Texas Instruments 2015 Annual Report Download - page 99

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 93
PROXY STATEMENT
•฀ TI is the only competitor with in-house capability to produce high volumes of Analog semiconductors on 300-millimeter
wafers. In 2014, the company initiated plans to increase Analog production on 300-millimeter wafers. Such production
provides cost advantages that will further improve margins and cash generation over the long term. TI will leverage existing
facilities along with equipment that has been strategically acquired at low price points, enabling the company to grow, yet
keep capital spending levels at about 4 percent of revenue.
•฀ The committee determined in conclusion that TI’s strategic condition was strengthened by management’s decisions in 2014,
noting sustainable advantages in the company’s manufacturing and technology, the breadth and differentiation of its product
portfolio, and the diversity of markets and customers it serves.
Performance summary
1-Year 3-Year
Revenue growth: total TI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9% -1.7% CAGR
Revenue growth without legacy wireless products . . . . . . . . . . . . . . . . . . . . . . . . . 11.0% 4.7% CAGR
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.3% 23.0% average
Free cash flow as % of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.9% 24.7% average
% of free cash flow returned to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118.4% 115.1% average
Increase in quarterly dividend rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3% 100.0%
Total shareholder return (TSR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.1% 25.8% CAGR
CAGR (compound annual growth rate) is calculated using the formula (Ending Value/Beginning Value)1/number of years-1.
One-year฀TSR฀%฀=฀฀(adjusted฀closing฀price฀of฀the฀company’s฀stock฀at฀year-end฀2014,฀divided฀by฀2013฀year-end฀adjusted฀closing฀
price) minus 1. The adjusted closing price is as shown under Historical Prices for the company’s stock on Yahoo
Finance and reflects stock splits and reinvestment of dividends.
Three-year฀TSR฀CAGR฀%฀=฀฀(adjusted฀closing฀price฀of฀the฀company’s฀stock฀at฀year-end฀2014,฀divided฀by฀2011฀year-end฀adjusted฀
closing price)1/3 minus 1. Adjusted closing price is as described above.
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.
In June 2014, Mr. Crutcher became responsible for all of the company’s product lines and sales activities. Previously he was responsible
for the company’s analog semiconductor product lines. The committee noted the financial performance and strategic position of the
product lines and activities for which he is responsible.
In June 2014, Mr. Anderson became responsible for the company’s analog semiconductor product lines. Previously he was responsible
for the company’s High Performance Analog product line. The committee noted the financial performance and strategic position of the
product lines for which he is responsible.
Mr. Ritchie is responsible for the company’s semiconductor manufacturing operations. The committee noted the performance of those
operations, including their cost-competitiveness and inventory management.
The bonuses awarded for 2014 performance are shown in the table on page 94. 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 bonus of each named executive
officer was paid under the Executive Officer Performance Plan described on pages 97 and 100.
Results of the compensation decisions
Results of the compensation decisions made by the committee relating to the named executive officers for 2014 are summarized in the
following table. This table is provided as a supplement to the summary compensation table on page 98 for investors who may find it