Under our Employee Stock Purchase Plan (ESPP), participating employees are granted the right to purchase shares of common stock at a price per share that is 85% of the lesser of the fair market value of the shares at (1) the beginning of an offering period (generally, a rolling two year period) or (2) the purchase date (generally occurring at the end of each semi-annual purchase period), subject to the terms of ESPP, including a limit on the number of shares that may be purchased in a purchase period.

On April 12, 2022, our stockholders approved amendments to the ESPP to increase the number of shares of common stock authorized for issuance under the plan by 2.0 million shares. During fiscal 2023, 2022 and 2021, we issued 0.6 million, 0.7 million, and 1.0 million shares, respectively, under the ESPP at average per share prices of $266.82, $195.48 and $134.26, respectively. As of October 31, 2023, 13.5 million shares of common stock were reserved for future issuance under the ESPP.

2006 Employee Equity Incentive Plan. On April 25, 2006, our stockholders approved the 2006 Employee Equity Incentive Plan (2006 Employee Plan), which provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights and other forms of equity compensation, including performance stock awards and performance cash awards, as determined by the plan administrator. The terms and conditions of each type of award are set forth in the 2006 Employee Plan and in the award agreements governing particular awards.

Restricted stock units are granted under the 2006 Employee Plan as part of our incentive compensation program. In general, restricted stock units vest over three to four years and are subject to the employee's continuing service with us. Restricted stock units granted with specific performance criteria vest to the extent performance conditions are met. Restricted stock units granted with certain market conditions vest over two to three years to the extent these market conditions are met. For each restricted stock unit granted under the 2006 Employee Plan, a share reserve ratio of 1.70 is applied for the purpose of determining the remaining number of shares reserved for future grants under the plan. Options granted under this plan generally have a contractual term of seven years and generally vest over four years.

On April 12, 2023, our stockholders amended the 2006 Employee Plan to, among other things, increase the number of shares of common stock reserved for future issuance under the plan by 3.3 million shares. As of October 31, 2023, an aggregate of 1.5 million stock options and 4.5 million restricted stock units were outstanding, and 13.3 million shares were available for future issuance under the 2006 Employee Plan.

2005 and 2017 Non-Employee Directors Equity Incentive Plans. On April 6, 2017, our stockholders approved the 2017 Non-Employee Directors Equity Incentive Plan (2017 Directors Plan). In connection with stockholder approval of the 2017 Directors Plan, the 2005 Non-Employee Directors Equity Incentive Plan (2005 Directors Plan) was terminated as of April 6, 2017, and no awards could be granted under the 2005 Directors Plan after that date.

Under the 2005 Directors Plan, we granted options, which vest over a period of three to four years to non-employee directors. As of October 31, 2023, 7,500 stock options were outstanding under the 2005 Directors Plan.

The 2017 Directors Plan provides for equity awards to non-employee directors in the form of stock options, restricted stock units, restricted stock or a combination thereof. On April 6, 2017, our stockholders approved an aggregate of 0.45 million shares of common stock reserved under the 2017 Directors Plan.

We grant restricted stock awards and options under the 2017 Directors Plan. Restricted stock awards generally vest on an annual basis and options vest over a period of three years. As of October 31, 2023, 4,806 shares of restricted stock awards were unvested and 12,792 stock options were outstanding, and a total of 368,407 shares of common stock were reserved for future issuance under the 2017 Directors Plan.

Other Assumed Stock Plans through Acquisitions. We have assumed certain outstanding stock awards of acquired companies, including restricted stock units and options. If these assumed equity awards are canceled, forfeited or expire unexercised, the underlying shares do not become available for future grant. As of October 31, 2023, 31 thousand shares of our common stock remained subject to such outstanding assumed equity awards.


	Restricted Stock Units Outstanding(1)	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (In Years)	Aggregate Fair Value
	(in thousands, except per share amounts and years)
Balance at October 31, 2020	4,130	$	134.80	1.47
Granted(2)	1,901	$	258.58
Vested(4)	(1,565)	$	122.01		$	421,034
Forfeited	(279)	$	167.76
Balance at October 31, 2021	4,187	$	193.58	1.39
Granted(3)	2,402	$	323.46
Vested(4)	(1,589)	$	170.36		$	529,766
Forfeited	(362)	$	228.70
Balance at October 31, 2022	4,638	$	265.76	1.32
Granted(3)	2,083	$	394.34
Vested(4)	(1,839)	$	237.19		$	706,136
Forfeited	(365)	$	283.29
Balance at October 31, 2023	4,517	$	335.26	1.41

(1)No restricted stock units were assumed in connection with acquisitions in the last three fiscal years, but the balance at fiscal year-end includes certain restricted stock units that were previously assumed in connection with acquisitions.

(2)The number of granted restricted stock units includes those granted to senior management with performance-based vesting criteria (in addition to service-based vesting criteria) (performance-based RSUs) reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied.

(3)The number of granted restricted stock units includes those granted to senior management with market-based and performance-based vesting criteria (in addition to service-based vesting criteria) (market-based RSUs) reported at the maximum possible number of shares that may ultimately be issuable if all applicable market-based and performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied.


	Options Outstanding
	Shares Under Stock Option (1)	Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life (In Years)	Aggregate Intrinsic Value
	(in thousands, except per share amounts and years)
Balance at October 31, 2020	3,993	$	85.26	4.10	$	513,845
Granted	353	$	239.46

Exercised	(1,203)	$	66.50
Canceled/forfeited/expired	(36)	$	128.49
Balance at October 31, 2021	3,107	$	109.51	3.81	$	694,921
Granted	293	$	342.86

Exercised	(1,126)	$	86.24
Canceled/forfeited/expired	(114)	$	164.46
Balance at October 31, 2022	2,160	$	150.37	3.57	$	328,120
Granted	294	$	361.64

Exercised	(849)	$	109.83
Canceled/forfeited/expired	(90)	$	245.86
Balance at October 31, 2023	1,515	$	208.49	3.70	$	376,563
Vested and expected to vest as of October 31, 2023	1,515	$	208.49	3.70	$	376,563
Exercisable at October 31, 2023	972	$	142.41	2.67	$	305,738

(1)No stock options were assumed in connection with acquisitions in the last three fiscal years, but the balance at fiscal year-end includes certain stock options that were previously assumed in connection with acquisitions.

The aggregate intrinsic value in the preceding table represents the pre-tax intrinsic value based on stock options with an exercise price less than our closing stock price of $457.00 as of October 31, 2023. The pre-tax intrinsic value of options exercised and their average exercise prices are:

Restricted Stock Units and Stock Options. The following table contains additional information concerning activities related to stock options and restricted stock units that were granted under the 2006 Employee Plan and assumed from acquisitions:


			Available for Grant (1)(2)

			(in thousands)
Balance at October 31, 2020			12,129
Options granted(2)			(353)


Options canceled/forfeited/expired(2)			36
Restricted stock units granted(1)(3)			(3,232)
Restricted stock units forfeited(1)			471
Additional shares reserved			4,700
Balance at October 31, 2021			13,751
Options granted(2)			(286)


Options canceled/forfeited/expired(2)			114
Restricted stock units granted(1)(4)			(4,083)
Restricted stock units forfeited(1)			615
Additional shares reserved			3,000
Balance at October 31, 2022			13,111
Options granted(2)			(294)


Options canceled/forfeited/expired(2)			89
Restricted stock units granted(1)(4)			(3,540)
Restricted stock units forfeited(1)			620
Additional shares reserved			3,300
Balance at October 31, 2023			13,286

(1)Restricted stock units includes awards granted under the 2006 Employee Plan and assumed through acquisitions. The number of RSUs reflects the application of the award multiplier of 1.70 as described above.

(3)The number of granted restricted stock units includes performance-based RSUs reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied.

(4)The number of granted restricted stock units includes market-based RSUs reported at the maximum possible number of shares that may ultimately be issuable if all applicable market-based and performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied.


	Restricted Shares	Weighted-Average Grant Date Fair Value
	(in thousands, except per share amounts)
Unvested at October 31, 2020	9	$	140.97
Granted	5	$	261.01
Vested	(9)	$	140.97
Forfeited	—	$	—
Unvested at October 31, 2021	5	$	261.01
Granted	5	$	310.02
Vested	(5)	$	261.01
Forfeited	—	$	—
Unvested at October 31, 2022	5	$	310.02
Granted	5	$	387.79
Vested	(5)	$	310.02
Forfeited	—	$	—
Unvested at October 31, 2023	5	$	387.79

Valuation and Expense of Stock-Based Compensation. We estimate the fair value of stock options and employee stock purchase rights under the ESPP on the grant date. The value of awards expected to vest is recognized as expense over the applicable service periods. We use the Black-Scholes option-pricing model to determine the fair value of stock options and employee stock purchase plan rights. The Black-Scholes option-pricing model incorporates various assumptions including expected volatility, expected term and interest rates. The expected volatility for both stock options and employee stock purchase rights is estimated by a combination of implied volatility for publicly traded options of our common stock with a term of six months or longer and the historical stock price volatility over the estimated expected term of such awards, which is based on historical experience.

Restricted stock units are valued based on the closing price of our common stock on the grant date. We use the straight-line attribution method to recognize stock-based compensation costs over the service period of the award except for performance-based RSUs and market-based RSUs.

We estimate the probability of achievement of applicable performance goals for performance-based RSUs in each reporting period and recognize related stock-based compensation expense using the graded-vesting method. The amount of stock-based compensation expense recognized in any period can vary based on the attainment or expected attainment of the various performance goals. If such performance goals are not ultimately met, no compensation expense is recognized and any previously recognized compensation expense is reversed.

We estimated the fair value of market-based RSUs on the grant date using a Monte Carlo simulation model. Under the award agreements, the vesting of the market-based RSUs is contingent on achieving total stockholder return (TSR) relative to a peer index as well as revenue growth metrics. The maximum potential awards that may be earned are 187.5% of the target number of the initial awards. For market-based RSUs granted in February, May, August and December 2022, the performance period during which the achievement goals will be measured is fiscal 2022 and fiscal 2023. The awards will vest in equal increments in December 2023 and December 2024 if the TSR target, revenue growth metrics, and service conditions are achieved. For market-based RSUs granted in February and August 2023, the performance period during which the achievement goals will be measured is fiscal 2023, fiscal 2024 and fiscal 2025. The awards will vest in December 2025 if the TSR target, revenue growth metrics, and service conditions are achieved.


	Year Ended October 31,
	2023	2022	2021
Stock Options:
Expected life (in years)	4.1	4.1	4.1
Risk-free interest rate	3.80%- 4.80%	1.07% - 4.42%	0.35% - 1.00%
Volatility	32.74% -36.16%	32.28% - 37.04%	29.19%- 32.28%
Weighted average estimated fair value	$120.33	$98.07	$61.58
ESPP:
Expected life (in years)	0.5 - 2.0	0.5 - 2.0	0.5 - 2.0
Risk-free interest rate	4.85% - 5.38%	0.67% - 3.44%	0.00% - 0.19%
Volatility	28.03% - 35.27%	34.51% - 38.69%	28.02% - 39.68%
Weighted average estimated fair value	$120.82	$102.63	$89.82


	Year Ended October 31,
	2023	2022	2021(1)
Expected life (in years)	0.90 - 2.70	1.16 - 1.69	—
Risk-free interest rate	4.36% - 4.80%	1.33% - 3.46%	—
Volatility	34.79% - 42.86%	33.01% - 37.80%	—
Grant date fair value	$357.29 - $465.79	$280.52 - $412.2	—


	Year Ended October 31,
	2023		2022		2021
	(in thousands)
Cost of products	$	65,221	$	55,134	$	38,345
Cost of maintenance and service	29,572		24,146		13,817
Research and development expense	294,154		241,978		171,013
Sales and marketing expense	106,574		81,617		61,940
General and administrative expense	67,771		56,154		60,157
Stock-based compensation expense before taxes	563,292		459,029		345,272
Income tax benefit	(90,915)		(74,271)		(53,483)
Stock-based compensation expense after taxes	$	472,377	$	384,758	$	291,789

As of October 31, 2023, we had $1.2 billion of total unrecognized stock-based compensation expense relating to options, RSUs and restricted stock awards, which is expected to be recognized over a weighted average period of 1.7 years. As of October 31, 2023, we had $42.3 million of total unrecognized stock-based compensation expense relating to the ESPP, which is expected to be recognized over a period of 2.0 years.

Deferred Compensation Plan. We maintain the Synopsys Deferred Compensation Plan (Deferred Plan), which permits eligible employees to defer up to 50% of their annual cash base compensation and up to 100% of their eligible cash variable compensation. Amounts may be withdrawn from the Deferred Plan pursuant to elections made by the employees in accordance with the terms of the plan. Since the inception of the Deferred Plan, we have not made any matching or discretionary contributions to the Deferred Plan. There are no Deferred Plan provisions that

Income or loss from the change in fair value of the Deferred Plan assets is recorded in other income (expense), net. The increase or decrease in the fair value of the undistributed Deferred Plan obligation is recorded in total cost of revenue and operating expense. The following table summarizes the impact of the Deferred Plan:


	Year Ended October 31,
	2023		2022		2021
	(in thousands)
Increase (reduction) to cost of revenue and operating expense	$	20,488	$	(68,778)	$	71,603
Other income (expense), net	20,488		(68,778)		71,603
Net increase (decrease) to net income	$	—	$	—	$	—

Other Retirement Plans. We sponsor various defined contribution retirement plans for our eligible U.S. and non-U.S. employees. Total contributions to these plans were $59.2 million, $51.2 million, and $49.4 million in fiscal 2023, 2022, and 2021, respectively. For employees in the United States and Canada, we match pre-tax employee contributions up to a maximum of U.S. $3,000 and Canadian $4,000, respectively, per participant per year.

Certain of our international subsidiaries sponsor defined benefit retirement plans. The unfunded projected benefit obligation for these defined benefit retirement plans as of October 31, 2023 and 2022 was immaterial and recorded in other long-term liabilities in our consolidated balance sheets.