Anirudh Devgan
CADENCE DESIGN SYSTEMSAbout Anirudh Devgan
Anirudh Devgan, Ph.D., is President and CEO of Cadence Design Systems, serving as CEO since 2021 and President since 2017; he joined Cadence in 2012 after leadership roles at Magma Design Automation and IBM. He is age 55 and has been a Cadence director since 2021; his credentials include induction into the National Academy of Engineering, IEEE Fellow status, and the IEEE/SEMI Phil Kaufman Award, with numerous patents and publications . Under his leadership, Cadence delivered 2024 revenue of $4.641B, non-GAAP operating income of $1.974B, and a 10% TSR in 2024; five-year TSR through 2024 was 327%, with market cap rising from $19.7B to $82.4B over that period . 2024 business highlights included a record $6.8B backlog and strong AI-driven portfolio momentum across EDA, IP, and SD&A, including >750 Cerebrus tape-outs and record hardware results (Palladium Z3/Protium X3) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cadence Design Systems | President and CEO | 2021–present | Led AI-driven portfolio expansion; sustained revenue and margin growth; strong multi-year TSR . |
| Cadence Design Systems | President | 2017–present | Oversaw strategy and operations across EDA, IP, SD&A businesses . |
| Cadence Design Systems | EVP & GM, Digital & Signoff and System & Verification | 2012–2017 | Drove growth in core digital, signoff, and verification portfolios . |
| Magma Design Automation | Corporate VP & GM, Custom Design BU | Pre-2012 | Led custom design business at EDA peer acquired by Synopsys (industry context) . |
| IBM | Management and technical roles | Pre-2012 | Multiple innovation awards, including IBM Outstanding Innovation Award . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No external public-company board roles disclosed for Devgan . |
Fixed Compensation
Multi-year summary compensation for Devgan (grant-date values; SEC methodology):
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | 725,000 | 750,000 | 750,000 |
| Stock Awards ($) | 25,318,495 | 7,702,791 | 8,686,096 |
| Option Awards ($) | 4,779,658 | 7,689,913 | 8,665,680 |
| Non-Equity Incentive Plan Comp (Cash Bonus) ($) | 1,381,859 | 1,187,386 | 1,177,600 |
| All Other Compensation ($) | 11,022 | 11,772 | 13,128 |
| Total ($) | 32,216,034 | 17,341,862 | 19,292,503 |
Additional fixed-pay specifics:
- Base salary: $750,000 in 2024; target bonus increased from 125% to 150% of salary for 2024 .
Performance Compensation
2024 Senior Executive Bonus Plan (SEBP) structure and results:
- Company Performance Factor: Revenue (45% weight) and Non-GAAP Operating Margin (55% weight); each component pays 0–150% vs targets set each half-year; acquisitions excluded if not in targets .
- Individual Performance Factor: Executive Leadership (80%) and Cadence Culture Modifier (20%) based on strategic results, innovation, operational excellence, customer success, and culture outcomes .
2024 half-year targets and actuals (company factor):
| Metric | Weight | H1 2024 Target | H1 2024 Actual | H1 Company Factor | H2 2024 Target | H2 2024 Actual | H2 Company Factor |
|---|---|---|---|---|---|---|---|
| Revenue ($MM) | 45% | 2,102 | 2,056 (excl. BETA; adj.) | 87.0% | 2,560 | 2,571 | 101.68% |
| Non-GAAP Op Margin (%) | 55% | 39.7% | 39.5% (adj.) | 87.0% | 45.3% | 45.4% | 101.68% |
Devgan’s 2024 bonus payouts by half:
| Period | % of Target | Amount ($) |
|---|---|---|
| 1H 2024 | 94.7% | 532,440 |
| 2H 2024 | 114.7% | 645,160 |
| Full Year | — | 1,177,600 |
Equity incentives (2024 annual grants; vesting and performance conditions):
- 2024 Incentive Stock Award: 29,105 shares; grant-date fair value $8,686,096; vests over 3 years (1/3 at ~12 months; remainder in four semiannual installments) subject to performance goals .
- 2024 Stock Options: 83,145 options at $298.44 exercise; 7-year term; vest monthly over 4 years; grant-date fair value $8,665,680 .
- LTP Awards (Long-Term Performance awards, 2022 cycle): stock-price hurdles (20-day average) with TSR relative to S&P IT indices; threshold $245 (+50%), max $359 (+120%); first measurement date March 15, 2025 with 33% vesting cap and 1-year holding on earned shares; 33% vested on March 15, 2025 given absolute and relative TSR hurdles met .
- 2025 program preview: introduction of PSUs (50% CEO annual equity) tied 50% to adjusted operating income growth and 50% to relative TSR; options replaced with PSUs and time-based RSUs; new 2025 LTP with baseline $262, threshold $359, max $524, with 2.5x value cap .
Equity Ownership & Alignment
- Beneficial ownership: 578,786 shares (as of March 10, 2025 record date) .
- Options exercisable within 60 days: 522,800 (contributes to beneficial ownership calc) .
- Unvested/Outstanding awards at 12/31/2024:
- Time-based/performance RS (not yet vested): 5,595 (2022 grant), 18,978 (2023 grant), 29,105 (2024 grant) .
- 2022 LTP unearned shares outstanding: 409,208 (subject to price/TSR hurdles; with vesting caps by measurement date and 1-year holding on earned shares) .
- Insider trading and hedging/pledging policy: Directors and officers are prohibited from hedging Cadence securities, short sales, and pledging Cadence stock or using it in margin accounts; trading requires preclearance .
- Stock ownership guidelines: CEO must hold ≥3x base salary in Cadence shares within 5 years; all executives were in compliance as of 12/31/2024 .
Insider selling/vesting activity (2024):
- Options exercised: 99,886 shares; value realized $22,336,990 .
- Shares vested (stock awards): 112,688; value realized $33,344,705 .
Note: 2022 LTP earned shares (first tranche) vested March 15, 2025 and are subject to a one-year holding period, tempering immediate selling pressure .
Employment Terms
- Employment agreement (amended/restated Dec 15, 2021): CEO base salary initially $725,000; SEBP target 125% of salary (raised to 150% in 2024); participation in severance/CIC protections as detailed below .
- Severance plan design: double-trigger equity acceleration on CIC-related qualifying termination; otherwise limited acceleration (12 months standard; 18 months for Devgan) for time-based awards; performance awards continue only if performance period ends within 12–18 months and conditions are met; COBRA paid; transition salary; lump-sum cash severance .
- Multiples: highest cash severance entitlement <1.6x base+bonus upon CIC-related qualifying termination; no tax gross-ups (best net alternative applies) .
- Non-compete/Non-solicit: during transition period (up to 1 year), executive may not compete/solicit; violations cease benefits .
- Clawback: mandatory recovery policy aligned with Nasdaq Rule 10D-1 for erroneously awarded incentive compensation; historical clawback applies pre-10/2/2023 .
- Potential payouts (as of 12/31/2024; pre-tax totals; $300.46 share price assumption):
- Termination without cause / constructive termination (non-CIC): $69,832,784 (includes equity acceleration and cash/benefits) .
- CIC + qualifying termination (double trigger): $79,070,484 (includes full equity acceleration and enhanced cash) .
Board Governance and Director Service
- Role: President & CEO, director since 2021; not independent .
- Board leadership: Independent Chair (ML Krakauer); CEO and Chair roles separated, mitigating dual-role concerns; executive directors receive no extra director compensation .
- Committees: Devgan serves on no board committees (all committees fully independent) .
- Board and committee attendance: All directors attended ≥75% of meetings in 2024; Board held 6 meetings .
- Stockholder support: Say-on-Pay received ~90% approval in 2024; 5-year average ~91% .
Compensation Program Design and Peer Context
- Pay-for-performance orientation: heavy weighting to at-risk equity (options, ISAs, and triennial LTP); 2025 shift increases performance linkage via PSUs tied to operating income growth and relative TSR .
- Short-term metrics: revenue and non-GAAP operating margin drive SEBP payouts; individual factor emphasizes execution and culture .
- Peer group (FY24 benchmarking) includes AMD, Synopsys, ANSYS, Marvell, Palo Alto Networks, etc.; Splunk removed for FY25 after acquisition; peers selected by industry and size criteria (revenue and market cap) .
- Independent consultant: Semler Brossy; no conflicts; advises on peer group and pay competitiveness .
Risk Indicators and Red Flags
- Positive governance features: clawback policy; no hedging/pledging; no tax gross-ups; double-trigger CIC; independent Chair; all committees independent .
- Insider activity: significant 2024 option exercises and RSU vesting create supply, although 2022 LTP earned shares carry a 1-year holding period post-vesting (reduces immediate float) .
- Section 16 compliance: one late Form 4 reported in 2024 for another director (not Devgan) .
- Related parties: robust review policy; no adverse related-party disclosures tied to Devgan .
Director Compensation (as a director)
- Employee directors (including Devgan) receive no additional pay for board service; non-employee director retainers and equity specified separately .
Data Tables – 2024 Equity Award Details (Devgan)
| Award | Grant Date | Shares/Options | Exercise Price | Vesting | Grant-Date FV ($) |
|---|---|---|---|---|---|
| Incentive Stock Award | 3/15/2024 | 29,105 | — | 1/3 at ~12 months; remainder in 4 semiannual installments; performance goals apply | 8,686,096 |
| Stock Options | 3/15/2024 | 83,145 | 298.44 | Monthly over 4 years; 7-year term | 8,665,680 |
| 2022 LTP (outstanding) | 1/13/2022 | 409,208 unearned at 12/31/2024 | — | Price/TSR hurdles; measurement dates 2025/2026/2027; 1-year post-vest holding | — |
Investment Implications
- Alignment and incentives: Devgan’s pay mix is heavily performance-based (SEBP on revenue/margins; options; LTP tied to absolute and relative TSR), with strengthened 2025 design via PSUs—supportive for long-term value creation and signal of management confidence in operating profit growth and TSR .
- Near-term stock supply: 2024 exercises and vesting indicate realized gains; however, LTP shares earned in 2025 are locked for one year, mitigating immediate selling pressure; anti-hedging/pledging further aligns insider behavior with shareholders .
- Retention/transition risk: Robust double-trigger CIC protections and meaningful potential payouts ($79.1M in CIC termination scenario) reduce flight risk during strategic events; non-compete/solicit during transition adds protection, though overall severance cash multiple remains <1.6x base+bonus (shareholder-friendly) .
- Governance quality: Separation of Chair/CEO, fully independent committees, strong say-on-pay support (~90%) and clawback policy indicate solid governance and investor alignment; no pledging, no gross-ups remove classic red flags .
- Track record: 2024 operational execution (revenue/margin delivery, record backlog) within the AI supercycle supports continued growth in EDA, IP, and SD&A; sustained TSR and market cap expansion under Devgan bolster confidence in execution capability, though equity realizations merit ongoing monitoring for selling pressure in open trading windows .