TERADYNE INC, DEF 14A, 1999-04-21

TERADYNE INC
DEF 14A, 1999-04-21
INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS

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<PAGE> 1

SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

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 Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

Teradyne, Inc.
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (set forth the amount on which the filing fee is
calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] 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:

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 (the "Corporation"), will be held on Thursday, May 27, 1999, at
10:00 A.M., at BankBoston, 100 Federal Street (Second 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 I Directors.

2. To ratify the selection of the firm of PricewaterhouseCoopers LLP as
auditors for the fiscal year ending December 31, 1999.

3. 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 12, 1999, 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, 1999

------------------------

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, 1999

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 27, 1999, at
10:00 A.M., at BankBoston, 100 Federal Street (Second Floor), Boston,
Massachusetts.

Only shareholders of record as of the close of business on April 12, 1999
(the "Record Date"), will be entitled to vote at the Annual Meeting and any
adjournments thereof. As of the Record Date, 84,995,713 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 the 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 a proposal 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
the 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.

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
and in accordance with the SEC's proxy rules. See "Shareholder Proposals" below.

An Annual Report to Shareholders, containing financial statements for the
fiscal year ended December 31, 1998, 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, 1999.
<PAGE> 4

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 I expires at the Annual Meeting. The nominees for election as Class I
directors are Messrs. d'Arbeloff, Bagley, Gregory and O'Reilly, each of whom,
except for Mr. O'Reilly, was elected at the Annual Meeting of Shareholders held
May 23, 1996. Mr. O'Reilly was appointed to the Board of Directors in January
1998. If re-elected, the Class I nominees will hold office until the Annual
Meeting of Shareholders to be held in 2002, 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 I
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 appointed or 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>
NOMINEE'S OR DIRECTOR'S NAME PRINCIPAL OCCUPATION YEAR
AND YEAR NOMINEE OR DIRECTOR AND BUSINESS EXPERIENCE TERM WILL
FIRST BECAME DIRECTOR DURING THE LAST FIVE YEARS EXPIRE/CLASS
---------------------------- -------------------------- ------------
<S> <C> <C>
Alexander V. d'Arbeloff........... Chairman of the Board of Directors(1) 1999/I
1960
James W. Bagley................... Director(2) 1999/I
1996
Albert Carnesale.................. Director(3) 2000/II
1993
George W. Chamillard.............. Director, President and Chief 2000/II
1996 Executive Officer(4)
Daniel S. Gregory................. Director(5) 1999/I
1977
Dwight H. Hibbard................. Director(6) 2000/II
1983
John P. Mulroney.................. Director(7) 2001/III
1983
Vincent M. O'Reilly............... Director(8) 1999/I
1998
James A. Prestridge............... Director(9) 2000/II
1992
Owen W. Robbins................... Director(10) 2001/III
1992
Richard J. Testa.................. Director, Secretary and Clerk(11) 2001/III
1973
Patricia S. Wolpert............... Director(12) 2001/III
1996
</TABLE>

- ---------------

(1) Mr. d'Arbeloff, 71, has been Chairman of the Board of Directors of the
Corporation since 1977, was President of the Corporation from 1971 until
January 1996 and Chief Executive Officer of the Corporation from 1971 until
May 1997 and has been a director of the Corporation since 1960. Since July
1997, Mr. d'Arbeloff has served as Chairman of the Board of Trustees of the
Massachusetts

2
<PAGE> 5

Institute of Technology. Mr. d'Arbeloff is also a director of PRI
Automation, Inc. and GeoTel Communications Corporation.

(2) Mr. Bagley, 60, has served as Chairman of the Board of Directors of Lam
Research Corporation since October 1998 and as Chief Executive Officer
since July 1997. Mr. Bagley served as Chairman and Chief Executive Officer
of OnTrak Systems, Inc. from May 1996 until July 1997. From 1987 until May
1996, Mr. Bagley served in various capacities at Applied Materials, Inc.,
including President and Chief Operating Officer from 1987 through 1994,
Vice Chairman from October 1995 until May 1996 and Vice Chairman and Chief
Operating Officer from January 1994 until October 1995. Mr. Bagley is also
a director of KLA/Tencor Instruments, Kulicke and Soffa Industries, Inc.
and Micron Technology, Inc.

(3) Mr. Carnesale, 62, has served as Chancellor of the University of
California, Los Angeles since July 1997. He served as Provost of Harvard
University from July 1994 until June 1997 and was the Dean of the John F.
Kennedy School of Government from 1991 through 1995 where he also served as
Professor of Public Policy from 1974 through 1995.

(4) Mr. Chamillard, 60, has served as Chief Executive Officer of the
Corporation since May 1997. Mr. Chamillard has served as President of the
Corporation and has been a director of the Corporation since January 1996.
Mr. Chamillard served as Chief Operating Officer of the Corporation from
1994 until May 1997 and as Executive Vice President of the Corporation from
January 1994 until January 1996. Prior to that time, Mr. Chamillard served
as a Vice President of the Corporation.

(5) Mr. Gregory, 70, has been a General Partner of various Greylock
partnerships since January 1965. From January 1991 until January 1992, Mr.
Gregory served as the Secretary of the Executive Office of Economic Affairs
for the Commonwealth of Massachusetts. From 1976 through 1990, Mr. Gregory
served as Chairman of Greylock Management Corporation.

(6) Mr. Hibbard, 75, served as Chairman of Cincinnati Bell Inc. from October
1993 until May 1996 and served as Chief Executive Officer and Chairman of
Cincinnati Bell Inc. from 1984 until October 1993. Mr. Hibbard retired from
his position as Chairman of Cincinnati Bell Inc. effective in May 1996.

(7) Mr. Mulroney, 63, served as Chief Operating Officer and President of Rohm
and Haas Company from 1986 until December 1998. He is a director of
Aluminum Company of America.

(8) Mr. O'Reilly, 62, was a partner, Chief Operating Officer and Vice-Chairman
at Coopers & Lybrand L.L.P. until his retirement in September 1997. Mr.
O'Reilly is a Distinguished Senior Lecturer at the Carroll Graduate School
of Management of Boston College. Mr. O'Reilly is also a director of the
Neiman Marcus Group, Inc. and Eaton Vance Corp.

(9) Mr. Prestridge, 67, has served as a director of the Corporation since 1992,
was Vice Chairman of the Board of Directors of the Corporation from January
1996 until May 1997 and served as Executive Vice President of the
Corporation from 1992 until May 1997. From 1982 to 1992 he served as Vice
President of the Semiconductor Test Group of the Corporation.

(10) Mr. Robbins, 69, has served as a director of the Corporation since 1992,
was Vice Chairman of the Board of Directors of the Corporation from January
1996 until May 1997 and served as Executive Vice President and Chief
Financial Officer of the Corporation from 1992 until May 1997. From 1977
through 1992, he served as Vice President of the Corporation.

(11) Mr. Testa, 59, has been a partner at the law firm of Testa, Hurwitz &
Thibeault, LLP since 1973. Testa, Hurwitz & Thibeault, LLP serves as
general counsel to the Corporation.

(12) Ms. Wolpert, 49, has served as Vice President, Business Operations,
Americas at International Business Machines Corporation since January 1999.
From January 1993 to December 1998, Ms. Wolpert served in various
capacities at International Business Machines Corporation, including
General Manager System Sales, Latin America; Executive Assistant of the
Chairman's Office; General Manager, Northeast Area; Vice President of
Operations, Northeast Area; and General Manager, Northern New England.

3
<PAGE> 6

BOARD OF DIRECTORS' MEETINGS AND COMMITTEES

The Board of Directors of the Corporation met five times and took action by
unanimous written consent twice during the fiscal year ended December 31, 1998.
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
1998. Messrs. Carnesale, Gregory, Mulroney, O'Reilly and Robbins are currently
members of the Audit and Finance Committee. The Management Compensation and
Development Committee (the "Compensation Committee"), which determines the cash
compensation of the Corporation's executive officers, met three times during
1998. Messrs. Bagley, Hibbard and Testa and Ms. Wolpert are currently members of
the Compensation Committee. The Stock Option Committee, which administers the
Corporation's stock option and certain other benefit plans, met four times
during 1998. Messrs. Bagley and Hibbard and Ms. Wolpert are currently members of
the Stock Option 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 1998. Messrs. d'Arbeloff, Mulroney and Prestridge
are currently 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 procedures 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.

DIRECTOR COMPENSATION

All non-employee directors are compensated at the rate of $20,000 per year
and $1,500 per meeting attended, plus reimbursement of reasonable expenses.
Directors who are employees of the Corporation receive no compensation in their
capacity as a director.

Each director who is not an employee or officer of the Corporation (a
"Non-Employee Director") is entitled to participate in the Corporation's 1996
Non-Employee Director Stock Option Plan, as amended (the "Director Plan"). On
December 14, 1998, the Director Plan was amended to authorize the automatic
grant of (i) an option to purchase 15,000 shares of the Corporation's Common
Stock to each Non-Employee Director who becomes a new member of the
Corporation's Board of Directors on or after January 1, 1997, (ii) an option to
purchase 15,000 shares of the Corporation's Common Stock to each person who was
a Non-Employee Director on December 14, 1998 and (iii) an option to purchase
7,500 shares of the Corporation's Common Stock to each person who is a
Non-Employee Director on the first Monday of February in each year beginning on
February 7, 2000 and continuing throughout the term of the Director Plan. The
Director Plan is administered by the Stock Option Committee of the Board of
Directors of the Corporation. Options granted under the Director Plan vest at
the rate of 25% per year beginning on the first anniversary of the grant date.
The exercise price per share for all options granted under the Director Plan is
equal to the fair market value per share of the Corporation's Common Stock on
the date of grant and the term of each option is for a period of five years from
the date of grant.

As of December 31, 1998, options to purchase 285,000 shares of the
Corporation's Common Stock under the Director Plan were outstanding at a
weighted average exercise price of $37.51.

4
<PAGE> 7

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of April 12, 1999 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 7, and by
all directors and executive officers as a group.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
NAME OWNERSHIP(1)(2) CLASS
---- --------------- ----------
<S> <C> <C>
Alexander V. d'Arbeloff.................................... 1,490,756(3) 1.75%
James W. Bagley............................................ 37,840 *
Michael A. Bradley......................................... 75,276 *
Albert Carnesale........................................... 21,650 *
John M. Casey.............................................. 38,600 *
George W. Chamillard....................................... 236,795 *
Daniel S. Gregory.......................................... 56,421 *
Dwight H. Hibbard.......................................... 43,725(4) *
Jeffrey R. Hotchkiss....................................... 54,830 *
John P. Mulroney........................................... 32,455 *
Vincent M. O'Reilly........................................ 4,250 *
James A. Prestridge........................................ 170,312(5) *
Owen W. Robbins............................................ 255,244 *
Edward Rogas, Jr........................................... 163,154(6) *
Richard J. Testa........................................... 15,750 *
Patricia S. Wolpert........................................ 15,625 *
All executive officers and directors as a group (20
people)(7)............................................... 3,033,004 3.51%
</TABLE>

- ---------------

* less than 1%

(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. d'Arbeloff, 239,000 shares; Mr.
Bagley, 18,750 shares; Mr. Bradley, 75,000 shares; Mr. Carnesale, 21,250
shares; Mr. Casey, 38,600 shares; Mr. Chamillard 157,000; Mr. Gregory, Mr.
Hibbard and Mr. Mulroney, 23,125 shares; Mr. Hotchkiss, 35,000 shares; Mr.
Prestridge, 145,875 shares; Mr. Robbins, 177,875 shares; Mr. Rogas, 131,000
shares; Mr. Testa and Mr. O'Reilly, 3,750 shares; Ms. Wolpert, 15,625
shares; all directors and executive officers as a group 1,334,050 shares.

(3) Includes 134,808 shares of Common Stock held by Mr. d'Arbeloff's wife and
11,200 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. Also includes 1,000 shares owned by The d'Arbeloff
Foundation, a private charitable foundation of which Mr. d'Arbeloff is the
founder and a co-trustee, as to all of which shares Mr. d'Arbeloff disclaims
beneficial ownership. In addition this amount includes 1,000 shares owned by
the d'Arbeloff Charitable Remainder Trust as to which shares Mr. d'Arbeloff
disclaims beneficial ownership.

(4) Includes 200 shares of Common Stock held by Mr. Hibbard's wife.
5
<PAGE> 8

(5) Includes 24,437 shares of Common Stock held in a living trust for the
benefit of Mr. Prestridge and his wife.

(6) Includes 9,460 shares of Common Stock held by Mr. Rogas' former wife, as to
all of which shares Mr. Rogas disclaims beneficial ownership.

(7) The group is comprised of the individuals named in the Summary Compensation
Table on page 7, the remaining executive officers of the Corporation, and
those persons who were directors of the Corporation on April 12, 1999.
Includes 1,334,050 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, includes 185,645 shares held by
family members of executive officers and directors, as to which shares the
applicable officer or director disclaims beneficial ownership.

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 date.

<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL HOLDER OF OWNERSHIP CLASS
-------------------- ----------------- ----------
<S> <C> <C>
FMR Corp.(1)............................................. 11,449,700 13.61%
82 Devonshire Street
Boston, MA 02109
Capital Guardian Trust Company(2)........................ 5,440,700 6.50%
333 So. Hope Street, 55th Floor
Los Angeles, California 90071
Neuberger Berman, LLC(3)................................. 5,059,781 6.01%
605 Third Avenue
New York, New York 10158-3698
</TABLE>

- ---------------

(1) According to a letter dated March 5, 1999 and as of January 30, 1999. As of
January 30, 1999, FMR Corp. ("FMR") had sole dispositive power with respect
to all of the shares and sole voting power with respect to 1,309,700 shares.
Fidelity Management & Research Company, a wholly-owned subsidiary of FMR,
was the beneficial owner of 10,140,000 or 12.05% of the outstanding shares
of the Corporation; Fidelity Management Trust Company, a wholly-owned
subsidiary of FMR was the beneficial owner of 1,207,800 shares or 1.44% of
the outstanding shares of the Corporation; and Fidelity International
Limited and various foreign-based subsidiaries were the beneficial owners of
101,900 shares, or 0.12% of the Corporation's outstanding shares.

(2) According to a Schedule 13G filed on February 12, 1999. The Capital Group
Companies, Inc. is the parent holding company of a group of investment
management companies that hold investment power and, in some cases, voting
power over the shares. The Capital Group Companies, Inc. does not have
direct investment power or voting power over any of the shares, however, The
Capital Group Companies, Inc. may be deemed to "beneficially own" such
shares by virtue of Rule 13d-3 under the Securities Exchange Act of 1934.

(3) According to a Schedule 13G Amendment filed on February 10, 1999. Neuberger
Berman, LLC ("Neuberger") is a registered investment advisor. In its
capacity as investment advisor, Neuberger may have discretionary authority
to dispose of or to vote shares that are under its management. As a result,
Neuberger may be deemed to have beneficial ownership of such shares.
Neuberger does not, however, have any economic interest in the shares. The
clients are the actual owners of the shares and have the sole right to
receive and the power to direct the receipt of dividends from or proceeds
from the sale of such shares. As of December 31, 1998, of the shares set
forth above, Neuberger had shared dispositive power

6
<PAGE> 9

with respect to 5,059,781 shares, sole voting power with respect to
2,024,626 shares and shared voting power with respect to 2,984,300 shares.
With regard to the shared voting power, Neuberger Berman Management, Inc.
and Neuberger Berman Funds are deemed to be beneficial owners for purposes
of Rule 13(d) since they have shared power to make decisions whether to
retain or dispose of the securities. Neuberger is the sub-advisor to the
above referenced funds. The above mentioned shares are also included with
the shared power to dispose calculation.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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, 1998 through
December 31, 1998, the directors and executive officers complied with all
applicable Section 16 filing requirements.

EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth the compensation for
the three fiscal years most recently ended received by the Chief Executive
Officer of the Corporation and the four other most highly compensated executive
officers of the Corporation.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(3)
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND --------------------------- OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) SARS(#) COMPENSATION(4)
------------------ ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
George W. Chamillard........... 1998 $411,036 $376,726 155,000(5) $37,549
Director, President and 1997 353,742 531,449 80,000 22,184
Chief Executive Officer 1996 273,444 217,757 60,000 26,634
Edward Rogas, Jr............... 1998 271,500 197,100 95,000(6) 898
Vice President 1997 245,916 295,157 50,000 --
1996 205,038 137,007 40,000 --
John M. Casey.................. 1998 254,262 184,587 85,000(7) --
Vice President 1997 234,948 276,903 45,000 --
1996 185,325 117,788 30,000 --
Michael A. Bradley............. 1998 242,616 179,081 85,000(8) 19,928
Vice President 1997 216,474 257,860 45,000 13,606
1996 174,000 118,718 30,000 9,436
Jeffrey R. Hotchkiss........... 1998 242,616 179,081 85,000(9) 19,928
Chief Financial Officer and 1997 216,474 257,860 45,000 13,511
Vice President 1996 174,606 118,805 30,000 9,350
</TABLE>

- ---------------

(1) The amounts in the "Salary" column represent the annual base salary for each
of the named executive officers, which is paid monthly.

(2) The amounts in the "Bonus" column represent the Variable Compensation earned
in 1998 pursuant to the Corporation's Cash Compensation Plan and Cash Profit
Sharing Plan.

(3) The named executive officers did not, as of December 31, 1998, receive from
the Corporation any grants of restricted stock as compensation.

7
<PAGE> 10

(4) The amounts in the "All Other Compensation" column represent the matching
contributions that the Corporation makes to the Savings Plan and
Supplemental Savings Plan.

(5) Includes 80,000 stock options which were repriced on August 27, 1998 from
$36.50 per share to $19.1875 per share.

(6) Includes 50,000 stock options which were repriced on August 27, 1998 from
$36.50 per share to $19.1875 per share.

(7) Includes 45,000 stock options which were repriced on August 27, 1998 from
$36.50 per share to $19.1875 per share.

(8) Includes 45,000 stock options which were repriced on August 27, 1998 from
$36.50 per share to $19.1875 per share.

(9) Includes 45,000 stock options which were repriced on August 27, 1998 from
$36.50 per share to $19.1875 per share.

The following table provides information with respect to stock option
grants by the Corporation to the named executive officers in 1998. The
Corporation did not grant any stock appreciation rights in 1998.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
PERCENTAGE OF AT ASSUMED ANNUAL RATES
NUMBER OF TOTAL OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION OVER THE
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION -------------------------
NAME GRANTED(1) YEAR ($/SHARE) DATE 5% 10%
---- ---------- ------------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
George W. Chamillard.... 75,000 1.09 $23.6250 7/29/03 $489,531 $1,081,741
80,000(3) 1.16 19.1875 8/27/03 424,087 937,127
Edward Rogas, Jr........ 45,000 0.65 23.6250 7/29/03 293,716 649,042
50,000(3) 0.73 19.1875 8/27/03 265,052 585,702
John M. Casey........... 40,000 0.58 23.6250 7/29/03 261,081 576,926
45,000(3) 0.65 19.1875 8/27/03 238,546 527,131
Michael A. Bradley...... 40,000 0.58 23.6250 7/29/03 261,081 576,926
45,000(3) 0.65 19.1875 8/27/03 238,546 527,131
Jeffrey R. Hotchkiss.... 40,000 0.58 23.6250 7/29/03 261,081 576,926
45,000(3) 0.65 19.1875 8/27/03 238,546 527,131
</TABLE>

- ---------------

(1) Stock options were granted under the Corporation's 1991 Employee Stock
Option 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

8
<PAGE> 11

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.

(3) Reflects stock options which were repriced on August 27, 1998 from $36.50
per share to $19.1875 per share.

The following table provides information on stock option exercises in
fiscal year 1998 by the named executive officers and the value of such officers'
unexercised options at December 31, 1998.

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
SHARES
ACQUIRED NUMBER OF SECURITIES
UPON UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTION OPTIONS HELD AT THE-MONEY OPTIONS AT
EXERCISE DECEMBER 31, 1998 DECEMBER 31, 1998
DURING VALUE --------------------------- ---------------------------
NAME 1998 REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George W. Chamillard... 60,000 $1,165,000 175,000 160,000 $4,417,125 $3,467,250
Edward Rogas, Jr....... 50,000 1,067,319 122,200 100,800 3,093,100 2,197,150
John M. Casey.......... -- -- 33,400 85,200 780,138 1,841,975
Michael A. Bradley..... 6,000 117,750 83,000 86,000 2,068,063 1,858,625
Jeffrey R. Hotchkiss... -- -- 50,400 86,000 1,119,888 1,858,625
</TABLE>

RETIREMENT BENEFITS

The Corporation 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.
Chamillard, Rogas, Casey, Bradley and Hotchkiss 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

9
<PAGE> 12

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.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
FIVE YEAR AVERAGE --------------------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35 40
----------------- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000.................................. $ 5,100 $ 7,700 $ 10,300 $ 12,900 $ 15,400 $ 18,000 $ 20,600
100,000.................................. 12,600 18,900 25,300 31,600 37,900 44,300 50,600
150,000.................................. 20,100 30,200 40,300 50,400 60,400 70,500 80,600
200,000.................................. 27,600 41,400 55,300 69,100 82,900 96,800 110,600
250,000.................................. 35,100 52,700 70,300 87,900 105,400 123,000 140,600
300,000.................................. 42,600 63,900 85,300 106,600 127,900 149,300 170,660
350,000.................................. 50,100 75,200 100,300 125,400 150,400 175,500 200,600
400,000.................................. 57,600 86,400 115,300 144,100 172,900 201,800 230,600
450,000.................................. 65,100 97,700 130,300 162,900 195,400 228,000 260,600
500,000.................................. 72,600 108,990 145,300 181,600 217,900 254,300 290,600
550,000.................................. 80,100 120,200 160,300 200,400 240,400 280,500 320,600
600,000.................................. 87,600 131,400 175,300 219,100 262,900 306,800 350,600
650,000.................................. 95,100 142,700 190,300 237,900 285,400 333,000 380,600
700,000.................................. 102,600 153,900 205,300 256,600 307,900 359,300 410,600
750,000.................................. 110,100 165,200 220,300 275,400 330,400 385,500 440,600
800,000.................................. 117,600 176,400 235,300 294,100 352,900 411,800 470,600
850,000.................................. 125,100 187,700 250,300 312,900 375,400 438,000 500,600
</TABLE>

The executive officers named in the Summary Compensation Table have been
credited as of January 1, 1999 with the following years of service: Mr.
Chamillard, 29 years; Mr. Rogas, 22 years; Mr. Casey, 21 years; Mr. Bradley, 19
years and Mr. Hotchkiss, 27 years.

10
<PAGE> 13

MANAGEMENT COMPENSATION AND
DEVELOPMENT COMMITTEE REPORT AND
STOCK OPTION 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 outside directors. The
Compensation Committee is responsible for developing and making recommendations
to the Board of Directors with respect to the Corporation's compensation
policies other than with respect to stock option awards. In addition, the
Compensation Committee, pursuant to authority delegated by the Board of
Directors, determines on an annual basis the cash compensation to be paid to
each of the executive officers. The Stock Option Committee is comprised entirely
of non-employee directors. The Stock Option Committee is responsible for
developing and making recommendations to the Board of Directors with respect to
the Corporation's compensation policies in connection with the awarding of stock
options. In addition, the Stock Option Committee, pursuant to authority
delegated by the Board of Directors, determines on an annual basis the stock
option awards to be granted to each of the executive officers.

The executive compensation policies are designed to provide competitive
levels of compensation that assist the Corporation in attracting and retaining
qualified executives. In setting cash compensation levels for executive
officers, the Compensation Committee takes into account such factors as: the
Corporation's past history and future expectations; the general and
industry-specific business environment; annual and long-term performance goals;
and 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, Cash
Profit Sharing Plan, long-term compensation in the form of stock option, savings
and retirement plans and various other benefits 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 executives
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 17 herein.

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 amount of Variable Compensation each participant receives is a function
of four factors:

(A) The employee's base annual salary as of the end of the year;

(B) Overall corporate performance versus goal;

11
<PAGE> 14

(D) 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 150% of base annual salary. An employee's model compensation is set
assuming a 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 1998, 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 an emphasis on profitability,
growth of sales, growth of bookings, and increase in market share; (2) the
extent to which each business group became a role model in the implementation of
"Total Quality Management"; (3) the extent to which the results for the year
verified each group's strategy and improved its strategic position; and (4) the
extent to which each group's 1999 mid-term plan and strategy contribute to the
Corporation's need for an aggressive and credible mid-term plan and adapt to
changes in the marketplace or environment. The Compensation Committee weighed
each of the four factors approximately equally in setting Variable Compensation
amounts. The factors are reviewed by the Compensation Committee based upon the
performance of the business group in which each executive officer serves rather
than upon the individual performance of the executive officer. In 1998, total
cash compensation for all executive officers from the Corporation's Cash
Compensation Plan ranged from 2% to 1% below 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 factors taken into account by the
Stock Option Committee in determining each executive officer's relative
contribution and responsibility within the Corporation include: the executive
officer's level of model compensation, the executive officer's position, the
responsibilities currently being performed by the executive officer, and the
responsibilities expected to be performed by the executive officer. The
individual factors are reviewed subjectively by the Stock Option Committee when
determining stock option awards for each executive officer. 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, are within the range of stock options granted by the surveyed
companies, and are competitive with the relative percentages of stock options
granted by the surveyed companies.

CHIEF EXECUTIVE OFFICER COMPENSATION

Mr. Chamillard's cash compensation for 1998 awarded under the Corporation's
Cash Compensation Plan was $745,220, which is approximately 2.4% less than Mr.
Chamillard's 1998 model compensation of $762,809. Mr. Chamillard's 1998 cash
compensation awarded pursuant to the Corporation's Cash Compensation Plan is an
11% decrease from his 1997 cash compensation. Mr. Chamillard's fixed salary
amount was $411,036 for

12
<PAGE> 15

1998 and was set by the Compensation Committee, in conjunction with his model
compensation amount, based upon salary surveys of chief executive officers for
similarly sized electronics companies. Mr. Chamillard's Variable Compensation
payout was $334,184 for 1998. Mr. Chamillard's Variable Compensation payouts are
determined based upon the same factors as the Corporation's other executive
officers who have general responsibilities within the Corporation rather than
responsibilities for one specific business group within the Corporation. Each of
such executive officer's Variable Compensation payout is based 50% upon the
performance of the Corporation as a whole and 50% upon the average of the
performances of each of the individual business groups within the Corporation.
Mr. Chamillard also received cash compensation in the amount of $42,542 in 1998
pursuant to the Corporation's Cash Profit Sharing Plan. Cash compensation awards
under the plan, which are calculated on a uniform basis as a percentage of the
recipient's salary, are made to the employees of the Corporation on an equal
basis.

The stock options granted to Mr. Chamillard during fiscal 1998 are
consistent with the design of the overall program and are shown in the Summary
Compensation Table above. Mr. Chamillard's 75,000 shares, which represented 2.0%
of the total option shares awarded to all employees during fiscal 1998, placed
him at the median of the external surveys (excluding for purposes of this
calculation only, options regranted pursuant to the option repricing discussed
on page 14). In assessing Mr. Chamillard's individual performance for the year
for purposes of his stock option awards, the Stock Option Committee concluded
that, on balance, Mr. Chamillard had achieved overall positive results for the
individual factors for which he was evaluated. A general description of these
factors is detailed above under the description of the Corporation's stock
option program.

MANAGEMENT COMPENSATION AND
DEVELOPMENT COMMITTEE

Dwight H. Hibbard (Chairman)
James W. Bagley
Richard J. Testa
Patricia S. Wolpert

STOCK OPTION COMMITTEE

Dwight H. Hibbard (Chairman)
James W. Bagley
Patricia S. Wolpert

COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION

Messrs. Bagley, Hibbard and Testa and Ms. Wolpert comprised the
Compensation Committee for fiscal year 1998. Richard J. Testa is a member of the
law firm Testa, Hurwitz & Thibeault, LLP in Boston, Massachusetts. Such law firm
served as general counsel for the Corporation during the fiscal year 1998 and
the Corporation expects to retain the services of such firm for the fiscal year
1999.

DEDUCTIBILITY OF EXECUTIVE COMPENSATION

In general, under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Corporation cannot deduct, for federal income tax
purposes, compensation in excess of $1,000,000 paid to certain executive
officers. This deduction limitation does not apply, however, to compensation
that constitutes "qualified performance-based compensation" within the meaning
of Section 162(m) of the Code and the regulations promulgated thereunder. The
Corporation has considered the limitations on deductions imposed by Section
162(m) of the Code, and it is the Corporation's present intention that, for so
long as it is consistent with its overall compensation objectives, substantially
all tax deductions attributable to executive compensation will not be subject to
the deduction limitations of Section 162(m) of the Code.

13
<PAGE> 16

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On June 1, 1997, the Corporation entered into consulting agreements with
each of James A. Prestridge and Owen W. Robbins, pursuant to which Messrs.
Prestridge and Robbins agreed to provide advice and consulting services to the
Corporation. Pursuant to such consulting agreements, the Corporation agreed to
pay each of Messrs. Prestridge and Robbins $22,353.00 per month throughout the
term of his respective agreement. Each agreement is for a period of three years
and is terminable by either party upon sixty (60) days' prior written notice.

OPTION REPRICING

The following table sets forth information concerning the repricing of
stock options held by executive officers of the Corporation during the last ten
completed fiscal years, including (i) the name and position of the executive
officer, (ii) the date of each repricing, (iii) the number of shares underlying
the repriced options, (iv) the per share market price of the underlying shares
at the time of repricing, (v) the original exercise price per share prior to
repricing, (vi) the new exercise price per share, and (vii) the amount of time
remaining before the replaced or amended option would have expired.

TEN YEAR OPTION REPRICINGS

14
<PAGE> 17

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING MARKET PRICE EXERCISE LENGTH OF ORIGINAL
OPTIONS OF STOCK AT PRICE OPTION TERM
REPRICED TIME OF AT TIME OF NEW REMAINING AT
OR REPRICING OR REPRICING OR EXERCISE DATE OF REPRICING
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE OR AMENDMENT
- ---- ------- ----------- ------------ ------------ -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
John M. Casey............. 8/27/98 45,000 $19.1875 $ 36.50 $19.1875 3.73 Years
Vice President 3/14/90 93,000 $ 4.75 $ 6.125 $ 4.75 1.62-3.82 Years
1/04/89 53,000 $ 6.125 $ 8.0625 $ 6.125 1.42-2.81 Years
1/04/89 20,000 $ 6.125 $ 8.00 $ 6.125 4.20 Years
1/04/89 20,000 $ 6.125 $ 7.00 $ 6.125 3.89 Years
Ronald J. Dias............ 8/27/98 25,000 $19.1875 $ 36.50 $19.1875 3.73 Years
Vice President 3/14/90 89,000 $ 4.75 $ 6.125 $ 4.75 1.62-3.82 Years
1/04/89 45,000 $ 6.125 $ 8.0625 $ 6.125 1.42-2.81 Years
1/04/89 22,000 $ 6.125 $ 8.00 $ 6.125 4.20 Years
1/04/89 22,000 $ 6.125 $ 7.00 $ 6.125 3.89 Years
Donald J. Hamman.......... 8/27/98 20,000 $19.1875 $ 36.50 $19.1875 3.73 Years
Controller 3/14/90 31,000 $ 4.75 $ 6.125 $ 4.75 1.62-3.82 Years
1/04/89 21,000 $ 6.125 $ 8.0625 $ 6.125 1.42-2.81 Years
1/04/89 5,000 $ 6.125 $ 8.00 $ 6.125 4.20 Years
1/04/89 5,000 $ 6.125 $ 7.00 $ 6.125 3.89 Years
John P. McCabe*........... 8/27/98 17,500 $19.1875 $ 36.50 $19.1875 3.73 Years
Vice President 3/14/90 104,000 $ 4.75 $ 6.125 $ 4.75 1.62-3.82 Years
1/04/89 60,000 $ 6.125 $ 8.0625 $ 6.125 1.42-2.81 Years
1/04/89 22,000 $ 6.125 $ 8.00 $ 6.125 4.20 Years
1/04/89 22,000 $ 6.125 $ 7.00 $ 6.125 3.89 Year
Stuart M. Osattin......... 8/27/98 22,000 $19.1875 $ 36.50 $19.1875 3.73 Years
Vice President and 3/14/90 92,000 $ 4.75 $ 6.125 $ 4.75 1.62-3.82 Years
Treasurer 1/04/89 48,000 $ 6.125 $ 8.0625 $ 6.125 1.42-2.81 Years
1/04/89 22,000 $ 6.125 $ 8.00 $ 6.125 4.20 Years
1/04/89 22,000 $ 6.125 $ 7.00 $ 6.125 3.89 Years
Edward Rogas, Jr.......... 8/27/98 50,000 $19.1875 $ 36.50 $19.1875 3.73 Years
Vice President 3/14/90 123,000 $ 4.75 $ 6.125 $ 4.75 1.62-3.82 Years
1/04/89 67,000 $ 6.125 $ 8.0625 $ 6.125 1.42-2.81 Years
1/04/89 28,000 $ 6.125 $ 8.00 $ 6.125 4.20 Years
1/04/89 28,000 $ 6.125 $ 7.00 $ 6.125 3.89 Years
David L. Sulman........... 8/27/98 40,000 $19.1875 $ 36.50 $19.1875 3.73 Years
Vice President 3/14/90 74,000 $ 4.75 $ 6.125 $ 4.75 1.62-3.82 Years
1/04/89 39,000 $ 6.125 $ 8.0625 $ 6.125 1.42-2.81 Years
1/04/89 20,000 $ 6.125 $ 8.00 $ 6.125 4.20 Years
1/04/89 15,000 $ 6.125 $ 7.00 $ 6.125 3.89 Years
George d'Arbeloff*........ 3/14/90 104,400 $ 4.75 $ 6.125 $ 4.75 1.62-3.82 Years
Former Vice President 1/04/89 48,400 $ 6.125 $ 8.0625 $ 6.125 1.42-2.81 Years
1/04/89 28,000 $ 6.125 $ 8.00 $ 6.125 4.20 Years
1/04/89 28,000 $ 6.125 $ 7.00 $ 6.125 3.89 Years
Richard Dyck*............. 8/27/98 8,000 $19.1875 $ 36.50 $19.1875 3.73 Years
Former Vice President 3/14/90 88,000 $ 4.75 $ 6.125 $ 4.75 1.62-3.82 Years
1/04/89 48,000 $ 6.125 $ 8.0625 $ 6.125 1.42-2.81 Years
1/04/89 20,000 $ 6.125 $ 8.00 $ 6.125 4.20 Years
1/04/89 20,000 $ 6.125 $ 7.00 $ 6.125 3.89 Years
Loren Eaton*.............. 3/14/90 103,600 $ 4.75 $ 6.125 $ 4.75 1.62-3.82 Years
Former Vice President 1/04/89 47,600 $ 6.125 $ 8.0625 $ 6.125 1.42-2.81 Years
1/04/89 28,000 $ 6.125 $ 8.00 $ 6.125 4.20 Years
1/04/89 28,000 $ 6.125 $ 7.00 $ 6.125 3.89 Years
</TABLE>

15
<PAGE> 18

- ---------------

* No longer an Executive Officer of the Corporation

STOCK OPTION COMMITTEE REPORT ON OPTION REPRICING

On August 20 1998, the Stock Option Committee of the Board of Directors
(the "Option Committee") approved a reduction, effective August 27, 1998, in the
exercise price of certain outstanding stock options held by executive officers
and employees of the Corporation to $19.1875 per share, the fair market value of
the Corporation's Common Stock on August 27, 1998. These options were granted
between May 15, 1997 and July 1, 1998 at exercise prices ranging from $36.50 to
$41.875 per share.

As set forth in the Corporation's 1991 and 1997 Employee Stock Option
Plans, stock options are intended to provide incentives to the Corporation's
executive officers and employees. The Option Committee believes that such equity
incentives are a significant factor in the Corporation's ability to attract,
retain and motivate key employees who are critical to the Corporation's
long-term success. The Option Committee believed that, at their original
exercise prices, the disparity between the exercise price of these options and
recent market prices for the Corporation's Common Stock did not provide
meaningful incentive to the executive officers and employees holding these
options to perform to their maximum potential and to work towards the success of
the Corporation. Inquiries conducted indicated that other comparable companies
in the high technology industry have been confronted with this problem and have
made similar adjustments in option prices to motivate their executive officers
and employees. The Option Committee approved the repricing of these options as a
means of ensuring that the optionees will continue to have meaningful equity
incentives to work toward the success of the Corporation. The adjustment was
deemed by the Option Committee to be in the best interest of the Corporation and
its stockholders.

16
<PAGE> 19

PERFORMANCE GRAPH (1)(2)

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, 1993 in the Corporation's Common
Stock and in each of the foregoing indices and assumes reinvestment of
dividends, if any.

<TABLE>
<CAPTION>
S&P HIGH TECHNOLOGY
TERADYNE, INC. S&P 500 INDEX COMPOSITE INDEX
-------------- ------------- -------------------
<S> <C> <C> <C>
'1993' 100 100 100
'1994' 122.08 101.36 116.57
'1995' 191.08 139.32 167.88
'1996' 175.68 171.23 238.15
'1997' 230.83 228.27 300.31
'1998' 305.41 293.04 519.21
</TABLE>

- ---------------

(1) This graph is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Corporation under the Securities Act of 1933
or the Securities Exchange Act of 1934 whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.

(2) The stock price performance shown on the graph is not necessarily indicative
of future price performance. Information used on the graph was obtained from
Hewitt Associates, a source believed to be reliable, but the Corporation is
not responsible for any errors or omissions in such information.

17
<PAGE> 20

RATIFICATION OF SELECTION OF AUDITORS

The Board of Directors has selected the firm of PricewaterhouseCoopers LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 1999. PricewaterhouseCoopers LLP, or its predecessor
Coopers & Lybrand L.L.P., have 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 Company's proxy
materials to be furnished to all shareholders entitled to vote at the next
annual meeting of shareholders of the Corporation pursuant to Securities and
Exchange Commission ("SEC") Rule 14a-8 must be received at the Corporation's
principal executive offices not later than January 15, 2000.

Under the Company's By-Laws, shareholders who wish to make a proposal at
the 2000 annual meeting of shareholders -- other than proposals that will be
included in the Corporation's proxy materials -- must notify the Corporation not
less than 50 days nor more than 90 days prior to the meeting; provided, however,
that in the event that less than 65 days' notice or prior public disclosure of
the date of the meeting is given or made to shareholders, to be timely, notice
by the shareholder must be so received not later than the close of business on
the fifteenth day following the day on which notice of the date of the meeting
was mailed or public disclosure was made, whichever occurs first. If a
shareholder who wishes to present a proposal fails to timely notify the
Corporation, the shareholder will not be entitled to present the proposal at the
meeting. If, however, notwithstanding the requirements of the Corporation's
By-Laws, the proposal is brought before the meeting, then under the SEC's proxy
rules, the proxies solicited by management of the Corporation with respect to
the 2000 annual meeting will confer discretionary voting authority with respect
to the shareholder's proposal on the persons selected by management to vote the
proxies. If a shareholder makes a timely notification, the proxies may still
exercise discretionary voting authority under circumstances consistent with the
SEC's proxy rules.

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.

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.

18
<PAGE> 21

0559-PS-99
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[0559 - TERADYNE, INC.] [FILE NAME: TRD81A.ELX] [VERSION - 1] [3/15/99]

DETACH HERE

TRD-81A

/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 I DIRECTORS AND
FOR THE PROPOSAL IN ITEM 2.

1. To elect four members to the Board of Directors to serve for a three-year
term as Class I Directors.
Nominees: A.V. d'Arbeloff, J.W. Bagley, D.S. Gregory and V.M. O'Reilly

FOR WITHHELD

/ / / /

/ / ___________________________________________
For all nominees except as noted above

2. To ratify the selection of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP
as auditors for the fiscal / / / / / /
year ending December 31, 1999.

MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /

(Please sign exactly as your 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:_______

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PROXY

TERADYNE, INC.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS

MAY 27, 1999

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, will 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 27, 1999, at 10:00 A.M., at BankBoston, 100 Federal Street (Second
Floor), Boston, Massachusetts, and at any adjournments thereof, upon matters set
forth in the Notice of Annual Meeting of Shareholders and Proxy Statement, dated
on or about April 21, 1999, 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 REVERSED SIDE SEE REVERSE
SIDE SIDE