Texas Instruments 2014 Annual Report Download - page 111

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PROXY STATEMENT
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The TI Employees Pension Plan is a qualified defined benefit pension plan. Please see page 95 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. As of December 31, 2014, Mr. Templeton, Mr. March and Mr. Ritchie were 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 participant’s 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 108.
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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 pages 95-96 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.
A participant’s 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 individual’s 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 participant’s 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.