Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Estimated Fair Value of TSR Performance-Based Restricted Stock Unit Awards Assumptions

The fair value was estimated using the Monte Carlo simulation model with the following assumptions:

	2019			2018			2017
Risk-free interest rate		2.6	%		2.2	%		1.5	%
Teradyne volatility-historical		31.9	%		26.8	%		26.6	%
NYSE Composite Index volatility-historical		11.9	%		12.4	%		13.4	%
Dividend yield		1.0	%		0.8	%		1.0	%

Fair Value of Stock Options Using Assumptions

The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions:

	2019			2018			2017
Expected life (years)		5.0			5.0			5.0
Risk-free interest rate		2.5	%		2.4	%		2.0	%
Volatility-historical		30.1	%		26.4	%		27.8	%
Dividend yield		1.00	%		0.80	%		1.00	%

Stock Compensation Plan Activity

Stock compensation plan activity for the years 2019, 2018, and 2017, is as follows:

	2019			2018			2017
	(in thousands)
Restricted Stock Units:
Non-vested at January 1		2,454			3,174			3,778
Awarded		1,139			790			939
Vested		(1,237	)		(1,382	)		(1,434	)
Forfeited		(87	)		(128	)		(109	)
Non-vested at December 31		2,269			2,454			3,174
Stock Options:
Outstanding at January 1		506			531			926
Granted		102			69			111
Exercised		(280	)		(94	)		(501	)
Forfeited		(7	)		—			—
Expired		(2	)		—			(5	)
Outstanding at December 31		319			506			531
Vested and expected to vest at December 31		319			506			531
Exercisable at December 31		85			256			233

Share Based Compensation Total Shares Available

Total shares available for the years 2019, 2018, and 2017:

	2019			2018			2017
	(in thousands)
Shares available:
Available for grant at January 1		7,874			8,605			9,546
Options granted		(102	)		(69	)		(111	)
Options forfeited		7			—			—
Restricted stock units awarded		(1,139	)		(790	)		(939	)
Restricted stock units forfeited		87			128			109
Available for grant at December 31		6,727			7,874			8,605

Weighted-Average Restricted Stock Unit Award Date Fair Value

Weighted average restricted stock unit award date fair value information for the years 2019, 2018, and 2017, is as follows:

	2019		2018		2017
Non-vested at January 1	$	29.22	$	21.71	$	18.27
Awarded		39.08		45.99		28.91
Vested		23.59		20.20		17.90
Forfeited		35.60		24.67		20.35
Non-vested at December 31	$	35.58	$	29.22	$	21.71

Restricted Stock Unit Awards Aggregate Intrinsic Value

Restricted stock unit awards aggregate intrinsic value information at December 31 for the years 2019, 2018, and 2017 is as follows:

	2019		2018		2017
	(in thousands)
Vested	$	46,110	$	63,688	$	40,649
Outstanding		154,752		77,015		132,875
Expected to vest		152,374		77,187		130,594

Restricted Stock Units Weighted Average Remaining Contractual Terms

Restricted stock units weighted average remaining contractual terms (in years) information at December 31 for the years 2019, 2018, and 2017 is as follows:

	2019		2018		2017
Outstanding		1.02		0.92		1.00
Expected to vest		1.02		0.91		0.99

Weighted Average Stock Options Exercise Price

Weighted average stock options exercise price information for the year ended December 31, 2019 is as follows:

	2019
Outstanding at January 1	$	19.06
Options granted		37.95
Options exercised		13.20
Options forfeited		36.75
Options cancelled		1.48
Outstanding at December 31		29.91
Exercisable at December 31		14.97

Stock Option Aggregate Intrinsic Value Information

Stock option aggregate intrinsic value information for the years ended December 31, 2019, 2018, and 2017 is as follows:

	2019		2018		2017
	(in thousands)
Exercised	$	9,232	$	2,960	$	8,035
Outstanding		12,218		7,359		14,831
Vested and expected to vest		7,701		7,359		14,831
Exercisable		4,517		5,905		9,076

Stock Options Weighted Average Remaining Contractual Terms

Stock options weighted average remaining contractual terms (in years) information at December 31, for the years 2019, 2018, and 2017 is as follows:

	2019		2018		2017
Outstanding		4.2		3.6		4.1
Vested and expected to vest		5.0		3.6		4.1
Exercisable		2.1		2.4		2.8

Effect to Income (Loss) from Operations for Recording Stock-Based Compensation

The following table provides the effect to income from operations for recording stock-based compensation for the years ended December 31, 2019, 2018, and 2017:

	2019			2018			2017
	(in thousands)
Cost of revenues	$	3,480		$	3,129		$	3,212
Engineering and development		9,913			9,181			9,370
Selling and administrative		24,504			21,267			21,515
Stock-based compensation		37,897			33,577			34,097
Income tax benefit		(8,360	)		(12,036	)		(10,462	)
Total stock-based compensation expense after income taxes	$	29,537		$	21,541		$	23,635