<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SYNOPSYS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 28, 1997
To the Stockholders of Synopsys, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Synopsys,
Inc., a Delaware corporation (the "Company"), will be held on Friday, February
28, 1997, at 4:00 p.m., local time, at the Company's principal executive offices
at 700 East Middlefield Road, Mountain View, California 94043, for the following
purposes:
1. To elect six directors to serve for the ensuing year or until their
successors are elected.
2. To approve an amendment to the Company's 1994 Non-Employee Directors
Stock Option Plan to increase the number of options to purchase shares of
Common Stock granted to non-employee directors who are re-elected to the
Board of Directors from 5,000 shares per year to 8,000 shares per year.
3. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company for fiscal year 1997.
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on January 9, 1997 are
entitled to notice of and to vote at the meeting. All stockholders are cordially
invited to attend the meeting in person. However, to assure your representation
at the meeting, you are urged to sign and return the enclosed Proxy as promptly
as possible in the envelope enclosed. Any stockholder attending the meeting may
vote in person even if he or she has previously returned a Proxy.
Sincerely,
[LOGO]
Harvey C. Jones, Jr.
CHAIRMAN OF THE BOARD
Mountain View, California
January 14, 1997
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, AND COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
<PAGE>
[LOGO]
700 EAST MIDDLEFIELD ROAD
MOUNTAIN VIEW, CALIFORNIA 94043
---------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 28, 1997
---------------------
GENERAL INFORMATION
The enclosed proxy is solicited on behalf of the Board of Directors of
Synopsys, Inc., a Delaware corporation ("Synopsys" or the "Company"), for use at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held on February
28, 1997 at the Company's principal executive offices, 700 East Middlefield
Road, Mountain View, California 94043.
These proxy solicitation materials were mailed on or about January 14, 1997
to all stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The cost of soliciting proxies will be borne by the Company. The Company has
retained the services of Beacon Hill Partners, Inc. to assist in the
solicitation of proxies, for which it will receive a fee from the Company of
approximately $2,500 plus out-of-pocket expenses. In addition, the Company may
reimburse brokerage houses and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such beneficial
owners. The Company will furnish copies of solicitation material to such
brokerage houses and other representatives. Proxies may also be solicited by
certain of the Company's directors, officers and employees, without additional
compensation, personally or by telephone, telecopy or telegram. Except as
described above, the Company does not presently intend to solicit proxies other
than by mail.
REVOCABILITY OF PROXIES
Any person giving a proxy has the power to revoke it at any time before its
use by delivering to the Company's principal executive offices a written notice
of revocation or a duly executed proxy bearing a later date. The proxy may also
be revoked by attending the Annual Meeting and voting in person.
RECORD DATE, VOTING AND SHARE OWNERSHIP
Stockholders of record on January 9, 1997 are entitled to notice of and to
vote at the Annual Meeting. As of the record date, 41,033,558 shares of the
Company's common stock, $.01 par value ("Common Stock"), were issued and
outstanding. No shares of the Company's preferred stock were outstanding.
Each stockholder is entitled to one vote for each share of Common Stock held
by such stockholder of record as of the close of business on January 9, 1997.
The holders of a majority of the shares issued and outstanding, represented in
person or by proxy, shall constitute a quorum. All valid proxies received before
the meeting will be exercised. All shares represented by a proxy will be voted,
and where a stockholder specifies by means of his or her proxy a choice with
respect to any matter to be acted upon, the shares will
<PAGE>
be voted in accordance with the specification so made. If no choice is indicated
on the proxy, the shares will be voted in favor of the proposal. A stockholder
who abstains on any or all matters will be deemed present at the meeting for
quorum purposes, but will be deemed not to have voted in favor of the particular
matter (or matters) as to which the stockholder has abstained. In the event a
nominee (such as a brokerage firm) that is holding shares for a beneficial owner
does not receive instructions from such beneficial owner as to how to vote those
shares on certain matters and does not have discretionary authority to vote on
those matters, then the shares held by the nominee will be deemed present at the
meeting for quorum purposes but will not be deemed to have voted on such other
matters (a so-called "non-vote").
NOTE REGARDING SHARE-RELATED DATA
On September 8, 1995, the Company effected a two-for-one stock split in the
form of a stock dividend. All references to numbers of shares appearing in this
Proxy Statement have been adjusted to reflect such stock dividend.
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL ONE--ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall consist
of not fewer than five and not more than eight persons; within that range, the
Board has set the number of directors at six persons. At the Annual Meeting, six
directors are to be elected to serve until the Company's next Annual Meeting or
until their successors are elected and qualified. The Board of Directors has
selected six nominees, all of whom are current directors of the Company. Each
person nominated for election has agreed to serve if elected, and management has
no reason to believe that any nominee will be unavailable to serve. Unless
otherwise instructed, the proxy holders will vote the Proxies received by them
FOR the nominees named below. The six candidates receiving the highest number of
affirmative votes of the shares represented and voting on this proposal at the
Annual Meeting will be elected directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE FOLLOWING NOMINEES TO SERVE AS DIRECTORS OF THE COMPANY
UNTIL THE NEXT ANNUAL MEETING OR UNTIL THEIR SUCCESSORS HAVE BEEN ELECTED AND
QUALIFIED.
NOMINEES
Set forth below is information regarding the nominees, including information
furnished by them as to principal occupations, certain other directorships held
by them, any arrangements pursuant to which they were selected as directors or
nominees and their ages as of December 31, 1996.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED
NAME AGE DIRECTOR
- ----------------------------------------------------------------------- --- ---------------
<S> <C> <C>
Harvey C. Jones, Jr.................................................... 43 1988
Aart J. de Geus........................................................ 42 1986
Deborah A. Coleman..................................................... 43 1995
William W. Lattin...................................................... 56 1995
A. Richard Newton...................................................... 45 1987;1995
Steven C. Walske....................................................... 44 1991
</TABLE>
BACKGROUND OF DIRECTORS
Harvey C. Jones, Jr. joined the Company in December 1987, has been serving
as Chairman of the Board since December 1992 and was first elected as a Director
in 1988. He served as Chief Executive Officer from December 1987 until January
1994. Prior to joining Synopsys, Mr. Jones served as President and Chief
Executive Officer of Daisy Systems Corporation, a CAE company he co-founded in
1981. From
2
<PAGE>
1974 to 1981, Mr. Jones was employed by Calma Company, a CAD company, where his
last position was Vice President, Business Development. Mr. Jones holds a B.S.
in mathematics and computer sciences from Georgetown University, and an M.S. in
management from the Massachusetts Institute of Technology. Mr. Jones is a
director of Remedy Corporation, a developer of client/server software.
Dr. Aart J. de Geus co-founded the Company in December 1986, currently
serves as President and Chief Executive Officer and has served as a Director
since 1986. He served as President from December 1992 until January 1994. Prior
to December 1992, Dr. de Geus served as Chairman of the Board and Senior Vice
President, Marketing of the Company. Prior to his appointment as Senior Vice
President, Marketing, Dr. de Geus served as the Company's Senior Vice President,
Engineering. From 1982 to 1986, Dr. de Geus was employed by General Electric
Corporation, where he was the Manager of the Advanced Computer-Aided Engineering
Group. Dr. de Geus holds an M.S.E.E. from the Swiss Federal Institute of
Technology in Lausanne, Switzerland, and a Ph.D. in electrical engineering from
Southern Methodist University.
Deborah A. Coleman has been a Director of the Company since November 1,
1995. Ms. Coleman has been Chairman and Chief Executive Officer of Merix
Corporation, a manufacturer of printed circuit boards, since May 1994, when it
was spun off from Tektronix, Inc. Ms. Coleman joined Merix from Tektronix, a
diversified electronics corporation, where she served as Vice President of
Materials Operations, responsible for worldwide procurement, distribution,
component engineering and component manufacturing operations. Prior to joining
Tektronix in November 1992, Ms. Coleman was with Apple Computer, Inc. for eleven
years, where she held several executive positions, including Chief Financial
Officer, Chief Information Officer and Vice President of Operations. She is a
director of Octel Communications, a manufacturer of voice messaging systems.
Dr. William W. Lattin is an Executive Vice President of the Company and has
been a Director of the Company since July 28, 1995. Dr. Lattin joined the
Company in February 1994 in connection with the Company's merger with Logic
Modeling Corporation ("LMC"). From October 1994 to July 1995 he served as the
Company's Senior Vice President, Corporate Marketing, and from February 1994
until October 1994 Dr. Lattin served as Senior Vice President, Logic Modeling
Group. From December 1992 to February 1994, Dr. Lattin served as President,
Chief Executive Officer and Director of LMC, and from May 1992 to December 1992
he served as Chairman of the Board and Chief Executive Officer of LMC. From 1986
to May 1992, Dr. Lattin served as Chairman of the Board of Directors, President
and Chief Executive Officer of Logic Automation Incorporated, a predecessor of
LMC. Dr. Lattin holds a B.S.E.E. and an M.S.E.E. from the University of
California at Berkeley, and a Ph.D. in Electrical Engineering from Arizona
State. Dr. Lattin is also a Director of RadiSys Corporation, a supplier of
embedded computers as well as a Trustee of The Oregon Graduate Institute.
Dr. A. Richard Newton has been a Director of the Company since January 5,
1995. Previously, Dr. Newton was a Director of the Company from January 1987 to
June 1991. Dr. Newton has been a Professor of Electrical Engineering and
Computer Sciences at the University of California at Berkeley since 1979. Since
1988, Dr. Newton has acted as a Venture Partner with the Mayfield Fund, a
venture capital partnership, and has contributed to the evaluation and
development of over a dozen new companies. From November 1994 to July 1995 he
was acting President and Chief Executive Officer of Silicon Light Machines, a
private company which is developing display systems based on the application of
micromachined silicon light-valves.
Steven C. Walske has been a Director of the Company since December 1991. Mr.
Walske has been Chairman and Chief Executive Officer and a director of
Parametric Technology Corporation ("Parametric"), a supplier of software
products for mechanical computer-aided engineering, since August 1994. From
December 1986 to July 1994 Mr. Walske was President and Chief Executive Officer
of Parametric. Mr. Walske is also a director of Videoserver, Inc., a supplier of
network conference servers, Cascade
3
<PAGE>
Communications Corp., which makes broadband data communications equipment, and
Object Design Inc., which makes object data management software.
There are no family relationships among executive officers or directors of
the Company.
BOARD COMMITTEES AND MEETINGS
During fiscal year 1996, the Board of Directors held four meetings and acted
by unanimous written consent on one occasion. During such year the Board of
Directors had an Audit Committee and a Compensation Committee. The Board had a
Plan Administrators Committee until November 1, 1995, when the functions of the
Plan Administrators Committee were consolidated into the Compensation Committee.
The Audit Committee currently consists of two directors, Ms. Coleman and Dr.
Newton. Ms. Coleman has served on the Committee since November 1, 1995, when she
was elected as a director. Mr. Robert Kagle served on the Audit Committee from
October 1, 1995 until March 1, 1996, when his term as a director expired. Dr.
Newton served on the Audit Committee from October 1, 1995 to November 1, 1995
and from July 25, 1996 through the end of the fiscal year. The Audit Committee
is primarily responsible for approving the services performed by the Company's
independent auditors and reviewing their reports regarding the Company's
accounting practices and systems of internal accounting controls. The Audit
Committee held four meetings during the last fiscal year.
The Compensation Committee currently consists of three directors, Mr.
Walske, Dr. Newton and Ms. Coleman. During fiscal year 1996, Mr. Walske and Dr.
Newton served as members of the Committee for the full year. Ms. Coleman served
on the Committee from November 1, 1995, when she was elected as a director,
through the end of the fiscal year. The Compensation Committee is primarily
responsible for reviewing and approving the Company's general compensation
policies, setting compensation levels for the Company's executive officers and
administering the Company's 1992 Stock Option Plan (the "1992 Plan"), Employee
Stock Purchase Plan, International Employee Stock Purchase Plan and 401(k)
Savings Plan. The Committee held five meetings during fiscal year 1996 and acted
by unanimous written consent on six occasions.
The Company currently has no standing Nominating Committee. Nominations for
election of directors at the Annual Meeting were made by the full Board of
Directors of the Company.
During fiscal year 1996, no director attended fewer than 75% of the meetings
of the Board of Directors and Committees of the Board on which such director
served.
DIRECTORS' COMPENSATION
Each non-employee Board member is paid $3,000 ($2,500 prior to May 1, 1996)
plus certain expenses for each Board Meeting attended. Board members receive no
compensation for attending meetings of Board Committees.
In addition, non-employee Board members receive automatic option grants
under the 1994 Non-Employee Directors Stock Option Plan (the "Directors Plan").
As of the date of this Proxy there were three non-employee Board members
eligible to participate in the Directors Plan. Under the Directors Plan each
eligible non-employee Board member will automatically be granted, at the time of
his or her initial election or appointment to the Board, a non-statutory option
to purchase 20,000 shares of Common Stock (unless such member was previously an
employee of the Company). On the date of each annual stockholders meeting each
individual re-elected as a non-employee Board member at the annual meeting will
automatically be granted a non-statutory option to purchase 5,000 shares of
Common Stock. Proposal Two in this proxy is a proposed amendment to the
Directors Plan to increase the annual option grant to 8,000 shares.
4
<PAGE>
A total of 225,000 shares has been reserved for issuance under the Directors
Plan. The exercise price per share of Common Stock subject to each automatic
option grant is equal to one hundred percent (100%) of the fair market value per
share on the automatic grant date. The options have a maximum term of 10 years,
measured from the grant date, subject to earlier termination upon cessation of
service as a director.
Options granted under the Directors Plan are immediately exercisable for
shares, but any shares purchased are subject to repurchase by the Company at the
exercise price until the recipient's right in such shares vests. The initial
automatic grant for 20,000 shares made to each non-employee Board member vests,
and the Company's repurchase right relating thereto lapses, in a series of four
successive equal installments on the date immediately prior to each of the first
four annual meetings of stockholders following the grant date of that option,
provided the optionee continues in Board service through each such vesting date.
Each annual automatic grant vests in full, and the Company's repurchase right
relating thereto lapses, on the date immediately prior to the fourth annual
meeting of stockholders following the grant date of that option, provided the
optionee continues in Board service through such vesting date.
Notwithstanding the preceding paragraph, options granted under the Directors
Plan shall automatically vest upon the occurrence of certain corporate
transactions, including certain mergers or changes in control of the Company or
the sale of all or substantially all of the Company's assets. In the event of a
hostile tender offer for securities possessing more than 50% of the Company's
outstanding voting power, options granted under the Directors Plan and held for
more than six months may be surrendered for a cash distribution equal to the
excess of the tender offer price over the exercise price of the options.
During fiscal year 1996, an automatic grant of options to purchase 20,000
shares of Common Stock was made to Ms. Coleman on November 1, 1995, at an
exercise price of $35.50 per share. Mr. Walske, Dr. Newton and Ms. Coleman each
received automatic grants of options to purchase 5,000 shares of Common Stock on
March 1, 1996, at an exercise price of $33.75. In connection with the 1997
Annual Stockholders Meeting, and subject to shareholder approval of Proposal
Two, Mr. Walske, Dr. Newton and Ms. Coleman each will receive automatic grants
of options to purchase 8,000 shares of Common Stock.
During fiscal year 1996, Dr. Newton earned $17,000 for consulting services
provided to the Company. Under the Company's agreement with Dr. Newton, at the
Company's request, Dr. Newton provides advice as to industry and competitive
developments and market conditions.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of December 2, 1996 by (i)
each person known by the Company to own beneficially more than five percent of
the outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each of the executive officers named in the "Executive Compensation--SUMMARY
COMPENSATION TABLE" on page 7 (the "Named Executive Officers") and (iv) all
directors and current executive officers as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
-------------------------
PERCENTAGE
DIRECTORS, EXECUTIVE OFFICERS AND FIVE PERCENT STOCKHOLDERS NUMBER OWNERSHIP
- ----------------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
Putnam Investment Management ............................................................ 3,786,856(2) 8.90%
Boston, MA 02109-2137
T. Rowe Price Associates, Inc. .......................................................... 3,366,200(2) 7.91%
Baltimore, MD 21202-1008
J. & W. Seligman & Co., Inc. ............................................................ 2,861,562(2) 6.73%
New York, NY 10017-5598
Warburg, Pincus Counsellors, Inc. ....................................................... 2,202,800(2) 5.18%
New York, NY 10017-3147
Aart J. de Geus.......................................................................... 409,184(3) 1.00%
William W. Lattin........................................................................ 170,745 *
Chi-Foon Chan............................................................................ 139,092 *
Harvey C. Jones Jr....................................................................... 105,041 *
Prakash Bhalerao......................................................................... 86,926 *
Alain J. Labat........................................................................... 72,774 *
David C Bullis........................................................................... 37,514 *
A. Richard Newton........................................................................ 25,078 *
Deborah A. Coleman....................................................................... 25,000 *
Steven C. Walske......................................................................... 15,199 *
All directors and executive officers as a group (15 persons)............................. 1,174,671(3) 2.88%
</TABLE>
- ------------------------
* Less than 1%
(1) Includes shares subject to stock options that are currently exercisable or
will become exercisable within 60 days after December 2, 1996.
(2) Based on information obtained from publicly available filings with the
Securities and Exchange Commission as of September 1996.
(3) Excludes 11,000 shares held by Dr. de Geus' spouse, and as to which he
disclaims beneficial ownership.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned by the Company's
Chief Executive Officer and each of the other four most highly compensated
executive officers whose compensation for fiscal year 1996 exceeded $100,000,
for services rendered in all capacities to the Company during the last three
fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
----------------------------------------------- COMPENSATION
OTHER ANNUAL SECURITIES AWARDS
COMPENSATION (1) UNDERLYING OPTIONS ALL OTHER
NAME AND POSITION YEAR SALARY($) BONUS($) ($) (#) COMPENSATION ($)(2)
- ----------------------------------- ---- ---------- --------- ---------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
Aart J. de Geus 1996 260,000 240,000 -- 120,000 2,517
President and 1995 230,000 190,277 -- -- 1,488
Chief Executive Officer 1994 229,423 81,075 -- 120,000 --
Alain J. Labat 1996 165,000 183,618 97,196 25,000 2,700
Sr. Vice President 1995 155,000 72,050 260,130 30,000 1,603
Worldwide Field Operations 1994 149,808 92,702 74,660 40,000 --
Chi-Foon Chan 1996 224,138 153,930 -- 35,000 3,122
Executive Vice President; 1995 200,000 146,199 -- 24,000 2,082
Sr. Vice President, 1994 174,521 61,863 -- 40,000 --
Design Tools Group and
Design Reuse Group (4)
David C. Bullis 1996 187,000 127,134 -- 25,000 2,719
Sr. Vice President 1995 175,000 105,402 -- 40,000 1,678
Verification Systems Group 1994 149,792 80,807 -- 18,928 --
Prakash Bhalerao(4) 1996 187,000 125,373 -- -- 3,122
Sr. Vice President 1995 58,857 707,804(3) -- 129,166 1,184
Design Reuse Group 1994 -- -- -- -- --
</TABLE>
- ------------------------------
(1) "Other Annual Compensation" includes the following: (i) commissions of
$97,196, $252,930, and $67,460 earned by Mr. Labat for fiscal years 1996,
1995 and 1994, respectively; (ii) car allowances of $7,200 for Mr. Labat for
fiscal years 1995 and 1994.
(2) Amounts in this column reflect premiums paid for group term life insurance
and Company 401(k) contributions.
(3) Includes a bonus of $600,000 paid in connection with the Company's
acquisition of Silicon Architects in May 1995.
(4) Effective October 1, 1996, Mr. Bhalerao ceased to act as Sr. Vice President
of the Design Reuse Group, and Dr. Chan was appointed to such office.
STOCK OPTION TABLE
The table on the following page sets forth further information regarding
individual grants of options for the Company's Common Stock during fiscal year
1996 for each of the Named Executive Officers. All grants for each of the Named
Executive Officers were made pursuant to the 1992 Plan. In accordance with the
rules of the Securities and Exchange Commission ("SEC"), the table sets forth
the hypothetical gains or "option spreads" that would exist for the options at
the end of their respective ten-year terms based on assumed annualized rates of
compound stock price appreciation of 0%, 5%, and 10% from the dates the options
were granted to the end of the respective option terms. Actual gains, if any, on
option exercises are dependent on the future performance of the Company's Common
Stock and overall market conditions. There can be no assurance that the
potential realizable values shown in this table will be achieved.
No stock appreciation rights were granted to such officers during the 1996
fiscal year.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
NUMBER OF PERCENT OF TOTAL PRICE APPRECIATION FOR OPTION
SECURITIES OPTIONS GRANTED EXERCISE OR TERM ($)
UNDERLYING TO EMPLOYEES BASE PRICE EXPIRATION -------------------------------
NAME OPTIONS GRANTED (1) FISCAL 1996 (%) ($/SHARE) DATE 0% 5% 10%
- ---------------------- ------------------- ------------------- ------------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Aart J. de Geus....... 120,000 5.47 35.50 11/1/05 0 2,679,091 6,789,343
Alain J. Labat........ 25,000 1.14 35.50 11/1/05 0 558,144 1,414,446
Chi-Foon Chan......... 35,000 1.60 35.50 11/1/05 0 781,402 1,980,225
David C. Bullis....... 25,000 1.14 35.50 11/1/05 0 558,144 1,414,446
Prakash Bhalerao...... -- -- -- -- -- -- --
</TABLE>
- ------------------------------
(1) These options become exercisable ratably in a series of monthly installments
over a four-year period from the grant date, assuming continued service to
the Company, subject to acceleration under certain circumstances involving
change in control of the Company. Each option has a maximum term of 10
years, subject to earlier termination upon the optionee's cessation of
service.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth, for each of the Named Executive Officers,
each exercise of stock options during fiscal year 1996 and the year-end value of
unexercised options.
No stock appreciation rights were exercised during such fiscal year by the
Named Executive Officers, and except for limited stock appreciation rights
granted to certain executive officers prior to fiscal year 1996 which form part
of the outstanding stock options held by those officers, no stock appreciation
rights were outstanding at the end of that fiscal year.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF IN-THE-MONEY
SHARES VALUE OPTIONS AT FY-END: OPTIONS AT FY-END: ($)(2)
ACQUIRED REALIZED -------------------------- --------------------------
NAME ON EXERCISE ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Aart J. de Geus.............. 20,000 537,250 58,500 147,500 1,195,266 2,459,297
Alain J. Labat............... 4,000 152,750 70,000 52,918 2,113,040 958,727
Chi-Foon Chan................ 17,500 669,281 123,790 53,710 4,330,165 933,129
David C. Bullis.............. 28,206 556,478 11,458 53,006 197,418 1,015,014
Prakash Bhalerao............. 51,450 1,788,745 15,625 62,091 290,039 1,879,620
</TABLE>
- ------------------------------
(1) Market value at exercise less exercise price.
(2) Market value of underlying securities at year-end ($46.00) minus the
exercise price.
8
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT ARRANGEMENTS AND CHANGE OF
CONTROL AGREEMENTS
On May 10, 1995, the Company entered into a three year employment and
noncompetition agreement with Mr. Prakash Bhalerao (the "Employment Agreement")
in order to retain his services after the acquisition of Silicon Architects.
Under the agreement, Mr. Bhalerao received an initial bonus and award of stock
options. For fiscal year 1995, Mr. Bhalerao received a base salary of $175,000
per year and a bonus, based on the performance of Silicon Architects, of
$107,804. For fiscal year 1996, Mr. Bhalerao's base salary and bonus were
determined in accordance with the Company's regular executive compensation
policies, and are reported under the SUMMARY COMPENSATION TABLE on page 7. In
November 1996, the Company and Mr. Bhalerao entered into an agreement amending
the Employment Agreement, under which Mr. Bhalerao's employment with the Company
terminated on December 31, 1996 and the Company agreed not to repurchase shares
that Mr. Bhalerao has the right to acquire through the early exercise of certain
options. In addition, the agreement confirmed that Mr. Bhalerao's covenant not
to compete with the Company will remain in effect for its original term.
Under the 1992 Plan, in the event of certain changes in the ownership or
control of the Company involving a "Corporate Transaction," which includes an
acquisition of the Company by merger or asset sale, all outstanding options
under the 1992 Plan will automatically become exercisable, unless the option is
assumed by the successor corporation (or parent thereof) or replaced by a
comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof).
In addition, in the event of a successful hostile tender offer for more than
50% of the Company's outstanding Common Stock or a change in the majority of the
Board as a result of one or more contested elections for Board membership, the
Compensation Committee has the authority to provide for the acceleration of
vesting of the shares of Common Stock subject to outstanding options under the
1992 Plan.
REPORT OF THE COMPENSATION COMMITTEE
The following is the Report of the Compensation Committee of the Board of
Directors describing the compensation policies, and the rationale therefor, with
respect to the compensation paid to the Company's executive officers for fiscal
year 1996.
PURPOSE OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for determining compensation levels for the executive officers for
each fiscal year based upon a consistent set of policies and procedures.
COMMITTEE STRUCTURE
During the 1996 fiscal year, the Committee was made up of three independent,
non-employee members of the Board of Directors. Steven C. Walske and Dr. A.
Richard Newton served as members of the Committee for the full year. Deborah
Coleman served as a member of the Committee from November 1, 1995 through the
end of the fiscal year. The Committee met during the first quarter of the fiscal
year to set executive officer salaries and bonus plans. Ms. Coleman joined the
Committee after such meeting and did not participate in such determination.
OBJECTIVES OF THE COMPENSATION PROGRAM
The objectives of the compensation program as established by the Committee
are: (1) to provide a means for the Company to attract and retain high-quality
executives; (2) to tie executive compensation directly to the Company's business
and performance objectives; and (3) to reward outstanding individual performance
that contributes to the long-term success of the Company.
9
<PAGE>
ELEMENTS OF COMPENSATION
Each executive officer's compensation package is comprised of three
elements: (1) base compensation, which reflects individual performance and is
designed primarily to be competitive with salary levels in a comparative group;
(2) annual bonus plan compensation payable in cash and tied to the achievement
of financial performance goals and specific individual performance objectives
established by the Chief Executive Officer for his direct reports, and by the
Committee for the Chief Executive Officer and the Chairman of the Board; and (3)
long-term stock-based incentive compensation which emphasizes a focus on Company
growth and increased stockholder value.
BASE COMPENSATION. The base compensation for each executive officer is
determined using an analysis of competitive salary ranges provided by an
independent compensation survey firm which focuses on software and related
companies similar in size and business that compete with Synopsys in the
recruitment and retention of senior personnel.
For purposes of the stock price performance graph which appears later in
this Proxy Statement, the Company has selected the S&P Technology Sector Index
as the industry index. Some of the companies which the Committee surveyed as
part of the peer group for comparative compensation purposes are included in
that index. The S&P Technology Sector Index also includes a significant number
of companies that are of greater size than the Company, that participate in
different industries than the Company or are located in different regions from
the Company, and use of index companies alone would have incorrectly affected
compensation comparisons. In selecting additional companies to survey for such
compensation purposes, the Committee reviewed the Radford Survey of competitive
salaries in the high technology sector and focused primarily on whether those
companies were actually competitive with the Company in seeking executive
talent. Consequently, the additional companies included in the compensation
comparison survey did not necessarily form a part of the S&P Technology Sector
Index.
The Committee considered the following factors in determining base
compensation: (1) salary levels for comparable positions in the compensation
comparison group; (2) each executive's performance relative to corporate,
business group (if applicable) and individual objectives; and (3) each
executive's responsibility level and financial and strategic objectives for the
subsequent year. The base compensation for the majority of the executive
officers of the Company for fiscal year 1996 was approximately equal to, or was
below, the mean compensation for executive officers at companies in the
compensation comparison group with which the Company competes for talent.
ANNUAL BONUS PLAN COMPENSATION. The Company's fiscal year 1996 bonus plan
provided for incentive bonus compensation to all officers and a number of key
employees based on the achievement of specific corporate performance targets
established at the beginning of the fiscal year relating to orders, operating
income and, for business groups, contribution margin. An executive officer may
receive additional compensation based on a qualitative assessment of his or her
performance by the Chief Executive Officer, in consultation with the Board of
Directors. For fiscal year 1996, a bonus formula was established such that
achievement of planned orders, operating income and, where applicable,
contribution margin would result in a specified bonus level. For performance
levels over or under plan, the bonus compensation amount would increase or
decrease proportionately. For fiscal year 1996, accepted orders were
significantly above and operating income slightly below the established targets,
and contribution margin varied by business unit. Bonus compensation (except for
the qualitative component) was determined according to the compensation formula
established at the beginning of the year. Total Bonus Compensation for the Named
Executive Officers is shown in the SUMMARY COMPENSATION TABLE on page 7. The
Committee believes that these levels of compensation are a fair reflection of
the performance of the named individuals.
The Company's incentive bonus compensation structure was reviewed for fiscal
year 1997 and revised to include specific corporate performance targets relating
to accepted orders, revenue, individual performance and operating margin (or,
for individual business groups, contribution margin).
10
<PAGE>
LONG-TERM INCENTIVE COMPENSATION. Long-term compensation provided to the
Company's executives has been in the form of stock options. The Committee
believes that equity-based compensation closely aligns the interests of
executive officers with those of stockholders by providing an incentive to
manage the Company with a focus on long-term strategic objectives set by the
Board of Directors relating to growth and stockholder value. Stock options are
granted under the Company's 1992 Stock Option Plan according to a matrix which
takes into account the Company's long-term objectives for maintaining and
expanding technological leadership through product development and growth, the
executive's responsibility level, expected Company performance, comparison with
comparable awards to individuals in similar positions in the industry, and the
executive's existing holdings of unvested stock options. However, the Committee
does not strictly adhere to these factors in all cases and will vary the size of
the grant made to each executive officer as the particular circumstances
warrant. Each grant allows the officer to acquire shares of the Company's Common
Stock at the fair market value in effect on the date of grant over a specified
period of time up to 10 years.
The options vest in a series of installments over a four-year period,
contingent upon the executive's continued employment with the Company.
Accordingly, the option will provide a return to the executive only if he or she
remains in the Company's employ, and then only if the market price of the Common
Stock appreciates over the option term. Subsequent grants may be made to
officers when the Committee believes that the officer has demonstrated greater
potential, achieved more than originally expected, or assumed expanded
responsibilities. Additionally, subsequent grants may be made to remain
competitive with similar companies.
The Committee concluded that the strategic objectives for fiscal year 1996
set by the Board of Directors were achieved by the executive officers and that
their performance warrants the level of long-term compensation awarded them as
set forth in the SUMMARY COMPENSATION TABLE on page 7. The Committee will
reexamine long-term compensation levels each year.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Compensation for the Chief Executive Officer is determined by a process
similar to that discussed above for executive officers. Dr. de Geus' base
compensation for fiscal year 1996 was established by the Committee in November
1995. Dr. de Geus' base compensation remained below the mean base compensation
for the chief executive officers in the compensation comparison group with which
the Company competes for executives.
The Committee also established Dr. de Geus' individual bonus plan for the
fiscal year by establishing a formula based on accepted orders and operating
income. For performance levels over or under plan, the bonus compensation amount
would increase or decrease proportionately. Dr. de Geus was also eligible for an
additional bonus based on a qualitative assessment of his performance by the
Board of Directors. For fiscal year 1996, accepted orders were significantly
above and operating income slightly below the established targets. Bonus
compensation (except for the qualitative component) was determined according to
the compensation formula established at the beginning of the year. Dr. de Geus'
total bonus compensation is shown in the SUMMARY COMPENSATION TABLE on page 7,
and reflects receipt of the full discretionary bonus amount by the Board. The
Committee believes that this level of compensation is a fair reflection of Dr.
de Geus' performance for the year.
11
<PAGE>
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The cash compensation to be paid to the Company's executive officers for
fiscal year 1996 is not expected to exceed the $1 million limit per officer on
the tax deductibility of such compensation under the Internal Revenue Code.
Under the Company's 1992 Stock Option Plan, compensation deemed paid to an
executive officer when he or she exercises an outstanding option under the Plan
will qualify as performance-based compensation which will not be subject to the
$1 million limitation.
COMPENSATION COMMITTEE
Steven C. Walske
A. Richard Newton
Deborah Coleman
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee or the Plan Administrators
Committee was at any time during the 1996 fiscal year or at any other time an
officer or employee of the Company. As described on page 5, Dr. Newton served as
a consultant to the Company during fiscal year 1996.
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as members of the Company's Board of Directors or the
Compensation Committee or the Plan Administrators Committee.
12
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders of
the Company's Common Stock since February 26, 1992 (the date the Company first
became subject to the reporting requirements of the Securities Exchange Act of
1934, as amended) to the cumulative total return since January 31, 1992 of (1)
the S&P 500 Index and (2) the S&P Technology Sector Index over the same period
(assuming the investment of $100 in the Company's Common Stock and in each of
the other indexes, and reinvestment of all dividends).
COMPARISON OF 55 MONTH CUMULATIVE TOTAL RETURN*
AMONG SYNOPSYS, INC., THE S&P 500 INDEX
AND THE S&P TECHNOLOGY SECTOR INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S & P TECHNOLOGY
SYNOPSYS, INC. S & P 500 SECTOR
<S> <C> <C> <C>
2/26/92 100 100 100
9/92 164 104 95
9/93 264 118 115
9/94 251 122 133
9/95 342 159 210
9/96 513 191 258
</TABLE>
* $100 INVESTED ON 02/26/92 IN STOCK OR
ON 01/31/92 IN INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
13
<PAGE>
PROPOSAL TWO--AMENDMENT TO THE COMPANY'S
1994 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Board of Directors is requesting stockholder approval of an amendment to
the Company's 1994 Non-Employee Director Stock Option Plan to increase the
number of options to purchase shares of Common Stock granted to non-employee
directors who are re-elected to the Board of Directors from 5,000 shares per
year to 8,000 shares per year.
The Directors Plan is designed to serve as an equity incentive program to
attract and retain highly-qualified individuals with substantial experience in
the industry to serve as non-employee members of the Board. The Board believes
that an increase in the annual grant to non-employee directors is warranted so
that the Company provides compensation to directors that is comparable to that
being provided by other Silicon Valley software companies.
The Board of Directors believes that the proposed amendment is in the best
interests of the Company, its stockholders and its employees. ACCORDINGLY, THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL TWO.
DESCRIPTION OF DIRECTORS PLAN
The following is a summary of the principal features of the Directors Plan.
The summary, however, does not purport to be a complete description of all of
the provisions of the Directors Plan. Any stockholder who wishes to obtain a
copy of the actual plan document may do so by written request to the Company's
Secretary at the Company's executive offices.
PLAN ADMINISTRATION
The terms and conditions of each automatic option grant (including the
timing and pricing of the option grant) will be governed by the express terms
and conditions of the Directors Plan, and neither the Board nor any Committee of
the Board will exercise any discretionary functions with respect to such option
grants.
ISSUABLE SHARES
Under the Directors Plan, 225,000 shares of Common Stock have been reserved
for issuance and may be drawn from the Company's authorized but unissued shares
of Common Stock, including shares repurchased by the Company. The share reserve
automatically increases by 25,000 shares on the first trading day of each
calendar year. As of December 2, 1996, options in respect of 65,000 shares were
outstanding under the Directors Plan and options in respect of 155,000 shares
were available for issuance.
Upon expiration or termination of an outstanding option for any reason prior
to exercise in full, the shares subject to the portion of each option not so
exercised will be available for subsequent option grants. Shares issued under
the Directors Plan, whether or not such shares are subsequently repurchased by
the Company and shares subject to any option or portion thereof surrendered in
accordance with the cash-out provisions of the Directors Plan will reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent option grants.
In the event of any change in the Common Stock issuable under the Directors
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Company's receipt of consideration, then, in order
to prevent the dilution or enlargement of the rights and benefits under each
option, appropriate adjustments will be made to (i) the maximum number and/or
class of securities issuable under the Directors Plan, (ii) the number and/or
class of securities by which the share reserve is to increase automatically each
calendar year, (iii) the number and/or class of securities for which automatic
option
14
<PAGE>
grants are to be subsequently made to each newly-elected or continuing
non-employee Board member and (iv) the number and/or class of securities and
exercise price per share under each outstanding option.
ELIGIBILITY FOR GRANTS
Under the Directors Plan, grants are made to non-employee directors upon
their initial election to the Board and upon their re-election as non-employee
Board members. A non-employee Board member who has previously been an employee
of the Company will not be eligible to receive an automatic option grant upon
his or her initial election or appointment to the Board, but will be eligible to
receive annual option grants. As of January 14, 1997, there were three
non-employee Board members eligible to participate in the Directors Plan.
OPTION GRANTS
Upon the initial election of a non-employee Board member, such member is
automatically granted an option to purchase 20,000 shares of Common Stock.
During fiscal year 1996, such a grant was made to Ms. Coleman on November 1,
1995.
In addition, under the current terms of the Directors Plan, on the date of
each annual stockholders meeting, each individual re-elected as a non-employee
Board member at the annual meeting will automatically be granted a non-statutory
option to purchase 5,000 shares of Common Stock. Mr. Walske, Dr. Newton and Ms.
Coleman each received such a grant in connection with their re-election to the
Board at the 1996 annual meeting. If this Proposal Two is adopted, the annual
automatic grant will be increased to 8,000 shares. Assuming adoption of this
Proposal, Mr. Walske, Dr. Newton and Ms. Coleman will each receive an option for
8,000 shares if they are re-elected to the Board at the Annual Meeting. There is
no limit on the number of such annual option grants that any one non-employee
Board member may receive over his or her period of continued Board service.
PRICE, VESTING AND EXERCISABILITY
The exercise price per share of Common Stock subject to each automatic
option grant will be equal to 100% of the fair market value per share of the
Common Stock on the grant date, which is deemed to be equal to the closing
selling price per share of Common Stock on the grant date, as reported on the
Nasdaq Stock Market. On December 2, 1996 the fair market value per share was
$46.125.
Each automatic grant will be immediately exercisable for any or all of the
option shares. Any shares purchased under such options will be subject to
repurchase by the Company, at the exercise price paid per share, upon the
optionee's cessation of Board service prior to vesting of those shares.
Upon exercise of the option, the option price for the purchased shares will
become immediately payable in cash or in shares of Common Stock valued at fair
market value on the date of exercise. For vested shares the option may also be
exercised through a cashless exercise procedure pursuant to which the optionee
provides irrevocable written instructions to a designated brokerage firm to
effect the immediate sale of the purchased shares and to remit to the Company,
out of the sale proceeds, an amount equal to the aggregate option price payable
for the purchased shares plus all applicable withholding taxes.
The initial automatic grant of 20,000 shares vests in a series of four
successive equal installments on the date immediately prior to each of the first
four annual stockholders' meetings following the grant date of that option,
provided the optionee continues in Board service through that vesting date.
Each annual 5,000-share automatic grant (8,000-share if this Proposal Two is
adopted) will vest in full on the date immediately prior to the fourth annual
stockholders' meeting following the grant date of that option, provided the
optionee continues in Board service through that vesting date.
The options have a maximum term of ten years, measured from the grant date.
15
<PAGE>
TERMINATION OF BOARD SERVICE
Should the optionee cease to serve as a Board member for any reason (other
than death or disability) while holding one or more automatic option grants,
then that individual will have a six-month period following the date of such
cessation of Board service in which to exercise each such option for any or all
of the option shares in which he or she is vested at the time of cessation of
Board service.
SPECIAL ACCELERATION EVENTS
In the event the Company is acquired by a merger or asset sale, the shares
of Common Stock at the time subject to each outstanding automatic grant but not
otherwise vested will vest in full so that each such option will, immediately
prior to the specified effective date for such acquisition, become exercisable
for fully-vested shares. Immediately following the consummation of the
acquisition, each automatic option grant will terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.
In connection with any hostile take-over of the Company, whether effected by
a tender offer for securities possessing more than 50% of the Company's
outstanding voting power or by a change in the majority of the Board resulting
from one or more contested elections for Board membership, the shares of Common
Stock at the time subject to each outstanding automatic grant but not otherwise
vested will vest in full so that each such option will, immediately prior to the
specified effective date for such take-over, become exercisable for fully-vested
shares. Each such option will remain so exercisable until the expiration or
sooner termination of the option term.
Upon the successful completion of a hostile tender offer for securities
possessing more than 50% of the Company's outstanding voting power, each
optionee will have a thirty-day period in which to surrender to the Company each
automatic option grant held by him or her for a period of at least six months.
The optionee will in return be entitled to a cash distribution from the Company
in an amount per surrendered option share equal to the highest price paid per
share of Common Stock in the tender offer, less the exercise price payable per
share under the surrendered option.
The automatic option grants will in no way affect the right of the Company
to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets. However, the acceleration of vesting of
the option shares upon an acquisition of the Company by merger or asset sale or
upon a hostile takeover may be seen as an anti-takeover provision and may have
the effect of discouraging a merger proposal, a takeover attempt or other effort
to gain control of the Company.
AMENDMENT AND TERMINATION
The Board of Directors may amend or modify the Directors Plan in any or all
respects whatsoever. However, the provisions of the Directors Plan, together
with the option grants outstanding thereunder, may not be amended at intervals
more frequently than once every six months, other than to the extent necessary
to comply with applicable Federal income tax laws and regulations. In addition,
without the approval of the Company's stockholders, the Board may not (i)
materially increase the maximum number of shares issuable under the Directors
Plan, (ii) materially modify the eligibility requirements for participation, or
(iii) otherwise materially increase the benefits accruing to participants under
the Directors Plan.
The Directors Plan will terminate upon the earlier of (i) October 26, 2004
or (ii) the date on which all shares available for issuance under the Directors
Plan are issued or canceled pursuant to the exercise or cash-out of the granted
options. Each stock option outstanding at the time of a termination pursuant to
clause (i) will remain in force in accordance with the provision of the
instruments evidencing such grant.
16
<PAGE>
TAX INFORMATION
Options granted under the Directors Plan will be non-statutory options that
are not intended to meet the requirements of Section 422 of the Internal Revenue
Code. No taxable income is recognized by an optionee upon the grant of a
non-statutory option. The optionee will in general recognize ordinary income, in
the year in which the option is exercised, equal to the excess of the fair
market value of the purchased shares on the date of exercise over the exercise
price paid for such shares, and the optionee will be required to satisfy the tax
withholding requirements applicable to such income.
Special provisions of the Internal Revenue Code apply to the acquisition of
unvested shares of Common Stock under a non-statutory option. These special
provisions may be summarized as follows:
If the shares acquired upon exercise of the non-statutory option are subject
to repurchase by the Company at the original option exercise price in the event
of the optionee's termination of Board service prior to vesting in those shares,
then the optionee will not recognize any taxable income at the time of exercise
but will have to report as ordinary income, as the optionee vests in the shares,
an amount equal to the excess of (i) the fair market value of those shares on
the vesting date over (ii) the option exercise price paid for such shares.
The optionee may, however, elect under Section 83(b) of the Internal Revenue
Code to include as ordinary income in the year of exercise of the non-statutory
option an amount equal to the excess of (i) the fair market value of the
purchased shares on the exercise date over (i) the option exercise price paid
for such shares. If the Section 83(b) election is made, the optionee will not
recognize any additional income as and when he or she vests in such shares.
The Company will be entitled to an income tax deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised
non-statutory option for the taxable year of the Company in which such ordinary
income is recognized by the optionee.
17
<PAGE>
PLAN BENEFITS TABLE
The table below shows, as to each of the Named Executive Officers and the
various indicated individuals and groups, the number of options on Common Stock
of the Company granted under the Directors Plan from the beginning of fiscal
year 1996 through December 1, 1996, together with the weighted average exercise
price payable per share.
PLAN BENEFITS
DIRECTORS PLAN
(OCTOBER 1, 1995 THROUGH DECEMBER 1, 1996)
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE EXERCISE
NAME AND POSITION OPTIONS GRANTED PRICE ($)
- ----------------------------------------------------------- --------------- -----------------
<S> <C> <C>
Aart J. de Geus (1) ....................................... -- --
President and Chief Executive Officer
Alain J. Labat (1) ........................................ -- --
Sr. Vice President
Worldwide Field Operations
Chi-Foon Chan (1)(2) ...................................... -- --
Executive Vice President;
Sr. Vice President,
Design Tools Group and
Design Reuse Group
David C. Bullis (1) ....................................... -- --
Sr. Vice President
Verification Systems Group
Prakash Bhalerao (1)(2) ................................... -- --
Sr. Vice President
Design Reuse Group
Executive officers as a group (15 persons) ................ -- --
Non-employee directors as a group (3 persons) ............. 35,000(3) 34.75
Non-executive officer employees as a group (1) ............ -- --
</TABLE>
- ------------------------
(1) Employees of the Company are not eligible to participate in the Directors
Stock Option Plan and are included in Table to satisfy reporting
requirements.
(2) Effective October 1, 1996, Mr. Bhalerao ceased to act as Sr. Vice President
of the Design Reuse Group, and Mr. Chan was appointed to such office.
(3) Represents 25,000 options for Ms. Coleman and 5,000 options for Dr. Newton
and Mr. Walske, respectively.
18
<PAGE>
PROPOSAL THREE--RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP,
independent auditors, to audit the financial statements of the Company for
fiscal year 1997. KPMG Peat Marwick LLP has audited the Company's consolidated
financial statements since fiscal year 1992.
A representative of KPMG Peat Marwick LLP is expected to be present at the
Annual Meeting, will have the opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Ratification of the appointment of KPMG
Peat Marwick LLP requires the affirmative vote of a majority of the votes cast
at a duly held stockholders meeting at which there is a quorum.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK LLP TO SERVE AS THE COMPANY'S
INDEPENDENT AUDITORS FOR FISCAL YEAR 1997.
ADDITIONAL INFORMATION
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, officers and ten percent stockholders to file reports of ownership
and changes in ownership with the SEC. Directors, officers and greater than ten
percent stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of the Forms 3, 4 and 5 received by
the Company and/or written representations from certain reporting persons that
no Form 5s were required for such persons, the Company believes that each of its
directors, officers and greater than ten percent beneficial owners during the
fiscal year ended September 28, 1996 have complied with all filing requirements
applicable to such person, except that in July 1996, Dr. Newton filed an amended
Form 4 to reflect 78 shares he held in July 1995 but did not report on his Form
4 filed at that time.
ANNUAL REPORT
A copy of the Annual Report of the Company for fiscal year 1996 has been
mailed concurrently with this Proxy Statement to all stockholders entitled to
notice of and to vote at the Annual Meeting. The Annual Report is not
incorporated into this Proxy Statement and is not considered proxy solicitation
material.
FORM 10-K
The Company filed an Annual Report on Form 10-K with the Securities and
Exchange Commission. Stockholders may obtain a copy of this report, without
charge, by writing to Paul Lippe, Secretary, at the Company.
19
<PAGE>
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
Proxy to vote the shares they represent as the Board of Directors may recommend.
Discretionary authority with respect to such other matters is granted by the
execution of the enclosed Proxy. Proposals of stockholders of the Company that
are intended to be presented by such stockholders at the Company's 1998 Annual
Meeting must be received by the Company no later than September 16, 1997 in
order that they may be included in the proxy statement and proxy relating to
that meeting.
THE BOARD OF DIRECTORS
Dated: January 14, 1997
20
<PAGE>
SYNOPSYS, INC.
Annual Meeting of Stockholders, February 28, 1997
P
R This Proxy is Solicited on Behalf of the Board of Directors of
O Synopsys, Inc.
X
Y The undersigned revokes all previous proxies, acknowledges receipt of
the Notice of Annual Meeting of Stockholders to be held February 28,
1997 and the Proxy Statement and appoints Aart J. de Geus and A. Brooke
Seawell, and each of them individually, the Proxy of the undersigned,
with full power of substitution, to vote all shares of Common Stock of
Synopsys, Inc. (the "Company") that the undersigned is entitled to
vote, either on his or her own behalf or on behalf of any entity or
entities, at the Annual Meeting of Stockholders of the Company to be
held at the Company's offices at 700 East Middlefield Road, Mountain
View, California on Friday, February 28, 1997 at 4:00 p.m. (the "Annual
Meeting"), and at any adjournment or adjournments thereof, with the same
force and effect as the undersigned might or could do if personally
present. The shares represented by the Proxy shall be voted in the
manner as set forth on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
<PAGE>
X PLEASE MARK
VOTES AS IN
THIS EXAMPLE
The Board of Directors recommends a vote FOR each of the directors listed
below and a vote FOR the other proposals. This Proxy, when properly executed,
will be voted as specified below. This Proxy will be voted FOR the election
of the directors listed below and FOR the other proposals if no specification
is made.
<TABLE>
<CAPTION>
<S> <C> <C>
1. To elect the following directors 2. To amend the Company's 1994 Non-Employee FOR AGAINST ABSTAIN
to serve for the ensuing year: Director Stock Option Plan to increase the number
NOMINEES: Harvey C. Jones Jr., of options to purchase shares of Common Stock / / / / / /
Aart J. de Geus, Deborah A. Coleman, granted to non-employee directors who are
William W. Lattin, A. Richard Newton, re-elected to the Board from 5,000 to 8,000
Steven C. Walske shares per year.
FOR WITHHELD 3. To ratify the appointment of KPMG Peat Marwick LLP FOR AGAINST ABSTAIN
/ / / / as independent auditors of the Company for the
current fiscal year ending September 27, 1997. / / / / / /
4. To transact such other business as may properly
come before the meeting or any adjournment or
adjournments thereof.
MARK HERE
FOR ADDRESS / /
- -------------------------------- CHANGE AND / /
For all nominees except as noted above NOTE BELOW
Please sign exactly as name appears above.
When shares are held by joint tenants both
should sign. When signing as an attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a
Corporation, please sign in full corporate name Please sign your name:
by the President or other authorized officer.
If a partnership, please sign in partnership Signature:----------------------------------Date------------
name by an authorized person. Signature:----------------------------------Date------------
</TABLE>
