Texas Instruments



Proxy statement – March 7, 2011
 
 
Executive offices
12500 TI BOULEVARD, DALLAS, TEXAS 75243
MAILING ADDRESS: P. O. BOX 660199, DALLAS, TEXAS 75266-0199
 
Voting procedures and quorum
TI’s board of directors requests your proxy for the annual meeting of stockholders on April 21, 2011. If you sign and return the enclosed proxy, or vote by telephone or on the Internet, you authorize the persons named in the proxy to represent you and vote your shares for the purposes mentioned in the notice of annual meeting. This proxy statement and related proxy are being distributed on or about March 7, 2011. If you come to the meeting, you can vote in person. If you don’t come to the meeting, your shares can be voted only if you have returned a properly signed proxy or followed the telephone or Internet voting instructions, which can be found on the enclosed proxy. If you sign and return your proxy but do not give voting instructions, the shares represented by that proxy will be voted as recommended by the board of directors. You can revoke your authorization at any time before the shares are voted at the meeting.
     A quorum of stockholders is necessary to hold a valid meeting. If at least a majority of the shares of TI stock issued and outstanding and entitled to vote are present in person or by proxy, a quorum will exist. Abstentions and broker non-votes are counted as present for purposes of establishing a quorum. Broker non-votes occur when a beneficial owner who holds company stock through a broker does not provide the broker with voting instructions as to any matter on which the broker is not permitted to exercise its discretion and vote without specific instruction.
     Scheduled to be considered at the meeting are the election of directors, advisory votes relating to executive compensation, and ratification of the appointment of our independent registered public accounting firm. Each of these matters is discussed elsewhere in this proxy statement.
     Any other matter that may properly be submitted at the meeting is approved if a majority of the votes present at the meeting vote “for” the proposal. On such matters you may vote “for,” “against” or “abstain”; abstentions and broker non-votes have the same effect as votes “against.”
 
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Election of directors
Directors are elected at the annual meeting to hold office until the next annual meeting and until their successors are elected and qualified. The board of directors has designated the following persons as nominees: RALPH W. BABB, JR., DANIEL A. CARP, CARRIE S. COX, STEPHEN P. MACMILLAN, PAMELA H. PATSLEY, ROBERT E. SANCHEZ, WAYNE R. SANDERS, RUTH J. SIMMONS, RICHARD K. TEMPLETON and CHRISTINE TODD WHITMAN.
     If you return a proxy that is not otherwise marked, your shares will be voted FOR each of the nominees.
     Directors must be elected by a majority of the votes present at the meeting and entitled to be cast in the election. You may vote “for,” “against,” or “abstain.” Abstentions have the same effect as votes “against.” Broker non-votes are not counted as votes “for” or “against.”
 
Nominees for directorship
 
All of the nominees for directorship will be directors of the company at the time of the annual meeting. For a discussion of each nominee’s qualifications to serve as a director of the company, please see pages 52-54. If any nominee becomes unable to serve before the meeting, the people named as proxies may vote for a substitute or the number of directors will be reduced accordingly.
 
Directors
 
         
     
RALPH W. BABB, JR.
Age 62
Director since 2010
Member, Audit Committee
        
ROBERT E. SANCHEZ
Age 45
Director
Member, Audit Committee
(Effective March 15, 2011)
         
DANIEL A. CARP
Age 62
Director since 1997
Member, Audit Committee
  
WAYNE R. SANDERS
Age 63
Director since 1997
Member, Governance and Stockholder
Relations Committee
         
CARRIE S. COX
Age 53
Director since 2004
Chair, Compensation Committee
  
RUTH J. SIMMONS
Age 65
Director since 1999
Chair, Governance and Stockholder
Relations Committee
         
STEPHEN P. MACMILLAN
Age 47
Director since 2008
Member, Compensation Committee
  
RICHARD K. TEMPLETON
Age 52
Chairman since 2008 and
director since 2003
         
PAMELA H. PATSLEY
Age 54
Director since 2004
Chair, Audit Committee
  
CHRISTINE TODD WHITMAN
Age 64
Director since 2003
Member, Governance and Stockholder
Relations Committee
 
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Directors (cont’d)
 
 
Directors not standing for re-election
 
DAVID L. BOREN
Member, Audit Committee
  
DAVID R. GOODE
Member, Compensation Committee
 
Messrs. Boren and Goode, highly valued directors since 1995 and 1996, respectively, will have attained the age of 70 on or before the date of the 2011 annual meeting and are, therefore, ineligible under the company’s by-laws to stand for re-election in 2011.
 
Director nomination process
 
The board is responsible for approving nominees for election as directors. To assist in this task, the board has designated a standing committee, the Governance and Stockholder Relations Committee (the G&SR Committee), which is responsible for reviewing and recommending nominees to the board. The G&SR Committee is comprised solely of independent directors as defined by the rules of the New York Stock Exchange (NYSE) and the board’s corporate governance guidelines. Our board of directors has adopted a written charter for the G&SR Committee. It can be found on our website at www.ti.com/corporategovernance.
     It is a long-standing policy of the board to consider prospective board nominees recommended by stockholders. A stockholder who wishes to recommend a prospective board nominee for the G&SR Committee’s consideration can write to the Secretary of the G&SR Committee, Texas Instruments Incorporated, Post Office Box 655936, MS 8658, Dallas, Texas 75265-5936. The G&SR Committee will evaluate the stockholder’s prospective board nominee in the same manner as it evaluates other nominees.
     In evaluating prospective nominees, the G&SR Committee looks for the following minimum qualifications, qualities and skills:
     Stockholders, non-employee directors, management and others may submit recommendations to the G&SR Committee.
     Mr. Sanchez was elected to the board effective March 15, 2011. He is the only director nominee for the 2011 annual meeting of stockholders who is standing for election by the stockholders for the first time. A search firm retained by the company to assist the G&SR Committee in identifying and evaluating potential nominees initially identified Mr. Sanchez as a potential director candidate. The search firm conducted research to identify a number of potential candidates, based on qualifications and skills the G&SR Committee determined that candidates should possess. It then conducted further research on the candidates in whom the G&SR Committee had the most interest. With the election of Mr. Sanchez, the board believes its current size is within the desired range as stated in the board’s corporate governance guidelines.
 
Board diversity and nominee qualifications
 
As indicated by the criteria above, the board prefers a mix of background and experience among its members. The board does not follow any ratio or formula to determine the appropriate mix. Rather, it uses its judgment to identify nominees whose backgrounds, attributes and experiences, taken as a whole, will contribute to the high standards of board service at the company. The effectiveness of this approach is evidenced by the directors’ participation in the insightful and robust yet collegial deliberation that occurs at board and committee meetings and in shaping the agendas for those meetings.
     As it considered director nominees for the 2011 annual meeting, the board kept in mind that the most important issues it considers typically relate to the company’s strategic direction; succession planning for senior executive positions; the company’s financial performance; the challenges of running a large, complex enterprise, including the management of its risks; major acquisitions and divestitures; and significant capital investment and research and development (R&D) decisions. These issues arise in the context of the company’s operations, which primarily involve the manufacture and sale of semiconductors all over the world into communications, computing, industrial and consumer electronics end markets.
 
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     As described below, each of our director nominees has achieved an extremely high level of success in his or her career, whether at multi-billion dollar multinational corporate enterprises, major U.S. universities or large governmental organizations. In these positions, each has been directly involved in the challenges relating to setting the strategic direction and managing the financial performance, personnel and processes of large, complex organizations. Each has had exposure to effective leaders and has developed the ability to judge leadership qualities. Eight of them have experience in serving on the board of directors of at least one other major corporation, and one has served in high political office, all of which provides additional relevant experience on which each nominee can draw.
     In concluding that each nominee should serve as a director, the board relied on the specific experiences and attributes listed below and on the direct personal knowledge (except as to Mr. Sanchez, who will join the board March 15, 2011), born of previous service on the board that each of the nominees brings insight and collegiality to board deliberations.
 
Mr. Babb
Mr. Carp
Ms. Cox
Mr. MacMillan
Ms. Patsley
Mr. Sanchez
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Mr. Sanders
Ms. Simmons
Mr. Templeton
Ms. Whitman
 
Communications with the board
 
Stockholders and others who wish to communicate with the board as a whole, or to individual directors, may write to them at: P.O. Box 655936, MS 8658, Dallas, Texas 75265-5936. All communications sent to this address will be shared with the board or the individual director, if so addressed.
 
Corporate governance
 
The board has a long-standing commitment to responsible and effective corporate governance. The board’s corporate governance guidelines (which include the director independence standards), the charters of each of the board’s committees, TI’s code of business conduct and our code of ethics for our chief executive officer and senior financial officers are available on our website at www.ti.com/corporategovernance. Stockholders may request copies of these documents free of charge by writing to Texas Instruments Incorporated, P.O. Box 660199, MS 8657, Dallas, Texas, 75266-0199, Attn: Investor Relations.
 
Annual meeting attendance
 
It is a policy of the board to encourage directors to attend each annual meeting of stockholders. Such attendance allows for direct interaction between stockholders and board members. In 2010, all but one director attended TI’s annual meeting of stockholders.
 
Director independence
 
Each of our directors and director nominees is independent except for Mr. Templeton. The board has adopted the following standards for determining independence.
 
A.  In no event will a director be considered independent if:
  1.  He or she is a current partner of or is employed by the company’s independent auditors; or
  2. An immediate family member of the director is (a) a current partner of the company’s independent auditors or (b) currently employed by the company’s independent auditors and personally works on the company’s audit.
B. In no event will a director be considered independent if, within the preceding three years:
  1. He or she was employed by the company (except in the capacity of interim chairman of the board, chief executive officer or other executive officer) or any of its subsidiaries;
  2. He or she received more than $120,000 during any twelve-month period in direct compensation from TI (other than (a) director and committee fees and pension or other forms of deferred compensation and (b) compensation received for former service as an interim chairman of the board, chief executive officer or other executive officer);
  3. An immediate family member of the director was employed as an executive officer by the company or any of its subsidiaries;

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  4.  An immediate family member of the director received more than $120,000 during any twelve-month period in direct compensation from TI (excluding compensation as a non-executive officer employee of the company);
  5.  He or she was (but is no longer) a partner or employee of the company’s independent auditors and personally worked on the company’s audit within that time;
  6.  An immediate family member of the director was (but is no longer) a partner or employee of the company’s independent auditors and personally worked on the company’s audit within that time;
  7.  He or she was an executive officer of another company, at which any of TI’s current executive officers at the same time served on that company’s compensation committee;
  8.  An immediate family member of the director was an executive officer of another company at which any of TI’s current executive officers at the same time served on that company’s compensation committee;
  9.  He or she was, and remains at the time of the determination, an executive officer or employee of a company that made payments to, or received payments from, TI for property or services in an amount which, in any single fiscal year, exceeded the greater of $1 million or 2 percent of the other company’s consolidated gross revenues for its last completed fiscal year (for purposes of this standard, charitable contributions are not considered “payments”); or
  10.  An immediate family member of the director was, and remains at the time of the determination, an executive officer of a company that made payments to, or received payments from, TI for property or services in an amount which, in any single fiscal year, exceeded the greater of $1 million or 2 percent of the other company’s consolidated gross revenues for its last completed fiscal year (for purposes of this standard, charitable contributions are not considered “payments”).
C.  Audit Committee members may not accept any consulting, advisory or other compensatory fee from TI, other than in their capacity as members of the board or any board committee. Compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with TI (provided that such compensation is not contingent in any way on continued service).
D.  The following relationships will not be considered material relationships with the company for the purpose of determining director independence:
  1.  A director is an employee, director or trustee of a charitable organization and TI or the TI Foundation makes discretionary contributions to that organization that are less than the greater of $50,000 or 2 percent of the organization’s latest publicly available consolidated gross revenue.
  2. A director is an employee, director or trustee of another entity that is indebted to TI or to which TI is indebted, and the total amount of either company’s indebtedness to the other is less than 2 percent of the total consolidated assets of the entity he or she serves as an executive officer, director or trustee.
     For any other relationship, the determination of whether it is material, and consequently whether the director involved is independent, will be made by directors who satisfy the independence criteria set forth in this section.
     For purposes of these independence determinations, “immediate family member” will have the same meaning as under the NYSE rules.



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