P. STOCK BASED COMPENSATION

Stock Compensation Plans

At Teradyne’s annual meeting of stockholders held May 28, 2009, Teradyne’s stockholders approved an amendment to Teradyne’s 2006 Equity and Cash Compensation Incentive Plan to increase the number of shares issuable by 10.0 million for an aggregate of 22.0 million shares issuable thereunder. Teradyne’s stockholders also approved an amendment to Teradyne’s 1996 Employee Stock Purchase Plan to increase the number of shares issuable by 5.0 million, for an aggregate of 25.4 million shares issuable thereunder.

Restricted stock unit awards granted to employees vest in equal annual installments over four years. Restricted stock unit awards granted to non-employee directors vest after a one year period, with 100% of the award vesting on the first anniversary of the grant date. A portion of the restricted stock unit awards granted to executive officers is subject to time-based vesting and a portion is subject to performance-based vesting. The percentage level of performance satisfied for performance-based grants is assessed on or near the anniversary of the grant date and, in turn, that percentage level determines the number of performance-based restricted stock units available for vesting over the vesting period; portions of the performance-based grants not available for vesting will be forfeited.

In 2012, 2011 and 2010, Teradyne granted service-based stock options to executive officers. These stock options vest in equal installments over four years and have a term of seven years.

Stock compensation plan activity for the years 2012, 2011 and 2010 follows:


	2012			2011			2010
	(in thousands)
Restricted Stock Units:
Non-vested at January 1		5,840			6,963			6,896
Awarded		1,844			1,936			2,626
Vested		(2,510	)		(2,624	)		(2,406	)
Forfeited		(204	)		(435	)		(153	)

Non-vested at December 31		4,970			5,840			6,963

Stock Options:
Outstanding at January 1		5,335			7,194			11,238
Granted		151			145			329
Assumed from acquisition		—			2,828			—
Exercised		(1,396	)		(965	)		(4,031	)
Forfeited		(203	)		—			—
Cancelled		(46	)		(3,867	)		(342	)

Outstanding at December 31		3,841			5,335			7,194

Vested and expected to vest at December 31		3,785			4,904			7,193

Exercisable at December 31		2,004			1,844			6,046

Total shares available for the years 2012, 2011 and 2010:


	2012			2011			2010
	(in thousands)
Shares available:
Available for grant at January 1		8,205			9,851			12,653
Options granted		(151	)		(145	)		(329	)
Restricted stock units granted		(1,844	)		(1,936	)		(2,626	)
Restricted stock units forfeited		204			435			153

Available for grant at December 31		6,414			8,205			9,851

Weighted-average restricted stock unit award date fair value information for the years 2012, 2011 and 2010 follows:


	2012		2011		2010
Non-vested at January 1	$	10.01	$	7.92	$	7.31
Awarded		16.67		15.77		9.39
Vested		9.29		8.56		7.73
Forfeited		13.32		9.24		8.11
Non-vested at December 31	$	12.72	$	10.01	$	7.92

Restricted stock unit awards aggregate intrinsic value information at December 31 for the years 2012, 2011 and 2010 follows:


	2012		2011		2010
	(in thousands)
Outstanding	$	83,949	$	79,598	$	97,762
Expected to vest		78,718		75,860		90,283

Restricted stock units weighted average contractual terms (in years) information at December 31, for the years 2012, 2011 and 2010 follows:


	2012		2011		2010
Outstanding		1.01		1.04		1.13
Expected to vest		1.00		1.03		1.12

Weighted average stock options exercise price information for the years 2012, 2011 and 2010 follows:


	2012		2011		2010
Outstanding at January 1	$	4.12	$	16.32	$	13.87
Options granted		16.95		16.23		9.34
Assumed from acquisition		—		2.69		—
Options exercised		3.87		4.38		8.65
Options forfeited		3.11		—		—
Options cancelled		16.21		26.38		19.54
Outstanding at December 31		4.64		4.12		16.32
Exercisable at December 31		3.70		4.10		18.24

Stock option aggregate intrinsic value information for the years ended December 31, 2012, 2011 and 2010 follows:


	2012		2011		2010
	(in thousands)
Exercised	$	17,136	$	11,307	$	15,096
Outstanding		47,051		51,306		30,871
Vested and expected to vest		46,283		46,655		30,868
Exercisable		26,436		17,766		21,872

Stock options weighted average contractual terms (in years) information at December 31, for the years 2012, 2011 and 2010 follows:


	2012		2011		2010
Outstanding		5.7		6.4		2.3
Vested and Expected to vest		5.6		6.2		5.4
Exercisable		4.9		4.0		1.7

Significant option groups outstanding at December 31, 2012 and related weighted average price and remaining contractual life information follow:


	Options Outstanding						Options Exercisable
Range Of Exercise Prices	Weighted- Average Remaining Contractual Life (Years)		Shares		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise Price
	(shares in thousands)
$0.47 – $2.58		6.31		864	$	1.69		492	$	1.60
$2.67 – $2.74		6.76		1,278		2.69		661		2.70
$3.23 – $4.81		3.88		795		4.29		490		4.14
$5.80 – $16.95		5.26		904		10.54		361		7.76

				3,841	$	4.64		2,004	$	3.70

As of December 31, 2012, total unrecognized expense related to non-vested restricted stock unit awards and stock options totaled $52.1 million, and is expected to be recognized over a weighted average period of 2.0 years.

Employee Stock Purchase Plan

Under the Teradyne 1996 Employee Stock Purchase Plan, eligible employees (including executive officers) may purchase shares of common stock through regular payroll deductions of up to 10% of their compensation, to a maximum of shares with a fair market value of $25,000 per calendar year, not to exceed 6,000 shares. Under the plan, the price paid for the common stock is equal to 85% of the lower of the fair market value of Teradyne’s common stock on the first business day and the last business day of each six month purchase period within each year. Beginning in January 2013, the price paid will be equal to 85% of the stock price on the last business day of the purchase period.

In July 2012, 0.6 million shares of common stock were issued to employees who participated in the plan during the first half of 2012, at the price of $11.69 per share. In January 2013, Teradyne issued 0.6 million shares of common stock to employees who participated in the plan during the second half of 2012, at the price of $11.91 per share.

In July 2011, 0.6 million shares of common stock were issued to employees who participated in the plan during the first half of 2011, at the price of $11.65 per share. In January 2012, Teradyne issued 0.6 million shares of common stock to employees who participated in the plan during the second half of 2011, at the price of $11.59 per share.

In July 2010, 0.6 million shares of common stock were issued to employees who participated in the plan during the first half of 2010, at the price of $8.29 per share. In January 2011, Teradyne issued 0.8 million shares of common stock to employees who participated in the plan during the second half of 2010, at the price of $8.12 per share.