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SCHEDULE 14A INFORMATION
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Cadence Design Systems, Inc.
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CADENCE DESIGN SYSTEMS, INC.
2655 SEELY AVENUE
SAN JOSE, CALIFORNIA 95134
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2001
------------------------
TO THE STOCKHOLDERS OF
CADENCE DESIGN SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CADENCE
DESIGN SYSTEMS, INC., a Delaware corporation, or Cadence, will be held on May
16, 2001, at 1:00 p.m. local time at 2655 Seely Avenue, Building 5, San Jose,
California 95134, for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve the Amended and Restated Senior Executive Bonus Plan.
3. To ratify the selection of Arthur Andersen LLP as independent auditors
of Cadence for its fiscal year ending December 29, 2001.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice.
The Board of Directors has fixed the close of business on March 23, 2001 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
R.L. Smith McKeithen
Secretary
San Jose, California
April 13, 2001
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
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CADENCE DESIGN SYSTEMS, INC.
2655 SEELY AVENUE
SAN JOSE, CALIFORNIA 95134
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 2001
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Cadence Design Systems, Inc., a Delaware corporation, or Cadence, for use at its
Annual Meeting of Stockholders to be held on May 16, 2001, at 1:00 p.m. local
time, or at any adjournment or postponement thereof, for the purposes set forth
in this proxy statement and in the accompanying notice of annual meeting. The
annual meeting will be held at 2655 Seely Avenue, Building 5, San Jose,
California 95134. Cadence intends to mail this proxy statement and accompanying
proxy card on or about April 13, 2001 to all stockholders entitled to vote at
the annual meeting.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Cadence's common stock, $0.01 par value per
share, at the close of business on March 23, 2001, referred to as the record
date, will be entitled to notice of and to vote at the annual meeting. At the
close of business on March 23, 2001, Cadence had outstanding and entitled to
vote approximately 244,716,706 shares of common stock.
Each holder of record of common stock on the record date will be entitled
to one vote for each share held on all matters to be voted upon at the annual
meeting. The presence in person or by proxy of a majority of the shares of
common stock outstanding on the record date is required for a quorum at the
annual meeting.
All votes will be tabulated by the inspector of elections appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved by a majority of the shares represented in person or by proxy and
entitled to vote.
SOLICITATION
Cadence will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding shares of the common stock beneficially owned by others
to forward to such beneficial owners. Cadence will reimburse persons
representing beneficial owners of its common stock for their costs of forwarding
solicitation materials to such beneficial owners. The solicitation of proxies
through this proxy statement may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other employees of Cadence. No
additional compensation will be paid to directors, officers or other employees
for such services.
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REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing a written
notice of revocation or a duly executed proxy bearing a later date with the
Secretary of Cadence at Cadence's principal executive offices, located at 2655
Seely Avenue, San Jose, California 95134, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
PROPOSAL 1
ELECTION OF DIRECTORS
Currently, there are nine directors serving on the Board of Directors, as
authorized by Cadence's Bylaws. The Nominating Committee of the Board of
Directors has recommended, and the Board has nominated, the eight nominees named
below for election to the Board of Directors. Each nominee listed below is
currently a director of Cadence. Except for Susan L. Bostrom, who was appointed
on February 7, 2001, all nominees were elected at the last annual meeting. One
of the incumbent directors, Carol A. Bartz, is not standing for re-election.
After the annual meeting, the Board of Directors plans to reduce the number of
authorized directors from nine to eight.
Each director elected at the annual meeting will hold office until the next
annual meeting of stockholders and until his or her successor is elected and has
qualified, or until such director's earlier death, resignation or removal.
Shares represented by executed proxies will be voted FOR the election of
the eight nominees named below, if authority to do so is not withheld. Directors
are elected by a plurality of the votes present in person or represented by
proxy and entitled to vote. Votes cannot be cast for greater than the number of
nominees listed below. In the event that any nominee should be unavailable for
election as a result of an unexpected occurrence, such shares will be voted for
the election of a substitute nominee named by Cadence. Each person nominated for
election has agreed to serve if elected, and management has no reason to believe
that any nominee will be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
EACH NAMED NOMINEE.
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NOMINEES
The names of the nominees, and certain information about them (including
their term of service), are set forth below:
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
--------------- --- -------------------- --------------
H. Raymond Bingham................... 55 President and Chief Executive Officer 1997
of Cadence
Susan L. Bostrom..................... 40 Senior Vice President, Internet 2001
Business Solutions Group, Cisco
Systems, Inc.
Dr. Leonard Y.W. Liu................. 59 President of ASE Group and Chief 1989
Executive Officer of ASE Test
Limited and Universal Scientific
Industrial Co. Ltd.
Donald L. Lucas...................... 71 Chairman of the Board of Cadence and 1988
private venture capital investor
Dr. Alberto 53 Professor of Electrical Engineering 1992
Sangiovanni-Vincentelli............ and Computer Sciences, University of
California, Berkeley
George M. Scalise.................... 66 President, Semiconductor Industry 1989
Association
Dr. John B. Shoven................... 53 Charles R. Schwab Professor of 1992
Economics, Stanford University
Roger S. Siboni...................... 46 President and Chief Executive 1999
Officer, E.piphany, Inc.
H. Raymond Bingham has served as President and Chief Executive Officer of
Cadence since May 1999. Mr. Bingham has been a director of Cadence since
November 1997. From 1993 to April 1999, Mr. Bingham served as Executive Vice
President and Chief Financial Officer of Cadence. Prior to joining Cadence, Mr.
Bingham was Executive Vice President and Chief Financial Officer of Red Lion
Hotels and Inns, an owner and operator of a chain of hotels, for eight years.
Mr. Bingham also is a director of Legato Systems, Inc., Onyx Software
Corporation, TenFold Corporation and KLA-Tencor Corporation.
Susan L. Bostrom has served as a director of Cadence since February 2001.
Ms. Bostrom has served as Senior Vice President, Internet Business Solutions
Group of Cisco Systems, Inc. since 1998, and joined Cisco as its Vice President
of Applications and Services Marketing in 1997. Prior to joining Cisco, Ms.
Bostrom served as Senior Vice President of Global Marketing and Strategic
Planning at FTP Software from 1996 to 1997. From 1993 to 1996, Ms. Bostrom
served as Director of Strategic Marketing at National Semiconductor Corporation,
a semiconductor manufacturing company.
Dr. Leonard Y.W. Liu has served as a director of Cadence since 1989. Dr.
Liu has served as President of ASE Group and Chief Executive Officer and a
director of ASE Test Limited and Universal Scientific Industrial Co. Ltd. since
October 1999. From 1995 to September 1999, Dr. Liu served as Chairman, President
and Chief Executive Officer of Walker Interactive Systems, Inc., a high-end
financial software company. From 1993 to 1995, Dr. Liu served as Chief Operating
Officer of Cadence. From 1989 until 1992, Dr. Liu was Chairman and Chief
Executive Officer of Acer America Corporation and President of Acer Group, a
personal computer manufacturer. Dr. Liu also serves as a director of Advanced
Semiconductor Engineering, Inc.
Donald L. Lucas has served as Chairman of the Board of Cadence since 1988.
From its inception in 1983 until 1987, Mr. Lucas served as Chairman of the Board
and a director of SDA Systems, Inc., a predecessor of Cadence. Mr. Lucas has
been a private venture capital investor since 1960. Mr. Lucas also serves as a
director of Macromedia, Inc., Preview Systems, Inc., Oracle Corporation,
Transcend Services, Inc. and Tricord Systems, Inc.
Dr. Alberto Sangiovanni-Vincentelli has served as a director of Cadence
since 1992. Dr. Sangiovanni-Vincentelli was named Chief Technology Advisor of
Cadence in June 1999, and prior to that time served as a consultant to Cadence
(or one of its predecessor corporations) since 1983. Dr. Sangiovanni-Vincentelli
has
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been Professor of Electrical Engineering and Computer Sciences at the University
of California at Berkeley since 1976.
George M. Scalise has served as a director of Cadence since 1989. Mr.
Scalise has served as President of the Semiconductor Industry Association, an
association of semiconductor manufacturers and suppliers, since June 1997. Mr.
Scalise served as Executive Vice President and Chief Administrative Officer of
Apple Computer, Inc. from March 1996 to May 1997. Mr. Scalise also served as
Senior Vice President of Planning and Development and Chief Administrative
Officer of National Semiconductor Corporation from 1991 to 1996. Mr. Scalise is
the Deputy Chairman of the Federal Reserve Bank of San Francisco.
Dr. John B. Shoven has served as a director of Cadence since 1992. Dr.
Shoven is currently the Charles R. Schwab Professor of Economics at Stanford
University. Dr. Shoven has been at Stanford University since 1973. Dr. Shoven
has served as director of the Stanford Institute for Economics Policy Research
since November 1999 and from 1989 to 1993. Dr. Shoven also served as Chairman of
the Economics Department from 1986 to 1989 and as Dean of the School of
Humanities and Science from 1993 to 1998.
Roger S. Siboni has served as a director of Cadence since January 1999. Mr.
Siboni has served as President and Chief Executive Officer of E.piphany Inc., a
software company which provides web-based enterprise relationship management
(ERM) solutions, since May 1997. Prior to joining E.piphany, Mr. Siboni spent
more than twenty years at KPMG Peat Marwick LLP, a worldwide accounting and
consulting organization, most recently as its Deputy Chairman and Chief
Operating Officer. Mr. Siboni also serves as a director of FileNET, Inc., Corio,
Inc. and the Walter A. Haas School of Business at the University of California
at Berkeley.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 30, 2000, the Board of Directors held
six meetings. The Board has an Audit Committee, a Compensation Committee, a
Nominating Committee and a Venture Committee.
The Audit Committee recommends the selection of independent auditors to the
Board of Directors, reviews the overall scope and procedures, as well as the
results, of the annual audit, and reviews the overall internal controls of
Cadence. The Board of Directors adopted a Charter for the Audit Committee in
February 2000. The Audit Committee is comprised of three non-employee directors,
Dr. Shoven and Messrs. Lucas and Siboni. During fiscal 2000, the Audit Committee
met four times. All members of the Audit Committee are "independent" and
"financially literate" as defined in the listing standards of the New York Stock
Exchange.
The Compensation Committee reviews and approves the general compensation
plans of Cadence, including Cadence's stock option, stock purchase and bonus
plans, and determines specific compensation matters, including salaries,
bonuses, stock options and incentive compensation, for the Chief Executive
Officer, or CEO, and other Executive Officers (as designated by Cadence or
otherwise covered as such under Rule 16b-3 of the Securities Exchange Act of
1934, as amended). The Compensation Committee also performs such other functions
regarding compensation as the Board may delegate. During fiscal 2000, the
Compensation Committee met three times and was comprised of three non-employee
directors, Dr. Shoven, Mr. Scalise and Carol A. Bartz. Ms. Bartz will no longer
serve on the Board of Directors or the Compensation Committee after the annual
meeting.
The Nominating Committee interviews, evaluates, nominates and recommends
individuals for membership on Cadence's Board of Directors and nominates
specific individuals for election as officers of Cadence by the Board. No
procedure has been established for the consideration of nominees recommended by
stockholders. The Nominating Committee met twice in fiscal 2000. The Nominating
Committee is comprised of Dr. Sangiovanni-Vincentelli and Messrs. Lucas and
Bingham.
The Venture Committee advises the Board of Directors and acts on behalf of
Cadence in monitoring its investment in Telos Venture Partners, L.P. The Venture
Committee is comprised of two directors, Messrs. Lucas and Bingham. The Venture
Committee met three times during fiscal 2000.
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During fiscal 2000, each Board member attended 75% or more of the meetings
of the Board, and of the committees on which he or she served, that were held
during the period for which he or she was a director or committee member.
COMPENSATION OF DIRECTORS
Each non-employee director of Cadence, other than the Chairman of the
Board, receives an annual retainer of $40,000. Mr. Lucas is paid an annual
retainer of $120,000 for his services as Chairman of the Board. In addition to
their annual Board retainer, directors are also paid an annual fee of $35,000
for service as Chairman of a committee of the Board. For the fiscal year ended
December 30, 2000, the total cash compensation paid to non-employee directors
was $500,000, excluding the consulting fee paid to Dr. Sangiovanni-Vincentelli,
described more fully below. The members of the Board are also eligible for
reimbursement of their expenses incurred in connection with attendance at Board
meetings in accordance with Cadence policy. Directors who are executive officers
of Cadence do not receive additional compensation for their service on the
Board.
Each "Non-Employee Director" of Cadence also receives stock option grants
under Cadence's 1995 Directors Stock Option Plan, or Directors Plan. A
Non-Employee Director is defined in the Directors Plan as a director of Cadence
who is not otherwise an employee or an affiliate of Cadence. Only Non-Employee
Directors are eligible to receive options under the Directors Plan.
Under the Directors Plan, each person who is first elected to be a
Non-Employee Director is automatically granted an option to purchase a number of
shares of common stock equal to 5,625 multiplied by the number of calendar
quarters occurring between the date on which such person begins serving as a
director of Cadence and the first April 1 following such person's becoming a
director of Cadence. These initial grants vest in full on the March 31st
following the grant date.
In addition, on April 1 of each year, each Non-Employee Director is
automatically granted an option to purchase 22,500 shares of common stock. On
each April 1, a Non-Employee Director may also be granted an option to purchase
11,250 shares of common stock if the Non-Employee Director is also serving as
Chairman of one committee of the Board and is a member of at least one
additional committee of the Board but is not serving as Chairman of the Board.
Also, on each April 1, a Non-Employee Director serving as Chairman of the Board
is automatically granted an additional option to purchase 22,500 shares of
common stock. All additional option grants vest in full one year following the
grant date.
Each Non-Employee Director who is a member of the Venture Committee of the
Board is automatically granted an additional option to purchase 33,750 shares of
common stock on the date of his or her initial selection to serve on the Venture
Committee. The Non-Employee Director who is serving as the Chairman of the
Venture Committee is on the date of his or her initial selection to serve as the
Chairman of the Venture Committee granted an additional option to purchase
33,750 shares of common stock. Prior to January 30, 1998, the Directors Plan
provided that a Non-Employee Director who completed five years of service as
Chairman of the Board would automatically receive a one-time option to purchase
135,000 shares of common stock; effective January 30, 1998, the number of shares
that in the future may be subject to such a one-time option grant was reduced to
101,250 shares. All options granted to members of the Venture Committee and the
one-time grant made to the Chairman of the Board vest over three years in equal
annual installments.
As of March 23, 2001, 1,258,125 shares subject to options under the
Directors Plan were outstanding at exercise prices ranging from $8.56 to $34.31
per share.
Pursuant to a consulting agreement with Cadence, Dr.
Sangiovanni-Vincentelli was paid $275,000 for his services as Chief Technology
Advisor to Cadence in 2000 and as a bonus for services performed in 1999. Dr.
Sangiovanni-Vincentelli's services consisted of providing technical direction
and strategic advice to Cadence. Dr. Sangiovanni-Vincentelli has provided
consulting services to Cadence since 1983, and is expected to render similar
services in 2001.
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PROPOSAL 2
APPROVAL OF THE AMENDED AND RESTATED SENIOR EXECUTIVE BONUS PLAN
In 1996, the Compensation Committee adopted, and Cadence's stockholders
subsequently approved, a cash incentive bonus plan for Cadence's CEO, referred
to as the CEO Bonus Plan. The CEO Bonus Plan was intended to serve as the
primary method for providing the CEO with cash incentive compensation.
In 1998, the Compensation Committee amended the CEO Bonus Plan, to (a)
extend eligibility to participate in the CEO Bonus Plan to those individuals who
were part of Cadence's senior executive staff, as designated by the CEO,
referred to collectively with the CEO as the Executives, (b) change the name of
the CEO Bonus Plan to the Senior Executive Bonus Plan, (c) authorize the
Compensation Committee to exercise positive discretion to increase the amount of
compensation payable under the Senior Executive Bonus Plan to an Executive who
was not a "covered employee" (that is, the CEO and the four highest compensated
executive officers on the last day of the company's taxable year) within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and
(d) provide for annual cash payments to the Executives based on the degree to
which Cadence achieved its goal for diluted earnings per share for the fiscal
year. This amendment of the CEO Bonus Plan was subsequently approved by
Cadence's stockholders.
In February 2001, the Board of Directors approved the amendment and
restatement of the Senior Executive Bonus Plan, subject to stockholder approval,
to authorize the Compensation Committee to (a) consider other relevant
performance criteria measured over all or part of the fiscal year in determining
performance bonus amounts, as described more fully below, and (b) exercise its
discretion to direct the payment of any additional amount to an Executive for
any fiscal year. A copy of the Senior Executive Bonus Plan is attached as
Exhibit A to this Proxy Statement.
The Amended and Restated Senior Executive Bonus Plan is being submitted for
the approval of the stockholders in order to allow Cadence to take a federal
income tax deduction for all performance-based cash payments under the Senior
Executive Bonus Plan to Executives without being limited by Section 162(m) of
the Internal Revenue Code of 1986, as amended. Section 162(m) limits to
$1,000,000 per year the deductibility of compensation paid to "covered
employees." However, compensation that satisfies the requirements for
"performance-based compensation" is not subject to this limit and, therefore, is
generally deductible in full by a corporate employer. One of the requirements
for this favorable tax treatment is stockholder approval of the material terms
of the proposed performance incentive compensation plan.
Stockholders are requested in this Proposal 2 to approve the Amended and
Restated Senior Executive Bonus Plan. The affirmative vote of the holders of a
majority of the shares present in person or represented by proxy and entitled to
vote at the annual meeting will be required to approve the Amended and Restated
Senior Executive Bonus Plan. Abstentions will be counted toward the tabulation
of votes cast and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum but are not counted for any purpose in determining
whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
The material terms of the Amended and Restated Senior Executive Bonus Plan,
referred to as the Bonus Plan below, are as follows (for the complete terms of
the Bonus Plan, see Exhibit A):
Eligibility: Only Executives may participate in the Bonus Plan.
Administration: The Compensation Committee administers the Bonus Plan.
Nature and Amount of Award: The Bonus Plan provides for annual cash
payments to the Executives. The amount of an annual performance-based payment
varies with the degree to which Cadence achieves its performance criteria. The
performance criteria can be measured individually or in combination and can be
applied to Cadence's performance as a whole or, alternatively, individual
business units of Cadence. In addition, the performance criteria can be measured
by Cadence's performance alone or, alternatively, relative
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to a designated group of comparable companies. The performance criteria will
include one or more of the following:
- cash flow
- earnings per share (including earnings before interest, taxes and
amortization)
- return on equity
- total stockholder return
- return on capital
- return on assets or net assets
- revenue
- income or net income
- operating income or net operating income
- operating profit or net operating profit
- operating margin
- return on operating revenue
- market share
- customer loyalty, as measured by a customer loyalty index determined by
an independent consultant expert in measuring such matters
- any other objective and measurable criteria tied to Cadence's performance
The performance bonus amounts payable to each Executive will be the product
of a target bonus multiplied by one or more factors, where each factor is based
on a relevant performance criterion and reflects the extent to which the targets
for such criterion are realized and the relative weight given to such
performance criterion. As determined by the Compensation Committee, any given
performance criterion may be measured over all or part of a fiscal year. The
Compensation Committee will establish these items for each fiscal year within
the first 90 days of the fiscal year, or within the first 25% of the days of any
shorter performance period.
The Compensation Committee may also direct that any performance bonus be
reduced below the amount as calculated above based on individual performance.
In addition to any performance bonus, the Compensation Committee may also,
in its discretion, direct the payment of any additional amount to an Executive
for any fiscal year, but this amount will not constitute performance-based
compensation for purposes of Section 162(m) of the Internal Revenue Code of
1986, as amended. No Executive's performance-based bonus under the Bonus Plan
may exceed $5,000,000 for a fiscal year.
Timing of Payment: Any annual payment under the Bonus Plan will be made as
soon as practicable after the end of the fiscal year, but only after the
Compensation Committee has certified that Cadence's performance criteria and
targets established for the relevant period have been met. The Executive must
remain employed by Cadence until the time the bonus is paid, except in the event
of death or disability, unless otherwise provided in a written agreement with
the Executive. If the Executive was not employed for the entire fiscal year, he
or she will be entitled to receive a prorated amount of the bonus.
Amendment and Termination: The Compensation Committee may terminate the
Bonus Plan at any time, for any or no reason, and may also amend the Bonus Plan
to reduce the amount of an Executive's bonus payment at any time, for any or no
reason.
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PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP as Cadence's
independent auditors for the fiscal year ending December 29, 2001, and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the annual meeting. Arthur Andersen LLP
has audited Cadence's financial statements since 1983. Representatives from
Arthur Andersen LLP are expected to be present at the annual meeting, will have
an opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions from stockholders.
Stockholder ratification of the selection of Arthur Andersen LLP as
Cadence's independent auditors is not required by Cadence's Bylaws or otherwise.
However, the Board is submitting the selection of Arthur Andersen LLP to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board, in their discretion, may direct the
appointment of different independent auditors at any time during the year, if
they determine that such a change would be in the best interests of Cadence and
its stockholders.
The Board recommends a vote FOR ratification of the selection of Arthur
Andersen LLP. The affirmative vote of the holders of a majority of the shares of
common stock present in person or represented by proxy and entitled to vote is
required to ratify the selection of Arthur Andersen LLP. Unless marked to the
contrary, proxies received will be voted FOR ratification of the selection of
Arthur Andersen LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews Cadence's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process. Cadence's independent auditors
are responsible for expressing an opinion on the conformity of Cadence's audited
financial statements to generally accepted accounting principles.
In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors the audited financial statements. The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committees). In addition, the Audit Committee has received from the
independent auditors the written disclosures required by Independence Standards
Board No. 1 (Independence Discussions with Audit Committee) and discussed with
them their independence from Cadence and its management. The Audit Committee has
also considered whether the independent auditors' provision of other non-audit
services to Cadence is compatible with the auditors' independence.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board of Directors
approved, the inclusion of the audited financial statements in Cadence's Annual
Report on SEC Form 10-K for the year ended December 30, 2000, for filing with
the SEC.
The foregoing Audit Committee report is not soliciting material, is not
deemed filed with the SEC and is not to be incorporated by reference in any
filing of Cadence under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after the
date hereof and irrespective of any general incorporation language in any such
filing.
AUDIT COMMITTEE
Donald L. Lucas, Chairman
John B. Shoven
Roger S. Siboni
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FEES BILLED TO COMPANY BY ARTHUR ANDERSEN LLP DURING FISCAL 2000
Audit Fees: Audit fees billed to Cadence by Arthur Andersen LLP during the
2000 fiscal year for review of Cadence's annual financial statements and those
financial statements included in its quarterly reports on Form 10-Q totaled
$934,000.
Financial Information Systems Design and Implementation Fees: Cadence did
not engage Arthur Andersen LLP to provide advice regarding financial information
systems design and implementation during the 2000 fiscal year.
All Other Fees: The aggregate of "All Other Fees" billed to Cadence by
Arthur Andersen LLP during fiscal 2000 for non-audit services totaled
$5,687,000. This figure includes fees billed for tax advisory, tax compliance,
internal audit services, business systems consulting and the separation from
Cadence and contemplated initial public offering of Tality Corporation.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of Cadence's common stock as of March 23, 2001 (unless otherwise indicated
below) by: (i) all those known by Cadence to be beneficial owners of more than
five percent of its common stock; (ii) each of the Executive Officers (or the
former Executive Officer) named in the Summary Compensation Table presented
below under "Compensation of Executive Officers -- Summary of Compensation";
(iii) all directors and director nominees and (iv) all Executive Officers and
directors of Cadence as a group.
BENEFICIAL OWNERSHIP(1)
-----------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
---------------- ---------- ----------
Capital Research and Management Company(2).................. 18,415,500 7.53%
333 South Hope Street
Los Angeles, CA 90071
Massachusetts Financial Services Company(3)................. 14,030,083 5.73%
500 Boylston Street
Boston, MA 02116
FMR Corp.(4)................................................ 36,843,560 15.06%
82 Devonshire Street
Boston, MA 02109
OppenheimerFunds, Inc.(5)................................... 21,047,160 8.60%
Two World Trade Center, 34th Floor
New York, NY 10048
Oppenheimer Global Fund(6).................................. 14,875,040 6.08%
6803 S. Tucson Way
Englewood, CO 80112
H. Raymond Bingham(7)....................................... 1,660,350 *
Kevin Bushby(7)............................................. 220,508 *
Adriaan Ligtenberg(7)(8).................................... 172,034 *
William Porter(7)........................................... 317,958 *
Ronald R. Barris(7)......................................... 111,152 *
Robert P. Wiederhold(7)..................................... 267,480 *
Carol A. Bartz(7)........................................... 125,000 *
Susan L. Bostrom(7)......................................... 5,625 *
Leonard Y.W. Liu, Ph.D.(7).................................. 216,500 *
Donald L. Lucas(7)(9)....................................... 447,500 *
Alberto Sangiovanni-Vincentelli, Ph.D.(7)................... 309,121 *
George M. Scalise(7)........................................ 212,500 *
John B. Shoven, Ph.D.(7).................................... 360,000 *
Roger S. Siboni(7).......................................... 50,625 *
All executive officers and directors as a group (15 4,490,498 1.83%
persons)(7)...............................................
- ---------------
* Less than 1%
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13G filed with the Securities and
Exchange Commission, referred to as the SEC. Unless otherwise indicated in
the footnotes to this table and subject to community property laws where
applicable, Cadence believes that each of the stockholders named in this
table has sole voting and investment power with respect to the shares
indicated as beneficially owned by such stockholder. Beneficial ownership of
greater than five percent of Cadence's outstanding common stock reflects
ownership as of the most recent date indicated under filings with the SEC as
noted below, while beneficial ownership of executive officers and directors
is as of March 23, 2001. Applicable percentages
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are based on 244,716,706 shares of Cadence common stock outstanding on March
23, 2001, adjusted as required by rules promulgated by the SEC.
(2) Capital Research and Management Company, or CRMC, filed with the SEC an
amended Schedule 13G dated February 12, 2001, indicating that CRMC holds
18,415,500 shares for which it has sole investment power. CRMC disclaims
beneficial ownership of any shares of Cadence's common stock deemed to be
beneficially owned by CRMC.
(3) Massachusetts Financial Services Company, or MFS, filed with the SEC an
amended Schedule 13G dated February 9, 2001, indicating that MFS holds
14,030,083 shares for which it has sole investment and sole voting power.
According to this Schedule 13G, 10,951,191 of these shares are also
beneficially owned by MFS Series Trust II -- MFS Emerging Growth Stock Fund
and 3,078,892 shares are also beneficially owned by certain non-reporting
entities as well as MFS.
(4) FMR Corp. filed with the SEC an amended Schedule 13G dated February 13,
2001, indicating that it holds 36,843,560 shares for which it has sole
investment power and 4,402,190 shares for which it has sole voting power.
According to this Schedule 13G, 32,069,470 shares are beneficially owned by
Fidelity Management & Research Company, a wholly-owned subsidiary of FMR
Corp. and an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, which acts as investment adviser to various
companies, 3,888,300 shares are beneficially owned by Fidelity Management
Trust Company, a wholly-owned subsidiary of FMR Corp., and a bank as defined
in Section 3(a)(6) of the Securities Exchange Act of 1934, and 882,800
shares are beneficially owned by Fidelity International Limited. Each of
Edward C. Johnson III, Chairman of FMR Corp., through its control of
Fidelity Management and Research Company, and the Fidelity Funds has sole
investment power over the 32,069,470 shares owned by the Fidelity Funds.
Each of Edward C. Johnson III and FMR Corp., through its control of Fidelity
Management Trust Company, has sole investment power over the 3,888,300
shares beneficially owned by Fidelity Management Trust Company and sole
voting power over 3,516,400 of such shares. Fidelity International Limited
holds 882,800 shares for which it has sole investment and sole voting power
and Abigail P. Johnson holds 2,990 shares for which she has sole voting and
sole investment power.
(5) OppenheimerFunds, Inc. has filed with the SEC a Schedule 13G dated February
13, 2001, indicating that it holds 21,047,160 shares for which it holds
shared investment power. OppenheimerFunds, Inc. disclaims beneficial
ownership of any shares of Cadence's common stock deemed to be beneficially
owned by OppenheimerFunds, Inc.
(6) OppenheimerFunds, Inc. filed a Schedule 13G dated February 13, 2001 on
behalf of Oppenheimer Global Fund, an investment company registered pursuant
to Section 8 of the Investment Company Act. Oppenheimer Global Fund holds
14,875,040 shares for which it has shared investment power and sole voting
power. Such shares are also included in OppenheimerFunds, Inc.'s 21,047,160
shares for which it holds shared investment power, discussed above in
footnote (5).
(7) Includes shares which certain executive officers, a former executive officer
and directors of Cadence have the right to acquire within 60 days after the
date of this table pursuant to outstanding options as follows: H. Raymond
Bingham, 1,553,015 shares; Kevin Bushby, 225,373 shares; Adriaan Ligtenberg,
169,999 shares; William Porter, 286,998 shares; Ronald R. Barris, 110,000
shares; Robert P. Wiederhold, 258,833 shares; Carol A. Bartz, 120,000
shares; Susan L. Bostrom, 5,625 shares; Leonard Y. W. Liu, Ph.D., 207,500
shares; Donald L. Lucas, 352,500 shares; Alberto Sangiovanni-Vincentelli,
Ph.D., 267,162 shares; George M. Scalise, 202,500 shares; John B. Shoven,
Ph.D., 345,000 shares; Roger S. Siboni, 50,625 shares; and all current
executive officers and directors as a group, 4,490,498 shares.
(8) Mr. Ligtenberg served until August 2000 as Senior Vice President,
Methodology Services and currently serves as Senior Vice President and
General Manager, eMerging Business.
(9) Includes 110,930 shares held under a trust agreement for the benefit of Mr.
Lucas and his wife.
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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of three
non-employee directors of Cadence. During the fiscal year, the Compensation
Committee met three times and was comprised of three non-employee directors, Dr.
Shoven, Mr. Scalise and Carol A. Bartz. Ms. Bartz will not continue to serve on
the Compensation Committee or the Board of Directors after the annual meeting.
COMPENSATION COMMITTEE POLICY
At or near the beginning of each fiscal year, the Compensation Committee
typically establishes base salary levels and target bonuses for the CEO and
other Executive Officers. The Compensation Committee acts on behalf of the Board
of Directors to establish the general compensation policy of Cadence for its
Executive Officers. The Compensation Committee administers the equity incentive
plans, including the Senior Executive Bonus Plan and Cadence's stock option
plans. The Compensation Committee believes that the compensation of the
Executive Officers should be greatly influenced by Cadence's performance.
Consistent with this philosophy, a designated portion of the compensation of
each Executive Officer is contingent upon corporate performance and adjusted
where appropriate, based on an Executive Officer's performance against personal
performance objectives. Long-term equity incentives for Executive Officers are
provided through the granting of stock options under Cadence's stock option
plans. The value of stock options generally can be realized by an Executive
Officer only if the price of common stock increases above the fair market value
on the grant date and the Executive Officer remains employed by Cadence for the
period required for the options to vest.
The base salaries, incentive compensation and stock option grants of the
Executive Officers are determined in part by the Compensation Committee in
reliance on surveys of prevailing competitive salaries and equity practices in
the technology sector for similar positions and by evaluating those salary
standards against the achievement by Cadence of its corporate goals. The cash
compensation of Cadence's Executive Officers was compared to equivalent data in
the Radford Survey and competitive market compensation levels to determine base
salary, target bonuses and target total cash compensation. The equity
compensation of the Executive Officers was compared to equivalent data in the
iQuantic Survey of prevailing competitive market equity practices to determine
stock option grants.
The Radford Survey and iQuantic Survey companies selected were intended to
match Cadence appropriately in terms of such things as product or industry,
geography and revenue levels. A significant percentage of the companies in the
Radford Survey and iQuantic Survey bases, for instance, had average sales that
closely approximate Cadence's revenue level. A portion of the companies in the
S&P Technology Sector Index, or S&P TS Index, which is used by Cadence in
preparing the stock price performance graph, was included in the Radford Survey
and iQuantic Survey. The balance of the S&P TS Index companies, however, was too
large or of a different business profile, and would have incorrectly increased
the market compensation comparisons used to evaluate Executive Officer salaries.
The additional companies in the Radford Survey and iQuantic survey bases were
believed to be relevant by Cadence's independent compensation consultants
because they compete for executive talent with Cadence, notwithstanding the fact
that they are not included in the S&P TS Index.
2000 EXECUTIVE COMPENSATION
Base Compensation. The Radford Survey information, together with the CEO's
recommendation of base salary and target bonus for 2000 for each Executive
Officer other than the CEO, was presented to the Committee in January 2000. The
Compensation Committee reviewed the recommendation of the CEO and the Radford
Survey data outlined above and established a base salary level to be effective
January 1, 2000 for each Executive Officer (see specific report on CEO
compensation below).
Incentive Compensation. The Compensation Committee reviewed the Senior
Executive Bonus Plan and the Cadence performance objectives to be used for
purposes of bonus determination within the first 90 days of fiscal 2000. The
Compensation Committee assigned a target bonus to each Executive Officer, which
was either a precise dollar figure or a percentage of the Executive Officer's
base salary. The Compensation
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Committee also approved the performance objectives to be used for bonus
determination, and the overall structure and mechanics of the Senior Executive
Bonus Plan. In January 2001, the Compensation Committee determined bonus awards
for 2000 for Executive Officers pursuant to the Senior Executive Bonus Plan.
Bonuses were determined with reference to the percentage relationship of actual
to targeted realization of the Cadence performance objectives, without
adjustment for individual performance.
Stock Purchase Program. In May 2000, the Compensation Committee adopted a
Stock Purchase Program to assist Cadence's efforts to attract and retain key
Cadence employees and to provide incentive to those employees who are critical
to the success of a business unit that is eventually intended to be separated
from Cadence. Under this program, Executive Officers and other selected Cadence
employees are offered the opportunity to purchase from Cadence stock of one or
more of the new entities holding these business units at a price equal to the
fair market value of the stock at the time of purchase. In connection with the
formation of each new entity, Cadence's Board of Directors or Compensation
Committee approves the total number of shares eligible for purchase by Cadence
employees under the Stock Purchase Program, as well as specific allocations of
shares offered to the CEO and the other Executive Officers. To date, the maximum
number of shares of any particular entity approved for sale to Cadence employees
generally has not exceeded 5% of the entity's total outstanding shares on a
fully-diluted basis. Available shares are generally allocated between two groups
of employees. The first group includes the CEO and certain Senior Vice
Presidents deemed critical to the success of the new entity as approved by the
Compensation Committee. The second group is comprised of Executive Officers,
Corporate Vice Presidents and other individuals (who need not be members of
management) selected by the CEO. The stock purchased by participants may be
subject to vesting restrictions based upon the employee's continued employment,
as determined in each case by the CEO. The subscription agreements for shares
purchased under the Stock Purchase Program permit Cadence (i) a right of first
refusal to purchase the shares, (ii) a right to repurchase the shares at the
original purchase price upon termination of a participant's employment other
than involuntary termination without cause at any time before the expiration of
any applicable vesting period, and (iii) a right to cause all participants to
sell their shares if Cadence wishes to sell the entity to a third party. During
2000, all of Cadence's Executive Officers participated in the Stock Purchase
Program.
Stock Options. Stock options typically have been granted to executives when
the executive joins Cadence, in connection with a significant change in
responsibilities and, occasionally, to achieve equity within a peer group. Stock
options were granted to two of the Named Executive Officers appearing in the
Summary Compensation Table below who became executive officers in fiscal 2000,
Messrs. Barris and Bushby. The Compensation Committee also grants stock options
to executives to provide ongoing incentives. The number of shares subject to
each stock option granted is based on anticipated future contribution and
ability to impact corporate and/or business unit results, past performance or
consistency within the executive's peer group. The iQuantic Survey data was also
used for general comparison purposes in determining stock option grants to
executives. The stock options generally become exercisable over a four-year
period and are granted at a price that is equal to the fair market value of
Cadence's common stock on the date of grant. The stock options have a ten-year
term. In December 2000, after evaluating 2000 performance and compensation
levels, the Compensation Committee, in its discretion, granted stock options to
the CEO.
2000 CEO COMPENSATION
Compensation for the CEO is determined through a process similar to that
discussed above for the other Executive Officers.
Mr. Bingham's base salary, target bonus, performance objectives, and
schedule of adjustment to the target bonus were established by the Committee
within the first 90 days of fiscal 2000. Mr. Bingham's base salary level and
target bonus were based upon the Compensation Committee's discretionary
evaluation of a number of factors, including the Radford Survey. For fiscal
2000, the Compensation Committee established Mr. Bingham's base salary at
$700,027 and awarded Mr. Bingham a cash bonus of $1,225,000. Mr. Bingham's bonus
was determined with reference to the percentage relationship of actual to
targeted realization of Cadence's performance objectives, without adjustment for
individual performance.
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Mr. Bingham was awarded stock option grants on January 14, 2000 for 350,000
shares and on December 4, 2000 for 500,000 shares of Cadence's common stock.
With respect to the stock option grants, the Compensation Committee, in
determining the size of the awards, took into account market data from companies
similar to Cadence, the iQuantic Survey, and the number of options previously
awarded to Mr. Bingham.
Mr. Bingham also participated in the Stock Purchase Program described
above.
COMPLIANCE WITH SECTION 162(m) OF THE INTERNAL REVENUE CODE OF 1986
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Internal Revenue Code of 1986, as amended. Section 162(m) limits deductions for
certain executive compensation in excess of $1,000,000 in any given year.
Certain types of compensation are deductible only if performance criteria are
specified in detail and payments are contingent on stockholder approval of the
compensation arrangement. Cadence believes that it is in the best interests of
its stockholders to structure compensation arrangements to achieve deductibility
under Section 162(m), except where the benefit of such deductibility is
outweighed by the need for flexibility or the attainment of other corporate
objectives. The Compensation Committee will continue to monitor issues
concerning the deductibility of executive compensation and will take appropriate
action if and when it is warranted. Since corporate objectives may not always be
consistent with the requirements for full deductibility, the Compensation
Committee is prepared, if it deems appropriate, to enter into compensation
arrangements under which payments may not be deductible under Section 162(m).
Thus, deductibility will not be the sole factor used by the Compensation
Committee in ascertaining appropriate levels or modes of compensation. The
Compensation Committee believes that all compensation realized in 2000 by the
Executive Officers is deductible under Section 162(m).
The foregoing Compensation Committee Report on Executive Compensation will
not be deemed to be incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended, except to the extent that Cadence specifically incorporates
this information by reference, and will not otherwise be deemed filed under such
Acts.
COMPENSATION COMMITTEE
John B. Shoven, Chairman
Carol A. Bartz
George M. Scalise
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is or ever was a Cadence officer or
employee. No member of the Compensation Committee is, or was during 2000, an
executive officer of another company whose board of directors has a comparable
committee on which one of Cadence's executive officers serves.
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COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows for fiscal years 1998, 1999 and 2000,
compensation awarded or paid to, or earned by, Cadence's six most highly
compensated executive officers or former executive officers at December 30,
2000, including Cadence's Chief Executive Officer, referred to as the Named
Executive Officers:
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION(1) ---------------------
--------------------- NUMBER OF SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) UNDERLYING OPTIONS(#) COMPENSATION(2)($)
--------------------------- ---- --------- --------- --------------------- ------------------
H. Raymond Bingham............. 2000 700,027 1,225,000 850,000 4,087
President and 1999 621,474 -- 1,200,000 47,149
Chief Executive Officer 1998 450,000 522,315 700,000 3,200
Ronald R. Barris(3)............ 2000 375,014 568,750 100,000 --
Senior Vice President, 1999 14,580 50,000 300,000 --
Corporate Strategy and
Services 1998 -- -- -- --
Kevin Bushby(4)................ 2000 315,189 601,348 150,000 99,504
Senior Vice President, 1999 281,162 233,021 150,000 295,076
Worldwide Field Operations 1998 264,269 -- 110,000 623,266
Adriaan Ligtenberg(5).......... 2000 300,012 526,500 -- 658
Senior Vice President, 1999 95,577 77,656 550,000 --
Methodology Services 1998 -- -- -- --
William Porter................. 2000 350,013 437,500 -- 2,229
Senior Vice President and 1999 268,505 112,500 400,000 24,516
Chief Financial Officer 1998 186,106 170,225 95,000 2,995
Robert P. Wiederhold(6)........ 2000 350,012 271,000 -- 4,380
President and Chief Executive 1999 281,250 151,875 350,000 37,298
Officer, Tality Corporation 1998 197,372 199,650 100,000 --
- ---------------
(1) Includes amounts deferred pursuant to Section 401(k) of the Internal Revenue
Code of 1986, as amended.
(2) Represents Cadence's contributions to 401(k) savings plan for each executive
except Mr. Bushby. In 2000, also includes Mr. Bushby's car allowance in the
amount of $22,395 and payments in lieu of a United Kingdom pension plan of
$77,109, but does not include Cadence's loan to Mr. Barris for the purchase
of a residence. See "Certain Transactions" for a description of the loan to
Mr. Barris. In 1999, also includes (i) the value of accrued but unused
vacation converted into cash in the amount of $44,349 for Mr. Bingham and
$18,080 for Mr. Porter, (ii) for Mr. Porter, $4,105 comprised of a non-cash
bonus and (iii) for Mr. Bushby, a car allowance in the amount of $24,273,
payments in lieu of a United Kingdom pension plan of $52,532 and sales
commissions of $218,271. In 1998, also includes for Mr. Busby, a car
allowance in the amount of $22,460, payments in lieu of a United Kingdom
pension plan of $78,643 and sales commissions of $522,163.
(3) Mr. Barris began serving as Senior Vice President, Services in August 2000.
(4) Mr. Bushby began serving as Senior Vice President, Worldwide Field
Operations in May 2000.
(5) Mr. Ligtenberg began serving as Senior Vice President, Methodology Services
in February 2000. Since August 2000, Mr. Ligtenberg has served as Senior
Vice President and General Manager, eMerging Business.
(6) Until July 2000, Mr. Wiederhold served as Senior Vice President of the
Worldwide Design Services Group, which now operates as an indirect
subsidiary of Cadence named Tality Corporation. Since its formation in July
2000, Mr. Wiederhold has served as President and Chief Executive Officer of
Tality
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Corporation. In connection with Tality Corporation's formation, Mr.
Wiederhold was granted an option to purchase 3,825,000 shares of Tality
Corporation.
STOCK OPTION GRANTS AND EXERCISES
During the fiscal year ending December 30, 2000, Cadence granted options to
its executive officers under Cadence's stock option plans. The following tables
show for the fiscal year, certain information regarding options granted to,
exercised by, and held at year end by, the Named Executive Officers:
INDIVIDUAL GRANTS
------------------------- POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES IN EXERCISE OR FOR OPTION TERM(1)
OPTIONS FISCAL BASE PRICE EXPIRATION --------------------------
NAME GRANTED(#) YEAR ($/SH) DATE 10%($) 5%($)
---- ---------- ------------ ----------- ---------- ------------ -----------
H. Raymond Bingham........... 350,000(2) 2.28% 21.50000 1/14/2010 11,992,912 4,732,432
500,000(2) 3.26% 24.40625 12/4/2010 19,448,638 7,674,480
Ronald R. Barris............. 100,000(2) 0.65% 14.68750 5/19/2010 923,689 2,340,809
Kevin Bushby................. 150,000(2) 0.98% 14.68750 5/19/2007 896,893 2,090,142
Adriaan Ligtenberg........... -- -- -- -- -- --
William Porter............... -- -- -- -- -- --
Robert P. Wiederhold(3)...... -- -- -- -- -- --
- ---------------
(1) Calculated on the assumption that the market value of the underlying stock
increases at the stated values compounded annually for the term of the
option.
(2) These option grants generally vest at the rate of 1/48 of the shares subject
to the option each month following the grant date.
(3) Mr. Wiederhold was granted an option to purchase 3,825,000 shares of Tality
Corporation at $6.25 per share in July 2000. This option grant vests in full
seven years from the date of grant and expires on July 13, 2010. The
potential realizable values at assumed annual rates of 10% and 5% stock
price appreciation for the option term are $38,100,406 and $15,034,512,
respectively, based on the fair market value of Tality Corporation common
stock ($6.25) on the date of grant. In the event that Mr. Wiederhold
surrenders existing Cadence unvested options on or before July 13, 2001,
this option grant will accelerate to vest in four equal installments
commencing one year from the date of grant. Mr. Wiederhold received 27.33%
of options for common stock granted to employees of Tality Corporation in
fiscal 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON VALUE OPTIONS AT 12/30/00 IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED EXERCISABLE/ 12/30/00 EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE(#) UNEXERCISABLE($)(2)
---- ----------- -------- ---------------------- -----------------------
H. Raymond Bingham............... -- -- 1,174,473/2,034,793 14,811,755/15,416,626
Ronald R. Barris................. -- -- 74,583/ 325,417 650,178/ 2,934,197
Kevin Bushby..................... 10,000 180,625 153,708/ 302,792 1,580,508/ 3,191,179
Adriaan Ligtenberg............... 40,000 406,875 45,833/ 464,167 568,329/ 4,864,171
William Porter................... -- -- 236,165/ 329,835 2,998,657/ 4,206,969
Robert P. Wiederhold(3).......... -- -- 221,332/ 436,668 3,014,277/ 5,561,581
- ---------------
(1) Value realized is based upon the fair market value of common stock on the
date of exercise less the exercise price and does not necessarily indicate
that the optionee sold such stock.
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(2) The fair market value of common stock at December 30, 2000 ($27.50) less the
exercise price for the options.
(3) Mr. Wiederhold also holds no exercisable and 3,825,000 unexercisable options
for Tality Corporation common stock, none of which is currently
in-the-money.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL AGREEMENTS
EMPLOYMENT AGREEMENT WITH H. RAYMOND BINGHAM
Effective April 26, 1999, Cadence entered into an employment agreement,
referred to as the Employment Agreement, with Mr. Bingham, which superseded
employment agreements with Mr. Bingham entered into in May 1993 and November
1997. The Employment Agreement provides, among other things, for Mr. Bingham's
employment as President and Chief Executive Officer at an initial base salary of
$700,000 per year. Under the Employment Agreement, Mr. Bingham is also eligible
for participation in the Bonus Plan at an annual target bonus of $700,000 per
year. The Employment Agreement also provided for the grant of a stock option for
850,000 shares of common stock. The option was granted by the Compensation
Committee to Mr. Bingham on May 7, 1999. The Employment Agreement also provides
for the indemnification of Mr. Bingham in accordance with the terms of the
indemnification agreement entered into between Cadence and Mr. Bingham.
Additionally, the Employment Agreement provides that Mr. Bingham will receive
such benefits as the Board of Directors may, from time to time, determine to
provide for Cadence's key executives.
Under the Employment Agreement, Mr. Bingham's employment by Cadence
terminates immediately upon Mr. Bingham's receipt of a written notice of
termination by Cadence, upon Cadence's receipt of written notice of termination
by Mr. Bingham, or upon Mr. Bingham's permanent disability or death. In the
event of termination of his employment other than (i) for "cause", such as Mr.
Bingham's gross misconduct, fraud, or material breach, (ii) on account of Mr.
Bingham's permanent disability, or (iii) by Mr. Bingham's voluntary termination
for other than "good reason," which term includes an involuntary demotion, an
involuntary reduction in compensation (including base compensation, fringe
benefits or target bonus) of more than 10%, or an involuntary relocation of more
than 30 miles, the Employment Agreement provides that Cadence will pay an amount
equal to 180% of one year's base salary and annual target bonus at the time of
termination to Mr. Bingham in one lump sum payment. Mr. Bingham would also
continue to receive all health, disability and life insurance coverage for a 12
month period after termination of employment. Additionally, all of the unvested
options held by Mr. Bingham on the date of such termination that would have
vested over the succeeding 30 month period, except any performance-based
options, will immediately vest and become exercisable in full. The options will
remain exercisable for the period specified in such option agreements.
Should a change of control in the ownership of Cadence occur, and Mr.
Bingham's employment with Cadence is terminated other than (i) for cause, (ii)
on account of total disability or death, or (iii) by a voluntary termination by
Mr. Bingham for other than good reason, in each case within 13 months after a
change in control, then the Employment Agreement provides that (1) Cadence will
pay in one lump sum an amount equal to 250% of one year's base salary and annual
target bonus for Mr. Bingham at the time of his termination, as in effect
immediately prior to such termination, and (2) all unvested options held by Mr.
Bingham on the date of such change in control will immediately vest and become
exercisable in full and will remain exercisable for the period specified in such
option agreements.
In the event that the severance and other benefits provided to Mr. Bingham
constitute "parachute payments" subject to federal excise tax, then Mr.
Bingham's benefits under the change of control provisions of the Employment
Agreement will be payable either (i) in full, or (ii) as to such lesser amount
which would result in no excise tax, whichever amount leaves Mr. Bingham with
the greatest amount of benefits on an after-tax basis.
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TALITY CORPORATION'S EMPLOYMENT AGREEMENT WITH ROBERT P. WIEDERHOLD
Tality Corporation, or Tality, a private indirect subsidiary of Cadence,
entered into an at-will employment agreement with Mr. Wiederhold in July 2000.
In the event of termination of Mr. Wiederhold's employment other than (i) for
"cause", such as Mr. Wiederhold's gross misconduct, fraud, or material breach,
(ii) on account of Mr. Wiederhold's permanent disability or (iii) by Tality's
"constructive termination" of Mr. Wiederhold, which term includes an involuntary
demotion, an involuntary reduction in compensation (including base compensation,
fringe benefits or target bonus) of more than 10%, or an involuntary relocation
of more than 30 miles, Tality will pay Mr. Wiederhold his base salary for 12
months immediately following termination. In addition, Tality will pay Mr.
Wiederhold his prorated target bonus through the date of termination and an
additional 12 months' bonus at the same rate. Mr. Wiederhold will also be
entitled to the immediate vesting of all unvested Tality options, which will
remain exercisable for the period specified in the relevant option agreements.
Mr. Wiederhold will also be entitled to these benefits in the event of a
termination upon a change of control of Tality.
In the event that any of the severance and other benefits provided to Mr.
Wiederhold constitute "excess parachute payments" subject to federal excise tax,
then Mr. Wiederhold, in his sole discretion, may elect to reduce the amounts
payable under the retention agreement or to have any portion of the applicable
options or restricted stock not vest in order to avoid any "excess parachute
payment."
CHANGE-IN-CONTROL AGREEMENTS
Cadence has entered into a change-in-control agreement with each of William
Porter, Kevin Bushby, and Ronald R. Barris, referred to in this and the next
paragraph as the Executives. If a change in control of the ownership of Cadence
occurs and the Executive's employment with Cadence is terminated within 13
months after the change in control other than (i) for cause, such as the
Executive's gross misconduct, fraud or improper disclosure or use of
confidential business information, (ii) on account of the Executive's total and
permanent disability or death or (iii) by a voluntary termination by the
Executive for other than "good reason", which term includes an involuntary
relocation of more than 50 miles, a reduction in base salary and target bonus of
more than 10% and a material reduction in the Executive's duties and
responsibilities, then Cadence will pay to the Executive an amount equal to one
year of his base salary at the time of termination in one lump sum payment.
Cadence will also pay the Executive's target bonus for the year of termination
as in effect immediately prior to such termination. Additionally, all unvested
Cadence options held by the Executive on the date of such change in control will
immediately vest and become exercisable in full and will remain exercisable for
the period specified in such option agreements.
In the event that any of the severance and other benefits provided to an
Executive constitute "excess parachute payments" subject to federal excise tax,
then the Executive, in his sole discretion, may elect to reduce the amounts
payable under the change-in-control agreement or to have any portion of the
applicable options or restricted stock not vest in order to avoid any "excess
parachute payment."
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PERFORMANCE MEASUREMENT COMPARISON
The following graph shows the total stockholder return of an investment of
$100 in cash on December 31, 1994 for (i) Cadence's common stock, (ii) the
Standard & Poor's 500 Composite Index, referred to as the S&P 500, and (iii) the
Standard & Poor's Technology Sector Index. All values assume reinvestment of the
full amount of all dividends and are calculated as of December 31 of each year.
This Section is not soliciting material, is not deem filed with the SEC and
is not to be incorporated by reference in any filing of Cadence under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
- ------------------------------------------------------------------------------------------
Cumulative Total Return
- ------------------------------------------------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99 12/00
- ------------------------------------------------------------------------------------------
CADENCE DESIGN
SYSTEMS, INC. 100 305.45 430.91 534.55 649.09 523.64 600.00
- ------------------------------------------------------------------------------------------
S&P 500 100 137.58 169.17 225.61 290.09 351.13 319.16
- ------------------------------------------------------------------------------------------
S&P TECHNOLOGY
SECTOR 100 144.04 204.35 257.67 445.72 780.60 468.75
- ------------------------------------------------------------------------------------------
COMPARISON OF 6 YEAR CUMULATIVE TOTAL RETURN
AMONG CADENCE DESIGN SYSTEMS, INC.,
THE S & P 500 INDEX AND THE S & P TECHNOLOGY SECTOR INDEX
[PERFORMANCE GRAPH]
SOURCE: RESEARCH DATA GROUP, INC.
CERTAIN TRANSACTIONS
All transactions from January 1, 2000 to the present between Cadence and
any current executive officer or director have been approved by a majority of
the disinterested members of the Board of Directors.
INDEMNIFICATION AGREEMENTS
Cadence's Bylaws provide that Cadence will indemnify its directors,
officers and employees to the fullest extent permitted by Delaware General
Corporation Law. Cadence's Bylaws also authorize the Board of Directors to cause
Cadence to enter into indemnification contracts with its directors, officers and
employees and to purchase insurance on behalf of any person it is permitted to
indemnify. Pursuant to these Bylaw
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provisions, Cadence has entered into indemnity agreements with each of its
directors and each of the Named Executive Officers.
Each indemnity agreement provides, among other things, that Cadence will
indemnify each such individual to the extent provided in the agreement, for
expenses, witness fees, damages, judgments, fines and amounts paid in settlement
and any other amounts that such individual becomes legally obligated to pay
because of any claim or claims made against or by him or her in connection with
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative, to which such
individual is or may be made a party by reason of his or her position as a
director, officer, employee or other agent of Cadence, and otherwise as may be
provided to such individual by Cadence under the non-exclusivity provisions of
the Delaware General Corporation Law and Cadence's Bylaws.
INDEBTEDNESS OF MANAGEMENT
Stock Purchase Program. During 2000, all Cadence executive officers were
granted the right to purchase shares of common stock of one or more of three new
Cadence-sponsored entities. These entities were SpinCircuit, Inc., Alchemy
Semiconductor, Inc. and Tality Corporation.
The percentages of the total number of outstanding shares of stock of these
new entities, on a fully-diluted basis, purchased by the executive officers
ranged as follows: H. Raymond Bingham, President, CEO and a director of Cadence,
0.2% to 0.8%; William Porter, Senior Vice President and Chief Financial Officer,
0.1% to 0.2%; Ronald R. Barris, Senior Vice President, Corporate Strategy and
Services, 0.1% to 0.2%; Kevin Bushby, Senior Vice President, Worldwide Field
Operations, 0.1% to 0.2%; Adriaan Ligtenberg, Senior Vice President, eMerging
Business, 0.1% to 0.6%; R.L. Smith McKeithen, Senior Vice President, General
Counsel and Secretary, 0.1% to 0.2%; Robert P. Wiederhold, President and Chief
Executive Officer of Tality Corporation, 0% to 0.2%; and Robert A. Promm, Vice
President and Corporate Controller, 0% to 0.02%. In partial payment of the
purchase price of their shares of Tality Corporation common stock allocated
under the Stock Purchase Program, in July 2000, the following executive officers
of Cadence issued to Cadence secured promissory notes, all bearing interest at
an annual rate of 6.51%, compounding every six months, in the following
principal amounts: H. Raymond Bingham, $1,875,000; William Porter, $625,000;
R.L. Smith McKeithen, $625,000; Kevin Bushby, $406,250; Ronald R. Barris,
$625,000; and Robert A. Promm, $93,750. Each note is secured by the purchased
Tality shares but includes full recourse against the purchaser.
Ronald R. Barris. In September 2000, in connection with Ronald R. Barris'
relocation to California, Cadence loaned Mr. Barris $2,803,000 for the purchase
of a residence. The loan bears interest at the applicable federal rate and is
secured by a first mortgage. The loan is due on September 18, 2008, or earlier
if Mr. Barris leaves Cadence's employ or sells the residence. Mr. Barris has the
right to demand that Cadence purchase the residence from him in exchange for a
cash payment of $100,000 and the retirement of the loan, referred to
collectively as the Option Consideration. Mr. Barris' put option is exercisable
at any time before the earlier of (i) the 30th day after the termination of Mr.
Barris' employment with Cadence, (ii) the payment in full of the loan or (iii)
September 18, 2008. Cadence has a call option to purchase the residence for the
Option Consideration at any time within 180 days after termination of Mr.
Barris' employment. If Mr. Barris sells the residence at any time before the
181st day after the termination of his employment with Cadence, then Cadence
will be entitled to 90% of the "Resale Participation," which is defined as the
amount by which the sales price exceeds $2,903,000, if any. In the event of the
exercise of either these put or call options, Cadence will pay reasonable
closing costs incurred in connection therewith. If Mr. Barris makes substantial
capital improvements to the residence that Cadence approves in advance, the
Option Consideration will be increased by Mr. Barris' reasonable cost of such
improvements and the Resale Participation will be decreased by Mr. Barris'
reasonable cost of such improvements, respectively.
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OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own more than ten percent of a
registered class of Cadence's equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of common stock and our
other equity securities. Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish Cadence with copies of
all Section 16(a) forms they file.
To Cadence's knowledge, based solely on a review of the copies of such
reports furnished to us and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to our officers,
directors and greater than ten percent beneficial owners were complied with for
our 2000 fiscal year.
STOCKHOLDER PROPOSALS
From time to time, Cadence stockholders submit proposals that they believe
should be voted upon at the annual meeting or nominate persons for election to
the Board of Directors. Pursuant to Rule 14a-8 of the Securities Exchange Act of
1934, certain stockholder proposals may be eligible for inclusion in Cadence's
proxy statement and form of proxy in connection with our 2002 Annual Meeting of
Stockholders. Such stockholder proposals must be submitted in writing to the
Secretary of Cadence no later than December 14, 2001 in order to be included in
the proxy statement and form of proxy relating to Cadence's 2002 Annual Meeting
of Stockholders. The submission of a stockholder proposal does not guarantee
that it will be included in Cadence's proxy statement and form of proxy.
Alternatively, under Cadence's Bylaws, any nominations or proposals which
the stockholder does not seek to include in Cadence's proxy statement and form
of proxy pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 must
be submitted in writing to our Corporate Secretary no later than February 15,
2002, nor earlier than January 16, 2002, and must otherwise satisfy the
requirements of Cadence's Bylaws. If the date of the 2002 Annual Meeting of
Stockholders changes by more than 30 days from the date of the 2001 Annual
Meeting, such stockholder proposals or nominations must be submitted in writing
to our Corporate Secretary no later than 10 days following the first public
announcement of the date of the meeting. If the stockholder does not also comply
with the requirements of Rule 14a-4, Cadence may exercise discretionary voting
authority under proxies it solicits to vote in accordance with its best judgment
on any such stockholder proposal or nomination submitted by a stockholder.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the annual meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
R.L. Smith McKeithen
Secretary
April 13, 2001
A COPY OF CADENCE'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 30, 2000 IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO: INVESTOR
RELATIONS, CADENCE DESIGN SYSTEMS, INC., 2655 SEELY AVENUE, SAN JOSE, CALIFORNIA
95134.
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EXHIBIT A
CADENCE DESIGN SYSTEMS, INC.
SENIOR EXECUTIVE BONUS PLAN
AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 2001
1. PURPOSE.
The purpose of the Senior Executive Bonus Plan ("Plan") is to motivate and
reward that individual who is serving as the Chief Executive Officer ("CEO") of
Cadence Design Systems, Inc. (the "Company") and the individuals who are part of
the senior executive staff as designated by the CEO (collectively, the
"Executives") in order to improve the Company's profitability and achieve the
established corporate goals of the Company. Under the Plan, an Executive may be
awarded for each fiscal year of the Company a performance bonus, described in
Section 3 hereof, which is intended to constitute "performance-based
compensation" within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), and a discretionary bonus, described in
Section 4 hereof, which is not intended to constitute performance-based
compensation for purposes of Code Section 162(m).
2. THE COMMITTEE.
The Plan shall be administered by the Compensation Committee of the Board
of Directors of the Company (the "Compensation Committee") which shall consist
of at least two independent directors of the Company who satisfy the
requirements of Code Section 162(m). The Compensation Committee shall have the
sole discretion and authority to administer and interpret the Plan in accordance
with Code Section 162(m) as appropriate and the decisions of the Compensation
Committee shall in every case be final and binding on all persons having an
interest in the Plan.
3. PERFORMANCE BONUS AMOUNTS.
For each fiscal year, the performance bonus amount payable to each
Executive under this Section 3 is intended to constitute performance-based
compensation for purposes of Code Section 162(m) and shall be the product of a
target bonus multiplied by one or more factors where each factor is based on a
relevant performance criterion and reflects the extent to which the target (or
targets) for such criterion is realized and the relative weight given to such
performance criterion. The Compensation Committee shall, for each fiscal year,
select the target bonus amount for each Executive, the relevant performance
criteria, the respective targets for such criteria, the corresponding factor for
each criterion and target(s) and the bonus amounts payable depending upon if and
the extent to which such targets are realized, in accordance with the following
rules:
(i) The relevant performance criteria shall include, either
individually or in combination, applied to the Company as a whole or to
individual units thereof, and measured either absolutely or relative to a
designated group of comparable group of companies: (a) cash flow, (b)
earnings per share (including earnings before interest, taxes and
amortization), (c) return on equity, (d) total stockholder return, (e)
return on capital, (f) return on assets or net assets, (g) revenue, (h)
income or net income, (i) operating income or net operating income, (j)
operating profit or net operating profit, (k) operating margin, (l) return
on operating revenue, (m) market share, (n) customer loyalty as measured by
a customer loyalty index determined by an independent consultant expert in
measuring such matters, or (o) any other objective and measurable criteria
tied to the Company's performance.
(ii) As determined by the Compensation Committee, any given
performance criterion may be measured over all or part of the fiscal year.
If for a fiscal year the Compensation Committee determines to use only
performance criteria measurable over the entire fiscal year, then it must
identify in writing within ninety (90) days after the beginning of the
fiscal year the target bonus, the selected performance criteria and the
factors (reflecting targets for such criteria and relative weighting). If
for any fiscal year
A-1
25
the Compensation Committee determines to use at least one performance
criterion to be measured over less than the entire fiscal year, then the
performance bonus for the fiscal year shall be the bonus calculated for
such short performance period or, if more than one performance period per
fiscal year is involved, then the sum of the bonuses calculated separately
for each short performance period ending with or within the fiscal year. In
that case, on or before the date which represents 25 percent of the total
number of days in such short performance period, the Compensation Committee
shall identify in writing the target bonus, the selected performance
criteria, and the factors (reflecting targets for such criteria with
relative weighting) applicable to such period.
(iii) The Compensation Committee may in its discretion direct that any
performance bonus be reduced below the amount as calculated above, based on
individual performance. Further, the Compensation Committee may in its
discretion increase the amount of compensation otherwise payable to any
executive upon satisfaction of the designated targets if such executive is
not covered by Code Section 162(m).
4. DISCRETIONARY BONUS.
In addition to any performance bonus payable under Section 3 above, the
Compensation Committee in its discretion may direct the payment of an additional
amount to any Executive for any fiscal year. Such amount shall not constitute
performance-based compensation for purposes of Code Section 162(m).
5. THE PAYMENT OF BONUSES.
Notwithstanding the foregoing, the maximum aggregate amount payable under
this Plan to any Executive for any fiscal year as a performance bonus shall be
$5,000,000. The bonus or bonuses for a fiscal year (including all short
performance periods ending with or within such year) shall be paid as soon as
practicable following the end of such year. No performance bonus under Section 3
hereof shall be paid unless and until the Compensation Committee makes a
certification in writing that the performance criteria and targets have been
satisfied as required by Code Section 162(m). Further, unless otherwise provided
in a written agreement with an Executive, the Executive must be employed by the
Company on the date that bonus payments are distributed for a fiscal year, or
have terminated employment prior to that time solely on account of death or
disability. If an Executive is entitled to payment of a performance bonus under
Section 3 hereof, but was not employed by the Company for the entire fiscal
year, he or she shall receive a prorated amount of the bonus amount payable as
though he or she were employed for the entire year determined as follows: (i) if
the performance period for such bonus is the entire fiscal year, the full year
bonus amount shall be multiplied by a fraction, the numerator of which is the
number of days the Executive was employed by the Company during the fiscal year
and the denominator of which is the number of days in the entire fiscal year; or
(ii) if the bonus for the fiscal year represents the bonus or sum of bonuses
computed separately for each short period within the fiscal year, then the bonus
otherwise payable for each short period shall be multiplied by a fraction, the
numerator of which is the number of days the Executive was employed by the
Company during such short period and the denominator of which is the total
number of days in such short period.
6. AMENDMENT AND TERMINATION.
The Compensation Committee may terminate the Plan at any time, for any and
no reason, and may also amend the Plan in order to reduce the amount of any
Executive's bonus payments at any time, for any or no reason.
A-2
26
PROXY PROXY
CADENCE DESIGN SYSTEMS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 2001
The undersigned hereby appoints H. Raymond Bingham and R.L. Smith
McKeithen, or either of them, each with power of substitution, to attend and to
represent the undersigned at the Annual Meeting of Stockholders of Cadence
Design Systems, Inc., or Cadence, to be held at Cadence Design Systems, Inc.,
2655 Seely Avenue, Building 5, San Jose, California, on May 16, 2001 at 1:00
p.m. local time and any continuation or adjournment thereof, and to vote the
number of shares of stock of Cadence the undersigned would be entitled to vote
if personally present at the meeting in accordance with the instructions set
forth on this proxy card. Any proxy heretofore given by the undersigned with
respect to such stock is hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CADENCE.
THE SHARES WILL BE VOTED AS DIRECTED ON THE REVERSE. IN THE ABSENCE OF
DIRECTION, THIS PROXY WILL BE VOTED FOR THE EIGHT NOMINEES FOR ELECTION AND FOR
PROPOSALS 2 AND 3. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL
MEETING, PROXIES WILL BE VOTED ON THESE MATTERS AS THE PROXIES NAMED HEREIN MAY
DETERMINE IN THEIR SOLE DISCRETION.
(Continued and to be signed on reverse side)
27
CADENCE DESIGN SYSTEMS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY: [X]
1. ELECTION OF DIRECTORS For Withhold For All 2. Approval of Amended and For Against Abstain
Nominees: H. Raymond Bingham, Susan All All Except Restated Senior [ ] [ ] [ ]
L. Bostrom, Leonard Y.W. Liu, Donald [ ] [ ] [ ] Executive Bonus Plan.
L. Lucas, Alberto
Sangiovanni-Vincentelli, George M.
Scalise, John B. Shoven and Roger S.
Siboni. (INSTRUCTION: To
withhold authority to vote for any 3. Ratification of For Against Abstain
individual nominee, write that selection of Arthur [ ] [ ] [ ]
nominee's name in the space provided Andersen LLP as
below) independent auditors of
Cadence for the fiscal
_____________________________________ year ending December 29,
(Except nominees written above) 2001.
Such other business as may properly come before the meeting or any
adjournment thereof.
The undersigned hereby acknowledges receipt of: (a) Notice of Annual
Meeting of Stockholders of Cadence, (b) accompanying Proxy Statement and
(c) Annual Report on Form 10-K for the fiscal year ended December 30,
2000.
Dated: _____________, 2001
Signature(s):
___________________________________________________________________
___________________________________________________________________
Please sign exactly as your name appears on your stock certificate.
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT
IN THE ENCLOSED ENVELOPE.