<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Teradyne, Inc.
(Name of Registrant as Specified In Its Charter)
Teradyne, Inc.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $0
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
TERADYNE, INC.
321 HARRISON AVENUE
BOSTON, MASSACHUSETTS 02118
------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------------------------------------------------------------
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Teradyne, Inc., a Massachusetts
corporation, will be held on Thursday, May 26, 1994, at 10:00 A.M., at The First
National Bank of Boston, 100 Federal Street (First Floor), Boston,
Massachusetts, for the following purposes:
1. To elect four members to the Board of Directors to serve for a
three-year term as Class II Directors.
2. To amend the 1979 Employee Stock Purchase Plan (the "1979 Plan")
by increasing the aggregate number of shares of Common Stock which may be
issued pursuant to said plan from 4,200,000 to 4,600,000.
3. To ratify the selection of the firm of Coopers & Lybrand as
auditors for the fiscal year ending December 31, 1994.
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Shareholders entitled to notice of and to vote at the meeting shall be
determined as of the close of business on April 15, 1994, the record date fixed
by the Board of Directors for such purpose.
By Order of the Board of Directors,
RICHARD J. TESTA, Clerk
April 21, 1994
------------------------
SHAREHOLDERS ARE REQUESTED TO SIGN THE ENCLOSED PROXY CARD AND
RETURN IT IN THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL.
<PAGE> 3
TERADYNE, INC.
321 HARRISON AVENUE
BOSTON, MASSACHUSETTS 02118
------------------------
PROXY STATEMENT
APRIL 21, 1994
Proxies in the form enclosed with this proxy statement are SOLICITED BY THE
BOARD OF DIRECTORS OF TERADYNE, INC. (the "Corporation") for use at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held on May 26, 1994, at
10:00 A.M., at The First National Bank of Boston, 100 Federal Street (First
Floor), Boston, Massachusetts.
Only shareholders of record as of the close of business on April 15, 1994
(the "Record Date"), will be entitled to vote at the Annual Meeting and any
adjournments thereof. As of the Record Date, 35,811,989 shares (excluding
treasury shares) of Common Stock of the Corporation were issued and outstanding.
Each share outstanding as of the Record Date will be entitled to one vote, and
shareholders may vote in person or by proxy. Execution of a proxy will not in
any way affect a shareholder's right to attend the Annual Meeting and vote in
person. Any shareholder delivering a proxy has the right to revoke it only by
written notice to the Clerk delivered at any time before it is exercised,
including at the Annual Meeting.
The persons named as attorneys in the proxies are officers and directors of
the Corporation. All properly executed proxies returned in time to be cast at
the Annual Meeting will be voted. With respect to the election of Directors, any
shareholder submitting a proxy has a right to withhold authority to vote for any
individual nominee by writing that nominee's name in the space provided on the
proxy. The proxies will be voted as stated below under "Election of Directors."
In addition to the election of Directors, the shareholders will consider and
vote upon proposals (i) to amend the 1979 Plan by increasing the aggregate
number of shares of Common Stock which may be issued pursuant to said plan from
4,200,000 to 4,600,000, and (ii) to ratify the selection of auditors. Where a
choice has been specified on the proxy with respect to the foregoing matters,
the shares represented by the proxy will be voted in accordance with the
specification and will be voted FOR if no specification is indicated.
A majority in interest of the outstanding shares represented at the meeting
in person or by proxy shall constitute a quorum for the transaction of business.
Votes withheld from any nominee, abstentions and broker "non-votes" are counted
as present or represented for purposes of determining the presence or absence of
a quorum for the meeting. A "non-vote" occurs when a nominee holding shares for
a beneficial owner votes on one proposal, but does not vote on another proposal
because the nominee does not have discretionary voting power and has not
received instructions from the beneficial owner. Directors are elected by a
plurality of the votes cast by shareholders entitled to vote at the meeting. On
all other matters being submitted to shareholders, an affirmative vote of at
least a majority of the shares present, or represented, and entitled to vote at
a meeting is required for approval. An automated system administered by the
Corporation's transfer agent tabulates the votes. The vote on each matter
submitted to shareholders is tabulated separately. Abstentions are included in
the number of shares present or represented and voting on each separate matter.
Broker "non-votes" are not so included.
<PAGE> 4
The Board of Directors knows of no other matter to be presented at the
Annual Meeting. If any other matter should be presented at the Annual Meeting
upon which a vote properly may be taken, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
An Annual Report to Shareholders, containing financial statements for the
fiscal year ended December 31, 1993, has been mailed to all shareholders
entitled to vote at the Annual Meeting. This proxy statement and the
accompanying proxy were first mailed to shareholders on or about April 21, 1994.
ELECTION OF DIRECTORS
The Corporation's Board of Directors is divided into three classes. Each
class serves three years, with the terms of office of the respective classes
expiring in successive years. The present term of office for the directors in
Class II expires at the Annual Meeting. The nominees for election as Class II
directors are Messrs. Carnesale, Hibbard, Johnson and Prestridge, each of whom,
except for Mr. Carnesale and Mr. Prestridge, was elected at the Annual Meeting
of Shareholders held May 29, 1991. Mr. Prestridge was elected at the Annual
Meeting of Shareholders held May 28, 1992. Mr. Carnesale was appointed as a
director by the Board of Directors on November 11, 1993. Mr. McArthur, currently
a Class II director, will not be a nominee for election to the Board of
Directors at the Annual Meeting. If re-elected, the Class II nominees will hold
office until the Annual Meeting of Shareholders to be held in 1997, and until
their successors shall have been elected and shall have been qualified. Shares
represented by all proxies received by the Board of Directors and not so marked
as to withhold authority to vote for any individual nominee will be voted
(unless one or more nominees are unable or unwilling to serve) for the election
of the Class II nominees. The Board of Directors knows of no reason why any such
nominee should be unable or unwilling to serve, but if such should be the case,
proxies will be voted for the election of some other person or the Board of
Directors will fix the number of directors at a lesser number.
The following table sets forth the nominees to be elected at the Annual
Meeting and the other current directors, the year each nominee or director was
first elected a director, the principal occupation of each of the nominees and
directors during the past five years, and the ages of each of the nominees and
directors.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NOMINEE'S OR DIRECTOR'S NAME AND BUSINESS EXPERIENCE YEAR
AND YEAR NOMINEE OR DIRECTOR DURING THE LAST TERM WILL
FIRST BECAME DIRECTOR FIVE YEARS EXPIRE/CLASS
---------------------------------------- ------------------------------ ------------
<S> <C> <C>
Alexander V. d'Arbeloff................. Chairman of the Board of 1996/I
1960 Directors and President(1)
Edwin L. Artzt.......................... Director(2) 1996/I
1987
Albert Carnesale........................ Director(3) 1994/II
1993
Daniel S. Gregory....................... Director(4) 1996/I
1977
Dwight H. Hibbard....................... Director(5) 1994/II
1983
Franklin P. Johnson, Jr................. Director(6) 1994/II
1974
John H. McArthur........................ Director(7) 1994/II
1981
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NOMINEE'S OR DIRECTOR'S NAME AND BUSINESS EXPERIENCE YEAR
AND YEAR NOMINEE OR DIRECTOR DURING THE LAST TERM WILL
FIRST BECAME DIRECTOR FIVE YEARS EXPIRE/CLASS
---------------------------- ----------------------- ------------
<S> <C> <C>
John P. Mulroney........................ Director(8) 1995/III
1983
James A. Prestridge..................... Executive Vice President(9) 1994/II
1992
Owen W. Robbins......................... Executive Vice President(10) 1995/III
1992
Richard J. Testa........................ Director, Secretary and Clerk(11) 1995/III
1973
Henry M. Watts, Jr...................... Director(12) 1995/III
1967
- ---------------
<FN>
(1) Mr. d'Arbeloff, 66, has been Chairman of the Board of Directors since 1977,
President of the Corporation since 1971 and a director since 1960. Mr.
d'Arbeloff is also a director of Stratus Computer, Inc. and BTU
International, Inc.
(2) Mr. Artzt, 64, has served as Chairman of the Board of Directors and Chief
Executive Officer of the Procter & Gamble Corporation since 1990. Prior to
that time, he served as director, Vice Chairman of the Board of Directors
and President of Procter & Gamble International. Mr. Artzt is also a
director of GTE Corporation and Delta Air Lines, Inc.
(3) Mr. Carnesale, 57, has served as the Dean of the John F. Kennedy School of
Government since 1991. Mr. Carnesale has served as Professor of Public
Policy at the John F. Kennedy School of Government since 1974.
(4) Since January 1992, Mr. Gregory, 65, has been a General Partner of various
Greylock partnerships. From January 1991 to January 1992, Mr. Gregory
served as the Secretary of the Executive Office of Economic Affairs for the
Commonwealth of Massachusetts. Prior to January 1991, Mr. Gregory served as
Chairman of Greylock Management Corporation.
(5) Mr. Hibbard, 70, Chairman of Cincinnati Bell Inc., served as Chief
Executive Officer and Chairman of Cincinnati Bell Inc. from 1984 to October
1993. He is also a director of Ohio National Life Insurance Co.
(6) Mr. Johnson, 65, has been a venture capitalist since 1962 and a General
Partner of Asset Management Partners, a venture capital limited partnership
since 1984. He is also a director of AmGen, Inc., BioSurface Technology,
Inc., Boole and Babbage, Inc., Ross Stores, Inc., Tandem Computers
Incorporated, IDEC Pharmaceuticals Corporation and Trinzic Corp.
(7) Mr. McArthur, 60, has served as Dean and a professor at the Graduate School
of Business Administration of Harvard University since 1980. He is also a
director of Cabot Corporation, The Chase Manhattan Corporation, Rohm & Haas
Co. and Spring Industries, Inc.
(8) Mr. Mulroney, 58, has served as Chief Operating Officer and President of
Rohm & Haas Co. since 1986. He is a director of Rohm & Haas Co. and
Aluminum Co. of America.
(9) Mr. Prestridge, 62, has served as Executive Vice President and director of
the Corporation since 1992. From 1982 to 1992, he served as Vice President
of the Semiconductor Test Group of the Corporation.
</TABLE>
3
<PAGE> 6
(10) Mr. Robbins, 64, has served as Executive Vice President and director of the
Corporation since 1992. From 1977 to 1992, he served as Vice President of
the Corporation.
(11) Mr. Testa, 55, has been a partner at the law firm of Testa, Hurwitz &
Thibeault since 1973. Testa, Hurwitz & Thibeault serves as general counsel
to the Corporation. He is also a director of Citizens Bank of
Massachusetts.
(12) Mr. Watts, 89, is a member of the New York Stock Exchange. He is also a
director of The Chestnut Street Exchange Fund, Independence Square Inc.,
Securities, Inc., Temporary Investment Fund, Inc., Trust for Short-Term
Federal Securities, Municipal Fund for California Investors and Municipal
Fund for Investors of New York.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors of the Corporation met four times during the fiscal
year ended December 31, 1993. The Audit and Finance Committee, which oversees
the accounting and financial functions of the Corporation, including matters
relating to the appointment and activities of the Corporation's independent
auditors, met three times during 1993. Messrs. Carnesale, Gregory, McArthur,
Mulroney and Watts are currently members of the Audit and Finance Committee. The
Management Compensation and Development Committee (the "Compensation
Committee"), which determines the compensation of the Corporation's executive
officers and administers the Corporation's stock option and certain other
benefit plans, met three times during 1993. Messrs. Artzt, Hibbard, Johnson and
Testa are members of the Compensation Committee. The Board Composition and
Agenda Committee, which acts, in part, as the Corporation's nominating
committee, and is responsible for recommending individuals to be nominated for
election to the Board of Directors and recommending the time, location and
agenda of the meetings of the Board of Directors, did not meet during 1993.
Messrs. Artzt, d'Arbeloff, Mulroney and Prestridge are members of the Board
Composition and Agenda Committee. Shareholders wishing to suggest nominees for
election to the Board of Directors should direct such suggestions to the Clerk
of the Corporation at the Corporation's principal address in accordance with the
nomination procedure set forth in the Corporation's By-Laws. All directors
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and the total number of meetings of all committees of the
Board on which they served, except for Mr. Artzt.
DIRECTOR COMPENSATION
All non-employee directors are compensated at the rate of $15,000 per year
and $1,000 per meeting attended, plus reimbursement of reasonable expenses.
Directors that are employees of the Corporation receive no compensation in their
capacity as a director. See also "1987 Non-Employee Director Stock Option Plan."
1987 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The 1987 Non-Employee Director Stock Option Plan (the "1987 Plan") was
adopted by the Board of Directors of the Corporation on March 12, 1987 and
approved by the shareholders on May 8, 1987. The 1987 Plan is administered by
the Compensation Committee. However, the time of grant, number of shares
granted, exercise price and vesting schedule are established by the terms of the
1987 Plan and are not subject to the discretion of the Compensation Committee or
any person. Only non-employee directors may participate in the 1987 Plan.
Under the 1987 Plan, all new non-employee directors elected after January
1, 1992 receive an automatic grant of an option to purchase 10,000 shares of
Common Stock. An additional annual grant of 5,000 shares is automatically made
to each non-employee director on the date of the first meeting of the Board of
Directors in each year. All options are non-statutory stock options, have an
exercise price equal to the fair market value on
4
<PAGE> 7
the date of grant, vest annually at the rate of 25% and have a term of five
years. Unless terminated sooner, the 1987 Plan will terminate on March 12, 1997.
The 1987 Plan authorizes the issuance of a maximum of 400,000 shares of
Common Stock, subject to adjustment for capital changes. On December 31, 1993,
options to purchase 156,250 shares of the Corporation's Common Stock under the
1987 Plan were outstanding at a weighted average exercise price of $13.64.
5
<PAGE> 8
<TABLE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 15, 1994 information relating to
the beneficial ownership of the Corporation's Common Stock by each Director,
each executive officer named in the Summary Compensation Table on page 8, and by
all directors and executive officers as a group.
<CAPTION>
AMOUNT AND PERCENT
NATURE OF OF
NAME OWNERSHIP(1)(2) CLASS
---------------------------------------------------------- --------------- -------
<S> <C> <C>
Alexander V. d'Arbeloff+.................................. 1,182,286(3) 3.30%
George V. d'Arbeloff+..................................... 38,091 *
Edwin L. Artzt............................................ 14,400 *
Albert Carnesale.......................................... 200 *
Daniel S. Gregory......................................... 15,898 *
Dwight H. Hibbard......................................... 12,700 *
Franklin P. Johnson, Jr................................... 39,100(4) *
John H. McArthur.......................................... 0 --
John P. Mulroney.......................................... 14,350 *
James A. Prestridge....................................... 89,496 *
Owen W. Robbins........................................... 90,352 *
Edward Rogas, Jr.......................................... 57,072 *
Richard J. Testa.......................................... 9,750 *
Henry M. Watts, Jr........................................ 32,301 *
All executive officers and directors as a group (21
persons)(5)............................................. 1,856,312 5.18%
<FN>
- ---------------
* less than 1%
+ Mr. Alexander d'Arbeloff and Mr. George d'Arbeloff are brothers.
(1) Unless otherwise indicated, the named person possesses sole voting and
dispositive power with respect to the shares.
(2) Includes shares of Common Stock which have not been issued but which are
subject to options which either are presently exercisable or will become
exercisable within 60 days, as follows: Mr. Alexander d'Arbeloff, 109,000
shares; Mr. George d'Arbeloff, 26,000 shares; Mr. Prestridge, 60,600
shares; Mr. Robbins, 33,000 shares; Mr. Rogas, 51,200 shares; each
non-employee director of the Corporation (except Mr. Carnesale, Mr.
Gregory, Mr. McArthur, and Mr. Testa), 12,500 shares; Mr. Carnesale 0
shares; Mr. Gregory, 8,750 shares; Mr. McArthur, 0 shares; Mr. Testa, 3,750
shares; all directors and executive officers as a group, 537,800 shares.
(3) Includes 67,404 shares of Common Stock held by Mr. d'Arbeloff's wife and
5,600 shares of Common Stock held in trust for the benefit of Mr.
d'Arbeloff's children, as to all of which shares Mr. d'Arbeloff disclaims
beneficial ownership.
(4) Includes 8,000 shares of Common Stock held in trust for the benefit of Mr.
Johnson's wife and children, as to all of which shares Mr. Johnson
disclaims beneficial ownership.
(5) The group is comprised of the individuals named in the Summary Compensation
Table on page 8, the remaining executive officers of the Corporation, and
those persons who were directors of the Corporation on April 15, 1994.
Includes 537,800 shares which the directors and executive officers as a
group have the right to acquire by exercise of stock options granted under
the Corporation's stock plans. In addition,
</TABLE>
6
<PAGE> 9
includes 89,529 shares held by family members of executive officers and
directors, as to which shares the applicable officer or director disclaims
beneficial ownership.
Based on a review of the forms and written representations received by the
Corporation pursuant to Section 16(a) of the Securities Exchange Act of 1934,
the Corporation believes that during the fiscal year January 1, 1993 through
December 31, 1993, the directors and executive officers complied with all
applicable Section 16 filing requirements, except that a Form 4 report for James
A. Prestridge was filed four days late with respect to one transaction, and
another report for Mr. Prestridge was filed which omitted certain information,
which was later included in an amended filing.
<TABLE>
Listed below are certain persons who to the knowledge of the Corporation
own beneficially, as of the dates indicated below, more than five percent of the
Corporation's Common Stock outstanding at such dates.
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL HOLDER OF OWNERSHIP CLASS
--------------------------------------------------- ----------------- ----------
<S> <C> <C>
Norwest Corporation................................ 3,937,675(1) 10.89%
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota
FMR Corp........................................... 3,226,430(2) 8.99%
82 Devonshire Street
Boston, Massachusetts
<FN>
- ---------------
(1) According to information submitted to the Corporation, as of March 4, 1994,
Norwest Corporation ("Norwest") had sole voting power as to 3,709,225
shares, shared voting power as to 19,400 shares, sole investment power as
to 3,936,475 shares and shared investment power as to 900 shares. Shares
held by Norwest and its subsidiaries are held in a fiduciary capacity.
Accordingly, Norwest and its subsidiaries disclaim beneficial ownership of
such shares.
(2) According to information submitted to the Corporation, as of March 23, 1994,
FMR Corp. beneficially owned 3,226,430 shares of the common stock of the
Corporation. This number includes 3,057,530 shares beneficially owned by
Fidelity Management & Research Company, as a result of its serving as
investment advisor to various investment companies registered under Section
8 of the Investment Company Act of 1940 and as investment adviser to
certain other funds which are generally offered to limited groups of
investors; 30,700 shares beneficially owned by Fidelity Management Trust
Company, as a result of its serving as trustee or managing agent for
various private investment accounts, primarily employee benefit plans, and
as investment adviser to certain other funds which are generally offered to
limited groups of investors; and 138,200 shares beneficially owned by
Fidelity International Limited, as a result of its serving as investment
adviser to various non-U.S. investment companies. FMR Corp. has sole voting
power with respect to 30,700 shares and sole dispositive power with respect
to 3,088,230 shares. Fidelity International Limited has sole voting and
dispositive power with respect to all the shares it beneficially owns.
</TABLE>
7
<PAGE> 10
<TABLE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation
received by the Chief Executive Officer and the four other most highly
compensated executive officers of the Corporation for the three fiscal years
most currently ended.
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(3)
----------------------------- ---------------
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) OPTIONS/SARS(#) COMPENSATION(4)
------------------ ---- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Alexander V. d'Arbeloff............ 1993 $ 288,768 $289,665 45,000 $10,047
Chairman of the 1992 $ 288,768 $258,491 40,000 $ 6,866
Board of Directors 1991 $ 288,768 $247,798 40,000 $ 8,133
and President
Owen W. Robbins.................... 1993 $ 207,360 $163,381 34,000 $10,047
Executive Vice 1992 $ 207,360 $145,183 25,000 $ 6,866
President 1991 $ 207,360 $132,580 25,000 $ 8,133
James A. Prestridge................ 1993 $ 201,360 $158,652 34,000 $10,047
Executive Vice 1992 $ 201,360 $148,911 25,000 $ 6,866
President 1991 $ 201,360 $148,880 25,000 $ 8,133
George V. d'Arbeloff............... 1993 $ 172,368 $115,240 25,000 $ 6,386
Vice President 1992 $ 165,984 $102,987 16,000 --
1991 $ 159,600 $ 77,505 16,000 --
Edward Rogas, Jr................... 1993 $ 170,772 $114,172 25,000 $ 6,197
Vice President 1992 $ 165,186 $102,033 18,000 $ 3,611
1991 $ 159,600 $ 77,505 18,000 $ 974
- ---------------
<FN>
(1) The amounts in the "Salary" column represent the annual base salary for each
of the named officers, which is paid monthly.
(2) The amounts in the "Bonus" column principally represent the Variable
Compensation paid pursuant to the Corporation's Cash Compensation Plan.
(3) The named executive officers have not as of December 31, 1993 received from
the Corporation any grants of restricted stock as compensation.
(4) The amounts in the "All Other Compensation" column represent the matching
contributions that the Corporation makes to the Savings Plan.
</TABLE>
8
<PAGE> 11
<TABLE>
The following table provides information with respect to stock option
grants by the Corporation to the named executive officers in 1993. The
Corporation did not grant any stock appreciation rights to the named executive
officers in 1993.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES
PERCENTAGE OF OF STOCK PRICE
NUMBER OF TOTAL OPTIONS APPRECIATION OVER
SECURITIES GRANTED TO THE OPTION TERM
UNDERLYING EMPLOYEES EXERCISE (2)
OPTIONS IN FISCAL PRICE EXPIRATION ----------------------
NAME GRANTED(1) YEAR ($/SHARE) DATE 5% 10%
---- ---------- ------------- -------- ---------- --- ---
<S> <C> <C> <C> <C> <C> <C>
Alexander V. d'Arbeloff.... 45,000 3.71% $17.75 6/09/98 $220,680 $487,645
Owen W. Robbins............ 34,000 2.80% $17.75 6/09/98 $166,736 $368,443
James A. Prestridge........ 34,000 2.80% $17.75 6/09/98 $166,736 $368,443
George V. d'Arbeloff....... 25,000 2.06% $17.75 6/09/98 $122,600 $270,914
Edward Rogas, Jr........... 25,000 2.06% $17.75 6/09/98 $122,600 $270,914
- ---------------
<FN>
(1) Stock options were granted under the Corporation's 1991 Plan at an exercise
price equal to the fair market value of the Corporation's Common Stock on
the date of grant. The options have a term of five years from the date of
grant. The options become exercisable as follows: 20% on the date of grant
and, following the first year of grant, 20% on an annual basis.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%)
of the Corporation's Common Stock over the term of the options. These
numbers are calculated based on rules promulgated by the Securities and
Exchange Commission and do not reflect the Corporation's estimate of future
stock price increases. Actual gains, if any, on stock option exercises and
Common Stock holdings are dependent on the timing of such exercise and the
future performance of the Corporation's Common Stock. There can be no
assurance that the rates of appreciation assumed in this table can be
achieved or that the amounts reflected will be received by the individuals.
</TABLE>
<TABLE>
The following table provides information on stock option exercises in
fiscal 1993 by the named executive officers and the value of such officers'
unexercised options at December 31, 1993.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
SHARES
ACQUIRED NUMBER OF SECURITIES
UPON UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTION OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
EXERCISE DECEMBER 31, 1993 DECEMBER 31, 1993
DURING VALUE --------------------------- --------------------------
NAME 1993 REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alexander V. d'Arbeloff.... 85,000 $888,125 77,000 83,000 $1,264,375 $1,064,375
Owen W. Robbins............ 32,000 $564,000 49,400 56,600 $ 803,650 $ 712,100
James A. Prestridge........ 42,000 $735,000 39,400 56,600 $ 622,400 $ 712,100
George V. d'Arbeloff....... 26,900 $526,625 11,400 39,200 $ 114,975 $ 488,300
Edward Rogas, Jr........... 14,000 $ 70,000 55,800 41,200 $ 944,475 $ 517,400
</TABLE>
9
<PAGE> 12
RETIREMENT BENEFITS
The Corporation has established a Retirement Plan for the purpose of
providing a lifetime annual income upon retirement to substantially all
employees, including officers, of the Corporation and its United States
subsidiaries. Membership in the Retirement Plan begins after one year of
employment with the Corporation. The Retirement Plan provides for credit toward
retirement income for years of employment with the Corporation prior to January
1, 1994 based upon a formula tied to average compensation from 1989 to 1993. For
years of service after December 31, 1993, credit towards retirement income is
determined on a yearly basis and is equal to the sum for each year of credited
service under the Retirement Plan of (1) .75% of the employee's compensation for
the year which is under the defined covered compensation for the year and (2)
1.5% of the amount of the employee's compensation for the year that exceeds the
covered compensation for the year. The covered compensation under the Retirement
Plan is based on the average of the social security wage basis in effect during
the thirty-five years up to and including normal retirement age. However,
federal tax law limitations on the total amount of benefits which a participant
may receive under qualified retirement plans may limit some participants'
benefits under the Retirement Plan.
Under the Retirement Plan, for participants employed by the Corporation on
or after January 1, 1989, accumulated annual retirement income vests partially
after three years of service with the Corporation and becomes fully vested after
seven years of service or upon normal, early or disability retirement. Benefits
are payable in the form of an annuity either at normal retirement age, upon
early retirement or upon disability. The Retirement Plan also provides for
certain benefits to a surviving spouse.
The Corporation also maintains the Teradyne, Inc. Supplemental Executive
Retirement Plan (the "SERP"). Under the SERP, annual pensions for Messrs.
Alexander d'Arbeloff, Robbins, Prestridge, George d'Arbeloff, Rogas and other
senior managers are computed based on model compensation. See discussion of
model compensation under Management and Compensation Development Committee
Report. The pension formula is identical to that of the qualified plan, except
an employee's annual pension is based on the average of the employee's last five
years of model compensation. The resulting benefit is reduced by the benefit
received from the qualified Retirement Plan.
The following table shows the estimated annual benefits payable to covered
participants in the United States upon retirement at age 65 under both the
Retirement Plan and the SERP. The amounts shown are computed on a single life
annuity basis and are not subject to deductions for Social Security benefits or
other amounts. Remuneration for purposes of the table is based upon an
employee's average model compensation for the five year period preceding
retirement.
<TABLE>
PENSION PLAN TABLE
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------
REMUNERATION 10 15 20 25 30 35
------------ -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$200,000........................... $ 28,200 $ 42,400 $ 56,500 $ 70,700 $ 84,800 $ 99,000
$250,000........................... $ 35,700 $ 53,600 $ 71,500 $ 89,400 $107,300 $125,200
$300,000........................... $ 43,200 $ 64,900 $ 86,500 $108,200 $129,800 $151,500
$350,000........................... $ 50,700 $ 76,100 $101,500 $126,900 $152,300 $177,700
$400,000........................... $ 58,200 $ 87,400 $116,500 $145,700 $174,800 $204,000
$450,000........................... $ 65,700 $ 98,600 $131,500 $164,400 $197,300 $230,200
$500,000........................... $ 73,200 $109,900 $146,500 $183,200 $219,800 $256,500
$550,000........................... $ 80,700 $121,100 $161,500 $201,900 $242,300 $282,700
$600,000........................... $ 88,200 $132,400 $176,500 $220,700 $264,800 $309,000
$650,000........................... $ 95,700 $143,600 $191,500 $239,400 $287,300 $335,200
$700,000........................... $103,200 $154,900 $206,500 $258,200 $309,800 $361,500
</TABLE>
The executive officers named in the Summary Compensation Table have been
credited as of January 1, 1994 with the following years of service: Mr.
Alexander d'Arbeloff, 33 years; Mr. Robbins, 23 years; Mr. Prestridge, 24 years;
Mr. George d'Arbeloff, 27 years; and Mr. Rogas, 17 years.
10
<PAGE> 13
MANAGEMENT COMPENSATION AND DEVELOPMENT COMMITTEE REPORT
OVERVIEW AND PHILOSOPHY
The Corporation's executive compensation program is administered by the
Management Compensation and Development Committee of the Board of Directors (the
"Compensation Committee"), which is composed entirely of non-employee directors.
The Compensation Committee is responsible for developing and making
recommendations to the Board of Directors with respect to the Corporation's
compensation policies. In addition, the Compensation Committee, pursuant to
authority delegated by the Board of Directors, determines on an annual basis the
compensation to be paid and stock option awards to be made to each of the
executive officers.
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that assist the Corporation in
attracting and retaining qualified executives. In setting compensation levels
for executive officers, the Compensation Committee takes into account such
factors as: (i) the Corporation's past history and future expectations; (ii) the
general and industry-specific business environment; (iii) annual and long-term
performance goals; and (iv) corporate and group performance.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Corporation's executive officer compensation program consists of
compensation received pursuant to the Corporation's Cash Compensation Plan,
long-term incentive compensation in the form of stock options, and various
benefits, including medical, savings and retirement plans generally available to
employees of the Corporation.
Under the Corporation's Cash Compensation Plan, the Compensation Committee
assigns to each senior employee of the Corporation, including all executive
officers, at the beginning of each year, a "model compensation" amount. The
model compensation amount is based on salary surveys of similarly sized
electronics companies, and on an as adjusted basis, larger sized companies, some
of which are represented in the S&P High Technology Composite Index appearing in
the Performance Graph on page 14 herein. The model compensation amount is
consistent with the Corporation's internal compensation structure.
Once model compensation for each participant has been determined, the
actual cash compensation paid to each employee under the Cash Compensation Plan
is comprised of two components: (1) a fixed monthly salary and (2) an annual
variable amount based upon overall corporate and group performance (referred to
herein as "Variable Compensation"). The fixed salary amount is set at a level
which is below the model compensation, and the variable portion is based upon
factors which, if achieved, would entitle the employee to reach or exceed model
compensation. The Corporation's goal, however, is to pay each employee his or
her model compensation over time.
The amount of Variable Compensation each participant receives is a function
of four factors:
(1) The employee's base annual salary as of the end of the preceding
year;
(2) Overall corporate performance versus goal;
(3) Performance of the individual business group versus goal; and
(4) The employee's "variable compensation factor," which is determined
by the Compensation Committee on the basis of responsibility and experience
level.
An employee's "variable compensation factor" is a percentage of his or her
base annual salary starting at 10% for new participants. At greater levels of
responsibility and experience, the variable compensation factor may increase to
more than 100% of base annual salary. An employee's model compensation is set
assuming a
11
<PAGE> 14
50% payout of the variable compensation factor. Accordingly, in a given year an
employee may achieve more or less than his or her model compensation depending
on corporate and business group performance.
At year end, the Compensation Committee evaluates the Corporation's overall
performance versus goal, and each individual group's performance versus goal.
Given the dynamics of the business, the Corporation's Cash Compensation Plan
relies heavily on the Compensation Committee's subjective judgment of
performance.
Specifically for 1993, in determining Variable Compensation payouts, the
Compensation Committee took the following factors into consideration in
evaluating both overall corporate performance and the performance of the
Corporation's individual business groups: (1) the extent to which quantitative
and qualitative plans were met for the year, with a particular emphasis on
profitability, growth of sales, growth of bookings, and increase in market
share; (2) the extent to which the group became a role model in the
implementation of "Total Quality Management"; (3) the extent to which the
financial results for the year were consistent with the Corporation achieving
its mid-term business plan; and (4) whether the group was in a stronger
strategic position at the end of the year than at the beginning. The Committee
generally weighs each of the four factors equally in setting Variable
Compensation amounts, although for the last two fiscal years the Committee has
viewed factor (1) referred to above as the most important factor in setting
Variable Compensation amounts as the Corporation has put increasing emphasis on
profit discipline. In 1993, the range of total cash compensation to model
compensation for all executive officers was from 101.8% of model compensation to
119.6% of model compensation.
The Corporation's stock option program is the Corporation's long-term
incentive plan for employees, including executive officers. The objectives of
the program are to align executive return with shareholder return and to create
and implement a program which will attract and retain talented employees and
executives. Stock options are awarded annually to employees, including the Chief
Executive Officer, based upon an employee's relative contribution and
responsibility within the Corporation. The Corporation conducts surveys of
various companies, some of which appear in the Performance Graph's S&P High
Technology Composite Index, to verify that the relative percentages of stock
options granted to its employees, its Chief Executive Officer and its other
executive officers, are consistent with high technology industry practice.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. d'Arbeloff's cash compensation for 1993 was $578,433, which is
approximately 19.6% more than Mr. d'Arbeloff's 1993 model compensation of
$483,686. Mr. d'Arbeloff's 1993 cash compensation is a 5.7% increase over his
1992 cash compensation. In assessing Mr. d'Arbeloff's performance for the year,
the Compensation Committee concluded that, on balance, Mr. d'Arbeloff had
achieved overall positive results on the matters on which he was evaluated.
The stock options granted to Mr. d'Arbeloff during fiscal 1993 are
consistent with the design of the overall program and are as shown in the
Summary Compensation Table above. Mr. d'Arbeloff's 45,000 shares, which
represented 3.71% of the total option shares awarded to all employees during
fiscal 1993, places him at the median of the external surveys.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section
162(m)"), generally disallows a tax deduction to the Corporation for
compensation over $1 million paid to the Corporation's Chief Executive Officer
and the other executive officers named in the Summary Compensation Table.
Qualifying performance-based compensation, however, will not be subject to the
deduction limit if certain requirements are met. At this time, due in part to
the transitional rules promulgated under Section 162(m), it is not
12
<PAGE> 15
anticipated that any executive officer of the Corporation will receive total
compensation in excess of $1,000,000 in 1994 for purposes of Section 162(m).
Although the Corporation may in the future structure the performance-based
portion of certain of the compensation paid to its executive officers in a
manner that complies with Section 162(m), the Compensation Committee has decided
presently not to take any action with respect to such compensation. The
Compensation Committee intends to monitor this situation and to take appropriate
action in the future if warranted.
MANAGEMENT COMPENSATION AND
DEVELOPMENT COMMITTEE
Edward L. Artzt
Dwight H. Hibbard
Franklin P. Johnson, Jr.
Richard J. Testa
COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION
Messrs. Artzt, Hibbard, Johnson and Testa comprise the Compensation
Committee. Richard J. Testa is a member of the law firm Testa, Hurwitz &
Thibeault in Boston, Massachusetts. Such law firm served as general counsel for
the Corporation during the fiscal year 1993 and the Corporation expects to
retain the services of such firm for the fiscal year 1994.
13
<PAGE> 16
<TABLE>
PERFORMANCE GRAPH
The following graph compares the change in the Corporation's cumulative
total shareholder return in its Common Stock with the Standard & Poor's 500
Index and the Standard & Poor's High Technology Composite Index. The comparison
assumes $100.00 was invested on December 31, 1988 in the Corporation's Common
Stock and in each of the foregoing indices and assumes reinvestment of
dividends, if any.
<CAPTION>
S&P High
Technology
Measurement Period Teradyne, S&P 500 In- Composite
(Fiscal Year Covered) Inc. dex Index
<S> <C> <C> <C>
1988 100 100 100
1989 94 132 99
1990 60 127 101
1991 135 166 115
1992 131 179 120
1993 236 197 147
</TABLE>
PROPOSAL TO AMEND THE 1979 EMPLOYEE STOCK PURCHASE PLAN
DESCRIPTION OF THE 1979 EMPLOYEE STOCK PURCHASE PLAN
On December 6, 1978, the Board of Directors of the Corporation adopted the
1979 Plan, which was approved by the shareholders of the Corporation on April
25, 1979. Substantially all employees of the Corporation and of its
participating subsidiaries, including officers of the Corporation, are eligible
to participate in the 1979 Plan; however, directors and employees who own 5 per
cent or more of the stock of the Corporation may not participate in the 1979
Plan. The 1979 Plan presently authorizes the issuance of a maximum of 4,200,000
shares of Common Stock, subject to adjustment for capital changes. As of March
31, 1994, there were approximately 3,900 officers and employees of the
Corporation and its subsidiaries eligible to participate in the 1979 Plan. The
market value of the 405,869 shares remaining reserved for issuance under the
Stock Purchase Plan is $10,248,192.25 based on the closing price of the Common
Stock on the New York Stock Exchange on March 31, 1994.
On January 1 of each year, the first day of a designated one-year payroll
deduction period (the "Payment Period"), the Corporation grants to each eligible
employee who has elected to participate in the 1979 Plan a nontransferable
option to purchase shares of Common Stock of the Corporation as follows: The
employee shall authorize the Corporation to deduct an amount from his pay (not
less than 2% nor more than 10% of his regular pay) during the Payment Period. On
the last day of the Payment Period the employee shall be deemed
14
<PAGE> 17
to have exercised his option to purchase shares of the Corporation's Common
Stock, at the option price, to the extent of his accumulated payroll deductions.
In no event may the employee exercise his option for more than 3,000 shares.
Under the terms of the 1979 Plan, the option price is an amount equal to 85% of
the fair market value of the Common Stock on either the first day or last day of
the Payment Period, whichever is lower.
If an employee is not a participant on the last day of a Payment Period, he
is not entitled to exercise his option, and the amount of his accumulated
payroll deductions is refunded to him. Option holders are protected against
dilution in the event of a recapitalization, stock split, merger, consolidation,
reorganization, combination, liquidation, stock dividend or similar transaction.
The 1979 Plan is administered by the Compensation Committee. The Board of
Directors may from time to time adopt amendments to the 1979 Plan provided that,
without the approval of the shareholders, no amendment may increase the number
of shares that may be issued under the 1979 Plan or change the class of
employees eligible to receive options under the 1979 Plan. The Board of
Directors may terminate the 1979 Plan at any time, but such action shall not
affect options previously granted. The 1979 Plan will terminate in any case when
all or substantially all of the unissued shares of Common Stock reserved for the
purposes of the 1979 Plan have been purchased.
Participation in the 1979 Plan is voluntary and is dependent upon each
eligible employee's election to participate and his or her determination as to
the level of payroll deduction. Accordingly, future purchases under the 1979
Plan are not determinable. The following table sets forth certain information
regarding shares purchased during fiscal year 1993 under the 1979 Plan by each
of the named executive officers appearing on page 8, all current executive
officers as a group and all other employees as a group, including all current
officers who are not executive officers:
<TABLE>
1979 EMPLOYEE STOCK PURCHASE PLAN
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK
INDIVIDUAL AND POSITION OR GROUP PURCHASED
----------------------------------------------------------------- -----------
<S> <C>
Owen W. Robbins.................................................. 2,766
Executive Vice President
James A. Prestridge.............................................. 1,099
Executive Vice President
George V. d'Arbeloff............................................. 2,159
Vice President
Executive Officers as a Group.................................... 13,922
Non-Executive Officer Employee Group............................. 361,202
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The following general rules are currently applicable to employees for
United States federal income tax purposes:
1. No taxable income will be realized by the employee either at the time
options are granted pursuant to the 1979 Plan or at the time the employee
purchases shares pursuant to the 1979 Plan.
2. If the employee disposes of shares within two years after the first day
of the Payment Period when the employee acquired the shares, then upon such
disposition the employee will recognize ordinary compensation income equal to
the fair market value of the shares on the day the employee purchased them (the
last business day of the applicable Payment Period) less the amount the employee
paid for the shares. In addition, the employee will recognize a capital gain or
loss in an amount equal to the difference between the amount
15
<PAGE> 18
realized upon the sale of the stock and the employee's basis in the stock (i.e.,
in this case, the purchase price plus the amount taxed to the employee as
ordinary compensation income).
3. If the employee disposes of shares two or more years after the first
day of the Payment Period when the employee acquired the shares, then upon such
disposition the employee will recognize as ordinary compensation income an
amount equal to the lesser of:
(a) the excess of the fair market value of the shares on the date of
disposition over the option price, or
(b) 15% of the fair market value of the shares at the beginning of the
Payment Period when then employee acquired the shares.
In addition, the employee will recognize a long-term capital gain or loss
in an amount equal to the difference between the amount realized upon the sale
of the stock and the employee's basis in the stock (i.e., the purchase price
plus the amount, if any, taxed to the employee as ordinary compensation income).
4. If the two-year holding period is satisfied, the Corporation will not
receive any deduction for federal income tax purposes with respect to the
options or the shares issued upon their exercise. If the two-year holding period
is not satisfied, the Corporation will be entitled to a deduction in an amount
equal to the amount which is considered ordinary compensation income.
PROPOSED AMENDMENT
The Board of Directors has proposed to amend the 1979 Plan by increasing
the number of shares of Common Stock which may be issued pursuant to said plan
from 4,200,000 to 4,600,000 shares.
Approval of the amendment to the 1979 Plan will require the affirmative
vote of a majority of the outstanding shares of Common Stock of the Corporation
represented in person or by proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT TO
THE 1979 PLAN.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Coopers & Lybrand,
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 1994. Coopers & Lybrand has served as the Corporation's
auditors since 1968. It is expected that a member of the firm will be present at
the Annual Meeting of Shareholders with the opportunity to make a statement if
so desired and will be available to respond to appropriate questions. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THIS SELECTION.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended for inclusion in the proxy statement to
be furnished to all shareholders entitled to vote at the next annual meeting of
the Corporation must be received at the Corporation's principal executive
offices not later than December 23, 1994. In order to minimize controversy as to
the date on which a proposal was received by the Corporation, it is suggested
that proponents submit their proposals by Certified Mail -- Return Receipt
Requested.
16
<PAGE> 19
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation, and
in addition to soliciting shareholders by mail through its regular employees,
the Corporation may request banks and brokers to solicit their customers who
have stock of the Corporation registered in the names of a nominee and, if so,
will reimburse such banks and brokers for their reasonable out-of-pocket costs.
Solicitation by officers and employees of the Corporation may also be made of
some shareholders in person or by mail, telephone or telegraph following the
original solicitation.
17
<PAGE> 20
TERADYNE, INC.
1979 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1 - PURPOSE
This Employee Stock Purchase Plan (the "Plan") is intended as
an incentive and to encourage stock ownership by all eligible
employees of Teradyne, Inc. (the "Company"), participating
subsidiaries, and acquired businesses so that they may share in
the growth of the Company by acquiring or increasing their
proprietary interest in the Company. It is intended that options
issued pursuant to the Plan shall constitute options issued
pursuant to an "employee stock purchase plan" within the meaning
of Section 423 of the Internal Revenue Code of 1986 (the "Code"),
as amended.
ARTICLE 2 - ADMINISTRATION OF THE PLAN
The Plan may be administered by a committee appointed by the
Board of Directors of the Company (the "Committee"). The
Committee shall consist of not less than two members of the
Company's Board of Directors. The Board of Directors may from
time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, howsoever caused, shall
be filled by the Board of Directors. The Committee may select on
one of its members as Chairman, and shall hold meetings at such
times and places as it may determine. Acts by a majority of the
Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts
of the Committee.
The interpretation and construction by the Committee of any
provisions of the Plan or of any option granted under its shall
be final unless otherwise determined by the Board of Directors.
The Committee may from time to time adopt such rules and
regulations for carrying out the Plan as it may deem best,
provided that any such rules and regulation shall be applied on a
uniform basis to all employees under the Plan. No member of the
Board of Directors or the Committee shall be liable for any
action or determination made in good faith with respect to the
Plan or any option granted under it.
In the event the Board of Directors fails to appoint or
refrains from appointing a Committee, the Board of Directors
shall have all powers and authority to administer the Plan. In
such event, the word "Committee" wherever used herein shall be
deemed to mean the Board of Directors.
ARTICLE 3 - ELIGIBLE EMPLOYEES
No option may be granted to any person serving as a member of
the Committee at the time of grant. Subject to this limitation,
<PAGE> 21
-2-
all Eligible Employees (as defined herein) of the Company or any
of its participating subsidiaries (as defined in Article 18) who
have completed more than 90 days of employment with the Company
or any of its subsidiaries on or before the first day of any
Payment Period (as defined in Article 5) shall be eligible to
receive options under this Plan to purchase the Company's Common
Stock, and all Eligible Employees shall have the same rights and
privileges as defined in this Plan. In no event may an employee
be granted an option if such employee, immediately after the
option is granted, owns stock possessing 5 percent or more of the
total combined voting power or value of all classes of stock of
the Company or of its parent corporation or subsidiary
corporation, as the terms "parent corporation" and "subsidiary
corporation" are defined in Section 425 of the Code. For
purposes of determining stock ownership under this paragraph, the
rules of Section 425(d) of the Code shall apply, and stock which
the employee may purchase under outstanding options shall be
treated as stock owned by the employee.
For purposes of this Plan the term "Eligible Employee" shall
not include an employee whose customary employment is less than
20 hours per week or whose customary employment is for not more
than 5 months in any calendar year.
The Board of Directors shall have the authority to permit
employees of acquired businesses to participate in the Plan
effective within the then current Payment Period without
compliance with the eligibility and participation requirements of
the Plan, to the extent permitted by the Code.
ARTICLE 4 - STOCK SUBJECT TO THE PLAN
The stock subject to the options shall be shares of the
Company's authorized but unissued shares of Common Stock or
shares of Common Stock re-acquired by the Company, including
shares purchased in the open market. The aggregate number of
shares which may be issued pursuant to the Plan is 4,600,000,
subject to adjustment as provided in Article 13. In the event
any option granted under the Plan shall expire or terminate for
any reason without having been exercised in full or shall cease
for any reason to be exercisable in whole or in part, the
unpurchased shares subject thereto shall again be available under
the Plan.
ARTICLE 5 - PAYMENT PERIOD AND STOCK OPTIONS
The twelve-month period commencing annually on the first day
of January and ending annually on the last day of December is the
Payment Period during which payroll deductions will be
accumulated under the Plan. Each Payment Period includes only
regular pay days falling within it.
<PAGE> 22
-3-
Annually on the first business day of the Payment Period, the
Company will grant to each Eligible Employee who has elected to
participate in the Plan an option to purchase on the last day of
such Payment Period, at the Option Price hereinafter provided
for, such number of shares of the Common Stock of the Company
reserved for the purpose of the Plan as does not exceed the
greater of the number of shares equal to 10% of the employee's
regular annual base pay divided by the price determined in
accordance with (i) below, or 3,000 shares, on condition that
such employee remains eligible to participate in the Plan
throughout such Payment Period. The participant shall be
entitled to exercise such options so granted only to the extent
of his accumulated payroll deductions on the last day of such
Payment Period, but in no event to exceed 3,000 shares. The
Option Price for each Payment Period shall be the lesser of
(i) 85% of the average market price of the Company's Common Stock
on the first business day of the Payment Period or (ii) 85% of
the average market price of the Company's Common Stock on the
last business day of the Payment Period, in either event rounded
up to avoid fractions other than 1/4, 1/2 and 3/4. The foregoing
limitation on the number of shares which may be granted in any
Payment period and the Option Price per share shall be subject to
adjustment as provided in Article 13.
For purposes of the Plan the term "average market price" is
the average of the high and low prices of the Common Stock of
the Company on the principal national securities exchange on
which it is so traded or such other national securities exchange
as shall be designated by the Committee.
For purposes of this Plan the term "business day" as
used herein means a day on which there is trading on the national
securities exchange.
No Eligible Employee shall be granted an option which permits
his rights to purchase Common Stock under the Plan and any
similar plans of the Company or any parent or subsidiary
corporations to accrue at a rate which exceeds $25,000 of fair
market value of such stock (determined at the time such option is
granted) for each calendar year in which such option is
outstanding at any time. The purpose of the limitation in the
preceding sentence is to comply with Section 423(b)(8) of the
Code.
ARTICLE 6 - EXERCISE OF OPTION
Each Eligible Employee who continues to be a participant in
the Plan on the last business day of a Payment Period shall be
deemed to have exercised his option on such date and shall be
deemed to have purchased from the Company such number of full
shares of Common Stock reserved for the purpose of the Plan as
his accumulated payroll deductions on such date will pay for at
such Option Price but in no event more than 3,000 shares.
<PAGE> 23
-4-
Subject to Article 15, if a participant is not an employee on the
last business day of a Payment Period, he shall not be entitled
to exercise his option.
ARTICLE 7 - UNUSED PAYROLL DEDUCTIONS
Only full shares of Common Stock may be purchased under the
Plan. Unused payroll deductions remaining in an employee's
account at the end of a Payment Period shall be refunded to such
participant without interest.
ARTICLE 8 - AUTHORIZATION FOR ENTERING PLAN
An Eligible Employee may enter the Plan by filling out,
signing and delivering to the Personnel Office an authorization:
A. Stating the amount to be deducted regularly from his pay;
B. Authorizing the purchase of stock for him in the Payment
Period in accordance with the terms of the Plan; and
C. Specifying the exact name in which stock purchased for
him is to be issued as provided under Article 12 hereof.
Such authorization must be received by the Personnel Office at
least 15 days before the beginning date of the next Payment
Period.
Unless an employee files a new authorization or withdraws
from the Plan, his deductions and purchases under the
authorization he has on file under the Plan will continue from
one Payment Period to succeeding Payment Periods as long as the
Plan remains in effect.
The Company will accumulate and hold for the employee's
account the amounts deducted from his pay. No interest will be
paid on it.
ARTICLE 9 - MINIMUM AND MAXIMUM AMOUNTS OF PAYROLL DEDUCTIONS
An Eligible Employee may authorize payroll deductions in an
amount (in whole percents) not less than 2% but not more than 10%
of his regular annual base pay.
ARTICLE 10 - NO CHANGE IN PAYROLL DEDUCTIONS
Deductions may not be increased or decreased during any
Payment Period, except to reflect changes in base pay during the
Payment Period.
<PAGE> 24
-5-
ARTICLE 11 - WITHDRAWAL FROM THE PLAN
An Eligible Employee may withdraw from the Plan, in whole but
not in part, at any time prior to the last business day of each
Payment Period by delivering a Withdrawal Notice to the Personnel
Office, in which event the Company will refund the entire balance
of his deductions as soon as practicable thereafter.
To re-enter the Plan, an Eligible Employee who has
previously withdrawn must file a new authorization in accordance
with Article 8. His re-entry into the Plan cannot, however,
become effective before the beginning of the next Payment Period
following his withdrawal.
ARTICLE 12 - ISSUANCE OF STOCK
Certificates for stock issued to participants will be
delivered as soon as practicable after each Payment Period.
Stock purchased under the Plan will be issued only in the
name of the Eligible Employee, or if his authorization so
specifies, in the name of the employee and another person of
legal age as joint tenants with rights of survivorship.
ARTICLE 13 - ADJUSTMENTS
Upon the happening of any of the following described events,
an optionee's rights under options granted hereunder shall be
adjusted as hereinafter provided:
A. In the event shares of Common Stock of the Company shall
be subdivided or combined into a greater or smaller number of
shares or if, upon a merger, consolidation, reorganization,
split-up, liquidation, combination, recapitalization or the
like of the Company, the shares of the Company's Common Stock
shall be exchanged for other securities of the Company or of
another corporation, each optionee shall be entitled, subject
to the conditions herein stated, to purchase such number of shares
of Common Stock or amount of other securities of the Company or
such other corporation as were exchangeable for the number of
shares of Common Stock of the Company which such optionee would
have been entitled to purchase except for such action, and
appropriate adjustments shall be made in the purchase price per
share to reflect such subdivision, combination, or exchange; and
B. In the event the Company shall issue any of its shares as
a stock dividend upon or with respect to the shares of stock
of the class which shall at the time be subject to option
hereunder, each optionee upon exercising such an option shall
be entitled to receive (for the purchase price paid upon such
exercise) the shares as to which he is exercising his option
and, in addition thereto (at no additional cost), such number
<PAGE> 25
-6-
of shares of the class or classes in which such stock
dividend or dividends were declared or paid, and such amount
of cash in lieu of fractional shares, as is equal to the
number of shares thereof and the amount of cash in lieu of
fractional shares, respectively, which he would have received
if he had been the holder of the shares as to which he is
exercising his option at all times between the date of the
granting of such option and the date of its exercise.
Upon the happening of any of the foregoing events, the class
and aggregate number of shares set forth in Article 4 hereof
which are subject to options which have heretofore been or may
hereafter be granted under the Plan shall also be appropriately
adjusted to reflect the events specified in paragraphs A and B
above. The Committee shall determine the adjustments to be made
under this Article 13, and its determination shall be conclusive.
ARTICLE 14 - NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS
An employee's rights under the Plan are his alone and may not
be transferred or assigned to, or availed of by, any other
person. Any option granted to an employee may be exercised only
by him.
ARTICLE 15 - TERMINATION OF EMPLOYEE'S RIGHTS
An employee's rights under the Plan will terminate when he
ceases to be an employee because of retirement, resignation,
discharge, death, change of status or for any other reason,
except that if an employee is laid off on account of an absence
of work during the last three months of any Payment Period, he
shall nevertheless be deemed to be a participant in the Plan on
the last day of the Payment Period. A Withdrawal Notice will be
considered as having been received from the employee on the day
his employment ceases, and all payroll deductions not used to
purchase stock will be refunded.
If an employee's payroll deductions are interrupted by any
legal process, a Withdrawal Notice will be considered as having
been received from him on the day the interruption occurs.
ARTICLE 16 - TERMINATION AND AMENDMENTS TO PLAN
The Plan may be terminated at any time by the Company's Board
of Directors but such termination shall not affect options then
outstanding under the Plan. It will terminate in any case when
all or substantially all of the unissued shares of stock reserved
for the purposes of the Plan have been purchased. If at any time
shares of stock reserved for the purposes of the Plan remain
available for purchase but not in sufficient number to satisfy
all then unfilled purchase requirements, the available shares
shall be apportioned among participants in proportion to their
options and the Plan shall terminate. Upon such termination or
any other termination of the Plan, all payroll deductions not
used to purchase stock will be refunded.
<PAGE> 26
-7-
The Board of Directors also reserves the right to amend the
Plan from time to time in any respect provided, however, that no
amendment shall be effective without prior approval of the
stockholders which would (a) except as provided in Article 13,
increase the number of shares of Common Stock to be offered under
the Plan or (b) change the class of employees eligible to receive
options under the Plan.
ARTICLE 17 - LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN
The Plan is intended to provide Common Stock for investment
and not for resale. The Company does not, however, intend to
restrict or influence any employee in the conduct of his own
affairs. An employee may, therefore, sell stock purchased under
the Plan at any time he chooses, subject to compliance with any
applicable Federal or state securities laws; provided, however,
that because of certain Federal tax requirements, each employee
will agree by entering the Plan, promptly to give the Company
notice of any such stock disposed of within two years after the
date of grant of the applicable option showing the number of such
share disposed of. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET
FLUCTUATIONS IN THE PRICE OF THE STOCK.
ARTICLE 18 - PARTICIPATING SUBSIDIARIES
The term "participating subsidiaries" shall mean any
subsidiary of the Company which is designated by the Committee to
participate in the Plan. The Committee shall have the power to
make such designation before or after the Plan is approved by the
stockholders.
ARTICLE 19 - OPTIONEES NOT STOCKHOLDERS
Neither the granting of an option to an employee nor the
deductions from his pay shall constitute such employee a
stockholder of the shares covered by an option until such shares
have been purchased by and issued to him.
ARTICLE 20 - APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Common
Stock pursuant to options granted under the Plan will be used for
general corporate purposes.
ARTICLE 21 - GOVERNMENTAL REGULATION
The Company's obligation to sell and deliver shares of the
Company's Common Stock under this Plan is subject to the approval
of any governmental authority required in connection with the
authorization, issuance or sale of such shares.
<PAGE> 27
-8-
ARTICLE 22 - APPROVAL OF STOCKHOLDERS
The Plan shall not take effect until approved by the holders
of a majority of the outstanding shares of the Common Stock of
the Company, which approval must occur within the period ending
twelve months after the date the plan was adopted by the Board of
Directors. The Plan was adopted by the Board of Directors on
December 6, 1978. It was approved by the stockholders of the
Company on April 25, 1979. All subsequent amendments to the Plan
adopted by the Board of Directors have been approved by the
stockholders.
<PAGE> 28
PROXY
TERADYNE, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 26, 1994
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints ALEXANDER V. D'ARBELOFF and RICHARD J.
TESTA and each or both of them, proxies, with full power of substitution to
vote all shares of stock of the Corporation which the undersigned is entitled
to vote at the Annual Meeting of Shareholders of Teradyne, Inc. to be held on
Thursday, May 26, 1994, at 10:00 A.M., at The First National Bank of Boston,
100 Federal Street (First Floor), Boston, Massachusetts, and at any
adjournments thereof, upon matters set forth in the Notice of Annual Meeting of
Shareholders and Proxy Statement dated April 21, 1994, a copy of which has been
received by the undersigned. The proxies are further authorized to vote, in
their discretion, upon such other business as may properly come before the
meeting or any adjournments thereof.
-----------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
-----------
<PAGE> 29
/ X / PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR THE ELECTION OF CLASS II DIRECTORS AND
FOR THE PROPOSALS IN ITEMS 2 AND 3.
<TABLE>
<S> <C>
1. To elect four members to the Board of Directors to
serve for a three-year term as Class II Directors. FOR AGAINST ABSTAIN
2. To amend the 1979 Employee / / / / / /
NOMINEES: A. Carnesale, D.H. Hibbard, F.P. Johnson, Jr. Stock Purchase Plan
and J.A. Prestridge
FOR WITHHELD 3. To ratify the selection of / / / / / /
/ / / / Coopers & Lybrand as auditors
for the fiscal year ending
December 31, 1994.
_______________________________________________________
* INSTRUCTIONS TO WITHHOLD AND VOTE FOR ANY INDIVIDUAL MARK HERE MARK HERE
NOMINEE, WRITE THE NOMINEE'S NAME IN THE SPACE PROVIDED FOR ADDRESS / / IF YOU PLAN / /
ABOVE. CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
(Please sign exactly as you name appears hereon. If
signing as attorney, executor, trustee or guardian, please
give your full title as such. If stock is held jointly, each
owner should sign. Please read reverse side before
signing.)
Signature:_______________________________Date_______________
Signature:_______________________________Date_______________
</TABLE>
