SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of
Commission Only (as Permitted
by Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
TEXAS INSTRUMENTS INCORPORATED
------------------------------------------------
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(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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4) Date Filed:
[Company Logo] TEXAS INSTRUMENTS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 17, 1997
We are pleased to invite you to attend the 1997 Annual Meeting of Stockholders
which will be held on Thursday, April 17, 1997 at the North Building Cafeteria
on the Company's property, 13500 North Central Expressway, Dallas, Texas, at
10:00 a.m. (Dallas time). The meeting will be held for the following
purposes:
1. To elect directors for the ensuing year;
2. To consider and act upon a board proposal to approve a Texas
Instruments Executive Officer Performance Plan;
3. To consider and act upon a board proposal to approve a TI
Employees 1997 Stock Purchase Plan; and
4. To consider and act upon such other matters as may properly come
before the meeting.
Stockholders of record at the close of business on February 18, 1997 are
entitled to notice of and to vote at the annual meeting.
Stockholders are urged to sign, date and return the enclosed proxy as promptly
as possible. You may revoke your proxy at any time before the shares to which
the proxy relates are voted at the meeting.
By Order of the Board of Directors,
/s/ RICHARD J. AGNICH
-----------------------------------
Richard J. Agnich
Senior Vice President,
Secretary and General Counsel
Dallas, Texas
March 7, 1997
[Company Logo] TEXAS INSTRUMENTS
EXECUTIVE OFFICES: NORTH BUILDING, 13500 NORTH CENTRAL EXPRESSWAY,
DALLAS, TEXAS
MAILING ADDRESS: POST OFFICE BOX 655474, DALLAS, TEXAS 75265-5474
PROXY STATEMENT
March 7, 1997
The board of directors of Texas Instruments Incorporated (the Company or TI) is
requesting your proxy for the Annual Meeting of Stockholders (the Annual
Meeting) on April 17, 1997. By executing and returning the enclosed proxy
card, you authorize the persons named in the proxy to represent you and vote
your shares in connection with the purposes set forth in the Notice of Annual
Meeting.
If you attend the meeting, you may of course vote in person. But, if you are
not present, your shares can be voted only if you have returned a properly
executed proxy. If a proxy in the accompanying form is duly executed and
returned, the shares represented thereby will be voted as specified therein,
and if no specification is made, the shares will be voted in accordance with
the recommendations of the board of directors. You may revoke the proxy at any
time before it is exercised.
ELECTION OF DIRECTORS
Directors are to be elected at the Annual Meeting to hold office until the next
Annual Meeting and until their successors are elected and qualified. Unless
authority to vote for directors is withheld in the proxy, the persons named in
the proxy will vote for the election of the following nominees, who have been
designated by the board of directors: JAMES R. ADAMS, DAVID L. BOREN, JAMES B.
BUSEY IV, THOMAS J. ENGIBOUS, GERALD W. FRONTERHOUSE, DAVID R. GOODE, GLORIA M.
SHATTO, WILLIAM P. WEBER and CLAYTON K. YEUTTER.
Nominees for Directorship
All of the nominees for directorship are now directors of the Company. While
it is not anticipated that any of the nominees will be unable to serve, if any
nominee is not a candidate for election as a director at the meeting, the proxy
will be voted for the election of a substitute nominee proposed by the present
board of directors or the number of directors will be reduced accordingly.
[Photo of J.R. Adams] JAMES R. ADAMS Chairman of the Board
Member, Benefit Plans, Board Organization
and Nominating and Finance Committees.
Chairman of the Board of the Company since
June 1996. Group president, SBC
Communications Inc. from 1992 until retirement
in 1995; president and chief executive officer
of Southwestern Bell Telephone Company,
1988-92.
[Photo of D.L. Boren] DAVID L. BOREN Director
Member, Compensation, Finance and Stockholder
Relations and Public Policy Committees.
President of the University of Oklahoma
since 1994. U.S. Senator, 1979-1994;
Governor of Oklahoma, 1975-1979. Director,
AMR Corporation, Phillips Petroleum Company
and Torchmark Corporation; trustee,
Yale University.
[Photo of J.B. Busey IV] JAMES B. BUSEY IV Director
Chair, Board Organization and Nominating
Committee; member, Audit and Finance
Committees.
Retired from U.S. Navy as Admiral in 1989.
President and chief executive officer, Armed
Forces Communications and Electronics
Association, 1992-96; Deputy Secretary,
Department of Transportation, 1991-92;
Administrator, Federal Aviation
Administration, 1989-91. Director,
Association of Naval Aviation,
Curtiss-Wright Corporation and S.T. Research
Corporation; trustee, MITRE Corporation.
[Photo of T.J. Engibous] THOMAS J. ENGIBOUS President and Chief
Executive Officer
Member, Benefit Plans and Finance Committees.
President and chief executive officer of the
Company since June 1996. Joined the Company
in 1976; elected executive vice president in
1993. Member, The Business Roundtable.
2
[Photo of G.W. Fronterhouse] GERALD W. FRONTERHOUSE Director
Chair, Compensation and Trust Review
Committees; member, Stockholder Relations and
Public Policy Committee.
Investments. Former chief executive officer
(1985-88) of First RepublicBank Corporation.
President and director, Hoblitzelle
Foundation.
[Photo of D.R. Goode] DAVID R. GOODE Director
Member, Board Organization and Nominating,
Compensation and Finance Committees.
Chairman of the board and chief executive
officer of Norfolk Southern Corporation since
1992; also, president since 1991. Director,
Caterpillar, Inc., Georgia-Pacific
Corporation and TRINOVA Corporation; member,
The Business Council and The Business
Roundtable; trustee, Hollins College.
[Photo of G.M. Shatto] GLORIA M. SHATTO Director
Chair, Stockholder Relations and Public Policy
Committee; member Audit, Board Organization
and Nominating and Trust Review Committees.
President of Berry College since 1980.
Director, Becton Dickinson and Company,
Georgia Power Company and The Southern
Company.
[Photo of W.P. Weber] WILLIAM P. WEBER Vice Chairman
Chair, Benefit Plans and Finance Committees.
Vice chairman of the Company since 1993.
Joined the Company in 1962; elected vice
president in 1979 and executive vice president
in 1984. Director, Kmart Corporation and
Semiconductor Industry Association.
3
[Photo of C.K. Yeutter] CLAYTON K. YEUTTER Director
Chair, Audit Committee; member, Stockholder
Relations and Public Policy and Trust Review
Committees.
Of counsel, Hogan & Hartson. Counselor to
President Bush for domestic policy during
1992; chairman, Republican National Committee,
1991-92; Secretary, Department of Agriculture,
1989-91; U.S. Trade Representative, 1985-89.
Director, B.A.T. Industries P.L.C.,
Caterpillar Inc., ConAgra, Inc., FMC
Corporation, IMC Global Inc. and Oppenheimer
Funds.
The ages and holdings of common stock of the nominees and the year in which
each became a director are as follows:
<TABLE>
<CAPTION>
Common Stock
Director Ownership at
Nominee Age Since December 31, 1996<F1>*
------- --- -------- ------------------
<S> <C> <C> <C>
James R. Adams 57 1989 7,314
David L. Boren 55 1995 2,926
James B. Busey IV 64 1992 4,066
Thomas J. Engibous 44 1996 103,444
Gerald W. Fronterhouse 60 1986 5,653
David R. Goode 56 1996 1,470
Gloria M. Shatto 65 1992 3,626
William P. Weber 56 1984 151,112
Clayton K. Yeutter 66 1992 4,226
- ---------------
<FN>
<F1>*Includes any shares subject to restricted stock unit awards. Also
includes shares subject to acquisition within 60 days by Messrs. Engibous and
Weber for 72,000 and 131,500 shares, respectively, and shares credited to
profit sharing stock accounts for Messrs. Engibous and Weber in the amounts of
2,124 and 6,088, respectively. Excludes shares held by a family member or
trust if a director has disclaimed beneficial ownership. Each nominee and
director owns less than 1% of the Company's common stock.
</TABLE>
Board and Committee Meetings
During 1996, the board held thirteen meetings. In addition, the following
committees of the board held the number of meetings indicated: Audit, six;
Benefit Plans, three; Board Organization and Nominating, nine; Compensation,
4
seven; Finance, five; Stockholder Relations and Public Policy, four; and Trust
Review, three. Overall attendance at board and committee meetings was
approximately 94%.
Committees of the Board
The Audit Committee has the responsibility to make recommendations to the board
with respect to the appointment of the independent public accountants and other
matters. This committee also has the responsibility to approve certain
non-audit services of the independent public accountants; to review the scope
of the annual audit, proposed changes in major accounting policies, reports of
compliance of management and operating personnel with the Company's code of
ethics and other matters; and to report to the board concerning the adequacy of
the Company's system of internal accounting controls, other factors affecting
the integrity of published financial reports and other matters.
The Benefit Plans Committee has the responsibility to institute, revise or
terminate incentive plans of the Company other than plans approved by
stockholders, and institute, revise or terminate pension, profit sharing and
other benefit plans, other than any incentive or benefit plan or amendment
thereto that would benefit only officers of the Company or disproportionately
benefit officers more than other employees. This committee also has the
responsibility to report to the board concerning general levels of increases in
compensation for employees, compensation and benefits philosophies and programs
of the Company and other matters.
The Board Organization and Nominating Committee has the responsibility to make
recommendations to the board with respect to nominees to be designated by the
board for election as directors, the structure, size and composition of the
board, compensation of board members, the organization and responsibilities of
board committees and other matters. This committee also has the responsibility
to report to the board concerning the general responsibilities and functions of
the board, a desirable balance of expertise among board members, overall
Company organizational health, with particular reference to succession plans
for top management positions within TI, and other matters.
Any stockholder who wishes to recommend a prospective nominee for the board of
directors for the committee's consideration may write Richard J. Agnich,
Secretary, Board Organization and Nominating Committee, c/o Texas Instruments
Incorporated, Post Office Box 655474, MS 407, Dallas, Texas 75265-5474.
The Compensation Committee has the responsibility to make changes in officers'
compensation and to take actions that are required to be taken by the committee
under the Company's incentive plans, stock option plans, stock option purchase
plans and other employee benefit plans. This committee also has the
responsibility to make recommendations to the board with respect to revisions
in and actions under such plans that are required to be approved by the board,
the institution of plans that benefit only officers of the Company or
disproportionately benefit officers of the Company more than other employees,
the institution of plans permitting the issuance of stock of the Company and
other matters.
5
The Finance Committee has the responsibility to make recommendations to the
board with respect to the annual capital authorization funding level, issuance
of equity and long-term debt and other matters. This committee also has the
responsibility to approve the annual financing plan and other matters; and to
report to the board concerning developments in financial markets and other
matters.
The Stockholder Relations and Public Policy Committee has the responsibility to
make recommendations to the board with respect to matters bearing on the
relationship between management and stockholders, public issues and other
matters. This committee also has the responsibility to report to the board
concerning the contribution policies of the Company and of the TI Foundation,
revisions in TI's code of ethics and other matters.
The Trust Review Committee has the responsibility to make recommendations to
the board with respect to the selection of trustees of benefit plan trust
funds, assignment of funds to trustees and establishment and amendment of
funding policies and methods of benefit plans and other matters. This
committee also has the responsibility to select investment managers and assign
funds to investment managers of benefit plan trust funds; to approve
compensation of trustees and investment managers and other matters; and to
report to the board concerning the performance and adequacy of trustees and
investment managers.
Directors Compensation
Directors who are not employees are annually paid a retainer of $40,000 (one-
half in cash and one-half in restricted stock units described below), a fee of
$7,500 for each committee on which they serve, except that a fee of $10,000 is
paid for membership on the Trust Review Committee, $2,500 for service as a
committee chair, $2,500 for attendance at the Company's strategic planning
conference, and $2,500 for attendance at the Company's annual planning
conference. Compensation for other designated activities, such as visits to TI
facilities and attendance at certain Company events, is provided at the rate of
$1,000 per day. In 1996, the Company made payments (an aggregate of $10,345)
relating to premiums for life, medical, dental, travel and accident insurance
policies covering directors. Subject to certain limitations, directors may
elect that all or part of the cash payments of their fees be deferred until
retirement from the board or other specified times. Deferred fees earn
interest from the Company at a rate (currently based on published interest
rates on certain corporate bonds) determined from time to time by the board.
Under the Company's restricted stock unit plan for directors (the stock plan),
new directors are awarded 1,000 restricted stock units (each for one share of
Company common stock) providing for issuance of Company common stock at the
time of retirement from the Board, or upon earlier termination of service from
the Board after completing at least eight years of service or because of death
or disability. However, the right to the shares will be forfeited if a
director's service terminates within less than six months after the date of
grant for reasons other than death or disability. Directors in office on the
effective date were granted the same number of restricted stock units (subject
to the same conditions) to replace their interests under the former retirement
6
plan. The stock plan also provides for payment of fifty percent of the annual
retainer for board service (not including retainers for committee membership or
committee chair) to be made in the form of restricted stock units. The shares
under such annual retainer restricted stock units will be issued upon the
termination of the director's service on the board. Any portion which is
unearned because of termination of service during a year will be forfeited.
Each director who has completed five years of service as a member of the board
of directors, and whose board membership terminates as a result of
ineligibility for reelection after the attainment of a specified age or, in the
case of non-employee directors, as a result of death or disability, will be
eligible to participate in a Director Award Program. The program was
established to promote the Company's interest in supporting educational
institutions. The Company may contribute a total of $500,000 with respect to
each eligible director to up to three eligible educational institutions (or
other charitable institutions approved by the Board Organization and Nominating
Committee) recommended by the director and approved by the Company. The
contributions will be made in five annual installments of $100,000 each,
commencing as soon as practicable following the director's death. Directors
derive no financial benefit from the program and all charitable deductions will
accrue solely to the Company.
EXECUTIVE COMPENSATION
Compensation Overview
The Company is committed to building shareholder value through improved
performance and growth. To achieve this objective, TI seeks to create an
environment in which employees recognize that they are valued as individuals
and treated with respect, dignity and fairness.
The Company uses a merit-based system of compensation to encourage individual
employees to achieve their productive and creative potential, and to link
individual financial goals to Company performance. The Company regularly
compares its compensation system with those of competitors and refines its
system as necessary to encourage a motivated and productive work force.
The following tables provide information regarding the compensation of those
who served as the Company's chief executive officer during 1996 and each of the
five other most highly compensated executive officers.
7
Summary Compensation Table
The following table sets forth information with respect to the compensation of
those who served as the Company's chief executive officer during 1996 and each
of the five other most highly compensated executive officers for services in
all capacities to the Company in 1994, 1995 and 1996, except as otherwise
indicated.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------- ---------------------------------------
Awards Payouts
------------------------- ------------
Name and Other Annual Restricted Stock Long-Term All Other
Principal Compensation Stock Awards Options Incentive Compensation
Position Year Salary Bonus <F3>(3) <F4>(4) (in shares) Plan Payouts <F5>(5)
- -------------------- ---- -------- ---------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T.J. Engibous<F1>(1) 1996 $509,640 $ 0 -- $875,000 60,000 0 $ 15,484
President & CEO 1995 $369,750 $1,000,000 -- 0 60,000 0 $145,887
1994 $306,000 $ 600,000 -- 0 42,000 0 $ 59,565
J.R. Junkins<F1>(1) 1996 $327,964 $ 0 -- $229,375 65,000 0 $ 8,144
Chairman, 1995 $792,050 $1,750,000 -- 0 130,000 0 $391,979
President & CEO 1994 $700,200 $1,227,600 -- $141,250 110,000 0 $276,714
W.B. Mitchell<F2>(2) 1996 $389,900 $ 0 -- 0 25,000 0 $ 25,101
Vice Chairman 1995 $373,750 $ 650,000 -- 0 50,000 0 $165,302
1994 $359,100 $ 500,000 -- 0 50,000 0 $103,157
W.P. Weber<F1>(1) 1996 $424,300 $ 0 -- 0 25,000 0 $ 24,868
Vice Chairman 1995 $404,250 $ 750,000 -- 0 50,000 0 $168,272
1994 $395,000 $ 600,000 -- 0 50,000 0 $110,899
G.D. Clubb 1996 $349,000 $ 0 -- 0 20,000 0 $ 17,555
Executive 1995 $316,700 $ 650,000 -- 0 40,000 0 $117,534
Vice President 1994 $274,500 $ 425,000 -- 0 36,000 0 $ 60,200
D.D. Martin 1996 $349,000 $ 0 -- 0 20,000 0 $ 21,623
Executive 1995 $315,700 $ 650,000 -- 0 40,000 0 $121,471
Vice President 1994 $263,500 $ 400,000 -- 0 36,000 0 $ 65,508
R.J. Agnich 1996 $346,500 $ 0 -- 0 20,000 0 $ 19,040
Senior Vice 1995 $328,250 $ 550,000 -- 0 37,000 0 $119,202
President, 1994 $308,250 $ 350,000 -- 0 37,000 0 $ 89,849
Secretary &
General Counsel
W.A. Aylesworth 1996 $346,500 $ 0 -- 0 20,000 0 $ 20,516
Senior Vice 1995 $328,250 $ 550,000 -- 0 37,000 0 $115,153
President, 1994 $308,250 $ 350,000 -- 0 37,000 0 $ 75,986
Treasurer &
Chief Financial
Officer
- ------------------
8
<FN>
<F1>(1) Mr. Junkins died on May 29, 1996. Mr. Weber served as Vice Chairman,
President and Chief Executive Officer from May 29, 1996 to June 20, 1996.
Mr. Engibous was elected President and Chief Executive Officer on June 20, 1996.
<F2>(2) Mr. Mitchell retired from the Company on December 31, 1996.
<F3>(3) The dollar value of perquisites and other personal benefits for each
of the named executive officers was less than the established reporting
thresholds.
<F4>(4) (a) For purposes of the table, restricted stock units awarded under
the Company's Long-Term Incentive Plan are valued at market on the date of
award.
(b) Payments pursuant to the restricted stock units awarded to
Mr. Engibous in 1996 are based primarily on whether the Company meets specific
goals regarding return on net assets and revenue growth over a period of five
years (as determined in accordance with the terms of the award) and generally
are payable only if Mr. Engibous remains employed by the Company for a period
of ten years.
(c) The restricted stock units awarded to Mr. Junkins in both 1994 and
1996 were retained by his estate pursuant to the terms of the awards.
(d) Dividend equivalent payments are paid on restricted stock units at
the same rate as dividends on the Company's common stock.
<F5>(5) During 1996, the Company made payments relating to premiums with
respect to split-dollar life insurance policies in the following amounts:
Mr. Engibous, $12,284; Mr. Junkins, $5,944; Mr. Mitchell, $21,901; Mr. Weber,
$21,668; Mr. Clubb, $14,355; Mr. Martin, $18,423; Mr. Agnich, $15,840; and
Mr. Aylesworth, $17,316. Also, the Company made payments relating to premiums
with respect to travel and accident insurance policies in the amount of $200
for each of the named executive officers.
During 1996, the Company made matching contributions to the cash or deferred
compensation account (401(k)) under the U.S. profit sharing plan in the
following amounts: Mr. Junkins, $2,000; each of the other named executive
officers, $3,000.
</TABLE>
9
Table of Option Grants in 1996
The following table sets forth details regarding stock options granted to the
named executive officers in 1996. In addition, there are shown the
hypothetical gains or "option spreads" that would exist for the respective
options. These gains are based on assumed rates of annual compound stock
appreciation of 5% and 10% from the date the options were granted over the
full option term.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Appreciation for Option Term (10 Years)
-----------------------------------------------------------
5% 10%
------------------------- -------------------------------
Options % of Total
Granted Options Stock Stock
(in Granted to Exercise Expir- Price (per Price (per
shares) Employees Price(per ation share) share)
Name <F1>(1) in 1996 share) Date <F2>(2) Gain <F2>(2) Gain
- ------------- ------- ---------- -------- ------- ---------- -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T.J. Engibous 30,000 1.1% $45.88 1/17/06 $74.73 $865,366 $118.99 $2,193,238
30,000 1.1% $43.75 7/18/06 $71.26 $825,424 $113.48 $2,091,787
J.R. Junkins 65,000 2.4% $45.88 1/17/06 $74.73 $1,874,960 $118.99 $4,752,016
W.B. Mitchell 25,000 .94% $45.88 1/17/06 $74.73 $721,139 $118.99 $1,827,698
W.P. Weber 25,000 .94% $45.88 1/17/06 $74.73 $721,139 $118.99 $1,827,698
G.D. Clubb 20,000 .75% $45.88 1/17/06 $74.73 $576,911 $118.99 $1,462,159
D.D. Martin 20,000 .75% $45.88 1/17/06 $74.73 $576,911 $118.99 $1,462,159
R.J. Agnich 20,000 .75% $45.88 1/17/06 $74.73 $576,911 $118.99 $1,462,159
W.A. Aylesworth 20,000 .75% $45.88 1/17/06 $74.73 $576,911 $118.99 $1,462,159
All stockholders $74.73 $5,464,775,441<F3>(3) $118.99 $13,848,814,761<F3>(3)
Employees $74.73 $501,177,577<F4>(4) $118.99 $1,270,082,380<F4>(4)
through TI profit sharing plans
- ---------------
<FN>
<F1>(1) These non-qualified options may become exercisable on a graduated
basis beginning after one year if specified earnings per share levels are
attained. These options are fully exercisable during the ninth and tenth year
without regard to earnings per share and also may become fully exercisable in
the event of a change in control (as defined in the options) of the Company.
Subject to certain conditions, the exercise price may be paid by delivery of
already-owned shares and tax withholding obligations related to exercise may
be paid in shares.
10
<F2>(2) The price of TI common stock at the end of the 10-year term of the
stock options granted at a 5% annual appreciation would be $74.73, and at a
10% annual appreciation would be $118.99 for the options expiring January 17,
2006, and $71.26 and $113.48 for the option expiring July 18, 2006.
<F3>(3) The gain is based on the fair market value ($45.88 per share) and
number of all the outstanding shares of common stock on the grant date of
January 17, 1996.
<F4>(4) The data presented for all employees represents the gain employees
would realize through the appreciation of the stock price of TI stock held in
TI profit sharing plans from the date of grant, January 17, 1996, assuming 5%
and 10% annual appreciation over the 10-year option term.
</TABLE>
Table of Option Exercises in 1996 and Year-End Option Values
The following table sets forth information with respect to the named executive
officers concerning the exercise of options during 1996, and unexercised
options held as of December 31, 1996.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares December 31, 1996<F2>(2) December 31, 1996<F2>(2)<F3>(3)
Acquired on Value -------------------------- ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T.J. Engibous - - 46,500 100,500 $ 1,360,335 $2,278,215
J.R. Junkins<F1>(1) - - 707,500 157,500 $28,519,475 $3,771,175
W.B. Mitchell - - 48,500 62,500 $ 1,458,445 $1,505,125
W.P. Weber - - 106,500 62,500 $ 3,369,405 $1,505,125
G.D. Clubb - - 77,500 49,000 $ 2,609,905 $1,175,670
D.D. Martin - - 73,000 49,000 $ 2,275,630 $1,175,670
R.J. Agnich - - 55,250 47,750 $ 1,636,483 $1,140,598
W.A. Aylesworth - - 50,250 47,750 $ 1,486,393 $1,140,598
- ---------------
<FN>
<F1>(1) Amounts reported for Jerry R. Junkins were owned by his estate at year-
end.
<F2>(2) Exercisable options or portions thereof relate to options granted
during 1987-1995; unexercisable options or portions thereof relate to options
granted during 1994-1996.
11
<F3>(3) Market value of underlying securities at year-end, minus the exercise
price.
</TABLE>
Pension Plan Table
The following table sets forth the approximate annual benefits relating to the
U.S. pension plan that would be payable as of December 31, 1996 under various
assumptions as to average credited earnings (as defined in the plan) and years
of credited service (as defined in the plan) to employees in higher salary
classifications who are 65 years of age as of such date. Benefits are based on
eligible earnings. Eligible earnings include (a) salary as shown in the
summary compensation table and (b) bonus as shown in the summary compensation
table. Other elements of compensation shown in the summary compensation table
or referred to in the footnotes to that table are not included in eligible
earnings.
<TABLE>
<CAPTION>
Estimated Annual Benefits Under Pension Plan for
Specified Years of Credited Service<F2>(2)<F3>(3)
---------------------------------------------------------------------------------
Average
Credited
Earnings
<F1>(1) 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 45 Years
- ---------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 600,000 131,898 175,864 219,830 263,795 307,761 352,761 397,761
700,000 154,398 205,864 257,330 308,795 360,261 412,761 465,261
800,000 176,898 235,864 294,830 353,795 412,761 472,761 532,761
900,000 199,398 265,864 332,330 398,795 465,261 532,761 600,261
1,000,000 221,898 295,864 369,830 443,795 517,761 592,761 667,761
1,100,000 244,398 325,864 407,330 488,795 570,261 652,761 735,261
1,200,000 266,898 355,864 444,830 533,795 622,761 712,761 802,761
1,300,000 289,398 385,864 482,330 578,795 675,261 772,761 870,261
1,400,000 311,898 415,864 519,830 623,795 727,761 832,761 937,761
1,500,000 334,398 445,864 557,330 668,795 780,261 892,761 1,005,261
1,600,000 356,898 475,864 594,830 713,795 832,761 952,761 1,072,761
- ---------------
<FN>
<F1>(1) The average credited earnings is the average of the five consecutive
years of highest earnings.
At December 31, 1996, the named executive officers were credited with the
following years of credited service and had the following average credited
earnings, respectively, under the U.S. pension plan: Mr. Engibous, 19 years,
$739,661; Mr. Mitchell, 35 years, $762,889; Mr. Weber, 35 years, $860,854;
Mr. Clubb, 29 years, $619,034; Mr. Martin, 37 years, $594,724; Mr. Agnich,
24 years, $673,075; and Mr. Aylesworth, 30 years, $604,456. Mr. Junkins' death
benefits under the U.S. pension plan were computed using 37 years of credited
service and $1,360,146 of average credited earnings.
<F2>(2) If the amount otherwise payable under the pension plan should be
restricted by the applicable provisions of ERISA, the amount in excess of
ERISA's restrictions will be paid by the Company.
12
<F3>(3) The benefits under the plan are computed as single life annuity at age
65. The amounts shown in the table reflect the offset provided in the pension
plan under the pension formula adopted July 1, 1989 to comply with the social
security integration requirements. The integration offset is $3,102 for
15 years of credited service, $4,136 for 20 years of credited service, $5,171
for 25 years of credited service, $6,205 for 30 years of credited service,
$7,239 for 35 years of credited service, $7,239 for 40 years of credited
service and $7,239 for 45 years of credited service.
</TABLE>
Early Retirement Agreements
The Company has a policy providing for optional early retirement agreements for
the chairman of the board, the president, vice chairmen and such other
personnel as the board of directors may designate, upon attainment of age 58
and such minimum lengths of service as the board may specify. Participants
enter into early retirement agreements with the Company which among other
things prohibit competition with the Company until the attainment of age 69.
Payments under the agreements are based on the difference between the
retirement benefits the individual is to receive from the Company's U.S.
pension plan and the retirement benefits the individual would have received
from the pension plan had the individual remained in employment with the
Company until the attainment of age 65 at a rate of compensation equal to the
average annual eligible earnings (as defined in the pension plan) received
during the three years immediately preceding early retirement. The individual
may elect payment under the early retirement agreement in the form of monthly
payments for life, monthly payments to the individual or the individual's
estate or survivors until the date of the individual's 69th birthday, or a 50%
joint and survivor's payment. Prior to his retirement, Mr. Mitchell entered
into an early retirement agreement with the Company.
13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the board of directors has furnished the
following report on executive compensation paid or awarded to executive
officers for 1996:
The Company's executive compensation program is administered by the
Compensation Committee of the board of directors (the Committee), which is
composed of the individuals listed below, all of whom are independent directors
of the Company. The program consists of base salaries, annual incentive awards
and long-term compensation. At higher management levels, the mix of
compensation is weighted more to the performance-based components-annual
incentive and long-term compensation.
In determining the compensation of the executive officers, the Committee
considered guidelines developed for each component of compensation. As
indicated below, the guidelines took account of compensation practices of
competitor companies (as reported in various surveys administered by national
compensation consulting firms) and the relative performance of TI and
competitor companies. The competitor companies are primarily major high-
technology competitors in one or more of the markets-semiconductor, defense and
information technology-in which the Company operates. While many of these
companies are included in the S&P Technology Sector Index appearing in the
graph regarding total shareholder return on page 17, these companies are not
the same as the companies comprising that index. Each guideline was set based
on the best available data from as many competitor companies as practicable.
The Committee also considered the contribution of each executive officer toward
achieving the Company's prior year and long-term strategic objectives; in this
connection, the CEO made recommendations regarding the components of each
executive officer's compensation package except the chairman's and his own.
In its considerations, the Committee did not assign quantitative relative
weights to different factors or follow mathematical formulae. Rather, the
Committee exercised its discretion and made a judgment after considering the
factors it deemed relevant. The Committee's decisions regarding 1996 executive
compensation were designed to: (1) align the interests of executive officers
with the interests of the stockholders by providing performance-based awards;
and (2) allow the Company to compete for and retain executive officers critical
to the Company's success by providing an opportunity for compensation that is
comparable to the levels offered by other companies in our markets.
Section 162(m) of the Internal Revenue Code generally denies a deduction to any
publicly held corporation for compensation paid to a "covered employee" in a
taxable year to the extent that the employee's compensation (other than
qualified performance-based compensation) exceeds $1 million. In December
1995, the Internal Revenue Service published regulations governing the $1
million deductibility cap. Pursuant to those regulations, the Company's
"covered employees" will be those who, at the end of the year, are the chief
executive officer and the four other highest compensated officers of the
Company as determined under the rules of the Securities and Exchange Commission
governing executive compensation disclosure.
It is the Committee's policy to consider deductibility under Section 162(m) in
determining compensation arrangements for the Company's "covered employees,"
and the Committee intends to optimize the deductibility of compensation to the
extent deductibility is consistent with the objectives of the executive
compensation program. The Committee, however, intends to weigh the benefits of
full deductibility with the objectives of the executive compensation program
14
and, if the Committee believes to do so is in the best interests of the Company
and its stockholders, will make compensation arrangements which may not be
fully deductible under Section 162(m).
Annual Compensation
Annual compensation (base salary and annual incentive) guidelines were
established such that TI executive officers will receive a level of annual
compensation at, above or below the median annual compensation paid by
competitor companies depending primarily on whether TI's actual return on net
assets (RONA) and growth in net revenues from 1995 to 1996 are at, above or
below its internally established performance thresholds.
Base Salary. Base salary guidelines were established at the median level of
salaries for similarly situated executive officers of competitor companies, or
of organizations within competitor companies, of similar size (in terms of
total revenues). The Committee, in its discretion, set base salaries somewhat
lower than competitive levels in order to weight more of total compensation to
performance-based components. The Committee determined not to adjust the base
salary for 1996 of its then CEO, Jerry R. Junkins.
The Committee made additional salary determinations in July 1996 following the
death of Mr. Junkins and the election or promotion of several new executive
officers, including the promotion of Thomas J. Engibous to President and Chief
Executive Officer. In making these determinations the Committee considered the
need to increase base salary commensurate with the new positions and
responsibilities. Accordingly, Mr. Engibous' base salary was adjusted to an
annual rate of $600,000. Mr. Engibous' annual salary during 1996 was below the
median annual salary of CEOs of competitor companies.
Annual Incentive. As the performance component of annual compensation, the
annual incentive award varies significantly based on the Company's
profitability and revenue growth and the individual's contribution toward the
Company's performance. Two primary performance thresholds were established for
purposes of determining annual incentive awards for 1996. These thresholds
were stated in terms of 1996 RONA and growth in net revenues from 1995 to 1996.
The Company's 1996 performance failed to meet the performance thresholds. The
Committee, therefore, granted no annual incentive awards to executive
officers, other than an award granted to Mr. Junkins in March 1996 that
terminated without becoming payable. Accordingly, the level of annual
compensation for 1996 (base salary plus incentive award) of the executive
officers, including Mr. Engibous, was below the median of competitors' annual
compensation.
Long-Term Compensation
The Committee made long-term compensation determinations in January 1996 and,
following Mr. Junkins' death, for newly elected or promoted executive officers,
in July 1996. Stock options constitute TI's primary long-term incentive
vehicle. Stock options granted in 1996 were granted at 100% of fair market
value on the date of grant, have a 10-year term and do not become exercisable
until after eight years, although exercisability may be accelerated to the
extent that earnings per share goals are achieved (or in the event of a change
in control of the Company). Any value actually realized by an executive
officer from an option grant depends completely upon increases in the price of
TI common stock.
15
Guidelines for awards granted under TI's long-term incentive program were set
with the intention of providing TI executive officers an opportunity for
financial gain equivalent to the median opportunity provided by competitor
companies through all their long-term compensation programs. For this purpose,
the future rate of appreciation of the shares underlying stock-based awards is
assumed to be the same for all companies. Although not considered in
establishing guidelines for stock option grants, the size of prior grants was
considered in administering the guidelines.
In January, the Committee reviewed the guidelines and granted stock options
meeting the guidelines to each executive officer at a price of $45.88 per share
(the market value of TI's common stock on the date of grant). The Committee
considered the significant contributions of each executive officer to the
development and implementation of a strategic plan for the Company. The
Committee intends for these grants to recognize progress toward accomplishment
of the strategic plan and, since these stock options will result in increased
compensation to an executive officer only if TI's stock price increases, focus
the executive officers on executing the plan and building value for
stockholders.
Mr. Junkins received an option to purchase 65,000 shares and was granted 5,000
restricted stock units in January 1996. Following his death, pursuant to the
terms of the awards, the stock options and the restricted stock units were
retained by Mr. Junkins' estate.
Mr. Engibous received an option to purchase 30,000 shares in the January 1996
round of awards. After his election to the position of CEO, the Committee
considered the need to increase Mr. Engibous' total long-term compensation
commensurate with the position of CEO and to align Mr. Engibous' long-term
financial opportunities more closely with the future performance of the
Company. With this goal in mind, the Committee granted Mr. Engibous an
additional option to purchase 30,000 shares of TI common stock at a price of
$43.75 (the fair market value of the Company's common stock on the date of the
grant) and a performance-based grant of 20,000 restricted stock units.
Payments pursuant to the restricted stock unit award are based primarily on
whether the Company meets specific RONA and revenue growth goals over a period
of five years (as determined in accordance with the terms of the award) and
generally are payable only if Mr. Engibous remains employed by the Company for
a period of ten years. The grants of stock options and restricted stock units
to Mr. Engibous in 1996 resulted in a total long-term compensation opportunity
comparable to those of CEOs of competitor companies. However, total
compensation (annual plus long-term) for Mr. Engibous was below the median
total compensation of CEOs of competitor companies.
Gerald W. Fronterhouse, Chair
David L. Boren
David R. Goode
16
COMPARISON OF TOTAL SHAREHOLDER RETURN
The following graph sets forth TI's total shareholder return as compared to the
S&P 500 Index and the S&P Technology Sector Index over a five-year period,
beginning December 31, 1991, and ending December 31, 1996. The total
shareholder return assumes $100 invested at the beginning of the period in TI
common stock, the S&P 500 and the S&P Technology Sector Index. It also assumes
reinvestment of all dividends.
[A performance graph showing five year cumulative
total return among the Company, the S&P 500 Index
and the S&P Technology Sector Index appears here.
The coordinates used in the graph appear below.]
<TABLE>
<CAPTION>
Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96
<S> <C> <C> <C> <C> <C> <C>
Texas Instruments $100 $154 $213 $254 $353 $443
S&P 500(R) $100 $108 $118 $120 $165 $203
S&P(R) Technology $100 $104 $128 $149 $215 $302
Sector Index
</TABLE>
*Assumes that the value of the investment in TI common stock and each index was
$100 on December 31, 1991, and that all dividends were reinvested.
**Year ending December 31. The S&P Technology Sector Index was previously
called the S&P High Tech Composite Index.
17
PROPOSAL TO APPROVE THE TEXAS INSTRUMENTS
EXECUTIVE OFFICER PERFORMANCE PLAN
Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on
the amount of compensation that may be deducted by the Company in any tax year
with respect to the Company's five most highly paid executives. However,
certain performance-based compensation that has been approved by stockholders
is not subject to the deduction limit. In order to maximize the Company's
deduction for compensation paid to its executive officers, the Board of
Directors has adopted, subject to stockholder approval, the Texas Instruments
Executive Officer Performance Plan. If the proposed Plan is approved by
stockholders, the annual performance-based compensation paid to the Company's
executive officers would be awarded under this plan rather than under the
Company's Annual Incentive Plan.
Texas Instruments Executive Officer Performance Plan
The full text of the proposed Texas Instruments Executive Officer Performance
Plan is shown on Exhibit A to this proxy statement. The principal features of
the Plan are summarized below.
The purpose of the Texas Instruments Executive Officer Performance Plan is to
provide performance-based compensation for the Company's executive officers,
and the Plan is intended to provide such compensation in accordance with
Section 162(m) of the Internal Revenue Code.
Employees covered under the Plan are the executive officers of the Company, as
defined in Section 3b-7 of the Securities Exchange Act of 1934. The Plan will
be administered by the Compensation Committee, and, subject to the Committee's
discretion to reduce the awards, each executive officer of the Company will be
entitled to an annual award for each performance year under the Plan 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 $25 million associated with an acquisition.
After the end of each performance year, the Company's independent auditors
will determine and report to the Compensation Committee, and the Compensation
Committee will certify, the amount of each award for that year under the Plan.
The Compensation Committee, based on such factors as it deems appropriate, may
reduce (including a reduction to zero), but may not increase, the amount of
any award under the Plan for that year.
All awards under the Plan will be paid in cash. The Compensation Committee
may, however, direct that any such award be paid in equal or varying
installments and may prescribe any other terms and conditions of payment as it
deems appropriate, including completion of specific periods of employment with
the Company.
18
The awards that would be received by the executive officers or the group named
in the table below under the proposed Plan are not determinable at this time,
and no awards were received for 1996 by executive officers under the Annual
Incentive Plan. However, the following table shows the amounts awarded to
such executive officers and group in January 1996 for the year 1995 under the
Annual Incentive Plan and which would have been awarded under the proposed
Plan after the exercise of the Compensation Committee's discretion to reduce
awards.
<TABLE>
<CAPTION>
Name and Position Dollar Value ($)
<S> <C>
Thomas J. Engibous <F1>(1) $1,000,000
President and Chief Executive
Officer
Jerry R. Junkins<F1>(1) $1,750,000
Chairman, President and
Chief Executive Officer
William B. Mitchell<F2>(2) $650,000
Vice Chairman
William P. Weber<F1>(1) $750,000
Vice Chairman
Gary D. Clubb $650,000
Executive Vice President
David D. Martin $650,000
Executive Vice President
Richard J. Agnich $550,000
Senior Vice President, Secretary
and General Counsel
William A. Aylesworth $550,000
Senior Vice President, Treasurer
and Chief Financial Officer
Executive Group $8,935,000
- ---------------
<FN>
<F1>(1) Mr. Junkins died on May 29, 1996. Mr. Weber served as Vice Chairman,
President and Chief Executive Officer from May 29, 1996 to June 20, 1996.
Mr. Engibous was elected President and Chief Executive Officer on June 20, 1996.
<F2>(2) Mr. Mitchell retired from the Company on December 31, 1996.
</TABLE>
The Board of Directors recommends a vote "FOR" the Texas Instruments Executive
Officer Performance Plan.
19
PROPOSAL TO APPROVE THE TI EMPLOYEES
1997 STOCK PURCHASE PLAN
In order to enable the Company to continue to provide flexible and competitive
employee benefits, the Board proposes that the TI Employees 1988 Stock Option
Purchase Plan be replaced with the TI Employees 1997 Stock Purchase Plan. The
proposed plan would afford the Compensation Committee greater flexibility in
that it would allow more than one offering per year and would allow the option
price to be less than 100% (but not less than 85%) of the fair market value of
the Company's stock.
TI Employees 1997 Stock Purchase Plan
The full text of the proposed TI Employees 1997 Stock Purchase Plan is shown
on Exhibit B to this proxy statement. The principal features of the Plan are
summarized below.
Plan Provisions. Each year during the term of the TI Employees 1997 Stock
Purchase Plan, unless the Compensation Committee determines otherwise, TI will
make one or more offers to each eligible employee of options to purchase TI
common stock through voluntary payroll deductions. Each eligible employee
will be entitled to purchase up to that number of full shares which could be
purchased at the option price (for this purpose, the price determined by the
Compensation Committee as of the date of grant, without regard to any lower
price that may become applicable at exercise) with an amount equal to such
percentage of the employee's compensation as the Compensation Committee
may determine (but not exceeding the amount specified in Section 423(b) of the
Internal Revenue Code) for any offering.
The option price for each offering will be determined by the Compensation
Committee and will not be less than 85% of fair market value on the date of
grant; provided that the Compensation Committee may also provide for an
alternative, lower option price which may not be less than 85% of fair market
value on the date the option is exercised.
The expiration date of the options will be determined for each offering by the
Compensation Committee but will not in any event be later than 27 months from
the date the option was granted. The term of an option will consist of an
Offering Period, a Payroll Deduction Period and an Exercise Period, the
beginning and ending date of each such period to be determined by the
Compensation Committee. Each eligible employee who wishes to participate will
elect to do so by the end of the Offering Period. The employee's election
will indicate the number of shares for which such employee wishes to
participate and will authorize payroll deductions, to be made over the Payroll
Deduction Period, which will aggregate no more than the amount required to
purchase the maximum number of shares covered by the employee's option. At
any time during the Payroll Deduction Period, a participant may cancel but not
reduce his or her payroll deduction and withdraw all, but not a part, of the
amount credited to his or her account. After completion of the Payroll
Deduction Period each participating employee may exercise his or her option,
in whole or in part, at any one time during the Exercise Period. If an
employee exercises an option in part, the option will terminate with respect
to the portion not exercised.
20
No more than 5,000,000 shares of TI common stock may be sold pursuant to the
TI Employees 1997 Stock Purchase Plan, subject to adjustments as described
below. In the event that the Compensation Committee determines that an
adjustment is appropriate by reason of any dividend or other distribution,
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of
shares or other securities of the Company, issuance of warrants or other
rights to purchase shares or other securities of the Company, or other similar
corporate transaction or event, it shall adjust any or all of (i) the number
and type of shares which may be made subject to options, (ii) the number and
type of shares subject to outstanding options, and (iii) the grant, purchase
or exercise price with respect to any option.
Either authorized and unissued shares or issued shares heretofore or hereafter
reacquired by the Company may be made subject to options under the Plan. Any
shares not purchased prior to the termination of an option may be again
subjected to an option under the Plan. No employee will be granted an option
under the Plan if such employee, immediately after the option is granted, owns
stock possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company. No employee will be granted an option which
permits such employee to accrue rights to purchase stock under all employee
stock purchase plans of the Company at a rate which exceeds $25,000 (or such
other maximum as may be prescribed from time to time under the Internal
Revenue Code) of fair market value of such stock (determined at the time such
option is granted) for each calendar year in which such option is outstanding
at any time in accordance with the provisions of Section 423(b)(8) of the
Internal Revenue Code. No option may be granted under the Plan after
April 16, 2002.
On or prior to the date of each offering, the Compensation Committee will
determine the effect of an employee's termination of employment during the
term of any option granted to him or her in such offering. Notwithstanding
the foregoing, no option will be exercisable under any conditions after the
expiration of 27 months from the date of grant or the end of the Exercise
Period, if shorter. Options are exercisable only by the employee to whom they
were granted during his or her lifetime or, in the case of incompetency, by
the employee's duly appointed representative, and they are not transferable
otherwise than by will or the laws of descent and distribution.
All shares purchased under an option will be paid for in full at the time the
option is exercised by transfer of the purchase price from the employee's
payroll deduction account.
Tax Consequences. The Plan is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code.
The board of directors is advised by counsel for the Company that an employee
will not be deemed to have received any compensation for federal income tax
purposes at the time of either the grant or the exercise of an option under
the Plan. If an employee exercises an option under the Plan and does not
dispose of the shares thus acquired until more than two years after the date
the option was granted, nor until more than one year after the transfer of the
21
shares to him or her, any profit realized upon such disposition will be
treated as a long-term capital gain, provided the option price determined by
the Compensation Committee as of the date of grant (without regard to any
lower price that may become applicable at exercise) was at least 100% of the
fair market value of the shares at the time granted. If, however, the option
price determined by the Compensation Committee as of the date of grant
(without regard to any lower price that may become applicable at exercise) was
less than 100% of the fair market value of the shares on the date of grant,
then upon a disposition of the shares after satisfaction of the required
holding period or upon the employee's death while owning such shares, there
must be reported as ordinary income (regardless of whether the option was
exercised at an alternative, lower price) an amount which equals the lesser of
(1) the amount by which the fair market value of the shares at the time the
option was granted exceeds the option price determined by the Compensation
Committee at the date of grant (without regard to any lower price that may
become applicable at exercise) or (2) the amount by which the fair market
value of the shares at the time of such disposition or death exceeds such
option price. In the case of the disposition of such shares after satisfaction
of the required holding period, the remainder of any profit realized will be
treated as a long-term capital gain. If the stock is disposed of after the
required holding period, the Company will not be entitled to a deduction for
federal income tax purposes in connection with either the grant or the
exercise of the option. However, if the optionee disposes of such shares
other than as described above, the Company will be entitled to a deduction for
federal income tax purposes in an amount equal to the ordinary income, if any,
realized by the optionee.
The Board of Directors recommends a vote "FOR" the TI Employees 1997 Stock
Purchase Plan.
22
ADDITIONAL INFORMATION
Voting Securities
As of February 18, 1997, there were outstanding 190,684,429 shares of the
Company's common stock, which is the only class of capital stock entitled to
vote at the meeting. Each holder of common stock is entitled to one vote for
each share held. As stated in the Notice of Meeting, holders of record of the
common stock at the close of business on February 18, 1997 will be entitled to
vote at the meeting or any adjournment thereof.
The following table sets forth certain information concerning (a) the only
persons that have reported beneficial ownership of more than 5% of the common
stock of the Company, and (b) the ownership of the Company's common stock by
the named executive officers (excluding Mr. Junkins), and all executive
officers and directors as a group.
<TABLE>
<CAPTION>
Shares Owned At Percent of
Name and Address December 31, 1996 Class
- -------------------------------- ----------------- ----------
<S> <C> <C>
The Capital Group Companies, Inc. 10,024,720<F1>(1) 5.3%
333 South Hope Street
Los Angeles, CA 90071
Putnam Investments, Inc. 10,469,689<F2>(2) 5.5%
One Post Office Square
Boston, MA 02109
Thomas J. Engibous 103,444<F3>(3) *
William B. Mitchell 99,294<F3>(3) *
William P. Weber 151,112<F3>(3) *
Gary D. Clubb 112,249<F3>(3) *
David D. Martin 117,794<F3>(3) *
Richard J. Agnich 102,474<F3>(3) *
William A. Aylesworth 95,679<F3>(3) *
All executive officers and 2,163,111<F3>(3)<F4>(4) 1.1%
directors as a group
- ---------------
*Less than 1%.
<FN>
<F1>(1) The Company understands that as of December 31, 1996, Capital Research
and Management Company, a wholly owned subsidiary of The Capital Group
Companies, Inc., had investment discretion with respect to all the above
shares, which were owned by others; Capital Research and Management Company had
no power to direct the vote of the above shares.
23
<F2>(2) The Company understands that as of December 31, 1996, Putnam
Investment Management, Inc. (PIM) and The Putnam Advisory Company, Inc. (PAC),
wholly owned subsidiaries of Putnam Investments, Inc. (a wholly owned
subsidiary of Marsh & McLennan Companies, Inc.), had investment discretion
with respect to 9,254,373 and 1,215,316 shares, respectively, which were owned
by others; PIM and PAC had no power to direct the vote of the above shares
except for 690,745 shares, with respect to which PAC had shared voting power.
<F3>(3) Includes shares subject to acquisition within 60 days by Messrs.
Engibous, Mitchell, Weber, Clubb, Martin, Agnich and Aylesworth for 72,000,
73,500, 131,500, 96,500, 92,000, 73,750 and 68,750 shares, respectively, and
shares credited to profit sharing stock accounts for Messrs. Engibous,
Mitchell, Weber, Clubb, Martin, Agnich and Aylesworth in the amounts of 2,124,
5,682, 6,088, 3,595, 5,497, 4,429 and 2,851, respectively. Excludes shares
held by a family member or trust if a director or officer has disclaimed
beneficial ownership.
<F4>(4) Includes (a) 1,867,575 shares subject to acquisition within 60 days,
and (b) 43,312 shares credited to profit sharing stock accounts.
As of December 31, 1996, the TI Employees Universal Profit Sharing Trust held
17,441,807 shares (9.2%) of the Company's common stock. Pursuant to the terms
of the trust, participants have the power to determine the voting and, to the
extent permitted, disposition of shares held by the trust.
</TABLE>
Cost of Solicitation
The solicitation is made on behalf of the board of directors of the Company.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, the Company will make arrangements with brokerage houses
and other custodians, nominees and fiduciaries to send proxies and proxy
material to their principals and will reimburse them for their expenses in so
doing. Officials and regular employees of the Company, without additional
compensation, may solicit proxies personally, by telephone, fax, E-mail or
telegram, from some stockholders if proxies are not promptly received. In
addition, the Company has retained Georgeson & Company, Inc. to assist in the
solicitation of proxies at a cost of $15,000 plus out-of-pocket expenses.
Proposals of Stockholders
The deadline for receipt of stockholder proposals for inclusion in the
Company's 1998 proxy material is November 7, 1997.
Suggestions from stockholders concerning the Company's business are welcome and
all will be carefully considered by the Company's management. To assure
appropriate board review of such suggestions, the Stockholder Relations and
Public Policy Committee of the board of directors periodically reviews
correspondence from stockholders and management's responses. Through this
activity, stockholders are provided access at the board level without having to
resort to formal stockholder proposals. As a general matter, the board would
prefer that stockholders present their views through the mechanism provided by
its Stockholder Relations and Public Policy Committee rather than through the
process of formal stockholder proposals.
24
Vote Required
The nine nominees for election as directors at the 1997 Annual Meeting of
Stockholders who receive the greatest number of votes cast at that meeting by
the holders of the Company's common stock entitled to vote at that meeting, a
quorum being present, shall become directors at the conclusion of the
tabulation of votes. An affirmative vote of the holders of a majority of the
voting power of the Company's common stock, present in person or represented by
proxy and entitled to vote at the meeting, a quorum being present, is necessary
to approve the action proposed in the matters listed in the accompanying Notice
of Annual Meeting of Stockholders. Under Delaware law and the Company's
Restated Certificate of Incorporation and By-Laws, the aggregate number of
votes entitled to be cast by all stockholders present in person or represented
by proxy at the meeting, whether those stockholders vote FOR, AGAINST or
abstain from voting, will be counted for purposes of determining the minimum
number of affirmative votes required for approval of such matters, and the
total number of votes cast FOR each of these matters will be counted for
purposes of determining whether sufficient affirmative votes have been cast.
An abstention from voting on a matter by a stockholder present in person or
represented by proxy at the meeting has the same legal effect as a vote AGAINST
the matter even though the stockholder or interested parties analyzing the
results of the voting may interpret such a vote differently.
Independent Auditors
The firm of Ernst & Young LLP has been selected by the board of directors,
pursuant to the recommendation of its Audit Committee, as independent auditors
for the Company. Representatives of such firm are expected to be present, and
to be available to respond to appropriate questions, at the annual meeting.
They will have the opportunity to make a statement if they desire to do so;
they have indicated that, as of this date, they do not desire to do so.
By Order of the Board of Directors,
/s/ RICHARD J. AGNICH
-----------------------------------
Richard J. Agnich
Senior Vice President,
Secretary and General Counsel
Dallas, Texas
March 7, 1997
25
EXHIBIT A
TEXAS INSTRUMENTS EXECUTIVE OFFICER PERFORMANCE PLAN
Dated February 20, 1997
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 "Company" shall
mean Texas Instruments Incorporated and its subsidiaries.
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 the Company (within the meaning of Rule 3b-7 of 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 of Directors 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
a "non-employee director" as described in Rule 16b-3 under the Securities
Exchange Act of 1934, as in effect from time to time. In addition, 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.
A-1
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 of Directors of the Company 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 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 Board may vary the provisions of the Plan as it
may deem appropriate to conform with local laws, practices and procedures.
Further, unless the stockholders of the Company shall have first approved
thereof, no amendment shall be made which shall increase the maximum amount of
any award above the amount determined by the formula described below in any
year.
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,
("Consolidated Income"), as determined and reported to the Committee by the
Company's independent auditors.
An individual who becomes an executive officer after March 30 and on or before
October 1 of a performance year shall receive an award for that performance
year based on the Consolidated Income of the Company for each calendar quarter
following the quarter in which the individual becomes an executive officer.
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, the Company'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
A-2
(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.
Payment of Awards
Awards and any installments thereof shall be paid in cash as of a date or dates
determined by the Committee or, if the Committee makes no determination, then
as soon as practicable after the amount of the awards has been determined.
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 this Plan. 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 and may amend or delete any
such terms and conditions if the Committee deems it appropriate. 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.
A-3
EXHIBIT B
TI EMPLOYEES 1997 STOCK PURCHASE PLAN
Dated April 17, 1997
The TI Employees 1997 Stock Purchase Plan (the "Plan") is designed to
encourage in all Employees a proprietary interest in the Company. The Plan
provides for all eligible Employees the option to purchase shares of the
common stock of the Company through voluntary systematic payroll deductions.
The options provided to participants under the Plan shall be in addition to
regular salaries, profit sharing, pension, life insurance, special payments
or other benefits related to a participant's employment with the Company.
For the purposes of the Plan unless otherwise indicated, the term "Company"
shall mean Texas Instruments Incorporated and its subsidiaries where
substantially all of their voting stock is owned directly or indirectly by
Texas Instruments. "Employee" shall mean an individual who is a full-time or
part-time employee of the Company.
Eligibility
All Employees of Texas Instruments Incorporated, and such of its subsidiaries
as the Committee described below shall from time to time designate who are
Employees on the date of grant of the option and who are not on an unpaid
leave of absence, shall be eligible to participate in offerings of options
under the Plan; Directors who are not full-time or part-time officers or
Employees are not eligible to participate in the Plan.
Administration of Plan
The Plan shall be administered by a Committee of the Board of Directors 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 a "non-employee director" as described in
Rule 16b-3 under the Securities Exchange Act of 1934, as in effect from time
to time. In addition, 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 Internal Revenue Code of
1986, as amended, and regulations promulgated thereunder (the "Code"). The
Committee shall have full power and authority to construe, interpret and
administer this 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.
B-1
The Committee shall have the full and exclusive right to establish the terms
of each offering of common stock of the Company under the Plan except as
otherwise expressly provided in this Plan.
The Committee may delegate such power, authority and rights with respect to
the administration of the Plan as it deems appropriate to one or more members
of the management of the Company (including, without limitation, a committee
of one or more members of management appointed by the Committee); provided,
however, that any delegation to management shall conform with the requirements
of the General Corporation Law of Delaware, and Rule 16b-3 under the
Securities Exchange Act of 1934, as in effect from time to time. The
Committee may also recommend to the Board revisions in this Plan.
Expenses of Administration
Except as otherwise determined by the Committee, any broker commissions, fees
or other expenses incurred in connection with the exercise of an option
hereunder or as a result of the opening or maintenance of accounts for
Employees and the purchase and sale of common stock of the Company on behalf
of Employees shall be paid by the Employee who incurs the expenses and any
other expenses of the administration of this Plan shall be borne by the
Company and charged against net income.
Amendments
The Committee 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
affect or impair the rights under any option theretofore granted under the
Plan, except that in the case of an Employee employed outside the United
States (or such Employee's beneficiary) the Committee may vary the provisions
of the Plan as it may deem appropriate to conform with local laws, practices
and procedures. Further, unless the stockholders of the Company shall have
first approved thereof, the total number of shares for which options may be
exercised under the Plan shall not be increased, except as set forth below,
and no amendment shall be made which shall allow an option price for
offerings under the Plan to be less than 85% of the fair market value of the
common stock of the Company on the date of grant of the options or 85% of the
fair market value of the common stock of the Company on the date on which an
option is exercised, if lower.
Notwithstanding the foregoing, the board of directors of any subsidiary of
the Company with approval of the Committee may adopt separate stock purchase
plans with respect to Employees employed outside the United States with such
provisions as the Committee may deem appropriate to conform with local laws,
practices and procedures, and to permit exclusion of certain Employees from
participation. All such plans shall be subject to the limitations on the
amount of stock that may be issued under the Plan and, except to the extent
otherwise provided in such plans, shall be subject to all of the provisions
set forth herein.
B-2
Offerings
Each year during the term of the Plan, unless the Committee determines
otherwise, Texas Instruments Incorporated will make one or more offerings in
which options to purchase Texas Instruments common stock will be granted to
all Employees of the Company then eligible to participate in the Plan. The
Plan is intended to qualify as an employee stock purchase plan under Section
423 of the Code.
Limitations on Grants
No more than 5,000,000 shares may be sold pursuant to options granted under
the Plan, subject to adjustments as described below. Either authorized and
unissued shares or issued shares heretofore or hereafter acquired by the
Company may be made subject to option under the Plan. If for any reason any
option under the Plan terminates in whole or in part, shares subject to such
terminated option may be again subjected to an option under the Plan.
Adjustments
In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, shares, other securities, or other
property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of shares or other securities of the Company, issuance
of warrants or other rights to purchase shares or other securities of the
Company, or other similar corporate transaction or event affects the shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the Committee
shall, in such manner as it may deem equitable, adjust any or all of (i) the
number and type of shares which may be made the subject of options, (ii) the
number and type of shares subject to outstanding options, and (iii) the
grant, purchase or exercise price with respect to any option or, if deemed
appropriate, make provision for a cash payment to the holder of an option,
provided, however, that no such adjustment shall be authorized to the extent
that such authority would cause the Plan to violate Section 423 of the Code.
Terms and Conditions of Options
(1) All of the options in each offering shall be granted on the date
specified by the Committee.
(2) An option price per share for each offering shall be determined by the
Committee on or prior to the date of grant of the option which shall in no
instance be less than 85% of fair market value of Texas Instruments common
stock on the date the option is granted; provided that the Committee may also
provide for an alternative, lower option price which may not be less than 85%
of fair market value of Texas Instruments common stock on the date the option
is exercised. The fair market value on the date on which an option is
granted or exercised shall be determined by such methods or procedures as
shall be established by the Committee prior to or on the date of grant of the
option.
B-3
(3) The expiration date of the options granted in each offering shall be
determined by the Committee prior to or on the date of grant of the options
but in any event shall be not more than 27 months after the date of grant of
the options.
(4) All Employees to whom options are granted shall have the same rights and
privileges. Each option shall entitle the Employee to purchase up to that
number of shares which could be purchased at the option price (for this
purpose, the price determined by the Committee as of the date of grant,
without regard to any lower price that may become applicable at exercise)
with an amount equal to such percentage of the Employee's Compensation (as
defined below) as the Committee shall determine for each offering (but not to
exceed the amount specified in section 423(b) of the Code). Each Employee
may elect to participate for less than the maximum number of shares which the
Employee is entitled to purchase under the Employee's option. The Committee
shall determine prior to or on the date of grant of the options the
consequences of an Employee's election to participate for less than the
maximum number of shares which the Employee is entitled to purchase.
(5) The term of each option shall consist of the following three
periods:
(a) An Offering Period during which each eligible Employee shall
determine whether or not and to what extent to participate by authorizing
payroll deductions;
(b) A Payroll Deduction Period during which payroll deductions shall
be made and credited to each Employee's payroll deduction account; and
(c) An Exercise Period during which participating Employees may
exercise their options, in whole or in part.
The beginning and ending dates of each Offering Period, Payroll Deduction
Period and Exercise Period shall be determined by the Committee, provided
that the Exercise Period shall end no more than 27 months after the date of
grant of the option.
(6) Each eligible Employee who desires to participate in an offering shall
elect to do so by completing and delivering by the end of the Offering Period
to a person designated by the Treasurer of the Company a payroll deduction
authorization in the form (including without limitation, telephonic and
electronic transmission, utilization of voice response systems and computer
entry) prescribed by the Committee authorizing payroll deductions during the
Payroll Deduction Period which shall aggregate no more than the amount
required to purchase at the option price (for this purpose, the price
determined by the Committee as of the date of grant, without regard to any
lower price that may become applicable at exercise) the maximum number of
full or fractional shares covered by the Employee's option. The Committee may
approve any brokerage firm or firms as a "designated" broker and may require
that all elections be delivered to the designated broker rather than a person
designated by the Treasurer of the Company.
B-4
(7) The Company shall maintain payroll deduction accounts for all
participating Employees.
(8) At any time after the expiration of the Payroll Deduction Period and
before the expiration of the Exercise Period, a participating Employee may
exercise his or her option in whole or in part by delivering notice of
exercise to a person designated by the Treasurer of the Company in such form
and manner (including without limitation, telephonic and electronic
transmission, utilization of voice response systems and computer entry) as
the Committee shall prescribe. If a participating Employee exercises his or
her option in part, the Employee's option shall thereupon terminate and
become void to the extent of the part not exercised and the balance of the
Employee's payroll deduction account shall be paid to the Employee in cash.
The Committee may approve any brokerage firm or firms as a "designated"
broker and may require that all exercises and notices of elections not to
exercise be delivered to the designated broker rather than a person
designated by the Treasurer of the Company.
Unless on or prior to the last day of the Exercise Period a participating
Employee has exercised his or her option or has given notice of election not
to exercise the option in such form and manner (including without limitation,
telephonic and electronic transmission, utilization of voice response systems
and computer entry) as the Committee may prescribe to a person designated by
the Treasurer of the Company, such Employee shall be deemed to have exercised
the option in full on the last day of the Exercise Period. The balance in
the payroll deduction account of any participating Employee whose option has
been exercised shall be paid to the Employee in cash.
(9) Upon exercise of an option, the shares shall be paid for in full by
transfer of the purchase price from the Employee's payroll deduction account
to the account of Texas Instruments Incorporated, and any balance in the
Employee's payroll deduction account shall be paid to the Employee in cash.
(10) A participating Employee may at any time prior to the expiration of the
Payroll Deduction Period cancel but not reduce his or her payroll deduction
authorization and simultaneously request that all but not a part of the
balance in the Employee's account be paid to him or her. Any participating
Employee may at any time during the Exercise Period without exercising any
part of his or her option withdraw all but not a portion of the balance in
his or her account. Such cancellation and withdrawal during the Payroll
Deduction Period or withdrawal during the Exercise Period shall constitute
withdrawal from the offering and the Employee's option shall thereupon
terminate and become void.
(11) The Committee shall determine on or prior to the date of grant of options
the consequences of the termination of employment of a participating Employee
for any reason, including death, during the term of an option.
(12) An Employee will have none of the rights and privileges of a stockholder
of the Company with respect to shares of common stock subject to an option
under the Plan until certificates representing such shares of common stock
have been transferred or issued to the Employee or to a designated broker for
the Employee's account on the books of the Company.
B-5
(13) An option granted under the Plan may not be transferred except by will
or the laws of descent and distribution and, during the lifetime of the
Employee to whom granted, may be exercised only by the Employee, or in the
case of incompetency by the Employee's duly appointed representative.
(14) Each option granted shall be evidenced by an instrument in such form
(including without limitation, telephonic and electronic transmission,
utilization of voice response systems and computer entry) as the Committee
shall approve which shall be dated the date of grant and shall comply with
and be subject to the terms and conditions of the Plan.
(15) No Employee shall be granted an option hereunder if such Employee,
immediately after the option is granted, owns stock possessing five percent
(5%) or more of the total combined voting power or value of all classes of
stock of the Company, computed in accordance with Section 423(b)(3) of the
Code. No Employee shall be granted an option which permits the Employee's
rights to purchase common stock under all employee stock purchase plans of
the Company to accrue at a rate which exceeds $25,000 (or such other maximum
as may be prescribed from time to time by the Code) of fair market value of
such common stock (determined at the time such option is granted) for each
calendar year in which such option is outstanding at any time in accordance
with the provisions of Section 423(b)(8) of the Code.
Plan Funds
All amounts held by the Company in payroll deduction accounts under the Plan
may be used for any corporate purpose of the Company.
Governmental Regulations
The obligation of Texas Instruments Incorporated to sell and deliver common
stock under the Plan is subject to applicable laws and to the approval of any
governmental authority required in connection with the authorization,
issuance, sale or delivery of such common stock.
Termination of Plan
No offering shall be made hereunder after April 16, 2002. Further, no
offering hereunder shall be made after any day upon which participating
Employees elect to participate for a number of shares equal to or greater
than the number of shares remaining available for purchase. If the number of
shares for which Employees elect to participate shall be greater than the
shares remaining available, the available shares shall at the end of the
Offering Period be allocated among such participating Employees pro rata on
the basis of the number of shares for which each has elected to participate.
B-6
ANNUAL MEETING OF STOCKHOLDERS
April 17, 1997
March 7, 1997
TO: Participants in TI's Universal Profit Sharing Plan
The accompanying Notice of Annual Meeting of Stockholders and Proxy Statement
and Instructions to Trustee on Voting relate to shares of common stock of
Texas Instruments Incorporated held by the Trustee for your profit sharing
accounts.
As noted in the Proxy Statement, the TI board of directors has designated the
following nominees for election to the board for the ensuing year: JAMES R.
ADAMS, DAVID L. BOREN, JAMES B. BUSEY IV, THOMAS J. ENGIBOUS, GERALD D.
FRONTERHOUSE, DAVID R. GOODE, GLORIA M. SHATTO, WILLIAM P. WEBER and CLAYTON
K. YEUTTER. Biographies of the nominees appear in the Proxy Statement. In
addition, the two board proposals set forth in the Proxy Statement are
expected to be presented at the annual meeting. The board of directors of TI
recommends a vote FOR the election of directors and the two board proposals.
The Trustee is required to vote the whole shares held for each of your
accounts (and whole and fractional shares held for Tax Credit Employee Stock
Ownership Accounts) in accordance with your instructions. If you wish to
instruct the Trustee on voting of whole shares held for your accounts (and
whole and fractional shares held for Tax Credit Employee Stock Ownership
Accounts), you should complete and sign the "Instructions to Trustee on
Voting" form enclosed and return it in the addressed, postage-free envelope
by April 14, 1997.
In the event that you do not instruct the Trustee on voting the whole shares
held for your accounts (except Tax Credit Employee Stock Ownership Account
shares) by April 14, 1997 in the manner provided in this letter, the Trustee
will vote such shares in accordance with the vote of the majority of the
shares for which the Trustee receives voting instructions from other
participants. Fractional shares and unallocated shares held for accounts
other than Tax Credit Employee Stock Ownership Accounts will be voted in the
same manner. The Trustee will vote the shares held for each Tax Credit
Employee Stock Ownership Account (generally 4 to 32 whole shares per account)
as instructed by participants by April 14, 1997 or as required by law or
otherwise where no instructions are received.
NOTE: If you own TI shares in your own name, a Proxy for those shares will
be sent to you in a separate package. Please sign and date the Proxy, if
applicable, and return it in the envelope provided.
/s/ CHUCK NIELSON
-------------------------------
Chuck Nielson
Vice President, Human Resources
PROXY PROXY
PROXY FOR ANNUAL MEETING TO BE HELD APRIL 17, 1997
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints JAMES R. ADAMS, JAMES B. BUSEY IV, GLORIA M.
SHATTO, or any one or more of them, the true and lawful attorneys of the
undersigned with power of substitution, to vote as proxies for the undersigned
at the annual meeting of stockholders of TEXAS INSTRUMENTS INCORPORATED to be
held in Dallas, Texas, on April 17, 1997, at 10:00 a.m. (Dallas time) and at
any or all adjournments thereof, according to the number of shares of common
stock which the undersigned would be entitled to vote if then personally
present, in the election of directors and upon other matters properly coming
before the meeting.
IMPORTANT-This Proxy must be signed and dated on the reverse side.
TEXAS INSTRUMENTS
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [/]
_____________________________________________________________________________
The board of directors recommends a vote FOR the election of directors and the
two board proposals.
For All
1. Election of Directors For Withheld Except Nominee(s)
Written Below
Nominees: J.R. Adams, D.L. Boren, [ ] [ ] [ ]______________
J.B. Busey IV, T.J. Engibous,
G.W. Fronterhouse, D.R. Goode,
G.M. Shatto, W.P. Weber
and C.K. Yeutter.
2. Proposal to approve the Texas For Against Abstain
Instruments Executive Officer [ ] [ ] [ ]
Performance Plan.
3. Proposal to approve the TI For Against Abstain
Employees 1997 Stock Purchase [ ] [ ] [ ]
Plan.
If no contrary indication is made, this proxy
will be voted FOR the election of each board
nominee and FOR the board proposals.
Dated __________________________, 1997
______________________________________________
Signature
______________________________________________
Signature
NOTE: Please sign exactly as name appears hereon. For joint accounts both
owners should sign. When signing as executor, administrator, attorney,
trustee or guardian, etc., please give your full title.
March 7, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549-1004
Re: Texas Instruments Incorporated
Dear Sir or Madam:
Transmitted herewith are our definitive proxy materials. If you have any
questions or comments, please contact me at (972) 995-1307.
Very truly yours,
/s/ JANE S. NAHRA
-----------------
Jane S. Nahra
Legal Counsel
tgp
