated assuming retirement as of that date.
|
|
(2)
|
|
See note 1 to the
Termination Due to Disability table.
|
|
(3)
|
|
See note 2 to the
Involuntary Termination for Cause table.
|
|
(4)
|
|
See note 3 to the
Involuntary Termination for Cause table.
|
|
(5)
|
|
See note 5 to the
Resignation; Involuntary Termination (Not for Cause) Excluding Change in
Control table.
|
|
(6)
|
|
See note 6 to the
Termination Due to Disability table.
|
|
(7)
|
|
Amounts earned in
2011.
|
|
(8)
|
|
See note 8 to the
Termination Due to Disability table.
|
Change in
control
We have no program, plan or
arrangement providing benefits triggered by a change in control except as
described below. In fact, the only consequences of a change in control are the
acceleration of payment of existing balances and the full vesting of certain
outstanding equity awards.
A change in control at December 31, 2011, would have
triggered payment of the balance under the TI Employees Non-Qualified Pension
Plan. Please see pages 87-88 for a discussion of the purpose of change in control
provisions relating to the non-qualified defined benefit plans and the deferred
compensation plan as well as the circumstances and the timing of
payment.
Please see pages 84-85 for further
information concerning change in control provisions relating to stock options
and RSU awards.
For a discussion of the impact of these programs on the compensation
decisions for 2011, please see page 78.
92
n
2012 PROXY
STATEMENT
|
TEXAS
INSTRUMENTS
|
The following table indicates the
amounts that would have been triggered for each executive officer had there been
a change in control as of December 31, 2011. The actual amounts that would be
paid out can only be determined at the time the change in control
occurs.
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified
|
|
Defined
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
|
|
Benefit
|
|
Defined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
Pension
|
|
Benefit
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
Plan
|
|
Pension
|
|
Deferred
|
|
RSUs
|
|
Options
|
|
Profit
|
|
Time
|
|
|
|
Name
|
|
Bonus
|
|
Plan
|
|
(2)
|
|
Plan II
|
|
Compensation
|
|
(3)
|
|
(4)
|
|
Sharing
|
|
Bank
|
|
Total
|
Templeton
|
|
(1)
|
|
|
|
$
|
324,484
|
|
|
|
|
|
$
|
14,307,187
|
|
$
|
4,704,391
|
|
|
|
|
|
$
|
19,336,062
|
March
|
|
(1)
|
|
|
|
$
|
194,321
|
|
|
|
|
|
$
|
2,862,503
|
|
$
|
1,345,200
|
|
|
|
|
|
$
|
4,402,024
|
Lowe
|
|
(1)
|
|
|
|
$
|
296,977
|
|
|
|
|
|
$
|
4,463,553
|
|
$
|
1,982,400
|
|
|
|
|
|
$
|
6,742,930
|
Ritchie
|
|
(1)
|
|
|
|
$
|
550,900
|
|
|
|
|
|
$
|
3,881,353
|
|
$
|
1,770,000
|
|
|
|
|
|
$
|
6,202,253
|
Crutcher
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
$
|
1,552,553
|
|
$
|
708,000
|
|
|
|
|
|
$
|
2,260,553
|
(1)
|
|
See note 1 to the
Termination Due to Disability table.
|
|
(2)
|
|
Lump sum value of the
December 31, 2011, accrued benefit calculated as required by the terms of
the plan assuming the earliest possible payment date.
|
|
(3)
|
|
Calculated by multiplying
the number of RSUs granted prior to 2010 by the closing price of the
companys common stock as of December 31, 2011 ($29.11).
|
|
(4)
|
|
Upon a change in control
meeting the pre-2010 definition (please see page 84), all outstanding
options granted prior to 2010 become immediately exercisable. Calculated
as the difference between the grant price of in-the-money options not
already exercisable and the closing price of the companys common stock as
of December 31, 2011 ($29.11), multiplied by the number of those options
as of December 31, 2011.
|
An involuntary termination (not for
cause) within 24 months after a change in control of TI will accelerate, to the
extent permitted by Section 409A of the IRC, the vesting of options and RSUs
granted after 2009.
Audit Committee
report
The Audit Committee of the
board of directors has furnished the following
report:
As noted
in the committees charter, TI management is responsible for preparing the
companys financial statements. The companys independent registered public
accounting firm is responsible for auditing the financial statements. The
activities of the committee are in no way designed to supersede or alter those
traditional responsibilities. The committees role does not provide any special
assurances with regard to TIs financial statements, nor does it involve a
professional evaluation of the quality of the audits performed by the
independent registered public accounting firm.
The
committee has reviewed and discussed with management and the independent
accounting firm, as appropriate, (1) the audited financial statements and (2)
managements report on internal control over financial reporting and the
independent accounting firms related opinions.
The
committee has discussed with the independent registered public accounting firm,
Ernst & Young, the required communications specified by auditing standards
together with guidelines established by the SEC and the Sarbanes-Oxley
Act.
The committee has received the
written disclosures and the letter from the independent registered public
accounting firm required by the applicable requirements of the Public Company
Accounting Oversight Board, regarding the independent registered public
accounting firms communications with the Audit Committee concerning
independence, and has discussed with Ernst & Young the firms
independence.
Based on the review and discussions
referred to above, the committee recommended to the board of directors that the
audited financial statements be included in the companys Annual Report on Form
10-K for 2011 for filing with the SEC.
Pamela H. Patsley,
Chair
|
Ralph W. Babb,
Jr.
|
Robert E.
Sanchez
|
TEXAS INSTRUMENTS
|
2012 PROXY
STATEMENT
n
93
|
Proposal to ratify appointment of
independent registered public accounting firm
The Audit Committee of the board has appointed Ernst
& Young LLP to be TIs independent registered public accounting firm for
2012.
The
board asks the stockholders to ratify the appointment of Ernst & Young. If
the stockholders do not ratify the appointment, the Audit Committee will
consider whether it should appoint another independent registered public
accounting firm.
Representatives of Ernst & Young are expected to be present, and to
be available to respond to appropriate questions, at the annual meeting. They
have the opportunity to make a statement if they desire to do so; they have
indicated that, as of this date, they do not.
The
company has paid fees to Ernst & Young for the services described
below:
Audit fees
. Ernst &
Youngs Audit Fees were $8,435,000 in 2011 and $6,881,000 in 2010. The services
provided in exchange for these fees were our annual audit, including the audit
of internal control over financial reporting, reports on Form 10-Q, assistance
with a public debt offering, and statutory audits required
internationally.
Audit-related fees
. In
addition to the Audit Fees, the company paid Ernst & Young $846,000 in 2011
and $706,000 in 2010. The services provided in exchange for these fees included
acquisition due diligence, employee benefit plan audits, financial reporting
system access testing, access to Ernst & Youngs online research tool and,
for various non-U.S. subsidiaries, audits relating to compliance with
local-government standards.
Tax fees
. Ernst & Youngs
fees for professional services rendered for tax compliance (preparation and
review of income tax returns and other tax-related filings), tax advice on U.S.
and foreign tax matters, and tax assistance related to acquisitions were
$1,371,000 in 2011 and $856,000 in 2010.
All other fees
. Ernst &
Youngs fees for all other professional services rendered were $323,000 in 2011
and $35,000 in 2010 for the TI Foundation audit, training, and assistance with
insurance claims.
Pre-approval policy
. The Audit
Committee is required to pre-approve the audit and non-audit services to be
performed by the independent registered public accounting firm in order to
assure that the provision of such services does not impair the firms
independence.
Annually the independent registered
public accounting firm and the Director of Internal Audits present to the Audit
Committee services expected to be performed by the firm over the next 12 months.
The Audit Committee reviews and, as it deems appropriate, pre-approves those
services. The services and estimated fees are presented to the Audit Committee
for consideration in the following categories: Audit, Audit-Related, Tax and All
Other (each as defined in Schedule 14A of the Securities Exchange Act of 1934).
For each service listed in those categories, the Committee receives detailed
documentation indicating the specific services to be provided. The term of any
pre-approval is 12 months from the date of pre-approval, unless the Audit
Committee specifically provides for a different period. The Audit Committee
reviews on at least a quarterly basis the services provided to date by the firm
and the fees incurred for those services. The Audit Committee may revise the
list of pre-approved services and related fees from time to time, based on
subsequent determinations.
In
order to respond to time-sensitive requests for services that may arise between
regularly scheduled meetings of the Audit Committee, the Committee has delegated
pre-approval authority to its Chair (the Audit Committee does not delegate to
management its responsibilities to pre-approve services). The Chair reports
pre-approval decisions to the Audit Committee and seeks ratification of such
decisions at the Audit Committees next scheduled meeting.
The Audit Committee or its Chair pre-approved all
services provided by Ernst & Young during 2011.
The board of directors recommends
a vote FOR ratification of the appointment of Ernst & Young LLP as the
companys independent registered public accounting firm for
2012.
94
n
2012 PROXY
STATEMENT
|
TEXAS
INSTRUMENTS
|
Additional
information
Voting securities
As of February 21, 2012,
1,142,083,207 shares of the companys common stock were outstanding. This is the
only class of capital stock entitled to vote at the meeting. Each holder of
common stock has one vote for each share held. As stated in the notice of
meeting, holders of record of the common stock at the close of business on
February 21, 2012, may vote at the meeting or any adjournment of the
meeting.
Security ownership of certain
beneficial owners
The following table shows the only
persons who have reported beneficial ownership of more than 5 percent of the
common stock of the company. Persons generally beneficially own shares if they
have the right to either vote those shares or dispose of them. More than one
person may be considered to beneficially own the same shares.
|
|
Shares Owned at
|
|
Percent
|
Name and Address
|
|
December 31,
2011
|
|
of Class
|
Capital World Investors (1)
|
|
|
|
|
|
|
333 South Hope St.
|
|
|
|
|
|
|
Los Angeles, CA 90071
|
|
104,250,262
|
(2)
|
|
9.1
|
%
|
|
PRIMECAP Management Company
|
|
|
|
|
|
|
225 South Lake Ave # 400
|
|
|
|
|
|
|
Pasadena, CA 91101
|
|
60,169,997
|
(3)
|
|
5.27
|
%
|
(1)
|
|
A division of Capital
Research and Management Company (CRMC).
|
(2)
|
|
TI understands that Capital
World Investors is deemed to be the beneficial owner of these shares as a
result of CRMC acting as an investment advisor to various investment
companies. Capital World Investors has sole voting power for 85,707,762
shares and sole dispositive power for 104,250,262 shares.
|
(3)
|
|
TI understands that PRIMECAP
Management Company has sole voting power for 16,266,397 shares and sole
dispositive power for 60,169,997 shares.
|
|
TEXAS INSTRUMENTS
|
2012 PROXY
STATEMENT
n
95
|
Security ownership of directors
and management
The following table shows the
beneficial ownership of TI common stock by directors, the named executive
officers and all executive officers and directors as a group. Each director and
named executive officer has sole voting power (except for shares obtainable
within 60 days, shares subject to RSUs and shares credited to deferred
compensation accounts as detailed in the footnotes to the table) and sole
investment power with respect to the shares owned. The table excludes shares
held by a family member if a director or executive officer has disclaimed
beneficial ownership. No director or executive officer has pledged shares of TI
common stock.
|
|
Shares Owned at
|
|
Percent
|
Name
|
|
December 31,
2011
|
|
of Class
|
Directors (1)
|
|
|
|
|
|
|
R. W. Babb,
Jr.
|
|
13,392
|
|
|
*
|
|
D. A. Carp
|
|
134,588
|
|
|
*
|
|
C. S.
Cox
|
|
74,217
|
|
|
*
|
|
P. H. Patsley
|
|
96,702
|
|
|
*
|
|
R. E.
Sanchez
|
|
2,000
|
|
|
*
|
|
W. R. Sanders
|
|
99,756
|
|
|
*
|
|
R. J.
Simmons
|
|
127,212
|
|
|
*
|
|
R. K. Templeton
|
|
5,126,873
|
|
|
*
|
|
C. T.
Whitman
|
|
92,049
|
|
|
*
|
|
|
Management (2)
|
|
|
|
|
|
|
K. P.
March
|
|
980,202
|
|
|
*
|
|
G. A. Lowe
|
|
1,191,419
|
|
|
*
|
|
K. J.
Ritchie
|
|
1,137,169
|
|
|
*
|
|
B. T. Crutcher
|
|
468,381
|
|
|
*
|
|
|
All executive officers and directors as a group (3)
|
|
13,479,761
|
|
|
1.18
|
%
|
(1) Included in the shares owned
shown above are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credited
|
|
|
|
Shares
|
|
Shares
|
|
|
|
|
|
to Deferred
|
|
|
|
Obtainable
|
|
Credited to
|
|
RSUs
|
|
Compensation
|
|
Director
|
|
within 60 Days
|
|
401(k)
Account
|
|
(in Shares) (a)
|
|
Accounts
(b)
|
|
R. W. Babb, Jr.
|
|
|
2,500
|
|
|
|
|
|
|
4,887
|
|
|
5,005
|
|
|
D. A.
Carp
|
|
|
80,250
|
|
|
|
|
|
|
21,551
|
|
|
32,787
|
|
|
C. S. Cox
|
|
|
55,250
|
|
|
|
|
|
|
14,887
|
|
|
941
|
|
|
P. H.
Patsley
|
|
|
55,250
|
|
|
|
|
|
|
12,387
|
|
|
26,565
|
|
|
R. E. Sanchez
|
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
|
|
W. R.
Sanders
|
|
|
70,250
|
|
|
|
|
|
|
19,987
|
|
|
1,419
|
|
|
R. J. Simmons
|
|
|
90,250
|
|
|
|
|
|
|
20,887
|
|
|
16,075
|
|
|
R. K.
Templeton
|
|
|
3,971,051
|
|
|
11,992
|
|
|
|
821,487
|
|
|
|
|
|
C. T. Whitman
|
|
|
70,250
|
|
|
|
|
|
|
12,887
|
|
|
6,912
|
|
|
(a)
|
|
The non-employee directors
RSUs granted before 2007 are settled in TI stock generally upon the
directors termination of service provided he or she has served at least
eight years or has reached the companys retirement age for directors.
RSUs granted after 2006 are settled in TI stock generally upon the fourth
anniversary of the grant date.
|
|
|
|
(b)
|
|
The shares in deferred
compensation accounts are issued following the directors termination of
service.
|
|
|
96
n
2012 PROXY
STATEMENT
|
TEXAS
INSTRUMENTS
|
(2) Included in the shares owned
shown above are:
|
|
|
Shares
|
|
Shares
|
|
|
|
|
|
Obtainable
|
|
Credited to
|
|
RSUs
|
|
Executive Officer
|
|
within 60 Days
|
|
401(k) Account
|
|
(in Shares)
|
|
K. P. March
|
|
712,706
|
|
1,933
|
|
197,919
|
|
G. A.
Lowe
|
|
875,206
|
|
3,727
|
|
307,502
|
|
K. J. Ritchie
|
|
871,975
|
|
8,409
|
|
250,002
|
|
B. T.
Crutcher
|
|
208,831
|
|
1,865
|
|
257,501
|
(3) Includes:
|
(a)
|
|
9,661,597 shares obtainable
within 60 days;
|
|
|
|
(b)
|
|
48,359 shares credited to
401(k) accounts;
|
|
|
|
(c)
|
|
3,226,187 shares subject to
RSU awards; for the terms of these RSUs, please see pages 64 and 84-85;
and
|
|
|
|
(d)
|
|
89,705 shares credited to
certain non-employee directors deferred compensation accounts; shares in
deferred compensation accounts are issued following a directors
termination of service.
|
Related person
transactions
The company has no reportable related
person transactions.
Because we believe that company transactions with directors and executive
officers of TI or with persons related to TI directors and executive officers
present a heightened risk of creating or appearing to create a conflict of
interest, we have a written related person transaction policy that has been
approved by the board of directors. The policy states that TI directors and
executive officers should obtain the approvals specified below in connection
with any related person transaction. The policy applies to transactions in
which:
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1.
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TI or any TI
subsidiary is or will be a participant;
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2.
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The amount
involved exceeds or is expected to exceed $100,000 in a fiscal year;
and
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3.
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Any of the
following (a related person) has or will have a direct or indirect
interest:
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(a)
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A TI director or executive
officer, or an Immediate Family Member of a director or executive
officer;
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(b)
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A stockholder owning more
than 5 percent of the common stock of TI or an Immediate Family Member of
such stockholder, or, if the 5 percent stockholder is not a natural
person, any person or entity designated in the Form 13G or 13D filed under
the SEC rules and regulations by the 5 percent stockholder as having an
ownership interest in TI stock (individually or collectively, a 5 percent
holder); or
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(c)
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An entity in which someone
listed in (a) or (b) above has a 5 percent or greater ownership interest,
by which someone listed in (a) or (b) is employed, or of which someone
listed in (a) or (b) is a director, principal or
partner.
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For purposes
of the policy, an Immediate Family Member is any child, stepchild, parent,
stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, sister-in-law or any person (other than a
tenant or employee) sharing the household of a TI director, executive officer or
5 percent holder.
The
policy specifies that a related person transaction includes, but is not limited
to, any financial transaction, arrangement or relationship (including any
indebtedness or guarantee of indebtedness) or any series of similar transactions
or arrangements.
Approval required
Arrangement
involving:
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Approval required
by:
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Executive officer who is also a member of the TI board, an
Immediate Family Member of such person, or an entity in which any of the
foregoing has a 5 percent or greater ownership interest
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Governance and Stockholder Relations Committee
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Chief compliance officer, any of his or her Immediate Family
Members, or an entity in which any of the foregoing has a 5 percent or
greater ownership interest
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Governance and Stockholder Relations Committee
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Any other director or executive officer, an Immediate Family Member
of such person, or an entity in which any of the foregoing has a 5 percent
or greater ownership interest
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Chief compliance officer in consultation with the Chair of the
Governance and Stockholder Relations Committee
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A 5 percent holder
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Governance and Stockholder Relations
Committee
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TEXAS INSTRUMENTS
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2012 PROXY
STATEMENT
n
97
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No member of the Governance and
Stockholder Relations Committee will participate in the consideration of a
related person arrangement in which such member or any of his or her Immediate
Family Members is the related person.
The approving body or persons will consider all of the
relevant facts and circumstances available to them, including (if applicable)
but not limited to: the benefits to the company of the arrangement; the impact
on a directors independence; the availability of other sources for comparable
products or services; the terms of the arrangement; and the terms available to
unrelated third parties or to employees generally. The primary consideration is
whether the transaction between TI and the related person (a) was the result of
undue influence from the related person or (b) could adversely influence or
appear to adversely influence the judgment, decisions or actions of the director
or executive officer in meeting TI responsibilities or create obligations to
other organizations that may come in conflict with responsibilities to
TI.
No related person arrangement will be
approved unless it is determined to be in, or not inconsistent with, the best
interests of the company and its stockholders, as the approving body or persons
shall determine in good faith.
The
chief compliance officer will provide periodic reports to the committee on
related person transactions. Any related person transaction brought to the
attention of the chief compliance officer or of which the chief compliance
officer becomes aware that is not approved pursuant to the process set forth
above shall be terminated as soon as practicable.
Compensation committee interlocks
and insider participation
During 2011, Mses. Cox and Simmons
and Messrs. Goode and MacMillan served on the Compensation Committee. No
committee member (i) was an officer or employee of TI, (ii) was formerly an
officer of TI, or (iii) had any relationship requiring disclosure under the
SECs rules governing disclosure of related person transactions (Item 404 of
Regulation S-K). No executive officer of TI served as a director or member of
the compensation committee of another entity, one of whose directors or
executive officers served as a member of our board of directors or a member of
the Compensation Committee.
Cost of
solicitation
The solicitation is made on behalf of
our board of directors. TI will pay the cost of soliciting these proxies. We
will reimburse brokerage houses and other custodians, nominees and fiduciaries
for reasonable expenses they incur in sending these proxy materials to you if
you are a beneficial holder of our shares.
Without receiving additional compensation, officials and regular
employees of TI may solicit proxies personally, by telephone, fax or e-mail,
from some stockholders if proxies are not promptly received. We have also hired
Georgeson Inc. to assist in the solicitation of proxies at a cost of $12,000
plus out-of-pocket expenses.
Stockholder proposals for
2013
If you wish to submit a proposal for
possible inclusion in TIs 2013 proxy material, we must receive your notice, in
accordance with the rules of the SEC, on or before November 6, 2012. Proposals
are to be sent to: Texas Instruments Incorporated, 12500 TI Boulevard, MS 8658,
Dallas, Texas, 75243, Attn: Secretary.
If
you wish to submit a proposal at the 2013 annual meeting (but not seek inclusion
of the proposal in the companys proxy material), we must receive your notice,
in accordance with the companys by-laws, on or before January 20,
2013.
All suggestions from stockholders
concerning the companys business are welcome and will be carefully considered
by TIs management. To ensure that your suggestions receive appropriate review,
the G&SR Committee from time to time reviews correspondence from
stockholders and managements responses. Stockholders are thereby given access
at the board level without having to resort to formal stockholder proposals.
Generally, the board prefers you present your views in this manner rather than
through the process of formal stockholder proposals. Please see page 60 for
information on contacting the board.
Benefit plan voting
If you are a participant in the TI
Contribution and 401(k) Savings Plan, or the TI 401(k) Savings Plan, you are a
named fiduciary under the plans and are entitled to direct the voting of
shares allocable to your accounts under these plans. The trustee administering
your plan will vote your shares in accordance with your instructions. If you
wish to instruct the trustee on the voting of shares held for your accounts, you
should do so by April 16, 2012, in the manner described in the notice of
meeting.
Additionally, participants under the
plans are designated as named fiduciaries for the purpose of voting TI stock
held under the plans for which no voting direction is received. TI shares held
by the TI 401(k) savings plans for which no voting instructions are received by
April 16, 2012, will be voted in the same proportions as the shares in the plans
for which voting instructions have been received by that date.
98
n
2012 PROXY
STATEMENT
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TEXAS
INSTRUMENTS
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Section 16(a) beneficial ownership
reporting compliance
Section 16(a) of the Securities
Exchange Act of 1934 requires certain persons, including the companys directors
and executive officers, to file reports with the SEC regarding beneficial
ownership of certain equity securities of the company. The company believes that
during 2011, all reports were timely filed by its directors and executive
officers except for a late filing by Mr. Crutcher with respect to a sale of
shares.
Telephone and Internet
voting
Registered stockholders and
benefit plan participants
. Stockholders with shares registered directly with
Computershare (TIs transfer agent) and participants who beneficially own shares
in a TI benefit plan may vote telephonically by calling (800) 690-6903 (within
the U.S. and Canada only, toll-free) or via the Internet at www.proxyvote.com.
The telephone and Internet voting procedures are
designed to authenticate stockholders identities, to allow stockholders to give
their voting instructions and to confirm that stockholders instructions have
been recorded properly. TI has been advised by counsel that the telephone and
Internet voting procedures, which have been made available through Broadridge
Investor Communication Solutions, Inc., are consistent with the requirements of
applicable law.
Stockholders with shares
registered in the name of a brokerage firm or bank
. A number of brokerage
firms and banks offer telephone and Internet voting options. These programs may
differ from the program provided to registered stockholders and benefit plan
participants. Check the information forwarded by your bank, broker or other
holder of record to see which options are available to you.
Stockholders voting via the Internet should understand
that there may be costs associated with electronic access, such as usage charges
from telephone companies and Internet access providers, that must be borne by
the stockholder.
Stockholders sharing the same
address
To reduce the expenses of delivering
duplicate materials, we take advantage of the SECs householding rules which
permit us to deliver only one set of proxy materials (or one Notice of Internet
Availability of Proxy Materials) to stockholders who share an address unless
otherwise requested. If you share an address with another stockholder and have
received only one set of these materials, you may request a separate copy at no
cost to you by calling Investor Relations at (972) 995-3773 or by writing to
Texas Instruments Incorporated, P.O. Box 660199, MS 8657, Dallas, TX 75266-0199,
Attn: Investor Relations. For future annual meetings, you may request separate
materials, or request that we send only one set of materials to you if you are
receiving multiple copies, by calling (800) 542-1061 or writing to Investor
Relations at the address given above.
Electronic delivery of proxy
materials
As an alternative to receiving
printed copies of these materials in future years, we are pleased to offer
stockholders the opportunity to receive proxy mailings electronically. To
request electronic delivery, please vote via the Internet at www.proxyvote.com
and, when prompted, enroll to receive or access proxy materials electronically
in future years. After the meeting date, stockholders holding shares through a
broker or bank may request electronic delivery by visiting
www.icsdelivery.com/ti and entering information for each account held by a bank
or broker. If you are a registered stockholder and would like to request
electronic delivery, please visit www-us.computershare.com/investor or call TI
Investor Relations at (972) 995-3773 for more information. If you are a
participant in a TI benefit plan and would like to request electronic delivery,
please call TI Investor Relations for more information.
Important Notice Regarding the
Availability of Proxy Materials for the Stockholder Meeting to be held on April
19, 2012. This 2012 proxy statement and the companys 2011 annual report are
accessible at: www.proxyvote.com.
Sincerely,
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Joseph F. Hubach
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Senior Vice
President,
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Secretary and General
Counsel
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March 6, 2012
Dallas,
Texas
TEXAS INSTRUMENTS
|
2012 PROXY
STATEMENT
n
99
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Directions and other annual
meeting information
Directions
From DFW airport:
Take the North Airport exit to IH-635E. Take IH-635E to
the Greenville Avenue exit. Turn right (South) on Greenville. Turn right (West)
on Forest Lane. Texas Instruments will be on your right at the second traffic
light. Please use the North entrance to the building.
From Love Field
airport:
Take Mockingbird Lane East to
US-75N (Central Expressway). Travel North on 75N to the Forest Lane exit. Turn
right (East) on Forest Lane. You will pass two traffic lights. At the third
light, the entrance to Texas Instruments will be on your left. Please use the
North entrance to the building.
Parking
There will be reserved parking for all visitors at the
North Lobby. Visitors with special needs requiring assistance will be
accommodated at the South Lobby entrance.
Security
Please be advised that TIs security policy forbids
weapons, cameras and audio/video recording devices inside TI buildings. All bags
will be subject to search upon entry into the building.
100
n
2012 PROXY
STATEMENT
|
TEXAS
INSTRUMENTS
|
TEXAS
INSTRUMENTS INCORPORATED
ATTN: JANE NAHRA
13588 N. CENTRAL EXPRESSWAY
MS 3999
DALLAS, TX 75243
For registered shares, your proxy must be received by 11:59 P.M. (Eastern
Time) on
April 18, 2012
.
For shares allocable to a benefit plan account, your proxy must be received by 11:59 P.M. (Eastern
Time) on
April 16, 2012
.
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain
your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF
FUTURE PROXY MATERIALS
If you
would like to reduce the costs incurred by our company in mailing proxy
materials, you can consent to receiving all future proxy statements, proxy cards
and annual reports electronically via e-mail or the Internet. To sign up for
electronic delivery, please follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree to receive or access
proxy
materials electronically in
future years.
VOTE BY PHONE -
1-800-690-6903
Use any
touch-tone telephone to transmit your voting instructions until 11:59 P.M.
Eastern Time the day before the cut-off date or meeting date. Have your proxy
card in hand when you call and then follow the instructions.
VOTE BY
MAIL
Mark, sign and date your
proxy card and return it in the postage-paid envelope we have provided or return
it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
TO VOTE, MARK BLOCKS BELOW IN
BLUE OR BLACK INK AS FOLLOWS:
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M40765-P20043-Z57118
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KEEP THIS
PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED
AND DATED.
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DETACH AND RETURN THIS PORTION
ONLY
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TEXAS INSTRUMENTS
INCORPORATED
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The board of directors
recommends you vote
FOR
each of the
nominees for director and
FOR
Proposals 2 and
3.
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Vote on
Directors
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1.
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Election of
Directors
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Nominees:
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For
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Against
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Abstain
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1a.
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R. W. Babb, Jr.
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o
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o
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o
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1b.
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D. A. Carp
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o
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o
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o
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1c.
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C. S. Cox
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o
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o
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o
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1d.
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P. H. Patsley
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o
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o
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o
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1e.
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R. E. Sanchez
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o
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o
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o
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1f.
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W. R. Sanders
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o
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o
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o
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1g.
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R. J. Simmons
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o
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o
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o
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1h.
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R. K. Templeton
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o
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o
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o
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1i.
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C. T. Whitman
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o
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o
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o
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For
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Against
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Abstain
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2.
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Board
proposal regarding advisory approval of the Company's executive
compensation.
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o
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o
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o
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3.
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Board
proposal to ratify the appointment of Ernst & Young LLP as the
Company's independent registered public accounting firm for
2012.
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o
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o
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o
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NOTE
: Such other business as
may properly come before the meeting or any adjournment
thereof.
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Please sign
exactly as your name(s) appear(s) hereon. When signing as attorney,
executor, administrator, or other fiduciary, please give full title as
such. Joint owners should each sign personally. All holders must sign. If
a corporation or partnership, please sign in full corporate or partnership
name by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
|
Date
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 19, 2012
You are invited to attend the 2012 annual meeting of
stockholders on Thursday, April 19, 2012, at the cafeteria on our property at
12500 TI Boulevard, Dallas, Texas, at 10:00 a.m. (Dallas time). At the meeting
we will consider the election of directors, advisory approval of the Company's
executive compensation, ratification of the appointment of Ernst & Young LLP
as the Companys independent registered public accounting firm for 2012, and
such other matters as may properly come before the meeting.
Electronic Delivery of Proxy
Materials
We are pleased to offer stockholders
the opportunity to receive future proxy mailings by e-mail. To request
electronic delivery, please vote via the Internet at www.proxyvote.com and, when
prompted, enroll to receive proxy materials electronically in future
years.
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The 2012 Notice and Proxy Statement and 2011 Annual Report are
also available at www.proxyvote.com.
PROXY FOR ANNUAL
MEETING
TO BE HELD APRIL 19, 2012
This proxy is solicited on behalf
of the Board of Directors
The undersigned hereby appoints CARRIE
S. COX, PAMELA H. PATSLEY, CHRISTINE T. WHITMAN, RICHARD K. TEMPLETON, or any
one or more of them, the true and lawful attorneys of the undersigned with power
of substitution, to vote as proxies for the undersigned at the annual meeting of
stockholders of Texas Instruments Incorporated to be held in Dallas, Texas, on
April 19, 2012, at 10:00 a.m. (Dallas time) and at any or all adjournments
thereof, according to the number of shares of common stock that the undersigned
would be entitled to vote if then personally present, in the election of
directors, upon the board proposals and upon other matters properly coming
before the meeting.
If no contrary indication is made, this proxy will be
voted FOR the election of each director nominee and FOR Proposals 2 and 3.
If other matters come before the meeting, this proxy will be voted in the
discretion of the named proxies.
Should you have an
account in the TI Contribution and 401(k) Savings Plan or the TI 401(k) Savings
Plan, this proxy represents the number of TI shares allocable to that plan
account as well as other shares registered in your name. As a "named fiduciary"
under the plans for TI shares allocable to that plan account and for shares for
which no voting instructions are received, this proxy will serve as voting
instructions for The Northern Trust Company, trustee for the plans, or its
designee. The plans provide that the trustee will vote each participant's shares
in accordance with the participant's instructions. If the trustee does not
receive voting instructions for TI shares under the plans by April 16, 2012,
those shares will be voted, in accordance with the terms of plans, in the same
proportion as the shares for which voting instructions have been received. If
other matters come before the meeting, the named proxies will vote plan shares
on those matters in their discretion.
IMPORTANT - On the reverse side of this card are procedures
on how to vote the shares.
Please consider voting by Internet or
telephone.
TEXAS INSTRUMENTS INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
RECORD DATE: February 21, 2012
MEETING DATE: April 19,
2012
CUSIP NUMBER: 882508104
You are cordially invited to attend the 2012 annual meeting of
stockholders on Thursday, April 19, 2012, at the cafeteria on our property at
12500 TI Boulevard, Dallas, Texas, at 10:00 a.m. (Dallas time). At the meeting,
we will consider and act upon the following matters: (i) the election of
directors, (ii) advisory approval of the company's executive compensation, (iii)
ratification of the appointment of Ernst & Young LLP as the Company's
independent registered public accounting firm for 2012, and (iv) such other
matters as may properly come before the meeting.
You are enrolled to receive stockholder communications via the
Internet. This e-mail
contains instructions for viewing the Texas Instruments 2012 Proxy Statement and
Annual Report for 2011 and for voting your shares.
Please read the instructions carefully before proceeding.
VIEWING THE PROXY MATERIALS AND VOTING YOUR SHARES-Please
review the Proxy Statement and Annual Report before voting. The
Proxy Statement discusses the proposals to be voted on.
You can enter your voting instructions and view the
shareholder material at the following Internet site. If your
browser supports secure transactions you will be automatically directed to a secure site.
http://www.proxyvote.com/0012345678901
Registered shares must be voted by 11:59 p.m. (Eastern Time) on
April 18, 2012. Shares allocable to a Texas Instruments (TI) benefit plan must
be voted by 11:59 p.m. (Eastern Time) on April 16, 2012.
To enter your vote you will need the following:
CONTROL NUMBER: 012345678901
YOUR 4-DIGIT PIN NUMBER
If you are a TI employee-stockholder,
your PIN is the last 4 digits of your Social Security Number (unless you have taken steps to
change your PIN). For other stockholders, your PIN is the 4-digit PIN you enrolled with at the time you elected to receive electronic
delivery (unless you have taken steps to change your
PIN).
If
you would like to cancel your enrollment, or change your e-mail
address or PIN, please go to http://www.InvestorDelivery.com. You will need the
enrollment number below, and your four-digit PIN. If you have forgotten your
PIN, you can have it sent to your enrolled e-mail address by going to http://www.InvestorDelivery.com.
Your InvestorDelivery Enrollment Number is:
|
M012345678901
|
This e-mail covers TI shares registered
directly in your name and TI shares allocable to employee benefit plan(s).
Should you have an account in the TI Contribution and 401(k) Savings Plan or the
TI 401(k) Savings Plan, this proxy represents the number of TI shares allocable
to the plan account as well as other shares registered in your name. As a "named
fiduciary" under the plans for TI shares allocable to the plan account and for
shares for which no voting instructions are received, this proxy will serve as
voting instructions for The Northern Trust Company, trustee for the plans, or
its designee. The plans provide that the trustee will vote each participant's
shares in accordance with the participant's instructions. If the trustee does
not receive voting instructions for TI shares under the plans by April 16, 2012,
those shares will be voted, in accordance with the terms of the plans, in the
same proportion as the shares for which voting instructions have been received.
If other matters come before the meeting, the named proxies will vote plan
shares on those matters in their discretion.
If you receive more than one e-mail or a proxy card in addition to this
e-mail, it
generally means that your holdings are listed under other names or different
spellings of your name, and you must vote under all e-mails and any proxy cards to vote all
shares.
At the
proxyvote.com link above, you can access the proxy materials in both PDF and
HTML formats.
You may also view the proxy materials in HTML and PDF at:
Annual Report (HTML)
https://materials.proxyvote.com/Approved/882508/20120221/AR_116549/
Annual
Report (PDF)
https://materials.proxyvote.com/Approved/882508/20120221/AR_116707.PDF
Proxy Statement (HTML)
https://materials.proxyvote.com/Approved/882508/20120221/NPS_116550/
Proxy Statement (PDF)
https://materials.proxyvote.com/Approved/882508/20120221/NPS_116708.PDF
To view the proxy materials, you may need Adobe Acrobat Reader,
which is available at the following Internet site:
http://www.adobe.com/products/acrobat/readstep2.html
There are no charges for any of the services referenced herein.
There may be costs associated with electronic access, such as usage charges from
Internet access providers and telephone companies, that must be borne by the
stockholder.
PAPER COPIES - You may receive paper copies of the
Proxy Statement and Annual Report free of charge by calling Investor Relations
at 972-995-3773 or by writing to Texas Instruments Incorporated, P.O. Box
660199, MS 8657, Dallas, TX 75266-0199, Attn: Investor
Relations.
TEXAS
INSTRUMENTS INCORPORATED
|
Control#
|
2012 Annual Meeting of Shareholders
|
Meeting Material(s)
|
|
|
Thursday, April 19, 2012
|
Proxy Materials
|
|
|
For
holders as of: 02/21/2012
|
|
|
|
Cusip: 882508
|
|
As your vote is very important,
we recommend that all voting instructions be received at least one business day
prior to the voting cut-off time stated in the proxy materials. Scroll down for
proxy instructions and voting.
To vote via telephone, call
1-800-690-6903 .
PROXY
BALLOT
TEXAS INSTRUMENTS
INCORPORATED
2012 Annual Meeting of
Shareholders
To be held on 04/19/2012 for holders of record as of
02/21/2012
PROXY FOR ANNUAL MEETING
TO BE HELD APRIL 19, 2012
This proxy is solicited on
behalf of the Board of Directors
The undersigned hereby
appoints CARRIE S. COX, PAMELA H. PATSLEY, CHRISTINE T. WHITMAN, RICHARD
K. TEMPLETON, or any one or more of them, the true and lawful attorneys of
the undersigned with power of substitution, to vote as proxies for the
undersigned at the annual meeting of stockholders of Texas Instruments
Incorporated to be held in Dallas, Texas, on April 19, 2012, at 10:00 a.m.
(Dallas time) and at any or all adjournments thereof, according to the
number of shares of common stock that the undersigned would be entitled to
vote if then personally present, in the election of directors, upon the
board proposals and upon other matters properly coming before the
meeting.
If no contrary indication
is made, this proxy will be voted FOR the election of each director
nominee and FOR Proposals 2 and 3.
If other matters come before the meeting, this proxy will be voted
in the discretion of the named proxies.
Should you have an account
in the TI Contribution and 401(k) Savings Plan or the TI 401(k) Savings
Plan, this proxy represents the number of TI shares allocable to that plan
account as well as other shares registered in your name. As a "named
fiduciary" under the plans for TI shares allocable to that plan account
and for shares for which no voting instructions are received, this proxy
will serve as voting instructions for The Northern Trust Company, trustee
for the plans, or its designee. The plans provide that the trustee will
vote each participant's shares in accordance with the participant's
instructions. If the trustee does not receive voting instructions for TI
shares under the plans by April 16, 2012, those shares will be voted, in
accordance with the terms of plans, in the same proportion as the shares
for which voting instructions have been received. If other matters come
before the meeting, the named proxies will vote plan shares on those
matters in their discretion.
IMPORTANT - On the reverse
side of this card are procedures on how to vote the shares.
Please consider voting by Internet or telephone.
|
Recommendations of the Board of
Directors:
Choose this option if you would
like to vote your shares with the recommendations of the Board of
Directors. See below or refer to the proxy statement for details on the
recommendations.
|
|
Vote with the Board's Recommendations
|
|
|
|
|
|
Proposal(s)
|
Recommendations
of the
Board of
Directors
|
Vote
Options
|
1A.
|
ELECTION OF DIRECTOR: R.W.
BABB, JR.
|
For
|
¡
For
¡
Against
¡
A
bstain
|
1B.
|
ELECTION OF DIRECTOR: D.A.
CARP
|
For
|
¡
For
¡
Against
¡
Abstain
|
1C.
|
ELECTION OF DIRECTOR: C.S.
COX
|
For
|
¡
For
¡
Against
¡
Abstain
|
1D.
|
ELECTION OF DIRECTOR: P.H.
PATSLEY
|
For
|
¡
For
¡
Against
¡
Abstain
|
1E.
|
ELECTION OF DIRECTOR: R.E.
SANCHEZ
|
For
|
¡
For
¡
Against
¡
Abstain
|
1F.
|
ELECTION OF DIRECTOR: W.R.
SANDERS
|
For
|
¡
For
¡
Against
¡
Abstain
|
1G.
|
ELECTION OF DIRECTOR: R.J.
SIMMONS
|
For
|
¡
For
¡
Against
¡
Abstain
|
1H.
|
ELECTION OF DIRECTOR: R.K.
TEMPLETON
|
For
|
¡
For
¡
Against
¡
Abstain
|
1I.
|
ELECTION OF DIRECTOR: C.T.
WHITMAN
|
For
|
¡
For
¡
Against
¡
Abstain
|
2.
|
BOARD PROPOSAL REGARDING
ADVISORY
APPROVAL OF THE COMPANY'S
EXECUTIVE
COMPENSATION.
|
For
|
¡
For
¡
Against
¡
Abstain
|
3.
|
BOARD PROPOSAL TO RATIFY THE
APPOINTMENT
OF ERNST & YOUNG LLP
AS THE COMPANY'S
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING
FIRM
FOR 2012.
|
For
|
¡
For
¡
Against
¡
Abstain
|
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