Palo Alto Networks Inc DEF 14A, filed Oct 29, 2024

Palo Alto Networks Inc (PANW)

DEF 14A 2024-10-29 For: 2024-12-10

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Added on June 12, 2026

About this DEF 14A

Palo Alto Networks Inc filed this DEF 14A on October 29, 2024.

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☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☑		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material under §240.14a-12

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During fiscal 2023, the Compensation and People Committee of our Board granted Nikesh Arora, our Chief Executive Officer, a significant performance-based restricted stock unit retention award. The committee reached its decision following a rigorous and data-driven assessment, concluding that Nikesh had typified our leadership ethos – one that values high integrity and high performance for the benefit of our shareholders. The committee also recognized that he led the transformation of our company from a market leader in next generation firewalls into the world’s cybersecurity leader, with best-of-breed products across network security, cloud security and security operations. During his tenure, our financial performance and product innovation has accelerated, and our market capitalization increased from $19.1 billion (as of May 31, 2018, the last trading day prior to announcing Nikesh as our Chief Executive Officer) to $76.5 billion (as of July 31, 2023, the last day of fiscal 2023), and it continued to increase substantially throughout fiscal 2024. With Nikesh at the helm, Palo Alto Networks has delivered extraordinary value creation for our shareholders and has become the largest pure-play cybersecurity company in the world.		21
		Meetings with investors

		Representing 33% of our outstanding shares, while offering meetings to investors representing 47% of our outstanding shares (each as of June 30, 2024).

●	Reducing the maximum payout of our performance stock unit awards by 33.3%, from 600% to 400% of the target number of performance stock units, for fiscal 2025, fiscal 2024, and fiscal 2023 awards.
●	Updating the financial measures used in performance stock unit awards to annual NGS ARR and annual non-GAAP earnings per diluted share, further aligning executive compensation to the success of our Platformization strategy and focus on profitability, including for the remaining performance periods in the fiscal 2023 and fiscal 2024 performance stock unit awards.
●	Clearly defining the threshold performance levels for each performance metric in our fiscal 2025 cash incentive plan such that if either metric’s performance is more than 10% below its respective target for fiscal 2025, then there is no funding of or payout from our cash incentive plan.
●	Enhancing the disclosures around our compensation practices, as reflected in the compensation, discussion and analysis (“CD&A”) contained in this Proxy Statement, as well as in a letter from our Compensation and People Committee.

		Date and Time				Virtual Meeting Site				Who Can Vote
		Tuesday, December 10, 2024 11:00 AM Pacific Time				www.virtualshareholder meeting.com/PANW2024				Shareholders of record as of October 18, 2024 are entitled to vote


			“The rollout of our new Secure AI by Design portfolio has begun. Our solutions, powered by Precision AI^TM, are your ultimate defense in an AI-first world.”


			“The Board recognizes that we are leading this company for our shareholders’ benefit. Thank you for the trust you place in us and the opportunity to serve you and our company as directors.”

Items of Business		Board Vote Recommendation		For Further Details
1.	To elect three Class I directors named in the accompanying proxy statement to serve until our 2027 annual meeting of shareholders and until their successors are duly elected and qualified.		“FOR” each director nominee	Page 52
2.	To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending July 31, 2025.		“FOR”	Page 66
3.	To approve, on an advisory basis, the frequency of holding future advisory votes on named executive officer compensation.		“ONE YEAR”	Page 69
4.	To approve, on an advisory basis, the compensation of our named executive officers.		“FOR”	Page 70
5.	To approve an amendment to the Palo Alto Networks, Inc. 2021 Equity Incentive Plan to increase the number of plan shares reserved for issuance.		“FOR”	Page 126
6.	To consider and vote upon a shareholder proposal, if properly presented at the Annual Meeting, regarding a report on climate risks to retirement plan beneficiaries.		“AGAINST”	Page 138

	Online
Visit www.proxyvote.com prior to the Annual Meeting, 24 hours a day, seven days a week.
	By Phone
Call the phone number located on your proxy card or voting instruction form.
	By Mail
Complete, sign, date and return your proxy card or voting instruction form in the envelope provided.
	QR CODE
Scan the QR code on your voting materials to vote with your mobile device


3	Letter from our Chair
5	Letter from our Lead Independent Director
7	Notice of 2024 Annual Meeting of Shareholders
9	About Us
12	Our Board at a Glance
15	Our Corporate Governance at a Glance
16	Shareholder Engagement at a Glance
17	Executive Compensation at a Glance
	17	Our Compensation Best Practices	18	Significant At-Risk Compensation
19	Corporate Responsibility at a Glance
20	Proxy Roadmap
21	Corporate Governance
	21	Corporate Governance Highlights	37	Select Oversight Areas
	22	Board Responsiveness to Shareholders	38	Enterprise Risk Management Program
	25	Leadership Structure	39	Succession Planning
	28	Board Committees and Responsibilities	39	Communications with the Board of Directors
	33	Annual Board and Committee Self-Evaluations		Communications with the Board of Directors
		Annual Board and Committee Self-Evaluations	40	Corporate Governance Guidelines and Code of Business Conduct and Ethics
	35	Board’s Role in Strategy Oversight
	35	Board’s Role in Risk Oversight	40	Compensation and People Committee Interlocks and Insider Participation
41	Corporate Responsibility
	41	An Overview of Our Environmental, Social and Governance Strategies	43	Environmental
			45	Social
	41	ESG Oversight and Governance	49	Our ESG Journey
50	Voting Roadmap
52		Proposal No. 1 Election of Directors
	53	Director Tenure and Refreshment	63	Director Independence
	53	Board Diversity	64	Director Compensation
	54	Board Skills and Experience Matrix	65	Director Stock Ownership Guidelines
	55	Directors	65	Director Attendance
	62	Identification and Evaluation of Director Nominees
66		Proposal No. 2 Ratification of Appointment of Independent Registered Public Accounting Firm
	66	Fees Paid to the Independent Registered Public Accounting Firm	67	Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

	66	Auditor Independence

			68	Report of the Audit Committee
69		Proposal No. 3 Advisory Vote on the Frequency of Advisory Votes on Named Executive Officer Compensation
70		Proposal No. 4 Advisory Vote on the Compensation of our Named Executive Officers
71	Executive Compensation
	71	Letter from our Compensation and People Committee	102	Fiscal 2025 Compensation Decisions
		Letter from our Compensation and People Committee	103	Other Aspects of Our Executive Compensation Programs
	74	Compensation Discussion and Analysis		Other Aspects of Our Executive Compensation Programs
	78	We Followed Through on Our Commitments	108	Report of the Compensation and People Committee
	79	Compensation-Setting Process		Report of the Compensation and People Committee
	82	CEO and NEO Pay for Performance Alignment for Fiscal 2024	109	Executive Compensation Tables
		CEO and NEO Pay for Performance Alignment for Fiscal 2024	124	Executive Officers
126		Proposal No. 5 Amendment to Our 2021 Equity Incentive Plan
	126	Why Should Shareholders Vote to Approve the Amendment to the 2021 Plan?	129	Summary of the 2021 Plan
138		Proposal No. 6 Shareholder Proposal – Report on Climate Risks to Retirement Plan Beneficiaries
	138	Shareholder’s Proposal and Supporting Statement	139	Company Opposing Statement
141	Security Ownership of Certain Beneficial Owners and Management
143	Related Person Transactions
144	About the Annual Meeting
150	Other Matters
	150	Delinquent Section 16(a) Reports	150	Fiscal Year 2024 Annual Report and SEC Filings
151	Appendix A
	151	Calculation of Billings and Organic Operating Margin	153	Non-GAAP Financial Measures and Other Key Metrics
	152	Calculation of Adjusted Operating Margin, Free Cash Flow Margin and Adjusted Free Cash Flow Margin
154	Appendix B
	154	Amended and Restated 2021 Equity Incentive Plan

12	Our Board at a Glance
15	Our Corporate Governance at a Glance
17	Executive Compensation at a Glance
50	Voting Roadmap
54	Board Skills and Experience Matrix
71	Letter from our Compensation and People Committee
74	Compensation Discussion and Analysis
126	Amendment to Our 2021 Equity Incentive Plan


“Best Company Culture” and “Best Company for Women” “Palo Alto Networks’ culture in the Top 5% compared to similar sized companies”	Recognized as a Best Place to Work for People with Disabilities	“Palo Alto Networks is on InHerSight’s list of the 50 best companies to work for. . .”	“Most Loved Workplace” - “Palo Alto Networks puts its people first . . . The company is dedicated to employee development, innovation and collaboration”
December 2023 (Comparably)	July 2024 (Disability:IN)	July 2024 (InHerSight)	June 2024 (Newsweek)

●	Total revenue increased to $8.03 billion, by 16% compared to fiscal 2023.
●	Next-Generation Security annual recurring revenue, or “NGS ARR”, increased to $4.22 billion, by 43% compared to fiscal 2023.⁽¹⁾
●	Remaining performance obligations, or “RPO”, increased to $12.7 billion, by 20% compared to fiscal 2023.
●	GAAP net income per diluted share (“EPS”) increased to $7.28, by 469% compared to fiscal 2023.⁽²⁾
●	Continued to drive innovation through the launch of our Secure AI by Design product offers and our Precision AI security bundle.
●	Continued to return capital to our shareholders through our stock repurchase program, totaling $4.1 billion over the last six years.

Total Revenue ($ in billions)		NGS ARR ($ in billions)

RPO ($ in billions)		Earnings Per Diluted Share⁽²⁾($)

⁽¹⁾	NGS 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.
⁽²⁾	EPS increased to $7.28 in fiscal 2024, 469% compared to fiscal 2023, primarily due to our recognition of a deferred tax benefit from the net release of our valuation allowance on United States ("U.S.") federal, U.S. states other than California, and United Kingdom deferred tax assets in fiscal 2024.


Table of Contents

Leadership & Governance
	Senior Leadership Experience		Global/International Experience		Public Company Board Experience and Corporate Governance



Risk Management		Financial Knowledge and Expertise		Human Capital Management
	Risk Management Experience		Financial Knowledge and Expertise		Human Capital Management



Strategic
	Industry and IT/Technical Expertise		Cybersecurity/Information Security/Security		Diverse Backgrounds and Experiences



	Emerging Technologies and Business Models Experience		Sales, Marketing and Brand Management Experience


We reached out to shareholders representing 61% of our outstanding shares		We engaged in discussions with investors representing 55% of our outstanding shares (which is all shareholders that indicated a willingness to engage with us)		Our Lead Independent Director participated in discussions with investors representing 33% of our outstanding shares (21 meetings), while offering meetings to investors representing 47% of our outstanding shares

		Who we met with		●Investors holding 55% of shares outstanding engaged with in discussions ●Offered meetings with Lead Independent Director to shareholders holding 47% of shares outstanding ●Investors holding 33% of shares outstanding engaged with Lead Independent Director
		Our primary engagement team		●Lead Independent Director (participated in 21 meetings) ●Investor Relations team ●General Counsel & Corporate Secretary ●People team (human resources) ●Corporate Responsibility team
		What we discussed		●Executive compensation ●Board structure ●Board composition and governance, including Board refreshment and diversity ●Board risk oversight ●Board leadership ●Shareholder engagement ●ESG initiatives and disclosure

WHAT WE HEARD OVER THE YEARS		HOW WE RESPONDED
Board Governance Classified Board of Directors, dual role of CEO and Chairman and annual election of all Board members		●Adopted a majority voting requirement for uncontested elections of directors, including a resignation policy in the event a director does not receive a majority of the vote ●Annual review of our Board leadership structure, including whether an independent director should be the Chair of our Board ●Maintaining a strong Lead Independent Director ●Annual review to determine whether maintaining a classified Board is appropriate for our Company ●Annual survey of the members of our Board and self-evaluation of the Board and its committees
Board Oversight of Risks, Including Cybersecurity and ESG Risks How the Board is addressing oversight of increased, varied and new risks		●Reallocated ESG responsibilities among our Board committees, clearly identifying the responsibilities of each committee ●Formed a Security Committee of our Board to enhance oversight over security issues facing our Company, including cybersecurity ●Reconstituted our Nominating and Corporate Governance Committee as the Governance and Sustainability Committee to enhance the Board’s oversight of ESG matters ●Appointed Lorraine Twohill as co-Chair of our Governance and Sustainability Committee ●Added additional disclosure in this proxy statement relating to Board oversight
Board Diversity and Refreshment The duration of Board service by certain long-standing directors, and the makeup of the Board and the rationale therefore		●Two long-standing directors did not stand for re-election at our 2022 Annual Meeting of Shareholders ●The Board appointed Ms. Bawa and Dr. Gayle to our Board during fiscal 2021, increasing the gender, racial and ethnic diversity of the Board. Presently, four of our ten directors are women ●During the period between April 2019 and May 2021, we appointed four new independent directors: Ms. Bawa, Dr. Gayle, Ms. Twohill and Rt Hon Sir John Key ●Expanded disclosure in our proxy statement of the rationales as to why each of our directors continue to serve on our Board
Shareholder Engagement Continued 1:1 investor outreach on executive compensation, ESG and other matters of interest to our shareholders		●Conducted extensive shareholder and investor outreach ●In fiscal 2024, engaged in discussion with shareholders holding 55% of our outstanding shares (as of June 30, 2024) ●In fiscal 2024, our Lead Independent Director participated in 21 investor meetings and engaged in discussion with shareholders holding 33% of our outstanding shares, and offered meetings to 47% (each, as of June 30, 2024) ●Modified our executive compensation program as a result of shareholder feedback

WHAT WE HEARD OVER THE YEARS		HOW WE RESPONDED
Environmental, Social & Governance Initiatives and Disclosures Would like to see more information about how we develop and manage environmental, social and governance initiatives		●Published our second ESG report in fiscal 2024, in which we report on our carbon emissions and other sustainability initiatives ●Added more disclosure in our annual report on Form 10-K and our proxy statement describing our ESG initiatives and oversight ●Advanced our science-based emissions reduction strategies, including deployment of renewable energy at our Santa Clara, CA headquarters, towards our 100% renewable energy goal, and advocacy for climate action ●In fiscal 2024, established an Inclusion and Diversity Steering Committee, which is made up of members of our management to set objectives and oversee program implementation ●Invested in nonprofit organizations and our social impact programs to advance cybersecurity education and to help develop a diverse talent pipeline ●Operationalized our ESG governance structure through an ESG Steering Committee consisting of cross-functional leaders from management to recommend strategies and lead implementation of ESG programs, which reports regularly to our ESG Executive Council and the Board
Executive Compensation Prioritize and ensure the retention of Chief Executive Officer, stand by our pay-for-performance philosophy and the commitments made in our 2021, 2022 and 2023 proxy statements relating to the structure of our executive compensation program and enhanced disclosure, and reduce stock-based compensation expense as a percentage of revenue		●Incentivized our Chief Executive Officer to remain at the Company for the long term to enhance our prospects of delivering sustained shareholder value ●100% of the equity awards granted to our NEOs in fiscal 2024 were performance-based, with different performance targets than the cash incentive plan ●Maintained our robust stock ownership guidelines for our NEOs, including our Chief Executive Officer ●Maintained an ESG modifier to our cash incentive plan, and in response to shareholder feedback, expanded our disclosure in our Compensation Discussion and Analysis to include data regarding the scorecard measures ●Maintained a one-year post-vesting holding period for all NEOs, including our Chief Executive Officer ●Reduced stock-based compensation expense as a percentage of revenue from 21.8% in fiscal 2021 to 13.4% of revenue in fiscal 2024 ●For fiscal 2025, we significantly redesigned performance-based equity awards to reduce the maximum payout by 33.3%, and updated the financial measures to align with our Platformization strategy and drive balanced focus on Platformization and profitability ●Although we shifted strategy during fiscal 2024, we did not reset the fiscal 2024 performance targets for outstanding performance-based equity awards – the fiscal 2024 portion of the fiscal 2023 and fiscal 2024 performance stock unit awards resulted in 0% payout for fiscal 2024 performance, demonstrating our commitment to a pay-for-performance philosophy

●	The effectiveness of the policies, practices, and people in place at the Company to help ensure strong, independent Board oversight.
●	The importance of consistent, unified leadership to execute and oversee the Company’s strategy.
●	The strength of Mr. Arora’s vision for the Company and the quality of his leadership.
●	Our performance and the effect the leadership structure could have on our performance.
●	The Board’s performance and the effect the leadership structure could have on the Board’s performance.
●	The meaningful and robust responsibilities and the performance of our Lead Independent Director.
●	The views of our shareholders through our ongoing engagement efforts.
●	The practices at other companies and trends in governance.
●	The current state of our Company.

		Nikesh Arora Chair and Chief Executive Officer				John M. Donovan Lead Independent Director
	●Substantial knowledge and deep understanding of our business and the challenges we face ●Substantial international business experience and business acumen and valued strategic, financial and operational insights ●Day-to-day insight into our prospects, opportunities, strategies and challenges facilitates the timely deliberation by the Board of the most important matters ●Brings a unique, shareholder-focused insight to assist the Company to most effectively execute its strategy and business plans to maximize shareholder value ●Serves as an important bridge between the Board and management, and provides critical leadership for carrying out our strategic initiatives and confronting our challenges ●Provides the Board with more complete and timely information about the Company ●Provides a unified structure and consistent leadership direction internally and externally, allowing the Company to act rapidly and proactively to address new and evolving technology ●Proven success in leading Palo Alto Networks since joining the Company				●Independence, confidence and gravitas, enabling strong oversight of executive leadership ●Deep understanding of our business ●Strong working relationship with our Chair and Chief Executive Officer ●Strength and effectiveness of communication with our Chair and Chief Executive Officer, resulting in active and visible oversight of the issues, plans and prospects of the Company ●Strong working relationship with other management and our independent directors ●Substantial experience leading a large multinational company ●Strong background in corporate governance ●Strong background as a technologist ●Dedicated to his service as Lead Independent Director, as demonstrated by the fact that, during fiscal 2024, he held 21 meetings with shareholders holding 33% of our outstanding shares and offered to meet with shareholders holding 47% of our outstanding shares ●Promotes a collaborative and collegial environment for Board decision making ●Actively and effectively engages with our shareholders on an annual basis

●	Presiding at meetings of the Board at which the Chair is not present, including calling and presiding over executive sessions of the independent directors.
●	Serving as liaison between the Chair and the independent directors.
●	Developing agendas for Board meetings in collaboration with the Chair, communicating with independent Board members to ensure that matters of interest are being included on agendas for Board meetings, and ensuring adequate time is allocated for Board discussions.
●	Communicating with independent Board members and with management to affirm that appropriate briefing materials are being provided to Board members sufficiently in advance of Board meetings to allow for proper preparation and participation at meetings.
●	Ensuring the Board exercises appropriate risk management oversight, including providing direction related thereto to management.
●	Having the authority to call meetings of the independent directors.
●	Preparing agendas for meetings of the independent directors.
●	Organizing and leading the Board’s evaluation of the Chief Executive Officer.
●	Leading the Board’s annual self-evaluation and assessing areas of current and future improvement in Board performance.
●	If requested by major shareholders, ensuring that he is available, as necessary, for consultation and direct communication.

●	Has biennial one-on-one discussions with each independent director, as part of the Board’s annual evaluation process.
●	Has access to all committee materials.
●	Has the authority to engage independent consultants.
●	Interviews Board candidates, and assesses future Board needs.
●	Spends time with senior management outside of Board meetings (as necessary) to ensure a deep understanding of the business and strategy of the Company.
●	Participates in shareholder engagement planning and activities.

●	Each committee chair meets with management in advance of meetings to review and refine agendas, add topics of interest, and review and comment on materials to be delivered to the committee.
●	Every independent director has access to all committee materials.
●	Each committee chair provides a report summarizing committee meetings to the full Board at each regular meeting of the Board.
●	Each committee meeting includes adequate time for executive session and the committees meet in executive session on a regular basis with no members of management present (unless otherwise requested by the committee).
●	Each committee effectively manages its Board-delegated duties and communicates regularly with the Chair, Lead Independent Director, the Board, and members of management.

Board of Directors	Audit Committee	Compensation and People Committee	Corporate Development Committee	Governance and Sustainability Committee	Security Committee
Nikesh Arora			●
Aparna Bawa*	●	●	●		●
John M. Donovan**		●
Carl Eschenbach*					●
Dr. Helene D. Gayle*				●	●
James J. Goetz*	●		●		●
Rt Hon Sir John Key*	●				●
Mary Pat McCarthy*			●		●
Lorraine Twohill*					●
Nir Zuk

●	Member
	Committee Chair or Co-Chair
**	Lead Independent Director
*	Independent Director
	Financial Expert

Audit Committee
Chair:	Members:		Number of meetings in fiscal 2024: 7
Mary Pat McCarthy	Aparna Bawa	Right Honorable Sir John Key
	James J. Goetz
Our Audit Committee is responsible for, among other things: ●Selecting and hiring our independent registered public accounting firm, including leading the review and selection of the lead audit engagement partner. ●Evaluating the performance and independence of our independent registered public accounting firm. ●Approving the audit and pre-approving any non-audit services to be performed by our independent registered public accounting firm. ●Reviewing our financial statements and related disclosures and reviewing our critical accounting policies and practices. ●Reviewing and participating in the selection of our chief audit executive and periodically reviewing the activities and reports of the internal audit function and any major issues encountered in the course of the internal audit function’s work. ●Reviewing the adequacy and effectiveness of our internal control policies and procedures and our disclosure controls and procedures. ●Overseeing procedures for the treatment of complaints on accounting, internal accounting controls, or audit matters. ●Reviewing and discussing with management and the independent registered public accounting firm the results of our annual audit, our quarterly financial statements, and our publicly filed periodic reports. ●Reviewing and approving or ratifying any proposed related person transactions. ●Preparing the Audit Committee report that the SEC requires in our annual proxy statement.

Compensation and People Committee
Chair:	Members:	Number of meetings in fiscal 2024: 4
Right Honorable Sir John Key	Aparna Bawa
	John M. Donovan
Our Compensation and People Committee is responsible for, among other things: ●Reviewing and approving our Chief Executive Officer’s and other executive officers’ annual base salaries, incentive compensation arrangements, including the specific goals and amounts, equity compensation, employment agreements, severance arrangements and change in control agreements, and any other benefits, compensation or arrangements. ●Establishing and administering our equity compensation plans. ●Overseeing our overall compensation philosophy and compensation plans. ●Preparing the Compensation and People Committee report that the SEC requires to accompany the Compensation Discussion and Analysis contained in this proxy statement. ●Administering the Company’s compensation recovery and clawback policies. y Overseeing our succession planning process for the Chief Executive Officer and members of the management team. ●Overseeing our talent management and people management, including the Company’s inclusion and diversity initiatives and results, the Company’s pay equity reviews and results, and the Company’s FLEXLearning and FLEXBenefits initiatives. ●Reviewing and discussing with management the risks arising from the Company’s compensation philosophy and practices applicable to employees to mitigate such risks.

Corporate Development Committee
Chair:	Members:
John M. Donovan	Nikesh Arora	James J. Goetz
	Aparna Bawa	Mary Pat McCarthy
Our Corporate Development Committee is responsible for, among other things: ●Assisting the Board in fulfilling its responsibilities relating to the review, evaluation, and approval of strategic, corporate development and other opportunities to enhance and complement the Company’s product suite, improve stakeholder satisfaction, and increase shareholder return. ●Reviewing and evaluating proposed acquisition and investment strategies with management. ●Reporting to the Board the Committee’s approval or recommendation of acquisitions or investment transactions and of such activity in general.

Governance and Sustainability Committee
Co-Chairs:	Members:	Number of meetings in fiscal 2024: 4
John M. Donovan	Dr. Helene D. Gayle
Lorraine Twohill
Our Governance and Sustainability Committee is responsible for, among other things: ●Identifying and evaluating individuals who are qualified to become members of the board of directors and selecting and recommending to the Board individuals as director nominees and appointments to the board of directors. ●Evaluating and making recommendations regarding the composition, organization, and governance of our board of directors and its committees, including issues of integrity, experience, expertise and diversity of membership. ●Considering board of director leadership structure, including the separation of the chairperson and chief executive officer roles and the appointment of a lead independent director and making recommendations to the board of directors. ●Evaluating and making recommendations regarding the creation of additional committees or the change in mandate or dissolution of committees. ●Reviewing and making recommendations with regard to our corporate governance guidelines and compliance with laws and regulations. ●Reviewing and approving conflicts of interest of our directors and corporate officers, other than related person transactions reviewed by our Audit Committee. ●Overseeing our annual board of director and committee self-assessment process. y Overseeing our ESG efforts and priorities and related policies and programs.

Security Committee
Chair:	Members:		Number of meetings in fiscal 2024: 4
John M. Donovan	Aparna Bawa	Rt Hon Sir John Key
	Carl Eschenbach Dr. Helene D. Gayle James J. Goetz	Mary Pat McCarthy Lorraine Twohill
Our Security Committee is responsible for, among other things: ●Overseeing (i) our policies, plans, metrics and programs relating to the physical security of our facilities and employees, and enterprise cybersecurity and data protection risks associated with our security-related infrastructure and related operations, and (ii) the effectiveness of our programs and practices for identifying, assessing and mitigating such risks across our business operations. ●Overseeing our cyber crisis preparedness, security breach and incident response plans, communication plans, and disaster recovery and business continuity capabilities. ●Overseeing the safeguards used to protect the confidentiality, integrity, availability, safety and resiliency of the Company’s employees, facilities, intellectual property and business operations. ●Reviewing and discussing with management the cybersecurity risks associated with our outside partners (such as vendors, suppliers, operations partners, etc.). ●Overseeing our compliance with applicable information security and data protection laws and industry standards, new or updated legal implications of security, data privacy, or other regulatory or compliance risks to us or our employees, facilities and business operations and the threat landscape facing our business operations. ●Reviewing and advising on our physical and cybersecurity strategy, crisis or incident management and security-related information technology planning processes and review strategy for investing in our security systems. ● Reviewing and discussing with management our public disclosures relating to the Company’s security of its employees, facilities and information technology systems, including privacy, network security and data security.

ACTION ITEM		ANNUAL BOARD AND COMMITTEE ASSESSMENT
Assessments and Discussions		Each director completes a survey to evaluate the Board and a separate survey for each committee on which they serve. Topics covered include, among others: ●Board size, composition, diversity, independence, and expertise ●Board culture, effectiveness, initiative, and strategic focus ●Board committee structure, membership, independence, responsibilities, and performance ●Board leadership structure ●Board education ●Board committee processes, including number of meetings, time allotted, sufficiency of executive sessions, and availability of management ●Risk oversight, access to information, and ethics ●Relationship with management, access to management, and management responsiveness ●Corporate governance policies and procedures ●Board and management succession planning ●Lead Independent Director meets individually with members of Board at least biennially to evaluate the Board and its committees
Analysis and Discussion		Results of these surveys are analyzed and processed as follows: ●Our General Counsel reviews and summarizes the responses from each director’s assessments for the Chair, the Lead Independent Director, and each committee chair ●Results are reviewed and robustly discussed with the full Board and each committee ●Each director participates in a one-on-one, open ended interview facilitated by the Lead Independent Director to discuss the results of the evaluations, and solicits input and feedback on the performance and effectiveness of the Board and its committees ●Directors are encouraged to provide ongoing feedback in addition to the annual self-assessment
Incorporation of Feedback and Action Planning		These self-evaluations show that our Board and its committees operate effectively and help ensure continued effectiveness. These evaluation processes have led to various refinements over recent years, including, for example: ●Ensuring the responsibilities of our Board committees are well defined, including with the establishment of our Security Committee for dedicated risk oversight of security matters, and reconstitution of the Governance and Sustainability Committee to oversee ESG matters ●Ensuring the Board and committee agendas continue to be focused on the Company’s key strategic priorities ●Increasing Board focus on succession planning and board refreshment ●Prioritizing regular director education regarding our industry, the industry landscape, and current events, including the impact of rapidly evolving technology (such as AI)


Annually holds a strategy offsite, receiving detailed presentations from, and engagement with, senior management across the Company	Annually reviews and approves the Palo Alto Networks operating plan	Quarterly engagement with senior management on critical business matters that tie to our overall strategy	Regularly interacts with the next generation of leadership to ensure the talent pipeline remains diverse, inclusive and up to the task


●Meets with our Chief Executive Officer and other members of the senior management team at quarterly meetings of our Board, where, among other topics, they discuss risks facing our Company, as well as at such other times as they deem appropriate ●Reviews strategic and operational risk in the context of reports from the management team, including data privacy, information security and cybersecurity, receives reports on all significant committee activities at each regular meeting, and evaluates the risks inherent in significant transactions



●Assists our Board in fulfilling its oversight responsibilities with respect to risk management in the areas of liquidity risk, internal control over financial reporting and disclosure controls and procedures, legal and regulatory compliance, and discusses with management and the independent auditor guidelines and policies with respect to risk assessment, risk management and risk mitigation ●Reviews our antifraud programs and controls ●Reviews our major financial risk exposures and the steps management has taken to monitor and control these exposures	●Assists our Board in fulfilling its oversight responsibilities with respect to the management of risk associated with Board organization, leadership, membership and structure, and corporate governance ●Reviews and monitors compliance with the Company’s Code of Business Conduct and Ethics ●Oversees and periodically reviews the Company’s risks relating to corporate social responsibility and environmental sustainability ●Oversees and discusses, as needed, with management, compliance with applicable laws, regulations and internal compliance programs	●Assist our Board in fulfilling its oversight responsibilities with respect to our compensation programs ●Assesses risks created by the incentives inherent in our compensation programs and policies, and determines whether they encourage excessive risk taking	●Assists our Board in fulfilling its oversight responsibilities with respect to the management of risk associated with cybersecurity, information security and physical security of the Company



Responsible for the day-to-day management of risks our Company faces