Texas Instruments 2015 Annual Report Download - page 93
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87
PROXY STATEMENT
○Bonus and equity compensation awards are subject to clawback under the committee’s policy described on page 95.
○We do not provide excessive perquisites. We provide no 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.
The committee’s 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 2014 are discussed on pages 89-94. Benefit programs in which the
executive officers participate are discussed on pages 95-96. Perquisites are discussed on page 96.
Detailed discussion
Compensation philosophy and elements
The Compensation Committee of TI’s 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.
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 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 company’s 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 ten years, the formula has been
based on company-level annual operating
profit margin. The formula was set by the
TI board. The committee’s 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
2014 was:
• Below10%company-level
annual operating profit as
a percentage of revenue
(“Margin”): no profit sharing
• At10%Margin:profitsharing=
2% of base salary
• AtMarginabove10%: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 2014, TI delivered Margin of
30.3%. As a result, all eligible
employees, including executive
officers, received profit sharing of
15.3% of base salary.