TERADYNE, INC Stock Compensation Disclosure

S. STOCK-BASED COMPENSATION

Stock Compensation Plans

Under Teradyne’s stock compensation plans, Teradyne grants time-based restricted stock units, performance-based restricted stock units and stock options, and employees are eligible to purchase Teradyne’s common stock through its Employee Stock Purchase Plan (“ESPP”).

Service-based restricted stock unit awards granted to employees vest in equal annual installments over four years. Restricted stock unit awards granted to non-employee directors vest after a one-year period, with 100% of the award vesting on the earlier of (a) the first anniversary of the grant date or (b) the date of the following year’s Annual Meeting of Shareholders. Teradyne expenses the cost of the restricted stock unit awards subject to time-based vesting, which is determined to be the fair market value of the shares at the date of grant, ratably over the period during which the restrictions lapse.

Performance-based restricted stock units (“PRSUs”) granted to Teradyne’s executive officers may have a performance metric based on relative total shareholder return (“TSR”). Teradyne’s three-year TSR performance is measured against the New York Stock Exchange (“NYSE”) Composite Index. The final number of TSR PRSUs that vest will vary based upon the level of performance achieved from 0% to 200% of the target shares. The TSR PRSUs will vest upon the three-year anniversary of the grant date. The TSR PRSUs are valued using a Monte Carlo simulation model. The number of units expected to be earned, based upon the achievement of the TSR market condition, is factored into the grant date Monte Carlo valuation. Compensation expense is recognized on a straight-line basis over the shorter of the three-year service period or the period from the grant to the date described in the retirement provisions below. Compensation expense for executive officers meeting the retirement provisions prior to the grant date is recognized during the year following the grant. Compensation expense is recognized regardless of the eventual number of units that are earned based upon the market condition, provided the executive officer remains an employee at the end of the three-year period. Compensation expense is reversed if at any time during the three-year service period the executive officer is no longer an employee, subject to the retirement and termination eligibility provisions noted below.

PRSUs granted to Teradyne’s executive officers may also have a performance metric based on three-year cumulative non-GAAP profit before interest and tax (“PBIT”) as a percent of Teradyne’s revenue. Non-GAAP PBIT is a financial measure equal to GAAP income from operations less restructuring and other, net; amortization of acquired intangible assets; acquisition and divestiture related charges or credits; pension actuarial gains and losses; non-cash convertible debt interest expense; and other non-recurring gains and charges. The final number of PBIT PRSUs that vest will vary based upon the level of performance achieved from 0% to 200% of the target shares. The PBIT PRSUs will vest upon the three-year anniversary of the grant date. Compensation expense is recognized on a straight-line basis over the shorter of the three-year service period or the period from the grant date to the date described in the retirement provisions below. Compensation expense for executive officers meeting the retirement provisions prior to the grant date is recognized during the year following the grant. Compensation expense is recognized based on the number of units that are earned based upon the three-year Teradyne PBIT as a percent of Teradyne’s revenue, provided the executive officer remains an employee at the end of the three-year period subject to the retirement and termination eligibility provisions noted below.

If a PRSU recipient’s employment ends prior to the determination of the performance percentage due to (1) death or (2) after attaining both at least age sixty and at least ten years of service, retirement or termination other than for cause, then all or a portion of the recipient’s PRSUs (based on the actual performance percentage achieved on the determination date) will vest on the date the performance percentage is determined. Except as set forth in the preceding sentence, no PRSUs will vest if the executive officer is no longer an employee at the end of the three-year period. Stock options to purchase Teradyne’s common stock at 100% of the fair market value on the grant date vest in equal annual installments over four years from the grant date and have a maximum term of seven years.

On January 22, 2024, the Board enacted the Executive Retirement Policy for Restricted Stock Unit and Option Vesting (the "Retirement Policy"). Under the Retirement Policy, an executive officer that is over the age of 65 and has 10 or more years of service as of the effective date of his or her retirement will be eligible for continued vesting of his or her unvested time-based restricted stock units and stock options granted prior to his or her retirement date.

During 2025, 2024 and 2023, Teradyne granted 0.6 million, 0.6 million and 0.5 million of service-based restricted stock unit awards to employees at a weighted average grant date fair value of $113.70, $96.72, and $102.45, respectively.

During 2025, 2024 and 2023, Teradyne granted 0.1 million of service-based restricted stock unit awards to non-employee directors at a weighted average grant date fair value of $79.78, $121.29, and $90.50, respectively.

During 2025, 2024 and 2023, Teradyne granted 0.1 million of PBIT PRSUs with a grant date fair value of $130.27, $94.51 and $102.91, respectively.

During 2025, 2024 and 2023, Teradyne granted 0.1 million TSR PRSUs, with a grant date fair value of $116.74, $102.51, and $139.04, respectively. The fair value was estimated using the Monte Carlo simulation model with the following assumptions:

Expected volatility was based on the historical volatility of Teradyne’s stock and the NYSE Composite Index for each of the 2025, 2024 and 2023 grants over the most recent three-year period. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of each of the grants. Dividend yield was based upon an estimated annual dividend amount of $0.48 per share for 2025, $0.48 per share for 2024, and $0.44 per share for 2023, divided by Teradyne’s weighted average stock price on the grant dates of $118.79 for the 2025 grants, $95.83 for the 2024 grants, and $104.12 for the 2023 grants.

During 2025, 2024 and 2023, Teradyne granted 0.1 million of service-based stock options to executive officers at a weighted average grant date fair value of $46.34, $37.50, and $41.23, respectively.

Teradyne determined the stock options’ expected life based upon historical exercise data for executive officers, the age of the executive officers and the terms of the stock option grant. Volatility was determined using historical volatility for a period equal to the expected life. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of $0.48 per share divided by Teradyne’s weighted average stock price on the grant dates of $119.34 for the 2025 grants, and $0.48 per share divided by Teradyne's stock price on the grant date of $95.14 for the 2024 grant, and $0.44 per share divided by Teradyne’s weighted average stock price on the grant dates of $104.15 for the 2023 grants.

The total cash received from employees as a result of employee stock options exercised during the years ended December 31, 2025, 2024 and 2023, was $2.2 million, $6.6 million, and $2.2 million, respectively. In connection with these exercises, the tax benefit realized by Teradyne for the years ended December 31, 2025, 2024 and 2023, was $0.2 million, $0.2 million, and $0.2 million, respectively.

As of December 31, 2025, total unrecognized expense related to non-vested restricted stock unit awards and stock options was $97.3 million and is expected to be recognized over a weighted average period of 2.6 years.

Employee Stock Purchase Plan

Under the ESPP, eligible employees may purchase shares of common stock through regular payroll deductions of up to 10% of their compensation, to a maximum of shares with a fair market value of $25,000 per calendar year, not to exceed 6,000 shares. Under the plan, the price paid for the common stock is equal to 85% of the stock price on the last business day of the six-month purchase period.

In July 2025, 0.2 million shares of common stock were issued to employees who participated in the plan during the first half of 2025 at the price of $76.44 per share. In January 2026, Teradyne issued 0.1 million shares of common stock to employees who participated in the plan during the second half of 2025 at the price of $164.53 per share.

In July 2024, 0.1 million shares of common stock were issued to employees who participated in the plan during the first half of 2024 at the price of $126.05 per share. In January 2025, Teradyne issued 0.1 million shares of common stock to employees who participated in the plan during the second half of 2024 at the price of $107.04 per share.

In July 2023, 0.2 million shares of common stock were issued to employees who participated in the plan during the first half of 2023 at the price of $94.64 per share. In January 2024, Teradyne issued 0.2 million shares of common stock to employees who participated in the plan during the second half of 2023 at the price of $92.25 per share.

As of December 31, 2025, there were 2.9 million shares available for grant under the ESPP.