DEF 14A of Teradyne, Inc, Mar 29, 2024

DEF 14A of Teradyne, Inc

Filed Mar 29, 2024 · FY20230000950170-24-038544

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS The Board presently consists of nine members, eight of whom are independent directors. Each director is elected annually for a one-year term. The current terms of the directors expire at the Annual Meeting. The Board, based on the recommendation of the Nominating and Corporate Governance Committee, has nominated all current directors for re-election, other than Mr. Guertin, who is retiring from the Board effective upon the conclusion of the Annual Meeting. Teradyne has no reason to believe that any of the nominees will be unable to serve; however, if that should be the case, proxies will be voted for the election of some other person (nominated in accordance with Teradyne’s bylaws) or the Board will decrease the number of directors that currently serve on the Board. If elected, each director will hold office until the 2025 Annual Meeting of Shareholders. The Board recommends a vote FOR the election to the Board each of Mses. Johnson, Matz and van Kralingen and each of Messrs. Herweck, Maddock, Smith, Tamer, and Tufano. The following table sets forth the nominees to be elected at the Annual Meeting, the year each person was first appointed or elected, the principal occupation of that person during at least the past five years, that person’s age, any other public company boards on which the nominee serves or has served in the past five years, and the nominee’s qualifications to serve on the Board. In addition to the information presented below regarding each nominee’s specific experience, background, qualifications, attributes and skills that led the Board to the conclusion that they should serve as a director, Teradyne also believes that all of its director nominees have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to Teradyne and the Board. Additionally, Teradyne values the directors’ diversity and significant experience on other public company boards of directors and board committees.

  2. Nominees for Directors

    Nominees for Directors

  3. Nominees for Directors

    | Name | Year Became Director | Background and Qualifications | | Peter Herweck Qualifications/Skills ✔ C-Level ✔ Global Business ✔ Robotics Industry ✔ M&A ✔ Sales & Marketing ✔ Technical Product Development ✔ Legal/Regulatory Compliance and Risk Oversight ✔ ESG Oversight ✔ Cybersecurity and Information Security ✔ Climate-related Risk | 2020 | Mr. Herweck, 57, has served as Chief Executive Officer of Schneider Electric since May 2023. Prior to serving as Schneider Electric’s Chief Executive Officer, Mr. Herweck served as Chief Executive Officer of the AVEVA Group plc from May 2021 to March 2023. Prior to AVEVA Group, Mr. Herweck served as Executive Vice President of Schneider Electric’s global Industrial Automation business and on Schneider Electric’s Executive Committee from October 2016 to April 2021. Mr. Herweck has been a director of the AVEVA Group plc from March 2018 until January 2023 when it was taken private. Mr. Herweck contributes valuable executive experience within the global industrial automation industry as well as extensive knowledge of the issues affecting complex industrial automation companies. | | Mercedes Johnson Qualifications/Skills ✔ C-Level ✔ Global Business ✔ Semiconductor and Electronics Industry ✔ M&A ✔ Financial | 2014 | Ms. Johnson, 70, served as Interim Chief Financial Officer of Intersil Corporation from April 2013 to September 2013 and as the Senior Vice President and Chief Financial Officer of Avago Technologies Limited from December 2005 to August 2008. Prior to joining Avago, Ms. Johnson was Senior Vice President, Finance, of Lam Research Corporation from June 2004 to January 2005 and Chief Financial Officer of Lam from May 1997 to May 2004. Ms. Johnson has been a director of Synopsys, Inc. since February 2017, and a director of Analog Devices, Inc. since August 2021. Ms. Johnson was a |

  4. Nominees for Directors

    | Name | Year Became Director | Background and Qualifications | | ✔ Legal/Regulatory Compliance and Risk Oversight ✔ ESG Oversight | | director of Intersil Corporation from August 2005 to February 2017, a director of Micron Technology, Inc. from June 2005 to January 2019, a director of Juniper Networks, Inc. from May 2011 to May 2019, a director of Maxim Integrated Products from September 2019 until its acquisition by Analog Devices, Inc. in August 2021, and a director of Millicom International Cellular S.A. from May 2019 to May 2023. Ms. Johnson contributes valuable industry and operational experience as a former senior financial executive at semiconductor and semiconductor equipment companies as well as a current member of the boards of directors of global technology companies. | | Ernest E. Maddock Qualifications/Skills ✔ C-Level ✔ Global Business ✔ Semiconductor and Electronics Industry ✔ M&A ✔ Technical Product Development ✔ Financial ✔ Legal/Regulatory Compliance and Risk Oversight ✔ ESG Oversight | 2022 | Mr. Maddock, 65, served as Senior Vice President and Chief Financial Officer of Micron Technology, Inc. from 2015 until his retirement in 2018. Prior to that, he served as Executive Vice President and Chief Financial Officer of Riverbed Technology, Inc. from 2013 to 2015. From 1997 to 2013, Mr. Maddock served in various roles at Lam Research Corporation, culminating in the position of Chief Financial Officer from 2008 to 2013. Mr. Maddock has served on the boards of directors of Ultra Clean Holdings Inc. since June 2018, Avnet since August 2021, and Ouster, Inc. (successor following merger with Velodyne Lidar, Inc). since January 2022. Mr. Maddock previously served on the Board of Intersil Corporation from 2015 until its acquisition in 2017. Mr. Maddock contributes over 35 years of experience in the technology industry serving in operations, technology and finance roles including 10 years as a public company Chief Financial Officer. | | Marilyn Matz Qualifications/Skills ✔ C-Level ✔ Global Business ✔ Robotics Industry ✔ Sales & Marketing ✔ Technical Product Development ✔ Legal/Regulatory Compliance and Risk Oversight ✔ ESG Oversight ✔ Cybersecurity and Information Security | 2017 | Ms. Matz, 70, is a co-founder of Paradigm4, Inc. and has served as its Chief Executive Officer and Chair of the Board of Directors since December 2009. Previously, Ms. Matz was a co-founder of Cognex Corporation where she held a variety of leadership positions in engineering and business operations from March 1981 to December 2008 including her final role as Senior Vice President and Business Unit Manager of its PC Vision Products Group. Ms. Matz served on the Board of Directors for LogMeIn, Inc. from September 2014 to February 2017. Ms. Matz contributes valuable technical expertise and leadership experience from more than 40 years in automation, machine vision and software analytics related industries. | | Gregory S. Smith Qualifications/Skills ✔ C-Level ✔ Global Business ✔ Semiconductor and Electronics Industry ✔ Robotics Industry ✔ M&A ✔ Sales & Marketing ✔ Technical Product Development ✔ Legal/Regulatory Compliance and Risk Oversight ✔ ESG Oversight | 2023 | Mr. Smith, 61, is the President and Chief Executive Officer of Teradyne. Mr. Smith was the President of Robotics at Teradyne from October 2020 through July 2023. Prior to leading Robotics, Mr. Smith was the President of the Semiconductor Test Business, Teradyne’s largest operating segment, from February 2016 to October 2020. Mr. Smith began his career at Raytheon as a test engineer and held numerous engineering and management roles in the semiconductor test industry before joining Teradyne in 2006. Mr. Smith contributes valuable executive experience from his 18 years in multiple management roles, including as President and Chief Executive Officer, within Teradyne. |

  5. Nominees for Directors

    | Name | Year Became Director | Background and Qualifications | | Ford Tamer Qualifications/Skills ✔ C-Level ✔ Global Business ✔ Semiconductor and Electronics Industry ✔ M&A ✔ Sales & Marketing ✔ Technical Product Development ✔ Financial ✔ Legal/Regulatory Compliance and Risk Oversight ✔ ESG Oversight ✔ Cybersecurity and Information Security ✔ Climate-related Risk | 2021 | Mr. Tamer, 62, has served as Senior Operating Partner at Francisco Partners since October 2022. Prior to this role, Mr. Tamer served as Chief Executive Officer of Inphi Corporation from February 2012 until April 2021. Mr. Tamer served as President and Chief Executive Officer of Telegent Systems from 2010 to 2012. Prior to that time, he served as a partner of Khosla Ventures from 2007 to 2010 and Senior Vice President and General Manager of Broadcom’s Infrastructure Networking from 2002 to 2007. Mr. Tamer also was the co-founder and Chief Executive Officer of Agere, Inc., which was acquired by Lucent Microelectronics. Mr. Tamer has been a director of Marvell Technology, Inc. since April 2021. Mr. Tamer was director of Inphi Corporation from February 2012 until its acquisition by Marvell Technology, Inc. in April 2021. Mr. Tamer contributes significant executive and operational experience at global semiconductor companies as well as extensive knowledge of the issues affecting Teradyne’s customers and suppliers. | | Paul J. Tufano Qualifications/Skills ✔ C-Level ✔ Global Business ✔ Semiconductor and Electronics Industry ✔ M&A ✔ Financial ✔ Legal/Regulatory Compliance and Risk Oversight ✔ ESG Oversight | 2005 | Mr. Tufano, 70, served as President and Chief Executive Officer of Benchmark Electronics, Inc. from September 2016 to March 2019. Mr. Tufano served as the Chief Financial Officer of Alcatel-Lucent from December 2008 to September 2013 and Chief Operating Officer of Alcatel-Lucent from January 2013 to September 2013. He was Executive Vice President of Alcatel-Lucent from December 2008 to January 2013. He also served as a consultant for Alcatel-Lucent from September 2013 to April 2014. Mr. Tufano was the Executive Vice President and Chief Financial Officer of Solectron Corporation from January 2006 to October 2007 and Interim Chief Executive Officer from February 2007 to October 2007. Prior to joining Solectron, Mr. Tufano worked at Maxtor Corporation where he was President and Chief Executive Officer from February 2003 to November 2004, Executive Vice President and Chief Operating Officer from April 2001 to February 2003 and Chief Financial Officer from July 1996 to February 2003. From 1979 until he joined Maxtor Corporation in 1996, Mr. Tufano held a variety of management positions in finance and operations at International Business Machines Corporation. Mr. Tufano has been a director of EnerSys since April 2015. Mr. Tufano served on the Board of Directors of Benchmark Electronics, Inc. from February 2016 to March 2019. Mr. Tufano contributes widespread knowledge of the issues confronting complex technology and manufacturing companies and extensive financial reporting and operational expertise. | | Bridget van Kralingen Qualifications/Skills ✔ C-Level ✔ Global Business ✔ M&A ✔ Sales & Marketing ✔ Technical Product Development ✔ Financial ✔ Legal/Regulatory Compliance and Risk Oversight ✔ ESG Oversight ✔ Cybersecurity and Information Security | 2024 | Ms. van Kralingen, 60, has been a Partner at Motive Partners since November 2022. Prior to Motive Partners, she served in various leadership positions at IBM Corporation from April 2004 through December 2021, including most recently leading IBM's Global Sales and Markets Division. Before joining IBM in 2004, Ms. van Kralingen served as Managing Partner, US Financial Services with Deloitte Consulting. Ms. van Kralingen has been a director of Royal Bank of Canada since June 2011, a director of Travelers Insurance since January 2022, and a director of Discovery Limited since June 2022. Ms. van Kralingen contributes extensive global business experience as a former executive of a global technology company and has significant expertise in information technology services, international operations, and global sales and business development. |

  6. Director Compensation

    Director Compensation Teradyne uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. Every year, Compensia, the Compensation Committee’s independent compensation consulting firm, conducts an analysis of director compensation, including a review of benchmark data, and reports to the Committee any recommendations regarding director compensation. The Compensation Committee considers Compensia’s annual input as part of its annual review of director compensation. Non-employee directors’ compensation is determined by the Board at the recommendation of the Compensation Committee. Directors who are employees of Teradyne receive no compensation for their service as a director. Cash Compensation After a review of peer benchmarking data and global survey data regarding director compensation, the Compensation Committee, with input from Compensia, recommended to the Board to maintain the non-employee director compensation generally, but to and increase the cash compensation of the non-employee director chairperson effective May 12, 2023, the date of the 2023 Annual Meeting of Shareholders. In 2023, the non-employee directors were compensated at the rate of $90,000 per year. Additional fees paid to certain non-employee directors in 2023 were as follows: • The Board Chair received an additional $75,000 per year pro-rated from January 1, 2023 until May 12, 2023 and an additional $100,000 per year pro-rated from May 12, 2023 through December 31, 2023; • The Chair of the Audit Committee received an additional $30,000 per year; • The Chair of the Compensation Committee received an additional $20,000 per year; and • The Chair of the Nominating and Corporate Governance Committee received an additional $15,000 per year. The shareholder-approved 2006 Equity and Cash Compensation Incentive Plan limits the aggregate amount or value, as applicable, of total annual cash and equity compensation that may be paid or granted, as applicable, to non-employee directors to an amount not to exceed $750,000. Stock-Based Compensation Each non-employee director receives an annual equity award having a fair market value equal to $230,000 on the earlier of (i) the date of the Annual Meeting or (ii) the last Thursday in May. This annual equity award, which is delivered in the form of restricted stock units, vests in full on the earlier of (i) the first anniversary of the date of grant or (ii) the date of the following year’s Annual Meeting of Shareholders. Each new non-employee director is granted an equity award on the date first elected or appointed to the Board having a fair market value equal to $230,000, pro-rated to reflect the period between the director’s date of election or appointment and the date of the next annual board grant. This equity award, which is also delivered in the form of restricted stock units, vests in full on the date of the next annual board equity award grant. Equity awards to directors are granted under the shareholder approved 2006 Equity and Cash Compensation Incentive Plan. Director Deferral Program The non-employee directors may elect to defer receipt of their cash and/or equity awards and have the compensation notionally invested into (1) an interest-bearing account (based on ten-year Treasury note interest rates) or (2) a deferred stock unit (“DSU”) account. If a non-employee director elects to participate in this deferral program, they will receive either the cash value of the interest-bearing account or the shares of the Company’s common stock underlying the DSUs, in either case, within 90 days following the end of their board service. Director Stock Ownership Guidelines The Company maintains stock retention and stock ownership guidelines to align the interests of the non-employee directors with those of the Company’s shareholders and ensure that the directors have an ongoing financial stake in the Company’s success. Pursuant to the guidelines, the non-employee directors are expected to attain (within five years from the date of initial election or appointment to the Board) and maintain an investment level in shares of the Company’s common stock equal to five times their annual cash retainer. Shares subject to the stock ownership guidelines do not include any unvested restricted stock units. All of the non-employee directors other than Mr. Maddock, who joined the Board in 2022, and Ms. van Kralingen, who joined the Board in January 2024, met the ownership guidelines as of December 31, 2023. Director Compensation Table for 2023 The table below summarizes the compensation Teradyne paid to the non-employee directors for the fiscal year ended December 31, 2023.

  7. Director Compensation

    | Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2)(3) | Total ($) | | Edwin J. Gillis(4) | $43,846.00 | — | $43,846.00 | | Timothy E. Guertin | $110,000.00 | $230,052.90 | $340,052.90 | | Peter Herweck | $90,000.00 | $230,052.90 | $320,052.90 | | Mercedes Johnson | $109,120.88 | $230,052.90 | $339,173.78 | | Ernest E. Maddock | $90,000.00 | $230,052.90 | $320,052.90 | | Marilyn Matz | $105,000.00 | $230,052.90 | $335,052.90 | | Ford Tamer | $90,000.00 | $230,052.90 | $320,052.90 | | Paul J. Tufano | $180,934.00 | $230,052.90 | $410,986.90 |

  8. Director Compensation

    (1) The non-employee directors were compensated at the rate of $90,000 per year through December 31, 2023. Ms. Johnson received an additional $30,000 as Chair of the Audit Committee, which was prorated based on her appointment on May 12, 2023, through December 31, 2023. Mr. Guertin received an additional $20,000 as Chair of the Compensation Committee. Ms. Matz received an additional $15,000 as Chair of the Nominating and Corporate Governance Committee. For service as Chair of the Board, Mr. Tufano received an additional $75,000 per year pro-rated from January 1, 2023 until May 12, 2023, and $100,000 per year pro-rated daily from May 13, 2023 through December 31, 2023. Mr. Gillis’ fees were pro-rated daily to reflect the period between January 1, 2023 and Mr. Gillis’ retirement from the Board on May 12, 2023. Mr. Tufano elected to defer receipt of his cash fees for 2023 and have the fees invested into a DSU account. (2) The amounts reported in the “Stock Awards” column represent the grant date fair value of the annual 2023 restricted stock unit awards calculated in accordance with FASB ASC Topic 718, disregarding the effects of estimated forfeitures. For a discussion of the assumptions underlying this valuation, please see Note Q to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. (3) As of December 31, 2023, each then-serving non-employee director held 2,530 restricted stock units with an expected vesting date of May 9, 2024. As of December 31, 2023, Mr. Guertin held 59,699 DSUs, Mr. Herweck held 5,133 DSUs, and Mr. Tufano held 48,655 DSUs. Mr. Gillis retired from the Board as of May 12, 2023.

  9. Compensation Discussion and Analysis

    The Compensation Committee continues to assess the Company’s executive compensation program to ensure it remains aligned with both short-term and long-term performance. In 2023, the Company’s long-term performance criteria for performance-based restricted stock unit awards included both a relative total shareholder return metric and a cumulative PBIT metric, each measured at the end of a three-year performance period, consistent with the Company’s long-term goal to deliver profitability and superior return to shareholders. The relative total shareholder return metric is based on a comparison of the Company’s total shareholder return to the performance of the New York Stock Exchange Composite Index. After a review of peer benchmarking and global survey data and the financial performance of our peer group companies, the Compensation Committee made the following changes to our long-term performance criteria for performance-based restricted stock units for 2023: • increased the three-year cumulative target PBIT rate from 23% to 24%; • increased the PBIT rate required to achieve maximum payout from 34% to 40%; and • increased the PBIT rate threshold from 10% to 13%. The final number of shares earned for the performance-based restricted stock unit awards granted in 2023 will be determined in January 2026. With respect to the performance-based restricted stock unit awards that were eligible to be earned based on 2021-2023 performance, 89% of the target award was earned based on the Company’s performance having achieved 0% of the target for the relative total shareholder return metric and 177.64% of the target for the cumulative PBIT metric for this period. The Compensation Committee believes that the compensation of its named executive officers for 2023 is reasonable and appropriate and is aligned to, and justified by, the performance of the Company and its results against its strategic goals and is aligned with the interests of shareholders. The variance in compensation of the named executive officers year over year demonstrates the alignment between pay and performance. The actual performance-based variable cash compensation paid to the named executive officers from 2016 to 2023 has varied from 69% to 185% of target depending on the strength of Company's financial and operational performance as compared to performance goals in the applicable year. For example, in 2022, despite the Company’s second highest revenue in its history, the named executive officers received below target variable cash compensation payouts between 89% and 99% of target. These payouts resulted from the Compensation Committee setting challenging performance targets that were meaningfully higher than the prior year and revenue results declining 15% from record 2021 results. As discussed above, again in 2023, the named executive officers received below target variable cash compensation payouts with a range between 69% and 85% of target. While this variance in compensation demonstrates that the program effectively rewards the executive officers when there is superior performance by the Company and appropriately adjusts compensation downward in the case of less-than-superior performance, the Compensation Committee continues to review the executive compensation program and its mix of short- and long-term incentives to ensure it reflects the correct balance between short-term financial performance and long-term shareholder return. The Committee also continues to establish challenging performance metrics reflecting the Company’s business objectives and strategy. The Compensation Committee regularly reviews the Company’s policies and practices related to compensation and governance, as set forth below: • Executive officer stock ownership guidelines requiring significant ownership; • Appropriate balance between short-term and long-term compensation to discourage short-term risk taking at the expense of long-term results; Multiple performance objectives used in the determination of variable cash compensation and performance-based stock awards; Engagement of an independent compensation consultant to advise the Compensation Committee on executive compensation matters; • Executive officers’ change-in-control agreements contain a double trigger for acceleration of equity awards requiring a qualifying termination following a change-in-control; • Recoupment of erroneously-paid incentive compensation from executives resulting from financial restatements; • Policy prohibiting executives from pledging Teradyne common stock; and • Policy prohibiting executives from hedging Teradyne stock (through short selling or the use of financial instruments such as exchange funds, equity swaps, puts, calls, collars or other derivative instruments). Executive Compensation Objectives The objective of the executive compensation program is to provide a competitive level of compensation that: 1) aligns the interests of the executive officers with the Company’s shareholders; 2) links executive officer compensation closely to corporate performance; 3) motivates the executive officers to achieve the Company’s short-term and long-term operating and financial goals without encouraging excessive or inappropriate risk taking; 4) encourages competitive excellence of the Company’s products and services; and 5) assists in attracting and retaining qualified executive officers. In setting compensation levels for the executive officers (or in the case of the Chief Executive Officer, in making recommendations about such levels to the independent members of the Board), the Compensation Committee takes into account such factors as internal equity, competitive market data (drawn from peer company and survey information described below), other benefits provided, individual and corporate performance and the general and industry-specific business environment, as well as the roles and responsibilities of each executive officer. Role of the Compensation Committee The Compensation Committee’s role is to fulfill certain responsibilities of the Board relating to compensation for the Company’s executive officers, and to review and oversee the administration of equity-based incentives, profit sharing, deferred compensation, retirement and pension plans, and other compensatory plans. The Compensation Committee recommends to the independent members of the Board all aspects of the Chief Executive Officer’s compensation and is also responsible for approving all aspects of the other executive officers’ compensation. The Compensation Committee has the authority to select, retain and terminate compensation consultants, independent counsel and such other advisors as it determines to be necessary to carry out its responsibilities and to approve the fees and other terms of retention of any such advisors. In 2023, as in prior years, it engaged the independent compensation consulting firm Compensia as its compensation consultant. Role of Executive Officers in Determining Executive Pay The Chief Executive Officer makes individual compensation recommendations for the other executive officers to the Compensation Committee for its review and consideration. The Compensation Committee’s compensation consultant and members of the Company’s Human Resources department provide competitive market information to the Compensation Committee for comparative purposes. The executive officers do not determine any element of their own compensation or their total compensation amount. Competitive Positioning To ensure its compensation is competitive, the Company makes extensive use of comparative data for its worldwide employee programs and its executive officer compensation. This includes data gathered from surveys, the Compensation Committee’s compensation consultant and public filings.

  10. Compensation Discussion and Analysis

    For purposes of determining 2023 compensation, the Compensation Committee asked Compensia to develop a competitive analysis of Teradyne’s peer companies, to analyze executive pay packages and to advise on the relationship of the Company’s short-term and long-term performance incentives to total compensation. In October 2022, Compensia recommended to the Compensation Committee a peer group that reflects organizations of comparable size (revenue and market capitalization) and operations (product type and geographic scope) to Teradyne and that provides an appropriate sample size for comparisons. The Compensation Committee reviewed and approved a peer group that included the 17 companies listed below:

  11. Compensation Discussion and Analysis

    At the time the peer group was approved, Teradyne was below the median of the peer group in terms of revenue (27th percentile), and below the median of the peer group in terms of market capitalization (19th percentile). For fiscal year 2024, the Compensation Committee revised our peer group to: (1) exclude Analog Devices, Inc. to more closely align the peer group with Teradyne’s business profile, and (2) add Fortive as its revenue and market capitalization were more appropriate for purposes of comparison with Teradyne’s business profile and otherwise met the criteria required for inclusion in the peer group. The Compensation Committee supplemented the peer group data with data from the Radford Global Survey. From this survey, the Company used reported data for its peer group companies as well as all technology companies with industry and financial characteristics generally aligned with our peers and with annual revenues between $1.1 billion and $11.1 billion and market capitalizations between $5.0 billion and $83.2 billion. Executive Compensation Program The Board has implemented an executive compensation program that fosters a performance-oriented environment by tying a significant portion of each executive officer’s cash and equity compensation to the achievement of short-term and long-term performance targets that are important to the Company and its shareholders. This approach is designed to focus the executive officers on creating shareholder value over the long term and on delivering exceptional performance throughout fluctuations in business cycles. The following charts illustrate performance-based target compensation for the Chief Executive Officer and the other named executive officers (as a group) as a percentage of total target compensation for 2023. For purposes of the charts, performance-based restricted stock units are valued based on target.

  12. Compensation Discussion and Analysis

    Target Cash Compensation Target cash compensation includes base salary and performance-based variable cash compensation measured at target. Base salary is designed to attract and retain talented executives and to provide a stable source of income. Variable cash compensation links the executive officers’ additional cash compensation to the Company’s annual financial and strategic performance objectives and motivates the executive officers to achieve Teradyne’s financial, operating, and growth goals that are designed to align with shareholder interests. Each January, the Compensation Committee sets target cash compensation for each executive officer, other than the Chief Executive Officer. The independent members of the Board set the target cash compensation for the Chief Executive Officer. The goal for such target cash compensation for each executive officer is that it should be competitive with that of individuals holding similar roles and responsibilities as reflected by the peer group and global survey data. The Committee and the Board also consider the performance of the Company relative to its peers, individual executive officer performance, the role and responsibilities of the executive officer, and other benefits available to the executive officers, including Teradyne’s Cash Profit Sharing Plan. Additionally, each January, the Compensation Committee establishes the specific performance measures and formulas for the year’s variable cash compensation program. The performance-based variable cash compensation goals are based on: (1) a baseline formula for non-GAAP profit rate before interest and taxes, or PBIT, percentage; (2) a two-year rolling revenue growth rate; and (3) measurable operating and strategic goals. PBIT is a non-GAAP financial measure equal to GAAP income from operations excluding restructuring and other; amortization of acquired intangible assets; acquisition and divestiture related charges or credits; pension actuarial gains and losses; non-cash convertible debt interest expense; and certain other gains and charges. This PBIT metric used by the Compensation Committee in the variable cash compensation calculation is the same as the PBIT metric reported by the Company in the financial statements accompanying its quarterly earnings releases. The performance-based variable cash compensation, depending on the named executive officer, is determined by a formula comprised of either company-wide or divisional PBIT percentage, company-wide or divisional revenue growth, and the performance against key operating, financial and strategic goals by the Company’s business divisions. For 2023, the PBIT metric contributes 30% toward the target variable cash compensation payout, with the revenue growth metric contributing 30% and the operating, financial and strategic goals contributing 40%. The maximum payout under this program is 200% of target. In establishing the performance target levels for the financial performance measures, the Compensation Committee sets the PBIT rate and the revenue growth rate at a level it believes to be appropriate for the businesses in which the Company operates, and sets other operating and strategic goals based on the specific objectives of the Company for the year. These operating and strategic goals, the achievement of which we believe will positively impact the Company's long-term performance, may include strategic customer wins, market share gains, gross margin and profitability goals, new product introductions, engineering project milestones, employee retention, cost controls and growth targets. Teradyne is not disclosing the specific performance target levels for these goals in this Compensation Discussion and Analysis section because they represent confidential, commercially sensitive information that Teradyne does not disclose to the public and it believes, if disclosed, would cause competitive harm. The target levels for such performance measures, such as product development, market share, new product introductions and margin goals for new and existing products, are inherently competitive and, if disclosed, would provide valuable insight into specific customers, markets and areas where Teradyne is focusing. The Compensation Committee sets operating, financial and strategic goals for the variable cash compensation program to align executive compensation with both the Company’s short-term financial and operating strategy and its long-term profitable growth strategy. In developing the variable cash compensation program, the Compensation Committee takes into account that these goals are difficult to achieve because they are heavily contingent upon multiple factors, including technological innovations, customer demand and the actions of competitors. The target levels for the measures to improve competitive positioning are challenging due to the strong competition within the Company’s markets, while technical and engineering innovations make product development goals difficult to achieve in a fixed time frame. Following the close of each fiscal year, management reviews the performance of the Company against each pre-established goal and prepares a calculation of the variable cash payout based on the review. The performance review and calculation are then presented to the Compensation Committee for its review. Based on the financial performance of the divisions or the Company as a whole, as applicable, and the performance against the operating and strategic goals, the variable cash compensation then is determined by the independent members of the Board for the Chief Executive Officer and by the Compensation Committee for the other named executive officers. Equity Compensation Equity compensation is designed to align executive compensation with shareholder return, motivate longer-term Company performance, and attract, retain and reward talented individuals. Teradyne’s equity compensation program provides three types of equity incentives: (1) time-based restricted stock unit awards that vest in equal installments annually over four years conditioned upon continued service, which support the Company’s employee retention efforts; (2) performance-based restricted stock unit awards, split equally between awards that vest based on the achievement of relative total shareholder return and cumulative PBIT percentage, in each case, measured at the end of a three-year performance period; and (3) stock options granted with an exercise price equal to the closing price of a share of Teradyne common stock on the date of grant, which vest in equal installments annually over four years conditioned upon continued service, where executives only benefit if the Company’s stock price appreciates. Equity awards are made under the shareholder-approved 2006 Equity and Cash Compensation Incentive Plan. The grant date value of awards granted to the named executive officers is based upon peer group data provided by Compensia, global survey data, and each executive’s relative contribution, performance and responsibility within the organization. The Compensation Committee assesses these factors each year for each executive officer.

  13. Compensation Discussion and Analysis

    At the beginning of each year, the Compensation Committee approves an overall annual equity budget to be used for awards to executive officers, directors and employees, including new hires. Various factors are used in determining the annual equity award budget, including the total projected compensation expense to be incurred as a result of the equity awards, “overhang” from previously issued and outstanding awards, burn rates and competitive market data from the peer group, global survey data, and compensation surveys. The independent members of the Board determine the award types and grant date value for the Chief Executive Officer and the Compensation Committee determines the award types and grant date value for each other executive officer. Management approves equity awards for all other employees within the overall equity budget pursuant to a delegation of authority from the Compensation Committee. The equity awards granted to the executive officers are made in January in order to align the evaluation of each named executive officer’s performance and the resulting award of the equity compensation with the end of the fiscal year. Stock options are granted with an exercise price equal to the closing price of the Company's stock on the date of grant, as provided by the terms of the shareholder-approved 2006 Equity and Cash Compensation Incentive Plan. No employee equity awards are granted during blackout periods, except for new hire grants. New hire grants are automatically issued on the first trading day of the month following the employee’s start date, in accordance with guidelines approved by the Compensation Committee. Retirement Benefits Retirement benefits are designed to attract and retain talented employees and reward long-term service to the Company. Retirement benefits provide a long-term savings opportunity for employees on a tax-efficient basis. In the U.S., the Company maintains the Teradyne, Inc. Savings Plan (the “401k Plan”), which is available to all employees and provides a discretionary employer matching contribution, and a non-qualified retirement plan, the Teradyne, Inc. Supplemental Savings Plan (the “Supplemental Savings Plan”), for certain employees whose benefits would otherwise be capped based on restrictions imposed by the Internal Revenue Service. Executive officers may participate in the 401k Plan on the same terms as those available for other eligible U.S. employees. For 2023, the Company matched $1 for every $1 contributed by the employee to the 401k Plan and Supplemental Savings Plan up to 4% of the employee’s compensation (subject to Internal Revenue Service limits in the case of the 401k Plan) for employees not accruing benefits in the Retirement Plan or SERP (each as defined below), with no match for employees accruing benefits in the Retirement Plan or SERP. For additional information regarding the Supplemental Savings Plan, see the Nonqualified Deferred Compensation Table. Teradyne also provides a separate defined benefit retirement plan, the Retirement Plan for Employees of Teradyne, Inc. (the “Retirement Plan”), and a non-qualified defined benefit Supplemental Executive Retirement Plan (“SERP”) for certain senior employees. In 1999, the Retirement Plan was closed to new employees, but participating employees were given the option to elect to continue to participate in the plan or to opt out of such participation in order to receive a higher employer match in the 401k Plan. Commencing in 2009, employees who continued to participate in the Retirement Plan receive no employer match in the 401k Plan. No named executive officer is currently accruing benefits under the Retirement Plan, but Mr. Jagiela participated in this plan prior to 1999. No named executive officer is currently accruing benefits under the SERP. For additional information, see the Pension Benefits Table. The Company provides certain other benefits to its retirees. Based on age and service, Mr. Smith and Mr. Burns qualify and, upon their respective retirements, Messrs. Jagiela and Gray qualified, for these broad-based employee benefits. These benefits include eligibility to receive a pro-rated amount of variable cash compensation through the date of his retirement and eligibility to continue in the Company’s health, dental and vision programs. In addition, if a named executive officer retires after at least ten years of service and having reached the age of sixty, then (a) one hundred percent of the shares subject to performance-based RSUs awarded more than 365 days prior to the date of termination of employment will vest on the third anniversary of the date of grant, after the Compensation Committee has determined the number of shares underlying the performance-based RSU grant, if any, that are earned at the end of the three-year performance period and (b) a pro-rata portion of the shares subject to performance-based RSUs awarded less than 365 days prior to the date of termination of employment (based on the number of days the named executive officer was employed by the Company during the 365 day period) will vest on the third anniversary of the date of grant, after the Compensation Committee determines the number of shares underlying the performance-based RSU grant, if any, that are earned at the end of the three-year performance period. Pursuant to an Executive Retirement Policy adopted by the Board in January 2024 (the “Executive Retirement Policy”), if a named executive officer retires after reaching the age of sixty-five and has at least ten years of service to the Company, then (a) unvested time-based RSUs and unvested stock options granted prior to a named executive officer’s retirement will continue to vest and (b) any vested stock options as of the applicable retirement date or stock options that become vested pursuant to the Executive Retirement Policy may be exercised for the remainder of the generally applicable term of such option, which in all cases is no later than seven (7) years from the date of grant of such options. Only a pro-rata portion of any time-based RSU award or stock option award granted less than 365 days prior to the executive officer’s last day of employment (based on the number of days the named executive officer was employed by the Company during the 365-day period) will continue to vest pursuant to the Executive Retirement Policy. Continued vesting of time-based RSUs and stock options following retirement is subject to the named executive officer’s continued compliance with any post-employment obligations to Teradyne, including a non-competition period. The Compensation Committee considers the expense of the executive officers’ retirement benefits in determining their overall compensation. Chief Executive Officer Severance Agreement

  14. Compensation Discussion and Analysis

    Shares subject to the stock ownership guidelines do not include any unvested grants of restricted stock units (including any unearned performance-based RSUs), any vested but unexercised stock options or any pledged Company stock. The Company maintains a policy prohibiting executives and directors from pledging Teradyne stock. During 2023, the executive officers complied with the stock ownership guidelines, and at year end, all named executive officers were at or above the stock ownership guideline investment levels, except for Mr. Burns who has until October 2025 to meet the ownership guidelines, and Mr. Kumar who has until August 2028 to meet the ownership guidelines. Compensation Recoupment Policy The Company has a compensation recoupment policy applicable to all executive officers that complies with Nasdaq listing standards. Impact of Accounting and Tax Treatment on Executive Compensation As a result of federal tax legislation enacted in December 2017, compensation paid to certain of the Company’s executive officers in excess of $1 million per person per year will not be deductible unless it qualifies for transition relief applicable to certain compensation arrangements in place as of November 2, 2017 and not later materially modified. The Compensation Committee believes that the interests of the Company’s stockholders are best served if the Compensation Committee continues to retain flexibility and discretion to approve and amend compensation plans, agreements and arrangements to support our corporate objectives, even if a plan, agreement or arrangement does not qualify for full or partial tax deductibility and even if an amendment results in a loss or limitation of tax deductibility. The Compensation Committee currently expects (consistent with its executive compensation philosophy) to structure the Company’s executive compensation programs such that a significant portion of executive compensation is linked to the performance of Teradyne. The Compensation Committee also takes into consideration the accounting treatment of the different forms of awards it may grant to executive officers. 2023 Executive Compensation In January 2023, the Compensation Committee reviewed the performance of the named executive officers during 2022 and conducted its annual assessment of executive compensation. In addition to the executive officer’s performance during 2022, the Compensation Committee considered peer group data provided by Compensia, its independent executive compensation consultant, as well as global survey data in setting executive compensation for 2023. 2023 Target Cash Compensation To align cash compensation with the competitive market, the Compensation Committee, and the independent members of the Board in the case of the Chief Executive Officer, approved increases in the 2023 base salaries and target cash compensation for certain of the named executive officers. The 2022 and 2023 base salaries and target cash compensation for the named executive officers are set forth below:

  15. Compensation Discussion and Analysis

    | | 2022 | | | 2023 | | | | | Base Salary | Target Bonus | Target Total Cash Comp | Base Salary | Target Bonus | Target Total Cash Comp | | Gregory S. Smith (1) | $645,000 | $750,000 | $1,395,000 | $850,000 | $1,062,500 | $1,912,500 | | Sanjay Mehta | 565,000 | 452,000 | 1,017,000 | 600,000 | 480,000 | 1,080,000 | | Charles J. Gray | 425,000 | 318,750 | 743,750 | 450,000 | 337,500 | 787,500 | | Richard J. Burns (2) | 400,000 | 320,000 | 720,000 | 500,000 | 400,000 | 900,000 | | Ujjwal Kumar (3) | — | — | — | 550,000 | 550,000 | 1,100,000 | | Mark E. Jagiela | 1,000,000 | 1,200,000 | 2,200,000 | 1,000,000 | 1,200,000 | 2,200,000 |

  16. Compensation Discussion and Analysis

    (1) The amounts listed in the “Base Salary” and “Target Bonus” columns in 2022 for Mr. Smith is an average of his base salary and target bonus for the year as his compensation was increased in July 2022 upon his promotion to President, as presented in detail below. (2) The amounts listed in the “Base Salary” and “Target Bonus” columns in 2023 for Mr. Burns are an average of his base salary and target bonus for the year as his compensation was increased in July 2023. Mr. Kumar's actual bonus and actual total cash received for 2023 was prorated based on the number of days that we was employed by the Company during the year. Following base salary and target bonus increases in 2022 in connection with his promotion to President, Mr. Smith's base salary and target bonus were further increased in 2023 by the independent members of the Board in connection with his promotion to chief executive officer. Mr. Smith's base salary was increased by an additional 13.3% to $850,000 and his performance-based variable cash target increased from 100% to 125% of his annual base salary, in each case effective February 1, 2023. The Compensation Committee also increased the base salaries of Messrs. Mehta, Gray, and Burns in January 2023 by 6.2%, 5.9%, and 25.0%, respectively. The Compensation Committee retained Messrs. Mehta’s, Gray’s, and Burns’ performance-based variable cash compensation targets at 80%, 75% and 80% respectively, of their annual base salaries. The Compensation Committee did not increase Mr. Jagiela’s base salary or his performance-based variable cash compensation for 2023 based on his pending retirement as of January 31, 2023. In determining base salaries for 2023, the Compensation Committee considered peer group data supplemented by data from the Radford Global Survey as detailed above. The performance measures for the 2023 variable cash compensation program reflected the following: 1) a target of 24% PBIT measured as a percentage of annual revenue; 2) a target of 15% two-year rolling revenue growth rate measured annually; and 3) performance against key operating and strategic goals by each business division. For 2023, the PBIT metric contributes 30% toward the target variable cash compensation payout, the revenue growth metric contributes 30% and the strategic goals contribute 40%. Achievement of a PBIT rate above 24% and of a revenue growth rate above 15% were necessary to result in payments above target for those metrics. Achievement of a 40% PBIT rate and a 35% revenue growth rate would have resulted in a maximum payout of 200% of target for those metrics. The operating and strategic goals for 2023 included market share gains, profit margin and gross margin targets, revenue and bookings targets, customer design-ins, employee retention and product development milestones in the Company’s various business units. The Compensation Committee believes these business and financial objectives effectively balance short-term profitability with long-term investment and growth. The maximum variable cash compensation payout for each named executive officer remained at 200% of the target amount for 2023. The PBIT and revenue growth metrics for the variable cash compensation program are illustrated below:

  17. Compensation Discussion and Analysis

    The variable cash compensation formula for awards granted to Messrs. Smith, Mehta, and Gray for 2023 was calculated by measuring total Company performance: Company-wide profit against the 24% target, Company-wide two-year rolling revenue growth rate against the 15% target, and a weighted averaging formula, based on division revenue, of the performance of all divisions against the division’s specific operating and strategic goals. The variable cash compensation formula for the award granted to Mr. Burns for 2023 was divided equally between (1) the performance of the Semiconductor Test Division and (2) total Company performance. The variable cash compensation formula for the award granted to Mr. Kumar for 2023 was divided equally between (1) the performance of the business units within Robotics, weighted by revenue, and (2) total Company performance. In January 2024, the Compensation Committee reviewed the Company’s performance against its 2023 performance-based variable cash compensation targets. Once the overall performance of the Company and the performance of each of the divisions were measured against the PBIT target, two-year revenue growth target, and divisional goals, the payout for the named executive officers was calculated. For 2023, the payout for the PBIT metric was just below target based on the Company’s PBIT rate of 20.4%, the payout for the two-year rolling revenue growth rate metric was below the 0% threshold based on a two-year rolling revenue growth rate of negative 14.98%, and the payout on the strategic goals was below target based on the realized achievement of certain divisional goals. These results led to a total Company performance in 2023 of 69% of target while the performance for the Semiconductor Test business was 87% of target and the performance within Robotics was 36% of target. Based on the total performance of the Company, the Compensation Committee, and in the case of the Chief Executive Officer, the independent members of the Board, approved for 2023 a payout of 69% of target variable cash compensation for Messrs. Smith, Mehta and Gray. Mr. Burns' and Mr. Kumar's variable cash compensation is fifty-percent (50%) based on total company performance and fifty-percent (50%) based on the performance of their respective business unit. As a result, based on total performance of the Company in 2023 of 69% of target and performance of the Semiconductor Test business in 2023 of 87% of target, the Compensation Committee approved a payout of 78% of target variable cash compensation for Mr. Burns. Total performance of the Company in 2023 of 69% of target combined with Robotics business unit performance in 2023 of 36% of target would have resulted in a variable cash compensation payout for Mr. Kumar of 52% of target; however, the Compensation Committee approved a payout at target for the fifty-percent (50%) portion of the variable cash compensation that is based on Robotics performance given Mr. Kumar joined the Company in the second half of 2023, during such time Robotics performance improved. This led to a payout of 85% of target variable cash compensation for Mr. Kumar.. The payout amounts of 2023 performance-based variable cash compensation for each named executive officer can be found under the column “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table. 2023 Equity Awards In January 2023, the Compensation Committee, and, in the case of the Chief Executive Officer, the independent members of the Board, approved the 2023 equity awards for the named executive officers. The Compensation Committee and the independent members of the Board continued to award equity in 2023 in the form of (i) performance-based restricted stock units (“RSUs”) making up 60% of the total grant date fair value of the awards, (ii) time-based RSUs making up 30% of the total grant date fair value of the awards, and (iii) non-qualified stock options making up 10% of the total grant date fair value of the awards. For the 2023 performance-based RSUs, the Compensation Committee approved performance metrics split equally between (1) a relative total shareholder return (“TSR”) formula measured at the end of a three-year performance period (using a 45-day price averaging method at both the beginning and the end of the performance period, which will be December 31, 2025) and (2) a three-year cumulative PBIT rate for the period from January 1, 2023 to December 31, 2025. Fifty percent (50%) of the performance-based RSUs (at target) are eligible to be earned and to vest based on the Company’s relative TSR performance and the remaining fifty percent (50%) of such awards (at target) are eligible to be earned and to vest based on the Company's cumulative PBIT rate. The Compensation Committee equally weighted these performance metrics to be consistent with the Company’s long-term goal to deliver profitability and superior return to shareholders. The TSR-based metric aligns the interests of executive officers with the interests of shareholders and provides a significant incentive for the executive officers to focus on increasing long-term shareholder value, while the PBIT-based metric provides an incentive to maintain a high level of profitability over the long term. For the TSR-based metric, Teradyne’s TSR performance is measured against the New York Stock Exchange Composite Index (ticker symbol: NYA) (the “NYA Index”) which consists of over 2,000 companies listed on the New York Stock Exchange. The NYA Index represents a broad, diverse group of high-quality investment alternatives to the Company’s common stock. The Compensation Committee has concluded that the diverse NYA Index is an appropriate benchmark for Teradyne. Teradyne’s TSR percentage point gain minus that of the NYA Index at the end of the three-year period will determine the number of performance-based RSUs that are earned based on the TSR-based performance metric. Payment from 0% to 200% of the target number of performance-based RSUs subject to the TSR performance metric can be earned based on the Company's TSR underperforming or exceeding the NYA Index’s three-year return. For the PBIT-based metric, the three-year cumulative target PBIT rate is 24%, the threshold PBIT rate required to trigger a payout is 13%, and the PBIT rate required to achieve maximum payout is 40%. Payment from 0% to 200% of the target number of performance-based RSUs subject to the cumulative three-year PBIT rate can be earned based on Company performance with respect to this metric. The number of performance-based RSUs that may be paid out based on relative TSR performance and PBIT rate are each illustrated below:

  18. Compensation Discussion and Analysis

    The final number of performance-based RSUs earned will be determined by the Compensation Committee and the independent members of the Board, as applicable, upon the completion of the three-year performance period. All of the performance-based RSUs earned will vest at the end of the three-year performance period. No performance-based RSUs will vest if the named executive officer is no longer an employee at the end of the three-year period, except that if the named executive officer’s employment ends prior to such time due to death or retirement or termination other than for cause after attaining both at least age sixty and at least ten years of service, then (a) 100% of the shares earned under the performance-based RSUs awarded more than 365 days prior to the last day of employment and (b) a pro-rata portion of the shares earned under the performance-based RSUs awarded less than 365 days prior to the last day of employment (based on the number of days the named executive officer was employed by the Company during the 365-day period) will vest, in each case, on the third anniversary of the date of grant, after the Compensation Committee and the independent members of the Board, as applicable, determine the final number of the performance-based RSUs earned, if any, with respect to the relevant three-year performance period. Continued vesting following retirement or termination, other than for cause, is subject to the named executive officer’s continued compliance with any post-employment obligations to Teradyne. Pursuant to an Executive Retirement Policy adopted by the Board in January 2024, unvested time-based RSUs and unvested stock options granted prior to a named executive officer’s retirement will continue to vest if, as of the effective date of the named executive officer’s retirement, the named executive officer is at least age sixty-five and has at least ten years of service to the Company. Additionally, any vested stock options as of the applicable retirement date or stock options that become vested pursuant to the Executive Retirement Policy may be exercised for the remainder of the generally applicable term of such option, which in all cases is no later than seven (7) years from the respective dates of grant. Only a pro-rata portion of any time-based RSU award or stock option award granted less than 365 days prior to the last day of employment (based on the number of days the named executive officer was employed by the Company during the 365-day period) will continue to vest pursuant to the Executive Retirement Policy. Continued vesting of time-based RSUs and stock options following retirement is subject to the named executive officer’s continued compliance with any post-employment obligations to Teradyne, including a non-competition period. To maintain a competitive equity compensation level relative to the market, the 2023 equity award values at target for certain of the named executive officers were increased from the 2022 equity award values at target. Mr. Smith’s 2023 equity award increased 400% in connection with his promotion to chief executive officer on February 1, 2023, and the awards for Messrs. Mehta, Gray, and Burns were increased 44%, 5%, and 36% (in each case, for purposes of restricted stock units, value is based on the stock price on the date of grant), respectively. In setting the 2023 equity award levels, the Compensation Committee considered benchmarking data against our peer group and generally aims for the fiftieth-percentile when setting the final values. Mr. Kumar received an initial equity award in August 2023 in connection with his appointment as President of Robotics. The specific number of RSUs was calculated based upon the closing market price of the Company’s common stock on the grant date (with performance-based awards determined based on target performance) and the specific number of options was calculated based upon the Black-Scholes grant date fair value. The table below sets forth the grant date equity values of the 2023 time-based RSUs, performance-based RSUs and stock options for each named executive officer.

  19. Compensation Discussion and Analysis

    | Name of Executive Officer | Number of Time-based RSUs (#) | Number of Performance-based RSUs at Target (#) | Number of Stock Options (#) | Value of Time-based RSUs ($) | Value of Performance-based RSUs at Target (1) ($) | Value of Stock Options ($) | Total Equity Value ($) | | Gregory S. Smith | 21,752 | 43,504 | 18,338 | 2,227,622 | 5,217,652 | 750,024 | 8,195,298 | | Sanjay Mehta | 10,441 | 20,882 | 8,802 | 1,069,263 | 2,504,482 | 360,002 | 3,933,747 | | Charles J. Gray | 3,046 | 6,091 | 2,568 | 311,941 | 730,507 | 105,031 | 1,147,479 | | Richard J. Burns | 4,931 | 9,861 | 4,157 | 504,984 | 1,182,661 | 170,021 | 1,857,666 | | Ujjwal Kumar | 8,947 | 8,901 | 3,705 | 995,175 | 990,058 | 165,021 | 2,150,254 | | Mark E. Jagiela | — | — | — | — | — | — | — |

  20. Compensation Discussion and Analysis

    (1) The values shown for the performance-based RSUs are based on (i) the stochastic “Monte Carlo” simulation method for 50% of the performance-based RSUs with a three-year TSR performance metric and (ii) the stock price on the date of grant for 50% of the performance-based RSUs with a three-year PBIT rate metric. However, the Compensation Committee decided to continue to use the stock price on the date of grant methodology as its calculation of the value of the awards for purposes of comparison with the equity values for peer companies and with prior year equity values for the named executive officers. The methodology used by the Compensation Committee creates a 33% lower valuation for the performance-based RSUs with a three-year TSR target and a 10% lower valuation for all equity. The grant date for the 2023 equity awards approved by the Compensation Committee or the independent members of the Board, as applicable, for all named executive officers other than Mr. Kumar was January 27, 2023. The grant date of Mr. Kumar’s equity awards was August 1, 2023 in connection with his appointment as President of Robotics. The 2023 time-based RSUs for all employees, including named executive officers, vest in equal installments annually over four years, commencing on the first anniversary of the grant date. The performance-based RSUs, including for Mr. Kumar, vest on the third anniversary of the January 27, 2023 grant date, with (1) half of the performance-based RSUs eligible to vest based upon the determination of Teradyne’s TSR performance relative to the NYA Index and (2) half of the performance-based RSUs eligible to vest based on three-year cumulative PBIT, in each case, as described above. The stock option grants vest in equal installments annually over four years, commencing on the first anniversary of the grant date, and have a term of seven years from the date of grant. The number of equity awards granted to each named executive officer is disclosed in the Grants of Plan-Based Awards Table and the value of the performance-based RSUs granted for each named executive officer assuming the highest level of performance conditions is achieved is disclosed in the footnotes to the column “Stock Awards” in the Summary Compensation Table. 2024 Determination of Performance Achievement for 2021 Performance-Based RSU Grant In January 2024, the Compensation Committee reviewed performance against the 2021 performance-based RSU targets: (1) a TSR formula measured against the NYA Index at the end of the three-year performance period ending on December 31, 2023 (using a 45-day price averaging method at both the beginning and the end of the three-year performance period); and (2) a three-year cumulative PBIT rate. For the performance-based RSUs granted in 2021, Teradyne’s relative total shareholder return performance (negative 21.72%) was measured against the NYA Index (11.32%) during the three-year performance period from January 1, 2021 to December 31, 2023. The three-year cumulative target PBIT rate for the performance-based RSUs granted in 2021 was 20%, the PBIT rate required to achieve maximum payout was 30%, and the actual PBIT rate for the three-year period from January 29, 2021 to December 31, 2023 was 27.8%. On this basis, the Compensation Committee approved the number of the 2021 performance-based RSUs based on the TSR formula at 0% of target and the number of performance-based RSUs based on the three-year cumulative PBIT rate at 177.64% of target. These performance-based RSUs vested on January 29, 2024.

  21. Executive Compensation Tables

    | Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(7) | Total ($) | | Gregory S. Smith | 2023 | $850,000 | $317,685 | $7,445,275 | $750,024 | $733,125 | $— | $14,328 | $10,110,437 | | President and | 2022 | $645,000 | $186,075 | $1,296,282 | $150,032 | $667,500 | $— | $13,328 | $2,958,217 | | Chief Executive Officer | 2021 | $500,000 | $— | $1,109,727 | $120,011 | $668,000 | $— | $12,728 | $2,410,466 | | Sanjay Mehta | 2023 | $600,000 | $179,399 | $3,573,745 | $360,002 | $331,200 | $— | $23,559 | $5,067,905 | | Vice President, Chief | 2022 | $565,000 | $268,132 | $2,160,368 | $250,015 | $415,840 | $— | $28,616 | $3,687,971 | | Financial Officer & Treasurer | 2021 | $525,000 | $356,652 | $1,664,478 | $180,035 | $764,400 | $— | $62,073 | $3,552,638 | | Charles J. Gray | 2023 | $450,000 | $130,812 | $1,042,447 | $105,031 | $232,875 | $— | $14,328 | $1,975,493 | | Vice President, General | 2022 | $425,000 | $196,090 | $864,187 | $100,022 | $293,250 | $— | $13,328 | $1,891,877 | | Counsel and Secretary | 2021 | $400,000 | $264,187 | $924,693 | $100,028 | $546,000 | $— | $12,728 | $2,247,636 | | Richard J. Burns | 2023 | $500,000 | $149,811 | $1,687,645 | $170,021 | $343,200 | $— | $39,777 | $2,890,454 | | President, Semiconductor | 2022 | $400,000 | $189,828 | $1,080,235 | $125,027 | $316,800 | $— | $13,328 | $2,125,218 | | Test | 2021 | $327,148 | $222,244 | $548,987 | $— | $478,945 | $— | $12,597 | $1,565,934 | | Ujjwal Kumar | 2023 | $113,607 | $— | $1,985,233 | $165,021 | $233,750 | $— | $159,475 | $2,657,086 | | President, Robotics | 2022 | $— | $— | $— | $— | $— | $— | $— | $— | | | 2021 | $— | $— | $— | $— | $— | $— | $— | $— | | Mark E. Jagiela | 2023 | $85,541 | $— | $3,297,232 | $2,501,052 | $— | $308,110 | $66,498 | $6,258,433 | | Former President and Former | 2022 | $1,000,000 | $580,030 | $6,999,301 | $810,004 | $1,104,000 | $— | $107,914 | $10,601,249 | | Chief Executive Officer | 2021 | $975,000 | $809,544 | $6,287,870 | $680,028 | $2,129,400 | $— | $72,871 | $10,954,713 |

  22. Retirement and Post-Employment Tables

    | Year | Summary Compensation Table Total for PEO 1¹ ($) | Compensation Actually Paid to PEO 1¹˒²˒³ ($) | Summary Compensation Table Total for PEO 21 ($) | Compensation Actually Paid to PEO 21,2,3 ($) | Average Summary Compensation Table Total for Non-PEO NEOs1 ($) | Average Compensation Actually Paid to Non-PEO NEOs1,2,3 ($) | Value of Initial Fixed $100 Investment based on:4 | | Net Income | PBIT⁵ | | | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) | ($ Millions) | | | (a) | (b) | (c) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 6,258,433 | 3,226,601 | 10,110,437 | 10,526,155 | 3,180,514 | 3,464,712 | 161.87 | 256.87 | 448.8 | 20.00% | | 2022 | 10,601,249 | -16,408,806 | — | — | 2,665,821 | -1,673,638 | 129.7 | 157.85 | 715.5 | 28.00% | | 2021 | 10,954,713 | 37,477,207 | — | — | 2,495,173 | 6,687,782 | 241.76 | 246.07 | 1,014.60 | 33.00% | | 2020 | 10,366,962 | 38,723,342 | — | — | 2,200,641 | 6,002,932 | 176.71 | 161.36 | 784.1 | 30.00% |