8-KMaterial Agreements

CADENCE DESIGN SYSTEMS INC 8-K Report, Material Agreement (Aug 4, 2006)

Filed August 4, 2006For Securities:CDNS

Summary

Cadence Design Systems, Inc. (CDNS) filed an 8-K on August 4, 2006, to report on the establishment of performance criteria and goals for its Senior Executive Bonus Plan for the second half of 2006. The Compensation Committee of the Board of Directors has set a minimum non-GAAP operating income target as the primary condition for any bonus payouts. This move signals a focus on operational profitability as a key performance indicator for executive compensation during the latter half of the fiscal year. The aggregate bonus pool for all eligible executive officers is capped at 5% of the company's non-GAAP operating income for the second half of 2006. Individual executive bonuses are further limited to the lesser of $5 million or a specific percentage of the total bonus pool. The filing also notes that the Compensation Committee retains discretion to adjust bonuses based on other business metrics, including revenue, bookings, and operating margins, providing flexibility in aligning executive rewards with overall company performance.

Key Highlights

  • 1Cadence Design Systems established performance criteria for its Senior Executive Bonus Plan for the second half of 2006 on August 1, 2006.
  • 2The primary performance criterion for bonus eligibility is achieving a minimum non-GAAP operating income target.
  • 3The total bonus pool is capped at 5% of the company's non-GAAP operating income for the second half of 2006.
  • 4Individual executive bonuses are capped at the lesser of $5 million or a pre-determined percentage of the aggregate bonus pool.
  • 5The Compensation Committee has discretion to adjust bonuses based on other factors such as revenue, net bookings, and operating margin.
  • 6Specific target bonus increases were made for Moshe Gavrielov (Executive Vice President, Verification Division) and R.L. Smith McKeithen (Senior Vice President and General Counsel) to 100% of their base salary, or $400,000 each.

Frequently Asked Questions

This 8-K filing is primarily to inform investors about the performance criteria and goals established by Cadence Design Systems' Compensation Committee for its Senior Executive Bonus Plan for the second half of 2006. It details how executive bonuses will be determined.

Bonuses will be paid only if Cadence achieves a minimum non-GAAP operating income target. The total bonus pool is limited to 5% of the second-half non-GAAP operating income, and individual bonuses are subject to further caps. The Compensation Committee also has the discretion to modify bonus amounts based on other company performance metrics.

Yes, the filing states that the target bonus for Moshe Gavrielov and R.L. Smith McKeithen was increased to 100% of their base salary, amounting to $400,000 each for the fiscal year, indicating a specific focus on these key executives.

The primary metric is non-GAAP operating income. However, the Compensation Committee can also consider other factors such as total revenue, net bookings, operating margin, and business group or individual goals when determining the final bonus amounts.