Exhibit 10.1

 

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October 13, 2016

Dear Mary:

On behalf of the Board of Directors (the “Board”) of Palo Alto Networks, Inc.
(the “Company”), we are pleased to inform you that our Nominating and Governance
Committee of the Board has nominated you for election as a member of our Board
and as a member of the Audit Committee.

As you are aware, the Company is a Delaware corporation and therefore your
rights and duties as a Board member of the Company are prescribed by Delaware
law, SEC laws, listing rules for the stock exchange on which our shares are
traded, our charter documents and by the policies established by our Board from
time to time. In addition, you may also be requested to serve as a director of
one or more of our subsidiaries in which case you may be subject to other laws
while serving in such a capacity.

From time to time, our Board may establish certain other committees to which it
may delegate certain duties. In addition to committee meetings, which shall be
convened as needed, our Board meetings are generally held quarterly at the
Company’s offices in Santa Clara, California. We would hope that your schedule
would permit you to attend all of the meetings of the Board and any committees
of which you are a member. In addition, from time to time, there may be
telephonic meetings to address special matters.

It is expected that during the term of your Board membership with the Company
you will not engage in any other employment, occupation, consulting or other
business activity that competes with the business in which the Company is now
involved in or becomes involved in during the term of your service to the
Company, nor will you engage in any other activities that conflict with your
obligations to the Company.

If you decide to join the Board and to serve as a member of the Audit Committee,
it will be recommended at the time of your election as a member of the Board
that the Company grant you a restricted stock unit award under our 2012 Equity
Incentive Plan (the “2012 Plan”) having a value equal to $1,000,000 (the
“Award”) in consideration for your service as a member of the Board consistent
with our non-employee director compensation policy. The number of Award shares
will be based on the average closing price of the Company’s common stock over
the 30 calendar days prior to the 15th day of the month in which the grant
occurs. The Award shares will vest over three years, with 1/3 of the shares
subject to the Award grant vesting on the first anniversary of the grant date
(which is expected to be October, 20, 2016), and the remaining shares vesting
equally over the next two years on a quarterly basis, subject to you continuing
to serve as a Board member on each vesting date. The vesting of the Award will
accelerate upon a Change in Control (as defined in the 2012 Plan).

In addition to the Award, you will be eligible to receive annual restricted
stock unit equity awards with a combined value of $320,000 on the date of each
annual meeting of stockholders (commencing with the December 2017 meeting) in
accordance with our non-employee director compensation policy, subject to your
continuing service on the Board and the Audit Committee. Each annual restricted
stock unit equity award is expected to vest over one year on a quarterly basis
and will accelerate upon a Change in Control (as defined in the 2012 Plan).

 

4401 GREAT AMERICA PARKWAY  |  SANTA CLARA, CA 95054  |  MAIN:
408.753.4000  |  PALOALTONETWORKS.COM

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The payment of compensation to Board members is subject to many restrictions
under applicable law, and as such, you should be aware that the compensation set
forth above is subject to such future changes and modifications as the Board or
its committees may deem necessary or appropriate. In addition, please note that
unless otherwise approved by our Board or required under applicable law,
directors of our subsidiaries shall not be entitled to any compensation. You
shall be entitled to reimbursement for reasonable expenses incurred by you in
connection with your service to the Company and attendance of Board and
committee meetings in accordance with the Company’s established policies.

Please note that nothing in this letter or any agreement granting you equity
should be construed to interfere with or otherwise restrict in any way the
rights of the Company, its Board or stockholders from removing you from the
Board or any committee in accordance with the provisions of applicable law.
Furthermore, except as otherwise provided to other non-employee Board members or
required by law, the Company does not intend to afford you any rights as an
employee, including without limitation, the right to further employment or any
other benefits.

We hope that you find the foregoing terms acceptable. You may indicate your
agreement with these terms by signing and dating both the enclosed duplicate and
original letter and returning them to me. By signing this letter you also
represent that the execution and delivery of this agreement and the fulfillment
of the terms hereof will not require the consent of another person, constitute a
default under or conflict with any agreement or other instrument to which you
are bound or a party.

On behalf of the Company it gives us great pleasure to welcome you as a member
of our Board. We anticipate your leadership and experience shall make a key
contribution to our success at this critical time in our growth and development.

Yours very truly,

/s/ Mark McLaughlin

Mark McLaughlin

Chief Executive Officer

Palo Alto Networks, Inc.

 

Acknowledged and agreed to October 15, 2016

/s/ Mary Pat McCarthy

Mary Pat McCarthy

 

4401 GREAT AMERICA PARKWAY  |  SANTA CLARA, CA 95054  |  MAIN:
408.753.4000  |  PALOALTONETWORKS.COM