Palo Alto Networks Inc PANW

30% shingled-prose overlap between the two filings.

2024: 200,000 chars · 2025: 200,000 chars

• Committee Report:33% overlap (5,998 → 6,000 chars)
• Pay Ratio (Item 402(u)):32% overlap (52,200 → 44,853 chars)
• Say-on-Pay proposal:14% overlap (3,853 → 25,000 chars)

• changedOur Compensation and People Committee believes that the fiscal 2025 2024compensation of our NEOs is commensurate with our size and performance, the significant scope of their roles and responsibilities, and their strong leadership in a manner consistent with our corporate values of disruption, collaboration, execution, inclusion, and integrity.
• newNikesh AroraChief ExecutiveOfficer, Chair ofthe BoardDipak GolechhaExecutive VicePresident, ChiefFinancial OfficerWilliam “BJ” JenkinsPresidentLee KlarichExecutive VicePresident, Chief Product andTechnology OfficerNir ZukFounder Emeritus, Former Executive Vice President, Chief TechnologyOfficer
• newCD&A HIGHLIGHTS•Our fiscal 2025 executive compensation programs align with recognized best practices •For fiscal 2025, our NEOs led us to delivering impressive financial results for our shareholders with record totals in total revenue of $9.22 billion, NGS ARR of $5.58 billion, RPO of $15.8 billion, and Non-GAAP EPS of $3.34•We continued our disciplined focus on our platformization strategy, which has underscored our financial results and we expect will continue to drive us toward delivering on our long-term financial performance goals and enhanced value for our customers and shareholders •We remained at the forefront of innovation through the introduction of new offerings, including Prisma Access Browser 2.0, Cortex Cloud, Prisma AIRS, and Cortex XSIAM 3.0•We made strategic decisions to capitalize on the inflection point in the cybersecurity industry being caused by generative and agentic artificial intelligence (“AI”) through our acquisition of Protect AI, Inc., accelerating our AI security offerings, and our proposed acquisition of CyberArk Software Ltd. (“CyberArk”), which will mark our entry into the Identity Security space following the closing of the proposed transaction•We engaged in discussions with shareholders holding 53% of our outstanding shares as of June 30, 2025, with a focus on the topics that mattered to them, including our executive compensation program•We implemented meaningful changes to our executive compensation programs, particularly our equity compensation program to address shareholder feedback•We followed through on the commitments we made to our shareholders in our 2024 Proxy Statement
• changed76 2025 2024Proxy Statement
• changedOur continued success has made our employees and executives more attractive as candidates for employment with other companies, and we are deeply intentlyfocused on maintaining competitive compensation programs, in part, to address recruiting efforts by other companies in the technology industry where the demand for talent far exceeds the supply of qualified candidates.
• newAccordingly, our compensation programs are built on a steadfast pay-for-performance philosophy, directly linking executive compensation to the achievement of our strategic, financial and operational goals.
• newDrive the future of Palo Alto Networks•Maintain a successful, profitable, and sustainable business through our next phase of growth•Bolster our vision of a world where each day is safer and more secure than the one beforeShareholder Alignment•Drive sustainable short- and long-term value for our shareholders by deeply aligning the interests of our executives with those our shareholders•Tailoring our compensation programs to be responsive to shareholder feedbackPay-for-Performance •Demand and reward our executives for achieving aggressive financial and strategic goals •Motivate outperformanceAttract, Motivate and Retain Talent •Attract, motivate, and retain highly qualified executives who possess the skills and leadership necessary to continue to grow our business and meet the challenges of the AI-era for cybersecurity•Provide competitive compensation packages that are heavily weighted to performance and at-risk compensation, while ensuring alignment with best practices and our compensation peer group
• changed2025 2024Proxy Statement 77
• changedShareholder Engagement in Fiscal 2025 2024
• changedEach year, our Compensation and People Committee routinelyconsiders the results of our annual Say-on-Pay vote and shareholder feedback regarding our executive compensation program gathered throughout the year.
• newAt our 2024 Annual Meeting, a majority of votes cast were in favor of our fiscal 2024 executive compensation program, which is an encouraging increase from the 38% of votes cast in favor of our fiscal 2023 executive compensation program.
• newWe believe the increase in support at our 2024 Annual Meeting reflects our commitment to addressing shareholder feedback and the meaningful changes we are making to our executive compensation programs.
• newHowever, we appreciate that the 2024 Say-on-Pay vote result demonstrates that you remain not completely satisfied with our executive compensation programs, even though our fiscal 2024 executive compensation program did not fully reflect all the changes we made in fiscal 2025 that were previewed in our 2024 Proxy Statement.
• changedAccordingly, Followingadisappointing“SayonPay”voteatour2023annualmeetingofshareholders,infiscal2024,we once again undertook extensive shareholder engagement efforts to obtain your views on executive compensation, corporate governance and other matters, and to determine how best to respond to that feedback.
• changedOur Lead Independent Director once again played a central role in leading our shareholder outreach efforts in fiscal 2025 2024,andtheChairofourCompensationandPeopleCommitteealsoengagedwithnumerousshareholdersto understand your theirperspectives regarding our executive compensation programs. program.
• newAs a result, in fiscal 2026 we again made meaningful improvements to our executive compensation program based on the feedback we receive from our shareholder engagements.
• newThe continuous shareholder feedback that we receive has shaped the executive compensation program implemented by our Compensation and People Committee.
• newIn fiscal 2025, there were a select few shareholders with whom we engaged that did not actively offer feedback during our discussions, and, accordingly, we drew upon on prior years’ feedback from those shareholders as a guide for their perspectives on our executive compensation program.
• new56%Contacted53%Engaged35%Lead Independent Director Engaged14meetingswith LeadIndependentDirectorWe contacted shareholders representing 56% of our outstanding sharesWe engaged in discussions with investors representing 53% of our outstanding shares (all shareholders willing to engage with us)Our Lead Independent Director engaged in discussions with investors representing 35% of our outstanding shares, while offering meetings to investors representing 45% of our outstanding shares
• new* Shareholder ownership, to our knowledge, as of June 30, 2025
• changedFiscal 2025 2024Executive Compensation Program Changes
• newIn fiscal 2025, we fully implemented a number of key changes to our executive compensation program in response to shareholder feedback, many of which were previewed in our 2024 Proxy Statement and were not yet fully implemented into our 2024 executive compensation programs.
• newThose changes have now been fully implemented into our executive compensation programs.
• newHowever, we also appreciate the need to continually look forward, including in light of the result of our 2024 Say-on-Pay vote.
• newWhile much of the feedback we received through the past year of extensive shareholder outreach and engagement focused on ensuring we follow through on the commitments and changes previewed in our 2024 proxy statement, we continued to take further steps to incorporate your feedback into our executive compensation programs.
• newThis led to further refinements to our executive compensation program for fiscal 2026 with a steadfast focus on pay-for-performance.
• newA summary of what we learned from you and how we responded in our fiscal 2025 executive compensation program and in our fiscal 2026 executive compensation program is included in the table below.
• changed78 2025 2024Proxy Statement
• newWHAT WE HEARD AND LEARNEDWHAT WE DID IN FISCAL 2025Our shareholders appreciated the changes made to our executive compensation program in fiscal 2025, as previewed in our 2024 Proxy Statement•We once again undertook extensive shareholder engagement efforts on executive compensation matters, which led to meaningful changes in fiscal 2026 to further align our program to reflect shareholder insights (discussed below) Shareholders offered mixed feedback on the maximum payout of the CEO annual equity compensation:•Active portfolio managers were generally supportive of our compensation philosophy, expressing their view that we compensate our CEO in a manner sufficient to ensure we retain him in a highly competitive talent market •Passive investors expressed their view that our CEO’s compensation remains high, given the one-time five-year retention grant made in June 2023, but they did not offer any quantitative input or other specific feedback•Balanced the views of our shareholders and determined to maintain aggressive performance targets, directly tied to company strategic and financial goals, that only provide above target payouts for meaningful outperformance.
• new•We believe this addresses the views of active portfolio managers by enabling compensation for our CEO in a manner that ensures and incentivizes his retention, and the views of passive investors by ensuring our compensation payouts are directly linked with performance that will drive meaningful shareholder returns through aggressive performance target setting.
• newFollow through on our 2024 proxy statement commitment to reduce the PSU maximum payout, and consider whether TSR modifier is disproportionately upside weighted•Reduced maximum payout of outstanding PSUs by 33%, from 600% to 400% of target payout, which we previewed in our fiscal 2024 proxy statement, but are now reflected in our fiscal 2025 equity awardsFollow through on our 2024 proxy statement commitment to align performance measures for long-term incentive equity awards, and clearly show a pay-for-performance connection•Followed through on our 2024 proxy statement commitment by aligning financial performance measures to our long-term strategy for all PSUs and remaining PSU performance periods by using NGS ARR and annual Non-GAAP EPS given our strategy shift to platformization in fiscal 2024, which helped contribute to a year of strong financial achievement and resulted in the prior PSU financial metric, billings, no longer being a key Company financial metric Follow through on our 2024 proxy statement commitment to refine the structure of the annual incentive plan to clarify whether payouts occur if a relevant financial metric is not achieved•Followed through on our 2024 proxy statement commitment by clearly defining and disclosing threshold performance levels for each financial metric so that there is no payout if achievement is more than 10% below either target performance measureFollow through on our commitment to not make one-time equity awards to our CEO with vesting or performance metrics that overlap with the June 2023 retention grant•Followed through on our commitment, and awarded no one-time equity awards granted to our CEO (or any other NEO) in fiscal 2025LOOKING AHEAD TO WHAT WE DID FOR FISCAL 2026Our shareholders asked us to consider whether the TSR modifier in the executive PSUs is disproportionately weighted toward upside opportunityFor fiscal 2026, we increased the target relative TSR for a 1.0x achievement in the relative TSR modifier increased the target relative TSR for a 1.0x achievement in the relative TSR modifier to be the 55th percentile rank from the 50th percentile rankContinued discussion around maintaining our commitment to a rigorous and clear linkage between pay and performance For fiscal 2026, the maximum and threshold achievement for the NGS ARR performance measure has be the maximum and threshold achievement for the NGS ARR performance measure has been increased 33.3% to required outperforming or underperforming the NGS ARR target by at least $400 million, instead of $300 million
• changed2025 2024Proxy Statement 79
• changedROBUST AND INDEPENDENT COMPENSATION DECISION-MAKING, ALIGNED WITH OUR CORPORATE VALUES 100% ✓100%Independent Compensation and People Committee Independent ✓Independentcompensation consultant Annual ✓Annualreview of compensation strategy Consideration ✓Considerationof annual Say-on-Pay vote and other shareholder feedback Maintain our commitments to our shareholders in our 2024 Proxy StatementCOMPENSATION COMPENSATIONBEST PRACTICESPay for PerformanceCompensation PoliciesWhat We Don’t Do Significant majority PRACTICES✓Majorityof compensation is performance-based and at-risk 100% ✓100%of short-term incentive cash compensation is performance-based and at-risk Inclusion ✓Inclusionof Corporate Responsibility ESGmodifier to cash incentive plan Use of multiple different performance measures in both cash plan,whichmodifiestheannualincentive plan cashcompensation(plusorminus10%),basedonourperformancerelativetoanESGscorecardwithclimate,inclusionand long-term equity incentive program 100% humancapitalmetrics✓100%of equity awards granted to our NEOs in fiscal 2025 2024were performance-based and use performance-based,basedondifferent performance metrics than the annualcash incentive plan Robust ✓Nosingletriggervestingofequityawardsonoccurrenceofachangeincontrol✓Nodividendspaidonunvestedequity✓Robuststock ownership guidelines for NEOs One-year ✓One-yearpost-vesting holding period for all NEOs, including our Chief Executive Officer, subject to Officer✓Nohedgingorpledging,exceptlimited exceptions Meaningful pledgingpermittedwiththepriorapprovaloftheGovernanceandSustainabilityCommittee✓Meaningfulcompensation recovery and clawback policies Limited ✓Limitedperquisites and personal benefits Assessing ✓NodefinedbenefitplansorSERPs✓Assessingand implementing the advice of independent compensation consultant, including a decision-making framework to further ensure alignment of executive compensation decision with our pay-for-performance philosophy No single trigger vesting of equity awards on occurrence of a change in control No dividends paid on unvested equity No hedging or pledging, except limited pledging permitted with the prior approval of the Governance and Sustainability Committee No defined benefit plans or special executive retirement plans
• changed80 2025 2024Proxy Statement
• newWe Continue to Meet Our Commitments
• changedSummarized below are our fiscal 2025 2024commitments, and our follow-through followthroughin meeting those commitments.
• changedOUR COMMITMENTS FOR FISCAL 2025OUR FOLLOW-THROUGHMaintain 2024OURFOLLOWTHROUGHMaintaina robust shareholder outreach program Provide more transparency in our executive compensation disclosures, as well as more robust CD&A disclosures Disclose the target value of equity grants to our NEOs for the completed fiscal year in the CD&A Maintain robust stock ownership guidelines Make any one-time awards to NEOs outside of the normal grant cycle (other than new hire awards) a majority performance-based, and only make such grants in exceptional circumstances Not grant our CEO additional one-time equity awards of any variety with vesting or performance metrics that would overlap with the one-time performance-based restricted stock unit retention award granted to him in June 2023 Make annual equity grants to our NEOs at least 75% performance-based Require a one year one-yearminimum vesting period for all grants to our Chief Executive Officer and other NEOs going forward, and implement a policy to require our Chief Executive Officer and other NEOs to hold all net shares for one year after vesting, vestingsubject to a limited exception certainexceptionsUse a performance-based restricted stock unit (“PSU”) award design that requires sustained performance over multiple years for any payout Include a relative TSR modifier to our executive PSU awards Ensure that ongoing incentive goals are considered challenging with targets set at or above management guidance For completed performance periods, disclose performance targets compared to actual results and corresponding payout scale Avoid duplicate performance metrics in our cash incentive plan and PSU awards Do not make upward discretionary adjustments except for extraordinary circumstances Include a Corporate Responsibility anESGmetric in fiscal2024cash incentive plan to ensure linkage between compensation and our Corporate Responsibility ESGgoals
• changed2025 2024Proxy Statement 81
• changed82 2025 2024Proxy Statement
• changedPARTICIPANTROLEINCOMPENSATIONDETERMINATIONPROCESSCompensation and People CommitteeManagementIndependent Compensation Consultant •Review, Committee●Review,evaluate and approve the compensation arrangements, plans, policies, and practices for our executives•Oversee NEOs●Overseeand administer cash-based and equity-based compensation plans•Review plans●Reviewour executive compensation program, from time to time, to determine whether they are appropriate, properly coordinated, achieve their intended purposes and to make any modifications to existing plans and arrangements or to adopt new plans or arrangements•Retain arrangements●Retainthe services of external advisors, including compensation consultants, legal counsel and other advisors, from time to time, as it sees fit, in connection with carrying out its duties•Together dutiesManagement●Togetherwith our independent compensation consultant, the Chief Executive Officer, Officerand the Chief People Officer, Officerassist the Compensation and People Committee in the execution of its responsibilities by providing information on corporate and individual performance, market data with respect to compensation and management’s perspective and recommendations on compensation matters•Chief matters●ChiefExecutive Officer makes recommendations to the Compensation and People Committee regarding compensation matters, including the compensation of executive officers (other than himself)•Chief himself)●ChiefExecutive Officer participates in meetings of the Compensation and People Committee (other than portions of meetings that involve discussions of his own compensation and executive sessions)•While compensation)●Whileour Compensation and People Committee solicits the recommendations and proposals of our Chief Executive Officer with respect to compensation-related matters, they theserecommendationsandproposalsare only one factor in our Compensation and People Committee’s decision-making process•Assist the Compensation and People Committee in executing the executive compensation strategy and guiding principles, assessing the current target total direct compensation opportunities of our executive officers, including comparing them against competitive market practices, developing a compensation peer group and advising on executive compensation decisions•Meridian Compensation Partners, a national compensation consulting firm, was retained by the Compensation and People Committee for fiscal 2025•Our Compensation and People Committee assessed the independence of Meridian Compensation Partners taking into account, among other things, the factors set forth in Exchange Act Rule 10C-1 and the listing standards of Nasdaq and has concluded that no conflict of interest exists with respect to the work that Meridian Compensation Partners performs for our Compensation and People Committee•Meridian Compensation Partners did not provide any services to the Company other than the services provided to our Compensation and People Committee process
• changed2025 2024Proxy Statement 83
• changedTo assess the competitiveness of our executive compensation program and to assist in setting compensation levels, at the Compensation and People Committee’s request, Meridian Compensation Partners, the committee’s independent compensation consultant, compiled market data from a compensation peer group approved by our Compensation and People Committee, Committeeand industry surveys, including the Radford Global Technology Executive Compensation Survey.
• changedThe Compensation and People Committee, with the assistance of Meridian Compensation Partners, then analyzed the market and survey data when making fiscal 2025 2024compensation decisions.
• changedFor fiscal 2025, 2024,our Compensation and People Committee continued to compare and analyze our executive compensation program and each component of executive compensation against data from a formal compensation peer group of companies.
• changedIn the context of our annual executive compensation review, with assistance from Meridian Compensation Partners and input from management, in February 2024, 2023,our Compensation and People Committee reviewed the peer group of publicly-traded technology companies used to provide information regarding compensation practices for fiscal 2024 2023to determine if any changes were appropriate for use in considering fiscal 2025 2024pay decisions.
• changedIn determining which companies to include in the peer group, our Compensation and People Committee considered companies that met some or all of the following updatedcriteria:
• new•had (i) revenue between 0.33 to 3.0 times our revenue, (ii) a market capitalization between 0.33 to 3.0 times our market capitalization, (iii) a market capitalization to revenue ratio greater than 5.0, and (iv) a number of employees between 0.5 to 2.0 times the number of our employees;
• new•had revenue growth greater than 10% in at least two of the last three years and TSR growth greater than 10% in at least two of the last three years;
• new•was headquartered on the west coast of the United States, operated in the software industry, and was selected by Institutional Shareholder Services as one of our peer companies; and
• new•whether we were included in the company’s peer group, whether the company provided some cybersecurity services, whether the company’s chief executive officer was a founder with an atypical compensation structure, and the company’s relevant acquisition activity.
• newBased on this review, and taking into account Meridian Compensation Partners’ review and recommendation, the following changes were made to our peer group for fiscal 2025, with the resulting peer group placing us at the 81st percentile of the peer group on both revenue and market capitalization as of December 31, 2023:
• new–Removed: Gen Digital Inc., VMWare, Inc., Splunk Inc., and Juniper Networks, Inc.
• new+Added: Adobe Inc. and Synopsys, Inc.
• changedAccordingly, the following publicly-traded companies made up our compensation peer group for fiscal 2025: 2024:
• newAdobe Inc.Akamai Technologies, Inc.Autodesk, Inc.Cadence Design Systems, Inc.CrowdStrike Holdings, Inc.Fortinet, Inc.Intuit Inc.Keysight Technologies, Inc.NetApp, Inc.Paychex, Inc.Roper Technologies, Inc.ServiceNow, Inc.Snowflake Inc.SS&C Technologies Holdings, Inc.Synopsys, Inc.Workday, Inc.
• changed84 2025 2024Proxy Statement
• newCEO and Other NEO Pay Mix for Fiscal 2025
• changed•Pay Payfor performance is a cornerstone of our compensation philosophy.
• changedWe balance our strong pay-for-performance compensation philosophy – where the vast majority of our Chief Executive Officer and other NEOcompensation NEOcompensationis at-risk and performance-based – with our need to recruit, incentivize, and retain talentedexecutives talentedexecutivesin a highly competitive market.
• changedThe result is an executive compensation program that is significantlyweighted significantlyweightedtoward at-risk compensation tied to our financial and operational performance.
• changedThe graphs below illustrate the predominance of at-risk and performance-based components of our fiscal 2025 2024compensation program for our Chief Executive Officer and other NEOs, based on total target annual compensation.
• newCEOAverage of Other NEOs1
• new(1)Mr. Zuk received no equity grant for fiscal 2025 and, as such, approximately 50 percent of Mr. Zuk’s target compensation was performance-based in fiscal 2025.
• newAccordingly, Mr. Zuk has been omitted from the analysis in this graphic for presentation purposes.
• newOur Compensation and People Committee focuses on awarding compensation commensurate with the position and responsibilities of our NEOs, including as their responsibilities may change, as well as their performance.
• changedHere, Inthissection,we provide further detailedinsights into the compensation of our NEOs, including a summary of the rationale for the decisions reached by our BoardandCompensation and People Committee.
• changed2025 2024Proxy Statement 85
• newLEADERSHIP THAT DRIVES OUR STRATEGIC VISION AND GROWTH
• newOur NEOs have been instrumental in driving our strategic vision, culture, and business trajectory.
• newSince Mr. Arora joined, we have evolved from a single product next-generation firewall company, to a cybersecurity leader across firewall, SASE, cloud security, and security operations, with AI integrated into each of our platforms.
• newAs the following shows, our TSR since Mr. Arora become CEO in 2018 significantly outperformed our 2025 compensation peer group and the S&P 500.
• newSee “—Compensation-Setting Process—Competitive Positioning” for a list of the companies in our 2025 compensation peer group.
• newSource: S&P Capital IQ, based on the latest closing price as of the beginning of the period and as of July 31, 2025.
• newThe compensation peer group TSR for our 2025 compensation peer group is the weighted-average TSR, based on the respective market capitalization of each peer at the beginning of each fiscal year, over the time period, and includes only publicly-traded companies as of such date.
• changedLed by Mr. Arora, we theCompanyhasfocused on three strategic priorities that proved priorities,critical to our success to date: long-termsuccess:transforming network security, delivering comprehensive cloud native security, securityand revolutionizing security operations, in each case poweredbyPrecisionAI™,driving our platformization strategy.
• newNow, when faced with the technological advancements presented by generative and agentic AI, our leadership has again made strategic decisions during fiscal 2025 that the Compensation and People Committee believes position us well for the long-term.
• newOur leadership’s successful execution of our strategies has led to the following notable highlights:
• new•A $66 billion increase in market capitalization since our fiscal year end 2022—an increase of 133%.
• new•Compound annual growth rates of 19% in revenue and 38% in Non-GAAP EPS, from fiscal year end 2022 through fiscal year end 2025, resulting in impressive totals in revenue of $9.22 billion and in Non-GAAP EPS of $3.34 for fiscal 2025 (please see Appendix A for a reconciliation of GAAP to non-GAAP measures).
• new•Compound annual growth rates of approximately 43% in NGS ARR and 25% in RPO, from fiscal year end 2022 through fiscal year end 2025, resulting in NGS ARR of $5.58 billion and $15.8 billion of RPO for fiscal 2025.

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