Texas Instruments (NASDAQ: TXN) director sells 28.2% of shares held after option exercise

What happened

Ronald Kirk, a director of Texas Instruments Inc (NASDAQ: TXN), sold 6,065 shares of common stock on Oct. 29 for about $1.88 million.

The weighted average price was $310.39 a share, with individual sales between $309.92 and $310.81, the filing says. Kirk held 15,462 shares directly after the sale.

The shares came from stock options that Kirk exercised the same day at $79.26 a share. An exercise lets the holder buy at that fixed price, and the same-day sale turns the gap into cash.

The weighted average sale price was $231.13 above the exercise price. The exercise covered the entire option, and the filing shows none left afterward.

The option became exercisable in four equal annual installments beginning Jan. 26, 2018, and expires Jan. 26, 2027. Attorney in fact John Whitney signed the filing for Kirk on Oct. 30.

Key numbers

Metric	Latest	Change	Source
Shares sold	6,065 shares		SEC Form 4
Weighted average sale price	$310.39		SEC Form 4
Total sale value	$1.88 million		SEC Form 4
Option exercise price	$79.26		SEC Form 4
Shares held after the sale	15,462 shares		SEC Form 4
Shares sold as a share of holding before the sale	28.2%		Calculated from SEC Form 4

Read more: Texas Instruments (TXN) company research

Why it matters

OptimistFi calculates that the shares sold equal 28.2% of the 21,527 shares Kirk held after the exercise and before the sale. The percentage measures the sale against the holding right after the exercise. All of the shares sold came from the option exercise.

OptimistFi has argued that Texas Instruments turns its manufacturing and its analog and embedded chip portfolio into predictable free cash flow per share and returns cash through buybacks and dividends. A director's option-linked sale does not test that claim, and the sale leaves the investment case unchanged.

Free cash flow per share, buybacks and dividends are the measures that carry the claim. The same-day exercise explains where the shares came from, but one director's trade on one day is a narrow basis for reading the business in either direction.

Stock perps: every US stock that trades as a perpetual future, by leverage, live

What's next

Texas Instruments' next quarterly report is the next scheduled test of the case. Free cash flow per share that holds up alongside continued buybacks and dividends would support OptimistFi's view, while weaker free cash flow per share or reduced shareholder returns would weaken it.

More from OptimistFi

• TXN stock: research and coverage of Texas Instruments
• Stock research on every company OptimistFi covers

From OptimistFi Perps