Exhibit 10.49


 


	
  Title:

  Effective
  Date:

  	
  Executive
  Incentive Plan (2008)

  November 4,
  2007

  
	
   

  	
   

  
	
  Document
  Owner:

  	
  Human
  Resources Compensation

  
	
   

  	
   

  
	
  Approvals:

  	
  Bruce
  Chizen

  
	
   

  	
  Chair,
  Compensation Committee

  



 


 


	
  Date

  	
   

  	
  Author

  	
   

  	
  Revision History

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March 15, 2005

  	
   

  	
  J. Cleveland

  	
   

  	
  2005 Initial Plan

  
	
  March 20, 2006

  	
   

  	
  J. Collinson

  	
   

  	
  2006 Plan Updates

  
	
  October 30, 2006

  	
   

  	
  S. Watanabe

  	
   

  	
  2007 Plan Updates

  
	
  April 27, 2007

  	
   

  	
  J. Liedtke

  	
   

  	
  Amendment to eligibility rules

  
	
  January 28, 2008

  	
   

  	
  S. Watanabe

  	
   

  	
  2008 Plan Updates

  



 


 


1

















 


PLAN
OBJECTIVES:


 


This Synopsys Executive Incentive Plan (“EIP”
or the “Plan”) provides members of the Company’s senior management the
potential to earn variable compensation linked directly to individual
contribution toward:


 


1.               Driving the strategic direction of the
Company.


2.               Driving attainment of revenue and
operating margin targets.


3.               Reinforcing a culture of accountability
and performance excellence.


4.               Ensuring that the payment of all incentive
bonuses under the Plan qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Internal Revenue Code (“Section 162(m)”),
and therefore not subject to the annual $1 million limitation on the income tax
deductibility of compensation paid per certain covered executive officers
imposed under Section 162(m). 
Accordingly, all payments under the Plan shall be made pursuant to the
terms and conditions of the Company’s 2006 Employee Equity Incentive Plan (2006
Equity Plan) approved by the Company’s stockholders, whether as “Performance
Cash Awards” or “Performance Stock Units Awards” thereunder.


 


ELIGIBILITY:


Subject to achievement as described below,
an employee is eligible to receive an EIP award if he or she is:


·                  a Corporate Staff Member and Section 16(b) officer


·                  a regular employee scheduled to work at least
20 hours per week


·                  employed by Synopsys as of the first working work day of the
fourth quarter of the fiscal year


·                  actively employed through the day the
incentive checks are distributed (or on an approved leave of absence)


and


·                  does not participate in a commission or other
incentive plan (including, but not limited to Sales, Applications
Consultants, or incentive plans relating to 
acquisitions)


·                  prepares and delivers performance reviews
for all direct reports eligible to receive reviews by August 1, 2008
unless an exception to this requirement is recommended by the SVP, Human Resources and
Facilities and approved by the Chairman of the Compensation Committee.


 


ADMINISTRATION:


The
Plan shall be administered by the Compensation Committee of the Board of
Directors (the “Committee”) that has been designated to administer programs
intended to qualify as “performance-based compensation” within the meaning of Section 162(m).  The Committee shall have authority to make rules and
adopt administrative procedures in connection with the Plan and shall have
discretion to provide for situations or conditions not specifically provided
for herein consistent with the purposes of the Plan.  The Committee shall determine the beginning
and ending dates for each performance period. 
Unless otherwise determined by the Committee, the performance period
shall correspond to the Company’s fiscal year. 
Notwithstanding any other provision of the Plan to the contrary, the
Plan shall be administered and its provisions interpreted so that payments
pursuant to the Plan qualify as “performance-based compensation” within the
meaning of Section 162(m). 
Determinations by the Committee shall be final and binding on the Company
and all participants.


 


INCENTIVE TARGET AWARDS:


The
individual’s incentive target award is based upon a percentage of annual base
salary as determined by the Committee (“Target Award”).  Stock-based and other variable compensation
are not included in the target calculation.


 


 


2

















 


PERFORMANCE
CRITERIA:


Payment
of the Target Award is determined by the Committee based on the Company’s
achievement of Corporate Financial Performance Goals which include current year
targeted revenue and operating margin goals as well as Revenue Backlog targets
(committed revenue for applicable future years), reinforcing the Company’s
ratable business model.  The specific Corporate Financial Performance
Goals and their relative weighting are as follows:


 


CORPORATE
FINANCIAL PERFORMANCE GOALS:


 




	
  FY2008 Revenue Target — 33.33%

  
	
  FY2008 Non-GAAP Operating Margin Target — 33.33%

  
	
  FY2009 Revenue Backlog Target — 33.34%

  






 


 


REVENUE
PREDICTABILITY FACTOR:


 




	
  FY2010 Revenue Backlog Target 

  






 


 


PAYOUT
FORMULA FOR
ACTUAL
AWARDS:


The Company must achieve a threshold of a
weighted average of 90% of the Corporate Financial Performance Goals before
payment of any portion of the Target Award is permitted. Achievement of 90% or
more of the Corporate Financial Performance Goals results in the applicable
Corporate Financial Payout Factor, as illustrated in Exhibit A.  For illustration purposes, Exhibit A,
the Corporate Financial Payout Factor Schedule, sets forth achievement
percentages at increments of one percentage. 
The actual Payout Factor will be calculated based upon one-quarter
percentage point increments of achievement to plan.  Achievement of 90% or more of target FY2010
Revenue Backlog Goal results in the applicable Revenue Predictability Payout
Factor set forth in Exhibit B.  The
Revenue Predictability Payout Factor will be calculated based upon whole
percent increments of achievement to plan, as reflected in Exhibit B, the
Revenue Predictability Payout Factor Schedule. 
Notwithstanding the foregoing,
the maximum Preliminary Award for any individual is 200% of the Target Award
and the Company has the option to fund achievement in excess of the Target
Award with cash and Restricted Stock Units (RSUs).


 


Payouts
of actual awards are determined by the Compensation Committee following a
recommendation by executive management.  Subject to the Committee’s discretion as
set forth under “Final Awards” below, the
payout formula for each Preliminary Award is as follows:


 


Preliminary Award =


Target Award x Corporate Financial Payout Factor x
Revenue Predictability Payout Factor (if any)


 


In addition and in accordance with the
2006 Equity Plan, the maximum Actual Award for any individual is $2,000,000 in
cash and 1,000,000 shares of RSUs in any calendar year.


 


 


3

















 


FINAL
AWARDS:


No later than thirty (30) days after the
receipt by the Committee of the financial statements for a performance period
the Committee shall determine whether the established performance criteria were
achieved. Executive management
will make recommendations to the Committee regarding individual payouts based
upon the individual’s relative performance against the Corporate Financial
Performance Goals and the Revenue Predictability Goal.  The Committee shall have full discretion to
reduce individual Preliminary Awards based on individual performance, EPS
considerations, or as it otherwise considers appropriate in the circumstances
in order to determine final actual awards (“Actual Awards”).  The Committee shall not have discretion to
increase Preliminary Awards for a performance period.


 


PAYMENT
SCHEDULE:


Payment of Actual Awards will occur within thirty
(30) days following the certification by the Committee that the performance and
other criteria for payment have been satisfied (the “Certification Date”) and
final determination of the Actual Award.


 


In the event the Committee does not specify the form
of the payment at the time the Committee establishes the Target Award, the form
of payment of the Actual Award shall be: (a) cash in an amount not to
exceed the amount of the Target Award, and (b) Restricted Stock Units,
100% of which will vest on the one-year anniversary of the effective grant date
provided the recipient is providing continuous services on such date, the value
of which would equal no more than the amount by which the Actual Award exceeds
the Target Award increased by an reasonable rate of interest to account for the
time value of money.  The Committee may
determine (a “Retroactive Determination”) on or before the Certification Date
that the form of the entire Actual Award payment will only be cash.  In the event the Committee makes a
Retroactive Determination, the total value of the cash payment shall not exceed
the amount of the Actual Award.


 


Cash, RSUs or Restricted Stock issued hereunder
shall be deemed issued pursuant to the 2006 Employee Equity Incentive Plan
unless otherwise determined by the Committee.


 


 


4

















 


IMPORTANT NOTES ABOUT THE PLAN:


This Plan supersedes and replaces all
prior executive incentive plans.  The
Committee reserves the right to terminate and or make changes to the Plan at
any time, with or without notice.  The
Committee may likewise terminate an individual’s participation in the Plan at
any time, with or without notice. 
Nothing in this Plan shall be construed to be a guarantee that any
participant will receive all or part of an incentive award or to imply a
contract between the Company and any participant.  The Committee may reduce the incentive payout
based on achievement of publicly announced targets, product milestones,
strategic goals, cross-functional teamwork and collaboration, and unforeseen
changes in the economy and/or geopolitical climate.


 


 


Notwithstanding the foregoing, the
performance criteria may be modified by the Committee to take into
consideration one or more of the following: (1) changes in accounting
principles that become effective during the performance period in accordance
with US GAAP, (2) extraordinary, unusual or infrequently occurring events,
(3) the disposition of a business or significant assets, (4) gains or
losses from all or certain claims and/or litigation and insurance recoveries, (5) the
impact of impairment of intangible assets, (6) restructuring activities, (7) the
impact of investments or acquisitions, and/or (8) changes in corporate
capitalization such as stock splits and certain reorganizations; provided,
however, that any such modifications are consistent with Section 162(m) and
the regulations issued thereunder.  Notwithstanding the foregoing, the
Committee must select criteria that collectively satisfy the requirements of
performance-based compensation for the purposes of Section 162(m),
including by establishing the targets at a time when the performance relative
to such targets is substantially uncertain.


 


 


 


Approvals:


 


 


Compensation Committee,


 


 


	
  By:

  	
  /s/ Bruce Chizen

  	
   

  	
  January 29, 2008

  
	
   

  	
  Bruce Chizen

  	
  Date

  
	
   

  	
  Chair, Compensation Committee

  	
   

  
					



 


 


5

















 


Executive Incentive Plan
(2008)


Exhibit A
— Corporate Financial Payout Factor Schedule


 




	
  %
  Achievement of Plan

  	
   

  	
  Payout Factor*

  
	
  <= 90%

  	
   

  	
  50.0%

  
	
  91%

  	
   

  	
  55.0%

  
	
  92%

  	
   

  	
  60.0%

  
	
  93%

  	
   

  	
  65.0%

  
	
  94%

  	
   

  	
  70.0%

  
	
  95%

  	
   

  	
  75.0%

  
	
  96%

  	
   

  	
  80.0%

  
	
  97%

  	
   

  	
  85.0%

  
	
  98%

  	
   

  	
  90.0%

  
	
  99%

  	
   

  	
  95.0%

  
	
  100%

  	
   

  	
  100.0%

  
	
  101%

  	
   

  	
  107.0%

  
	
  102%

  	
   

  	
  114.0%

  
	
  103%

  	
   

  	
  121.0%

  
	
  104%

  	
   

  	
  127.5%

  
	
  105%

  	
   

  	
  134.0%

  
	
  106%

  	
   

  	
  140.0%

  
	
  107%

  	
   

  	
  146.0%

  
	
  108%

  	
   

  	
  150.0%

  
	
  109%

  	
   

  	
  154.0%

  
	
  110%

  	
   

  	
  156.8%

  
	
  111%

  	
   

  	
  159.5%

  
	
  112%

  	
   

  	
  161.5%

  
	
  113%

  	
   

  	
  163.5%

  
	
  114%

  	
   

  	
  165.5%

  
	
  115%

  	
   

  	
  167.5%

  
	
  116%

  	
   

  	
  169.5%

  
	
  117%

  	
   

  	
  171.5%

  
	
  118%

  	
   

  	
  173.5%

  
	
  119%

  	
   

  	
  175.5%

  
	
  >=120%

  	
   

  	
  177.5%

  










*The Payout Factor column represents
payout factors based upon whole percentage increments of achievement to
plan.  The actual Payout Factor will be
interpolated based upon one-quarter percent increments of achievement.  For example, if percent achievement to plan
is 101.5%, the Actual Payout Factor would be 110.5%.


 


 


6

















 


Executive
Incentive Plan (2008)


Exhibit B
— Revenue Predictability Payout Factor Schedule


 




	
  Revenue Predictability Factor

  
	
  Percent of FY2010 Revenue Backlog Achieved

  	
   

  	
  Payout Factor

  
	
  <= 95%

  	
   

  	
  100.0%

  
	
  96%

  	
   

  	
  102.0%

  
	
  97%

  	
   

  	
  104.0%

  
	
  98%

  	
   

  	
  106.0%

  
	
  99%

  	
   

  	
  108.0%

  
	
  100%

  	
   

  	
  110.0%

  
	
  101%

  	
   

  	
  112.0%

  
	
  102%

  	
   

  	
  114.0%

  
	
  103%

  	
   

  	
  116.0%

  
	
  104%

  	
   

  	
  118.0%

  
	
  105%

  	
   

  	
  120.0%

  
	
  106%

  	
   

  	
  122.0%

  
	
  107%

  	
   

  	
  124.0%

  
	
  108%

  	
   

  	
  126.0%

  
	
  109%

  	
   

  	
  128.0%

  
	
  >= 110%

  	
   

  	
  130.0%

  






 


 


7