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May 11, 2018.
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| | | | A-1 | | |
Q: |
Q: Who is entitled to vote at the 2018 Annual Meeting? A: You may vote |
If your shares of Fortinet common stock if our records show that you owned your shares at the close of business on the Record Date. At the close of business on the Record Date, there were 168,092,936 shares of Fortinet common stock outstanding and entitled to vote at the 2018 Annual Meeting. You may cast one vote for each share of common stock held by you as of the Record Date on all matters presented.
Fortinet’s bylaws also provide that the only business that may be conducted at an annual meeting is business that is (1) properly brought before the meeting pursuant to Fortinet’s proxy materials with respect to such meeting, (2) properly brought before the meeting by or at the direction of the Board of Directors or (3) properly brought before the meeting by a stockholder who has delivered written notice to Fortinet’s Corporate Secretary at its principal executive offices within the Notice Period (as defined below) and who was a stockholder at the time of such notice and as of the record date. The notice must contain specified information about the matters to be brought before such meeting and about the stockholder proposing such matters.
27, 2019.
Our
Two candidates have been nominated for election as
Name | | | Age | | | Position | | |
Ken Xie | | | | | Chief Executive Officer, | | ||
Michael Xie | | | | | President, Chief Technology Officer and Director | | ||
Peter D. Cohen(1)(2) | | | 51 | | | Director | | |
Ming Hsieh(1) | | | | | Director | | ||
Gary Locke(2)** | | | 68 | | | Director and Director Nominee | ||
| ||||||||
William H. Neukom(1)(2) | | | | | Director | | ||
Christopher B. Paisley(1) | | | | | Director | | ||
Judith Sim(2)(3) | | | 49 | | | Director and Director Nominee | ||
|
The Board of Directors also believes Mr. Ken Xie provides valuable perspective and experience as a co-founder of Fortinet and one of its largest stockholders.
Ming Hsieh has served as a member of our Board of Directors since April 2013. Mr. Hsieh has served as the Chairman and Chief Executive Officer of Fulgent Therapeutics Inc., a cancer drug research and development company, since September 2012. From October 2010 to June 2012, Mr. Hsieh served as the President of 3M Cogent, Inc., a provider of global biometric identification solutions, following the acquisition of Cogent, Inc. by 3M Company in 2010. Prior to the acquisition, Mr. Hsieh served as the Chief Executive Officer, President and Chairman of the board of directors of Cogent since founding Cogent in 1990. Prior to that, Mr. Hsieh was a research and development engineer at International Rectifier Corporation, a manufacturer of semiconductors, from 1985 to 1987. Mr. Hsieh received a B.S.E.E. from the University of Southern California in 1983 and an M.S.E.E. from University of Southern California in 1984.
Cogent.
Microsoft. The Board of Directors believes that Mr. Neukom, with his experience with the technology industry and his expertise in legal, governance and compliance matters, brings a unique and valuable perspective to the Board of Directors.
Mr. Paisley has developed expertise in finance, including accounting and financial reporting, as a Chief Financial Officer of 3Com Corporation and in other finance roles and currently as a professor in the field of accounting and finance. Mr. Paisley also has over 15 years of outside board experience at the aforementioned companies and numerous other public and private companies.
| | | 2017 | | | 2016 | | ||||||
Audit Fees(1) | | | | $ | 3,043,457 | | | | | $ | 3,087,330 | | |
Audit-Related Fees(2) | | | | | 58,500 | | | | | | 644,903 | | |
Tax Fees(3) | | | | | 448,699 | | | | | | 533,392 | | |
All Other Fees(4) | | | | | 1,895 | | | | | | 2,000 | | |
Total | | | | $ | 3,552,551 | | | | | $ | 4,267,625 | | |
|
2015 | 2014 | |||||||
Audit Fees(1) | $ | 2,045,019 | $ | 1,695,284 | ||||
Tax Fees(2) | 376,208 | 429,626 | ||||||
Other Fees(3) | 26,950 | 10,500 | ||||||
Total | $ | 2,488,177 | $ | 2,135,410 |
Our
Our
Our
The Audit Committee is responsible for, among other things:
Our Compensation
Our CompensationCommittee and was renamed by the Board of Directors during fiscal 2017.
Our Nominating and Corporate
Our NominatingCommittee and Corporatewas renamed by the Board of Directors during fiscal 2017.
Our
The Board also directly oversees certain strategic risks to Fortinet and other risk areas not delegated to one of its committees, including risks related to data privacy and cybersecurity.
Name | | | Age | | | Position | |
Ken Xie | | 55 | | | Chief Executive Officer and Chairman of the Board of Directors | | |
Michael Xie | | 49 | | | President, Chief Technology Officer and Director | | |
| 59 | | | Chief Financial Officer | | ||
John Whittle | | 49 | | | Vice President of Corporate Development, General Counsel and Corporate Secretary | |
Andrew Del Matto
Sacramento.
The following
Our Compensation
Equity-Based Awards.
Committee, which are designed to reflect and reward sustained performance over time, as reflected in improved overall company value. As described in more detail below, we design our equity-based compensationawards to help retain talent over a period of time and to provide our named executive officers with a long-term reward that aligns their interests with those of our stockholders. AThe Human Resources Committee considers a number of factors are considered when determining the size of equity grants,awards, including peer groupcompetitive market data, named executive officer performance, the proposed award’s retention value, the value of unvested equity awards already held by the named executive officer and a review of the named executive officer’s overall compensation package, which takes into account our approach to base pay and variable pay. Initial grantsequity awards granted upon hire are generally designed to attract experienced executives with established records of success and help retain them over the long term. Subsequent grants to named executive officersequity awards are designed to help retain and incentivize our named executive officers.
Stock price performance is measured using the average shareexercise price of the applicableoption), and to grant equity-based awards with a longer-term perspective (as our stock during the final 90 trading days of the two- oroptions vest over four years and can be exercised for up to seven years after grant, while our PSUs vest over a three-year performance period divided by the average share price during the 90 trading days ending on the trading day prior to the first day of the two- or three-year performance period, including the value attributable to reinvestment of dividends, if any. period).
The Human Resources Committee grants stock options and RSUs (and, in prior years, has granted PSUs) in order to: create a stronger and more visible link between executive pay and Fortinet’s stock price performance; further align our executives’ interests with those of our stockholders; to better incentivize and retain our senior executives; and maintain a long-term incentive program that is competitive with practices at peer companies.
Variable Pay. Rewarding performance through variable pay is an important element of named executive officer compensation. We design our variable pay programs to be both reasonable and competitive in relation to the market. We consider adjusting our variable pay programs as appropriate for our named executive officers. Our senior management incentive bonus program is designed to motivate our named executive officers to achieve goals and to align payouts with actual results. The variable pay incentives are based on a formulaic assessment of our financial performance and an assessment of each individual’s performance. The Compensation Committee has the discretion to increase or decrease a payout under the variable pay programs at any time in the event that it determines that circumstances warrant adjustment. A key factor in this evaluation is our executive “peer review” process, in which our broader executive team reviews the performance of certain other executives, including certain named executive officers, on a quarterly basis, and their confidential feedback is reviewed by our Compensation Committee when considering individual variable pay incentives. We believe the executive peer review motivates executive officers to work together in a productive fashion.
Benefits Programs.We provide our named executive officers the following benefits: employee retirement; health and welfare benefits, such asincluding participation in our 401(k) retirement plan; participation in our 2011 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”); group health insurance plans; and life, disability and accidental death insurance plans. Our named executive officers generally receive the same benefits as those provided to our other U.S. employees and do not receive any additional perquisites. OurWe design our employee benefits programs are typically establishedto be both cost-effective and adjusted bycompetitive in relation to the market as well as compliant with applicable laws and practices. We adjust our human resources department with approval,benefits programs as necessary, from senior managementneeded based upon regular monitoring of applicable laws and are consistent withpractices and the competitive practices of companies similar to us.
2017
ANSYS, Inc. | | ||||
| Aspen Technology, Inc. | | ServiceNow, Inc. | | |
| Check Point Software Technologies Ltd. | | Splunk Inc. | | |
CoStar Group, Inc. | | | SS&C Technologies Holdings, Inc. | | |
| FactSet Research Systems Inc. | | Tableau Software, Inc. | | |
Fair Isaac Corporation | | | The Ultimate Software Group, Inc. | | |
FireEye, Inc. | | | Tyler Technologies, Inc. | | |
| IPG Photonics Corporation | | | Verint Systems Inc. | |
j2 Global, Inc. | | | VeriSign, Inc. | | |
| NetSuite Inc. | | |
the competitive market.CompensationHuman Resources Committee assesses the performance of the named executive officers, considering factors such as company performance, department performance and individual performance, including the named executive officer’s expertise, position, past contributions to Fortinet and potential future contributions to Fortinet. Largely as a result of this assessment and taking into account reasonable annual base pay increase practices and Compensia’s data and analysis, the CompensationHuman Resources Committee considered whether and how much to adjust the base pay of the named executive officers.2015,2017, the CompensationHuman Resources Committee raised the annual base pay of Mr. Ken Xie by 12.6%3% to $425,000,$450,882, Mr. Michael Xie by 12%3% to $375,000,$397,838, Mr. Del Matto by 3% to $391,400$415,237 and Mr. Whittle by 5%3% to $344,532.$365,514. After these increases, salary for our named executive officers was generally positioned around the base pay50th percentile of the competitive market, with the exception of Mr. Ken Xie, whose salary was below Compensia’sthe 25th percentile of market data, Mr. Michael Xie’s was at Compensia’s 75th percentile of market data, Mr. Del Matto’s was near Compensia’s 55th percentile of market data and Mr. Whittle’s was near Compensia’s 40th percentile of market data.
executive and Compensia’s data and analysis.
Also in January 2015, the Compensation Committee approved refresh awards of 40,000 PSUs for Mr. Ken Xie, 30,000 PSUs for Mr. Michael Xie and 20,000 PSUs for each of Mr. Del Matto and Mr. Whittle. Each of these PSUs vests 50% at the end of a two-year service period and up to the remaining 50%, plus any unvested from the two-year period, at the end of a three-year service period with a multiplier based on Fortinet’s relative stock price performance over those respective periods compared to the performance of the NASDAQ Composite Index, as described in more detail under“— Elements of Our Compensation Program — Equity Based Awards” above.
Variable Pay.We determine the executive’s actual level of variable compensation in accordance with the terms of the variable pay programs.Senior Management Bonus Program (the “Bonus Program”) approved by the Human Resources Committee for the year. In developing the framework, we seek to set total cash compensation (base(i.e. base salary plus variable pay) to meet our goal of ensuring that our cash compensation levels are competitive and to enable us to retain and motivate our named executive officers.
Alosses and other adjustments to GAAP income as defined in our non-GAAP definition for external reporting purposes.
Revenue Performance | | | Funding Amount | |
95% – 100% | | | 70% funding of the revenue-based portion for performance at 95% and 6% funding for every additional 1% of performance between 95% and 100% | |
100% – 150% | | | 0.8% funding for every additional 1% of performance between 100% and 150% | |
Operating Income Performance | | | Funding Amount | |
95% – 100% | | | 70% funding of the operating income-based portion for performance at 95% and 6% funding for every additional 1% of performance between 95% and 100% | |
100% – 150% | | | 0.8% funding for every additional 1% of performance between 100% and 150% | |
For 2015,2017, with respect to Messrs. Del Matto and Whittle, the minimum percentage ofthreshold performance level for the revenue target was 90% and the minimum percentage ofthreshold performance level for the operating income target was 85%. Once the threshold performance target is realized,level was attained, the funding of the bonus payments for Messrs. Del Matto and Whittle increases on a graduated basis for each of the revenue portion and the operating income portion as follows:
Revenue Performance | | | Funding Amount | |
90% – 100% | | | 40% funding of the revenue-based portion for performance at 90% and 6% funding for every additional 1% of performance between 90% and 100% | |
100% – 150% | | | 0.8% funding for every additional 1% of performance between 100% and 150% | |
Operating Income Performance | | | Funding Amount | |
85% – 90% | | | 8% funding of the operating income-based portion for every additional 1% of performance over 85% | |
90% – 100% | | | 6% funding for every additional 1% of performance between 90% and 100% | |
100% – 150% | | | 0.8% funding for every additional 1% of performance between 100% and 150% | |
As noted above, the Bonus Program iswas based on internal revenue and operating income performance targets set at the beginning of the year. The targets were set at levels determined to be challenging and requiring substantial effort on the part of senior management. For 2015,2017, we achieved between 97% and 137%98% of our quarterly and annual revenue targets and we achieved between 99% and 119% of our quarterly and annual operating income targets and we achieved between 100% and 104% of our quarterly and annual revenue targets. We paid bonuses toThe Human Resources Committee approved bonus payments for our senior management for 20152017 based on achievement of these corporate goals and the peer reviewsindividual performance of certain of our named executive officers as discussedevaluated pursuant to the “peer review” process described above. The following charts below set forth both the target levels for our internal revenue and operating income performance, targets compared to the revenue and operating income levels actually achieved, and indicates the percentages of target revenue actually achieved.
their employment in specified circumstances. These arrangements (including potential payments and terms) are discussed in more detail in the “— Potential Payments Upon Termination or Change of Control” section below. We believe that these severance agreements help us from a retention standpoint, and they are particularly necessary in an industry such as ours, where there has been market consolidation. We believe that entering into these agreements helps the named executive officers maintain continued focus and dedication to their assigned duties to maximize stockholder value. The terms of these agreements were determined after review by the CompensationHuman Resources Committee of our retention goals for each named executive officer, as well as analysis of market data, similar agreements established by our peer group and applicable law.
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Option Awards ($)(1) | | | Stock Awards ($)(1)(2) | | | Non-Equity Incentive Plan Compensation ($)(3) | | | All Other Compensation ($)(4) | | | Total ($) | | ||||||||||||||||||||||||
Ken Xie Chief Executive Officer | | | | | 2017 | | | | | | 450,882 | | | | | | — | | | | | | 1,221,810 | | | | | | 1,862,000 | | | | | | 425,746 | | | | | | — | | | | | | 3,960,438 | | |
| | | 2016 | | | | | | 437,750 | | | | | | — | | | | | | 520,806 | | | | | | 953,200 | | | | | | 301,689 | | | | | | — | | | | | | 2,213,445 | | | ||
| | | 2015 | | | | | | 425,000 | | | | | | — | | | | | | — | | | | | | 2,788,200 | | | | | | 435,385 | | | | | | — | | | | | | 3,648,585 | | | ||
Michael Xie President and Chief Technology Officer | | | | | 2017 | | | | | | 397,838 | | | | | | — | | | | | | 733,086 | | | | | | 1,489,600 | | | | | | 187,829 | | | | | | — | | | | | | 2,808,353 | | |
| | | 2016 | | | | | | 386,250 | | | | | | — | | | | | | 390,605 | | | | | | 953,200 | | | | | | 133,138 | | | | | | — | | | | | | 1,863,193 | | | ||
| | | 2015 | | | | | | 375,000 | | | | | | — | | | | | | — | | | | | | 2,411,500 | | | | | | 192,081 | | | | | | — | | | | | | 2,978,581 | | | ||
Andrew Del Matto Chief Financial Officer | | | | | 2017 | | | | | | 415,237 | | | | | | — | | | | | | 488,724 | | | | | | 1,489,600 | | | | | | 248,882 | | | | | | 5,400 | | | | | | 2,647,843 | | |
| | | 2016 | | | | | | 403,143 | | | | | | — | | | | | | 260,403 | | | | | | 714,900 | | | | | | 206,555 | | | | | | 5,200 | | | | | | 1,590,201 | | | ||
| | | 2015 | | | | | | 391,400 | | | | | | — | | | | | | — | | | | | | 1,716,950 | | | | | | 256,658 | | | | | | 5,200 | | | | | | 2,370,208 | | | ||
John Whittle Vice President of Corporate Development, General Counsel and Corporate Secretary | | | | | 2017 | | | | | | 365,514 | | | | | | — | | | | | | 366,543 | | | | | | 1,117,200 | | | | | | 216,230 | | | | | | 4,619 | | | | | | 2,070,106 | | |
| | | 2016 | | | | | | 354,868 | | | | | | 30,534(5) | | | | | | 260,403 | | | | | | 714,900 | | | | | | 139,552 | | | | | | 4,758 | | | | | | 1,505,015 | | | ||
| | | 2015 | | | | | | 344,532 | | | | | | 28,982(5) | | | | | | — | | | | | | 1,716,950 | | | | | | 180,500 | | | | | | 4,843 | | | | | | 2,275,807 | | |
2017 Table
” and “— Elements of Our Compensation Program — Equity Based Awards” for additional details regarding the RSUs granted to named executive officers in fiscal 2017.Name | | | Type of Award | | | Grant Date | | | Approval Date | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other Option Awards: Number of Shares Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Share) | | | Grant Date Fair Value of Stock and Option Awards ($)(2) | | |||||||||||||||||||||||||||
| Threshold ($) | | | Target ($) | | | Maximum ($) | | ||||||||||||||||||||||||||||||||||||||||||||
Ken Xie | | | Cash | | | — | | ��� | — | | | | | 21,041 | | | | | | 450,882 | | | | | | 631,235 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | RSU | | | 2/16/2017 | | | 1/20/2017 | | | | | — | | | | | | — | | | | | | — | | | | | | 50,000 | | | | | | — | | | | | | — | | | | | | 1,862,000 | | |
| | | Stock Option | | | 2/16/2017 | | | 1/20/2017 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 100,000 | | | | | | 37.24 | | | | | | 1,221,810 | | |
Michael Xie | | | Cash | | | — | | | — | | | | | 9,283 | | | | | | 198,919 | | | | | | 278,487 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | RSU | | | 2/16/2017 | | | 1/20/2017 | | | | | — | | | | | | — | | | | | | — | | | | | | 40,000 | | | | | | — | | | | | | — | | | | | | 1,489,600 | | |
| | | Stock Option | | | 2/16/2017 | | | 1/20/2017 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 60,000 | | | | | | 37.24 | | | | | | 733,086 | | |
Andrew Del Matto | | | Cash | | | — | | | — | | | | | 1,439 | | | | | | 269,904 | | | | | | 377,866 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | RSU | | | 2/16/2017 | | | 1/20/2017 | | | | | — | | | | | | — | | | | | | — | | | | | | 40,000 | | | | | | — | | | | | | — | | | | | | 1,489,600 | | |
| | | Stock Option | | | 2/16/2017 | | | 1/20/2017 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 40,000 | | | | | | 37.24 | | | | | | 488,724 | | |
John Whittle | | | Cash | | | — | | | — | | | | | 1,170 | | | | | | 219,308 | | | | | | 307,032 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | RSU | | | 2/16/2017 | | | 1/20/2017 | | | | | — | | | | | | — | | | | | | — | | | | | | 30,000 | | | | | | — | | | | | | — | | | | | | 1,117,200 | | |
| | | Stock Option | | | 2/16/2017 | | | 1/20/2017 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 30,000 | | | | | | 37.24 | | | | | | 366,543 | | |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(2) | |||||||||||||||||||||||||||||||||||||||||
Name | Type of Award | Grant Date | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||
Ken Xie | Cash | — | — | 12,396 | 425,000 | 595,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
RSU | 2/11/2015 | 1/16/2015 | — | — | — | — | — | — | 40,000 | 1,311,400 | ||||||||||||||||||||||||||||||||||
PSU | 2/11/2015 | 1/16/2015 | — | — | — | — | 40,000 | 60,000 | 40,000 | 1,466,800 | ||||||||||||||||||||||||||||||||||
Michael Xie | Cash | — | — | 5,469 | 187,500 | 262,500 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
RSU | 2/11/2015 | 1/16/2015 | — | — | — | — | — | — | 40,000 | 1,311,400 | ||||||||||||||||||||||||||||||||||
PSU | 2/11/2015 | 1/16/2015 | — | — | — | — | 40,000 | 60,000 | 30,000 | 1,100,100 | ||||||||||||||||||||||||||||||||||
Andrew Del Matto | Cash | — | — | 848 | 254,410 | 356,174 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
RSU | 2/11/2015 | 1/16/2015 | — | — | — | — | — | — | 30,000 | 983,550 | ||||||||||||||||||||||||||||||||||
PSU | 2/11/2015 | 1/16/2015 | — | — | — | — | 30,000 | 45,000 | 20,000 | 733,400 | ||||||||||||||||||||||||||||||||||
John Whittle | Cash | — | — | 689 | 206,719 | 275,626 | (3) | — | — | — | — | — | ||||||||||||||||||||||||||||||||
RSU | 2/11/2015 | 1/16/2015 | — | — | — | — | — | — | 30,000 | 983,550 | ||||||||||||||||||||||||||||||||||
PSU | 2/11/2015 | 1/16/2015 | — | — | — | — | 30,000 | 45,000 | 20,000 | 733,400 |
Table
Name | | | | | | Option Awards | | | Stock Awards | | |||||||||||||||||||||||||||||||||||||||
| | | | Number of Securities Underlying Unexercised Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | | Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#)(3) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Units That Have Not Vested ($)(2) | | ||||||||||||||||||||||||||
| Grant Date(1) | | | Exercisable | | | Unexercisable | | |||||||||||||||||||||||||||||||||||||||||
Ken Xie | | | 2/08/2011 | | | | | 100,000(4) | | | | | | — | | | | | | 20.235 | | | | 2/08/2018 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 8/02/2011 | | | | | 50,000(4) | | | | | | — | | | | | | 20.13 | | | | 8/02/2018 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/14/2012 | | | | | 80,000(4) | | | | | | — | | | | | | 26.70 | | | | 2/14/2019 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/12/2014 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 2,500 | | | | | | 109,225 | | | | | | — | | | | | | — | | |
| | | 2/11/2015 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 12,500 | | | | | | 546,125 | | | | | | — | | | | | | — | | |
| | | 2/11/2015 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | — | | | | | | — | | | | | | 21,016(5) | | | | | | 918,189 | | |
| | | 2/11/2016 | | | | | 27,499 | | | | | | 32,501 | | | | | | 23.83 | | | | 2/11/2023 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/11/2016 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 22,500 | | | | | | 983,025 | | | | | | — | | | | | | — | | |
| | | 2/16/2017 | | | | | — | | | | | | 100,000 | | | | | | 37.24 | | | | 2/16/2024 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/16/2017 | | | | | — | | | | | | — | | | | | | — | | | | — | | | �� | | 50,000 | | | | | | 2,184,500 | | | | | | — | | | | | | — | | |
Michael Xie | | | 2/12/2014 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 2,500 | | | | | | 109,225 | | | | | | — | | | | | | — | | |
| | | 2/11/2015 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 12,500 | | | | | | 545,125 | | | | | | — | | | | | | — | | |
| | | 2/11/2015 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | — | | | | | | — | | | | | | 15,762(5) | | | | | | 688,642 | | |
| | | 2/11/2016 | | | | | 20,624 | | | | | | 24,376 | | | | | | 23.83 | | | | 2/11/2023 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/11/2016 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 22,500 | | | | | | 983,025 | | | | | | — | | | | | | — | | |
| | | 2/16/2017 | | | | | — | | | | | | 60,000 | | | | | | 37.24 | | | | 2/16/2024 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/16/2017 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 40,000 | | | | | | 1,747,600 | | | | | | — | | | | | | — | | |
Andrew Del Matto | | | 2/12/2014 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 7,500 | | | | | | 327,675 | | | | | | — | | | | | | — | | |
| | | 2/11/2015 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 9,375 | | | | | | 409,594 | | | | | | — | | | | | | — | | |
| | | 2/11/2015 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | — | | | | | | — | | | | | | 10,508(5) | | | | | | 459,095 | | |
| | | 2/11/2016 | | | | | 13,749 | | | | | | 16,251 | | | | | | 23.83 | | | | 2/11/2023 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/11/2016 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 16,875 | | | | | | 737,269 | | | | | | — | | | | | | — | | |
| | | 2/16/2017 | | | | | — | | | | | | 40,000 | | | | | | 37.24 | | | | 2/16/2024 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/16/2017 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 40,000 | | | | | | 1,747,600 | | | | | | — | | | | | | — | | |
John Whittle | | | 2/14/2012 | | | | | 39,166(4) | | | | | | — | | | | | | 26.70 | | | | 2/14/2019 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/12/2014 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 2,500 | | | | | | 109,225 | | | | | | — | | | | | | — | | |
| | | 2/11/2015 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 9,375 | | | | | | 409,594 | | | | | | — | | | | | | — | | |
| | | 2/11/2015 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | — | | | | | | — | | | | | | 10,508(5) | | | | | | 459,095 | | |
| | | 2/11/2016 | | | | | 13,749 | | | | | | 16,251 | | | | | | 23.83 | | | | 2/11/2023 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/11/2016 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 16,875 | | | | | | 737,269 | | | | | | — | | | | | | — | | |
| | | 2/16/2017 | | | | | — | | | | | | 30,000 | | | | | | 37.24 | | | | 2/16/2024 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 2/16/2017 | | | | | — | | | | | | — | | | | | | — | | | | — | | | | | 30,000 | | | | | | 1,310,700 | | | | | | — | | | | | | — | | |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Units That Have Not Vested ($)(2) | ||||||||||||||||||||||||||||||
Name | Grant Date(1) | Exercisable | Unexercisable | |||||||||||||||||||||||||||||||||
Ken Xie | 2/10/2010 | 100,000 | (4) | — | 8.43 | 2/10/2017 | — | — | — | — | ||||||||||||||||||||||||||
2/08/2011 | 100,000 | (4) | — | 20.235 | 2/08/2018 | — | — | — | — | |||||||||||||||||||||||||||
8/02/2011 | 50,000 | (4) | — | 20.13 | 8/02/2018 | — | — | — | — | |||||||||||||||||||||||||||
2/14/2012 | 76,666 | 3,334 | 26.70 | 2/14/2019 | — | — | — | — | ||||||||||||||||||||||||||||
8/8/2012 | — | — | — | — | 6,563 | 204,568 | — | — | ||||||||||||||||||||||||||||
2/13/2013 | — | — | — | — | 7,813 | 243,531 | — | — | ||||||||||||||||||||||||||||
8/13/2013 | — | — | — | — | — | — | 32,500 | (5) | 1,013,025 | |||||||||||||||||||||||||||
2/12/2014 | — | — | — | — | 22,500 | 701,325 | — | — | ||||||||||||||||||||||||||||
5/7/2014 | — | — | — | — | — | — | 40,000 | (6) | 1,246,800 | |||||||||||||||||||||||||||
2/11/2015 | — | — | — | — | 40,000 | 1,246,800 | — | — | ||||||||||||||||||||||||||||
2/11/2015 | — | — | — | — | — | — | 40,000 | (7) | 1,246,800 | |||||||||||||||||||||||||||
Michael Xie | 1/28/2009 | 200,000 | (4) | — | 3.735 | 1/28/2016 | — | — | — | — | ||||||||||||||||||||||||||
2/10/2010 | 50,000 | (4) | — | 8.43 | 2/10/2017 | — | — | — | — | |||||||||||||||||||||||||||
2/08/2011 | 100,000 | (4) | — | 20.235 | 2/08/2018 | — | — | — | — | |||||||||||||||||||||||||||
8/02/2011 | 50,000 | (4) | — | 20.13 | 8/02/2018 | — | — | — | — | |||||||||||||||||||||||||||
2/14/2012 | 76,666 | 3,334 | 26.70 | 2/14/2019 | — | — | — | — | ||||||||||||||||||||||||||||
8/8/2012 | — | — | — | — | 3,126 | 97,437 | — | — | ||||||||||||||||||||||||||||
2/13/2013 | — | — | — | — | 12,500 | 389,625 | — | — | ||||||||||||||||||||||||||||
8/13/2013 | — | — | — | — | — | — | 17,500 | (5) | 545,475 | |||||||||||||||||||||||||||
2/12/2014 | — | — | — | — | 22,500 | 701,325 | — | — | ||||||||||||||||||||||||||||
5/7/2014 | — | — | — | — | — | — | 30,000 | (6) | 935,100 | |||||||||||||||||||||||||||
2/11/2015 | — | — | — | — | 40,000 | 1,246,800 | — | — | ||||||||||||||||||||||||||||
2/11/2015 | — | — | — | — | — | — | 30,000 | (7) | 935,100 | |||||||||||||||||||||||||||
Andrew Del Matto | 2/12/2014 | — | — | — | — | 67,500 | 2,103,975 | — | — | |||||||||||||||||||||||||||
2/12/2014 | — | — | — | — | — | — | 25,000 | (8) | 779,250 | |||||||||||||||||||||||||||
2/11/2015 | — | — | — | — | 30,000 | 935,100 | — | — | ||||||||||||||||||||||||||||
2/11/2015 | — | — | — | — | — | — | 20,000 | (7) | 623,400 | |||||||||||||||||||||||||||
John Whittle | 2/14/2012 | 38,333 | 1,667 | 26.70 | 2/14/2019 | — | — | — | — | |||||||||||||||||||||||||||
8/8/2012 | — | — | — | — | 1,875 | 58,443 | — | — | ||||||||||||||||||||||||||||
2/13/2013 | — | — | — | — | 10,938 | 340,937 | — | — | ||||||||||||||||||||||||||||
8/13/2013 | — | — | — | — | — | — | 15,000 | (5) | 467,550 | |||||||||||||||||||||||||||
2/12/2014 | — | — | — | — | 22,500 | 701,325 | — | — | ||||||||||||||||||||||||||||
5/7/2014 | — | — | — | — | — | — | 25,000 | (6) | 779,250 | |||||||||||||||||||||||||||
2/11/2015 | — | — | — | — | 30,000 | 935,100 | — | — | ||||||||||||||||||||||||||||
2/11/2015 | — | — | — | — | — | — | 20,000 | (7) | 623,400 |
(3) Represents the target number of shares of Fortinet common stock that may vest under PSUs outstanding as of December 31, 2017. Each of these PSUs vests 50% at the end of a two-year service period and up to the remaining 50%, plus any unvested from the two-year period, at the end of a three-year service period based on Fortinet’s relative stock price performance over those respective periods compared to the performance of the NASDAQ Composite Index. (4) The option is fully vested and immediately exercisable. (5) The two-year service periods for the PSUs granted to Messrs. Ken Xie, Michael Xie, Del Matto and Whittle in 2015 ended in February 2017, at which time 18,984 PSUs vested for Mr. Ken Xie, 14,238 PSUs vested for Mr. Michael Xie, 9,492 PSUs vested for Mr. Del Matto and 9,492 PSUs vested for Mr. Whittle. The three-year service period for the PSUs granted to Messrs. Ken Xie, Michael Xie and Whittle in 2015 ends in February 2018, at which time 21,016 PSUs vested for Mr. Ken Xie, 15,762 PSUs vested for Mr. Michael Xie, 10,508 PSUs vested for Mr. Del Matto and 10,508 PSUs vested for Mr. Whittle. 2017 |
Table
| | | Option Awards | | | Stock Awards | | ||||||||||||||||||
Name | | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(2) | | ||||||||||||
Ken Xie | | | | | 50,000 | | | | | | 1,463,473 | | | | | | 88,047 | | | | | | 3,211,506 | | |
Michael Xie | | | | | 280,000 | | | | | | 5,331,880 | | | | | | 76,738 | | | | | | 2,791,803 | | |
Andrew Del Matto | | | | | — | | | | | | — | | | | | | 78,867 | | | | | | 2,783,973 | | |
John Whittle | | | | | 13,749 | | | | | | 291,066 | | | | | | 61,055 | | | | | | 2,230,733 | | |
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||||||
Ken Xie | 500,000 | 14,891,000 | 81,250 | 3,491,386 | ||||||||||||
Michael Xie | 250,000 | 10,895,275 | 57,916 | 2,385,889 | ||||||||||||
Andrew Del Matto | — | — | 52,500 | 1,800,450 | ||||||||||||
John Whittle | 85,000 | 1,653,629 | 51,250 | 2,097,232 |
year following a Change of Control, in addition to receiving twelve12 months of base salary (as in effect immediately prior to the Change of Control or his termination, whichever is greater) and twelve12 months of medical, dental,
This agreement provides that, if
the excise tax imposed by Section 4999 of the Code (as a result of a payment being classified as a parachute payment under Section 280G of the Code), he will be entitled to receive such payment as would entitle him to receive the greatest after-tax benefit of either the full payment or a lesser payment which would result in no portion of such severance benefits being subject to excise tax.
John Whittle.Whittle. On February 4, 2016, we entered into an Amended and Restated Change of Control Severance Agreement with JohnMr. Whittle, our Vice President of Corporate Development, General Counsel and Corporate Secretary, under which he may receive certain payments and benefits upon certain terminations of employment, provided that he has provided us with an executed release of claims and subject to non-solicitation and non-competition for a period of twelve12 months. The amendment was entered into to clarify Mr. Whittle’s prior Change of Control Severance Agreement and did not reflect substantive changes. The term of Mr. Whittle’s Amended and Restated Change of Control Severance Agreement expires on August 7, 2019.
| | | Qualifying Termination Not Within One Year after a Change of Control(1) | | | Qualifying Termination Within One Year after a Change of Control(1) | | ||||||||||||||||||
Name | | | Salary ($)(2) | | | Acceleration of Equity Vesting ($) | | | Salary ($)(2) | | | Acceleration of Equity Vesting ($)(3) | | ||||||||||||
Ken Xie(4) | | | | | 450,882 | | | | | | — | | | | | | 450,882 | | | | | | 6,049,316 | | |
Michael Xie(5) | | | | | — | | | | | | — | | | | | | 198,919 | | | | | | 4,959,050 | | |
Andrew Del Matto(6) | | | | | 311,428 | | | | | | 2,156,336(7) | | | | | | 415,237 | | | | | | 4,270,846 | | |
John Whittle(5) | | | | | 365,514 | | | | | | 2,043,601(7) | | | | | | 365,514 | | | | | | 3,550,996 | | |
Qualifying Termination Not Within One Year after a Change of Control(1) | Qualifying Termination Within One Year after a Change of Control(1) | |||||||||||||||
Name | Salary ($)(2) | Acceleration of Equity Vesting ($) | Salary ($)(2) | Acceleration of Equity Vesting ($)(3) | ||||||||||||
Ken Xie(4) | 425,000 | — | 425,000 | 5,917,753 | ||||||||||||
Michael Xie(5) | — | — | 187,500 | 4,865,765 | ||||||||||||
Andrew Del Matto(6) | 293,550 | 1,636,425 | (7) | 391,400 | 4,636,538 | |||||||||||
John Whittle(5) | 344,532 | 1,916,614 | (7) | 344,532 | 3,913,458 |
2017
Name | | | Fees Earned or Paid in Cash ($)(1) | | | Stock Awards ($)(2) | | | Total ($) | | |||||||||
Peter D. Cohen(3) | | | | | 22,317 | | | | | | 578,400 | | | | | | 600,717 | | |
Ming Hsieh(4) | | | | | 59,250 | | | | | | 237,769 | | | | | | 297,019 | | |
Gary Locke(5) | | | | | 50,000 | | | | | | 197,450 | | | | | | 247,450 | | |
William H. Neukom(6) | | | | | 59,000 | | | | | | 237,769 | | | | | | 296,769 | | |
Christopher B. Paisley(7) | | | | | 85,000 | | | | | | 237,769 | | | | | | 322,769 | | |
Judith Sim(8) | | | | | 50,250 | | | | | | 197,450 | | | | | | 247,700 | | |
Name | Fees Earned or Paid in Cash ($)(3) | Stock Awards ($)(4)(5) | Total ($) | |||||||||
Ming Hsieh | 48,973 | 244,150 | 293,123 | |||||||||
Chenming Hu(1) | 21,610 | — | 21,610 | |||||||||
Gary Locke | 12,024 | 499,650 | 511,674 | |||||||||
Hong Liang Lu(2) | 31,152 | 244,150 | 275,302 | |||||||||
William H. Neukom | 47,382 | 244,150 | 291,532 | |||||||||
Christopher B. Paisley | 71,731 | 244,150 | 315,881 | |||||||||
Judith Sim | 22,663 | 732,450 | 755,113 |
(7) | ||||
vest in full.
As of December 31, 2017, there were no awards outstanding under either the 2000 Plan or the 2008 Plan.
| | | (a) | | | (b) | | | (c) | | |||||||||
Plan category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (#) | | | Weighted-average exercise price per share of outstanding options, warrants and rights ($) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#) | | |||||||||
Equity compensation plans approved by security holders | | | | | 12,839,699(1) | | | | | $ | 27.50(2) | | | | | | 49,869,573(3) | | |
Equity compensation plans not approved by security holders | | | | | 584 | | | | | | N/A | | | | | | — | | |
Total | | | | | 12,840,283 | | | | | $ | 27.50 | | | | | | 49,869,573 | | |
|
(a) | (b) | (c) | ||||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (#) | Weighted-average exercise price per share of outstanding options, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#) | |||||||||
Equity compensation plans approved by security holders | 16,190,249 | (1) | $ | 20.03 | (2) | 40,827,422 | (3) | |||||
Equity compensation plans not approved by security holders | 34,571 | N/A | — | |||||||||
Total | 16,224,820 | $ | 20.03 | 40,827,422 |
5% Stockholders, Directors, Director Nominees and Officers(1) | Shares Beneficially Owned (#)(2) | Percentage Beneficially Owned (%)(2) | ||||||
5% Stockholders: | ||||||||
BlackRock, Inc.(3) | 11,106,678 | 6.5 | ||||||
The Vanguard Group(4) | 10,179,640 | 6.0 | ||||||
Non-Employee Directors and Nominees: | ||||||||
Ming Hsieh(5) | 18,974 | * | ||||||
Gary Locke | — | — | ||||||
William H. Neukom(6) | 22,211 | * | ||||||
Christopher B. Paisley(7) | 93,648 | * | ||||||
Judith Sim | — | — | ||||||
Named Executive Officers: | ||||||||
Ken Xie(8) | 14,324,876 | 8.3 | ||||||
Michael Xie(9) | 13,704,542 | 8.0 | ||||||
Andrew Del Matto(10) | 28,492 | * | ||||||
John Whittle(11) | 65,928 | * | ||||||
All directors and current executive officers as a group (9 persons)(12) | 28,258,671 | 16.4 |
5% Stockholders, Directors, Director Nominees and Officers(1) | | | Shares Beneficially Owned (#)(2) | | | Percentage Beneficially Owned (%)(2) | | ||||||
5% Stockholders: | | | | | | | | | | | | | |
BlackRock, Inc.(3) | | | | | 13,793,707 | | | | | | 8.2 | | |
The Vanguard Group(4) | | | | | 12,596,781 | | | | | | 7.5 | | |
Non-Employee Directors and Nominees: | | | | | | | | | | | | | |
Peter D. Cohen | | | | | 467 | | | | | | * | | |
Ming Hsieh(5) | | | | | 662 | | | | | | * | | |
Gary Locke(6) | | | | | 17,500 | | | | | | * | | |
William H. Neukom(7) | | | | | 40,268 | | | | | | * | | |
Christopher B. Paisley(8) | | | | | 72,268 | | | | | | * | | |
Judith Sim(9) | | | | | 18,750 | | | | | | * | | |
Named Executive Officers: | | | | | | | | | | | | | |
Ken Xie(10) | | | | | 14,895,044 | | | | | | 8.9 | | |
Michael Xie(11) | | | | | 14,626,671 | | | | | | 8.7 | | |
Andrew Del Matto(12) | | | | | 56,587 | | | | | | * | | |
John Whittle(13) | | | | | 24,933 | | | | | | * | | |
All directors and current executive officers as a group (10 persons)(14) | | | | | 29,714,968 | | | | | | 17.7 | | |
PROPOSED RESTATED CERTIFICATE