December 7, 2020
Luis Felipe Visoso
Palo Alto Networks, Inc.
3000 Tannery Way
Santa Clara, California 95054
Re: Addendum to Employment Offer Letter (the Addendum)
In confirmation of our conversation on December 6, 2020, in consideration of your continued employment by Palo Alto Networks, Inc. (the Company), I would like to confirm that the Company intends to provide you the following:
(a) Equity. So long as you continue to be employed by the Company on each such date, the Company will recommend to the Companys compensation committee (the Committee) each October beginning in 2021 through October 2027 that you be granted a Performance Stock Unit award pursuant to the Companys employee equity incentive plans (the Plan). Each award will have an approximate value of $4,000,000, and will in each case be subject to the Committees approval. The recommendation would be to vest over a 4-year period from the grant date subject to you being a Service Provider under the Plan terms through each vesting date.
(b) Performance Option. The Company will make a one-time grant to you of a stock option to purchase 182,659 Shares pursuant to the Companys 2012 Equity Incentive Plan that results in such option having an approximate aggregate grant date fair value for financial accounting purposes of $15,000,000 (the Performance Option) with the terms described below. The Performance Option will have a per Share exercise price equal to the fair market value of a Share on the grant date. The Performance Option will have a maximum term equal to 6 years, except that the 1/4 of the Performance Option described under clause (iv) below will have a maximum term of 6.5 years.
The Shares subject to the Performance Option will become eligible to vest (Eligible Option Shares) based upon achievement of the following stock price targets (measured based on the average closing price for a period of 30 consecutive trading days (Stock Price Achievement) during the period specified below following the grant date of the Performance Option (the Performance Window)):
(i) 1/4 of the Shares subject to the Performance Option will become Eligible Option Shares upon Stock Price Achievement on or before November 1, 2023 that equals or exceeds $397.00 per Share.
(ii) 1/4 of the Shares subject to the Performance Option will become Eligible Option Shares upon Stock Price Achievement on or before November 1, 2024 that equals or exceeds $496.25 per Share.