Manager/Employee FAQs-- Restricted Stock Units (RSUs)

About Restricted Stock Units (RSUs)

What are RSUs? RSUs are Restricted Stock Units, which are a promise to issue shares of stock once the vesting requirement is satisfied. With RSUs, you receive actual shares of Teradyne stock on the vesting dates. The restricted simply means there is a restriction on your ability to own or sell the shares until vesting is satisfied. The units correspond in number and value to a specified number of shares of stock at the time the grant is made. How do RSUs Vest? RSUs vest 25% each year for 4 years beginning one year after grant date. As a reminder, in order for RSUs to vest, you need to be employed by Teradyne on the vesting date. Example of Vesting: Lets say you were granted 400 RSUs on January 25, 2013 vesting shares to date vest 1/25/2014 100 1/25/2015 100 1/25/2016 100 1/25/2017 100

Can I sell my vested shares? Yes, you can sell your shares through your Fidelity account or you can hold them. However, you are reminded that you cannot sell your vested shares if you have any material non-public information as described in more detail in our Code of Conduct. In addition, some employees will be subject to the Companys quarterly trading blackout period. You will be notified by Teradyne legal if you are subject to the quarterly blackout period.

Fidelity Information
When should I see my vested shares in my Fidelity account? The shares should be reflected in your account the day after vesting. How can I view my shares in my Fidelity Account? Login to your Fidelity account at www.netbenefits.com and select stock plans and then Teradyne Restricted Stock. I forgot my Fidelity account User Name & Password, how can I get it reset? If you have activated your Fidelity account but forgotten your User I.D. and/or password, in the US please call 1.866.956.3097 and a Fidelity customer service representative will assist you.

US Employees Tax Information

What are the tax implications of my RSU vesting? In the US, all applicable taxes must be paid at the time RSUs vest. That means all federal; state and FICA taxes are due on the day the RSUs vest. It doesnt matter if you hold or sell the shares at vestingfederal, FICA and state taxes are due. The amount of income subject to tax is the fair market value of the shares at the time of vesting. What is the Fair Market Value (FMV) of the vested shares? The fair market value is the closing price of Teradynes stock on the trading day that the RSU vests. How do I have taxes withheld? You can choose to pay cash (cash option) or have shares withheld from the vesting (net shares option). If you choose to pay with net shares at vesting, Teradyne will withhold enough Teradyne shares (from the shares that have just vested) to cover your tax withholding obligation. The number of shares that vest less the number of shares withheld to cover your taxes will automatically be deposited into your Fidelity Account. If you choose to pay with cash at vesting, you need to have enough cash in your Fidelity Account on the date of vesting to cover your tax withholding obligation. At vesting, the amount necessary to cover your tax withholding obligation will be debited from your account and forwarded to Teradyne for reporting and remitting to the appropriate tax authorities. All of the Teradyne shares that vest will be automatically deposited into your Fidelity Account. Consult with a tax advisor to determine the amount of cash due on the date of vesting.

US Employees Tax Example if choosing the net shares at vesting option

Fair Market Value on Vesting Date Total Taxable Value (this amount will be reported on your W-2 Total Tax Due (This amount will be reported on your W-2) Net Shares Deposited to Employees Fidelity Account

Shares Vesting

Shares Withheld (2) $531.30/ $14 = 42.88 (1) 57 100 $14.00 $1,400.00 42.88% $600.32 43 shares will be withheld (1) Example withholding rates are based on 25% Federal, 10.23% California State, 6.2% FICA and 1.45% Medicare. Withholding rates will vary based on State % and employees year-to-date FICA amounts. (2) Shares will be withheld in whole share amounts. The number of shares withheld will be rounded up and the additional tax amount withheld will be applied to the federal tax withholding.

Tax Withholding Rate

In the example above, you would receive 57 shares. You now own these shares. You can choose to hold the shares or sell them, provided you comply with applicable securities trading laws and Teradynes policies. Will the value of the RSUs be reflected on my W2? The value of the RSUs and taxes withheld for them will be reflected in your W2. In all these instances, if there are any questions, you should consult your tax advisor. Do I pay taxes again when I sell the shares that I own after vesting? Upon a later sale of the shares, you would recognize capital gain income or loss; whether such capital gain would be short or long-term depends on the time between the beginning of the holding period at vesting and the date of the subsequent sale. Consult your tax advisor regarding the income tax consequences to you. Does Fidelity provide any tax guidance? Fidelity will send out high level yearend mailers that will explain how to fill out a schedule D and a set of FAQs. You should consult your tax advisor with any questions.

If I have additional questions, whom should I contact? If you have additional questions, you should contact the HR Service Center at hr.service.center@teradyne.com or (978) 370-3041.