Texas Instruments

Board organization

Board and committee meetings
During 2008, the board held nine meetings. The board has three standing committees described below. The committees of the board collectively held 22 meetings in 2008. Overall attendance at board and committee meetings was approximately 98 percent.
     Non-employee directors of the board meet in executive session at each regularly scheduled meeting and at such other times as the Governance and Stockholder Relations Committee recommends. The chair of the appropriate board committee acts as chair at executive sessions at which the principal item to be considered is within the scope of authority of his or her committee or, if there is no single principal item, the chair of the Governance and Stockholder Relations Committee acts as chair.

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Committees of the board
Audit Committee. The Audit Committee is a separately designated standing committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. All members of the Audit Committee are independent under the rules of the NYSE and the board’s corporate governance guidelines. From January 1, 2008, to April 17, 2008, the committee members were Ms. Patsley (Chair), Ms. Cox and Mr. Sanders. Since April 18, 2008, Ms. Patsley (Chair), Mr. Boren and Mr. Sanders have been members of the committee. Mr. MacMillan joined the committee on September 18, 2008. The Audit Committee is generally responsible for:

  • Appointing, compensating, retaining and overseeing TI’s independent registered public accounting firm.
  • Reviewing the annual report of TI’s independent registered public accounting firm related to quality control.
  • Reviewing TI’s annual reports to the SEC, including the financial statements and the “Management’s Discussion and Analysis” portion of those reports, and recommending appropriate action to the board.
  • Reviewing TI’s audit plans.
  • Reviewing before issuance TI’s news releases regarding annual and interim financial results and discussing with management any related earnings guidance that may be provided to analysts and rating agencies.
  • Discussing TI’s audited financial statements with management and the independent registered public accounting firm, including a discussion with the firm regarding the matters required to be reviewed under applicable legal or regulatory requirements.
  • Reviewing relationships between the independent registered public accounting firm and TI.
  • Reviewing and discussing the adequacy of TI’s internal accounting controls and other factors affecting the integrity of TI’s financial reports with management and with the independent registered public accounting firm.
  • Creating and periodically reviewing TI’s whistleblower policy.
  • Reviewing TI’s risk assessment and risk management policies.
  • Reviewing TI’s compliance and ethics program.
  • Reviewing a report of compliance of management and operating personnel with TI’s code of business conduct, including TI’s conflict of interest policy.
  • Reviewing TI’s non-employee-related insurance programs.
  • Reviewing changes, if any, in major accounting policies of the company.
  • Reviewing trends in accounting policy changes that are relevant to the company.
  • Reviewing the company’s policy regarding investments and financial derivative products.

     The board has determined that all members of the Audit Committee are financially literate and have financial management expertise, as the board has interpreted such qualifications in its business judgment. In addition, the board has designated Ms. Patsley as the audit committee financial expert as defined in the Securities Exchange Act of 1934, as amended. 
     The Audit Committee met six times in 2008. The Audit Committee holds regularly scheduled meetings and reports its activities to the board. The committee also continued its long-standing practice of meeting directly with our internal audit staff to discuss the audit plan and to allow for direct interaction between Audit Committee members and our internal auditors. Please see page 85 for a report of the committee.

Compensation Committee. The Compensation Committee consists of three independent directors. From January 1, 2008, to April 17, 2008, the committee members were Mr. Carp (Chair), Ms. Simmons and Ms. Whitman. Since April 18, 2008, the committee members have been Mr. Carp (Chair), Ms. Cox and Mr. Goode. The committee is responsible for:

  • Reviewing and approving company goals and objectives relevant to CEO compensation.
  • Evaluating the CEO’s performance in light of those goals and objectives.
  • Setting the compensation of the CEO and other executive officers.
  • Overseeing administration of employee benefit plans.
  • Making recommendations to the board regarding:
     
  • Institution and termination of, revisions in and actions under employee benefit plans that (i) increase benefits only for officers of the company or disproportionately increase benefits for officers of the company more than other employees of the company, (ii) require or permit the issuance of the company’s stock or (iii) the board must approve.
  • Reservation of company stock for use as awards of grants under plans or as contributions or sales to any trustee of any employee benefit plan.
  • Purchase of company stock in connection with employee benefit plans.
  • Taking action as appropriate regarding the institution and termination of, revisions in and actions under employee benefit plans that are not required to be approved by the board.

     The Compensation Committee holds regularly scheduled meetings, reports its activities to the board, and consults with the board before setting annual executive compensation. During 2008, the committee met eight times. Please see page 71 for a report of the committee.

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     In performing its functions, the committee is supported by the company’s Human Resources organization. The committee has the authority to retain any advisors it deems appropriate to carry out its responsibilities. The committee retained Pearl Meyer & Partners as its compensation consultant for the 2008 compensation cycle. The committee instructed the consultant to advise it directly on executive compensation philosophy, strategies, pay levels, decision-making processes and other matters within the scope of the committee’s charter. Additionally, the committee instructed the consultant to assist the company’s Human Resources organization in its support of the committee in these matters with such items as peer-group assessment, analysis of the executive compensation market, and compensation recommendations.
     The Compensation Committee considers it important that its compensation consultant’s objectivity not be compromised by other business engagements with the company or its management. In support of this belief, the committee adopted a policy in June 2007 on compensation consultants. A copy of the policy may be found on www.ti.com/corporategovernance. During 2008, neither the consultant nor any of its affiliates performed services for TI other than pursuant to the engagement by the committee.
     The Compensation Committee considers executive compensation in a multistep process that involves the review of market information, performance data and possible compensation levels over several meetings leading to the annual determinations in January. Before setting executive compensation, the committee reviews the total compensation and benefits of the executive officers and considers the impact that their retirement, or termination under various other scenarios, would have on their compensation and benefits.
     The CEO and the senior vice president responsible for Human Resources, who is an executive officer, are regularly invited to attend meetings of the committee. The CEO is excused from the meeting during any discussion of his own compensation. No executive officer determines his or her own compensation or the compensation of any other executive officer. As members of the board, the members of the committee receive information concerning the performance of the company during the year and interact with our management. During the committee’s deliberations on executive compensation, the CEO gives the committee and the board an assessment of his own performance during the year just ended. He also reviews the performance of the other executive officers with the committee and makes recommendations regarding their compensation. The senior vice president responsible for Human Resources assists in the preparation of and reviews the compensation recommendations made to the committee other than for her compensation.
     The Compensation Committee’s charter provides that it may delegate its power, authority and rights with respect to TI’s long-term incentive plans, employee stock purchase plan and employee benefit plans to (i) one or more committees of the board established or delegated authority for that purpose; or (ii) employees or committees of employees except that no such delegation may be made with respect to compensation of the company’s executive officers.
     Pursuant to that authority, the Compensation Committee has delegated to a special committee established by the board the authority to grant a limited number of stock options and restricted stock units under the company’s long-term incentive plans. The sole member of the special committee is Mr. Templeton. The special committee has no authority to grant, amend or terminate any form of compensation to TI’s executive officers. The Compensation Committee reviews the grant activity of the special committee.

Governance and Stockholder Relations Committee. All members of the Governance and Stockholder Relations Committee are independent. From January 1, 2008, to April 17, 2008, the committee members were Mr. Boren (Chair), Mr. Adams and Mr. Goode. Since April 18, 2008, the committee members have been Ms. Simmons (Chair), Mr. Adams and Ms. Whitman. The Governance and Stockholder Relations Committee is generally responsible for:

  • Making recommendations to the board regarding:
     
  • The development and revision of our corporate governance principles.
  • The size, composition and functioning of the board and board committees.
  • Candidates to fill board positions.
  • Nominees to be designated for election as directors.
  • Compensation of board members.
  • Organization and responsibilities of board committees.
  • Succession planning by the company.
  • Issues of potential conflicts of interest involving a board member raised under TI’s conflict of interest policy.
  • Election of executive officers of the company.
  • Topics affecting the relationship between the company and stockholders.
  • Public issues likely to affect the company.
  • Responses to proposals submitted by stockholders.
  • Reviewing:

 
  • Contribution policies of the company and of the TI Foundation.
  • Revisions to TI’s code of ethics.
  • Electing officers of the company other than the executive officers.
  • Overseeing an annual evaluation of the board and the committee.

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     The Governance and Stockholder Relations Committee met eight times in 2008. The Governance and Stockholder Relations Committee holds regularly scheduled meetings and reports its activities to the board. Please see page 54 for a discussion of stockholder nominations and communications with the board.





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