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.
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
The Committee shall have the full and exclusive right to make reductions in
awards under the Plan. In determining whether to reduce any award and the
amount of any reduction, the Committee shall take into consideration such
factors as the Committee shall determine.
Expenses of Administration
The expenses of the administration of this Plan, including the interest
provided in the Plan, shall be borne by the Company.
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
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
(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.