This excerpt taken from the SNPS DEF 14A filed Feb 20, 2007.
Equity Compensation. The Compensation Committee believes that equity based compensation closely aligns the interests of executive officers with those of stockholders. The Compensation Committee awards equity compensation to Synopsys executive officers in the form of stock options and restricted stock units. The exercise price of stock options is 100% of the fair market value of the common stock on the date of grantand restricted stock units are valued at 100% of the fair market value of the underlying common stock. Most awards vest in a series of monthly installments over four years provided that the executive officer continues his or her employment with Synopsys, although some grants, including those granted pursuant to the OPI, vest upon Synopsys achievement of certain financial results.
The Compensation Committee determines the size of each award by considering, among other things, Synopsys financial performance, the performance of the executive officers individual business unit and the officers individual performance. The Compensation Committee also considers the executive officers responsibility level, the value of awards granted to similarly situated executive officers of comparable companies and the executive officers existing holdings of unvested equity awards. The Compensation Committee believes that the equity compensation awarded to its executive officers during fiscal 2006 was reasonable in light of the factors described above.