Form 4: Teradyne CEO Awarded Stock Options and Restricted Stock Units

Teradyne, Inc.'s President and CEO, Gregory S. Smith, has been granted 26,773 restricted stock units and 23,143 stock options, according to a recent SEC filing.

Summary

• Teradyne, Inc.'s President and CEO, Gregory S. Smith, received 26,773 restricted stock units (RSUs) on January 31, 2025.
• These RSUs vest in four equal annual installments starting January 31, 2026.
• Mr. Smith also received 23,143 stock options with an exercise price of $115.79 on January 31, 2025.
• These options vest 25% per year over four years, starting January 31, 2026.
• On February 3, 2025, 3,526 shares were withheld to cover tax obligations related to the vesting of RSUs.
• Following these transactions, Mr. Smith owns 98,002.2277 shares of Teradyne common stock directly.

Sentiment

Score: 7

Explanation: The document reflects a generally positive sentiment, as the equity awards suggest confidence in the company's future and alignment of the CEO's interests with shareholders. However, the fact that the stock options are currently 'out of the money' slightly tempers the overall positivity.

Positives

• The grant of RSUs and stock options aligns the CEO's interests with those of shareholders, potentially incentivizing long-term value creation.
• The vesting schedule of the RSUs and stock options encourages continued service and performance from the CEO.
• The CEO's direct ownership of a significant number of shares demonstrates his confidence in the company's future.

Negatives

• The exercise price of the stock options is higher than the current market price, meaning the options are currently 'out of the money' and have no immediate value.
• The withholding of shares for tax purposes reduces the CEO's overall share ownership, although this is a standard practice.

Risks

• The value of the RSUs and stock options is dependent on the future performance of Teradyne's stock price.
• If the stock price does not appreciate significantly, the RSUs and stock options may provide limited value to the CEO.
• Changes in market conditions or company performance could negatively impact the value of these equity awards.

Future Outlook

The document does not explicitly provide forward-looking statements, but the grant of equity awards suggests an expectation of future value creation and stock price appreciation.

Industry Context

This announcement is typical for executive compensation practices in the technology industry, where equity awards are commonly used to attract, retain, and incentivize key personnel.

Comparison to Industry Standards

• Compared to similar companies like National Instruments (NATI) and Cognex (CGNX), Teradyne's use of RSUs and stock options for executive compensation is standard practice.
• The vesting schedules are also in line with industry norms, typically ranging from 3-5 years.
• For example, National Instruments CEO Eric Starkloff received a mix of performance-based RSUs and stock options in their most recent proxy statement, similar to the structure of Mr. Smith's awards.
• Cognex's CEO, Robert Willett, also has a compensation package that includes RSUs and stock options with multi-year vesting periods.

Stakeholder Impact

• Shareholders: The equity awards could potentially benefit shareholders if they incentivize the CEO to create long-term value and drive stock price appreciation.
• Employees: The use of equity compensation for the CEO may signal a broader commitment to employee ownership and engagement.
• Customers: No direct impact on customers is mentioned in the document.
• Suppliers: No direct impact on suppliers is mentioned in the document.
• Creditors: No direct impact on creditors is mentioned in the document.

Next Steps

• The next steps involve the vesting of the granted RSUs and stock options over the next four years, starting January 31, 2026.

Key Dates

Keywords

Teradyne, TER, Gregory S. Smith, stock options, restricted stock units, RSU, executive compensation, insider ownership, SEC Form 4, equity incentive plan