Palo Alto Networks CEO Nikesh Arora Enters $147M Variable Prepaid Forward Contract

Transaction Overview

On October 12, 2026, Nikesh Arora, Chief Executive Officer and Director of Palo Alto Networks Inc ($PANW), entered into a variable prepaid share forward contract through the Aurora Trust covering up to 500,000 shares of common stock.

Key Terms of the Forward Contract

• Upfront Cash Consideration: Approximately $147.3 million received from an unaffiliated dealer.
• Collared Price Bands:
  • Floor Price: $342.38
  • Cap Price: $755.25
• Settlement Formula:
  • If Settlement Price $\le$ $342.38: Deliver all 500,000 shares (or cash equivalent).
  • If $342.38 $<$ Settlement Price $\le$ $755.25: Deliver $(500,000 \times \frac{$342.38}{\text{Settlement Price}})$ shares.
  • If Settlement Price $>$ $755.25: Deliver $500,000 \times \frac{$342.38 + (\text{Settlement Price} - $755.25)}{\text{Settlement Price}}$ shares.
• Expected Maturity: October 2029.
• Voting & Beneficial Ownership: Retained by the trust unless physical settlement occurs or a default/termination event takes place.

Rationale and Board Governance

According to Exhibit 99:

• Tax Liabilities: Mr. Arora faces more than $100 million in equity-related tax liabilities over the next three years, largely driven by FICA obligations on deferred compensation plan (DCP) share vestings.
• Market Impact Mitigation: The arrangement provides liquidity without executing a large open-market block sale.
• Board Oversight: The Issuer’s Governance and Nominating Committee approved the arrangement after review, highlighting that the pledged shares represent under 10% of Mr. Arora’s total beneficial and deferred equity holdings (which include over 2.95 million deferred shares, with distributions deferred out to 2033–2036).