def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE
14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a-12
CADENCE DESIGN SYSTEMS, 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):
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Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
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CADENCE
DESIGN SYSTEMS, INC.
2655
SEELY AVENUE
SAN JOSE, CALIFORNIA 95134
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held on May 12,
2010
TO THE STOCKHOLDERS OF CADENCE DESIGN SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of CADENCE DESIGN SYSTEMS, INC., a Delaware corporation, will be
held on May 12, 2010, at 1:00 p.m. Pacific time,
at Cadences offices located at 2655 Seely Avenue, Building
10, San Jose, California 95134 for the following purposes:
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1.
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To elect directors to serve until the 2011 Annual Meeting of
Stockholders and until their successors are elected and
qualified, or until the directors earlier death,
resignation or removal.
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2.
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To ratify the selection of KPMG LLP as the independent
registered public accounting firm of Cadence for its fiscal year
ending January 1, 2011.
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3.
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To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
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These items of business are more fully described in the proxy
statement accompanying this notice.
Cadences Board of Directors has fixed the close of
business on March 16, 2010 as the record date for the
determination of stockholders entitled to notice of, and to vote
at, this Annual Meeting of Stockholders and at any adjournment
or postponement thereof.
By Order of the Board of Directors
James J. Cowie
Secretary
San Jose, California
March 26, 2010
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE
CAST YOUR VOTE VIA THE INTERNET OR BY TELEPHONE AS INSTRUCTED IN
THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS AS
PROMPTLY AS POSSIBLE. IF YOU CHOSE TO RECEIVE PAPER COPIES OF
YOUR PROXY MATERIALS, INCLUDING THE PROXY CARD, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE PROXY CARD IN THE RETURN ENVELOPE
PROVIDED (WHICH HAS PREPAID POSTAGE IF MAILED IN THE UNITED
STATES) AS PROMPTLY AS POSSIBLE TO ENSURE YOUR REPRESENTATION AT
THE MEETING. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL
VOTE IN PERSON AT THE MEETING. PLEASE NOTE, HOWEVER, THAT IF
YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN A
PROXY ISSUED IN YOUR NAME FROM THE RECORD HOLDER.
TABLE OF
CONTENTS
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CADENCE
DESIGN SYSTEMS, INC.
2655 SEELY AVENUE
SAN JOSE, CALIFORNIA 95134
PROXY
STATEMENT
FOR ANNUAL MEETING OF
STOCKHOLDERS
MAY 12, 2010
INFORMATION
CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of
Directors of Cadence Design Systems, Inc., a Delaware
corporation, which is referred to in this proxy statement as
Cadence, for use at its Annual Meeting of Stockholders to be
held on May 12, 2010, at 1:00 p.m. Pacific time,
or at any adjournment or postponement thereof, for the purposes
set forth in this proxy statement and in the accompanying notice
of annual meeting. The annual meeting will be held at
Cadences offices located at 2655 Seely Avenue, Building
10, San Jose, California 95134. Cadence intends to publish
this proxy statement on the investor relations page of its
website at
http://www.cadence.com/company/investor_relations
on or about March 26, 2010.
INTERNET
AVAILABILITY OF PROXY MATERIALS
Pursuant to the rules adopted by the U.S. Securities and
Exchange Commission, which is referred to in this proxy
statement as the SEC, Cadence is furnishing proxy materials to
its stockholders primarily via the Internet, rather than mailing
paper copies of these materials to each stockholder. We believe
that this process expedites stockholders receipt of the
proxy materials, lowers the costs of our annual meeting and
helps conserve natural resources. On or about March 26,
2010, we will mail to each stockholder (other than those who
previously requested electronic or paper delivery) a Notice of
Internet Availability of Proxy Materials containing instructions
on how to access and review the proxy materials, including our
proxy statement and annual report, on the Internet and how to
access a proxy card to vote on the Internet or by telephone. The
Notice of Internet Availability of Proxy Materials also contains
instructions on how to request a paper copy of the proxy
materials. If you received a Notice of Internet Availability of
Proxy Materials by mail, you will not receive a paper copy of
the proxy materials unless you request one. If you received a
Notice of Internet Availability of Proxy Materials by mail and
would like to receive a paper copy of the proxy materials,
please follow the instructions included in the Notice of
Internet Availability of Proxy Materials. We may choose to mail
or deliver a paper copy of the proxy materials, including our
proxy statement and annual report, to one or more stockholders.
An audio webcast of the annual meeting will also be available on
the investor relations page of Cadences website at
http://www.cadence.com/company/investor_relations.
The webcast will allow investors to listen to the proceedings of
the annual meeting, but stockholders accessing the annual
meeting using the Internet will not be considered present at the
annual meeting by virtue of this access and will not be able to
vote on matters presented at the annual meeting or ask any
questions of Cadences directors, management or independent
registered public accounting firm. For a description of how to
vote on matters presented at the annual meeting, see
Voting below. The webcast will begin promptly at
1:00 p.m. Pacific time on the day of the annual
meeting and may be accessed on Cadences website for
30 days thereafter.
VOTING
RIGHTS AND OUTSTANDING SHARES
Only holders of record of Cadences outstanding common
stock, $0.01 par value per share, at the close of business
on March 16, 2010, which is referred to in this proxy
statement as the record date, will be entitled to notice of and
to vote at the annual meeting. At the close of business on the
record date, Cadence had 270,413,071 shares of common stock
outstanding and entitled to vote. Each holder of record of
common stock outstanding at the close of business on the record
date will be entitled to one vote for each share held on all
matters to be voted on at the annual meeting.
1
QUORUM;
ABSTENTIONS; BROKER NON-VOTES
The presence in person or by proxy of a majority of the shares
of Cadence common stock outstanding and entitled to vote on the
record date is required for a quorum at the annual meeting. Both
abstentions and broker non-votes are counted as
present for purposes of determining the presence of a quorum,
but broker non-votes will not be counted towards the tabulation
of votes cast on proposals presented to stockholders.
Broker non-votes include shares for which a bank, broker or
other nominee holder (i.e., record holder) has not received
voting instructions from the beneficial owner and for which the
record holder does not have discretionary power to vote on a
particular matter. Under the rules that govern brokers who are
record holders of shares that are held in brokerage accounts for
the beneficial owners of the shares, brokers who do not receive
voting instructions from their clients have the discretion to
vote uninstructed shares on routine matters but have no
discretion to vote such uninstructed shares on non-routine
matters. Due to recent changes in applicable law, brokers are
not permitted to vote on the election of directors without
instructions from the beneficial owner, because the election of
directors is considered a non-routine matter. Therefore, if your
shares are held through a broker, bank or other nominee holder,
such shares will not be voted in the election of directors
unless you affirmatively provide instructions to your broker on
how to vote your shares. The proposal regarding the ratification
of Cadences independent registered public accounting firm
is considered a routine matter and brokers are therefore
permitted to vote shares held by them without instruction.
ANNUAL
MEETING ADMISSION
Stockholders at the close of business on the record date or
holders of a valid proxy for the annual meeting are entitled to
attend the annual meeting. Such individuals should be prepared
to present photo identification, such as a valid drivers
license or passport, and verification of Cadence stock ownership
for admittance. For stockholders at the close of business on the
record date, proof of ownership as of the record date will be
verified prior to admittance into the annual meeting. For
stockholders who were not stockholders of record at the close of
business on the record date but hold shares through a bank,
broker or other nominee holder, proof of beneficial ownership at
the close of business on the record date, such as an account
statement or similar evidence of ownership, will be verified
prior to admittance into the annual meeting. Stockholders will
be admitted to the annual meeting if they comply with these
procedures. Please allow ample time for admittance procedures.
VOTE
REQUIRED
The election of directors at the annual meeting requires that
each director receive a majority of the votes cast with respect
to that director at the annual meeting (number of shares voted
for a director must exceed the number of votes cast
against that director), provided that in a contested
election, each director shall be elected by the affirmative vote
of a plurality of the votes cast at the annual meeting.
All other items to be voted on at the annual meeting require the
affirmative vote of a majority of the shares present in person
or represented by proxy and entitled to vote at the annual
meeting.
BNY Mellon Shareowner Services has been appointed as the
inspector of elections for this years annual meeting. All
votes will be tabulated by a representative of BNY Mellon
Shareowner Services. This representative will also separately
tabulate affirmative and negative votes, abstentions and broker
non-votes.
VOTING
Stockholders at the close of business on the record date have
three options for submitting their vote prior to the annual
meeting: (i) vote via the Internet by following the
instructions provided in the Notice of Internet Availability of
Proxy Materials, (ii) vote via telephone by following the
instructions provided in the Notice of Internet Availability of
Proxy Materials, or (iii) vote via mail by completing,
signing, dating and mailing a paper proxy card in a
pre-addressed envelope, which a stockholder can request as
outlined in the Notice of Internet Availability of Proxy
Materials.
If a stockholder attends the annual meeting, he or she may also
submit his or her vote in person, and any votes that were
previously submitted whether via the Internet, by
telephone or by mail will be superseded by the
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vote that is cast at the annual meeting. Whether the proxy is
submitted via the Internet, by telephone or by mail, if it is
properly completed and submitted and if it is not revoked prior
to the annual meeting, the shares will be voted at the annual
meeting in the manner set forth in this proxy statement or as
otherwise specified by the stockholder.
REVOCABILITY
OF PROXIES
Whether the proxy is submitted via the Internet, by telephone or
by mail, any person giving a proxy pursuant to this solicitation
has the power to revoke it at any time before it is voted. A
proxy may be revoked by providing a written notice of revocation
or a duly executed proxy bearing a later date to Cadences
Corporate Secretary at Cadences corporate offices located
at 2655 Seely Avenue, Building 5, San Jose, California
95134, or it may be revoked by attending the meeting and voting
in person. Attendance at the annual meeting will not, by itself,
be sufficient to revoke a proxy. Accessing the webcast of the
annual meeting will not, by itself, constitute attendance at the
annual meeting and will not enable a stockholder to revoke his,
her or its proxy via the Internet.
SOLICITATION
Cadence will bear the entire cost of soliciting proxies,
including the preparation, assembly, printing and mailing of
this proxy statement, the proxy card and any additional
information furnished to stockholders by Cadence in connection
with the matters to be voted on at the annual meeting. Copies of
solicitation materials will be furnished to banks, brokerage
houses, fiduciaries and custodians holding shares of Cadence
common stock beneficially owned by others for forwarding to the
beneficial owners. Cadence will reimburse persons representing
beneficial owners of its common stock for their costs of
forwarding solicitation materials to the beneficial owners. The
solicitation of proxies through this proxy statement may be
supplemented by telephone, facsimile, use of the Internet or
personal solicitation by directors, officers or other employees
of Cadence and by Georgeson Inc., which is referred to in this
proxy statement as Georgeson. Cadence has retained Georgeson to
solicit proxies and to separately prepare a stockholder vote
analysis of certain proposals for an aggregate fee of
approximately $10,000, plus reasonable expenses. No additional
compensation will be paid to directors, officers or other
employees of Cadence or any of its subsidiaries for their
services in soliciting proxies.
HOUSEHOLDING
INFORMATION
SEC rules permit companies and intermediaries, such as brokers,
to deliver a single copy of certain proxy materials to certain
stockholders who share the same address, a practice referred to
as householding. Some banks, brokers and other
nominees will be householding Cadences Notice of Internet
Availability of Proxy Materials and proxy materials for
stockholders who do not participate in electronic delivery of
proxy materials, unless contrary instructions are received from
the affected stockholders. Once you have received notice from
your broker or other nominee holder of your Cadence common stock
that the broker or other nominee holder will be householding the
Notice of Internet Availability of Proxy Materials or proxy
materials to your address, householding will continue until you
are notified otherwise or until you revoke your consent. If, at
any time, you no longer wish to participate in householding and
would prefer to receive a separate Notice of Internet
Availability of Proxy Materials and proxy materials, or if you
are receiving multiple copies of the Notice of Internet
Availability of Proxy Materials and proxy materials and wish to
receive only one copy, please notify your broker or other
nominee holder of your Cadence common stock. You may also
request additional copies of Cadences Notice of Internet
Availability of Proxy Materials and proxy materials by writing
to Cadences Corporate Secretary at Cadences
corporate offices located at 2655 Seely Avenue, Building 5,
San Jose, California 95134, or by calling Cadences
Investor Relations Group at
(408) 944-7100
or e-mailing
the Investor Relations Group at investor_relations@cadence.com.
Please note, however, that if you wish to receive a paper copy
of the proxy or other proxy materials for purposes of this
years annual meeting, you should follow the instructions
provided in the Notice of Internet Availability of Proxy
Materials. Copies of Cadences SEC filings and certain
other submissions are made available free of charge on the
investor relations page of Cadences website at
http://www.cadence.com/company/investor_relations
as soon as practicable after Cadence electronically files or
furnishes these documents with the SEC. Information on
Cadences website is not incorporated by reference in this
proxy statement unless expressly noted.
3
CORPORATE
GOVERNANCE
Cadence common stock is listed on the NASDAQ Global Select
Market, which is referred to in this proxy statement as NASDAQ.
Cadence and its Board of Directors, which is referred to in this
proxy statement as the Board, regularly review and evaluate
Cadences corporate governance practices. Cadences
corporate governance documents are posted on the investor
relations page of its website at
http://www.cadence.com/company/investor_relations.
Paper copies of these documents are also available to
stockholders upon written request directed to Cadences
Corporate Secretary at Cadences corporate offices located
at 2655 Seely Avenue, Building 5, San Jose, California
95134.
CORPORATE
GOVERNANCE GUIDELINES
The Board has adopted Corporate Governance Guidelines of the
Board of Directors, which are referred to in this proxy
statement as the Corporate Governance Guidelines. The Corporate
Governance Guidelines cover various topics relating to the Board
and its activities including, but not limited to, the selection
and composition of the Board, Board leadership, compensation of
directors, responsibilities of directors, Board access to senior
management and outside advisors, meeting procedures, board and
committee responsibilities and other matters. The Corporate
Governance and Nominating Committee of the Board periodically
reviews the Corporate Governance Guidelines, which may be
amended by the Board at any time.
CODE OF
BUSINESS CONDUCT
Cadence has adopted a Code of Business Conduct to provide
standards for ethical conduct in dealing with customers,
suppliers, agents, government officials, political entities and
others, which is referred to in this proxy statement as the Code
of Business Conduct. The Code of Business Conduct applies to all
Cadence directors, officers and employees (and those of its
subsidiaries), including Cadences President and Chief
Executive Officer, who is referred to in this proxy statement as
the CEO, and Cadences Chief Financial Officer, who is
referred to in this proxy statement as the CFO. Compliance with
the Code of Business Conduct is a condition of continued service
to or employment with Cadence. The Code of Business Conduct
covers topics including, but not limited to, integrity and
confidentiality of assets and information, conflicts of
interest, compliance with federal and state securities laws,
employment practices, payment practices, and compliance with
competition, anti-corruption and other laws and regulations.
Except as otherwise provided by applicable law, each person
subject to the Code of Business Conduct has the responsibility
to report any possible misconduct, including unethical business
practices, violations of the Code of Business Conduct and
apparent or suspected illegal activities and any concerns
regarding corporate governance, accounting, internal accounting
controls or auditing matters, in the following manner:
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Employees must report to the Office of the General Counsel or,
in the event the report concerns a Cadence executive officer, to
the General Counsel or the chair of the Corporate Governance and
Nominating Committee (employees may report possible misconduct
on an anonymous basis);
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Executive officers must report to the General Counsel or, if the
report concerns the General Counsel, to the chair of the
Corporate Governance and Nominating Committee, or, if the report
concerns the chair of that committee, to another member of that
committee; and
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Directors must report to the chair of the Corporate Governance
and Nominating Committee or, if the report concerns the chair of
that committee, to another member of the committee.
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Any waiver of a provision of the Code of Business Conduct with
respect to a director or an executive officer may only be made
by the Board or the Corporate Governance and Nominating
Committee. Any waivers for other employees may be granted only
by the CEO or the General Counsel, or their respective
designees. To the extent required under applicable SEC rules,
Cadence will disclose material amendments to the Code of
Business Conduct and any waiver of its provisions with respect
to any director or executive officer by filing a Current Report
on
Form 8-K
with the SEC or posting such information on its website at
www.cadence.com.
4
STOCK
OWNERSHIP GUIDELINES
The Board has adopted Stock Ownership Guidelines for its members
and Cadences executive officers to align the interests of
its directors and executive officers with the interests of
stockholders and to further promote Cadences commitment to
sound corporate governance. Each member of the Board is
encouraged to hold at least 5,000 shares of Cadence common
stock within the first two years of his or her election to the
Board, and Cadences executive officers are encouraged to
hold at least the following number of shares of Cadence common
stock no later than five years after the date of his or her
designation to the following offices: CEO
100,000 shares; CFO 50,000 shares; and
Senior Vice Presidents 25,000 shares. All
directors and executive officers met the Stock Ownership
Guidelines as of the record date.
CADENCES
BOARD OF DIRECTORS
DIRECTOR
INDEPENDENCE
Cadences Corporate Governance Guidelines require that at
least a majority of the Board be independent
directors within the meaning of the listing standards of
NASDAQ, as determined by the Board. To be
independent a director must not have a relationship
that, in the opinion of the Board, would interfere with his or
her exercise of independent judgment in carrying out the
responsibilities of a Cadence director. In making these
determinations, the Board considers all relevant facts and
circumstances and applies the following standards:
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A director who is employed by Cadence or any of its
subsidiaries, or whose family member is employed as an executive
officer of Cadence or any of its subsidiaries, is not
independent until three years after the end of the employment
relationship;
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A director who accepts, or whose family member accepts, more
than $120,000 in compensation from Cadence or any of its
subsidiaries, other than compensation for Board or Board
committee service, compensation paid to a family member who is a
non-executive employee of Cadence or any of its subsidiaries,
benefits under a tax-qualified retirement plan or
non-discretionary compensation and payments arising solely from
investment in Cadence stock, during any twelve month period
within the past three fiscal years, until three years after the
date of payment;
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A director who is, or whose family member is, a current partner
or employee of Cadences independent registered public
accounting firm is not independent;
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A director who was, or whose family member was, a partner or
employee of Cadences independent registered public
accounting firm who worked on Cadences audit during that
time is not independent until three years after the end of the
employment relationship;
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A director who is, or whose family member is, employed as an
executive officer of another entity for which at any time during
the past three years any of Cadences executive officers
served on the compensation committee of such entity is not
independent; and
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A director who is, or whose family member is, a partner in, or a
controlling stockholder or an executive officer of, any
organization to which Cadence made, or from which Cadence
received, payments for property or services in the current
fiscal year or any of the past three fiscal years that exceed in
such year the greater of 5% of the recipients consolidated
gross revenues or $200,000, other than payments arising solely
from investments in Cadence securities or payments under
non-discretionary charitable contribution matching programs, is
not independent until three years after the conclusion of the
fiscal year in which such payments are made or received.
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The Board has determined that Dr. Shoven and
Messrs. Lucas, Scalise, Siboni and Swainson, who constitute
a majority of the Board, are independent directors
within the meaning of the listing standards of NASDAQ.
5
BOARD
MEETINGS
During the fiscal year ended January 2, 2010, the Board
held five meetings, in addition to taking actions by unanimous
written consent in lieu of a meeting. Each director attended
more than 75% of the meetings of the Board and of the committees
on which he served that were held during the period for which he
was a director or committee member during fiscal 2009. The
Corporate Governance Guidelines encourage directors to attend
the annual meeting of stockholders. All of Cadences
directors, except Mr. Swainson, attended the 2009 Annual
Meeting of Stockholders.
Under the Corporate Governance Guidelines, Cadences
independent directors meet separately at least twice each year.
Pursuant to the Corporate Governance Guidelines,
Dr. Shoven, as the Chairman of the Board and an independent
director, presides over meetings of the independent directors.
CONTACTING
THE BOARD OF DIRECTORS
Stockholders interested in communicating directly with the Board
may do so by sending a letter to the Board, or to any individual
director, group of directors or committee of the Board,
c/o the
Office of the Corporate Secretary, Cadence Design Systems, Inc.,
2655 Seely Avenue, Building 5, San Jose, California 95134.
Inquiries and other communications may be submitted anonymously
and confidentially. The Corporate Secretary will review the
correspondence and will transmit such communications as soon as
practicable to the identified director addressee(s), unless
there are legal or other considerations that mitigate against
further transmission of the communication, as determined by the
Corporate Secretary. In that regard, certain items that are
unrelated to the duties and responsibilities of the Board will
not be forwarded by the Corporate Secretary, such as business
solicitations or advertisements, junk mail and mass mailings,
new product suggestions, product complaints, product inquiries,
resumes and other forms of job inquiries, spam and surveys. In
addition, material that the Corporate Secretary determines is
unduly hostile, threatening, illegal or similarly unsuitable
will be excluded, with the provision that the Board or
individual directors so addressed shall be advised of any
communication withheld for legal or other considerations as soon
as practicable.
COMMITTEES
OF THE BOARD OF DIRECTORS
The Board currently has the following committees:
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Audit Committee;
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Compensation Committee;
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Corporate Governance and Nominating Committee;
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Finance Committee; and
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Technology Committee.
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Each of the above committees has a written charter approved by
the Board. The charters of the Audit Committee, the Compensation
Committee and the Corporate Governance and Nominating Committee
are posted
6
on the investor relations page of Cadences website at
http://www.cadence.com/company/investor_relations.
The members and chairs of the current committees are identified
in the following table.
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Corporate
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Governance
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and
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Director
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Audit
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Compensation
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Nominating
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Finance
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Technology
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Donald L. Lucas
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ü
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ü
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Chair
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Chair
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Dr. Alberto Sangiovanni-Vincentelli
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Chair
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George M. Scalise
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ü
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ü
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ü
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Dr. John B. Shoven
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ü
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Chair
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ü
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ü
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Roger S. Siboni
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Chair
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ü
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ü
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John A.C. Swainson
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ü
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Lip-Bu Tan
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ü
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Audit
Committee
The Board has determined that all members of the Audit Committee
are independent as defined by the NASDAQ listing
standards and
Rule 10A-3
of the Securities Exchange Act of 1934, as amended, which is
referred to in this proxy statement as the Exchange Act. The
Board has also determined that each of the members of the Audit
Committee is an audit committee financial expert as
defined in rules promulgated by the SEC. In addition, the Board
has determined that each Audit Committee member is able to read
and understand fundamental financial statements and, other than
strictly in his capacity as a member of the Board or a committee
of the Board, has not participated in preparing Cadences
financial statements in any of the past three years.
The Audit Committee charter was amended in February 2010 and
complies with the NASDAQ listing standards. The duties and
responsibilities of the Audit Committee include:
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Appointing, retaining, compensating, evaluating, overseeing and
terminating Cadences independent registered public
accounting firm and annually evaluating the qualifications,
performance and independence of the independent registered
public accounting firm, including an evaluation of the lead
partner of the independent registered public accounting firm;
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Pre-approving all audit and permissible non-audit services to be
provided by the independent registered public accounting firm
and establishing policies and procedures for such pre-approval;
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Reviewing and discussing with the independent registered public
accounting firm their report regarding all relationships or
services between Cadence and the independent registered public
accounting firm and any other relationship or services that may
impact the objectivity and independence of the independent
registered public accounting firm;
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Reviewing with the independent registered public accounting firm
their audit procedures, including the scope and timing of the
audit, the results of the annual audit and any audit problems or
difficulties and managements response to any such problems
or difficulties;
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Meeting to review with management and the independent registered
public accounting firm Cadences annual and quarterly
financial statements, reports and specific disclosures, and
recommending to the Board whether the financial statements
should be included in Cadences Annual Report on
Form 10-K;
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Reviewing and discussing the adequacy and effectiveness of
Cadences internal controls, disclosure controls and
procedures and practices with respect to risk assessment and
risk management as they relate to financial reporting; and
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7
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Establishing and overseeing procedures for the receipt,
retention and treatment of complaints regarding accounting,
internal controls or auditing matters, including a system for
the confidential anonymous submission of accounting or auditing
concerns by Cadence employees.
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The Audit Committee held nine meetings during fiscal 2009. See
Report of the Audit Committee below for more
information.
Compensation
Committee
The Compensation Committee of the Board is comprised of three
non-employee directors of Cadence, each of whom the Board has
determined to be independent as defined by the
listing standards of NASDAQ. In addition, all Compensation
Committee members are outside directors within the
meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (which is referred to in this proxy statement
as the Code), to allow Cadence a tax deduction for certain
employee compensation exceeding $1,000,000 for an individual.
All Compensation Committee members are also outside
directors within the meaning of
Rule 16b-3
of the Exchange Act to allow Cadence to exempt certain option
grants and similar transactions from the short-swing profits
prohibition of Section 16 of the Exchange Act. As provided
in its charter, the Compensation Committee acts on behalf of the
Board to identify, review and approve corporate goals and
objectives relevant to the compensation of Cadences CEO
and any director who is also a Cadence employee, evaluate the
performance of the CEO and any director who is also a Cadence
employee in light of those goals and objectives, and determine
and approve the compensation of the CEO and any director who is
also a Cadence employee. Although the Compensation Committee may
delegate its authority to management when it deems it to be
appropriate and in the best interests of Cadence, the
Compensation Committee did not delegate any authority with
respect to the consideration and determination of executive
officer and director compensation in fiscal 2009 and does not
currently expect to delegate any such authority in the future.
At or near the beginning of each fiscal year, the Compensation
Committee typically establishes base salary levels and target
bonuses for the CEO and other executive officers of Cadence. In
addition, the Compensation Committee administers and, if deemed
necessary, may amend the Senior Executive Bonus Plan, which is
referred to in this proxy statement as the Bonus Plan,
Cadences equity-based compensation plans and stock
purchase plans, and Cadences deferred compensation plans.
The Compensation Committee also reviews and recommends to the
Board the compensation of Cadences directors.
The Compensation Committee charter was amended in February 2010.
The duties and responsibilities of the Compensation Committee
include:
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Identifying, reviewing and approving corporate goals and
objectives relevant to the compensation of Cadences CEO
and any director who is also a Cadence employee, evaluating the
performance of the CEO and any employee director in light of
those goals and objectives and determining and approving, either
as a committee or together with the independent directors of the
Board, the compensation of the CEO and any employee director
based on such evaluation;
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Overseeing the evaluation of the executive officers of Cadence;
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Reviewing periodically Cadences management succession
planning in consultation with the CEO and reporting to the
Board, at least annually, on CEO succession planning;
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Reviewing compensation programs and determining the compensation
of Cadences executive officers;
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Reviewing and discussing with management Cadences
Compensation Discussion and Analysis and related disclosures
that are required be included in Cadences annual report
and proxy statement, recommending to the Board, based on the
review and discussions, whether the Compensation Discussion and
Analysis should be included in the annual report and the proxy
statement, and preparing the compensation committee report that
SEC rules require to be included in the annual report and the
proxy statement;
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Overseeing Cadences overall compensation practices,
policies and programs, assessing whether Cadences
compensation structure establishes appropriate incentives for
management and employees, and assessing the risks associated
with such practices, policies and programs; and
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8
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Reviewing and, in certain cases, amending and administering
Cadences general compensation plans including:
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Equity incentive and stock purchase plans;
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Benefit programs; and
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Bonus plans.
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In fiscal 2009, the Compensation Committee retained the services
of an independent compensation consultant, Semler Brossy
Consulting Group, LLC, or Semler Brossy, for advice regarding
the compensation of Cadences executive officers. The
Compensation Committee believes that having an independent
evaluation of executive officer salary, bonus and equity
compensation is a valuable tool for the Compensation Committee
and Cadences stockholders. Semler Brossy has not been
engaged to perform any other work for Cadence.
The Compensation Committee retained Semler Brossy for a number
of purposes, including:
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Constructing and reviewing peer groups for compensation
comparison purposes;
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Performing a competitive assessment of Cadences
compensation programs, practices and levels for its executive
officers and other select employees; and
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Providing information on typical industry practices concerning
employment, severance and change in control agreements.
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The Compensation Committee made a number of compensation
decisions, including decisions with respect to Cadences
Named Executive Officers (as defined below in Compensation
of Executive Officers), based on the competitive
assessments provided by and through consultation with Semler
Brossy. In addition, Cadences CEO typically makes
assessments and recommendations to the Compensation Committee on
whether there should be adjustments to the annual base salary,
annual cash incentive compensation and long-term equity
incentive compensation of executive officers other than himself
based upon an assessment of certain factors described further in
Compensation Discussion and Analysis below. The
Compensation Committee reviews such assessments and
recommendations and determines whether or not to approve or
modify the CEOs recommendations. The Compensation
Committees decisions are made, however, by the
Compensation Committee in its sole discretion. See
Compensation Discussion and Analysis below for more
information.
The Compensation Committee, in consultation with Semler Brossy,
reviews Cadences compensation practices, policies and
programs for all employees, including the Named Executive
Officers, to assess the risks associated with such practices,
policies and programs. The risk-mitigating factors considered by
the Compensation Committee include:
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the use of different types of compensation that provide a
balance of short-term and long-term incentives with fixed and
variable components;
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Cadences Stock Ownership Guidelines;
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Cadences Clawback Policy which, in the event of a
restatement of Cadences financial results, allows Cadence
to seek to recover or cancel performance-based bonuses and
awards to the extent that performance goals would not have been
met under such restated financial results;
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caps on bonus awards to limit windfalls;
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the Named Executive Officers must obtain permission from
Cadences General Counsel before the sale of any shares of
Cadence common stock, even during an open trading
period; and
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the Compensation Committees consideration of ethical
behavior as integral in assessing the performance of all
executive officers, including the Named Executive Officers.
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The Compensation Committee held three meetings during fiscal
2009.
9
Corporate
Governance and Nominating Committee
The Board has determined that all Corporate Governance and
Nominating Committee members are independent as defined by the
NASDAQ listing standards.
The Corporate Governance and Nominating Committee charter was
amended in February 2010. The duties and responsibilities of the
Corporate Governance and Nominating Committee include:
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Determining any criteria for selecting new directors;
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Interviewing and evaluating candidates for Board membership;
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Evaluating director nominees recommended by stockholders;
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Reviewing, at least annually, the appropriate skills and
characteristics required for directors in the context of the
composition of the Board;
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Reviewing periodically the size of the Board and recommending
any changes to the Board;
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Recommending to the Board director nominees for election at the
next annual or special meeting of stockholders or to fill any
vacancies or newly created directorships that may occur between
such meetings;
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Making a recommendation to the Board as to whether to accept or
reject the resignation of an incumbent director who receives a
greater number of votes cast against than votes cast
for at an annual or special meeting of stockholders;
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Reviewing, at least annually, the Corporate Governance
Guidelines and the Code of Business Conduct;
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Overseeing the administration of the Code of Business Conduct
and administering the Code of Business Conduct with respect to
Cadences directors and executive officers;
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Reviewing and approving any related person transactions
involving Cadence directors and executive officers and
establishing policies and procedures for the review, approval
and ratification of such transactions;
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Reviewing whether it is appropriate for a director to continue
service if his or her business responsibilities or personal
circumstances change and make a recommendation to the Board as
to any action to be taken with respect to such change; and
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Overseeing the annual evaluation of the Board and its committees.
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The Corporate Governance and Nominating Committee uses a variety
of methods to identify and evaluate director nominees. The
committee periodically assesses the appropriate size of the
Board, and whether any vacancies on the Board are expected due
to retirement of directors or otherwise, and the need for
particular expertise on the Board. If vacancies are anticipated
or otherwise arise, the committee considers potential director
candidates. Additionally, candidates may come to the attention
of the committee through current directors, officers,
professional search firms, stockholders or other persons. These
candidates are evaluated at regular or special meetings of the
committee, and may be considered at any point during the year.
In connection with this evaluation, the Corporate Governance and
Nominating Committee determines whether to interview the
prospective nominee and, as warranted, one or more members of
the committee, and others as appropriate, interview prospective
nominees in person or by telephone. After completing this
evaluation and interview, the committee makes a recommendation
to the full Board as to the persons who should be nominated or
elected by the Board, and the Board determines whether to
reject, elect or nominate the candidate, as the case may be,
after considering the recommendation of the committee.
The Corporate Governance and Nominating Committee will consider
individuals recommended by stockholders for nomination as a
director pursuant to the provisions of Cadences Bylaws
relating to stockholder nominations. A stockholder who wishes to
recommend a prospective nominee for the Board should notify
Cadences Corporate Secretary or the Corporate Governance
and Nominating Committee in writing with the supporting material
required by Cadences Bylaws as described under Other
Matters Stockholder Proposals and Nominations
below, and any other material the stockholder considers
necessary or appropriate.
10
Although the Board currently has no defined minimum criteria for
consideration or continued service as a director, the Corporate
Governance and Nominating Committee evaluates prospective
nominees against the standards and qualifications set out in the
Corporate Governance Guidelines and other relevant factors as it
deems appropriate. Among the factors the Board may consider are
the current composition of the Board, the need for particular
expertise, a prospective nominees experience, judgment,
integrity, diversity of background, independence, ability to
commit sufficient time and attention to Board activities,
skills, such as an understanding of electronic design and
semiconductor technologies, international background and other
relevant characteristics. At least a majority of directors on
the Board must be independent as defined by the
NASDAQ listing standards and as determined by the Board.
The Corporate Governance and Nominating Committee held three
meetings during fiscal 2009.
Finance
Committee
The Finance Committee, on behalf of the Board, evaluates and
approves financings, mergers, acquisitions, divestitures and
other financial commitments of Cadence to unaffiliated third
parties that involve amounts greater than $30 million and
up to $60 million.
The Finance Committee held four meetings during fiscal 2009.
Technology
Committee
The Technology Committee monitors trends in technology that may
affect Cadences strategic plans, advises the Board
regarding Cadences research and development activities and
reviews and makes recommendations to management regarding
Cadences leading technologists and researchers.
The Technology Committee held five meetings during fiscal 2009.
Board
Leadership Structure
Currently, Mr. Tan serves as CEO and Dr. Shoven, an
independent director, serves as Chairman of the Board. The Board
believes that Cadence and its stockholders are best served at
this time by this leadership structure because it is valuable to
have strong independent leadership to assist the Board in
fulfilling its role of overseeing the management of Cadence and
its risk management practices, separate from the CEO. However,
the Corporate Governance Guidelines permit the roles of the
Chairman of the Board and the CEO to be filled by the same or
different individuals. This provides the Board with flexibility
to determine whether the two roles should be combined in the
future based on Cadences needs and the Boards
assessment of Cadences leadership from time to time. The
Corporate Governance Guidelines provide for a lead independent
director if the roles are combined.
Risk
Oversight
The Board exercises its risk oversight function through the
Board as a whole and through certain of its committees. The
Board and the relevant committees seek to understand and oversee
the most critical risks facing Cadence. The Board does not view
risk in isolation, but considers risk as part of its regular
consideration of business decisions and business strategy. The
Board as a whole has the ultimate responsibility for the
oversight of risk management, but has delegated the oversight of
certain risks to the Audit Committee and the Compensation
Committee. The Audit Committee is responsible for overseeing
risk management as it relates to Cadences financial
condition, financial statements, financial reporting process and
accounting matters. The Compensation Committee is responsible
for overseeing Cadences overall compensation practices,
polices and programs and assessing the risks associated with
such practices, policies and programs. The Board and the
relevant committees review with Cadences management the
risk management practices for which they have oversight
responsibility. Since overseeing risk is an ongoing process and
inherent in Cadences strategic decisions, the Board and
the relevant committees also discuss risk throughout the year in
relation to specific proposed actions.
11
COMPENSATION
OF DIRECTORS
Directors who are Cadence employees do not receive additional
compensation for their service on the Board. The following table
sets forth the compensation earned by Cadences
non-employee directors (as defined below) for their service on
the Board in fiscal 2009:
DIRECTOR
COMPENSATION FOR FISCAL 2009
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Fees Earned
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Option
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All Other
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or Paid in Cash
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Awards
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Compensation
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Total
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Name
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($)
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($)(1)(2)
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($)(3)
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($)
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Donald L. Lucas
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$
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173,000
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$
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63,625
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$
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7,355
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$
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243,980
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Dr. Alberto Sangiovanni-Vincentelli
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136,000
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63,625
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8,843
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208,468
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George M. Scalise
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108,000
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63,625
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0
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171,625
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Dr. John B. Shoven
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215,000
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127,250
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4,101
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346,351
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Roger S. Siboni
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151,000
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63,625
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11,602
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226,227
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John A.C. Swainson
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89,000
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63,625
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0
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152,625
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(1) |
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As of January 2, 2010, the aggregate number of outstanding
stock options held by each director was as follows:
Mr. Lucas 240,000;
Dr. Sangiovanni-Vincentelli 285,000;
Mr. Scalise 245,000;
Dr. Shoven 392,500; Mr. Siboni
257,500; and Mr. Swainson 100,000. |
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(2) |
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In accordance with SEC rules, the amount shown reflects the
grant date fair value of stock options granted during fiscal
2009 calculated pursuant to Financial Accounting Standards Board
Codification (ASC) 718, Compensation Stock
Compensation, which is referred to in this proxy statement
as FASB ASC 718. The grant date fair value is based on the price
of Cadence common stock on the date the stock option was granted
and does not reflect any fluctuations in the price of Cadence
common stock subsequent to the grant date. The amount shown
therefore does not reflect the financial benefit that the holder
of the stock option will actually realize upon the vesting of
the stock option nor whether the stock option will be exercised
or exercisable prior to its expiration. The assumptions used to
calculate the valuation of the stock options for fiscal 2009 are
set forth in Note 9 to the Notes to Consolidated Financial
Statements in Cadences Annual Report on
Form 10-K
for the fiscal year ended January 2, 2010. |
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(3) |
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All Other Compensation for Drs. Sangiovanni-Vincentelli and
Shoven and Messrs. Lucas and Siboni consists of
reimbursements pursuant to the director health care and
prescription drug insurance coverage plan described below. |
A non-employee director is a Cadence director who is
not an employee of Cadence. As of the beginning of fiscal 2009,
the annual retainer for non-employee directors was $80,000, with
an additional annual retainer of $80,000 for a non-employee
director serving as Chairman of the Board. In May 2009, the
Board temporarily reduced the retainer fees payable to the
non-employee directors and the retainer fee payable to the
Chairman of the Board by 10% each, effective July 1, 2009
through March 31, 2010 and, in February 2010, extended the
duration of the reduction through June 30, 2010. A
non-employee director serving as Chairman of the Audit
Committee, the Finance Committee or the Technology Committee
receives an annual retainer of $40,000 per year and a
non-employee director serving as Chairman of the Corporate
Governance and Nominating Committee or the Compensation
Committee receives an annual retainer of $20,000 per year. A
non-employee director serving as Chairman of the Board is also
eligible to receive fees for service as the Chairman of these
committees of the Board.
Each non-employee director of Cadence earned a $76,000 retainer
for his service on the Board in fiscal 2009. Dr. Shoven
earned an additional $76,000 retainer for his service as
Chairman of the Board and a retainer of $20,000 for his service
as Chairman of the Compensation Committee. Mr. Siboni and
Dr. Sangiovanni-Vincentelli each earned a retainer of
$40,000 for his service as Chairman of the Audit Committee and
Chairman of the Technology Committee, respectively.
Mr. Lucas earned a retainer of $20,000 for his service as
the Chairman of the Corporate Governance and Nominating
Committee and a retainer of $40,000 for his service as the
Chairman of the Finance Committee. Each non-employee director
also received meeting fees of $2,000 for each meeting attended
in person and $1,000 for each meeting attended via telephone. No
additional compensation was paid when the Board or a
12
committee acted by unanimous written consent in lieu of a
meeting. Non-employee directors were also eligible for
reimbursement of their expenses incurred in connection with
attending Cadences Board meetings in accordance with
Cadences policy.
Each non-employee director also receives stock option grants
under Cadences 1995 Directors Stock Option Plan, as
amended, which is referred to in this proxy statement as the
Directors Plan. Only non-employee directors are eligible to
receive stock options under the Directors Plan.
Under the Directors Plan, each non-employee director, upon
joining the Board, is automatically granted a one-time option to
purchase the number of shares of Cadence common stock equal to
6,250 multiplied by the number of full calendar quarters between
the date the directors service begins and the next
April 1st. A director is considered to have served the
entire calendar quarter if he or she becomes a director at any
time during the first half of the quarter. These initial grants
vest and become exercisable in full on the
March 31st following the grant date and have an
exercise price equal to the average closing price of Cadence
common stock for the 20 trading days prior to the grant date.
In addition, every April 1st, each non-employee director is
automatically granted an option to purchase 25,000 shares
of Cadence common stock and a non-employee director serving as
Chairman of the Board is automatically granted an option to
purchase an additional 25,000 shares of common stock. These
annual stock option grants vest and become exercisable in full
on the March 31st following the grant date and have an
exercise price equal to the average closing price of Cadence
common stock for the 20 trading days prior to the grant date.
Directors may elect to defer compensation payable to them under
Cadences deferred compensation plan. These deferred
compensation payments are held in accounts with values indexed
to the performance of selected mutual funds, self-directed
accounts or money market accounts. Cadence does not match
contributions made under Cadences deferred compensation
plan.
Furthermore, a health care and prescription drug insurance
coverage plan is available for active non-employee directors,
eligible retired directors and their dependents. All
non-employee directors and their dependents are eligible for
coverage under the plan during their term of service on the
Board. Retired employee and non-employee directors and their
dependents are eligible for continuing coverage under the plan
after the directors termination of service for a term not
to exceed such directors term of service on the Board.
Under the plan, Cadence reimburses 100% of the premiums for
participants and their dependents up to a maximum of $20,000 per
calendar year, which maximum amount may be adjusted for future
changes in health care costs. Benefits under the plan are fully
taxable to the participants and Cadence does not defray any such
taxes. Messrs. Lucas and Siboni and
Drs. Sangiovanni-Vincentelli and Shoven maintained health
insurance coverage under this plan in fiscal 2009.
PROPOSAL 1
ELECTION
OF DIRECTORS
The Corporate Governance and Nominating Committee of the Board
has recommended, and the Board has nominated, the seven nominees
named below for election to the Board. Each director elected at
the 2010 Annual Meeting of Stockholders will hold office until
the 2011 Annual Meeting of Stockholders and until his successor
is elected and qualified, or until the directors earlier
death, resignation or removal. Each nominee listed below is
currently a Cadence director. All of the nominees have
previously been elected by Cadences stockholders.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED
NOMINEE.
DIRECTOR
QUALIFICATIONS AND DIVERSITY
The Board believes that the Board, as a whole, should possess a
combination of skills, professional experience and diversity of
backgrounds necessary to oversee Cadences business. In
addition, the Board believes that there are certain attributes
that every director should possess, as reflected in the
Boards membership criteria. Accordingly, the Board and the
Corporate Governance and Nominating Committee consider the
qualifications of directors and
13
director candidates individually and in the broader context of
the Boards overall composition and Cadences current
and future needs.
The Corporate Governance and Nominating Committee is responsible
for developing and recommending Board membership criteria to the
Board for approval. The criteria, which are set forth in the
Corporate Governance Guidelines, include a prospective
nominees integrity, experience, judgment, diversity of
background, independence, ability to commit sufficient time and
attention to Board activities, skills such as an understanding
of electronic design and semiconductor technologies,
international background and other relevant characteristics. The
Corporate Governance and Nominating Committee considers all of
these criteria in the context of the perceived needs of the
Board at that point in time. In addition, the Corporate
Governance and Nominating Committee annually reviews with the
Board the appropriate skills and characteristics required of
directors in the context of the current composition of the
Board. In seeking a diversity of background, the Corporate
Governance and Nominating Committee seeks a variety of
occupational and personal backgrounds on the Board in order to
obtain a range of viewpoints and perspectives. This annual
assessment enables the Board to update the skills and experience
it seeks in the Board as a whole, and in individual directors,
as Cadences needs evolve and change over time, and also
enables the Board to assess the effectiveness of its policy to
seek a diversity of background on the Board. In identifying
director candidates from time to time, the Corporate Governance
and Nominating Committee and the Board may establish specific
skills and experience that it believes Cadence should seek in
order to have an effective board of directors.
In evaluating director candidates, and considering incumbent
directors for renomination to the Board, the Corporate
Governance and Nominating Committee has considered all of the
criteria described above and, for incumbent directors, past
performance on the Board. Among other things, the Corporate
Governance and Nominating Committee has determined that it is
important to have individuals with the following skills and
experiences on the Board:
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Strong technologists with in-depth understanding of electronic
design and semiconductor technologies, which is vital in
understanding and reviewing Cadences strategy, including
product development and the acquisition of businesses that offer
complementary products, services or technologies;
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Current or former executives with significant operating
experience that gives them specific insight into developing,
implementing and assessing our operating plan and business
strategy;
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Substantial international experience, which is particularly
important given our global presence;
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Financial expertise with which to evaluate our financial
statements and capital structure; and
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Corporate governance experience from publicly traded companies
to support our goals of accountability for management and the
Board, and protection of stockholder interests.
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The Corporate Governance and Nominating Committee believes that
all of the seven director nominees listed below are highly
qualified and have the skills and experience required for
service on our Board. The biographies below contain information
regarding each of their experiences, qualifications and skills.
NOMINEES
The names of the nominees and certain information about them,
including term of service as a Cadence director and age as of
the 2010 Annual Meeting of Stockholders, are set forth below:
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Name and Principal Occupation
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Business Experience and Directorships
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Donald L. Lucas
80 Years Old
Director Since 1988
Private venture capital investor
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Donald L. Lucas served as Chairman of the Board of Cadence from
1988 to 2004. From its inception in 1983 to 1987, Mr. Lucas
served as Chairman of the Board and a director of SDA Systems,
Inc., a predecessor of Cadence. Mr. Lucas has been a private
venture capital investor since 1960. Mr. Lucas also serves as a
director of 51job, Inc., DexCom, Inc., Oracle Corporation,
Spansion, Inc. and Vimicro International Corporation.
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14
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Name and Principal Occupation
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Business Experience and Directorships
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Mr. Lucas served as a director of Macromedia, Inc. from 2003 to
2005 and PDF Solutions, Inc. from 1999 to 2005.
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As a private venture capital investor and long-time director for
a range of technology companies, Mr. Lucas has broad industry
and business experience, as well as financial and corporate
governance expertise.
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Dr. Alberto Sangiovanni-Vincentelli
62 Years Old
Director Since 1992
Professor of Electrical Engineering and Computer Sciences,
University of California, Berkeley
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Dr. Alberto Sangiovanni-Vincentelli is a co-founder of SDA
Systems, Inc., a predecessor of Cadence, and served as a
consultant to Cadence, or one of its predecessor corporations,
from 1983 to 2008. Since 1976, Dr. Sangiovanni-Vincentelli
has been a professor of electrical engineering and computer
sciences at the University of California, Berkeley, where he
holds the Edgar L. and Harold H. Buttner Chair of Electrical
Engineering. Dr. Sangiovanni-Vincentelli was elected to
the National Academy of Engineering in 1998 and received the
Kaufman Award from the Electronic Design Automation Consortium
in 2001, the IEEE/RSE Wolfson James Clerk Maxwell Medal for his
impact on the development of electronics and electrical
engineering or related fields in 2008 and the ACM/IEEE A.
Richard Newton Technical Impact Award in Electronic Design
Automation in 2009.
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As a co-founder of one of Cadences predecessor companies,
a professor of electrical engineering at the University of
California, Berkeley and a well-known expert in electrical
engineering, Dr. Sangiovanni-Vincentelli is a strong
technologist with significant industry expertise, as well as
substantial international experience.
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George M. Scalise
76 Years Old
Director Since 1989
President, Semiconductor Industry Association
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George M. Scalise has served as President of the Semiconductor
Industry Association, an association of semiconductor
manufacturers and suppliers, since 1997. Mr. Scalise served on
the Board of Directors of the Federal Reserve Bank of
San Francisco from 2000 to 2005, including as Deputy
Chairman from 2001 to 2003 and as Chairman from 2003 to 2005.
Mr. Scalise served as Executive Vice President and Chief
Administrative Officer of Apple Computer, Inc. (now Apple,
Inc.), a company that designs and manufactures consumer
electronics and software products, from 1996 to 1997. Mr.
Scalise also served as Senior Vice President of Planning and
Development and Chief Administrative Officer of National
Semiconductor Corporation, a semiconductor company, from 1991 to
1996. Mr. Scalise served on President George W. Bushs
Council of Advisors on Science and Technology from 2001 to 2009.
Mr. Scalise also serves as a director of MindTree Ltd.
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As the President of the Semiconductor Industry Association, a
former board member of the Federal Reserve and a former Chief
Administrative Officer of Apple Computer, Inc. (now Apple,
Inc.), Mr. Scalise has significant semiconductor and financial
expertise and substantial international experience.
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15
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Name and Principal Occupation
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Business Experience and Directorships
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Dr. John B. Shoven
62 Years Old
Director Since 1992
Professor of Economics, Stanford University
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Dr. John B. Shoven has served as Chairman of the Board
since 2005. Dr. Shoven is the Charles R. Schwab Professor
of Economics at Stanford University and the Wallace R. Hawley
Director of the Stanford Institute for Economic Policy Research.
He is also a senior fellow at the Hoover Institution, a fellow
of the American Academy of Arts and Sciences and a research
associate at the National Bureau of Economic Research.
Dr. Shoven has been a member of the faculty at Stanford
University since 1973, serving as Chairman of the Economics
Department from 1986 to 1989, director of the Center for
Economic Policy Research from 1988 to 1993 and as Dean of the
School of Humanities and Sciences from 1993 to 1998.
Dr. Shoven also serves as a director of Exponent, Inc.,
Financial Engines, Inc. and the Mountain View Board of American
Century Funds.
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Dr. Shoven served as a director of PalmSource, Inc. from
2002 to 2005 and Watson Wyatt Worldwide, Inc. from 2002 to 2006.
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As a professor of economics at Stanford University, the director
of the Stanford Institute for Economic Policy Research and a
director of a number of companies, Dr. Shoven has strong
financial and corporate governance expertise.
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Roger S. Siboni
55 Years Old
Director Since 1999
Independent Investor
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Roger S. Siboni served as Chairman of the Board, from 2003 to
2005, and as President and Chief Executive Officer, from 1998 to
2003, of Epiphany, Inc., a software company that provided
customer relationship management solutions. Prior to joining
Epiphany, Inc., Mr. Siboni spent more than 20 years at KPMG
LLP, most recently as its Deputy Chairman and Chief Operating
Officer. Mr. Siboni also serves as a director of ArcSight, Inc.,
Dolby Laboratories, Inc. and infoGroup, Inc.
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Mr. Siboni served as a director of Classmates Media Corporation
from 2007 to 2010 and FileNet Corporation from 1998 to 2006.
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As a former Chairman of the Board and Chief Executive Officer of
Epiphany, Inc., a former Chief Operating Officer of and
accountant at KPMG LLP and a director of a number of software
companies, Mr. Siboni has significant operating experience, as
well as financial, accounting and corporate governance expertise.
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John A.C. Swainson
55 Years Old
Director Since 2006
Former Chief Executive Officer,
CA, Inc.
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John A.C. Swainson served as Chief Executive Officer of CA,
Inc., an information technology management software company,
from 2005 through 2009 and as a director of CA, Inc. from
November 2004 through 2009. Prior to joining CA, Inc., Mr.
Swainson was Vice President of Worldwide Sales and Marketing of
the Software Group at International Business Machines
Corporation (IBM), a computer hardware and software company,
during 2004 and General Manager of the Application Integration
and Middleware division of IBMs Software Group from 1997
to 2004. Mr. Swainson also serves as a director of Visa, Inc.,
where he has been Lead Independent Director since 2007.
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Mr. Swainson served as a director of Visa U.S.A., the
predecessor of Visa, Inc., from 2006 to 2007.
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16
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Name and Principal Occupation
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Business Experience and Directorships
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As a former Chief Executive Officer and director of CA, Inc., as
well as a former General Manager and Vice President of Worldwide
Sales and Marketing of IBM, Mr. Swainson has significant
management, international operating and sales and marketing
experience, as well as substantial corporate governance
expertise.
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Lip-Bu Tan
50 Years Old
Director Since 2004
President and Chief Executive Officer,
Cadence Design Systems, Inc.
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Lip-Bu Tan has served as President and Chief Executive Officer
of Cadence since January 2009. In 1987, Mr. Tan founded Walden
International, an international venture capital firm, and since
its founding has served as its Chairman. Mr. Tan also serves as
a director of Flextronics International Ltd., Semiconductor
Manufacturing International Corporation and SINA Corporation.
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Mr. Tan served as a director of Centillium Communications, Inc.
from 1997 to 2007, Creative Technology, Ltd. from 1990 to 2009,
Integrated Silicon Solution, Inc. from 1990 to 2007, Leadis
Technology, Inc. from 2002 to 2006 and MindTree Ltd. from 2006
to 2009.
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As a Chairman of an international venture capital firm and a
director of a number of technology companies, Mr. Tan has
extensive experience in the electronic design and semiconductor
industries, as well as international operations and corporate
governance expertise.
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VOTE
REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION
Shares represented by executed proxies will be voted
FOR the election of the seven nominees named
above, if authority to do so is not withheld.
The Board recommends a vote FOR the election of
each of the seven nominees. The election of directors at the
annual meeting requires that each director receive a majority of
the votes cast with respect to that director, which means that
the number of shares voted for a director must
exceed the number of shares voted against that
director; provided, however, that in a contested election, the
directors shall be elected by the affirmative vote of a
plurality of the votes cast at the annual meeting. The election
this year is not contested and the majority voting standard
applies.
In order for an incumbent Cadence director to become a nominee
at the annual meeting, such director must submit an irrevocable
resignation that becomes immediately effective if (i) the
votes cast for such director does not exceed the
votes cast against such director in an election that
is not a contested election, and (ii) the Board accepts the
resignation in accordance with the policies and procedures
adopted by the Board for such purpose. If a nominee who is
currently serving as a Cadence director is not elected at the
annual meeting, the Corporate Governance and Nominating
Committee will make a recommendation to the Board as to whether
to accept or reject such directors resignation, or whether
to take other action. The Board will act on the Corporate
Governance and Nominating Committees recommendation and
publicly disclose (as required by applicable law) its decision
and the reasons behind it within 90 days from the date the
election results are certified.
If any nominee should be unavailable for election as a result of
unexpected circumstances, shares will be voted for the election
of any substitute nominee named by the Board. Each person
nominated for election has agreed to be named in this proxy
statement and to serve if elected, and Cadence has no reason to
believe that any nominee will be unable to serve.
Abstentions will be treated as being present and entitled to
vote on the proposal, however, abstentions are not counted as
votes for or against directors and will
not have an effect on the election of directors. Unless marked
to the contrary, proxies received will be voted FOR
the election of each of the seven director nominees.
17
PROPOSAL 2
RATIFICATION
OF APPOINTMENT OF THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee has selected KPMG LLP as Cadences
independent registered public accounting firm for the fiscal
year ending January 1, 2011. Pursuant to the Audit
Committee charter, the Board has directed management to submit
the selection of the independent registered public accounting
firm for ratification by the stockholders at the annual meeting.
KPMG LLP has audited Cadences financial statements since
fiscal 2002. Representatives from KPMG LLP are expected to be
present at the 2010 Annual Meeting of Stockholders, will have an
opportunity to make a statement, if they so desire, and will be
available to respond to appropriate questions.
Stockholder ratification of the selection of KPMG LLP as
Cadences independent registered public accounting firm is
not required by Cadences Bylaws or otherwise. However, the
Board is submitting the selection of KPMG LLP to the
stockholders for ratification as a matter of good corporate
practice. If Cadences stockholders fail to ratify the
selection, the Audit Committee will reconsider whether or not to
retain KPMG LLP. Even if the selection is ratified, the Audit
Committee, in its discretion, may direct the appointment of a
different independent registered public accounting firm at any
time during the year, if it determines that such a change would
be in the best interests of Cadence and its stockholders.
VOTE
REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION
The Board recommends a vote FOR ratification of
the selection of KPMG LLP. The affirmative vote of a majority of
the shares present in person or represented by proxy and
entitled to vote on the proposal is required for approval of
this proposal. Abstentions will be treated as being present and
entitled to vote on the proposal and, therefore, will have the
effect of votes against the proposal. Unless marked to the
contrary, proxies received will be voted FOR
ratification of the selection of KPMG LLP.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
PROPOSAL 2.
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee of the Board is comprised of three
non-employee directors of Cadence who are
independent as defined by the listing standards of
NASDAQ and as defined under the Exchange Act. During fiscal
2009, the Audit Committee was comprised of Dr. Shoven and
Messrs. Lucas and Siboni, with Mr. Siboni serving as
its Chairman. The Audit Committee met nine times in fiscal 2009.
The Audit Committee operates under a charter that was amended by
the Board in February 2010. The Audit Committee charter is
posted on the investor relations page of Cadences website
at http://www.cadence.com/company/investor_relations. As more
fully described in its charter, the Audit Committee appoints and
retains the independent registered public accounting firm and
oversees the quality and integrity of Cadences financial
statements, Cadences compliance with legal and regulatory
requirements, the independent registered public accounting
firms qualifications and independence, and the performance
of Cadences internal audit function, the independent
registered public accounting firm, Cadences accounting and
financial reporting processes and the audits of Cadences
financial statements on behalf of the Board.
In this context, the Audit Committee has reviewed and discussed
the audited financial statements included in Cadences
Annual Report on
Form 10-K
for the fiscal year ended January 2, 2010 with
Cadences management and KPMG LLP, Cadences
independent registered public accounting firm. The Audit
Committee has also discussed with KPMG LLP the matters required
to be discussed by the Statement on Auditing Standards
No. 61 (Communication with Audit Committees), as amended.
In addition, the Audit Committee has received from KPMG LLP the
written disclosures and the letter required by the applicable
requirements of the Public Company Accounting Oversight Board
regarding KPMG LLPs communications with the Audit
Committee concerning independence, and has discussed with KPMG
LLP its independence from Cadence and its management. The Audit
Committee has
18
also considered whether the provision of other non-audit
services by KPMG LLP to Cadence is compatible with KPMG
LLPs independence.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board, and the Board
approved, the inclusion of the audited financial statements in
Cadences Annual Report on
Form 10-K
for the fiscal year ended January 2, 2010 for filing with
the SEC.
AUDIT COMMITTEE
Roger S. Siboni, Chairman
Donald L. Lucas
John B. Shoven
The foregoing Audit Committee report is not soliciting material,
is not deemed filed with the SEC and is not to be incorporated
by reference in any filing of Cadence under the Securities Act
of 1933, as amended, or under the Exchange Act, whether made
before or after the date of this proxy statement and
irrespective of any general incorporation language in any such
filing.
FEES
BILLED TO CADENCE BY KPMG LLP DURING FISCAL 2009 AND
2008
The following table presents fees incurred by Cadence for
professional services rendered by KPMG LLP for the fiscal years
ended January 2, 2010 and January 3, 2009.
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Fiscal Year Ended
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Fiscal Year Ended
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January 2,
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January 3,
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2010
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2009
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(In thousands)
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Audit Fees(1)
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$ 3,150
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$ 5,108
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Audit-Related Fees(2)
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1
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(3)
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Total Audit and Audit-Related Fees
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3,151
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5,108
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Tax Fees(4)
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40
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(5)
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33
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(6)
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All Other Fees
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Total Fees
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$ 3,191
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$ 5,141
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(1) |
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Includes fees for the audit of Cadences consolidated
financial statements in Cadences Annual Report on
Form 10-K,
fees for the audit of Cadences internal control over
financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002, fees for the review of the interim
condensed consolidated financial statements in Cadences
Quarterly Reports on
Form 10-Q
and fees for services that are normally provided by KPMG LLP in
connection with statutory and regulatory filings or other
engagements. The amount for fiscal 2009 also includes estimated
fees of $587,064, not yet paid as of the date of this
filing, which includes fees for services rendered in connection
with Cadences year-end financial statement audit and the
audit of Cadences internal control over financial
reporting in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002 of $272,062 and fees for statutory
and regulatory filings related to fiscal 2009 of $315,002. The
amount for fiscal 2008 also includes fees for the services
rendered in connection with the restatements of the interim
condensed consolidated financial statements for the first and
second quarters of fiscal 2008. |
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(2) |
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Includes fees for assurance and related services that are
reasonably related to the performance of the audit or review of
Cadences consolidated financial statements that are not
reported under Audit Fees. |
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(3) |
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Audit-Related Fees for fiscal 2009 consisted of fees for a
statutory compliance engagement in India associated with the
certification of certain financial data for a regulatory filing. |
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(4) |
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Includes fees for tax compliance, tax advice and tax planning. |
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(5) |
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Tax Fees for fiscal 2009 consisted of tax compliance fees of
$40,218. |
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(6) |
|
Tax Fees for fiscal 2008 consisted of tax compliance fees of
$26,383 and tax planning and consulting fees of $6,596. |
19
AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE
NON-AUDIT SERVICES OF THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee pre-approves all audit and permissible
non-audit services provided by KPMG LLP prior to the engagement
of KPMG LLP with respect to such services. Pursuant to the Audit
Committees pre-approval policy, these services may include
specified audit services, audit-related services, tax compliance
services and tax planning and related tax services.
However, engagements for these pre-approved audit-related and
tax services with an estimated cost of more than $250,000 or
that exceed the applicable budgeted amount for the pre-approved
services must be pre-approved on a
case-by-case
basis by the Audit Committee or the Chairman of the Audit
Committee, or, if the Chairman is unavailable, another member of
the Audit Committee. In addition, any proposed engagement of
KPMG LLP for services that are not pre-approved audit-related
and tax services as described above must also be pre-approved on
a
case-by-case
basis by the Audit Committee or the Chairman of the Audit
Committee, or, if the Chairman is unavailable, another member of
the Audit Committee. The members to whom such authority is
delegated must report any approval decisions to the full Audit
Committee at its next scheduled meeting. None of the services
described in the table above entitled Fees Billed to
Cadence by KPMG LLP During Fiscal 2009 and 2008 were
approved by the Audit Committee under the de minimis
exception provided by
Rule 2-01(c)(7)(i)(C)
of
Regulation S-X.
20
SECURITY
OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of Cadence common stock as of March 16, 2010, the
record date, unless otherwise indicated below, by:
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All those known by Cadence to be beneficial owners of more than
5% of its common stock;
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Each of the executive officers named in the Summary Compensation
Table presented below under Compensation of Executive
Officers;
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All directors and director nominees; and
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All current executive officers and directors of Cadence as a
group.
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Beneficial Ownership(1)
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Number of
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Percent of
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Beneficial Owner
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Shares
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Total
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Five Percent Stockholders:
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Dodge & Cox(2)
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46,518,050
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17.20
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%
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555 California Street, 40th Floor
San Francisco, CA 94104
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T. Rowe Price Associates, Inc.(3)
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21,349,558
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|
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7.90
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|
100 E. Pratt Street
Baltimore, Maryland 21202
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BlackRock, Inc.(4)
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|
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16,011,440
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5.92
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40 East 52nd Street
New York, NY 10022
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|
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|
|
|
|
|
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Directors and Executive Officers:
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|
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|
|
Donald L. Lucas(5)(6)
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200,000
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|
|
|
*
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|
Alberto Sangiovanni-Vincentelli(5)
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292,993
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|
|
|
*
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|
George M. Scalise(5)
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|
|
232,500
|
|
|
|
*
|
|
John B. Shoven(5)
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|
|
473,750
|
|
|
|
*
|
|
Roger S. Siboni(5)
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|
|
240,000
|
|
|
|
*
|
|
John A.C. Swainson(5)
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|
|
115,000
|
|
|
|
*
|
|
Lip-Bu Tan(5)(7)
|
|
|
1,391,814
|
|
|
|
*
|
|
Kevin S. Palatnik(5)
|
|
|
610,890
|
|
|
|
*
|
|
Charlie Huang(5)(8)
|
|
|
658,451
|
|
|
|
*
|
|
John J. Bruggeman II(5)
|
|
|
75,934
|
|
|
|
*
|
|
Thomas A. Cooley(5)
|
|
|
193,927
|
|
|
|
*
|
|
James J. Cowie(5)
|
|
|
261,181
|
|
|
|
*
|
|
All current executive officers and directors as a group
(14 persons)(9)
|
|
|
5,526,408
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|
|
|
2.02
|
|
|
|
|
* |
|
Less than 1% |
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(1) |
|
This table is based upon information provided by principal
stockholders pursuant to Schedules 13G filed with the SEC and
the executive officers and directors. Unless otherwise indicated
in the footnotes to this table and subject to community property
laws where applicable, Cadence believes that each of the
stockholders named in this table has sole voting and investment
power with respect to the shares indicated as beneficially owned
by such stockholder. Beneficial ownership of greater than 5% of
Cadences outstanding common stock reflects ownership as of
the most recent date indicated under filings with the SEC as
noted below, while beneficial ownership of the executive
officers and directors is as of the record date. Applicable
percentages are based on 270,413,071 shares of Cadence
common stock outstanding on the record date, adjusted as
required by rules promulgated by the SEC. |
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(2) |
|
Dodge & Cox filed an amended Schedule 13G with
the SEC on February 12, 2010, indicating that it
beneficially owns 46,518,050 shares for which it has sole
voting power with respect to 44,238,700 shares, shared
voting power with respect to 53,400 shares and sole
dispositive power with respect to 46,518,050 shares. |
(footnotes continue on following
page)
21
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(3) |
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T. Rowe Price Associates, Inc. filed a Schedule 13G with
the SEC on February 11, 2010, indicating that it
beneficially owns 21,349,558 shares for which it has sole
voting power with respect to 2,866,328 shares and sole
dispositive power with respect to 21,111,339 shares. |
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(4) |
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BlackRock, Inc. filed an amended Schedule 13G with the SEC
on January 29, 2010, indicating that it acquired, on
December 1, 2009, Barclays Global Investors. As a result,
Barclays Global Investors is now included as a subsidiary of
BlackRock, Inc. for purposes of Schedule 13G filings.
BlackRock, Inc. indicated that it beneficially owns
16,011,440 shares for which it has sole voting and
dispositive power. |
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(5) |
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Includes shares which executive officers named in the Summary
Compensation Table presented under Compensation of
Executive Officers and directors of Cadence have the right
to acquire within 60 days after the record date upon
exercise of outstanding stock options as follows: |
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Donald L. Lucas
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195,000
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Lip-Bu Tan
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804,687
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Alberto Sangiovanni-Vincentelli
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262,500
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Kevin S. Palatnik
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331,562
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George M. Scalise
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222,500
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Charlie Huang(8)
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282,334
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John B. Shoven
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358,750
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John J. Bruggeman II
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8,125
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Roger S. Siboni
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235,000
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Thomas A. Cooley
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84,584
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John A.C. Swainson
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100,000
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James J. Cowie
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142,709
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(6) |
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Includes 5,000 shares held by Donald L. Lucas, TTEE, Donald
L. & Lygia S. Lucas Trust dtd 12/3/84, of which
Mr. Lucas is the trustee. |
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(7) |
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Includes 122,795 shares held by Lip-Bu Tan and Ysa Loo
Trust dated 2/3/1992, of which Mr. Tan and his spouse are
trustees and for which Mr. Tan shares voting and investment
power with his spouse, and 5,000 shares held by A&E
Investment LLC, the sole member of which is the Lip-Bu Tan and
Ysa Loo Trust dated 2/3/1992. Also includes 1,000 shares
held by L Tan & N Lee & W Lee Trustees,
Pacven Walden Inc. 401(k) PSP FBO Lip-Bu Tan for which
Mr. Tan has sole voting and investment power. Mr. Tan
disclaims beneficial ownership of these shares except to the
extent of his pecuniary interest therein. |
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(8) |
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Includes 244,488 shares held by Huang-Zhang Trust U/A
DTD 6/12/96, of which Mr. Huang and his spouse are trustees
and for which Mr. Huang shares voting and investment power
with his spouse. Also includes 11,420 shares held in
custodial accounts by Mr. Huangs spouse for their
minor children and 10,680 shares held by
Mr. Huangs spouse (including 3,959 shares that
may be acquired within 60 days after the record date upon
exercise of outstanding stock options) for which Mr. Huang
may be deemed to share voting and investment power.
Mr. Huang disclaims beneficial ownership of these shares
except to the extent of his pecuniary interest therein. |
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(9) |
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Includes 3,590,182 shares which all current executive
officers and directors in the aggregate have the right to
acquire within 60 days after the record date upon exercise
of outstanding stock options. |
22
COMPENSATION
DISCUSSION AND ANALYSIS
OVERALL
OBJECTIVES OF EXECUTIVE COMPENSATION
Compensation of Cadences executive officers is intended to
attract, motivate and retain highly qualified individuals with
the leadership skills necessary to achieve Cadences annual
and long-term business objectives and to create stockholder
value. Cadences executive officer compensation is based on
the following principles:
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Executive officers total direct compensation (consisting
of salary, annual cash incentive compensation and long-term
equity incentive compensation) should be competitive with market
practice;
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Compensation of the executive officers should align the
interests of the executive officers with the interests of
Cadences stockholders by providing the executive officers
with long-term equity incentive compensation opportunities and
promoting stock ownership, and thereby discourage behavior that
leads to excessive risk; and
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A substantial portion of the compensation of executive officers
should be at risk and should vary based on Cadences
financial and operational performance as well as the executive
officers level of responsibility and individual
performance at Cadence.
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The Compensation Committee assesses the compensation of the
executive officers annually to monitor Cadences adherence
to these principles.
FISCAL
2009 COMPENSATION HIGHLIGHTS
In light of the challenging economic environment in fiscal 2009,
and taking into consideration the objectives listed above, the
following compensation decisions were made with respect to
fiscal 2009:
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The Compensation Committee accepted the voluntary temporary
reduction of the base salaries of each Named Executive Officer
(as defined in Compensation of Executive Officers
below) who was an executive officer of Cadence in May 2009;
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The Compensation Committee accepted the recommendation of
management to withhold bonus opportunities from executive
officers, including the Named Executive Officers, for
performance in fiscal 2009 under the Bonus Plan; and
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The Compensation Committee determined that a relatively higher
ratio of long-term equity incentive compensation to cash
compensation would provide the appropriate alignment with
stockholders during difficult economic times.
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DETERMINING
EXECUTIVE COMPENSATION
Competitive
Compensation Levels
Each year the Compensation Committee benchmarks the
competitiveness of the elements of the executive officers
total direct compensation. The Compensation Committee also
periodically reviews the competitiveness of the executive
officers severance and change in control arrangements and
the broad-based employee benefit plans in which the executive
officers participate.
In July 2008, the Compensation Committee identified two separate
peer groups for benchmarking purposes to be used in connection
with compensation decisions for fiscal 2009. One peer group was
used to understand market trends with respect to pay programs
and practices among business and talent competitors and other
industry bellwethers, and is referred to in this proxy statement
as the Direct Practices Peer Group. The other peer group was
used to assess the competitiveness of the executive
officers total direct compensation compared to executives
with similar titles and responsibilities at companies with which
Cadence competes for talent, and is referred to in this proxy
statement as the Primary Compensation Peer Group.
23
Direct
Practices Peer Group
The Direct Practices Peer Group was determined qualitatively by
the Compensation Committee with the assistance of its
independent compensation consultant, Semler Brossy, and is
comprised of technology bellwether companies, as well as
companies in nearby or adjacent markets and other business and
talent competitors. Although the Compensation Committee monitors
the compensation practices of the companies in this group to
understand the compensation landscape in the technology market,
it does not generally consider the level of compensation that
these companies pay their executive officers (other than the
companies that are also in the Primary Compensation Peer Group)
when determining the compensation of Cadences executive
officers, because of differences in the scope of job
responsibilities or the breadth of the organizations managed by
executives holding the same or similar titles.
The following companies (three of which were also included in
the Primary Compensation Peer Group, as indicated by an asterisk
(*) below) comprised the Direct Practices Peer Group for fiscal
2009:
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Adobe Systems Incorporated
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Intel Corporation
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Oracle Corporation
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Applied Materials, Inc.
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KLA-Tencor Corporation*
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Synopsys, Inc.*
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Broadcom Corporation
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Mentor Graphics Corporation
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VMware, Inc.
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Cisco Systems, Inc.
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NVIDIA Corporation*
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Primary
Compensation Peer Group
In order to reflect more accurately the pool from which
executive talent is drawn and to which it is lost, the Primary
Compensation Peer Group is not limited to Cadences direct
business competitors. Rather, the Compensation Committee
included companies that have a technology emphasis, are located
in the San Francisco Bay Area (where Cadence is
headquartered), compete in the same talent market as Cadence and
fall within a relevant revenue and market capitalization range
(i.e., technology companies with revenue between 0.5 and 2.5
times that of Cadences fiscal 2007 revenue and two-year
average market capitalization between 0.25 and 4 times that of
Cadences two-year average market capitalization as of July
2008). The resulting group of 28 companies was used to
assess the competitiveness of the executive officers base
salaries, target and actual annual cash incentive compensation,
long-term equity incentive opportunities and total direct
compensation.
The following companies (three of which were also included in
the Direct Practices Peer Group, as indicated by an asterisk (*)
below) comprised the Primary Compensation Peer Group for fiscal
2009 for determining competitive compensation levels:
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Altera Corporation
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Lam Research Corporation
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NVIDIA Corporation*
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Atmel Corporation
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Linear Technology Corporation
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Palm, Inc.
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Autodesk, Inc.
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Logitech International S.A.
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Polycom Inc.
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Brocade Communications Systems, Inc.
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LSI Corporation
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SanDisk Corporation
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Cypress Semiconductor Corporation
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Maxim Integrated Products, Inc.
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Sybase, Inc.
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Electronic Arts Inc.
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McAfee, Inc.
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Synopsys, Inc.*
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Intuit Inc.
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National Semiconductor Corporation
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Trimble Navigation Limited
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JDS Uniphase Corporation
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Network Appliance Inc.
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VeriSign, Inc.
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Juniper Networks Inc.
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Novellus Systems, Inc.
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Xilinx Inc.
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KLA-Tencor Corporation*
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Compensation
Determinations
Consistent with the principles of Cadences executive
officer compensation outlined above, after the Compensation
Committee determines the market levels of each executive
officers compensation based on the compensation paid by
the companies in the Primary Compensation Peer Group, the
Compensation Committee assesses the appropriateness of each
executive officers compensation relative to executives
with similar titles and responsibilities at the companies in the
Primary Compensation Peer Group. Cadence does not target
executive officer compensation at a specific level or percentage
relative to compensation provided by the companies in the
24
Primary Compensation Peer Group, whether for total direct
compensation or any element of total direct compensation.
Instead, when determining compensation for the executive
officers, the Compensation Committee takes into account not only
the information regarding compensation paid to executives with
similar titles and responsibilities at the companies in the
Primary Compensation Peer Group, but also each of the following
factors, without prescribing particular weightings:
Cadence
Factors
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Cadences financial and operational performance as compared
to the performance of the companies in the Primary Compensation
Peer Group; and
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Cadences relative size and scope of business as compared
to the companies in the Primary Compensation Peer Group.
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Individual
Factors
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Strategic importance of the position;
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Scarcity in the market of the individuals skills and
talents;
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Individual performance over the preceding year;
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Expected future contributions;
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Historical compensation;
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Ability to impact corporate
and/or
business unit results;
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Retention risks; and
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Relative positioning/performance versus other executives.
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For each executive officer other than the CEO, the CEO typically
makes assessments and recommendations to the Compensation
Committee on whether there should be adjustments to an executive
officers annual base salary, annual cash incentive
compensation and long-term equity incentive compensation based
upon an assessment of each of the Cadence Factors
and the Individual Factors outlined above, which are
collectively referred to in this proxy statement as the
Compensation Factors. The Compensation Committee then reviews
these assessments and recommendations and determines whether or
not to approve
and/or
modify the CEOs recommendations.
The Compensation Committee evaluates each of the Cadence
Factors as well as the CEOs performance with respect
to each of the Individual Factors described above,
and the assessment from such evaluation is used to determine
whether or not to adjust the CEOs compensation. The
Compensation Committee, in its sole discretion, makes all
decisions related to the CEOs compensation.
ELEMENTS
OF EXECUTIVE COMPENSATION
The Named Executive Officers compensation is comprised of
the following elements:
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Total direct compensation, consisting of:
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Base salary;
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Annual cash incentive compensation; and
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Long-term equity incentive compensation (including stock options
and shares of restricted stock).
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Other compensation and benefits, consisting of:
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Participation in Cadences broad-based benefit plans;
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Participation in Cadences nonqualified deferred
compensation plans; and
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Limited perquisites.
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25
Consistent with the principles of Cadences executive
officer compensation outlined above, an executive officers
total direct compensation is based upon Cadences
performance as well as the performance of the individual
executive officer. Cadence does not have a pre-established
policy or target for allocating between fixed and variable
compensation or among the different types of variable
compensation, although the allocation is influenced by the
Compensation Committees assessment of the compensation
practices of the companies in the Primary Compensation Peer
Group and Cadences short-term and long-term strategic
objectives. Instead, the Compensation Committee aims to provide
total direct compensation at levels sufficient to attract and
retain qualified executives. Variable compensation generally
consists of annual cash incentive compensation and long-term
equity incentives, and represents the majority of the total
direct compensation opportunity for each executive officer. As
discussed in further detail below, for fiscal 2009, the
Compensation Committee accepted the recommendation of management
to withhold bonus opportunities from executive officers,
including the Named Executive Officers, under the Bonus Plan,
and determined that variable compensation would consist entirely
of long-term equity incentives. The Compensation Committee
believes that the executive officers consistent and
sustained performance can have a direct and significant impact
on long-term stockholder value.
Base
Salaries
Cadence offers its executive officers an annual base salary to
compensate them for services rendered during the year. Base
salaries are essential for the attraction and retention of
talented executive officers and are determined as described
above under Compensation Determinations. The
executive officers base salaries are reviewed annually by
the Compensation Committee, but do not automatically increase
each year. Changes to the executive officers base
salaries, if any, are typically made in the first quarter of the
year or in connection with an executive officers promotion
or change in responsibilities.
In February 2009, the Compensation Committee approved the
following base salary increases for certain Named Executive
Officers as a result of changes in Cadences organizational
structure and in recognition of each executives increased
responsibilities: (i) Mr. Palatniks base salary
was increased to $450,000; (ii) Mr. Huangs base
salary was increased to $400,000; and
(iii) Mr. Cooleys base salary was increased to
$425,000.
In May 2009, in support of Cadences cost-reduction
strategy and commitment to operational efficiency,
Cadences executive officers volunteered a temporary
reduction of the base salaries of each of the executive
officers, including the Named Executive Officers who were then
executive officers, effective July 1, 2009 through
March 31, 2010, and the Compensation Committee accepted
this voluntary reduction. During this period, the base salary of
Mr. Tan was reduced by 20% and the base salary of each of
Cadences Senior Vice Presidents (which include all of the
other Named Executive Officers who were executive officers at
the time) was reduced by 10%. In February 2010, Mr. Tan
requested to reduce his base salary, effective March 1,
2010, by another 6.25%, without any limitation on the duration
of such additional salary reduction, and the Compensation
Committee accepted this voluntary reduction. At the same time,
Cadences other executive officers, including each of the
other Named Executive Officers, volunteered to continue the
temporary reductions to their base salaries through
June 30, 2010, and the Compensation Committee accepted such
extension.
Annual
Cash Incentive Compensation
Cadence generally provides its executive officers with the
opportunity to earn variable cash compensation under the Bonus
Plan. The purpose of the Bonus Plan is to reward executive
officers for performance during a single fiscal year and to
provide incentives for them to achieve Cadences annual
financial and operational goals, as measured against specific
performance criteria relative to their respective business
groups and Cadences overall business results. In light of
the challenging economic environment and in support of
Cadences cost reduction strategy, in early 2009, the
Compensation Committee accepted the recommendation of management
to withhold bonus opportunities from executive officers,
including the Named Executive Officers, for fiscal 2009. The
Compensation Committee believed that a relatively higher ratio
of long-term equity incentive compensation to cash compensation
would provide appropriate alignment with stockholders during
this challenging period and would reward the executive officers
for building and sustaining long-term stockholder value.
26
In February 2010, the Compensation Committee determined that the
executive officers, including the Named Executive Officers,
would be eligible for bonus opportunities under the Bonus Plan
for fiscal year 2010, subject to the satisfaction of the
financial and operational goals set forth in the Bonus Plan.
Under the Bonus Plan for fiscal 2010, Cadence will provide its
executive officers with the opportunity to earn variable cash
compensation in two independent semi-annual performance
measurement and payment periods.
Other
Discretionary Bonuses
The Compensation Committee has the discretion to reward
executive officers with additional cash compensation, including
in connection with their performance, contribution, promotion or
retention. As an inducement for Mr. Bruggeman to join
Cadence and in connection with the negotiation of the terms of
his employment, the Compensation Committee approved a one-time
hiring bonus of $40,000, payable upon the commencement of his
employment in August 2009. Mr. Bruggeman must repay a
pro-rated amount of the bonus if he voluntarily terminates his
employment within 24 months of his hire date: 100% in the
first 12 months after his hire date, 70% in the subsequent
12-18 months
after his hire date, and 40% in the remaining
18-24 months
after his hire date. In December 2008, the Compensation
Committee approved a discretionary cash payment of $250,000 to
Mr. Tan in recognition of his service as a member of the
Interim Office of the Chief Executive, referred to as the IOCE
in this proxy statement, which became payable upon his
appointment as CEO. Mr. Tan was a member of the IOCE from
October 15, 2008 through the beginning of fiscal 2009, and
therefore $11,765 of the discretionary cash payment he received
for his service as a member of the IOCE was considered earned in
fiscal 2009.
Long-Term
Equity Incentive Compensation
Consistent with the principles of Cadences compensation
for its executive officers outlined above, long-term equity
incentives are designed to provide executive officers with an
equity stake in Cadence, promote stock ownership to align the
executive officers interests with those of Cadences
stockholders and create significant incentives for executive
retention. Specifically, stock options provide an opportunity
for Cadence to reward its executive officers if Cadences
stock price increases and the executive officers remain employed
at Cadence during the period required for the stock options to
vest. Furthermore, awards of restricted stock align the
interests of executive officers with the interests of
stockholders through stock ownership, and the value of the
executive officers reward increases when Cadences
stock price increases.
When the Compensation Committee determines and approves
individual equity grants to executive officers, it considers
compensation paid to executives with similar titles and
responsibilities at the companies in the Primary Compensation
Peer Group and each of the Compensation Factors, without
prescribing particular weightings to any of the Compensation
Factors. In addition, the Compensation Committee reviews the
CEOs assessments and recommendations as to the long-term
equity compensation for all of the executive officers except
himself.
In fiscal 2010, the Compensation Committee adopted a policy
that, in determining the compensation of executive officers,
including the Named Executive Officers, a portion of their stock
awards granted be performance-based. The performance-based stock
awards may take either of the following forms:
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Performance-Vesting Stock Awards stock awards that
do not vest or become exercisable unless certain specific
business performance goals established by the Compensation
Committee are met.
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Performance-Accelerated Stock Awards stock awards
for which vesting is accelerated upon achievement of specific
business performance goals established by the Compensation
Committee.
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In consideration of the other elements of his compensation
package and as an inducement for Mr. Tan to accept
appointment as CEO in January 2009, Mr. Tan received an
option to purchase shares of Cadence common stock at its fair
market value on the grant date, 25% of which vests on the first
anniversary of the grant date and the remainder of which vests
monthly over a period of three years thereafter, and an award of
shares of restricted stock, 25% of which vests on each of the
first four anniversaries of the grant date, subject to the
achievement of performance goals intended to qualify the awards
as performance-based compensation under
Section 162(m) of the Code. Mr. Tans January
2009 equity grant reflected the Compensation Committees
determination that long-term equity incentives
27
align the CEOs incentives with stockholder interests.
Please refer to the Grants of Plan-Based Awards in Fiscal Year
2009 table below for more detail regarding Mr. Tans
grants.
In February 2009, 65% to 80% of the long-term equity incentives
provided to the Named Executive Officers at the time, in terms
of grant date fair value, consisted of stock options and the
remaining 20% to 35% consisted of restricted stock. The
Compensation Committee intended this long-term equity incentive
mix to provide the appropriate level of stockholder alignment,
reward its executives for building and sustaining long-term
stockholder value, and balance between stock options (which
provide value only if the stock price increases) and restricted
stock (which provide more certain retention value). The
Compensation Committee and the CEO continue to believe that
equity-based compensation is an important component of
Cadences compensation program and essential to motivate
executives and align their interests with those of its
stockholders.
As an inducement for Mr. Bruggeman to join Cadence and in
connection with the negotiation of the terms of his employment,
the Compensation Committee approved an equity grant to
Mr. Bruggeman in September 2009 that included stock options
and restricted stock. Please refer to the Grants of Plan-Based
Awards in Fiscal Year 2009 table below for more detail regarding
Mr. Bruggemans grants.
The February 2009 stock options (which were 65% to 80% of the
February 2009 grants based on the total grant date fair value)
vest monthly over four years from the date of grant and expire
seven years from the date of grant. The February 2009 restricted
stock awards (which were 20% to 35% of the February 2009 grants
based on the total grant date fair value), vest in equal
semi-annual installments over three years from the date of
grant, subject to the achievement of performance goals intended
to qualify the awards as performance-based
compensation under Section 162(m) of the Code. This
vesting schedule reflects a change from the restricted stock
granted during fiscal 2008, which vests 25% on each of the first
four anniversaries of the grant date, subject to the achievement
of certain specified performance goals intended to qualify the
awards as performance-based compensation under
Section 162(m) of the Code. The Compensation Committee
determined that a shorter vesting schedule with more frequent
vesting dates would be appropriate given the lower overall
compensation opportunities provided to the Named Executive
Officers in fiscal 2009, and would serve to more effectively
bolster the ownership stake the Named Executive Officers would
have in Cadence, given the proportion of past stock option
grants that continue to be underwater.
In February 2010, the Compensation Committee made annual equity
grants in the form of stock options and restricted stock to each
of the Named Executive Officers. Consistent with the February
2009 equity grants, the February 2010 equity grants are
allocated more heavily towards stock options than restricted
stock. The Compensation Committee awarded approximately 80% of
the total grant date fair value of Mr. Tans equity
grant in the form of stock options, with the remainder
consisting of restricted stock. For the other Named Executive
Officers, approximately 60% of the total grant date fair value
of the equity grants is in the form of stock options. The terms
and vesting schedules of February 2010 stock option grants are
consistent with the stock option grants made in fiscal 2009. The
February 2010 restricted stock awards vest in equal semi-annual
installments over three years from the date of grant, subject to
the achievement of performance goals intended to qualify the
awards as performance-based compensation under
Section 162(m) of the Code.
Grant
Timing Policy
The Compensation Committee and senior management monitor
Cadences stock option and restricted stock grant policies
to ensure that such policies comply with governing regulations
and are consistent with good corporate practice. Grants to the
executive officers are generally made at the Compensation
Committee meeting held in February of each year, after results
for the preceding fiscal year become publicly available,
enabling the Compensation Committee to consider both the prior
years performance and expectations for the succeeding year
in making grant decisions. However, the Compensation Committee
may make grants at any time of the year it deems appropriate.
Deferred
Compensation
In fiscal 2009, each of the Named Executive Officers was
eligible to defer compensation payable to them under a
nonqualified deferred compensation plan maintained by Cadence,
which is referred to in this proxy statement as
28
the Deferred Compensation Plan. The Deferred Compensation Plan
is designed to allow for savings above the limits imposed by the
Code for 401(k) plans on an income tax-deferred basis for
Cadence employees at the level of vice president (or its
equivalent) and above who choose to participate. Amounts
deferred into the Deferred Compensation Plan are held in
accounts with values indexed to the performance of selected
mutual funds or money market accounts. The investment options
made available under the Deferred Compensation Plan are
substantially similar to those available under Cadences
tax-qualified 401(k) plan. Cadence does not match contributions
made under the Deferred Compensation Plan. Cadence maintains the
Deferred Compensation Plan for the purposes of providing a
competitive benefit and allowing all participants, including the
Named Executive Officers, an opportunity to defer income tax
payments on their cash compensation.
Other
Employee Benefit Plans
The Named Executive Officers are eligible for the same benefits
available to Cadence employees generally. These include
participation in a tax-qualified 401(k) plan, employee stock
purchase plan, and group life, health, dental, vision and
disability insurance plans. Cadence also periodically benchmarks
its broad-based employee benefit plans based upon a review of
the benefits survey conducted by the Silicon Valley
Employers Forum. Cadence aims to provide benefits to its
employees that are consistent with market practice.
Perquisites
The only material perquisite provided to any Named Executive
Officer in fiscal 2009 was a payment of $15,792 made to outside
counsel for legal services provided to Mr. Tan in
connection with the negotiation of his employment agreement.
Severance
Benefits
The Compensation Committee periodically reviews typical industry
practices concerning severance and change in control agreements
and Cadences severance and change in control agreements.
Cadence has entered into agreements with Messrs. Tan,
Palatnik, Cooley, Cowie and Huang that provide for benefits upon
termination of employment under certain circumstances, including
in connection with a change in control of Cadence. Cadence
provides these benefits as a means of remaining competitive,
retaining executive officers, focusing executive officers on
stockholder interests when considering strategic alternatives
and providing income protection in the event of involuntary loss
of employment. In general, these arrangements provide for
severance benefits upon Cadences termination of the
executives employment without cause or resignation by the
executive for good reason (constructive termination). In the
event of a change in control of Cadence, and if the
executives employment is terminated without cause or for
good reason (constructive termination), the executive will
receive enhanced severance benefits. Accordingly, Cadence
provides for enhanced severance benefits only in the event of a
double trigger because it believes that the
executive officers would be materially harmed only if a change
in control results in reduced responsibilities or compensation
or loss of employment.
Please refer to the discussion under Potential Payments
upon Termination or Change in Control and Employment
Contracts below for a more detailed discussion of the
severance and change in control arrangements with the Named
Executive Officers.
STOCK
OWNERSHIP GUIDELINES
Cadence maintains stock ownership guidelines for its executive
officers. These guidelines are designed to promote alignment
with the interests of stockholders and Cadences commitment
to sound corporate governance. The Compensation Committee
reviewed industry standard practices when it established the
guidelines below. All of the Named Executive Officers satisfy
Cadences stock ownership guidelines.
29
Stock
Ownership Guidelines
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|
Position
|
|
|
Shares(1)
|
|
|
Years to Meet Guidelines
|
Chief Executive Officer
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
50,000
|
|
|
|
5 years
|
|
|
|
|
|
|
|
|
|
Senior Vice Presidents
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For purposes of determining stock ownership levels, the
following forms of equity interests in Cadence count towards
satisfaction of the stock ownership guidelines: restricted or
incentive shares (whether vested or unvested), shares obtained
through the Amended and Restated Employee Stock Purchase Plan,
which is referred to in this proxy statement as the ESPP, shares
acquired and held through the exercise of stock options, shares
purchased on the open market, shares owned outright by the
executive officer or his or her immediate family members
residing in the same household, and shares held in trust for the
benefit of the executive officer or his or her family. |
CLAWBACK
POLICY
Cadence has adopted a clawback policy, which provides that if
Cadence restates its reported financial results, the Board will
review all bonuses and other awards made after January 1,
2010 that were made to senior executive officers on the basis of
having met or exceeded performance goals during the period
covered by the restatement and will, to the extent practicable
and in the best interests of stockholders, instruct Cadence to
seek to recover or cancel such bonuses or awards to the extent
that performance goals would not have been met under such
restated financial results.
TAX
CONSIDERATIONS
Section 162(m)
of the Internal Revenue Code of 1986
Section 162(m) of the Code limits deductions for certain
executive compensation in excess of $1,000,000 in any fiscal
year. Certain types of compensation are deductible only if
performance criteria are specified in detail and payments are
contingent on stockholder approval of the compensation
arrangement. Cadence attempts to structure its compensation
arrangements to achieve deductibility under Section 162(m)
of the Code, unless the benefit of such deductibility is
outweighed by the need for flexibility or the attainment of
other corporate objectives. The Compensation Committee will
continue to monitor issues concerning the deductibility of
executive compensation and will take appropriate action if and
when it is warranted. Since corporate objectives may not always
be consistent with the requirements for full deductibility, the
Compensation Committee is prepared, if it deems appropriate, to
enter into compensation arrangements under which payments may
not be deductible under Section 162(m) of the Code. Thus,
deductibility will not be the sole factor used by the
Compensation Committee in ascertaining appropriate levels or
modes of compensation.
In fiscal 2009, all stock option and restricted stock grants to
Messrs. Tan, Palatnik, Cooley, Cowie and Huang were
structured with the intent to qualify them as
performance-based compensation under
Section 162(m) of the Code, and should be fully deductible.
Section 280G
of the Internal Revenue Code of 1986
Section 280G of the Code disallows a companys tax
deduction for certain payments in connection with a change in
control, defined as excess parachute payments, and
Section 4999 of the Code imposes a 20% excise tax on
certain persons who receive excess parachute payments.
Messrs. Tan, Palatnik, Cooley, Cowie and Huang are not
provided with tax
gross-up
payments in the event their payments become subject to this
excise tax, but instead are entitled to the best after-tax
alternative. In other words, they are entitled to whichever of
the following payments results in the largest after-tax amount:
|
|
|
|
|
The full payout including any portion that would be classified
as an excess parachute payment; or
|
|
|
|
The maximum payout that would result in no portion of the payout
being subject to the excise tax.
|
30
Cadence chose to provide Messrs. Tan, Palatnik, Cooley,
Cowie and Huang with the best after-tax alternative to maximize
the benefits provided to each executive in connection with a
change in control while allowing Cadence to avoid making any
gross-up
payments.
In the event that a portion of the payout would be classified as
an excess parachute payment, Cadences tax deduction would
be disallowed under Section 280G of the Code and an excise
tax would be imposed on the Named Executive Officer under
Section 4999 of the Code. Please refer to the discussion
below under Potential Payments upon Termination or Change
in Control and Employment Contracts for more detail on the
potential lost tax deductions.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis above with management. In
reliance on the review and discussions referred to above, the
Compensation Committee recommended to the Board, and the Board
approved, the inclusion of the Compensation Discussion and
Analysis in this proxy statement and incorporation by reference
into Cadences Annual Report on
Form 10-K
for the fiscal year ended January 2, 2010.
COMPENSATION COMMITTEE
John B. Shoven, Chairman
Donald L. Lucas
George M. Scalise
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is, or was during or
prior to fiscal 2009, an officer or employee of Cadence or any
of its subsidiaries. None of Cadences executive officers
serves or served as a director or member of the compensation
committee of another entity where an executive officer of such
other entity serves or served as a director or member of the
Compensation Committee of Cadence.
31
COMPENSATION
OF EXECUTIVE OFFICERS
The following table shows the compensation awarded or paid to,
or earned by, Cadences CEO and CFO as of the end of fiscal
2009, Cadences Senior Vice President who performed
functions similar to a principal executive officer until
Cadences CEO was appointed on January 8, 2009 and
Cadences three most highly compensated executive officers
other than those three officers as of the end of fiscal 2009
(collectively referred to herein as the Named Executive
Officers).
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)(1)
|
|
($)(1)
|
|
($)(2)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
Lip-Bu Tan
|
|
|
2009
|
|
|
$
|
531,692
|
|
|
$
|
11,765
|
(4)
|
|
$
|
2,076,000
|
|
|
$
|
3,636,609
|
|
|
$
|
26,029
|
|
|
$
|
6,282,095
|
|
President and Chief Executive Officer
|
|
|
2008
|
|
|
|
0
|
|
|
|
238,235
|
|
|
|
0
|
|
|
|
163,900
|
|
|
|
0
|
|
|
|
402,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin S. Palatnik
|
|
|
2009
|
|
|
|
423,135
|
|
|
|
0
|
|
|
|
210,000
|
|
|
|
625,873
|
|
|
|
10,261
|
|
|
|
1,269,269
|
|
Senior Vice President and
Chief Financial Officer
|
|
|
2008
|
|
|
|
383,269
|
|
|
|
0
|
|
|
|
562,000
|
|
|
|
410,520
|
|
|
|
6,992
|
|
|
|
1,362,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charlie Huang
|
|
|
2009
|
|
|
|
375,692
|
|
|
|
0
|
|
|
|
147,000
|
|
|
|
455,180
|
|
|
|
9,168
|
|
|
|
987,040
|
|
Senior Vice President and
Chief Strategy Officer
|
|
|
2008
|
|
|
|
350,000
|
|
|
|
0
|
|
|
|
318,300
|
|
|
|
256,212
|
|
|
|
8,135
|
|
|
|
932,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Bruggeman II(5)
|
|
|
2009
|
|
|
|
125,192
|
|
|
|
40,000
|
(6)
|
|
|
212,100
|
|
|
|
653,140
|
|
|
|
4,369
|
|
|
|
1,034,801
|
|
Senior Vice President and
Chief Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Cooley
|
|
|
2009
|
|
|
|
401,337
|
|
|
|
0
|
|
|
|
126,000
|
|
|
|
455,180
|
|
|
|
9,386
|
|
|
|
991,903
|
|
Senior Vice President,
Worldwide Field Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Cowie
|
|
|
2009
|
|
|
|
332,096
|
|
|
|
0
|
|
|
|
168,000
|
|
|
|
455,180
|
|
|
|
8,788
|
|
|
|
964,064
|
|
Senior Vice President,
General Counsel and Secretary
|
|
|
2008
|
|
|
|
333,846
|
|
|
|
100,000
|
(7)
|
|
|
327,900
|
|
|
|
239,514
|
|
|
|
8,135
|
|
|
|
1,009,395
|
|
|
|
|
(1) |
|
Includes amounts deferred pursuant to Section 401(k) of the
Code and the Deferred Compensation Plan. |
|
(2) |
|
In accordance with SEC rules, the amount shown reflects the
grant date fair value of stock awards and option awards granted
during fiscal 2009 calculated pursuant to FASB ASC 718. The
grant date fair value is based on the price of Cadence common
stock on the date the award was granted and does not reflect any
fluctuations in the price of Cadence common stock subsequent to
the grant date. The amount shown therefore does not reflect the
financial benefit that the holder of the award will actually
realize upon the vesting of the award, nor, with respect to
stock options, whether the stock option will be exercised or
exercisable prior to its expiration. The assumptions used to
calculate the valuation of the stock awards and option awards
for fiscal 2009 are set forth in Note 9 to the Notes to
Consolidated Financial Statements in Cadences Annual
Report on
Form 10-K
for the fiscal year ended January 2, 2010. |
|
|
|
In accordance with the new SEC rules, the amount shown for
fiscal 2008 was recalculated to reflect the grant date fair
value of stock awards and option awards and is therefore
different than the amounts shown in Cadences 2008 proxy
statement. |
|
(3) |
|
The payments listed in the All Other Compensation
column above reflect the following and, unless noted below, are
based upon the actual cost expended by Cadence in connection
with the following amounts: |
|
|
|
|
|
For Mr. Tan, the amount shown includes (for fiscal 2009):
$7,350 for 401(k) matching contributions, $2,847 for term life
insurance premium payments, $15,792 paid to outside counsel for
legal services provided in connection with the negotiation of
his employment agreement and a sales incentive gift.
|
(footnotes continue on following
page)
32
|
|
|
|
|
For Mr. Palatnik, the amount shown includes (for fiscal
2009): $7,350 for 401(k) matching contributions and $2,911 for
term life insurance premium payments.
|
|
|
|
For Mr. Huang, the amount shown includes (for fiscal 2009):
$7,350 for 401(k) matching contributions and $1,818 for term
life insurance premium payments.
|
|
|
|
For Mr. Bruggeman, the amount shown includes (for fiscal
2009): $3,982 for 401(k) matching contributions and $387 for
term life insurance premium payments.
|
|
|
|
For Mr. Cooley, the amount shown includes (for fiscal
2009): $7,350 for 401(k) matching contributions and $2,036 for
term life insurance premium payments.
|
|
|
|
For Mr. Cowie, the amount shown includes (for fiscal 2009):
$7,350 for 401(k) matching contributions and $1,438 for term
life insurance premium payments.
|
|
|
|
(4) |
|
Mr. Tan received a discretionary cash payment of $250,000
that was approved by the Compensation Committee on
December 15, 2008 in recognition of Mr. Tans
service as a member of the IOCE. The amount of $11,765
represents the prorated portion earned by Mr. Tan in fiscal
2009 and $238,235 represents the prorated portion earned by
Mr. Tan in fiscal 2008. |
|
(5) |
|
Mr. Bruggeman commenced his employment as Senior Vice
President and Chief Marketing Officer on August 26, 2009. |
|
(6) |
|
As an inducement for Mr. Bruggeman to join Cadence,
Mr. Bruggeman received a one-time discretionary bonus of
$40,000, in connection with the commencement of his employment
as Senior Vice President and Chief Marketing Officer on
August 26, 2009. |
|
(7) |
|
Mr. Cowie received a discretionary bonus of $100,000 in
connection with his promotion to Senior Vice President and
General Counsel. |
GRANTS OF
PLAN-BASED AWARDS IN FISCAL YEAR 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Number of
|
|
Exercise or
|
|
Fair Value
|
|
|
|
|
Possible Payments Under
|
|
Shares of
|
|
Securities
|
|
Base Price
|
|
of Stock
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
Stock or
|
|
Underlying
|
|
of Option
|
|
and Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)(1)
|
|
(#)
|
|
($/Sh)(2)
|
|
($)(3)
|
|
Lip-Bu Tan
|
|
|
1/08/09
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
300,000
|
|
|
|
|
|
|
$
|
|
|
|
$
|
1,236,000
|
|
|
|
|
2/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
840,000
|
|
|
|
|
1/08/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
900,000
|
(4)
|
|
|
4.12
|
|
|
|
2,009,340
|
|
|
|
|
2/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
715,000
|
(5)
|
|
|
4.20
|
|
|
|
1,627,269
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin S. Palatnik
|
|
|
2/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
210,000
|
|
|
|
|
2/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
275,000
|
(5)
|
|
|
4.20
|
|
|
|
625,873
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charlie Huang
|
|
|
2/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
147,000
|
|
|
|
|
2/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(5)
|
|
|
4.20
|
|
|
|
455,180
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Bruggeman II
|
|
|
9/15/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
212,100
|
|
|
|
|
9/15/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(6)
|
|
|
7.07
|
|
|
|
653,140
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Cooley
|
|
|
2/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
126,000
|
|
|
|
|
2/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(5)
|
|
|
4.20
|
|
|
|
455,180
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Cowie
|
|
|
2/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
168,000
|
|
|
|
|
2/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(5)
|
|
|
4.20
|
|
|
|
455,180
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(footnotes continue on following
page)
33
|
|
|
(1) |
|
The stock awards granted to Messrs. Cooley, Cowie, Huang,
Palatnik and Tan on February 5, 2009 were granted under the
1987 Stock Incentive Plan, as amended and restated, which is
referred to in this proxy statement as the 1987 Plan, and vest
over three years, with 1/6th of the shares subject to such stock
award vesting every six months after the date of grant, subject
to the achievement of certain specified performance goals
intended to qualify the stock awards as performance-based
compensation under Section 162(m) of the Code. The
stock award granted to Mr. Tan on January 8, 2009 was
granted under the 1987 Plan as an inducement for him to accept
appointment as CEO and vests over four years, with 1/4th of the
shares subject to such stock award vesting on each anniversary
of the date of grant, subject to the achievement of certain
specified performance goals intended to qualify the stock awards
as performance-based compensation under
Section 162(m) of the Code. The stock award granted to
Mr. Bruggeman on September 15, 2009 was granted under
the 2000 Nonstatutory Equity Incentive Plan, as amended and
restated, which is referred to in this proxy statement as the
2000 Plan, as an inducement for him to accept employment as
Senior Vice President and Chief Marketing Officer.
Mr. Bruggemans award vests over three years, with
1/6th of the shares subject to such stock award vesting every
six months after the date of grant. |
|
(2) |
|
The exercise price of the stock options is equal to the closing
price of Cadence common stock on the date of grant. |
|
(3) |
|
In accordance with SEC rules, the amount shown reflects the
grant date fair value of stock awards and option awards
calculated pursuant to FASB ASC 718. The grant date fair value
is based on the price of Cadence common stock on the date the
award was granted and does not reflect any fluctuations in the
price of Cadence common stock subsequent to the grant date. The
amount shown therefore does not reflect the financial benefit
that the holder of the award will actually realize upon the
vesting of the award, and with respect to option awards, such
amount does not reflect whether the option award will be
exercised or exercisable prior to its expiration. The
assumptions used to calculate the valuation of the stock awards
and option awards for fiscal 2009 are set forth in Note 9
to the Notes to Consolidated Financial Statements in
Cadences Annual Report on
Form 10-K
for the fiscal year ended January 2, 2010. |
|
(4) |
|
The stock option was granted as an inducement for Mr. Tan
to accept appointment as CEO and under the 1987 Plan and vests
over four years, with 1/4th of the shares subject to such stock
option vesting on the first anniversary after the date of grant
and 1/36th of the remaining shares vesting monthly thereafter. |
|
(5) |
|
The stock options were granted under the 1987 Plan and vest over
four years, with 1/48th of the shares subject to such option
vesting at the end of each month after the date of grant. |
|
(6) |
|
The stock option was granted as an inducement for
Mr. Bruggeman to accept employment as Senior Vice President
and Chief Marketing Officer and under the 2000 Plan and vests
over four years, with 1/4th of the shares subject to such stock
option vesting on the first anniversary after the date of grant
and 1/36th of the remaining shares vesting monthly thereafter. |
NARRATIVE
DISCLOSURE TO SUMMARY COMPENSATION TABLE AND
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2009 TABLE
EMPLOYMENT
TERMS
Certain elements of compensation set forth in the Summary
Compensation Table and Grants of Plan-Based Awards in Fiscal
Year 2009 table reflect the terms of an employment agreement or
an offer letter between Cadence and each of the Named Executive
Officers that were in effect as of January 2, 2010.
Lip-Bu Tan. Cadence is a party to an
employment agreement with Mr. Tan pursuant to which
Mr. Tan serves as President and Chief Executive Officer.
The agreement provides for an initial base salary of $600,000
per year and for Mr. Tans participation in the Bonus
Plan at an annual target bonus of 100% of his base salary.
Effective July 1, 2009 through March 1, 2010,
Mr. Tans base salary was subject to a voluntary
salary reduction whereby his salary was reduced by 20%.
Effective March 1, 2010, Mr. Tans employment
agreement was further amended to reflect Mr. Tans
request to further reduce his base salary to $450,000, without
any limitation on the duration of such further reduction.
34
Kevin S. Palatnik. Cadence is a party to an
employment agreement with Mr. Palatnik pursuant to which
Mr. Palatnik serves as Senior Vice President and Chief
Financial Officer. The agreement provides for an initial base
salary of $400,000 per year and for Mr. Palatniks
participation in the Bonus Plan at an annual target bonus of 75%
of his base salary. In February 2009, Mr. Palatniks
base salary was increased to $450,000. Effective July 1,
2009 through June 30, 2010, Mr. Palatniks base
salary was voluntarily reduced by 10%.
Charlie Huang. Cadence is a party to an
employment agreement with Mr. Huang pursuant to which
Mr. Huang serves as Senior Vice President and Chief
Strategy Officer. The agreement provides for an initial base
salary of $350,000 per year and for Mr. Huangs
participation in the Bonus Plan at an annual target bonus of 75%
of his base salary. In February 2009, Mr. Huangs base
salary was increased to $400,000. Effective July 1, 2009
through June 30, 2010, Mr. Huangs base salary
was voluntarily reduced by 10%.
John J. Bruggeman II. Cadence is a party to an
offer letter with Mr. Bruggeman pursuant to which
Mr. Bruggeman serves as Senior Vice President and Chief
Marketing Officer. The offer letter provides for an initial base
salary of $350,000 per year and for Mr. Bruggemans
participation in the Bonus Plan at an annual target bonus of 75%
of his base salary. Effective April 1, 2010 through
June 30, 2010, Mr. Bruggemans base salary was
voluntarily reduced by 10%.
Thomas A. Cooley. Cadence is a party to an
employment agreement with Mr. Cooley pursuant to which
Mr. Cooley serves as Senior Vice President, Worldwide Field
Operations. The agreement provides for an initial base salary of
$425,000 per year and for Mr. Cooleys participation
in the Bonus Plan at an annual target bonus of 75% of his base
salary. Effective July 1, 2009 through June 30, 2010,
Mr. Cooleys base salary was voluntarily reduced by
10%.
James J. Cowie. Cadence is a party to an
employment agreement with Mr. Cowie pursuant to which
Mr. Cowie serves as Senior Vice President, General Counsel
and Secretary. The agreement provides for an initial base salary
of $350,000 per year and for Mr. Cowies participation
in the Bonus Plan at an annual target bonus of 75% of his base
salary. Effective July 1, 2009 through June 30, 2010,
Mr. Cowies base salary was voluntarily reduced by 10%.
The proportion of salary to total compensation of the Named
Executive Officers is explained above under Compensation,
Discussion and Analysis Elements of Executive
Compensation.
EQUITY
PLAN AWARDS
The stock awards granted in fiscal 2009 to the Named Executive
Officers were granted under the 1987 Plan or the 2000 Plan and
vest over three years, with 1/6th of the shares subject to
vesting every six months after the date of grant, except for the
January 8, 2009 grant to Mr. Tan, which was granted as
an inducement for him to accept appointment as CEO, vests over
four years and is described in footnote (6) to the
Outstanding Equity Awards at 2009 Fiscal Year End table below.
The stock awards granted on January 8, 2009 and
February 5, 2009 under the 1987 Plan are also subject to
the achievement of certain specified performance goals intended
to qualify the stock awards as performance-based
compensation under Section 162(m) of the Code. The
stock options granted in fiscal 2009 to the Named Executive
Officers were granted under the 1987 Plan or the 2000 Plan and
vest over four years, with 1/48th of the shares subject to
vesting at the end of each month after the date of grant, except
for the grant to Messrs. Bruggeman and Tan, which are
described in footnote (4) to the Outstanding Equity Awards
at 2009 Fiscal Year End table below. The exercise price of stock
options granted under the 1987 Plan and the 2000 Plan in fiscal
2009 was the closing price of Cadence common stock on the date
of grant. Dividends, if any, are payable to the holders of
restricted stock issued under Cadences equity plans.
35
OUTSTANDING
EQUITY AWARDS AT 2009 FISCAL YEAR END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Number of
|
|
Market Value of
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
Shares of Stock
|
|
Shares of Stock
|
|
|
Options
|
|
Options
|
|
Exercise
|
|
Option
|
|
that have not
|
|
that have not
|
|
|
(#)
|
|
(#)
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
Name
|
|
Exercisable(1)
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
(#)
|
|
($)(2)
|
|
Lip-Bu Tan
|
|
|
6,250
|
|
|
|
0
|
|
|
$
|
18.30
|
|
|
|
2/04/14
|
|
|
|
|
|
|
$
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
14.87
|
|
|
|
4/01/14
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
14.59
|
|
|
|
4/01/15
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
18.08
|
|
|
|
4/01/16
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
20.53
|
|
|
|
4/02/17
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
10.94
|
|
|
|
4/01/18
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(3)
|
|
|
0
|
|
|
|
2.61
|
|
|
|
12/15/15
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
900,000
|
(4)
|
|
|
4.12
|
|
|
|
1/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
148,958
|
|
|
|
566,042
|
(5)
|
|
|
4.20
|
|
|
|
2/05/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
(6)
|
|
|
1,797,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,666
|
(7)
|
|
|
998,329
|
|
Kevin S. Palatnik
|
|
|
125,000
|
|
|
|
0
|
|
|
|
21.99
|
|
|
|
6/15/11
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
22.35
|
|
|
|
12/28/11
|
|
|
|
|
|
|
|
|
|
|
|
|
32,291
|
|
|
|
17,709
|
(5)
|
|
|
21.58
|
|
|
|
5/15/14
|
|
|
|
|
|
|
|
|
|
|
|
|
41,666
|
|
|
|
58,334
|
(5)
|
|
|
11.24
|
|
|
|
4/23/15
|
|
|
|
|
|
|
|
|
|
|
|
|
57,291
|
|
|
|
217,709
|
(5)
|
|
|
4.20
|
|
|
|
2/05/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(8)
|
|
|
44,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,750
|
(9)
|
|
|
52,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(10)
|
|
|
74,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,666
|
(7)
|
|
|
249,579
|
|
Charlie Huang
|
|
|
20,000
|
|
|
|
0
|
|
|
|
24.00
|
|
|
|
3/09/11
|
|
|
|
|
|
|
|
|
|
|
|
|
53,500
|
|
|
|
0
|
|
|
|
15.49
|
|
|
|
9/21/11
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
12.63
|
|
|
|
7/31/12
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
9.59
|
|
|
|
2/07/13
|
|
|
|
|
|
|
|
|
|
|
|
|
32,291
|
|
|
|
17,709
|
(5)
|
|
|
21.58
|
|
|
|
5/15/14
|
|
|
|
|
|
|
|
|
|
|
|
|
28,750
|
|
|
|
31,250
|
(5)
|
|
|
10.61
|
|
|
|
2/01/15
|
|
|
|
|
|
|
|
|
|
|
|
|
41,666
|
|
|
|
158,334
|
(5)
|
|
|
4.20
|
|
|
|
2/05/16
|
|
|
|
|
|
|
|
|
|
|
|
|
48,958
|
|
|
|
1,042
|
(11)
|
|
|
16.80
|
|
|
|
2/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(12)
|
|
|
29,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500
|
(13)
|
|
|
134,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,166
|
(7)
|
|
|
174,704
|
|
John J. Bruggeman II
|
|
|
0
|
|
|
|
200,000
|
(4)
|
|
|
7.07
|
|
|
|
9/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
(14)
|
|
|
179,700
|
|
Thomas A. Cooley
|
|
|
5,937
|
|
|
|
9,063
|
(5)
|
|
|
11.25
|
|
|
|
5/15/15
|
|
|
|
|
|
|
|
|
|
|
|
|
6,459
|
|
|
|
0
|
|
|
|
17.89
|
|
|
|
12/09/15
|
|
|
|
|
|
|
|
|
|
|
|
|
41,666
|
|
|
|
158,334
|
(5)
|
|
|
4.20
|
|
|
|
2/05/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
(15)
|
|
|
17,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
(16)
|
|
|
112,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(7)
|
|
|
149,750
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Number of
|
|
Market Value of
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
Shares of Stock
|
|
Shares of Stock
|
|
|
Options
|
|
Options
|
|
Exercise
|
|
Option
|
|
that have not
|
|
that have not
|
|
|
(#)
|
|
(#)
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
Name
|
|
Exercisable(1)
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
(#)
|
|
($)(2)
|
|
James J. Cowie
|
|
|
25,000
|
|
|
|
0
|
|
|
|
20.19
|
|
|
|
8/25/10
|
|
|
|
|
|
|
|
|
|
|
|
|
5,834
|
|
|
|
0
|
|
|
|
13.04
|
|
|
|
4/30/14
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
17.89
|
|
|
|
12/09/15
|
|
|
|
|
|
|
|
|
|
|
|
|
26,250
|
|
|
|
33,750
|
(5)
|
|
|
10.93
|
|
|
|
4/01/15
|
|
|
|
|
|
|
|
|
|
|
|
|
41,666
|
|
|
|
158,334
|
(5)
|
|
|
4.20
|
|
|
|
2/05/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
(15)
|
|
|
14,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(8)
|
|
|
44,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(10)
|
|
|
74,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,333
|
(7)
|
|
|
199,665
|
|
|
|
|
(1) |
|
Unless otherwise indicated, these stock options were granted on
the date ten years prior to the expiration date and were fully
vested on January 2, 2010. |
|
(2) |
|
The market value of the stock awards that have not vested is
calculated by multiplying the number of shares that have not
vested by the closing price of Cadence common stock on
December 31, 2009 (the last business day of Cadences
fiscal 2009) of $5.99 per share. |
|
(3) |
|
Stock option was granted on the date seven years prior to the
expiration date and was fully vested on January 2, 2010. |
|
(4) |
|
Stock option was granted on the date seven years prior to the
expiration date and 1/4th of the shares vests on the first
anniversary of the date of grant and 1/36th of the remaining
shares vests monthly thereafter. |
|
(5) |
|
Stock option was granted on the date seven years prior to the
expiration date and vests at a rate of 1/48th per month each
month after the date of grant. |
|
(6) |
|
Restricted stock was granted on January 8, 2009 and vests
at a rate of 1/4th on each anniversary of the date of grant,
subject to the achievement of certain specified performance
goals. |
|
(7) |
|
Restricted stock was granted on February 5, 2009 and vests
at a rate of 1/6th every six months from the date of grant over
three years, subject to the achievement of certain specified
performance goals. |
|
(8) |
|
Restricted stock was granted on August 15, 2007 and vests
at a rate of 1/4th on each anniversary of the date of grant. |
|
(9) |
|
Restricted stock was granted on May 15, 2006 and vests at a
rate of 1/4th on each March 15th following the date of
grant. |
|
(10) |
|
Restricted stock was granted on February 15, 2007 and vests
at a rate of 1/4th on each anniversary of the date of grant. |
|
(11) |
|
Stock option was granted on the date ten years prior to the
expiration date and vests at a rate of 1/48th per month each
month after the date of grant. |
|
(12) |
|
Restricted stock was granted on February 15, 2006 and vests
at a rate of 1/4th on each January 23rd following the date
of grant. |
|
(13) |
|
Restricted stock was granted on February 1, 2008 and vests
at a rate of 1/4th on each anniversary of the date of grant. |
|
(14) |
|
Restricted stock was granted on September 15, 2009 and
vests at a rate of 1/6th every six months from the date of grant
over three years. |
|
(15) |
|
Restricted stock was granted on December 7, 2006 and vests
at a rate of 1/4th on each anniversary of the date of grant. |
|
(16) |
|
Restricted stock was granted on May 15, 2008 and vests at a
rate of 1/4th on each anniversary of the date of grant. |
37
The following table sets forth information with respect to the
stock awards vested during fiscal 2009.
OPTION
EXERCISES AND STOCK VESTED IN FISCAL YEAR
2009(1)
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Number of Shares
|
|
|
|
|
Acquired on
|
|
Value Realized on
|
|
|
Vesting
|
|
Vesting
|
Name
|
|
(#)
|
|
($)(2)
|
|
Lip-Bu Tan
|
|
|
33,334
|
|
|
$
|
190,004
|
|
Kevin S. Palatnik
|
|
|
47,084
|
|
|
|
220,304
|
|
Charlie Huang
|
|
|
18,334
|
|
|
|
79,854
|
|
John J. Bruggeman II
|
|
|
|
|
|
|
|
|
Thomas A. Cooley
|
|
|
16,750
|
|
|
|
96,023
|
|
James J. Cowie
|
|
|
29,167
|
|
|
|
146,977
|
|
|
|
|
(1) |
|
No stock options were exercised by the Named Executive Officers
during fiscal 2009. |
|
(2) |
|
Value based on the closing price of Cadence common stock on the
date of vesting. |
NONQUALIFIED
DEFERRED COMPENSATION FOR FISCAL YEAR 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Earnings in
|
|
|
Withdrawals/
|
|
|
Balance
|
|
|
|
Last FY
|
|
|
Last FY
|
|
|
Last FY
|
|
|
Distributions
|
|
|
at Last FYE
|
|
Name
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(2)
|
|
|
Lip-Bu Tan
|
|
$
|
|
|
|
$
|
|
|
|
$
|
512
|
|
|
$
|
|
|
|
$
|
84,612
|
|
Kevin S. Palatnik
|
|
|
209,383
|
|
|
|
|
|
|
|
596,907
|
|
|
|
51,411
|
|
|
|
2,396,340
|
|
Charlie Huang
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Bruggeman II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Cooley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Cowie
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,722
|
|
|
|
0
|
|
|
|
|
(1) |
|
All executive contributions are reported as salary in the
Summary Compensation Table above. |
|
(2) |
|
Mr. Palatnik contributed $290,153 to the Deferred
Compensation Plan during fiscal 2008 and such amount was
reported in the Summary Compensation Table as fiscal 2008
compensation. |
Executive officers may elect to defer up to 80% of their base
salary and up to 100% of the non-equity incentive plan
compensation payable to them under the Deferred Compensation
Plan. These deferred compensation payments are held in accounts
with values indexed to the performance of selected mutual funds
or money market accounts. Executive officers may elect to
receive distributions from their account upon termination of
employment with Cadence, the passage of a specified number of
years or the attainment of a specified age, whichever event
occurs first. In addition, executive officers may elect a
lump-sum payment or monthly installments over a five or ten year
period.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL AND
EMPLOYMENT CONTRACTS
The information below describes certain compensation that would
have become payable under existing plans and contractual
arrangements assuming a termination of employment or assuming a
change in control that is combined with a termination of
employment had occurred on January 2, 2010 (based upon the
closing price of Cadence common stock on December 31, 2009
(the last business day of Cadences fiscal 2009) of
$5.99 per share), given the compensation and service levels of
the Named Executive Officers. In addition to the benefits
described below, upon any termination of employment, each of the
Named Executive Officers would also be entitled to the amount
shown in the Aggregate Balance at Last FYE column of
the Nonqualified Deferred Compensation for Fiscal Year 2009
table above.
38
Employment
Terms
As of January 2, 2010, Cadence had an employment agreement
with each of Messrs. Cooley, Cowie, Huang, Palatnik and
Tan. The employment agreements generally provide for the payment
of benefits if the executives employment with Cadence is
terminated either by Cadence without cause (as
defined below) or by the executive in connection with a
constructive termination (as defined below). In
addition, the employment agreements provide for certain benefits
upon a termination of employment due to death or permanent
disability (as defined below). The employment agreements
also provides for enhanced benefits upon a termination either by
Cadence without cause or by the executive in
connection with a constructive termination that
occurs during the period commencing three months before a
change in control (as defined below) of Cadence and
ending 13 months following such change in
control. The employment agreements do not provide for any
benefits upon a termination by Cadence for cause or
upon the executives resignation other than in connection
with a constructive termination.
For purposes of the employment agreements, cause,
constructive termination, change in
control and permanent disability are defined
as follows.
Cause generally means an executives:
|
|
|
|
|
gross misconduct or fraud in the performance of his duties under
the employment agreement;
|
|
|
|
conviction or guilty plea or plea of nolo contendere with
respect to any felony or act of moral turpitude;
|
|
|
|
engaging in any material act of theft or material
misappropriation of company property in connection with his
employment;
|
|
|
|
material breach of the employment agreement, after written
notice is delivered to the executive of such breach;
|
|
|
|
material breach of Cadences Employee Proprietary
Information and Inventions Agreement (as defined in the
employment agreement);
|
|
|
|
material failure/refusal to perform the assigned duties, and,
where such failure/refusal is curable; or
|
|
|
|
material breach of the Code of Business Conduct, as such code
may be revised from time to time.
|
Constructive termination generally means the
occurrence of any one of the following events:
|
|
|
|
|
for Messrs. Cowie, Huang, Palatnik and Tan, a material
adverse change, without the executives written consent, in
the executives authority, duties or title causing the
executives position to be of materially less stature or
responsibility; provided, however, that for Messrs. Cowie,
Palatnik and Tan such material adverse change shall be deemed to
occur if the executive is removed from his current position;
|
|
|
|
for Mr. Cooley, it is if he is removed from his executive
position and ceases to be identified as an executive officer of
Cadence for purposes of the rules promulgated under
Section 16 of the Exchange Act;
|
|
|
|
for Messrs. Cooley, Cowie, Huang and Palatnik, any change,
without the executives written consent, to the
executives reporting structure causing the executive to no
longer report to the CEO;
|
|
|
|
a reduction, without the executives written consent, in
the executives base salary in effect by more than 5% or a
reduction by more than 5% in the executives stated target
bonus in effect under a bonus plan (for Messrs. Cooley,
Cowie, Huang, Palatnik and Tan, these percentages will be
reinstated to the 10% limit prescribed in their respective
employment agreements once they are no longer subject to
voluntary salary reductions);
|
|
|
|
a relocation of the executives principal place of
employment by more than 30 miles, unless the executive
consents in writing to such relocation;
|
|
|
|
any material breach by Cadence of any provision of the
employment agreement;
|
|
|
|
any failure by Cadence to obtain the written assumption of the
employment agreement by any successor to Cadence; or
|
39
|
|
|
|
|
for Messrs. Cooley, Cowie, Palatnik and Tan, in the event
the executive, prior to a change in control, is
identified as an executive officer of Cadence for purposes of
the rules promulgated under Section 16 of the Exchange Act
and following a change in control in which Cadence
or any successor remains a publicly traded entity, the executive
is not identified as an executive officer for purposes of
Section 16 of the Exchange Act at any time within one year
after the change in control.
|
Change in control generally means the occurrence of
any one of the following events:
|
|
|
|
|
any person acquires more than 50% of the total voting power
represented by Cadences then outstanding voting securities;
|
|
|
|
any person acquires in one transaction (or has acquired during
the 12-month
period ending on the date of the most recent acquisition by such
person) more than 30% of the total voting power represented by
Cadences then outstanding voting securities;
|
|
|
|
if a majority of the members of the Board are replaced in any
two-year period other than in specific circumstances;
|
|
|
|
the consummation of a merger or consolidation of Cadence with
any other corporation if such merger or consolidation is
approved by the stockholders of Cadence, other than a merger or
consolidation in which the holders of Cadences outstanding
voting securities immediately prior to such merger or
consolidation receive securities possessing at least 80% of the
total voting power represented by the outstanding voting
securities of the surviving entity immediately after such merger
or consolidation; or
|
|
|
|
the consummation of the liquidation, sale or disposition by
Cadence of all or substantially all of Cadences assets if
such liquidation, sale or disposition is approved by the
stockholders of Cadence.
|
Permanent disability generally means any medically
determinable physical or mental impairment that can reasonably
be expected to result in death or that has lasted or can
reasonably be expected to last for a continuous period of not
less than 12 months and that renders the executive unable
to perform effectively all of the essential functions of his
position pursuant to his employment agreement, with or without
reasonable accommodation.
Under the employment agreements, if the executives
employment is terminated by Cadence without cause
(and not due to death or permanent disability) or if
the executive terminates his employment in connection with a
constructive termination, the executive will be
entitled to the benefits provided for in an Executive Transition
and Release Agreement in exchange for his execution and delivery
of that agreement. These transition agreements provide for the
following payments and benefits:
|
|
|
|
|
continued employment by Cadence, for up to one year after the
executives termination, as a non-executive employee at a
monthly salary of $4,000 per month, payable for up to six months
commencing on the first pay date that is more than 30 days
following the date that is six months following the date of his
termination;
|
|
|
|
provided the executive elects COBRA coverage, continued coverage
for up to one year under Cadences medical, dental and
vision insurance plans, at Cadences expense;
|
|
|
|
accelerated vesting, as of the date of the executives
termination, of his outstanding and unvested equity compensation
awards, other than awards with performance-based vesting
criteria, that would have vested over the succeeding
12-month
period (or, in the case of Mr. Tan, the succeeding
18-month
period); provided that, if the executive remains employed
pursuant to his transition agreement through the end of the
applicable performance period, unvested equity compensation
awards that are subject to performance-based vesting criteria
and that are outstanding as of the date of his termination shall
continue to vest through the end of the applicable performance
period; provided any such performance period ends within
12 months (or, in the case of Mr. Tan, 18 months)
of his termination and only to the extent the applicable
performance conditions are satisfied;
|
|
|
|
a lump-sum payment equal to one years base salary at the
highest rate in effect during the executives employment,
payable on the 30th day following the date that is six
months after the date of his termination; and
|
40
|
|
|
|
|
a lump-sum payment equal to 75% (or, in the case of
Mr. Tan, 100%) of one years base salary at the
highest rate in effect during the executives employment,
payable 30 days following termination of the transition
agreement.
|
In addition, the employment agreements provide that if, within
three months before or 13 months after a change in
control, an executives employment is terminated
without cause or the executive terminates his
employment in connection with a constructive
termination (any such termination, a Change of
Control Termination), then, in exchange for the
executives execution and delivery of the transition
agreement, all of the executives outstanding and unvested
equity compensation awards will immediately vest in full. All
other provisions of the transition agreement described in the
paragraph above remain unchanged, except that the executives
shall receive, in addition: (i) a lump-sum payment equal to
50% of one years base salary at the highest rate in effect
during the executives employment, payable on the
30th day following the date that is six months after the
date of his termination and (ii) a lump-sum payment equal
to 37.5% (or, in the case of Mr. Tan, 50%) of one
years base salary at the highest rate in effect during the
executives employment, payable 30 days following
termination of the transition agreement. As discussed in more
detail in Compensation Discussion and Analysis
Section 280G of the Internal Revenue Code of 1986,
the executives are not entitled to a tax
gross-up in
connection with any excess parachute payments paid
upon a change in control, but instead are entitled
to the best after-tax alternative.
Under the employment agreements, if the executives
employment is terminated due to the executives death or
permanent disability, the executive will be entitled
to the following payments and benefits if his estate executes
and delivers a release agreement:
|
|
|
|
|
accelerated vesting, as of the date of the executives
termination of employment, of his outstanding and unvested
equity compensation awards that would have vested over the
succeeding
12-month
period, and such awards and all previously vested equity awards
shall remain exercisable for 24 months from the date of the
executives termination of employment (but not later than
the expiration of the term of the applicable award); and
|
|
|
|
solely in the case of termination due to permanent
disability, and provided the executive elects COBRA
coverage, continued coverage for 12 months under
Cadences medical, dental and vision insurance plans, at
Cadences expense.
|
Under the employment agreement with Mr. Tan, with respect
to any equity awards granted in the first year of his service as
CEO (including his sign-on grants), the vesting of such awards
(to the extent then unvested) shall continue after he ceases to
serve as CEO if he voluntarily resigns his position as CEO other
than in the event of a constructive termination so
long as he continues to serve Cadence as an employee, director
or consultant, with such additional vesting continuing until the
lesser of 18 months or the number of full months he served
as CEO.
The receipt of benefits following termination under each of the
employment agreements is contingent upon the affected executive
delivering and not revoking a general release in favor of
Cadence. In addition, the post-termination benefits provided for
under these employment agreements, except upon death or
permanent disability, are contingent upon the
affected executive complying with the terms of an Executive
Transition and Release Agreement. These transition agreements
provide that the affected executive will continue to provide
services to Cadence for a one-year transition period. During
this one-year transition period, the executive is entitled to
receive the termination payments described above, is prohibited
from competing with Cadence, soliciting employees of Cadence or
interfering with Cadences relationship with its current or
prospective clients, customers, joint-venture partners or
financial backers, and must provide Cadence with continued
cooperation in matters related to his employment. Any violation
of the provisions of the transition agreement would result in
the cessation of Cadences obligation to provide the then
unpaid portion of the affected executives termination
benefits.
In addition to the benefits described above and quantified
below, Cadence provides each of its benefits-eligible U.S.-based
employees, including each of the Named Executive Officers, with
life insurance in an amount equal to the lesser of two times the
employees annual target cash compensation (base salary
plus target bonus) or $2,000,000, which, as of January 2,
2010, for Messrs. Tan, Palatnik, Huang, Bruggeman, Cooley
and Cowie was $2,000,000, $1,575,000, $1,400,000, $1,225,000,
$1,487,500 and $1,225,000, respectively.
41
The tables below set forth the estimated value of the potential
payments to the Named Executive Officers, assuming the
executives employment had terminated on January 2,
2010 (based upon the closing price of Cadence common stock on
December 31, 2009 (the last business day of Cadences
fiscal 2009) of $5.99 per share) under an employment
agreement or offer letter in effect at that time, and, for
purposes of the second table below, that a change in control of
Cadence had also occurred on that date. Amounts are reported
without any reduction for possible delay in the commencement or
timing of payments.
Potential
Payments and Benefits Upon a Termination of Employment by
Cadence
Without Cause or by Executive in Connection with a Constructive
Termination Not
in Connection with a Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump Sum
|
|
Lump Sum
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment
|
|
Payment
|
|
Company-
|
|
|
|
Vesting of
|
|
|
|
|
Transition
|
|
(7 Months
|
|
(13 Months
|
|
Paid
|
|
Vesting of
|
|
Restricted
|
|
|
|
|
Period
|
|
After
|
|
After
|
|
COBRA
|
|
Stock
|
|
Stock
|
|
Pre-Tax
|
|
|
Salary
|
|
Termination)
|
|
Termination)
|
|
Premiums
|
|
Options
|
|
Awards
|
|
Total
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
Lip-Bu Tan
|
|
$
|
24,000
|
|
|
$
|
600,000
|
|
|
$
|
600,000
|
|
|
$
|
20,970
|
|
|
$
|
1,496,756
|
|
|
$
|
1,497,500
|
|
|
$
|
4,239,226
|
|
Kevin S. Palatnik
|
|
|
24,000
|
|
|
|
450,000
|
|
|
|
337,500
|
|
|
|
16,151
|
|
|
|
123,063
|
(3)
|
|
|
212,148
|
|
|
|
1,162,862
|
|
Charlie Huang
|
|
|
24,000
|
|
|
|
400,000
|
|
|
|
300,000
|
|
|
|
|
|
|
|
89,500
|
(4)
|
|
|
144,760
|
|
|
|
958,260
|
|
John J. Bruggeman II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Cooley
|
|
|
24,000
|
|
|
|
425,000
|
|
|
|
318,750
|
|
|
|
24,060
|
|
|
|
89,500
|
(5)
|
|
|
115,308
|
|
|
|
996,618
|
|
James J. Cowie
|
|
|
24,000
|
|
|
|
350,000
|
|
|
|
262,500
|
|
|
|
15,323
|
|
|
|
89,500
|
(6)
|
|
|
154,746
|
|
|
|
896,069
|
|
|
|
|
(1) |
|
These amounts are calculated based on the number of shares of
Cadence common stock that would have been subject to
acceleration multiplied by the difference between the closing
price of Cadence common stock on December 31, 2009 of $5.99
per share (assuming it was the market price per share of Cadence
common stock on the date of termination of employment) and the
exercise price of the stock option. |
|
(2) |
|
These amounts are calculated assuming that the market price per
share of Cadence common stock on the date of termination of
employment was equal to the closing price of Cadence common
stock on December 31, 2009 of $5.99 per share. |
These amounts include stock awards that would continue to vest
through the end of the applicable performance period provided
any such performance period ends within 12 months (or, in
the case of Mr. Tan, 18 months) following
January 2, 2010 and assume the achievement of certain
specified performance goals. Upon the conclusion of the
performance period, the stock awards would immediately vest to
the extent that they would have vested over 12 months (or,
in the case of Mr. Tan, 18 months) following
January 2, 2010.
|
|
|
(3) |
|
This amount does not include Mr. Palatniks out
of the money options to purchase 37,500 shares of
Cadence common stock that would have been subject to
acceleration because these stock options have an exercise price
significantly higher than $5.99 per share (the closing price of
Cadence common stock on December 31, 2009 (the last
business day of Cadences fiscal 2009)) and the
acceleration would have had no value. |
|
(4) |
|
This amount does not include Mr. Huangs out of
the money options to purchase 28,542 shares of
Cadence common stock that would have been subject to
acceleration because these stock options have an exercise price
significantly higher than $5.99 per share (the closing price of
Cadence common stock on December 31, 2009 (the last
business day of Cadences fiscal 2009)) and the
acceleration would have had no value. |
|
(5) |
|
This amount does not include Mr. Cooleys out of
the money option to purchase 3,750 shares of Cadence
common stock that would have been subject to acceleration
because the stock option has an exercise price significantly
higher than $5.99 per share (the closing price of Cadence common
stock on December 31, 2009 (the last business day of
Cadences fiscal 2009)) and the acceleration would have had
no value. |
|
(6) |
|
This amount does not include Mr. Cowies out of
the money option to purchase 15,000 shares of Cadence
common stock that would have been subject to acceleration
because the stock option has an exercise price significantly
higher than $5.99 per share (the closing price of Cadence common
stock on December 31, 2009 (the last business day of
Cadences fiscal 2009)) and the acceleration would have had
no value. |
42
Potential
Payments and Benefits Upon a Termination of Employment by
Cadence
Without Cause or by Executive in Connection with a Constructive
Termination for
Good Reason Within 3 Months Prior to or 13 Months Following a
Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump Sum
|
|
|
Lump Sum
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment
|
|
|
Payment
|
|
|
Company-
|
|
|
|
|
|
Vesting of
|
|
|
|
|
|
|
Transition
|
|
|
(7 Months
|
|
|
(13 Months
|
|
|
Paid
|
|
|
Vesting of
|
|
|
Restricted
|
|
|
|
|
|
|
Period
|
|
|
After
|
|
|
After
|
|
|
COBRA
|
|
|
Stock
|
|
|
Stock
|
|
|
Pre-Tax
|
|
|
|
Salary
|
|
|
Termination)
|
|
|
Termination)
|
|
|
Premiums
|
|
|
Options
|
|
|
Awards
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
Lip-Bu Tan
|
|
$
|
24,000
|
|
|
$
|
900,000
|
|
|
$
|
900,000
|
|
|
$
|
20,970
|
|
|
$
|
2,696,215
|
|
|
$
|
2,795,329
|
|
|
$
|
7,336,514
|
|
Kevin S. Palatnik
|
|
|
24,000
|
|
|
|
675,000
|
|
|
|
506,250
|
|
|
|
16,151
|
|
|
|
389,699
|
(3)
|
|
|
421,792
|
|
|
|
2,032,892
|
|
Charlie Huang
|
|
|
24,000
|
|
|
|
600,000
|
|
|
|
450,000
|
|
|
|
|
|
|
|
283,418
|
(4)
|
|
|
339,429
|
|
|
|
1,696,847
|
|
John J. Bruggeman II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Cooley
|
|
|
24,000
|
|
|
|
637,500
|
|
|
|
478,125
|
|
|
|
24,060
|
|
|
|
283,418
|
(5)
|
|
|
280,033
|
|
|
|
1,727,136
|
|
James J. Cowie
|
|
|
24,000
|
|
|
|
525,000
|
|
|
|
393,750
|
|
|
|
15,323
|
|
|
|
283,418
|
(6)
|
|
|
334,440
|
|
|
|
1,575,931
|
|
|
|
|
(1) |
|
These amounts are calculated based on the number of shares of
Cadence common stock that would have been subject to
acceleration upon a change in control multiplied by the
difference between the closing price of Cadence common stock on
December 31, 2009 of $5.99 per share (assuming it was equal
to the market price per share of Cadence common stock on the
date of termination of employment) and the exercise price of the
stock option. |
|
(2) |
|
These amounts are calculated assuming that the market price per
share of Cadence common stock on the date of termination of
employment was equal to the closing price of Cadence common
stock on December 31, 2009 of $5.99 per share. |
|
(3) |
|
This amount does not include Mr. Palatniks out
of the money options to purchase 76,043 shares of
Cadence common stock that would have been subject to
acceleration upon a change in control because these stock
options have an exercise price significantly higher than $5.99
per share (the closing price of Cadence common stock on
December 31, 2009 (the last business day of Cadences
fiscal 2009)) and the acceleration would have had no value. |
|
(4) |
|
This amount does not include Mr. Huangs out of
the money options to purchase 50,001 shares of
Cadence common stock that would have been subject to
acceleration upon a change in control because these stock
options have an exercise price significantly higher than $5.99
per share (the closing price of Cadence common stock on
December 31, 2009 (the last business day of Cadences
fiscal 2009)) and the acceleration would have had no value. |
|
(5) |
|
This amount does not include Mr. Cooleys out of
the money option to purchase 9,063 shares of Cadence
common stock that would have been subject to acceleration upon a
change in control because the stock option has an exercise price
significantly higher than $5.99 per share (the closing price of
Cadence common stock on December 31, 2009 (the last
business day of Cadences fiscal 2009)) and the
acceleration would have had no value. |
|
(6) |
|
This amount does not include Mr. Cowies out of
the money option to purchase 33,750 shares of Cadence
common stock that would have been subject to acceleration upon a
change in control because the stock option has an exercise price
significantly higher than $5.99 per share (the closing price of
Cadence common stock on December 31, 2009 (the last
business day of Cadences fiscal 2009)) and the
acceleration would have had no value. |
43
Potential
Payments and Benefits Upon a Termination of Employment by Reason
of Death or
due to Permanent Disability
The table below sets forth the estimated value of the potential
payments to each Named Executive Officer, assuming the
executives employment had terminated on January 2,
2010 by reason of the executives death or permanent
disability. Amounts are reported without any reduction for
possible delay in the commencement or timing of payments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company- Paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA Premiums
|
|
|
|
|
|
|
|
|
Pre-Tax Total
|
|
|
|
|
|
|
(Upon Termination
|
|
|
|
|
|
Vesting of
|
|
|
(Upon Termination of
|
|
|
Pre-Tax Total
|
|
|
|
of Employment due
|
|
|
Vesting of
|
|
|
Restricted
|
|
|
Employment due
|
|
|
(Upon Termination of
|
|
|
|
to Permanent
|
|
|
Stock
|
|
|
Stock
|
|
|
to Permanent
|
|
|
Employment due
|
|
|
|
Disability)
|
|
|
Options
|
|
|
Awards
|
|
|
Disability)
|
|
|
to Death)
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
Lip-Bu Tan
|
|
$
|
20,970
|
|
|
$
|
1,496,756
|
|
|
$
|
1,497,500
|
|
|
$
|
3,015,226
|
|
|
$
|
2,994,256
|
|
Kevin S. Palatnik
|
|
|
16,151
|
|
|
|
123,063
|
(3)
|
|
|
212,148
|
|
|
|
351,362
|
|
|
|
335,211
|
|
Charlie Huang
|
|
|
|
|
|
|
89,500
|
(4)
|
|
|
144,760
|
|
|
|
234,260
|
|
|
|
234,260
|
|
John J. Bruggeman II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Cooley
|
|
|
24,060
|
|
|
|
89,500
|
(5)
|
|
|
115,308
|
|
|
|
228,868
|
|
|
|
204,808
|
|
James J. Cowie
|
|
|
15,323
|
|
|
|
89,500
|
(6)
|
|
|
154,746
|
|
|
|
259,569
|
|
|
|
244,246
|
|
|
|
|
(1) |
|
These amounts are calculated based on the number of shares of
Cadence common stock that would have been subject to
acceleration multiplied by the difference between the closing
price of Cadence common stock on December 31, 2009 of $5.99
per share (assuming it was equal to the market price per share
of Cadence common stock on the date of termination of
employment) and the exercise price of the stock option. |
|
(2) |
|
These amounts are calculated assuming that the market price per
share of Cadence common stock on the date of termination of
employment was equal to the closing price of Cadence common
stock on December 31, 2009 of $5.99 per share. |
|
(3) |
|
This amount does not include Mr. Palatniks out
of the money options to purchase 37,500 shares of
Cadence common stock that would have been subject to
acceleration because these stock options have an exercise price
significantly higher than $5.99 per share (the closing price of
Cadence common stock on December 31, 2009 (the last
business day of Cadences fiscal 2009)) and the
acceleration would have had no value. |
|
(4) |
|
This amount does not include Mr. Huangs out of
the money options to purchase 28,542 shares of
Cadence common stock that would have been subject to
acceleration because these stock options have an exercise price
significantly higher than $5.99 per share (the closing price of
Cadence common stock on December 31, 2009 (the last
business day of Cadences fiscal 2009)) and the
acceleration would have had no value. |
|
(5) |
|
This amount does not include Mr. Cooleys out of
the money option to purchase 3,750 shares of Cadence
common stock that would have been subject to acceleration
because the stock option has an exercise price significantly
higher than $5.99 per share (the closing price of Cadence common
stock on December 31, 2009 (the last business day of
Cadences fiscal 2009)) and the acceleration would have had
no value. |
|
(6) |
|
This amount does not include Mr. Cowies out of
the money option to purchase 15,000 shares of Cadence
common stock that would have been subject to acceleration
because the stock option has an exercise price significantly
higher than $5.99 per share (the closing price of Cadence common
stock on December 31, 2009 (the last business day of
Cadences fiscal 2009)) and the acceleration would have had
no value. |
44
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information about Cadences
equity compensation plans, including its equity incentive plans
and employee stock purchase plans, as of January 2, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
Number of Securities
|
|
|
Weighted-Average
|
|
|
for Future Issuance
|
|
|
|
to be Issued Upon
|
|
|
Exercise Price of
|
|
|
Under Equity
|
|
|
|
Exercise of
|
|
|
Outstanding
|
|
|
Compensation Plans
|
|
|
|
Outstanding Options,
|
|
|
Options, Warrants
|
|
|
(Excluding Securities
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
and Rights
|
|
|
Reflected in Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
10,336,409
|
(1)
|
|
$
|
12.99
|
|
|
|
14,915,865
|
(2)
|
Equity compensation plans not approved by security holders
|
|
|
24,800,695
|
(3)
|
|
$
|
14.89
|
|
|
|
5,830,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
35,137,104
|
|
|
$
|
14.33
|
|
|
|
20,764,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This amount excludes purchase rights accruing under the ESPP,
for which remaining available rights are included in column (c).
Under the ESPP, each eligible employee may purchase shares of
Cadence common stock at six-month intervals at a purchase price
per share equal to 85% of the lower of the fair market value of
Cadence common stock on (i) the first day of an offering
period (currently, six months in duration), or (ii) the
last day of the offering period. |
|
(2) |
|
This amount includes 9,896,193 shares available for
issuance under the ESPP as of January 2, 2010. |
|
(3) |
|
This amount excludes 2,212,795 shares subject to issuance
upon exercise of options assumed in connection with acquisitions
at a weighted average exercise price of $11.14. No additional
options may be granted under the assumed plans. |
Cadences 1993 Nonstatutory Stock Incentive Plan, which is
referred to in this proxy statement as the 1993 Plan, its 1997
Nonstatutory Stock Incentive Plan, which is referred to in this
proxy statement as the 1997 Plan, and its 2000 Plan (which
collectively are referred to below as the Plans) provide for the
issuance of nonstatutory stock options, restricted stock,
restricted stock units, stock bonuses and rights to acquire
restricted stock to Cadence employees and consultants who are
not executive officers, directors or beneficial owners of 10% or
more of Cadence common stock. As of January 2, 2010:
|
|
|
|
|
Under the 1993 Plan, there were options to purchase
699,306 shares outstanding with a weighted average exercise
price of $17.45, no shares subject to unvested restricted stock
grants and 156,626 shares remaining available for grant of
the 24,750,000 shares reserved for issuance;
|
|
|
|
Under the 1997 Plan, there were options to purchase
3,633,555 shares outstanding with a weighted average
exercise price of $9.82, 2,143,421 shares subject to
unvested restricted stock grants and 1,885,397 shares
remaining available for grant of the 30,000,000 shares
reserved for issuance; and
|
|
|
|
Under the 2000 Plan, there were options to purchase
20,467,834 shares outstanding with a weighted average
exercise price of $15.70, 5,673,042 shares subject to
unvested restricted stock grants and 3,788,867 shares
remaining available for grant of the 50,000,000 shares
reserved for issuance.
|
The exercise price of options granted under the Plans may not be
less than the fair market value of a share of Cadence common
stock on the grant date. Prior to January 1, 2007, the fair
market value was the average of the high and low price of
Cadence common stock on the grant date. For grants made since
January 1, 2007, the fair market value is the closing price
of Cadence common stock on the grant date. Options granted to
new employees under the Plans generally become exercisable over
a four-year period, with one-fourth of the shares vesting one
year from the vesting commencement date, and the remaining
shares vesting in 36 equal monthly installments thereafter.
Options granted to current employees under the Plans generally
become exercisable over a four-year period, vesting in 48 equal
monthly installments. Options granted under the Plans prior to
October 1, 2006 generally expire ten years from the grant
date and options granted under the Plans since October 1,
2006 expire seven years from the grant date. Awards of
restricted stock granted under the Plans vest at the times and
in installments determined by the
45
Board. The vesting of options and restricted stock may be
subject to continued employment, the passage of time
and/or
performance criteria deemed appropriate by the Board. Stock
bonus awards and restricted stock awards granted under the Plans
are subject to the terms and conditions determined by the Board.
CERTAIN
TRANSACTIONS
REVIEW,
APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED
PERSONS
The Board has adopted written Related Party Transaction Policies
and Procedures which require that all interested
transactions with related parties (each as
defined below) be subject to approval or ratification in
accordance with the procedures set forth therein.
An interested transaction is any transaction,
arrangement or relationship, or series of similar transactions,
arrangements or relationships, in which:
|
|
|
|
|
The aggregate amount involved will or may be expected to exceed
$100,000 in any calendar year;
|
|
|
|
Cadence is a participant; and
|
|
|
|
Any related party has or will have a direct or
indirect interest (other than solely as a result of being a
director or less than 10% beneficial owner of another entity).
|
A related party covered by the policy is any:
|
|
|
|
|
Person who was or is (since the beginning of the last fiscal
year for which Cadence has filed an Annual Report on
Form 10-K
or proxy statement) an executive officer, director or nominee
for election as a director;
|
|
|
|
Greater than 5% beneficial owner of Cadence common stock; or
|
|
|
|
Immediate family member of the foregoing, which includes a
persons spouse, parents, stepparents, children,
stepchildren, siblings, mothers- and
fathers-in-law,
sons- and
daughters-in-law,
and brothers- and sisters- in law and anyone residing in such
persons home (other than tenants or employees).
|
The Corporate Governance and Nominating Committee reviews the
material facts of all interested transactions and either
approves or disapproves of the entry into the transaction. If
advanced approval of an interested transaction is not feasible,
the transaction is reviewed and, if the Corporate Governance and
Nominating Committee determines it to be appropriate, ratified
at that committees next scheduled meeting. In determining
whether to approve or ratify an interested transaction, the
Corporate Governance and Nominating Committee takes into
account, among other appropriate factors, the extent of the
related partys interest in the transaction and whether the
interested transaction is on terms no less favorable than terms
generally available to unaffiliated third parties under similar
circumstances. Directors may not participate in any discussion
or approval of an interested transaction for which they are a
related party.
The Corporate Governance and Nominating Committee has
pre-approved or ratified the following categories of interested
transactions:
|
|
|
|
|
Any employment by Cadence of an executive officer of Cadence if:
|
|
|
|
|
|
The related compensation is required to be reported in
Cadences proxy statement under the SECs compensation
disclosure requirements, or
|
|
|
|
The executive officer is not an immediate family of another
executive officer or director of Cadence, the related
compensation would be reported in Cadences proxy statement
under the SECs compensation disclosure requirements if the
executive officer was a named executive officer and the
Compensation Committee approved (or recommended that the Board
approve) such compensation;
|
|
|
|
|
|
Any compensation paid to a director if the compensation is
required to be reported in Cadences proxy statement under
the SECs compensation disclosure requirements;
|
46
|
|
|
|
|
Any transaction with another company in which the related
persons only relationship is as a non-executive employee,
director or beneficial owner of less than 10% of that
companys shares, if the amount involved does not exceed
the greater of $1,000,000 or 2% of that companys total
annual revenues;
|
|
|
|
Any charitable contribution by Cadence to a charitable
organization, foundation or university at which a related
persons only relationship is as a non-executive employee
or director, if the amount involved does not exceed the lesser
of $100,000 or 2% of the charitable organizations total
annual receipts;
|
|
|
|
Any transaction where the related persons interest arises
solely from the ownership of Cadence common stock and all
holders of Cadence common stock received the same benefit on a
pro rata basis; and
|
|
|
|
Any transaction with a related party involving services as a
bank depositary of funds, transfer agent, registrar, trustee
under an indenture or similar services.
|
In addition, the Board has delegated to the Chairman of the
Corporate Governance and Nominating Committee the authority to
pre-approve or ratify any interested transaction with a related
party in which the aggregate amount is expected to be less than
$1,000,000.
TRANSACTIONS
WITH RELATED PARTIES
The spouse of Mr. Huang has been employed by Cadence since
1990 and has held various engineering positions during her
employment, most recently as an Architect. The total
compensation of Mr. Huangs spouse for the services
provided to Cadence in fiscal 2009 as an employee is $165,758,
which was calculated in the same manner as total compensation in
the Summary Compensation Table and included the calculation of
the fair value of her equity grant pursuant to FASB ASC 718
based on the price of Cadence common stock on the date the stock
award was granted.
By contract, a Cadence subsidiary previously held 50% of equity
in PARADES S.c.a.r.l., an Italian entity engaged in research
related to electronic systems engineering, which is referred to
in this proxy statement as PARADES, and contributed up to 50% of
PARADES annual funding needs.
Dr. Sangiovanni-Vincentelli was the Scientific Director of
PARADES until December 2009 and did not receive any fees in 2009
for his services as Scientific Director. In April 2009, Cadence
entered into an agreement with ALES s.r.l., an entity controlled
by Dr. Sangiovanni-Vincentelli and one of
Dr. Sangiovanni-Vincentellis colleagues, which is
referred to in this proxy statement as ALES, whereby ALES
acquired all of Cadences and its subsidiarys
interests and obligations to PARADES for the nominal sum of
1. In consideration of the cancellation of all obligations
of Cadence and its subsidiary to fund or otherwise make any
payments by or on behalf of PARADES, including the release of a
guarantee in the amount of 199,660 issued to PARADES by a
Cadence subsidiary, in April 2009 Cadence paid 199,660
(approximately $263,725 based on the average foreign currency
exchange rate during April 2009) to PARADES.
INDEMNIFICATION
AGREEMENTS
Cadences Bylaws provide that Cadence will indemnify its
directors and officers to the fullest extent permitted by the
Delaware General Corporation Law. Cadences Bylaws also
authorize the Board to cause Cadence to enter into
indemnification agreements with its directors, officers and
employees and to purchase insurance on behalf of any person it
is permitted to indemnify. Pursuant to these Bylaw provisions,
Cadence has entered into indemnity agreements with each of its
directors and executive officers, and has also purchased
insurance on behalf of its directors and executive officers.
Each indemnity agreement provides, among other things, that
Cadence will indemnify each signatory to the extent provided in
the agreement for expenses, witness fees, damages, judgments,
fines and amounts paid in settlement and any other amounts that
the individual becomes legally obligated to pay because of any
claim or claims made against or by him or her in connection with
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, arbitral, administrative or
investigative, to which the individual is or may be made a party
by reason of his or her position as a director, officer,
employee or other agent of Cadence, and otherwise as may be
provided to the individual by Cadence under the non-exclusivity
provisions of the Delaware General Corporation Law and
Cadences Bylaws.
47
OTHER
MATTERS
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, which is referred to in
this proxy statement as Section 16(a), requires the
directors and executive officers of Cadence, and persons who
beneficially own more than 10% of a registered class of
Cadences equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of
common stock and other equity securities. Executive officers,
directors and greater than 10% stockholders are required by SEC
regulation to furnish Cadence with copies of all
Section 16(a) forms they file.
To Cadences knowledge, based solely on a review of the
copies of the reports furnished to us and written
representations that no other reports were required, all
Section 16(a) filing requirements applicable to its
executive officers and directors and greater than 10% beneficial
owners were complied with on a timely basis.
STOCKHOLDER
PROPOSALS AND NOMINATIONS
From time to time, Cadence stockholders submit proposals that
they believe should be voted upon at the annual meeting or
nominate persons for election to the Board. Under
Rule 14a-8
of the Exchange Act, certain stockholder proposals may be
eligible for inclusion in Cadences proxy statement and
form of proxy in connection with the annual meeting of
stockholders. Stockholder proposals must be submitted in writing
to the Corporate Secretary of Cadence no later than
November 26, 2010 to be included in the proxy statement and
form of proxy relating to Cadences 2011 Annual Meeting of
Stockholders pursuant to
Rule 14a-8
under the Exchange Act. The submission of a stockholder proposal
does not guarantee that it will be included in Cadences
proxy statement and form of proxy.
Alternatively, under Cadences Bylaws, any director
nominations or other business proposals which the stockholder
does not seek to include in Cadences 2011 proxy statement
and form of proxy pursuant to
Rule 14a-8
under the Exchange Act must be submitted in writing to
Cadences Corporate Secretary no later than
February 11, 2011, nor earlier than January 12, 2011,
and must otherwise satisfy the requirements set forth in
Cadences Bylaws. If the date of the 2011 Annual Meeting of
Stockholders changes by more than 30 days from the
anniversary date of the 2010 Annual Meeting of Stockholders,
stockholder proposals or nominations must be submitted in
writing to Cadences Corporate Secretary no later than ten
days following the first public announcement of the date of the
meeting. If the stockholder does not also comply with the
requirements of
Rule 14a-4
under the Exchange Act, Cadence may exercise discretionary
voting authority under proxies it solicits to vote in accordance
with its best judgment on any such stockholder proposal or
nomination submitted by a stockholder.
A stockholders notice must include: (A) as to each
person whom the stockholder proposes to nominate for election as
a director, all information relating to the candidate that is
required to be disclosed in proxy solicitations for a contested
election of directors, or is otherwise required pursuant to
Regulation 14A under the Exchange Act, accompanied by the
candidates written consent to being named in the proxy
statement as a nominee and to serving as a director if elected;
(B) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material
interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made; and
(C) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such
stockholder, as they appear on Cadences books, and of such
beneficial owner, (ii) the class and number of shares of
Cadence common stock owned directly and indirectly and of record
by such stockholder and beneficial owner, (iii) a
representation that the stockholder intends to appear in person
or proxy at the meeting to propose the nomination for director
or other business, (iv) the class and number of shares of
Cadence common stock beneficially owned (within the meaning of
Section 13(d) of the Exchange Act) by such stockholder and
beneficial owner as of the date of the notice, and a
representation that such stockholder will notify Cadence in
writing within five business days after the record date for such
meeting of the class and number of Cadence shares beneficially
owned by such stockholder or beneficial owner as of the record
date for the meeting, (v) a description of any agreement,
arrangement or understanding with respect to the nomination for
director or other business between or among such stockholder or
beneficial owner and any other person, (vi) a description
of any agreement, arrangement or understanding that has been
entered into as of
48
the date of the stockholders notice by, or on behalf of,
such stockholder or beneficial owner with the effect or intent
to mitigate loss to, manage risk or benefit from changes in
Cadences share price, or increase or decrease the voting
power of the stockholder or beneficial owner, and (vii) a
representation as to whether the stockholder or beneficial
owner, if any, intends or is part of a group that intends to
deliver a proxy statement
and/or form
of proxy to holders of at least the percentage of Cadences
outstanding shares required to elect the director nominee or
approve the other business
and/or
otherwise to solicit proxies from stockholders in support of the
nomination or other business. If a stockholder intending to make
a nomination of a director or to propose other business (other
than matters brought under
Rule 14a-8
under the Exchange Act) at an annual meeting pursuant to the
terms set forth in Cadences Bylaws does not provide the
information described in clause (C) above within five
business days following the record date for the annual meeting,
or the stockholder (or a qualified representative of the
stockholder) does not appear at the annual meeting to present
the nomination of a director or other business, such nomination
of a director or other business shall not be presented for
stockholder action at the annual meeting and shall be
disregarded, although the proxies in respect of such nomination
or other business may have been received by Cadence.
Only candidates nominated in accordance with the procedures set
forth above are eligible to serve as directors. Except as
otherwise provided by law, the Chairman of a meeting determines
whether a nomination or any business proposed to be brought
before the annual meeting was made, or proposed, as the case may
be, in accordance with the procedures set forth in
Cadences Bylaws and, if any proposed nomination or
business is not in compliance with Cadences Bylaws,
whether to declare that such defective proposal or nomination
shall not be presented for stockholder action at the meeting.
OTHER
MATTERS
The Board knows of no other matters that will be presented for
consideration at the 2010 Annual Meeting of Stockholders. If any
other matters are properly brought before the annual meeting, it
is the intention of the persons named in the accompanying proxy
to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
James J. Cowie
Secretary
March 26, 2010
A COPY OF CADENCES ANNUAL REPORT ON
FORM 10-K
FOR THE FISCAL YEAR ENDED JANUARY 2, 2010 CAN BE FOUND ON THE
INTERNET AT HTTP://WWW.CADENCE.COM/COMPANY/INVESTOR_RELATIONS
OR, IF A STOCKHOLDER REQUESTED A PAPER COPY, IS BEING DELIVERED
WITH THIS PROXY STATEMENT, AND IS ALSO AVAILABLE WITHOUT CHARGE
UPON WRITTEN REQUEST TO: INVESTOR RELATIONS, CADENCE DESIGN
SYSTEMS, INC., 2655 SEELY AVENUE, BUILDING 5, SAN JOSE,
CALIFORNIA 95134.
49
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time on May 11, 2010.
INTERNET
http://www.proxyvoting.com/cdns
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
OR
TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy
card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
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PX 69931
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Fulfillment PX 70505
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▼ FOLD AND DETACH HERE ▼
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR THE PROPOSALS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CADENCE DESIGN SYSTEMS, INC.
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Please mark
your votes as
indicated in
this example
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1. ELECTION OF DIRECTORS |
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FOR
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FOR
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AGAINST
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1.1 Donald L. Lucas
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1.5 Roger S. Siboni
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1.2 Alberto Sangiovanni-Vincentelli
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1.6 John A.C.
Swainson
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1.3 George M. Scalise
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1.7 Lip-Bu Tan
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1.4 John B. Shoven
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FOR
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2. Ratification of the selection of KPMG LLP
as the independent registered public
accounting firm of Cadence Design
Systems, Inc. for its fiscal year ending
January 1, 2011.
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Authority is hereby given to the proxies identified on the front of this card to vote in their
discretion upon such other business as may properly come before the meeting or any adjournment
thereof. |
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The undersigned hereby acknowledges receipt of: (a) Notice of Internet Availability of Proxy
Materials, (b) Notice of Annual Meeting of Stockholders of Cadence Design Systems, Inc., (c)
accompanying Proxy Statement, and (d) Annual Report on Form 10-K for the fiscal year ended January
2, 2010. |
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Mark Here for
Address Change
or Comments
SEE REVERSE
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
You can now access your Cadence Design Systems, Inc. account online.
Access your Cadence Design Systems, Inc. account online via Investor ServiceDirect®(ISD).
BNY Mellon Shareowner Services, the transfer agent for Cadence Design Systems, Inc., now makes it
easy and convenient to get current information on your shareholder account.
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View account status
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View payment history for dividends |
View certificate history
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Make address changes |
View book-entry information
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Establish/change your PIN |
Visit us on the web at http://www.bnymellon.com/shareowner/isd
For Technical Assistance Call 1-877-978-7778 between 9am-7pm Eastern Time
Monday-Friday
Investor ServiceDirect®
Available 24 hours per day, 7 days per week
TOLL FREE NUMBER: 1-877-899-9107
Choose MLinkSMfor fast, easy and secure 24/7 online access to your future proxy
materials, investment plan statements, tax documents and more. Simply log on to Investor
ServiceDirect®at www.bnymellon.com/shareowner/isd where step-by-step instructions will
prompt you through enrollment.
Important notice regarding the Internet availability of proxy materials for the 2010 Annual Meeting
of Stockholders of Cadence Design Systems, Inc. The 2010 Proxy Statement and the Annual Report for
the fiscal year ended January 2, 2010 of Cadence Design Systems, Inc. are available at:
http://www.proxyvoting.com/cdns
▼ FOLD AND DETACH HERE ▼
PROXY
CADENCE DESIGN SYSTEMS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 2010
The undersigned hereby appoints Lip-Bu Tan, Kevin S. Palatnik and James J. Cowie, or any of
them, each with power of substitution, to attend and to represent the undersigned at the 2010
Annual Meeting of Stockholders of Cadence Design Systems, Inc., to be held at the offices of
Cadence Design Systems, Inc. located at 2655 Seely Avenue, Building 10, San Jose, California 95134,
on May 12, 2010 at 1:00 p.m. Pacific time and any continuation or adjournment thereof, and to vote
the number of shares of common stock of Cadence Design Systems, Inc. that the undersigned would be
entitled to vote if personally present at the meeting in accordance with the instructions set forth
on this proxy card. Any proxy previously given by the undersigned with respect to such shares of
common stock is hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CADENCE DESIGN SYSTEMS, INC.
THE SHARES WILL BE VOTED AS DIRECTED ON THE REVERSE. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL
BE VOTED FOR EACH OF THE SEVEN DIRECTOR NOMINEES FOR ELECTION, AND FOR PROPOSAL 2. IF ANY OTHER
MATTERS ARE PROPERLY BROUGHT BEFORE THE 2010 ANNUAL MEETING OF STOCKHOLDERS, PROXIES WILL BE VOTED
ON THESE MATTERS AS THE PROXIES NAMED ABOVE MAY DETERMINE IN THEIR SOLE DISCRETION.
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Address Change/Comments |
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(Mark the corresponding box on the reverse side) |
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BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and signed, on the other side)
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PX 69931
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Fulfillment
PX 70505 |