| • | The median of the annual total compensation of all employees (other than Mr. Arora) of our company and our consolidated subsidiaries in fiscal 2022 was approximately $268,463. This annual total compensation of all of our employees (other than Mr. Arora and including our consolidated subsidiaries) in fiscal 2019 was approximately $219,722. This annual total | compensation was calculated in accordance with Item 402(c)(2)(x) ofRegulation S-K, and reflects, among other things, salary, all bonuses earned, commissions, other cash payments, PTO payouts, allowance, employer benefit and 401(k) contribution matches, ESPP purchase gain,life and disability insurance premiums paid by the Company and the aggregate “grant date fair value” of RSUequity awards granted during fiscal 2022. | | • | Mr. Arora’s annual total compensation, as reported in the12- month period ended July 31, 2019. Fiscal 2022 Summary Compensation Table included in this Proxy Statement, was $10,410,477. | | • | Based on the above, for fiscal 2022, the ratio of Mr. Arora’s annual total compensation to the median of the annual total compensation of all employees was approximately 39 to 1. |
Mr. Arora’s annual total compensation, as reported in the 2019 Summary Compensation Table included in this Proxy Statement, was $23,885,839.
Based on the above, for fiscal 2019, the ratio of Mr. Arora’s annual total compensation to the median of the annual total compensation of all employees was approximately 109 to 1.
This pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) ofRegulation S-K under the Securities Act of 1933, as amended, and based upon our reasonable judgment and assumptions. The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio, and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to our pay ratio as disclosed above. Executive Compensation Fiscal 20192022 Grants of Plan-Based Awards The following table presents information regarding the amount of equity awards granted to our Named Executive Officers during our fiscal year ended July 31, 2019.2022. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (1) | | | Estimated Future Payouts
Under Equity Incentive
Plan Awards (2) | | | | | | | | | | | | | | Name | | Grant
Date | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) (3) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) (3) | | | Exercise
or Base
Price of
Option
Awards
($/
Share) | | | Grant
Date Fair
Value of
Stock and
Option
Awards
($) (4) | | Mr. Arora | | | — | | | | — | | | | 1,000,000 | | | | 3,000,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 48,556 | (5) | | | — | | | | — | | | | 10,999,876 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,655 | (6) | | | — | | | | — | | | | 374,924 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | 36,417 | | | | 48,556 | | | | 48,556 | | | | — | | | | — | | | | — | | | | 10,999,876 | | Ms. Bonanno | | | — | | | | — | | | | 345,000 | | | | 1,035,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 10/20/18 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 167,673 | (7) | | | 193.51 | | | | 10,000,018 | | | | | 10/20/18 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 9,012 | (8) | | | — | | | | — | | | | 1, 743,912 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 622 | (6) | | | — | | | | — | | | | 140,908 | | Mr. Singh | | | — | | | | — | | | | 562,500 | | | | 1,687,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 11/2/18 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 434,145 | (7) | | | 184.24 | | | | 24,503,144 | | | | | 11/2/18 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 47,981 | (9) | | | — | | | | — | | | | 8,840,019 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 28,251 | (10) | | | — | | | | — | | | | 6,399,982 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,240 | (6) | | | — | | | | — | | | | 280,910 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | 21,188 | | | | 28,251 | | | | 28,251 | | | | — | | | | — | | | | — | | | | 6,399,982 | | Mr. Klarich | | | — | | | | — | | | | 495,000 | | | | 1,485,000 | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | — | | | | | 10/20/18 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 670,693 | (7) | | | 193.51 | | | | 40,000,131 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 22,071 | (11) | | | — | | | | — | | | | 4,999,964 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 909 | (6) | | | — | | | | — | | | | 205,925 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | 16,553 | | | | 22,071 | | | | 22,071 | | | | — | | | | — | | | | — | | | | 4,999,964 | | Mr. Zuk | | | — | | | | — | | | | 295,625 | | | | 886,875 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 10/20/18 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 503,019 | (7) | | | 193.51 | | | | 30,000,053 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,035 | (11) | | | — | | | | — | | | | 2,499,869 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 534 | (6) | | | — | | | | — | | | | 120,972 | | | | | 7/31/19 | | | | — | | | | — | | | | — | | | | 8,276 | | | | 11,035 | | | | 11,035 | | | | — | | | | — | | | | — | | | | 2,499,869 | |
| | | | | Date of
Board or
Committee
Action to | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1) | | Estimated Future Payouts
Under Equity Incentive
Plan Awards(2) | | All Other
Stock Awards:
Number of
Shares of | | Grant
Date Fair
Value of
Stock | | Name | | Grant
Date | | Grant the
Award | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | Stock or Units
(#)(2) | | Awards
($)(3) | | Mr. Arora | | — | | — | | 450,000 | | 1,000,000 | | 1,650,000 | | — | | — | | — | | — | | | — | | | | 8/20/21 | | 8/17/21 | | — | | — | | — | | 18,989 | | 50,636 | | 151,908 | | — | | | 7,007,348 | | Mr. Golechha | | — | | — | | 270,000 | | 600,000 | | 990,000 | | — | | — | | — | | — | | | — | | | | 8/20/21 | | 8/17/21 | | — | | — | | — | | 5,064 | | 13,503 | | 40,509 | | — | | | 1,868,557 | | Mr. Jenkins | | — | | — | | 337,500 | | 750,000 | | 1,237,500 | | — | | — | | — | | — | | | — | | | | 8/20/21 | | 8/15/21 | | — | | — | | — | | — | | — | | — | | 76,542 | (4) | | 9,375,377 | | | | 8/20/21 | | 8/17/21 | | — | | — | | — | | 28,866 | | 65,189 | | 160,204 | | — | | | 8,459,773 | | Mr. Klarich | | — | | — | | 247,500 | | 550,000 | | 907,500 | | — | | — | | — | | — | | | — | | | | 8/20/21 | | 8/17/21 | | — | | — | | — | | 12,659 | | 33,758 | | 101,274 | | — | | | 4,671,565 | | Mr. Zuk(5) | | — | | — | | 206,739 | | 459,420 | | 758,043 | | — | | — | | — | | — | | | — | | | | 8/20/21 | | 8/17/21 | | — | | — | | — | | 4,431 | | 11,815 | | 35,445 | | — | | | 1,635,031 |
| (1) | Amounts in the “Estimated Future Payouts UnderNon-Equity Incentive Plan Awards” columns relate to target incentive compensation opportunities under the Fiscal 2019 Incentive Compensation Planfiscal 2022 cash incentive plan and assumes achievement at target levels for our corporate |
| performance measures. For achievement in excess of target, overperformance could be rewarded with a payout of up to an additional 200%165% of each Named Executive Officer’s target (for a maximum payment of 300% each Named Executive Officer’s target).NEO’s target. The actual amounts paid to our Named Executive OfficersNEOs are set forth in the “Fiscal 20192022 Summary Compensation Table” above and the calculation of the actual amounts paid is discussed more fully in the section titled “Discussion of our Fiscal 2019“Fiscal 2022 Executive Compensation Program—Fiscal 20192022 Executive Compensation Program Components—Short-TermAnnual Cash Incentive Compensation.Compensation.” |
| (2) | Represents performance-based restricted stock unit awards (“PSUs”) and restricted stock unit awards (“RSUs”) which were granted under our Palo Alto Networks, Inc. 2012 Equity Incentive Plan (“2012 Plan”). After achievement(as adjusted for the three-for-one stock split effected in the form of a specifiedstock dividend in September 2022, or the “Stock Split”)). The threshold is calculated as if the threshold of Company performance metric in each of fiscal 2020, fiscal 2021measure and fiscal 2022, this performance-based stock unit award vests as toone-third of the shares that have become eligible to vest on October 20, 2020, as toone-third oflowest TSR multiplier was reached. The maximum is calculated assuming all maximum Company performance targets were met and the shares that have become eligible to vest on October 20, 2021 and as toone-third ofrelative TSR modifier was also at the shares that have become eligible to vest on October 20, 2022.maximum value. For more information, see the section titled “Discussion of our Fiscal 2019“Fiscal 2022 Executive Compensation Program—Fiscal 20192022 Executive Compensation Program Components—Fiscal 2022 Equity Compensation.” |
| (3) | The restricted stock unit awards were made under the 2012 Plan.
|
(4) | The amounts reported in the Grant Date Fair Value of Stock and Option Awards column represent the grant date fair value of the awards of restricted stock unit awards and Performance Optionsunits (including PSUs) granted in fiscal 2019,2022, calculated in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of the PSUs and restricted stock unit awards reported in this column are set forth in the notes to our audited consolidated financial statements included in our Annual Report on Form10-K filed for our fiscal year ended July 31, 2022. The value of the PSUs is calculated using a Monte-Carlo simulation valuation performed as of the date of grant by an independent third party. Because the grant date for a PSU occurs when performance targets are approved, and we approved performance targets only with respect to fiscal year 2022, PSU values in this column include for Mr. Arora, Golechha, Klarich and Zuk 42% and for Mr. Jenkins 61% of the SEC on September 9, 2019.PSUs. Note that the amounts reported in this column do not correspond to the actual economic value that may be received by our Named Executive OfficersNEOs from their performance-based restricted stock unit awards. |
(5)(4) | Represents restricted stock unit awardsRSUs which were granted under our 2012 Plan, and vestupon Mr. Jenkins’ hiring as to 1/12 of the shares on September 7, 2019 and as to the remaining shares in equal quarterly increments thereafter until June 7, 2022. |
(6) | Represents restricted stock unit awards which were granted under our 2012 Plan and vest as to 25%President. Vests over a four-year period with forty percent (40%) of the restricted stock units vesting on October 31, 2019 and the remaining restricted stock units shall vest in equal increments each quarter thereafter with full vesting occurring on July 31, 2020.
|
(7) | The amount reported in the Option Awards column for fiscal 2019 consist of a performance option. The valueone-year anniversary of the performance option at the date of grant was as set forth herein, assuming the highest level of the performance condition is satisfied.
|
(8) | Represents restricted stock unit awards which were granted under our 2012 Plan, and vest as to 1/16 of the shares on January 20, 2019 and as to the remaining shares in equal quarterly increments thereafter until October 20, 2022.
|
(9) | Represents restricted stock unit awards which were granted under our 2012 Plan, and vest as to 40%date; thirty percent (30%) of the restricted stock units on November 2, 2019; as to 30%vesting quarterly during the second year; twenty percent (20%) of the restricted stock units in four equalvesting quarterly installments through November 2, 2020; as to 20%during the third year; and ten percent (10%) of the restricted stock units vesting quarterly during the fourth year.
| | (5) | The amounts set forth in four equal quarterly installments through November 2, 2021 and asthe table for Mr. Zuk for estimated future payouts under Non-Equity Incentive Plan Awards reflect the conversion from Israeli currency to 10%U.S. dollars using an average exchange rate of the restricted stock units in four equal quarterly installments through November 2,0.31 U.S. dollars for one Israeli new shekel for fiscal 2022. |
(10)90 | Represents restricted stock unit awards which were granted under our 2012 Plan, and vest as to 1/12 of the shares on February 20, 2020 and as to the remaining shares in equal quarterly increments thereafter until November 20, 2022.
 |
(11) |
Represents restricted stock unit awards which were granted under our 2012 Plan, and vest as to 1/12 of the shares on January 20, 2020 and as to the remaining shares in equal quarterly increments thereafter until October 20, 2022.
|
Executive Compensation Fiscal 20192022 Outstanding Equity Awards at FiscalYear-End The following table presents information regarding outstanding stock options and other equity awards held by our Named Executive Officers as of July 31, 2019.2022, as adjusted for the Stock Split. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Grant Date | | | Option
Awards—
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | | Option
Awards—
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | | Option
Awards—
Option
Exercise
Price ($) | | | Option
Awards—
Option
Expiration
Date | | | Stock
Awards—
Number of
Shares or
Units of
Stock That
Have Not
Vested (#) | | | Stock
Awards—
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($) (1) | | Mr. Arora | | | 7/31/2019 | (2) | | | — | | | | — | | | | — | | | | — | | | | 48,556 | | | | 10,999,876 | | | | | 7/31/2019 | (3) | | | — | | | | — | | | | — | | | | — | | | | 1,655 | | | | 374,924 | | | | | 7/31/2019 | (4) | | | — | | | | — | | | | — | | | | — | | | | 48,556 | | | | 10,999,876 | | | | | 6/7/2018 | (5) | | | — | | | | — | | | | — | | | | — | | | | 170,226 | | | | 38,562,998 | | | | | 6/18/2018 | (6) | | | — | | | | — | | | | — | | | | — | | | | 71,737 | | | | 16,251,300 | | | | | 6/7/2018 | (7) | | | — | | | | 1,158,100 | | | | 198.50 | | | | 12/6/25 | | | | — | | | | — | | Ms. Bonanno | | | 7/31/2019 | (3) | | | — | | | | — | | | | — | | | | — | | | | 622 | | | | 140,908 | | | | | 10/20/2018 | (8) | | | — | | | | — | | | | — | | | | — | | | | 7,323 | | | | 1,658,952 | | | | | 10/20/2018 | (9) | | | — | | | | 167,673 | | | | 193.51 | | | | 4/19/26 | | | | — | | | | — | | | | | 11/22/2017 | (10) | | | — | | | | — | | | | — | | | | — | | | | 6,732 | | | | 1,525,067 | | | | | 11/22/2017 | (11) | | | — | | | | — | | | | — | | | | — | | | | 7,103 | | | | 1,609,114 | | | | | 7/20/2017 | (12) | | | — | | | | — | | | | — | | | | — | | | | 5,535 | | | | 1,253,899 | | | | | 10/20/2016 | (13) | | | — | | | | — | | | | — | | | | — | | | | 2,025 | | | | 458,744 | | Mr. Singh | | | 7/31/2019 | (14) | | | — | | | | — | | | | — | | | | — | | | | 28,251 | | | | 6,399,982 | | | | | 7/31/2019 | (3) | | | — | | | | — | | | | — | | | | — | | | | 1,240 | | | | 280,910 | | | | | 7/31/2019 | (4) | | | — | | | | — | | | | — | | | | — | | | | 28,251 | | | | 6,399,982 | | | | | 11/2/2018 | (15) | | | — | | | | — | | | | — | | | | — | | | | 47,981 | | | | 10,869,616 | | | | | 11/2/2018 | (9) | | | — | | | | 434,145 | | | | 184.24 | | | | 5/1/26 | | | | — | | | | — | | Mr. Klarich | | | 7/31/2019 | (16) | | | — | | | | — | | | | — | | | | — | | | | 22,071 | | | | 4,999,964 | | | | | 7/31/2019 | (3) | | | — | | | | — | | | | — | | | | — | | | | 909 | | | | 205,925 | | | | | 7/31/2019 | (4) | | | — | | | | — | | | | — | | | | — | | | | 22,071 | | | | 4,999,964 | | | | | 10/20/2018 | (9) | | | — | | | | 670,693 | | | | 193.51 | | | | 4/19/26 | | | | — | | | | — | | | | | 10/20/2017 | (17) | | | — | | | | — | | | | — | | | | — | | | | 13,020 | | | | 2,949,551 | | | | | 10/20/2017 | (18) | | | — | | | | — | | | | — | | | | — | | | | 13,736 | | | | 3,111,753 | | | | | 10/20/2016 | (19) | | | — | | | | — | | | | — | | | | — | | | | 9,235 | | | | 2,092,097 | | | | | 10/20/2016 | (20) | | | — | | | | — | | | | — | | | | — | | | | 5,047 | | | | 1,143,347 | | Mr. Zuk | | | 7/31/2019 | (16) | | | — | | | | — | | | | — | | | | — | | | | 11,035 | | | | 2,499,869 | | | | | 7/31/2019 | (3) | | | — | | | | — | | | | — | | | | — | | | | 534 | | | | 120,972 | | | | | 7/31/2019 | (4) | | | — | | | | — | | | | — | | | | — | | | | 11,035 | | | | 2,499,869 | | | | | 10/20/2018 | (9) | | | — | | | | 503,019 | | | | 193.51 | | | | 4/19/26 | | | | — | | | | — | | | | | 10/20/2017 | (21) | | | — | | | | — | | | | — | | | | — | | | | 7,811 | | | | 1,769,504 | | | | | 10/20/2017 | (22) | | | — | | | | — | | | | — | | | | — | | | | 8,242 | | | | 1,867,143 | | | | | 10/20/2016 | (23) | | | — | | | | — | | | | — | | | | — | | | | 6,075 | | | | 1,376,231 | | | | | 10/20/2016 | (24) | | | — | | | | — | | | | — | | | | — | | | | 3,320 | | | | 752,113 | |
Named Executive
Officer | | Grant Date | | | Option
Awards–
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | Option
Awards–
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | Option
Awards–
Option
Exercise
Price ($) | | Option
Awards–
Option
Expiration
Date | | Stock
Awards-
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#) | | Stock
Awards–
Market Value
of Shares or
Units of Stock
That Have Not
Vested ($)(1) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested (#) | | Equity
Incentive Plan
Awards: Market
or Payout Value
of Unearned
Shares, Units
or Other Rights
That Have Not
Vested ($) | | | Mr. Arora | | 8/20/21 | (2) | | — | | — | | — | | — | | — | | — | | 364,581 | | 60,655,341 | | | | | 10/20/2020 | (3) | | — | | — | | — | | — | | 453,000 | | 75,365,610 | | — | | — | | | | | 7/31/2019 | (4) | | — | | — | | — | | — | | 46,387 | | 7,717,405 | | — | | — | | | | | 6/7/2018 | (5) | | — | | — | | — | | — | | 255,348 | | 42,482,247 | | — | | — | | | | | 6/7/2018 | (6) | | 3,474,300 | | — | | 66.17 | | 12/6/25 | | — | | — | | — | | — | | | Mr. Golechha | | 8/20/21 | (2) | | — | | — | | — | | — | | — | | — | | 97,218 | | 16,174,159 | | | | | 3/20/2021 | (7) | | — | | — | | — | | — | | 45,714 | | 7,605,438 | | — | | — | | | | | 12/20/2020 | (8) | | — | | — | | — | | — | | 25,212 | | 4,194,520 | | — | | — | | | Mr. Jenkins | | 8/20/21 | (2) | | — | | — | | — | | — | | 48,093 | | 8,001,232 | | 215,392 | | 35,834,767 | | | | | 8/20/21 | (9) | | — | | — | | — | | — | | 76,542 | | 12,734,293 | | — | | — | | | Mr. Klarich | | 8/20/21 | (2) | | — | | — | | — | | — | | — | | — | | 243,054 | | 40,436,894 | | | | | 10/20/2020 | (10) | | — | | — | | — | | — | | 136,716 | | 22,745,441 | | — | | — | | | | | 7/31/2019 | (11) | | — | | — | | — | | — | | 5,520 | | 918,362 | | — | | — | | | | | 7/31/2019 | (4) | | — | | — | | — | | — | | 21,085 | | 3,507,911 | | — | | — | | | | | 10/20/2018 | (12) | | 1,509,063 | | 503,016 | | 64.50 | | 4/19/26 | | — | | — | | — | | — | | | Mr. Zuk | | 8/20/21 | (2) | | — | | — | | — | | — | | — | | — | | 85,068 | | 14,152,763 | | | | | 10/20/2020 | (13) | | — | | — | | — | | — | | 61,974 | | 10,310,614 | | — | | — | | | | | 7/31/2019 | (11) | | — | | — | | — | | — | | 2,760 | | 459,181 | | — | | — | | | | | 7/31/2019 | (4) | | — | | — | | — | | — | | 10,542 | | 1,753,873 | | — | | — | | | | | 10/20/2018 | (12) | | 1,131,801 | | 377,256 | | 64.50 | | 4/19/26 | | — | | — | | — | | — | | | | | 1/21/2013 | (14) | | 45,000 | | — | | 18.45 | | 1/20/23 | | — | | — | | — | | — | |
| (1) | The market value of unvested or unearned shares is calculated by multiplying the number of unvested or unearned shares held by the applicable Named Executive OfficerNEO by the closing market price of our common stock on the NYSENasdaq on July 31, 201929, 2022 (the last trading day of our fiscal year), which was $226.54$166.37 per share. share (as adjusted for the Stock Split). |
| (2) | This restricted stock unit award vests as to 1/12thRepresents PSUs which were granted under our 2012 Plan (as adjusted for the Stock Split). Values included in the Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested and Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested columns include the restricted stock units on September 7, 2019maximum values for number of shares and market value (i.e., calculated assuming all maximum company performance targets were met and the remaining restricted stock units shallrelative TSR modifier was also at the maximum value). For more information, see the section titled “Discussion of our Fiscal 2022 Executive Compensation Program—Fiscal 2022 Executive Compensation Program Components—Equity Compensation.”
| | (3) | Represents PSUs which were granted under our 2012 Plan. A specified performance metric having been achieved, the PSUs that became eligible to vest will vest over a four-year period with 15% of such PSUs vesting in equal quarterly increments each quarter thereafterduring year two with fullthe first vesting occurring on June 7, 2022. |
(3) | This restricted stock unit award vests as to 25%January 20, 2022; 42.5% of the restricted stock units on October 31, 2019 and the remaining restricted stock units shall vestsuch PSUs vesting in equal quarterly increments during year three; and 42.5% of such PSUs vesting in equal quarterly increments during year four, in each quarter thereafter with fullcase subject to the executive’s continued service through the applicable vesting occurring on July 31, 2020.
date. |
| (4) | After achievement of a specified performance metric, this performance-based stock unit award veststhese PSUs vested as toone-third of the sharesPSUs that have becomebecame eligible to vest on October 20, 2020, vested as toone-third of the sharesPSUs that have becomebecame eligible to vest on October 20, 2021 and will vest as toone-third of the sharesPSUs that have becomebecame eligible to vest on October 20, 2022. 2022, in each case subject to the executive’s continued service through the applicable vesting date. |
| (5) | This restricted stock unit award vestedVested as to 1/7th7th of the restricted stock units on June 7, 2019 and the remaining restricted stock units shall vest in equal increments each quarter thereafter with full vesting occurring on June 7, 2025.
|
(6) | This restricted stock unit award vested as to 25% of the restricted stock units on June 18, 2019 and the remaining restricted stock units shall vest2025, in equal increments each quarter thereafter with full vesting occurring on June 18, 2022.
|
(7) | This PSO is subject to performance-based vesting. This PSO has a per share exercise price of $198.50 (the “Baseline Price”). Sharescase subject to the executive’s continued service through the applicable vesting date.
| | (6) | All shares subject to this PSO become eligiblehave vested due to vest (the “Eligible Option Shares”) uponthe achievement of certain stock price targets as set forth inand continued service. For more information, see the table below. The performance-based vesting requirement will makesection titled “Discussion of our Fiscal 2022 Executive Compensation Program—Fiscal 2022 Executive Compensation Program Components—Equity Compensation.” |
Executive Compensation | (7) | A specified performance metric having been achieved, the PSOsPSUs that became eligible to vest in four tranches once the stock price meets the achievement hurdle for 30 consecutive trading days during thewill vest over a four-year period set forth below. To the extent that Stock Price Achievements for this PSO have been met,one-fourthwith one fourth (1/4th) of such PSUs vesting on the Eligible Option Shares will vest annually on eachone-year anniversary of the PSO’s grant date,date; and one-sixteenth (1/16th) of such PSUs vesting quarterly thereafter, in each case subject to Mr. Arora’sthe executive’s continued service on eachthrough the applicable vesting date. Upon a “Change in Control” (as described below in the section entitled “—Executive Employment Agreements” and “—Potential Payments Upon Termination or Change in Control”) the price payable to our stockholders at the closing of the transaction will be the final Stock Price Achievement. |
| | | | | | | % of PSO becoming Eligible
Option Shares
(8) | | Stock Price Achievement
| | Time to
Achieve | | Expiration
of Option | 25% | | More than 150% of Baseline Price | | 4 years | | 7 years | 25% | | More than 200% of Baseline Price | | 5 years | | 7 years | 25% | | More than 250% of Baseline Price | | 6 years | | 7 years | 25% | | More than 300% of Baseline Price | | 7 years | | 7.5 years |
(8) | This restricted stock unit award vests as to 1/16thVests over a four-year period with one fourth (1/4th) of the restricted stock units vesting on January 20, 2019 and the remaining restricted stock units shall vest in equal increments each quarter thereafter with full vesting occurring on October 20, 2022.
|
(9) | This stock option is subject to performance-based vesting. See “—Fiscal 2019 Executive Compensation Program Components—Equity Compensation—Fiscal 2019 PSOs” for a descriptionone-year anniversary of the performance metrics.
|
(10) | This restricted stock unit award vests quarterly over a4-year period with full vesting on November 22, 2021.
|
(11) | After achievement of a specified performance metric, this performance stock unit award vests as to the units that have become eligible to vest in equal quarterly increments over a4-year period with full vesting on November 22, 2021.
|
(12) | This restricted stock unit award vests in equal quarterly increments over a4-year period with full vesting on July 20, 2021.
|
(13) | This restricted stock unit award vested as to 25%grant date; and one-sixteenth (1/16th) of the restricted stock units vesting quarterly thereafter, in each case subject to the executive’s continued service through the applicable vesting date.
| | (9) | Vests over a four-year period with forty percent (40%) of the restricted stock units vesting on October 20, 2017 with the remainingone-year anniversary of the grant date; thirty percent (30%) of the restricted stock units vesting in equal quarterly increments with full vesting on October 20, 2020. |
(14) | This restricted stock unit award vests as to 1/12thduring the second year; twenty percent (20%) of the restricted stock units on February 20, 2020 and the remaining restricted stock units shall vestvesting in equal quarterly increments each quarter thereafter with full vesting occurring on November 20, 2022.
|
(15) | This restricted stock unit award vests as to as to 40%during the third year; and ten percent (10%) of the restricted stock units vesting in equal quarterly increments during the fourth year, in each case subject to the executive’s continued service through the applicable vesting date.
| | (10) | A specified performance metric having been achieved, the PSUs that became eligible to vest will vest over a four-year period, with 25% of such PSUs having vested on November 2, 2019;October 20, 2021; 25% of such PSUs vesting in equal quarterly increments during year two; 25% of such PSUs vesting in equal quarterly increments during year three; and 25% of such PSUs vesting in equal quarterly increments during year four, in each case subject to the executive’s continued service through the applicable vesting date. | | (11) | Vested as to 30% of the restricted stock units in four equal quarterly installments through November 2, 2020; as to 20% of the restricted stock units in four equal quarterly installments through November 2, 2021 and as to 10% of the restricted stock units in four equal quarterly installments through November 2, 2022. |
(16) | This restricted stock unit award vests as to 1/12th12th of the restricted stock units on January 20, 2020 and the remaining restricted stock units shall vest in equal increments each quarter thereafter with full vesting occurring on October 20, 2022.
2022, in each case subject to the executive’s continued service through the applicable vesting date. |
(17)(12) | This restrictedAll shares subject to this PSO became eligible to vest due to the achievement of certain stock unit award vested as to 25%price targets. Three-fourths (3/4th) of the restricted stock units in equal quarterly increments until October 20, 2018,shares subject to this PSO have vested and one-fourth (1/4th) of the shares subject to this PSO will vest as to 37.5% of the restricted stock units in equal quarterly increments thereafter until October 20, 2019, as to 25% of the restricted stock units in equal quarterly increments thereafter until October 20, 2020, and as to 12.5% of the restricted stock units in equal quarterly increments thereafter with full vesting on October 20, 2021.
2022, subject to the executive’s continued service through such vesting date. |
(18)(13) | After achievement of aA specified performance metric this performance-based stock unit award vested as to 25% ofhaving been achieved, the units that have become eligible to vest in equal quarterly increments until October 20, 2018, then will vest as to 37.5% of the units that have become eligible to vest in equal quarterly increments thereafter until October 20, 2019, as to 25% of the units that have become eligible to vest in equal quarterly increments thereafter until October 20, 2020, and as to 12.5% of the units that have become eligible to vest in equal quarterly increments thereafter with full vesting on October 20, 2021.
|
(19) | This restricted stock award vested as to 12% of the shares on October 20, 2017, vested as to 12% of the shares in equal quarterly increments thereafter until October 20, 2018 and the remaining shares thereafter will vest in equal quarterly increments thereafter with full vesting on October 20, 2020.
|
(20) | This performance stock award vested as to 12% of the sharesPSUs that became eligible to vest will vest over a four-year period with 20% of such PSUs vesting during year two with the first vest on OctoberJanuary 20, 2017, vested as to 12%2022; 40% of the shares that became eligible to vestsuch PSUs vesting in equal quarterly increments thereafter until October 20, 2018during year three; and then the remaining shares that became eligible to vest thereafter will vest40% of such PSUs vesting in equal quarterly increments thereafter with fullduring year four, in each case subject to the executive’s continued service through the applicable vesting on October 20, 2020.
date. | | (14) | All shares subject to this option have vested. |
(21) | This restricted stock unit award vested as to 1/16th of the restricted stock units on January 20, 2018 and the remaining restricted stock units shall vest in equal increments each quarter thereafter with full vesting occurring on October 20, 2021.
|
(22) | After achievement of a specified performance metric, this performance-based stock unit award vested as to 1/16th of the units that have become eligible to vest on January 20, 2018 and the remaining units that have become eligible to vest will vest in equal increments each quarter thereafter with full vesting occurring on October 20, 2021.
|
(23) | This restricted stock award vested as to 1/8th of the shares on October 20, 2017; 1/8th of the shares vested in equal increments each quarter in the second year; and the remaining shares will vest in equal increments each quarter thereafter with full vesting occurring on October 20, 2020.
|
(24) | After achievement of a specified performance metric, this restricted stock award vested as to 1/8th of the shares that have become eligible to vest on October 20, 2017; 1/8th of the shares that have become eligible to vest have vested in equal increments each quarter in the second year; and the remaining shares that have become eligible to vest will vest in equal increments each quarter thereafter with full vesting occurring on October 20, 2020.
|
Fiscal 20192022 Option Exercises and Stock Vested The following table presents information regarding the exercise of stock options and the vesting of stock awards by our Named Executive OfficersNEOs during our fiscal year ended July 31, 2019.2022. | | | | | | | | | | | | | | | | | Named Executive Officer | | Option Awards—
Number of Shares
Acquired on Exercise
(#) | | | Option Awards—
Value Realized on
Exercise ($) (1) | | | Stock Awards—
Number of Shares
Acquired on Vesting
(#) | | | Stock Awards—
Value Realized on
Vesting ($) (2) | | Mr. Arora | | | — | | | | — | | | | 52,284 | | | | 10,458,200 | | Ms. Bonanno | | | — | | | | — | | | | 16,660 | | | | 3,477,461 | | Mr. Singh | | | — | | | | — | | | | — | | | | — | | Mr. Klarich | | | — | | | | — | | | | 71,708 | | | | 14,376,190 | | Mr. Zuk | | | — | | | | — | | | | 62,545 | | | | 12,197,034 | |
| Named Executive Officer | Option Awards–
Number of Shares
Acquired on Exercise
(#) | Option
Awards–Value
Realized on
Exercise ($) | Stock Awards–
Number of Shares
Acquired on Vesting
(#) | Stock Awards–
Value Realized on
Vesting ($)(1) | | Mr. Arora | — | — | 311,385 | 54,039,670 | | Mr. Golechha | — | — | 35,907 | 6,520,699 | | Mr. Jenkins | — | — | — | — | | Mr. Klarich | — | — | 155,832 | 27,461,433 | | Mr. Zuk | — | — | 38,361 | 6,815,090 |
| (1) | Based on the market price of our company’s common stock on the date of exercise less the option exercise price paid for those shares, multiplied by the number of shares for which the option was exercised. |
(2) | Based on the market price of our company’s common stockCompany’s Common Stock on the vesting date, multiplied by the number of shares vested.
vested (as adjusted for the Stock Split). |
We did not sponsor any defined benefit pension or other actuarial plan for our Named Executive OfficersNEOs during our fiscal year ended July 31, 2019.2022. Nonqualified Deferred Compensation We did not maintain any nonqualified defined contribution or otherIn May 2022, our Compensation and People Committee adopted a deferred compensation plansplan, which is a non-qualified deferred compensation plan established in compliance with Section 409A of the Code. Participation in the deferred compensation plan is voluntary and limited to U.S. employees of the Company and affiliates that are at the Vice President level or arrangements for our Named above, as determined by the administrator of the deferred compensation plan, and includes the Company’s executive officers, except Mr. Zuk who is not a U.S. employee. The plan allows eligible participants to defer up to 50% of their annual base salary and up to 100% of their annual incentive cash payment and 100% equity compensation. There were no executive contributions or Company contributions made during fiscal 2022.
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Executive Officers during our fiscal year ended July 31, 2019.Compensation Executive Employment Agreements We have entered into employment offer letters with each of our Named Executive Officers (other than Mr. Zuk)NEOs in connection with his or her commencement of employment with us. In December 2011, we entered into confirmatory new employment agreements with Messrs. Klarich and Zuk to achieve consistency in the employment terms and conditions of our then-serving executive officers. In February 2022, we entered into addendums to the offer letters of Messrs. Jenkins and Golechha to achieve consistency in the employment terms and conditions of our then-serving executive officers. Each of our Named Executive OfficersNEOs is eligible to receive certain severance payments and/or benefits in connection with his or her termination of employment under various circumstances, including following a change in control, pursuant to written severance and change in control arrangements. For a summary of the material terms and conditions of these arrangements, as well as an estimate of the potential payments and/or benefits payable to our Named Executive OfficersNEOs under these arrangements, see the description below and the section titled “—“—Potential Payments Upon Termination or Change in ControlControl” ” below. The estimated potential severance payments and/or benefits payable to each Named Executive OfficerNEO in the event of termination of employment as of July 31, 2019,2022, pursuant to the arrangements under the employment agreements, are described below. The actual amounts that would be paid or distributed to our Named Executive OfficersNEOs as a result of one of the termination events occurring in the future may be different than those presented below as many factors will affect the amount of any payments and/or benefits upon a termination of employment. For example, some of the factors that could affect the amounts payable include the Named Executive Officer’sNEO’s base salary and the market price of our common stock. Although we have entered into written arrangements to provide severance payments and/or benefits to our Named Executive OfficersNEOs in connection with a termination of employment under particular circumstances, we or an acquirer may mutually agree with the Named Executive OfficersNEOs on severance terms that vary from those provided in thesepre-existing arrangements. Finally, in addition to the amounts presented below, each Named Executive OfficerNEO would also be able to exercise any previously-vested stock options that he or she held. For more information about the Named Executive OfficersNEOs outstanding equity awards as of July 31, 2019,2022, see the section titled “—Fiscal 20192022 Outstanding Equity Awards at FiscalYear-End.” Along with the severance payments and/or benefits described in a Named Executive Officer’san NEO’s individual severance and change in control arrangement, they are eligible to receive any benefits accrued under our broad-based benefit plans, such as accrued vacation pay, in accordance with those plans and policies. Termination of Employment Unrelated to a Change in Control Mr. Arora.MR. ARORA
In the event of an involuntary termination of employment (a termination of employment by us without “cause”), at any time before a “change in control” or more than 12 months following a “change in control,” provided that he executes an appropriate release and waiver of claims, then Mr. Arora will be entitled to receive: | • | continued payment of his then-current base salary for a period of 12 months and reimbursement of 12 months of COBRA premiums; and | | • | accelerated vesting of the time-based restricted stock units, investment restricted stock units and eligible option shares for shares that would vest through the date 12 months after termination of employment. |
continued payment of his then-current base salary for a period of 12 months and reimbursement of 12 months of COBRA premiums; and
accelerated vesting of the Time-Based RSUs, Investment RSUs and Eligible Option Shares for shares that would vest through the date 12 months after termination of employment.
Mr. Singh. In the event that Mr. Singh’s employment is terminated by us other than for “cause,” at any time before a “change in control” or more than 12 months following a “change in control,” provided that he executes an appropriate release and waiver of claims, Mr. Singh will be entitled to receive:TERMINATION OF EMPLOYMENT— OTHER NAMED EXECUTIVE OFFICERS
continued payment of his then-current base salary for a period of nine months, 75% of his target incentive compensation for that fiscal year and reimbursement of nine months of COBRA premiums; and
accelerated vesting of the Time-Based RSUs, Eligible Options Shares and any other unvested time-based equity awards that would vest through the date nine months after termination of employment.
Ms. Bonanno. In the event of an involuntary termination of employment (a termination of employment by us without “cause”), at any time before a “change in control” or more than 24 months following a “change in control,” provided that she executes an appropriate release and waiver of claims, Ms. Bonanno will be eligible to receive:
continued payment of base salary as in effect as of the date of termination for a period of six months; and
a lump sum cash payment equal to the amount payable for premiums for continued COBRA benefits for a period of six months.
Termination of Employment—Other Named Executive Officers. None of the remaining Named Executive OfficersNEOs are eligible to receive any specific payments or benefits in the event of an involuntary termination of employment unrelated to a change in control.
Executive Compensation Termination of Employment in Connection with a Change in Control Mr. Arora.MR. ARORA
In the event of an involuntary termination of employment (a termination of employment by us or our successor without “cause or a termination of employment for “good reason”) within 12 months following a “change in control,” provided that he executes an appropriate release and waiver of claims, Mr. Arora will be entitled to receive: | • | a lump sum payment equal to his then-current annual base salary; | | • | 100% of his incentive compensation for that fiscal year; | | • | reimbursement of 12 months of COBRA premiums; | | • | accelerated vesting of each of his awards of time-based restricted stock units or investment restricted stock units as to the greater of: (x) 50% of the then-unvested portion of such award or (y) the portion of such award that would vest through the date 24 months after termination of employment; and | | • | accelerated vesting of 100% of his eligible option shares subject to the performance option. |
a lump sum payment equal to his then-current annual base salary;
100% of his incentive compensation for that fiscal year;
reimbursement of 12 months of COBRA premiums;
accelerated vesting of his time-based RSUs and Investment RSUs as to the greater of: (x) 50% of unvested shares or (y) shares that would vest through the date 24 months after termination of employment; and
accelerated vesting of 100% of his Eligible Option Shares subject to the Performance Option
Mr. Singh.In the event that there is a “change in control” of us, and we or our successor terminates Mr. Singh’s employment other than for “cause” or Mr. Singh terminates his employment for “good reason”, in either case upon or within 12 months following a “change of control,” provided that he executes an appropriate release and waiver of claims, then Mr. Singh will be entitled to receive (subject to signing a release of claims):
a lump sum payment equal to his then-current annual base salary, 100% of his incentive compensation for that fiscal year and reimbursement of 12 months of COBRA premiums;
accelerated vesting of the Time-Based RSUs, and any other then unvested time-based equity awards, equal to the shares that would vest through the date 24 months after termination of employment; and
accelerated vesting of any unvested Eligible Option Shares subject to the Performance Option equal to the shares that would vest through the date 24 months after termination of employment.
Messrs. Klarich and Zuk. In the event of an involuntary termination of employment (a termination of employment by us without “cause” or a termination of employment for “good reason”) within 12 months following a “change in control,” provided that the executive officer executes an appropriate release and waiver of claims, provided that they each execute an appropriate release and waiver of claims, Messrs. Golechha, Jenkins, Klarich and Zuk will each be eligibleentitled to receive:
| • | a lump sum cash payment equal to 12 months of his base salary as in effect as of the date of termination; | | • | a lump sum cash payment equal to 100% of his target incentive payment for that fiscal year; | | • | a lump sum cash payment equal to the amount payable for premiums for continued COBRA benefits for a period of 12 months (except Mr. Zuk); and | | • | accelerated vesting of each of his then outstanding time-based equity awards, as to (i) in the cases of Messrs. Golechha and Jenkins, 12 months’ vesting of such award, or (ii) in the cases of Messrs. Klarich and Zuk, the greater of 12 months’ vesting of such award and 50% of the then-unvested portion of such award. |
a lump sum cash payment equal to 12 months of his base salary as in effect as of the date of termination;
a lump sum cash payment equal to 100% of his target incentive payment for that fiscal year;
a lump sum cash payment equal to the amount payable for premiums for continued COBRA benefits for a period of 12 months; and
accelerated vesting of the greater of (i) 12 months vesting of his then outstanding time-based equity awards, or (ii) 50% of his then outstanding, time-based equity awards.
Ms. Bonanno. In the event of an involuntary termination of employment (a termination of employment by us without “cause” or a termination of employment for “good reason”) within 12 months following a “change in control,” provided that she executes an appropriate release and waiver of claims, Ms. Bonanno would be eligible to receive:APPLICABLE DEFINITIONS
a lump sum cash payment equal to her annual base salary as in effect as of the date of termination;
a lump sum cash payment equal to 100% of her target incentive payment for that fiscal year;
a lump sum cash payment equal to the amount payable for premiums for continued COBRA benefits for a period of 12 months; and
24 months of accelerated vesting of her then-outstanding, time-based equity awards.
Applicable Definitions. Generally, for purposes of the foregoing provisions, a “change in control” means:
the sale or other disposition of all or substantially all of our assets;
any sale or exchange of our capital stock by stockholders in a transaction or series of related transactions where more than 50% of the outstanding voting power of our company is acquired by a person or entity or group of related persons or entities;
any reorganization, consolidation, or merger of our company where our outstanding voting securities immediately before the transaction represent or are converted into less than 50% of the outstanding voting power of the surviving entity (or its parent organization) immediately after the transaction; or
the consummation of the acquisition of 51% or more of our outstanding stock pursuant to a tender offer validly made under any state or federal law (other than a tender offer by us).
| • | the sale or other disposition of all or substantially all of our assets; | | • | any sale or exchange of our capital stock by stockholders in a transaction or series of related transactions where more than 50% of the outstanding voting power of our company is acquired by a person or entity or group of related persons or entities; | | • | any reorganization, consolidation, or merger of our company where our outstanding voting securities immediately before the transaction represent or are converted into less than 50% of the outstanding voting power of the surviving entity (or its parent organization) immediately after the transaction; or | | • | the consummation of the acquisition of 51% or more of our outstanding stock pursuant to a tender offer validly made under any state or federal law (other than a tender offer by us). |
Generally, for purposes of the foregoing provisions, “cause” is limited to: | • | conviction of any felony or any crime involving moral turpitude or dishonesty; | | • | participation in intentional fraud or an act of willful dishonesty against us; | | • | willful breach of our policies that materially harms us; | | • | intentional damage of a substantial amount of our property; | | • | willful and material breach of the NEO’s employment offer letter, employment agreement or his employee invention assignment and confidentiality agreement; or | | • | a willful failure or refusal in a material respect to follow the lawful, reasonable policies or directions of us as specified by our board of directors or Chief Executive Officer after being provided with notice of such failure, which failure is not remedied within 30 days after receipt of written notice from us. |
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participation in intentional fraud or an act of willful dishonesty against us;
willful breach of our policies that materially harms us;
intentional damage of a substantial amount of our property;
willful and material breach of the Named Executive Officer’s employment offer letter, employment agreement or his employee invention assignment and confidentiality agreement; orCompensation
a willful failure or refusal in a material respect to follow the lawful, reasonable policies or directions of us as specified by our board of directors or Chief Executive Officer after being provided with notice of such failure, which failure is not remedied within 30 days after receipt of written notice from us.
Generally, for purposes of the foregoing provisions, “good reason” means a resignation within 12 months following the occurrence, without the Named Executive Officer’s written consent, of one or more of the following: there is a material reduction in the Named Executive Officer’s authority, status, obligations, or responsibilities;
there is a reduction in the Named Executive Officer’s total annual compensation of more than 10% unless such reduction is no greater (in percentage terms) than compensation reductions imposed on substantially all of our employees pursuant to a directive of our board of directors;
any failure by us to pay the Named Executive Officer’s base salary;
the relocation of the principal place of our business to a location that is more than a specified number of miles further away from the Named Executive Officer’s home than our current location.
| • | there is a material reduction in the NEO’s authority, status, obligations, or responsibilities; | | • | there is a reduction in the NEO’s total annual compensation of more than 10% unless such reduction is no greater (in percentage terms) than compensation reductions imposed on substantially all of our employees pursuant to a directive of our board of directors; | | • | any failure by us to pay the NEO’s base salary; or | | • | the relocation of the principal place of our business to a location that is more than a specified number of miles further away from the NEO’s home than our current location. |
A resignation for “good reason” will not be deemed to have occurred unless the Named Executive OfficerNEO gives us written notice of one of the above conditions within 90 days of its occurrence, and we fail to remedy the condition within 30 days of receipt of such notice. Potential Payments Upon Termination or Change in Control Termination of Employment Unrelated to a Change in Control | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Value of Accelerated Equity
Awards ($) | | | Value of
Continued
Health Care
Coverage
Premiums ($) | | | | | Named Executive Officer | | Salary
Continuation
($) | | | Target
Annual Cash
Bonus
($) | | | Restricted
Stock and
Restricted
Stock Units (1) | | | Options (2) | | | Total ($) | | Mr. Arora | | | 1,000,000 | | | | — | | | | 15,885,664 | | | | — | | | | 28,882 | | | | 16,914,547 | | Ms. Bonanno | | | 250,000 | | | | — | | | | — | | | | — | | | | 10,249 | | | | 260,249 | | Mr. Singh | | | 562,500 | | | | 421,875 | | | | 5,907,257 | | | | — | | | | 21,662 | | | | 6,913,294 | |
| | | | | | | Value of Accelerated
Equity
Awards ($) | | Value of | | | | Named Executive Officer | | Salary
Continuation
($) | | Target
Annual Cash
Bonus
($) | | Restricted
Stock and
Restricted
Stock
Units(1) | | Options | | Continued
Health Care
Coverage
Premiums
($) | | Total ($) | | Mr. Arora | | 1,000,000 | | — | | 52,130,209 | | — | | 31,394 | | 53,161,603 |
| (1) | The amounts reported in the table reflect the aggregate market value of the unvested shares of our common stock underlying outstanding restricted stock awardsRSUs and restricted stock unit awards.PSUs which remain subject to time-based vesting only. The aggregate market value is computed by multiplying (i) the number of unvested shares of our common stock, subject to outstanding restricted stock awards or outstanding restricted stock unit awards atRSUs and PSUs which remain subject to time-based vesting only on July 31, 2019,2022, that would become vested by (ii) $226.54$166.37 (the closing market price of our common stock on the NYSENasdaq on July 31, 2019,29, 2022, the last trading day in the fiscal year ended July 31, 2019). |
(2) | As of July 31, 2019, there were no Eligible Option Shares because2022 (as adjusted for the Stock Price Achievements have not been met.
Split)). |
Termination of Employment in Connection with a Change in Control | | | | | | | | | | | | | | | | | | | | | | | | | | | | Salary
Continuation
($) | | | Target
Annual Cash
Bonus
($) | | | Value of Accelerated Equity
Awards ($) | | | Value of
Continued
Health Care
Coverage
Premiums
($) | | | Total ($) | | Named Executive Officer | | Restricted
Stock and
Restricted
Stock Units (1) | | | Options (2) | | Mr. Arora | | | 1,000,000 | | | | 1,000,000 | | | | 35,115,286 | | | | — | | | | 28,882 | | | | 37,144,168 | | Ms. Bonanno | | | 500,000 | | | | 345,000 | | | | 5,660,102 | | | | — | | | | 20,497 | | | | 6,525,599 | | Mr. Singh | | | 750,000 | | | | 562,500 | | | | 12,176,525 | | | | — | | | | 28,882 | | | | 13,517,907 | | Mr. Klarich | | | 550,000 | | | | 495,000 | | | | 8,929,980 | | | | — | | | | 28,882 | | | | 10,003,862 | | Mr. Zuk | | | 430,000 | | | | 295,625 | | | | 4,689,151 | | | | — | | | | 28,882 | | | | 5,443,659 | |
| | | | | | | Value of Accelerated Equity
Awards ($) | | Value of
Continued | | | | Named Executive Officer | | Salary
Continuation
($) | | Target
Annual Cash
Bonus
($) | | Restricted
Stock and
Restricted
Stock Units(1) | | Options(2) | | Health Care
Coverage
Premiums
($) | | Total ($) | | Mr. Arora | | 1,000,000 | | 1,000,000 | | 102,381,602 | | — | | 31,394 | | 104,412,996 | | Mr. Golechha | | 600,000 | | 600,000 | | 4,444,076 | | — | | 31,394 | | 5,675,470 | | Mr. Jenkins | | 750,000 | | 750,000 | | 15,960,539 | | — | | 31,394 | | 17,491,933 | | Mr. Klarich | | 550,000 | | 550,000 | | 15,798,993 | | 51,240,580 | | 31,394 | | 68,170,967 | | Mr. Zuk | | 459,420 | | 459,420 | | 7,368,361 | | 38,429,824 | | — | | 46,717,025 |
| (1) | The amounts reported in the tablethis column reflect the aggregate market value of the unvested shares of our common stock underlying outstanding restricted stock awardsRSUs and restricted stock unit awards.PSUs which remain subject to time-based vesting only. The aggregate market value is computed by multiplying (i) the number of unvested shares of our common stock subject to outstanding restricted stock awards or outstanding restricted stock unit awards atRSUs and PSUs which remain subject to time-based vesting only on July 31, 2019,2022, that would become vested by (ii) $226.54$166.37 (the closing market price of our common stock on the NYSENasdaq on July 31, 2019,29, 2022, the last trading day in the fiscal year ended July 31, 2019). |
(2) | As of July 31, 2019, there were no Eligible Option Shares because2022 (as adjusted for the Stock Price Achievements have not been met.
Split)). | | (2) | The amounts reported in this column reflect the accelerated vesting of outstanding performance stock options valued at the closing stock price on July 29, 2022 of $166.37 minus the exercise price of the options. |
Executive Compensation Executive OfficersThe following table identifies certain information about our executive officers as of October 14, 2022. Officers are appointed by our board of directors to hold office until their successors are elected and qualified. | Name | | Age | | Position(s) | | Nikesh Arora | | 54 | | Chief Executive Officer and Chairman | | Dipak Golechha | | 48 | | Executive Vice President and Chief Financial Officer | | William “BJ” Jenkins | | 56 | | President | | Lee Klarich | | 47 | | Chief Product Officer | | Nir Zuk | | 51 | | Chief Technology Officer and Director |
Nikesh Arora. For a brief biography of Mr. Arora, please see “Proposal No. 1 - Election of Directors - Directors - Continuing Directors.” Dipak Golechha has served as our Chief Financial Officer since March 2021. Mr. Golechha joined the Company in December 2020 as Senior Vice President, Finance. Prior to joining the Company, from August 2020 until December 2020, Mr. Golechha served as senior advisor at Boston Consulting Group, a management consulting firm. From December 2016 to April 2020, Mr. Golechha was President and Chief Executive Officer of Excelligence Learning Corporation, a tech-enabled platform company in early childhood education. From August 2014 through July 2016, Mr. Golechha served as the chief financial officer of NBTY Inc., also known as The Nature’s Bounty Company, a manufacturer of vitamins, minerals and health supplements. During 2014, Mr. Golechha served as the chief financial officer of Chobani, a yogurt company. Prior to Chobani, Mr. Golechha worked at The Procter & Gamble Company, an American multinational consumer goods corporation, for 18 years, most recently serving as chief financial officer / chief operating officer of the Global Feminine Care / Adult Care Division from August 2012 to December 2013. Mr. Golechha holds a bachelor’s degree and a master’s degree from St. John’s College, Cambridge University in Economics. William “BJ” Jenkins has served as our President since August 2021. Prior to joining the Company, Mr. Jenkins served as President and CEO of Barracuda Networks, Inc., a computer security and data storage company, from November 2012 through July 2021. Prior to this position, Mr. Jenkins held multiple business unit and sales and marketing leadership roles at EMC Corporation, a provider of enterprise storage systems, software, and networks. Mr. Jenkins holds an engineering degree from the University of Illinois and an M.B.A. from Harvard Business School. Lee Klarich has served as our Chief Product Officer since August 2017. Prior to this appointment, Mr. Klarich served as our Executive Vice President of Product Management, a role he held since November 2015. From November 2012 to November 2015, Mr. Klarich served as our Senior Vice President, Product Management and our Vice President, Product Management from May 2006 to November 2012. Prior to joining us, Mr. Klarich held various positions at NetScreen Technologies, Juniper Networks, Excite@Home, and Packard Bell-NEC. Mr. Klarich holds a B.S. in Engineering from Cornell University. Nir Zuk. For a brief biography of Mr. Zuk, please see “Proposal No. 1 - Election of Directors - Directors - Continuing Directors.” | 96 | |
Executive Compensation Equity Compensation Plan Information The following table provides information as of July 31, 2019,2022 (as adjusted for the Stock Split), with respect to the shares of our common stock that may be issued under our existing equity compensation plans. | | | | | | | | | | | | | Plan Category | | (a) Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants and
Rights | | | (b) Weighted
Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights ($) (2) | | | (c) Number of
Securities
Remaining
Available for
Future
Issuance Under
Equity
Compensation
Plans (Excluding
Securities
Reflected in
Column (a)) | | Equity compensation plans approved by stockholders (1) | | | 10,940,834 | | | $ | 177.01 | | | | 11,701,305 | | Equity compensation plans not approved by stockholders | | | 312,042 | | | | — | | | | — | | | | | | | | | | | | | | | Total | | | 11,252,876 | | | | | | | | 11,701,305 | | | | | | | | | | | | | | |
| Plan Category | | (a) Number of Securities
to be Issued Upon
Exercise of Outstanding
Options, Warrants and
Rights | | (b) Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights ($)(2) | | (c) Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a)) | | Equity compensation plans approved by stockholders (1) | | 25,307,469 | | $64.59 | | 28,482,339 | | Equity compensation plans not approved by stockholders | | 576,387 | | — | | — | | Total | | 25,883,856 | | | | 28,482,339 |
| (1) | Includes the following plans: the 2012 Plan, 20052021 Equity Incentive Plan and 2012 Employee Stock Purchase Plan (“2012 ESPP”). Our 2012 Plan provides that on the first day of each fiscal year commencing in fiscal year 2014, the number of shares authorized for issuance under the 2012 Plan is automatically increased by a number equal to the lesser of (i) 8,000,000 shares of common stock, (ii) four and one half percent (4.5%) of the aggregate number of shares of common stock outstanding on the last day of the preceding fiscal year, or (iii) such number of shares that may be determined by our board of directors. Our 2012 ESPP provides that on the first day of each fiscal year commencing inbeginning with fiscal year 2014 the number of shares authorized for issuance under the 2012 ESPP is automatically increased by a number equal to the lesser of (i) 2,000,0006,000,000 shares of common stock, (ii) one percent (1.0%) of the aggregate number of shares of common stock outstanding on such date, or (iii) an amount determined by our board of directors or a duly authorized committee of our board of directors. |
| (2) | The weighted average exercise price does not take into account outstanding restricted stock, PSUs or RSUs, which have no exercise price. |
Table of Contents SECURITY OWNERSHIPPROPOSAL NO. 4
Amendment to Our 2021 Equity Incentive Plan We are asking our stockholders to approve an amendment to our 2021 Equity Incentive Plan (the “2021 Plan”) to increase the number of shares of our common stock (“Shares”) reserved for issuance under the 2021 Plan by 5,985,000 Shares. Other than this increase, no changes have been made to the 2021 Plan. All Share numbers in this Proposal No. 4 have been adjusted for our Stock Split. Why Should Stockholders Vote to Approve the Amendment to the 2021 Plan? The Amendment to the 2021 Plan Will Allow Us to Continue Attracting and Retaining the Best Talent Our Board believes that our success depends on the ability to attract and retain the best available personnel for positions of substantial responsibility and that the ability to grant equity awards is crucial to recruiting and retaining the services of these individuals. In addition, our Board believes that equity awards provide additional incentive to our employees, directors and consultants and promote our success. If stockholders do not approve the amendment to the 2021 Plan at the Annual Meeting, we may be unable to continue granting equity awards as needed, which could prevent us from successfully attracting and retaining the highly skilled talent we need. A Reasonable Number of Shares Will Be Added to the 2021 Plan If our stockholders approve the amendment to the 2021 Plan, 5,985,000 Shares will be added to the 2021 Plan. We anticipate these Shares will be enough to meet our expected needs for the next one to two years. | • | Number of Shares Remaining under the 2021 Plan. As of October 14, 2022, 10,428,915 Shares remained available for issuance under the 2021 Plan. | | • | Overhang. As of October 14, 2022, outstanding equity awards under our 2012 Equity Incentive Plan (the “2012 Plan”) and the 2021 Plan covered 27,705,573 Shares, which represented approximately 9% of our outstanding Shares as of that date. | | • | Historical Grant Practices. In fiscal 2020, 2021 and 2022, we granted equity awards (excluding RSUs assumed in acquisitions) covering 11.4 million, 14.1 million and 6.6 million Shares, respectively, for approximately 32.1 million equity awards over that three-year period. | | • | Forecasted Grants. To determine how long the Shares to be added to the 2021 Plan will enable us to make grants of equity awards, our Compensation and People Committee and our Board reviewed a forecast that considered these factors: (i) the remaining number of Shares available for future grants under the 2021 Plan and (ii) forecasted future grants, with the future grant numbers determined based on assumptions about stock price and the competitive dollar value to be delivered to the grant recipient. Because we generally determine the size of equity awards to be granted based on the value of the award, if the stock price used to determine the number of Shares subject to an award differs significantly from the stock price assumed in the forecast (which was $167 to $200 per share), our actual Share usage will deviate significantly from our forecasted Share usage. For example, if our stock price used to determine the number of Shares subject to an award is lower than the stock price assumed in the forecast, we would need a larger number of Shares than anticipated to deliver the same intended value to participants. |
| 98 | |
Proposal No. 4 Amendment to Our 2021 Equity Incentive Plan We Have Used our Equity Plans Responsibly We recognize the dilutive impact of our equity compensation on our stockholders and continuously strive to balance this concern with the competition for talent. In the process it used to determine the number of Shares to be added to the 2021 Plan, our Compensation and People Committee and Board reviewed analyses prepared by Meridian Compensation Partners, independent compensation consultant, which included analysis of the burn rate and overhang metrics discussed below. If approved, the Shares added to the 2021 Plan would represent approximately 2% of our 300,395,286 outstanding Shares as of October 14, 2022. Our Board believes the potential dilution to stockholders is reasonable and sustainable to meet our business goals. Gross burn rate can be used by some to assess a company’s use of equity compensation. Gross burn rate is defined as the number of shares underlying equity awards granted in a given fiscal year (excluding any RSUs assumed in acquisitions) divided by the number of shares of weighted average common stock outstanding (“CSO”). Potential actual dilution to stockholders is often measured by analyzing the net burn rate. Net burn rate is defined as (i) the number of shares underlying equity awards granted in a given fiscal year (excluding any RSUs assumed in acquisitions) minus shares subject to outstanding equity awards forfeited during the year and returned to the plan divided by (ii) CSO. This measure indicates the rate at which we actually create potential future stockholder dilution. We have managed our net burn rate to 2.0% in fiscal 2020, 3.7% in fiscal 2021, and 1.0% in fiscal 2022. Our burn rates are lower in fiscal 2022 primarily due to stock price appreciation. The following table shows our gross and net burn rate over the past three fiscal years and the average CSO of those three years. | in millions | | Fiscal 2020 | | | Fiscal 2021 | | | Fiscal 2022 | | | Average | | | Performance-based stock options (“PSOs”) granted | | | 0 | | | | 0.6 | | | | 0 | | | | 0.2 | | | PSOs earned | | | 0 | | | | 1.2 | | | | 5.6 | | | | 2.3 | | | Restricted Stock Units (“RSUs”) granted(1) | | | 10.2 | | | | 11.1 | | | | 5.7 | | | | 9.0 | | | Performance-based restricted stock units (“PSUs”) granted(2) | | | 1.2 | | | | 2.4 | | | | 0.9 | | | | 1.5 | | | PSUs earned | | | 0.3 | | | | 0.3 | | | | 1.2 | | | | 0.6 | | | Total awards granted(3) | | | 11.4 | | | | 14.1 | | | | 6.6 | | | | 10.7 | | | Weighted average common stock outstanding | | | 290.7 | | | | 289.2 | | | | 295.5 | | | | 291.8 | | | Gross Burn Rate | | | 3.9 | % | | | 4.9 | % | | | 2.2 | % | | | 4.0 | % | | Forfeitures of Options | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | Forfeitures of PSOs | | | 2.7 | | | | 0.6 | | | | 0.3 | | | | 1.2 | | | Forfeitures of RSUs and PSUs | | | 3.0 | | | | 2.7 | | | | 3.3 | | | | 3.0 | | | Net Burn Rate | | | 2.0 | % | | | 3.7 | % | | | 1.0 | % | | | 2.2 | % |
| (1) | Excludes RSUs assumed in acquisitions. | | (2) | For PSUs, shares granted represent the aggregate maximum number of shares that may be earned and issued with respect to these awards over their full terms. | | (3) | Includes RSUs granted, PSOs granted and PSUs granted. |
The 2021 Plan Includes Compensation and Governance Best Practices The 2021 Plan includes provisions considered best practices for compensation and corporate governance purposes. These provisions protect our stockholders’ interests: | • | Administration. The 2021 Plan is administered by our Compensation and People Committee, which consists entirely of independent non-employee directors. | | • | Repricing is Not Allowed without Stockholder Approval. The 2021 Plan does not permit awards to be repriced or exchanged for other awards unless stockholders approve the repricing or exchange. |
Proposal No. 4 Amendment to Our 2021 Equity Incentive Plan | • | No Single-Trigger Vesting Acceleration upon a Change in Control for Employees and Consultants. Awards under the 2021 Plan will be treated in a change in control (as defined in the 2021 Plan) in the manner determined by the administrator, and except for awards granted to our non-employee directors for their service as non-employee directors, the terms of the 2021 Plan provide for no automatic vesting of awards upon a change in control unless the award is not assumed or substituted. | | • | Limited transferability. Awards under the 2021 Plan generally may not be sold, assigned, hypothecated, transferred, or disposed of in any manner, unless otherwise approved by the administrator (on such terms as the administrator deems appropriate) or required by applicable laws. | | • | No Tax Gross-ups. The 2021 Plan does not provide for any tax gross-ups. | | • | Forfeiture Events. Each award under the 2021 Plan and any other incentive compensation paid to a participant is subject to our clawback policy that was in effect when the 2021 Plan was originally adopted and any clawback policy that we establish or amend to comply with applicable laws, and the administrator may require a participant to forfeit, return, or reimburse all or a portion of the award or other compensation and any amounts paid under the award or other compensation to comply with such clawback policy or applicable laws. | | • | Reasonable Annual Limits on Non-Employee Director Compensation. The 2021 Plan sets limits as to the total compensation that non-employee directors may receive (for service as a non-employee director) during each fiscal year. | | • | No Dividends on Unvested Awards. No dividends or other distributions may be paid with respect to any Shares underlying the unvested portion of an award. |
Our executive officers and directors have an interest in the approval of the amendment to the 2021 Plan because they are eligible to receive equity awards under the 2021 Plan. Required Vote The approval of an amendment of our 2021 Equity Incentive Plan requires the affirmative vote of a majority of the shares of our common stock present virtually or by proxy at the virtual Annual Meeting and entitled to vote thereon to be approved. You may vote “for,” “against,” or “abstain” with respect to this proposal. Abstentions are considered votes present and entitled to vote on this proposal, and thus will have the same effect as votes “against” this proposal. Broker non-votes will have no effect on the outcome of this proposal.  | Recommendation of the Board | | The Board recommends that you vote “FOR” the approval of the amendment to the 2021 Equity Incentive Plan and the number of shares reserved for issuance under the 2021 Plan. |
Summary of the 2021 Plan The following paragraphs summarize the principal features of the 2021 Plan, as amended, and its operation. However, this summary is not a complete description of the provisions of the 2021 Plan and is qualified in its entirety by the specific language of the 2021 Plan. A copy of the 2021 Plan is provided as Appendix B to this proxy statement. Purpose of the 2021 Plan The purpose of the 2021 Plan is to attract and retain the best available personnel for positions of substantial responsibility, provide additional incentive to employees, directors, and consultants, and promote the success of our business. These incentives can be provided through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, and performance shares. | 100 | |
Proposal No. 4 Amendment to Our 2021 Equity Incentive Plan Shares Available for Issuance Subject to the adjustment provisions in the 2021 Plan, the number of Shares reserved for issuance under the 2021 Plan is equal to (a) 19,185,000 new Shares plus (b) any Shares subject to awards previously granted under the 2012 Plan that, on or after the date our stockholders initially approve the 2021 Plan, expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by us for payment of an exercise price or for tax withholding obligations, or that are forfeited to or repurchased by us due to failure to vest, with the maximum number of shares to be added under the foregoing clause equal to 31,740,063 Shares. If we substitute equity awards for equity awards of acquired entities in connection with mergers, reorganizations, separations, or other transactions as described in the 2021 Plan, the grant of such substituted awards will not decrease the number of Shares available for issuance under the 2021 Plan. Shares may be authorized, but unissued, or reacquired common stock. If an award granted under the 2021 Plan expires or becomes unexercisable without having been exercised in full or is forfeited to or repurchased by us due to failure to vest, then the expired, unexercised, forfeited, or repurchased Shares subject to that award will become available for future grant or sale under the 2021 Plan. If an award of stock appreciation rights is exercised, the gross number of Shares underlying the portion of a stock appreciation right that is exercised will cease to be available under the 2021 Plan. Shares actually issued under the 2021 Plan under any award will not be returned to the 2021 Plan and will not become available for future grant or sale under the 2021 Plan; provided, however, that if Shares issued under awards of restricted stock, restricted stock units, performance shares or performance units are repurchased by us or are forfeited to us due to failure to vest, such Shares will become available for future grant under the 2021 Plan. Shares used to pay the exercise price of an award or to satisfy tax withholding obligations related to an award will not become available for future grant or sale under the 2021 Plan. If an award is paid in cash rather than Shares, such payment will not reduce the number of Shares available for issuance under the 2021 Plan. In the event of certain dividends or other distributions (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spinoff, combination, repurchase or exchange of Shares or other securities or other change in the corporate structure affecting our Shares, the 2021 Plan administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the 2021 Plan, will adjust the number and class of shares that may be delivered under the 2021 Plan, and/or the number, class and price of shares of stock subject to outstanding awards, and the award grant limitations discussed above. During the term of the 2021 Plan, we will at all times reserve and keep available a number of Shares sufficient to satisfy the requirements of the 2021 Plan. Limitations The 2021 Plan also provides that no non-employee director may be paid compensation for service as a non-employee director that, in the aggregate, exceeds $2,000,000 for any fiscal year of ours, increased to $4,000,000 for the non-employee director for our fiscal year in which he or she joins our Board as a non-employee director. For these purposes, compensation includes equity awards (including any awards issued under the 2021 Plan), with the value of such equity awards measured based on their grant date fair value (determined under U.S. generally accepted accounting principles), and any other compensation (such as cash retainers or fees) for director service. Any award granted to a participant while he or she was an employee or a consultant (other than a non-employee director) will not count for this limitation. Administration Our Board, any committee of individuals satisfying applicable laws appointed by our Board, or any duly authorized committee of our Board acts as the “administrator” of the 2021 Plan. Different administrators may administer the 2021 Plan with respect to different groups of service providers. Our Board has designated our Compensation and People Committee as an administrator of the 2021 Plan. To make grants to certain officers and key employees, the members of the committee must qualify as “non-employee directors” under Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Proposal No. 4 Amendment to Our 2021 Equity Incentive Plan Subject to the terms of the 2021 Plan, the administrator has the authority to make any determinations and perform any actions that it deems necessary or advisable to administer the 2021 Plan, such as the authority to: determine the fair market value of a Share, select the service providers who will receive awards; determine the number of Shares covered by each award and the terms of each award; approve forms of award agreements for use with the 2021 Plan; interpret, modify or amend each award (subject to the repricing restrictions of the 2021 Plan), including to accelerate vesting or waive forfeiture restrictions; interpret the 2021 Plan; and delegate ministerial duties to any of our employees. The administrator may allow a participant to defer the receipt of payment of cash or delivery of Shares otherwise due to such participant. The administrator may make rules and regulations relating to the 2021 Plan, including rules, regulations, and sub-plans to facilitate compliance with applicable non-U.S. laws, easing the administration of the 2021 Plan, and/or take advantage of tax-favorable treatment of awards granted to service providers outside the U.S., and may make all other determinations deemed necessary or advisable for administering the 2021 Plan. Eligibility All types of awards, other than incentive stock options, may be granted to our non-employee directors and to employees and consultants of ours or any parent or subsidiary corporation of ours. Incentive stock options may be granted only to employees of ours or any parent or subsidiary corporation of ours. As of July 31, 2022, we and our parent and subsidiary corporations had approximately 12,561 employees (including three employee directors), nine non-employee directors, and approximately 11 consultants. Stock Options An option gives a participant the right to purchase a specified number of Shares for a fixed exercise price during a specified period. Each option granted under the 2021 Plan will be evidenced by an award agreement specifying the number of Shares subject to the option and the other terms of the option, consistent with the 2021 Plan. The exercise price per Share of each option may not be less than the fair market value of a Share on the date of grant (except, in the case of a nonstatutory stock option, as otherwise required by applicable laws). However, any incentive stock option granted to a person who at the time of grant owns stock representing more than 10% of the total combined voting power of all classes of our stock or any parent or subsidiary corporation of ours (a “ten percent stockholder”) must have an exercise price per Share equal to at least 110% of the fair market value of a Share on the date of grant. The aggregate fair market value of the Shares (determined on the grant date) covered by incentive stock options which first become exercisable by any participant during any calendar year also may not exceed $100,000. For this purpose, the fair market value of a Share is generally the closing sales price of our stock, as reported on the primary stock exchange on which it is traded. On October 14, 2022, the closing price of a Share on Nasdaq was $154.83. Options will be exercisable at such times or under such conditions as determined by the administrator and set forth in the award agreement. When a participant’s service ends, the unvested portion of the participant’s option generally expires. The vested portion of the option will remain exercisable for the period following the end of the participant’s service that was determined by the administrator and specified in the participant’s award agreement, and if no such period was specified in the award agreement, the vested portion of the option will remain exercisable for: (i) 3 months following the end of the participant’s service provider status for reasons other than death or disability or (ii) 12 months following the end of the participant’s service provider status due to death or disability. In addition, a participant’s award agreement may provide for an extension of the post-service exercise period if the participant’s service ends for reasons other than his or her death or disability and the exercise of the option following the termination of service would result in liability under Section 16(b) of the Exchange Act or would violate the registration requirements under the Securities Act of 1933, as amended (the “Securities Act”). The term of an option will be specified in the award agreement, but the term of an incentive stock option may not be more than ten years (or five years for an incentive stock option granted to a ten percent stockholder). The administrator will determine the acceptable form(s) of consideration for exercising an option. An option will be deemed exercised when we receive the notice of exercise and full payment for the Shares to be exercised, together with any amounts necessary to satisfy withholding obligations for tax-related items. At any time after the grant of an option, the administrator has the discretion to accelerate the time at which the option will vest or become exercisable. | 102 | |
Proposal No. 4 Amendment to Our 2021 Equity Incentive Plan Stock Appreciation Rights A stock appreciation right gives a participant the right to receive the appreciation in the value of a Share between the date an award is granted and the date it is exercised. Upon exercise of a stock appreciation right, the holder of the award will be entitled to receive an amount determined as the product of: (i) the difference between the fair market value of a Share on the date of exercise and the exercise price per Share and (ii) the number of Shares covered by the exercised portion of the stock appreciation right. We may pay that amount in cash, Shares, or a combination of both. Each stock appreciation right granted under the 2021 Plan will be evidenced by an award agreement specifying the exercise price and the other terms of the award. The exercise price per Share of each stock appreciation right may not be less than the fair market value of a Share on the date of grant, unless otherwise required by applicable laws. Stock appreciation rights will be exercisable at such times or under such conditions as determined by the administrator and set forth in the award agreement. The terms relating to the period of exercise of stock appreciation rights following the termination of a participant’s service are similar to those for options described above. At any time after the grant of a stock appreciation right, the administrator has the discretion to accelerate the time at which the stock appreciation right will vest or become exercisable. Restricted Stock Awards Awards of restricted stock are rights to acquire or purchase Shares that vest under the terms established by the administrator in its sole discretion. Unless the administrator provides otherwise, participants holding Shares of restricted stock will have voting rights with respect to such Shares without regard to vesting. After an award of restricted stock has been granted, the administrator has the discretion to reduce or waive any restrictions and to accelerate the time at which any restrictions will lapse or be removed. Restricted Stock Units A restricted stock unit represent a right to receive cash or Shares if the performance goals or other vesting criteria set by the administrator are achieved or the restricted stock unit otherwise vests. Each award of restricted stock units granted under the 2021 Plan will be evidenced by an award agreement specifying the number of Shares subject to the award and other terms of the award. The administrator may set vesting conditions based upon the achievement of company-wide, divisional, business unit or individual goals (such as continued employment or service), applicable U.S. or non-U.S. federal or state securities laws, or any other basis determined by the administrator, in its discretion. After an award of restricted stock units has been granted, the administrator has the discretion to reduce or waive any restrictions or vesting criteria that must be met to receive a payout or to accelerate the time at which any restrictions will lapse or be removed. A participant will forfeit any unearned restricted stock units on the date specified in the participant’s award agreement. The administrator in its sole discretion may pay earned restricted stock units in cash, Shares, or a combination of both. Performance Units and Performance Shares Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. Performance units will have an initial value established by the administrator on or before the date of grant. Each performance share will have an initial value equal to the fair market value of a Share on the grant date. Performance units and performance shares will result in a payment to a participant only if the performance goals or other vesting criteria set by the administrator are achieved or the awards otherwise vest. Each award of performance units or performance shares granted under the 2021 Plan will be evidenced by an award agreement specifying the performance period and other terms of the award. The administrator may set vesting criteria based upon the achievement of company-wide, divisional, business unit or individual goals (such as continued employment or service), applicable U.S. or non-U.S. federal or state securities laws, or any other basis determined by the administrator, in its discretion.
Proposal No. 4 Amendment to Our 2021 Equity Incentive Plan After an award of performance units or performance shares has been granted, the administrator has the discretion to accelerate, reduce or waive any performance objectives or other vesting provisions for such performance units or performance shares. The administrator has the discretion to pay earned performance units or performance shares in the form of cash, Shares (which will have an aggregate fair market value equal to the earned performance units or performance shares at the close of the performance period), or a combination of both. A participant will forfeit any performance units or performance shares not earned and not vested as of the date specified in the participant’s award agreement. Transferability of Awards Unless otherwise specified by the administrator or required by applicable laws, awards are not transferable other than by will or by the laws of descent or distribution. The administrator may permit an award to be transferred (i) under a domestic relations order, official marital settlement agreement, or other divorce or separation agreement, or (ii) to the extent permitted by Form S-8 under the Securities Act and any other applicable laws. Any individual or entity to whom an award is transferred will be subject to all of the terms and conditions applicable to the participant who transferred the award, including the terms and conditions in the 2021 Plan and the award agreement. If an award is unvested, then the service of the participant will continue to determine whether the award will vest and when it will terminate. Dissolution or Liquidation In the event of our proposed dissolution or liquidation, the administrator will notify each participant as soon as practicable prior to the effective date of such proposed transaction. An award will terminate immediately prior to consummation of such proposed action to the extent the award has not been previously exercised. Merger or Change in Control The 2021 Plan provides that, in the event of a merger or change in control, each award will be treated as the administrator determines without a participant’s consent. The administrator will not be required to treat all awards¸ all awards held by a participant, all awards of the same type, or all portions of awards the same in the transaction. If the successor corporation does not assume or substitute for the award (or portion thereof), the participant will vest in and may exercise all of the participant’s outstanding options and stock appreciation rights (or portion thereof) that is not assumed or substituted for, all restrictions on restricted stock and restricted stock units will lapse. With respect to awards with performance-based vesting that are not assumed or substituted for, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels, and all other terms met, in each case, unless specifically provided otherwise under the applicable award agreement. In addition, if an option or stock appreciation right (or its applicable portion) is not assumed or substituted for, the administrator will notify the participant in writing or electronically that the option or stock appreciation right will be exercisable for a period of time determined by the administrator, in its sole discretion, and the option or stock appreciation right (or its applicable portion) will terminate upon the expiration of such period. For awards granted to each of our non-employee directors, in the event of a change in control, (i) the non-employee director will fully vest in and have the right to exercise all of his or her outstanding options and stock appreciation rights, (ii) all restrictions on the non-employee director’s restricted stock and restricted stock units will lapse, and (iii) with respect to the non-employee director’s awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions will be deemed met, unless specifically provided otherwise under the applicable award agreement. | 104 | |
Proposal No. 4 Amendment to Our 2021 Equity Incentive Plan Forfeiture Events Each award under the 2021 Plan and any other compensation paid or payable to a participant (including, but not limited to, equity awards issued outside of the 2021 Plan) will be subject to any clawback policy of ours, and the administrator also may specify in an award agreement that the participant’s rights, payments, and benefits regarding an award will be subject to reduction, cancellation, forfeiture, recoupment, reimbursement, or reacquisition upon the occurrence of certain specified events. An award will be subject to the Company’s clawback policy in effect when the award is granted and any other clawback policy of ours as established and/or amended to comply with applicable laws (such as under the listing standards of any national securities exchange or association on which our securities are listed or as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act). The administrator may require a participant to forfeit, return, or reimburse all or a portion of the award and any amounts paid under the award to comply with such clawback policy or applicable laws. No recovery of compensation under a clawback policy or otherwise will constitute an event that triggers or contributes to any right of a participant to resign for “good reason” or “constructive termination” (or similar term) under any agreement with us or any of our parent or subsidiary corporations, unless the 2021 Plan provisions described in the prior paragraph specifically are mentioned and waived in an award agreement or other document. Termination or Amendment The administrator may amend, alter, suspend, or terminate the 2021 Plan at any time, provided that no amendment may be made without stockholder approval to the extent approval is necessary to comply with any applicable laws. No amendment, alteration, suspension, or termination may materially impair the rights of any participant with respect to his or her outstanding awards unless mutually agreed otherwise between the participant and the administrator. The 2021 Plan will continue until terminated by the administrator, but no incentive stock option may be granted after the tenth anniversary of the date the 2021 Plan was originally adopted by our Board. Notwithstanding the prior paragraph, the Administrator may amend the terms of any one or more awards without an affected participant’s consent even if it does materially impair the participant’s rights, subject to the limitations of applicable laws, if any, if such amendment is done (i) in a manner expressly permitted under the 2021 Plan; (ii) to maintain the qualified status of the award as an incentive stock option under Section 422 of the Code; (iii) to change the terms of an incentive stock option, if such change results in impairment of the award only because it impairs the qualified status of the award as an incentive stock option under Section 422 of the Code; (iv) to clarify the manner of exemption from, or to bring the award into compliance with, Section 409A of the Code; or (v) to comply with other applicable laws. Summary of U.S. Federal Income Tax Consequences The following summary is intended only as a general guide to the U.S. federal income tax consequences of participation in the 2021 Plan. The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change. The summary is not complete and does not discuss the tax consequences upon a participant’s death, or the income tax laws of any municipality, state, or non-U.S. country in which a participant may reside. Tax consequences for any particular participant may vary based on individual circumstances. Incentive Stock Options A participant recognizes no taxable income for regular income tax purposes because of the grant or exercise of an option that qualifies as incentive stock option under Section 422 of the Code. If a participant exercises the option and then later sells or otherwise disposes of the Shares acquired through the exercise the option after both the two-year anniversary of the date the option was granted and the one-year anniversary of the exercise, the participant will recognize a capital gain or loss equal to the difference between the sale price of the Shares and the exercise price.
Proposal No. 4 Amendment to Our 2021 Equity Incentive Plan However, if the participant disposes of such Shares either on or before the two-year anniversary of the date of grant or on or before the one-year anniversary of the date of exercise (a “disqualifying disposition”), any gain up to the excess of the fair market value of the Shares on the date of exercise over the exercise price generally will be taxed as ordinary income, unless the Shares are disposed of in a transaction in which the participant would not recognize a loss (such as a gift). Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. For purposes of the alternative minimum tax, the difference between the option exercise price and the fair market value of the Shares on the exercise date is treated as an adjustment item in computing the participant’s alternative minimum taxable income in the year of exercise. In addition, special alternative minimum tax rules may apply to certain subsequent disqualifying dispositions of the Shares or provide certain basis adjustments or tax credits. Nonstatutory Stock Options A participant generally recognizes no taxable income as the result of the grant of a nonstatutory stock option. However, upon exercising the option with respect to any Shares, the participant normally recognizes ordinary income equal to the amount that the fair market value of such Shares on such date exceeds the exercise price for such Shares. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of the Shares acquired by exercising a nonstatutory stock option, any gain or loss (based on the difference between the sale price and the fair market value on the exercise date) will be taxed as capital gain or loss. Stock Appreciation Rights A participant generally recognizes no taxable income as the result of the grant of a stock appreciation right. However, upon exercising the stock appreciation right with respect to any Shares, the participant normally recognizes ordinary income equal to the amount that the fair market value of such Shares on such date exceeds the exercise price for such Shares. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of the Shares acquired by exercising a stock appreciation right, any gain or loss (based on the difference between the sale price and the fair market value on the exercise date) will be taxed as capital gain or loss. Restricted Stock Awards A participant acquiring Shares of restricted stock generally will recognize ordinary income equal to the amount that the fair market value of the Shares on the vesting date exceeds the purchase price paid by the participant for such Shares (if any). If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The participant may elect, under Section 83(b) of the Code, to accelerate the ordinary income tax event to the date of acquisition by filing an election with the Internal Revenue Service no later than thirty days after the date the Shares are acquired. Upon the sale of Shares acquired under a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss. Restricted Stock Unit Awards There are no immediate tax consequences of receiving an award of restricted stock units. A participant who is awarded restricted stock units generally will have to recognize ordinary income equal to the fair market value of Shares issued to such participant at the end of the applicable vesting period or, if later, the settlement date elected by the administrator or a participant. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Any additional gain or loss recognized upon any later disposition of any Shares received would be capital gain or loss. | 106 | |
Proposal No. 4 Amendment to Our 2021 Equity Incentive Plan Performance Shares and Performance Unit Awards A participant generally will recognize no income upon the grant of a performance share or a performance unit award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any cash or unrestricted Shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of any Shares received, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss. Section 409A Section 409A provides certain requirements for non-qualified deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Awards granted under the 2021 Plan with a deferral feature will be subject to the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, when vested, which may be before the compensation is actually or constructively received. Also, if an award subject to Section 409A violates Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income and potentially penalties and interest on such deferred compensation. Tax Effect for Us We generally will be entitled to a tax deduction in connection with an award under the 2021 Plan equal to the ordinary income realized by a participant when the participant recognizes such income (for example, the exercise of a nonstatutory stock option or the disqualifying disposition of Shares acquired through the exercise of an incentive stock option) except to the extent such deduction is limited by applicable provisions of the Code. Special rules limit the deductibility of compensation paid to our chief executive officer and other “covered employees” as determined under Section 162(m) and applicable guidance. Under Section 162(m), the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000. THE SUMMARY ABOVE IS ONLY A SUMMARY OF CERTAIN BENEFICIAL OWNERSTHE EFFECT OF U.S. FEDERAL INCOME TAXATION ON PARTICIPANTS AND MANAGEMENTUS WITH RESPECT TO AWARDS UNDER THE 2021 PLAN. IT IS NOT INTENDED TO BE COMPLETE AND MAY NOT DISCUSS THE IMPACT OF EMPLOYMENT OR OTHER TAX REQUIREMENTS, THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH, OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE, OR NON-U.S. COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE. Number of Awards Granted to Employees, Consultants, and Directors The number of awards that an employee, director, or consultant may receive under the 2021 Plan is in the discretion of the administrator and therefore cannot be determined in advance. The following table sets forth: (i) time-based restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”) granted under the 2012 Plan and the 2021 Plan during fiscal 2022 to each of our named executive officers; our executive officers, as a group; our directors who are not executive officers, as a group; and all of our employees who are not executive officers, as a group; and (ii) the aggregate grant date fair value of such RSUs and PSUs.
Proposal No. 4 Amendment to Our 2021 Equity Incentive Plan | Name of Individual or Group | | Number of
Shares Subject
to RSUs and
PSUs Granted(1) | | Dollar Value of
Shares Subject
to RSUs and
PSUs Granted(1) | | Nikesh Arora
Chief Executive Officer and Chair of the Board | | | 50,636 | (2) | | $ | 7,007,348 | | Dipak Golechha
Executive Vice President, Chief Financial Officer | | | 13,503 | (2) | | $ | 1,868,557 | | William “BJ” Jenkins
President | | | 141,731 | (3) | | $ | 17,835,150 | | Lee Klarich
Chief Product Officer | | | 33,758 | (2) | | $ | 4,671,565 | | Nir Zuk
Chief Technology Officer | | | 11,815 | (2) | | $ | 1,635,031 | | | All executive officers, as a group | | | 251,433 | | | $ | 33,017,651 | | | All directors who are not executive officers, as a group | | | 12,990 | (4) | | $ | 2,219,125 | | | All employees who are not executive officers, as a group | | | 5,986,680 | | | $ | 987,175,002 | |
| (1) | The amounts reported represent the grant date fair value of the PSUs and the RSUs granted in fiscal 2022, calculated in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of the PSUs and the RSUs reported in this column are set forth in the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for our fiscal year ended July 31, 2022. The value of the PSUs is calculated using a Monte-Carlo simulation valuation performed as of the date of grant by an independent third party. With respect to the performance-based restricted stock units, in fiscal year 2022, we approved only the fiscal year 2022 performance targets. As a result, only these portions of the performance-based restricted stock unit awards (covering 42% of the performance-based restricted stock units for Messrs. Arora, Golechha, Klarich and Zuk and 61% of the performance-based restricted stock units for Mr. Jenkins) have a reportable grant date fair value under ASC Topic 718 and are included in this table. The remaining performance-based restricted stock units do not have a reportable grant date fair value under ASC Topic 718 and are not included in this table. In addition, the target number of shares subject to PSUs granted in fiscal 2022, which have a reportable grant date fair value under ASC Topic 718, are shown in this table. | | (2) | Consists of PSUs only. | | (3) | Consists of 76,542 RSUs and 65,189 PSUs. | | (4) | Consists of RSUs only. |
Additional Equity Plan Information The following table provides certain additional information regarding our equity compensation plans, excluding the Employee Stock Purchase Plan: | | As of 10/14/2022 | | Total Stock Options (including PSOs) Outstanding | | 8,017,260 | | Weighted-Average Exercise Price of Stock Options Outstanding | | $64.59 per share | | Weighted-Average Remaining Duration of Stock Options Outstanding | | 2.95 years | | Total Restricted Stock Units (including PSUs) Outstanding | | 19,688,313 | Total Shares Available for Grant under the 2021 Equity Incentive Plan and the 2012 Equity
Incentive Plan(1) | | 10,629,453 |
| (1) | Shares available for grant under the 2012 Equity Incentive Plan are limited to performance-based restricted stock units which do not yet have approved performance targets established. These performance-based restricted stock units do not yet have a reportable grant date fair value under ASC Topic 718. |
For more information regarding our equity compensation plans, including the Employee Stock Purchase Plan, please see “Equity Compensation Plan Information.” | 108 | |
Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information with respect to the beneficial ownership of our common stock as of September 30, 20192022 for: each of our directors and nominees for director;
each of our named executive officers;
all of our current directors and executive officers as a group; and
each person or group, who beneficially owned more than 5% of our common stock.
| • | each of our directors and nominees for director; | | • | each of our NEOs; | | • | all of our current directors and executive officers as a group; and | | • | each person or group, who beneficially owned more than 5% of our common stock. |
We have determined beneficial ownership in accordance with the rules and regulations of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole investment power with respect to all shares of common stock that they beneficially owned, subject to applicable community property laws. Applicable percentage ownership is based on 96,955,436300,395,166 shares of our common stock outstanding at September 30, 2019.2022. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of such person, we deemed to be outstanding all shares of common stock subject to options held by the person that are currently exercisable or exercisable (or issuable upon vesting of restricted stock units or performance stock unit awards) within 60 days of September 30, 2019.2022. However, we did not deem such shares outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Palo Alto Networks, Inc., 3000 Tannery Way, Santa Clara, California 95054. The information provided in the table below is based on our records, information filed with the SEC and information provided to us, except where otherwise noted. All shares reported have been adjusted for the Stock Split. | | | | | | | | | | | | Number of
Shares | | | Percent of
Shares
Outstanding | | 5% Stockholders: | | | | | | | | | The Vanguard Group (1) | | | 8,031,694 | | | | 8.3 | % | BlackRock, Inc. (2) | | | 5,229,159 | | | | 5.4 | % | Named Executive Officers and Directors: | | | | | | | | | Nikesh Arora (3) | | | 131,436 | | | | * | | Mark D. McLaughlin (4) | | | 341,273 | | | | * | | Amit Singh (5) | | | 19,503 | | | | * | | Kathleen Bonanno (6) | | | 3,382 | | | | * | | Lee Klarich (7) | | | 254,638 | | | | * | | Nir Zuk (8) | | | 1,146,743 | | | | 1.2 | % | Frank Calderoni (9) | | | 12,831 | | | | * | | Asheem Chandna (10) | | | 111,994 | | | | * | | John M. Donovan (11) | | | 26,201 | | | | * | | Carl Eschenbach (12) | | | 3,893 | | | | * | | James J. Goetz (13) | | | 168,259 | | | | * | | Rt Hon Sir John Key | | | 0 | | | | * | | Mary Pat McCarthy (14) | | | 10,148 | | | | * | | Sridhar Ramaswamy (15) | | | 6,212 | | | | * | | Lorraine Twohill | | | 0 | | | | * | | Daniel J. Warmenhoven (16) | | | 27,795 | | | | * | | All current directors and executive officers as a group (17 Persons) (17) | | | 2,271,720 | | | | 2.3 | % |
| | | Number of
Shares | | | Percent of
Shares
Outstanding | | 5% Stockholders: | | | | | | | | | | The Vanguard Group(1) | | | 25,699,323 | | | | 8.6 | % | | BlackRock, Inc.(2) | | | 17,107,173 | | | | 5.7 | % | | Named Executive Officers and Directors: | | | | | | | | | | Nikesh Arora(3) | | | 4,197,196 | | | | 1.4 | % | | Mark D. McLaughlin(4) | | | 242,235 | | | | * | | | William “BJ” Jenkins(5) | | | 70,095 | | | | * | | | Dipak Golechha(6) | | | 60,024 | | | | * | | | Lee Klarich(7) | | | 2,586,043 | | | | * | | | Nir Zuk(8) | | | 3,749,580 | | | | 1.2 | % | | Aparna Bawa(9) | | | 714 | | | | * | | | Asheem Chandna(10) | | | 346,119 | | | | * | | | John M. Donovan(11) | | | 139,737 | | | | * | | | Carl Eschenbach(6) | | | 21,849 | | | | * | | | Helene D. Gayle(12) | | | 4,335 | | | | * | | | James J. Goetz(13) | | | 504,777 | | | | * | | | Rt Hon Sir John Key(6) | | | 15,240 | | | | * | | | Mary Pat McCarthy(6) | | | 41,268 | | | | * | | | Lorraine Twohill(6) | | | 16,146 | | | | * | | | All current directors and executive officers as a group (15 Persons)(14) | | | 11,995,358 | | | | 3.9 | % |
Security Ownership of Certain Beneficial Owners and Management | * | Represents beneficial ownership of less than one percent (1%). |
| (1) | According to a Schedule 13G/A filed with the SEC on February 11, 2019, (i)10, 2022, The Vanguard Group, Inc. (“Vanguard”), as investment advisor, has sole voting power with respect to 70,408none of the reported shares, shared voting power with respect to 22,378280,020 of the reported shares, sole dispositive power with respect to 7,940,18125,063,716 of the reported shares and shared dispositive power with respect to 91,513635,607 of the reported shares; (ii) Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard, is the beneficial owner of 41,904 shares of the reported shares as a result of its serving as investment manager of collective trust accounts; and (iii) Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of Vanguard, is the beneficial owner of 76,882 shares of the reported shares as a result of its serving as investment manager of Australian investment offerings.shares. The address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355. |
| (2) | According to a Schedule 13G13G/A filed with the SEC on February 11, 2019,3, 2022, BlackRock, Inc. (“BlackRock”), as a parent holding company, has sole voting power with respect to 4,630,48615,340,071 of the reported shares, and sole dispositive power with respect to 5,229,15917,107,173 of the reported shares. The address of BlackRock is 55 East 52nd Street, New York, NY 10055. |
| (3) | Consists of (i) 131,022641,364 shares held of record by Mr. Arora, (ii) 16,005 shares held of record by Bacchey Investments L.P., of which Bacchey Management LLC (the “LLC”) is the General Partner, Mr. Arora is the manager of the LLC and (ii) 414the sole member of the LLC is the Aurora Trust, for which Mr. Arora serves as a trustee, (iii) 65,527 shares of common stock issuable upon the vesting of restrictedperformance stock unitsunit awards within 60 days of September 30, 2019. Although they are early-exercisable,2022 and (iv) 3,474,300 PSOs were not included because the performance criteria have not been met. exercisable within 60 days of September 30, 2022. |
| (4) | Consists of (i) 152,139128,529 shares held of record by Mr. McLaughlin of which 18,789 were issued pursuant to restricted stock awards and performance stock awards and remained subject to further vesting within 60 days of September 30, 2019; (ii) 51,911 shares held of record by the Mark McLaughlin 2017 Annuity Trust GRAT, for which Mr. McLaughlin serves as a trustee; (iii) 103,849113,706 shares held of record by the Mark McLaughlin Revocable Living Trust; (iv) 28,024 shares issuable pursuant to stock options exercisable within 60 days of September 30, 2019; and (v) 5,350 shares of common stock issuable upon the vesting of restricted stock units and performance stock unit awards within 60 days of September 30, 2019. Trust. |
| (5) | Consists of 19,503 shares of common stock issuable upon the vesting of restricted stock units within 60 days of September 30, 2019. Although they are early-exercisable, PSOs were not included because the performance criteria have not been met.
|
(6) | Consists of (i) 2816,263 shares held of record by Ms. Bonanno;Mr. Jenkins and (ii) 3,35453,832 shares issuable upon the vesting of restricted stock units and performance stock unit awards within 60 days of September 30, 2019. Although they are early-exercisable, PSOs were not included because2022. | | (6) | Consists of shares held of record by the performance criteria have not been met.director or officer. |
| (7) | Consists of (i) 249,059532,167 shares held of record by Mr. Klarich, (ii) 41,797 shares that are issuable upon the vesting of which 11,425 were issued pursuant to restricted stock awardsunits and performance stock unit awards and remained subject to further vesting within 60 days of September 30, 2019;2022 and (iii) 2,012,079 PSOs exercisable within 60 days of September 30, 2022. | | (8) | Consists of (i) 1,903,665 shares held of record by Mr. Zuk, (ii) 274,914 shares held by the Cliff Family Trusts, for which Mr. Zuk serves as a trustee, (iii) 45,000 shares that are issuable pursuant to stock options exercisable within 60 days of September 30, 2022, (iv) 16,944 shares that are issuable upon the vesting of restricted stock units and performance stock unit awards within 60 days of September 30, 2022 and (v) 1,509,057 PSOs exercisable within 60 days of September 30, 2022. | | (9) | Consists of 714 shares issuable upon the vesting of restricted stock units within 60 days of September 30, 2022. | | (10) | Consists of (i) 34,023 shares held of record by Mr. Chandna and (ii) 5,579312,096 shares held of record by the Chandna Family Revocable Trust DTD 4/13/98. | | (11) | Consists of (i) 81,273 shares held of record by Mr. Donovan and (ii) 58,464 shares held of record by SRJ Norway Partners LP, for which Mr. Donovan serves as the general partner. | | (12) | Consists of (i) 3,612 shares held of record by Dr. Gayle and (ii) 723 shares issuable upon the vesting of restricted stock units within 60 days of September 30, 2022. | | (13) | Consists of (i) 460,935 shares held of record by Mr. Goetz and (ii) 43,842 shares held of record by the Goetz Children’s Trust 4/24/1998. | | (14) | Consists of (i) 4,775,385 shares beneficially owned by the current directors and executive officers, (ii) 45,000 shares issuable pursuant to stock options exercisable within 60 days of September 30, 2022; (iii) 179,537 shares issuable upon the vesting of restricted stock units and performance stock unit awards within 60 days of September 30, 2019. Although they are early-exercisable,2022 and (iv) 6,995,436 PSOs were not included because the performance criteria have not been met. |
(8) | Consists of (i) 875,773 shares held of record by Mr. Zuk, of which 7,515 were issued pursuant to restricted stock awards and performance stock awards and remained subject to further vesting within 60 days of September 30, 2019; (ii) 44,976 shares held by the Zuk 2015 Grantor Retained Annuity Trust (GRAT) dated June 17, 2015, for which Mr. Zuk serves as a trustee; (iii) 209,077 shares held by the Zuk 2017 Grantor Retained Annuity Trust (GRAT) dated March 29, 2017 for which Mr. Zuk serves as a trustee, (iv) 15,000 shares issuable pursuant to stock options exercisable within 60 days of September 30, 2019; and (v) 1,917 shares of common stock issuable upon the vesting of restricted stock units and performance stock unit awards within 60 days of September 30, 2019. Although they are early-exercisable, PSOs were not included because the performance criteria have not been met.
2022. |
(9)110 | Consists of 12,831 shares held of record by Mr. Calderoni.
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(10) | Consists of 7,962 shares held of record by Mr. Chandna and (ii) 104,032 shares held of record by the Chandna Family Revocable Trust DTD 4/13/98.
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(11) | Consists of (i) 6,713 shares held of record by Mr. Donovan; and (ii) 19,488 shares held of record by SRJ Norway Partners LP, for which Mr. Donovan serves as the general partner.
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(12) | Consists of 3,893 shares held of record by Mr. Eschenbach.
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(13) | Consists of (i) 153,645 shares held of record by Mr. Goetz; and (ii) 14,614 shares held of record by the Goetz Children’s Trust 4/24/1998.
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(14) | Consists of (i) 9,608 shares held of record by Ms. McCarthy; and (ii) 540 shares issuable upon the vesting of restricted stock units within 60 days of September 30, 2019.
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(15) | Consists of 6,212 shares held of record by Mr. Ramaswamy.
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(16) | Consists of (i) 2,826 shares held of record by Mr. Warmenhoven and (ii) 24,969 shares held of record by Mr. Warmenhoven as Trustee of the Dan Warmenhoven Tr Ua 12/16/1987 The Warmenhoven 1987 Revocable Trust.
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(17) | Consists of (i) 2,190,463 shares beneficially owned by the current directors and executive officers, of which 37,729 were issued pursuant to restricted stock awards and performance stock awards and remained subject to further vesting within 60 days of September 30, 2019; (ii) 43,024 shares issuable pursuant to stock options exercisable within 60 days of September 30, 2019; and (iii) 38,233 shares of common stock issuable upon the vesting of restricted stock units and performance stock unit awards within 60 days of September 30, 2019.
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RELATED PERSON TRANSACTIONSRelated Person Transactions
We describe belowThe Audit Committee of the Board of Directors has adopted a written policy and procedures for the review, approval and ratification, if necessary, of the transactions among the Company and series of similar transactions, since the beginning of our last fiscal year, to which we were a party or will be a party, in which:
the amounts involved exceeded or will exceed $120,000; and
any of ourits directors, nominees for director, executive officers or beneficial holders of more than 5% of any class of our outstanding capital stock had or will have a direct or indirect material interest.
Other than as described below, there has not been, nor is there any currently proposed, transactions or series of similar transactions to which we have been or will be a party.
Employment Arrangements and Indemnification Agreementstheir related interests.
We have entered into employment arrangements with certain current and formerour executive officers. Pursuant to Mr. McLaughlin’s offer letter dated May 31, 2018, in fiscal 2022, he received an annual salary of $500,000 and received benefits available to other employees. See also the section titled “Discussion of our Fiscal 20192022 Executive Compensation Program—Executive Employment AgreementsAgreements..” We have also entered into indemnification agreements with our directors and executive officers. The indemnification agreements and our amended and restated certificate of incorporation and amended and restated bylaws require us to indemnify our directors and officers to the fullest extent permitted by Delaware law. Transactions with AT&T Inc., Anaplan, Inc., Google Inc. and Sequoia Operations LLC
Mr. Donovan,Ms. Twohill, one of our independent directors, was an executive officeris currently Chief Marketing Officer at AT&T until October 1, 2019.Google. Since the beginning of our last fiscal year through October 15, 2019,September 30, 2022, we sold an aggregate of approximately $34.5 million of our products and services to Google and Google’s parent company, Alphabet, Inc. in arm’s length transactions, on terms generally available to third parties under the same or similar circumstances. We also listed our products and services on the Google marketplace. Sales to third parties of our products and services from these listings totaled approximately $220.6 million, for which the fee payable by us to Google totaled approximately $6.3 million. We have purchased an aggregate of approximately $228.0 million of Google products and services, all in arm’s length transactions. Ms. Bawa, who joined our board in May 2021 is the COO and interim Chief Legal Officer of Zoom Video Communications, Inc. (“Zoom”). Since the beginning of our last fiscal year through September 30, 2022, both directly and through our channel partners, we have sold an aggregate of approximately $88.1$0.5 million of products and services to AT&TZoom and have purchased an aggregate of approximately $0.1$2.7 million of AT&TZoom products and services, all in arm’s length transactions. Mr. Calderoni, one
None of our independent directors,the foregoing transactions is an executive officer at Anaplan. Since the beginning of our last fiscal year through October 15, 2019, both directly and through our channel partners, we have sold an aggregate of approximately $1.1 million of products and servicesmaterial to Anaplan and have purchased an aggregate of approximately $0.9 million of Anaplan products and services, all in arm’s length transactions. Mr. Ramaswamy, one of our independent directors, was an executive at Google until October 2018 and Ms. Twohill, one of our independent directors, is currently an executive at Google. Since the beginning of our last fiscal year through October 15, 2019, both directly and through our channel partners, we have sold an aggregate of approximately $14.3 million of products and services to Google and have purchased an aggregate of approximately $28.2 million of Google products and services, all in arm’s length transactions. Messrs. Eschenbach and Goetz, each an independent director, are a member and partner, respectively, of Sequoia. Since the beginning of our last fiscal year through October 15, 2019, both directlyMmes. Bawa or through our channel partners, we have sold an aggregate of approximately $0.1 million of products and services to Sequoia Capital, all in arm’s length transactions. Twohill. Additionally, none of Ms.Mmes. Bawa or Twohill or Messrs. Donovan, Calderoni, Ramaswamy, Eschenbach or Goetz take part in the discussion of transactions with us and (a) Google for Ms. Twohill, and Mr. Ramaswamy, AT&Tor (b) Zoom for Mr. Donovan, Anaplan for Mr. Calderoni, or Sequoia for Messrs. Eschenbach and Goetz,Ms. Bawa, when such transactions are reviewed by our audit committeeAudit Committee or board of directors. Additionally, AT&T expects its calendar year 2019 net capital expenditures to be in the $23 billion range. AT&T’s purchases of our products and services, which totaled $88.1 million since the beginning of our last fiscal year through October 15, 2019, are not material to either us or AT&T.Board. All transactions with AT&T, Anaplan, Google and SequoiaZoom are subject to our rigorous related partyperson transactions review process and policy, as further described below. Acquisition of Demisto, Inc.
On March 28, 2019, we acquired Demisto, Inc., a privately held security company (“Demisto”) in a merger transaction for total consideration of approximately $560 million in cash and common stock, subject to adjustments. The securities of Demisto acquired in the merger included securities held by Greylock 15 Limited Partnership, Greylock15-A Limited Partnership and Greylock 15 Principals Limited Partnership (together, the “Greylock Entities”). Mr. Chandna, a member of our board of directors, is a senior managing member of Greylock 15 GP LLC which is the managing member of each of the Greylock Entities and Mr. Chandna holds a less than 5% equity interest in Greylock 15 Principals Limited Partnership. As a result of his indirect ownership of Demisto through his equity interest in Greylock 15 Principals Limited Partnership, and as a result of his status as a senior managing member of certain of the Greylock Entities and/or their affiliates, our acquisition of Demisto resulted in an indirect benefit to Mr. Chandna of approximately $1,750,000.
Policies and Procedures for Related PartyPerson Transactions Our audit committeeAudit Committee has the primary responsibility for reviewing and approving or ratifying transactions with related parties.persons. We have a formal written policy providing that ourany transactions in which the aggregate amount exceeds or may be expected to exceed $120,000 between us and a related person (defined as an executive officers, directors, nomineesofficer, director, nominee for election as directors,director, beneficial ownersowner of more than 5% of any class of our capital stock, any member of the immediate family of any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is employed, is a general partner or principal or in a similar position, or in which such person has a 5% or greater beneficial ownership interest, is not permitted to enter into a related party transaction with us without the consent ofinterest) are reviewed and approved or ratified quarterly by our audit committee, subject to the exceptions described below.Audit Committee. In approving or rejecting any such proposal, our audit committeeAudit Committee is to consider the relevant facts and circumstances available and deemed relevant to our audit committee,Audit Committee, including, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, and the extent of the related party’sperson’s interest in the transaction. Our audit committee has determined that certain transactions will not require audit committee approval, including certain employment arrangements of executive officers, director compensation, transactions with another company at which a related party’s only relationship is as anon-executive employee, director or beneficial owner of less than 10% of that company’s shares and the aggregate amount involved does not exceed the greater of $500,000 or 2% of our company’s total annual revenues, transactions where a related party’s interest arises solely from the ownership of our common stock and all holders of our common stock received the same benefit on a pro rata basis, and transactions available to all employees generally. In addition, it is our policy that directors interested in a related person transaction will recuse themselves from any discussion or vote on a related person transaction in which they may have an interest. Each About the Annual Meeting Why are you holding a virtual meeting and how can stockholders attend? We have adopted a virtual meeting format for our Annual Meeting this year to protect our stockholders and employees in light of the transactionsongoing coronavirus (COVID-19) pandemic. In addition, a virtual meeting format will provide a consistent experience to all stockholders regardless of geographic location and enhance stockholder access and engagement. To participate in our virtual Annual Meeting, including to vote, ask questions and to view the list of registered stockholders as of the record date during the meeting, visit www.virtualshareholdermeeting.com/PANW2022 with your 16-digit control number included on the accompanying proxy card, or in the instructions that accompanied your proxy materials. If you did not receive a 16-digit control number, please reach out to your broker for instructions. If you are not a stockholder or do not have a control number, you may still access the meeting as a guest, but you will not be able to submit questions or vote at the meeting. How can I ask questions during the Annual Meeting? The virtual format allows stockholders to communicate with us during the Annual Meeting. Stockholder questions may be submitted in the field provided in the web portal prior to or during the Annual Meeting for consideration. Detailed guidelines for submitting written questions during the Annual Meeting are available at http://www.virtualshareholdermeeting.com/PANW2022. You can submit questions in advance of the Annual Meeting by visiting www.proxyvote.com. The chairperson of the meeting will review the questions and determine whether the questions are relevant to the subject matter of the meeting and otherwise appropriate for answering at the meeting. We reserve the right to edit profanity or other inappropriate language and to exclude questions regarding topics that are not pertinent to meeting matters or our business, or are otherwise not appropriate for answering at the meeting. If we receive substantially similar questions, we may group such questions together and provide a single response to avoid repetition. Who is entitled to vote? Only holders of our common stock as of the close of business on October 14, 2022 (the “Record Date”), are entitled to vote at the Annual Meeting. As of the Record Date, 300,395,286 shares of our common stock were outstanding and entitled to vote. For each proposal at the Annual Meeting, each stockholder will be entitled to one vote for each share of our common stock held by them on the Record Date. Stockholders may not cumulate votes in the election of directors. Registered Stockholders of Record. If shares of our common stock are registered directly in your name with our transfer agent, you are considered the stockholder of record with respect to those shares, and the proxy materials were provided to you directly by us. As the stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the accompanying proxy card, or to vote online, by telephone or virtually at the virtual Annual Meeting as described was approvedabove. Throughout this proxy statement, we refer to these registered stockholders as “stockholders of record.”
Street Name Stockholders. If shares of our common stock are held on your behalf in compliancea brokerage account or by a bank or other nominee, you are considered to be the beneficial owner of shares that are held in “street name,” and the proxy materials were forwarded to you by your broker, bank or other nominee, who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or other nominee as to how to vote your shares. Beneficial owners are also invited to participate in and vote online at the Annual Meeting; however, since a beneficial owner is not the stockholder of record, you may not vote your shares of our common stock virtually at the virtual Annual Meeting unless you follow your broker’s procedures for obtaining a legal proxy. If you request a printed copy of our proxy materials by mail, your broker, bank or other nominee will provide a voting instruction form for you to use. Throughout this proxy statement, we refer to stockholders who hold their shares through a broker, bank or other nominee as “street name stockholders.” | 112 | |
About the Annual Meeting How do I vote? If you are a stockholder of record, there are four ways to vote: | • | by Internet, prior to the virtual Annual Meeting at http://www.proxyvote.com, 24 hours a day, seven days a week (have your proxy card in hand when you visit the website); | | • | by toll-free telephone at 1-800-690-6903 until 11:59 p.m. Eastern Standard Time, on December 12, 2022 (have your proxy card in hand when you call); | | • | by completing and mailing the accompanying proxy card in the envelope provided so it is received prior to the Annual Meeting or | | • | by attending and voting during the virtual Annual Meeting by visiting www.virtualshareholdermeeting.com/PANW2022. Please have your 16-digit control number to join the virtual Annual Meeting. |
Even if you plan to attend the virtual Annual Meeting, we recommend that you also vote by Internet, telephone, or returning a proxy card so that your vote will be counted if you later decide not to attend the virtual Annual Meeting. If you are a street name stockholder, you will receive voting instructions from your broker, bank or other nominee. You must follow the voting instructions provided by your broker, bank or other nominee in order to direct your broker, bank or other nominee on how to vote your shares. Street name stockholders should generally be able to vote by returning a voting instruction form, or by telephone or on the Internet. However, the availability of telephone and Internet voting will depend on the voting process of your broker, bank or other nominee. As discussed above, if you are a street name stockholder, you may not vote your shares online at the virtual Annual Meeting unless you obtain a legal proxy from your broker, bank, or other nominee. Can I change my vote or revoke my proxy? Yes. If you are a stockholder of record, you can change your vote or revoke your proxy any time before the Annual Meeting by: | • | entering a new vote by Internet or by telephone on a later date; | | • | completing and returning a later-dated proxy card; | | • | sending a written notice of revocation to the Corporate Secretary of Palo Alto Networks, at Palo Alto Networks, Inc., 3000 Tannery Way, Santa Clara, CA 95054; or | | • | attending and voting online during the virtual Annual Meeting by visiting www.virtualshareholdermeeting.com/PANW2022. Please have your 16-digit control number to join the Annual Meeting. |
If you are a street name stockholder, your broker, bank or other nominee can provide you with instructions on how to change your vote or revoke your proxy. How many votes are needed for approval of each proposal? | • | Proposal No. 1: Each director nominee will be elected by a vote of the majority of the votes cast. A majority of the votes cast means the number of votes cast “For” such nominee’s election exceeds the number of votes cast “Against” that nominee. An affirmative vote of a majority means the number of votes cast “for” such nominee’s election exceeds the number of votes cast “against” that nominee. You may vote “for,” “against,” or “abstain” on each of the nominees for election as a director. Broker non-votes and abstentions will have no effect on the outcome of this proposal. | | • | Proposal No. 2: The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending July 31, 2023 requires the affirmative vote of a majority of the shares of our common stock present virtually or by proxy at the virtual Annual Meeting and entitled to vote thereon to be approved. You may vote “for,” “against,” or “abstain” with respect to this proposal. Abstentions are considered votes present and entitled to vote on this proposal, and thus will have the same effect as a vote “against” this proposal. Broker non-votes will have no effect on the outcome of this proposal. | | • | Proposal No. 3: The approval, on an advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority of the shares of our common stock present virtually or by proxy at the virtual Annual Meeting and entitled to vote thereon to be approved. You may vote “for,” “against,” or “abstain” with |
About the Annual Meeting | respect to this proposal. Abstentions are considered votes present and entitled to vote on this proposal, and thus will have the same effect as votes “against” this proposal. Broker non-votes will have no effect on the outcome of this proposal. Although the advisory vote is non-binding, our board of directors values our stockholders’ opinions. The Compensation and People Committee will review the results of the vote and, consistent with our record of stockholder responsiveness, consider stockholders’ concerns and take into account the outcome of the vote when considering future decisions concerning our executive compensation program. | | • | Proposal No. 4: The approval of an amendment of our 2021 Equity Incentive Plan requires the affirmative vote of a majority of the shares of our common stock present virtually or by proxy at the virtual Annual Meeting and entitled to vote thereon to be approved. You may vote “for,” “against,” or “abstain” with respect to this proposal. Abstentions are considered votes present and entitled to vote on this proposal, and thus will have the same effect as votes “against” this proposal. Broker non-votes will have no effect on the outcome of this proposal. |
What is the effect of giving a proxy? Proxies are solicited by and on behalf of our Board. The persons named in the proxy have been designated as proxies by our Board. When a proxy card is properly dated, executed and returned, the shares represented by such policy.proxies will be voted at the virtual Annual Meeting in accordance with the instruction of the stockholder. If a proxy card is signed, but no specific instructions are given, the shares represented by such proxy card will be voted in accordance with the recommendations of our board of directors, as described above. If any matters not described in this proxy statement are properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote the shares subject to proxies. If the Annual Meeting is adjourned, the proxy holders can vote your shares subject to proxies when the Annual Meeting is rescheduled, unless you have properly revoked your proxy instructions, as described above. What is a quorum? A quorum is the minimum number of shares required to be present for the virtual Annual Meeting to be properly held under our amended and restated bylaws and Delaware law. The presence, virtually or by proxy, of a majority of all issued and outstanding shares of our common stock entitled to vote at the virtual Annual Meeting will constitute a quorum at the virtual Annual Meeting. A proxy submitted by a stockholder may indicate that all or a portion of the shares represented by the proxy are not being voted (“stockholder withholding”) with respect to a particular matter. Similarly, a broker may not be permitted to vote shares held in street name on a particular matter in the absence of instructions from the beneficial owner of such shares (“broker non-vote”). See the question below titled “How may my broker, bank or other nominee vote my shares if I fail to timely provide voting instructions?” The shares of our common stock subject to a proxy that are not being voted on a particular matter because of either stockholder withholding or a broker non-vote will count for purposes of determining the presence of a quorum. Abstentions are also counted in the determination of a quorum. Where can I find the voting results of the Annual Meeting? We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four business days after the Annual Meeting, we will file a Current Report on Form 8-K to publish preliminary voting results and will provide the final voting results in an amendment to the Current Report on Form 8-K as soon as they become available. | 114 | |
About the Annual Meeting How are proxies solicited for the Annual Meeting?Our Board is soliciting proxies for use at the Annual Meeting. All expenses associated with this solicitation will be borne by us. We will reimburse brokers, banks or other nominees for reasonable expenses that they incur in sending our proxy materials to you if a broker, bank or other nominee holds your shares of our common stock. In addition to using the internet, our directors, officers and employees may solicit proxies in person and by mail, telephone, facsimile, or electronic transmission, for which they will not receive any additional compensation. We have retained Georgeson LLC to assist us in soliciting proxies for a fee of approximately $37,000, plus reasonable out-of-pocket expenses incurred in the process of soliciting proxies. How may my broker, bank or other nominee vote my shares if I fail to timely provide voting instructions? Brokerage firms, banks or other nominees holding shares of our common stock in street name for beneficial owners are generally required to vote such shares in the manner directed by the beneficial owner. In the absence of timely directions, your broker, bank or other nominee will have discretion to vote your shares on our sole “routine” matter, the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending July 31, 2023. Your broker will not have discretion to vote on any other proposals, which are “non-routine” matters, absent direction from you. I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials? We have adopted a procedure called “householding,” which the SEC has approved. Under this procedure, we deliver a single copy of our proxy materials to multiple stockholders who share the same address unless we receive contrary instructions from one or more of the stockholders sharing the same address. This procedure reduces our printing costs, mailing costs, and fees. Stockholders who participate in householding will continue to be able to access and receive separate copies of our proxy materials. Upon written or oral request, we will deliver promptly separate copies of our proxy materials, to any stockholder at a shared address which we delivered a single copy of any of these materials. To receive a separate copy, or, if a stockholder is receiving multiple copies, to request that we only send a single copy of our proxy materials, stockholders may contact us at our principal executive address: Palo Alto Networks, Inc., Attention: Investor Relations, 3000 Tannery Way, Santa Clara, California 95054 or Tel: (408) 753-4000. Stockholders who hold shares of our common stock in street name may contact their brokerage firm, bank, broker-dealer or other similar organization to request information about householding. What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors? STOCKHOLDER PROPOSALS Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at the next annual meeting of stockholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) by submitting their proposals in writing to our Corporate Secretary in a timely manner. For a Rule 14a-8 stockholder proposal to be considered for inclusion in our proxy statement for our 2023 annual meeting of stockholders, our Corporate Secretary must receive the written proposal at our principal executive offices not later than July 6, 2023. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 under the Exchange Act regarding the inclusion of stockholder proposals in Company-sponsored proxy materials. Stockholder proposals should be addressed to: Palo Alto Networks, Inc., Attention: Corporate Secretary, 3000 Tannery Way, Santa Clara, California 95054.
About the Annual Meeting Our amended and restated bylaws also establish an advance notice procedure for stockholders who wish to present a proposal before an annual meeting of stockholders but do not intend for the proposal to be included in our proxy statement pursuant to Rule 14a-8. Our amended and restated bylaws provide that the only business that may be conducted at an annual meeting is business that is (i) specified in our proxy materials with respect to such annual meeting, (ii) otherwise properly brought before the annual meeting by or at the direction of our board of directors, or (iii) properly brought before the annual meeting by a stockholder of record entitled to vote at the annual meeting who has delivered timely written notice to our Corporate Secretary, which notice must contain the information specified in our amended and restated bylaws. To be timely for our 2023 annual meeting of stockholders, our Corporate Secretary must receive the proper written notice at our principal executive offices: | • | not earlier than the close of business on August 15, 2023; and | | • | not later than the close of business on September 14, 2023. |
In the event that we hold our 2023 annual meeting of stockholders more than 30 days before or more than 60 days after the one-year anniversary of the Annual Meeting, then notice of a stockholder proposal that is not intended to be included in our proxy statement must be received no earlier than the close of business on the 120th day before such annual meeting and no later than the close of business on the later of the following two dates: | • | the 90th day prior to such annual meeting; or | | • | the 10th day following the day on which public announcement of the date of such annual meeting is first made. |
If a stockholder who has notified us of his, her or its intention to present a proposal at an annual meeting does not appear to present his, her or its proposal at such annual meeting, we are not required to present the proposal for a vote at such annual meeting. DIRECTOR NOMINATIONS Stockholders may propose director candidates for consideration by our ESG and Nominating Committee. Any such recommendations should include the nominee’s name and qualifications for membership on our Board of Directors and should be directed to our Corporate Secretary at the address set forth above. For additional information regarding stockholder recommendations for director candidates, see the section titled “Identification and Evaluation of Director Nominees—Stockholder Recommendations for Nominations to the Board of Directors” beginning on page 56 of this proxy statement. In addition, our amended and restated bylaws permit stockholders to nominate directors for election at an annual meeting of stockholders. To nominate a director, the stockholder must provide the information required by our amended and restated bylaws, which includes the information required by Rule 14a-19 of the Exchange Act. In addition, the stockholder must give timely notice to our Secretary in accordance with our amended and restated bylaws, which, in general, require that the notice be received at the address set forth above within the time periods described above under the section titled “Stockholder Proposals” for stockholder proposals that are not intended to be included in a proxy statement. Furthermore, our amended and restated bylaws permit stockholders or a group of stockholders that wish to nominate one or more directors through proxy access for inclusion in our proxy statement. To nominate a director using this process, the stockholder must provide the information required by the proxy access provision of our amended and restated bylaws. In addition, the stockholder must give timely notice to our Corporate Secretary in accordance with our amended and restated bylaws, which, in general, require that the notice be received by our Corporate Secretary at our principal executive offices: | • | not earlier than the close of business on June 6, 2023; and | | • | not later than the close of business on July 6, 2023. |
AVAILABILITY OF BYLAWS A copy of our amended and restated bylaws may be obtained by accessing our public filings on the SEC’s website at www.sec.gov. You may also contact our Corporate Secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. | 116 | |
OTHER MATTERSOther Matters
Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires the Company’s officers and directors and persons who beneficially own more than 10% of the Company’s common stock (collectively, “Reporting Persons”) to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Based solely on our review of filed reports or written representations from certain Reporting Persons relating to fiscal 2022, the Company believes that all reports were filed on a timely basis. Fiscal Year 20192022 Annual Report and SEC Filings Our financial statements for our fiscal year ended July 31, 2019,2022, are included in our Annual Report onForm 10-K, which we will make available to stockholders at the same time as this proxy statement. This proxy statement and our annual report are posted on our website at www.paloaltonetworks.com and are available from the SEC at its website at www.sec.gov. You may also obtain a copy of our annual report without charge by sending a written request to Investor Relations, Palo Alto Networks, Inc., 3000 Tannery Way, Santa Clara, California 95054. * * * The board of directors does not know of any other matters to be presented at the Annual Meeting. If any additional matters are properly presented at the Annual Meeting, the persons named in the enclosed proxy card will have discretion to vote the shares of our common stock they represent in accordance with their own judgment on such matters. It is important that your shares of our common stock be represented at the Annual Meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote by telephone or by using the Internet as instructed on the enclosed proxy card or execute and return, at your earliest convenience, the enclosed proxy card in the envelope that has also been provided. | THE BOARD OF DIRECTORS | | | | Santa Clara, California | | November 3, 2022 |
Appendix A Calculation of Normalized Billings and Organic Operating Margin CALCULATION OF NORMALIZED BILLINGS (in millions): | Billings | | FY’22 | | | Total Revenue | | $ | 5,501.5 | | | Add: Change in total deferred revenue, net of acquired revenue | | | 1,970.0 | | | Total billings | | | 7,471.5 | | | Less: billings from acquired entities(1) | | | (0.0 | ) | | Normalized billings | | $ | 7,471.5 | |
| (1) | Consists of billings from the entities acquired in fiscal 2022. |
CALCULATION OF ORGANIC OPERATING INCOME AND ORGANIC OPERATING MARGIN $ In millions | | | FY’22 | | Organic Operating Income and Operating Margin: | | $ | | | % | | | GAAP operating loss | | | ($188.8 | ) | | | -3.4 | % | | Share-based compensation-related charges | | | 1,072.0 | | | | 19.5 | % | | Acquisition-related costs(1) | | | 5.5 | | | | 0.1 | % | | Amortization expense of acquired intangible assets | | | 125.8 | | | | 2.3 | % | | Litigation-related charges(2) | | | 7.1 | | | | 0.1 | % | | Restructuring and other costs | | | 21.2 | | | | 0.4 | % | | Non-GAAP operating income and operating margin | | $ | 1,042.8 | | | | 19.0 | % | | | | | | | | | | | | Operating loss from acquired entities(3) | | | 2.8 | | | | 0.0 | % | | Incremental bonus payout(4) | | | 53.8 | | | | 1.0 | % | | Organic operating income and operating margin | | $ | 1,099.4 | | | | 20.0 | % | | | | | | | | | | |
| (1) | Consists of acquisition transaction costs, share-based compensation related to the cash settlement of certain equity awards, and costs to terminate certain employment, operating lease, and other contracts of the acquired companies. | | (2) | Consists of the amortization of intellectual property licenses and covenant not to sue. | | (3) | Consists of operating loss from the entities acquired in fiscal 2022. | | (4) | Consists of bonus payout in excess of 100% of the target cash incentive of the 2022 Incentive Compensation Plan. |
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Appendix A Non-GAAP Financial Measures and Other Key Metrics Palo Alto Networks has provided in this Proxy Statement financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). The Company uses these non-GAAP financial measures and other key metrics internally to set targets for employee compensation programs. Non-GAAP Operating Margin. Palo Alto Networks defines non-GAAP operating margin as operating margin plus share-based compensation-related charges, including share-based payroll tax expense, acquisition-related costs, amortization expense of acquired intangible assets, litigation-related charges, including legal settlements, along with certain non-recurring expenses. The Company believes that excluding these items from non-GAAP operating margin provides management and investors with greater visibility into the underlying performance of the Company’s core business operating results, meaning its operating performance excluding these items and, from time to time, other discrete charges that are infrequent in nature, over multiple periods. Organic operating margin. Palo Alto Networks defines organic operating margin as non-GAAP operating margin, excluding the effects of acquisitions and dispositions and bonus payout in excess of 100% of the target cash incentive under the 2022 Cash Incentive Compensation Plan. Billings. Palo Alto Networks defines billings as total revenue plus the change in total deferred revenue, net of acquired deferred revenue, during the period. The Company considers billings to be a key metric used by management to manage the Company’s business and believes billings provides investors with an important indicator of the health and visibility of the Company’s business because it includes subscription and support revenue, which is recognized ratably over the contractual service period, and product revenue, which is recognized at the time of shipment, provided that all other conditions for revenue recognition have been met. The Company considers billings to be a useful metric for management and investors, particularly if sales of subscriptions continue to increase and the Company experiences strong renewal rates for subscriptions and support. Normalized billings. Palo Alto Networks defines normalized billings as billings defined above, less billings from entities acquired in fiscal 2022. Next-Gen Security ARR is annualized allocated revenue of all active contracts as of the final day of the reporting period for Prisma and Cortex offerings inclusive of the VM-Series and related services, and certain cloud-delivered security services. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures and key metrics as analytical tools. In particular, the billings metric reported by the Company includes amounts that have not yet been recognized as revenue. Furthermore, these non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP.
Appendix B Amended and Restated 2021 Equity Incentive Plan PALO ALTO NETWORKS, INC.
2021 EQUITY INCENTIVE PLAN (As amended and restated, subject to, and contingent upon, stockholder approval at the
2022 annual meeting of the Company’s stockholders) | 1. | Purpose of the Plan. The purpose of this Plan is to: |
| • | to attract and retain the best available personnel for positions of substantial responsibility, | | • | to provide additional incentive to Employees, Directors and Consultants, and | | • | to promote the success of the Company’s business. |
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares. | 2. | Definitions. The following definitions are used in this Plan: |
| (a) | “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan. | | (b) | “Applicable Laws” means the legal and regulatory requirements relating to the administration of equity-based awards and issuance of shares of Common Stock, including under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any non-U.S. country or jurisdiction where Awards are, or will be, granted under the Plan. Reference to a specific section of an Applicable Law or regulation related to that section shall include such section or regulation, any valid regulation or other official guidance issued under that section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding that section or regulation. | | (c) | “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares. | | (d) | “Award Agreement” means the written or electronic agreement between the Company and Participant setting forth the terms and provisions applicable to an Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. | | (e) | “Board” means the Board of Directors of the Company. | | (f) | “Change in Control” means the occurrence of any of the following events: |
| (i) | Change in Ownership of the Company. A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, if any one Person is already considered to own more than 50% of the total voting power of the stock of the Company, the acquisition of additional stock by such Person will not be considered a Change in Control; or | | (ii) | Change in Effective Control of the Company. A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or |
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Appendix B | (iii) | Change in Ownership of a Substantial Portion of the Company’s Assets. A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. |
For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A. Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (x) its primary purpose is to change the jurisdiction of the Company’s incorporation, or (y) its primary purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction. | (g) | “Code” means the U.S. Internal Revenue Code of 1986. | | (h) | “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or a duly authorized committee of the Board, in accordance with Section 4 hereof. | | (i) | “Common Stock” means the common stock of the Company. | | (j) | “Company” means Palo Alto Networks, Inc., a Delaware corporation, or any successor thereto. | | (k) | “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary of the Company to render bona fide services to such entity, provided the services (i) are not in connection with the offer or sale of securities in a capital-raising transaction, and (ii) do not directly promote or maintain a market for the Company’s securities, in each case, within the meaning used with respect to Form S-8 promulgated under the Securities Act, and provided, further, that a Consultant will include only those persons to whom the issuance of Shares may be registered under Form S-8 promulgated under the Securities Act. | | (l) | “Director” means a member of the Board. | | (m) | “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time. | | (n) | “Employee” means any person, including Officers and Inside Directors, providing services as an employee to the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. | | (o) | “Exchange Act” means the U.S. Securities Exchange Act of 1934. | | (p) | “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is reduced. As described in Section 4(i), the Administrator may not institute an Exchange Program. |
Appendix B | (q) | “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: |
| (i) | If the Common Stock is listed on any established stock exchange or a national market system, including without limitation Nasdaq Global Select Market, Nasdaq Global Market or Nasdaq Capital Market of Nasdaq Stock Market or the New York Stock Exchange, its Fair Market Value will be the closing sales price for such stock (or, the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported by such source as the Administrator deems reliable; | | (ii) | If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or the closing bid, if no sales were reported), as reported by such source as the Administrator deems reliable; or | | (iii) | In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator. |
| | If the Fair Market Value is to be determined under subsection (i) or (ii) above and the determination date for the Fair Market Value occurs on a day other than a Trading Day, the Fair Market Value will be the price as determined under subsection (i) or (ii) above, as applicable, on the immediately preceding Trading Day, unless otherwise determined by the Administrator. In addition, for purposes of determining the fair market value of shares for any reason other than the determination of the exercise price of Options or Stock Appreciation Rights, fair market value will be determined by the Administrator in a manner compliant with Applicable Laws and applied consistently for such purpose. Note that the determination of fair market value for purposes of withholding Tax-Related Items may be made in the Administrator’s sole discretion subject to Applicable Laws and is not required to be consistent with the determination of Fair Market Value for other purposes. | | (r) | “Fiscal Year” means the fiscal year of the Company. | | (s) | “Incentive Stock Option” means an Option that is intended to qualify, and actually qualifies, as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. | | (t) | “Inside Director” means a Director who is an Employee. | | (u) | “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option. | | (v) | “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. | | (w) | “Option” means a stock option granted pursuant to the Plan. | | (x) | “Outside Director” means a Director who is not an Employee. | | (y) | “Parent” means a “parent corporation” of the Company, whether now or hereafter existing, as defined in Section 424(e) of the Code. | | (z) | “Participant” means the holder of an outstanding Award. | | (aa) | “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine pursuant to Section 10. | | (bb) | “Performance Unit” means an Award denominated in Shares or cash, which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10. | | (cc) | “Period of Restriction” means the period (if any) during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator. | | (dd) | “Plan” means this Palo Alto Networks, Inc. 2021 Equity Incentive Plan. | | (ee) | “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan, or issued pursuant to the early exercise of an Option. |
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Appendix B | (ff) | “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company. | | (gg) | “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. | | (hh) | “Section 16(b)” means Section 16(b) of the Exchange Act. | | (ii) | “Section 409A” means Section 409A of the Code. | | (jj) | “Securities Act” means the U.S. Securities Act of 1933. | | (kk) | “Service Provider” means an Employee, Director or Consultant. | | (ll) | “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan. | | (mm) | “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 9 is designated as a Stock Appreciation Right. | | (nn) | “Subsidiary” means a “subsidiary corporation” of the Company whether now or hereafter existing, as defined in Section 424(f) of the Code. | | (oo) | “Substituted Award” means an Award granted in substitution for an equity award of an acquired entity in connection with a merger, reorganization, separation, or other transaction to which Section 424(a) of the Code applies. | | (pp) | “Tax-Related Items” means any U.S. and non–U.S. federal, state, or local taxes (including, without limitation, income tax, social insurance, payroll tax, fringe benefits tax, payment on account and any other tax-related items) related to a Participant’s participation in the Plan and legally applicable or deemed applicable to the Participant, or have been transferred to the Participant. | | (qq) | “Trading Day” means a day that the primary stock exchange, national market system, or other trading platform, as applicable, upon which the Common Stock is listed is open for trading. |
| 3. | Stock Subject to the Plan. |
| (a) | Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is (i) 19,185,000 Shares, plus (ii) any Shares subject to awards granted under the Company’s 2012 Equity Incentive Plan, as amended, that, on or after the date stockholders initially approve the Plan, expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest, with the maximum number of Shares to be added to the Plan pursuant to clause (ii) equal to 31,740,063 Shares. In addition, Shares may become available for issuance under the Plan pursuant to Section 3(b). The Shares may be authorized, but unissued, or reacquired Common Stock. If the Committee grants Substituted Awards in substitution for equity awards outstanding under a plan maintained by an entity acquired by or consolidated with the Company, the grant of those Substituted Awards will not decrease the number of Shares available for issuance under the Plan. | | (b) | Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, is forfeited to or repurchased by the Company due to failure to vest, then the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights, the forfeited or repurchased Shares) that were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, the gross number of Shares underlying the portion of a Stock Appreciation Right that is exercised will cease to be available under the Plan. Shares that actually have been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company due to failure to vest, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price or purchase price of an Award or to satisfy the tax withholding obligations related to an Award will not become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not reduce the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment as provided in Section 14, the |
Appendix B | | maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to this Section 3(b). | | (c) | Share Reserve. The Company, at all times during the term of this Plan, will reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan. |
| 4. | Administration of the Plan. |
| (i) | General. The Plan will be administered by (A) the Board or (B) a Committee constituted to satisfy Applicable Laws. The Board or Committee will be the Administrator. Different Administrators may administer the Plan with respect to different groups of Service Providers. The Board may retain the authority to concurrently administer the Plan with a Committee and may, at any time, revoke the delegation of some or all authority previously delegated. | | (ii) | Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3. |
| (b) | Powers of the Administrator. Subject to the Plan, any limitations on delegations specified by the Board, and any requirements imposed by Applicable Laws, the Administrator will have the authority, in its sole discretion, to make any determinations and perform any actions deemed necessary or advisable to administer the Plan including to: |
| (i) | determine the Fair Market Value; | | (ii) | select the Service Providers to whom Awards may be granted hereunder; | | (iii) | determine the number of Shares to be covered by each Award granted hereunder; | | (iv) | approve forms of Award Agreements for use under the Plan; | | (v) | determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. The terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating to an Award; | | (vi) | establish, amend and rescind rules and regulations and adopt sub-plans relating to the Plan, including rules, regulations, and sub-plans for the purposes of facilitating compliance with non-U.S. laws, easing the administration of the Plan and/or taking advantage of tax-favorable treatment for Awards granted to Service Providers outside the U.S.; | | (vii) | interpret the Plan and make any decision necessary to administer the Plan; | | (viii) | interpret, modify or amend each Award (subject to Section 17(c) of the Plan), including without limitation the discretionary authority to extend the post-termination exercisability period of Awards; | | (ix) | allow Participants to satisfy tax withholding obligations in a manner prescribed in Section 15 of the Plan; | | (x) | authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; | | (xi) | delegate ministerial duties to any of the Company’s employees; | | (xii) | temporarily suspend the exercisability of an Award if the Administrator deems such suspension to be necessary or appropriate for administrative purposes; | | (xiii) | allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that otherwise would be due to the Participant under an Award; and | | (xiv) | make all other determinations deemed necessary or advisable for administering the Plan. |
| (c) | Grant Date. The grant date of an Award (“Grant Date”) will be the date that the Administrator makes the determination granting such Award or may be a later date if such later date is designated by the Administrator on the date of the determination or under an automatic grant policy. Notice of the determination will be provided to each Participant within a reasonable time after the Grant Date. |
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Appendix B | (d) | Waiver. The Administrator may waive any terms, conditions or restrictions. | | (e) | Fractional Shares. Except as otherwise provided by the Administrator, any fractional Shares that result from the adjustment of Awards will be cancelled. Any fractional Shares that result from vesting percentages will be accumulated and vested on the date that an accumulated full Share is vested. | | (f) | Electronic Delivery. The Company may deliver by e-mail or other electronic means (including posting on a website maintained by the Company or its agent) all documents relating to the Plan or any Award and all other documents that the Company is required to deliver to its security holders (including prospectuses, annual reports and proxy statements). | | (g) | Choice of Law; Choice of Forum. The Plan, all Awards and all determinations made and actions taken under the Plan, to the extent not otherwise governed by the laws of the United States, will be governed by the laws of the State of Delaware without giving effect to principles of conflicts of law. For purposes of litigating any dispute that arises under this Plan, a Participant’s acceptance of an Award is his or her consent to the jurisdiction of the State of Delaware, and agreement that any such litigation will be conducted in Delaware Court of Chancery, or the federal courts for the United States for the District of Delaware, and no other courts, regardless of where a Participant’s services are performed. | | (h) | Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards and will be given the maximum deference permitted by Applicable Laws. | | (i) | Exchange Program. The Administrator may not institute an Exchange Program. |
| 5. | Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. | | 6. | Stock Options. |
| (a) | Grant of Options. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Options to Service Providers in such amounts as the Administrator determines in its sole discretion. | | (b) | Stock Option Agreement. Each Option will be evidenced by an Award Agreement that will specify the exercise price, the number of Shares subject to the Option, the exercise restrictions, if any, applicable to the Option, and such other terms and conditions as the Administrator determines in its sole discretion. | | (c) | Limitations. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(c), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. | | (d) | Term of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will be 10 years from the Grant Date or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be 5 years from the Grant Date or such shorter term as may be provided in the Award Agreement. | | (e) | Option Exercise Price and Consideration. |
| (i) | Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following: |
| (1) | In the case of an Incentive Stock Option |
Appendix B | (A) | granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the Grant Date. | | (B) | granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the Grant Date. |
| (2) | In the case of a Nonstatutory Stock Option, the per Share exercise price will be determined by the Administrator and may no less than 100% of the Fair Market Value per Share on the Grant Date unless otherwise required by Applicable Laws. | | (3) | Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the Grant Date pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. |
| (ii) | Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised. | | (iii) | Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (1) cash; (2) check or wire transfer; (3) promissory note, to the extent permitted by Applicable Laws; (4) other Shares, provided that such Shares have a fair market value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (6) net exercise, under which Shares are withheld from otherwise deliverable Shares that has been approved by the Board or a Committee; (7) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (8) any combination of the foregoing methods of payment. |
| (i) | Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. Notwithstanding the foregoing, at any time after the grant of an Option, the Administrator, in its sole discretion, may accelerate the time at which the Option will vest or become exercisable. An Option may not be exercised for a fraction of a Share. | | | An Option will be deemed exercised when the Company receives: (i) notice of exercise (in accordance with the procedures that the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with any amounts necessary to satisfy withholding obligations for Tax-Related Items). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant and approved by the Administrator, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan. |
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Appendix B | | Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. | | (ii) | Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the cessation of the Participant’s Service Provider status as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of cessation of the Participant’s Service Provider status (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for 3 months following cessation of the Participant’s Service Provider status. Unless otherwise provided by the Administrator, if on the date of cessation of the Participant’s Service Provider status the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If, after cessation of the Participant’s Service Provider status, the Participant does not exercise his or her Option within the time specified in the Award Agreement or herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. | | (iii) | Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of cessation of the Participant’s Service Provider status (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for 12 months following cessation of the Participant’s Service Provider status. Unless otherwise provided by the Administrator, if on the date of cessation of the Participant’s Service Provider status the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If, after cessation of the Participant’s Service Provider status, the Participant does not exercise his or her Option within the time specified in the Award Agreement or herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. | | (iv) | Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the Option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided the Administrator has permitted the designation of a beneficiary and provided such beneficiary has been designated prior to the Participant’s death in a form acceptable to the Administrator. If the Administrator has not permitted the designation of a beneficiary or if no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for 12 months following the Participant’s death. Unless otherwise provided by the Administrator, if at the time of death, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified in the Award Agreement or herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. | | (v) | Tolling Expiration. A Participant’s Award Agreement may also provide that: |
| (1) | if the exercise of the Option following the cessation of the Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would result in liability under Section 16(b), then the Option will terminate on the earlier of (A) the expiration of the term of the Option set forth in the Award Agreement, or (B) the 10th day after the last date on which such exercise would result in liability under Section 16(b); or | | (2) | if the exercise of the Option following the cessation of the Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of Shares would violate the registration requirements |
Appendix B | | under the Securities Act, then the Option will terminate on the earlier of (A) the expiration of the term of the Option or (B) the expiration of a period of 30 days after the cessation of the Participant’s status as a Service Provider during which the exercise of the Option would not be in violation of such registration requirements. |
| (a) | Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator determines in its sole discretion. | | (b) | Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify any Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator determines in its sole discretion. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed. | | (c) | Transferability. Except as provided in this Section 7 of the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of any applicable Period of Restriction. | | (d) | Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate. | | (e) | Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of any applicable Period of Restriction or at such other time as the Administrator may determine. Notwithstanding the foregoing, at any time after the grant of an Option, the Administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. | | (f) | Voting Rights. During any applicable Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. | | (g) | Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan. |
| 8. | Restricted Stock Units. |
| (a) | Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units. | | (b) | Restricted Stock Unit Agreement. Each Award of Restricted Stock Units will be evidenced by an Award Agreement that will specify vesting criteria, the number of Restricted Stock Units granted, and such other terms and conditions as the Administrator determines in its sole discretion. | | (c) | Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service), applicable U.S. or non-U.S. federal or state securities laws or any other basis determined by the Administrator in its discretion. | | (d) | Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout. | | (e) | Form and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) determined by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may settle earned Restricted Stock Units only in cash, Shares, or a combination of both. |
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Appendix B | (f) | Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company. |
| 9. | Stock Appreciation Rights. |
| (a) | Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. | | (b) | Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator determines in its sole discretion. Notwithstanding the foregoing, at any time after the grant of a Stock Appreciation Right, the Administrator, in its sole discretion, may accelerate the time at which the Stock Appreciation Right will vest or become exercisable. | | (c) | Number of Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Service Provider. | | (d) | Exercise Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation Right will be determined by the Administrator and will be no less than 100% of the Fair Market Value per Share on the Grant Date. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan. | | (e) | Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date as determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the tolling and expiration rules of Section 6(f) relating to exercise also will apply to Stock Appreciation Rights. | | (f) | Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined as the product of: |
| (i) | The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; and | | (ii) | The number of Shares with respect to which the Stock Appreciation Right is exercised. |
| | At the discretion of the Administrator, the payment upon exercise of a Stock Appreciation Right may be in cash, in Shares of equivalent value, or in some combination of both. |
| 10. | Performance Units and Performance Shares. |
| (a) | Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant. | | (b) | Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the Grant Date. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the Grant Date. | | (c) | Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during which the performance objectives or other vesting provisions must be met will be called the “Performance Period.” Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator determines in its sole discretion. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable U.S. or non-U.S. federal or state securities laws, or any other basis determined by the Administrator in its discretion. |
Appendix B | (d) | Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. Notwithstanding the foregoing, at any time after the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share. | | (e) | Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof. | | (f) | Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan. |
| (a) | Outside Director Award Limitations. No Outside Director may be paid compensation for service as an Outside Director that, in the aggregate, exceeds $2,000,000, increased to $4,000,000 for such Outside Director for the Fiscal Year in which he or she joins the Board as an Outside Director. Compensation includes equity awards, including any Awards issued under this Plan, the value of which will be based on their grant date fair value determined in accordance with U.S. generally accepted accounting principles and any other compensation (including without limitation any cash retainers or fees). Any Awards or other compensation paid or provided to an individual for his or her services as an Employee, or for his or her services as a Consultant (other than as an Outside Director), will not count for purposes of the limitation under this Section 11(a). | | (b) | Dividends and Other Distributions. No dividends or other distributions shall be paid with respect to any Shares underlying any unvested portion of an Award. |
| 12. | Leaves of Absence/Transfer Between Locations. Unless the Administrator provides otherwise or Applicable Laws require otherwise, vesting of Awards will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or the Participant’s employer or (ii) transfers between locations of the Company or between the Company, its Parent, or any of its Subsidiaries. For purposes of Incentive Stock Options, no such leave may exceed 3 months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company or the Participant’s employer is not so guaranteed, then 6 months following the 1st day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option. | | 13. | Transferability of Awards. |
| (a) | General Rule. Unless determined otherwise by the Administrator, or otherwise required by Applicable Laws, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, the Award will be limited by any additional terms and conditions imposed by the Administrator. Any unauthorized transfer of an Award will be void. | | (b) | Domestic Relations Orders. If approved by the Administrator, an Award may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulations Section 1.421-1(b)(2). An Incentive Stock Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer. | | (c) | Limited Transfers for the Benefit of Family Members. The Administrator may permit an Award or Share issued under this Plan to be assigned or transferred subject to the applicable limitations, set forth in the General Instructions to Form S-8 Registration Statement under the Securities Act, if applicable, and any other Applicable Laws. For the avoidance of doubt, during the lifetime of the Participant, no Award may be assigned or transferred to a third-party financial institution. |
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Appendix B | (d) | Permitted Transferees. Any individual or entity to whom an Award is transferred will be subject to all of the terms and conditions applicable to the Participant who transferred the Award, including the terms and conditions in this Plan and the Award Agreement. If an Award is unvested, then the service of the Participant will continue to determine whether the Award will vest and when it will terminate. |
| 14. | Adjustments; Dissolution or Liquidation; Merger or Change in Control; Death. |
| (a) | Adjustments. In the event that any extraordinary dividend or other extraordinary distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, reclassification, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs (other than any ordinary dividends or other ordinary distributions), the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of shares of stock that may be delivered under the Plan and/or the number, class, and price of shares of stock covered by each outstanding Award, and the numerical Share limits in Section 3 of the Plan. | | (b) | Dissolution or Liquidation. In the event of a proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action. | | (c) | Merger or Change in Control. In the event of a merger of the Company with or into another corporation or other entity or a Change in Control, each outstanding Award will be treated as the Administrator determines (subject to the provisions of the following paragraph) without a Participant’s consent, including, without limitation, that each Award be assumed or an equivalent option or right substituted by the successor corporation or its Parent. The Administrator will not be obligated to treat all Awards, all Awards held by a Participant, all Awards of the same type, or all portions of Awards, similarly. | | | In the event that the successor corporation does not assume or substitute for the Award (or portion thereof), the Participant will fully vest in and have the right to exercise the Participant’s outstanding Option and Stock Appreciation Right (or portion thereof) that is not assumed or substituted for, including Shares as to which such Award would not otherwise be vested or exercisable, all restrictions on Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units (or portions thereof) not assumed or substituted for will lapse, and, with respect to such Awards with performance-based vesting (or portions thereof) not assumed or substituted for, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met, in each case, unless specifically provided otherwise under the applicable Award Agreement or other written agreement between the Participant and the Company or any of its Subsidiaries or Parents, as applicable. In addition, if an Option or Stock Appreciation Right (or portion thereof) is not assumed or substituted for in the event of a merger or Change in Control, the Administrator will notify the Participant in writing or electronically that such Option or Stock Appreciation Right (or its applicable portion) will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right (or its applicable portion) will terminate upon the expiration of such period. | | | For the purposes of this Section 14(c), an Award will be considered assumed if, following the merger or Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change in Control. |
Appendix B | | Notwithstanding anything in this Section 14(c) to the contrary, and unless otherwise provided in an Award Agreement or other written agreement between the Participant and the Company or any of its Subsidiaries or Parents, as applicable, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption. | | | Notwithstanding anything in this Section 14(c) to the contrary, if a payment under an Award Agreement is subject to Section 409A and if the change in control definition contained in the Award Agreement or other written agreement related to the Award does not comply with the definition of “change in control” for purposes of a distribution under Section 409A, then any payment of an amount that otherwise is accelerated under this Section will be delayed until the earliest time that such payment would be permissible under Section 409A without triggering any penalties applicable under Section 409A. | | (d) | Outside Director Awards. With respect to Awards granted to Outside Directors for their service as Outside Directors, in the event of a Change in Control, such Participants will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such Awards, including those Shares which would not be vested or exercisable, all restrictions on such Participants’ Restricted Stock and Restricted Stock Units will lapse, and, with respect to such Participants’ Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met, unless specifically provided otherwise under the applicable Award Agreements or other written agreements between the Participants and the Company or any of its Subsidiaries or Parents, as applicable. |
| (a) | Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as any withholding obligations for Tax-Related Items are due, the Company (or any of its Subsidiaries, Parents or affiliates employing or retaining the services of a Participant, as applicable) will have the power and the right to deduct or withhold, or require a Participant to remit to the Company (or any of its Subsidiaries, Parents or affiliates, as applicable), an amount sufficient to satisfy any Tax-Related Items required to be withheld with respect to such Award (or exercise thereof). | | (b) | Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such withholding obligation for Tax-Related Items, in whole or in part by (without limitation) (i) paying cash, check or other cash equivalents, (ii) electing to have the Company withhold otherwise deliverable Shares having a fair market value equal to the minimum statutory amount applicable in a Participant’s jurisdiction or such greater amount as the Administrator may determine (including up to a maximum statutory amount) if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion, (iii) delivering to the Company already-owned Shares having a fair market value equal to the minimum statutory amount applicable in a Participant’s jurisdiction or such greater amount as the Administrator may determine (including up to a maximum statutory amount), in each case, provided the delivery of such Shares will not result in any adverse accounting consequences, as the Administrator determines in its sole discretion, (iv) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) to cover the amount of the withholding obligation for Tax-Related Items, (v) having the Company or a Parent or Subsidiary withhold from wages or any other cash amount due or to become due to the Participant and payable by the Company or any Parent or Subsidiary, (vi) any other method of withholding determined by the Administrator, or (vii) any combination of the foregoing methods of payment. The withholding amount will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum statutory rates applicable in a Participant’s jurisdiction with respect to the Award on the date that the amount of Tax-Related Items to be withheld is to be determined or such greater amount as the Administrator may determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion. The fair market value of the Shares to be withheld or delivered will be determined as of the date that the amount of Tax-Related Items to be withheld is calculated. |
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Appendix B | (c) | Compliance With Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Section 409A the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A. In no event will the Company or any of its Subsidiaries or Parents have any obligation or liability under the terms of this Plan to reimburse, indemnify, or hold harmless any Participant or any other person in respect of Awards, for any taxes, interest or penalties imposed, or other costs incurred, as a result of Section 409A. |
| (a) | Stockholder Approval and Term of Plan. The Plan will become effective upon its approval by the Company’s stockholders within 12 months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws. The Plan will continue in effect until terminated earlier under Section 17 of the Plan, but no Incentive Stock Options may be granted after 10 years from the date the Plan is adopted by the Board. | | (b) | Legal Compliance. Shares will not be issued pursuant an Award unless the exercise or vesting of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance. | | (c) | Investment Representations. As a condition to the exercise or vesting of an Award, the Company may require the person exercising or vesting in such Award to represent and warrant at the time of any such exercise or vesting that the Shares are being acquired only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. | | (d) | Inability to Obtain Authority. If the Company determines it to be impossible or impracticable to obtain authority from any regulatory body having jurisdiction or to complete or comply with the requirements of any registration or other qualification of the Shares under any U.S. state or federal law or non-U.S. law or under the rules and regulations of the U.S. Securities and Exchange Commission, the stock exchange on which Shares of the same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the issuance and sale of any Shares hereunder, the Company will be relieved of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority, registration, qualification or rule compliance will not have been obtained. | | (e) | No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider, nor interfere in any way with the Participant’s right or the right of the Company and its Subsidiaries or Parents, as applicable, to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws. | | (f) | Forfeiture Events. The Administrator may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award will be subject to reduction, cancellation, forfeiture, recoupment, reimbursement, or reacquisition upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Notwithstanding any provisions to the contrary under this Plan, an Award and any other compensation paid or payable to a Participant (including, but not limited to, equity awards issued outside of this Plan) (such compensation, “Other Compensation”) will be subject to the Company’s clawback policy in effect as of the adoption of this Plan, and will be subject to any other clawback policy of the Company as may be established and/or amended from time to time to comply with Applicable Laws (including without limitation pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as may be required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act) (the “Clawback Policy”). The Administrator may require a Participant to |
Appendix B | | forfeit, return or reimburse the Company all or a portion of the Award or Other Compensation and any amounts paid thereunder pursuant to the terms of the Clawback Policy or as necessary or appropriate to comply with Applicable Laws. Unless this subsection (f) specifically is mentioned and waived in an Award Agreement or other document, no recovery of compensation under a Clawback Policy or otherwise will constitute an event that triggers or contributes to any right of a Participant to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company or any Parent or Subsidiary. |
| 17. | Amendment and Termination of the Plan. |
| (a) | Amendment and Termination. The Administrator, at any time, may amend, alter, suspend or terminate the Plan. | | (b) | Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. | | (c) | Consent of Participants Generally Required. Subject to Section 17(d) below, no amendment, alteration, suspension or termination of the Plan or an Award under it will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it regarding Awards granted under the Plan prior to such termination. | | (d) | Exceptions to Consent Requirement. |
| (i) | A Participant’s rights will not be deemed to have been impaired by any amendment, alteration, suspension or termination if the Administrator, in its sole discretion, determines that the amendment, alteration, suspension or termination taken as a whole, does not materially impair the Participant’s rights, and | | (ii) | Subject to the limitations of Applicable Laws, if any, the Administrator may amend the terms of any one or more Awards without the affected Participant’s consent even if it does materially impair the Participant’s right if such amendment is done |
| (1) | in a manner expressly permitted under the Plan; | | (2) | to maintain the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; | | (3) | to change the terms of an Incentive Stock Option, if such change results in impairment of the Award only because it impairs the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; | | (4) | to clarify the manner of exemption from, or to bring the Award into compliance with, Section 409A; or | | (5) | to comply with other Applicable Laws. |
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BOARD OF DIRECTORS Nikesh Arora Chief Executive Officer and
Chair of the Board of Directors Mark D. McLaughlin Vice Chair of the Board of Directors Nir Zuk Chief Technology Officer and Director Aparna Bawa Chief Operating Officer and Interim Chief Legal Officer,
Zoom Video Communications, Inc. Asheem Chandna Partner, Greylock Partners John M. Donovan Former Chief Executive Officer—AT&T Communications Carl Eschenbach General Partner, Sequoia Capital Operations, LLC Dr. Helene D. Gayle President, Spelman College James J. Goetz Managing Member, Sequoia Capital Rt Hon Sir John Key Former Prime Minister of New Zealand Mary Pat McCarthy Former Vice Chair, KPMG LLP Lorraine Twohill Chief Marketing Officer, Google CORPORATE EXECUTIVES Nikesh Arora Chief Executive Officer and
Chair of the Board of Directors Dipak Golechha Chief Financial Officer BJ Jenkins President Lee Klarich Chief Product Officer Nir Zuk Chief Technology Officer and Director CORPORATE HEADQUARTERS Palo Alto Networks, Inc.
3000 Tannery Way
Santa Clara, California 95054 October 22, 2019
PALO ALTO NETWORKS, INC. 3000 TANNERY WAY SANTA CLARA, CA 95054 VOTE BY INTERNET—www.proxyvote.com Use the Internet to transmitVIRTUAL ANNUAL MEETING OF STOCKHOLDERS
Tuesday, December 13, 2022 at 12:15 p.m. PST
www.virtualshareholdermeeting.com/PANW2022 REGISTRAR AND TRANSFER AGENT For questions regarding your voting instructions and for electronic deliveryaccount, changes of information up until 11:59 p.m. Eastern Standard Time on December 8, 2019. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mailaddress or the Internet. To sign up for electronic delivery,consolidation of accounts, please followcontact the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BYPHONE—1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Standard Time on December 8, 2019. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E84946-P29182 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY PALO ALTO NETWORKS, INC. The Board of Directors recommends you vote FOR proposals 1, 2, and 3. 1. Election of Class II Directors Nominees: For Withhold 1a. Asheem Chandna 1b. James J. Goetz 1c. Mark D. McLaughlin For Against Abstain 2. To ratify the appointment of Company’s transfer agent: Computershare Trust Company, N.A. P.O. Box 43006
Providence RI 02940-3006 T: (877) 373-6374
Foreign Stockholders: (781) 575-2879 www.computershare.com/investor LEGAL COUNSEL Wilson Sonsini Goodrich & Rosati
Professional Corporation Palo Alto, California INDEPENDENT AUDITORS Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending July 31, 2020. 3. To approve, on an advisory basis, the compensation San Jose, California INVESTOR RELATIONS Palo Alto Networks, Inc. Investor Relations 3000 Tannery Way
Santa Clara, California 95054 Email: ir@paloaltonetworks.com
T: (408) 753-4000
| | |  | | | 3000 Tannery Way
Santa Clara, CA 95054 Main: +1.408.753.4000 Sales: +1.866.320.4788 Support: +1.866.898.9087 www.paloaltonetworks.com | |  | | | |
| PALO ALTO NETWORKS, INC.
3000 TANNERY WAY
SANTA CLARA, CA 95054 |
VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on December 12, 2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/PANW2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on December 12, 2022. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | | KEEP THIS PORTION FOR YOUR RECORDS | | DETACH AND RETURN THIS PORTION ONLY | | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
| | | | | | | | | | | | | | The Board of Directors recommends you vote FOR
the following: | | | | | | | | 1. | | Election of Class II Directors. | | | | | | | | | Nominees | | For | | Against | | Abstain | | 1a. | | Dr. Helene D. Gayle | | ☐ | | ☐ | | ☐ | | 1b. | | James J. Goetz | | ☐ | | ☐ | | ☐ |
| The Board of Directors recommends you vote FOR proposals 2, 3 and 4. | | For | | Against | | Abstain | | 2. | | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending July 31, 2023. | | ☐ | | ☐ | | ☐ | | 3. | | To approve, on an advisory basis, the compensation of our named executive officers. | | ☐ | | ☐ | | ☐ | | 4. | | To approve an amendment to the 2021 Palo Alto Networks, Inc. Equity Incentive Plan. | | ☐ | | ☐ | | ☐ | | NOTE: To transact such other business as may properly come before the meeting or any adjournment thereof. | | | | | | |
| | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | |
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| | | | | | Signature [PLEASE SIGN WITHIN BOX] | Date | | Signature (Joint Owners) | Date | |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report areCombined Document is available at www.proxyvote.com. E84947-P29182 www.proxyvote.com.
PROXY
PALO ALTO NETWORKS, INC.
Proxy For Annual Meeting of Stockholders
December 9, 201913, 2022 at 10:00 AM 12:15 PM The undersigned stockholder of Palo Alto Networks, Inc., a Delaware corporation (“("Palo Alto Networks”Networks"), hereby appoints Nikesh Arora, Dipak Golechha and Jeffrey C. True,Bruce Byrd, or eitherany of them, as proxies andattorneys-in-fact, each with full power of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Palo Alto Networks to be held on Monday, December 9, 201913, 2022 at 10:00 a.m.12:15 PM Pacific Standard Time virtually via a live webcast at Palo Alto Networks’ headquarters located at 3000 Tannery Way, Santa Clara, CA 95054www.virtualshareholdermeeting.com/PANW2022 and at any adjournment or postponement thereof, and to vote all shares of common stock of Palo Alto Networks held of record by the undersigned at the close of business on October 15, 2019,14, 2022, as hereinafter specified upon the proposals on the reverse side. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PALO ALTO NETWORKS. IN ORDER TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED “FOR”"FOR" ALL NOMINEES, AND “FOR”"FOR" PROPOSALS 2, 3 AND 3.4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING. Continued and to be signed on reverse side
0000583448_2 R1.0.0.3
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Security Operations
Cloud Security
Network Security
100% of equity compensation (aside from new hire awards) is performance-based, with different performance targets than the cash incentive plan
See page 40.
OUR FISCAL 2022 COMMITMENTS
1,482,000
