Document:

ex102.htm

    Exhibit
10.2

    

    TEXAS
INSTRUMENTS EXECUTIVE OFFICER PERFORMANCE PLAN

    

    As
Amended September 17, 2009

    

    The
purpose of the Plan is to promote the success of the Company by providing
performance-based compensation for executive officers.

    

    For
purposes of the Plan, unless otherwise indicated, the term "TI" shall mean Texas
Instruments Incorporated, "Company" shall mean TI and its subsidiaries, and
"Board" shall mean the Board of Directors of TI.

    

    The Plan
is intended to provide qualified performance-based compensation in accordance
with Section 162(m) of the Internal Revenue Code of 1986, as amended, and
regulations thereunder ("Code") and will be so interpreted.

    

    Covered
Employees

    

    The
executive officers of TI (within the meaning of Rule 3b-7 under the Securities
Exchange Act of 1934 as amended from time to time) as of March 30 of each
calendar year ("performance year") shall receive awards under the Plan for such
performance year. An individual who becomes an executive officer after March 30
and on or before October 1 of a performance year shall receive an award as
provided below.

    

    Administration
of Plan

    

    The Plan
shall be administered by a Committee of the Board which shall be known as the
Compensation Committee (the "Committee"). The Committee shall be appointed by a
majority of the whole Board and shall consist of not less than three directors.
The Board may designate one or more directors as alternate members of the
Committee, who may replace any absent or disqualified member at any meeting of
the Committee. A director may serve as a member or alternate member of the
Committee only during periods in which the director is an "outside director" as
described in Section 162(m) of the Code. The Committee shall have full power and
authority to construe, interpret and administer the Plan. It may issue rules and
regulations for administration of the Plan. It shall meet at such times and
places as it may determine. A majority of the members of the Committee shall
constitute a quorum and all decisions of the Committee shall be final,
conclusive and binding upon all parties, including the Company, the stockholders
and the employees.

    

    The
Committee shall have the full and exclusive right to make reductions in awards
under the Plan. In determining whether to reduce any award and the amount of any
reduction, the Committee shall take into consideration such factors as the
Committee shall determine.

    

    Expenses
of Administration

    

    The
expenses of the administration of this Plan, including the interest provided in
the Plan, shall be borne by the Company.

    

    Amendments

    

    The Board
may, at any time and from time to time, alter, amend, suspend or terminate the
Plan or any part thereof as it may deem proper and in the best interests of the
Company, provided, however, that no such action shall (i) affect or impair the
rights under any award theretofore granted under the Plan, except that in the
case of a covered employee employed outside the United States the Committee may
vary the provisions of the Plan as it may deem appropriate to conform with local
laws, practices and procedures or (ii) increase the maximum amount of any award
above the amount described below.

    

    Awards

    

    Subject
to the Committee's discretion to reduce such awards, each covered employee shall
be entitled to an award for each performance year equal to 0.5% of the Company's
consolidated income from continuing operations before (i) provision for income
taxes, (ii) awards under the Plan, (iii) any pretax gain or loss exceeding $25
million recognized for the year related to divestiture of a business and (iv)
any write-off of in process research and development expenses exceeding $25
million associated with an acquisition, as determined and reported to the
Committee by TI's independent auditors ("Consolidated Income").

    

    An
individual who becomes an executive officer after March 30 and on or before
October 1 of a performance year shall be entitled to a prorated award for that
performance year which shall be 0.5% of the Company's Consolidated Income, as
defined above, for such performance year multiplied by a fraction, the numerator
of which is the number of complete calendar quarters of such year following the
date on which the individual becomes an executive officer and the denominator of
which is 4. Such prorated award shall be subject to the Committee's discretion
to reduce awards.

    

    Scope
of the Plan

    

    Nothing
in this Plan shall be construed as precluding or prohibiting the Company from
establishing or maintaining other bonus or compensation arrangements, which may
be generally applicable or applicable only to selected employees or
officers.

    

    Report
of Awards; Committee Discretion to Reduce

    

    As soon
as practicable after the end of each performance year, TI's independent
auditors shall
determine and report to the Committee and the Committee shall certify the amount
of each award for that year under the provisions of this Plan.

    

    The
Committee, in its sole discretion, based on any factors the Committee deems
appropriate, may reduce the award to any covered employee in any year (including
reduction to zero if the Committee so determines). The Committee shall make a
determination of whether and to what extent to reduce awards under the Plan for
each year at such time or times following the close of the performance year as
the Committee shall deem appropriate. The reduction in the amount of an award to
any covered employee for a performance year shall have no effect on the amount
of the award to any other covered employee for such year.

    

    All
awards are subject to recoupment by the Company, at its request, in accordance
with the recoupment policy adopted by the Committee and in effect at the time of
the Committee’s determination of the award.

    

    Payment
of Awards

    

    Except to
the extent deferred pursuant to the terms and provisions of the TI Deferred
Compensation Plan or as provided in the next paragraph, awards and any
installments thereof shall be paid in a cash lump sum as soon as practicable
after the amount of the awards has been determined, but in no event later than
March 15 of the year following the performance year.

    

    The
Committee may direct the awards to the covered employees or any of them for any
year to be paid in a single amount or in installments of equal or varying
amounts or may defer payment of any awards and may prescribe such terms and
conditions concerning payment of awards as it deems appropriate, including
completion of specific periods of employment with the Company, provided that
such terms and conditions are not more favorable to a covered employee than
those expressly set forth in the Plan.  In the event the Committee
designates a time or form of payment of any award different from the time and
form specified in the preceding paragraph, the Committee's designation shall be
in writing and made not later than a time that will meet the requirements of
Treas. Reg. Section 1.409A-2(a)(2).  The Committee may determine that
interest will be payable with respect to any payment of any award. The Committee
may at any time amend any such direction or amend or delete any such terms and
conditions if the Committee deems it appropriate, provided that any such change
will be made in a manner that will meet the requirements for subsequent
elections of Treas. Reg. Section 1.409A-2(b) and no such change shall accelerate
any payment except as permitted by Section 409A of the Code.  The
Committee's actions under this paragraph shall be subject to and in accordance
with the rules governing qualified performance based compensation in Section
162(m) of the Code.

    

    Payments
of awards to covered employees who are employees of subsidiaries of the Company
shall be paid directly by such subsidiaries.exhibit101.htm

 

Exhibit 10.1

July 24, 2009

NAME

ADDRESS

ADDRESS

 

Re:           Your 2009 Supplemental Long Term Incentive Award

 

 

Dear NAME:

 

 

On July 14, 2009 the Compensation Committee of the Board of Director’s approved a Supplemental Long Term Incentive Plan (the “Supplemental Plan”). The Supplemental Plan is in recognition of the current worldwide economic slowdown and its impact on our revenue growth objectives. During this period of slower growth, the
compensation committee of the board of directors and senior management determined management’s efforts should be focused on profit improvement. The objective agreed upon was a two percentage point increase in operating profit margin over the next two and a half years. Details of a supplemental long term incentive plan that measures profit margin improvement are included in the attached plan summary.

 

 

At the time the Supplemental Plan was adopted, the compensation committee also granted you a Supplemental Long Term Incentive Plan Award (the “Supplemental Award”) with a target value of  _________.

 

 

This award is made under the terms of our 2007 Omnibus Incentive Compensation Plan (the “Omnibus Plan”).  We have attached a summary of the terms of your award.  Please read it carefully.

 

 

I am pleased you are a participant in this Supplemental Plan. Your contributions to our lean programs, development and sale of our high value products and services, expense control and continuing organization effectiveness improvements all contribute to profit improvement. I trust your efforts and participation will be beneficial to both
you and the Company.

 

 

Sincerely,

 

 

 

Richard D. Luzzi

Vice President, Human Resources

  

  

  

Summary of Your Supplemental Award

 

What is the Supplemental Award?

 

The Supplemental Award is a “Cash-Based Performance Award” made under the Omnibus Plan.  The award represents the conditional right to receive a cash payment upon the achievement of pre-established, objective performance goals.  The amount of cash that you will receive depends on how well the Company’s
actual performance compares to specified performance goals at the end of the performance period.

 

What is the performance goal?

 

The ultimate performance goal is to increase Operating Profit Margin, also called OPM, by 2% by December 31, 2011.  Operating Profit Margin is equal to our consolidated operating profit divided by our consolidated net sales as determined by the compensation committee.  Our current forecast OPM for 2009 is 10.2%.  The
target is to increase OPM by 0.3% from July 1, 2009 to December 31, 2009, an additional 0.7% during 2010 and an additional 1.0% during 2011.

 

What is the performance period?

 

The Company’s performance against the goals is measured over the 2.5-year period that begins July 1, 2009 and ends December 31, 2011.  However, performance will be measured and calculated at the end of each calendar year.  20% of your Supplemental Award payout will be based upon performance from July 1, 2009 to December
31, 2009, 40% of your Supplemental Award payout will be based upon performance from January 1, 2010 to December 31, 2010 and 40% of your Supplemental Award payout will be based upon performance from January 1, 2011 to December 31, 2011.

 

How is the Supplemental Award cash payment calculated?

 

Your target Supplemental Award amount on the first page of this letter is the dollar value of the cash payment you would receive if the Company obtains 100% of each of the three annual OPM targets.  Additional cash will be paid under this Supplemental Award if actual performance
exceeds the target performance level, and less cash will be paid if actual performance falls short of the target performance level.  No cash will be paid out if actual performance falls below the minimum acceptable level.

 

After December 31 of each year in the 2.5 year performance period, the Company will determine the OPM for that period.  The OPM will be compared to the target for that year and a payout amount for that period will be determined based on actual performance compared to target performance.  The annual payout amount will be
weighted in accordance with the chart below and then added to the other years’ payout amounts to determine your total payment.

 

	
Relevant Performance Period
	
Target OPM
	
OPM Increase

During the Period
	
Payout Weight

	
   July 1, 2009 to December 31, 2009
	
10.5%
	
0.3%
	
20%

	
   January 1, 2010 to December 31, 2010
	
11.2%
	
0.7%
	
40%

	
   January 1, 2011 to December 31, 2011
	
12.2%
	
1.0%
	
40%

	  	
TOTAL
	
2.0%
	
100%

  

2

  

The payout will vary based upon achievement versus the target OPM for each calendar year based upon the following  tables:

 

	
July – December 2009

	
 (20% Weighting)

	
Performance Range
	
OPM Attained
	
Payout

	
Maximum:
	
115%
	
12.08%
	
150%

	
Target:
	
100%
	
10.50%
	
100%

	  	
 95%
	
9.98%
	
 80%

	
Threshold:
	
 85%
	
8.93%
	
 50%

	
Less than 85%:
	  	
 -0-

	
January – December 2010

	
 (40% Weighting)

	
Performance Range
	
OPM Attained
	
Payout

	
Maximum:
	
115%
	
12.88%
	
150%

	
Target:
	
100%
	
11.20%
	
100%

	  	
 95%
	
10.64%
	
 80%

	
Threshold:
	
 85%
	
9.52%
	
 50%

	
Less than 85%:
	
Less than  9.52%
	
 -0-

	
January – December 2011

	
 (40% Weighting)

	
Performance Range
	
OPM Attained
	
Payout

	
Maximum:
	
115%
	
14.03%
	
150%

	
Target:
	
100%
	
12.20%
	
100%

	  	
 95%
	
11.59%
	
 80%

	
Threshold:
	
 85%
	
10.37%
	
 50%

	
Less than 85%:
	
Less than  10.37%
	
 -0-

If actual OPM attained falls between any of the performance range percentages above in any year, the payout for that portion of your Supplemental Award will be determined by applying a mathematical formula to estimate the value based on the two nearest percentages.

 

Can my award be changed?

 

Yes, the Committee can change the targets as it considers appropriate.  In the event of acquisitions or divestitures the Committee will on a case-by-case basis determine the necessity to change or revise the performance targets.

 

When will I know how much cash I will receive?

 

The cash will be paid to you in early 2012 after the OPM at the end of the entire performance period is calculated.  This calculation will be certified by the Compensation Committee after review of the Company’s audited financial statements.

 

May I defer receipt of the payout of my Supplemental Award?

 

No.  These awards are not eligible for deferral under any employee benefit plan.

 

  

3

  

Are there circumstances under which my right to receive a cash payment would terminate?

 

You will not be entitled to receive a cash payment with respect to your Supplemental Award if:

 

	
1.  
	
Your employment terminates for any reason before December 31, 2011; or

 

	
2.  
	
If at any time during your employment or within 3 months following termination of your employment, you directly or indirectly engage in activity harmful to, or not in the best interest of, the Company.  Such activity includes, without limitation:

 

	
·  
	
conduct related to your employment for which either criminal or civil penalties against you may be sought;

 

	
·  
	
acquisition of a direct or indirect interest or an option to acquire such an interest in any person or entity engaged in competition with the Company’s business (other than an interest of not more than 5 percent of the outstanding stock of any publicly traded company);

 

	
·  
	
accepting employment with or serving as a director, officer, employee or consultant of, or furnishing information to, or otherwise facilitating the efforts of, any person or entity engaged in competition with the Company’s business;

 

	
·  
	
soliciting, employing, interfering with, or attempting to entice away from the Company any employee who has been employed by the Company in an executive or supervisory capacity within one year before such solicitation, employment, interference or enticement;

 

	
·  
	
violation of Company policies, including the Company’s insider-trading policy; or

 

	
·  
	
using for yourself or others, or disclosing to others, any confidential or proprietary information of the Company in contravention of any Company policy or agreement.

 

Are there any other things I should be aware of?

 

This is summary of your Supplemental Award.  Your award is subject to the terms of the Omnibus Plan.   If you have not previously received a prospectus for the Omnibus Plan, this award is being delivered with an Information Statement, which gives additional information about your award and the Omnibus Plan under which
it is granted.  We encourage you to read the Information Statement.  Additional terms and conditions may apply to your award under the terms of the Omnibus Plan.

 

 

  

4

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