Company: SNPS
Filing Date: 2025-02-14
Form Type: DEF 14A
Source: 0000883241-25-000008
Chunk: 122

Company: SYNOPSYS INC
Filing Date: 2025-02-14
Form: DEF 14A
Chunk 122
---
 and Executive Chair, are subject to our Executive Severance Benefit and Transition Plan and our Executive Change of Control Severance Benefit Plan (collectively, the Severance Plans), which provide for post-termination benefits comparable to benefits offered by our peers. The Severance Plans already place reasonable limits on cash severance payments that are lower than the 2.99x limit proposed by the proponent.

In addition, our employment agreements with our CEO and Executive Chair (each, an Executive Employment Agreement) were designed to provide severance benefits that are fair, reasonable and competitive in light of market practices for executives of a similar level at comparable companies and reflect the contributions of our CEO and Executive Chair to our business growth and sustainable stockholder returns. The Executive Employment Agreements do not provide for any “golden parachute” excise tax gross ups or “single trigger” payments in connection with a change of control. Further, the Executive Employment Agreement with our CEO provides for limited cash severance benefits outside of a change of control, while the Executive Employment Agreement with our Executive Chair provides for no severance benefits outside of a change of control.

The proposal could create a misalignment between our executives and our stockholders, including during a change of control transaction.

We believe that long-term equity awards are critical to aligning the interests of our executives with those of our stockholders as they motivate our executives to increase stockholder value. In fact, over 90% of our NEOs’ average fiscal 2024 compensation is performance-based and/or at risk. In line with our pay for performance compensation philosophy and widespread market practice, our Severance Plans and Executive Employment Agreements provide for accelerated vesting of equity upon certain qualifying terminations, including “double trigger” vesting upon an (i) executive’s termination without cause or good reason and (ii) completion of a change of control transaction. By including “equity awards if vesting is accelerated” in the 2.99x severance multiple, the proposal introduces uncertainty around all components of severance compensation, placing an arbitrary and non-market competitive limit on our NEOs’ severance benefits and effectively discouraging the use of such equity awards.

Additionally, the proposal would impose significant limits on our use of severance protections to retain senior executives, particularly during a potential change of control, and could impair our ability to deliver maximum stockholder value in such a transaction. Specifically, we may struggle to retain and preserve the productivity of our executives and maintain the stability of our business during the pendency of an acquisition. The