Corporate Governance Guidelines

(As last amended on December 9, 2022)

Introduction

The Board of Directors (the “Board”) oversees the management of Synopsys, Inc.’s (“Synopsys”) business operations and ensures that the interests of Synopsys’ stockholders are served. The Board recognizes that to advance the interests of stockholders, the interests of other Synopsys stakeholders, including, among others, customers, employees, business partners and local communities are important. The Board has established a governance framework to meet these obligations in compliance with applicable laws and regulations. These guidelines are reviewed and modified by the Board from time to time, as appropriate.

Board Oversight

  • Management Oversight. Stockholders elect the Board to oversee management and to assure that stockholder interests are served. Through oversight, review, and counsel, the Board oversees Synopsys’ business, strategic, environmental, social and organizational objectives. The Board is deeply engaged and involved in Synopsys' long-term strategy, including evaluating key market opportunities and competitive developments. The Board and its committees oversee, among other areas, business affairs and integrity, senior executive succession planning, and internal control over financial reporting and external audit, and perform the annual Chief Executive Officer (“CEO”) evaluation.
  • Risk Oversight. The Board oversees risk management at Synopsys. The Board executes its oversight responsibility directly and through its committees, who regularly report back to the Board. For information on specific areas of risk oversight, each committee has a charter describing its specific responsibilities which can be found on our website at https://www.synopsys.com/company/corporate-governance-ethics/board-committees.html.

Composition of the Board; Director Independence

  • Selection of Chairperson. The Chairperson of the Board shall be appointed periodically by the Board based on the recommendation of the Corporate Governance and Nominating Committee (the “CGN Committee”). The positions of Chairperson of the Board and CEO may be held by the same person. In the event that such positions are held by the same person, the Board shall appoint a Lead Independent Director based on the recommendation of the CGN Committee.
  • Selection of Directors. The CGN Committee shall identify and recommend to the Board individuals for membership on Synopsys’ Board. The Board is responsible for selecting its members and recommending them for election or reelection by the stockholders.
  • Annual Election of Directors; Term Limits. Directors are elected by the stockholders every year and are not subject to term limits. Directors who have served on the Board for an extended period provide valuable insight into Synopsys’ business and operations based on this experience.
  • Board Size. The CGN Committee will periodically review the appropriate size of the Board.
  • Board Membership Criteria. The CGN Committee is responsible for evaluating, and then reviewing with the Board, the requisite skills and characteristics of Board nominees as well as the composition of the Board as a whole. The CGN Committee and the Board will also consider diversity in their assessment of potential candidates for the Board, including diversity of personal background, professional experience, qualifications and skills. This assessment will include consideration of individual skills, experience and perspectives that will help create an outstanding, dynamic, diverse and effective Board.
  • Independent Directors. Director independence is a cornerstone of good corporate governance, enabling the Board to objectively exercise oversight, evaluate performance and provide strategic direction. Our independent Board members provide the CEO and the rest of the management team unbiased input, while acting as a sounding board for new ideas. Except during periods of temporary vacancies, a majority of Synopsys’ Board must qualify as independent directors in accordance with the applicable federal securities laws and rules of The Nasdaq Stock Market.
  • Lead Independent Director. The Lead Independent Director (if appointed), along with the Chairperson of the Board, establishes the agenda for regular Board meetings and reviews and advises on the schedule of regular Board meetings, serves as chairperson of regular Board meetings when the Chairperson of the Board is absent, calls executive sessions of the independent directors, establishes the agenda for and presides at executive sessions, provides feedback from executive sessions to management, serves as a liaison between the CEO and the independent directors, participates in the annual performance evaluation of the CEO, encourages dialogue between the independent directors and management, and is available for consultation with stockholders at management’s request. The Lead Independent Director (if appointed) also performs such other duties as the Board may establish or delegate.

Number and Composition of Board Committees

  • Board Committee Composition. The purpose and responsibilities for each of the Board’s committees shall be outlined in committee charters adopted by the Board. The Board currently has the following three standing committees: the Audit Committee, Compensation and Organizational Development Committee (the “Compensation Committee”) and CGN Committee.
  • Other Board Committees. The Board may, from time to time, form new committees, reallocate responsibilities of one committee to another committee or disband a current committee. In addition, the Board may form ad hoc committees from time to time and determine the composition and areas of competence of such committees.

Majority Voting in Election of Directors

  • Majority Voting. In accordance with Synopsys’ Bylaws, in an uncontested election, a candidate for director will be elected only if the votes “for” the candidate exceeds 50% of the number of votes cast on the issue of that director’s election (including votes “for” and votes “against” with respect to that director’s election, but excluding any abstentions or broker non-votes). Notwithstanding the foregoing, in a contested election, each director to be so elected will be elected by a plurality of the votes cast by stockholders at such meeting, and shall only include votes “for” and votes to withhold authority.
  • Advance Conditional Resignation. A director who stands for re-election is expected to tender their resignation if they fail to receive the required number of votes for re-election. The Board shall nominate for election or re-election as director only candidates who tender, prior to such nomination, an irrevocable resignation that will be effective only upon (i) the failure to receive the required vote at a meeting at which they stand for election or re-election and (ii) the Board’s acceptance of such resignation in the Board’s exclusive discretion. In addition, the Board shall fill director vacancies and new directorships only with candidates who tender, prior to their appointment to the Board, the same form of resignation tendered by other directors in accordance with these guidelines.
  • Resignation Review Process. If a director fails to receive the required vote for re-election (a "Majority Against Vote") in an uncontested election, the CGN Committee shall promptly (i) consider such director’s resignation offer and the appropriate response based on the best interests of Synopsys and, if known, the reasons for the Majority Against Vote, and (ii) make a recommendation to the Board (which may include accepting the resignation, maintaining the director but addressing what the CGN Committee believes to be the underlying cause of the “against” votes, maintaining the director but resolving that the director will not be re-nominated in the future for election, or rejecting the resignation). The Board will act on the CGN Committee's recommendation within 90 days following certification of the stockholder vote. Thereafter, Synopsys will publicly disclose the decision reached by the Board and the reasons therefor. Any director who offers their resignation pursuant to this provision is expected to not participate in the CGN Committee or Board deliberations regarding whether to accept the resignation offer. However, if each member of the CGN Committee received a Majority Against Vote at the same election or if the only directors who did not receive a Majority Against Vote in the same election constitute three or fewer directors, then all directors may participate in the action regarding whether to accept the resignation offers, with each director who is required to offer their resignation in accordance with these guidelines recusing him or herself from the CGN Committee's and Board's deliberations and voting with respect to their individual offer to resign.

Board Meetings

  • Frequency of Board Meetings. The Board will generally hold four regularly scheduled meetings per year and holds additional meetings as necessary. Directors are expected to attend meetings, except in unusual circumstances.
  • Attendance at Annual Stockholders Meeting. Directors are expected to attend Synopsys’ annual stockholders meeting, except in unusual circumstances.
  • Executive Sessions. The Board will have regularly convened executive sessions of the independent directors.
  • Access to Employees and External Advisors. The Board is given access to Synopsys employees and external advisors to ensure that directors can gather all information necessary to fulfill their duties. Management is encouraged to invite Synopsys personnel to any Board meeting at which their presence and expertise would be helpful to the Board. 

Succession Planning and Performance Evaluations

  • Succession Planning. The Board will annually review the performance, development plans, retention strategies and succession plans for senior executive officers.
  • Board Evaluation. The Board, in conjunction with the CGN Committee, will undertake an annual assessment and evaluation of the Board, its committees and its members.

Director Service Guidelines

  • Limits on Other Board Service. The Board has approved a limit of four public company board memberships (including service on Synopsys’ Board) for non-employee directors. In addition, Board members who hold the position of executive officer of a public company should not serve on more than a total of two public company boards (including the board of their own company). Board members must consult with the Chairperson of the Board, the Chairperson of the CGN Committee, and the General Counsel before accepting an invitation to serve on the board of directors of another company. In any case, each Board member is expected to ensure that other existing and planned future commitments do not interfere with service as a Synopsys director and do not pose an actual or potential conflict of interest.
  • Directors Who Change Their Job Responsibility. The Board believes that directors who retire or change jobs should not necessarily leave the Board, but that such change in job responsibility may be a sufficient reason for leaving the Board. As a result, any director who retires or changes their job shall promptly submit to the Board an offer of resignation, which resignation offer shall be conditioned upon acceptance by the Board. The CGN Committee shall (i) consider the resignation offer and the appropriate response based on the best interests of Synopsys and (ii) make a recommendation to the Board (which may include accepting the resignation, maintaining the director but resolving that the director will not be re-nominated in the future for election or rejecting the resignation). Any director who offers their resignation pursuant to this provision shall not participate in the CGN Committee or Board deliberations regarding whether to accept the resignation offer. The CGN Committee should consider the change in job responsibility in connection with its assessment of the composition of the Board as a whole.
  • Board Refreshment Mechanisms. Synopsys does not have a mandatory retirement age. In lieu of a mandatory retirement age, the Board reviews director succession planning on an annual basis, and evaluates director skills, experience, diversity, qualifications and other attributes, including tenure and age, before nominating such Board member for re-election.
  • Continuing Education. Board members are expected to attend periodic presentations and updates on governance and other topics of importance for continuing education.
  • Board’s Communications with the Public and Others. The Board believes that management speaks for Synopsys. Individual Board members may, from time to time at the request of management, meet or otherwise communicate with investors, the press, and other various constituencies that are involved with Synopsys, with a representative of management present. If comments from the Board are appropriate, they should, in most circumstances, come from the Chairperson or Lead Independent Director (if appointed) of the Board.