Charter of the Compensation Committee of the Board of Directors of Synopsys, Inc.
(As last amended on August 31, 2016)
The purpose of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Synopsys, Inc. (“Synopsys”) established pursuant to this charter is to make all cash and equity compensation decisions relating to (i) Synopsys’ Chief Executive Officer or Co-Chief Executive Officers, as the case may be, (ii) all other persons determined by the Board to be “officers” of Synopsys (“Officers”) as defined under Section 16 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), (iii) all other persons determined by the Board to be members of Synopsys’ Corporate Staff (“Corporate Staff members”), and (iv) members of the Board.
The Committee shall have the authority to undertake the specific duties and responsibilities listed below and the authority to undertake such other specific duties as the Board from time to time delegates to it, and shall have the authority to engage, at the expense of Synopsys, advisors (with expertise in legal, accounting, compensation or other matters) to assist the Committee in fulfilling its responsibilities under this charter.
The Committee shall consist of a minimum of two (2) members of the Board, all of whom shall qualify as “non-employee directors” within the meaning of Rule 16b-3 of the Exchange Act, “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, meet the independence and other requirements set forth in (i) the rules of The NASDAQ Stock Market (the “Nasdaq Rules”) and (ii) the rules and regulations of the Securities and Exchange Commission (the “SEC”), and be free from any relationship that, in the opinion of the Board, would interfere with the free exercise of independent judgment as a Committee member, and one of whom shall be designated by the Board as Chairperson. The members of the Committee are appointed by and serve at the discretion of the Board.
The Committee may form and delegate authority to subcommittees as appropriate. The operation of the Committee shall be subject to the Bylaws of Synopsys as in effect from time to time and Section 141 of the Delaware General Corporation Law. The approval of this Compensation Committee Charter shall be construed as a delegation of authority to the Committee with respect to the responsibilities set forth herein.
The Committee shall have sole authority to retain or obtain the advice of, at Synopsys’ expense, compensation and other consultants, legal counsel, or other advisors as it deems necessary or appropriate in the performance of its duties as required by Nasdaq Rules and SEC rules and regulations; provided that the Committee first considers the independence factors set forth in the Nasdaq Rules and the SEC rules and regulations in making such retention decision. The Committee shall have direct oversight of the work performed by such advisors. The Committee shall have the authority to approve the fees and other retention terms of such advisors. The Committee shall have authority to require that any of Synopsys’ personnel, counsel, or any other consultant or advisor to Synopsys attend any meeting of the Committee or meet with any member of the Committee or any of its special compensation, legal or other advisors and consultants. The Committee shall have full access to all books, records, facilities and personnel of Synopsys as deemed necessary or appropriate by any member of the Committee to discharge his or her responsibilities hereunder, and to investigate any matter brought to its attention within the scope of its duties.
The responsibilities of the Committee shall be to:
- Establish the compensation policies for the Chief Executive Officer or the Co-Chief Executive Officers, as the case may be, all persons determined by the Board to be Officers and all persons determined by the Board to be Corporate Staff members.
- Review the performance of the Chief Executive Officer or the Co-Chief Executive Officers, as the case may be, and such other senior managers of Synopsys that the Committee, in consultation with the Chief Executive Officer or the Co-Chief Executive Officers, as the case may be, deems appropriate.
- Make all decisions regarding all forms of cash and equity compensation (including all “plan” compensation, as such term is defined in Item 402(a)(6)(ii ) of Regulation S-K promulgated by the SEC, and all non-plan compensation) to be provided to the Chief Executive Officer or the Co-Chief Executive Officers, as the case may be, and other Officers and Corporate Staff members, including determination of salary, bonus, stock options, restricted stock units, stock appreciation rights or other equity compensation. Material decisions regarding compensation to be provided to the Chief Executive Officer or the Co-Chief Executive Officers, as the case may be, shall be made in consultation with the full Board, excluding the employee directors. The Chief Executive Officer or the Co-Chief Executive Officers, as the case may be, may not be present during voting or deliberations on his, her or their compensation.
- Review and make recommendations to management or the Board, as appropriate, regarding general compensation goals and guidelines for Synopsys’ annual incentive plan designs and performance criteria. Review achievement levels for the variable compensation incentive plans, which will generate funding of bonuses for employees participating in such plans.
- Oversee the annual performance of a risk assessment of Synopsys’ compensation programs as generally applicable to employees to identify any potential material risks that may be created by such programs.
- Administer, within the authority delegated by the Board, Synopsys’ employee stock purchase plans and other equity incentive plans as may be approved by the Board from time to time (collectively, the “Plans”). In its administration of the Plans, the Committee may (a) grant stock options, restricted stock units, stock appreciation rights or other long term incentive awards to individuals eligible for such grants and (b) amend such stock options, restricted stock units, stock appreciation rights and other equity incentive awards consistent with the terms of the Plans. The Committee shall also make recommendations to the Board with respect to amendments to the Plans and changes in the number of shares reserved for issuance thereunder.
- Review and make recommendations to the Board regarding the adoption of new Plans.
- Review and make recommendations to management or the Board, as appropriate, regarding such other plans that are adopted or proposed for adoption for the provision of compensation and benefits programs such as the 401(k) plan, employment agreements, and change of control and deferred compensation plans to employees and consultants of Synopsys.
- Review and discuss with management Synopsys’ disclosures contained under the caption “Compensation Discussion and Analysis” for use in any of Synopsys’ Annual Reports on Form 10-K, registration statements or proxy statements and make recommendations to the Board that such disclosures be approved for inclusion in Synopsys’ Annual Reports on Form 10-K, registration statements or proxy statements in compliance with the rules of the Exchange Act as they may be amended from time to time. Annually prepare a report to stockholders as required by the rules and regulations of the SEC to be included in Synopsys’ annual proxy statement.
- Review and make recommendations to the Board with respect to stockholder approval of executive compensation (“say-on-pay” votes), the frequency of say-on-pay votes and “golden parachute” arrangements, and review related stockholder feedback.
- Review and make recommendations to the Board with respect to the compensation of non-employee directors including compensation for service on committees of the Board.
- Provide input to the Corporate Governance and Nominating Committee on executive and leadership development policies and management succession.
- Authorize the repurchase of shares from terminated employees pursuant to the terms of the Plans or otherwise and applicable law.
- Review and reassess the adequacy of this charter once each year and, if appropriate, make recommendations to the Board as to changes to this charter as the Committee may deem necessary or advisable. Periodically evaluate the Committee’s performance and measure against best practices.
- Perform such other functions and to have such other powers as may be necessary or appropriate in the efficient and lawful discharge of the foregoing.
The Committee will meet at such times, and with such frequency, as it shall determine necessary or appropriate for it to fulfill its responsibilities under this charter.
At a minimum of one of its meetings annually, the Committee will consider Plans, performance goals and incentive awards, and the overall coverage and composition of the compensation package.
The Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board.
The Committee shall provide regular reports to the Board regarding the deliberations, actions taken and recommendations of the Committee.