Exhibit 10. O

AGREEMENT TO POLICY FOR RECOVERY OF INCENTIVE COMPENSATION

This Agreement to Policy for Recovery of Incentive Compensation is entered into
by the undersigned executive officer of Mentor Graphics Corporation (the
“Company”) effective as of February 1, 2011.

On January 31, 2011, the Board of Directors of the Company approved the
Company’s Policy for Recovery of Incentive Compensation (the “Policy”), a copy
of which is attached hereto as Exhibit A. The Policy requires an executive
officer of the Company to repay to the Company certain incentive compensation if
the Board of Directors determines that the Misconduct (as defined in the Policy)
of the executive officer directly contributed to an obligation to restate the
Company’s financial statements for any fiscal quarter or year commencing after
January 31, 2011. The Policy will therefore apply to annual bonuses payable
under the Company’s variable incentive plans for fiscal years commencing with
fiscal 2012 and to excess sale proceeds from sales occurring after the release
of earnings for the first quarter of fiscal 2012 of any shares acquired under
the Company’s equity incentive plans.

In consideration of the annual bonuses to be awarded and paid by the Company to
the undersigned executive officer for fiscal 2012 and subsequent years, and of
future equity incentive awards to be made to the undersigned executive officer
by the Company, the undersigned executive officer hereby agrees to the terms of
the Policy, and further agrees to repay to the Company any amount that may be
required under the Policy. The undersigned executive officer acknowledges and
agrees that his or her execution and delivery of this Agreement is a condition
to all future bonus and equity incentive awards from the Company.

 

 

Signature

 

Type or Print Name

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EXHIBIT A

MENTOR GRAPHICS CORPORATION

POLICY FOR RECOVERY OF INCENTIVE COMPENSATION

Board Discretionary Recovery of Incentive Compensation from Officers. If the
Company is required to prepare an accounting restatement for any fiscal quarter
or year commencing after January 31, 2011 and the Board of Directors of the
Company (the “Board”) determines that the Misconduct (as defined below) of any
person who was an executive officer of the Company subject to the reporting
requirements of Section 16 of the Securities Exchange Act of 1934 at the time of
the Misconduct (an “Affected Officer”) directly contributed to the obligation to
restate the Company’s financial statements pertaining to the previous three
fiscal years, the Board of Directors may require the Affected Officer to repay
to the Company all or part of the following:

 

(a) the full amount of any bonus received by the Affected Officer under any of
the Company’s variable incentive plans that was calculated based on the
financial statements that were subsequently restated; and

 

(b) if, after the release of earnings for any period with respect to which
financial statements were subsequently restated and prior to the announcement of
such restatement, the Affected Officer sold any Incentive Shares (as defined
below), the excess of (i) the actual aggregate sales proceeds from the Affected
Officer’s sale of those shares, over (ii) the aggregate sales proceeds the
Affected Officer would have received from the sale of those shares at a price
per share determined appropriate by the Board in its discretion to reflect what
the Company’s common stock price would have been if the restatement had occurred
prior to such sales; provided, however, that the aggregate sales proceeds
determined by the Board under this clause (ii) with respect to shares acquired
upon exercise of an option shall not be less than the aggregate exercise price
paid for those shares. “Incentive Shares” means any shares of Company common
stock that were acquired pursuant to an option, restricted stock unit or other
award under any Company equity incentive plan.

“Misconduct” is defined as the willful commission of an act of fraud or
dishonesty or willful gross negligence in the performance of an officer’s
duties.

If an amount to be repaid to the Company under this Policy is not deductible by
the Affected Officer, the Board shall reduce the amount to be repaid by the
amount determined by the Board to reasonably take into account the tax
consequences of such repayment. To the extent practicable under applicable law,
the Company will seek direct repayment from the Affected Officer of any amount
that is recoverable under this policy and may, to the extent permitted by
applicable law, offset such amount against any compensation or other amounts
owed by the Company to the Affected Officer.