Notice of 2017 Annual Meeting and Proxy Statement April 6, 2017 ‰ Sunnyvale, CA Notice of 2017 Annual Meeting of Stockholders April 6, 2017 Dear Stockholder, You are cordially invited to attend the 2017 Annual Meeting of Stockholders of Synopsys, Inc., a Delaware corporation, which will be held on April 6, 2017, at 8:00 a.m. Pacific Time at our office located at 1030 West Maude Avenue, Sunnyvale, California 94085. We are holding the meeting for the following purposes, which are more fully described in the attached Proxy Statement: 1. To elect ten directors nominated by our Board of Directors to hold office until the next annual meeting of stockholders or until their successors have been elected 2. To approve our 2006 Employee Equity Incentive Plan, as amended, in order to, among other items, increase the number of shares available for issuance under the plan by 5,000,000 shares 3. To approve our 2017 Non-Employee Directors Equity Incentive Plan 4. To approve, on an advisory basis, the frequency with which to hold an advisory vote on executive compensation 5. To approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this Proxy Statement 6. To ratify the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending October 28, 2017 7. To consider any other matters that may properly come before the meeting All of our stockholders of record at the close of business on February 10, 2017 are entitled to attend and vote at the annual meeting. A list of registered stockholders entitled to vote at the meeting will be available at our office located at 690 East Middlefield Road, Mountain View, California 94043, for ten days prior to the meeting and at the meeting location during the meeting. Whether or not you plan to attend the annual meeting, we urge you to cast your vote. For most items being put to a vote, if you do not provide voting instructions via the Internet, by telephone, or by returning the proxy card or voting instruction card, your shares will not be voted. Please vote as promptly as possible. Every stockholder vote is important. Sincerely yours, John F. Runkel, Jr. General Counsel and Corporate Secretary Mountain View, California February 17, 2017 Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting to Be Held on April 6, 2017 The Proxy Statement and our 2016 Annual Report on Form 10-K will be available at http://materials.proxyvote.com/871607 on or about February 21, 2017 Proxy Statement Table of Contents Introduction and Annual Meeting Agenda ................................................... 1 Proposal 1—Election of Directors ........................................................ 3 Corporate Governance .................................................................... 9 Certain Relationships and Related Transactions ............................................. 17 Director Compensation .................................................................... 18 Proposal 2—Approval of Our 2006 Employee Equity Incentive Plan, as Amended .......... 21 Proposal 3—Approval of our 2017 Non-Employee Directors Equity Incentive Plan ......... 35 Proposal 4—Advisory Vote to Approve Frequency of an Advisory Vote on Executive Compensation ......................................................................... 42 Proposal 5—Advisory Vote to Approve Executive Compensation .......................... 43 Compensation Discussion and Analysis ..................................................... 44 Executive Summary ................................................................. 44 Compensation Practices and Governance Policies .................................... 47 Fiscal 2016 NEO Compensation Details ............................................... 49 Fiscal 2017 NEO Target Compensation Decisions ..................................... 57 Compensation Governance and Our Compensation Philosophy ......................... 59 Compensation Risk Assessment ..................................................... 63 Compensation Committee Report .......................................................... 64 Compensation Committee Interlocks and Insider Participation ................................. 65 Executive Compensation Tables ........................................................... 66 Summary Compensation Table ....................................................... 66 Grants of Plan-Based Awards ........................................................ 68 Outstanding Equity Awards at Fiscal 2016 Year-End ................................... 69 Option Exercises and Stock Vested in Fiscal 2016 ..................................... 71 Non-Qualified Deferred Compensation ................................................ 72 Potential Payments upon Termination of Employment or Change of Control .............. 74 Equity Compensation Plan Information ...................................................... 77 Proposal 6—Ratification of Selection of Independent Registered Public Accounting Firm ................................................................................... 78 Fees and Services of Independent Registered Public Accounting Firm ................... 78 Audit Committee Report* .................................................................. 80 Security Ownership of Certain Beneficial Owners and Management ........................... 82 Section 16(a) Beneficial Ownership Reporting Compliance .................................... 84 About the Annual Meeting ................................................................. 84 Other Matters ............................................................................ 90 Appendix A ............................................................................... A-1 Appendix B ............................................................................... B-1 Proxy Statement for the 2017 Annual Meeting of Stockholders to Be Held April 6, 2017 We are providing these proxy materials to you in connection with Synopsys’ 2017 Annual Meeting of Stockholders to be held on Thursday, April 6, 2017 at 8:00 a.m. Pacific Time at our office located at 1030 West Maude Avenue, Sunnyvale, California 94085 (referred to in this Proxy Statement as the Annual Meeting). The solicitation by this Proxy Statement is made by Synopsys, Inc. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully. You do not need to attend the Annual Meeting in order to vote. If your shares are held through a broker, bank, or other agent and not in your name, your broker is not permitted to vote on your behalf on proposals where broker discretionary votes are not allowed, as indicated below. Thus for most items being put to a vote, if you do not provide voting instructions via the Internet, by telephone, or by returning the proxy card or voting instruction card, your shares will not be voted. We strongly encourage all stockholders to vote, and to do so as promptly as possible. The deadline for voting by Internet or phone is 11:59 p.m. Eastern Time on April 5, 2017. Annual Meeting Agenda Proxy Broker Statement Discretionary Page Board’s Votes Proposal Numbers Recommendation Vote Required for Approval Allowed Proposal 1: Election of 3—20 FOR all The ten nominees receiving No Directors nominees the highest number of FOR votes will be elected. Nominees receiving more WITHHOLD votes than FOR votes must offer their resignation to the Board. Proposal 2: Approval of Our 21—34 FOR FOR votes must exceed No 2006 Employee Equity votes AGAINST. Incentive Plan, as Amended Proposal 3: Approval of Our 35—41 FOR FOR votes must exceed No 2017 Non-Employee Directors votes AGAINST. Equity Incentive Plan Proposal 4: Advisory Vote to 42 1 Year The option of 1 Year, 2 No Approve Frequency of Years or 3 Years receiving Executive Compensation the most votes will be Advisory Vote approved. Proposal 5: Advisory Vote to 43 FOR FOR votes must exceed No Approve Executive votes AGAINST. Compensation Proposal 6: Ratification of 78 FOR FOR votes must exceed Yes Selection of Independent votes AGAINST. Registered Public Accounting Firm 1 Questions and Answers about the Annual Meeting and Voting Please see the “About the Annual Meeting” section beginning on page 84 for answers to common questions about the Annual Meeting, voting, attendance, submitting a proposal for next year’s annual meeting of stockholders, and other procedures. A Note about Our Fiscal Year Our fiscal year generally ends on the Saturday nearest to October 31. Fiscal 2016 ended on October 29, 2016. Fiscal 2017 will end on October 28, 2017. 2 Proposal 1 – Election of Directors We are asking our stockholders to vote for the election of ten directors at the Annual Meeting. We do not have a classified or staggered Board of Directors. Each of our directors stands for election on an annual basis, and of the eleven current directors whose term expires in 2017, ten directors are standing for re-election. As previously announced, Alfred Castino has decided not to stand for re-election at the end of his term at the Annual Meeting. In light of Mr. Castino’s departure at the end of his term, in February 2017 the Board of Directors (also referred to in this Proxy Statement as the Board) expanded the full Board size to eleven members and elected Mercedes Johnson to the Board in accordance with our Amended and Restated Bylaws. The Board also voted to reduce the size of