Texas Instruments 2014 Annual Report Download - page 103

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PROXY STATEMENT
The Texas Instruments 2009 Long-Term Incentive Plan generally establishes double-trigger change-in-control terms for grants made
in 2010 and later years. Under those terms, options become fully exercisable and shares are issued under restricted stock unit awards
(to the extent permitted by Section 409A of the IRC) if the grantee is involuntarily terminated within 24 months after a change in control
of TI. These terms are intended to encourage employees to remain with the company through a transaction while reducing employee
uncertainty and distraction in the period leading up to any such event.
Stock ownership guidelines and policy against hedging
Our board of directors has established stock ownership guidelines for executive officers. The guideline for the CEO is four times base
salary or 125,000 shares, whichever is less. The guideline for other executive officers is three times base salary or 25,000 shares,
whichever is less. Executive officers have five years from their election as executive officers to reach these targets. Directly owned
shares and restricted stock units count toward satisfying the guidelines.
Short sales of TI stock by our executive officers are prohibited. It is against TI policy for any employee, including an executive officer, to
engage in trading in “puts” (options to sell at a fixed price on or before a certain date), “calls” (similar options to buy), or other options or
hedging techniques on TI stock.
Consideration of tax and accounting treatment of compensation
Section 162(m) of the IRC generally denies a deduction to any publicly held corporation for compensation paid in a taxable year to the
company’s CEO and three other highest compensated officers excluding the CFO, to the extent that the officer’s compensation (other
than qualified performance-based compensation) exceeds $1 million. The Compensation Committee considers the impact of this
deductibility limit on the compensation that it intends to award. The committee exercises its discretion to award compensation that
does not meet the requirements of Section 162(m) when applying the limits of Section 162(m) would frustrate or be inconsistent with
our compensation policies and/or when the value of the foregone deduction would not be material. The committee has exercised this
discretion when awarding restricted stock units that vest over time, without performance conditions to vesting. The committee believes
it is in the best interest of the company and our shareholders that restricted stock unit awards provide for the retention of our executive
officers in all market conditions.
The Texas Instruments Executive Officer Performance Plan is intended to ensure that performance bonuses under the plan are fully tax
deductible under Section 162(m). The plan, which shareholders approved in 2002, is further described on page 100. The committee’s
general policy is to award bonuses within the plan, although the committee reserves the discretion to pay a bonus outside the plan if it
determines that it is in the best interest of the company and our shareholders to do so. The committee set the bonuses of the named
executive officers for 2014 performance at the levels described on page 94. The bonuses were awarded within the plan.
When setting equity compensation, the committee considers the cost for financial reporting purposes of equity compensation it intends
to grant. Its consideration of the cost of grants made in 2014 is discussed on pages 90-91 above.
Compensation Committee report
The Compensation Committee of the board of directors has furnished the following report:
The committee has reviewed and discussed the Compensation Discussion and Analysis (CD&A) with the company’s management. Based
on that review and discussion, the committee has recommended to the board of directors that the CD&A be included in the company’s
annual report on Form 10-K for 2014 and the company’s proxy statement for the 2015 annual meeting of stockholders.
Robert E. Sanchez, Chair Pamela H. Patsley Christine Todd Whitman