2009 Proxy Statement - Executive compensation

Executive compensation

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 2008 compensation program, how we selected them and how they relate to one another; and
How we determined the amount of the compensation for 2008.

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 2008 (collectively called the “named executive officers”) can be found in the tables beginning on page 72.

Executive summary

The Compensation Committee of TI’s board of directors is responsible for setting the compensation of all TI executive officers. The committee consults with the other independent directors on the board before setting annual compensation for the executives. The committee chair regularly reports on committee actions at board meetings.

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The primary goal of the compensation program is to provide meaningful incentives that motivate executive officers to achieve profitable growth and build long-term capability that will deliver shareholder value. To achieve this goal, the committee has designed the compensation program to (1) pay for performance; and (2) deliver rewards in ways that encourage executives to think and act in both the near-term and long-term interests of our stockholders.
In a cyclical industry such as ours, in which market conditions and therefore growth and profitability can change quickly, we do not use formulas or pre-set thresholds or multiples to determine compensation awards. The only exception to this is the broad-based profit sharing program, which pays in accordance with a formula based on company profitability.
All executive officers are employed at will. None has an employment contract.
Executive compensation has cash and non-cash components. The cash components are base salary, profit sharing and performance bonus. The non-cash component is equity compensation in the form of non-qualified (NQ) stock options and restricted stock units. In addition, executive officers get the same benefits as other U.S. employees and a few perquisites, such as financial counseling and executive physicals.
Setting cash compensation: base salary is generally set below the market median; profit sharing is determined according to a formula and depends on the level of company’s annual operating profit as a percentage of revenue; and bonuses are set at an appropriate level to reflect the company’s near-term performance as compared to competitors, its strategic progress, and the performance of the operations for which the executive is responsible.
Setting equity compensation: the primary consideration is the level of equity compensation granted to similarly situated executive officers at a peer group of companies (the “Comparator Group” discussed below).

Compensation elements
The primary elements of our executive compensation program are as follows:

Near-term compensation, paid in cash

Element	Purpose	Policy	Terms

Base salary	Basic, least variable form of compensation	Pay slightly below market median in order to weight total compensation to the performance-based elements described below	Paid twice monthly

Profit sharing	Broad-based program designed to emphasize that each employee contributes to the company’s profitability and can share in it	Pay according to a formula that focuses employees on a company goal, and at a level that will affect behavior. Profit sharing is paid in addition to any performance bonus awarded for the year. For the last five years, the formula has been based on company-level annual operating profit margin. The formula was set by the TI board. The committee’s practice has been not to adjust amounts earned under the formula.	Payable in a single cash payment shortly after the end of the performance year As in recent years, the formula for 2008 was: Below 10% company-level annual operating profit as a percentage of revenue (“Margin”): No profit sharing At 10% Margin: Profit sharing = 2% of base salary At Margin above 10%: Profit sharing increases by 0.5% of base salary for each percentage point of Margin between 10% and 24%, and 1% of base salary for each percentage point of Margin above 24%. The maximum profit sharing is 20% of base salary. In 2008, TI delivered Margin of 19.5%. As a result, all eligible employees, including executive officers, received profit sharing of 6.75% of base salary.

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Element	Purpose	Policy	Terms

Performance bonus	To motivate executives and reward them according to the company’s performance and the executive’s individual performance	Bonus is based primarily on one-year and three-year company performance on certain measures (revenue growth percent, operating margin and total shareholder return) as compared to competitors and on our strategic progress in key markets and with customers.¹ These factors have been chosen to reflect our near-term financial performance as well as our progress in building long-term shareholder value. If relative company performance is better than last year, then bonuses will generally be higher than last year. If relative performance is the same or lower than last year, bonuses will generally be the same or lower than last year. The committee does not rely on formulas or performance targets or thresholds. Instead it uses its judgment based on its assessment of the factors described above. Our general policy is to pay the bonus under the Texas Instruments Executive Officer Performance Plan (approved by stockholders in 2002). It provides for a bonus of 0.5% of TI consolidated income, as defined in the plan, to each executive officer, subject to the committee’s authority to reduce the amount to any level it considers appropriate, including $0. The committee reserves the right to pay bonuses outside the plan if it considers it in stockholder interests to do so.	Determined by the committee and paid in a single payment after the performance year

Long-term compensation, awarded in equity

Non-qualified stock options and restricted stock units	Alignment with shareholders; long-term focus; retention, particularly with respect to restricted stock units	We grant a combination of stock options and restricted stock units, targeted at the median level of equity compensation awarded to executives in similar positions at the Comparator Group.	The terms and conditions of stock options and restricted stock units are summarized on pages 76-77. The committee’s grant-timing policy is described on page 69.

Comparator group
The Compensation Committee considers the market level of compensation when setting the salary, bonuses and equity compensation of the executive officers. The Committee targets salary slightly below market median in order to weight total compensation to performance-based elements. To estimate the market level of pay, the committee uses information provided by its compensation consultant and TI’s Compensation and Benefits organization about compensation paid to executives in similar positions at Comparator Group companies.

____________________

“Total shareholder return” refers to the percentage change in the value of a stockholder’s investment in a company over the relevant time period, as determined by dividends paid and the change in the company’s share price during the period.

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The committee sets the Comparator Group annually in June for the next compensation cycle. In general, the selected companies (1) are U.S.-based, (2) engage in the semiconductor business or other electronics or information technology activities, and (3) use forms of executive compensation comparable to TI’s.

In June 2007, the committee set the Comparator Group for compensation decisions to be made in January 2008 (referred to below as the “2008 Comparator Group”). The 2008 Comparator Group consisted of the following 27 companies:

Advanced Micro Devices, Inc.	EMC Corporation	Microsoft Corporation
Altera Corporation	Fairchild Semiconductor International, Inc.	Motorola, Inc.
Analog Devices, Inc.	Intel Corporation	National Semiconductor Corporation
Apple Inc.	Intersil Corporation	NVIDIA Corporation
Applied Materials, Inc.	Jabil Circuit, Inc.	ON Semiconductor Corporation
Broadcom Corporation	Linear Technology Corporation	Oracle Corporation
Cisco Systems, Inc.	LSI Logic Corporation	QUALCOMM Incorporated
Conexant Systems, Inc.	Maxim Integrated Products, Inc.	Seagate Technology
Dell Inc.	Microchip Technology Incorporated	Xilinx, Inc.

The committee used the 2008 Comparator Group for the base salary and equity compensation decisions made in January 2008.
On the advice of its compensation consultant, the committee decided that the revenue range of the Comparator Group should more closely align with that of TI. Accordingly, the committee approved the following Comparator Group in June 2008 for use in the compensation decisions to be made in January 2009 (the “2009 Comparator Group”):

Analog Devices, Inc.	Emerson Electric Co.	Seagate Technology
Apple Inc.	Google Inc.	Sun Microsystems, Inc.
Applied Materials, Inc.	Intel Corporation	Tyco Electronics Ltd.
Cisco Systems, Inc.	Motorola, Inc.	Yahoo! Inc.
Computer Sciences Corporation	NVIDIA Corporation	Western Digital Corporation
eBay Inc.	Oracle Corporation	Xerox Corporation
EMC Corporation	QUALCOMM Incorporated

Eleven of the 20 companies in 2009 Comparator Group were in the 2008 Comparator Group. The two largest companies in terms of revenue in the 2008 Comparator Group, each of which had revenue of approximately four times TI’s, were dropped from the Comparator Group, as were thirteen companies that had significantly less revenue than TI. The median revenue and market capitalization of the 2009 Comparator Group was approximately equivalent to TI’s. The revenue range of the 2009 Comparator Group was significantly narrower (generally between 1/3 and 3 times TI revenue) than the 2008 Comparator Group.² In January 2009, the committee considered 2009 Comparator Group data when setting bonuses for 2008 performance.

Analysis of compensation determinations for 2008
In setting compensation, the committee applied the same policies to all named executive officers. The committee determined each named executive officer’s compensation separately, without using any formula to set one officer’s compensation at a higher or lower level than another officer’s.

Total compensation – Before finalizing the compensation of the executive officers, the committee performed a “tally sheet” review, i.e., a review covering all elements of compensation. The review included total cash compensation (salary, profit sharing and projected bonus), the grant date fair value of equity compensation, the impact that proposed compensation would have on other compensation elements such as pension, and a summary of benefits that the executives would receive under various termination scenarios. The review enabled the committee to see how various compensation elements relate to one another and what impact its decisions would have on the total earnings opportunity of the executives. In assessing the “tally sheet” data, the committee did not target a specific level of total compensation or use a formula to allocate compensation among the various elements. Instead, it discussed the data with its compensation consultant and used its judgment in assessing whether the total was consistent with the objectives of the program. Based on this review, the committee determined that the level of compensation was appropriate.

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The statements in this paragraph about revenue and market capitalization reflect the information available to the committee when it made its June 2008 decision. Comparator Group and TI revenue is for the four completed fiscal quarters before June 2008. Market capitalization is as of April 2008.

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Base salary – In January 2008, the committee set the base salary of each named executive officer for 2008. In keeping with its strategy, the committee targeted base salary for the named executive officers below the estimated median level of salaries that will be paid to similarly situated executives of the Comparator Group of companies in 2008. As a result of the committee’s decisions, the 2008 rate of base salary for the officers was as follows:

Officer	2008 Annual Rate*		Change from 2007 Annual Rate

Mr. Templeton	$	963,120		+3.0%
Mr. March	$	465,000		+6.9%
Mr. Lowe	$	535,020		+5.9%
Mr. Ritchie	$	448,080		+3.0%
Mr. Hames	$	463,500		+3.0%

Effective February 1, 2008. The numbers in this column differ from the “Salary” column of the Summary Compensation Table on page 72 because (as required by SEC rules) the latter shows salary received in the year 2008, including amounts paid in January 2008 at the prior year’s annual rate.

The salary differences among the named executive officers were driven primarily by differences in the market rate of pay for each officer. The increase for Mr. Templeton reflected the expected increase in the market rate of base salary for CEOs. The increase for Mr. March was in response to the rise in CFO compensation that has occurred in recent years. The committee continued to adjust Mr. Lowe’s salary to the market level for the additional responsibilities he assumed in 2006. The increases for Messrs. Hames and Ritchie reflected the expected increase in the market rate of base salary for executive officers generally.

Equity compensation – In January 2008, the committee granted long-term equity compensation to the named executive officers using a combination of NQ stock options and restricted stock units.
     The committee’s objective was to set equity grants at approximately the median level, in this case the 40th to 60th percentile, of equity compensation granted by the 2008 Comparator Group for each of the executive officers. In assessing the market level of equity compensation, the committee considered information presented by TI’s Compensation and Benefits organization (prepared using data provided by the committee’s compensation consultant) on both the value of the awards and number of shares expected to be granted by the 2008 Comparator Group to similarly situated executives in 2008.
     The award value was estimated using the same methodology used for financial accounting. The number of shares was assessed in terms of “NQ Equivalents,” which were calculated by treating each option share as 1 NQ Equivalent, and each restricted stock unit as 3 NQ Equivalents. This 3:1 ratio approximates the relative accounting expense of granting one restricted stock unit as compared to an option for one share.
     Before setting the awards, the committee also 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.
     For each of the named executive officers, the committee decided to hold the number of NQ Equivalents at the same level as in 2007. The committee found that at the 2007 grant level, the value of each officer’s award would be at approximately the market median and the number of NQ Equivalents would still be competitive with the number of shares expected to be granted by the Comparator Group to similarly situated officers.
     Based on its review of the retention value of outstanding awards, the committee concluded that the allocation of shares between stock options and restricted stock units was still appropriate for purposes of retention and there was no need to increase or decrease the award from the targeted level.
     Accordingly, the committee awarded to each of the named executive officers the same number of stock options and restricted stock units as in 2007. The differences in the equity granted to the named executive officers were primarily the result of differences in the applicable market level of equity compensation for their positions, and not the application of any formula designed to maintain differentials between the officers.
     Please see the Grants of Plan-Based Awards in 2008 table on page 73 for details concerning the grants, including the grant date fair value of the 2008 awards. The table below is provided to assist the reader in comparing NQ Equivalent levels in the three reporting years. The grant date fair value of the 2008 awards is shown in the chart on page 68.

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				Restricted
		Stock Options		Stock Units
Officer	Year	(in Shares)		(in Shares)			NQ Equivalents

Mr. Templeton	2008		270,000		150,000			720,000
	2007		270,000		150,000			720,000
	2006		350,000		150,000			800,000
Mr. March	2008		85,000		35,000			190,000
	2007		85,000		35,000			190,000
	2006		85,000		30,000			175,000
Mr. Lowe	2008		100,000		60,000			280,000
	2007		100,000		60,000			280,000
	2006		100,000		150,000	*		550,000	*
Mr. Ritchie	2008		100,000		50,000			250,000
	2007		100,000		50,000			250,000
	2006		100,000		50,000			250,000
Mr. Hames	2008		75,000		45,000			210,000
	2007		75,000		45,000			210,000
	2006		80,000		50,000			230,000

Includes a June 2006 retention grant of 100,000 restricted stock units made in connection with his assuming additional responsibilities.

All grants of equity compensation were made under the Texas Instruments 2000 Long-Term Incentive Plan, which stockholders approved in April 2000. The grants have the terms described on pages 76-77.

Bonus – In January 2009, the committee set the 2008 bonus compensation for executive officers based on its assessment of 2008 performance. The committee considered the bonus amount specified by the Executive Officer Performance Plan. In deciding whether to reduce that amount, 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 2008 performance. In assessing performance, the committee did not use formulas or pre-set 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. We believe the committee’s approach, which assesses the company’s relative performance in hindsight after year-end, gave it the insight to judge results and encouraged 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”):³

Advanced Micro Devices, Inc. Intel Corporation National Semiconductor Corporation

Altera Corporation Intersil Corporation NVIDIA Corporation

Analog Devices, Inc. Linear Technology Corporation ON Semiconductor Corporation

Broadcom Corporation LSI Logic Corporation QUALCOMM Incorporated

Conexant Systems, Inc. Marvell Technology Group Ltd. STMicroelectronics N.V.

Fairchild Semiconductor International, Inc.      Maxim Integrated Products, Inc. Xilinx, Inc.

Infineon Technologies AG Microchip Technology Incorporated

These companies include broad-based and niche suppliers that operate in our key markets or offer technology that competes with our products. This list of companies was unchanged from the list used by the committee in January 2008 in assessing TI performance for purposes of setting the bonuses for 2007 performance.

____________________

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 2008.

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Overall, the committee determined that TI’s performance in 2008 was below the median of the competitor companies. Specifically, revenue growth was below the median, operating margin was above the median, and total shareholder return was below the median. With regard to strategic position, the committee determined that once again the company strengthened in Analog and Embedded Processing, due to a broader portfolio of products and deeper relationships with customers. However, the company’s position weakened in cellular basebands for wireless phones, due both to market conditions and to loss of market share. After reviewing all these factors, the committee applied its judgment and determined that, in total, TI’s performance in 2008 was below that of the prior year when the committee determined performance was well above the median of the competitor companies. As a result, total cash compensation for the named executive officers for 2008 was 18 to 24 percent lower than for 2007.
Below are details of the committee’s assessment.

Revenue and margin

TI’s 2008 revenue declined 9.6 percent, below the median. About 6 points of this decline reflect weaker wireless performance. Analog revenue declined about 1.4 percent, and Embedded Processing revenue grew about 2.7 percent.
Three-year compounded annual revenue growth was 0.4 percent, below the median of the competitor companies.
One-year operating profit margin was 19.5 percent, above the median of the competitor companies.
Three-year average operating profit margin was 22.8 percent, above the median of the competitor companies.

Total shareholder return (“TSR”)

One-year TSR declined 52.8 percent, below the median performance of the competitor companies.
Three-year TSR declined 20.7 percent on a compounded annual basis, the median performance of the competitor companies.
The company returned cash to stockholders through stock repurchases of $2.1 billion, reducing outstanding shares by 6 percent. The company also increased the quarterly dividend rate by 10 percent, the sixth increase in five years.
Even accounting for the above stock repurchases and dividend increases, the balance sheet remained robust, ending the year with cash and short-term investments of more than $2.5 billion.

Strategic progress

TI’s strategic position in Analog and Embedded Processing strengthened in 2008 as the company put more of its attention and investment into these areas. Among the year’s results were acquisitions that broadened the company’s portfolio and the introduction of important new products. Through acquisitions, TI gained technology for improving energy efficiency and for medical applications. The company launched more than 700 new analog semiconductors and embedded processors, allowing it to reach new customers and deepen its relationships with existing customers. In total, TI remained the leading supplier of the complete chain of analog and digital semiconductors necessary for the electronic conversion and processing of real-world signals.
The company increased the intensity around growth initiatives for tens of new applications by creating small groups to design and market products for areas such as alternative energy, LED lighting and smart electric meters. TI also established Kilby Labs, where researchers and engineers can conduct early-stage experiments to determine the viability of new ideas and technologies.
Customer-centricity again gained momentum as a defining component of TI’s culture. While this is primarily an outcome of employee commitment and dependable delivery of products, the further expansion of sales networks in the emerging markets of Asia and Eastern Europe contributed to TI’s ability to engage with a broader group of customers. More than 10 new sales offices were opened in these regions, including five in India, two each in China and Vietnam, and one each in Poland, Russia and Thailand.
With slowing growth in the market for cellular basebands, TI took hard but important steps to transform its wireless business and reduce investments by about $200 million annually when fully implemented. The company is running the cellular baseband part of its wireless product line to maximize its economic value to TI. Strategically, TI is focusing on applications processors for smartphones, which have strong growth potential.

Performance summary

	1-Year	3-Years

Revenue growth	-9.6%	0.4% CAGR
Operating margin	19.5%	22.8% average
Return on invested capital (ROIC)	20.2%	22.3% average
Dividend rate growth	10%	267%
Total shareholder return (TSR)	-52.8%	-20.7% CAGR

CAGR = compound annual growth rate

ROIC = operating margin x (1 – tax rate) / (assets – non-debt liabilities)

One-year TSR % =

[(Closing price of the company’s stock at year-end 2008, plus dividends paid during 2008) divided by 2007 year-end closing price] minus 1, multiplied by 100

Three-year TSR CAGR % =

[(Closing price of the company’s stock at year-end 2008, plus dividends paid during 2006 through 2008) divided by 2005 year-end closing price] ^1/3 minus 1, multiplied by 100

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Based on its assessment of company performance, the committee determined that the bonuses of the named executive officers for 2008 performance should be approximately 35 percent lower than for 2007. The committee considered the officers’ individual performance. The performance of the CEO was judged according to the performance of the company. For the other officers, the committee also considered the factors described below in assessing individual performance. In making this assessment, the committee did not apply any formula or performance targets.
     Mr. March is the chief financial officer. The committee noted the financial management of the company.
     Mr. Lowe is responsible for the company’s analog semiconductor product lines. The committee noted the financial performance of those product lines, including the company’s analog market share, and the position of the operations strategically and with customers.
     Mr. Ritchie is responsible for the company’s semiconductor manufacturing operations. The committee noted the on-time delivery of products, inventory management and the implementation of manufacturing process technologies, as well as associated cost-competitiveness.
     Mr. Hames is responsible for the company’s Embedded Processing product lines. The committee noted the financial performance of the product lines, including the position of the product lines strategically and with customers.
     The committee determined that this assessment did not warrant a change to its preliminary bonus determination.
     The committee also compared the total cash compensation (salary, profit sharing and the proposed bonus) for each executive officer against the total cash compensation that the 2009 Comparator Group was expected to pay to similarly situated officers. Based on this review, the committee confirmed that the total cash compensation of the named executive officers was competitive and consistent with the relative performance of the company.
     Accordingly the bonuses for 2008 performance were set at approximately 35 percent lower than for 2007. The differences in the amounts awarded to the named executive officers were primarily the result of differences in the officers’ level of responsibility and the applicable market level of total cash compensation expected to be paid to similarly situated officers in the Comparator Group. The bonus of each named executive officer was paid under the Executive Officer Performance Plan described on page 63.

Results of the compensation decisions – Results of the compensation decisions made by the committee relating to the named executive officers for 2008 are summarized in the following table. This table is provided as a supplement to the Summary Compensation Table on page 72 for investors who may find it useful to see the data presented in this form. Although the committee does not target a specific level of total compensation, it considers information similar to that in the table in order to ensure that the sum of these elements is, in its judgment, in a reasonable range. The principal differences between this table and the Summary Compensation Table are explained in footnote 4 below.⁴

										Equity
										Compensation
				Salary		Profit				(Grant Date
Officer	Year			(Annual Rate)		Sharing		Bonus		Fair Value)		Total

Mr. Templeton		2008		$	963,120	$	64,853	$	1,500,000	$	6,866,100	$	9,394,073
		2007		$	935,040	$	95,822	$	2,300,000	$	6,864,300	$	10,195,162
		2006		$	900,000	$	79,070	$	2,300,000	$	8,965,500	$	12,244,570
Mr. March		2008		$	465,000	$	31,219	$	425,000	$	1,797,450	$	2,718,669
		2007		$	435,000	$	44,248	$	650,000	$	1,814,850	$	2,944,098
		2006		$	380,160	$	33,344	$	650,000	$	1,970,850	$	3,034,354
Mr. Lowe		2008		$	535,020	$	35,945	$	730,000	$	2,675,400	$	3,976,365
		2007		$	505,020	$	51,661	$	1,100,000	$	2,668,200	$	4,324,881
		2006	*	$	475,200	$	39,730	$	1,100,000	$	5,712,000	$	7,326,930
Mr. Ritchie		2008		$	448,080	$	30,172	$	520,000	$	2,377,500	$	3,375,752
Mr. Hames		2008		$	463,500	$	31,210	$	490,000	$	2,006,550	$	2,991,260
		2007		$	450,000	$	46,132	$	750,000	$	2,001,150	$	3,247,282

____________________

This table shows the annual rate of base salary as set by the committee (effective in February of the year). In the Summary Compensation Table, the “Salary” column shows the actual salary paid in the year. This table has separate columns for profit sharing and bonus. In the Summary Compensation Table, profit sharing and bonus are aggregated in the column for “Non- Equity Incentive Plan Compensation,” in accordance with SEC requirements. This table shows the grant-date fair value of equity compensation awarded in the year. Please see note 3 to the Grants of Plan-Based Awards in 2008 for information about how grant-date fair value was calculated. In the Summary Compensation Table, the “Stock Awards” and “Option Awards” columns show the expense recognized in the company’s financial statements for the year under SFAS 123(R) and include past restricted stock unit and stock option grants held by the officer.

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In June 2006, Mr. Lowe received a salary increase and a retention grant of restricted stock units in connection with his assuming additional responsibilities. For 2006, the amounts in the table are: his annual rate of salary as adjusted in June 2006; profit sharing for 2006; grant date fair value of all awards received in 2006; and bonus for 2006.

For each of the officers, the “Total” shown in this table is lower for 2008 than for 2007 due to the lower level of total cash compensation primarily as a result of the lower bonus paid for 2008 performance.

Equity dilution
The Compensation Committee’s goal is to keep net annual dilution from equity compensation under 2 percent. “Net annual dilution” means the number of shares under equity awards granted by the committee each year to all employees (net of award forfeitures) as a percentage of the shares of the company’s outstanding common stock. Equity awards granted in 2008 under the company’s equity-compensation program resulted in net annual dilution of 0.7 percent.

Equity compensation in 2009
Although 2009 equity compensation decisions would normally be discussed in next year’s proxy statement, we are providing the following information so that stockholders are aware of it as they consider the company’s proposal of a new long-term incentive plan (see page 86 below).
At its January 2009 meeting, the committee approved an annual grant of stock options and restricted stock units to employees, including the named executive officers. At the same meeting, the committee also approved a separate grant to each employee who received an annual grant, again including the named executive officers. The separate grant was generally for the same number of shares as the annual grant. The exercise price of the options in both these grants was the closing price of TI stock on January 29, 2009, the third trading day after the company released its annual and fourth quarter financial results for 2008. The details of the grants to the named executive officers have been reported on Form 4s filed with the SEC.
The committee decided on these actions to keep equity compensation competitive with anticipated market levels and increase the retention and incentive value of employees’ outstanding equity compensation. Even with the separate grant, the Committee expects to be well below its goal of keeping net annual dilution from equity compensation under 2 percent for 2009. The combined grant-date fair value of the annual and separate grants to Mr. Templeton is approximately the same as his 2008 equity compensation.

Policy on equity grant timing
The Compensation Committee makes grant decisions for equity compensation at its January meeting each year. The dates on which these meetings occur are generally set three years in advance. The January meetings of the board and the committee generally occur in the week or two before we announce our financial results for the previous quarter and year.
     On occasion, the committee may grant stock options or restricted stock units to executives at times other than January. For example, it has done so in connection with job promotions and for purposes of retention.
     We do not back-date stock options or restricted stock units. We do not accelerate or delay the release of information due to plans for making equity grants.
     In July 2007, the committee changed its grant-timing policy with effect in January 2008. Under the policy, if the committee meeting falls in the same month as the release of the company’s financial results, the grants approved at the meeting will be made effective on the later of (i) the meeting day or (ii) the third trading day after the release of results. Otherwise they will be made effective on the day of committee action. Previously all grants were made effective on the day of committee action. The exercise price of stock options continues to be the closing price of TI stock on the effective date of the grant.

Benefits
Reflecting the company’s culture of respect and value for all employees, the financial and health benefits received by executive officers are the same as those received by other U.S. employees except for the few benefits described under the sub-heading Other Benefits below in the last paragraph of this section.

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 benefits frozen in that plan and begin participating in an enhanced defined contribution plan. Mr. Templeton chose not to remain in the defined benefit plan. As a result, his benefits under that plan were frozen in 1997 and he participates 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 a non-qualified defined benefit pension plan for participants in the qualified pension plan.

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Under the non-qualified plan, participants receive a benefit 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 78-79.
Employees accruing benefits in the qualified pension plan, including the named executive officers other than Mr. Templeton, 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 participates, provides for a fixed employer contribution plus an employer matching contribution.
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 do not result in greater benefits for him under the company’s defined benefit pension plans because his benefits under those plans were frozen in 1997. The committee considers the potential effect on the executive’s retirement benefits when it sets salary and performance bonus levels.

Deferred compensation
Any U.S. employee whose base salary exceeds 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 program 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 offer it to be competitive with the benefits packages offered by other companies.
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 2008 Summary Compensation Table on page 72 because no “above market” rates were earned on deferred amounts in 2008.

Employee stock purchase plan
Our stockholders 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 stockholders. Consistent with our general approach to benefit programs, executive officers are also eligible to participate.

Health-related benefits
Executive officers are eligible under the same plans as all other U.S. employees for medical, dental, vision, disability and life insurance. These benefits are intended to be competitive with benefits offered in the semiconductor industry.

Other benefits
Executive officers receive only a few benefits that are not available to all other U.S. employees. These benefits fall into one of two categories: personal and security.

Personal benefits: We promote sustained good health by providing a company-paid physical for each executive officer, and we encourage effective long-term financial planning by providing financial counseling up to $8,000 per year for each executive officer.

Security: We pay for maintenance and monitoring of home-security systems for certain executive officers to help ensure personal safety.

The board of directors has determined that for security reasons, it is in the company’s interest to require the CEO to use company aircraft for personal air travel. Because this required use of the aircraft results in taxable income for the CEO, the company reimburses a portion of the tax expense that he incurs as a result of the requirement. Under SEC rules, Mr. Lowe is deemed to have received a personal benefit in 2008, because corporate aircraft incurred additional mileage in picking him up from, or delivering him to, his home outside Dallas in connection with some of his business trips.

Compensation following employment termination or change in control
None of the executive officers has an employment contract. Executive officers are eligible for benefits on the same terms as other U.S. employees upon termination of employment or a change in control of the company. The current programs are described under the heading Potential Payments upon Termination or Change in Control beginning on page 81. None of the few additional benefits that the executive officers receive continue after the year of termination of employment. The committee reviews the potential impact of these programs before finalizing the annual compensation for the named executive officers. The committee did not raise or lower compensation for 2008 based on this review.

[ 70 ] TEXAS INSTRUMENTS 2009 PROXY STATEMENT

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 four other highest compensated officers 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 its stockholders that restricted stock unit awards provide for the retention of our executive officers in all market conditions.
The Texas Instruments Executive Officer Performance Plan (described on page 63) is intended to ensure that performance bonuses under the plan are fully tax deductible under Section 162(m). 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 our stockholders’ best interest to do so. It did not exercise this discretion for 2008 performance.
When setting equity compensation, the committee considers the estimated cost for financial reporting purposes of equity compensation it intends to grant. Its consideration of the estimated cost of grants made in 2008 is discussed on pages 64-65 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 2008 and the company’s proxy statement for the 2009 annual meeting of stockholders.

Daniel A. Carp, Chair

Carrie S. Cox

David R. Goode

2008 summary compensation table
The table below shows the compensation of the company’s chief executive officer, chief financial officer and each of the other three most highly compensated individuals who were executive officers during 2008 (collectively called the “named executive officers”) for services in all capacities to the company in 2008. For a discussion of the amount of a named executive officer’s salary and bonus in proportion to his total compensation, please see the Compensation Discussion and Analysis on pages 61-71.
We believe that our compensation practices are fair and reasonable. Our executive officers do not have employment contracts. They are not guaranteed salary increases or bonus amounts. 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. We do not guarantee a return or provide above-market returns on compensation that has been deferred. We have not repriced stock options, and we do not grant reload options. We do not provide excessive perquisites. Those few we do provide do not result in significant expense for TI. We believe our compensation program holds our executive officers accountable for the financial and competitive performance of TI, and for their individual contribution toward that performance.

TEXAS INSTRUMENTS 2009 PROXY STATEMENT [ 71 ]

											Change in
											Pension Value
											and
											Non-qualified
									Non-equity		Deferred
					Stock		Option		Incentive Plan		Compensation			All Other
Name and Principal		Salary		Bonus	Awards		Awards		Compensation		Earnings			Compensation
Position	Year	($)		($)(2)	($)(3)		($)(4)		($)(5)		($)(6)			($)(8)		Total ($)

R. K. Templeton	2008	$	960,780	—	$	3,829,281	$	3,726,796	$	1,564,853	$	36,592		$	231,857	$	10,350,159
Chairman, President	2007	$	932,120	—	$	3,526,500	$	5,753,975	$	2,395,822	$	(7	)	$	111,417	$	12,719,834
& Chief Executive	2006	$	897,500	—	$	2,553,000	$	5,703,156	$	2,379,070	$	17,578		$	173,769	$	11,724,073
Officer

K. P. March	2008	$	462,500	—	$	862,328	$	871,125	$	456,219	$	385,214		$	31,477	$	3,068,863
Senior Vice President	2007	$	430,430	—	$	810,788	$	1,130,591	$	694,248	$	294,365		$	21,758	$	3,382,180
& Chief Financial	2006	$	371,169	—	$	669,988	$	1,022,478	$	683,344	$	234,690		$	33,414	$	3,015,083
Officer

G. A. Lowe	2008	$	532,520	—	$	2,235,538	$	1,042,531	$	765,945	$	429,163		$	89,471	$	5,095,168
Senior Vice President	2007	$	502,535	—	$	2,033,450	$	1,389,313	$	1,151,661	$	318,096		$	7,103	$	5,402,158
	2006	$	450,970	—	$	1,676,175	$	1,311,938	$	1,139,730	$	218,026		$	20,885	$	4,817,724

K. J. Ritchie (1)	2008	$	446,990	—	$	1,366,219	$	1,066,194	$	550,172	$	540,851		$	16,836	$	3,987,262
Senior Vice President

M. J. Hames (1)	2008	$	462,375	—	$	1,296,684	$	871,844	$	521,210	$	405,104		$	11,652	$	3,568,869
Senior Vice President	2007	$	448,750	—	$	1,367,800	$	1,283,016	$	796,132	$	296,953		$	20,389	$	4,213,040

(1)		Mr. Ritchie was not a named executive officer in 2006 or 2007. Mr. Hames was not a named executive officer in 2006.

(2)		Performance bonuses for 2008 were paid under the Texas Instruments Executive Officer Performance Plan. In accordance with SEC requirements, these amounts are reported in the Non-Equity Incentive Plan Compensation column.

(3)		Shown is the expense recognized in the company’s financial statements for 2008 under SFAS 123(R) for all outstanding restricted stock unit (RSU) awards held by the named executive officers. This amount consists of the portions of the fair values of RSUs granted in 2004-2008 that were allocated to service provided by the named executive officers during 2008. The discussion of the assumptions used for purposes of the valuation appears on pages 12-15 of Exhibit 13 to TI’s annual report on Form 10-K for the year ended December 31, 2008. In accordance with SEC rules, no estimates were made for forfeitures in calculating these amounts. For a description of the grant terms, please see pages 76-77.

(4)		Shown is the expense recognized in the company’s financial statements for 2008 under SFAS 123(R) for all outstanding options held by the named executive officers. This amount consists of the portions of the fair values of options granted in 2004-2008 that were allocated to service provided by the named executive officers in 2008. The discussion of the assumptions used for purposes of valuation appears on pages 12-15 of Exhibit 13 to TI’s annual report on Form 10-K for the year ended December 31, 2008. In accordance with SEC rules, no estimates were made for forfeitures in calculating these amounts. For a description of the grant terms, please see page 76. Mr. Ritchie was the only named executive officer for whom the company incurred retirement-eligible stock-based compensation expense in 2008, as he will become retirement eligible in 2011 (prior to his 2008 option grant becoming fully vested). Exhibit 13 to TI’s annual report on Form 10-K also discusses the assumptions used when calculating retirement-eligible stock-based compensation expense.

(5)		Consists of performance bonus and profit sharing for 2008. Please see page 68 of the Compensation Discussion and Analysis for the amounts of bonus and profit sharing paid to each of the named executive officers for 2008.

(6)		The company does not pay above-market earnings on deferred compensation. Therefore, no amounts are reported in this column for deferred compensation. The amounts in this column represent the change in the actuarial value of the named executive officers’ benefits under the qualified defined benefit pension plan (TI Employees Pension Plan) and the non-qualified defined benefit pension plan (TI Employees Non-Qualified Pension Plan) from December 31, 2007, through December 31, 2008. This “change in the actuarial value” is the difference between the 2007 and 2008 present value of the pension benefit accumulated as of year-end by the named executive officer, assuming that benefit is not paid until age 65. Mr. Templeton’s benefits under the company’s pension plans were frozen as of December 31, 1997.

[ 72 ] TEXAS INSTRUMENTS 2009 PROXY STATEMENT

(7)		The actuarial value of Mr. Templeton’s account decreased by $11,314 during 2007. In accordance with SEC rules, this amount has not been included in his total 2007 compensation shown in this table.

(8)		In the interest of transparency, the value of perquisites and other personal benefits is provided in this column even if the amount is less than the reporting threshold established by the SEC. The table below shows the value of perquisites and other benefits for 2008.

					Defined			Personal
					Contribution	Unused		Use of							Home
	Insurance		401(k)		Retirement	Vacation		Company		Financial			Executive		Security
Name	(a)		Contribution		Plan (b)	Time (c)		Aircraft (d)		Counseling			Physical		Monitoring

R. K. Templeton	$	270	$	9,200	$ 72,495		—	$	138,391	$	8,000		$	2,867	$	634
K. P. March	$	270	$	4,600	N/A	$	23,465		—	$	797		$	1,891	$	454
G. A. Lowe	$	270	$	4,600	N/A		—	$	71,678	$	11,183	(e)	$	1,740		N/A
K. J. Ritchie	$	270	$	4,600	N/A	$	10,289		—	$	1,677			—		N/A
M. J. Hames	$	270	$	4,600	N/A	$	1,558		—		—		$	5,224		N/A

(a)		Consists of payments made in connection with travel and accident policies of $20 and insurance premium contributions of $250 for each of the named executive officers.

(b)		Consists of (i) contributions under the company’s enhanced defined contribution retirement plan of $4,600, and (ii) an additional amount of $67,895 accrued by TI to offset IRC limitations on amounts that could be contributed to the enhanced defined contribution retirement plan. All of these amounts are also shown in the Non-qualified Deferred Compensation table on page 79.

(c)		Represents payments for unused vacation time that could not be carried forward.

(d)		The board of directors has determined that for security reasons, it is in TI’s interest to require the chief executive officer to use the company aircraft for personal air travel. The amount shown for Mr. Templeton includes $125,640 incremental cost of company-required personal use of aircraft and $12,751 for reimbursement of a portion of the tax related to the incremental cost of company-required personal use of aircraft. We valued the incremental cost of the personal use of company aircraft using a method that takes into account: landing, parking and flight planning services expenses; crew travel expenses; supplies and catering expenses; aircraft fuel and oil expenses per hour of flight; communications costs; a portion of ongoing maintenance; and any customs, foreign permit and similar fees. Because company aircraft are primarily used for business travel, this methodology excludes the fixed costs, which do not change based on usage, such as pilots’ salaries and the lease cost of the company aircraft. The amount shown for Mr. Lowe was valued using the same methodology. Under SEC rules, Mr. Lowe is deemed to have received a personal benefit in 2008, because corporate aircraft incurred additional mileage in picking him up from, or delivering him to, his home outside Dallas in connection with some of his business trips. He was not reimbursed for any portion of the tax related to his personal use of corporate aircraft.

(e)		Includes amounts for services rendered in 2007 that were not invoiced until 2008. In neither year did services exceed the $8,000 limit.

Grants of plan-based awards in 2008
The following table shows the grants of plan-based awards to the named executive officers in 2008.

								All Other	All Other
		Estimated Possible Payouts			Estimated Future Payouts			Stock	Option
		under Non-equity Incentive			under Equity Incentive			Awards:	Awards:	Exercise
		Plan Awards			Plan Awards			Number of	Number of	or Base		Grant Date
								Shares of	Securities	Price of		Fair Value
								Stock or	Underlying	Option		of Stock
	Grant	Threshold	Target	Maximum	Threshold	Target	Maximum	Units	Options	Awards		and Option
Name	Date	($)	($)	($)	(#)	(#)	(#)	(#)(1)	(#)(2)	($/Sh)		Awards (3)

R. K. Templeton	1/25/08	*	*	*	—	—	—		270,000	$	29.79	$	2,397,600
	1/25/08							150,000				$	4,468,500
K. P. March	1/25/08	*	*	*	—	—	—		85,000	$	29.79	$	754,800
	1/25/08							35,000				$	1,042,650
G. A. Lowe	1/25/08	*	*	*	—	—	—		100,000	$	29.79	$	888,000
	1/25/08							60,000				$	1,787,400
K. J. Ritchie	1/25/08								100,000	$	29.79	$	888,000
	1/25/08							50,000				$	1,489,500
M. J. Hames	1/25/08	*	*	*	—	—	—		75,000	$	29.79	$	666,000
	1/25/08							45,000				$	1,340,550

TEXAS INSTRUMENTS 2009 PROXY STATEMENT [ 73 ]

*		TI did not use formulas or pre-set thresholds or multiples to determine incentive awards. Under the terms of the Executive Officer Performance Plan, each named executive officer is eligible to receive a cash bonus equal to 0.5 percent of the company’s consolidated income (as defined in the plan). However, the Compensation Committee has the discretion to set bonuses at a lower level if it decides it is appropriate to do so. The committee decided to do so for 2008.

(1)		The stock awards granted to the named executive officers in 2008 were RSU awards. These awards were made under the company’s 2000 Long-Term Incentive Plan. For information on the terms and conditions of these RSU awards, please see the discussion beginning on page 76.

(2)		These options were granted under the company’s 2000 Long-Term Incentive Plan. For information on the terms and conditions of these options, please see the discussion on page 76.

(3)		Shown is the aggregate grant date fair value computed in accordance with SFAS 123(R) for stock and option awards in 2008. The discussion of the assumptions used for purposes of the valuation appears on pages 12-15 of Exhibit 13 to TI’s annual report on Form 10-K for the year ended December 31, 2008. By contrast, the amount shown for stock and option awards in 2008 in the Summary Compensation Table is the amount recognized by the company for financial statement purposes in 2008 for awards granted in 2008 and prior years to the named executive officers.

None of the options or other equity awards granted to the named executive officers was repriced or modified by the company.
For additional information regarding TI’s equity compensation grant practices, please see the Compensation Discussion and Analysis on page 69.

Outstanding equity awards at fiscal year-end 2008
The following table shows the outstanding equity awards for each of the named executive officers as of December 31, 2008.

	Option Awards							Stock Awards
												Equity
												Incentive	Equity
				Equity								Plan	Incentive
				Incentive								Awards:	Plan Awards:
				Plan								Number of	Market or
				Awards:								Unearned	Payout Value
	Number of	Number of		Number of						Market Value		Shares,	of Unearned
	Securities	Securities		Securities				Number of		of Shares or		Units or	Shares, Units
	Underlying	Underlying		Underlying				Shares or		Units of Stock		Other	or Other
	Unexercised	Unexercised		Unexercised	Option		Option	Units of Stock		That Have Not		Rights That	Rights That
	Options (#)	Options (#)		Unearned	Exercise		Expiration	That Have Not		Vested		Have Not	Have Not
Name	Exercisable	Unexercisable		Options (#)	Price ($)		Date	Vested (#)		($)(1)		Vested (#)	Vested ($)

R. K. Templeton	—	270,000	(2)	—	$	29.79	1/25/2018	150,000	(6)	$	2,328,000	—	—
	67,500	202,500	(3)	—	$	28.32	1/18/2017	150,000	(7)	$	2,328,000	—	—
	175,000	175,000	(4)	—	$	32.55	1/19/2016	150,000	(8)	$	2,328,000	—	—
	375,000	125,000	(5)	—	$	21.55	1/20/2015	100,000	(9)	$	1,552,000	—	—
	700,000	—		—	$	32.39	1/14/2014	—			—	—	—
	375,000	—		—	$	16.25	2/20/2013	—			—	—	—
	625,000	—		—	$	16.11	1/15/2013	—			—	—	—
	625,000	—		—	$	26.50	1/16/2012	—			—	—	—
	210,000	—		—	$	31.30	11/29/2011	—			—	—	—
	325,000	—		—	$	50.38	1/17/2011	—			—	—	—
	400,000	—		—	$	55.22	1/19/2010	—			—	—	—
	600,000	—		—	$	24.90	1/20/2009	—			—	—	—

K. P. March	—	85,000	(2)	—	$	29.79	1/25/2018	35,000	(6)	$	543,200	—	—
	21,250	63,750	(3)	—	$	28.32	1/18/2017	35,000	(7)	$	543,200	—	—
	42,500	42,500	(4)	—	$	32.55	1/19/2016	30,000	(8)	$	465,600	—	—
	60,000	20,000	(5)	—	$	21.55	1/20/2015	25,000	(9)	$	388,000	—	—
	120,000	—		—	$	32.39	1/14/2014	—			—	—	—
	60,000	—		—	$	16.25	2/20/2013	—			—	—	—
	60,000	—		—	$	16.11	1/15/2013	—			—	—	—
	100	—		—	$	29.19	2/21/2012	—			—	—	—
	30,000	—		—	$	26.50	1/16/2012	—			—	—	—
	12,700	—		—	$	35.13	7/31/2011	—			—	—	—
	20,000	—		—	$	50.38	1/17/2011	—			—	—	—
	24,000	—		—	$	55.22	1/19/2010	—			—	—	—
	15,000	—		—	$	24.90	1/20/2009	—			—	—	—

[ 74 ] TEXAS INSTRUMENTS 2009 PROXY STATEMENT

Outstanding equity awards at fiscal year-end 2008 (cont’d)
	Option Awards							Stock Awards
												Equity
												Incentive	Equity
												Plan	Incentive
				Equity								Awards:	Plan Awards:
				Incentive								Number of	Market or
				Plan Awards:								Unearned	Payout Value
	Number of	Number of		Number of						Market Value		Shares,	of Unearned
	Securities	Securities		Securities				Number of		of Shares or		Units or	Shares, Units
	Underlying	Underlying		Underlying				Shares or		Units of Stock		Other	or Other
	Unexercised	Unexercised		Unexercised	Option		Option	Units of Stock		That Have Not		Rights That	Rights That
	Options (#)	Options (#)		Unearned	Exercise		Expiration	That Have Not		Vested		Have Not	Have Not
Name	Exercisable	Unexercisable		Options (#)	Price ($)		Date	Vested (#)		($)(1)		Vested (#)	Vested ($)

G. A. Lowe	—	100,000	(2)	—	$	29.79	1/25/2018	60,000	(6)	$	931,200	—	—
	25,000	75,000	(3)	—	$	28.32	1/18/2017	60,000	(7)	$	931,200	—	—
	50,000	50,000	(4)	—	$	32.55	1/19/2016	50,000	(8)	$	776,000	—	—
	75,000	25,000	(5)	—	$	21.55	1/20/2015	50,000	(9)	$	776,000	—	—
	150,000	—		—	$	32.39	1/14/2014	100,000	(10)	$	1,552,000	—	—
	125,000	—		—	$	26.50	1/16/2012	—			—	—	—
	70,000	—		—	$	31.30	11/29/2011	—			—	—	—
	60,000	—		—	$	50.38	1/17/2011	—			—	—	—
	80,000	—		—	$	55.22	1/19/2010	—			—	—	—

K. J. Ritchie	—	100,000	(2)	—	$	29.79	1/25/2018	50,000	(6)	$	776,000	—	—
	25,000	75,000	(3)	—	$	28.32	1/18/2017	50,000	(7)	$	776,000	—	—
	50,000	50,000	(4)	—	$	32.55	1/19/2016	50,000	(8)	$	776,000	—	—
	75,000	25,000	(5)	—	$	21.55	1/20/2015	50,000	(9)	$	776,000	—	—
	150,000	—		—	$	32.39	1/14/2014	—			—	—	—
	90,000	—		—	$	16.25	2/20/2013	—			—	—	—
	175,000	—		—	$	16.11	1/15/2013	—			—	—	—
	100	—		—	$	29.19	2/21/2012	—			—	—	—
	125,000	—		—	$	26.50	1/16/2012	—			—	—	—
	40,000	—		—	$	31.30	11/19/2011	—			—	—	—
	50,000	—		—	$	50.38	1/17/2011	—			—	—	—
	50,000	—		—	$	55.22	1/19/2010	—			—	—	—
	60,000	—		—	$	24.90	1/20/2009	—			—	—	—

M. J. Hames	—	75,000	(2)	—	$	29.79	1/25/2018	45,000	(6)	$	698,400	—	—
	18,750	56,250	(3)	—	$	28.32	1/18/2017	45,000	(7)	$	698,400	—	—
	40,000	40,000	(4)	—	$	32.55	1/19/2016	50,000	(8)	$	776,000	—	—
	75,000	25,000	(5)	—	$	21.55	1/20/2015	50,000	(9)	$	776,000	—	—
	150,000	—		—	$	32.39	1/14/2014	—			—	—	—
	125,000	—		—	$	16.25	2/20/2013	—			—	—	—
	250,000	—		—	$	16.11	1/15/2013	—			—	—	—
	250,000	—		—	$	26.50	1/16/2012	—			—	—	—
	100,000	—		—	$	31.30	11/29/2011	—			—	—	—
	130,000	—		—	$	50.38	1/17/2011	—			—	—	—
	100,000	—		—	$	55.22	1/19/2010	—			—	—	—

(1)		Calculated by multiplying the number of restricted stock units by the closing price of TI’s common stock on December 31, 2008 ($15.52).

(2)		One-quarter of the shares became exercisable on January 25, 2009, and one-quarter of the remaining shares become exercisable on each of January 25, 2010, January 25, 2011, and January 25, 2012.

(3)		One-third of the shares became exercisable on January 18, 2009, and one-third of the remaining shares become exercisable on each of January 18, 2010, and January 18, 2011.

(4)		One-half of the shares became exercisable on January 19, 2009, and the remaining one-half become exercisable on January 19, 2010.

(5)		Became fully exercisable on January 20, 2009.

TEXAS INSTRUMENTS 2009 PROXY STATEMENT [ 75 ]

(6)		Vesting date is January 31, 2012. Dividend equivalents are paid on these restricted stock units.

(7)		Vesting date is January 31, 2011. Dividend equivalents are paid on these restricted stock units.

(8)		Vesting date is January 29, 2010. Dividend equivalents are not paid on these restricted stock units.

(9)		Vested on January 30, 2009. Dividend equivalents were paid on these restricted stock units.

(10)		Vesting date is July 30, 2010. Dividend equivalents are not paid on these restricted stock units.

The “Option Awards” shown in the table above are non-qualified stock options, each of which represents the right to purchase shares of TI common stock at the stated exercise price. For grants before 2007, the exercise price is the average of the high and low price of TI common stock on the grant date. For grants after 2006, the exercise price is the closing price of TI common stock on the grant date. The term of each option is 10 years unless the option is terminated earlier pursuant to provisions summarized in the chart below and in the paragraph following the chart. Options vest (become exercisable) in increments of 25 percent per year beginning on the first anniversary of the date of the grant. The chart below shows the termination provisions relating to outstanding stock options as of December 31, 2008. The Compensation Committee of the board of directors established these termination provisions to promote employee retention while offering competitive terms.

		Employment	Employment Termination (at
	Employment	Termination (at Least	Least 6 Months after Grant)		Other
	Termination Due to	6 Months after Grant)	with 20 Years of Credited	Employment	Circumstances
	Death or Permanent	When Retirement	Service, but Not Retirement	Termination for	of Employment
Grant	Disability	Eligible	Eligible	Cause	Termination

Before February 20, 2003	Vesting continues; option remains in effect to end of term	Vesting continues; option remains in effect to end of term	Vesting continues; option remains in effect to end of term	Option cancels	Option remains exercisable for 30 days

On or after February 20, 2003	Vesting continues; option remains in effect to end of term	Vesting continues; option remains in effect to end of its term	Option remains in effect to the end of the term; vesting does not continue after employment termination	Option cancels	Option remains exercisable for 30 days

Options may be cancelled if the grantee competes with TI during the two years after employment termination or discloses TI trade secrets. In addition, for options received while the grantee was an executive officer, the company may reclaim (or “claw back”) profits earned under grants if the officer engages in such conduct. These provisions are intended to strengthen retention and provide a reasonable remedy to TI in case of competition or disclosure of our confidential information.
The stock option terms also provide that upon a change in control of TI, the option becomes fully vested to the extent it is then outstanding. Further, if employment termination (except for cause) has occurred within 30 days before the change in control, the change in control is deemed to have occurred first. “Change in control” is defined as (1) acquisition of 20 percent of TI common stock other than through a transaction approved by the board of directors, or (2) change of a majority of the board of directors in a 24-month period unless a majority of the directors then in office have elected or nominated the new directors (together, the “standard definition”). TI stock options have had these change-in-control terms for many years. They are intended to reduce employee uncertainty and distraction in the period leading up to a change in control, if such an event were to occur.

The “Stock Awards” in the table of Outstanding Equity Awards at Fiscal Year-End 2008 are restricted stock unit (RSU) awards. Each RSU represents the right to receive one share of TI common stock on a stated date (the “vesting date”) unless the award is terminated earlier under terms summarized below. In general, the vesting date is approximately four years after the grant date. Except for 2006 grants, each RSU includes the right to receive dividend equivalents, which are paid annually in cash at a rate equal to the amount paid to stockholders in dividends. The table below shows the termination provisions of outstanding RSUs as of December 31, 2008.

[ 76 ] TEXAS INSTRUMENTS 2009 PROXY STATEMENT

	Employment Termination		Other Circumstances
	Due to Death or Permanent	Employment Termination When	of Employment
Grant	Disability	Retirement Eligible	Termination

Before January 19, 2006	Vesting continues; shares are paid at the scheduled vesting date	Grant terminates unless the Compensation Committee determines otherwise case-by-case*	Grant cancels; no shares are issued

On or after January 19, 2006	Vesting continues; shares are paid at the scheduled vesting date	Grant stays in effect and pays out shares at the scheduled vesting date. Number of shares reduced according to the duration of employment over the vesting period**	Grant cancels; no shares are issued

*		To date, the Compensation Committee has made no such determination for any of the named executive officers.

**		Calculated by multiplying the number of RSUs by a fraction equal to the number of whole 365-day periods from the grant date to the employment termination date (or first day of any bridge leave of absence leading to retirement), divided by the number years in the vesting period.

These termination provisions are intended to promote retention. RSU awards made after 2005 contain cancellation and “claw back” provisions, like those described above for stock options, in case of competition with TI or disclosure of TI trade secrets. The terms of awards after 2005 also provide for full vesting of the award upon a change in control of TI. Change in control is the standard definition unless the grant is subject to Section 409A of the Internal Revenue Code, in which event the definition under Section 409A applies. Section 409A defines a change in control as a change in the ownership or effective control of a corporation or a change in the ownership of a substantial portion of the assets of a corporation. These cancellation, “claw back” and change-in-control terms were added after 2005 to conform RSU terms with those of stock options (to the extent permitted by the Internal Revenue Code) and to achieve the objectives described above in the discussion of stock options.
In addition to the “Stock Awards” shown in the Outstanding Equity Awards at Fiscal Year-End 2008 table above, Mr. Templeton holds an award of RSUs that was granted in 1995. The award, for 120,000 shares of TI common stock, vested in 2000. Under the award terms, the shares will be issued to Mr. Templeton in March of the year after his termination of employment for any reason. These terms were designed to provide a tax benefit to the company by postponing the related compensation expense until it was likely to be fully deductible. In accordance with SEC requirements, this award is reflected in the 2008 Non-qualified Deferred Compensation table on page 79.

2008 option exercises and stock vested
The following table lists the number of shares acquired and the value realized as a result of option exercises by the named executive officers in 2008 and the value of any restricted stock units that vested in 2008.

	Option Awards			Stock Awards
	Number of			Number of
	Shares Acquired	Value Realized		Shares Acquired	Value Realized
Name	on Exercise (#)	on Exercise ($)		on Vesting (#)	on Vesting ($)

R. K. Templeton	—		—	100,000	$	3,085,000
K. P. March	1,000	$	17,600	20,000	$	617,000
G. A. Lowe	—		—	30,000	$	925,500
K. J. Ritchie	—		—	30,000	$	925,500
M. J. Hames	—		—	50,000	$	1,542,500

TEXAS INSTRUMENTS 2009 PROXY STATEMENT [ 77 ]

2008 pension benefits
The following table shows the present value as of December 31, 2008, of the benefit of the named executive officers under our qualified defined benefit pension plan (TI Employees Pension Plan) and non-qualified defined benefit pension plan (TI Employees Non-Qualified Pension Plan).

					Payments
			Present		During
		Number of	Value of		Last
		Years Credited	Accumulated		Fiscal
Name	Plan Name	Service (#)(2)	Benefit ($)(3)		Year ($)

R. K. Templeton (1)	TI Employees Pension Plan	16	$	326,375	—
	TI Employees Non-Qualified Pension Plan	16	$	240,099	—
K. P. March	TI Employees Pension Plan	23	$	304,975	—
	TI Employees Non-Qualified Pension Plan	23	$	1,076,148	—
G. A. Lowe	TI Employees Pension Plan	23	$	323,405	—
	TI Employees Non-Qualified Pension Plan	23	$	1,194,243	—
K. J. Ritchie	TI Employees Pension Plan	29	$	570,574	—
	TI Employees Non-Qualified Pension Plan	29	$	1,753,211	—
M. J. Hames	TI Employees Pension Plan	27	$	469,166	—
	TI Employees Non-Qualified Pension Plan	27	$	1,344,952	—

(1)		In 1997, TI’s U.S. employees were given the choice between continuing to participate in the defined benefit pension plans or participating in a new enhanced defined contribution retirement plan. Mr. Templeton chose to participate in the defined contribution plan. Accordingly, his accrued pension benefits were frozen as of December 31, 1997. Contributions to the defined contribution plan for Mr. Templeton’s benefit are included in the 2008 Summary Compensation Table.

(2)		Credited service began on the date the officer became eligible to participate in the plan. Eligibility to participate began on the earlier of 18 months of employment, or January 1 following the completion of one year of employment. Accordingly, each of the named executive officers has been employed by TI for longer than the years of credited service shown above. Because Mr. Templeton’s benefits were frozen as of December 31, 1997, he accumulates no additional years of credited service beyond that date.

(3)		The assumptions and valuation methods used to calculate the present value of the accumulated pension benefits shown are the same as those used by TI for financial reporting purposes and are described in Note 12 to Exhibit 13 to TI’s annual report on Form 10-K for the year ended December 31, 2008, except that a named executive officer’s retirement is assumed (in accordance with SEC rules) for purposes of this table to occur at age 65 and no assumption for termination prior to that date is used. The amount of the lump sum benefit earned as of December 31, 2008, is determined using either (i) the Pension Benefit Guaranty Corporation (PBGC) interest assumption of 3.75 percent or (ii) the Pension Protection Act of 2006 (PPA) corporate bond yield interest assumption of 6.14 percent for the TI Employees Pension Plan and 6.16 percent for the TI Employees Non-Qualified Pension Plan, whichever rate produces the higher lump sum amount. A discount rate assumption of 6.14 percent for the TI Employees Pension Plan and 6.16 percent for the TI Employees Non-Qualified Pension Plan were used to determine the present value of the lump sum.

TI Employees Pension Plan
The TI Employees Pension Plan is a qualified defined benefit pension plan. Please see page 69 under the Benefits heading of the Compensation Discussion and Analysis for a discussion of the origin and purpose of the plan. Employees who joined the U.S. payroll after November 30, 1997, are not eligible to participate in this plan.
     A plan participant is eligible for normal retirement under the terms of the plan if he is at least 65 years of age with one year of credited service. A participant is eligible for early retirement if he is at least 55 years of age with 20 years of employment or 60 years of age with five years of employment. None of the named executive officers are currently eligible for early or normal retirement.
     A participant may request payment of his accrued benefit at termination or any time thereafter. Participants may choose a lump sum payment or one of six forms of annuity. In order of largest to smallest periodic payment, the forms of annuity are: (i) single life annuity, (ii) 5-year certain and life annuity, (iii) 10-year certain and life annuity, (iv) qualified joint and 50 percent survivor annuity, (v) qualified joint and 75 percent survivor annuity, and (vi) qualified joint and 100 percent survivor annuity. If the participant does not request payment, he will begin to receive his benefit in April of the year after he reaches the age of 70½ in the form of annuity required under the IRC.
     The pension formula for the qualified plan is intended to provide a participant with an annual retirement benefit equal to 1.5 percent multiplied by the product of (i) years of credited service and (ii) the average of the five highest consecutive years of his base salary plus bonus up to a limit imposed by the IRS, less a percentage (based on his year of birth, when he elects to retire and his years of service with TI) of the amount of compensation on which his Social Security benefit is based.

[ 78 ] TEXAS INSTRUMENTS 2009 PROXY STATEMENT

     If an individual takes early retirement and chooses to begin receiving his annual retirement benefit at that time, such benefit is reduced by an early retirement factor. As a result, the annual benefit is lower than the one he would have received at age 65.
     If the participant’s employment terminates due to disability, the participant may choose to receive his accrued benefit at any time prior to age 65. Alternatively, the participant may choose to defer receipt of the accrued benefit until reaching age 65 and then take a disability benefit. The disability benefit paid at age 65 is based on salary and bonus, years of credited service the participant would have accrued to age 65 had he not become disabled and disabled status.
     The benefit payable in the event of death is based on salary and bonus, years of credited service and age at the time of death, and may be in the form of a lump sum or annuity at the election of the beneficiary. The earliest date of payment is the first day of the second calendar month following the month of death.
     Leaves of absence, including a bridge to retirement, are credited to years of service under the qualified and non-qualified pension plans. Please see the discussion of leaves of absence on page 84 below.

TI Employees Non-Qualified Pension Plan
The TI Employees Non-Qualified Pension Plan is a non-qualified defined benefit pension plan. Please see pages 69-70 under the Benefits heading of the Compensation Discussion and Analysis for a discussion of the purpose of this plan. As with the qualified defined benefit pension plan, employees who joined the U.S. payroll after November 30, 1997, are not eligible to participate in this Plan. Eligibility for normal and early retirement under this plan is the same as under the qualified plan (please see page 69). Benefits under this plan are paid in a lump sum.
     A participant’s benefit under the non-qualified pension plan is calculated using the same formula as described above for the TI Employees Pension Plan. However, the IRS limit on the amount of compensation on which a qualified pension benefit may be calculated does not apply. Additionally, the IRS limit on the amount of qualified benefit the participant may receive does not apply to this plan. Once this non-qualified benefit amount has been determined using the formula described above, the individual’s qualified benefit is subtracted from it. The resulting difference is multiplied by an age-based factor to obtain the amount of the lump sum benefit payable to an individual under this non-qualified plan.
     Amounts earned before 2005 will be distributed when payment of the participant’s benefit under the qualified pension plan commences. Amounts earned after 2004 will be distributed subject to the requirements of Section 409A of the IRC. Because the named executive officers are among the 50 most highly compensated officers of the company, Section 409A of the IRC requires that they not receive any lump sum distribution payments under the non-qualified pension plan before the first day of the seventh month following termination of employment.
     If a participant terminates due to disability, amounts earned prior to 2005 will be distributed when payment of the participant’s benefit under the qualified plan commences. For amounts earned after 2004, distribution is governed by Section 409A of the IRC as discussed above, and the disability benefit is reduced to reflect the payment of the benefit prior to age 65.
     In the event of death, payment is based on salary and bonus, years of credited service and age at the time of death and will be in the form of a lump sum. The earliest date of payment is the first day of the second calendar month following the month of death.
     Balances in this plan are unsecured obligations of the company. For amounts accrued prior to 2005, in the event of a change in control, the present value of the individual’s benefit would be paid not later than the month following the month in which the change in control occurred. For such amounts, the standard definition of a change in control (please see page 76) applied. For amounts accrued after 2004, the change in control definition required by Section 409A of the IRC applied. For all amounts accrued under this plan, if a sale of substantially all of the assets of the company occurred, the present value of the individual’s benefit would be distributed in a lump sum as soon as reasonably practicable following the sale of assets.

2008 non-qualified deferred compensation
The following table shows contributions to the named executive officer’s deferred compensation account in 2008 and the aggregate amount of his deferred compensation as of December 31, 2008.

	Executive			Registrant					Aggregate			Aggregate
	Contributions			Contributions in		Aggregate Earnings in			Withdrawals/			Balance at Last
Name	in Last FY ($)			Last FY ($)(2)		Last FY ($)			Distributions ($)			FYE ($)

R. K. Templeton		—		$	67,895	$	(2,557,862	)(3)	$	1,985,760	(4)	$	2,827,134	(5)
K. P. March		—			—	$	1,399			—		$	91,750
G. A. Lowe	$	255,784	(1)		—	$	(632,677	)	$	907,307		$	423,741
K. J. Ritchie		—			—	$	(47,493	)		—		$	43,311
M. J. Hames		—			—	$	(223,226	)	$	1,304,754		$	74,741

(1)

Amount shown is (a) a portion of Mr. Lowe’s bonus and profit sharing for 2007, both of which were paid in 2008; and (b) a portion of his 2008 salary. The full amount of the bonus and profit sharing for 2007 was included in the Summary Compensation Table of the company’s proxy statement dated March 7, 2008. The full amount of his 2008 salary is included in the Salary column of the 2008 Summary Compensation Table on page 72.

TEXAS INSTRUMENTS 2009 PROXY STATEMENT [ 79 ]

(2)		Company matching contributions pursuant to the defined contribution plan. These amounts are included in the All Other Compensation column of the 2008 Summary Compensation Table on page 72.

(3)		Consists of: (a) $49,200 in dividend equivalents paid under the 120,000-share 1995 RSU award discussed on page 77, settlement of which has been deferred until after termination of employment; (b) a $2,145,600 decrease in the value of the RSU award (calculated by subtracting $4,008,000 (the value of the award at year-end 2007) from $1,862,400 (the value of the award at year-end 2008) (in both cases, the number of RSUs is multiplied by the closing price of TI common stock on the last trading date of the year)); and (c) a $461,462 loss in Mr. Templeton’s deferred compensation account in 2008. Dividend equivalents are paid at the same rate as dividends on the company’s common stock.

(4)		Dividend equivalents paid on the RSUs discussed in note 3 and a $1,936,560 withdrawal by Mr. Templeton.

(5)		Of this amount, $1,862,400 is attributable to Mr. Templeton’s 1995 RSU award, calculated as described in note 3. The remainder is the balance of his deferred compensation account.

Please see page 70 for a discussion of the purpose of the plan. An employee’s deferred compensation account contains eligible compensation the employee has elected to defer and contributions by the company that are in excess of the IRS limits on (i) contributions the company may make to the enhanced defined contribution plan and (ii) matching contributions the company may make related to compensation the executive officer deferred into his deferred compensation account.
     Participants in the deferred compensation plan may choose to defer up to (i) 25 percent of their base salary, (ii) 90 percent of their performance bonus, and (iii) 90 percent of profit sharing. In addition, in 2004, participants had a one-time opportunity to defer up to 100 percent of their non-qualified pension benefit accrued after 2004. Elections to defer compensation must be made in the calendar year prior to the year in which the compensation will be earned.
     The company has determined that the investment alternatives for deferred compensation balances should generally be the same as the investment alternatives available under the company’s defined contribution plan. These investment alternatives may be changed at any time.
     During 2008, participants could choose to have their deferred compensation mirror the performance of one or more of the following mutual funds, each of which is managed by a third party (these alternatives are a subset of those offered to participants in the defined contribution plans): Northern Trust Short Term Investment Fund, Northern Trust Daily Aggregate Bond Fund Index, Barclays Global Investors Equity Index Fund, Northern Trust Russell 1000 Value Equity Index, Barclays Global Investors Russell 3000 Alpha Tilts, Northern Trust Russell 2000 Equity Index, Barclays Global Investors Active International Equity, Barclays Global Investors Lifepath Funds (Lifestyle 2010), Barclays Global Investors Lifepath Funds (Lifestyle 2020), Barclays Global Investors Lifepath Funds (Lifestyle 2030) and Barclays Global Investors Lifepath Funds (Lifestyle 2040). Prior to April 2005, participants could also choose to have their deferred compensation mirror the performance of TI’s common stock; that choice was eliminated for new deferrals beginning in April 2005.
     From among the available alternatives, participants may change their instructions relating to their deferred compensation daily, except that instructions to move compensation out of the TI stock fund are subject to our policy regarding transactions in TI stock. Earnings on a participant’s balance are determined solely by the performance of the investments that the participant has chosen for his plan balance. The company does not guarantee any minimum return on investments. A third party administers the company’s deferred compensation program.
     Prior to November 1, 2008, for compensation deferred before 2005, the participant while an employee had the opportunity to request a distribution at any time subject to a 10 percent reduction in the distribution. After November 1, 2008, a participant may request distribution of amounts deferred before 2005 only in the case of an unforeseen emergency as discussed below. For compensation deferred after 2004, in the case of an unforeseen emergency, a plan participant may request a hardship withdrawal. To obtain a hardship withdrawal, a participant must meet the requirements of Section 409A of the IRC. Except for these circumstances, a participant’s balance is paid pursuant to his distribution election and is subject to applicable IRC limitations.
     Prior to November 1, 2008, for amounts that were contributed by the company and amounts earned and deferred by the participant before 2005 and earnings on those amounts (collectively, pre-2005 amounts), termination of employment with the company triggered distribution of the amount in the participant’s account. If the participant had a valid distribution election on file, TI distributed the amount in his account according to his election. If there was no valid distribution election on file, TI distributed the entire amount in the account as soon as possible following his termination of employment. Prior to November 1, 2008, for amounts that were contributed by TI and amounts earned and deferred by the executive officer after 2004 and earnings on those amounts (collectively, post-2004 amounts), if there was no valid distribution election on file, or if the participant elected to receive a lump sum distribution on retirement, TI distributed the entire amount in the account on the first day of the seventh month following termination of employment. If a participant has elected installment payments, for post-2004 amounts, the first installment payment can be made no earlier than the first day of the seventh month following termination of employment. Effective November 1, 2008, the distribution elections then in effect apply to all deferred amounts.⁵

____________________

The named executive officers have made the following distribution elections for deferred compensation: Mr. Templeton, lump sum paid in January 2012; Mr. March, lump sum paid in January 2011; Mr. Lowe, lump sum paid in January 2012; Mr. Ritchie, lump sum paid in January 2011; and Mr. Hames, lump sum paid in January 2011.

[ 80 ] TEXAS INSTRUMENTS 2009 PROXY STATEMENT

In the event of the participant’s death, one-half of the amount in his account will be immediately paid to his beneficiaries. The remaining half will be paid to his beneficiaries on or about March 31 of the following year.
Like the balances under the non-qualified defined benefit pension plan, deferred compensation balances are unsecured obligations of the company. If a change in control occurred, amounts earned and deferred before 2005 would be paid to the individual not later than the month following the month in which the change in control occurred. The standard definition of change in control applied. For amounts earned and deferred after 2004, the participant would receive payment of his balance not later than the month following the month in which the change in control as defined in Section 409A of the IRC has occurred.

Potential payments upon termination or change in control
None of the named executive officers has an employment contract with the company. They are eligible for benefits on generally the same terms as other U.S. employees upon termination of employment or change in control of the company. TI does not reimburse executive officers for any income or excise taxes that are payable by the executive as a result of payments relating to termination or change in control.

Termination
The following programs may result in payments to a named executive officer whose employment terminates. Most of these programs have been discussed above in the proxy statement. For a discussion of the impact of these programs on the compensation decisions for 2008, please see the Compensation Discussion and Analysis on page 70.

Bonus. Our policies concerning bonus and the timing of payments are described on page 63. Whether a bonus would be awarded, and in what amount, to an executive officer whose employment has terminated would depend on the circumstances of termination. It may be presumed that no bonus would be awarded in the event of a termination for cause. If awarded, bonuses are paid by the company.

Qualified and non-qualified defined benefit pension plans. The purposes of these plans are described on pages 69-70. The formula for determining benefits, the forms of benefit and the timing of payments are described on pages 78-79. The amounts disbursed under the qualified and non-qualified plans are paid, respectively, by the TI Employees Pension Trust and the company.

Deferred compensation. The purpose of this plan is described on page 70. The amounts payable under this program depend solely on the performance of investments that the participant has chosen for his plan balance. The timing of payments is discussed on pages 79-81. Amounts distributed are paid by the company.

Equity compensation. Depending on the circumstances of termination, grantees whose employment terminates may retain the right to exercise previously granted stock options or receive shares under outstanding restricted stock unit (RSU) awards. Please see pages 76-77. Most RSU awards include a right to receive dividend equivalents. The dividend equivalents are paid annually by the company in a single cash payment after the last dividend payment of the year.

Profit sharing. For a description of the purpose of this program, the formula for determining payments and the timing of payments, please see page 62. Like other U.S. employees, if a named executive officer remains employed through the end of the year, he will receive any profit sharing paid for that year. In the event of retirement or commencement of a bridge to retirement, any profit sharing will be paid for the portion of the year worked before retirement or the beginning of the bridge. In the event of termination due to disability or death, the officer or his beneficiaries would receive any profit sharing paid for the year. Profit sharing payments are made by the company.

Time bank. Based on years of employment with the company, employees accrue hours in a time bank. Time bank hours may be used for paid absences from the office such as vacation and sick days. Employees receive a cash payment for any time bank hours still outstanding on termination of employment. The amount paid is calculated by applying the employee’s base salary rate in effect at the time of termination to the number of hours remaining in the time bank. Time bank payments are made in a lump sum by the company. They are ordinarily paid no later than what would have been the employee’s next regular pay cycle.
The following tables indicate the amounts for which each named executive officer would have been eligible if his employment had terminated on December 31, 2008, as a result of disability, death, involuntary termination for cause, resignation, or involuntary termination not for cause. Because none of the executive officers was eligible to retire as of December 31, 2008, no potential payments are stated assuming retirement.

TEXAS INSTRUMENTS 2009 PROXY STATEMENT [ 81 ]

Termination due to disability

		Qualified		Non-Qualified
		Defined		Defined
		Benefit		Benefit
		Pension		Pension		Deferred				Stock	Profit		Time
		Plan		Plan		Compensation		RSUs		Options	Sharing		Bank
Name	Bonus	(2)		(3)		(4)		(5)		(6)	(7)		(8)		Perquisites	Total

Templeton	(1)	$	798,378	$	588,995	$	964,734	$	10,398,400	—	$	64,853	$	184,383	—	$	12,999,743
March	(1)	$	1,212,470	$	1,947,850	$	91,750	$	1,940,000	—	$	31,219	$	92,107	—	$	5,315,396
Lowe	(1)	$	1,598,998	$	2,705,327	$	423,741	$	4,966,400	—	$	35,945	$	81,693	—	$	9,812,104
Ritchie	(1)	$	1,653,134	$	3,118,696	$	43,311	$	3,104,000	—	$	30,172	$	79,275	—	$	8,028,588
Hames	(1)	$	1,620,617	$	3,106,065	$	74,741	$	2,948,800	—	$	31,210	$	88,245	—	$	7,869,678

(1)	Because the amount of a bonus is subject to the Compensation Committee’s discretion considering the facts and circumstances of the termination, it is not possible to predict the amount of bonus, if any, the executive officer would have received.

(2)	The amount shown is the lump sum benefit payable at age 65 to the named executive officer in the event of termination as of December 31, 2008, due to disability, assuming the named executive officer does not request payment of his disability benefit until age 65. The assumptions used in calculating these amounts are the same as the age-65 lump-sum assumptions used for financial reporting purposes for the company’s audited financial statements for 2008 and are described in footnote 3 to the 2008 Pension Benefits table on page 78.

(3)	The amount shown is the lump sum benefit payable at age 65 to the named executive officers in the event of termination due to disability. The assumptions used are the same as those described in note (2) above.

(4)	Aggregate account value as of December 31, 2008. The amounts shown in the 2008 Non-qualified Deferred Compensation table on page 79 include the amounts shown in this column.

(5)	Calculated by multiplying the number of outstanding RSUs by the closing price of TI common stock as of December 31, 2008 ($15.52). Because the executive officer will retain his RSU awards in the event of termination and they will continue to vest according to their terms, all outstanding RSUs are assumed to be vested for purposes of this table. Please see the Outstanding Equity Awards at Fiscal Year-End 2008 table on pages 74-75 for the number of unvested RSUs as of December 31, 2008, and page 77 for a discussion of an additional outstanding RSU award held by Mr. Templeton.

(6)	Calculated as the difference between the grant price of all outstanding in-the-money options and the closing price of TI common stock as of December 31, 2008 ($15.52), multiplied by the number of shares under such options as of December 31, 2008. As of December 31, 2008, no outstanding options were in the money.

(7)	Amounts earned in 2008.

(8)	Calculated by multiplying the number of hours remaining in the named executive officer’s time bank by the applicable base salary rate as of December 31, 2008.

Termination due to death

		Qualified		Non-Qualified
		Defined		Defined
		Benefit		Benefit
		Pension		Pension		Deferred				Stock	Profit		Time
	Bonus	Plan		Plan		Compensation		RSUs		Options	Sharing		Bank
Name	(1)	(2)		(2)		(3)		(4)		(5)	(6)		(7)		Perquisites	Total

Templeton	(1)	$	194,873	$	143,998	$	964,734	$	10,398,400	—	$	64,853	$	184,383	—	$	11,951,241
March	(1)	$	187,275	$	663,649	$	91,750	$	1,940,000	—	$	31,219	$	92,107	—	$	3,006,000
Lowe	(1)	$	210,570	$	781,560	$	423,741	$	4,966,400	—	$	35,945	$	81,693	—	$	6,499,909
Ritchie	(1)	$	326,441	$	1,007,097	$	43,311	$	3,104,000	—	$	30,172	$	79,275	—	$	4,590,296
Hames	(1)	$	304,204	$	875,866	$	74,741	$	2,948,800	—	$	31,210	$	88,245	—	$	4,323,066

(1)	See note (1) to the Termination Due to Disability table.

(2)	Value of the benefit payable in a lump sum to the executive officer’s beneficiary calculated as required by the terms of the plan assuming the earliest possible payment date. The plan provides that in the event of death, the beneficiary receives 50 percent of the participant’s accrued benefit, reduced by the age-applicable joint and 50 percent survivor factor.

[ 82 ] TEXAS INSTRUMENTS 2009 PROXY STATEMENT

(3)	See note (4) to the Termination Due to Disability table.

(4)	Calculated by multiplying the number of outstanding RSUs by the closing price of TI common stock as of December 31, 2008 ($15.52). Because the executive officer’s estate will receive his RSU awards in the event of his death, all outstanding RSUs are assumed to be vested for purposes of this table. Please see the Outstanding Equity Awards at Fiscal Year-End 2008 table on pages 74-75 for the number of unvested RSUs as of December 31, 2008, and see page 77 for a discussion of an additional outstanding RSU award held by Mr. Templeton.

(5)	See note (6) to the Termination Due to Disability table.

(6)	Amounts earned in 2008.

(7)	See note (8) to the Termination Due to Disability table.

Involuntary termination for cause

Qualified Non-Qualified

Defined Defined

Benefit Benefit

Pension Pension Deferred Profit Time

Bonus Plan Plan Compensation Stock Sharing Bank

Name (1) (2) (2) (3) RSUs Options (5) (6) Perquisites Total

Templeton — $ 376,884 $ 278,491 $ 964,734 $ 1,862,400 (4) — $ 64,853 $ 184,383 — $ 3,731,745

March — $ 346,974 $ 1,229,584 $ 91,750 — — $ 31,219 $ 92,107 — $ 1,791,634

Lowe — $ 394,427 $ 1,463,958 $ 423,741 — — $ 35,945 $ 81,693 — $ 2,399,764

Ritchie — $ 637,160 $ 1,965,664 $ 43,311 — — $ 30,172 $ 79,275 — $ 2,755,582

Hames —

All grants of equity compensation were made under the Texas Instruments 2000 Long-Term Incentive Plan, which stockholders approved in April 2000. The grants have the terms described on pages 76-77. Bonus – In January 2009, the committee set the 2008 bonus compensation for executive officers based on its assessment of 2008 performance. The committee considered the bonus amount specified by the Executive Officer Performance Plan. In deciding whether to reduce that amount, 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 2008 performance. In assessing performance, the committee did not use formulas or pre-set 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. We believe the committee’s approach, which assesses the company’s relative performance in hindsight after year-end, gave it the insight to judge results and encouraged 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”):³