This simple analysis is a clear warning sign. Mentor has grown SG&A at a rate in excess of its 5.3% revenue growth and its SG&A relative to its revenues are significantly higher than its peers. Often it is difficult for public companies across our country to control growth in SG&A for a variety of reasons. The fact that the CEO has been with the Company for 18 years may make it even more difficult. While we believe a board should not micro-manage, in certain instances where there are clear warning signs, a board needs to take action. At Icahn controlled companies or those where we have a strong minority position on the board, if presented with similar facts, we would move to form a committee of the board to assess the situation in further detail, possibly engaging a leading consulting firm to advise the board and also work cooperatively with management in order to determine how to improve efficiency in the Company's SG&A spend. We have set up an organization to develop methodologies and controls to leverage best practices and make them available to portfolio companies and use the collective scale of these companies to negotiate improvements in rates on a variety of products and services from third parties. This cost control has been an important factor in the success of the companies where we have been involved over the years. We believe the collective impact of this effort will result in a reduction in SG&A expenses without affecting the revenue growth of the Company. One of our nominees, David Schechter, as an employee of Carl Icahn since 2004, has served on the board of directors of several of the companies controlled by Carl Icahn and is well versed and has been involved in employing methods that we have used successfully to "cost control" without affecting revenue growth.

Mentor's Board has persistently diluted its shareholders while its closest peers have not. The table below highlights the magnitude of this dilution over the past eight years. During this timeframe not a single director was added or left the Board of Mentor Graphics.

This SG&A growth in excess of revenue growth and dilution are indicative of the Company's performance since 1994. Over that timeframe the Company generated negative $336MM of cumulative cash flow from operations less capital expenditures and cash acquisitions.

Selling the Company is not our only plan. Our nominees have two plans that are not mutually exclusive. Plan A is to explore a sale of the Company to a strategic buyer. Plan B is to hold management accountable to lower the ratio of SG&A as a percentage of Total Revenues (to be more in line with its peers) and to use its cash flow to buy back its stock. Our Plan B could have a meaningful benefit to earnings per share growth.

If the Company had identified just $20MM of SG&A reductions that would not impact the top line and implemented them prior to its FY 2012, then its EPS guidance would have been 15% higher(iii) than the $1.00 per share non-GAAP guidance it provided. Keep in mind that even with this reduction, Mentor's SG&A as a percentage of Total Revenues would still be higher than both its leading peers.

If the Company uses its cash flow going forward to buy back stock, it will reduce the share count and thereby further improve EPS. Assuming net income is equal to cash flow, if Mentor used all its net income(iv) in the next fiscal year to repurchase stock, at a price of $14.01 the Company could repurchase 8MM shares, which represents 7% of its outstanding shares.

Our nominees are highly qualified to serve on Mentor's Board and to advocate for Plan B.

Jose Maria Alapont - Why his background is relevant to Mentor and our Plan B?

Mentor dedicated three pages of its Investor Presentation to its Transportation Solutions segment that is growing and represents 15% of its product bookings in recent quarters. Jose Maria is CEO of Federal-Mogul Corporation, which generates over $6 billion in revenues and shares many of the same customers that Mentor targets in its Transportation Solutions segment. Jose Maria has strong relationships in this industry that are unmatched by the directors we seek to replace and can clearly offer advice to management. Jose Maria has been a visionary in terms of his efforts to improve the cost structure at Federal-Mogul. As CEO he manages over 42,700 employees, a large multinational customer base, numerous plants all over the world, and advanced technologies throughout its products set. Jose Maria has aggressively managed his cost structure while continuing to invest heavily in R&D to successfully lead his company through an extraordinarily difficult period for the automotive industry. Jose Maria has a clear track record of success as Federal-Mogul's stock price has risen 10x from its low in 2009.(v)

Gary Meyers - Why his background is relevant to Mentor and our Plan B?

Gary is uniquely qualified to evaluate Mentor's product portfolio and assess the Company's strategy. This knowledge will be instrumental in assessing how to better manage SG&A. He recently left Synopsys in April 2010 where he served as a senior executive after serving as CEO of Synplicity, a publicly traded peer to Mentor Graphics, which was sold to Synopsys in 2008. Previously, Gary was a chip designer and served in senior sales and marketing roles in the semiconductor industry. Gary has a clear track record of success as Synplicity was sold for $223 million to Synopsys, a 50% premium relative to the last closing price prior to the announcement of the deal.(vi) Gary's industry expertise may assist the Board in assessing whether there are any inefficient "pet projects" that should be eliminated or scaled back.