Texas Instruments 2014 Annual Report Download - page 88

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PROXY STATEMENT
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 board’s leadership structure. The board’s consideration is guided by two
questions: would stockholders be better served and would the board be more effective with a different structure. The board’s 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 board’s goal is for each director to have an equal stake in the board’s 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.
Risk oversight by the board
It is management’s responsibility to assess and manage the various risks TI faces. It is the board’s 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 company’s 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.
TI’s 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 company’s code of conduct and finance- and accounting-related laws and policies, as well as the company’s compliance
program itself; the Compensation Committee oversees compliance with the company’s executive compensation plans and related
laws and policies; and the G&SR Committee oversees compliance with governance-related laws and policies, including the company’s
corporate governance guidelines.
The Audit Committee oversees the company’s approach to risk management as a whole. It reviews the company’s risk management
process at least annually by means of a presentation by the CFO.
The board’s 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 TI’s 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 2014 for the non-employee directors were:
•฀ Annual retainer of $80,000 for board and committee service.
•฀ Additional annual retainer of $25,000 for service as the lead director.