Exhibit 10.49


 


	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Executive Incentive Plan (2009)

  
	
  Effective Date:

  	
   

  	
  November 2, 2008

  
	
   

  	
   

  	
   

  
	
  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

  
	
  November 23,
  2008

  	
   

  	
  J.
  Collinson

  	
   

  	
  2009
  Plan Updates

  



 

















 


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 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 at any time in the
performance period 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 July 31, 2009 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 determined by the Compensation Committee
within ninety (90) days of the beginning of the performance period or the
appointment as an Eligible Employee, as applicable (“Target Award”).  The Target Award is based upon a percentage
of annual base salary prorated for the number of months expected to work during
the performance period as an Eligible Employee.   Stock-based and other variable compensation
are not included in the target calculation.


 

















 


PERFORMANCE
CRITERIA:


 


Payment
of the Target Award is determined by the Committee based on the Company’s
achievement of revenue and Non-GAAP operating margin targets 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:


 


FY2009 Revenue Target – 33.33%


 


FY2009 Non-GAAP Operating Margin Target –
33.33%


 


FY2010 Revenue Backlog Target – 33.34%


 


REVENUE
PREDICTABILITY FACTOR:


 


FY2011 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 set forth 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 FY2011
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 one-half
percent increments of achievement to plan. 
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, Restricted Stock Units (RSUs), or Restricted Stock.


 


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)


 


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.  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 or Restricted Stock in any calendar year.


 


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. 
Actual Awards are subject to the Compensation Recapture Policy.


 


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 the amount by which the Actual Award exceeds the
Target Award increased by a 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. 
Actual Awards are subject to the Compensation Recovery Policy, adopted December 2008.


 


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
Accounting, (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 modification 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:

  	
   

  	
   

  	
   

  
	
   

  	
  Bruce
  Chizen

  	
   

  	
  Date

  
	
   

  	
  Chair, Compensation Committee

  	
   

  	
   

  
					



 

















 


Executive Incentive Plan (2009)


Exhibit A – Corporate Financial Payout Factor Schedule


 




	
  % Achievement of Plan

  	
   

  	
  Payout Factor *

  
	
  90%

  	
   

  	
  50%

  
	
  91%

  	
   

  	
  55%

  
	
  93%

  	
   

  	
  65%

  
	
  95%

  	
   

  	
  75%

  
	
  97%

  	
   

  	
  85%

  
	
  99%

  	
   

  	
  95%

  
	
  100%

  	
   

  	
  100%

  
	
  101%

  	
   

  	
  108%

  
	
  103%

  	
   

  	
  124%

  
	
  105%

  	
   

  	
  138%

  
	
  107%

  	
   

  	
  151%

  
	
  109%

  	
   

  	
  159%

  
	
  111%

  	
   

  	
  165%

  
	
  113%

  	
   

  	
  169%

  
	
  115%

  	
   

  	
  173%

  
	
  117%

  	
   

  	
  177%

  
	
  119%

  	
   

  	
  181%

  
	
  >=120%

  	
   

  	
  183%

  






 






*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%.


 

















 


Executive Incentive Plan (2009)


Exhibit B – Revenue Predictability Payout Factor Schedule


 




	
  Percent of FY2011 Revenue Backlog

  Achieved

  	
   

  	
  Payout Factor *

  
	
  <95%

  	
   

  	
  100.0%

  
	
  96%

  	
   

  	
  100.5%

  
	
  97%

  	
   

  	
  101.0%

  
	
  98%

  	
   

  	
  101.5%

  
	
  99%

  	
   

  	
  102.0%

  
	
  100%

  	
   

  	
  102.5%

  
	
  101%

  	
   

  	
  108.0%

  
	
  102%

  	
   

  	
  113.5%

  
	
  103%

  	
   

  	
  119.0%

  
	
  104%

  	
   

  	
  124.5%

  
	
  105%

  	
   

  	
  130.0%

  
	
  106%

  	
   

  	
  135.5%

  
	
  107%

  	
   

  	
  141.0%

  
	
  108%

  	
   

  	
  146.5%

  
	
  >109%

  	
   

  	
  150.0%

  






 






*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-half percent increments of achievement.  For example, if percent achievement to plan
is 101.5% the Actual Payout Factor would be 110.8%.