ANSYS, Inc.

2600 Ansys Drive

Canonsburg, PA 15317

844-462-6797

March 31, 2020

NOTICE OF ANNUAL MEETING OF

STOCKHOLDERS

To Be Held on Friday, May 15, 2020

TO THE STOCKHOLDERS OF ANSYS, INC.

The annual meeting of stockholders of ANSYS, Inc. (“Ansys,” “we,” or the “Company”) will be held on Friday, May 15, 2020, at 11:30 a.m. Eastern Time (the “Annual Meeting”), virtually via live webcast at www.virtualshareholdermeeting.com/anss2020 for the following purposes, as more fully described in the accompanying proxy statement:

The Board of Directors has fixed the close of business on March 20, 2020 as the record date for determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. Only holders of record of common stock at the close of business on that date will be entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. In the event there are not sufficient shares to be voted in favor of any of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies.

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE URGE YOU TO SUBMIT YOUR VOTE VIA THE INTERNET, TELEPHONE, OR MAIL.

We appreciate your continued support of Ansys.

Very truly yours,

Janet Lee

Vice President, General Counsel and Secretary

Virtual Annual Meeting

We are again this year offering our stockholders a virtual annual meeting. We began to offer virtual annual meetings in 2016 to facilitate stockholder access by enabling stockholders to participate fully and equally from any location around the world at no cost. We believed this was the right choice for a widely-held technology company, such as Ansys, with global operations; as it brought cost savings to Ansys and stockholders by using a technology platform in line with our commitment to support innovative technology, while also increasing our ability to engage with all stockholders, regardless of size, resources, or physical location. A virtual meeting was also environmentally friendly and furthered our strategic goal to operate our business in a sustainable manner. This year, in light of the public health impacts of the coronavirus outbreak (COVID-19), in addition to these other benefits, a virtual annual meeting also enables us to communicate with our stockholders and partners while supporting the health and safety of our communities.

We are sensitive to concerns regarding virtual annual meetings generally from investor advisory groups and other stockholder rights advocates who have voiced concerns that virtual meetings may diminish stockholder voice or reduce accountability. Accordingly, we have designed this virtual annual meeting format to enhance, rather than constrain, stockholder access, participation and communication. For example, the online format allows stockholders to communicate with us during the meeting so they can ask questions of our management. During the live Q&A session of the meeting, we will answer questions pertinent to the 2020 Annual Meeting matters, as time permits. Questions regarding personal matters, including those related to employment, product issues or suggestions for product innovations are not pertinent to 2020 Annual Meeting and therefore will not be answered. Any questions pertinent to 2020 Annual Meeting that cannot be answered during the 2020 Annual Meeting due to time constraints will be posted

online and answered at https://investors.ansys.com/governance/proxy-materials/. If you wish to submit a question during the 2020 Annual Meeting, you may do so by logging into the virtual annual meeting platform at www.virtualshareholdermeeting.com/anss2020, typing your question in the “Ask a Question” field and clicking “Submit.” Although the live webcast is available only to stockholders at the time of the meeting, a replay of the meeting will be made publicly available for one year at www.virtualshareholdermeeting.com/anss2020.

We will have technicians ready to assist you with any difficulties you may have accessing the virtual annual meeting. If you need technical support during the 2020 Annual Meeting, including to access the 2020 Annual Meeting’s virtual meeting platform, please call the technical support number 30 minutes or less prior to the start of the meeting at 800-586-1548 (US) or 303-562-9288 (International).

Additional information regarding the ability of stockholders to ask questions during the 2020 Annual Meeting, technical support, and rules of conduct for the 2020 Annual Meeting will be available on our investor relations webpage one week before the 2020 Annual Meeting at https://investors.ansys.com/governance/proxy-materials/. 

Business Overview

If you’ve ever seen a rocket launch, flown on an airplane, driven a car, used a computer, touched a mobile device, crossed a bridge or put on wearable technology, chances are you’ve used a product where Ansys software played a critical role in its creation. Ansys is the global leader in engineering simulation. Through our strategy of Pervasive Engineering Simulation, we help the world’s most innovative companies deliver radically better products to their customers. By offering the best and broadest portfolio of engineering simulation software, we help them solve the most complex design challenges and create products limited only by imagination. Founded in 1970, Ansys is headquartered south of Pittsburgh, Pennsylvania, U.S.A.

Our products are widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia, including aerospace and defense, automotive, electronics, semiconductors, energy, materials and chemical processing, turbomachinery, consumer products, healthcare, and sports.

Our growth and financial strength reflect our leading technology position and commitment to innovation. In each of the last three years, we invested more than 18% of our revenues into research and development. Ansys simulation software, coupled with our team of applications experts and global support network, is the key to:

The focused execution of our pervasive simulation strategy continues to work and is creating long-term value for all of our stakeholders. In fiscal year 2019, we delivered strong financial results for a second consecutive year, extended our technology leadership by developing capabilities organically as well as pursuing strategic acquisitions, expanded our partner ecosystem and continued to thrive with a culture that values innovation, inclusiveness, transparency and integrity. We have built a “One Ansys” culture focused on our people, the planet, and our practices. Our overall attrition rate is low at 8% and our employee engagement scores are excellent and continue to improve. In 2019, we were recognized by Fast Company as one of the 50 Best Workplaces for Innovators, Corporate Knights named us as one of the most sustainable companies in the world, and we were honored to join the prestigious NASDAQ-100 Index^® and be included among the leading technology companies in the world.

We achieved our financial goal of delivering double-digit revenue growth while maintaining industry leading operating margins. In addition, our successful execution yielded strong financial results, reflected in our annual contract value (ACV) growth of 10%, or 12% in constant currency, and operating cash flows of $499.9 million for the year ended December 31, 2019. We repurchased 0.3 million shares during the year at an average price per share of $179.41. We have delivered strong long-term total stockholder return (TSR) as indicated by the chart below which shows how a $100 investment in Ansys on December 31, 2016 would have grown to $278 on December 31, 2019. The chart also compares the TSR of an investment in our common stock to the same investment in the S&P 500 Index, a peer group consisting of Autodesk, Inc., Cadence Design Systems, Dassault Systemes SE, PTC Inc., Synopsys, Inc., Altair Engineering Inc. and Aspen Technology, Inc. and the Nasdaq Composite Stock Market Index over the last three years.

In 2019, we maintained our commitment to investing in both our core and adjacent products by making several strategic acquisitions of market-leading technologies, which we believe extends our simulation technology leadership, expands our multi-physics product portfolio and accelerates product innovation to enable our customers to solve their biggest product design challenges. We completed the acquisition of our long-term technology partner, Livermore Software Technology Corporation, the premier provider of explicit dynamics and other advanced finite element analysis technology, and the acquisition of Dynardo, which will enhance Ansys Minerva, a new platform that improves engineering productivity by providing simulation process and data management, process integration, and design optimization capabilities, with advanced process integration and design optimization capabilities. Earlier in the year, we closed the

acquisitions of technology leaders Granta Design Limited, Helic, Inc. (“Helic”) and DfR Solutions, all of which have been integrated into the Ansys platform.

During 2019, we introduced new capabilities across our entire product portfolio. We released Ansys^® 2019 R2, which accelerates, streamlines and simplifies the product life cycle through new functionalities, including new materials capabilities for structural analysis following the acquisition of Granta Design in the first quarter.

We strengthened our product leadership in the simulation of autonomous systems by adding the capabilities of our VR-Xperience Driving Simulator to prepare advanced scenarios and run simulations with more complete and accurate multi-body vehicle dynamics. The new capabilities also dramatically enhance functions crucial

to the design and analysis of radar used in autonomous vehicles. Our new innovation around Accelerated Doppler Processing speeds the time to simulate radar systems by more than 100x. This new breakthrough capability delivers gold-standard accuracy and enhances collaboration between radar sensor designers and the original equipment manufacturers that incorporate the sensors on vehicles.

Our Ansys^® 2019 R3 release included new capabilities across our portfolio, including Ansys Autonomy, which enables engineers to develop safer autonomous vehicles, and Ansys Minerva.

We are further expanding by embedding simulation into our partner ecosystem. In 2019, we forged great partnerships with established leaders including BMW, Airbus and Autodesk. Our partnership with automotive leader BMW allows us to jointly create what we believe to be the industry’s first holistic simulation tool chain for developing autonomous vehicle technologies. The tool chain will optimize valuable test data by providing a development framework around rigorous safety planning, efficient test space exploration, and data analytics in a virtual driving environment. Airbus Defense and Space will use Ansys SCADE solutions to enable safety-critical controls with sophisticated artificial intelligence with the goal of fully autonomous flight by 2030. Our existing alliances with global leaders include: SAP incorporating Ansys Twin Builder runtimes into its cloud-based product Predictive Engineering Insights; Synopsys integrating Ansys RedHawk with its IC Compiler II for early signoff

accuracy; and PTC embedding Ansys Discovery Live and AIM within its Creo product for CAD-embedded simulation. These partnerships remain strong and we are excited about the collaborative value we can bring to address our customers’ design problems. Discovery Live, one of our high potential adjacencies, continues to gain momentum and to garner recognition for its innovative technology. The most recent recognition was from Fast Company, which in its September 2019 issue, named us as one of the 50 Best Workplaces for Innovators for our development of this groundbreaking product.

In addition to our strong financial results, key strategic achievements and robust product development, we continued our investment in employee talent and engagement and the infrastructure needed to capture and support faster growth and a larger addressable market. We continued to recruit top talent globally across our key regions: Americas, Asia-Pacific and Europe, Middle East and Africa, with headcount increasing to 4,134 in 2019, constituting an 18% growth rate year on year. Our 2019 engagement score increased to a new high of 79% from 77% in 2018 and the percentage of women in senior leadership was 21% as of December 31, 2019. We made progress towards our key sustainability objectives and our simulation software continues to make a difference by having a positive environmental application for our customers’ products. We continue to impact our community and serving in the community, including through our employees’ personal community volunteer initiatives and Ansys-sponsored programs.

We take pride in our engagement with our stockholders. We welcome the insights and feedback our stockholders bring to our management team and Board and take our stockholders’ points of view into account when developing our governance practices. The Board firmly believes that the mutual trust we build with our stockholders is one of the key components of good governance and is an important element of driving Board responsibility and a strong governance culture.

Ansys has a very active investor relations program, engaging with over 500 stockholders and interested investors globally throughout the year via investor conferences, non-deal roadshows, conference calls and headquarters visits. Our outreach has resulted in:

We held an Investor Day on September 12, 2019 in Pittsburgh, PA with a reception the evening before at the new Ansys Hall at Carnegie Mellon University. Investors met and engaged with senior management and learned about our vision, strategy, total addressable market opportunities, new and upgraded products, our go-to-market plans, as well as an overview of our financials and longer-term 2022 ACV and operating margin targets. All of the presentations and the full video archive of the event can be found on our Investor Relations website at https://investors.ansys.com.

We conducted an investor perception study following Investor Day, eliciting feedback from attendees of the event. This feedback was shared with the full Board and will be used as a guide to enhance our ongoing investor communications. The feedback was very positive and overall opinions remained favorable, with above average marks on key attributes such as credibility of management, attractiveness of end markets, long-term growth opportunities, market position and operating margins.

Our Corporate Responsibility (“CR”) program is centered around three themes of People, Planet and Practices. Our Board has oversight of our CR activity through its Nominating and Corporate Governance Committee. Our CR program itself is managed by a committee of select senior leaders, chaired by our General Counsel.

People – Our People initiatives help us invest in our employees and contribute to the communities in which we function.

Planet – Our Planet initiatives encourage us to contribute to the well-being of the environment by promoting and enabling sustainable business practices.

Practices – Our focus on Practices helps us in our quest to generate long-term value for our shareholders and consistently meet customer expectations.

More information regarding our sustainability initiatives is available on our Sustainability webpage, located at https://investors.ansys.com/sustainability/.

Our Board is divided into three classes and is currently comprised of three directors in each of Class I, Class II and Class III. Directors serve for three-year terms with one class of directors being elected by our stockholders at each annual meeting.

At the 2020 Annual Meeting, three Class III directors will be put forward for election to serve until the annual meeting of stockholders in 2023 and until such directors’ successors are duly elected and qualified. Based on the recommendation of our Nominating and Corporate Governance Committee, our Board has nominated Robert M. Calderoni, Glenda M. Dorchak and Ajei S. Gopal for election as Class III directors at the 2020 Annual Meeting.

Unless otherwise specified in the proxy, it is the intention of the persons named in the proxy to vote the shares represented by each properly executed proxy for the election of Mr. Calderoni, Ms. Dorchak and Dr. Gopal. Proxies cannot be voted for a greater number of persons than the number of nominees named. The nominees have agreed to stand for election and to serve, if elected, as directors. However, if any person nominated by our Board is unable to stand for election, the proxies will be voted for the election of such other person or persons as our Board may recommend unless the Board determines to reduce the size of the Board.

We maintain a majority voting policy for the election of directors coupled with a resignation policy in uncontested elections. To be elected in an uncontested election, a director must receive a majority of the votes cast. This means that the number of votes cast “FOR” such nominee’s election must exceed the number of votes cast “AGAINST” that nominee’s election. Broker non-votes and abstentions will have no effect on the outcome of the election.

If, in any uncontested election of directors, any incumbent director nominee receives a greater number of votes cast “AGAINST” his or her re-election than “FOR” his or her re-election, he or she must promptly tender a resignation to the Board. The Board will then decide, through a process managed by the Nominating and Corporate Governance Committee and excluding the incumbent director nominee in question, whether to accept the resignation or take other action.

THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE CLASS III DIRECTOR NOMINEES.

Director Independence

Our Corporate Governance Guidelines require that at least a majority of the Board qualifies as independent directors under applicable federal securities laws, the listing standards of the Nasdaq Global Select Market (“Nasdaq”) and any other requirements of the committees upon which he or she serves. Nasdaq listing standards have both objective tests and a subjective test for determining who is an independent director. The objective tests include that the director not be an employee of the company and not have engaged in various types of business dealings with the Company. The subjective test requires the Board to affirmatively determine that the director does not have a relationship that would interfere with the director’s exercise of independent judgment in carrying out his or her responsibilities. During the Board’s annual review of director independence, the Board also considers transactions, relationships and arrangements between each director (or an immediate family member of the director) and the Company and management, as well as certain other factors that the Board deems relevant in determining independence, such as beneficial ownership of our capital stock.

The Board completed a thorough review of the independence of each of our current directors as well as other directors who served during 2019 and determined that each of Ms. Anasenes, Mr. Calderoni, Ms. Dorchak, Mr. Dubois, Dr. Gallimore, Mr. Hovsepian, Ms. Scherer, and Mr. Vijayaraghavan is not an affiliate or employee of the Company and is independent under Rule 5605 of the Nasdaq listing requirements and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board also determined that Michael C. Thurk and William R. McDermott, each of whom served as a director during a portion of 2019, were both independent within the meaning of applicable independence standards. Dr. Gopal is currently serving as President and Chief Executive Officer of the Company and therefore is not considered an independent director. In addition, the Board determined that James E. Cashman, who served as a director during fiscal year 2019, was not independent within the meaning of applicable independence standards because of his prior service as an executive officer of the Company.

Board Responsibilities

The Board has adopted Corporate Governance Guidelines to promote the effective functioning of the Board and its committees and provide the framework for our corporate governance. Our current Corporate Governance Guidelines are available on the investor relations section of our website https://investors.ansys.com/ under the heading “Governance.”

Oversight of Risk Management

The Board has responsibility to provide risk oversight as a part of each director’s obligations to us and our stockholders. The Board aims to set a healthy “tone at the top” and guides our management to take appropriate measures to control material risks. The Board executes on these responsibilities directly and also through its standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Strategic Partnerships and

Transactions Committee, each of which is comprised solely of members and chairs who qualify as independent directors. While the Board believes that we practice good risk management strategies and processes, it is the Board’s responsibility to oversee the pressure testing of these strategies and processes on a continuous basis in order to ensure that risk management stays effective despite evolving market conditions, business strategies, regulatory rules, and our development.

Our Board delegates principal responsibility for its risk management and assessment functions to its Audit Committee. The Board directly receives a quarterly risk report from the General Counsel. Likewise, the Audit Committee receives a risk management update from our management as part of its regular quarterly meetings. In addition, the Audit Committee oversees our annual enterprise business risk assessment and bi-annual fraud risk assessment which are conducted by our internal auditor. The internal auditor delivers reports directly to the Audit Committee. This annual assessment reviews our performance with regard to ongoing financial, operational, and strategic risks, both existing and new. The Nominating and Corporate Governance Committee oversees and reports to the Board on the progress of our corporate responsibility program including the program’s initiatives in environmental, social and governance areas.

Details on the activities and responsibilities of the Board’s committees are discussed later in this proxy statement. In summary, the Board provides oversight over risk that is material to our long-term stockholder value. The committees implement the Board’s risk oversight in particular focus areas, namely:

Stockholder Communications

Stockholders may communicate with the full Board or individual directors by writing to:

ANSYS, Inc. Board of Directors

c/o General Counsel and Secretary ANSYS, Inc.

Southpointe

2600 Ansys Drive

Canonsburg, PA, 15317

The Secretary will deliver to the appropriate directors all communications addressed to the Board received at this address, except for spam, junk mail, mass mailings, solicitations, resumes, job inquiries, product complaints/inquiries, new product suggestions, surveys or other matters unrelated to the Company.

Related-Party Transactions

The Board of Directors has a policy requiring the review and oversight of Related Party Transactions by the Audit Committee. The terms Related Party and Related Party Transactions have the meaning as set forth in Item 404 of SEC Regulation S-K. The Policy requires each director and executive officer of the Company to disclose any proposed transaction with the Company to our General Counsel, if such director or executive officer may have a direct or indirect interest as a Related Party. The General Counsel will analyze and review the proposed transaction and, for any transaction with a related party in which the amount involved exceeds $120,000 and such party would have a direct or indirect interest, will present that information to the Audit Committee, including the General Counsel’s assessment of whether or not such proposed transaction meets or exceeds the materiality threshold in Item 404 of SEC Regulation S-K. If the proposed transaction meets or exceeds the materiality threshold, the Audit Committee will either approve, disapprove or request amendment of the transaction. In the event of a Related Party Transaction that has not been previously approved under this Policy, the transaction will promptly be submitted to the Audit Committee, and the Audit Committee will review the Related Party Transaction in accordance with the criteria set forth by the Policy. The Audit Committee will evaluate all options, including without limitation, approval, ratification, amendment or termination of the Related Party Transaction. Any such determination by the Audit Committee will be reported to the Board of Directors.

There have been no Related Party Transactions requiring disclosure under SEC rules in 2019 or 2020 year-to-date.

Board Structure and Processes

Leadership Structure

The roles of Chairman of the Board and CEO of the Company are separated, and the role of Chairman is held by an independent director pursuant to our Corporate Governance Guidelines. Mr. Hovsepian currently serves as the Chairman of the Board and has the principal responsibility for leading meetings of our independent directors which ensures that our independent directors have a strong voice in the leadership of the Board and risk oversight.

For information on how the Board’s responsibility for risk oversight impacts its leadership structure, see “Board Structures and Processes – Oversight of Risk Management.”

Our Chairman of the Board is the primary point of consultation with the Nominating and Corporate

Governance Committee regarding director nominations and process and management succession planning, which we believe helps to maintain a strong and independent direction to our highest-level governance matters. We believe that this structure provides our Board with the greatest breadth of leadership and depth of experience, while also providing balance for the direction of the Company. It gives primary responsibility for our operational leadership to our CEO. The Chairman of the Board facilitates our Board’s independent oversight of management, enables communication between the management and the Board, and leads the Board’s consideration of governance matters. The Nominating and Corporate Governance Committee periodically reviews the Board’s leadership structure and, when appropriate, recommends changes in response to evolving needs.

Board Processes

Each standing committee of the Board conducts a thorough evaluation of its effectiveness each year. In addition, the Nominating and Corporate Governance Committee conducts an annual evaluation of the Board. The purpose of the evaluations is to identify areas of strength and areas for improvement in the activities and effectiveness of each committee and the Board. The evaluations are generally in the form of a detailed assessment performed by the Chair of each committee. The Chair of the Nominating and Corporate Governance Committee conducts the assessment of the Board, which includes engagement with individual Board members and candid discussions with the relevant committees and the Board.

We support and encourage the continuing education of our Board members. We maintain membership in the National Association of Corporate Directors and reimburse the directors for their expenses in attending trainings and other events on topics including committee roles and responsibilities, and legal and ethical developments. We also provide educational sessions periodically to the Board on our business, industry developments, and other pertinent topics.

Board Meetings

Our Board held 7 meetings during 2019. Each of our current directors attended at least 75% of the aggregate of the Board meetings and meetings of Board committees of which they were a member during the periods they served in 2019. Messrs. Calderoni and Vijayaraghavan were not members of the Board in 2019.

Committees

In 2019, the Board had the following standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. In March 2020, the Board established a Strategic Partnerships and Transactions Committee as an additional standing committee. The Board may from time to time establish ad hoc and special purpose committees.

Audit Committee

Each member of the Audit Committee is not an affiliate or employee of the Company and is independent as such

term is defined in Rule 5605 of the Nasdaq listing requirements and applicable SEC rules, including the heightened independence requirements for Audit Committee members. In addition, we have determined that each of the members is financially literate and our Board has determined that each of Ms. Scherer, Ms. Anasenes and Mr. Calderoni qualifies as an “audit committee financial expert” within the meaning of the SEC rules.

Our Audit Committee oversees our accounting and financial reporting process and the audit of our financial statements and monitors legal and regulatory compliance. The committee is responsible for, among other things:

Our Audit Committee charter is available on the investor relations section of our website https://investors.ansys.com/ under the heading “Governance.”

Compensation Committee

Each member of the Compensation Committee is not an affiliate or employee of the Company and is independent as such term is defined in Rule 5605 of the Nasdaq listing requirements. Each qualifies as a “non-employee director” under Section 16 of the Exchange Act. Our Compensation Committee oversees our compensation policies, plans and programs. The committee is responsible for, among other things:

Our Compensation Committee charter is available on the investor relations section of our website https://investors.ansys.com/ under the heading “Governance.”

Nominating and Corporate Governance Committee

Each member of the Nominating and Corporate Governance Committee is not an affiliate or employee of the Company and is independent as such term is defined in Rule 5605 of the Nasdaq listing requirements.

Our Nominating and Corporate Governance Committee oversees and assists our Board in reviewing and recommending corporate governance policies and nominees for election to our Board and its committees. The committee is responsible for, among other things:

Our Nominating and Corporate Governance Committee charter is available on the investor relations section of our website https://investors.ansys.com/ under the heading “Governance.”

Strategic Partnerships and Transactions Committee*

* The Strategic Partnerships and Transactions Committee was formed effective March 1, 2020.

Each member of the Strategic Partnerships and Transactions Committee is not an affiliate or employee of the Company and is independent as such term is defined in Rule 5605 of the Nasdaq Stock Market listing requirements.

Our Strategic Partnerships and Transactions Committee oversees and assists our Board in reviewing strategic initiatives and evaluating potential mergers, acquisitions, dispositions, investments, joint ventures, collaborations, partnerships, licensing arrangements or similar transactions or arrangements. The committee is responsible for, among other things:

Our Strategic Partnerships and Transactions Committee charter is available on the investor relations section of our website https://investors.ansys.com/ under the heading “Governance.”

Director Nomination Process

Candidates for nomination to our Board are recommended by the Nominating and Corporate Governance Committee. In recommending candidates, the Nominating and Corporate Governance Committee considers persons recommended by directors, officers, and in some cases third party consultants or search firms. Evaluations of candidates generally involve a review of background materials, internal discussions and interviews with selected candidates. The Nominating and Corporate Governance Committee will also consider candidates recommended by stockholders, who are evaluated in the same manner as

other director nominees. A stockholder submitting a prospective nominee for the Board should follow the procedures described under “Stockholder Proposals and Nominations for the 2021 Annual Meeting.”

During 2019 and early 2020, the Nominating and Corporate Governance Committee engaged in a search for qualified candidates for the Board. Although the Nominating and Corporate Governance Committee does not have specific minimum qualifications that must be met for a prospective director candidate to be nominated, the search focused on candidates with certain qualifications, including skills in leadership, technology, risk management, financial acumen, and domestic and global business development. We also considered diversity in skills, abilities, industry knowledge, experience, gender, race and ethnicity in reviewing potential candidates.

Under the guidance of the Chairman of the Board, the suitability of qualified candidates was vetted, and interviews were conducted with selected directors. Both Mr. Calderoni and Mr. Vijayaraghavan were identified as director candidates by current members of our Board. The Nominating and Corporate Governance Committee presented information regarding each candidate and recommended each appointment to the Board. The Board considered and approved each candidate for election to the Board. The Board also recommends the election of all Class III director nominees by the Company’s stockholders at the 2020 Annual Meeting.

Compensation Committee Interlocks and Insider Participation

No member of our Compensation Committee was or is an officer or employee of the Company or any of its subsidiaries and all members are considered independent as such term is defined in Rule 5605 of the Nasdaq listing requirements. None of our executive officers serves as a member of the compensation committee of any other company that has an executive officer serving as a member of our Board. None of our executive officers serves as a member of the board of directors of any other company that has an executive officer serving as a member of our Compensation Committee.

Director Attendance at the 2019 Annual Meeting

We do not have a policy with respect to directors’ attendance at our annual meeting of stockholders, but directors are encouraged to attend. All nine directors serving at the time of our 2019 annual meeting attended the meeting.

Our non-employee director compensation program is designed to attract, retain and reward qualified directors and align the financial interests of the non-employee directors with those of our stockholders. Pursuant to this program, each non-employee director will receive the following cash and equity compensation for Board service. We also reimburse our non-employee directors for expenses incurred in connection with attending Board and committee meetings, assisting with other Company business, such as meeting with potential officer and director candidates, as well as continuing director education.

Non-employee director compensation, including cash retainers for Board and committee service and equity grants, is reviewed annually by the Compensation Committee and the Board. Our independent executive compensation consulting firm, Compensia, supports the Compensation Committee by providing detailed benchmarks of non-employee director compensation at peer companies, historical non-employee director compensation at the Company, and guidance regarding trends of proxy advisory firms, among other information. Non-employee director compensation is subject to the approval of the Board, upon the recommendation of the Compensation Committee. The Compensation Committee periodically reviews its independent executive compensation consulting firm, and also verifies annually the independence of any firm used to provide such support.

Cash Compensation

During 2019, our non-employee directors were entitled to receive the following cash fees:

With respect to the Strategic Partnerships and Transactions Committee, the Chair will receive $15,000 per year for service and each member (not including the Committee Chair) will receive $5,000 per year. In any one year, measured from annual meeting of stockholders to annual meeting of stockholders, a member will receive $1,000 for every telephonic meeting and $1,500 for every in-person meeting in excess of eight meetings.

Equity Compensation

Each then-serving non-employee director is granted a Restricted Stock Unit (“RSU”) award having a value of $300,000 on the date of each annual meeting of stockholders. If an independent director’s commencement date is other than the date of an annual meeting of stockholders, such independent director may be granted, on such independent director’s commencement date, an annual award having an award value prorated based on the number of days between such director’s commencement date and the next annual meeting of stockholders. In connection with his appointment as Chairman of the Board and in light of strong leadership of and service to the Board, including guidance through the new director selections and a successful Chief Executive Officer transition, the Board approved a one-time increase of $50,000 in the value of the RSUs awarded to Mr. Hovsepian at the time of the 2019 annual meeting for an aggregate RSU award amount of $350,000.

The annual RSU awards will vest upon the earlier of one year after grant or the next annual meeting of stockholders, subject to accelerated or prorated vesting under certain circumstances such as death or disability or change in control of the Company. Shares of our common stock will be issued at, or shortly following, the vesting of the RSUs.

Prior to 2016, certain of our non-employee directors were granted deferred stock units (“DSUs”) as part of our director compensation program. In 2016, our Compensation Committee approved a plan to allow our non-employee directors to have the ability to diversify a portion of any DSUs that may be held by such director, subject to the Director Stock Ownership Guidelines described below. Since November 1, 2016, non-employee directors have been permitted to individually choose whether to retain all or part of his or her existing DSUs or to elect another investment alternative, such as an index or mutual fund or funds. This program is subject in all respects to our Director Stock Ownership Guidelines, meaning that directors would only be permitted to diversify DSUs held in excess of the required minimum ownership guidelines. Two of our non-employee directors elected to diversify a portion of his or her DSUs in 2019.

Our employee directors do not receive additional compensation for service on the Board.

Director Stock Ownership Guidelines

Non-employee directors are required to satisfy minimum stock ownership guidelines. Under these guidelines, non-employee directors are required to own equity in the form of common stock or DSUs of the Company equal to a minimum of five times the annual cash retainer. This ownership requirement is competitive with the practices of our peer group. Each non-employee director is required to maintain this minimum amount throughout his or her tenure as a member of our Board. New Board members have five years to attain this minimum stock ownership level. In 2019, each non-employee director met their stock ownership guidelines (or is on track to do so by the end of the applicable five-year period). Our current Corporate Governance Guidelines which contain these stock ownership guidelines are available on the investor relations section of our website https://investors.ansys.com/home/ under the heading “Governance.”

Notwithstanding its selection and even if our stockholders ratify the selection, our Audit Committee, in its discretion, may appoint another independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of Ansys and our stockholders. At the 2020 Annual Meeting, the stockholders are being asked to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Our Audit Committee is submitting the selection of Deloitte & Touche LLP to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate

governance. Representatives of Deloitte & Touche LLP will be present at the 2020 Annual Meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions from stockholders.

If the stockholders do not ratify the appointment of Deloitte & Touche LLP, the Audit Committee may reconsider the appointment.

THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2020.

Independent Registered Accounting Firm Services and Fees

The following table sets forth the aggregate fees billed to us for professional services rendered by Deloitte & Touche LLP for the fiscal years ended December 31, 2019 and 2018, including the reviews of the financial statements included in our Form 10-Q filings and general accounting consultations.

“Audit fees” in 2019 and 2018 consisted of fees billed for professional services rendered for the audit of our annual financial statements and management’s report on internal control included in our annual reports on Form 10-K and for the review of the financial statements included in our quarterly reports on Form 10-Q, as well as services that generally only our independent registered public accountants can reasonably provide, including statutory audits and services rendered in connection with SEC filings. In addition to the foregoing, “Audit fees” also included services rendered for the audit of our adoption of certain provisions of the Tax Cuts and Jobs Act of 2017 and our adoption of new accounting standards.

“Audit-related fees” in 2019 and 2018 consisted of assurance and related services by Deloitte & Touche LLP that are reasonably related to the performance of the audit or review of our financial statements, including financial and tax due diligence related to business acquisitions.

“Tax fees” in 2019 and 2018 consisted of fees billed for tax compliance, consultation and planning services. Tax fees in 2019 did not exceed aggregate audit and audit-related fees paid to Deloitte & Touche LLP, and $507,202 of the tax fees incurred in 2019 related to tax return preparation services. Tax fees in 2018 did not exceed aggregate audit and audit-related fees paid to Deloitte & Touche LLP, and $449,711 of the tax fees incurred in 2018 related to tax return preparation services.

“All other fees” in 2019 and 2018 consisted of consulting services associated with information technology projects.

All of the services performed by Deloitte & Touche LLP in 2019 and 2018 were pre-approved in accordance with the pre-approval policy and procedures adopted by our Audit Committee and in effect for those fiscal years. The policy required that during each of the Audit Committee’s scheduled quarterly meetings, a description of services requested to be provided by the independent registered public accounting firm during the following quarter be submitted to the Audit Committee for approval. Any request for audit, audit-related, tax and other services not contemplated during the quarterly approval process were submitted to the Audit Committee for specific pre-approval and did not commence until such approval had been granted.

In February 2020, the Audit Committee adopted new audit and non-audit services pre-approval procedures. Under these procedures, the Audit Committee is required to pre-approve all services provided by the independent auditor to assure that these services do not impair the independence of the auditor. Unless the type of service is both on a list of pre-approved services and within the quarterly and per service dollar limits established by the procedures, such service will require the specific pre-approval by the Audit Committee. Under the procedures, the Audit Committee can delegate its responsibility to specifically pre-approve certain permitted services to a member or members of the Audit Committee. Any pre-approval granted by delegates must be reported to the Audit Committee at its next scheduled meeting.

Accordingly, we ask our stockholders to vote “FOR” the following resolution at the 2020 Annual Meeting:

“RESOLVED, that the stockholders approve, on a non-binding, advisory basis, the compensation paid to the named executive officers, as disclosed in the proxy statement for the 2020 Annual Meeting pursuant to the compensation disclosure rules of the SEC, including the

Compensation Discussion and Analysis, compensation tables and narrative discussion, and other related disclosure.”

THE BOARD RECOMMENDS A VOTE “FOR” ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

The following table identifies certain information about our executive officers as of March 15, 2020.

Ajei S. Gopal The biographical information of Dr. Gopal is set forth in “Proposal 1: Election of Class III Directors - Director Nominees.”

Maria T. Shields is Senior Vice President and Chief Financial Officer. She has served as Chief Financial Officer since September 1998 and served as a Vice President from May 1998 until April 2018, when she was promoted to Senior Vice President. Ms. Shields joined the Company in September 1994 as our Corporate Controller. Prior to joining the Company, Ms. Shields held various positions as a CPA with Deloitte & Touche LLP, including that of audit manager. She currently serves as a Director of the First National Bank of Pittsburgh Community Bank.

Richard S. Mahoney is Senior Vice President of Worldwide Sales and Customer Excellence. Mr. Mahoney joined the Company in December 2016 as Vice President and was

promoted to Senior Vice President in April 2018. Prior to joining the Company, from 2014 to 2016, he was Senior Vice President, Design Enablement and International Sales, at Global Foundries. Prior to that time, starting in 1989, he held positions of increasing responsibility at Cadence Design Systems, including Senior Vice President of Worldwide Field Operations with responsibility for worldwide sales, field application engineering, customer support and sales operations.

Shane R. Emswiler is Senior Vice President and General Manager, Physics business units which includes mechanical, fluids, electronics, design and materials. He served as Vice President of the mechanical, fluids and electronics business units from April 2017 until October 2019, when he assumed his current role. From 2010 until 2017, he served as Vice President and General Manager of the electronics business unit. Prior to this, Mr. Emswiler, served as Chief Financial Officer of Ansoft Corporation, a company acquired by Ansys in 2008.

Janet Lee joined Ansys as Vice President, General Counsel and Secretary in June 2017. From 2010 to 2017, she was the Vice President, Legal and Intellectual Property, at HERE Technologies. Prior to this, from 2007 to 2010, she held positions of increasing responsibility at Nokia Corporation, including as a Director for Legal and Intellectual Property supporting the Nokia Research Center and Vice President for Legal and Intellectual Property matters for services. Prior to Nokia Corporation, Ms. Lee served as an Assistant General Counsel at America Online, Inc.

Matthew C. Zack has served as the Vice President, Corporate Development and Global Partnerships since August 2019. He joined Ansys as the Vice President, Business Development and Corporate Marketing in April 2017. From 2014 until April 2017, he served as a Senior Corporate Development Executive at SAP. From 2012 to 2014, he served as Executive Vice President and Chief Financial Officer of Ariba, where he led corporate development and human resources. Before joining Ariba, he headed corporate development at FreeMarkets and served in various consulting roles at Accenture.

Our Named Executive Officers

This Compensation Discussion and Analysis (“CD&A”) section describes the compensation of our named executive officers. Our named executive officers for the year ended December 31, 2019 are Ajei S. Gopal, Maria T. Shields, Richard S. Mahoney, Shane R. Emswiler, and Matthew C. Zack.

Overview of Compensation Program & Philosophy

Paying for performance is the guiding principle of Ansys’ total rewards strategy. Ansys’ philosophy is to target actual total compensation at the 50^th percentile of the relevant market. However, for sustained superior performance, Ansys’ philosophy is to provide premium actual total compensation that is comparable to the upper quartile of the peer group.

Our Compensation Committee ensures that the total compensation paid to our named executive officers is reasonable, competitive and principally performance-based. Generally, the types of compensation and benefits provided to our named executive officers are similar to those provided to our other officers and employees.

Fiscal 2019 Business Highlights

We achieved our financial goal of delivering double-digit revenue growth while maintaining industry leading operating margins. In addition, our successful execution yielded strong financial results, reflected in our annual contract value (ACV) growth of 12% in constant currency and operating cash flows of $499.9 million for the year ended December 31, 2019. We repurchased 0.3 million shares during the year at an average price per share of $179.41. We have delivered strong three-year total stockholder return (TSR) as indicated by the chart below which shows how a $100 investment in Ansys on December 31, 2016 would have grown to $278 on December 31, 2019. The chart also compares the TSR of an investment in our common stock to the same investment in the S&P500 Index, a peer group consisting of Autodesk Inc., Cadence Design Systems, Dassault Systemes SE, PTC Inc., Synopsys, Inc., Altair Engineering Inc. and Aspen Technology, Inc. and Nasdaq Composite Stock Market Index over the last three years.

2019 Business Progress

We maintained our commitment to investing in both our core and adjacent products by making several strategic acquisitions of market-leading technologies, which we believe extends our simulation technology leadership, expands our multi-physics product portfolio and accelerates product innovation to enable our customers to solve their biggest product design challenges. We closed the acquisition of our long-term technology partner, Livermore Software Technology Corporation, the premier provider of explicit dynamics and other advanced finite element analysis technology, and the acquisition of

Dynardo, which will enhance Ansys Minerva with advanced process integration and design optimization capabilities. Earlier in the year, we closed the acquisitions of technology leaders Granta Design, Helic and DfR Solutions, all of which have been integrated into the Ansys platform.

During 2019, we introduced new capabilities across our entire product portfolio. We strengthened our product leadership in the simulation of autonomous systems by adding the capabilities of our VR-Xperience Driving Simulator to prepare advanced scenarios and run simulations with complete and accurate multi-body

vehicle dynamics. Our Ansys^® 2019 R3 release included new capabilities across our portfolio, with notable capabilities including Ansys Autonomy, which enables engineers to develop safer autonomous vehicles, and Ansys Minerva, a new platform that improves engineering productivity by providing simulation process and data management, process integration, and design optimization capabilities. We are also further expanding by embedding simulation into our partner ecosystem. In 2019, we forged great partnerships with established leaders including BMW, Airbus and Autodesk.

2019 Say-on-Pay

Our Compensation Committee met to determine the compensation of our named executive officers for 2020 in February 2020. 93% of our stockholders voting on the 2019 Say-on-Pay proposal approved the compensation of our named executive officers at our 2019 annual meeting. The Compensation Committee considered the results of the 2019 non-binding advisory Say-on-Pay proposal in connection with the discharge of its responsibilities regarding executive compensation and at that time determined that the vote result did not indicate that the Committee should consider changes to the program based on the vote.

Objectives of Our Compensation Program

The main objectives of our executive compensation program are to create a competitive total rewards package based on the attainment of short-term performance objectives and long-term strategic goals and to retain and attract qualified executive officers who will lead us to long-term success and enhance stockholder value. Each element of our compensation program supports these objectives.

Role of Compensation Consultant

The Compensation Committee has the authority to retain the services and obtain the advice of external advisors, including compensation consultants, legal counsel and other advisors to assist in the evaluation of executive officer compensation. The Compensation Committee has engaged Compensia, Inc. (“Compensia”) to conduct an executive compensation market analysis and review of our equity practices to help ensure they align with market

practices. Compensia reviewed and advised on all principal aspects of our executive compensation program, including:

Outside of its services to the Nominating and Corporate Governance Committee and the Compensation Committee, Compensia provides no other services to us.

Role of Compensation Committee and Executive Officers in Compensation Decisions

Our Compensation Committee works in close collaboration with the full Board on executive compensation matters. The Compensation Committee has a practice of informing and consulting with the full Board concerning the establishment of performance goals and objectives for our CEO, Dr. Gopal, evaluating our CEO’s performance in light of the goals and objectives that were set, and determining the CEO’s compensation based on that evaluation. Dr. Gopal serves on our Board but recuses himself from any deliberations about his compensation.

For 2019, Dr. Gopal prepared an analysis for the Compensation Committee recommending each element of compensation to be paid to all other executive officers. The Compensation Committee considered his recommendations, along with an analysis from Compensia, in approving the compensation of our other executive officers.

In addition to Dr. Gopal and Compensia, our Human Resources team provides advice, analysis and recommendations to our Compensation Committee.

Peer Group Considerations

Our peer group of companies used for compensation benchmarking purposes was recommended by Compensia. Peer company selection criteria, which are aligned with the market, include:

Our 2019 compensation benchmarking peer group consisted of the following companies:

As of the date of in July 2018 when Compensia conducted the analysis, we ranked at the 36^th percentile on revenue, 70^th percentile on 30-day average market cap, 18^th percentile on number of employees and 82^nd percentile on operating income.

Components of Compensation Program and Fiscal 2019 Compensation

Our executive compensation program consists of the following principal components:

We also provide our employees, including our executive officers, with comprehensive employee benefit programs such as, in the United States, medical, dental and vision insurance, a 401(k) plan, life and disability insurance, flexible spending accounts, an employee stock purchase plan, financial planning and other plans and programs made available to eligible employees generally.

We emphasize performance-based, variable incentive compensation over fixed compensation, such as base salary. Each element of compensation is chosen in order to attract and retain the necessary executive talent and to reward corporate performance by creating a balance between shorter-term corporate performance and providing incentives for the attainment of long-term strategic goals and enhancing stockholder value. The allocation of each element of compensation is determined by our Compensation Committee for each executive based on the following factors:

While we believe in structuring executive compensation plans that give our executives incentives to deliver certain objective elements of corporate financial performance over specified time periods, we do not believe in a purely mechanical approach. Instead, part of our executive compensation philosophy includes an element of reward for non-quantitative achievements demonstrated by our executives in the actions and decisions they make throughout the year. When establishing our executive compensation plans for a given year, it is not possible to foresee all of the challenges and demands that will present to our executives, both as a management team and in their areas of individual responsibility. We believe that rewarding decision-making and leadership builds a management team capable of creating stockholder value over the longer term. At the same time, rewarding the achievement of quantifiable results helps ensure executives remained disciplined in delivering shorter-term financial results.

The allocation of an executive officer’s compensation among each of the compensation components is based on our competitive benchmarking, our recruiting and retention goals, our view of internal fairness and consistency and other considerations that our Compensation Committee deems relevant, such as extraordinary performance. While our Compensation Committee does not have a formula for determining the appropriate allocation between cash and non-cash compensation or short-term and long-term performance-based compensation, historically our Compensation Committee has allocated a greater percentage of an executive’s total compensation to equity.

Base Salaries

We pay base salaries to attract talented executives and to provide a fixed base level of cash compensation. Base salaries for executive officers are individually determined by the Compensation Committee after consideration of:

There are generally three reasons for adjustments to our executives’ base salaries: annual increases, promotions or change in role, and market adjustments. The Compensation Committee considers base salary increases for our executive officers annually, based on the factors described above. The Compensation Committee’s review of these factors is subjective, and no fixed value or weight is assigned to any specific factor when making salary decisions.

2019 Base Salaries

The table below sets forth the 2019 annual base salaries for our named executive officers:

All base salary increases were customary annual adjustments based on: market data of our peer group provided by Compensia, the recommendations of Dr. Gopal (other than with respect to his own base salary), and individual performance.

Performance Based Cash Bonuses

A key compensation objective is to have a significant portion of each named executive officer’s compensation tied to our performance. In support of this objective, we generally provide annual performance-based cash bonuses for our named executive officers, based on achievement against corporate and individual performance objectives established at the beginning of the calendar year. Performance-based cash bonuses are designed to reward executives based on the achievement of our financial goals as well as individual performance goals tied to the executive’s functional role. Executives are assigned a target bonus opportunity each year. Actual bonus awards are calculated based on our financial performance during the year and achievement of individual performance results.

At the beginning of 2019, the Board approved the performance objectives for the Company that the Compensation Committee and Dr. Gopal used to design our named executive officers’ cash bonus opportunity for 2019. The Compensation Committee set both individual and Company metrics.

The Compensation Committee determined that non-GAAP revenue and non-GAAP operating income were the appropriate metrics to measure short term company performance on the one hand and that ACV and non-GAAP operating cash flows were the appropriate metrics to measure longer term company performance for purposes of the regular-cycle three-year PSUs on the other hand. Annex A includes a reconciliation to GAAP of non-GAAP revenue, non-GAAP operating income and non-GAAP cash flows for the year ended December 31, 2019, each of which is used to measure Company performance for purposes of executive compensation. The weighting of non-GAAP revenue and non-GAAP operating income to determine the performance based annual cash bonus is set forth in the tables below.

⁽¹⁾ Payout at Maximum for Dr. Ajei S. Gopal is 200%

Payouts as a percentage of target are subject to straight line interpolation to the extent that the performance metrics are between target percentage levels.

Non-GAAP revenue is calculated in accordance with GAAP and ASC 606 for the year ended December 31, 2019 and then adjusted to (i) reflect results at planned foreign currency exchange rates, (ii) exclude the impact of acquisitions not contemplated in our 2019 budget, specifically DfR Solutions, Livermore Software Technology Corporation and Dynardo, and (iii) include revenue not reported during the period as a result of acquisition

accounting adjustment associated with the accounting for deferred revenue in business combinations.

Non-GAAP operating income is calculated in accordance with GAAP and ASC 606 for the year ended December 31, 2019 and then adjusted to (i) reflect results at planned foreign currency exchange rates, (ii) exclude the impact of acquisitions not contemplated in our 2019 budget, specifically DfR Solutions, Livermore Software Technology Corporation and Dynardo, and (iii) include the additional adjustments to GAAP described in Annex A.

The individual results are determined for each of our named executive officers by using qualitative goals that are established at the beginning of the fiscal year. The Compensation Committee reviews and approves the CEO’s qualitative goals, which are aimed at implementing the Company’s strategic objectives. The CEO then leads a discussion with the Compensation Committee about the qualitative goals of the named executive officers, which are intended to implement the CEO’s goals and the primary areas of focus of the relevant functional duties. Each qualitative goal of the named executive officers takes into account the strategic priorities of the Company and the most impactful way in which the relevant business unit or function can meet the Company’s overall targets. These qualitative individual goals are challenging, yet attainable. Due to their long-term strategic nature, we do not disclose details of the goals tied to the individual results. For the named executive officers, the qualitative goals for 2019 included operational improvements to support the business as it scales, attraction of top talent, successful completion of acquisitions and partnerships in line with strategic objectives and the seamless integration of newly acquired companies, extension of core technologies to adjacent technologies, and strengthening investor engagement.

2019 Target Performance Based Cash Bonus Opportunities

The target annual cash bonus opportunities for our named executive officers are expressed as a percentage of their respective base salaries. The table below shows the target bonus amount for each named executive officer as a percentage of base salary and as a corresponding cash amount:

2019 Actual Performance Based Cash Bonus Payments

We achieved the following results as it relates to the 2019 Performance Based Cash Bonus metrics:

Applying straight line interpolation to calculate the payouts based on Company performance against these targets resulted in a payout of 121.4% for our named executive officers other than our CEO and a payout of 142.8% for our CEO due to a maximum payout potential of 200% of target. As a result of individual performance results of 200% for Dr. Gopal, 112.5% for Ms. Shields, 125% for Mr. Mahoney and 121.4% for each of Mr. Emswiler and Mr. Zack, the Compensation Committee awarded cash bonuses in the following amounts:

Long-Term Equity Compensation

Our executive compensation program includes stock-based awards, the value of which depends on our stock performance and other performance measures, to achieve strong long-term performance. The stock-based awards consist of PSUs and time based RSUs.

PSUs align our executive officers’ pay to our financial performance based on specific metrics such as revenue, ACV and operating cash flows as well as a metric based on our TSR compared to the return on the Nasdaq Composite Index (the “Index”).

RSUs offer value delivery to our executive officers while promoting alignment of their interests with the long-term interests of our stockholders in a manner consistent with our peer company compensation practices. The combination of PSUs and RSUs motivates and retains our valued executive officers. In the future, we may introduce other forms of equity compensation to our executive officers that are also aligned with the interests of our stockholders.

The Compensation Committee, in consultation with our CEO (other than with respect to his compensation), determines the size, mix, material terms and metrics (in

the case of PSUs) of equity awards granted to each of our executive officers. The Committee takes into consideration factors such as the scope of role, responsibilities, competitive market data provided by Compensia, individual performance and retention risk.

Similar to 2017 and 2018, in 2019, the Compensation Committee decided to grant an equal distribution of PSU and RSU awards. Each named executive officer received 50% of their target long-term equity compensation in the form of RSUs and the remaining 50% of their target long-term equity compensation in the form of PSUs. 80% of the PSUs were based on metrics related to the Company’s financial performance (the “Operating Metric PSUs”) and 20% of the PSUs were based on the Company’s three-year relative TSR (the “TSR PSUs”).

Performance Metrics for Annual PSU Awards

For the 2019 TSR PSUs, similar to 2017 and 2018, the Compensation Committee will measure our TSR compared to the Index at the end of a three-year cumulative performance period ending December 31, 2021. The 2019 TSR PSUs will be earned at 100% if our TSR equals the return of the Index at the end of the cumulative three-year performance period.

The target award is reduced by three percentage points for each percent point by which the return of the Index exceeds our TSR and is reduced to zero percent if the return of the Index exceeds our TSR by twenty-five percentage points or more. In addition, zero percent of the target award will be earned if both return rates are negative and the return of the Index exceeds our TSR performance over the three-year performance period.

The target award will be increased by four percentage points for each percentage point by which our TSR exceeds the return of the Index, up to a maximum of two hundred percent (200%) of the target award. If, however, our TSR is negative but still exceeds the return of the Index, a maximum of one hundred percent (100%) of the target may be earned for such period.

For purposes of illustration, the performance assessment is as follows:

Please see “Grants of Plan-Based Awards Table” for additional information on these equity awards.

For the Operating Metric PSUs, three one-year sub-performance periods are used to measure performance against annual goals that are determined by the Compensation Committee at the beginning of the relevant year. At the end of each sub-performance period, performance against the pre-established goals is measured and certified. Upon the achievement of these goals, the shares will vest at the end of the three-year performance period, with payment being contingent upon the named executive officer’s continued employment.

For the 2019 sub-performance period of the 2017, 2018, and 2019 Operating Metric PSUs, the Compensation Committee selected adjusted ACV with a non-GAAP operating cash flows modifier as the relevant metric (as further described below).

ACV is a financial metric we introduced in 2018 for which there is no comparable GAAP measure. It is calculated as follows:

To arrive at adjusted ACV, we calculated ACV for the year ended December 31, 2019 and then excluded the impact of acquisitions not contemplated in our 2019 budget, specifically DfR Solutions, Livermore Software Technology Corporation and Dynardo.

Operating cash flows was calculated in accordance with GAAP for the year ended December 31, 2019 and then adjusted to (i) reflect results at planned foreign currency exchange rates, (ii) exclude the impact of acquisitions not contemplated in our 2019 budget, specifically DfR Solutions, Livermore Software Technology Corporation and Dynardo, and (iii) exclude the impact of the early adoption of ASC 2018-15 which was not contemplated in our 2019 budget.

2019 Regular-Cycle PSU Awards

TSR Metric

As described above, the 2019 TSR PSUs are based on our TSR as compared to the return of the Index at the end of a three-year performance period ending December 31, 2021.

ACV and Operating Cash Flows Metric

In 2019, we achieved adjusted ACV of $1,444.7 million and non-GAAP operating cash flows of $501.1 million resulting in a payout at 175% of target for the first sub-performance period of the 2019 Operating Metric PSUs. The underlying shares for the first sub-performance period will vest three years from the grant date contingent upon the named executive officer’s continued employment through the vesting date.

2017 and 2018 PSU Awards

TSR Metric

The 2017 TSR PSUs were paid out following the end of a three-year period ended December 31, 2019. The TSR

calculation for the 2019 tranche was based upon the return of the 10-trading day average price of the Company and the Index preceding the start of the performance period (January 1, 2017) and the return of the 10-trading day average price at the end of the relevant tranche period (December 31, 2019). For the 2019 tranche of the 2017 TSR PSUs, the results were as follows:

Under the terms of the award, maximum payout (150%) of the tranche occurred if the Company’s TSR outperformed the Index by 25 percentage points or more. For the 2019 tranche, the Company’s TSR outperformed the Index by 110.36 percentage points resulting in the maximum payout of 150%. The 2017 and 2018 tranches also outperformed the Index by more than 25 percentage points resulting in an aggregate payout of this award of 150% at the end of the three-year vesting period.

This resulted in the following share payouts to our NEOs:

The 2018 TSR PSUs measure our TSR as compared to the Index at the end of a three-year period ending December 31, 2020 and will pay out, if earned, following the end of that period.

Performance Metrics

Under the terms of the 2017 Operating Metric PSUs, upon the achievement of the targets for the 2017 and 2018 sub-performance periods, 50% of the award for such periods vested and the other 50% were earned but paid out at the end of the 2019 performance period. The 2019 sub-performance period for this award was earned at 175%. Upon the completion of the performance period for this award, the following shares were paid out for the three sub-performance periods:

For the 2018 Operating Metric PSU awards, the 2019 second sub-performance period was earned at 175%. The underlying shares for the second sub-performance period will vest three years from the grant date contingent upon the named executive officer’s continued employment through the vesting date.

Special Retention RSU Grant for Mr. Emswiler

In September 2019, Mr. Emswiler was promoted to Senior Vice President and General Manager, Physics business units. In addition to maintaining his existing responsibilities, he was given oversight responsibilities for our Design Business Unit as well as the operation of several of our recently acquired businesses, including Livermore Software Technology Corporation, DfR Solutions and Granta Design. In recognition of the size, importance and complexity of Mr. Emswiler’s increased responsibilities and to ensure Mr. Emswiler’s continued employment as we integrate these critical new businesses into our portfolio, he was awarded a one-time RSU award in the amount of $500,000 on October 1, 2019. These shares vest ratably on the first, second and third anniversaries of the date of grant.

Long-Term Performance-Based Equity Grant for Select Key Executives

We do not as a general practice grant awards outside of our established executive compensation program.

However, in September 2019, we unveiled challenging, new long-term Company financial goals of achieving reported ACV of $2.0 billion by 2022 and non-GAAP operating margins in the range of 42-44% between 2020 and 2022. For the year ended December 31, 2019, our reported ACV equaled $1.46 billion.

Following the announcement of these new goals, the Compensation Committee determined it was in the best interest of the Company and our stockholders to act immediately to motivate select executives critical to successfully achieving these new ambitious long-term targets that we expect will result in the creation of value for our stockholders. In addition, the Compensation Committee considered the intense competition for executive talent in the software industry and focused on reducing the risk of losing proven executive talent as we embarked upon the pursuit of these ambitious financial goals.

In November 2019, the Compensation Committee approved a long-term PSU grant (“Special PSUs”) to a group of key executives primarily responsible for new sales generation, product research and development and expense control including Ajei Gopal, Maria Shields, Richard Mahoney and Shane Emswiler. The size of the target award granted to each of these executives was as follows:

Three-step process used to determine payout

A three-step process will determine final payouts for these awards. First, the number of Special PSUs to be earned is based on achievement of 2022 reported ACV. Second, any payout based on ACV is subject to downward adjustment based on the three-year average reported non-GAAP operating margin. Third, any payout percentage based on the first two steps is further subject to upward or downward adjustment based on certain individual performance criteria. In all cases, the maximum award payout is limited to 180% of the target number of Special PSUs. If there are any material acquisitions or divestitures by the Company during the performance period, the Compensation Committee will review and reconsider the goals.

In the first payout determination step, the preliminary achievement percentage will be calculated based on the ACV we report in our public filings for the year ended December 31, 2022, as follows:

To the extent reported 2022 ACV is between $1.80 billion and $2.00 billion or between $2.00 billion and $2.20 billion, the initial number of Special PSUs earned will be determined through straight-line interpolation.

ACV goals set using rigorous analysis

The ACV goals for these awards were based on an extensive and diligent process that included a combination of market intelligence, internal planning and modeling, and third-party data and analysis. In September 2019, our management team announced an ambitious goal to grow reported ACV significantly faster than the market. At the time that these new financial goals were publicly announced at the Company’s September 2019 Investor Day event, market intelligence indicated that our market will grow at approximately 9% per year over the next several years; at the time, we set the target on these awards to represent a compounded annualized growth rate of 11%, leading to an ACV of $2.00 billion by the end of 2022. Our Compensation Committee believes that this represents a strenuous, but attainable goal.

The threshold goal of $1.80 billion was set to provide a base level of reward for growing our ACV more than 23% over three years. We believe that even this threshold level of ACV growth would deliver substantial value to our stockholders, and we believe that this goal is rigorous and would require significant effort from our management team to achieve. If management does not keep pace with continued ACV growth, these awards will either pay out at 50% or not pay out at all.

Finally, the maximum goal of $2.20 billion was set at a point that the Compensation Committee believed was attainable, but would represent a truly extraordinary effort, to accomplish. Diligent internal modeling and analysis showed that there was a low probability of achieving this result and setting the goal at this point would effectively continue to motivate the executive team to perform without introducing excessive risk.

Operating margin modifier motivates management to deliver profitable growth

In the second payout determination step, three-year average non-GAAP operating margin acts as a modifier metric that operates on a downward-only basis. The metric is designed to ensure that top-line ACV growth is achieved responsibly and profitably, in an effort to ensure that long-term value is created for stockholders. As a result, top-line growth achieved while making significant sacrifices to operating margins would result in this award being forfeited.

Non-GAAP operating margins must equal or exceed 40% for the ACV award to not be reduced. This level is deliberately set slightly below the publicly stated 42%-44% range announced in September 2019 because the Compensation Committee understands the volatility in the market and wants to allow management the flexibility to make long-term value-creating acquisitions that may, in the short term, slightly dilute non-GAAP operating margin results.

The percentage of Special PSUs to be received, if any, will be reduced to the extent the three-year average non-GAAP operating margin percentage as reported in our public filings for 2020, 2021 and 2022 is less than 40% as follows:

Discretion limited to 20% adjustment and cannot increase maximum award

In the third payout determination step, and after the 2022 ACV and the three-year average operating margin and their related effects upon the payout amounts of the Special PSU award are determined, the Compensation Committee will consider certain qualitative factors in the areas of sales and marketing, product and research and development and human capital management to further adjust the payout amount upwards or downwards up to 20%. In no event, however, may the maximum number of PSUs exceed 180% of target.

Subject to certain exceptions for death, disability, change in control events and termination without cause, an executive must be employed through December 31, 2022 in order to receive the earned Special PSUs.

Other Compensation Policies and Information

Employee Benefits and Perquisites

Employee benefits are provided to all eligible employees, including our named executive officers, which the Compensation Committee believes are reasonable and consistent with its overall compensation objective to better enable us to attract and retain employees. These benefits include, in the United States, medical, dental and vision insurance, health savings account, a 401(k) retirement plan, life and disability insurance, flexible spending accounts, an employee stock purchase plan, and other programs.

We provide limited perquisites to our executives. We have no deferred compensation, pension arrangements, post-retirement health coverage or similar benefits for our executives that are not generally available to other eligible employees, other than as provided under the Executive Severance Plan, details of which are included below under “Employment, Severance and Change in Control Agreements.” In addition, in 2019, we began paying for the cost of financial planning services provided by a third party to assist our executives with managing complex investment, tax, legal and estate planning matters so that the executives remain focused on our business priorities rather than personal financial concerns. While we pay for the cost of this voluntary benefit, the executive is responsible for the taxes on the value of this benefit.

2019 Stock Ownership Guidelines

The Board believes that our directors and executive officers should hold a meaningful financial stake in the Company in order to further align their interests with those of our stockholders. As a result, our Board has adopted stock ownership guidelines for members of our Executive Leadership Team and our Senior Leadership Team as indicated below. The stock ownership guidelines were modified effective January 1, 2018 for executive officers.

Equity Grant Policy

Under the Equity Grant Policy, all equity granted under our equity incentive plans, and the terms and conditions governing such grants, must be authorized and approved by our Compensation Committee. Our Compensation Committee must authorize and approve any changes to the terms and conditions of any grant and any exceptions to our Equity Grant Policy.

Our Compensation Committee may authorize block grants of options, RSUs, or PSUs for employees who are not our executive officers or directors and may delegate the allocation of awards under these blocks to our CEO, Chief Financial Officer, General Counsel and/or Vice President of Human Resources.

Our Compensation Committee has delegated to our CEO and Vice President of Human Resources authority to make awards under the following three types of equity blocks: (i) new hire RSU grants of up to $500,000 per new hire, so long as the aggregate number of grants in a calendar year does not exceed the applicable total number of shares approved by the Compensation Committee for such block grant; (ii) grants of RSUs to current employees for the achievement of extraordinary objectives or for special retention purposes of up to $150,000 per employee (known as “recognition and retention grants”), so long as the aggregate number of shares subject to grants in a calendar year does not exceed the applicable total number of shares approved by the Compensation Committee for such block grant; and (iii) stock option or RSU grants to new employees acquired in connection with designated business combinations, not to exceed an aggregate grant date fair value of ten percent (10%) of the purchase price of each delegated business combination or such higher amount as may be approved by the Compensation Committee. No grant date may precede the date the grant was authorized by our Compensation Committee. The grant or exercise price for all grants will be the fair market value per share of the stock on the grant date unless such date falls on a non-trading day. The fair market value for RSU and PSU awards will be the average closing price per share of the stock over the 20 trading days immediately preceding and including the grant date.

Clawback of Compensation

On May 12, 2010, our Board established a Recoupment of Compensation Policy that is now part of our Corporate Governance Guidelines. Under the policy, if our Board determines, in its sole discretion, that our financial results are restated, whether in part or in their entirety, due to misconduct by one or more executive officers, the Board has the discretion to use commercially reasonable best efforts to remedy the misconduct and prevent its recurrence. The Board may determine, to the fullest extent permitted by law, to (i) recoup any bonus or other performance-based compensation that has been paid, (ii) cancel any equity-based awards made, and/or (iii) recoup any gains from equity-based awards made, to any executive officer engaged in such misconduct. The Board may also take any of the actions described in the preceding sentence with respect to compensation paid or awarded in the preceding three years if an executive violates the terms of a non-competition agreement with the Company.

Anti-Hedging and Anti-Pledging Policy

Under our Insider Trading Policy and Procedures, no director, executive officer, or employee may at any time purchase financial instruments (including prepaid variable forward contracts, equity swaps, collars, puts, calls, and exchange funds), or otherwise engage in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our equity securities that are (i) granted to them by us as part of their compensation or (ii) held, directly or indirectly, by them.

Directors and executive officers are prohibited from holding our securities in a margin account or otherwise pledging our securities as collateral for a loan.

Post-Employment Compensation

Retirement Benefits

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

Nonqualified Deferred Compensation

We do not provide any nonqualified defined contribution or other deferred compensation plans to our executive officers.

Employment, Severance and Change in Control Agreements

Our executive officers do not have employment agreements with us except in the case of our CEO as described below.

Gopal Agreement

We entered into an employment agreement with Dr. Gopal on August 29, 2016 (the “Gopal Agreement”), pursuant to which Dr. Gopal’s employment was for an initial term of one year and annually automatically renews for additional one-year periods unless either party elects not to renew on 60 days prior written notice or the employment is earlier terminated by either party.

Under the terms of the employment agreement, in the event that Dr. Gopal’s employment with us is terminated by us without “Cause” or as a result of his resignation with “Good Reason,” (each as defined in the Gopal Agreement) Dr. Gopal will be entitled to (i) receive an amount equal to two times the sum of his then effective base salary plus his target bonus, payable over 24 months in equal installments, (ii) in certain circumstances, a monthly payment would be made by us of an amount equal to the employer health insurance contribution amount that would have been paid in respect of Dr. Gopal for at most 24 months following such termination and (iii) the period of time during which Dr. Gopal may exercise his vested stock options shall be extended to the longer of (x) three months after his date of termination or (y) seven days after the commencement of our first open trading window that occurs after the date of termination, but in no event later than the 10-year expiration date of such options.

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

Dr. Gopal has agreed to be subject to certain non-competition, non-solicitation and non-hire provisions during the term of his employment and for 24 months following the termination of his employment, subject to certain limited exceptions.

Executive Severance Plan

On February 17, 2010, we adopted the ANSYS, Inc. Executive Severance Plan, which was amended as of July 29, 2014, (the “Executive Severance Plan”), for executives and other employees selected for participation by our Compensation

Committee. The Executive Severance Plan applies to all named executive officers with the exception of Dr. Gopal whose severance terms are set forth in the Gopal Agreement.

Pursuant to the Executive Severance Plan, covered executives whose employment with us is terminated for any reason other than for cause, death or disability will receive a lump-sum severance payment equal to the sum of six months’ base salary and target bonus and an amount equal to the earned, but unpaid, portion of the covered executive’s target bonus, as well as 12 months’ health and welfare benefits and outplacement services up to $15,000. In the event the employment of a covered executive is terminated for any reason other than for cause, death or disability, or by the covered executive with good reason, in either case within 18 months after a change in control of the Company and without cause, the covered executive will (a) receive a lump-sum severance payment equal to the sum of 12 months’ base salary and target bonus and an amount equal to the earned, but unpaid, portion of the covered executive’s target bonus, (b) receive 12 months’ health and welfare benefits and outplacement services up to $15,000 and (c) have all outstanding stock options and other outstanding stock-based awards accelerate and become fully exercisable and non-forfeitable as of the date of such termination of employment.

All of our executive equity award agreements are subject to “double- trigger” vesting, meaning that if within eighteen months of a change in control, an executive’s employment is terminated without cause or is terminated by such executive after any adverse modification of his or her duties, principal employment location or compensation, then all stock options and other equity incentives awarded to that employee would become fully vested.

In all cases, receipt of severance payments are conditioned on the timely execution of an appropriate release of claims on the part of the terminated executive.

For additional information regarding our change in control severance arrangements, see “Potential Payments Upon Termination or Change in Control Under Employment or Other Agreements Table.”

Our Compensation Committee has implemented these arrangements to protect the interests of our senior executives when a potential change in control could affect our executives’ job security, authority or compensation, and believes that these arrangements help us recruit and retain executive-level talent. These change in control severance arrangements also promote the interests of our stockholders by mitigating the senior executives’ concerns about such potential matters and thereby assuring that management provides guidance to the Board and stockholders that is not related to such concerns. In the event employment is terminated for reason of death or disability, all unvested RSUs will become immediately vested. Unvested PSUs will vest, as scheduled, on a prorated basis, based on the achievement of the applicable metrics.

The Compensation Committee, with the assistance of Compensia, assesses and considers potential risks when reviewing and approving our compensation policies and practices for our executive officers and employees, with particular attention to risks related to the Company’s use of, and degree of use of, equity and incentive-based compensation as a portion of the total compensation paid to the executive officers. We have designed our compensation programs, including our incentive compensation plans, with features to address potential risks while rewarding employees for achieving financial and strategic objectives through prudent business judgement and appropriate risk taking. Based upon its assessment, the Compensation Committee believes that any risks arising from our compensation programs do not create disproportionate incentives for our employees to take risks that are reasonably likely to have a material adverse impact on us in the future.

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