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Employee Benefit Plans | 12 Months Ended
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Oct. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Employee Benefit Plans | Employee Benefit Plans Employee Stock Purchase Plan Under our 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 12, 2022, our stockholders approved amendments to the ESPP to increase the number of shares of common stock authorized for issuance under the plan by 2.0 million shares. During fiscal 2024, 2023 and 2022, we issued 0.5 million, 0.6 million, and 0.7 million shares, respectively, under the ESPP at average per share prices of $315.24, $266.82 and $195.48, respectively. As of October 31, 2024, 12.9 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, our 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. Restricted stock units are granted under the 2006 Employee Plan as part of our incentive compensation program. In general, restricted stock units vest over three to four years and are subject to the employee's continuing service with us. Restricted stock units granted with specific performance criteria vest to the extent performance conditions are met. Restricted stock units granted with certain market conditions vest over two to three years to the extent these market conditions are met. For each restricted stock unit granted under the 2006 Employee Plan, a share reserve ratio of 1.70 is applied for the purpose of determining the remaining number of shares reserved for future grants under the plan. Options granted under this plan generally have a contractual term of seven years and generally vest over four years. On April 10, 2024, our stockholders amended the 2006 Employee Plan to, among other things, increase the number of shares of common stock reserved for future issuance under the plan by 3.4 million shares. As of October 31, 2024, an aggregate of 1.3 million stock options and 3.9 million restricted stock units were outstanding, and 14.5 million shares were available for future issuance under the 2006 Employee Plan. 2017 Non-Employee Directors Equity Incentive Plans. On April 6, 2017, our stockholders approved the 2017 Non-Employee Directors Equity Incentive Plan (2017 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, our stockholders approved an aggregate of 0.45 million shares of common stock reserved under the 2017 Directors Plan. We grant restricted stock awards and options under the 2017 Directors Plan. Restricted stock awards generally vest on an annual basis and options vest over a period of three years. As of October 31, 2024, 3,751 shares of restricted stock awards were unvested and 12,792 stock options were outstanding, and a total of 365,203 shares of common stock were reserved for future issuance under the 2017 Directors Plan. Other Assumed Stock Plans through Acquisitions. We have assumed certain outstanding stock awards of acquired companies, including restricted stock units and options. 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, 2024, 18 thousand shares of our common stock remained subject to such outstanding assumed equity awards. Restricted Stock Units. The following table contains information concerning activities related to restricted stock units granted under the 2006 Employee Plan and assumed from acquisitions including those associated with our discontinued operations:
| Restricted Stock Units Outstanding(1) |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Contractual Life (In Years) |  | Aggregate Fair Value
| (in thousands, except per share amounts and years)
Balance at October 31, 2021 | 4,187 |  |  | $ | 193.58 |  |  | 1.39 |  |
Granted(2) | 2,402 |  |  | $ | 323.46 |  |  |  |  |
Vested(3) | (1,589) |  |  | $ | 170.36 |  |  |  |  | $ | 529,766 |
Forfeited | (362) |  |  | $ | 228.70 |  |  |  |  |
Balance at October 31, 2022 | 4,638 |  |  | $ | 265.76 |  |  | 1.32 |  |
Granted(2) | 2,083 |  |  | $ | 394.34 |  |  |  |  |
Vested(3) | (1,839) |  |  | $ | 237.19 |  |  |  |  | $ | 706,136 |
Forfeited | (365) |  |  | $ | 283.29 |  |  |  |  |
Balance at October 31, 2023 | 4,517 |  |  | $ | 335.26 |  |  | 1.41 |  |
Granted(2) | 1,620 |  |  | $ | 543.69 |  |  |  |  |
Vested(3) | (1,778) |  |  | $ | 303.23 |  |  |  |  | $ | 962,127 |
Forfeited | (460) |  |  | $ | 395.74 |  |  |  |  |
Balance at October 31, 2024 | 3,899 |  |  | $ | 429.36 |  |  | 1.35 |  |
(1)No restricted stock units were assumed in connection with acquisitions in the last three fiscal years. (2)The number of granted restricted stock units includes those granted to senior management with market-based and performance-based vesting criteria (in addition to service-based vesting criteria) (market-based RSUs) reported at the maximum possible number of shares that may ultimately be issuable if all applicable market-based and performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied. (3)The number of vested restricted stock units includes shares that were withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. Stock Options. The following table summarizes stock option activity and includes stock options granted under all equity plans including those associated with our discontinued operations:
|  | Options Outstanding |  |  |  |
| Shares Under Stock Option (1) |  | Weighted- Average Exercise Price per Share |  | Weighted- Average Remaining Contractual Life (In Years) |  | Aggregate Intrinsic Value |  |  |  |
|  | (in thousands, except per share amounts and years) |  |  |  |
Balance at October 31, 2021 |  | 3,107 |  |  | $ | 109.51 |  |  | 3.81 |  | $ | 694,921 |  |  |  |  |
Granted |  | 293 |  |  | $ | 342.86 |  |  |  |  |  |  |  |  |
Exercised |  | (1,126) |  |  | $ | 86.24 |  |  |  |  |  |  |  |  |
Canceled/forfeited/expired |  | (114) |  |  | $ | 164.46 |  |  |  |  |  |  |  |  |
Balance at October 31, 2022 |  | 2,160 |  |  | $ | 150.37 |  |  | 3.57 |  | $ | 328,120 |  |  |  |  |
Granted |  | 294 |  |  | $ | 361.64 |  |  |  |  |  |  |  |  |
Exercised |  | (849) |  |  | $ | 109.83 |  |  |  |  |  |  |  |  |
Canceled/forfeited/expired |  | (90) |  |  | $ | 245.86 |  |  |  |  |  |  |  |  |
Balance at October 31, 2023 |  | 1,515 |  |  | $ | 208.49 |  |  | 3.70 |  | $ | 376,563 |  |  |  |  |
Granted |  | 238 |  |  | $ | 551.41 |  |  |  |  |  |  |  |  |
Exercised |  | (429) |  |  | $ | 141.83 |  |  |  |  |  |  |  |  |
Canceled/forfeited/expired |  | (42) |  |  | $ | 376.97 |  |  |  |  |  |  |  |  |
Balance at October 31, 2024 |  | 1,282 |  |  | $ | 288.91 |  |  | 3.63 |  | $ | 301,781 |  |  |  |  |
Vested and expected to vest as of October 31, 2024 |  | 1,282 |  |  | $ | 288.91 |  |  | 3.63 |  | $ | 301,781 |  |  |  |  |
Exercisable at October 31, 2024 |  | 810 |  |  | $ | 197.95 |  |  | 2.54 |  | $ | 259,550 |  |  |  |  |
(1)No stock options were assumed in connection with acquisitions in the last three fiscal years, but the balance at fiscal year-end includes certain stock options that were previously assumed in connection with acquisitions. The aggregate intrinsic value in the preceding table represents the pre-tax intrinsic value based on stock options with an exercise price less than our closing stock price of $518.40 at the end of fiscal 2024. The pre-tax intrinsic value of options exercised and their average exercise prices including those associated with our discontinued operations are:
| Year Ended October 31,
| 2024 |  | 2023 |  | 2022
| (in thousands, except per share price)
Intrinsic value | $ | 185,663 |  |  | $ | 241,385 |  |  | $ | 273,524 |
Average exercise price per share | $ | 141.83 |  |  | $ | 109.83 |  |  | $ | 86.24 |
Restricted Stock Units and Stock Options. The following table contains additional information concerning activities related to stock options and restricted stock units that were granted under the 2006 Employee Plan and assumed from acquisitions including those associated with our discontinued operations:
| Available for Grant (1)(2) |  |
| (in thousands)
Balance at October 31, 2021 | 13,751 |  |  |  |  |  |  |  |  |
Options granted(2) | (286) |  |  |  |  |  |  |  |  |
Options canceled/forfeited/expired(2) | 114 |  |  |  |  |  |  |  |  |
Restricted stock units granted(1)(3) | (4,083) |  |  |  |  |  |  |  |  |
Restricted stock units forfeited(1) | 615 |  |  |  |  |  |  |  |  |
Additional shares reserved | 3,000 |  |  |  |  |  |  |  |  |
Balance at October 31, 2022 | 13,111 |  |  |  |  |  |  |  |  |
Options granted(2) | (294) |  |  |  |  |  |  |  |  |
Options canceled/forfeited/expired(2) | 89 |  |  |  |  |  |  |  |  |
Restricted stock units granted(1)(3) | (3,540) |  |  |  |  |  |  |  |  |
Restricted stock units forfeited(1) | 620 |  |  |  |  |  |  |  |  |
Additional shares reserved | 3,300 |  |  |  |  |  |  |  |  |
Balance at October 31, 2023 | 13,286 |  |  |  |  |  |  |  |  |
Options granted(2) | (238) |  |  |  |  |  |  |  |  |
Options canceled/forfeited/expired(2) | 40 |  |  |  |  |  |  |  |  |
Restricted stock units granted(1)(3) | (2,754) |  |  |  |  |  |  |  |  |
Restricted stock units forfeited(1) | 782 |  |  |  |  |  |  |  |  |
Additional shares reserved | 3,400 |  |  |  |  |  |  |  |  |
Balance at October 31, 2024 | 14,516 |  |  |  |  |  |  |  |  |
(1)Restricted stock units includes awards granted under the 2006 Employee Plan and assumed through acquisitions. The number of RSUs reflects the application of the award multiplier of 1.70 as described above. (2)Options granted by us are not subject to the award multiplier ratio described above. (3)The number of granted restricted stock units includes market-based RSUs reported at the maximum possible number of shares that may ultimately be issuable if all applicable market-based and performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied. Restricted Stock Awards. The following table summarizes restricted stock award activities under the 2005 Directors Plan and 2017 Directors Plan:
| Restricted Shares |  | Weighted-Average Grant Date Fair Value
| (in thousands, except per share amounts)
Unvested at October 31, 2021 | 5 |  |  | $ | 261.01 |
Granted | 5 |  |  | $ | 310.02 |
Vested | (5) |  |  | $ | 261.01 |
Forfeited | — |  |  | $ | — |
Unvested at October 31, 2022 | 5 |  |  | $ | 310.02 |
Granted | 5 |  |  | $ | 387.79 |
Vested | (5) |  |  | $ | 310.02 |
Forfeited | — |  |  | $ | — |
Unvested at October 31, 2023 | 5 |  |  | $ | 387.79 |
Granted | 3 |  |  | $ | 561.23 |
Vested | (4) |  |  | $ | 382.88 |
Forfeited | — |  |  | $ | — |
Unvested at October 31, 2024 | 4 |  |  | $ | 541.51 |
Valuation and Expense of Stock-Based Compensation. We estimate the fair value of stock options and employee stock purchase rights under the ESPP on the grant date. The value of awards expected to vest is recognized as expense over the applicable service periods. We use the Black-Scholes option-pricing model to determine the fair value of stock options and employee stock purchase plan rights. The Black-Scholes option-pricing model incorporates various assumptions including expected volatility, expected term and interest rates. The expected volatility for both stock options and employee stock purchase rights is estimated by a combination of implied volatility for publicly traded options of our common stock with a term of six months or longer and the historical stock price volatility over the estimated expected term of such awards, which is based on historical experience. Restricted stock units are valued based on the closing price of our common stock on the grant date. We use the straight-line attribution method to recognize stock-based compensation costs over the service period of the award except for performance-based RSUs and market-based RSUs. We estimate the probability of achievement of applicable performance goals for performance-based RSUs in each reporting period and recognize related stock-based compensation expense using the graded-vesting method. The amount of stock-based compensation expense recognized in any 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. We estimated the fair value of market-based RSUs on the grant date using a Monte Carlo simulation model. Under the award agreements, the vesting of the market-based RSUs is contingent on achieving total stockholder return (TSR) relative to a peer index as well as revenue growth metrics. The maximum potential awards that may be earned are 187.5% of the target number of the initial awards. For market-based RSUs granted in February, May, August and December 2022, the performance period during which the achievement goals was measured is fiscal 2022 and fiscal 2023. Following the achievement of the TSR target, revenue growth metrics, and service conditions, the first tranche of the awards vested in December 2023 and the second tranche of the awards will vest in December 2024. For market-based RSUs granted in February and August 2023, the performance period during which the achievement goals will be measured is fiscal 2023, fiscal 2024 and fiscal 2025. The awards will vest in December 2025 if the TSR target, revenue growth metrics, and service conditions are achieved. For market-based RSUs granted in December 2023, the performance period during which the achievement goals will be measured is fiscal 2024, fiscal 2025 and fiscal 2026. The awards will vest in December 2026 if the TSR target, revenue growth metrics, and service conditions are achieved. The assumptions presented in the following table are used to estimate the fair value of stock options and employee stock purchase rights granted under our stock plans:
| Year Ended October 31,
| 2024 |  | 2023 |  | 2022
Stock Options: |  |  |  |  |
Expected life (in years) | 4.1 |  | 4.1 |  | 4.1
Risk-free interest rate | 3.62%- 4.61% |  | 3.8% - 4.80% |  | 1.07% - 4.42%
Volatility | 32.09% -35.42% |  | 32.74% - 36.16% |  | 32.28%- 37.04%
Weighted average estimated fair value | $178.67 |  | $120.33 |  | $98.07
ESPP: |  |  |  |  |
Expected life (in years) | 0.5 - 2.0 |  | 0.5 - 2.0 |  | 0.5 - 2.0
Risk-free interest rate | 3.88% - 5.27% |  | 4.85% - 5.38% |  | 0.67% - 3.44%
Volatility | 31.40% - 34.39% |  | 28.03% - 35.27% |  | 34.51% - 38.69%
Weighted average estimated fair value | $179.10 |  | $120.82 |  | $102.63
The grant date fair value of the market-based RSUs and the assumptions used in the Monte Carlo simulation model to determine the grant date fair value during the periods are as follows:
| Year Ended October 31,
| 2024 |  | 2023 |  | 2022
Expected life (in years) | 2.89 |  | 0.90 - 2.70 |  | 1.16 - 1.69
Risk-free interest rate | 4.41% |  | 4.36% - 4.80% |  | 1.33% - 3.46%
Volatility | 34.03% |  | 34.79% - 42.86% |  | 33.01% - 37.80%
Grant date fair value | $600.29 |  | $357.29 - $465.79 |  | $280.52 - $412.20
The compensation cost recognized in the consolidated statements of income for our stock compensation arrangements is as follows:
| Year Ended October 31,
| 2024 |  | 2023 |  | 2022
| (in thousands)
Cost of products | $ | 66,403 |  |  | $ | 49,896 |  |  | $ | 43,618 |
Cost of maintenance and service | 32,189 |  |  | 29,572 |  |  | 24,146 |
Research and development expense | 359,244 |  |  | 282,540 |  |  | 233,772 |
Sales and marketing expense | 121,524 |  |  | 91,082 |  |  | 70,607 |
General and administrative expense | 78,575 |  |  | 60,004 |  |  | 49,606 |
Stock-based compensation expense from continuing operations before taxes | 657,935 |  |  | 513,094 |  |  | 421,749 |
Stock-based compensation expense from discontinued operations before taxes | 34,381 |  |  | 50,198 |  |  | 37,280 |
Total stock-based compensation expense before taxes | 692,316 |  |  | 563,292 |  |  | 459,029 |
Income tax benefit | (115,271) |  |  | (90,915) |  |  | (74,271) |
Stock-based compensation expense after taxes | $ | 577,045 |  |  | $ | 472,377 |  |  | $ | 384,758 |
As of October 31, 2024, we had $1.3 billion of total unrecognized stock-based compensation expense relating to options, RSUs and restricted stock awards, which is expected to be recognized over a weighted average period of 2.3 years. As of October 31, 2024, we had $111.2 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. We maintain 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, we have 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 our creditors. Deferred plan assets and liabilities are as follows:
| As of October 31,
| 2024 |  | 2023
| (in thousands)
Plan assets recorded in other long-term assets | $ | 386,757 |  |  | $ | 297,180 |
Plan liabilities recorded in other long-term liabilities(1) | $ | 386,757 |  |  | $ | 297,180 |
(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 interest and 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,
| 2024 |  | 2023 |  | 2022
| (in thousands)
Increase (reduction) to cost of revenue and operating expense | $ | 85,446 |  |  | $ | 20,196 |  |  | $ | (67,516) |
Interest and other income (expense), net | 85,446 |  |  | 20,196 |  |  | (67,516) |
Net increase (decrease) to net income | $ | — |  |  | $ | — |  |  | $ | — |
Other Retirement Plans. We sponsor various defined contribution retirement plans for our eligible U.S. and non-U.S. employees. Total contributions to these plans were $51.3 million, $50.8 million, and $44.0 million in fiscal 2024, 2023, and 2022, respectively. For employees in the United States and Canada, we match pre-tax employee contributions up to a maximum of U.S. $3,000 and Canadian $4,000, respectively, per participant per year. Certain of our international subsidiaries sponsor defined benefit retirement plans. The unfunded projected benefit obligation for these defined benefit retirement plans as of October 31, 2024 and 2023 was immaterial and recorded in other long-term liabilities in our consolidated balance sheets.

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