Summary
Teradyne, Inc. (TER) filed an 8-K on June 1, 2005, reporting a significant decision made by its Board of Directors on May 26, 2005. The company approved a plan to accelerate the vesting of certain "out of the money" stock options. These options, with exercise prices above $13.26 (the closing price on May 26, 2005), ranged from $13.73 to $41.37 per share. This acceleration allows approximately 7.6 million shares worth of stock options to become immediately exercisable. The primary driver for this action appears to be the anticipated impact of the Financial Accounting Standards Board's new standard, SFAS No. 123R, which mandates the recognition of stock-based compensation expense at fair value. By accelerating these options, Teradyne likely aimed to manage its financial reporting under the new accounting rules.
Key Highlights
- 1Teradyne accelerated the vesting of "out of the money" stock options on May 26, 2005.
- 2Approximately 7.6 million stock options became immediately exercisable due to this acceleration.
- 3The exercise prices of the accelerated options were above the May 26, 2005 closing price of $13.26.
- 4The accelerated options had exercise prices ranging from $13.73 to $41.37 per share.
- 5The primary reason cited for the acceleration is to address the impact of the new SFAS No. 123R standard on stock-based compensation expense.
- 6The company expects this move to reduce the effects of recognizing stock-based compensation at fair value.