O. STOCK BASED COMPENSATION

Stock Compensation Plans

At Teradyne’s annual meeting of stockholders held May 21, 2013, 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 32.0 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 30.4 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 2013, 2012 and 2011, 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 2013, 2012 and 2011 follows:


	2013			2012			2011
	(in thousands)
Restricted Stock Units:
Non-vested at January 1		4,970			5,840			6,963
Awarded		2,110			1,844			1,936
Vested		(2,322	)		(2,510	)		(2,624	)
Forfeited		(122	)		(204	)		(435	)

Non-vested at December 31		4,636			4,970			5,840

Stock Options:
Outstanding at January 1		3,841			5,335			7,194
Granted		213			151			145
Assumed from acquisition		—			—			2,828
Exercised		(1,220	)		(1,396	)		(965	)
Forfeited		(104	)		(203	)		—
Cancelled		(24	)		(46	)		(3,867	)

Outstanding at December 31		2,706			3,841			5,335

Vested and expected to vest at December 31		2,694			3,785			4,904

Exercisable at December 31		1,814			2,004			1,844

Total shares available for the years 2013, 2012 and 2011:


	2013			2012			2011
	(in thousands)
Shares available:
Available for grant at January 1		6,414			8,205			9,851
Options granted		(213	)		(151	)		(145	)
Restricted stock units granted		(2,110	)		(1,844	)		(1,936	)
Restricted stock units forfeited		122			204			435
Additional shares reserved		10,000			—			—

Available for grant at December 31		14,213			6,414			8,205

Weighted-average restricted stock unit award date fair value information for the years 2013, 2012 and 2011 follows:


	2013		2012		2011
Non-vested at January 1	$	12.72	$	10.01	$	7.92
Awarded		16.53		16.67		15.77
Vested		10.40		9.29		8.56
Forfeited		15.48		13.32		9.24
Non-vested at December 31	$	15.56	$	12.72	$	10.01

Restricted stock unit awards aggregate intrinsic value information at December 31 for the years 2013, 2012 and 2011 follows:


	2013		2012		2011
	(in thousands)
Outstanding	$	81,680	$	83,949	$	79,598
Expected to vest		77,388		78,718		75,860

Restricted stock units weighted average contractual terms (in years) information at December 31, for the years 2013, 2012 and 2011 follows:


	2013		2012		2011
Outstanding		1.14		1.01		1.04
Expected to vest		1.13		1.00		1.03

Weighted average stock options exercise price information for the years 2013, 2012 and 2011 follows:


	2013		2012		2011
Outstanding at January 1	$	4.64	$	4.12	$	16.32
Options granted		16.56		16.95		16.23
Assumed from acquisition		—		—		2.69
Options exercised		3.28		3.87		4.38
Options forfeited		2.57		3.11		—
Options cancelled		8.05		16.21		26.38
Outstanding at December 31		6.29		4.64		4.12
Exercisable at December 31		4.55		3.70		4.10

Stock option aggregate intrinsic value information for the years ended December 31, 2013, 2012 and 2011 follows:


	2013		2012		2011
	(in thousands)
Exercised	$	16,848	$	17,136	$	11,307
Outstanding		30,673		47,051		51,306
Vested and expected to vest		30,512		46,283		46,655
Exercisable		23,707		26,436		17,766

Stock options weighted average contractual terms (in years) information at December 31, for the years 2013, 2012 and 2011 follows:


	2013		2012		2011
Outstanding		4.9		5.7		6.4
Vested and Expected to vest		4.9		5.6		6.2
Exercisable		4.3		4.9		4.0

Significant option groups outstanding at December 31, 2013 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)
$0.94 – $2.58		5.97		485	$	1.83		436	$	1.79
$2.67 – $2.74		5.39		821		2.69		545		2.70
$3.23 – $7.71		3.80		674		5.15		590		5.00
$9.34 – $16.95		4.64		726		14.39		243		12.58

				2,706	$	6.29		1,814	$	4.55

As of December 31, 2013, total unrecognized expense related to non-vested restricted stock unit awards and stock options was $51.3 million, and is expected to be recognized over a weighted average period of 2.4 years.

Employee Stock Purchase Plan

Under the Teradyne 1996 Employee Stock Purchase Plan, eligible employees 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, in 2013, is equal to 85% of the stock price on the last business day of the six month purchase period. In 2012 and 2011, the price paid for the common stock was 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.

In July 2013, 0.4 million shares of common stock were issued to employees who participated in the plan during the first half of 2013, at the price of $14.94 per share. In January 2014, Teradyne issued 0.4 million shares of common stock to employees who participated in the plan during the second half of 2013, at the price of $14.98 per share.

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.