XML 38 R20.htm IDEA: XBRL DOCUMENT
v3.20.4

Employee Benefit Plans | 12 Months Ended
--- | ---
Oct. 31, 2020
Share-based Payment Arrangement [Abstract] |
Employee Benefit Plans | Employee Benefit Plans Employee Stock Purchase Plan Under the Company’s Employee Stock Purchase Plan (ESPP), participating employees are granted the right to purchase shares of common stock at a price per share that is 85% of the lesser of the fair market value of the shares at (1) the beginning of an offering period (generally, a rolling two year period) or (2) the purchase date (generally occurring at the end of each semi-annual purchase period), subject to the terms of ESPP, including a limit on the number of shares that may be purchased in a purchase period. On April 9, 2020, the Company’s stockholders approved an amendment to the ESPP to increase the number of shares of common stock authorized for issuance under the plan by 5.0 million shares. During fiscal 2020, 2019 and 2018, the Company issued 1.0 million, 1.2 million, and 1.2 million shares, respectively, under the ESPP at average per share prices of $103.41, $73.18 and $62.52, respectively. As of October 31, 2020, 13.8 million shares of common stock were reserved for future issuance under the ESPP. Equity Compensation Plans 2006 Employee Equity Incentive Plan. On April 25, 2006, the Company’s stockholders approved the 2006 Employee Equity Incentive Plan (2006 Employee Plan), which provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights and other forms of equity compensation, including performance stock awards and performance cash awards, as determined by the plan administrator. The terms and conditions of each type of award are set forth in the 2006 Employee Plan and in the award agreements governing particular awards. Options granted under this plan generally have a contractual term of seven years and generally vest over four years. On April 9, 2020, the Company's stockholders approved an amendment to, among other things, increase the number of shares of common stock reserved for future issuance under the 2006 Employee Plan by 3.5 million shares. As of October 31, 2020, an aggregate of 3.9 million stock options and 4.1 million restricted stock units were outstanding, and 12.1 million shares were available for future issuance under the 2006 Employee Plan. 2005 and 2017 Non-Employee Directors Equity Incentive Plans. On April 6, 2017, the Company’s stockholders approved the 2017 Non-Employee Directors Equity Incentive Plan (2017 Directors Plan). In connection with stockholder approval of the 2017 Directors Plan, the 2005 Non-Employee Directors Equity Incentive Plan (2005 Directors Plan) was terminated as of April 6, 2017, and no awards can be granted under the 2005 Directors Plan after that date. Under the 2005 Directors Plan, the Company granted options to purchase 188,709 shares of common stock, which vest over a period of three to four years, with an aggregate grant date fair value of $6.7 million, to non-employee directors during fiscal 2007, fiscal 2011, fiscal 2015, and fiscal 2017. As of October 31, 2020, 29,222 stock options were outstanding under the 2005 Directors Plan. The 2017 Directors Plan provides for equity awards to non-employee directors in the form of stock options, restricted stock units, restricted stock or a combination thereof. On April 6, 2017, the Company’s stockholders approved an aggregate of 0.45 million shares of common stock reserved under the 2017 Directors Plan. For the fiscal year ended October 31, 2020, the Company issued an aggregate of 9,412 shares of restricted stock awards with an aggregate grant date fair value of approximately $1.3 million under the 2017 Directors Plan. Restricted stock awards generally vest on an annual basis under the 2017 Directors Plan. In addition, the Company granted options to purchase 5,998 shares of common stock, which vest over a period of three years, with an aggregate grant date fair value of $1.4 million. As of October 31, 2020, 9,412 shares of restricted stock were unvested and 5,998 stock options were outstanding, and a total of 389,682 shares of common stock were reserved for future grant under the 2017 Directors Plan. Other Assumed Stock Plans through Acquisitions. In connection with the Company’s acquisitions in fiscal 2008, fiscal 2010, fiscal 2012, fiscal 2014, fiscal 2015, fiscal 2017, and fiscal 2018 the Company assumed certain outstanding stock awards of acquired companies. If these assumed equity awards are canceled, forfeited or expire unexercised, the underlying shares do not become available for future grant. As of October 31, 2020, 0.1 million shares of the Company’s common stock remained subject to such outstanding assumed equity awards. Restricted Stock Units. Restricted stock units are granted under the 2006 Employee Plan as part of the Company’s incentive compensation program. In general, restricted stock units vest over three to four years and are subject to the employee's continuing service with the Company. Certain restricted stock units were granted with specific performance criteria and vest to the extent performance conditions are met. For each restricted stock unit granted under the 2006 Employee Plan, a share reserve ratio is applied for the purpose of determining the remaining number of shares reserved for future grants under the plan. As of October 31, 2020, the share reserve ratio was 1.70. The following table contains information concerning activities related to restricted stock units:
| Restricted Stock Units |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Contractual Life (In Years) |  | Aggregate Fair Value
| (in thousands, except per share and life amounts)
Balance at October 31, 2017 | 3,843 |  |  | $ | 57.26 |  |  | 1.54 |  |
Granted(2) | 1,679 |  |  | $ | 89.35 |  |  |  |  |
Vested(1) | (1,495 | ) |  | $ | 52.55 |  |  |  |  | $ | 136,417 |
Forfeited | (258 | ) |  | $ | 67.04 |  |  |  |  |
Balance at October 31, 2018 | 3,769 |  |  | $ | 72.75 |  |  | 1.46 |  |
Granted | 1,844 |  |  | $ | 119.27 |  |  |  |  |
Vested(1) | (1,508 | ) |  | $ | 65.97 |  |  |  |  | $ | 176,659 |
Forfeited | (248 | ) |  | $ | 79.49 |  |  |  |  |
Balance at October 31, 2019 | 3,857 |  |  | $ | 97.21 |  |  | 1.56 |  |
Granted | 2,041 |  |  | $ | 168.15 |  |  |  |  |
Vested(1) | (1,480 | ) |  | $ | 88.70 |  |  |  |  | $ | 261,563 |
Forfeited | (288 | ) |  | $ | 104.67 |  |  |  |  |
Balance at October 31, 2020 | 4,130 |  |  | $ | 134.80 |  |  | 1.47 |  |
(1) | The number of vested restricted stock units includes shares that were withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.
(2) | The Company assumed unvested restricted stock units from acquisitions including Black Duck.
The following table contains additional information concerning activities related to stock options and restricted stock units under all equity plans, other than shares available for grant under the 2017 Directors Plan:
| Available for Grant(3) |  | Options(2)
| Options Outstanding |  | Weighted- Average Exercise Price per Share |  | Weighted- Average Remaining Contractual Life (In Years) |  | Aggregate Intrinsic Value
| (in thousands, except per share and life amounts)
Balance at October 31, 2017 | 12,583 |  |  | 6,530 |  |  | $ | 46.83 |  |  | 4.60 |  | $ | 263,555 |
Options granted | (1,134 | ) |  | 1,134 |  |  | $ | 89.52 |  |  |  |  |
Options assumed(2) |  |  | 141 |  |  | $ | 18.66 |  |  |  |  |
Options exercised |  |  | (1,336 | ) |  | $ | 38.18 |  |  |  |  |
Options canceled/forfeited/expired | 157 |  |  | (178 | ) |  | $ | 51.82 |  |  |  |  |
Restricted stock units granted(1) | (2,541 | ) |  |  |  |  |  |  |  |
Restricted stock units forfeited(1) | 374 |  |  |  |  |  |  |  |  |
Additional shares reserved | 3,000 |  |  |  |  |  |  |  |  |
Balance at October 31, 2018 | 12,439 |  |  | 6,291 |  |  | $ | 55.63 |  |  | 4.39 |  | $ | 214,432 |
Options granted | (799 | ) |  | 799 |  |  | $ | 113.17 |  |  |  |  |
Options exercised |  |  | (1,615 | ) |  | $ | 44.29 |  |  |  |  |
Options canceled/forfeited/expired | 129 |  |  | (185 | ) |  | $ | 58.02 |  |  |  |  |
Restricted stock units granted(1) | (3,134 | ) |  |  |  |  |  |  |  |
Restricted stock units forfeited(1) | 373 |  |  |  |  |  |  |  |  |
Additional shares reserved | 3,200 |  |  |  |  |  |  |  |  |
Balance at October 31, 2019 | 12,208 |  |  | 5,290 |  |  | $ | 65.57 |  |  | 4.08 |  | $ | 373,112 |
Options granted | (694 | ) |  | 700 |  |  | $ | 143.44 |  |  |  |  |
Options exercised |  |  | (1,891 | ) |  | $ | 51.76 |  |  |  |  |
Options canceled/forfeited/expired | 102 |  |  | (106 | ) |  | $ | 84.14 |  |  |  |  |
Restricted stock units granted(1) | (3,469 | ) |  |  |  |  |  |  |  |
Restricted stock units forfeited(1) | 482 |  |  |  |  |  |  |  |  |
Additional shares reserved | 3,500 |  |  |  |  |  |  |  |  |
Balance at October 31, 2020 | 12,129 |  |  | 3,993 |  |  | $ | 85.26 |  |  | 4.10 |  | $ | 513,845 |
Exercisable at October 31, 2020 |  |  | 2,311 |  |  | $ | 65.36 |  |  | 3.23 |  | $ | 343,230 |
(1) | These amounts do not reflect the actual number of restricted stock units granted or forfeited but rather the effect on the total remaining shares available for future grants after the application of the share reserve ratio. For more information about the share reserve ratio, please see Restricted Stock Units above.
(2) | The Company assumed options outstanding under various plans through acquisitions.
(3) | Excluding shares reserved for future issuance under the 2017 Directors Plan.
The aggregate intrinsic value in the preceding table represents the pretax intrinsic value based on stock options with an exercise price less than the Company’s closing stock price of $213.86 as of October 31, 2020. The pretax intrinsic value of options exercised and their average exercise prices were:
| Year Ended October 31,
| 2020 |  | 2019 |  | 2018
| (in thousands, except per share price)
Intrinsic value | $ | 218,640 |  |  | $ | 110,815 |  |  | $ | 71,840 |
Average exercise price per share | $ | 51.76 |  |  | $ | 44.29 |  |  | $ | 38.18 |
Restricted stock award activities during fiscal 2020 under the 2005 Directors Plan and 2017 Directors Plan are summarized as follows:
| Restricted Shares |  | Weighted-Average Grant Date Fair Value
| (in thousands, except per share)
Unvested at October 31, 2017 | 38 |  |  | $ | 59.89 |
Granted | 15 |  |  | $ | 82.96 |
Vested | (32 | ) |  | $ | 62.09 |
Forfeited | (1 | ) |  | $ | 48.27 |
Unvested at October 31, 2018 | 20 |  |  | $ | 73.95 |
Granted | 11 |  |  | $ | 116.43 |
Vested | (20 | ) |  | $ | 73.95 |
Forfeited | — |  |  | $ | — |
Unvested at October 31, 2019 | 11 |  |  | $ | 116.43 |
Granted | 9 |  |  | $ | 140.97 |
Vested | (11 | ) |  | $ | 116.43 |
Forfeited | — |  |  | $ | — |
Unvested at October 31, 2020 | 9 |  |  | $ | 140.97 |
Valuation and Expense of Stock-Based Compensation. The Company estimates the fair value of stock-based awards in the form of stock options and employee stock purchase rights under employee stock purchase plans on the grant date. The value of awards expected to vest is recognized as expense over the applicable service periods. The Company uses the straight-line attribution method to recognize stock-based compensation costs over the service period of the award except for performance grants with specific performance criteria. With respect to such performance grants in each reporting period, the Company estimates the probability of achievement of applicable performance goals and recognizes related stock-based compensation expense using the graded-vesting method. The amount of stock-based compensation expense recognized in any one period can vary based on the attainment or expected attainment of the various performance goals. If such performance goals are not ultimately met, no compensation expense is recognized and any previously recognized compensation expense is reversed. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options, stock appreciation rights and employee stock purchase plan awards. The Black-Scholes option-pricing model incorporates various subjective assumptions including expected volatility, expected term and interest rates. The expected volatility for both stock options and stock purchase rights under the ESPP is estimated by a combination of implied volatility for publicly traded options of the Company’s common stock with a term of six months or longer and the historical stock price volatility over the estimated expected term of the Company’s stock-based awards. The expected term of the Company’s stock-based awards is based on historical experience. Restricted stock units are valued based on the closing price of the Company’s common stock on the grant date. The assumptions presented in the following table were used to estimate the fair value of stock options and employee stock purchase rights granted under the Company’s stock plans or stock plans assumed from acquisitions:
| Year Ended October 31,
| 2020 |  | 2019 |  | 2018
Stock Options |  |  |  |  |
Expected life (in years) | 4.1 |  | 4.1 |  | 4.1
Risk-free interest rate | 0.26% - 1.71% |  | 1.28% - 2.73% |  | 2.10% - 2.95%
Volatility | 23.05% - 32.80% |  | 23.16% - 24.76% |  | 20.22% - 21.04%
Weighted average estimated fair value | $33.02 |  | $22.86 |  | $23.55
ESPP |  |  |  |  |
Expected life (in years) | 0.5 - 2.0 |  | 0.5 - 2.0 |  | 0.5 - 2.0
Risk-free interest rate | 0.09% - 1.24% |  | 1.54% - 2.60% |  | 1.80% - 2.73%
Volatility | 25.59% - 43.06% |  | 23.73% - 27.86% |  | 19.99% - 21.54%
Weighted average estimated fair value | $47.69 |  | $35.18 |  | $23.34
The compensation cost recognized in the consolidated statements of operations for the Company's stock compensation arrangements was as follows:
| Year Ended October 31,
| 2020 |  | 2019 |  | 2018
| (in thousands)
Cost of products | $ | 27,193 |  |  | $ | 17,193 |  |  | $ | 14,648 |
Cost of maintenance and service | 9,327 |  |  | 6,385 |  |  | 5,467 |
Research and development expense | 125,814 |  |  | 75,853 |  |  | 67,355 |
Sales and marketing expense | 43,205 |  |  | 28,834 |  |  | 28,069 |
General and administrative expense | 43,045 |  |  | 26,736 |  |  | 24,493 |
Stock-based compensation expense before taxes | 248,584 |  |  | 155,001 |  |  | 140,032 |
Income tax benefit | (39,077 | ) |  | (26,226 | ) |  | (26,578 | )
Stock-based compensation expense after taxes | $ | 209,507 |  |  | $ | 128,775 |  |  | $ | 113,454 |
As of October 31, 2020, the Company had $488.6 million of total unrecognized stock-based compensation expense relating to options and restricted stock units and awards, which is expected to be recognized over a weighted average period of 2.3 years. As of October 31, 2020, the Company had $55.8 million of total unrecognized stock-based compensation expense relating to the ESPP, which is expected to be recognized over a period of 2.0 years. Deferred Compensation Plan. The Company maintains the Synopsys Deferred Compensation Plan (Deferred Plan), which permits eligible employees to defer up to 50% of their annual cash base compensation and up to 100% of their eligible cash variable compensation. Amounts may be withdrawn from the Deferred Plan pursuant to elections made by the employees in accordance with the terms of the plan. Since the inception of the Deferred Plan, the Company has not made any matching or discretionary contributions to the Deferred Plan. There are no Deferred Plan provisions that provide for any guarantees or minimum return on investments. Undistributed amounts under the Deferred Plan are subject to the claims of the Company’s creditors. The securities held by the Deferred Plan are classified as trading securities. Deferred plan assets and liabilities are as follows:
| As of October 31, 2020 |  | As of October 31, 2019
| (in thousands)
Plan assets recorded in other long-term assets | $ | 269,737 |  |  | $ | 249,822 |
Plan liabilities recorded in other long-term liabilities(1) | $ | 269,737 |  |  | $ | 249,822 |
(1) | Undistributed deferred compensation balances due to participants.
Income or loss from the change in fair value of the Deferred Plan assets is recorded in other income (expense), net. The increase or decrease in the fair value of the undistributed Deferred Plan obligation is recorded in total cost of revenue and operating expense. The following table summarizes the impact of the Deferred Plan:
| Year Ended October 31,
| 2020 |  | 2019 |  | 2018
| (in thousands)
Increase (reduction) to cost of revenue and operating expense | $ | 21,469 |  |  | $ | 27,759 |  |  | $ | 4,636 |
Other income (expense), net | 21,469 |  |  | 27,759 |  |  | 4,636 |
Net increase (decrease) to net income | $ | — |  |  | $ | — |  |  | $ | — |
Other Retirement Plans. The Company sponsors various retirement plans for its eligible U.S. and non-U.S. employees. Total contributions to these plans were $54.7 million, $50.7 million, and $56.5 million in fiscal 2020, 2019, and 2018, respectively. For employees in the United States and Canada, the Company matches pretax employee contributions up to a maximum of U.S. $3,000 and Canadian $4,000, respectively, per participant per year.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration