Texas Instruments 2013 Annual Report Download - page 81

TEXAS INSTRUMENTS 2014 PROXY STATEMENT • 79
PROXY
STATEMENT
Benefits
Retirement plans
The executive officers participate in our retirement plans under the same rules that apply to other U.S. employees. We maintain these
plans to have a competitive benefits program and for retention.
Like other established U.S. manufacturers, we have had a U.S. qualified defined benefit pension plan for many years. At its origin,
the plan was designed to be consistent with those offered by other employers in the diverse markets in which we operated, which at
the time included consumer and defense electronics as well as semiconductors and materials products. In order to limit the cost of the
plan, we closed the plan to new participants in 1997. We gave U.S. employees as of November 1997 the choice to remain in the plan,
or to have their plan benefits frozen (i.e., no benefit increase attributable to years of service or change in eligible earnings) and begin
participating in an enhanced defined contribution plan. Mr. Templeton and Mr. Crutcher chose not to remain in the defined benefit plan.
As a result, their benefits under that plan were frozen in 1997 and they participate in the enhanced defined contribution plan. The other
named executive officers have continued their participation in the defined benefit pension plan.
The Internal Revenue Code (IRC) imposes certain limits on the retirement benefits that may be provided under a qualified plan. To
maintain the desired level of benefits, we have non-qualified defined benefit pension plans for participants in the qualified pension plan.
Under the non-qualified plans, participants receive benefits that would ordinarily be paid under the qualified pension plan but for the
limitations under the IRC. For additional information about the defined benefit plans, please see pages 86-90.
Employees accruing benefits in the qualified pension plan, including the named executive officers other than Mr. Templeton and
Mr. Crutcher, also are eligible to participate in a qualified defined contribution plan that provides employer matching contributions. The
enhanced defined contribution plan, in which Mr. Templeton and Mr. Crutcher participate, provides for a fixed employer contribution plus
an employer matching contribution.
In general, if an employee who participates in the pension plan (including an employee whose benefits are frozen as described
above) dies after having met the requirements for normal or early retirement, his or her beneficiary will receive a benefit equal to the
lump-sum amount that the participant would have received if he or she had retired before death. In 2013, having reached the age
of 55 with at least 20 years of employment, Mr. Templeton, Mr. March and Mr. Ritchie were eligible for early retirement under the
pension plans.
Because benefits under the qualified and non-qualified defined benefit pension plans are calculated on the basis of eligible earnings
(salary and bonus), an increase in salary or bonus may result in an increase in benefits under the plans. Salary or bonus increases for
Mr. Templeton and Mr. Crutcher do not result in greater benefits for them under the company’s defined benefit pension plans because
their benefits under those plans were frozen in 1997. The committee considers the potential effect on the executives’ retirement
benefits when it sets salary and performance bonus levels.
Deferred compensation
Any U.S. employee whose base salary and management responsibility exceed a certain level may defer the receipt of a portion of
his or her salary, bonus and profit sharing. Rules of the U.S. Department of Labor require that this plan be limited to a select group of
management or highly compensated employees. The plan allows employees to defer the receipt of their compensation in a tax-efficient
manner. Eligible employees include, but are not limited to, the executive officers. We have the plan to be competitive with the benefits
packages offered by other companies.
The executive officers’ deferred compensation account balances are unsecured and all amounts remain part of the company’s
operating assets. The value of the deferred amounts tracks the performance of investment alternatives selected by the participant.
These alternatives are a subset of those offered to participants in the defined contribution plans described above. The company does
not guarantee any minimum return on the amounts deferred. In accordance with SEC rules, no earnings on deferred compensation are
shown in the summary compensation table on page 81 for 2013 because no “above market” rates were earned on deferred amounts in
that year.
Employee stock purchase plan
Our shareholders approved the TI Employees 2005 Stock Purchase Plan in April 2005. Under the plan, all employees in the U.S. and
certain other countries may purchase a limited number of shares of the company’s common stock at a 15 percent discount. The plan is
designed to offer the broad-based employee population an opportunity to acquire an equity interest in the company and thereby align
their interests with those of shareholders. Consistent with our general approach to benefit programs, executive officers are also eligible
to participate.