CDNS Cadence Design Systems Inc

		NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS

The 2024 Annual Meeting of Stockholders of CADENCE DESIGN SYSTEMS, INC., a Delaware corporation, will be held as follows:

Items of Business:

The purpose of the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) is to consider and take action on the following:

These items of business are more fully described in the proxy statement accompanying this notice.

Record Date:

Holders of Cadence Design Systems, Inc. common stock at the close of business on March 4, 2024 are entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof.

How to Vote:

Your vote is important to us. Please cast your vote promptly via the internet, telephone or mail. Specific instructions on how to vote are included in the Notice of Internet Availability of Proxy Materials that Cadence will mail to its stockholders as of the Record Date on or about March 20, 2024. You will also be able to vote your shares electronically during the virtual Annual Meeting.

How to Attend:

The Annual Meeting will be held online at www.meetnow.global/ M5WZT79 via live audio webcast. Stockholders will be able to attend and participate in the Annual Meeting online, vote their shares electronically, and submit questions through the virtual meeting platform during the meeting. Please refer to the “Information About the Annual Meeting” section of the proxy statement for detailed instructions on how to register for and attend the Annual Meeting.

By Order of the Board of Directors,

TABLE OF CONTENTS

PROXY STATEMENT   LETTER TO OUR STOCKHOLDERS     Dear Cadence Stockholders:   On behalf of the Board of Directors, I would like to thank you for your continued trust and confidence in Cadence. The Board represents your interests as we work towards creating sustainable long-term value for stockholders. We are continuing our

focus on overseeing the execution of Cadence’s business strategy and prudent risk management, and I am pleased to communicate with you about several of our priorities and actions since the 2023 Annual Meeting of Stockholders.

Business Strategy and Risk Management

The Board discusses Cadence’s business strategy and risk throughout the year. In 2023 and early 2024, Cadence delivered several significant products including the revolutionary Millennium^™ M1 platform, the industry’s first accelerated multi-physics supercomputing platform. Cadence also substantially grew its footprint at market shaping customers in 2023 and furthered its relationships with key ecosystem partners. Generational trends such as AI, hyperscale computing, autonomous driving, 5G, and IoT continue driving strong design activity and our Intelligent System Design^™ strategy has us extremely well positioned to benefit from the resulting opportunities. Cadence is at the forefront of the AI revolution, closely partnering with several marquee semiconductor and systems companies on their trailblazing AI designs. Over the course of 2023, Cadence continued building out its generative Cadence.AI portfolio, the industry’s broadest AI offerings spanning chip to board to system, delivering exceptional optimization and productivity benefits. Accelerating momentum of the Cadence.AI portfolio has led to an almost tenfold increase in the number of customers adopting Cadence’s GenAI solutions in 2023, as customers embrace the technology to develop optimized products much more efficiently. Cadence continues to return significant value to stockholders through our continued focus on delivering innovative products, consistent execution, and driving customer success.

Human Capital Management and Corporate Social Responsibility

Cadence employees are at the center of everything we create and the business success we achieve. Our people-first One Team culture drives the employee experience and enables us to attract and retain the best talent. Our programs foster high trust, collaboration, inclusiveness and teamwork, and Cadence is dedicated to creating an environment where employees of all backgrounds can have a meaningful career and can achieve their full potential. Our One Team culture cultivates the innovation needed to develop Cadence’s suite of industry-leading products and services. Our team of passionate, dedicated, and talented employees go above and beyond for our customers, our communities, and each other, generating long-term value for Cadence and all its stakeholders. Our 49% headcount growth over the last five years and average tenure of 6.9 years reflect our efforts to create an environment that attracts and retains high-performing talent. Cadence was again recognized for its One Team culture in 2023, receiving accolades such as #9 on Fortune’s World’s Best Workplaces list, The Wall Street Journal’s Best-Managed Companies, the Human Rights Campaign Equality 100 Award for LGBTQ+ inclusion, and Global Semiconductor Alliance’s (GSA) Designing the Difference Award. Of employees surveyed, 94% say they are proud to tell others they work at Cadence and 93% say Cadence is a great place to work.

Cadence is dedicated to building ethical and sustainable business operations and supply chains, and to maintaining governance structures that are in line with the best practices of our peers. In 2023, we submitted our greenhouse gas reduction targets to the Science Based Targets Initiative (SBTi) for validation, procured 100% renewable energy for our global operations, and are a CarbonNeutral^® certified company for the third year in a row. The Cadence Giving Foundation partnered with the Clinton Health Access Initiative to provide funding and

technology to develop and scale access to low-emission AC units in India and Indonesia, an effort that is expected to mitigate 60Gt of CO2 emissions by 2050 – a year’s worth of current emissions for the entire planet. In addition, Cadence’s products and services enable our customers to design tomorrow’s products and help drive advancements in sustainability across industries.

We encourage you to review the Corporate Social Responsibility section of this proxy statement, as well as our 2023 ESG Report, which will be available on the Corporate Social Responsibility page at www.cadence.com, for more information on our environmental, social and governance initiatives.

Board Refreshment

Dr. John B. Shoven is not seeking re-election at the Annual Meeting of Stockholders when his current term expires. The Board thanks Dr. Shoven for his 32 years of service on the Board, including 16 years as Chair, and for his invaluable contributions to Cadence. As we continue to evaluate board refreshment, we remain committed to seeking skilled and talented leaders who can apply their unique and valuable experiences to the stewardship of Cadence. Since the beginning of 2020, we have added five directors to the Board, each of whom enhances our Board through their distinct and diverse professional and personal experiences. We regularly review board composition and will continue to proactively manage the composition of the Board to ensure it has the appropriate mix of tenures and the requisite skills to address Cadence’s current and future needs.

Corporate Governance and Stockholder Engagement

We routinely evaluate our corporate governance in light of best practices at fellow S&P 500 companies, investor guidelines and alignment with Cadence’s strategy and needs. As our stockholders play an important role in governance, Cadence maintains a robust stockholder engagement program to better understand your viewpoints on topics such as sustainable business practices, board composition and refreshment, culture, diversity, equity and inclusion, and executive compensation. For our engagement in the fall of 2023, Cadence reached out to more than 20 stockholders representing over half of our outstanding shares. Our stockholders also have the opportunity to communicate their views at the Annual Meeting, quarterly earnings process, or by writing to us at the address provided in the section of this proxy statement entitled “Communication with Directors.”

Your vote is important to us. We encourage you to read this proxy statement and vote your shares.

Sincerely,

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE HIGHLIGHTS

CORPORATE GOVERNANCE PRACTICES

Cadence is governed by the Board and the committees of the Board, which meet throughout the year. Cadence and its Board are committed to sound corporate governance which helps Cadence compete more effectively, sustain its success and build long-term stockholder value. The Board and management regularly review and evaluate Cadence’s corporate governance practices. Cadence’s corporate governance documents, including the charters of the Audit Committee, Compensation Committee, Corporate Governance and Nominating Committee and Finance Committee, the Code of Business Conduct, the Related Party Transactions Policies and Procedures and the Board’s Corporate Governance Guidelines, are available on the Corporate Governance page at www.cadence.com. Paper copies of these documents are also available to stockholders upon written request directed to Cadence’s Corporate Secretary at our corporate offices located at 2655 Seely Avenue, Building 5, San Jose, California 95134.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines, which cover various topics relating to the Board and its activities, including the selection and composition of the Board, Board leadership, compensation of directors, responsibilities of directors, Board access to senior management and outside advisors, meeting procedures, Board and committee responsibilities and other matters. The Corporate Governance and Nominating Committee annually reviews the Corporate Governance Guidelines, which may be amended by the Board at any time and were most recently amended in May 2023.

Code of Business Conduct

Cadence has adopted a Worldwide Code of Business Conduct (the “Code of Business Conduct”) to provide standards for ethical conduct in dealing with customers, suppliers, agents, government officials and others. The Code of Business Conduct applies to Cadence’s directors, officers and employees (and those of its subsidiaries), including Cadence’s Chief Executive Officer and Chief Financial Officer. The Code of Business Conduct also applies to certain independent contractors and consultants who work at Cadence’s facilities or at Cadence’s direction. Compliance with the Code of Business Conduct is a condition to continued service or employment with Cadence. The Code of Business Conduct covers topics including diversity and inclusion, health and safety, confidentiality of assets and information, conflicts of interest, anonymous reporting of non-compliance, compliance with federal and state securities laws, employment practices, political contributions, payment practices and compliance with competition, human rights, anti-corruption and other laws and regulations.

Any waiver of a provision of the Code of Business Conduct with respect to a director or an executive officer may only be made by the Board. Any waivers for other employees may be granted only by the Chief Executive Officer or the General Counsel or their respective designees. To the extent required under applicable U.S. Securities and Exchange Commission (the “SEC”) or Nasdaq Stock Market (“Nasdaq”) rules, Cadence will disclose material amendments to the Code of Business Conduct and any waiver of its provisions with respect to any director or executive officer in accordance with applicable law by posting such information on its website at www.cadence.com.

Stock Ownership Guidelines

The Board has adopted Stock Ownership Guidelines for Cadence’s directors and executive officers to further align the interests of the directors and executive officers with the interests of stockholders and to reinforce Cadence’s commitment to sound corporate governance. Each non-employee member of the Board is required to hold shares of Cadence common stock with a value of at least $375,000 within five years of the date of his or her initial appointment or election to the Board. Cadence’s Chief Executive Officer is required to hold shares of Cadence common stock with a value of at least three times his or her annual base salary within five years of the date of his or her appointment, and Cadence’s other executive officers are required to hold shares of Cadence common stock with a value of at least his or her annual base salary within five years of the date of his or her appointment.

As of the Record Date, all directors and executive officers met the stock ownership guidelines applicable to them.

Anti-Hedging Policy and Trading Restrictions

Cadence’s Securities Trading Policy restricts certain transactions in Cadence securities and prohibits Cadence’s directors, executive officers and all other Cadence employees (and their respective family and household members) from hedging their ownership of Cadence securities (regardless of whether such securities were granted as compensation or are otherwise held, directly or indirectly, by such employee or director), including by purchasing financial instruments such as prepaid variable forward contracts, equity swaps, collars and exchange funds, or trading in publicly-traded options, puts, calls or other derivative instruments related to Cadence securities. Cadence’s Securities Trading Policy also prohibits short-sales and similar transactions and pledges of Cadence stock or deposits of Cadence stock in margin accounts.

CORPORATE SOCIAL RESPONSIBILITY

Cadence’s commitment to corporate social responsibility and its environmental, social and governance (“ESG”) initiatives create value for the company and all of its stakeholders. Our employees are at the center of everything we create and the business success we achieve. Cadence is committed to maximizing innovation by fostering an environment where all employees have an equal opportunity to share their ideas and to be heard. Fostering a high-performing, inclusive culture is a foundational tenet of our business strategy. We believe that as a global leader in electronic design whose offerings enable the world’s most innovative companies to bring to market products that transform the way people live, work and play, Cadence has an opportunity and a responsibility to be an organization that positively impacts society. As we work towards this goal, Cadence is committed to building ethical and sustainable business operations and supply chains and to maintaining governance structures that are in line with the best practices of our peers.

For more information on Cadence’s ESG strategy, programs and activities, see Cadence’s Corporate Social Responsibility page at www.cadence.com for our annual ESG Report, including the 2022 ESG Report and the 2023 ESG Report, which will be available later this year. Our most recent EEO-1 data will also be made available on our website when complete. The contents of Cadence’s ESG Report and website, including our EEO-1 data, are not part of or incorporated by reference into this proxy statement.

Environmental Sustainability

As the impact of climate change intensifies, Cadence is increasingly providing creative solutions to reduce power consumption and enable more sustainable innovation across the technology industry. We are committed to our target of reaching Net-Zero greenhouse gas (“GHG”) emissions in our operations by 2040. Since 2019, we have significantly decreased the combined Scope 1, 2, and 3 emissions, and we are on track to halve GHG emissions by 2030. For the third year in a row, Cadence has secured a CarbonNeutral^® certification across our global operations. While we are excited about our progress, we continue to invest in value chain engagement around decarbonization through our full value chain to achieve Net-Zero by 2040.

Diversity, Equity and Inclusion

It is important to the success of Cadence that we provide the support our employees need to thrive. Cadence strives to foster an environment where all employees can have a meaningful career and equal opportunities to make an impact. This includes building an inclusive culture based on trust, cooperation, respect and equitable treatment. We believe a diverse team can create a competitive advantage by contributing unique perspectives that advance high performance, innovation and teamwork.

Our key programs and initiatives, which are described in more detail in our annual ESG Report available on our Corporate Social Responsibility page at www.cadence.com, are focused on improving diversity in our hiring pipeline, increasing recruiting and engagement efforts in underrepresented communities, providing career support,

maintaining pay equity among our employees and raising awareness of unconscious bias. We currently support global Inclusion Groups for Black, Latinx, LGBTQ+, Veteran and Women employees and their allies, in addition to supporting U.S. Inclusion Groups for Asian American and Pacific Islander employees, employees who are neurodivergent or have disabilities and their allies. Each of these forums encourages dialogue for sharing and connecting, as well as promoting belonging in the workplace and awareness of experiences.

Supply Chain Management

Cadence is committed to doing business honestly and ethically, and we expect the same from our suppliers. We partner with suppliers that share our values and aim to build long-lasting relationships that are mutually beneficial and create value for society beyond our respective organizations. In 2023, we continued to identify and promote diversity in our supply chain as well as to extend our rigorous governance standards across our value chain with our Supplier Code of Conduct that was introduced in 2020.

We are partnering with key suppliers to improve the accuracy of GHG emissions calculations, and more than half of our 2023 upstream Scope 3 emissions are now calculated using suppliers’ reported emissions, up from one-third in 2022. We continue to track and analyze key suppliers’ carbon reduction goals and disclosures, and 100 of our key suppliers were included in our climate-risk assessment to better understand our upstream climate-related risk and opportunities.

Oversight and Management of Corporate Social Responsibility

Our Board, through its Corporate Governance and Nominating Committee, oversees our corporate social responsibility program and the progress of our environmental (including climate-related risks and opportunities), social (including health, wellness and safety) and governance efforts, matters and initiatives. The Corporate Governance and Nominating Committee formally reviews our environmental, social and governance efforts and climate-related issues within the organization at every regular meeting and regularly reports to the Board on such programs. In 2023, the Corporate Governance and Nominating Committee held three meetings, and in the quarter that it did not meet, the Corporate Governance and Nominating Committee received and reviewed materials relating to ESG. The Board and its Compensation Committee formally review the benefits provided to our employees, including health and wellness, once a year. In 2023, the Compensation Committee charter was amended to add that the Compensation Committee is responsible for overseeing our human capital management (“HCM”) practices.

BOARD OF DIRECTORS

OVERVIEW AS OF THE RECORD DATE

BOARD MEMBERSHIP

The Board currently consists of ten members: Mark W. Adams, Ita Brennan, Lewis Chew, Anirudh Devgan, ML Krakauer, Julia Liuson, James D. Plummer, Alberto Sangiovanni-Vincentelli, John B. Shoven, and Young K. Sohn. Dr. Shoven is not on the slate of nominees for re-election and his term as a director will expire at the Annual Meeting. As a result, the size of the Board will be reduced to nine members immediately following the expiration of Dr. Shoven’s term at the Annual Meeting.

Cadence remains committed to ensuring the Board is composed of directors who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds and effectively represent the long-term interests of stockholders. See “Director Qualifications and Diversity of Background” below for more information.

DIRECTOR INDEPENDENCE

The Board determines director independence in accordance with the Corporate Governance Guidelines, which require that at least a majority of the Board be “independent” within the meaning of the Nasdaq listing standards.

To be “independent” under the Nasdaq listing standards, among other bright line tests enumerated in the standards, a director must not be an executive officer or employee of the company and must not have a

relationship that, in the opinion of the Board, would interfere with his or her exercise of independent judgment in carrying out the responsibilities of a Cadence director. In determining each director’s independence, the Board considers all relevant facts and circumstances in conjunction with the guidelines provided by the Nasdaq listing standards. This includes, without limitation, Mr. Adams’ role as President and Chief Executive Officer of SMART Global Holdings, Inc. (“SMART”), Ms. Brennan’s role as the former Senior Vice President, Chief Financial Officer of Arista Networks, Inc. (“Arista”), Mr. Chew’s role as the former Executive Vice President, Chief Financial Officer of Dolby Laboratories, Inc. (“Dolby”) and Mr. Sohn’s role as co-founder and co-manager of one of Walden International’s funds, Walden Catalyst, and Cadence’s ordinary course business transactions with SMART, Arista, Dolby and companies in which Mr. Sohn and Walden Catalyst are involved. The Board considers these transactions as part of its overall analysis of the independence of the Board. The Board also considers other board membership, employment, advisory and academic relationships of its members with other companies and institutions with which Cadence does business or to which it makes charitable gifts.

In addition, all such transactions are subject to the terms of the Code of Business Conduct and Related Party Transactions Policies and Procedures. These policies and internal procedural guidelines also require that directors recuse themselves from any discussion or approval by the Corporate Governance and Nominating Committee of Cadence’s transactions with those companies and institutions that are associated with such directors, except to provide material information concerning such transactions to the Corporate Governance and Nominating Committee.

The aggregate annual amounts involved in each of the foregoing transactions involving an entity in which an independent director is or was a partner, or a controlling shareholder or an executive officer in each of the last three fiscal years were less than the greater of 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, and the affiliated Board members were determined not to have a direct or indirect material interest in such transactions.

CURRENT INDEPENDENT DIRECTORS

Among the current members of the Board, the Board has determined that Directors Adams, Brennan, Chew, Krakauer, Liuson, Plummer, Sangiovanni-Vincentelli, Shoven and Sohn are independent directors within the meaning of the Nasdaq listing standards. Dr. Devgan, the President and CEO of Cadence, is not deemed independent.

BOARD LEADERSHIP

Dr. Devgan serves as CEO and Ms. Krakauer, an independent director, serves as Board Chair. The Board believes that at this time, Cadence and its stockholders are best served by this leadership structure because it facilitates effective oversight and further strengthens the Board’s independent leadership and commitment to sound governance. This also allows the CEO to focus on the day-to-day business of Cadence, while allowing the Chair to lead the Board in its oversight of management. While the Corporate Governance Guidelines permit the role of Chair to be filled by an officer or employee of Cadence, a lead independent director is required if the Chair is also a Cadence officer or employee. This provides the Board with flexibility to determine whether the two roles should be combined based on the Board’s assessment of Cadence’s needs and leadership from time to time.

PROCESS FOR SELECTING DIRECTOR NOMINEES AND CANDIDATES

The Corporate Governance and Nominating Committee evaluates and recommends director candidates for nomination by the full Board. The Corporate Governance and Nominating Committee regularly discusses and annually reviews as a committee and with the Board the appropriate skills and characteristics required of directors (such as integrity, experience, judgment, diversity of background (including, among other factors, race, ethnicity and gender), independence, ability to commit sufficient time and attention to Board activities, understanding of

Cadence’s products, technologies and strategy, and the specific skills set forth under “Director Nominee Qualifications, Skills and Experience” below in Proposal 1 regarding the election of directors) in the context of the current composition of the Board and its committees.

STOCKHOLDER RECOMMENDATIONS OF DIRECTOR CANDIDATES

Stockholders who wish to recommend a prospective candidate for the Board must notify Cadence’s Corporate Secretary in writing with the supporting materials required by Cadence’s Bylaws as described under “Information About the Annual Meeting” below and any other material the stockholder considers necessary or appropriate in order for their recommended candidate to be considered by the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee will evaluate any such candidate in the same manner as it evaluates candidates recommended from other sources; provided that, with respect to those candidates recommended by stockholders, such stockholders have provided Cadence with a notice that sets forth information as to such stockholders and director candidates in accordance with Cadence’s Bylaws.

DIRECTOR ATTENDANCE

During the fiscal year ended December 31, 2023, the Board held nine meetings, in addition to taking actions by unanimous written consent for certain of its committees in lieu of a meeting. Each of our current directors attended at least 75% of the meetings of the Board and the committees on which he or she served that were held during the period for which he or she was a director or committee member during fiscal 2023, with the exception of Ms. Liuson. In the fourth quarter of 2023, Ms. Liuson experienced a death in her family the same week Cadence held multiple Board and committee meetings, and her attendance subsequently fell below 75% for the year. Prior to the fourth quarter of 2023, she attended 100% of the meetings of the Board and the committees on which she served that were held during the period for which she was a director or committee member. The Corporate Governance Guidelines encourage directors to attend the Annual Meeting, and all of Cadence’s directors attended the 2023 Annual Meeting of Stockholders.

INDEPENDENT DIRECTOR SESSIONS

Pursuant to the Corporate Governance Guidelines, Cadence’s independent directors meet privately at least twice each year and Ms. Krakauer as Board Chair and an independent director, presides over portions of Board meetings attended exclusively by independent directors.

BOARD EVALUATIONS

The Board is committed to reviewing its performance through an annual evaluation process. Through the evaluations, the Board assesses its processes, meetings, planning and overall effectiveness. The directors provide feedback on the Board and its committees through questionnaires and interviews with an independent third party. Each year, the independent third party reviews the results and feedback provided by the directors and follows up with the directors regarding their evaluations and presents to the full Board. Any findings that require additional consideration are addressed at subsequent Board and committee meetings, as appropriate.

BOARD SUCCESSION PLANNING

Board succession planning is a regular topic for discussion at Board meetings. The Corporate Governance and Nominating Committee reviews with the Board at least annually the appropriate experience, skills and characteristics required of Board members in the context of the current composition of the Board. New directors undergo a robust orientation process overseen by the Corporate Governance and Nominating Committee that includes a series of briefings with senior management and other experts designed to enable new directors to quickly become active, knowledgeable and effective members of the Board. The briefings include profiles on Cadence’s business, industry, technology, financial landscape, people and culture, as well as corporate governance and regulatory matters.

CEO AND MANAGEMENT SUCCESSION PLANNING

The Board is actively engaged and involved in the succession planning of Cadence’s management. The Compensation Committee regularly discusses and annually reports to the Board with respect to CEO succession planning, including policies for CEO selection and succession in the event of incapacitation, emergency situations, operational needs, retirement or removal of the CEO and evaluations of and development plans for potential successors to the CEO. In addition, the Compensation Committee, in consultation with the CEO, regularly discusses and annually reviews senior leadership succession planning and reports to the Board with respect to Cadence’s management development program and succession planning.

BOARD RISK OVERSIGHT

The Board exercises its risk oversight function through the Board as a whole and through certain of its committees. The Board and the relevant committees seek to understand and oversee the most critical risks facing Cadence. The Board does not view risk in isolation but considers risk as part of its regular consideration of business decisions and business strategy. The Board as a whole has the ultimate responsibility for the oversight of risk management but has delegated the oversight of certain risks to the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee as set forth in the table below.

The Board and the relevant committees review with Cadence’s management the risk management practices for which they have oversight responsibility. Since overseeing risk is an ongoing process and inherent in Cadence’s strategic decisions, the Board and the relevant committees also discuss risk throughout the year in relation to specific proposed actions.

Cybersecurity

Cybersecurity continues to be an important area of focus. Cadence is committed to the protection of our customers’, vendors’, partners’ and employees’ personal information and our Information Security team works to identify and prevent cybersecurity risks through enhanced privacy and data cybersecurity initiatives. Our Chief Information Security Officer administers our data privacy and cybersecurity program with oversight by the Audit Committee and regularly updates the Board and Audit Committee on our cybersecurity performance and risk profile.

COMMITTEES OF THE BOARD

The Board currently has the following committees: Audit Committee, Compensation Committee, Corporate Governance and Nominating Committee and Finance Committee. Each of these committees meets regularly, reports on its activities to the full Board, is authorized to engage external advisors and has a written charter that is approved by the Board and available on the Corporate Governance page at www.cadence.com. The table below shows the current composition of the committees.

Director

Audit

Compensation

Corporate Governance and Nominating

Finance

Mark W. Adams

✓

Ita Brennan

✓

Lewis Chew

✓

Anirudh Devgan

ML Krakauer

✓

✓

Julia Liuson

✓

✓

James D. Plummer

✓

✓

Alberto Sangiovanni-Vincentelli

✓

✓

John B. Shoven

✓

✓

Young K. Sohn

   Committee Chair ✓ Member

Audit Committee

The Board has determined that all four members of the Audit Committee are “independent” as defined by the Nasdaq listing standards applicable to audit committee members and Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board has also determined that Directors Brennan, Chew and Shoven are “audit committee financial experts” as defined in rules promulgated by the SEC.

The Audit Committee charter was last amended in February 2023 and complies with the Nasdaq listing standards. The duties and responsibilities of the Audit Committee include:

The Audit Committee held five meetings during fiscal 2023. See “Audit Committee Report” below for more information.

Compensation Committee

The Compensation Committee is currently comprised of four members, each of whom the Board has determined to be “independent” as defined by the Nasdaq listing standards applicable to compensation committee members and satisfies the applicable independence standards under the Exchange Act for compensation committee service. All Compensation Committee members are also “non-employee directors” within the meaning of Rule 16b-3 of the Exchange Act.

The Compensation Committee may delegate its authority over certain matters to management when it deems it to be appropriate and in the best interests of Cadence. In fiscal 2023, the Compensation Committee did not delegate any authority with respect to the consideration and determination of executive officer compensation. At or near the beginning of each fiscal year, the Compensation Committee typically establishes base salary levels and target bonuses for the CEO, Chief Financial Officer (“CFO”) and other executive officers of Cadence. In addition, the Compensation Committee administers and, if deemed necessary, may amend Cadence’s Senior Executive Bonus Plan, Cadence’s equity-based compensation plans and stock purchase plans, and Cadence’s deferred compensation plans. The Compensation Committee also reviews and recommends to the Board the compensation of Cadence’s directors, and the Compensation Committee did not delegate any authority with respect to the consideration and determination of director compensation in fiscal 2023.

The Compensation Committee charter was last amended in February 2024. The duties and responsibilities of the Compensation Committee include:

The Compensation Committee believes that having an outside evaluation of executive officer salary, bonus and equity compensation is a valuable tool for the Compensation Committee and Cadence stockholders. In fiscal 2023, the Compensation Committee retained the services of a compensation consultant, Semler Brossy Consulting Group, LLC (“Semler Brossy”), for advice regarding the compensation of Cadence’s executive officers and Board. The Compensation Committee retained Semler Brossy for a number of purposes, including constructing and reviewing peer groups for compensation comparison purposes, performing a competitive assessment of Cadence’s compensation programs, practices and levels for its executive officers and certain other employees and providing information on typical industry practices concerning employment, equity practices, severance and change in control agreements. Semler Brossy has not been engaged to perform any other work for Cadence. Pursuant to the factors set forth in Item 407 of Regulation S-K promulgated by the SEC and the Nasdaq listing standards, the Compensation Committee has reviewed the independence of Semler Brossy and conducted a conflicts of interest assessment, and has concluded that Semler Brossy is independent and Semler Brossy’s work for the Compensation Committee has not raised any conflicts of interest.

In determining the compensation of Cadence’s executive officers, including Cadence’s named executive officers (as defined below in “Compensation Discussion and Analysis”), the Compensation Committee considers the competitive assessments provided by and through consultation with Semler Brossy. In addition, Cadence’s CEO typically makes assessments and recommendations to the Compensation Committee on whether there should be adjustments to the annual base salary, annual cash incentive compensation and equity incentive compensation of executive officers other than himself based upon an assessment of certain factors described in “Compensation Discussion and Analysis” below. The Compensation Committee reviews such assessments and recommendations and determines whether or not to approve or modify the CEO’s recommendations. The Compensation Committee’s decisions are made, however, by the Compensation Committee in its sole discretion. See “Compensation Discussion and Analysis” below for more information.

The Compensation Committee, in consultation with Semler Brossy, reviews Cadence’s compensation practices, policies and programs for all employees, including the named executive officers, to assess the risks associated with such practices, policies and programs. The risk-mitigating factors considered by the Compensation Committee include the following:

The Compensation Committee held three meetings during fiscal 2023.

Corporate Governance and Nominating Committee

The Board has determined that all five members of the Corporate Governance and Nominating Committee are “independent” as defined by the Nasdaq listing standards.

The Corporate Governance and Nominating Committee charter was last amended in February 2024. The duties and responsibilities of the Corporate Governance and Nominating Committee include:

The Corporate Governance and Nominating Committee regularly discusses and annually reviews the appropriate size of the Board, whether any vacancies on the Board are expected due to retirement or otherwise, and the need for particular expertise on the Board. If vacancies on the Board are anticipated or otherwise arise, the committee considers potential director candidates, which may come to the committee’s attention through a variety of channels, including current directors, officers, professional search firms, stockholders or other persons. The Corporate Governance and Nominating Committee makes a recommendation to the full Board as to the persons who should be nominated or elected by the Board, and the Board determines whether to reject, elect or nominate the candidate, as the case may be, after considering the recommendation of the committee.

The Corporate Governance and Nominating Committee held three meetings during fiscal 2023.

Finance Committee

The Finance Committee, on behalf of the Board, evaluates and approves financings, mergers, acquisitions, divestitures and other financial commitments of Cadence to third parties and has the authority to approve those that involve amounts up to $200 million. The Finance Committee charter was last amended in July 2020.

The Finance Committee held five meetings during fiscal 2023.

COMPONENTS OF DIRECTOR COMPENSATION

The Compensation Committee, with input from its independent compensation consultant Semler Brossy, annually reviews and recommends to the Board the compensation program for directors who are not employees of Cadence. Directors who are Cadence employees, such as Dr. Devgan, do not receive additional compensation for their service on the Board. In setting non-employee director compensation, the Compensation Committee considers the competitiveness of Cadence’s director compensation from a number of different perspectives, including average total compensation, aggregate compensation for the full Board and individual director compensation as differentiated by committee membership and leadership roles. The Compensation Committee also reviews Cadence’s director compensation relative to Cadence’s peer group, which is also used to determine market levels for executive compensation (see “Compensation Discussion and Analysis” below for more information).

The following table sets forth the components of the non-employee directors’ compensation for fiscal 2023:

In addition, a medical and prescription benefits coverage reimbursement plan is available to active non-employee directors who were directors on December 31, 2014 (the “Eligible Directors”), eligible retired directors who retired from the Board on or prior to December 31, 2014 (the “Eligible Retired Directors”) and their respective dependents (the “Medical Reimbursement Plan”). Directors first elected or appointed to the Board after December 31, 2014 are not eligible to participate in the Medical Reimbursement Plan. Eligible Directors and their dependents may obtain coverage under the Medical Reimbursement Plan during their term of service on the Board. Eligible Retired Directors, Eligible Directors and their dependents may continue coverage under the Medical Reimbursement Plan starting immediately after the director’s termination of service for a continuous term not to exceed such director’s term of service on the Board.

A director’s eligibility for participation in the Medical Reimbursement Plan immediately ceases if the plan administrator determines that he or she has violated the Code of Business Conduct or is engaged as an

employee, consultant, director or advisor of, or significant investor in, a competitor of Cadence. Under the Medical Reimbursement Plan, Cadence reimburses 100% of the premiums for participants and their dependents up to a maximum of $20,000 for expenses incurred per calendar year, which maximum amount may be adjusted for future changes in medical costs. Benefits under the Medical Reimbursement Plan are fully taxable to the participants and Cadence does not gross up reimbursement payments to cover any such taxes.

DIRECTOR COMPENSATION FOR FISCAL 2023

The following table sets forth the compensation earned in fiscal 2023 by Cadence’s directors (other than Dr. Devgan) who served on the Board in fiscal 2023. Dr. Devgan, Cadence’s President and CEO, and Lip-Bu Tan, former Executive Chair, did not receive any additional compensation for serving as director in fiscal 2023. Dr. Devgan’s compensation is disclosed in the Compensation Discussion and Analysis and Compensation of Executive Officers sections of this proxy statement.

BOARD DIVERSITY MATRIX

The table below provides certain highlights of the composition of our current Board. Each of the categories listed in the below table has the meaning as it is used in the Nasdaq listing standards.

STOCKHOLDER ENGAGEMENT

Cadence values and actively solicits input from its stockholders, which directly informs the Board’s decision-making on a variety of topics. In addition to management’s regular engagement with stockholders throughout the year, the Board Chair annually leads a robust outreach program to obtain stockholder feedback on numerous important issues, which in 2023 included our ESG program, sustainable business practices, board composition and refreshment, culture, diversity, equity and inclusion, executive compensation, and the results of the 2023 Annual Meeting of Stockholders. For our engagement in the fall of 2023, Cadence reached out to more than 20 stockholders representing over half of our outstanding shares.

Cadence continues to welcome stockholder feedback on these and other matters of importance and will incorporate such feedback appropriately into its decision-making and approach to stockholder engagement and corporate governance. The Board’s leadership and management plan to continue to engage with stockholders throughout 2024.

COMMUNICATION WITH DIRECTORS

Stockholders interested in communicating directly with the Board may do so by sending a letter to the following address:

Cadence Design Systems, Inc.

Board of Directors

c/o the Office of the Corporate Secretary

2655 Seely Avenue, Building 5

San Jose, California 95134

The Corporate Secretary will review the correspondence and will transmit such communications as soon as practicable to the identified director addressee(s), unless there are legal or other considerations that mitigate against further transmission of the communication, as determined by the Corporate Secretary. In that regard, certain items that are unrelated to the duties and responsibilities of the Board will not be forwarded by the Corporate Secretary, such as business solicitations or advertisements, junk mail and mass mailings, new product suggestions, product complaints, product inquiries, resumes and other forms of job inquiries, spam and surveys. In addition, material that the Corporate Secretary determines is unduly hostile, threatening, illegal or similarly unsuitable will be excluded, with the provision that the Board or individual directors so addressed will be advised of any communication withheld for legal or other considerations as soon as practicable.

MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING

PROPOSAL 1: ELECTION OF DIRECTORS

The Corporate Governance and Nominating Committee has recommended, and the Board has nominated, the nine nominees named below for election to the Board. Each director elected at the Annual Meeting will hold office until Cadence’s 2025 Annual Meeting of Stockholders and until his or her successor is elected and qualified, or until the director’s earlier resignation, removal or death.

Each nominee listed below is currently a Cadence director, and all nominees were previously elected by Cadence stockholders at the 2023 Annual Meeting of Stockholders.

DIRECTOR QUALIFICATIONS AND DIVERSITY OF BACKGROUND

The Board believes that the Board, as a whole, should possess a combination of skills, professional experience and diversity of backgrounds necessary to oversee Cadence’s business and that there are certain attributes that every director should possess, as reflected in the Board’s membership criteria. Accordingly, the Board and the Corporate Governance and Nominating Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition and Cadence’s current and future needs.

The Corporate Governance and Nominating Committee is responsible for developing the Board membership criteria and recommending them to the Board for approval. The criteria, which are set forth in the Corporate Governance Guidelines, include a prospective nominee’s integrity, experience, judgment, diversity of background (including, among other factors, race, ethnicity and gender), independence, financial literacy, ability to commit sufficient time and attention to Board activities, skills such as an understanding of electronic design, semiconductor and electronics systems technologies, international background and other relevant characteristics. The Corporate Governance and Nominating Committee considers all of these criteria in the context of the needs of the Board from time to time. In addition, the Corporate Governance and Nominating Committee regularly discusses and annually reviews as a committee and with the Board the appropriate experience, skills and characteristics required of directors in the context of the current composition of the Board and its committees. In seeking diversity of background, the Corporate Governance and Nominating Committee seeks a variety of occupational and personal backgrounds and race, ethnicity and gender diversity on the Board in order to obtain a range of viewpoints and perspectives. This annual assessment enables the Board to update the skills and experience it seeks in the Board as a whole, and in individual directors, as Cadence’s needs evolve and change over time, and also enables the Board to assess the effectiveness of its policy to seek a diversity of background on the Board. In identifying director candidates from time to time, the Corporate Governance and Nominating Committee and the Board may establish specific skills and experience that it believes Cadence should seek in order to have an effective board of directors.

DIRECTOR NOMINEE QUALIFICATIONS, SKILLS AND EXPERIENCE

Set forth below is a summary of the qualifications, skills and experience of the director nominees determined by the Corporate Governance and Nominating Committee to be important for an effective Board.

DIRECTOR NOMINEES

The Corporate Governance and Nominating Committee believes that all nine director nominees listed below are highly qualified and have the skills and experience required for service on the Board. The biographies set forth below contain information regarding their specific experience, qualifications, attributes and skills that led to the conclusion that each person should serve as a director, in light of our business and structure.

TENURE OF DIRECTOR NOMINEES

The Corporate Governance and Nominating Committee regularly reviews the tenure of Cadence’s directors and practices a long-term approach to board refreshment, which is a regular topic in the stockholder engagement sessions led by our Board Chair. A number of changes have occurred in our Board over the past several years as part of our continuing efforts to ensure that our Board has the right skills and tenures to best oversee management and the execution of our strategy and the associated risks. Our Board is of the view that a mix of tenures that takes into consideration appropriate levels of continuity, institutional memory and fresh perspectives is critical in achieving and maintaining a high-performing board. Over half of our director nominees joined the Board within the last five years. The Board will continue to proactively manage its composition to ensure it has the appropriate mix of tenures and the requisite skills to address Cadence’s current and future needs.

The following table sets forth summary of the tenure of the director nominees:

VOTING INFORMATION AND BOARD RECOMMENDATION

The Board recommends a vote FOR the election of each director nominees named in this proxy statement.

The election of directors at the Annual Meeting requires that each director receive the affirmative vote of a majority of the votes cast with respect to that director, which means that the number of shares voted “for” a director must exceed the number of shares voted “against” that director. If, however, the election of directors is contested, the directors will be elected by the vote of a plurality of the shares present in person or represented by proxy and entitled to vote on the proposal. The election this year is not contested, so the majority voting standard outlined above applies.

Under the Corporate Governance Guidelines, in order for an incumbent Cadence director to become a nominee at the Annual Meeting, such director must submit an irrevocable resignation that becomes immediately effective if (1) the number of votes cast “for” such director does not exceed the number of votes cast “against” such director in an election that is not a contested election, and (2) the Board accepts the resignation in accordance with the policies and procedures adopted by the Board for such purpose. If a nominee who is currently serving as a Cadence director is not elected at the Annual Meeting, the Corporate Governance and Nominating Committee will make a recommendation to the Board as to whether to accept or reject such director’s resignation, or whether to take other action. The Board will act on the Corporate Governance and Nominating Committee’s recommendation and publicly disclose (as required by applicable law) its decision and the reasons behind it within 90 days from the date the election results are certified.

If any nominee should be unavailable for election as a result of unexpected circumstances, the Board may designate a substitute nominee or reduce the size of the Board. If the Board designates a substitute nominee, proxies will be voted for such substitute nominee. Each person nominated for election has agreed to be named in this proxy statement and to serve if elected, and Cadence has no reason to believe that any nominee will be unable to serve.

Abstentions will be treated as being present and entitled to vote on the election; however, abstentions will not be counted as votes “for” or “against” directors and will not have an effect on the election of directors. Broker non-votes will be treated as not being entitled to vote on the election of directors, and, therefore, will not be counted for purposes of determining whether the directors have been elected. Unless marked to the contrary, proxies received will be voted FOR the election of each of the nine director nominees.

PROPOSAL 2: APPROVAL OF THE AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN

OVERVIEW

Cadence is requesting that stockholders approve the amendment and restatement of the Cadence Design Systems, Inc. Amended and Restated Employee Stock Purchase Plan (the “ESPP” and, as further amended and restated, as proposed in this proxy statement, the “Amended and Restated ESPP”). The ESPP was most recently amended by the Board on March 15, 2018 and approved by the stockholders on May 3, 2018. On February 2, 2024, subject to stockholder approval, the Board approved the Amended and Restated ESPP. If approved by stockholders, the Amended and Restated ESPP would enact the following material changes: (i) increase the number of shares of common stock authorized for issuance under the ESPP by 3,500,000 shares for a total of 81,500,000 shares authorized under the Amended and Restated ESPP, (ii) allow the Board or the Compensation Committee to delegate some or all of its administrative authority under the Amended and Restated ESPP to Cadence officers or other persons to the extent permitted under applicable law, and (iii) align the “Change in Control” definition with the definition used under Cadence’s Omnibus Equity Incentive Plan. If the stockholders do not approve the Amended and Restated ESPP, then the ESPP, as currently in effect prior to the amendment and restatement proposed in this proxy statement, will remain in effect.

REASONS FOR THE PROPOSED INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE

The primary purpose of the Amended and Restated ESPP is to ensure that Cadence will have a sufficient reserve of common stock thereunder to continue to grant purchase rights to its employees, in addition to providing for certain updates to reflect legal compliance and administrative matters. The ESPP provides eligible employees with the opportunity to become Cadence stockholders and participate in Cadence’s success, which aligns the interests of participating employees with those of stockholders. The ESPP also helps to attract and retain employees because employee stock purchase plans are a common benefit offered by Cadence’s competitors and other industry leaders. Approximately three-fourths of Cadence’s eligible employees as of the Record Date were enrolled to participate in the current offering period. As evidenced by the high level of employee participation, Cadence believes that the ESPP is a highly valued benefit that is necessary in order for Cadence to compete with other companies in attracting and retaining employees. In addition, as of the Record Date, a total of 2,954,195 shares were available for future purchases under the ESPP and employees purchased a total of 646,863 shares under the ESPP during fiscal year 2023.

SUMMARY OF THE AMENDED AND RESTATED ESPP

The following summary of the material provisions of the Amended and Restated ESPP is qualified in its entirety by the complete text of the Amended and Restated ESPP, a copy of which is attached as Appendix A to this proxy statement. Except as otherwise indicated in this proposal the terms of the Amended and Restated ESPP are materially consistent with the terms of the ESPP as currently in effect prior to the amendment and restatement proposed in this proxy statement.

Purpose

The purpose of the ESPP is to provide a means by which Cadence can offer its employees, as well as the employees of certain affiliates and related entities designated by the Board, an opportunity to purchase Cadence common stock. In doing so, the ESPP assists Cadence in retaining the services of its employees, securing and retaining the services of new employees, and providing incentives for these persons to exert maximum efforts for the success of Cadence.

The ESPP includes two components: a “423 Component” and a “Non-423 Component.” It is the intention of Cadence to have the 423 Component qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986 (the “Code”). The provisions of the 423 Component, accordingly, will be construed to extend and limit participation on a uniform and nondiscriminatory basis consistent with the requirements of Section 423 of the Code. In addition, the ESPP authorizes the grant of rights under a Non-423 Component that does not qualify as an employee stock purchase plan under Section 423 of the Code. Rights under the Non-423 Component will be granted pursuant to offerings, rules, procedures or sub-plans adopted by the Board designed to achieve tax, securities laws or other objectives for eligible employees, Cadence and designated affiliates and related entities.

Administration

The Board (or its delegate, as described below) administers the ESPP and has the final power to construe and interpret both the ESPP and the rights granted under the ESPP. The Board has the power, subject to the provisions of the ESPP, to determine when and how rights to purchase Cadence common stock will be granted, the provisions of each offering of these rights (which need not be identical), and whether employees of a designated affiliate or related entity of Cadence will be eligible to participate in the ESPP.

The Board may delegate administration of the ESPP to a committee comprised of not less than two Board members. The Board has delegated administration of the ESPP to the Compensation Committee. The ESPP provides that, subject to applicable law, the Board or Compensation Committee may delegate some or all of its authority thereunder to one or more officers of Cadence or other persons or groups of persons as the Board or Compensation Committee deems necessary, appropriate or advisable.

As used in this proxy statement solely with respect to describing the terms of the ESPP, the “Board” refers to the Board itself as well as to any committee or delegate the Board appoints to administer the ESPP.

All determinations by the Board or committee (and its delegates) in carrying out and administering the ESPP and in construing and interpreting the ESPP and any enrollment form or other instrument or agreement relating to the ESPP will be made in the sole discretion of the Board and will be final, binding and conclusive for all purposes and upon all interested persons.

Offerings

The Board implements the ESPP by offering participation rights to all eligible employees during offering periods designated by the Board, which shall not exceed 27 months. Currently, each ESPP offering period is six months long, commencing on February 1 and August 1 of each year, and ending on July 31 and January 31, respectively. If February 1 or August 1 is not a trading day, the offering period will commence on the first trading day after February 1 or August 1, respectively. If July 31 or January 31 is not a trading day, the offering period will end on the last trading day before July 31 or January 31, respectively.

Eligibility

Subject to any additional requirements consistent with the requirements of Section 423 of the Code (only with respect to the 423 Component), any person employed by Cadence or employed by any affiliate or related entity of Cadence which has been designated by the Board as a “designated company” eligible to participate in the ESPP will be eligible to participate in an offering if the employee was employed by Cadence or a “designated company” on the fifteenth day of the month before the first day of the offering period. The Board may specify that employees must be employed for a minimum period in order to participate in the ESPP, provided that such minimum service period must be less than two years. As of December 31, 2023, Cadence had approximately 11,200 employees, of which approximately 98% were eligible to participate in the ESPP, including all of Cadence’s executive officers. Cadence’s non-employee directors are not eligible to participate in the ESPP.

No employee is eligible to participate in the 423 Component of the ESPP if, immediately after the grant of purchase rights, the employee would, directly or indirectly, own stock or hold options possessing 5% or more of the total combined voting power or value of all classes of stock of Cadence or of any Cadence parent or subsidiary, including any stock which the employee may purchase under outstanding rights and options.

In addition, as required by Section 423 of the Internal Revenue Code, with respect to the 423 Component, no employee may accrue the right to purchase shares under the ESPP at a rate that exceeds $25,000 worth of common stock (determined at the fair market value of the shares at the time the right is granted, which fair market value is based upon the closing price of the shares) for any calendar year in which such right is outstanding. The Board can, and has, imposed further limitations on the rate at which employees may accrue the right to purchase shares under the ESPP, as discussed below.

Rights granted in any offering under the ESPP terminate immediately upon cessation of an employee’s employment for any reason, and Cadence will distribute to a former employee all of his or her accumulated contributions, without interest (unless otherwise specified in the offering or required by applicable law), less any accumulated contributions previously applied to the purchase of common stock on the employee’s behalf during the offering.

Participation in the ESPP

The Board has the discretion to designate the maximum percentage (of up to 15%) of gross earnings (before withholding of taxes and other amounts) and dollar amount that eligible employees may contribute toward the purchase of common stock under the ESPP, which the Board may modify from time to time. In the current offering period, eligible employees are permitted to contribute the lesser of a maximum of 15% of their eligible gross earnings (before withholding of taxes and other amounts) and $25,000, and are not permitted to purchase more than 10,000 shares of common stock during any offering period.

Upon an employee’s withdrawal from an offering, Cadence will distribute to the employee his or her accumulated contributions, without interest (unless otherwise specified in the offering or required by applicable law), less any accumulated contributions previously applied to the purchase of common stock on the employee’s behalf during the offering.

Purchase Price

The purchase price at which shares of common stock are sold in an offering under the ESPP shall not be less than the lower of:

Purchase of Shares

A participant accumulates the purchase price of the shares by contributions over the course of the offering period. Unless otherwise specifically provided in the offering or permitted by applicable law, a participant may not (i) begin such contributions after the beginning of the offering, (ii) make payments into his or her account by means other than payroll deductions and (iii) make additional payments into his or her account, provided that such participant has not already contributed the maximum dollar amount allowable for the offering.

In connection with offerings made under the ESPP, the Board may specify a maximum number of shares of common stock an employee may be granted the right to purchase and the maximum number of shares of common stock that may be purchased in that offering by all participants. If the total number of shares to be purchased upon exercise of rights granted in the offering exceeds the maximum aggregate number of shares of common stock available for the offering, the Board will make a pro rata allocation of available shares in as nearly a uniform manner as is practicable and equitable as determined by the Board. Unless the employee’s participation is discontinued, his or her right to purchase shares is exercised automatically at the end of the purchase period at the then applicable purchase price.

Shares Subject to the ESPP

Upon stockholder approval of this proposal, an additional 3,500,000 shares of common stock would be reserved for issuance under the Amended and Restated ESPP for an aggregate of 81,500,000 shares authorized. An aggregate of 2,954,195 shares were available for issuance under the ESPP as of the Record Date. The proposed increase in the number of shares authorized for issuance under the Amended and Restated ESPP represents approximately 1.28% of Cadence’s outstanding common stock as of the Record Date. If rights granted under the ESPP expire, lapse or otherwise terminate without being exercised, the shares of common stock not purchased under the rights again become available for issuance under the ESPP.

Effect of Certain Corporate Events

In the event of a dissolution or liquidation of Cadence, all offerings will terminate prior to the consummation of the proposed transaction or, at the Board’s discretion, the purchase date of any offering will be accelerated so that the outstanding rights may be exercised before or concurrent with the proposed transaction. In the event of a “Change in Control” (as defined in the Amended and Restated ESPP), all offerings will terminate immediately prior to the consummation of the Change in Control, unless otherwise provided by the Board. The Board, at its discretion, in lieu of assumption or substitution of the rights under the Amended and Restated ESPP, may provide that participants may exercise outstanding rights. If the Board makes a right exercisable in lieu of assumption or substitution in the event of a Change in Control, the Board must notify participants that their rights under the ESPP will be fully exercisable for a period of 20 days from the date of such notice, or such other period of time as the Board determines, and the right shall terminate upon the expiration of such period. In the case of a spin-off or similar transaction, the Board may take actions including shortening an offering.

Adjustment Provisions

Upon an increase or decrease in the number of issued shares of Cadence common stock resulting from a stock split, the payment of a stock dividend or any other increase or decrease in the number or value of shares of Cadence common stock effected without receipt of consideration by Cadence, the number of shares authorized for issuance under the ESPP, and the number of shares and the price per share of common stock covered by each right under the ESPP that has not yet been exercised, will be proportionately adjusted for any increase or decrease.

Duration, Amendment and Termination

The Board may suspend or terminate the ESPP without stockholder approval at any time. Unless terminated earlier, the ESPP will terminate when all of the shares reserved for issuance under the ESPP, as increased or adjusted from time to time, have been issued.

The Board may also amend the ESPP at any time. However, any amendment of the ESPP must be approved by the stockholders to the extent stockholder approval is necessary for the ESPP to satisfy Section 423 (with respect to the 423 Component) of the Code, Rule 16b-3 under the Exchange Act or any Nasdaq or other applicable securities exchange listing requirements. Generally, under the Code, stockholder approval must be obtained within twelve months before or after its adoption by the Board if the amendment would, among other things:

Rights granted before any amendment or termination of the ESPP will not be altered or impaired by any amendment or termination of the ESPP without the consent of the employee to whom such rights were granted or as expressly contemplated in the ESPP.

FEDERAL INCOME TAX INFORMATION

The following is only a summary of the federal income tax consequences with respect to the grant and exercise of rights granted under the ESPP based upon applicable federal law as currently in effect, is not complete, does not discuss the income tax laws of any locality, state or foreign country in which a participant may reside, is subject to change and is not intended to be relied upon as tax advice. Participants in the ESPP should consult their own tax advisors regarding the specific tax consequences to them of participating in the ESPP.

423 Component

Rights granted under the 423 Component of the ESPP are intended to qualify for favorable federal income tax treatment associated with an employee stock purchase plan that qualifies under Section 423 of the Internal Revenue Code, which requires stockholder approval of the ESPP and certain amendments.

A participant will be taxed on amounts withheld for the purchase of shares of common stock under the 423 Component of the ESPP as if such amounts were actually received. No other income will be taxable to a participant as a result of participating in the 423 Component of the ESPP until the disposition of the acquired shares, and the effect of taxation will depend on the holding period of the acquired shares.

If there is a specified per participant maximum number of shares that may be purchased during an offering period and if the stock is disposed of more than two years after the first day of the offering period (the “grant date”) and more than one year after the purchase date, if later, then the participant will recognize ordinary income equal to the lesser of:

Any further gain or any loss will be taxed as a long-term capital gain or loss. Generally, long-term capital gains are currently subject to lower tax rates than ordinary income. Cadence will not be allowed a deduction if the holding period requirements described in this section are satisfied. If the shares are sold or disposed of before the expiration of either of the two holding periods described above, then the amount by which the fair market value of the shares on the purchase date exceeds the purchase price will be treated as ordinary income at the time of disposition. The balance of any gain will be treated as capital gain. Even if the stock is later disposed of for less than its fair market value on the purchase date, the same amount of ordinary income is attributed to the participant, and a capital loss is recognized equal to the difference between the sales price and the fair market value of the stock on the purchase date. Any capital gain or loss will be short-term or long-term, depending on how long the stock has been held. Cadence will be entitled to a deduction equal to the ordinary income recognized by the employee, but will not be entitled to any deduction with respect to the amount recognized by such employee as capital gain.

Non-423 Component

The Non-423 Component is not intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. A participant will be taxed on amounts withheld for the purchase of shares of common stock under the Non-423 Component of the ESPP as if such amounts were actually received. A participant will also recognize taxable income as a result of purchasing shares under the Non-423 Component of the ESPP. The participant will recognize ordinary income on the purchase date in an amount equal to the difference between the fair market value of the shares purchased on the purchase date and the purchase price paid for the shares and Cadence will be entitled to a corresponding deduction. Upon subsequent resale of the shares, the difference between the sale price and the fair market value on the purchase date will be treated either as a capital gain or loss.

STOCK PRICE

On the Record Date, the closing price of Cadence common stock as reported by Nasdaq was $317.31.

NEW PLAN BENEFITS

Because benefits under the ESPP depend on employees’ voluntary elections to participate and the fair market value of Cadence common stock at various future dates, it is not possible as of the date of this proxy statement to accurately determine future benefits that will be received by executive officers and other employees under the ESPP.

ESPP SHARES PURCHASED SINCE INCEPTION

The table below provides details on shares purchased under the ESPP from the inception of the ESPP through January 30, 2024.

VOTING INFORMATION AND BOARD RECOMMENDATION

The Board recommends a vote FOR approval of the Amended and Restated ESPP.

The affirmative vote of a majority of the voting power of the stock present in person or represented by proxy and entitled to vote on this proposal is required for approval of this proposal. Stockholders will be treated as present whether they attend the Annual Meeting virtually or by proxy. Abstentions will be treated as being present and entitled to vote on this proposal and, therefore, will have the effect of votes against this proposal. Broker non-votes will be treated as not being entitled to vote on the proposal and, therefore, will not be counted for purposes of determining whether this proposal has been approved. Unless marked to the contrary, proxies received will be voted FOR the approval of the Amended and Restated ESPP.

PROPOSAL 3: APPROVAL AND ADOPTION OF THE AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION TO LIMIT MONETARY LIABILITY OF CERTAIN OFFICERS AS PERMITTED BY LAW

OVERVIEW

Cadence requests that its stockholders approve and adopt an amendment of the Restated Certificate of Incorporation (the “Charter”) to limit the monetary liability of certain officers to the fullest extent currently permitted by Delaware law. The Charter currently provides for the exculpation of directors in specific circumstances but does not include a provision that allows for the exculpation of officers. The proposed amendment (the “Officer Exculpation Amendment”) would extend exculpation protections to certain officers.

Pursuant to and consistent with Section 102(b)(7) of the Delaware General Corporation Law (the “DGCL”), Article VII of the Charter already eliminates the monetary liability of directors for certain breaches of their fiduciary duty of care. Effective August 1, 2022, Section 102(b)(7) of the DGCL was amended to permit companies to include in their certificates of incorporation limitations of monetary liability for the following officers in certain actions: (i) a corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer and chief accounting officer, (ii) an individual identified as a named executive officer in the corporation’s public SEC filings and (iii) an individual who, by written agreement with the corporation, has consented to be identified as an officer for purposes of Delaware’s long-arm jurisdiction statute. Consistent with Section 102(b)(7) of the DGCL, the Officer Exculpation Amendment would permit exculpation of these officers for breaches of their fiduciary duty of care in any direct claim. The DGCL does not permit the elimination of liability of these officers for:

The DGCL also does not permit the limitation of monetary liability of these officers in any action by or in the right of the company, such as a derivative claim.

The Board approved, adopted and declared advisable the Officer Exculpation Amendment on February 2, 2024.

REASONS FOR THE PROPOSED OFFICER EXCULPATION AMENDMENT

The Board took into account the narrow class and type of claims for which these officers would be exculpated, and the benefits it believes the Officer Exculpation Amendment would accrue to Cadence, including, without limitation, (i) the mitigation of the risk of an officer’s financial liability without intentional misconduct, (ii) the ability to attract and retain talented officers and (iii) the potential to reduce future litigation costs associated with frivolous lawsuits. After balancing these considerations, the Board determined that it is in the best interests of Cadence and its stockholders to adopt the Officer Exculpation Amendment.

The summary of the Officer Exculpation Amendment contained in this proposal is qualified in its entirety by reference to the full text of such amendment as set forth in Appendix B to this proxy statement.

VOTING INFORMATION AND BOARD RECOMMENDATION

The Board recommends a vote FOR approval and adoption of the amendment of the Restated Certificate of Incorporation to limit monetary liability of certain officers as permitted by law.

The affirmative vote of a majority of the voting power of the outstanding shares of stock of the Company entitled to vote at the Annual Meeting is required for approval of the proposal. Abstentions and broker non-votes will each have the effect of votes against this proposal. Unless marked to the contrary, proxies received will be voted FOR the approval and adoption of the Officer Exculpation Amendment.

The approval of this proposal is not conditioned upon approval of Proposal 4, which is the other Charter proposal described in this proxy statement. As a result, if this proposal is approved by Cadence stockholders, the Board has authorized the officers of Cadence to file with the Delaware Secretary of State a certificate of amendment that includes the Officer Exculpation Amendment set forth in Appendix B, regardless of whether Proposal 4 is also approved. The Officer Exculpation Amendment will become effective on the date it is filed with the Delaware Secretary of State (or at such later effective date set forth in the Officer Exculpation Amendment). The Board retains the discretion to abandon and not implement the Officer Exculpation Amendment at any time before it becomes effective. If this proposal is not approved by the requisite vote, the Officer Exculpation Amendment will not be implemented.

PROPOSAL 4: APPROVAL AND ADOPTION OF THE AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION REGARDING STOCKHOLDER ACTION BY WRITTEN CONSENT

OVERVIEW

Cadence requests that its stockholders approve and adopt an amendment of the Charter regarding stockholder action by written consent in lieu of a meeting that balances the important right of allowing stockholders to act by written consent with procedural and other safeguards described below that the Board believes are in the best interests of Cadence and its stockholders. Certain of these provisions were previously included in Cadence’s Bylaws. The Board amended Cadence’s Bylaws on November 2, 2023 to, among other things, delete these provisions after questions were raised about their enforceability as Bylaw provisions. The provisions in the proposed amendment (the “Written Consent Amendment”) are similar to the deleted Bylaw provisions but do not pose the same issues regarding enforceability.

Delaware law permits Cadence stockholders to act between stockholder meetings if consents setting forth an action are signed by persons holding at least the same amount of stock that would be necessary to authorize the action if it were adopted at a meeting where all stock was present and voted. The Board may fix a record date to determine the Cadence stockholders entitled to act by consent. If the action to be taken by consent does not require prior Board approval and the Board does not fix a record date, then the record date is the first date that a Cadence stockholder delivers a consent to Cadence. Delaware law allows Cadence to place additional procedures and safeguards regarding action by written consent in the Charter. The Written Consent Amendment would enact the following provisions.

Under the Written Consent Amendment, the election or removal of directors is deemed a “Similar Item” with respect to other items of business impacting the size or composition of the Board.

The Board approved, adopted and declared advisable the Written Consent Amendment on February 2, 2024.

REASONS FOR THE PROPOSED WRITTEN CONSENT AMENDMENT

After careful consideration, the Board has determined that adoption of this proposal would allow stockholders to retain their ability to fully exercise their voting rights without needing to convene at a meeting of stockholders while also protecting Cadence and its stockholders from abuse of the written consent process.

The summary of the Written Consent Amendment is qualified in its entirety by reference to the full text of such amendment as set forth in Appendix C to this proxy statement. In addition, this proposal, if approved, will amend Article VIII of the Charter to include the Written Consent Amendment, and re-number the existing Article VIII and Article IX to Article IX and Article X, respectively, including any cross-references to such sections in the Charter, as shown in Appendix C to this proxy statement.

VOTING INFORMATION AND BOARD RECOMMENDATION

The Board recommends a vote FOR approval and adoption of the amendment of the Charter regarding stockholder action by written consent.

The affirmative vote of a majority of the voting power of the outstanding shares of stock of the Company entitled to vote at the Annual Meeting is required for approval of this proposal. Abstentions and broker non-votes will each have the effect of votes against this proposal. Unless marked to the contrary, proxies received will be voted FOR the approval and adoption of the Written Consent Amendment.

The approval of this proposal is not conditioned upon approval of Proposal 3. As a result, if this proposal is approved by Cadence stockholders, the Board has authorized the officers of Cadence to file with the Delaware Secretary of State a certificate of amendment that includes the Written Consent Amendment set forth in Appendix C, regardless of whether Proposal 3 is also approved. The Written Consent Amendment will become effective on the date it is filed with the Delaware Secretary of State (or at such later effective date set forth in the Written Consent Amendment). The Board retains the discretion to abandon and not implement the Written Consent Amendment at any time before it becomes effective. If this proposal is not approved by the requisite vote, the Written Consent Amendment will not be implemented.

PROPOSAL 5: ADVISORY RESOLUTION TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

Pursuant to Section 14A of the Exchange Act, Cadence stockholders are entitled to vote to approve, on an advisory (non-binding) basis, the compensation of Cadence’s named executive officers as disclosed in this proxy statement. This proposal, which is commonly known as the “say-on-pay” proposal, provides stockholders the opportunity to express their views on the named executive officers’ compensation. Cadence has held a vote on the say-on-pay proposal annually, as determined by the Board and consistent with the past advisory vote by Cadence stockholders. The next say-on-pay proposal is expected to occur at the 2025 Annual Meeting of Stockholders.

The Board and the Compensation Committee value feedback from Cadence stockholders on executive compensation and will review and consider the voting results when evaluating Cadence’s executive compensation program. At the 2023 Annual Meeting of Stockholders, approximately 89% of votes cast by Cadence stockholders approved the compensation of the named executive officers as disclosed in the 2023 proxy statement. Over the past five years, our say-on-pay proposals have had an average level of stockholder support of approximately 92% of the votes cast. In deciding how to vote on this proposal, stockholders are encouraged to read the “Compensation Discussion and Analysis” and the related tables and narrative in this proxy statement for the details of Cadence’s executive compensation program. As described in “Compensation Discussion and Analysis” below, the Board and the Compensation Committee designed Cadence’s executive compensation program to support the long-term success of Cadence and the creation of stockholder value. Cadence’s executive compensation program for fiscal 2023 tied a significant majority of the named executive officers’ compensation to performance. As a result, the pay-for-performance component in Cadence’s executive compensation program should be considered an important factor in Cadence’s strong performance in fiscal 2023, including its revenue of $4.090 billion for the year.

The Board and the Compensation Committee believe that the leadership provided by Cadence’s management team, including the named executive officers, was key to Cadence’s execution and strong performance in fiscal 2023, which contributed to a total stockholder return of 526% over the five fiscal year period through 2023. In accordance with Section 14A of the Exchange Act, Cadence is asking its stockholders to approve the following advisory resolution at the Annual Meeting:

RESOLVED, that the compensation paid to Cadence’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K of the Exchange Act, including the “Compensation Discussion and Analysis,” compensation tables and narrative discussion in this proxy statement, is hereby APPROVED.

Cadence stockholders should note that because the advisory vote on named executive officer compensation occurs well after the beginning of the compensation year, and because the different elements of Cadence’s executive compensation program are designed to operate in an integrated manner and to complement one another, in many cases it may not be appropriate or feasible to change such executive compensation program in consideration of any one year’s advisory vote on named executive officer compensation by the time of the following year’s annual meeting of stockholders.

VOTING INFORMATION AND BOARD RECOMMENDATION

The Board recommends a vote FOR the advisory resolution to approve named executive officer compensation.

The affirmative vote of a majority of the voting power of the stock present in person or represented by proxy and entitled to vote on this proposal is required for approval of this proposal. Stockholders will be treated as present whether they attend the Annual Meeting virtually or by proxy. Abstentions will be treated as being present and entitled to vote on this proposal and, therefore, will have the effect of votes against this proposal. Broker non-votes will be treated as not being entitled to vote on this proposal and, therefore, will not be counted for purposes of determining whether this proposal has been approved. Unless marked to the contrary, proxies received will be voted FOR the advisory resolution to approve named executive officer compensation.

PROPOSAL 6: RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) as Cadence’s independent registered public accounting firm for the fiscal year ending December 31, 2024. PwC has served as our independent registered public accounting firm since February 26, 2020. Pursuant to the Audit Committee charter, the Audit Committee and the Board have directed management to submit the selection of the independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. Representatives from PwC are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions.

Stockholder ratification of the selection of PwC as Cadence’s independent registered public accounting firm is not required by Cadence’s Bylaws or otherwise. However, the Board is submitting the selection of PwC to the stockholders for ratification as a matter of good corporate practice. If Cadence stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain PwC. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year, if it determines that such a change would be in the best interests of Cadence and its stockholders.

VOTING INFORMATION AND BOARD RECOMMENDATION

The Board recommends a vote FOR ratification of the selection of PwC as Cadence’s independent registered public accounting firm.

The affirmative vote of a majority of the voting power of the stock present in person or represented by proxy and entitled to vote on this proposal is required for approval of this proposal. Stockholders will be treated as present whether they attend the Annual Meeting virtually or by proxy. Abstentions will be treated as being present and entitled to vote on this proposal and, therefore, will have the effect of votes against this proposal. This proposal is considered a routine matter, and brokers are therefore permitted to exercise discretionary voting authority and vote shares held by them if the beneficial owners of the shares do not provide voting instructions. Unless marked to the contrary, proxies received will be voted FOR ratification of the selection of PwC.

AUDIT COMMITTEE REPORT

The Audit Committee is currently comprised of four directors of Cadence who are “independent” as defined by Nasdaq’s listing standards and the Exchange Act. The Audit Committee met five times in fiscal 2023.

The Audit Committee operates under a charter that is available on the Corporate Governance page at www.cadence.com. As more fully described in its charter, the Audit Committee appoints and retains the independent registered public accounting firm and oversees the quality and integrity of Cadence’s financial statements, Cadence’s compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications, independence and performance, and the performance of Cadence’s internal audit function, Cadence’s accounting and financial reporting processes and the audits of Cadence’s financial statements on behalf of the Board.

In this context, the Audit Committee has reviewed and discussed the audited financial statements included in Cadence’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 with Cadence’s management and PricewaterhouseCoopers LLP (“PwC”), Cadence’s independent registered public accounting firm. The Audit Committee has also discussed with PwC the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC, as well as PwC’s independence from Cadence and its management. In addition, the Audit Committee has received from PwC the written disclosures and letter regarding PwC’s communications with the Audit Committee concerning these matters and PwC’s independence, as required by the Public Company Accounting Oversight Board. The Audit Committee has also considered whether the provision of non-audit services by PwC to Cadence is compatible with PwC’s independence.

In reliance on the reviews and discussions referred to above, the then-current members of the Audit Committee recommended to the Board, and the Board approved, the inclusion of the audited financial statements in Cadence’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for filing with the SEC.

AUDIT COMMITTEE

Lewis Chew, Chair

Ita Brennan

James D. Plummer

John B. Shoven

The foregoing Audit Committee report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of Cadence under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in any such filing.

FEES BILLED TO CADENCE BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DURING FISCAL 2023 AND 2022

The following table presents fees incurred by Cadence for professional services rendered by PwC for the fiscal years ended December 31, 2023 and 2022:

AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee pre-approves, or where permitted by the rules of the SEC, subsequently approves, the audit services and non-audit services provided by Cadence’s independent registered public accounting firm. In accordance with its charter, the Audit Committee has delegated its authority to pre-approve services to the Chair of the Audit Committee or, if the Chair is unavailable, another member of the Audit Committee, provided that such designees present any such approvals to the full Audit Committee at its next regularly scheduled meeting. All of the audit and non-audit fees reported in the table above were approved by the Audit Committee.

PROPOSAL 7: STOCKHOLDER PROPOSAL REGARDING VOTE ON GOLDEN PARACHUTES

Cadence received a stockholder proposal from John R. Chevedden of 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, who beneficially owns 50 shares of Cadence common stock (the “Proponent”). The Proponent has given Cadence notice of the intent to introduce the following proposal for consideration and action by the stockholders at the Annual Meeting. The proposal may be voted on at the Annual Meeting only if properly presented by the Proponent or the Proponent’s qualified representative at the Annual Meeting.

In accordance with the Federal securities laws, the proposal and supporting statement are presented below as submitted by the Proponent and are quoted verbatim. The proposal and supporting statement may contain assertions about Cadence that Cadence believes are incorrect. The Board has not attempted to refute all assertions and Cadence has not corrected any errors in the proposal or supporting statement.

For the reasons set forth following the Proponent’s proposal, the Board opposes adoption of the proposal and recommends that stockholders vote AGAINST the proposal.

VOTING INFORMATION AND BOARD RECOMMENDATION

The Board recommends a vote AGAINST this proposal. The Board has carefully considered this proposal and believes that it is unnecessary and not in the best interests of Cadence and its stockholders. Consequently, the Board recommends a vote AGAINST this proposal for the following reasons.

Cadence’s existing severance and change in control arrangements are reasonable, tailored to the needs of Cadence, and already include a 2.99 times limit on cash severance payments.

To ensure our compensation arrangements remain competitive with our peers, the Compensation Committee regularly reviews industry practices and considers how those practices compare to Cadence’s severance and change in control arrangements.

Cadence’s current cash severance levels, which are only paid in connection with involuntary terminations, are carefully considered, consistent with market practices, and are less than 1.6 times the sum of each executive’s base salary and target bonus, even in a change in control scenario. Cadence’s executives are not entitled to tax gross-ups in connection with any “excess parachute payments” paid in connection with a change in control.

Additionally, while the Board believes that Cadence’s severance arrangements are reasonable and consistent with current market practice, the Compensation Committee recently adopted a new policy to further align our compensation program with stockholder expectations on executive termination pay. The policy provides that Cadence will not enter into arrangements with executive officers providing for cash severance payments in excess of 2.99 times the sum of an executive officer’s annual salary and target bonus without seeking stockholder ratification. As noted above, Cadence’s current cash severance levels are substantially lower than the limit under the policy. Given Cadence’s current severance arrangements and existing 2.99 times policy, the proposal is unnecessary.

The proposal would place Cadence at a competitive disadvantage by limiting Cadence’s ability to attract and retain executives.

Under the proposal, the value of equity that vests in a termination scenario would count against the 2.99 times limit. This limitation would significantly impact Cadence’s ability to attract and retain highly qualified executives with competitive compensation packages and creates uncertainty that would be undesirable for prospective senior executives — particularly if our competitors have not adopted similar restrictions. Our executive severance arrangements provide for partial equity award vesting acceleration upon a qualifying termination of employment that is not in connection with a change in control, and only provide for full equity award vesting acceleration if a qualifying termination of employment occurs in connection with a change in control. Given that our executives’ compensation is heavily weighted towards equity awards, providing for equity award vesting acceleration in the event of a qualifying termination is important to our executive retention strategy. The proposal could have the

result of needing to offer larger pay packages to attract or retain executives. The Board and the Compensation Committee believe that the existing arrangements are appropriate and effective at aligning the interests of our employees with those of our stockholders.

The proposal discourages the use of at-risk, long-term equity incentive awards, which are a key element of Cadence’s executive compensation.

Target direct compensation is comprised of 90.1% long-term equity incentives for our chief executive officer and 79.6% long-term equity incentives for our other named executive officers, excluding any LTP Awards (as defined below in “Compensation Discussion and Analysis”). The LTP Awards further enhance those percentages and reinforce the Compensation Committee’s focus on aligning compensation with stock performance and value creation. Cadence’s stock options provide an opportunity to reward our executives solely to the extent the stock price increases after the date of grant, and the LTP Awards are entirely performance-based and provide value to the recipients only if there are sustained and significant increases in stockholder value during the multi-year performance period of the awards. The proposal would limit our executives’ ability to realize the full value of these awards by imposing an arbitrary limit on all severance benefits, thereby discouraging the use of such equity incentive awards. This would be detrimental to Cadence and its stockholders because these awards are tied to maximizing long-term stockholder value and delivering significant performance results.

Stockholders already have an opportunity to express their approval of Cadence’s compensation practices.

Cadence’s stockholders regularly support our executive compensation program through an annual “say-on-pay” vote. At the 2023 Annual Meeting, stockholders expressed strong support for Cadence’s executive compensation program, with approximately 89% of the votes cast for approval of the advisory “say-on-pay” vote, and an average level of stockholder support of approximately 92% of the votes cast for approval of the advisory “say-on-pay” vote over the past five years. In addition, at the 2023 Annual Meeting of Stockholders, stockholders overwhelmingly approved an amendment to Cadence’s Omnibus Equity Incentive Plan, with such amendment receiving approval from approximately 95% of the votes cast.

The proposal would create a misalignment between executives and stockholders regarding change in control transactions.

Given the high risk of job loss during a change in control transaction, executives may be motivated to seek new employment, rather than stay through the duration of the transaction. If a potential change in control transaction is in the best interests of our stockholders, our executives should focus their full energy on pursuing such transaction, even if it may result in their termination, and not worry about whether stockholders will approve their equity award vesting in connection with a termination. Our current executive compensation program reinforces this message and encourages executives to focus on long-term stockholder interests, rather than personal interests.

For the reasons above, the Board recommends a vote AGAINST Proposal 7.

The affirmative vote of a majority of the voting power of the stock present in person or represented by proxy and entitled to vote on this proposal is required for approval of this proposal. Stockholders will be treated as present whether they attend the Annual Meeting virtually or by proxy. Abstentions will be treated as being present and entitled to vote on this proposal and, therefore, will have the effect of votes against this proposal. Broker non-votes will be treated as not being entitled to vote on this proposal and, therefore, will not be counted for purposes of determining whether this proposal has been approved. Unless marked to the contrary, proxies received will be voted AGAINST this proposal.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP

The following table sets forth certain information regarding the ownership of Cadence common stock as of March 4, 2024, the Record Date, unless otherwise indicated below, by: