Summary
Teradyne, Inc. (TER) filed an 8-K on May 31, 2006, to report on significant actions taken at its Annual Shareholders Meeting on May 25, 2006. The most critical development for investors is the shareholder approval of the "Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan." This new plan, effective for ten years, replaces several older stock option and cash compensation plans, consolidating and modernizing the company's incentive compensation framework. It authorizes 12,000,000 shares for grants and permits a wide range of equity awards, including stock options, restricted stock, and phantom stock, alongside cash incentives. In addition to the new incentive plan, the company also reported on amendments and restatements to its "Deferral Plan for Non-Employee Directors," "Supplemental Executive Retirement Plan (SERP)," and "Supplemental Savings Plan." These restatements are primarily to ensure compliance with Section 409A of the Internal Revenue Code, which governs non-qualified deferred compensation arrangements. Investors should note that these plans are unfunded and paid from the company's general assets, and the changes aim to align compensation practices with current tax regulations while offering directors and executives flexibility in deferring compensation and receiving retirement benefits.
Key Highlights
- 1Shareholder approval of the "Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan" on May 25, 2006, effective for 10 years.
- 2The new plan consolidates and replaces prior stock option and cash compensation plans, including the 1996 Non-Employee Director Stock Option Plan, 1997 Employee Stock Option Plan, and 1991 Employee Stock Option Plan.
- 3A total of 12,000,000 shares of common stock are available for grants under the new incentive plan.
- 4The plan allows for various award types, including stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock, and cash awards, designed to motivate employees, officers, directors, consultants, and advisors.
- 5Non-employee directors will receive automatic cash or stock-based awards based on a percentage of their annual cash retainer.
- 6Amendments and restatements to the "Deferral Plan for Non-Employee Directors," "Supplemental Executive Retirement Plan (SERP)," and "Supplemental Savings Plan" were adopted to comply with Section 409A of the Internal Revenue Code.
- 7The company terminated the older stock option plans concurrent with the adoption of the new incentive plan, meaning no further grants can be issued under them.