DEF 14A of Cadence Design Systems Inc, Mar 21, 2024

DEF 14A of Cadence Design Systems Inc

Filed Mar 21, 2024 · FY20230001193125-24-073902

Open on EDGAR

  1. BOARD OF DIRECTORS

    BOARD OF DIRECTORS

  2. PROCESS FOR SELECTING DIRECTOR NOMINEES AND CANDIDATES

    PROCESS FOR SELECTING DIRECTOR NOMINEES AND CANDIDATES The Corporate Governance and Nominating Committee evaluates and recommends director candidates for nomination by the full Board. The Corporate Governance and Nominating Committee regularly discusses and annually reviews as a committee and with the Board the appropriate skills and characteristics required of directors (such as integrity, experience, judgment, diversity of background (including, among other factors, race, ethnicity and gender), independence, ability to commit sufficient time and attention to Board activities, understanding of

  3. PROCESS FOR SELECTING DIRECTOR NOMINEES AND CANDIDATES

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  4. PROCESS FOR SELECTING DIRECTOR NOMINEES AND CANDIDATES

    Cadence’s products, technologies and strategy, and the specific skills set forth under “Director Nominee Qualifications, Skills and Experience” below in Proposal 1 regarding the election of directors) in the context of the current composition of the Board and its committees.

  5. COMPONENTS OF DIRECTOR COMPENSATION

    COMPONENTS OF DIRECTOR COMPENSATION The Compensation Committee, with input from its independent compensation consultant Semler Brossy, annually reviews and recommends to the Board the compensation program for directors who are not employees of Cadence. Directors who are Cadence employees, such as Dr. Devgan, do not receive additional compensation for their service on the Board. In setting non-employee director compensation, the Compensation Committee considers the competitiveness of Cadence’s director compensation from a number of different perspectives, including average total compensation, aggregate compensation for the full Board and individual director compensation as differentiated by committee membership and leadership roles. The Compensation Committee also reviews Cadence’s director compensation relative to Cadence’s peer group, which is also used to determine market levels for executive compensation (see “Compensation Discussion and Analysis” below for more information). The following table sets forth the components of the non-employee directors’ compensation for fiscal 2023:

  6. COMPONENTS OF DIRECTOR COMPENSATION

    | Compensation Component | Director Compensation | | Annual Retainer(1) | $80,000 | | Lead Independent Director Fees(2) (3) | $80,000 for Lead Independent Director | | Chair Fees(3) | $80,000 for Board Chair(4) $40,000 for Chair of the Audit Committee $30,000 for Chair of the Compensation Committee, Corporate Governance and Nominating Committee and Finance Committee | | Meeting Attendance Fees(5) | $2,000 per meeting attended in person or by videoconference $1,000 per meeting attended by telephone |

  7. COMPONENTS OF DIRECTOR COMPENSATION

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  8. COMPONENTS OF DIRECTOR COMPENSATION

    | Compensation Component | Director Compensation | | Incentive Stock Award(6) | Incentive stock award with a grant date fair value of $219,997 for each non-employee director that fully vests on the first anniversary of the date of grant | | New Director Equity Award (one-time grant) | Each non-employee director who joins the Board may be granted incentive stock awards, stock options and restricted stock units (“RSUs”) under the 1995 Directors Stock Incentive Plan (the “Directors Plan”), the amounts of which are determined at the sole discretion of the Board or its designated committee | | Stock Ownership Guidelines(7) | Each non-employee director is required to hold shares of Cadence common stock with a value equal to at least $375,000 within five years of initial appointment or election to the Board |

  9. COMPONENTS OF DIRECTOR COMPENSATION

    | (1) The annual retainer fees paid to our non-employee directors are typically paid quarterly, with proration for partial terms served. Directors may elect to defer cash compensation payable to them under Cadence’s deferred compensation plan. These deferred compensation amounts are credited to participant accounts, with values indexed to the performance of mutual funds or money market accounts selected by the participant. Cadence does not match contributions made under Cadence’s deferred compensation plan. |

  10. COMPONENTS OF DIRECTOR COMPENSATION

    | (2) Dr. Shoven served as Lead Independent Director of the Board until the 2023 Annual Meeting of Stockholders. |

  11. COMPONENTS OF DIRECTOR COMPENSATION

    | (3) Chair and Lead Independent Director fees are typically paid quarterly. |

  12. COMPONENTS OF DIRECTOR COMPENSATION

    | (4) Ms. Krakauer has served as Board Chair since the date of the 2023 Annual Meeting of Stockholders. A non-employee director serving as Board Chair is also eligible to receive fees for service as the Chair of any of the Board committees. |

  13. COMPONENTS OF DIRECTOR COMPENSATION

    | (5) No additional compensation is paid when the Board or a committee acts by unanimous written consent in lieu of a meeting. Non-employee directors are also eligible for reimbursement of expenses they incur in connection with attending Board meetings in accordance with Cadence’s expense reimbursement policy. |

  14. COMPONENTS OF DIRECTOR COMPENSATION

    | (6) On May 4, 2023, each then-serving non-employee director was granted an incentive stock award of 1,073 shares of Cadence common stock under the Directors Plan (which award had a grant date fair value of approximately $219,997). Incentive stock awards granted to each of the non-employee directors will vest in their entirety on the earlier to occur of (i) the first anniversary of the grant date or (ii) the date of the next annual meeting of stockholders, provided that the director continues to serve Cadence on that date. |

  15. COMPONENTS OF DIRECTOR COMPENSATION

    | (7) As of the Record Date, all directors met the stock ownership guidelines applicable to them. Separately, Cadence’s Securities Trading Policy restricts certain transactions in Cadence securities, as discussed above under “Anti-Hedging Policy and Trading Restrictions.” |

  16. COMPONENTS OF DIRECTOR COMPENSATION

    In addition, a medical and prescription benefits coverage reimbursement plan is available to active non-employee directors who were directors on December 31, 2014 (the “Eligible Directors”), eligible retired directors who retired from the Board on or prior to December 31, 2014 (the “Eligible Retired Directors”) and their respective dependents (the “Medical Reimbursement Plan”). Directors first elected or appointed to the Board after December 31, 2014 are not eligible to participate in the Medical Reimbursement Plan. Eligible Directors and their dependents may obtain coverage under the Medical Reimbursement Plan during their term of service on the Board. Eligible Retired Directors, Eligible Directors and their dependents may continue coverage under the Medical Reimbursement Plan starting immediately after the director’s termination of service for a continuous term not to exceed such director’s term of service on the Board. A director’s eligibility for participation in the Medical Reimbursement Plan immediately ceases if the plan administrator determines that he or she has violated the Code of Business Conduct or is engaged as an

  17. COMPONENTS OF DIRECTOR COMPENSATION

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  18. COMPONENTS OF DIRECTOR COMPENSATION

    employee, consultant, director or advisor of, or significant investor in, a competitor of Cadence. Under the Medical Reimbursement Plan, Cadence reimburses 100% of the premiums for participants and their dependents up to a maximum of $20,000 for expenses incurred per calendar year, which maximum amount may be adjusted for future changes in medical costs. Benefits under the Medical Reimbursement Plan are fully taxable to the participants and Cadence does not gross up reimbursement payments to cover any such taxes.

  19. DIRECTOR COMPENSATION FOR FISCAL 2023

    DIRECTOR COMPENSATION FOR FISCAL 2023 The following table sets forth the compensation earned in fiscal 2023 by Cadence’s directors (other than Dr. Devgan) who served on the Board in fiscal 2023. Dr. Devgan, Cadence’s President and CEO, and Lip-Bu Tan, former Executive Chair, did not receive any additional compensation for serving as director in fiscal 2023. Dr. Devgan’s compensation is disclosed in the Compensation Discussion and Analysis and Compensation of Executive Officers sections of this proxy statement.

  20. DIRECTOR COMPENSATION FOR FISCAL 2023

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Option Awards ($)(3) | All Other Compensation ($)(4)(5) | Total ($) | | Mark W. Adams | 144,000 | 219,997 | — | — | 364,737 | | Ita Brennan | 142,000 | 219,997 | — | — | 362,420 | | Lewis Chew | 158,000 | 219,997 | — | — | 379,184 | | ML Krakauer | 162,747 | 219,997 | — | — | 384,808 | | Julia Liuson | 102,000 | 219,997 | — | — | 321,997 | | James D. Plummer | 114,000 | 219,997 | — | — | 334,737 | | Alberto Sangiovanni-Vincentelli | 114,000 | 219,997 | — | 17,314 | 357,711 | | John B. Shoven | 141,473 | 219,997 | — | 16,036 | 378,245 | | Young K. Sohn | 138,000 | 219,997 | — | — | 357,997 | | Lip-Bu Tan | — | — | — | 427,143 | 427,143 |

  21. DIRECTOR COMPENSATION FOR FISCAL 2023

    | (1) In accordance with SEC rules, the amount shown reflects the grant date fair value of stock awards granted during fiscal 2023 calculated pursuant to Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 (Compensation — Stock Compensation) (“FASB ASC 718”). The assumptions used to calculate the valuation of the stock awards for fiscal 2023 are set forth in Note 9 to the Notes to Consolidated Financial Statements in Cadence’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The amount shown 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 may not reflect the financial benefit that the holder of the award will actually realize upon the vesting of the award. |

  22. DIRECTOR COMPENSATION FOR FISCAL 2023

    | (2) As of December 31, 2023, the number of unvested shares of restricted stock held by each director other than Dr. Devgan was as follows: |

  23. DIRECTOR COMPENSATION FOR FISCAL 2023

    | Mark W. Adams | 1,073 | James D. Plummer | 1,073 | | Ita Brennan | 1,073 | Alberto Sangiovanni-Vincentelli | 1,073 | | Lewis Chew | 1,073 | John B. Shoven | 1,073 | | ML Krakauer | 1,073 | Young K. Sohn | 1,073 | | Julia Liuson | 1,073 | Lip-Bu Tan | 235,984 |

  24. DIRECTOR COMPENSATION FOR FISCAL 2023

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  25. DIRECTOR COMPENSATION FOR FISCAL 2023

    | (3) No option awards were granted to the directors, other than Dr. Devgan, during fiscal 2023. As of December 31, 2023, the number of outstanding stock options held by each director other than Dr. Devgan was as follows: |

  26. DIRECTOR COMPENSATION FOR FISCAL 2023

    | Mark W. Adams | 0 | James D. Plummer | 0 | | Ita Brennan | 0 | Alberto Sangiovanni-Vincentelli | 10,000 | | Lewis Chew | 0 | John B. Shoven | 0 | | ML Krakauer | 0 | Young K. Sohn | 0 | | Julia Liuson | 0 | Lip-Bu Tan | 785,520 |

  27. DIRECTOR COMPENSATION FOR FISCAL 2023

    | (4) The amounts listed in the “All Other Compensation” column above for Dr. Sangiovanni-Vincentelli and Dr. Shoven consist of reimbursements pursuant to the Medical Reimbursement Plan described above. |

  28. DIRECTOR COMPENSATION FOR FISCAL 2023

    | (5) Mr. Tan served as Executive Chair through the date of the 2023 Annual Meeting of Stockholders and as an employee throughout 2023. The amounts listed in the “All Other Compensation” column above for Mr. Tan consist of his base salary and cash incentive compensation for 2023 for his services as an employee. |

  29. PROPOSAL 1: ELECTION OF DIRECTORS

    PROPOSAL 1: ELECTION OF DIRECTORS The Corporate Governance and Nominating Committee has recommended, and the Board has nominated, the nine nominees named below for election to the Board. Each director elected at the Annual Meeting will hold office until Cadence’s 2025 Annual Meeting of Stockholders and until his or her successor is elected and qualified, or until the director’s earlier resignation, removal or death. Each nominee listed below is currently a Cadence director, and all nominees were previously elected by Cadence stockholders at the 2023 Annual Meeting of Stockholders.

  30. DIRECTOR QUALIFICATIONS AND DIVERSITY OF BACKGROUND

    DIRECTOR QUALIFICATIONS AND DIVERSITY OF BACKGROUND The Board believes that the Board, as a whole, should possess a combination of skills, professional experience and diversity of backgrounds necessary to oversee Cadence’s business and that there are certain attributes that every director should possess, as reflected in the Board’s membership criteria. Accordingly, the Board and the Corporate Governance and Nominating Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition and Cadence’s current and future needs. The Corporate Governance and Nominating Committee is responsible for developing the Board membership criteria and recommending them to the Board for approval. The criteria, which are set forth in the Corporate Governance Guidelines, include a prospective nominee’s integrity, experience, judgment, diversity of background (including, among other factors, race, ethnicity and gender), independence, financial literacy, ability to commit sufficient time and attention to Board activities, skills such as an understanding of electronic design, semiconductor and electronics systems technologies, international background and other relevant characteristics. The Corporate Governance and Nominating Committee considers all of these criteria in the context of the needs of the Board from time to time. In addition, the Corporate Governance and Nominating Committee regularly discusses and annually reviews as a committee and with the Board the appropriate experience, skills and characteristics required of directors in the context of the current composition of the Board and its committees. In seeking diversity of background, the Corporate Governance and Nominating Committee seeks a variety of occupational and personal backgrounds and race, ethnicity and gender diversity 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 Cadence’s 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.

  31. DIRECTOR QUALIFICATIONS AND DIVERSITY OF BACKGROUND

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  32. DIRECTOR NOMINEE QUALIFICATIONS, SKILLS AND EXPERIENCE

    DIRECTOR NOMINEE QUALIFICATIONS, SKILLS AND EXPERIENCE Set forth below is a summary of the qualifications, skills and experience of the director nominees determined by the Corporate Governance and Nominating Committee to be important for an effective Board.

  33. DIRECTOR NOMINEE QUALIFICATIONS, SKILLS AND EXPERIENCE

    | Summary of Qualifications, Skills and Experience | | | | | | | | | | | Compensation / Human Capital Management (“HCM”) Experience in compensation, organizational management, leadership, talent development and identifying, recruiting and motivating top talent | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Corporate Governance Experience in corporate governance and compliance at the public company board level | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Cybersecurity Understanding cybersecurity risks in enterprise operations | | ✓ | ✓ | ✓ | ✓ | ✓ | | ✓ | | | Financial Expertise Experience in evaluating financial statements and capital structures and overseeing financial reporting and internal controls | ✓ | ✓ | ✓ | ✓ | ✓ | | ✓ | | ✓ | | Government / Regulatory / Public Policy Experience in or working with governmental and regulatory organizations | | ✓ | ✓ | | | | | | | | International Experience with global businesses, operations, strategy and customer bases | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | ✓ | ✓ | | Marketing Experience in marketing and branding of products and services and identifying and developing new markets for products and services | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | ✓ | | Operations Current or former executives with significant operating experience, who are able to provide insight into developing, implementing and assessing an enterprise’s operating plan, business and strategy | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | ✓ | | Risk Management Experience in overseeing risk management and understanding risks faced by enterprise operations | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Strategic Planning Experience in providing insight into developing, implementing and assessing corporate growth strategy, including through acquisitions and other business transactions | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Technology / Semiconductor / Electronic Design Automation (“EDA”) Understanding of EDA, semiconductor and electronics systems technologies and related industries; ability to understand and oversee the overall business and strategy of Cadence as an industry leader | ✓ | | | ✓ | ✓ | | ✓ | ✓ | ✓ |

  34. DIRECTOR NOMINEE QUALIFICATIONS, SKILLS AND EXPERIENCE

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  35. DIRECTOR NOMINEES

    DIRECTOR NOMINEES The Corporate Governance and Nominating Committee believes that all nine director nominees listed below are highly qualified and have the skills and experience required for service on the Board. The biographies set forth below contain information regarding their specific experience, qualifications, attributes and skills that led to the conclusion that each person should serve as a director, in light of our business and structure.

  36. DIRECTOR NOMINEES

    | Mark W. Adams | | | | Cadence Committees: Compensation (Chair) Finance Occupation: President and Chief Executive Officer, SMART Global Holdings, Inc. Age: 59 Director Since: 2015 | Mr. Adams has served as President and Chief Executive Officer of SMART Global Holdings, Inc., a compute, memory and LED solutions provider, since August 2020. He served as Chief Executive Officer of Lumileds Holding B.V., a light engine technology company, from February 2017 to February 2019 and served as President of Micron Technology, Inc., a semiconductor solutions company, from February 2012 to February 2016. From 2006 to February 2012, Mr. Adams served in several positions at Micron Technology, Inc., including interim Chief Financial Officer, Vice President of Worldwide Sales and Vice President of Digital Media. Prior to joining Micron Technology, Inc., Mr. Adams served as Chief Operating Officer of Lexar Media, Inc. in 2006 and as Vice President of Sales and Marketing of Creative Labs, Inc. from 2002 to 2006. Mr. Adams also serves as a director of SMART Global Holdings, Inc. and served as a director of Seagate Technology plc from January 2017 to October 2022. Mr. Adams has extensive executive leadership and management experience from his roles as a chief executive officer and other management positions at a range of technology companies, including in the areas of finance, sales and operations. In addition to his experience as a technology company executive, Mr. Adams contributes to the expertise of our Board from serving and having served as a member of other public company boards. | | | | Skills & Qualifications: | | | | • Compensation / HCM • Corporate Governance • Financial Expertise • International • Marketing | • Operations • Risk Management • Strategic Planning • Technology / Semiconductor / EDA |

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  38. DIRECTOR NOMINEES

    | Ita Brennan | | | | Cadence Committees: Audit Corporate Governance and Nominating (Chair) Occupation: Former Senior Vice President and Chief Financial Officer, Arista Networks, Inc. Age: 57 Director Since: 2020 | Ms. Brennan served as Senior Vice President, Chief Financial Officer of Arista Networks, Inc., a cloud networking solutions company, from May 2015 to February 2024. Prior to joining Arista she held several key finance roles, including Chief Financial Officer of QuantumScape Corporation and Chief Financial Officer of Infinera Corporation. Ms. Brennan also serves as a director of Planet Labs PBC and served as a director of LogMeln, Inc. from November 2018 to September 2020. Ms. Brennan has extensive financial and accounting expertise and executive leadership experience from her roles as chief financial officer and other finance positions at companies in the technology industry. In addition to her experience as a chief financial officer, Ms. Brennan contributes to the expertise of our Board from serving and having served as a member of other public company boards. | | | | Skills & Qualifications: | | | | • Compensation / HCM • Corporate Governance • Cybersecurity • Financial Expertise • Government / Regulatory / Public Policy | • International • Marketing • Operations • Risk Management • Strategic Planning |

  39. DIRECTOR NOMINEES

    | Lewis Chew | | | | Cadence Committees: Audit (Chair) Finance Occupation: Former Executive Vice President and Chief Financial Officer, Dolby Laboratories, Inc. Age: 61 Director Since: 2020 | Mr. Chew served as Executive Vice President and Chief Financial Officer of Dolby Laboratories, Inc., an audio, voice and imaging technology company, from June 2012 to October 2021. He served as Senior Vice President of Finance and Chief Financial Officer of National Semiconductor Corporation, a designer and manufacturer of semiconductor components, from 2001 to 2011. Prior to joining National Semiconductor Corporation, Mr. Chew was a partner at KPMG LLP, an accounting firm. Mr. Chew also serves as a director of Arista Networks, Inc. and served as a director of PG&E Corporation and Pacific Gas and Electric Company from 2009 to 2019. In addition, Mr. Chew is standing for election as a director at Intuitive Surgical, Inc., and plans to serve as a director if he is elected at the company’s annual meeting. Mr. Chew has extensive financial and accounting expertise and executive leadership experience from his roles as chief financial officer at other technology companies and as a partner at a Big 4 accounting firm. In addition to his experience as a chief financial officer and an accounting firm partner, Mr. Chew contributes to the expertise of our Board from serving and having served as a member of other public company boards. | | | | Skills & Qualifications: | | | | • Compensation / HCM • Corporate Governance • Cybersecurity • Financial Expertise • Government / Regulatory / Public Policy | • International • Marketing • Operations • Risk Management • Strategic Planning |

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  41. DIRECTOR NOMINEES

    | Anirudh Devgan, Ph.D. | | | | Cadence Committees: N/A Occupation: President and CEO Cadence Design Systems, Inc. Age: 54 Director Since: 2021 | Dr. Devgan has served as CEO of Cadence since December 2021 and President of Cadence since November 2017 and has been a member of the Board since August 2021. Prior to becoming President, he was Executive Vice President and General Manager of the Digital & Signoff and System & Verification groups at Cadence. Prior to joining Cadence in 2012, Dr. Devgan was General Manager and Corporate Vice President of the Custom Design Business Unit at Magma Design Automation. Previous roles include management and technical positions at IBM, where he received numerous awards including the IBM Outstanding Innovation Award. Dr. Devgan is the recipient of the IEEE/SEMI Phil Kaufman Award, has been inducted into the National Academy of Engineering, is an IEEE Fellow, has written numerous research papers, and holds several patents. As our President and CEO with over a decade of service in executive leadership roles at Cadence, Dr. Devgan has thorough knowledge of our strategy, operations, culture and competitive landscape. In addition to Dr. Devgan’s Cadence experiences and insights, he has extensive industry relationships, awards and recognitions, including as an inventor, as well as operational and industry experience acquired from his roles at other technology companies, all of which contribute to his service on our Board. | | | | Skills & Qualifications: | | | | • Compensation / HCM • Corporate Governance • Cybersecurity • Financial Expertise • International | • Marketing • Operations • Risk Management • Strategic Planning • Technology / Semiconductor / EDA |

  42. DIRECTOR NOMINEES

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  43. DIRECTOR NOMINEES

    | ML Krakauer | | | | Cadence Committees: Compensation Corporate Governance and Nominating Occupation: Former Executive Vice President and Chief Information Officer, Dell Corporation Age: 67 Director Since: 2022 | Ms. Krakauer has served as Board Chair since May 2023 and as a director of Cadence since January 2022. Ms. Krakauer retired as executive vice president, Chief Information Officer of Dell Corporation, a global information technology company, in January 2017. Prior to that, she served in various executive positions at EMC Corporation, a global IT infrastructure company, which she joined in 2008, including Executive Vice President, Chief Information Officer in 2016; Executive Vice President, Business Development, Global Enterprise Services during 2015; and Executive Vice President, Global Human Resources from 2012 to 2015. Ms. Krakauer also held executive general management roles at Hewlett-Packard Enterprise, Compaq Computer Corporation and Digital Equipment Corporation. Ms. Krakauer also serves as a director of Proterra Inc. and served as a director of Xilinx, Inc. from October 2017 to February 2022, DXC Technology Company from May 2018 to July 2022 and Mercury Systems, Inc. from July 2017 to October 2023. Ms. Krakauer has extensive information technology and cybersecurity expertise and executive leadership experience from her chief information officer, business development and human resources management roles at technology companies. In addition to her executive leadership experience, Ms. Krakauer contributes to the expertise of our Board from serving and having served as a member of other public company boards. | | | | Skills & Qualifications: | | | | • Compensation / HCM • Corporate Governance • Cybersecurity • Financial Expertise • International | • Marketing • Operations • Risk Management • Strategic Planning • Technology / Semiconductor / EDA |

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  45. DIRECTOR NOMINEES

    | Julia Liuson | | | | Cadence Committees: Compensation Corporate Governance and Nominating Occupation: President of the Developer Division of Microsoft Corporation Age: 53 Director Since: 2021 | Ms. Liuson has served as President of the Developer Division of Microsoft Corporation, a global technology provider, since November 2021 and previously served as Corporate Vice President of the Developer Division from 2012 to November 2021. Prior to 2012, Ms. Liuson served in several leadership roles in product and engineering in the Microsoft Visual Studio product line and served as General Manager of Microsoft’s Server and Tools business in Shanghai. Ms. Liuson first joined Microsoft in 1992 and began her career as a software design engineer. Ms. Liuson has extensive product and engineering expertise, technology industry knowledge, cybersecurity experience and operational leadership experience, including in Asia, from her over thirty years at Microsoft Corporation. Ms. Liuson contributes her strategic and international technology industry insights as a member of our Board. | | | | Skills & Qualifications: | | | | • Compensation / HCM • Corporate Governance • Cybersecurity • International | • Marketing • Operations • Risk Management • Strategic Planning |

  46. DIRECTOR NOMINEES

    | James D. Plummer, Ph.D. | | | | Cadence Committees: Audit Corporate Governance and Nominating Occupation: John M. Fluke Professor of Electrical Engineering, Stanford University Age: 79 Director Since: 2011 | Dr. Plummer has been a professor of electrical engineering at Stanford University since 1978 and served as the Dean of the Stanford School of Engineering from 1999 to 2014. Dr. Plummer has received numerous awards for his research and is a member of the National Academy of Engineering. Dr. Plummer directed the Stanford Nanofabrication Facility from 1994 to 2000. Dr. Plummer served as a director of Intel Corporation from 2005 to 2017 and International Rectifier Corporation from 1994 to 2014. In 2023, he was also selected to serve as the inaugural chair of the National Semiconductor Technology Center’s board of trustees. Dr. Plummer has extensive electrical engineering and technical expertise in the broad field of silicon devices and technology, a deep understanding of our industry and competitive landscape, and industry recognition and relationships from his academic and research roles. In addition to his academic and industry expertise, Dr. Plummer contributes to the expertise of our Board from having served as a member of other public company boards. | | | | Skills & Qualifications: | | | | • Compensation / HCM • Corporate Governance • Financial Expertise | • Risk Management • Strategic Planning • Technology / Semiconductor / EDA |

  47. DIRECTOR NOMINEES

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  48. DIRECTOR NOMINEES

    | Alberto Sangiovanni-Vincentelli, Ph.D. | | | | Cadence Committees: Corporate Governance and Nominating Finance Occupation: Edgar L. and Harold H. Buttner Professor of Electrical Engineering and Computer Sciences, University of California, Berkeley Age: 76 Director Since: 1992 | Dr. Sangiovanni-Vincentelli was a co-founder of SDA Systems, Inc., a predecessor of Cadence. Dr. Sangiovanni-Vincentelli has been a professor of electrical engineering and computer sciences at the University of California, Berkeley since 1976. He has also served as the President of Fondazione Chips-IT since December 2023. 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 exceptional impact on the development of electronics and electrical engineering or related fields in 2008, the ACM/IEEE A. Richard Newton Technical Impact Award in EDA in 2009, the EDAA Lifetime Achievement Award in 2012 and the BBVA Foundation Frontiers Knowledge Award in Information and Communications Technologies in 2023. Dr. Sangiovanni-Vincentelli also serves as a director of Cy4Gate SpA and KPIT Technologies Ltd. As a pioneer in the EDA industry, co-founder of a predecessor company of Cadence and member of our Board for over 30 years, Dr. Sangiovanni-Vincentelli has a thorough understanding of our business, culture and history. As an accomplished academic and engineer, he also brings critical perspective on industry developments and engineering advancements and contributes his expertise in science, technology and innovation to our Board. | | | | Skills & Qualifications: | | | | • Compensation / HCM • Corporate Governance • Cybersecurity • International | • Risk Management • Strategic Planning • Technology / Semiconductor / EDA |

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  50. DIRECTOR NOMINEES

    | Young K. Sohn | | | | Cadence Committees: Finance (Chair) Occupation: Managing Partner, Walden Catalyst Management LLC Age: 67 Director Since: 2013 | Mr. Sohn has served as senior advisor at Samsung Electronics, a consumer electronics company, since 2021, and as a founding managing partner at Walden Catalyst Management LLC, a venture capital firm, since November 2021. He previously served as Corporate President and Chief Strategy Officer of Samsung Electronics from 2012 to 2020. Mr. Sohn also served as a senior advisor to Silver Lake Management LLC, a private investment firm, from 2012 through January 2021. In addition, Mr. Sohn served as President and Chief Executive Officer of Inphi Corporation, a provider of high-speed mixed signal semiconductor solutions, from 2007 to 2012. Prior to joining Inphi Corporation, he served as President of Agilent Technologies, Inc.’s Semiconductor Group from 2003 until 2005, as Chief Executive Officer of Oak Technology, Inc. from 1999 until it was acquired by Zoran Corporation in 2003, and in executive positions at Quantum Corporation from 1992 to 1999, including co-President and General Manager. Mr. Sohn served as a director of Arm Holdings plc from 2007 to 2012, Cymer, Inc. from 2003 to 2013 and Inphi Corporation from 2007 to 2012. Mr. Sohn has extensive finance, operations and investment expertise in the semiconductor and broader technology industry from his leadership and advisory roles at technology companies and investment firms. Mr. Sohn brings broad perspective on corporate strategy and international industry trends to our Board. In addition, Mr. Sohn contributes to the expertise of our Board from having served as a member of other public company boards. | | | | Skills & Qualifications: | | | | • Compensation / HCM • Corporate Governance • Financial Expertise • International • Marketing | • Operations • Risk Management • Strategic Planning • Technology / Semiconductor / EDA |

  51. TENURE OF DIRECTOR NOMINEES

    TENURE OF DIRECTOR NOMINEES The Corporate Governance and Nominating Committee regularly reviews the tenure of Cadence’s directors and practices a long-term approach to board refreshment, which is a regular topic in the stockholder engagement sessions led by our Board Chair. A number of changes have occurred in our Board over the past several years as part of our continuing efforts to ensure that our Board has the right skills and tenures to best oversee management and the execution of our strategy and the associated risks. Our Board is of the view that a mix of tenures that takes into consideration appropriate levels of continuity, institutional memory and fresh perspectives is critical in achieving and maintaining a high-performing board. Over half of our director nominees joined the Board within the last five years. The Board will continue to proactively manage its composition to ensure it has the appropriate mix of tenures and the requisite skills to address Cadence’s current and future needs. The following table sets forth summary of the tenure of the director nominees:

  52. TENURE OF DIRECTOR NOMINEES

    | Years of Service (as of the Record Date) | | | | | 0 – 5 Years | 6 – 10 Years | 11 – 15 Years | 16+ Years | | • Anirudh Devgan • Julia Liuson • ML Krakauer • Ita Brennan • Lewis Chew | • Mark W. Adams | • James D. Plummer • Young K. Sohn | • Alberto Sangiovanni- Vincentelli |

  53. TENURE OF DIRECTOR NOMINEES

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  54. TENURE OF DIRECTOR NOMINEES

    The Board recommends a vote FOR the election of each director nominees named in this proxy statement. The election of directors at the Annual Meeting requires that each director receive the affirmative vote of 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. If, however, the election of directors is contested, the directors will be elected by the vote of a plurality of the shares present in person or represented by proxy and entitled to vote on the proposal. The election this year is not contested, so the majority voting standard outlined above applies. Under the Corporate Governance Guidelines, 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 (1) the number of votes cast “for” such director does not exceed the number of votes cast “against” such director in an election that is not a contested election, and (2) 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 director’s resignation, or whether to take other action. The Board will act on the Corporate Governance and Nominating Committee’s 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, the Board may designate a substitute nominee or reduce the size of the Board. If the Board designates a substitute nominee, proxies will be voted for such substitute nominee. 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 election; however, abstentions will not be counted as votes “for” or “against” directors and will not have an effect on the election of directors. Broker non-votes will be treated as not being entitled to vote on the election of directors, and, therefore, will not be counted for purposes of determining whether the directors have been elected. Unless marked to the contrary, proxies received will be voted FOR the election of each of the nine director nominees.

  55. TENURE OF DIRECTOR NOMINEES

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  56. Cadence’s Executive Compensation Practices

    | • | Independent Compensation Consultant. The Compensation Committee engages its own compensation consultant, Semler Brossy, which does not provide any services to management or otherwise to Cadence and has no prior relationship with any of Cadence’s executive officers. |

  57. Executive Compensation Objectives

    | • | Total direct compensation and other compensation elements are targeted to be competitive with peer companies and market practices, taking into account each executive officer’s scope of responsibility, impact, criticality and individual performance; and |

  58. Executive Compensation Objectives

    | • | A substantial portion of compensation of the executive officers is at-risk and is highly dependent on Cadence’s short-term and long-term financial, operational and stock performance. |

  59. Competitive Compensation Levels

    Competitive Compensation Levels For fiscal 2023, the Compensation Committee assessed the competitiveness of each element of the executive officers’ total direct compensation, including the annualized impact of any outstanding Long Term Plan (“LTP”) Awards, against Cadence’s peer group, as discussed below. 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 particular, the Compensation Committee considered the competitiveness of the executive officers’ compensation as compared to executives with similar titles and responsibilities at companies with which Cadence competes for executive talent (the “Peer Group”). In order to accurately reflect the pool from which executive talent is drawn and to which it is lost, the Peer Group includes publicly listed companies located throughout the United States that the Compensation Committee deems comparable to Cadence in revenue, market capitalization and scope, are in similar technical fields, and compete in the same talent market as Cadence, each as further described in the Peer Group selection criteria chart below. The Peer Group excludes companies that are foreign or are in businesses or industries that are not considered by the Compensation Committee to be reasonably comparable.

  60. Competitive Compensation Levels

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  61. Competitive Compensation Levels

    | Selection Criteria | Fiscal 2023 Peer Group | | Geographic Location | Located in the United States | | Industry | Application Software, Communications Equipment, Electronic Components, Electronic Equipment and Instruments, Semiconductor, Internet Services and Infrastructure, IT Consulting and Other Services, Semiconductor Equipment, and Systems Software | | Financial Scope | Revenue and market capitalization of approximately one-third to three times that of Cadence’s trailing twelve-month revenue and market capitalization at the time the Peer Group is determined |

  62. Competitive Compensation Levels

    In August 2022, the Compensation Committee reviewed the Peer Group that would be used to evaluate fiscal 2023 compensation decisions and removed six companies and replaced with five companies. Three of our Fiscal 2022 Peer Group companies (Citrix Systems, Maxim Integrated Products, and Xilinx) were acquired or in the process of being acquired and were no longer relevant peers. Additionally, given Cadence’s continued revenue and market value growth, three existing Fiscal 2022 Peer Group companies (Dolby Laboratories, National Instruments, and Nutanix) were removed since they were undersized relative to our financial screening criteria (between 0.33x – 3x of Cadence on revenues and less than 0.33x of Cadence on market value). The Compensation Committee reviewed companies that fit the criteria listed above and added five companies that were determined to have closer business and overall scope with Cadence. These new companies included CrowdStrike Holdings, Datadog, Microchip Technology, Palo Alto Networks, and Veeva Systems. The resulting Peer Group had a median revenue of approximately $4.6 billion (calculated based on the most recently available trailing four fiscal quarters as of June 30, 2022) and a median market value of approximately $35 billion (calculated based on the 90-day average as of July 28, 2022). Cadence’s revenue for the same period was approximately $3.3 billion and had a market value of $42 billion. The Compensation Committee considered the balanced positioning on both revenue and market value when making these adjustments. The Peer Group approved by the Compensation Committee for evaluating fiscal 2023 competitive compensation levels is comprised of the following companies:

  63. Competitive Compensation Levels

    | Fiscal 2023 Peer Group | | | | ANSYS, Inc. | Keysight Technologies, Inc. | Skyworks Solutions, Inc. | | Autodesk, Inc. | Marvell Technology, Inc. | Splunk Inc. | | Arista Networks | Microchip Technology | Synopsys, Inc. | | CrowdStrike Holdings | Palo Alto Networks | Veeva Systems | | Datadog | PTC Inc. | Workday, Inc. | | Fortinet, Inc. | ServiceNow, Inc. | |

  64. Competitive Compensation Levels

    In August 2023, the Compensation Committee reviewed the Peer Group that would be used to evaluate fiscal 2024 compensation decisions and added Advanced Micro Devices (AMD) to the existing peer group.

  65. Compensation Determinations

    | • | Cadence’s financial and operational performance as compared to the performance of the companies in the Peer Group |

  66. Compensation Determinations

    | • | Cadence’s relative size and scope of business as compared to the companies in the Peer Group |

  67. Compensation Determinations

    | • | Compensation paid to executives with similar titles and responsibilities as the individual at the companies in the Peer Group |

  68. ELEMENTS OF FISCAL 2023 EXECUTIVE COMPENSATION

    | • | Short-term cash incentive compensation |

  69. ELEMENTS OF FISCAL 2023 EXECUTIVE COMPENSATION

    | • | Equity incentive compensation (including stock options and incentive stock awards) |

  70. ELEMENTS OF FISCAL 2023 EXECUTIVE COMPENSATION

    | • | Non-qualified deferred compensation plan |

  71. ELEMENTS OF FISCAL 2023 EXECUTIVE COMPENSATION

    | • | Severance benefits |

  72. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”) Overview. Cadence provides its executive officers with the opportunity to earn short-term cash incentive compensation under its SEBP. The purpose of SEBP is to reward executive officers for performance during a single fiscal year (or portions thereof) and to provide incentives for them to achieve Cadence’s short-term financial and operational goals, as measured against specific performance criteria relative to Cadence’s overall business results and individual performance. Cash bonus payouts under SEBP for fiscal 2023 were determined semi-annually based on base salary earned in each half of the fiscal year. For each executive officer other than the CEO, the CEO makes an assessment and recommendation for each individual’s target bonus. The Compensation Committee reviews the CEO’s recommendation, as described above under “Compensation Determinations,” and approves (with or without modification, in its sole discretion) the CEO’s recommendation. For the CEO, the Compensation Committee is solely responsible for assigning a target bonus based on its review of the performance of Cadence and the CEO, as described above under “Compensation Determinations.” In February 2023, consistent with the process discussed in “Compensation Determinations” above, the Compensation Committee reviewed the target bonus levels of the NEOs and determined that the fiscal 2022 target bonus levels as a percentage of base salary for the NEOs were appropriate and would remain unchanged for fiscal 2023. The base salaries, target bonus levels under SEBP, and actual bonuses earned by the NEOs for fiscal 2023 (as determined using the criteria described below) are set forth in the table below.

  73. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    | | | Senior Executive Bonus Plan | | | | Name | Base Salary | Target Bonus (as % of Base Salary) | Target Bonus | Actual Bonus | | Anirudh Devgan | $750,000 | 125% | $937,500 | $1,187,386 | | John M. Wall | 575,000 | 100 | 575,000 | 705,606 | | Neil Zaman | 575,000 | 100 | 575,000 | 712,722 | | Paul Cunningham | 475,000 | 100 | 475,000 | 594,990 | | Chin-Chi Teng | 475,000 | 100 | 475,000 | 580,438 |

  74. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    Performance Factors. Each NEO’s actual bonus under SEBP for fiscal 2023 was determined by multiplying his or her base salary earned during the bonus period by his or her target bonus percentage, the product of which is then multiplied by two factors: (i) a “Company Performance Factor” and (ii) an “Individual Performance Factor.” In fiscal 2023, the Company Performance Factor was comprised of (a) a “Revenue Component” (weighted 45%) and (b) an “Operating Margin Component” (weighted 55%), and the Individual Performance Factor was comprised of (y) a “Cadence Culture Modifier” (weighted 20%) and (z) an “Executive Leadership Component” (weighted 80%). The combination of these performance factors is intended to ensure that all critical aspects of performance are considered in determining short-term cash incentive awards.

  75. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

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  76. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    The bonus determination under SEBP is illustrated below: Determination of Company Performance Factor. The Company Performance Factor is designed to reflect Cadence’s overall financial performance. The weightings and performance components used to determine the Company Performance Factor are reviewed by the Compensation Committee, in consultation with the CEO, for each performance period to evaluate whether the weightings and performance components align with what the Compensation Committee and the CEO believe are the most important factors that influence Cadence’s business and financial performance and directly impact long-term stockholder value. The Revenue Component is a percentage ranging from 0% to 150% that is a function of Cadence’s total revenue for the performance period as compared to the pre-established revenue target (the “Revenue Target”) for the same performance period. The Operating Margin Component is a percentage ranging from 0% to 150% that is a function of Cadence’s non-GAAP operating margin for the performance period divided by a pre-established non-GAAP operating margin target (the “Operating Margin Target”) for the same performance period. For purposes of SEBP, non-GAAP operating margin is defined as the ratio of non-GAAP income from operations (that is, GAAP operating income adjusted for amortization of acquired intangibles, stock-based compensation expense, non-qualified deferred compensation expenses or credits, restructuring and other charges or credits, acquisition- and integration-related costs, and special charges) divided by total revenue. For both components of the Company Performance Factor, the Compensation Committee excludes the impact of acquisitions made by Cadence during the applicable performance period if such acquisitions were not taken into account in the setting of the targets. For each half of fiscal 2023, the revenue and non-GAAP operating margin performance targets and actual performance against such targets used to determine the Company Performance Factor were as follows:

  77. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    | | 1st Half 2023 | | 2nd Half 2023 | | | | | Revenue (in millions) | Non-GAAP Operating Margin | Revenue (in millions) | Non-GAAP Operating Margin | | | 2023 SEBP Target | $1,990 | 41.5% | $2,072 | 41.5 | | | Actual Achievement | $1,998 | 41.9% | $2,092 | 42.2 | %(1) | | Company Performance Factor | 102.41% | | 104.59% | | |

  78. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    | (1) Non-GAAP operating margin for the second half of fiscal 2023 excludes a special bonus paid to employees below the NEO level for exceptional performance, which had an insignificant impact on payments to the NEOs. |

  79. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    Determination of Individual Performance Factor. As described under “Performance Factors” above, for fiscal 2023, the Individual Performance Factor consisted of two components (both expressed as a percentage ranging from 0% to 150%): (i) a Cadence Culture Modifier based on criteria such as diversity, equity and inclusion, sustainability and climate and talent development and (ii) an Executive Leadership Component based on criteria such as the achievement of strategic objectives, leadership within the organization, talent acquisition and retention, and fiscal management.

  80. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

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  81. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    At the beginning of the fiscal year, the Compensation Committee meets to review performance criteria for the Cadence Culture Modifier and Executive Leadership components. These criteria generally reflect a combination of quantitative and qualitative metrics for each executive with specific attention to their individual focus area to deliver on the business unit results or other corporate priorities in driving long term value creation. The Compensation Committee believes that the criteria are rigorous yet achievable and provide good balance with the company-wide performance metrics in the Company Performance Factor detailed above. Performance against these goals is measured at the end of each performance period during the year (1st Half and 2nd Half) and is evaluated on a holistic basis with input from the CEO (for the non-CEO performance assessments). The Individual Performance Factor criteria specific to each NEO that were considered by the Compensation Committee for fiscal 2023 are set forth below:

  82. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    | • | Dr. Devgan: Led the company to achieve leading levels of shareholder returns with record revenue and profitability. Drove market expansion with significant new products, including transformative artificial intelligence (AI) solutions and acquisitions that broadened our Total Available Market in furtherance of Cadence’s Intelligent System Design strategy. To ensure that Cadence is a leader in innovation, Dr. Devgan sponsored talent initiatives that moved the needle on diversity of experience and thought, and he and his team continued to elevate Cadence as a leading technology company and employer. |

  83. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    | • | Mr. Wall: Exceeded all financial targets for the year: revenue, operating margin, cash from operations and earnings per share and reached the milestone of $4B+ in revenue and 40%+ non-GAAP operating margin (30%+ GAAP operating margin). Executed to long-term operating model, and sponsored advancement of Cadence’s sustainable business practices. Contributed to the development Cadence’s next generation of leaders. |

  84. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    | • | Mr. Zaman: Exceeded revenue and bookings targets and drove expansion into new markets. Partnered effectively with market-shaping customers and drove operational excellence across the Worldwide Field Operations organization. Sponsored unique university programs that are focused on diversity of experience and comprehensive development of Cadence’s junior talent. |

  85. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    | • | Dr. Cunningham: Took the System Verification business to a new level of success, crossing an important $1B revenue milestone. Drove a record year for the hardware business through significant expansions with several key customers. Continued to grow a strong leadership team. |

  86. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    | • | Dr. Teng: Proliferation of digital full flow solutions at market-leading customers and key wins with large hyper-scalers. Led the company’s artificial intelligence initiatives. Strong contributor to the company’s top talent hiring from universities, ensuring Cadence builds a strong bench of next generation, innovative, diverse talent. |

  87. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    Actual Bonus Payments. Based on its assessment of Cadence’s performance and individual performance as described above, the Compensation Committee approved the following bonus payouts under SEBP for each half of fiscal 2023:

  88. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    | | 1st Half 2023 | | 2nd Half 2023 | | | Name | (% of Target)(1) | ($) | (% of Target)(1) | ($) | | Anirudh Devgan | 123.2 | 577,496 | 130.1 | 609,890 | | John M. Wall | 115.1 | 330,938 | 130.3 | 374,667 | | Neil Zaman | 116.7 | 335,649 | 131.2 | 377,073 | | Paul Cunningham | 121.5 | 288,463 | 129.1 | 306,527 | | Chin-Chi Teng | 114.5 | 271,924 | 129.9 | 308,514 |

  89. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

    | (1) The percentage of target is equal to (a) the actual bonus amount divided by (b) the actual base salary earned during each bonus period multiplied by the target bonus percentage. |

  90. Short-Term Cash Incentive Compensation under the Senior Executive Bonus Plan (“SEBP”)

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  91. Equity Incentive Compensation

    Equity Incentive Compensation Overview. Consistent with the principles of Cadence’s compensation for its executive officers outlined above, equity incentives are designed to provide executive officers with an ownership stake in Cadence, promote stock ownership to align the executive officers’ interests with those of other Cadence stockholders, and create significant incentives for executive retention. Specifically, equity incentives in the form of stock options provide an opportunity for Cadence to reward its executive officers solely to the extent Cadence’s stock price increases from the date of grant, which aligns the interests of executive officers with those of Cadence stockholders. Further, the executive officers generally must remain employed at Cadence during the period required for the stock options to vest, except as otherwise provided for in the award agreement or the Company’s severance arrangements. Equity incentive awards in the form of incentive stock awards also align the interests of executive officers with the interests of stockholders through stock ownership, require continued employment of the executive throughout the vesting period, and increase in value when Cadence’s stock price increases. The vesting of incentive stock awards granted to Cadence’s executive officers is also subject to performance goals originally intended to qualify the awards as “performance-based compensation” under section 162(m) of the Internal Revenue Code before passage of the Tax Cuts and Jobs Act. Although the performance-based compensation exemption under section 162(m) of the Internal Revenue Code has been repealed, the Compensation Committee continued to maintain the performance goal requirement for incentive stock awards granted in fiscal 2023. Additionally, as an important component of executive officers’ equity incentive compensation, since 2016 the Compensation Committee has made grants of LTP Awards every three years. The Compensation Committee granted LTP Awards to all then-serving executive officers in fiscal 2016, fiscal 2019 and fiscal 2022. The Compensation Committee, with input and collaboration from its independent compensation consultant, designed the LTP Awards to further focus the executive officers on building strong, sustained levels of growth, to provide a pay opportunity for exceptional market performance by Cadence, and to inspire innovation and resourcefulness to achieve Cadence’s strategic priorities over a multi-year performance period. By design, the LTP Awards provide value to the recipients only if there is a significant increase in stockholder value during the multi-year performance period of the awards. The Compensation Committee continues to assess Cadence’s equity incentive compensation program and may make future grants of LTP Awards with similar or different design parameters as prior LTP Awards, as it deems appropriate. When the Compensation Committee determines and approves individual equity grants to executive officers, it considers each of the compensation factors set forth under “Compensation Determinations,” without prescribing particular weight to any of the compensation factors. In addition, the Compensation Committee reviews the CEO’s assessments and recommendations as to the equity compensation for all of the executive officers except himself. Fiscal 2023 Equity Grants. The Compensation Committee believes equity incentive grants provide the appropriate level of executive alignment with Cadence stockholder interests and reward Cadence’s executives for building long-term stockholder value. The fiscal 2023 equity grants were designed to create balance among stock options (which provide value only if the stock price increases) and incentive stock awards (which provide more certain retention value subject to the fulfillment of certain vesting conditions, while still providing an incentive to improve Cadence’s stock performance). In March 2023, the Compensation Committee approved stock option and incentive stock award grants for the NEOs as part of the annual equity program. Approximately 50% of the fiscal 2023 equity grants for the CEO consisted of stock options, and approximately 34% of the other NEOs’ annual fiscal 2023 equity grants in the aggregate consisted of stock options, with the remainder of the equity grants being incentive stock awards. The Compensation Committee continued to place significant weight on stock options to focus on stock price appreciation over the seven-year term of the stock option. The stock options granted to the NEOs in March 2023 vest monthly over four years from the date of grant and expire seven years from the date of grant. The incentive stock awards granted to the NEOs in March 2023 vest over three years, with one-third of the award shares vesting approximately twelve months after the date of grant and the remaining shares vesting in four equal semi-annual installments, subject to achievement of the performance goal requirement described above.

  92. Equity Incentive Compensation

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  93. Equity Incentive Compensation

    Please see the Grants of Plan-Based Awards table for a description of the grants awarded to our named executive officers during 2023. The values included in the Summary Compensation Table and the Grants of Plan-Based Awards Table reflect the accounting grant date fair value of the grants. These values do not reflect amounts actually realizable by our executive officers. Outstanding LTP Awards. LTP Award grants on March 15, 2019 (the “2019 LTP Awards”) to the then-serving executive officers were eligible to begin vesting when Cadence’s 20-day average stock price exceeded a threshold of $77.80 per share and full vesting is scheduled to occur when the average stock price reaches a goal of $138 per share, with the first vesting date on March 15, 2022 and subject to a vesting cap of 33% of the award shares. The 2019 LTP Awards also require relative TSR to exceed the 35th percentile of the companies in both the S&P MidCap 400 Information Technology Index and the S&P 500 Information Technology Index as of March 15, 2019 in order for the awards to vest. Cadence’s 20-day average stock price on March 15, 2022 was $146.72 and its TSR relative to the comparator groups was in the 89th percentile. Accordingly, 33% of the shares under each 2019 LTP Award vested on March 15, 2022. Cadence’s 20-day average stock price on March 15, 2023 was $196.09 and its TSR relative to the comparator groups was in the 91st percentile. Accordingly, an additional 34% of the shares under each 2019 LTP Award vested on March 15, 2023; together with the 33% vesting from the March 15, 2022 first measurement date, the total vesting from the 2019 LTP Award is within the cumulative 67% vesting cap through the second measurement date. LTP Award grants on January 13, 2022 (the “2022 LTP Awards”) to the then-serving executive officers are eligible to begin vesting when Cadence’s 20-day average stock price exceeded a threshold of $245 per share and full vesting is scheduled to occur when the average stock price reaches a goal of $359 per share, with the first vesting date on March 15, 2025 and subject to a vesting cap of 33% of the award shares. The 2022 LTP Awards also require relative TSR to exceed the 35th percentile of the companies in both the S&P MidCap 400 Information Technology Index and the S&P 500 Information Technology Index as of January 13, 2022 in order for the awards to vest. Any shares that vest on a measurement date are subject to a one-year holding period and will not be delivered to the executive until the first anniversary of such measurement date. No shares have been earned or vested given the first measurement date is March 15, 2025.

  94. Equity Incentive Compensation

    | 62 | |

  95. Equity Incentive Compensation

    | (1) While Cadence’s recent and strong share price performance early in 2024 is well positioned against the 2022 LTP performance threshold of $245.00 and the share price target of $282.62 required for the first 33% vesting opportunity, nothing has been earned or vested and actual performance will be measured in early 2025. In order for anything to be earned at the first vesting event in 2025, Cadence’s stock price will need to remain above the $245 stock price threshold while also being above the relative TSR performance threshold. Additionally, no more than 33% of the shares on a cumulative basis can vest on the 2025 first measurement date even if the performance conditions necessary for vesting are achieved as of such date. |

  96. Severance Benefits

    Severance Benefits The Compensation Committee periodically reviews typical industry practices concerning severance and change in control arrangements and considers how those practices compare to Cadence’s severance and change in control arrangements. Cadence has entered into an employment agreement with Dr. Devgan that provides for benefits upon termination of employment under certain circumstances, such as in connection with a change in control of Cadence. Cadence’s Executive Severance Plan provides certain severance benefits to individuals promoted to or hired as executive officers of Cadence, to the extent designated as a participant in the Executive Severance Plan by the Compensation Committee. Each of the NEOs other than Dr. Devgan have been designated as a participant in the Executive Severance Plan. In designing the Executive Severance Plan, the Compensation Committee structured the severance benefit levels based on Cadence’s historical practices, as reflected in the executive employment agreement in place with Dr. Devgan. Cadence provides these severance benefits as a means of 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, the employment agreements and the Executive Severance Plan provide for severance benefits upon Cadence’s termination of the executive’s employment without “cause.” The employment agreements, but not the Executive Severance Plan, provide severance benefits upon resignation by the executive in connection with a “constructive termination” without a change in control. In the event of a change in control of Cadence, and if the executive’s employment is terminated without “cause” or by the executive in connection with a “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.

  97. Severance Benefits

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  98. Severance Benefits

    The highest cash severance entitlement Cadence provides is less than 1.6 times base salary plus target bonus for a termination without “cause” or by the executive in connection with a “constructive termination” in the event of a change in control of Cadence. See “Potential Payments upon Termination or Change in Control” below for a more detailed discussion of the severance and change in control arrangements with the NEOs.

  99. 2023 SUMMARY COMPENSATION TABLE

    2023 SUMMARY COMPENSATION TABLE

  100. 2023 SUMMARY COMPENSATION TABLE

    | Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2)(3) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(1) | All Other Compensation ($)(4) | Total ($) | | Anirudh Devgan President and Chief Executive Officer | 2023 | 750,000 | 7,702,791 | 7,689,913 | 1,187,386 | 11,772 | 17,341,862 | | | 2022 | 725,000 | 25,318,495 | 4,779,658 | 1,381,859 | 11,022 | 32,216,034 | | | 2021 | 604,808 | 2,499,956 | 17,496,404 | 1,109,054 | 25,572 | 21,735,794 | | John M. Wall Senior Vice President and Chief Financial Officer | 2023 | 575,000 | 3,050,188 | 1,568,773 | 705,606 | 11,772 | 5,911,339 | | | 2022 | 550,000 | 8,528,597 | 1,218,800 | 845,326 | 11,022 | 11,153,745 | | | 2021 | 500,000 | 7,310,069 | 1,189,938 | 788,207 | 10,572 | 9,798,786 | | Neil Zaman Senior Vice President and Chief Revenue Officer | 2023 | 575,000 | 2,711,278 | 1,394,457 | 712,722 | 11,772 | 5,405,229 | | | 2022 | 550,000 | 8,370,707 | 1,137,557 | 845,326 | 11,022 | 10,914,612 | | | 2021 | 500,000 | 1,980,035 | 1,019,901 | 784,476 | 10,572 | 4,294,984 | | Paul Cunningham Senior Vice President GM, System Verification Group | 2023 | 475,000 | 2,541,824 | 1,307,264 | 594,990 | 11,222 | 4,930,300 | | | 2022 | 450,000 | 7,461,699 | 975,070 | 661,438 | 10,036 | 9,558,243 | | Chin-Chi Teng Senior Vice President, GM, Digital & Signoff Group | 2023 | 475,000 | 2,541,824 | 1,307,264 | 580,438 | 13,183 | 4,917,709 | | | 2022 | 450,000 | 7,461,699 | 975,070 | 650,089 | 12,260 | 9,549,118 | | | 2021 | 425,000 | 1,484,957 | 764,946 | 657,251 | 11,638 | 3,343,792 |

  101. 2023 SUMMARY COMPENSATION TABLE

    | (1) Includes amounts deferred pursuant to Section 401(k) of the Internal Revenue Code and the Deferred Compensation Plan. |

  102. 2023 SUMMARY COMPENSATION TABLE

    | (2) In accordance with SEC rules, the amount shown reflects the grant date fair value of stock awards and option awards granted during fiscal 2023 calculated pursuant to FASB ASC 718. The assumptions used to calculate the valuation of the awards for fiscal 2023 are set forth in Note 9 to the Notes to Consolidated Financial Statements in Cadence’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and the assumptions used to calculate the valuation of the awards for prior years are set forth in the Notes to Consolidated Financial Statements in Cadence’s annual reports on Form 10-K for the corresponding years. While the grant date fair value of awards reflects the full value of the awards in the year of grant, the awards will be earned by the holder over a number of years, and the stock awards are subject to performance conditions. The terms of the applicable awards are discussed in more detail in the tables entitled “Grants of Plan-Based Awards in Fiscal Year 2023” and “Outstanding Equity Awards at 2023 Fiscal Year End.” The amount shown 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. |

  103. 2023 SUMMARY COMPENSATION TABLE

    | (3) The amount shown includes both the grants of incentive stock awards (“ISAs”) and long-term equity awards subject to stockholder return targets (“LTP Awards”). LTP Awards were granted to all of the NEOs in fiscal 2022. As a result of the foregoing, stock award values and total compensation for years in which an executive officer received an LTP Award are significantly higher than Cadence’s historical compensation levels. |

  104. 2023 SUMMARY COMPENSATION TABLE

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  105. 2023 SUMMARY COMPENSATION TABLE

    The per share and aggregate grant date fair values of the ISAs granted in fiscal 2023, calculated pursuant to FASB ASC 718, are set forth below.

  106. 2023 SUMMARY COMPENSATION TABLE

    | | ISAs | | | | Name | Shares | Per Share ($) | Aggregate ($) | | Anirudh Devgan | 37,956 | 202.94 | 7,702,791 | | John M. Wall | 15,030 | 202.94 | 3,050,188 | | Neil Zaman | 13,360 | 202.94 | 2,711,278 | | Paul Cunningham | 12,525 | 202.94 | 2,541,824 | | Chin-Chi Teng | 12,525 | 202.94 | 2,541,824 |

  107. 2023 SUMMARY COMPENSATION TABLE

    | (4) The amounts 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 fiscal 2023: |

  108. 2023 SUMMARY COMPENSATION TABLE

    | • | For Dr. Devgan, the amount shown includes $9,900 for 401(k) matching contributions and $1,872 for term life insurance premium payments. |

  109. 2023 SUMMARY COMPENSATION TABLE

    | • | For Mr. Wall, the amount shown includes $9,900 for 401(k) matching contributions and $1,872 for term life insurance premium payments. |

  110. 2023 SUMMARY COMPENSATION TABLE

    | • | For Mr. Zaman, the amount shown includes $9,900 for 401(k) matching contributions and $1,872 for term life insurance premium payments. |

  111. 2023 SUMMARY COMPENSATION TABLE

    | • | For Dr. Cunningham, the amount shown includes $9,900 for 401(k) matching contributions and $1,322 for term life insurance premium payments. |

  112. 2023 SUMMARY COMPENSATION TABLE

    | • | For Dr. Teng, the amount shown includes $9,900 for 401(k) matching contributions and $3,283 for term life insurance premium payments. |

  113. 2023 SUMMARY COMPENSATION TABLE

    | 70 | |

  114. GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023

    GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023

  115. GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023

    | Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh)(4) | Grant Date Fair Value of Stock and Option Awards ($)(5) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Anirudh Devgan | 3/15/23 | — | — | — | — | — | — | 37,956 | — | — | 7,702,791 | | | 3/15/23 | — | — | — | — | — | — | — | 108,390 | 202.94 | 7,689,913 | | | SEBP | — | 937,500 | 2,109,375 | — | — | — | — | — | — | — | | John M. Wall | 3/15/23 | — | — | — | — | — | — | 15,030 | — | — | 3,050,188 | | | 3/15/23 | — | — | — | — | — | — | — | 22,112 | 202.94 | 1,568,773 | | | SEBP | — | 575,000 | 1,293,750 | — | — | — | — | — | — | — | | Neil Zaman | 3/15/23 | — | — | — | — | — | — | 13,360 | — | — | 2,711,278 | | | 3/15/23 | — | — | — | — | — | — | — | 19,655 | 202.94 | 1,394,457 | | | SEBP | — | 575,000 | 1,293,750 | — | — | — | — | — | — | — | | Paul Cunningham | 3/15/23 | — | — | — | — | — | — | 12,525 | — | — | 2,541,824 | | | 3/15/23 | — | — | — | — | — | — | — | 18,426 | 202.94 | 1,307,264 | | | SEBP | — | 475,000 | 1,068,750 | — | — | — | — | — | — | — | | Chin-Chi Teng | 3/15/23 | — | — | — | — | — | — | 12,525 | — | — | 2,541,824 | | | 3/15/23 | — | — | — | — | — | — | — | 18,426 | 202.94 | 1,307,264 | | | SEBP | — | 475,000 | 1,068,750 | — | — | — | — | — | — | — |

  116. GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023

    | (1) The Non-Equity Incentive Plan Awards consist of cash bonuses under the SEBP. Pursuant to the terms of the SEBP, bonus amounts are based on base salary earned during the year by each NEO. The minimum dollar amount for each such bonus award is $0. |

  117. GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023

    | (2) The incentive stock awards granted to Messrs. Devgan, Wall, Zaman, Cunningham and Teng on March 15, 2023 were granted under the Omnibus Plan and vest over three years, with 1/3rd of the shares subject to each such stock award vesting twelve months after the date of grant and the remaining shares vesting in four equal semi-annual installments, subject to the achievement of certain specified performance goals. |

  118. GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023

    | (3) The stock options granted to Messrs. Devgan, Wall, Zaman, Cunningham and Teng on March 15, 2023 were granted under the Omnibus Plan and vest over four years, with 1/48th of the shares vesting each month after the date of grant. |

  119. GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023

    | (4) The exercise price of the stock options is the closing price of Cadence common stock on the date of grant. |

  120. GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023

    | (5) In accordance with SEC rules, the amount shown reflects the grant date fair value of stock awards and option awards granted during fiscal 2023 calculated pursuant to FASB ASC 718. The assumptions used to calculate the valuation of the awards for fiscal 2023 are set forth in Note 9 to the Notes to Consolidated Financial Statements in Cadence’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The grant date fair value of the stock awards and stock options granted during fiscal 2023 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. |

  121. GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023

    | | 71 |

  122. NARRATIVE DISCLOSURE TO 2023 SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023 TABLE

    NARRATIVE DISCLOSURE TO 2023 SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2023 TABLE

  123. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

  124. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | | Option Awards | | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Anirudh Devgan | 2/6/18 | 99,886(3) | 0 | 39.58 | 2/6/2025 | — | — | — | — | | | 2/22/19 | 93,151(3) | 0 | 56.57 | 2/22/2026 | — | — | — | — | | | 2/14/20 | 68,828 | 2,993 | 78.76 | 2/14/2027 | — | — | — | — | | | 2/25/21 | 44,351 | 18,263 | 138.02 | 2/25/2028 | — | — | — | — | | | 12/15/21 | 140,496 | 140,497 | 184.27 | 12/15/2028 | — | — | — | — | | | 3/15/22 | 42,700 | 54,901 | 142.5 | 3/15/2029 | — | — | — | — | | | 3/15/23 | 20,323 | 88,067 | 202.94 | 3/15/2030 | | | | | | | 3/15/19 | — | — | — | — | — | — | 79,500(4) | 21,653,415 | | | 2/25/21 | — | — | — | — | 3,018(5) | 822,013 | — | — | | | 3/15/22 | — | — | — | — | 16,787(6) | 4,572,275 | — | — | | | 3/15/23 | — | — | — | — | 37,956(7) | 10,338,076 | — | — | | | 1/13/22 | — | — | — | — | | | 409,208(8) | 111,455,983 | | John M. Wall | 2/14/20 | 4,391 | 1,609 | 78.76 | 2/14/2027 | — | — | — | — | | | 2/25/21 | 16,587 | 6,831 | 138.02 | 2/25/2028 | — | — | — | — | | | 2/25/21 | 4,524 | 1,863 | 138.02 | 2/25/2028 | — | — | — | — | | | 3/15/22 | 10,888 | 14,000 | 142.50 | 3/15/2029 | — | — | — | — | | | 3/15/23 | 4,146 | 17,966 | 202.94 | 3/15/2030 | — | — | — | — | | | 3/15/19 | — | — | — | — | — | — | 39,750(4) | 10,826,708 | | | 2/25/21 | — | — | — | — | 2,191(5) | 596,763 | — | — | | | 2/25/21 | — | — | — | — | 597(5) | 162,605 | — | — | | | 3/15/22 | — | — | — | — | 8,310(6) | 2,263,395 | — | — | | | 12/15/21 | — | — | — | — | 9,046(9) | 2,463,859 | — | — | | | 1/13/22 | — | — | — | — | | | 122,763(8) | 33,436,958 | | | 3/15/23 | — | — | — | — | 15,030(7) | 4,093,721 | — | — | | Neil Zaman | 2/14/20 | 6,733 | 1,497 | 78.76 | 2/14/2027 | — | — | — | — | | | 2/25/21 | 4,169 | 5,837 | 138.02 | 2/25/2028 | — | — | — | — | | | 2/25/21 | 3,920 | 1,615 | 138.02 | 2/25/2028 | — | — | — | — | | | 3/15/22 | 10,162 | 13,067 | 142.5 | 3/15/2029 | — | — | — | — | | | 3/15/23 | 3,685 | 15,970 | 202.94 | 3/15/2030 | — | — | — | — | | | 3/15/19 | — | — | — | — | — | — | 39,750(4) | 10,826,708 | | | 2/25/21 | — | — | — | — | 1,873(5) | 510,149 | — | — | | | 2/25/21 | — | — | — | — | 518(5) | 141,088 | — | — | | | 3/15/22 | — | — | — | — | 7,755(6) | 2,112,229 | — | — | | | 1/13/22 | | | | | — | — | 122,763(8) | 33,436,958 | | | 3/15/23 | — | — | — | — | 13,360(7) | 3,638,863 | — | — | | Paul Cunningham | 2/25/21 | 10,857 | 4,471 | 138.02 | 2/25/2028 | — | — | — | — | | | 3/15/22 | 8,711 | 11,200 | 142.50 | 3/15/2029 | — | — | — | — | | | 3/15/23 | 3,454 | 14,972 | 202.94 | 3/15/2030 | | | | | | | 7/1/20 | | | | | | | 43,101(10) | 11,739,419 | | | 2/25/21 | — | — | — | — | 1,434(5) | 390,579 | — | — | | | 3/15/22 | — | — | — | — | 6,648(6) | 1,810,716 | — | — | | | 3/15/23 | — | — | — | — | 12,525(7) | 3,411,434 | — | — | | | 1/13/22 | — | — | — | — | — | — | 110,941(8) | 30,217,000 |

  125. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | | 73 |

  126. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | | Option Awards | | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Chin-Chi Teng | 2/22/19 | 35,260(3) | 0 | 56.57 | 2/22/2026 | — | — | — | — | | | 2/14/20 | 34,413 | 1,497 | 78.76 | 2/14/2027 | — | — | — | — | | | 2/14/20 | 4,301 | 188 | 78.76 | 2/14/2027 | — | — | — | — | | | 2/25/21 | 13,571 | 5,589 | 138.02 | 2/25/2028 | — | — | — | — | | | 3/15/22 | 8,711 | 11,200 | 142.5 | 3/15/2029 | — | — | — | — | | | 3/15/23 | 3,454 | 14,972 | 202.94 | 3/15/2030 | | | | | | | 3/15/19 | — | — | — | — | — | — | 39,750(4) | 10,826,708 | | | 2/25/21 | — | — | — | — | 1,793(5) | 488,359 | — | — | | | 3/15/22 | — | — | — | — | 6,648(6) | 1,810,716 | — | — | | | 3/15/23 | — | — | — | — | 12,525(7) | 3,411,434 | — | — | | | 1/13/22 | — | — | — | — | — | — | 110,941(8) | 30,217,000 |

  127. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | (1) Unless otherwise indicated, these stock options vest at a rate of 1/48th every month after the date of grant and expire on the seven-year anniversary of the grant date. |

  128. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | (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 29, 2023 (the last business day of Cadence’s fiscal 2023) of $272.37 per share. |

  129. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | (3) Stock option fully vested as of January 2, 2024. |

  130. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | (4) LTP Award was granted on March 15, 2019 and vests upon achieving TSR of (i) 32% (corresponding to a $77.80 stock price) above which vesting begins, (ii) 100% (corresponding to a $118 stock price) at or above which 100% vesting of the “Base Shares” would occur, or (iii) 134% (corresponding to a $138 stock price) at or above which 100% vesting of the “Overage Shares” would occur, from the $58.98 trailing 15-day average stock price as of March 15, 2019 (the award grant date) through March 15, 2024 (the end of the award’s multi-year term). The percentage of the award that vests for TSR in between the 32%, 100% and 134% levels is determined by linear interpolation between such levels. TSR is calculated using a trailing 20-day average stock price and the corresponding stock prices cited above assume that no dividends, stock splits or other similar adjustments have occurred. The LTP Award terms provided for the possibility of partial vesting on two interim measurement dates – March 15, 2022 and March 15, 2023 – if TSR reached the vesting range by such dates, subject to vesting limits of 33% of the “Base Shares” for the 2022 measurement date and 67% of the “Base Shares” for the 2023 measurement date on a cumulative basis. No portion of the LTP Award shall vest at any time unless Cadence’s TSR from March 15, 2019 through the applicable measurement date is equal to or greater than the 35th percentile of the companies listed in the S&P MidCap 400 Information Technology Index and the S&P 500 Information Technology Index as of March 15, 2019. “Base Shares” consist of approximately 83% of the total shares subject to the LTP Award and “Overage Shares” consist of the remainder of the shares subject to the LTP Award. |

  131. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | (5) Restricted stock was granted on February 25, 2021 and vests over three years, with 1/3rd of the shares vesting approximately twelve months after the date of grant and the remaining shares vesting in four equal semi-annual installments, subject to the achievement of specific performance goals. |

  132. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | (6) Restricted stock was granted on March 15, 2022 and vests over three years, with 1/3rd of the shares vesting approximately twelve months after the date of grant and the remaining shares vesting in four equal semi-annual installments, subject to the achievement of specific performance goals. |

  133. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | 74 | |

  134. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | (7) Restricted stock was granted on March 15, 2023 and vests over three years, with 1/3rd of the shares vesting approximately twelve months after the date of grant and the remaining shares vesting in four equal semi-annual installments, subject to the achievement of specific performance goals. |

  135. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | (8) LTP Award was granted on January 13, 2022 and vests upon achieving TSR of (i) 50% (corresponding to a $245 stock price) above which vesting begins or (ii) 120% (corresponding to a $359 stock price) at or above which 100% vesting would occur, from the $163.16 closing trading price on January 13, 2022 (the award grant date) through March 15, 2027 (the end of the award’s multi-year term). The percentage of the award that vests for TSR in between the 50% and 120% levels is determined by linear interpolation between such levels. TSR is calculated using a trailing 20-day average stock price and the corresponding stock prices cited above assume that no dividends, stock splits or other similar adjustments have occurred. The LTP Award terms provide for the possibility of partial vesting on two interim measurement dates – March 15, 2025 and March 15, 2026 – if TSR reaches the vesting range by such dates, subject to vesting limits of 33% of the total shares for the 2025 measurement date and 67% of the total shares for the 2026 measurement date on a cumulative basis. No portion of the LTP Award shall vest at any time unless Cadence’s TSR from January 13, 2022 through the applicable measurement date is equal to or greater than the 35th percentile of the companies listed in the S&P MidCap 400 Information Technology Index and the S&P 500 Information Technology Index as of January 13, 2022. |

  136. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | (9) Restricted stock was granted on December 15, 2021 and vests over three years, with 1/3rd of the shares vesting approximately twelve months after the date of grant and the remaining shares vesting in four equal semi-annual installments. |

  137. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | (10) LTP Award was granted on July 1, 2020 and vests upon achieving TSR of (i) 32% (corresponding to a $77.80 stock price) above which vesting begins, (ii) 100% (corresponding to a $118 stock price) at or above which 100% vesting of the “Base Shares” would occur, or (iii) 134% (corresponding to a $138 stock price) at or above which 100% vesting of the “Overage Shares” would occur, from the $58.98 trailing 15-day average stock price as of March 15, 2019 through March 15, 2024 (the end of the award’s multi-year term). The percentage of the award that vests for TSR in between the 32%, 100% and 134% levels is determined by linear interpolation between such levels. TSR is calculated using a trailing 20-day average stock price and the corresponding stock prices cited above assume that no dividends, stock splits or other similar adjustments have occurred. The LTP Award terms provide for the possibility of partial vesting on two interim measurement dates – March 15, 2022 and March 15, 2023 – if TSR reaches the vesting range by such dates, subject to vesting limits of 20% of the “Base Shares” for the 2022 measurement date and 40% of the “Base Shares” for the 2023 measurement date on a cumulative basis. No portion of the LTP Award shall vest at any time unless Cadence’s TSR from March 15, 2019 through the applicable measurement date is equal to or greater than the 35th percentile of the companies listed in the S&P MidCap 400 Information Technology Index and the S&P 500 Information Technology Index as of March 15, 2019. “Base Shares” consist of approximately 83% of the total shares subject to the LTP Award and “Overage Shares” consist of the remainder of the shares subject to the LTP Award. |

  138. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END

    | | 75 |

  139. OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2023

    OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2023 The following table sets forth information with respect to the exercise of stock options by the NEOs during fiscal 2023 and the vesting during fiscal 2023 of stock awards previously granted to the NEOs:

  140. OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2023

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | | Anirudh Devgan | — | — | 79,412 | 16,328,431 | | John M. Wall | 69,864 | 10,241,904 | 51,435 | 11,035,818 | | Neil Zaman | 15,017 | 1,807,708 | 40,832 | 8,403,587 | | Paul Cunningham | — | — | 24,328 | 5,057,796 | | Chin-Chi Teng | 2,000 | 280,100 | 38,876 | 7,981,924 |

  141. OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2023

    | (1) Amounts shown for option awards are determined by multiplying (i) the number of shares of Cadence common stock to which the exercise of the options related, by (ii) the difference between the per share sales price of Cadence common stock at exercise and the exercise price of the options. |

  142. OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2023

    | (2) Amounts shown for stock awards are determined by multiplying the number of shares that vested by the per share closing price of Cadence common stock on the vesting date. |

  143. NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 2023

    NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 2023 Under the Deferred Compensation Plan, Cadence employees who are classified as officers, vice presidents, directors, or an equivalent title and selected as eligible, as well as non-employee directors, may elect to defer compensation otherwise payable to them. Eligible employees may elect to defer up to 80% of their base salary and up to 100% of their non-equity incentive plan compensation while non-employee directors may elect to defer up to 100% of their directors’ fees. These deferred compensation amounts are credited to participant accounts, with values indexed to the performance of mutual funds or money market accounts selected by the participant. Participants may elect to receive distributions from their account upon termination of employment or service with Cadence, the passage of a specified number of years or the attainment of a specified age. In addition, participants may elect to receive distributions in a lump-sum payment or annual installments over a five-, ten- or fifteen-year period. The participant’s account will be distributed upon termination of employment if it occurs prior to the participant’s elected period of service, years or age, in the form selected.

  144. NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 2023

    | Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(2)(3) | | Anirudh Devgan | 7,086 | — | 372 | — | 101,817 | | John M. Wall | 558,045 | — | 85,185 | — | 3,462,183 | | Neil Zaman | — | — | — | — | — | | Paul Cunningham | — | — | — | — | — | | Chin-Chi Teng | 379,013 | — | 93,047 | (232,317) | 2,822,432 |

  145. NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 2023

    | (1) The amounts reported in this column are reported as either “Salary” or “Non-Equity Incentive Plan Compensation” for such NEO in the 2023 Summary Compensation Table. |

  146. NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 2023

    | (2) Amounts in this column take into consideration the following executive contribution amounts that were previously reported in the Summary Compensation Table as compensation for 2022 and 2021: Dr. Devgan, $12,587, Mr. Wall, $1,444,637 and Dr. Teng, $674,315. |

  147. NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 2023

    | (3) Amounts in this column take into account transactional fees. |

  148. NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 2023

    | 76 | |

  149. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

    POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

  150. POTENTIAL PAYMENTS

    POTENTIAL PAYMENTS The tables below set forth the estimated value of the potential payments to the NEOs, assuming the executive’s employment was terminated on December 31, 2023, based upon the $272.37 per share closing price of Cadence common stock on December 29, 2023 (the last business day of Cadence’s fiscal 2023), under Dr. Devgan’s employment agreement or the Executive Severance Plan 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 or due to any reduction under Section 280G of the Internal Revenue Code.

  151. POTENTIAL PAYMENTS

    | 80 | |

  152. POTENTIAL 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

  153. POTENTIAL PAYMENTS

    | Name | Transition Period Salary ($) | Lump Sum Payment 1 ($)(1) | Lump Sum Payment 2 ($)(2) | Company- Paid COBRA Premiums ($) | Vesting of Stock Options ($)(3) | Vesting of Restricted Stock Awards ($)(4) | Pre-Tax Total ($) | | Anirudh Devgan | 24,000 | 750,000 | 937,500 | 42,246 | 19,891,676 | 40,886,530 | 62,531,952 | | John M. Wall(5) | 24,000 | 575,000 | 575,000 | 28,269 | 2,504,421 | 21,079,113 | 24,785,802 | | Neil Zaman(5) | 24,000 | 575,000 | 575,000 | 42,246 | 2,243,262 | 18,179,189 | 21,638,697 | | Paul Cunningham(5) | 24,000 | 475,000 | 356,250 | 42,246 | 1,481,056 | 17,164,356 | 19,542,908 | | Chin-Chi Teng(5) | 24,000 | 475,000 | 475,000 | 42,246 | 1,935,996 | 17,701,452 | 20,653,695 |

  154. POTENTIAL PAYMENTS

    | (1) Lump Sum Payment 1 is payable on the First Transition Payment Date (defined above under “Employment Agreements and the Executive Severance Plan”). |

  155. POTENTIAL PAYMENTS

    | (2) Lump Sum Payment 2 is payable on the Second Transition Payment Date (defined above under “Employment Agreements and the Executive Severance Plan”). |

  156. POTENTIAL PAYMENTS

    | (3) 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 29, 2023 (the last business day of Cadence’s fiscal 2023) of $272.37 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. |

  157. POTENTIAL PAYMENTS

    | (4) These amounts are calculated based on the number of shares of Cadence common stock that would have been subject to acceleration multiplied by the closing price of Cadence common stock on December 29, 2023 (the last business day of Cadence’s fiscal 2023) of $272.37 per share. In addition, these amounts include the value of LTP Awards that would have vested at the next measurement date, as prorated in accordance with their terms, assuming a trailing 20-day average stock price of $272.37 per share on such date. |

  158. POTENTIAL PAYMENTS

    | (5) Under the terms of the Executive Severance Plan, Messrs. Cunningham, Teng, Wall and Zaman would have been eligible for severance benefits following a termination of employment by Cadence without “cause,” but would not have been entitled to severance benefits following a “constructive termination” unless in connection with a “change in control.” |

  159. POTENTIAL PAYMENTS

    Potential Payments and Benefits Upon a Termination of Employment by Cadence Without Cause or by Executive in Connection with a Constructive Termination Within 3 Months Prior to or 13 Months Following a Change in Control

  160. POTENTIAL PAYMENTS

    | Name | Transition Period Salary ($) | Lump Sum Payment 1 ($)(1) | Lump Sum Payment 2 ($)(2) | Company- Paid COBRA Premiums ($) | Vesting of Stock Options ($)(3) | Vesting of Restricted Stock Awards ($)(4) | Pre-Tax Total ($) | | Anirudh Devgan | 24,000 | 1,125,000 | 1,406,250 | 42,246 | 28,655,379 | 45,556,879 | 76,809,754 | | John M. Wall | 24,000 | 862,500 | 862,500 | 28,269 | 4,545,117 | 24,492,600 | 30,814,986 | | Neil Zaman | 24,000 | 862,500 | 862,500 | 42,246 | 4,096,819 | 21,314,587 | 27,202,651 | | Paul Cunningham | 24,000 | 712,500 | 534,375 | 42,246 | 3,094,729 | 20,286,935 | 24,694,785 | | Chin-Chi Teng | 24,000 | 712,500 | 712,500 | 42,246 | 3,571,165 | 20,622,767 | 25,685,178 |

  161. POTENTIAL PAYMENTS

    | | 81 |

  162. POTENTIAL PAYMENTS

    | (1) Lump Sum Payment 1 is payable on the First Transition Payment Date (defined above under “Employment Agreements and the Executive Severance Plan”). |

  163. POTENTIAL PAYMENTS

    | (2) Lump Sum Payment 2 is payable on the Second Transition Payment Date (defined above under “Employment Agreements and the Executive Severance Plan”). |

  164. POTENTIAL PAYMENTS

    | (3) These amounts are calculated based on the number of shares of Cadence common stock that would have been subject to acceleration upon a termination of employment in connection with a change in control multiplied by the difference between the closing price of Cadence common stock on December 29, 2023 (the last business day of Cadence’s fiscal 2023) of $272.37 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. |

  165. POTENTIAL PAYMENTS

    | (4) These amounts are calculated based on the number of shares of Cadence common stock that would have been subject to acceleration upon a termination of employment in connection with a change in control multiplied by the closing price of Cadence common stock on December 29, 2023 (the last business day of Cadence’s fiscal 2023) of $272.37 per share. In addition, these amounts include the value of LTP Awards that would have vested assuming an acquisition price of $272.37 per share. |

  166. Potential Payments and Benefits Upon a Termination of Employment by Reason of Death or Due to Permanent Disability

    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 NEO, assuming the executive’s employment had terminated on December 31, 2023 by reason of the executive’s death or “permanent disability.” Amounts are reported without any reduction for possible delay in the commencement or timing of payments.

  167. Potential Payments and Benefits Upon a Termination of Employment by Reason of Death or Due to Permanent Disability

    | Name | Company-Paid COBRA Premiums (Upon Termination of Employment Due to Permanent Disability) ($) | Vesting of Stock Options ($)(1) | Vesting of Restricted Stock Awards ($)(2) | Pre-Tax Total (Upon Termination of Employment Due to Permanent Disability) ($) | Pre-Tax Total (Upon Termination of Employment Due to Death) ($) | | Anirudh Devgan | 42,246 | 13,921,611 | 37,639,607 | 49,722,120 | 49,679,874 | | John M. Wall | 28,269 | 2,504,421 | 21,079,113 | 23,611,802 | 23,583,533 | | Neil Zaman | 42,246 | 2,243,262 | 18,179,189 | 20,464,697 | 20,422,451 | | Paul Cunningham | 42,246 | 1,481,056 | 17,164,356 | 18,687,658 | 18,645,412 | | Chin-Chi Teng | 42,246 | 1,935,996 | 17,701,452 | 19,679,695 | 19,637,449 |

  168. Potential Payments and Benefits Upon a Termination of Employment by Reason of Death or Due to Permanent Disability

    | (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 29, 2023 (the last business day of Cadence’s fiscal 2023) of $272.37 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. |

  169. Potential Payments and Benefits Upon a Termination of Employment by Reason of Death or Due to Permanent Disability

    | (2) These amounts are calculated based on the number of shares of Cadence common stock that would have been subject to acceleration multiplied by the closing price of Cadence common stock on December 29, 2023 (the last business day of Cadence’s fiscal 2023) of $272.37 per share. In addition, these amounts include the value of LTP Awards that would have vested at the next measurement date, as prorated in accordance with their terms, assuming a trailing 20-day average stock price of $272.37 per share on such date. |

  170. Potential Payments and Benefits Upon a Termination of Employment by Reason of Death or Due to Permanent Disability

    | 82 | |

  171. PAY RATIO DISCLOSURE

    PAY RATIO DISCLOSURE As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, Cadence is providing the following information about the relationship of the annual total compensation of its employees to the annual total compensation of Dr. Devgan, Cadence’s CEO. To understand this disclosure, Cadence believes that it is important to give context to Cadence’s operations. Cadence’s corporate headquarters is in San Jose, California and Cadence has employees in 26 countries. As a global organization, approximately 68% of Cadence’s employees were located outside of the U.S. as of December 31, 2023. As discussed above in the “Compensation Discussion and Analysis,” Cadence is engaged in a very competitive industry, and its success depends on its ability to attract, motivate and retain highly qualified, talented and creative employees. Consistent with Cadence’s executive compensation program, Cadence’s global compensation program is designed to be competitive in terms of both the position and the geographic location in which an employee is located. Accordingly, Cadence’s pay structures vary among its employees based on position and geographic location, with significant consideration given to competitive market practices.

  172. PAY RATIO

    PAY RATIO For 2023, Cadence’s last completed fiscal year:

  173. PAY RATIO

    | • | The median of the annual total compensation of all of Cadence’s employees, other than Dr. Devgan, was $114,804. |

  174. PAY RATIO

    | • | Dr. Devgan’s annual total compensation, as reported in the “Total” column of the 2023 Summary Compensation Table presented above under “Compensation of Executive Officers,” was $17,341,862. |

  175. PAY RATIO

    Based on this information, the ratio of the annual total compensation of Dr. Devgan to the median of the annual total compensation of all of Cadence’s employees other than Dr. Devgan is estimated to be 151 to 1.

  176. PAY RATIO

    | 84 | |

  177. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE As highlighted in “Compensation Discussion and Analysis,” one of the primary principles of our compensation program is to ensure that there is a substantial portion of compensation of executive officer pay that is at-risk and is highly dependent on Cadence’s short-term and long-term financial, operational, and stock price performance. For our executives, over 75% of their opportunity is tied to long-term equity incentives which will depend on our stock price performance while roughly 10% to 15% of our executive pay is tied to annual financial and operational performance. As a result, we would expect that our Compensation Actually Paid in the table below will have a stronger correlation with our TSR and stock price performance than our annual financial and operational performance. We expect a strong correlation to stock price performance through the combination of (a) having a significant portion of executive pay tied to long-term incentives (“LTI”) and (b) using options as part of our annual LTI mix (50% for our CEO and 34% for our other NEOs) and periodic LTP awards that require meeting material stock price growth hurdles before any value is delivered to our executives. Driven by continued strong business performance (including increased revenues, operating margin, and net income) Cadence’s stock price increased by approximately 70% in 2023. In the charts and descriptions of the relationships presented below we note the following:

  178. PAY VERSUS PERFORMANCE

    | (a) We show two Principal Executive Officers (“PEOs”) over the four-year period due to our CEO transition in 2021 (Dr. Devgan is PEO #1 for 2023, 2022 and 2021 and Mr. Tan is PEO #2 for 2021 and 2020). |

  179. PAY VERSUS PERFORMANCE

    | (b) There is a notable difference in the Compensation Actually Paid for 2020 compared to 2021 despite continued stock price performance in 2021. The higher Compensation Actually Paid values for 2020 when compared to 2021 reflect three primary factors: (a) the Compensation Actually Paid calculation measures the change in fair value of equity awards (not the absolute value), (b) our stock price grew 97% in 2020 compared to a 37% increase in 2021 indicating that the change in the fair value of equity awards would be larger in 2020 compared to 2021, and (c) we had five LTP tranches as part of the 2020 calculation (two outstanding LTP I awards and three outstanding LTP III awards) compared to four LTP tranches as part of the 2021 calculation (one outstanding LTP I award and three outstanding LTP III awards). |

  180. PAY VERSUS PERFORMANCE

    | (c) There is also a notable difference in the Compensation Actually Paid for 2023 compared to 2022 given strong stock price performance in 2023. The higher Compensation Actually Paid values for 2023 when compared to 2022 reflect two primary factors: (a) the Compensation Actually Paid calculation measures the change in fair value of equity awards (not the absolute value), (b) our stock price grew 70% in 2023 compared to a 14% decrease in 2022 indicating that the change in the fair value of equity awards would be larger in 2023 compared to 2022. |

  181. PAY VERSUS PERFORMANCE

    | | 85 |

  182. PAY VERSUS PERFORMANCE

    The following table sets forth additional compensation information of our PEO and our other (non-PEO) NEOs along with TSR, net income, and non-GAAP operating income performance results for our fiscal years 2020, 2021, 2022 and 2023.

  183. PAY VERSUS PERFORMANCE

    | | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year (1) | Summary Comp Table Total for PEO#1 (2) | Compensation Actually Paid to PEO#1 (3)(4) | Summary Comp Table Total for PEO#2 (2) | Compensation Actually Paid to PEO#2 (3)(5) | Average Summary Comp Table Total for non-PEO NEOs (2) | Average Compensation Actually Paid to non-PEO NEOs (3)(6) | Cadence Design Systems’ Total Shareholder Return (7) | Peer Group Total Shareholder Return (7) | GAAP Net Income | Non-GAAP Operating Income (8) | | (a) | (b) | (c) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | $17,341,862 | $119,135,192 | N/A | N/A | $5,291,144 | $34,337,386 | $393 | $211 | $1,041,144,000 | $1,717,212,000 | | 2022 | $32,216,034 | $24,757,155 | N/A | N/A | $10,293,930 | $7,377,865 | $232 | $135 | $848,952,000 | $1,436,000,000 | | 2021 | $21,735,794 | $39,820,493 | $11,166,016 | $60,351,290 | $5,188,515 | $14,539,214 | $269 | $190 | $695,955,000 | $1,111,000,000 | | 2020 | N/A | N/A | $9,604,640 | $93,290,140 | $4,251,412 | $21,315,667 | $197 | $142 | $590,644,000 | $944,000,000 |

  184. PAY VERSUS PERFORMANCE

    | (1) NEOs included in the above compensation columns reflect the following: |

  185. PAY VERSUS PERFORMANCE

    | Year | PEO #1 | PEO #2 | Non-PEO NEOs | | 2023 2022 | Dr. Devgan Dr. Devgan | — — | Messrs. Wall, Zaman, Cunningham and Teng Messrs. Wall, Zaman, Cunningham and Teng | | 2021 | Dr. Devgan | Mr. Tan | Messrs. Wall, Zaman, Teng and Beckley | | 2020 | — | Mr. Tan | Messrs. Devgan, Wall, and Teng and Ms. Flaminia |

  186. PAY VERSUS PERFORMANCE

    | (2) Amounts reported in this column represent (i) the total compensation as reported in the Summary Compensation Table for the applicable year in the case of Dr. Devgan and Mr. Tan (for each year they served as PEO) and (ii) the average of the total compensation as reported in the Summary Compensation Table for Cadence’s other NEOs for the applicable year. |

  187. PAY VERSUS PERFORMANCE

    | (3) The fair value or change in fair value, as applicable, of equity awards in the “Compensation Actually Paid” columns has been estimated pursuant to the guidance in Accounting Standards Codification Topic No. 718: Compensation–Stock Compensation (“ASC Topic 718”). The fair values of restricted share awards that are subject to solely service-based vesting criteria equals the closing price on applicable year-end date(s) or, in the case of vesting dates, the closing price on the applicable vesting dates. The fair values of LTP awards that vest upon the attainment of both stock price targets and TSR hurdles relative to a group of peer companies were estimated with a Monte Carlo simulation model as of the applicable year-end date(s) using the same methodology as used to estimate the grant date fair value, but using each company’s closing stock price on the applicable revaluation date as the current market price and volatility assumptions and risk free rates determined as of the revaluation date based on the length of the LTP award’s remaining performance measurement period. The vest date values of the LTP awards equals the closing price on the applicable vesting dates. The fair values of stock options were estimated using the Black Scholes option pricing model as of the applicable year-end or vesting date(s), using the same methodology as used to estimate the grant date fair value but using (a) the closing stock price on applicable revaluation date as the current market price, (b) an expected remaining life assumption that is based on the stock options remaining contractual term as the applicable revaluation date and the degree to which the revaluation date stock price is greater than or less than the exercise price, with stock options that have an exercise price that is less than the revaluation date stock price having a shorter remaining expected life and stock options that have an exercise price that is greater than the revaluation date stock price having a longer remaining expected life, (c) expected volatility assumptions and risk free rates determined as of the revaluation date based on the length of the expected remaining life, and (d) an expected dividend rate of 0%. For additional information on the assumptions used to estimate the fair value of the awards, see the Notes to Consolidated Financial Statements in Cadence’s Annual Reports on Form 10-K for the fiscal year ended December 31, 2023 and prior fiscal years. |

  188. PAY VERSUS PERFORMANCE

    | 86 | |

  189. PAY VERSUS PERFORMANCE

    | (4) Compensation Actually Paid to PEO #1 (Dr. Devgan) reflects the following adjustments from Total compensation reported in the Summary Compensation Table: |

  190. PAY VERSUS PERFORMANCE

    | | 2023 | | 2022 | | 2021 | | 2020 | | Total Reported in Summary Compensation Table (SCT) | | 17,341,862 | | 32,216,034 | | 21,735,794 | — | | Less, value of Stock Awards reported in SCT | ($ | 15,392,704 | ($ | 30,098,153 | ($ | 19,996,360) | — | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | | 20,512,907 | | 33,730,111 | | 20,926,797 | — | | Plus, Change in Fair Value of Prior Years awards that are Outstanding and Unvested | | 65,834,172 | ($ | 31,069,495) | ($ | 4,318,614) | — | | Plus, FMV of Awards Granted and Vested in the indicated Year | | 1,733,185 | | 962,229 | | 557,207 | — | | Plus, Change in Fair Value (from prior year-end) of Prior Year awards that Vested this year | | 29,105,769 | | 19,016,429 | | 20,915,668 | | | Less Prior Year Fair Value of Prior Year awards that Failed to vest this year | ($ | 0) | ($ | 0) | ($ | 0) | | | Total Adjustments | | 101,793,329 | ($ | 7,458,879) | | 18,084,699 | | | Actual Compensation Paid | | 119,135,192 | | 24,757,155 | | 39,820,493 | |

  191. PAY VERSUS PERFORMANCE

    | (5) Compensation Actually Paid to PEO #2 (Mr. Tan) reflects the following adjustments from Total compensation reported in the Summary Compensation Table: |

  192. PAY VERSUS PERFORMANCE

    | | 2023 | 2022 | 2021 | | 2020 | | | Total Reported in Summary Compensation Table (SCT) | — | — | | 11,166,016 | | 9,604,640 | | Less, value of Stock Awards reported in SCT | | — | ($ | 8,999,650) | ($ | 7,498,545) | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | — | — | | 12,344,763 | | 16,413,875 | | Plus, Change in Fair Value of Prior Years awards that are Outstanding and Unvested | — | — | | 6,806,871 | | 48,081,970 | | Plus, FMV of Awards Granted and Vested in the indicated Year | — | — | | 1,003,000 | | 1,244,473 | | Plus, Change in Fair Value (from prior year-end) of Prior Year awards that Vested this year | — | — | | 38,030,290 | | 25,443,727 | | Less Prior Year Fair Value of Prior Year awards that Failed to vest this year | — | — | ($ | 0) | ($ | 0) | | Total Adjustments | — | — | | 49,185,274 | | 83,685,500 | | Actual Compensation Paid | — | — | | 60,351,290 | | 93,290,140 |

  193. PAY VERSUS PERFORMANCE

    | | 87 |

  194. PAY VERSUS PERFORMANCE

    | (6) The average Compensation Actually Paid to the non-PEO NEOs reflects the following adjustments from Total compensation reported in the Summary Compensation Table: |

  195. PAY VERSUS PERFORMANCE

    | | 2023 | | 2022 | | 2021 | | 2020 | | | Total Reported in Summary Compensation Table (SCT) | | 5,291,144 | | 10,293,930 | | 5,188,515 | | 4,251,412 | | Less, value of Stock Awards reported in SCT | ($ | 4,105,718) | ($ | 9,032,300) | ($ | 3,999,937) | ($ | 3,206,240) | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | | 5,483,961 | | 10,165,513 | | 5,017,287 | | 6,219,548 | | Plus, Change in Fair Value of Prior Years awards that are Outstanding and Unvested | | 16,894,138 | ($ | 11,766,789) | ($ | 1,923,004) | | 8,360,210 | | Plus, FMV of Awards Granted and Vested in the indicated Year | | 314,241 | | 216,729 | | 208,366 | | 236,946 | | Plus, Change in Fair Value (from prior year-end) of Prior Year awards that Vested this year | | 10,459,620 | | 7,500,782 | | 10,047,986 | | 5,453,791 | | Less Prior Year Fair Value of Prior Year awards that Failed to vest this year | ($ | 0) | ($ | 0) | ($ | 0) | ($ | 0) | | Total Adjustments | | 29,046,242 | ($ | 2,916,064) | | 9,350,699 | | 17,064,255 | | Actual Compensation Paid | | 34,337,386 | | 7,377,865 | | 14,539,214 | | 21,315,667 |

  196. PAY VERSUS PERFORMANCE

    | (7) Peer group TSR reflects the S&P 500 Information Technology Index performance as reflected in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 pursuant to Item 201(e) of Regulation S-K. For Cadence’s and the peer group’s TSR, each year reflects what the cumulative value of $100 would be, including reinvestment of dividends, if such amount were invested on December 28, 2019. |

  197. PAY VERSUS PERFORMANCE

    | (8) We identified Non-GAAP Operating Income Dollars as our company selected measure which is defined as operating income adjusted for amortization of acquired intangibles, stock-based compensation expense, non-qualified deferred compensation expenses or credits, restructuring charges or credits, acquisition- and integration-related costs, and special charges. |

  198. PAY VERSUS PERFORMANCE

    | 88 | |

  199. Compensation Actually Paid versus Total Shareholder Return

    Compensation Actually Paid versus Total Shareholder Return As indicated above, we believe there is a strong alignment between Compensation Actually Paid and our TSR as we have outperformed our peer group. Specifically, when our stock price has grown (in 2020, 2021, and 2023), the Compensation Actually Paid has been above our Summary Compensation Table values and when our stock price has decreased (2022) the Compensation Actually Paid has been below our Summary Compensation Table values (and lower than prior years). The 2020 Compensation Actually Paid values for Mr. Tan reflect the impact of prior option awards and prior LTP awards that had meaningful changes in fair value because of our significant stock price gains in 2020. As noted above, the lower Compensation Actually Paid values in 2021 compared to 2020 are a result of several factors including lower price growth and fewer outstanding LTP awards included in the calculations. The higher Compensation Actually Paid values in 2023 compared to 2022 are a result of several factors including significant stock price growth and the use of options and periodic LTP grants in the program.

  200. Compensation Actually Paid versus Total Shareholder Return

    | | 89 |

  201. Compensation Actually Paid versus GAAP Net Income and

    Compensation Actually Paid versus GAAP Net Income and