Preliminary Copy
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
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Commission Only (as Permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
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Rule 14a-11(c) or Rule 14a-12
TEXAS INSTRUMENTS INCORPORATED
------------------------------------------------
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(1) Amount Previously Paid:
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Preliminary Copy
[Company Logo] TEXAS INSTRUMENTS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 16, 1998
We are pleased to invite you to attend the 1998 Annual Meeting of Stockholders
which will be held on Thursday, April 16, 1998 at the Cafeteria on the
Company's property, 8505 Forest Lane, 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 proposal to approve an amendment to the
Company's Restated Certificate of Incorporation for the purpose of
increasing the authorized shares of common stock of the Company from
500,000,000 to 1,200,000,000; and
3. 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 17, 1998 are
entitled to notice of and to vote at the annual meeting.
Stockholders are urged to vote their shares as promptly as possible by either
(1) signing, dating and returning the enclosed proxy, or (2) calling the
toll-free number indicated in the enclosed telephone voting instructions.
By Order of the Board of Directors,
-----------------------------------
Richard J. Agnich
Senior Vice President,
Secretary and General Counsel
Dallas, Texas
February __, 1998
1
[Company Logo] TEXAS INSTRUMENTS
EXECUTIVE OFFICES: 8505 FOREST LANE, DALLAS, TEXAS
MAILING ADDRESS: POST OFFICE BOX 660199, DALLAS, TEXAS 75266-0199
PROXY STATEMENT
February__, 1998
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 16, 1998. By executing and returning the enclosed proxy or
by following the enclosed telephone voting instructions, 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 or followed the telephone voting instructions. If you have
returned a properly executed proxy or followed the telephone voting
instructions, the related shares will be voted as you specify. If no
specification is made, the shares will be voted in accordance with the
recommendations of the board of directors. You may revoke the authorization
given in your proxy or telephone call at any time before the shares are voted
at the meeting.
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, DANIEL A. CARP, THOMAS J. ENGIBOUS, GERALD W. FRONTERHOUSE, DAVID R.
GOODE, WAYNE R. SANDERS, GLORIA M. SHATTO and CLAYTON K. YEUTTER. William P.
Weber, a highly valued director since 1984, will retire from the Company on
April 30, 1998, and will not stand for re-election in 1998. Mr. Weber
currently serves as Vice Chairman and is Chair of the Benefit Plans and Finance
Committees.
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.
2
[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
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, 1979-94;
Governor of Oklahoma, 1975-79. 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 Aministration,
1989-91. Director, Curtiss-Wright Corporation
and S.T. Research Corporation; trustee and
vice-chairman, MITRE Corporation.
[Photo of D.A. Carp] DANIEL A. CARP Director
Member, Audit and Stockholder Relations and
Public Policy Committees.
President and chief operating officer of
Eastman Kodak Company since January 1997;
also, director since December 1997. Executive
vice president and assistant chief operating
officer of Eastman Kodak, 1995-97; general
Manager, European Region, 1991-95.
3
[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 1996. Joined the Company
in 1976; elected executive vice president in
1993. Member, The Business Roundtable;
trustee, Southern Methodist University.
[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,
Aeroquip-Vickers, Inc., Caterpillar, Inc. and
Georgia-Pacific Corporation; member, The
Business Council and The Business Roundtable;
trustee, Hollins College.
[Photo of W.R. Sanders] WAYNE R. SANDERS Director
Member, Audit and Compensation Committees.
Chairman of the board of Kimberly-Clark
Corporation since 1992; also, chief executive
officer since 1991. Director, Adolph Coors
Company, Coors Brewing Company and Texas
Commerce Bank, N.A.; trustee, Marquette
University.
4
[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 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 and Oppenheimer Funds.
The ages and holdings of common stock of the directors and the year in which
each became a director are as follows:
<TABLE>
<CAPTION>
Common Stock
Director Ownership at
Director Age Since December 31, 1997<F1>*
-------- --- -------- ------------------
<S> <C> <C> <C>
James R. Adams 58 1989 78,507
David L. Boren 56 1995 6,320
James B. Busey IV 65 1992 8,620
Daniel A. Carp 49 1997 2,166
Thomas J. Engibous 45 1996 392,765
Gerald W. Fronterhouse 61 1986 11,773
David R. Goode 57 1996 3,408
Wayne R. Sanders 50 1997 3,800
Gloria M. Shatto 66 1992 7,720
William P. Weber 57 1984 389,692
Clayton K. Yeutter 67 1992 9,320
- ---------------
<FN>
<F1>*Includes any shares subject to restricted stock unit awards. Also
includes shares subject to acquisition within 60 days by Messrs. Adams,
5
Engibous and Weber for 57,500, 329,888 and 350,500 shares, respectively, and
shares credited to profit sharing stock accounts for Messrs. Adams, Engibous
and Weber in the amounts of 379, 4,237 and 12,144, respectively. Excludes
shares held by a family member if a director has disclaimed beneficial
ownership. Each director owns less than 1% of the Company's common stock.
</TABLE>
Board and Committee Meetings
During 1997, the board held 12 meetings. In addition, the following committees
of the board held the number of meetings indicated: Audit, 6; Benefit Plans,
4; Board Organization and Nominating, 7; Compensation, 6; Finance, 5;
Stockholder Relations and Public Policy, 5; and Trust Review, 3. Overall
attendance at board and committee meetings was approximately 93%.
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 660199, MS 8658, Dallas, Texas 75266-0199.
6
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 performance plans, incentive plan, stock purchase plan 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.
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 1997, the Company made payments (an aggregate of $6,649)
relating to premiums for life, medical, dental, travel and accident insurance
policies covering directors.
Subject to certain limitations, directors may elect that all or a part of the
cash portion of their fees be deferred until termination of service from the
board or other specified times. The deferred amounts are credited to a cash
account or stock unit account. Cash accounts earn interest from the Company at
a rate (currently based on published interest rates on certain corporate bonds)
7
determined from time to time by the Board Organization and Nominating
Committee. Stock unit accounts fluctuate in value with the underlying shares
of Company common stock, which will be issued after the deferral period.
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. 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.
8
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 the
Company's chief executive officer and each of the four other most highly
compensated executive officers.
9
Summary Compensation Table
The following table sets forth information with respect to the compensation of
the Company's chief executive officer and each of the four other most highly
compensated executive officers for services in all capacities to the Company in
1995, 1996 and 1997, except as otherwise indicated.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------- ---------------------------------------
Awards Payouts
------------------------- ------------
Stock
Name and Other Annual Restricted Options Long-Term All Other
Principal Compensation Stock Awards (in shares) Incentive Compensation
Position Year Salary Bonus <F1>(1) <F2>(2) <F3>(3) Plan Payouts <F4>(4)
- -------------------- ---- -------- ---------- ------------ ------------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T.J. Engibous 1997 $645,870 $1,500,000 -- 0 260,000 0 $ 98,604
President & CEO 1996 $509,640 $ 0 -- $875,000 120,000 0 $ 15,484
1995 $369,750 $1,000,000 -- 0 120,000 0 $145,887
W.P. Weber 1997 $441,620 $ 800,000 -- 0 100,000 0 $ 59,343
Vice Chairman 1996 $424,300 $ 0 -- 0 50,000 0 $ 24,868
1995 $404,250 $ 750,000 -- 0 100,000 0 $168,272
R.K. Templeton<F5>(5) 1997 $358,770 $1,100,000 -- 0 140,000 0 $ 41,278
Executive Vice 1996 $278,750 $ 0 -- 0 120,000 0 $ 3,200
President
R.J. Agnich 1997 $363,950 $ 600,000 -- 0 70,000 0 $ 47,954
Senior Vice 1996 $346,500 $ 0 -- 0 40,000 0 $ 19,040
President, 1995 $328,250 $ 550,000 -- 0 74,000 0 $119,202
Secretary &
General Counsel
W.A. Aylesworth 1997 $363,950 $ 600,000 -- 0 70,000 0 $ 47,888
Senior Vice 1996 $346,500 $ 0 -- 0 40,000 0 $ 20,516
President, 1995 $328,250 $ 550,000 -- 0 74,000 0 $115,153
Treasurer &
Chief Financial
Officer
- ------------------
<FN>
<F1>(1) The dollar value of perquisites and other personal benefits for each
of the named executive officers was less than the established reporting
thresholds.
<F2>(2) (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
10
of ten years. As of December 31, 1997, the value of the 40,000 unvested
shares (as adjusted to give effect to the 1997 two-for-one stock split) was
$1,800,000.
(c) Dividend equivalent payments are paid on restricted stock units at
the same rate as dividends on the Company's common stock.
<F3>(3) The number of shares granted has been adjusted to give effect to the
1997 two-for-one stock split.
<F4>(4) During 1997, the Company made payments relating to premiums with
respect to split-dollar life insurance policies in the following amounts:
Mr. Engibous, $43,601; Mr. Weber, $21,387; Mr. Templeton, $8,977; Mr. Agnich,
$16,075; and Mr. Aylesworth, $16,009. 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 1997, the Company made matching contributions to the cash or deferred
compensation account (401(k)) under the U.S. profit sharing plan in the
amount of $3,200 for each of the named executive officers.
For 1997, the profit sharing cash payments and contributions (plus ERISA
reductions for which the Company will provide an offsetting supplemental
benefit) were as follows: Mr. Engibous, $51,603; Mr. Weber, $34,556;
Mr. Templeton, $28,871; Mr. Agnich, $28,479; and Mr. Aylesworth, $28,479.
<F5>(5) Mr. Templeton became an executive officer of the Company in 1996.
</TABLE>
11
Table of Option Grants in 1997
The following table sets forth details regarding stock options granted to the
named executive officers in 1997. 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 Exercise Stock Stock
(in Granted to Price(per Expir- Price (per Price (per
shares) Employees share) ation share) share)
Name <F1>(1) in 1997 <F2>(2) Date <F2>(2) Gain <F2>(2) Gain
- ------------- ------- ---------- -------- ------- ---------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T.J. Engibous 260,000 2.54% $33.85 1/15/07 $55.13 $5,532,276 $87.78 $14,022,346
W.P. Weber 100,000 0.98% $33.85 1/15/07 $55.13 $2,127,798 $87.78 $5,393,210
R.K. Templeton 140,000 1.37% $33.85 1/15/07 $55.13 $2,978,918 $87.78 $7,550,494
R.J. Agnich 70,000 0.68% $33.85 1/15/07 $55.13 $1,489,459 $87.78 $3,775,247
W.A. Aylesworth 70,000 0.68% $33.85 1/15/07 $55.13 $1,489,459 $87.78 $3,775,247
All stockholders $55.13 $8,107,347,262<F3>(3) $87.78 $20,545,609,741<F3>(3)
Employees $55.13 $732,666,128<F4>(4) $87.78 $1,856,719,818<F4>(4)
through TI profit sharing plans
- ---------------
<FN>
<F1>(1) These non-qualified options become exercisable in four equal annual
installments beginning on January 15, 1998 and also may become fully
exercisable in the event of a change in control (as defined in the options) of
the Company. The number of shares granted and the exercise price per share
have been adjusted to give effect to the 1997 two-for-one stock split.
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.
<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 $55.13, and at a
10% annual appreciation would be $87.78.
<F3>(3) The gain is based on the fair market value ($33.85 per share) and
number of all the outstanding shares of common stock on the grant date of
January 15, 1997.
12
<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 15, 1997, assuming 5%
and 10% annual appreciation over the 10-year option term.
</TABLE>
Table of Option Exercises in 1997 and Year-End Option Values
The following table sets forth information with respect to the named executive
officers concerning the exercise of options during 1997, and unexercised
options held as of December 31, 1997.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired on December 31, 1997 December 31, 1997<F2>(2)
Exercise Value -------------------------- ---------------------------
Name <F1>(1) Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T.J. Engibous - - 144,000 410,000 $3,970,200 $6,425,200
W.P. Weber - - 263,000 175,000 $7,527,780 $2,897,500
R.K. Templeton - - 181,000 295,000 $5,119,940 $5,212,500
R.J. Agnich 147,500 $4,836,242 - 128,500 - $2,165,730
W.A. Aylesworth 48,000 $1,488,890 89,500 128,500 $2,438,050 $2,165,730
- ---------------
<FN>
<F1>(1) The number of shares acquired upon exercise has been adjusted to give
effect to the 1997 two-for-one stock split.
<F2>(2) Market value of underlying securities at year-end, minus the exercise
price.
</TABLE>
13
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, 1997 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>
$ 500,000 $109,203 $145,604 $182,006 $218,407 $254,808 $292,308 $ 329,808
600,000 131,703 175,604 219,506 263,407 307,308 352,308 397,308
700,000 154,203 205,604 257,006 308,407 359,808 412,308 464,808
800,000 176,703 235,604 294,506 353,407 412,308 472,308 532,308
900,000 199,203 265,604 332,006 398,407 464,808 532,308 599,808
1,000,000 221,703 295,604 369,506 443,407 517,308 592,308 667,308
1,100,000 244,203 325,604 407,006 488,407 569,808 652,308 734,808
1,200,000 266,703 355,604 444,506 533,407 622,308 712,308 802,308
1,300,000 289,203 385,604 482,006 578,407 674,808 772,308 869,808
1,400,000 311,703 415,604 519,506 623,407 727,308 832,308 937,308
1,500,000 334,203 445,604 557,006 668,407 779,808 892,308 1,004,808
1,600,000 356,703 475,604 594,506 713,407 832,308 952,308 1,072,308
- ---------------
<FN>
<F1>(1) The average credited earnings is the average of the five consecutive
years of highest earnings.
At December 31, 1997, 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, 20 years,
$820,553; Mr. Weber, 36 years, $863,764; Mr. Templeton, 16 years, $536,761;
Mr. Agnich, 25 years, $682,364; and Mr. Aylesworth, 31 years, $612,566.
<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.
<F3>(3) The benefits under the plan are computed as single life annuity at
age 65.
14
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 $3,297 for
15 years of credited service, $4,396 for 20 years of credited service, $5,495
for 25 years of credited service, $6,593 for 30 years of credited service,
$7,692 for 35 years of credited service, $7,692 for 40 years of credited
service and $7,692 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.
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 1997:
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 performance
awards and long-term compensation. At higher management levels, the mix of
compensation is weighted more to the performance-based components-annual
performance awards and long-term compensation.
In determining the compensation of the executive officers, the Committee
considered compensation practices of competitor companies (based on the best
available data from as many competitor companies as practicable) and the
relative performance of TI and competitor companies. The competitor companies
are major high-technology competitors of the Company. 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
15
the same as the companies comprising that index. 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 Chairman and
the CEO made recommendations regarding the components of each executive
officer's compensation package except their 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 1997 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 competitor companies.
Section 162(m) of the Internal Revenue Code generally denies a deduction to any
publicly held corporation for compensation paid in a taxable year to the
Company's CEO and four other highest compensated officers to the extent that
the officer's compensation (other than qualified performance-based
compensation) exceeds $1 million.
It is the Committee's policy to consider deductibility under Section 162(m) in
determining compensation arrangements for these officers, and 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 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). In April
1997, the stockholders of the Company approved the Texas Instruments Executive
Officer Performance Plan. The Company believes the Plan provides
performance-based compensation for the Company's executive officers that will
comply with the requirements for full deductibility under Section 162(m).
Compensation Components and Determination
Compensation decisions for 1997 were made such that TI executive officers will
receive a level of annual total compensation that, when compared to the annual
total compensation of competitor companies, reflects the Company's performance
relative to those competitor companies. In order to weight more of total
compensation to performance-based components, the Committee's base salary
decisions are intended to provide salaries somewhat lower than 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). Annual performance award decisions for 1997 were primarily
driven by each individual's contribution to the Company's progress toward two
measures: improvement in profit from operations (PFO) as a percent of revenues
and growth in net revenues from 1996 to 1997.
16
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 opportunity provided by similarly performing
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. The Committee, in
its discretion, may adjust the awards considering each executive officer's
individual contribution to the implementation of the strategic plan of the
Company.
Base Salary. The Committee reviewed base salaries for executive officers of
competitor companies and set base salaries for its executive officers somewhat
lower than competitive levels. The Committee considered the level of base
salary of CEOs of competitor companies and consequently increased Mr. Engibous'
base salary to an annual rate of $650,000. Mr. Engibous' annual salary during
1997 was below the median annual salary of CEOs of competitor companies.
Annual Performance Award. The annual performance award varies significantly
based on the Company's profitability and revenue growth and the individual's
contribution toward that performance. The Committee considered rankings of
estimates of competitor companies' 1997 performance compared to the Company's
performance, and granted annual performance awards to executive officers
intended to approximate total annual compensation of the same rank. As a
result, Mr. Engibous received an annual performance award of $1,500,000.
Long-Term Compensation. The Committee made long-term compensation
determinations in January 1997. Stock options constitute TI's primary
long-term incentive vehicle. Stock options granted in 1997 were granted at
100% of fair market value on the date of grant, have a 10-year term, do not
become exercisable until one year after grant, then become exercisable in four
equal annual installments. Any value actually realized by an executive officer
from an option grant depends completely upon increases in the price of TI
common stock.
In January, the Committee reviewed each officer's contribution to
implementation of the strategic plan of the Company, and followed the
guidelines by granting each officer stock options at a price per share of
$33.85 (the market value of TI's common stock on the date of grant giving
effect to the subsequent two-for-one stock split). 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.
Considering Mr. Engibous' contribution to execution of the strategic plan for
the Company, the Committee granted Mr. Engibous an option to purchase 260,000
shares, resulting in a total long-term compensation opportunity comparable to
those of CEOs of similarly performing competitor companies.
17
The ranking of total compensation (annual plus long-term) for Mr. Engibous as
compared to the total compensation of CEOs of competitor companies was intended
to approximate the estimated ranking of TI performance compared to the
performance of competitor companies.
Gerald W. Fronterhouse, Chair David R. Goode
David L. Boren Wayne R. Sanders
18
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, 1992, and ending December 31, 1997. 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 Indes appears here.
The coordinates used in the graph appear below.]
<TABLE>
<CAPTION>
Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
<S> <C> <C> <C> <C> <C> <C>
Texas Instruments $100 $138 $164 $229 $287 $407
S&P 500(R) $100 $110 $112 $153 $189 $252
S&P(R) Technology $100 $123 $143 $207 $290 $366
Sector Index
</TABLE>
*Assumes that the value of the investment in TI common stock and each index was
$100 on December 31, 1992, 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.
19
PROPOSAL TO APPROVE AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
The board of directors believes that it is desirable for the stockholders to
consider and act upon a proposal to amend the Company's Restated Certificate
of Incorporation (the Certificate). Pursuant to the proposal, the currently
authorized shares of common stock, $1 par value, will be increased from
500,000,000 to 1,200,000,000 shares.
Of the 500,000,000 currently authorized shares of common stock, as of December
31, 1997, 390,359,317 were issued (including 860,765 treasury shares). Of the
remaining 109,640,683 authorized shares of common stock, 77,631,128 were
reserved for issuance in connection with the Company's incentive plans, stock
option plans, stock purchase plan and profit sharing plans.
Except for shares currently reserved as explained above, the Company does not
now have any present plan, understanding or agreement to issue additional
shares of common stock. However, the board believes that the proposed
increase in authorized shares of common stock is desirable to enhance the
Company's flexibility in connection with possible future actions, such as
stock splits, stock dividends, corporate mergers and acquisitions, financings,
acquisitions of property, use in employee benefit plans, or other corporate
purposes. The board will determine whether, when, and on what terms the
issuance of shares of common stock may be warranted in connection with any of
the foregoing purposes.
If the proposed amendment is approved, all or any of the authorized shares of
common stock may be issued without further action by the stockholders and
without first offering such shares to the stockholders for subscription. The
issuance of common stock otherwise than on a pro-rata basis to all holders of
such stock would reduce the proportionate interests of such stockholders.
Pursuant to the proposal, the first sentence of Article Fourth of the
Certificate will be amended to read as follows:
"The total number of shares of all classes of stock which the
Company shall have authority to issue is One Billion Two
Hundred Ten Million (1,210,000,000) shares, of which Ten
Million (10,000,000) shall be Preferred Stock with a par value
of $25.00 per share, and One Billion Two Hundred Million
(1,200,000,000) shall be Common Stock with a par value of $1.00
per share."
Other than increasing the authorized shares of common stock from 500,000,000
to 1,200,000,000, the proposed amendment in no way changes the Certificate.
The board has unanimously adopted resolutions setting forth the proposed
amendment to the Certificate, declaring its advisability and directing that
the proposed amendment be submitted to the stockholders for their approval at
the annual meeting on April 16, 1998. If adopted by the stockholders, the
amendment will become effective upon filing as required by the General
Corporation Law of Delaware.
The board of directors recommends a vote "FOR" the above proposal.
20
ADDITIONAL INFORMATION
Financial Statements
This proxy statement has been preceded or accompanied by the Annual Report for
the fiscal year ended December 31, 1997. The consolidated financial statements
and auditor's report on pages __-__, the management discussion and analysis of
financial condition and results of operations on pages __ - __ and __ - __, and
information concerning the quarterly financial data on page __ of the Annual
Report are incorporated herein by reference.
Voting Securities
As of February 17, 1998, there were outstanding ___________ 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 17, 1998 will be entitled to
vote at the meeting or any adjournment thereof.
The following table sets forth certain information concerning (a) the only
person that has 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, and all executive officers and directors as a
group.
<TABLE>
<CAPTION>
Shares Owned At Percent of
Name and Address December 31, 1997 Class
- -------------------------------- ----------------- ----------
<S> <C> <C>
FMR Corp. <F1>(1)
82 Devonshire Street
Boston, MA 02109
Thomas J. Engibous 392,765<F2>(2) *
William P. Weber 389,692<F2>(2) *
Richard K. Templeton 377,330<F2>(2) *
Richard J. Agnich 123,425<F2>(2) *
William A. Aylesworth 209,343<F2>(2) *
All executive officers and 2,277,778<F2>(2)<F3>(3) *
directors as a group
- ---------------
*Less than 1%.
<FN>
<F1>(1) The Company understands that, as of December 31, 1997, (a) FMR Corp.
and its Chairman, Edward C. Johnson 3rd, had sole dispositive power with
21
respect to all of the above shares and FMR Corp. had sole voting power with
respect to __% of the above shares, and (b) the above shares included
____________ shares beneficially owned by Fidelity Management & Research
Company, a wholly-owned subsidiary of FMR Corp., as a result of acting as
investment advisor to several investment companies.
<F2>(2) Includes shares subject to acquisition within 60 days by Messrs.
Engibous, Weber, Templeton, Agnich and Aylesworth for 329,888, 350,500,
341,000, 66,000 and 155,500 shares, respectively, and shares credited to profit
sharing stock accounts for Messrs. Engibous, Weber, Templeton, Agnich and
Aylesworth in the amounts of 4,237, 12,144, 2,530, 8,835 and 5,687,
respectively. Excludes shares held by a family member if a director or
officer has disclaimed beneficial ownership.
<F3>(3) Includes (a) 1,797,800 shares subject to acquisition within 60 days,
and (b) 64,248 shares credited to profit sharing stock accounts.
As of December 31, 1997, the TI Employees Universal Profit Sharing Trust held
26,361,189 shares (6.7%) 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 1999 proxy material is October 30, 1998.
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.
22
Vote Required
The ten nominees for election as directors at the 1998 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. A majority vote of the outstanding common stock is
necessary for the adoption of the proposed charter amendment. 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 any other matters as
may properly come before the meeting. 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.
Section 16(a) Beneficial Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires certain persons,
including the Company's directors and executive officers, to file reports with
the Securities and Exchange Commission regarding beneficial ownership of
certain equity securities of the Company. Because of an inadvertent clerical
error at the Company, one of Mr. Adams' transactions during 1997 was reported
late.
By Order of the Board of Directors,
-----------------------------------
Richard J. Agnich
Senior Vice President,
Secretary and General Counsel
Dallas, Texas
February __, 1998
23
Directions to Annual Meeting Site
From DFW Airport
Take the North Airport exit to 635E. Take 635E to the Greenville Avenue Exit.
Turn right on Greenville. Turn right on Forest Lane. Texas Instruments will
be on your right at the second traffic light. Please use the south entrance
to the building.
Directions from Love Field Airport
Take Mockingbird Lane to 75N (Central Expressway). Travel north on 75 to the
Forest Lane Exit. Turn right on Forest Lane. You will pass two traffic
lights. At the third light, the entrance to Texas Instruments will be on your
left. Please use the south entrance to the building.
[map]
24
Preliminary Copy
PROXY PROXY
PROXY FOR ANNUAL MEETING TO BE HELD APRIL 16, 1998
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 16, 1998, 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.
- ------------------------------------------------------------------------------
Dear Stockholder:
On the reverse side of this card are instructions on how to vote for the
election of directors and the board proposal by telephone. Please consider
voting by telephone. Your vote is recorded as if you mailed in your proxy
card. We believe voting this way is convenient and it also saves the Company
money.
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
board proposal.
For All
1. Election of Directors For Withheld Except Nominee(s)
Written Below
Nominees: J.R. Adams, D.L. Boren, [ ] [ ] [ ]______________
J.B. Busey IV, D.A. Carp,
T.J. Engibous, G.W. Fronterhouse,
D.R. Goode, W.R. Sanders,
G.M. Shatto, and C.K. Yeutter.
For Against Abstain
2. Proposal regarding increasing the
Company's authorized common stock. [ ] [ ] [ ]
If no contrary indication is made, this proxy
will be voted FOR the election of each board
nominee and FOR the board proposal.
Dated __________________________, 1998
______________________________________________
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.
IF YOU WISH TO VOTE BY TELEPHONE, PLEASE SEE INSTRUCTION CARD BELOW.
- ------------------------------------------------------------------------------
____________
| | [TI LOGO]
|____________|
Dear Stockholder:
Texas Instruments Incorporated offers you a convenient way to vote your
shares. By following the simple instructions below, your vote can now be
counted over the telephone. We encourage you to take advantage of this new
feature which eliminates the need to return the proxy card but authorizes the
named proxies in the same manner as if you marked, signed and dated your proxy
card.
TELEPHONE VOTING INSTRUCTIONS
On a Touch-Tone Telephone - Call the toll-free number 1-888-___-____,
24 hours per day, 7 days a week. You will hear these instructions.
Press __ to vote FOR all nominees, or press __ to WITHHOLD for all
nominees.
Press __ to vote FOR the proposal regarding increasing the
Company's authorized common stock, press __ to vote AGAINST the
proposal, or press __ to ABSTAIN.
Press __ to conclude this phone call and to cast your vote.
HOWEVER, if you wish to withhold authority to vote for an individual
nominee, you must do so by marking the exceptions box of your proxy card,
writing the nominee(s) name in the space provided on the proxy card, signing,
dating and returning the proxy card in the envelope provided.
If you vote by telephone, there is no need for you to mail back your proxy.
THANK YOU FOR VOTING.
Preliminary Copy
ANNUAL MEETING OF STOCKHOLDERS
April 16, 1998
February __, 1998
TO: Participants in the TI Universal Profit Sharing Plan (the "Universal
Plan") and the TI U.S. Employees Retirement and Profit Sharing Plan (the
"Retirement and 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, DANIEL A. CARP, THOMAS J. ENGIBOUS,
GERALD W. FRONTERHOUSE, DAVID R. GOODE, GLORIA M. SHATTO, WAYNE R. SANDERS and
CLAYTON K. YEUTTER. Biographies of the nominees appear in the Proxy
Statement. In addition, the board proposal set forth in the Proxy Statement is
expected to be presented at the Annual Meeting. The board of directors of TI
recommends a vote FOR the election of directors and the board proposal.
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 the 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
or use the telephone voting procedures specified on the voting instructions
form by April 13, 1998.
If you are a participant in the Universal Plan and 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 13, 1998 in the manner
specified on the voting instructions form, 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 Universal Plan participants.
Similarly, if you are a participant in the Retirement and Profit Sharing Plan,
and do not instruct the Trustee on voting the whole shares held for your
accounts (except Tax Credit Employee stock ownership account shares) by April
13, 1998 in the manner specified on the voting instructions form, 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
Retirement and Profit Sharing Plan 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 8 to 64 whole shares per account) as instructed by participants by
April 13, 1998 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, or follow the telephone
voting procedures accompanying the Proxy.
-------------------------------
Steve Leven
Vice President, Human Resources
Preliminary Copy
INSTRUCTIONS TO TRUSTEE ON VOTING
TI COMMON STOCK HELD UNDER THE
TI EMPLOYEES UNIVERSAL PROFIT SHARING PLAN OR
TI U.S. EMPLOYEES RETIREMENT AND PROFIT SHARING PLAN
PLEASE VOTE BY SIGNING ON REVERSE SIDE AND RETURNING IN THE ENCLOSED ENVELOPE
OR BY FOLLOWING THE TELEPHONE VOTING PROCEDURES
These voting instructions are requested in conjunction
with a proxy solicitation by the Board of Directors
of Texas Instruments Incorporated.
[participant identifying information]
I hereby instruct Bankers Trust Company as Trustee of the TI Employees
Universal Profit Sharing Trust and of the TI U.S. Employees Retirement and
Profit Sharing Trust ("Trusts") to vote in person or by proxy, at the annual
meeting of stockholders of Texas Instruments Incorporated ("TI") on April 16,
1998, or any adjournments thereof, the whole shares of TI common stock ("TI
stock") held in the TI Stock Funds under the Trusts which are attributable to
my Universal Profit Sharing Account and CODA Account or Profit Sharing Account
and 401(k) Account and the whole and fractional shares of TI Stock held in the
TI Stock Funds which are attributable to my Tax Credit Employee Stock
Ownership Account in the manner indicated on the reverse side of this form
with respect to each item identified thereon.
The Trustee will vote the shares represented by this voting instructions form
if, by April 13, 1998, (a) the form is properly signed and received, or
(b) the telephone voting procedures are followed. Shares for which no voting
instructions have been received will be voted as follows: for shares held
under the TI U.S. Employees Universal Profit Sharing Plan (the "Universal
Plan") in accordance with the vote of the majority of the shares for which
voting instructions are received from other Universal Plan participants; for
shares held under the TI U.S. Employees Retirement and Profit Sharing Plan
(the "Retirement and Profit Sharing Plan") in accordance with the vote of the
majority of the shares for which voting instructions are received from other
Retirement and Profit Sharing Plan participants; except that for both the
Universal Plan and the Retirement and Profit Sharing Plan, the Trustee will
vote shares of TI stock attributable to Tax Credit Employee Stock Ownership
Accounts for which no voting instructions have been received to the extent
required by law or otherwise.
- ------------------------------------------------------------------------------
On the reverse side of this card are procedures on how to vote for the
election of directors and the board proposal by telephone. Please consider
voting by telephone. Your vote is recorded as if you mailed in your voting
instructions form. We believe voting this way is convenient and it also saves
the Company money.
PLEASE MARK YOUR CHOICE IN OVAL IN THE FOLLOWING MANNER USING DARK INK
ONLY: [ / ]
________________________________________________________________________
The board of directors of TI recommends a vote FOR the election of
directors and the board proposal.
For All
1. Election of Directors For Withheld Except Nominee(s)
Written Below
Nominees: J.R. Adams, D.L. Boren, [ ] [ ] [ ]______________
J.B. Busey IV, D.A. Carp,
T.J. Engibous, G.W. Fronterhouse,
D.R. Goode, W.R. Sanders,
G.M. Shatto, and C.K. Yeutter.
For Against Abstain
2. Proposal regarding increasing the
Company's authorized common stock. [ ] [ ] [ ]
Dated __________________________, 1998
______________________________________________
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.
IF YOU WISH TO VOTE BY TELEPHONE, PLEASE SEE PROCEDURES BELOW.
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Texas Instruments Incorporated offers you a convenient way to vote your
shares. By following the simple procedures below, your vote can now be
counted over the telephone. We encourage you to take advantage of this new
feature which eliminates the need to return the voting instructions form.
TELEPHONE VOTING PROCEDURES
On a Touch-Tone Telephone - Call the toll-free number 1-888-___-____,
24 hours per day, seven days a week. You will hear these directions.
Press __ to vote FOR all nominees, or press __ to WITHHOLD for all
nominees.
Press __ to vote FOR the proposal regarding increasing the
Company's authorized common stock, press __ to vote AGAINST the
proposal, or press __ to ABSTAIN.
Press __ to conclude this phone call and to cast your vote.
HOWEVER, if you wish to withhold authority to vote for an individual
nominee, you must do so by marking the exceptions box of your voting
instructions form, writing the nominee(s) name in the space provided on the
voting instructions form, signing, dating and returning the voting
instructions form in the envelope provided.
If you vote by telephone, there is no need for you to mail back your voting
instructions form.
THANK YOU FOR VOTING
