Texas Instruments 2013 Annual Report Download - page 76

Download and view the complete annual report

Please find page 76 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 INSTRUMENTS74 • 2014 PROXY STATEMENT
PROXY
STATEMENT
2 To the extent the companies had not released financial results for the year or most recent quarter, the committee based its
evaluation on estimates and projections of the companies’ financial results for 2013.
In assessing the market level, the committee considered information presented by TI’s Compensation and Benefits organization
(prepared using data provided by the committee’s compensation consultant) on the estimated value of the awards expected to be
granted by the Comparator Group to similarly situated executives. The award value was estimated using the same methodology used for
financial accounting.
For each officer, the committee set a number of NQ Equivalents to achieve the desired grant value. The committee decided to
allocate the NQ Equivalents for each officer equally between restricted stock units and options to give equal emphasis to promoting
retention, motivating the executive and aligning his interests with those of shareholders.
Before approving the grants, the committee reviewed the amount of unvested equity compensation held by the officers to assess its
retention value. In making this assessment, the committee used its judgment and did not apply any formula, threshold or maximum. This
review did not result in an increase or decrease of the awards from the levels described above.
The exercise price of the options was the closing price of TI stock on January 25, 2013, the third trading day after the company
released its annual and fourth quarter financial results for 2012. All grants were made under the Texas Instruments 2009 Long-Term
Incentive Plan, which shareholders approved in April 2009.
All grants have the terms described on pages 85-86. The differences in the equity awards between the named executive officers
were primarily the result of differences in the applicable estimated market level of equity compensation for their positions, and not the
application of any formula designed to maintain differentials between the officers.
Bonus – In January 2014, the committee set the 2013 bonus compensation for executive officers based on its assessment of 2013
performance. In setting the bonuses, the committee used the following performance measures to assess the company:
•฀ The฀relative one-year and three-year performance of TI as compared with competitor companies, as measured by
○ revenue growth,
○ operating profit as a percentage of revenue,
○ total shareholder return; and
•฀ The฀absolute one-year and three-year performance of TI on the above measures.
In addition, the committee considered our strategic progress by reviewing how competitive we are in key markets with our core
products and technologies, as well as the strength of our relationships with key customers.
One-year relative performance on the three measures and one-year strategic progress were the primary considerations in the
committee’s assessment of the company’s 2013 performance. In assessing performance, the committee did not use formulas,
thresholds or multiples. Because market conditions can quickly change in our industry, thresholds established at the beginning of a
year could prove irrelevant by year-end. The committee believes its approach, which assesses the company’s relative performance
in hindsight after year-end, gives it the insight to most effectively and critically judge results and encourages executives to pursue
strategies that serve the long-term interests of the company and its shareholders.
In the comparison of relative performance, the committee used the following companies (the “competitor companies”):2
Advanced Micro Devices, Inc.
Altera Corporation
Analog Devices, Inc.
Atmel Corporation
Broadcom Corporation
Fairchild Semiconductor International, Inc.
Freescale Semiconductor, Ltd.
Infineon Technologies AG
Intel Corporation
Intersil Corporation
Linear Technology Corporation
LSI Corporation
Marvell Technology Group Ltd.
Maxim Integrated Products, Inc.
Microchip Technology Incorporated
NVIDIA Corporation
NXP Semiconductors N.V.
ON Semiconductor Corporation
QUALCOMM Incorporated
STMicroelectronics N.V.
Xilinx, Inc.
This list includes both broad-based and niche suppliers that operate in our key markets or offer technology that competes with our
products. The committee considers annually whether the list is still appropriate in terms of revenue, market capitalization and changes
in business activities of the companies. The committee made no change to the list of competitor companies in 2013.