Over that same time span, Texas Instruments sold 90.8 million shares to management and board members as they exercised options and restricted stock grants, for a total of $2.5 billion. That works out to an average sale price of $27.51.

The difference in average purchase price and average sale price, multiplied by the number of shares so affected, is the direct monetary benefit for management. This is true whether or not management sells their new shares into the buyback or holds them. That amount works out to be $3.6 billion.

In other words, 40% of TXN’s stock buybacks over this five-year period were used to sterilize stock issuance to senior management and the board of directors.
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In other words, senior management and the board of directors received $3.6 BILLION in direct value from these stock buybacks.

But wait, there’s more …As of December 31, 2018, there were still 40 million shares outstanding in the form of options and restricted stock grants to management and directors, at an average weighted exercise price of $55.

At today’s stock price, that means there is an additional $2.6 BILLION in stock-based compensation already awarded to TXN’s executives and directors.

Eoin Treacy's view

This point about the quantity of shares not declining even through share buybacks have been going on for more than a decade is a topic which is getting increased airplay since Yardeni Research first highlighted it in March. 

This chart highlights the fact Texas Instruments has reduced its share count by around 45% since 2006 which is supportive of the share price. The fact the share has been performing more or less in line with the Semiconductors’ index is attributable to the weight it represents in the measure as well as the fact this process of buying back shares and awarding massive stipends to managers is going on in every company.

That is one of the hallmarks of every bull market. The people at the centre of the money-making enterprise accrue significant wealth in the expansion phase. That was true of the tech CEOs in the 1990s and arguably is still true today and it was certainly true of the credit derivative and mortgage brokers ahead of 2008. The corporate sector, through balance sheet optimisation, offshoring, managing labour costs and low energy prices is in a benign position today despite well publicised challenges.

Texas Instruments has underperformed of late and needs to hold the region of the trend mean if the benefit of the doubt is to be given to the upside.