8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):  December 9, 2008

SYNOPSYS, INC.
(Exact name of Registrant as specified in charter)

Delaware	000-19807	56-1546236
(State or other jurisdiction	(Commission File Number)	(I.R.S. Employer
of incorporation)		Identification No.)

700 East Middlefield Road
Mountain View, California 94043
(Address of principal executive offices)

Registrant’s telephone number, including area code: (650) 584-5000

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On December 9, 2008, the Compensation Committee of the Board of Directors of Synopsys, Inc. (the “Company”) approved fiscal 2008 cash bonus payments, as set forth below, based upon the Company’s achievement of certain performance objectives in fiscal 2008, pursuant to the Synopsys, Inc. Executive Incentive Plan (2008).   The Compensation Committee also determined that the amount of the 2009 target bonus as well as base salaries for 2009 for each named executive officer would remain the same as for 2008.

On December 10, 2008, the Compensation Committee approved the Synopsys Executive Incentive Plan (2009) (“EIP”) for fiscal 2009.  The EIP sets forth the Company performance objectives against which named executive officers will be measured after the completion of fiscal 2009 in order to determine the actual bonus compensation earned by each named executive officer.  The performance criteria are the Company’s fiscal 2009 revenue target, fiscal 2009 non-GAAP operating margin target, fiscal 2010 revenue backlog target, and fiscal 2011 revenue backlog target, as more fully described in the EIP attached as Exhibit 10.49 hereto and incorporated herein by reference. The EIP requires that the Company achieve a weighted average of 90% of these performance objectives as a minimum threshold before executive officers earn bonuses under the EIP.  Executive officers may receive less than the target bonus and in no event may an actual payout exceed the lesser of $2,000,000 or 200% of the bonus targets.  Amounts in excess of the bonus target may, at the election of the Compensation Committee, be paid in the form of Restricted Stock Units which vest one year thereafter.

The following table sets forth the above mentioned compensation for our current Named Executive Officers:

Name	Fiscal 2008 Bonus(1)		Fiscal 2009 Base Salary		Fiscal 2009 Bonus Target
Aart de Geus	$	1,415,800	$	500,000	$	1,200,000
Chi-Foon Chan	$	902,600	$	450,000	$	765,000
Brian Beattie	$	589,900	$	400,000	$	500,000
Antun Domic	$	368,100	$	390,000	$	312,000

(1)Bonus paid pursuant to the Synopsys, Inc. Executive Incentive Plan (2008).

The Compensation Committee also (i) certified that the Company achieved the pre-determined level of non-GAAP net income for fiscal year 2008 resulting in certain previously granted performance-based Restricted Stock Units (RSUs) to begin vesting as to 25% of such RSUs as of December 3, 2008, (ii) granted additional stock options, effective December 10, 2008, 3/48th of which vest on March 10, 2009 and 1/48^th of which vest monthly thereafter, and (iii) granted additional performance-based RSUs, 25% of which could vest upon the achievement of an established level of non-GAAP net income for fiscal year 2009, and if achieved, would continue vesting in three equal annual increments thereafter. In addition, in recognition of outstanding achievements in fiscal year 2008, the Compensation Committee approved additional RSUs for certain named executive officers, 50% of which vest on December 8, 2009 and 2010, respectively.

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The following table sets forth the above mentioned equity compensation for our current Named Executive Officers:

Name	Performance- Based RSUs Earned (2)	Stock Options granted	Performance- Based RSUs eligible for future vesting (3)	Time- Based RSUs eligible for future vesting (4)
Aart de Geus	84,000	240,000	79,800
Chi-Foon Chan	44,000	130,000	43,300	7,900
Brian Beattie	27,500	80,000	26,600
Antun Domic	17,000	75,000	25,000	5,000

(2) Only 25% of such performance-based RSUs vested as of December 3, 2008; the remaining 75% shall vest in three annual equal increments on the following three annual anniversaries of December 8, so long as the executive is providing continuous services for the Company.

(3) Such performance-based RSUs shall not vest until certain non-GAAP net income for fiscal year 2009 is achieved.

(4) 50% of such time-based RSUs shall vest on December 8, 2009 and 2010, respectively, so long as the executive is providing continuous services for the Company.

On December 10, 2008, the Compensation Committee also adopted a Compensation Recovery Policy (the “Recovery Policy”).  The Recovery Policy provides that to the extent the Board in its sole discretion determines appropriate, the Company may require reimbursement of all or a portion of any bonus, incentive payment, commission, equity-based award or other compensation granted or received after January 1, 2009, by any individual who was an “Officer” or certain designated members of management when such compensation is granted or received, where (1) the compensation was predicated upon achieving certain financial results that were subsequently the subject of a substantial restatement of Company financial statements filed with the Securities and Exchange Commission, and (2) less compensation would have been earned by such employee based upon the restated financial results.

Item 8.01 Other Events

On December 10, 2009, the Board of Directors of the Company determined that the following members of management were “Officers” as defined in Rule 16a-1(f) promulgated under Section 16 of the Securities Exchange Act of 1934, as amended:  Aart de Geus, Chief Executive Officer; Chi-Foon Chan, President and Chief Operating Officer; Brian Beattie, Chief Financial Officer; Brian Cabrera, Vice President, General Counsel and Corporate Secretary; Joseph Logan, Senior Vice President, Worldwide Sales; and Esfandiar Naddaf, Vice President, Corporate Controller and Principal Accounting Officer.

Item 9.01 Financial Statements and Exhibits

(d)  Exhibits

10.49       Synopsys, Inc. Executive Incentive Plan (2009)

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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: December 15, 2008	SYNOPSYS, INC.
	/s/ Brian E. Cabrera
	Brian E. Cabrera
	Vice President, General Counsel
	and Corporate Secretary

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Exhibit Index

Exhibit Number	Exhibit Title
10.49	Executive Incentive Plan (2009)

EX-10.49

Exhibit 10.49

Title:	Executive Incentive Plan (2009)
Effective Date:	November 2, 2008
Document Owner:	Human Resources Compensation
Approvals:	Bruce Chizen
	Chair, Compensation Committee

Date	Author	Revision History
March 15, 2005	J. Cleveland	2005 Initial Plan
March 20, 2006	J. Collinson	2006 Plan Updates
October 30, 2006	S. Watanabe	2007 Plan Updates
April 27, 2007	J. Liedtke	Amendment to eligibility rules
January 28, 2008	S. Watanabe	2008 Plan Updates
November 23, 2008	J. Collinson	2009 Plan Updates

PLAN OBJECTIVES:

This Synopsys Executive Incentive Plan (“EIP” or the “Plan”) provides members of the Company’s senior management the potential to earn variable compensation linked directly to individual contribution toward:

1.Driving the strategic direction of the Company.

2.Driving attainment of revenue and operating margin targets.

3.Reinforcing a culture of accountability and performance excellence.

4.Ensuring that the payment of all incentive bonuses under the Plan qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code (“Section 162(m)”), and therefore not subject to the annual $1 million limitation on the income tax deductibility of compensation paid per certain covered executive officers imposed under Section 162(m).  Accordingly, all payments under the Plan shall be made pursuant to the terms and conditions of the Company’s 2006 Employee Equity Incentive Plan (2006 Equity Plan) approved by the Company’s stockholders, whether as “Performance Cash Awards” or “Performance Stock Awards” thereunder.

ELIGIBILITY:

Subject to achievement as described below, an employee is eligible to receive an EIP award if he or she is:

·a Corporate Staff Member and Section 16(b) officer at any time in the performance period a regular employee scheduled to work at least 20 hours per week

·employed by Synopsys as of the first working work day of the fourth quarter of the fiscal year

·actively employed through the day the incentive checks are distributed (or on an approved leave of absence)

and

·does not participate in a commission or other incentive plan (including, but not limited to Sales, Applications Consultants, or incentive plans relating to  acquisitions)

·prepares and delivers performance reviews for all direct reports eligible to receive reviews by July 31, 2009 unless an exception to this requirement is recommended by the SVP, Human Resources and Facilities and approved by the Chairman of the Compensation Committee.

ADMINISTRATION:

The Plan shall be administered by the Compensation Committee of the Board of Directors (the “Committee”) that has been designated to administer programs intended to qualify as “performance-based compensation” within the meaning of Section 162(m).  The Committee shall have authority to make rules and adopt administrative procedures in connection with the Plan and shall have discretion to provide for situations or conditions not specifically provided for herein consistent with the purposes of the Plan.  The Committee shall determine the beginning and ending dates for each performance period.  Unless otherwise determined by the Committee, the performance period shall correspond to the Company’s fiscal year.  Notwithstanding any other provision of the Plan to the contrary, the Plan shall be administered and its provisions interpreted so that payments pursuant to the Plan qualify as “performance-based compensation” within the meaning of Section 162(m).  Determinations by the Committee shall be final and binding on the Company and all participants.

INCENTIVE TARGET AWARDS:

The individual’s incentive target award is determined by the Compensation Committee within ninety (90) days of the beginning of the performance period or the appointment as an Eligible Employee, as applicable (“Target Award”).  The Target Award is based upon a percentage of annual base salary prorated for the number of months expected to work during the performance period as an Eligible Employee.   Stock-based and other variable compensation are not included in the target calculation.

PERFORMANCE CRITERIA:

Payment of the Target Award is determined by the Committee based on the Company’s achievement of revenue and Non-GAAP operating margin targets as well as Revenue Backlog targets (committed revenue for applicable future years), reinforcing the Company’s ratable business model.  The specific Corporate Financial Performance Goals and their relative weighting are as follows:

FY2009 Revenue Target – 33.33%

FY2009 Non-GAAP Operating Margin Target – 33.33%

FY2010 Revenue Backlog Target – 33.34%

REVENUE PREDICTABILITY FACTOR:

FY2011 Revenue Backlog Target

PAYOUT FORMULA FORACTUAL AWARDS:

The Company must achieve a threshold of a weighted average of 90% of the Corporate Financial Performance Goals before payment of any portion of the Target Award is permitted. Achievement of 90% or more of the Corporate Financial Performance Goals results in the applicable Corporate Financial Payout Factor set forth in Exhibit A. For illustration purposes, Exhibit A, the Corporate Financial Payout Factor Schedule, sets forth achievement percentages at increments of one percentage.  The actual Payout Factor will be calculated based upon one-quarter percentage point increments of achievement to plan.  Achievement of 90% or more of target FY2011 Revenue Backlog Goal results in the applicable Revenue Predictability Payout Factor set forth in Exhibit B.  The Revenue Predictability Payout Factor will be calculated based upon one-half percent increments of achievement to plan.  Notwithstanding the foregoing, the maximum Preliminary Award for any individual is 200% of the Target Award and the Company has the option to fund achievement in excess of the Target Award with cash, Restricted Stock Units (RSUs), or Restricted Stock.

Payouts of actual awards are determined by the Compensation Committee following a recommendation by executive management.  Subject to the Committee’s discretion as set forth under “Final Awards” below, the payout formula for each Preliminary Award is as follows:

Preliminary Award =

Target Award x Corporate Financial Payout Factor x Revenue Predictability Payout Factor (if any)

FINAL AWARDS:

No later than thirty (30) days after the receipt by the Committee of the financial statements for a performance period the Committee shall determine whether the established performance criteria were achieved.  Executive management will make recommendations to the Committee regarding

individual payouts based upon the individual’s relative performance against the Corporate Financial Performance Goals and the Revenue Predictability Goal.   The Committee shall have full discretion to reduce individual Preliminary Awards based on individual performance, EPS considerations, or as it otherwise considers appropriate in the circumstances in order to determine final actual awards (“Actual Awards”).  The Committee shall not have discretion to increase Preliminary Awards for a performance period.  In addition and in accordance with the 2006 Equity Plan, the maximum Actual Award for any individual is $2,000,000 in cash and 1,000,000 shares of RSUs or Restricted Stock in any calendar year.

PAYMENT SCHEDULE:

Payment of Actual Awards will occur within thirty (30) days following the certification by the Committee that the performance and other criteria for payment have been satisfied (the “Certification Date”) and final determination of the Actual Award.  Actual Awards are subject to the Compensation Recapture Policy.

In the event the Committee does not specify the form of the payment at the time the Committee establishes the Target Award, the form of payment of the Actual Award shall be: (a) cash in an amount not to exceed the amount of the Target Award, and (b) Restricted Stock Units, 100% of which will vest on the one-year anniversary of the effective grant date provided the recipient is providing continuous services on such date, the value of which would equal no more the amount by which the Actual Award exceeds the Target Award increased by a reasonable rate of interest to account for the time value of money.  The Committee may determine (a “Retroactive Determination”) on or before the Certification Date that the form of the entire Actual Award payment will only be cash.  In the event the Committee makes a Retroactive Determination, the total value of the cash payment shall not exceed the amount of the Actual Award.

Cash, RSUs or Restricted Stock issued hereunder shall be deemed issued pursuant to the 2006 Employee Equity Incentive Plan unless otherwise determined by the Committee.  Actual Awards are subject to the Compensation Recovery Policy, adopted December 2008.

IMPORTANT NOTES ABOUT THE PLAN:

This Plan supersedes and replaces all prior executive incentive plans.  The Committee reserves the right to terminate and or make changes to the Plan at any time, with or without notice.  The Committee may likewise terminate an individual’s participation in the Plan at any time, with or without notice.  Nothing in this Plan shall be construed to be a guarantee that any participant will receive all or part of an incentive award or to imply a contract between the Company and any participant.   The Committee may reduce the incentive payout based on achievement of publicly announced targets, product milestones, strategic goals, cross-functional teamwork and collaboration, and unforeseen changes in the economy and/or geopolitical climate.

Notwithstanding the foregoing, the performance criteria may be modified by the Committee to take into consideration one or more of the following: (1) changes in accounting principles that become effective during the performance period in accordance with US GAAP Accounting, (2) extraordinary, unusual or infrequently occurring events, (3) the disposition of a business or significant assets, (4) gains or losses from all or certain claims and/or litigation and insurance recoveries, (5) the impact of impairment of intangible assets, (6) restructuring activities, (7) the impact of investments or acquisitions, and/or (8) changes in corporate capitalization such as stock splits and certain reorganizations; provided however, that any such modification are consistent with Section 162(m) and the regulations issued thereunder.  Notwithstanding the foregoing, the Committee must select criteria that collectively satisfy the requirements of performance-based compensation for the purposes of Section 162(m), including by establishing the targets at a time when the performance relative to such targets is substantially uncertain.

Approvals:
Compensation Committee,
By:
	Bruce Chizen	Date
	Chair, Compensation Committee

Executive Incentive Plan (2009)

Exhibit A – Corporate Financial Payout Factor Schedule

% Achievement of Plan	Payout Factor *
90%	50%
91%	55%
93%	65%
95%	75%
97%	85%
99%	95%
100%	100%
101%	108%
103%	124%
105%	138%
107%	151%
109%	159%
111%	165%
113%	169%
115%	173%
117%	177%
119%	181%
>=120%	183%

*The Payout Factor column represents payout factors based upon whole percentage increments of achievement to plan.  The actual payout Factor will be interpolated based upon one-quarter percent increments of achievement.  For example, if percent achievement to plan is 101.5% the Actual Payout Factor would be 110.5%.

Executive Incentive Plan (2009)

Exhibit B – Revenue Predictability Payout Factor Schedule

Percent of FY2011 Revenue Backlog Achieved	Payout Factor *
<95%	100.0%
96%	100.5%
97%	101.0%
98%	101.5%
99%	102.0%
100%	102.5%
101%	108.0%
102%	113.5%
103%	119.0%
104%	124.5%
105%	130.0%
106%	135.5%
107%	141.0%
108%	146.5%
>109%	150.0%

*The Payout Factor column represents payout factors based upon whole percentage increments of achievement to plan.  The actual payout Factor will be interpolated based upon one-half percent increments of achievement.  For example, if percent achievement to plan is 101.5% the Actual Payout Factor would be 110.8%.