Exhibit 10.09
SENIOR EXECUTIVE BONUS PLAN

1.   Purpose.

     The purpose of the Senior Executive Bonus Plan (“Plan”) is to motivate and
reward that individual who is serving as the Chief Executive Officer (“CEO”) of
Cadence Design Systems, Inc. (the “Company”) and the individuals who are part of
the senior executive staff as designated by the CEO (collectively, the
“Executives”) in order to improve the Company’s profitability and achieve the
established corporate goals of the Company. Under the Plan, an Executive may be
awarded for each fiscal year of the Company a performance bonus, described in
Section 3 hereof, which is intended to constitute “performance-based
compensation” within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the “Code”), and a discretionary bonus, described in
Section 4 hereof, which is not intended to constitute performance-based
compensation for purposes of Code Section 162(m).

2.   The Committee.

     The Plan shall be administered by the Compensation Committee of the Board
of Directors of the Company (the “Compensation Committee”) which shall consist
of at least two independent directors of the Company who satisfy the
requirements of Code Section 162(m). The Compensation Committee shall have the
sole discretion and authority to administer and interpret the Plan in accordance
with Code Section 162(m) as appropriate and the decisions of the Compensation
Committee shall in every case be final and binding on all persons having an
interest in the Plan.

3.   Performance Bonus Amounts.

     For each fiscal year, the performance bonus amount payable to each
Executive under this Section 3 is intended to constitute performance-based
compensation for purposes of Code Section 162(m) and shall be based on a target
bonus, in turn based on one or more relevant performance criteria and the extent
to which targets identified for such criteria are realized. The Compensation
Committee shall, for each fiscal year, select the target bonus amount for each
Executive, the relevant performance criteria, the respective targets for such
criteria, and the bonus amounts payable depending upon if and the extent to
which such targets are realized, in accordance with the following rules;

  (i)   The relevant performance criteria shall include, either individually or
in combination, applied to the Company as a whole or to individual units
thereof, and measured either absolutely or relative to a designated group of
comparable group of companies: (a) cash flow, (b) earnings per share (including
earnings before interest, taxes and amortization), (c) return on equity,
(d) total stockholder return, (e) return on capital, (f) return on assets or net
assets, (g) revenue, (h) income or net income, (i) operating income or net
operating income, (j) operating profit or net operating profit, (k) operating
margin, (l) return on operating revenue, (m) market share, and (n) customer
loyalty as measure by a customer loyalty index determined by an independent
consultant expert in measuring such matters.     (ii)   As determined by the
Compensation Committee, any given performance criterion may be measured over all
or part of the fiscal year. If for a fiscal year the Compensation Committee
determines to use only performance criteria measurable over the entire fiscal
year, then it must identify in writing within ninety (90) days after the
beginning of the fiscal year the target bonus, and the selected performance
criteria and targets. If for any fiscal year the Compensation Committee
determines to use at least one performance criterion to be measured over less
than the entire fiscal year, then the performance bonus for the fiscal year
shall be the bonus calculated for such short performance period or, if more than
one performance period per fiscal year is involved, then the sum of the bonuses
calculated separately for each short performance period ending with or within
the fiscal year. In that case, on or before the date which represents 25 percent
of the total number of days in such short performance period, the Compensation
Committee shall identify in writing the target bonus, the selected performance
criteria, and applicable to such period.     (iii)   The Compensation Committee
may in its discretion direct that any performance bonus be reduced below the
amount as calculated above, based on individual performance. Further, the
Compensation Committee may in its discretion increase the amount of compensation
otherwise payable to any

 

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      executive upon satisfaction of the designated targets if such executive is
not covered by Code Section 162(m).

4.   Discretionary Bonus.

     In addition to any performance bonus payable under Section 3 above, the
Compensation Committee in its discretion may direct the payment of an additional
amount to any Executive for any fiscal year. Such amount shall not constitute
performance-based compensation for purposes of Code Section 162(m).

5.   The Payment of Bonuses.

     Notwithstanding the foregoing, the maximum aggregate amount payable under
this Plan to any Executive for any fiscal year as a performance bonus shall be
$5,000,000. The bonus or bonuses for a fiscal year (including all short
performance periods ending with or within such year) shall be paid as soon as
practicable following the determination of such bonuses following the end of
such year or short performance period, as the case may be. No performance bonus
under Section 3 hereof shall be paid unless and until the Compensation Committee
makes a certification in writing that the performance criteria and targets have
been satisfied as required by Code Section 162(m). Further, unless otherwise
provided in a written agreement with an Executive, the Executive must be
employed by the Company on the date that bonus payments are distributed for a
fiscal year or short performance period, as the case may be, or have terminated
employment prior to that time solely on account of death or disability. If an
Executive is entitled to payment of a performance bonus under Section 3 hereof,
but was not employed by the Company for the entire fiscal year or short
performance period, as the case may be, he or she may, at the discretion of the
Compensation Committee, receive a prorated amount of the bonus amount payable as
though he or she were employed for the entire year determined as follows: (i) if
the performance period for such bonus is the entire fiscal year, the full year
bonus amount shall be multiplied by a fraction, the numerator of which is the
number of days the Executive was employed by the Company during the fiscal year
and the denominator of which is the number of days in the entire fiscal year; or
(ii) if the bonus for the fiscal year represents the bonus or sum of bonuses
computed separately for each short period within the fiscal year, then the bonus
otherwise payable for each short period shall be multiplied by a fraction, the
numerator of which is the number of days the Executive was employed by the
Company during such short period and the denominator of which is the total
number of days in such short period.

6.   Amendment and Termination.

     The Compensation Committee may terminate the Plan at any time, for any and
no reason, and may also amend the Plan in order to reduce the amount of any
Executive’s bonus payments at any time, for any or no reason.

7.   Clawback Policy.

     The Executives participating in the Plan and all amounts earned under the
Plan on or after January 1, 2010 are subject to the Cadence Design Systems, Inc.
Clawback Policy as in effect from time to time and the terms and conditions of
which are hereby incorporated by reference into the Plan.

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