ANSS ANSYS Inc

Security Ownership of Certain Beneficial Owners

The following table presents information about persons or entities known to the Company to be beneficial owner of more than five percent of our Common Stock as of December 31, 2016. The following information is based solely upon copies of filings of Schedule 13G received by the Company pursuant to the rules of the Securities and Exchange Commission (“SEC”).

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers and Directors, and persons who own more than 10% of our outstanding shares of Common Stock (collectively, “Section 16 Persons”), to file reports of ownership and changes in ownership with the SEC and NASDAQ. Section 16 Persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

Based solely on our review of the copies of such forms received by us, or written representations from certain Section 16 Persons that no Section 16(a) reports were required for such persons, eight (8) Section 16 reports were filed 5 days late due to administrative error in connection with a change to the equity grant program for our independent Directors in Fiscal 2017.

Maria T. Shields has been our chief financial officer and vice president of finance and administration since September 1998. Previously, she served as our corporate controller since September 1994 and as a vice president since May 1998. Prior to joining the Company, Ms. Shields held various positions as a CPA with Deloitte & Touche LLP, including that of audit manager. Ms. Shields serves as a Director of the First National Bank Pittsburgh Community Board, and as a member of the Board of Trustees of the Anglican Diocese of Pittsburgh. Ms. Shields holds a bachelor of science degree in accounting from Pennsylvania State University.

Walid Abu-Hadba joined ANSYS in April 2013 in the newly created position of Chief Product Officer. For the five years prior to that he was Corporate Vice President, Developer and Platform Evangelism at Microsoft Corporation, where he worked in a variety of progressively challenging management roles for 21 years including Vice President, Specialist Sales, Enterprise and Partner Group; General Manager, Asia Pacific and Japan Technology center; General Manager, Global Technical Center; and Practice Manager, Advanced Technology Group. He is a graduate of Arizona State University with a bachelor of science degree in Systems Engineering.

Rick Mahoney joined ANSYS as our vice president of worldwide sales and customer excellence in December 2016. From 2014 to 2016, he was senior vice president, design enablement and international sales, at GlobalFoundries. Prior to that, he had a long successful career at Cadence Design Systems, starting as a software developer and architect, then advancing to senior vice president of worldwide field operations with responsibility for worldwide sales, field application engineering, customer support and sales operations. He brings a wealth of experience in sales leadership, business management, operations and technical roles. While at Cadence, he led a global engineering team and was responsible for multiple billions of dollars in international sales.

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Robert Kocis was our vice president of worldwide sales and support from July 2014 until his resignation from the Company effective in October 2016. Prior to joining the Company, Mr. Kocis spent the past 16 years with PTC, Inc., a U.S. based computer software company specializing in 3D design software, product lifecycle management, and service management solutions. He holds a bachelor of science in Marine Engineering Systems from the United States Merchant Marine Academy and also graduated from the General Dynamics Nuclear Engineering School.

Compensation Discussion and Analysis

Overview of Compensation Program

Our Compensation Committee has responsibility for establishing, implementing and continually monitoring adherence with our compensation philosophy. Our Compensation Committee ensures that the total compensation paid to our named executive officers is reasonable, competitive and principally performance-based. Generally, the types of compensation and benefits provided to our named executive officers are similar to those provided to our other officers and employees.

Throughout this Proxy Statement, the individuals who served as our CEO and CFO during Fiscal 2016, as well as the other individuals included in the Summary Compensation Table on page 49, are referred to as the “named executive officers” or “NEOs.”

Objectives of Compensation Program

The main objectives of our executive compensation program are to create a competitive total rewards package based on the attainment of short-term performance objectives and long-term strategic goals and to retain and attract qualified executive officers who will lead us to long-term success and enhance stockholder value. Each element of our compensation program supports these objectives. Accordingly, our executive compensation program consists of the following three principal elements: base salary, performance-based cash bonus and performance-based and time-based equity grants in the form of stock options and restricted stock units, with an emphasis on performance-based compensation rather than base salary. Our executives are also generally eligible to participate in employee benefit and retirement plans offered by us, which currently include a 401(k) plan, an employee stock purchase plan, and health care and other insurance programs. The benefit programs available to executives are the same as those available to all other eligible employees.

Role of Compensation Committee and Executive Officers in Compensation Decisions

Our Compensation Committee is comprised solely of independent Directors who meet the independence requirements of the NASDAQ and qualify as “outside directors” under Section 162(m) of the Internal Revenue Code.

Our Compensation Committee makes a recommendation to our full Board of Directors regarding the compensation of our CEO through 2016, James E. Cashman III, and our new CEO, Dr. Gopal, including establishing the performance goals and objectives for our CEO, evaluating our CEO’s performance in light of the goals and objectives that were set, and determining and recommending to our Board the CEO’s compensation based on that evaluation. Mr. Cashman serves on our Board of Directors but recuses himself from any deliberations about his compensation. Dr. Gopal similarly recuses himself from any deliberations about his compensation. Our Board of Directors makes all final decisions relating to our CEO’s compensation, other than the granting of equity awards. For 2016, as noted above, Mr. Cashman prepared an analysis for our Compensation Committee recommending each element of compensation to be paid to all other named executive officers, which our Compensation Committee considered along with an analysis from Compensia, our independent compensation consultant, in approving the compensation of our other NEOs. To the extent not established by our Board of Directors, our Compensation Committee is also authorized to establish compensation and benefits for our Chairman and for new and existing independent Directors.

Our CEO, our Vice President of Human Resources and our external compensation consultant provide advice, analysis and recommendations to our Compensation Committee.

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As part of its ongoing oversight of our compensation programs, our Compensation Committee pays particular attention to the review of risks related to our reliance on equity compensation as a significant portion of the total compensation paid to our executive officers. We have determined that it is not reasonably likely that our compensation policies would have a material adverse effect on the Company.

Our Compensation Committee and our Board of Directors considered the following elements of our compensation plans and policies when evaluating whether our plans and policies encourage our executives and employees to take unreasonable risks:

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Setting Exec utive Compensation

To achieve our compensation objectives, our Compensation Committee has structured our annual and long- term performance-based cash and non-cash executive compensation to motivate executives to achieve the business goals set by us and reward executives for achieving such goals. In furtherance of these goals, our Compensation Committee engaged Compensia, Inc. (“Compensia”), an independent compensation consulting firm, to conduct a review of the total compensation program for our CEO and CFO, as well as for other key executives, and including in connection with the hiring of Dr. Gopal as a Company executive, for purposes of setting cash and equity compensation for Fiscal 2016. Compensia provides no other services to the Company.

Compensia provided our Compensation Committee with relevant market data and alternatives to consider when making compensation decisions for our CEO and the recommendations made by our CEO for our CFO and other executives.

In the fourth quarter of 2015, our Compensation Committee met to set 2016 cash and equity compensation for our NEOs and to determine our internal financial targets for 2016. The Compensation Committee reviewed the compensation analysis prepared by Compensia in the fourth quarter of 2015, which considered the size and growth of the Company and benchmarked our executive compensation against select peer companies to help set our NEOs’ base salaries and target bonuses.

The peer companies developed by Compensia for consideration by our Compensation Committee in setting cash and equity compensation for our NEOs for 2016 are the following:

In relation to these peer companies as of the date of the 2015 Compensia analysis, our Company was at the 16 ^th percentile in revenue, was at the 13 ^th percentile in number of employees, was at the 82 ^nd percentile in operating income and was at the 69 ^th percentile in market capitalization.

Elements of Executive Compensation and Allocation among Elements

Our executive compensation program consists of the following three principal elements: base salary, performance-based cash bonus and performance-based and time-based equity grants in the form of stock options and restricted stock units, with an emphasis on performance-based compensation rather than base salary. Each element of compensation is chosen in order to attract and retain the necessary executive talent and to reward corporate performance by creating a balanced focus on shorter-term corporate performance and providing incentives for the attainment of long-term strategic goals and enhancing stockholder value. The allocation of each element of compensation is determined by our Compensation Committee for each executive based on the following factors:

While we believe in structuring executive compensation plans that give our executives incentive to deliver certain objective elements of corporate financial performance over specified time periods, we do not believe in a purely mechanical approach. Instead, part of our executive compensation philosophy includes an element of reward for non-quantitative achievements demonstrated by our executives in the actions and decisions they have made

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throughout the year. When establishing our executive compensation plans for a given year, it is not possible to foresee all of the challenges and demands that will be made of our executives, both as a management team and in their areas of individual responsibility. We believe that, by rewarding decision-making and leadership, in addition to the achievement of quantifiable results, we are building a management team capable of creating stockholder value over the longer-term, while remaining disciplined in delivering shorter-term financial results.

The allocation of an executive officer’s compensation among each of the compensation components is based on our competitive benchmarking, as appropriate, our recruiting and retention goals, our view of internal fairness and consistency and other considerations that our Compensation Committee deems relevant, such as extraordinary performance. However, our Compensation Committee does not structure compensation so that significant compensation derived from one component of compensation negates or offsets compensation from other components. While our Compensation Committee does not have a formula for determining the appropriate allocation between cash and non-cash compensation or short-term and long-term performance-based compensation, historically our Compensation Committee has allocated a greater percentage of an employee’s total compensation to performance-based equity compensation as he or she becomes more senior in the organization.

Cashman Transition Compensation

In connection with the previously announced leadership transition, on December 22, 2016, we entered into a Transition Agreement with Mr. Cashman, pursuant to which Mr. Cashman became the Chairman of the Board, effective January 1, 2017. The terms of the Transition Agreement are described in further detail below, but generally provide Mr. Cashman with a certain level of pay and benefits which the Compensation Committee deemed appropriate after considering the length and level of his service with the Company, his significant contributions to the Company, the Company’s achievements under his leadership, his compensation while serving as CEO of the Company, the expected level of his contributions during the transition period, and the value that his continued role at the Company will have during the transition period.

Gopal Compensation

In connection with our hiring of Dr. Gopal as our President and Chief Operating Officer and in anticipation of his leadership transition to become our Chief Executive Officer effective January 1, 2017, we entered into an employment agreement with Dr. Gopal on August 29, 2016. Similar to Mr. Cashman, the Compensation Committee considered Dr. Gopal’s background and significant previous leadership expertise and expected level of contributions when determining his level of pay and benefits. After evaluating such factors, the Compensation Committee recommended a compensation package for Dr. Gopal to the full Board for approval, which consisted of the terms as set forth below in the proxy statement. Additionally, the equity awards granted to Dr. Gopal, in particular, were set at levels determined to be appropriate for his planned transition to Chief Executive Officer, and at levels determined to be necessary to attract Dr. Gopal to the role.

Consideration of Say-on-Pay Results

Our Compensation Committee met to determine the compensation of our NEOs for 2016 prior to our annual meeting in 2016 at which our stockholders took a non-binding advisory vote on the compensation of our executives. The Compensation Committee considered the results of the 2015 non-binding advisory “say-on-pay” proposal in connection with the discharge of its responsibilities regarding executive compensation after receiving those results. Because approximately 98% of our stockholders voting on the “say-on-pay” proposal approved the compensation of our NEOs described in our proxy statement in 2015, the Compensation Committee did not implement significant changes to our executive compensation program as a result of the stockholder advisory vote.

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Base Salary, Performance-Based Cash Bonus and Total Cash Compensation

In December 2015, our Compensation Committee met to set 2016 cash and equity compensation for our NEOs and to determine our internal financial targets for 2016. As is our standard practice, the Compensation Committee reviewed the compensation analysis prepared by Compensia in the fourth quarter of 2015, which considered the size and growth of the Company and benchmarked our executive compensation against select peer companies.

Our internal financial targets for 2016 were $1.045 billion for internal non-GAAP revenue, $497 million for internal non-GAAP operating profit and $3.71 for internal non-GAAP earnings per share. When compared against these internal financial targets for 2016, we achieved 95% of our internal non-GAAP revenue target for 2016, 94% of our internal non-GAAP operating profit target for 2016 and 99% of our internal non-GAAP earnings per share target for 2016. We calculate internal non-GAAP revenue, internal non-GAAP operating profit and internal non-GAAP earnings per share as described in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 23, 2017 under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the sections entitled “Non-GAAP Results” and “Non-GAAP Measures” beginning on pages 37 and 38, respectively, of the Form 10-K.

Cash Compensation Generally

Base salaries are intended to provide a fixed amount of compensation for an executive’s regular work and are set at appropriate market levels, while performance-based cash bonuses are designed to reward our executives for the achievement of shorter-term financial goals and individual performance objectives. Our base salary determinations principally reflect the skills and performance levels of individual executives, our needs, and pay practices of comparable public companies. We establish executive base salaries conservatively relative to an appropriate set of peers. We believe this policy sets a prudent and fiscally responsible tone for our overall base salary compensation programs, while still enabling us to attract and retain employees who can contribute to our long-term success.

Performance-based cash bonuses effectively link individual contributions to overall business and individual performance and encourage executives to increase stockholder value in both the short and long term. Our philosophy with respect to the allocation of our overachievement of earnings in the form of performance-based cash bonuses is to reward our stockholders first and then to allocate bonus payments first to our employees and then to senior management and the CEO. The amount of performance-based cash bonus payments to be awarded to all executives, including the CEO, depends upon the achievement of corporate performance in the key areas of internal non-GAAP revenue growth, operating profit and earnings per share in accordance with internal plan goals, which are established by our Board prior to the start of each fiscal year. Bonus payments up to 100% of target are based upon the achievement of these internal financial targets which have been aggressive and are not always achieved. Since 2000, the Company has achieved its internal revenue target approximately as often as it has not achieved it. Individual differences in bonus payments above, at or below 100% of target are determined based upon our achievement of internal non-GAAP financial targets and individual performance factors depending on the particular executive’s role. Target bonuses for our executives range from 30% to 100% of base salary for Fiscal 2015, depending on the specific role and job responsibilities held by each of our executives. Our CEO’s performance-based cash bonus is determined semi-annually and at year-end based on corporate, individual and organizational performance at mid-year and year-end. Performance-based cash bonuses for our other executive officers are determined quarterly and at year-end.

Base Salaries Awarded in 2016

Our Compensation Committee set our CEO’s base salary at $750,000 for Fiscal 2016, representing a 3.5% increase over the CEO’s 2015 base salary. Compared to the peer companies listed above, Mr. Cashman’s base salary for 2016 ($750,000) was within the mid-point range at 97% of the median ($773,000). Our Compensation Committee also set Dr. Gopal’s salary as COO at $550,000 consistent with market conditions and internal equity considerations, including his background and significant previous leadership expertise, as well as his anticipated corporate performance in connection with his transition to Chief Executive Officer. Dr. Gopal’s base salary for 2016 was at 116% of the median ($474,000). In December 2016, the Board approved an increase in Dr. Gopal’s base salary to $750,000 effective upon becoming CEO on January 1, 2017.

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In setting base salaries to be paid to all other NEOs for Fiscal 2016, as discussed further above, Mr. Cashman recommended increases over 2015 levels for the base salaries of Ms. Shields, Mr. Abu-Hadba and Mr. Kocis, consistent with the recommendations of the Committee’s independent compensation consultant. Compared to the peer companies listed above, Ms. Shields’ base salary for 2016 ($375,000) was set at 86% of the median ($438,000), Mr. Abu-Hadba’s base salary for 2016 ($364,000) was set at 90% of the median ($406,000) and Mr. Kocis’ base salary for 2016 ($340,000) was set at 75% of the median ($451,000). Our Compensation Committee concurred with Mr. Cashman’s base salary recommendations for these NEOs. Mr. Mahoney joined the Company in December 2016, and his base salary was set at $370,000 consistent with market conditions and internal equity considerations.

Performance-Based Cash Bonuses Awarded in 2016

Our Compensation Committee awarded performance-based cash bonuses above or below 100% of target amounts for Fiscal 2016 because of our level of achievement of internal financial targets, and because of each executive’s level of achievement of his or her 2016 individual goals as approved by our Compensation Committee. Under our executive bonus plan for 2016, target bonuses were set between 30% and 100% of base salary depending on the role and individual goals for each executive. As noted above, annual bonus payments of up to 100% of target for executives are based on our level of achievement of internal financial targets, and individual differences in bonus payments for each executive depend on individual goals and overall performance.

Performance-based cash bonuses for all NEO’s were awarded between 84% and 110% of target for Fiscal 2016 because the Company performed at 95% of its internal non-GAAP revenue plan, 94% of its internal non-GAAP operating profit plan and 99% of its internal non-GAAP earnings per share plan for Fiscal 2016 and each executive’s level of achievement of his or her individual bonus plan goals.

Individual goals for Mr. Cashman in 2016 included achievement of annual corporate operational objectives relating to internal non-GAAP revenue growth, internal non-GAAP operating profit, internal non-GAAP earnings per share, cash management and days sales outstanding. Our Compensation Committee also considered individual strategic goals relating to organic growth, partnering, merger and acquisition plans and achievement, long-term strategic plans, evolution of product roadmaps and the creation of stockholder value, as well as individual goals relating to organizational and executive development, succession planning and stockholder and Board communications. For 2016, Mr. Cashman achieved the corporate operational goal for internal non-GAAP earnings per share, and under- achieved the corporate operational goals for internal non-GAAP revenue and internal non-GAAP operating profit, in relation to our internal financial targets. Mr. Cashman’s cash bonus award also reflects his level of over- achievement of his individual goals as determined by our Compensation Committee and Board.

Individual goals for Ms. Shields in 2016 included improvements in organization and staff development, corporate governance, business operations, IT systems optimization, capital structure and business modeling, merger and acquisition activities, and oversight of the CRM project. Individual goals for Mr. Abu- Hadba in 2016 included evolution and organization of development teams, delivery of product roadmaps on schedule, and improvement in product output efficiency and quality. Individual goals for Mr. Kocis in 2016 included achievement of the 2016 sales plan, delivery of a scalable, motivated, effective sales organization, short- term and long-range forecast accuracy, CRM system optimization, services growth and leveraging marketing investment. Dr. Gopal joined the Company as an employee in August 2016 and his individual goals for the balance of 2016 included achievement of the Q4 financial plan, 2017 planning, sales executive recruiting, 2017 development priorities and strategy development. Mr. Mahoney joined the Company in December 2016 and his individual goals for the balance of 2016 included achieving the Q4 sales plan and driving a successful 2016 close.

Ms. Shields, Dr. Gopal, Mr. Abu-Hadba and Mr. Kocis each received performance-based cash bonus payments for 2016 that were above or below their targets because of our level of achievement of our internal non-GAAP revenue, internal non-GAAP operating profit and internal non-GAAP earnings per share financial targets, for non-quantitative achievements, and because of their level of performance in relation to the individual goals identified above.

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In the aggregate for 2016, Mr. Cashman received a performance-based cash bonus of $627,000, or 84% of his target bonus of $750,000, comprised of a performance bonus for the six-month period of January 1, 2016 through June 30, 2016 in the amount of $258,000 or 86% of target, a performance bonus for the six-month period of July 1, 2016 through December 31, 2016 in the amount of $244,000 or 81% of target, and an annual performance bonus for Fiscal 2016 in the amount of $125,000 or 83% of target.

In the aggregate for 2016, Ms. Shields received a performance-based cash bonus of $268,470, or 94% of her target bonus of $285,000; Dr. Gopal received a performance-based cash bonus of $201,000, or 110% of his target bonus of $182,727; Mr. Abu-Hadba received a performance-based cash bonus of $276,600, or 92% of his target bonus of $300,000; and Mr. Kocis received a performance-based cash bonus of $167,400, or 90% of his target bonus of $186,000 for his performance for the first half and pro-rated second half of Fiscal 2016. Because Mr. Mahoney joined the Company in December 2016, he did not receive a cash bonus target or payment. Individual differences in performance-based cash bonus payments relative to targets were based on individual performance goals described above. Our Compensation Committee concurred with Mr. Cashman’s achieved bonus recommendations for all NEOs.

Total Cash Compensation Awarded in 2016

Utilizing the peer companies developed by Compensia and listed on page 27, Mr. Cashman’s targeted total cash compensation ($1,500,000) was set at 91% of the median ($1,657,000). His actual total cash compensation ($1,377,000) was at 83% of the median for the peer group ($1,657,000).

Compared to the peer companies developed by Compensia and listed on page 27, targeted total cash compensation for Ms. Shields was set at 81% of the median ($811,000), targeted total cash compensation for Mr. Abu- Hadba was set at 94% of the median ($710,000), and targeted total cash compensation for Mr. Kocis was set at 77% of the median ($839,000). Ms. Shields’ actual total cash compensation was at 79% of the median, Mr. Abu-Hadba’s actual total cash compensation was at 90% of the median and Mr. Kocis’ actual total cash compensation (as of his resignation in October 2016) was at 60% of the median. Dr. Gopal joined the Company as President and COO in August 2016 and his targeted and actual total cash compensation was consistent with market conditions, internal equity considerations and based on negotiations to attract Dr. Gopal to the Company. Mr. Mahoney joined the Company in December 2016 and his targeted and actual total cash compensation was consistent with market conditions and internal equity considerations.

Variations Among Executive Officer Compensation

As our CEO and President in 2016, Mr. Cashman had primary responsibility for delivering results and managing operations. Accordingly, his compensation is determined based on Company-wide financial, organizational and strategic goals. Mr. Cashman had the highest performance-based component of his target bonus relative to his base salary, reflecting his overall operational and strategic responsibilities and their direct relationship to stockholder value. Because we performed against our internal financial targets at 95% for internal non-GAAP revenue, 94% for internal non-GAAP operating profit and 99% for internal non-GAAP earnings per share and he achieved many of his individual goals, Mr. Cashman received 84% of his target bonus for 2016. In addition, it is also our Compensation Committee’s intent to ensure that Mr. Cashman’s interests have been aligned with the interests of our stockholders, and accordingly, his compensation has been heavily weighted with performance-based equity components.

As described above, our Compensation Committee also relies on benchmarking data in assessing the reasonableness of the compensation for all of the named executive officers. Mr. Cashman’s base salary of $750,000 was at 97% of the median for CEOs in the peer group. Mr. Cashman’s target bonus was equal to 100% of base salary, compared to the peer group median of 115% of base salary for target bonus, and he was awarded a performance-based cash bonus of $627,000, or 84% of base salary, based on our level of achievement of our internal non-GAAP revenue, internal non-GAAP operating profit and internal non-GAAP earnings per share financial targets, and his level of achievement of his individual   goals.

Dr. Gopal, our President and Chief Operating Officer (and now Chief Executive Officer as of January 1, 2017), has a variable component in his target bonus that is based on achievement of the Q4 financial plan, 2017 planning, sales executive recruiting, 2017 development priorities and strategy development. Dr. Gopal’s target bonus was equal to 100% of base salary, compared to the peer group median of 80% of base salary.

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Ms. Shields, our chief financial officer, has a variable component in her target bonus that is principally tied to corporate performance because of her corporate-wide finance and administration responsibilities, including functional performance of finance, information technology, business operations and investor relations and consideration of potential acquisitions. Ms. Shields’ target bonus was equal to 76% of base salary, compared to the peer group median of 80% of base salary.

Mr. Abu-Hadba, our chief product officer, has a variable component in his target bonus that is based on delivery of the product roadmap, evolution of product architecture and integration, increased development productivity, collaboration on short and long-term product plans, and development of long-term technical initiatives. Mr. Abu-Hadba’s target bonus was equal to 82% of base salary, compared to a peer group median of 60% of base salary.

Mr. Mahoney, our vice president of worldwide sales and customer excellence has a higher performance-based component in his target bonus relative to his base salary because of his responsibilities in driving sales and the heightened risk associated with his role. For example, individual goals for Mr. Mahoney in 2016 included achievement of the 2016 sales plan, delivery of a scalable, motivated, effective sales organization, forecast accuracy, services development and marketing integration. Because Mr. Mahoney’s joined the Company in December 2016, he did not receive a target cash bonus or bonus payment for 2016.

Mr. Kocis, our former vice president of worldwide sales and customer excellence who resigned in October 2016, had a higher performance-based component in his target bonus relative to his base salary because of his responsibilities in driving sales and the heightened risk associated with his role. For example, individual goals for Mr. Kocis in 2016 included achievement of the 2016 sales plan, delivery of a scalable, motivated, effective sales organization, forecast accuracy, services development and marketing integration. Mr. Kocis’ target bonus was equal to 91% of base salary, compared to the peer group median of 90% of base salary.

Performance-Based Equity Compensation

Performance-based equity compensation is intended to align the interests of executives with long-term stockholder interests and to create incentives for executives to work cooperatively to ensure we continue our successful growth. We have no set formula for the granting of performance-based equity awards to individual executives or employees. In determining performance-based equity grants made in 2016, our Compensation Committee set aside a pool of performance-based equity awards by considering the number of equity awards available for grant under our Option Plan and reviewing an analysis prepared by our compensation consultant to determine market and stockholder value transfer levels. Our Compensation Committee believes that performance-based equity award grants help it achieve our compensation goals by giving executives a significant, long-term interest in our success, helping to attract and retain key executives in a competitive market for executive talent and aligning the interests of executives with long-term stockholder interests, thereby enhancing stockholder value. Our Compensation Committee believes that our performance-based equity compensation policies do not create risks that are reasonably likely to have a material and adverse effect on the Company.

Our NEOs are significantly impacted by fluctuations in the world economy and the Company’s stock price as the compensation plans of our NEOs are more heavily weighted with performance-based equity compared to other employees and officers, so that their interests are aligned with the interests of our stockholders. The Company experienced an increase in the price of its Common Stock during 2016 as compared to 2015 and, as a result, total compensation of our NEOs was impacted accordingly.

Our Compensation Committee monitors industry trends and applicable tax, accounting and regulatory changes and might in the future, for financial, competitive or other reasons, use other performance-based equity incentive vehicles in place of or in combination with stock options and restricted stock units.

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Performance-Based Equity Awards Granted for 2016

During Fiscal 2016, we granted stock options, performance-based restricted stock units (“PSUs”), time-based restricted stock units (“RSUs”) and deferred stock units (“DSUs”) to acquire an aggregate of 868,104 shares of our Common Stock to our employees, officers and non-employee Directors, representing 1% of the outstanding shares of our Common Stock as of December 31, 2016. Of this aggregate amount, our six named executive officers received stock options to acquire an aggregate of 238,882 shares, 59,600 PSUs and 118,181 RSUs, or approximately 48% of the total equity we granted in Fiscal 2016. Our employees and other officers received an aggregate of 21,000 stock options, 10,400 PSUs and 370,411 RSUs equal to approximately 46% of the total equity we granted in Fiscal 2016. Our non-employee Directors received an aggregate of 11,200 DSUs and 38,400 RSUs equal to approximately 6% of the total equity we granted in Fiscal 2016 pursuant to the terms of our Option Plan.

In setting the individual equity awards based on the available alternatives, our Compensation Committee considered:

In determining the equity awards for our NEOs in 2016, our Compensation Committee considered analysis and a recommendation from Compensia that equity awards be granted in the form of a combination of performance-based restricted stock unit awards and time-based restricted stock unit awards. In March 2016, Mr. Cashman received an equity award in the form of performance-based and time-based restricted stock units above the 50 ^th percentile, and Ms. Shields, Mr. Abu-Hadba and Mr. Kocis each received an equity award in the form of performance-based and time-based restricted stock units below the 50 ^th percentile, of the grant guidelines identified by Compensia, which our Compensation Committee determined to be appropriate levels considering the factors noted as well as our historic equity grant levels, the equity grants to the employee population generally and each executive’s overall level of compensation. Because Dr. Gopal joined the Company as President and COO in August 2016 and Mr. Mahoney joined the Company in December 2016, they did not receive an award of stock units at such time, but, instead, received initial equity grants in connection with joining the Company.

Long-Term Performance-Based Awards

Long-term performance-based compensation is a combination of stock options, performance-based restricted stock units and time-based restricted stock units. The 2016 performance-based and time-based restricted stock unit grants were above the 50 ^th percentile for Mr. Cashman and below the 50 ^th percentile for Ms. Shields, Mr. Abu-Hadba and Mr. Kocis. Dr. Gopal joined the Company as President and COO in August 2016, and his long-term equity compensation is comprised of stock options and time-based restricted stock units in amounts determined by market conditions and internal equity considerations in connection with a negotiation to attract Dr. Gopal to become an employee of the Company. Mr. Mahoney joined the Company in December 2016, and his long-term equity compensation is comprised of stock options and time-based restricted stock units in amounts determined by market conditions and internal equity considerations.

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Performance-Based Restricted Stock Units

Long-Term Incentive Plan Grants Tied to Total Stockholder Return

Beginning in 2010, the Company established the ANSYS, Inc. Long-Term Incentive Plan (the “Long-Term Incentive Plan”) for executives and other employees selected for participation by our Compensation Committee. Pursuant to the Long-Term Incentive Plan, executives receive an annual target award of performance-based restricted stock units, with performance assessed by comparing the Company’s Total Stockholder Return (“TSR”) to the NASDAQ Composite Total Returns Index TSR over successive three (3) year periods.

In 2014, the Long-Term Incentive Plan was amended and restated (the “Second Amended and Restated Long-Term Incentive Plan”) to amend the performance targets under the Long-Term Incentive Plan for performance periods beginning on or after January 1, 2014. Under the Second Amended and Restated Long-Term Incentive Plan, one third of each award is eligible to be credited for each calendar year during each successive 3- year performance period, with performance assessed by comparing the Company’s TSR relative to the NASDAQ Composite Total Returns Index TSR for each such calendar year. Specifically, one hundred percent (100%) of the applicable portion of the award for each sub-period is eligible to be earned if the TSR equals the NASDAQ Composite Total Returns Index over the same period. The applicable portion of the target award will be reduced by three percentage points for each percent by which the NASDAQ Composite Total Returns Index exceeds the TSR; provided, however, that the applicable portion of the target is reduced to zero percent (0%) if the NASDAQ Composite Total Returns Index exceeds the TSR by twenty-five percent (25%) or more. In addition, zero percent (0%) of the applicable portion of the target award will be earned for any sub-period in which there is both a negative TSR and the NASDAQ Composite Total Returns Index exceeds the TSR. The applicable portion of the target award will be increased by two percentage points for each percent by which the TSR exceeds the NASDAQ Composite Total Returns Index, up to a maximum of one-hundred and fifty percent (150%) of the target award. If, however, there is negative TSR that still exceeds the NASDAQ Composite Total Returns Index, a maximum of one hundred percent (100%) of the target may be earned for such period. For purposes of illustration, the performance assessment is as follows:

Performance-based restricted stock units credited pursuant to the Company’s Second Amended and Restated Long-Term Incentive Plan will be settled in stock to our NEOs at the end of the full 3-year performance cycle, as long as the NEO remains employed by us for the duration of such 3-year period.

For the three-year performance period beginning on January 1, 2014, Mr. Cashman received a target award of 15,000 performance-based restricted stock units under the Company’s Second Amended and Restated Long- Term Incentive Plan, Ms. Shields received a target award of 4,600 performance-based restricted stock units and Mr. Abu-Hadba received a target award of 5,350 performance-based restricted stock units. For the performance sub-period beginning on January 1, 2015 and ending on December 31, 2015, Mr. Cashman earned 2,350 units, Ms. Shields earned 920 units and Mr. Abu-Hadba earned 1,070 units. Because Mr. Kocis joined the Company in July 2014, Dr. Gopal joined the Company as an employee in August 2016 and Mr. Mahoney joined the Company in December 2016, they did not receive an award of units for this performance period. For the performance sub-period beginning on January 1, 2014 and ending on December 31, 2014, no target awards were earned.

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For the three-year performance period beginning on January 1, 2015, Mr. Cashman received a target award of 13,500 performance-based restricted stock units under the Company’s Second Amended and Restated Long- Term Incentive Plan, Ms. Shields received a target award of 3,800 performance-based restricted stock units, Mr. Abu-Hadba received a target award of 3,800 performance-based restricted stock units, and Mr. Kocis received a target award of 3,800 performance-based restricted stock units. Because Dr. Gopal joined the Company as an employee in August 2016 and Mr. Mahoney joined the Company in December 2016, they did not receive an award of units for this performance period. For the performance sub-period beginning on January 1, 2015 and ending on December 31, 2015, Mr. Cashman earned 5,040 units, Ms. Shields earned 1,418 units and Mr. Abu-Hadba earned 1,418 units. Though Mr. Kocis earned 1,418 units, his entire award was forfeited because he resigned from the Company in October 2016.

For the three-year performance period beginning on January 1, 2016, Mr. Cashman received a target award of 17,500 performance-based restricted stock units under the Company’s Second Amended and Restated Long- Term Incentive Plan, Ms. Shields received a target award of 4,100 performance-based restricted stock units, Mr. Abu-Hadba received a target award of 4,100 performance-based restricted stock units and Mr. Kocis received a target award of 4,100 performance-based restricted stock units. Because Dr. Gopal joined the Company as an employee in August 2016 and Mr. Mahoney joined the Company in December 2016, they did not receive an award of units for this performance period. For the performance sub-period beginning on January 1, 2016 and ending on December 31, 2016, no target awards were earned. Because Mr. Kocis left the Company in October 2016, his entire award was forfeited.

Performance-Based Restricted Stock Units Tied to Revenue Growth and Operating Margin

In addition to awards granted under the Second Amended and Restated Long-Term Incentive Plan, our NEOs received performance-based restricted stock units pursuant to our Option Plan. One third of each award is eligible to be credited for each calendar year during each successive 3-year performance period, with performance assessed by comparing the Company’s achieved non-GAAP revenue growth and non-GAAP operating margin percent (in each case as reported in the Company’s public filings) with the Company’s target non-GAAP revenue growth and non-GAAP operating margin as follows:

Performance-based restricted stock units credited pursuant to the Company’s Option Plan will be issued to our NEOs at the end of each successive 3-year performance period, as long as the NEO remains employed by us for the duration of the 3-year performance period.

For the three-year performance period beginning on January 1, 2014, Mr. Cashman received a target award of 15,000 performance-based restricted stock units under the Company’s Option Plan, Ms. Shields received a target award of 4,600 performance-based restricted stock units and Mr. Abu-Hadba received a target award of 5,350 performance-based restricted stock units. For the performance sub-period beginning on January 1, 2015 and ending on December 31, 2015, it was determined that 7% Revenue Growth and 47.5% Operating Margin had been achieved resulting in each of Mr. Cashman, Ms. Shields and Mr. Abu-Hadba earning 0% of the portion of the target award eligible to be earned for 2015. Accordingly, no performance stock units have been banked for each of Mr. Cashman, Ms. Shields and Mr. Abu-Hadba for this performance sub-period. Because Mr. Kocis joined the Company in July 2014, Dr. Gopal joined the Company as an employee in August 2016 and Mr. Mahoney joined the Company in December

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2016, they did not receive an award of units for this performance period. For the performance sub-period beginning on January 1, 2014 and ending on December 31, 2014, it was determined that 10% Revenue Growth and 48% Operating Margin had been achieved resulting in each of Mr. Cashman, Ms. Shields and Mr. Abu-Hadba earning 60% of the portion of the target award eligible to be earned for 2014. Accordingly, 3,000, 920 and 1,070 performance stock units have been banked for each of Mr. Cashman, Ms. Shields and Mr. Abu-Hadba, which units will become vested on December 31, 2016 subject to each executive’s continued employment through such date. In making its determination of the achievement of the 2014 operating metrics, the Compensation Committee exercised its discretion to determine the amounts and types of revenue that would be included for this purpose. Had the Compensation Committee not exercised such discretion, no target awards would have been earned.

For the three-year performance period beginning on January 1, 2015, Mr. Cashman received a target award of 13,500 performance-based restricted stock units under the Company’s Option Plan, Ms. Shields received a target award of 3,800 performance-based restricted stock units, Mr. Abu-Hadba received a target award of 3,800 performance-based restricted stock units, and Mr. Kocis received a target award of 3,800 performance-based restricted stock units. Because Dr. Gopal joined the Company as an employee in August 2016 and Mr. Mahoney joined the Company in December 2016, they did not receive an award of units for this performance period. For the performance sub-period beginning on January 1, 2015 and ending on December 31, 2015, it was determined that 7% Revenue Growth and 47.5% Operating Margin had been achieved resulting in each of Mr. Cashman, Ms. Shields, Mr. Abu-Hadba and Mr. Kocis earning no portion of the target award eligible to be earned for 2015. Accordingly, no performance stock units have been banked for each of Mr. Cashman, Ms. Shields, Mr. Abu-Hadba and Mr. Kocis for this performance sub-period. Further, because Mr. Kocis left the Company in October 2016, the remainder of his award was forfeited.

For the three-year performance period beginning on January 1, 2016, Mr. Cashman received a target award of 17,500 performance-based restricted stock units under the Company’s Option Plan, Ms. Shields received a target award of 4,100 performance-based restricted stock units, Mr. Abu-Hadba received a target award of 4,100 performance-based restricted stock units and Mr. Kocis received a target award of 4,100 performance-based restricted stock units. Because Dr. Gopal joined the Company as an employee in August 2016 and Mr. Mahoney joined the Company in December 2016, they did not receive an award of units for this performance period. For the performance sub-period beginning on January 1, 2016 and ending on December 31, 2016, it was determined that 5% Revenue Growth and 47% Operating Margin had been achieved resulting in each of Mr. Cashman, Ms. Shields, Mr. Abu-Hadba and Mr. Kocis receiving no portion of the target award eligible to be earned for 2016. Accordingly, no performance stock units have been banked for each of Mr. Cashman, Ms. Shields, Mr. Abu-Hadba and Mr. Kocis for this performance sub-period. Further, because Mr. Kocis left the Company in October 2016, the remainder of his award was forfeited.

Performance-Based Restricted Stock Units Tied to Revenue Growth and Bookings Growth

In addition, certain NEOs received additional performance-based restricted stock units pursuant to our Option Plan. One third of each award is eligible to be credited for each calendar year during each successive 3- year performance period, with performance assessed by comparing the Company’s achieved non-GAAP revenue growth and bookings growth (reflecting the percentage growth in non-GAAP revenue or bookings for any calendar year in the period compared to the prior calendar year’s non-GAAP revenue or bookings) with the Company’s target non-GAAP revenue growth and bookings growth as follows:

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For the three-year performance period beginning on January 1, 2015, Mr. Cashman received a target award of 46,307 performance-based restricted stock units under the Company’s Option Plan, Ms. Shields received a target award of 11,576 performance-based restricted stock units, Mr. Abu-Hadba received a target award of 11,576 performance-based restricted stock units, and Mr. Kocis received a target award of 11,576 performance- based restricted stock units. Because Dr. Gopal joined the Company as an employee in August 2016 and Mr. Mahoney joined the Company in December 2016, they did not receive an award of stock units for this performance period. For the performance sub-period beginning on January 1, 2015 and ending on December 31, 2015, it was determined that 7% Revenue Growth and 5% Bookings Growth had been achieved resulting in each of Mr. Cashman, Ms. Shields, Mr. Abu-Hadba and Mr. Kocis earning no portion of the target award eligible to be earned for 2015. Accordingly, no performance stock units have been banked for each of Mr. Cashman, Ms. Shields, Mr. Abu-Hadba and Mr. Kocis for this performance sub-period. Further, because Mr. Kocis left the Company in October 2016, the remainder of his award was forfeited.

For the performance sub-period beginning on January 1, 2016 and ending on December 31, 2016, it was determined that 5% Revenue Growth and 15% Bookings Growth had been achieved resulting in each of Mr. Cashman, Ms. Shields and Mr. Abu-Hadba earning no portion of the target award eligible to be earned for 2016. Because Dr. Gopal joined the Company in August 2016 and Mr. Mahoney joined the Company in December 2016, they did not receive an award of stock units for this performance period. Accordingly, no performance stock units have been banked for each of Mr. Cashman, Ms. Shields and Mr. Abu-Hadba for this performance sub-period. Because Mr. Kocis resigned from the Company effective October 2016, he was not eligible for awards for this performance sub-period.

Time-Based Restricted Stock Units

In March 2016, pursuant to the Company’s Option Plan, our NEOs also received time-based restricted stock unit awards that vest annually in equal installments over four (4) years, subject to the NEO’s continuous employment with us. Mr. Cashman received an award of 35,000 time-based restricted stock units, Ms. Shields received an award of 8,200 time-based restricted stock units, Mr. Abu-Hadba received an award of 8,200 time-based restricted stock units and Mr. Kocis received an award of 8,200 time-based restricted stock units. Because Mr. Kocis left the Company in October, 2016, he did not vest in any restricted stock units and his award was forfeited. Dr. Gopal joined the Company as an employee in August 2016, and received an award of 52,581 time-based restricted stock units at that time. The size of Dr. Gopal’s award, in particular, was based on his background and significant previous leadership expertise while reflecting his overall operational and strategic responsibilities and their direct relationship to stockholder value in connection with his transition to become the Company’s Chief Executive Officer. Further, his award was set at levels determined to be necessary and appropriate for both attracting him to his role and the planned transition to CEO for which he did not receive an additional equity grant. Mr. Mahoney joined the Company in December 2016, and he received an award of 6,000 restricted stock units at that time, consistent with market conditions and internal equity considerations.

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Differences in performance-based and time-based restricted stock unit awards among NEOs reflect factors such as individual roles and responsibilities, past performance and execution history, experience on the management team and retention factors. No shares of stock will vest or be issued pursuant to these target awards until the end of each three-year performance period and provided performance targets are achieved.

Non-Qualified Stock Option

Dr. Gopal joined the Company in August 2016, and pursuant to the Company’s Option Plan and Equity Grant Policy, received a nonqualified stock option grant of 208,882 shares at that time. Such option vests annually over four (4) years, subject to his continuous employment with us. The size of Dr. Gopal’s award, in particular, was based on his background and significant previous leadership expertise while reflecting his overall operational and strategic responsibilities and their direct relationship to stockholder value in connection with his transition to become Chief Executive Officer. Further, his award was set at levels determined to be necessary and appropriate for both attracting him to his role and the planned transition to Chief Executive Officer for which he did not receive an additional equity grant.

Mr. Mahoney joined the Company in December 2016, and he received an award of 30,000 non-qualified stock options at that time, consistent with market conditions and internal equity considerations.

Equity Grant Policy

Under the ANSYS, Inc. Equity Grant Policy, all grants, and the terms and conditions thereof, are authorized and approved by our Compensation Committee. Our Compensation Committee may authorize block grants of options or restricted stock units for employees who are not our executive officers or directors, and delegate the allocation of those awards to our CEO, CFO, General Counsel and Vice President of Human Resources. Our Compensation Committee has delegated to our CEO and Vice President of Human Resources authority to make (i) new hire option grants of up to 10,000 options per new hire, not to exceed an aggregate of 50,000 delegated new hire option grants per calendar quarter, and new hire restricted stock unit grants of up to $350,000 per new hire, not to exceed an aggregate of $700,000 per calendar quarter; and (ii) stock option and restricted stock unit grants to new employees acquired in connection with delegated business combinations, not to exceed an aggregate grant date fair value of ten percent (10%) of the purchase price, inclusive of the purchase price, of each delegated business combination. Our Compensation Committee must authorize and approve any changes to the terms and conditions of any grant and any exceptions to our policy.

Under our policy, grants to existing directors, officers, employees, consultants and key persons occur during open trading windows when all material information, including our earnings, has been publicly disclosed. Accordingly, the grant date for all grants will be the later of (i) forty-five (45) days after the end of each calendar quarter or the next business day thereafter, (ii) two (2) business days after the start of our next open trading window after the end of a calendar quarter or the next business day thereafter, or (iii) for independent directors, beginning with calendar year 2016 as described above, on the date of the Company’s annual stockholder meeting, unless otherwise determined by our Compensation Committee. No grant date shall precede the date the grant was authorized by our Compensation Committee. The grant date for delegated new hire grants shall be the last business day of the month in which the hire date occurs and shall not precede the employee’s hire date.

The grant or exercise price for all grants will be the fair market value of the stock on the grant date. It is our policy to set the fair market value equal to the closing price of the stock on the grant date.

Equity Ownership by Executives

On July 25, 2007, our Committee approved Management Stock Ownership Guidelines. Under these guidelines, our CEO is required to own equity in the Company equal to a minimum of three times his or her base salary, and all other members of our senior management team are required to own equity in the Company equal to a minimum of two times their base salary, and to attain this minimum stock ownership level within four years. For purposes of this calculation, at least one half of the minimum must be comprised of shares of stock and the balance may be

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comprised of up to one half of the in-the-money value of an executive’s stock option gains. The Management Stock Ownership Guidelines are part of our Corporate Governance Guidelines and are available on our website at www.ansys.com in the “Investor Relations” section under the heading “Corporate Governance.”

Recoupment of Compensation

On May 12, 2010, our Board of Directors established a Recoupment of Compensation policy. Under the policy, if our Board determines in its sole discretion that the Company’s financial results are restated, whether in part or in their entirety, due to misconduct by one or more executive officers, the Board shall have the discretion to use commercially reasonable best efforts to remedy the misconduct and prevent its recurrence. The Board may determine, to the fullest extent permitted by law, to (i) recoup any bonus or other performance-based compensation that has been paid, (ii) cancel any equity-based awards made, and/or (iii) recoup any gains made under equity-based awards made, to any executive officer engaged in such misconduct. The Board may also take any of the actions described in the preceding sentence in the event that one of the Company’s executive officers violates the terms of a non-competition agreement with the Company. The Recoupment of Compensation policy is part of our Corporate Governance Guidelines and is available on our website at www.ansys.com in the “Investor Relations” section under the heading “Corporate Governance.”

Anti-Hedging Policy

Under our Policy on Insider Trading and Insider Trading Procedures, no insider, which includes all of our Directors and NEOs, may at any time sell any securities of the Company that are not owned by such insider at the time of sale (a “short sale”). In addition, no insider may buy or sell puts, calls or other derivative securities of the Company, or pledge securities of the Company, at any time.

Perquisites

Some of our executives receive de minimus benefits that are not available to all of our employees. We do not provide aircraft or premium travel allowances to our executives, and we have no deferred compensation, pension arrangements, post-retirement health coverage or similar benefits for our executives.

Perquisites Provided in 2016

All of our named executive officers participated in the same Company retirement plans that are available to all of our eligible employees. Mr. Cashman, Ms. Shields and Mr. Abu-Hadba each received a Company 401(k) plan matching contribution of $11,818 and Mr. Kocis received a Company 401(k) plan matching contribution of $13,933. Mr. Cashman received an auto allowance of $7,200, reimbursement for auto usage-related expenses of $1,000, gifts of $12,027, legal fees of $10,000 and life insurance premiums totaling $3,430. Dr. Gopal received a relocation payment of $11,693 and legal fees of $17,923. Our corporate health and other insurance plans are the same for all eligible employees, and our executives pay the same premiums as our other employees who are enrolled in our plans.

Post-Employment Compensation

Retirement Benefits

We do not provide pension arrangements or post-retirement health coverage for our executives or employees, except as provided in certain employment agreements and our Executive Severance Plan discussed beginning on page 48. Our U.S.-based employees are eligible to participate in our 401(k) plan or that of one of our subsidiaries. In any plan year, we will contribute to each ANSYS, Inc. participant a matching contribution as follows: a dollar-for-dollar match for the first 3% an employee contributes to his or her 401(k) account, and a 25% match on the next 5% an employee contributes, for a maximum matching payment by us of 4.25%. All other executives are eligible to participate in the retirement plans offered generally to employees in the location where they are employed.

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Nonqualified Deferred Compensation

We do not provide any nonqualified defined contribution or other deferred compensation plans.

Other Post-Employment Payments

We do not provide post-employment health coverage or other benefits, except in connection with certain employment agreements, details of which are included below under “Employment, Severance and Change-of- Control Agreements.”

Employment, Severance and Change of Control Agreements

All of our employees, including our executive officers, are employees-at-will and as such do not have employment contracts with us, except in the case of our CEO and our President and COO (who is now our CEO) and some employees of our foreign or acquired subsidiaries, which is consistent with our moderately conservative compensation philosophy. We have entered into severance agreements with these individuals because of the unique situations of each of these executives.

Cashman Agreements

In connection with the previously announced leadership transition, on December 22, 2016, we entered into a Transition Agreement with Mr. Cashman, pursuant to which Mr. Cashman became Chairman of the Board, effective as of January 1, 2017. Pursuant to the terms of the Transition Agreement, Mr. Cashman will be employed through April 30, 2019 (or such earlier date as his employment is terminated pursuant to the terms of the Transition Agreement). From the period from January 1, 2017 through February 28, 2018, Mr. Cashman will be paid $250,000 in the aggregate, in bi-monthly installments. From the period from March 1, 2018 through April 30, 2019, Mr. Cashman will be paid $250,000 in the aggregate, in bi-monthly installments. Mr. Cashman will not be entitled to bonus payments during his employment pursuant to the Transition Agreement. Mr. Cashman will continue to be eligible to participate in our benefit plans subject to the terms of such plans.

In the event that Mr. Cashman’s employment with us is terminated by us without “cause” prior to April 30, 2019 and subject to entering into an agreed upon release of claims, Mr. Cashman will be entitled to receive an amount equal to three million dollars ($3,000,000) less (i) any salary he has received pursuant to the Transition Agreement and (ii) the aggregate fair market value (determined at the highest of our stock price on the date such amounts vested or on the date of his termination of employment or on the date the shares received pursuant to such awards were sold (based on actual sale price)) of any time or performance-based restricted stock units that vested during Mr. Cashman’s employment pursuant to the Transition Agreement (whether granted in connection with the Transition Agreement or otherwise). Such amounts would be payable in equal monthly installments over the next 24-month period following the effective date of the release. In addition, if such termination without “cause” occurs prior to Mr. Cashman reaching age 65, we will continue to provide Mr. Cashman with life insurance coverage in the amount of $2,000,000 and health insurance coverage through Company-paid COBRA premiums equal to our current contributions for Mr. Cashman until the date Mr. Cashman reaches age 65. Mr. Cashman will not be entitled to any severance if his employment with the Company ends for any other reason, including as a result of reaching the end of the term of the Transition Agreement. Mr. Cashman has agreed to remain subject to the existing non-competition, non-solicitation and non-hire restrictions included in his employment agreement. Other than those obligations, the terms of the Transition Agreement supersede the terms of Mr. Cashman’s employment agreement.

Prior to the Transition Agreement, we had entered into an employment agreement with Mr. Cashman in 2003, which was subsequently amended in 2011. Mr. Cashman’s amended employment agreement originally had a five-year term commencing in 2011, with annual renewals thereafter. At the end of the original five-year term, and at the end of each annual renewal period thereafter, either party may give notice of its desire to terminate the agreement. If the Company chooses not to renew the agreement, it would be considered a termination without cause (as defined in the agreement).Mr. Cashman’s employment agreement (i) provides for an annual base salary and participation in our executive bonus plan, (ii) provides for termination benefits equal to two times his combined salary and target bonus and continuation of benefits then in effect if we terminate him without cause at any time or

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demote or terminate him with or without cause within 180 days following a change of control, or if he resigns following our material breach of his employment agreement, (iii) in the case of a change of control, provides for “double trigger” accelerated vesting of stock options in the event Mr. Cashman’s employment is terminated by us without cause or by him with good reason in the 18 month period following the change in control (as such terms are defined in the employment agreement), (iv) provides Mr. Cashman with a $2.0 million term life insurance policy, the proceeds of which are payable to beneficiaries designated by Mr. Cashman, and (v) restricts competitive activities by Mr. Cashman for two years following the termination of his employment with us regardless of the basis of that termination. The provisions described in clause (v) above continued to be effective following the effectiveness of the Transition Agreement.

Gopal Agreement

In connection with our hiring of Dr. Gopal as our President and COO and in anticipation of his leadership transition to become our CEO, we have also entered into an employment agreement with Dr. Gopal on August 29, 2016, pursuant to which Dr. Gopal’s employment will be for an initial term of one year, to automatically continue for additional one-year periods unless either party elects not to renew on 60 days prior written notice or the employment is earlier terminated by either party. Under the terms of the employment agreement, Dr. Gopal will receive an annual base salary of $550,000, which was increased to $750,000 by the Board in December 2016, and an annual bonus opportunity of up to 100% of his base salary in accordance with bonus goals and targets set by the Board. For Fiscal 2016, Dr. Gopal’s bonus opportunity will be pro-rated for the portion of the year he was employed by us. Dr. Gopal will be eligible to participate in all of our benefit plans subject to the terms of such plans.

In the event that Dr. Gopal’s employment with us is terminated by us without “cause” or as a result of his resignation with “good reason,” Dr. Gopal will be entitled to (i) receive an amount equal to two times the sum of his then effective base salary plus his target bonus, payable over 24 months in equal installments, (ii) in certain circumstances a monthly payment by us of an amount equal to the employer health insurance contribution amount that would have been paid in respect of Dr. Gopal for at most 24 months following such termination, (iii) the vesting of a portion of the time-based vesting restricted stock units included in the Initial RSUs (as defined below) as if Dr. Gopal had been employed for an additional two (2) years, and (iv) the period of time during which Dr. Gopal may exercise his vested stock options shall be extended to the longer of (x) three months after his date of termination or (y) seven days after the commencement of our first open trading window that occurs after the date of termination, but in no event later than the 10-year expiration date of such options.

If a termination under such circumstances occurs during the period beginning 60 days prior to the effective date of a definitive agreement that will result in a change in control and ending 18 months after the consummation (closing) of a change in control, then, in lieu of the benefits described in the foregoing sentence, Dr. Gopal will be entitled to (a) the amounts described in clause (i) above, which will be paid in a lump sum in certain circumstances rather than over 24 months, (b) the acceleration and vesting of all outstanding stock options or other stock-based awards held by Dr. Gopal, subject to any performance or metric-based requirements set forth therein which shall be separately determined as set forth in the applicable award agreement and (c) in certain circumstances, a monthly payment by us of an amount equal to the employer health insurance contribution amount that would have been paid in respect of Dr. Gopal for at most 24 months following such termination.

Dr. Gopal has agreed to be subject to certain non-competition, non-solicitation and non-hire provisions during the term of his employment and for 24 months following the termination of his employment, subject to certain carve-outs for passive involvement in private equity firms with competitive investments, serving as a board member (or equivalent) of businesses with a de minimis competitive activity or serving as an executive of a business with a de minimis competitive activity provided that he has no involvement with the competitive activity.

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Executive Severance Plan

On February 17, 2010, the Company adopted the ANSYS, Inc. Executive Severance Plan, which was amended as of July 29, 2014, (“Executive Severance Plan”), for executives and other employees selected for participation by our Compensation Committee. Pursuant to the Executive Severance Plan, covered executives whose employment with the Company is terminated for any reason other than for cause, death or disability will receive a lump-sum severance payment equal to the sum of six (6) months’ base salary and target bonus and an amount equal to the earned, but unpaid, portion of the covered executive’s target bonus, as well as twelve (12) months’ health and welfare benefits and outplacement services up to $15,000 in the aggregate. In the event the employment of a covered executive is terminated for any reason other than for cause, death or disability, or by the covered executive with good reason, in either case within eighteen (18) months after a change of control of the Company and without cause, the covered executive will (a) receive a lump-sum severance payment equal to the sum of twelve (12) months’ base salary and target bonus and an amount equal to the earned, but unpaid, portion of the covered executive’s target bonus, (b) receive twelve (12) months’ health and welfare benefits and outplacement services up to $15,000 in the aggregate and (c) have all outstanding stock options and other outstanding stock-based awards accelerate and become fully exercisable and non-forfeitable as of the date of such termination of employment. Ms. Shields, Mr. Abu-Hadba and Mr. Mahoney currently participate in the Executive Severance Plan. Mr. Cashman and Dr. Gopal do not participate in the Executive Severance Plan.

All of our executive equity award agreements, including those of Mr. Cashman, Dr. Gopal, Ms. Shields, Mr. Abu- Hadba and Mr. Mahoney, are subject to “double-trigger” vesting, meaning that if within 18 months of a change of control, their respective employment is terminated without cause or is terminated by such executive after any adverse modification of his or her duties, principal employment location or compensation, then all stock options and other equity incentives awarded to that employee would become fully vested. Assuming a change of control occurred on December 31, 2016, their employment terminated on December 31, 2016, and the price per share paid in the change of control is the closing market price as of that date, Mr. Cashman would have received $18,364,537, Ms. Shields would have received $4,808,740, Dr. Gopal would have received $4,863,217, Mr. Abu-Hadba would have received $5,052,283 and Mr. Mahoney would have received $554,760 in connection with the vesting of their stock options, PSUs and RSUs.

Had a change of control occurred during Fiscal 2016 and had their employment been terminated on December 31, 2016, Mr. Cashman, Ms. Shields, Dr. Gopal, Mr. Abu-Hadba and Mr. Mahoney would have been eligible to receive the severance payments set forth in the table entitled “Potential Payments Under Employment, Severance and Change-of-Control Agreements” on page 46 of this Proxy Statement. Further, as described below, Mr. Cashman’s severance protection was modified, effective January 1, 2017, pursuant to the terms of the Transition Agreement.

Our Compensation Committee has implemented these change of control arrangements because it believes that such arrangements are necessary to protect the interests of our senior executives when a potential change of control could affect our executives’ job security, authority or compensation and that these arrangements help us recruit and retain executive-level talent. These change of control arrangements also promote the interests of our stockholders by mitigating the senior executives’ concerns about such potential matters and thereby assuring that management provides guidance to the Board of Directors and stockholders that is not related to such concerns. In general, change of control agreements are in place to provide appropriate incentive in a change of control situation positive to stockholders.

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