Synopsys believes director and senior executive financial interests should be aligned closely with its stockholders' long-term interests. Accordingly, a substantial portion of director and executive compensation is linked to Synopsys' stock performance.
To further align these interests, in August 2003 Synopsys adopted Stock Ownership Guidelines for Board members and senior executives. The guidelines recommend that the following share ownership levels be achieved and maintained during the period of service: the CEO 50,000 shares; the COO 25,000 shares; and Senior VPs 10,000 shares. The guidelines recommend that non-employee Board members hold a number of shares equal in value to three times their annual cash retainer (currently, $125,000 per year).
Synopsys also believes that employee compensation should be tied to business success. Synopsys' annual corporate incentive plan represents a significant portion of our employees' total compensation opportunity. For technical and infrastructure employees, plan payouts are based on Synopsys' performance against plan, and on the specific performance of the individual employee's particular business unit against plan. Synopsys' sales personnel and applications consultants have variable compensation plans that are also linked to performance, including bookings.
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