A majority of Palo Alto Networks shareholders have voted against the cybersecurity company’s executive compensation packages seven times since 2015, a record that makes it the most rejected pay programme in the S&P 500 and the third-most in the Russell 3000. The most recent vote came in December, when less than half of shareholders supported a package valued at nearly $100 million for CEO Nikesh Arora, a figure that would exceed the compensation of Jamie Dimon at JPMorgan Chase, Tim Cook at Apple, and Satya Nadella at Microsoft, all of whom run companies at least three times larger by market capitalisation.

The votes are non-binding. Palo Alto Networks is not required to act on them, and it has not meaningfully changed course despite seven rejections in 11 years. The company’s board called Arora “a world-class, exceptionally talented CEO whose focus and interests fully align with those of our shareholders,” noting that the stock has added more than $100 billion in market capitalisation since he took over in 2018.

The performance argument

Arora’s defence is straightforward: he has delivered. Palo Alto Networks shares have gained nearly 800% since 2018, roughly four times the S&P 500’s return over the same period. Annual revenue has quadrupled to more than $9 billion. The company has been transformed from a firewall maker into one of the world’s largest cybersecurity platforms, competing at the top tier of the enterprise security market alongside CrowdStrike, Microsoft, and Fortinet. Arora oversaw the acquisition of CyberArk Software earlier this year in a deal valued at approximately $25 billion.

“You can correlate the amount I’ve gotten paid to the $100 billion,” Arora said in an interview. He also noted that his compensation structure has not always worked in his favour: in fiscal 2024, he said, he missed his targets and “got paid zero,” earning only his $1 million base salary and $1.2 million in non-equity incentives. “I worked for free for 12 months,” he said.

The 💜 of EU tech

The latest rumblings from the EU tech scene, a story from our wise ol’ founder Boris, and some questionable AI art. It’s free, every week, in your inbox. Sign up now!

Why shareholders keep voting no

The persistent opposition reflects specific structural concerns rather than a blanket objection to high pay. The proxy advisory firm Institutional Shareholder Services has recommended that investors vote against Palo Alto Networks’ compensation packages in all but three of the past 11 fiscal years, warning that an “unmitigated pay-for-performance misalignment exists” and that Arora’s target compensation was nearly twice that of peers. Glass Lewis urged rejection in the last three fiscal years.

The Florida State Board of Administration, which oversees investments for the retirement fund of public employees, has been particularly vocal. Michael McCauley, senior officer for investment programmes and governance, cited “insufficiently challenging goals” within the pay packages and “weak” links between actual payouts and shareholder returns. The question of how corporate wealth is distributed between executives and workers is not unique to Palo Alto Networks, but the company’s CEO-to-worker pay ratio of 442 to 1, against a US corporate average of 281 to 1, makes the disparity particularly stark.

The company’s “moonshot” pay structure is part of the problem. Palo Alto Networks ties big payouts to gains in revenue, profitability, and other financial metrics, with maximum payouts set at four times the target (reduced from six times after shareholder pushback). Brian Bueno of Farient Advisors called this “very unusual,” noting that most companies cap performance-based stock awards at two times the target.

The governance gap

Say-on-pay votes were introduced under the Dodd-Frank Act after the 2008 financial crisis, intended to give shareholders meaningful input on executive compensation. In the enterprise software sector, where competition for executive talent is intense and stock-based compensation dominates, the votes have had limited impact on actual pay levels. Only 1.4% of Russell 3000 companies saw their say-on-pay votes fail in 2025.

Palo Alto Networks is an outlier precisely because the stock performance is so strong. Research suggests shareholders tend to tolerate high pay when returns are strong, making the seven rejections at a company with 800% stock gains genuinely anomalous. The pattern suggests that institutional investors are objecting not to the outcome (exceptional returns) but to the mechanism (a pay structure they consider insufficiently rigorous and excessively generous relative to peers).

The cybersecurity industry is consolidating rapidly, and Arora’s track record of platform-building and acquisitions makes him difficult to replace. That leverage dynamic, a CEO who has delivered extraordinary results and cannot easily be substituted, is exactly what non-binding say-on-pay votes were not designed to address. Every enterprise software company is racing to embed AI, and Palo Alto Networks is expected to report record revenue when it posts quarterly results later on Tuesday. The shareholders will keep voting no, and the pay will keep flowing.