Nikesh Arora is placing a $20 million bet of his own capital on his performance at his new gig.
The incoming CEO of Palo Alto Networks, the world’s biggest pure-play cybersecurity company by market capitalization, tells Coins2Day that he is purchasing millions of dollars in Palo Alto Networks shares in order to show his commitment to the new job, which he is set to start on June 6th. “It’s sort of like put your money where your mouth is,” he says.
Palo Alto Networks said it would match Arora’s personal investment with equity in the company via “restricted stock units” that will vest over a 4-year schedule.Additionally, the company will grant $40 million in restricted stock units that will vest over 7 years and 1 million stock options that will be realized only if Arora triples the company’s already sizable $19.2 billion market capitalization over that period.
On top of stock options, the former top Google and Softbank executive’s compensation package includes an annual base salary of $1 million, as the company disclosed in a filing to the Securities and Exchange Commission ahead of an earnings call Monday morning.
Asheem Chandna, a member of Palo Alto Networks’ board of directors and investor at Greylock Partners, a Silicon Valley venture capital firm, tells Coins2Day that Arora’s compensation package was designed to align with the company’s priorities as well as those of its shareholders for the long term.
“We wanted to make sure that Nikesh, as the new leader of the company, has strong skin in the game,” Chandna says. “And we wanted to make sure Nikesh is rewarded if he creates multiples of value for shareholders.”
The skin-in-the-game strategy is one Arora has employed before. In 2015, Arora bought $483 million worth of Softbank shares at a time when he appeared to be the Japanese telecom giant’s heir apparent. He sold the shares at a loss when he resigned his post a year later, following Softbank CEO Masayoshi Son’s decision to remain boss for as long as another decade.