Investor Presentaiton
Total stock compensation expense recognized is as follows:
For Years Ended December 31,
2015
COR
R&D
SG&A
Acquisition charges
Total
2016
2014
$ 40
$ 47
$ 48
60
60
62
152
169
156
10
11
$ 252
$ 286
$ 277
These amounts include expenses related to non-qualified stock options, RSUs and stock options offered under our employee stock
purchase plan and are net of expected forfeitures.
We issue awards of non-qualified stock options with graded vesting provisions (e.g., 25 percent per year for four years). We
recognize the related compensation expense on a straight-line basis over the minimum service period required for vesting of the
award, adjusting for expected forfeiture activity. Awards issued to employees who are retirement eligible or nearing retirement
eligibility are expensed on an accelerated basis.
Our RSUs generally vest four years after the date of grant. We recognize the related compensation expense on a straight-line basis
over the vesting period, adjusting for expected forfeiture activity. RSUs issued to employees who are retirement eligible or nearing
retirement eligibility are expensed on an accelerated basis.
Fair-value methods and assumptions
We account for all awards granted under our various stock compensation plans at fair value. We estimate the fair values for
non-qualified stock options using the Black-Scholes-Merton option-pricing model with the following weighted average
assumptions:
Weighted average grant date fair value, per share
Weighted average assumptions used:
Expected volatility..
Expected lives (in years)
Risk-free interest rates
Expected dividend yields
For Years Ended December 31,
2016
2015
$ 10.03
$9.49
2014
$ 8.13
25%
7.3
1.72%
22%
7.3
22%
7.3
1.64% 2.45%
2.87% 2.52% 2.72%
We determine expected volatility on all options granted using available implied volatility rates. We believe that market-based
measures of implied volatility are currently the best available indicators of the expected volatility used in these estimates.
We determine expected lives of options based on the historical option exercise experience of our optionees using a rolling 10-year
average. We believe the historical experience method is the best estimate of future exercise patterns currently available.
Risk-free interest rates are determined using the implied yield currently available for zero-coupon U.S. government issues with a
remaining term equal to the expected life of the options.
Expected dividend yields are based on the annualized approved quarterly dividend rate and the current market price of our
common stock at the time of grant. No assumption for a future dividend rate change is included unless there is an approved plan to
change the dividend in the near term.
The fair value per share of RSUs is determined based on the closing price of our common stock on the date of grant.
Our employee stock purchase plan is a discount-purchase plan and consequently the Black-Scholes-Merton option-pricing model
is not used to determine the fair value per share of these awards. The fair value per share under this plan equals the amount of the
discount.
TEXAS INSTRUMENTS . 2016 FORM 10-K
39
FORM 10-KView entire presentation