Texas Instruments 2013 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 2013 Texas Instruments annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

TEXAS INSTRUMENTS 2014 PROXY STATEMENT • 69
PROXY
STATEMENT
Compensation Discussion and Analysis
This section describes TI’s compensation program for executive officers. It will provide insight into the following:
•฀ The฀elements฀of฀the฀2013฀compensation฀program,฀why฀we฀selected฀them฀and฀how฀they฀relate฀to฀one฀another;฀and
•฀ How฀we฀determined฀the฀amount฀of฀compensation฀for฀2013.
Currently, TI has 14 executive officers. These executives have the broadest job responsibilities and policy-making authority in
the company. We hold them accountable for the company’s 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 2013 (collectively called the
“named executive officers”) can be found in the tables beginning on page 81.
Executive summary
•฀ TI’s 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.
•฀ 2013 compensation decisions for the CEO:
○ Base salary was increased by 3.4 percent over 2012.
○ The grant date fair value of equity compensation awarded in 2013 was 2 percent higher than in 2012. The number of shares
was 11 percent higher than in 2012.
○ The bonus decision was based primarily on the following performance results in 2013:
2013 Absolute Performance 2013 Relative Performance**
Revenue Growth: Total TI
Revenue Growth without legacy wireless products*
-4.8%
0.9%
Below Median
Above Median
Profit from Operations as a % of Revenue (PFO%) 23.2% Above Median
Total Shareholder Return (TSR) 46.3% Above Median
Year-on-Year Change in CEO Bonus
(2013 bonus compared to 2012) 11% change
* Revenue growth for total TI excluding wireless product lines that, as of year-end 2013, we have exited. See note 3 on page 75.
** Relative to semiconductor competitors as outlined on page 74. Includes estimates and projections of certain competitors’
financial results.
•฀ 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 committee’s policy described on page 78.
○ 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.