0001174947-23-000676.txt : 20230501 0001174947-23-000676.hdr.sgml : 20230501 20230501160218 ACCESSION NUMBER: 0001174947-23-000676 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 24 FILED AS OF DATE: 20230501 DATE AS OF CHANGE: 20230501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Fortinet, Inc. CENTRAL INDEX KEY: 0001262039 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 770560389 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-34511 FILM NUMBER: 23873461 BUSINESS ADDRESS: STREET 1: 899 KIFER ROAD CITY: SUNNYVALE STATE: CA ZIP: 94086 BUSINESS PHONE: 408-235-7700 MAIL ADDRESS: STREET 1: 899 KIFER ROAD CITY: SUNNYVALE STATE: CA ZIP: 94086 FORMER COMPANY: FORMER CONFORMED NAME: FORTINET INC DATE OF NAME CHANGE: 20030902 DEF 14A 1 def14a0423_fortinetinc.htm DEFINITIVE PROXY STATEMENT

  

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________

SCHEDULE 14A INFORMATION

________________

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.    )

Filed by the Registrant

 

Filed by a Party other than the Registrant

 

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

FORTINET, INC.
(Name of Registrant as Specified in Its Charter)

_______________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

  

 

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NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS

Dear Fortinet Stockholder:

Notice is hereby given that the 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”) of Fortinet, Inc., a Delaware corporation (“Fortinet,” “we,” “us” or “our”), will be held on Friday, June 16, 2023, at 10:00 a.m. Pacific time, in a virtual-only format, for the following purposes:

1.    To elect the eight directors listed in the accompanying proxy statement to serve for a one-year term expiring at Fortinet’s 2024 Annual Meeting of Stockholders and until their respective successors have been duly elected and qualified.

2.    To ratify the appointment of Deloitte & Touche LLP as Fortinet’s independent registered public accounting firm for the fiscal year ending December 31, 2023.

3.    An advisory vote to approve named executive officer compensation.

4.    An advisory vote on the frequency of future advisory votes to approve named executive officer compensation.

5.    To adopt an amendment to Fortinet’s amended and restated certificate of incorporation to remove the supermajority voting requirement and make certain other changes.

6.    To adopt an amendment to Fortinet’s amended and restated certificate of incorporation to permit the exculpation of officers by Fortinet from personal liability for certain breaches of the duty of care.

7.    To transact such other business proposals, if properly presented before the meeting.

We believe that a virtual stockholder meeting allows better access to those who may want to attend by providing for greater stockholder attendance and participation from any location around the world, and therefore we have chosen this over an in-person meeting. This approach also lowers costs and aligns with our broader sustainability goals.

The preceding items of business are more fully described in the proxy statement accompanying this notice. Any action on the items of business described above may be considered at the 2023 Annual Meeting at the time and on the date specified above or at any time and date to which the 2023 Annual Meeting may be properly adjourned or postponed. Only stockholders of record at the close of business on April 17, 2023 are entitled to notice of, and to vote at, the 2023 Annual Meeting.

We have elected to provide access to our proxy materials over the internet. Accordingly, stockholders of record at the close of business on April 17, 2023 will receive a Notice of Internet Availability of Proxy Materials and may vote at the 2023 Annual Meeting and any meetings pursuant to postponements or adjournments of the 2023 Annual Meeting. We expect to mail the Notice of Internet Availability of Proxy Materials on or about May 3, 2023.

 

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Your vote is very important. Whether or not you plan to attend the 2023 Annual Meeting, we encourage you to read the proxy statement and vote as instructed in the Notice of Internet Availability of Proxy Materials or vote on the internet or by telephone as soon as possible. Alternatively, you may follow the procedures outlined in the Notice of Internet Availability of Proxy Materials to request a paper copy of the proxy materials, which include a proxy card to submit your vote by mail. For specific instructions on how to vote your shares, please refer to the section entitled “Questions and Answers About the 2023 Annual Meeting and Procedural Matters” and the instructions on the Notice of Internet Availability of Proxy Materials.

Thank you for your ongoing support of Fortinet.

 

By Order of the Board of Directors,

   

   

Ken Xie

   

Chief Executive Officer and Chairman of the Board of Directors

   

Sunnyvale, California

   

May 1, 2023

 

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PROXY STATEMENT
FOR 2023 ANNUAL MEETING OF STOCKHOLDERS

TABLE OF CONTENTS

 

Page

PROXY SUMMARY

 

1

QUESTIONS AND ANSWERS ABOUT THE 2023 ANNUAL MEETING AND PROCEDURAL MATTERS

 

6

Why am I receiving these materials?

 

6

Why did I receive a one-page notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?

 

6

How can I get electronic access to the proxy materials?

 

6

Can I attend the 2023 Annual Meeting?

 

7

How can I ask questions at the 2023 Annual Meeting?

 

7

Who is entitled to vote at the 2023 Annual Meeting?

 

7

What is the difference between holding shares as a stockholder of record or as a beneficial owner?

 

8

How can I vote my shares without attending the 2023 Annual Meeting?

 

8

How many shares must be present or represented to conduct business at the 2023 Annual Meeting?

 

9

What proposals will be voted on at the 2023 Annual Meeting?

 

9

What is the voting requirement to approve each of the proposals?

 

9

What happens if only one of the Majority Voting Amendment (Proposal Five) or the Officer Exculpation Amendment (Proposal Six) is adopted, or if both are adopted?

 

10

How are votes counted?

 

10

How does the Board of Directors recommend that I vote?

 

10

What happens if additional matters are presented at the 2023 Annual Meeting?

 

11

Can I change my vote?

 

11

What should I do if I receive more than one set of voting materials?

 

11

Is my vote confidential?

 

11

Who will serve as inspector of election?

 

11

Where can I find the voting results of the 2023 Annual Meeting?

 

11

Who will bear the cost of soliciting votes for the 2023 Annual Meeting?

 

12

What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors?

 

12

How may I obtain a separate set of proxy materials or the 2022 Annual Report?

 

13

PROPOSAL ONE — ELECTION OF DIRECTORS

 

14

General

 

14

Nominees

 

14

Information Regarding the Board of Directors and Director Nominees

 

15

Director Expertise and Experience

 

18

Board Diversity Matrix

 

18

Director Tenure and Age Distribution

 

19

Board Evaluations

 

19

PROPOSAL TWO — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

21

General

 

21

Principal Accounting Fees and Services

 

21

Approval of Audit and Non-Audit Services

 

21

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Page

PROPOSAL THREE — ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

 

22

PROPOSAL FOUR — ADVISORY VOTE ON the frequency of future advisory votes TO APPROVE NAMED executive officer compensation

 

23

PROPOSAL FIVE — ADOPTION OF AN AMENDMENT TO THE CURRENT CERTIFICATE IN ORDER TO REMOVE THE SUPERMAJORITY VOTING REQUIREMENT AND MAKE CERTAIN OTHER CHANGES

 

24

PROPOSAL SIX — ADOPTION OF AN AMENDMENT TO THE CURRENT CERTIFICATE IN IN ORDER TO PERMIT THE EXCULPATION OF OFFICERS FROM PERSONAL LIABILITY FOR CERTAIN BREACHES OF THE DUTY OF CARE

 

26

CORPORATE SOCIAL RESPONSIBILITY

 

28

Environment

 

28

Social

 

29

Governance

 

29

CORPORATE GOVERNANCE

 

31

Corporate Governance Guidelines

 

31

Code of Business Conduct and Ethics

 

31

Human Capital Management

 

31

Majority Voting Standard for Director Elections and Director Resignation Policy

 

32

Director Independence

 

32

Board Meetings and Committees

 

32

Human Resources Committee Interlocks and Insider Participation

 

34

Anti-Hedging and Anti-Pledging Policy

 

34

Board Leadership Structure

 

34

Board of Directors’ Role in Risk Oversight

 

35

Cybersecurity Risk Oversight

 

36

Management Succession Planning

 

37

Oversight of Corporate Strategy

 

37

Process for Recommending Candidates for Election to the Board of Directors

 

38

Proxy Access

 

39

Attendance at Annual Meetings of Stockholders by the Board of Directors

 

39

Contacting the Board of Directors

 

39

EXECUTIVE OFFICERS

 

40

EXECUTIVE COMPENSATION

 

41

Compensation Discussion and Analysis

 

41

Elements of Our Compensation Program

 

42

Determining the Amount of Elements of Executives’ Compensation in 2022

 

44

Human Resources Committee Report

 

48

2022 Summary Compensation Table

 

48

Grants of Plan-Based Awards in 2022 Table

 

49

Outstanding Equity Awards at 2022 Fiscal Year-End Table

 

50

2022 Option Exercises and Stock Vested Table

 

51

Potential Payments Upon Termination or Change of Control

 

51

Pay Versus Performance

 

54

CEO Pay Ratio Disclosure

 

58

Compensation of Directors

 

59

Equity Compensation Plan Information

 

62

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Page

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

63

Related-Person Transactions

 

63

Review of Related-Person Transactions

 

63

DELINQUENT SECTION 16(A) REPORTS

 

64

OWNERSHIP OF SECURITIES

 

65

AUDIT COMMITTEE REPORT

 

67

OTHER MATTERS

 

68

APPENDIX A — MAJORITY VOTING AMENDMENT

 

A-1

APPENDIX B — OFFICER EXCULPATION AMENDMENT

 

B-1

Forward-Looking Statements

This Proxy Statement includes forward-looking statements. These statements are not historical facts and are based on current expectations, estimates, and projections about our industry, management’s beliefs, and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. For a discussion of some of the risks and important factors that could affect our future results and financial condition, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022.

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PROXY STATEMENT
FOR 2023 ANNUAL MEETING OF STOCKHOLDERS

PROXY SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement for the Annual Meeting (this “Proxy Statement”). This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. References to our website in this Proxy Statement are not intended to function as hyperlinks and the information contained on our website is not intended to be incorporated into this Proxy Statement. In this Proxy Statement, we refer to Fortinet, Inc. as “Fortinet,” “we,” “us” or “our.”

Financial and Business Highlights

The list below highlights our financial highlights for 2022.

        Total revenue was $4.42 billion for 2022, an increase of 32% compared to $3.34 billion in 2021.

        Product revenue was $1.78 billion for 2022, an increase of 42% compared to $1.26 billion in 2021.

        Service revenue was $2.64 billion for 2022, an increase of 26% compared to $2.09 billion in 2021.

        Total gross profit was $3.33 billion in 2022, an increase of 30% compared to $2.56 billion in 2021.

        Operating income was $969.6 million in 2022, an increase of 49% compared to $650.4 million in 2021.

        Cash flows from operating activities were $1.73 billion in 2022, an increase of $230.9 million, or 15%, compared to 2021.

CORPORATE Social RESPONSIBILITY Highlights

We are committed to corporate social responsibility (“CSR”) and responsible environmental, social and governance (“ESG”) practices. The list below includes some of our CSR and ESG highlights for 2022, as discussed further in this Proxy Statement.

        We formally signed on to the Science-Based Target Initiative commitment in September 2022.

        We have engaged with a consultancy to measure our Scope 3 emissions.

        We implemented an Environmental Management Systems platform to track our energy, water and waste impact, and engage on the ISO14001 certification process for largest, company-owned warehouse in Union City, California.

        The Board of Directors is comprised of directors with diverse backgrounds and experiences. More than 50% of our directors self-report racial diversity and 25% self-report gender diversity.

        The Social Responsibility Committee of the Board of Directors (the “Social Responsibility Committee”) helps ensure corporate social responsibility is a high priority of ours and is reviewed and supported at the highest level.

        We publicly issued our 2022 Sustainability Report detailing our progress on sustainability matters.

•  In 2022, we were named to the Dow Jones Sustainability World and North America Indices among the top sustainable companies in the software industry.

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GOVERNANCE AND BOARD HIGHLIGHTS

We are committed to good corporate governance, which strengthens the accountability of the Board of Directors and promotes the long-term interests of our stockholders. The list below highlights our independent board and leadership practices, as discussed further in this Proxy Statement.

        A majority of our directors are independent (six out of eight current directors).

        Our Lead Independent Director is elected annually, to serve and function separately from the Chairman of the Board of Directors.

        All committees of the Board of Directors are composed of independent directors, with the exception of the Social Responsibility Committee.

        The Board of Directors is focused on enhancing diversity, equity and inclusion. Management frequently presents to the Human Resources Committee of the Board of Directors on progress around diversity, equity and inclusion initiatives.

        The Social Responsibility Committee oversees our Corporate Social Responsibility (“CSR”) strategy, initiatives and execution related to ESG practices.

        The Board of Directors focuses on broad risk oversight practices, including CSR, cybersecurity, data privacy, legal and regulatory matters, and other critical evolving areas.

        The Board of Directors regularly reviews our governance practices. Over the years, on its own initiative, the Board of Directors has made adjustments to our corporate governance practices as we have matured as a public company, such as changing from a Board of Directors with three-year staggered terms for each director, to one-year terms.

        Following feedback from our stockholders at our 2022 annual meeting of stockholders (the “2022 Annual Meeting”) on supermajority voting, the Board of Directors has recommended that our stockholders adopt an amendment (the “Majority Voting Amendment”) to our current amended and restated certificate of incorporation (the “Current Certificate”) in order to remove the supermajority voting requirement in our Current Certificate. The Board of Directors has also approved amended and restated bylaws (the “Restated Bylaws”), which shall become effective contingent upon and subject to the effectiveness of the filing of the Majority Voting Amendment with the Delaware Secretary of State after its adoption by our stockholders, to remove the supermajority voting requirement in our current amended and restated bylaws (the “Current Bylaws”). Information regarding this proposal can be found under the section titled “Proposal Four — Adoption of an Amendment to the Current Certificate to Remove the Supermajority Voting Requirement.”

        Independent directors conduct regular executive sessions.

        Our directors maintain open communication and strong working relationships among themselves and have regular access to management.

        The Board of Directors conducts a robust annual Board of Directors and committee self-assessment process.

        The Board of Directors has related-party transaction standards for any direct or indirect involvement of a director in our business activities.

•  Our non-employee directors are required to hold shares of our common stock pursuant to our Stock Ownership Guidelines for our non-employee directors.

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STOCKHOLDER ENGAGEMENT

The Board of Directors and our executive management team are committed to actively engaging with our stockholders and maintaining a regular dialogue with our stockholders. We meet with current stockholders and prospective stockholders through meetings at our headquarters, investor conferences, roadshows and via videoconferences. These meetings allow stockholders the opportunity to provide feedback on our financial performance, corporate governance, executive compensation, environmental and sustainability matters and corporate responsibility initiatives. Members of the Board of Directors and our executive management and investor relations teams participate in meetings with stockholders. In 2022, we engaged in discussions with approximately 145 stockholders representing approximately 48% of our institutional share count.

Key themes from our engagement with stockholders and the actions we took in response include:

Theme

 

What We Heard

 

How We Responded

Executive Compensation

 

Stockholders preferred executives be awarded performance stock units (“PSUs”) pursuant to our long-term incentive compensation plan.

 

In 2023, we introduced PSUs with performance metrics and a four-year vesting period for the senior management team pursuant to our long-term incentive compensation plan.

       

For the senior management grants in 2023, 50% of the long-term incentive compensation plan is comprised of PSUs and the remainder is time-based restricted stock units.

ESG and Sustainability

 

Stockholders were pleased with our progress on ESG and sustainability matters, including our efforts to align with the Task Force on Climate-Related Financial Disclosures (“TCFD”), the Science Based Targets initiative (“SBTi”) and Sustainability Accounting Standards Board frameworks as well as our disclosure of EEO-1 data.

 

In 2021, in alignment with SBTi methodology, we publicly committed to reach net zero on our Scope 1 and 2 emissions by 2030 and pledged to increase our climate disclosures.

In 2022, we aligned with TCFD recommendations and participated in Carbon Disclosure Project reporting to increase the transparency of our environmental disclosures. We signed the SBTi commitment letter.

   

Stockholders recommended that we continue to enhance our ESG and sustainability disclosures.

 

We continued to reduce the environmental footprint of our products. In 2022, we released the FortiGate 1000F, which consumes 80% less power than competing products and began to use 100% bio-degradable packaging in low-end FortiGate models.

       

We publicly issued our 2022 Sustainability Report.

Directors’ Outside Board Commitments

 

Some stockholders mentioned that one director was not in compliance with the stockholders’ “overboarding” policies.

 

In May 2022, the director in question stepped down from one board position.

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PROPOSAL ONE

 

BOARD’S
RECOMMENDATION:
“FOR” each of the nominees

ELECTION OF DIRECTORS

 

We are asking our stockholders to elect eight directors for a one-year term expiring at Fortinet’s 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”) and until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation, disqualification or removal. The table below sets forth information with respect to our eight nominees standing for election. All of the nominees are currently serving as directors. Additional information about our director nominees and their respective qualifications can be found under the section titled “Proposal One — Election of Directors — Nominees to the Board of Directors.”

 

Name

 

Age

 

Director Since

Ken Xie

 

60

 

October 2000

Michael Xie

 

54

 

February 2001

Kenneth A. Goldman

 

73

 

October 2020

Ming Hsieh

 

67

 

April 2013

Jean Hu

 

59

 

October 2019

William H. Neukom

 

81

 

January 2013

Judith Sim

 

54

 

June 2015

Admiral James Stavridis (Ret)

 

68

 

October 2021

PROPOSAL TWO

 

BOARD’S
RECOMMENDATION:
“FOR” Proposal Two

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We are asking our stockholders to ratify the audit committee’s appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2023. Information regarding fees paid to Deloitte & Touche LLP during 2022 and 2021 can be found under the section titled “Proposal Two — Ratification of Appointment of Independent Registered Public Accounting Firm.”

 

PROPOSAL THREE

 

BOARD’S
RECOMMENDATION:
“FOR” Proposal Three

ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

 

We are asking our stockholders to approve, on an advisory and non-binding basis, the compensation of our named executive officers as disclosed in accordance with the SEC’s rules in the “Executive Compensation” section of this Proxy Statement. Information regarding compensation of our named executive officers can be found under the section titled “Proposal Three — Vote to Approve Named Executive Officer Compensation”

 

PROPOSAL FOUR

 

BOARD’S
RECOMMENDATION:
Every “ONE YEAR”

ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

 

We are asking our stockholders to approve, on an advisory and non-binding basis, the frequency of future advisory votes to approve the compensation of our named executive officers. Information regarding this proposal can be found under the section titled “Proposal Four — Advisory Vote on the Frequency of Future Advisory Votes to Approve Named Executive Officer Compensation.”

 

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PROPOSAL FIVE

 

BOARD’S
RECOMMENDATION:
“FOR” Proposal Five

ADOPTION OF AN AMENDMENT TO THE CURRENT CERTIFICATE TO REMOVE THE SUPERMAJORITY VOTING REQUIREMENT

 

We are asking our stockholders to adopt the Majority Voting Amendment in order to remove the supermajority voting requirement in the Current Certificate. The Majority Voting Amendment also removes from the Current Certificate language relating to the 2022 Stock Split (as defined below). Information regarding this proposal can be found under the section titled “Proposal Five — Adoption of an Amendment to the Current Certificate to Remove the Supermajority Voting Requirement and Make Certain Other Changes.”

 

PROPOSAL SIX

 

BOARD’S
RECOMMENDATION:
“FOR” Proposal Six

ADOPTION OF AN AMENDMENT TO THE CURRENT CERTIFICATE IN ORDER TO PERMIT THE EXCULPATION OF OFFICERS FROM PERSONAL LIABILITY FOR CERTAIN BREACHES OF THE DUTY OF CARE

 

We are asking our stockholders to adopt an amendment to the Current Certificate in order to provide exculpation for our officers from personal liability for certain breaches of the duty of care (the “Officer Exculpation Amendment”). Information regarding this proposal can be found under the section titled “Proposal Six — Adoption of an Amendment to the Current Certificate in Order to Permit the Exculpation of Officers from Personal Liability for Certain Breaches of the Duty of Care.”

 

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FORTINET, INC.
899 Kifer Road
Sunnyvale, California 94086

____________________________

PROXY STATEMENT
FOR 2023 ANNUAL MEETING OF STOCKHOLDERS

QUESTIONS AND ANSWERS ABOUT THE 2023 ANNUAL MEETING AND PROCEDURAL MATTERS

Q:   Why am I receiving these materials?

A:    The Board of Directors is providing these proxy materials to you in connection with the solicitation of proxies for use at Fortinet’s 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”), to be held on Friday, June 16, 2023 at 10:00 a.m. Pacific time, and at any adjournment or postponement thereof, for the purpose of considering and acting upon the matters set forth in this Proxy Statement.

We expect to mail the Notice of Internet Availability of Proxy Materials (the “Notice”) on or about May 3, 2023. Copies of our proxy materials and 2022 Annual Report are available at www.edocumentview.com/FTNT. Our 2022 Annual Report may also be obtained by accessing Fortinet’s filings on the SEC’s website at www.sec.gov.

The 2023 Annual Meeting will be held in a virtual-only format. We believe that hosting a virtual meeting will allow for greater stockholder attendance and participation from any location around the world. The virtual-only approach also lowers costs and aligns with our broader sustainability goals. You will not be able to attend the 2023 Annual Meeting in person.

Q:   Why did I receive a one-page notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?

A:    Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the internet. Accordingly, we are sending the Notice to our stockholders of record and beneficial owners. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request a printed set of the proxy materials. Instructions on how to access the proxy materials over the internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.

Q:   How can I get electronic access to the proxy materials?

A:    The Notice will provide you with instructions regarding how to:

        View our proxy materials for the 2023 Annual Meeting on the internet; and

        Have future proxy materials sent to you electronically by email.

Choosing to receive future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site.

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Q:   Can I attend the 2023 Annual Meeting?

A:    If you were a stockholder of record at the close of business on April 17, 2023 (the “Record Date”) (i.e., your shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A. (“Computershare”)) or if you are a proxy holder for such a stockholder, you may participate in the 2023 Annual Meeting by following the instructions below:

        Beginning at 9:45 a.m. Pacific Time on June 16, 2023, please visit www.meetnow.global/MFQX4LA.

        Enter the 15-digit control number on the Proxy Card or Notice of Availability of Proxy Materials you receive.

If you held your shares through an intermediary on the Record Date (i.e., you hold your shares in “street name” through an intermediary, such as a bank or broker), you must register in advance to virtually attend the 2023 Annual Meeting by following the instructions below:

        You must obtain a legal proxy, executed in your favor, from the holder of record reflecting the number of shares of common stock you held as of the Record Date, along with your name and email address.

        Submit proof of your legal proxy by forwarding the email from your broker, or attaching an image of your legal proxy, to legalproxy@computershare.com. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. Eastern Time on June 13, 2023. You will then receive a confirmation of your registration, with a control number, by email from Computershare.

        At the time of the 2023 Annual Meeting, go to www.meetnow.global/MFQX4LA and enter your control number.

If we experience technical difficulties during the meeting (e.g. a temporary or prolonged power outage), we will determine whether the meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any situation, we will promptly notify stockholders of the decision via www.meetnow.global/MFQX4LA. The virtual meeting platform is fully supported across most browsers (including Edge, Firefox, Chrome and Safari) and devices (including desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plugins. Internet Explorer is not a supported browser. Participants should ensure that they have a strong internet connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. For further assistance should you need it you may call Computershare toll free at (888) 724-2416.

Q:   How can I ask questions at the 2023 Annual Meeting?

A:   You will be able to attend the 2023 Annual Meeting online and submit your questions during the meeting by visiting www.meetnow.global/MFQX4LA. For technical support, please call Computershare toll free at (888) 724-2416.

Q:   Who is entitled to vote at the 2023 Annual Meeting?

A:    You may vote your shares of Fortinet common stock if our records show that you owned your shares at the close of business on the Record Date. At the close of business on the Record Date, there were 784,374,421 shares of Fortinet common stock outstanding and entitled to vote at the 2023 Annual Meeting. You may cast one vote for each share of common stock held by you as of the Record Date on all matters presented.

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Q:   What is the difference between holding shares as a stockholder of record or as a beneficial owner?

A:    With respect to your shares that are registered directly in your name with Fortinet’s transfer agent, Computershare, you are considered the “stockholder of record” and the Notice has been sent directly to you by Fortinet. As the stockholder of record, you have the right to grant your voting proxy directly to Fortinet or to a third party, or to vote in person at the 2023 Annual Meeting.

With respect to your shares that are held by a brokerage account or by another nominee, you are considered the “beneficial owner” of shares held in “street name” and the Notice is being forwarded to you together with voting instructions on behalf of your broker, trustee or nominee. As the beneficial owner, you have the right to direct your broker, trustee or nominee how to vote, and you are also invited to attend the 2023 Annual Meeting. Your broker, trustee or nominee has enclosed or provided voting instructions for you to use in directing the broker, trustee or nominee how to vote your shares. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the 2023 Annual Meeting unless you obtain a “legal proxy” from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the 2023 Annual Meeting. If you hold your shares through a broker and do not provide your broker with specific voting instructions, under the rules that govern brokers in such circumstances, your broker will have the discretion to vote such shares on routine matters but not on non-routine matters. Even though we are listed on The Nasdaq Stock Market LLC (“Nasdaq”), the rules of the New York Stock Exchange (the “NYSE”) govern how a broker licensed by the NYSE can vote shares it holds on behalf of stockholders of Nasdaq-listed companies.

As a result:

        Your broker will not have the authority to exercise discretion to vote your shares with respect to the election of directors (Proposal One), the advisory vote on named executive officer compensation (Proposal Three), the advisory vote on the frequency of future advisory votes to approve named executive officer compensation (Proposal Four), the adoption of the Majority Voting Amendment (Proposal Five) or the adoption of the Officer Exculpation Amendment (Proposal Six).

        Your broker will have the authority to exercise discretion to vote your shares with respect to the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2023 (Proposal Two), because that matter is treated as routine under NYSE rules.

Because the proposals to be acted upon at the 2023 Annual Meeting include both routine and non-routine matters, if you do not give voting instructions to your broker, trustee or nominee, your broker, trustee or nominee may either (i) vote your shares on routine matters or (ii) leave your shares unvoted.

A broker “non-vote” occurs when your broker, trustee or nominee does not vote on a particular proposal because the broker, trustee or nominee does not have discretionary voting power with respect to that item and has not received voting instructions from you as the beneficial owner.

Q:   How can I vote my shares without attending the 2023 Annual Meeting?

A:    You are encouraged to vote your shares in advance of the 2023 Annual Meeting.    If voting in advance of the 2023 Annual Meeting, the steps required to cast your votes are the same as indicated in the materials received with this Proxy Statement. If you have not already voted your shares in advance, you will be able to vote your shares electronically during the 2023 Annual Meeting by clicking on the “Cast Your Vote” link on the Meeting Center site.

Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the 2023 Annual Meeting. There are three ways to vote by proxy:

By mail — If you are a stockholder of record, you may vote by submitting a proxy card; please refer to the voting instructions in the Notice or below. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker, trustee or nominee; please refer to the voting instructions provided to you by your broker, trustee or nominee.

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By internet — Stockholders of record of Fortinet common stock with internet access may submit proxies by following the “Vote by Internet” instructions described in the Notice until 11:59 p.m. Eastern time on Thursday, June 15, 2023 or by following the instructions at www.investorvote.com/FTNT. Most Fortinet stockholders who hold shares beneficially in street name may vote by accessing the website specified in the voting instructions provided by their brokers, trustees or nominees. Please check the voting instructions for internet voting availability.

By telephone — Depending on how your shares are held, you may be able to vote by telephone. If this option is available to you, you will have received information with the Notice or the voting instruction card provided by your broker, trustee or nominee explaining this procedure.

Q:   How many shares must be present or represented to conduct business at the 2023 Annual Meeting?

A:    The presence of the holders of a majority of the issued and outstanding shares of our capital stock entitled to vote at the 2023 Annual Meeting is necessary to constitute a quorum at the 2023 Annual Meeting. Such stockholders are counted as present at the meeting if they (i) are present in person at the 2023 Annual Meeting or (ii) represented by proxy.

Under Delaware law, abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining whether a quorum is present at the 2023 Annual Meeting. However, as discussed above, under “What is the difference between holding shares as a stockholder of record or as a beneficial owner?” brokers have limited discretionary authority to vote shares that are beneficially owned and, therefore, are not entitled to vote on non-routine matters in the absence of voting instructions from the beneficial owner of such shares.

Q:   What proposals will be voted on at the 2023 Annual Meeting?

A:    The proposals scheduled to be voted on at the 2023 Annual Meeting are:

        Proposal One:    The election of the eight directors set forth in Proposal One to serve for a one-year term expiring at the 2024 Annual Meeting and until their respective successors are duly elected and qualified;

        Proposal Two:    The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023;

        Proposal Three:    An advisory vote to approve our named executive officer compensation;

        Proposal Four:    An advisory vote on the frequency of future advisory votes to approve named executive officer compensation;

        Proposal Five:    Adoption of the Majority Voting Amendment; and

        Proposal Six:    Adoption of the Officer Exculpation Amendment.

Q:   What is the voting requirement to approve each of the proposals?

A:    We have a majority voting standard for uncontested elections of directors (Proposal One), which means that to be elected, a director nominee must receive a majority of the votes cast, i.e. the number of shares voted “FOR” a director nominee must exceed the votes cast “AGAINST” that nominee.

The affirmative vote of a majority of the shares of our common stock that are present in person or represented by proxy at the 2023 Annual Meeting and entitled to vote is required to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm (Proposal Two) and to approve the advisory resolution on named executive compensation (Proposal Three).

The frequency that is selected by the greatest number of shares of our common stock that are present in person or represented by proxy at the 2023 Annual Meeting and entitled to vote will be considered the non-binding advisory vote of our stockholders for the advisory resolution on the frequency of future advisory votes to approve named executive officer compensation (Proposal Four).

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The affirmative vote of at least 66 2/3% of the voting power of all of the shares of our common stock outstanding as of the Record Date is required for the adoption of the Majority Voting Amendment (Proposal Five) and the adoption of the Officer Exculpation Amendment (Proposal Six).

Q:   What happens if only one of the Majority Voting Amendment (Proposal Five) or the Officer Exculpation Amendment (Proposal Six) is adopted, or if both are adopted?

A:    Proposals Five and Six are independent from one another. If our stockholders adopt the amendment to the Current Certificate in one proposal and not the other (and if the Board of Directors does not abandon the adopted amendment after it is adopted by the stockholders), we will file the adopted amendment to the Current Certificate as soon as practicable after adoption by the stockholders.

If our stockholders adopt both amendments (and if the Board of Directors does not abandon the adopted amendments after they are adopted by the stockholders), we will file both adopted amendments to the Current Certificate as soon as practicable after approval by the stockholders.

Thereafter, in either scenario, we expect that the Board of Directors would then approve, and we would then file, a restated certificate of incorporation that will integrate the adopted amendment(s) (unless abandoned) into a single document without further amending our certificate of incorporation. Under the Delaware General Corporation Law, this restatement would not require an additional stockholder vote.

In connection with Proposal Five, the Board of Directors has also approved the Restated Bylaws, which shall become effective contingent upon and subject to the effectiveness of the filing of the Majority Voting Amendment with the Delaware Secretary of State after its adoption by our stockholders, to remove the supermajority voting requirement in our Current Bylaws.

Q:   How are votes counted?

A:    You may vote “FOR” or “AGAINST” each of the nominees for election as director in Proposal One and on each of Proposal Two, Proposal Three, Proposal Five and Proposal Six. You may also “ABSTAIN” from voting.

You may vote select every “ONE YEAR,” TWO YEARS” or “THREE YEARS” for the advisory resolution on the frequency of future advisory votes to approve named executive officer compensation (Proposal Four). You may also “ABSTAIN” from voting.

Abstentions are deemed to be shares present or represented by proxy and entitled to vote. Abstentions have no effect on Proposal One or Proposal Four and the same effect as a vote against Proposals Two, Three, Five and Six.

Brokers have discretionary authority to vote shares that are beneficially owned on Proposal Two. If a broker chooses not to vote shares for or against Proposal Two, it would have the same effect as an abstention. Broker non-votes are not deemed to be shares entitled to vote on and will have no effect on Proposals One, Three and Four. Broker non-votes will also have the same effect on Proposals Five and Six as an abstention.

All shares entitled to vote and represented by properly submitted proxies received prior to the 2023 Annual Meeting (and not revoked) will be voted at the 2023 Annual Meeting in accordance with the instructions indicated by such proxy. If no instructions are indicated on such proxy, the shares represented by that proxy will be voted as recommended by the Board of Directors.

Q:   How does the Board of Directors recommend that I vote?

A:    The Board of Directors recommends that you vote your shares:

        FOR” each of the eight nominees for election as directors (Proposal One);

        FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023 (Proposal Two);

•  FOR” the advisory resolution to approve named executive officer compensation (Proposal Three);

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•  ONE YEAR” with respect to the advisory resolution on the frequency of future advisory votes to approve named executive officer compensation (Proposal Four);

        FOR” the adoption of the Majority Voting Amendment (Proposal Five); and

        FOR” the adoption of the Officer Exculpation Amendment (Proposal Six).

Q:   What happens if additional matters are presented at the 2023 Annual Meeting?

A:    If any other matters are properly presented for consideration at the 2023 Annual Meeting, including, among other things, consideration of a motion to adjourn the 2023 Annual Meeting to another time or place (including, without limitation, for the purpose of soliciting additional proxies), the persons named as proxy holders, Ken Xie and John Whittle, or either of them, will have discretion to vote on those matters in accordance with their best judgment. Fortinet does not currently anticipate that any other matters will be raised at the 2023 Annual Meeting.

Q:   Can I change my vote?

A:    Subject to any rules your broker, trustee or nominee may have, you may change your proxy instructions at any time before your proxy is voted at the 2023 Annual Meeting.

If you are the stockholder of record, you may change your vote: (i) by granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method); (ii) by providing a written notice of revocation to Fortinet’s Corporate Secretary at Fortinet, Inc., 899 Kifer Road, Sunnyvale, California 94086 prior to your shares being voted; or (iii) by attending the 2023 Annual Meeting and voting virtually. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request.

If you are a beneficial owner of shares held in street name, you may change your vote (a) by submitting new voting instructions to your broker, trustee or nominee or (b) if you have obtained a legal proxy from the broker, trustee or nominee that holds your shares giving you the right to vote your shares, by attending the 2023 Annual Meeting and voting virtually.

Q:   What should I do if I receive more than one set of voting materials?

A:    If you received more than one Notice, voting instruction card or set of proxy materials, your shares are registered in more than one name or brokerage account. Please follow the instructions on each Notice or voting instruction card that you receive to ensure that all of your shares are voted.

Q:   Is my vote confidential?

A:    Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Fortinet or to third parties, except: (i) as necessary to meet applicable legal requirements; (ii) to allow for the tabulation of votes and certification of the vote; and (iii) to facilitate a successful proxy solicitation. Occasionally, stockholders provide written comments on their proxy cards, which may be forwarded to Fortinet management.

Q:   Who will serve as inspector of election?

A:    The inspector of election will be a representative of Computershare.

Q:   Where can I find the voting results of the 2023 Annual Meeting?

A:    We will announce preliminary voting results at the 2023 Annual Meeting. We will disclose final voting results in a Current Report on a Form 8-K filed with the SEC within four business days after the 2023 Annual Meeting.

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Q:   Who will bear the cost of soliciting votes for the 2023 Annual Meeting?

A:    Fortinet will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. We may reimburse brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners for their reasonable expenses in forwarding solicitation material to such beneficial owners. Our directors, officers and employees may also solicit proxies in person or by other means of communication. Such directors, officers and employees will not be additionally compensated but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation.

Q:   What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors?

A:    You may submit proposals, including nominations of director candidates, for consideration at future stockholder meetings.

For inclusion in Fortinet’s proxy materials — Stockholders may present proper proposals for inclusion in Fortinet’s proxy statement and for consideration at the next annual meeting of stockholders by submitting their proposals in writing to Fortinet’s Corporate Secretary in a timely manner. In order to be included in the proxy statement for the 2024 Annual Meeting, stockholder proposals must be received by Fortinet’s Corporate Secretary no later than January 2, 2024, and must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

To be brought before the annual meeting — In addition, Fortinet’s Current Bylaws establish an advance notice procedure for stockholders who wish to present certain matters before an annual meeting of stockholders. In general, nominations for the election of directors may be made (i) pursuant to our notice of meeting of stockholders, (ii) by or at the direction of the Board of Directors or a duly authorized committee thereof or (iii) by a stockholder who has delivered written notice to Fortinet’s Secretary within the Notice Period (as defined below) and complied with the other procedural requirements sets forth in our Current Bylaws and who was a stockholder of record at the time of such notice, as of the record date and at the time of the annual meeting. The notice must contain specified information about the nominees and about the stockholder proposing such nominations.

Fortinet’s Current Bylaws also provide that the only business that may be conducted at an annual meeting is business that is (a) properly brought before the meeting pursuant to Fortinet’s proxy materials with respect to such meeting, (b) properly brought before the meeting by or at the direction of the Board of Directors or (c) properly brought before the meeting by a stockholder who has delivered written notice to Fortinet’s Corporate Secretary at its principal executive offices within the Notice Period and who was a stockholder at the time of such notice and as of the record date. The notice must contain specified information about the matters to be brought before such meeting and about the stockholder proposing such matters.

The “Notice Period” is defined as that period not less than 90 days nor more than 120 days prior to the one-year anniversary of the preceding year’s annual meeting. As a result, the Notice Period for the 2024 Annual Meeting will start on February 17, 2024 and end on March 18, 2024.

If a stockholder who has notified Fortinet of such stockholder’s intention to present a proposal at an annual meeting does not appear to present such stockholder’s proposal at such meeting, Fortinet need not present the proposal for vote at such meeting.

A copy of the full text of the bylaw provisions discussed above may be obtained by writing to Fortinet’s Corporate Secretary at our principal executive offices or by accessing Fortinet’s filings on the SEC’s website at www.sec.gov. All notices of proposals by stockholders, whether or not included in Fortinet’s proxy materials, should be sent to Fortinet’s Corporate Secretary at our principal executive offices.

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Q:   How may I obtain a separate set of proxy materials or the 2022 Annual Report?

A:    If you share an address with another stockholder, each stockholder may not receive a separate copy of our proxy materials and 2022 Annual Report. Stockholders who do not receive a separate copy of our proxy materials and 2022 Annual Report and want to receive a separate copy may request to receive a separate copy of, or stockholders may request additional copies of, our proxy materials and 2022 Annual Report by calling (408) 235-7700 or by writing to Fortinet, Inc., 899 Kifer Road, Sunnyvale, California 94086, Attention: Investor Relations. Our 2022 Annual Report may also be obtained by accessing Fortinet’s filings on the SEC’s website at www.sec.gov. Stockholders who share an address and receive multiple copies of our proxy materials and 2022 Annual Report can also request to receive a single copy by following the instructions above.

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PROPOSAL ONE

ELECTION OF DIRECTORS

General

The Board of Directors currently consists of eight members, and the Current Certificate provides that the entire Board of Directors will stand for election annually for one-year terms. Each director holds office until that director’s successor is duly elected and qualified. Our Current Bylaws permit the Board of Directors to establish by resolution the authorized number of directors, and eight directors are currently authorized.

Nominees

Eight candidates have been nominated for election as directors at the 2023 Annual Meeting for a one-year term expiring at the 2023 Annual Meeting. Upon recommendation of the Governance Committee of the Board of Directors (the “Governance Committee”), the Board of Directors has nominated Ken Xie, Michael Xie, Kenneth A. Goldman, Ming Hsieh, Jean Hu, William Neukom, Judith Sim and Admiral James Stavridis (Ret) for election as directors. Biographical information about each of the nominees is contained in the following section. A discussion of the qualifications, attributes and skills of each nominee that led the Board of Directors and the Governance Committee to the conclusion that such nominee should serve as a director has been added following each of the director and nominee biographies.

Each nominee has agreed to serve if elected, and management has no reason to believe that any nominee will be unavailable to serve. In the event any nominee is unable or declines to serve as a director at the time of the 2023 Annual Meeting, the proxies will be voted for any nominee who may be proposed by the Governance Committee and designated by the present Board of Directors to fill the vacancy.

If you sign your proxy card or voting instruction card or vote by telephone or over the internet but do not give instructions with respect to the voting of directors, your shares will be voted for the eight nominees recommended by the Board of Directors. If you wish to give specific instructions with respect to the voting of directors, you may do so by indicating your instructions on your proxy or voting instruction card or when you vote by telephone or over the internet. If you do not give voting instructions to your broker, your broker will leave your shares unvoted on this matter.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF
Ken Xie, Michael Xie, Kenneth a. goldman, Jean Hu, Ming Hsieh,
William Neukom, Judith Sim and ADMIRAL JAMES STAVRIDIS (RET).

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Information Regarding the Board of Directors and Director Nominees

The names of the members of the Board of Directors and our proposed director nominees, their respective ages, their positions with Fortinet (as applicable) and other biographical information as of March 31, 2023, are set forth below.

Messrs. Ken Xie and Michael Xie are brothers. There are no other family relationships among any of our directors or executive officers.

Name

 

Age

 

Position

Ken Xie

 

60

 

Chief Executive Officer, Chairman of the Board of Directors and Director Nominee

Michael Xie(4)****

 

54

 

President, Chief Technology Officer, Director and Director Nominee

Kenneth A. Goldman(1)(2)

 

73

 

Director and Director Nominee

Ming Hsieh(2)(3)*

 

67

 

Director and Director Nominee

Jean Hu(2)**

 

59

 

Director and Director Nominee

William H. Neukom(3)(4)

 

81

 

Lead Independent Director and Director Nominee

Judith Sim(1)(3)***

 

54

 

Director and Director Nominee

Admiral James Stavridis (Ret)(1)(4)

 

68

 

Director and Director Nominee

__________________

(1)    Member of the Human Resources Committee.

(2)    Member of the Audit Committee.

(3)    Member of the Governance Committee.

(4)    Member of the Social Responsibility Committee.

*       Chairperson of the Governance Committee.

**     Chairperson of the Audit Committee.

***   Chairperson of the Human Resources Committee.

**** Chairperson of the Social Responsibility Committee.

Ken Xie has served as our Chief Executive Officer and a member of the Board of Directors since he co-founded Fortinet in October 2000. He previously served as our President until November 2013. Prior to co-founding Fortinet, Mr. Ken Xie was the Founder, President and Chief Executive Officer of NetScreen Technologies, Inc., a provider of network security products, which was acquired by Juniper Networks, Inc. in April 2004. Additionally, Mr. Ken Xie was Chief Executive Officer of SIS, Inc. and is a member of the National Academy of Engineering. In addition to the Board of Directors, Mr. Ken Xie has served on the board of directors of TeleNav, Inc. since July 2012. Mr. Ken Xie received a B.S. and an M.S. in electrical engineering from Tsinghua University in China and an M.S. in electrical engineering from Stanford University.

Mr. Ken Xie has more than 25 years of technical and management experience in the networking and security industries, which includes his roles as a founder of Fortinet, NetScreen and SIS and as President and Chief Executive Officer of each of the foregoing companies. The Board of Directors also believes Mr. Ken Xie provides valuable perspective and experience as a co-founder of Fortinet and one of its largest stockholders.

Michael Xie has served as our President and Chief Technology Officer since November 2013 and as a member of the Board of Directors since February 2001. He previously served as our Vice President of Engineering and Chief Technology Officer after co-founding Fortinet in October 2000. Prior to co-founding Fortinet, he held positions as Vice President of Engineering for ServGate Technologies, Inc., a network security provider that was acquired by Amarium Technologies, Inc. in April 2006, Software Director and Architect for NetScreen and Senior Software Engineer for Milkyway Networks Corporation, a network security solutions provider. Mr. Michael Xie has an M.S. in electrical engineering from the University of Manitoba in Canada, as well as a B.S. and an M.S. in automobile engineering from Tsinghua University in China.

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Mr. Michael Xie has more than 20 years of technical and operational experience in the network security industry, which includes positions as the President and Chief Technology Officer of Fortinet, the Vice President of Engineering of ServGate and the Software Director and Architect of NetScreen. The Board of Directors believes that Mr. Michael Xie’s deep technical knowledge is invaluable in developing and improving Fortinet’s technology and network security products. The Board of Directors also believes Mr. Michael Xie provides valuable perspective and experience as a co-founder of Fortinet and one of its largest stockholders.

Kenneth A. Goldman has served as a member of the Board of Directors since October 2020. Mr. Goldman has served as the President of Hillspire LLC, a family office management company, since September 2017. From October 2012 to June 2017, Mr. Goldman served as the Chief Financial Officer of Yahoo! Inc., a provider of internet content and services. Prior to this, Mr. Goldman was our Senior Vice President and Chief Financial Officer from September 2007 to October 2012. From January 2015 to December 2017, Mr. Goldman served as a member of the PCAOB, Standing Advisory Group. From December 1999 to December 2003, Mr. Goldman served on the Financial Accounting Standards Board’s primary advisory group. Mr. Goldman currently serves on the boards of directors of GoPro, Inc., RingCentral, Inc. and Zuora, Inc. Mr. Goldman is also on the board of directors of the Value Reporting Foundation (“VRF”), which is responsible for the financing, oversight, administration and appointment of the VRF Standard Board. Mr. Goldman holds a B.S. in Electrical Engineering from Cornell University and an M.B.A. from Harvard Business School.

Mr. Goldman has developed expertise in finance, including accounting and financial reporting, as a Chief Financial Officer of Yahoo! Inc. and in other finance roles, and has career experience managing human resources and legal functions. Mr. Goldman also has over ten years of outside board experience at the aforementioned companies and numerous other public and private companies.

Ming Hsieh has served as a member of the Board of Directors since April 2013. Mr. Hsieh has served as the Chairman and Chief Executive Officer of Fulgent Therapeutics Inc., a cancer drug research and development company, since September 2012. From October 2010 to June 2012, Mr. Hsieh served as the President of 3M Cogent, Inc., a provider of global biometric identification solutions, following the acquisition of Cogent, Inc. by 3M Company in 2010. Prior to the acquisition, Mr. Hsieh served as the Chief Executive Officer, President and Chairman of the board of directors of Cogent since founding Cogent in 1990. Prior to that, Mr. Hsieh was a research and development engineer at International Rectifier Corporation, a manufacturer of semiconductors, from 1985 to 1987. Mr. Hsieh received a B.S.E.E. from the University of Southern California in 1983 and an M.S.E.E. from University of Southern California in 1984.

Mr. Hsieh has leadership, operational and executive experience by serving as Chief Executive Officer, President and Chairman of the board of directors of Cogent.

Jean Hu has served as a member of the Board of Directors since October 2019. Since January 2023, Ms. Hu has served as Executive Vice President and Chief Financial Officer of Advance Micro Devices, Inc., a semiconductor company. Prior to AMD, Ms. Hu served as Executive Vice President and Chief Financial Officer of Marvell Technology Group Ltd., a semiconductor company, from August 2016 to January 2023. Ms. Hu served as Senior Vice President and Chief Financial Officer of Qlogic Corporation, a network server and storage networking company, from April 2011 to August 2016, and as acting Chief Executive Officer of Qlogic from May 2013 to February 2014 and from August 2015 to August 2016. From 2004 to 2011, Ms. Hu served in various senior positions at Conexant Systems, Inc., a semiconductor company, including as Chief Financial Officer and Senior Vice President, Business Development from December 2008 to April 2011 and as Treasurer from June 2009 until April 2011. Ms. Hu holds a B.S. in Chemical Engineering from Beijing University of Chemical Engineering and a Ph.D. in Economics from Claremont Graduate University

Ms. Hu has extensive experience in the management of technology companies from her positions at Marvell and Qlogic, and expertise in corporate financing, accounting and financial reporting.

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William H. Neukom has served as a member of the Board of Directors since January 2013 and has served as our Lead Independent Director since April 2018. Mr. Neukom is the Founder and Chief Executive Officer of the World Justice Project, an organization devoted to promoting the rule of law throughout the world. He is a retired partner in the Seattle office of the international law firm K&L Gates LLP and is a lecturer at Stanford Law School, where he teaches a seminar on the rule of law. He is a member of the Dean’s Council at Stanford Law School and was its chair from 2012 to 2015. Mr. Neukom was the Chief Executive Officer of the San Francisco Giants major league baseball team from 2008 to 2011, and served as its Chairman Emeritus during 2012. He is a trustee emeritus of Dartmouth College, having served as chair of the board from 2004 to 2007, and was president of the American Bar Association from 2007 to 2008, and was awarded the ABA Medal in 2020. Mr. Neukom was previously the lead lawyer for Microsoft Corporation for nearly 25 years, managing its legal, government affairs and philanthropic activities. He retired from Microsoft as its Executive Vice President of Law and Corporate Affairs in 2002, when he returned to Preston, Gates & Ellis LLP and served as the firm’s chairman from 2003 until its merger with Kirkpatrick & Lockhart Nicholson Graham LLP in 2007. Mr. Neukom also serves on the board of several not-for-profit organizations. Mr. Neukom earned an A.B. from Dartmouth College and an LL.B. from Stanford University.

Mr. Neukom has business leadership, operational, legal and executive experience as a result of his service as Managing General Partner and Chief Executive Officer of San Francisco Baseball Associates, as President of the American Bar Association, as a partner at an international law firm and as the Executive Vice President of Law and Corporate Affairs for Microsoft. The Board of Directors believes that Mr. Neukom, with his experience with the technology industry and his expertise in legal, governance and compliance matters, brings a unique and valuable perspective to the Board of Directors.

Judith Sim has served as a member of the Board of Directors since June 2015. Ms. Sim previously held various customer-related and marketing positions at Oracle Corporation from 1991 to April 2020, including as its Chief Marketing Officer from 2005 to April 2020. Ms. Sim received a B.S. in dietetics from the University of California at Davis.

Ms. Sim has leadership and executive experience from her position as head of marketing programs at Oracle, including experience in field marketing, corporate communications, global customer programs, advertising, campaigns, events and corporate branding.

Admiral James Stavridis, USN (Ret), PhD has served as a member of the Board of Directors since October 2021. Admiral Stavridis (Ret) spent 37 years in the U.S. Navy, rising to the rank of 4-star Admiral. Among Admiral Stavridis’ (Ret) many commands were four years as the 16th Supreme Allied Commander of NATO, leading the NATO Alliance in global operations and where his responsibilities included cybersecurity. He was the longest serving Combatant Commander in recent U.S. history. In the course of his Navy career, Admiral Stavridis (Ret) served as senior military assistant to the Secretary of the Navy and the Secretary of Defense. He led the Navy’s premier operational think tank for innovation, Deep Blue. Following his military career, Admiral Stavridis (Ret) served for five years as the 12th Dean of The Fletcher School of Law and Diplomacy at Tufts University. While Dean, he created a blended master’s degree in cyber and international relations at Tufts. He is a nationally recognized cybersecurity expert and routinely teaches on cyber challenges and offers insights via speaking appearances. He is currently Managing Director and Vice Chairman, Global Affairs of The Carlyle Group and is Chair of the Board of Trustees of the Rockefeller Foundation. Admiral Stavridis (Ret) attended the U.S. Naval Academy at Annapolis and earned a PhD in international relations from The Fletcher School at Tufts University.

Admiral Stavridis (Ret) has extensive government and leadership experience as a result of his military service. The Board of Directors believes that Admiral Stavridis (Ret), with his experience with NATO and his expertise governance matters, brings a unique and valuable perspective to the Board of Directors.

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Director Expertise and Experience

The Board of Directors is comprised of a diverse mix of directors with complementary expertise and experience, as summarized in the table below. Our directors may also have limited expertise and experience in addition to what is reflected in the “Number of Directors” column below.

Summary of Expertise, Experience or Attribute

 

Ken
Xie

 

Michael Xie

 

Kenneth A. Goldman

 

Ming Hsieh

 

Jean Hu

 

William H. Neukom

 

Judith Sim

 

Admiral James Stavridis (Ret)

 

Number of Directors

Cybersecurity
Extensive knowledge of corporate and global issues related to cybersecurity challenges within private and public organizations.

 

🗸

 

🗸

                     

🗸

 

3 of 8

Technology and Product Development
Significant background working in the technology industry, including government sectors, and in management of technology companies; experience in product development, including engineering and design.

 

🗸

 

🗸

 

🗸

 

🗸

 

🗸

 

🗸

 

🗸

 

🗸

 

8 of 8

Leadership
Extensive executive, director or management experience from leadership and governance roles in corporations, government or public organizations.

 

🗸

 

🗸

 

🗸

 

🗸

 

🗸

 

🗸

 

🗸

 

🗸

 

8 of 8

Public Service and Legal
Dedication to public service through leadership of government, non-governmental organizations and not-for-profit institutions; extensive experience in legal and compliance matters.

 

🗸

     

🗸

         

🗸

     

🗸

 

4 of 8

Finance
Leadership of a financial firm or management of the finance function of an enterprise, resulting in financial proficiency and expertise.

         

🗸

     

🗸

             

2 of 8

Sales and Marketing
Experience in sales or marketing, and leadership of corporate sales or marketing functions.

                         

🗸

     

1 of 8

Board Diversity Matrix

We believe that representation of gender, ethnic, geographic, cultural or other perspectives expands the Board of Directors’ understanding of the needs and viewpoints of our customers, partners, employees and other stakeholders. The following matrix discloses the gender and demographic backgrounds of our directors, as self-identified by its members in accordance with Nasdaq Listing Rule 5606.

As of the 2023 Annual Meeting:

 

Ken Xie

 

Michael Xie

 

Kenneth A. Goldman

 

Ming Hsieh

 

Jean Hu

 

William H. Neukom

 

Judith Sim

 

Admiral James Stavridis (Ret)

 

Number of Directors

Part I: Gender Identity

                                   

Female

                 

🗸

     

🗸

     

2 of 8

Male

 

🗸

 

🗸

 

🗸

 

🗸

     

🗸

     

🗸

 

6 of 8

Non-Binary

                                 

0 of 8

Did Not Disclose Gender

                                 

0 of 8

Part II: Demographic Background

                                   

African American or Black

                                 

0 of 8

Alaskan Native of Native American

                                 

0 of 8

Asian

 

🗸

 

🗸

     

🗸

 

🗸

     

🗸

     

5 of 8

Hispanic or Latinx

                                 

0 of 8

Native Hawaiian or Pacific Islander

                                 

0 of 8

White

         

🗸

         

🗸

     

🗸

 

3 of 8

Two or more Races or Ethnicities

                                 

0 of 8

LGBTQ+

                                 

0 of 8

Military Veteran

                             

🗸

 

1 of 8

Did Not Disclose Demographic Background

                                 

0 of 8

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As of the 2022 Annual Meeting:

 

Ken Xie

 

Michael Xie

 

Kelly Ducourty

 

Kenneth A. Goldman

 

Ming Hsieh

 

Jean Hu

 

William H. Neukom

 

Judith Sim

 

Admiral James Stavridis (Ret)

 

Number of Directors

Part I: Gender Identity

                                       

Female

         

🗸

         

🗸

     

🗸

     

3 of 9

Male

 

🗸

 

🗸

     

🗸

 

🗸

     

🗸

     

🗸

 

6 of 9

Non-Binary

                                     

0 of 9

Did Not Disclose Gender

                                     

0 of 9

Part II: Demographic Background

                                       

African American or Black

                                     

0 of 9

Alaskan Native of Native American

                                     

0 of 9

Asian

 

🗸

 

🗸

         

🗸

 

🗸

     

🗸

     

5 of 9

Hispanic or Latinx

                                     

0 of 9

Native Hawaiian or Pacific Islander

                                     

0 of 9

White

         

🗸

 

🗸

         

🗸

     

🗸

 

4 of 9

Two or more Races or Ethnicities

                                     

0 of 9

LGBTQ+

                                     

0 of 9

Military Veteran

                                 

🗸

 

1 of 9

Did Not Disclose Demographic Background

                                     

0 of 9

Director Tenure and Age Distribution

We also believe that our current Board of Directors composition represents an effective balance with respect to director tenure and age. Recent director additions provide the Board of Directors with fresh perspectives and diverse experiences, while directors with longer tenure provide continuity and valuable insight into our business and strategy. The following tables provide information regarding the current tenure and age distribution of the Board of Directors (as of March 31, 2023).

Tenure

 

Number of Directors

 

Age

 

Number of Directors

More than 10 years

 

3

 

70+ years

 

2

6 – 10 years

 

2

 

61 – 70 years

 

2

0 – 5 years

 

3

 

45 – 60 years

 

4

Board Evaluations

The Board of Directors is committed to a robust self-evaluation process designed for continuous improvement. To achieve this, the Board of Directors conducts an annual self-evaluation for itself and its committees. As part of this process, each member of the Board of Directors completes a survey conducted by a third-party consulting firm to provide feedback and/or individually meets with the consulting firm to discuss, the processes, structure, composition and effectiveness of the Board of the Directors. The evaluation process is designed to help the Board of Directors assess the performance of the Board of Directors and its committees, their own individual performance and the individual performances of fellow directors. The third-party consulting firm also collects feedback on the Board of Directors as a whole and each individual director from key members of management. The feedback received from the Board of Directors and management is shared first with the Governance Committee, and then made available to the individual directors and the full Board of Directors.

The Board of Directors evaluation process is used:

        by the Board of Directors and the Governance Committee to assess the current composition of the Board of Directors and its committees and make recommendations for the qualifications, expertise and characteristics we should seek in identifying potential new directors;

•  by the Board of Directors and the Governance Committee to identify the strengths and areas of opportunity of each member of the Board of Directors, the Board as a whole and each committee;

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•  by the Board of Directors to provide insight into how the Board as a whole, each committee and each member of the Board of Directors can be most valuable;

        to improve agenda topics of the Board of Directors and its committees so that information they receive enables them to effectively address the issues they consider most critical; and

        by the Governance Committee as part of its annual review of each director’s performance when considering whether to recommend the nomination of the director for re-election to the Board of Directors.

See “Corporate Governance” and “Executive Compensation — Compensation of Directors” for additional information regarding the Board of Directors.

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PROPOSAL TWO

RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

General

The Audit Committee of the Board of Directors (the “Audit Committee”) has selected Deloitte & Touche LLP as Fortinet’s independent registered public accounting firm to audit the financial statements of Fortinet for the fiscal year ending December 31, 2023, which will include an audit of the effectiveness of Fortinet’s internal control over financial reporting. A representative of Deloitte & Touche LLP is expected to be present at the 2023 Annual Meeting, will have the opportunity to make a statement if such representative desires to do so and is expected to be available to respond to appropriate questions.

If the appointment is not ratified, the Audit Committee will consider whether it should select other independent auditors. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm as Fortinet’s independent auditors at any time during the year if the Audit Committee determines that such a change would be in Fortinet’s and its stockholders’ best interests.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS FORTINET’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023.

Principal Accounting Fees and Services

The following table presents fees billed for professional audit services and other services rendered to Fortinet by Deloitte & Touche LLP for the years ended December 31, 2022 and December 31, 2021.

 

2022

 

2021

Audit Fees(1)

 

$

4,717,260

 

$

3,109,169

Audit-Related Fees(2)

 

 

 

 

969,300

Tax Fees(3)

 

 

602,286

 

 

619,244

All Other Fees(4)

 

 

1,895

 

 

Total

 

$

5,321,441

 

$

4,697,713

__________________

(1)   Audit Fees consist of fees for professional services provided in connection with the audit of our annual consolidated financial statements, audit of our internal control over financial reporting, the review of our quarterly consolidated financial statements and audit services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings for those fiscal years.

(2)   Audit-Related Fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and which are not reported under Audit Fees above. In 2021, Audit-Related Fees related primarily to debt offering, business combination and equity investment services.

(3)   Tax Fees consist of fees for services related to federal and state income tax compliance, transfer pricing review, reports related to research and development credits, country-by-country reporting, the Foreign Derived Intangible Income and routine tax consulting.

(4)   All Other Fees consist of products and services provided by Deloitte & Touche LLP that are not included in the service categories reported above.

Approval of Audit and Non-Audit Services

Pursuant to its charter, the Audit Committee is required to (i) review and approve, in advance, the scope and plans for all audits and audit fees and (ii) approve, in advance, all non-audit services to be performed by our independent auditor that are not otherwise prohibited by law and any associated fees.

All Deloitte & Touche LLP services and fees in fiscal 2022 and fiscal 2021 were approved by the Audit Committee.

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PROPOSAL THREE

ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

As required by Section 14A of the Exchange Act and the corresponding rules of the SEC, Fortinet is seeking stockholder approval, on an advisory and non-binding basis, of the compensation of our named executive officers as disclosed in accordance with the SEC’s rules in the “Executive Compensation” section of this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer but rather the overall compensation of all of our named executive officers and the compensation philosophy, policies and practices described in this Proxy Statement.

The say-on-pay vote is advisory, and therefore not binding on Fortinet, the Human Resources Committee of the Board of Directors (the “Human Resources Committee”) or the Board of Directors. Following the 2023 Annual Meeting, the next such non-binding advisory vote to approve our named executive officers’ compensation as a whole is scheduled to occur at the 2024 Annual Meeting.

The Board of Directors and the Human Resources Committee value the opinions of our stockholders and the say-on-pay vote provides information to us regarding stockholder sentiment about our executive compensation philosophy, policies and practices, which the Human Resources Committee will be able to consider when determining executive compensation for the remainder of the current fiscal year and beyond. To the extent there is any significant vote against the compensation of our named executive officers as disclosed in this Proxy Statement, we will consider our stockholders’ concerns, and the Human Resources Committee will evaluate whether any actions are necessary to address those concerns. We believe that the information we have provided in the “Executive Compensation” section of this Proxy Statement, and in particular the information discussed in “Executive Compensation — Compensation Discussion and Analysis,” demonstrates that our executive compensation program was designed appropriately and is working to ensure our executive officers’ interests are aligned with our stockholders’ interests. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the 2023 Annual Meeting:

“RESOLVED, that Fortinet’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in Fortinet’s Proxy Statement for the 2023 Annual Meeting pursuant to the Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion and the other related disclosure.”

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL.

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PROPOSAL FOUR

ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES
TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

In accordance with Section 14A of the Exchange Act and the rules of the SEC, we are providing our stockholders with an opportunity to make a non-binding, advisory vote on the frequency of future advisory votes to approve the compensation of our named executive officers. This non-binding advisory vote must be submitted to stockholders at least once every six years, and we most recently submitted this vote to our stockholders in 2017.

Stockholders may indicate whether they would prefer a non-binding vote on named executive officer compensation to occur once every “ONE YEAR,” TWO YEARS” or “THREE YEARS.” Stockholders may also “ABSTAIN” from voting. The frequency that is selected by the greatest number of shares of our common stock that are present in person or represented by proxy at the 2023 Annual Meeting and entitled to vote will be considered preference of our stockholders. However, because this vote is advisory and non-binding, the Huma Resources Committee or the Board of Directors may decide that it is in the best interests of our stockholders and Fortinet to hold future advisory votes to approve the compensation of our named executive officers more or less frequently than the frequency approved by our stockholders.

After careful consideration, the Board of Directors recommends that future non-binding advisory votes on the compensation of our named executive officers be held every year.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE OF
EVERY “ONE YEAR” ON THIS PROPOSAL.

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PROPOSAL FIVE

ADOPTION OF AN AMENDMENT TO THE CURRENT CERTIFICATE IN ORDER TO REMOVE
THE SUPERMAJORITY VOTING REQUIREMENT AND MAKE CERTAIN OTHER CHANGES

Summary of Proposal

Presently, the affirmative vote of the holders of at least 66 2/3% of the voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors is required to amend, alter or repeal the Current Certificate, or to adopt any provision inconsistent with the purpose and intent of Article V, Article VI, Article VIII or Article X (including, without limitation, any such Article as renumbered as a result of any amendment, alteration, change, repeal or adoption of any other Article) of the Current Certificate, in addition to any other vote that may be required by law or any preferred stock then outstanding.

In response to feedback from our stockholders at the 2022 Annual Meeting on removing the supermajority voting requirements in our Current Certificate and Current Bylaws, we are asking our stockholders to adopt the Majority Voting Amendment in order to reduce the voting threshold for amending, altering or repealing the Current Certificate from 66 2/3% to a simple majority.

The Majority Voting Amendment also removes from the Current Certificate language relating to the 2022 Stock Split.

If our stockholders adopt the Majority Voting Amendment (and if the Board of Directors does not abandon it after it is adopted by the stockholders), the threshold to adopt, amend or repeal our certificate of incorporation would be lowered to a majority of all then-outstanding shares of our capital stock entitled to vote generally in the election of directors.

In connection with its approval of the Majority Voting Amendment, the Board of Directors has also approved the Restated Bylaws, which shall become effective contingent upon and subject to the effectiveness of the filing of the Majority Voting Amendment with the Delaware Secretary of State after its adoption by our stockholders. The Restated Bylaws would similarly lower the vote threshold for the adoption, amendment and repeal of the Current Bylaws from 66 2/3% to a simple majority vote. The Restated Bylaws do not require stockholder approval.

If the Majority Voting Amendment is not adopted by our stockholders or is abandoned by the Board of Directors, then the Majority Voting Amendment and the Restated Bylaws will not become effective and the supermajority requirements in the Current Certificate and Current Bylaws will remain in place.

The description of the Majority Voting Amendment as set forth above is qualified in its entirety by reference to the text of the Majority Voting Amendment, which is attached to this Proxy Statement as Appendix A.

Recommendation of the Board of Directors

The Board of Directors has approved and adopted the Majority Voting Amendment, declared it to be advisable and in the best interests of Fortinet and its stockholders and recommended that the stockholders adopt the Majority Voting Amendment.

Reducing the requisite vote threshold to a simple majority vote can benefit stockholders by: promoting stockholder participation, as more stockholders may feel empowered to participate in the decision-making process; facilitating faster decision-making as a lower voting threshold can make it easier to reach the required number of votes, thereby reducing the time and cost associated with the process; and increasing flexibility in our operations and governance. Further, the Board of Directors believes it is important to be responsive and accountable to stockholders and committed to strong corporate governance.

If our stockholders adopt the Majority Voting Amendment, the Board of Directors has authorized our officers to file the Majority Voting Amendment with the Delaware Secretary of State, and it would become effective upon such filing. The Board of Directors intends to make that filing if and as soon as practicable after the Majority Voting Amendment is adopted. However, even if our stockholders adopt the Majority Voting

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Amendment, the Board of Directors may abandon the Majority Voting Amendment without further stockholder action prior to the effectiveness of the filing of the Majority Voting Amendment and, if abandoned, the Majority Voting Amendment will not become effective. If the Board of Directors abandons the Majority Voting Amendment, it will publicly disclose that fact and the reason for its determination.

Voting Requirement to Approve Proposal

The affirmative vote of at least 66 2/3% of the voting power of all of the shares of our common stock outstanding as of the Record Date is required to adopt the Majority Voting Amendment.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” THE ADOPTION OF THE MAJORITY VOTING AMENDMENT.

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PROPOSAL SIX

ADOPTION OF AN AMENDMENT TO THE CURRENT CERTIFICATE
IN ORDER TO PERMIT THE EXCULPATION OF OFFICERS FROM
PERSONAL LIABILITY FOR CERTAIN BREACHES OF THE DUTY OF CARE

Summary of Proposal

Section 102(b)(7) of the Delaware General Corporation Law was amended effective August 1, 2022 to permit a Delaware corporation’s certificate of incorporation to include a provision that limits or eliminates (i.e., exculpates) the monetary liability of certain officers for breaches of the fiduciary duty of care as officers in certain actions. This exculpation would not protect officers from liability for breach of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Nor would this exculpation shield such officers from liability for claims brought by or in the right of the corporation, such as derivative claims.

Article IX of the Current Certificate provides for the elimination of personal liability of our directors for monetary damages for breaches of the duty of care as directors. We are asking our stockholders to adopt the Officer Exculpation Amendment in order to permit the exculpation for our officers by us from monetary damages for breaches of the duty of care as officers in certain actions, as described above, similar to our existing ability to exculpate our directors. The Officer Exculpation Amendment would not be retroactive and would not apply to any act or omission occurring prior to the effectiveness of the amendment.

If the Officer Exculpation Amendment is not adopted or is abandoned by the Board of Directors, then the Officer Exculpation Amendment will not become effective and Fortinet’s officers will continue to potentially face personal liability for all breaches of the duty of care in all actions.

The description of the Officer Exculpation Amendment as set forth above is qualified in its entirety by reference to the text of the Officer Exculpation Amendment, which is attached to this proxy statement as Appendix B.

Recommendation of the Board of Directors

The Board of Directors has approved and adopted the Officer Exculpation Amendment, declared it to be advisable and in the best interests of Fortinet and its stockholders and recommended that the stockholders adopt the Officer Exculpation Amendment.

The Board of Directors believes that providing protection to officers to the fullest extent permitted by law is necessary to attract and retain highly qualified senior leadership, especially since we expect competitor companies to adopt similar exculpation clauses. The nature of the role of officers often requires them to make decisions on crucial matters often in time-sensitive situations, which can create risk of investigations, claims or proceedings seeking to impose liability on the basis of hindsight, especially in the current litigious environment and regardless of merit. Limiting concern about personal risk would empower both directors and officers to best exercise their business judgment in furtherance of stockholder interests and can benefit stockholders by encouraging appropriate risk taking that could result in greater innovation and growth. Exculpation could also reduce legal costs for Fortinet by discouraging lawsuits over matters covered by exculpation. This protection has long been afforded to directors, and the Board of Directors believes that extending similar exculpation to its officers is fair and in the best interests of Fortinet and its stockholders.

If our stockholders adopt the Officer Exculpation Amendment, the Board of Directors has authorized our officers to file the Officer Exculpation Amendment with the Delaware Secretary of State, and it would become effective upon such filing. The Board of Directors intends to make that filing if and as soon as practicable after the Officer Exculpation Amendment is adopted. However, even if our stockholders adopt the Officer Exculpation Amendment, the Board of Directors may abandon the Officer Exculpation Amendment without further stockholder action prior to the effectiveness of the filing of the Officer Exculpation Amendment and, if abandoned, the Officer Exculpation Amendment will not become effective. If the Board of Directors abandons the Officer Exculpation Amendment, it will publicly disclose that fact and the reason for its determination.

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Voting Requirement to Approve Proposal

The affirmative vote of at least 66 2/3% of the voting power of all of the shares of our common stock outstanding as of the Record Date is required to adopt the Officer Exculpation Amendment.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” THE ADOPTION OF THE
Officer Exculpation Amendment.

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CORPORATE SOCIAL RESPONSIBILITY

We believe that our corporate vision — a digital world you can always trust — is essential to achieving just and sustainable societies, and that it is our responsibility to deliver on that vision by innovating sustainable security technologies, diversifying cybersecurity talent and promoting responsible business across our value chain. These responsibilities drive our CSR practices.

Our commitment to CSR starts at the highest level with the Social Responsibility Committee, which the Board of Directors established on its own initiative in 2021 to ensure proper focus on, and provide proper oversight of, our CSR strategy, initiatives and execution. Our senior leadership sponsors and helps oversee the integration of our CSR priorities broadly throughout our business operations, and our Global Head of Sustainability manages a team and chairs an internal cross-functional employee CSR Committee to define our CSR strategy and lead execution. We believe having oversight at the level of a committee of the Board of Directors reinforces the importance of CSR practices in our business and helps steer our CSR performance.

Our objective is to promote long-term value for our stakeholders, including customers, partners, suppliers, employees, stockholders and communities. Our sustainability strategy, which is based on a formal materiality assessment conducted in 2021 with outside experts, is informed as follows:

Innovating for a Safe Internet

 

Growing an
Inclusive
Cybersecurity Workforce

 

Promoting Responsible Business

 

Respecting the Environment

We believe that ensuring the digital security and privacy of individuals and organizations enables digital progress, and we strive to create value through security innovation, expertise, research and cooperation.

 

We are committed to building an inclusive, equitable and diverse workforce within our organization and across the industry to help empower individuals to reach their full potential.

 

We are committed to doing business ethically and in compliance with all laws. Our corporate governance practices aim to ensure accountability to meet our responsibilities across our entire value chain.

 

We are focused on addressing the climate change impacts and minimizing the environmental footprint of our solutions, operations and our broader value chain.

Priority issues: Cyber Risks to Society; Information Security & Privacy

 

Priority issues: Diversity, Equity & Inclusion; Cybersecurity Skills Gap

 

Priority issues: Business Ethics; Responsible Product Use

 

Priority issues: Product Environmental Impacts; Climate Change

For each of our defined CSR priorities we have developed roadmaps and engaged relevant business units in the implementation process. We are focused on continuously improving our sustainability efforts and further aligning with global reporting frameworks. In 2022, we published our first sustainability report, continued to improve disclosure on our public website, and actively participated in sustainability assessments from rating agencies. The progress made on our sustainability journey allowed us to consistently improve our scores and to be added to the 2022 Dow Jones Sustainability World and North American Indices.

In April 2023, we published our second sustainability report, which presents a balanced account of our 2022 sustainability performance and progress across our most material priority areas. The report references Global Reporting Initiative standards, Sustainability Accounting Standards Board standards, the TCFD framework and United Nations Sustainable Development Goals.

We engage with key internal and external stakeholders to help refine our CSR practices. Below are specific areas that we know are of particular importance to many of our stockholders based on the feedback received.

Environment

We recognize that environmental considerations such as climate change, resource scarcity and the energy crisis are top priorities for the future of our planet. We are committed to helping address climate change impacts and minimizing the environmental footprint of our solutions, operations and our broader value chain. A significant part of our core business mission is to consolidate security functionalities and networking functionalities in a way that is more energy efficient. We continue to combine innovation with environmental

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sustainability to reduce the use of energy, cooling and space required for our solutions, thereby helping our customers minimize power consumption and greenhouse gas emissions. We also ensure that our products comply with global product environmental compliance directives and regulations.

We engaged with a consultancy to conduct the inventory and measure our Scope 3 emissions and, to further engage on our path to net zero in alignment with the Paris Agreement we formally signed on to the Science-Based Target Initiative commitment in September 2022. We implemented an Environmental Management Systems platform to track our energy, water and waste impact, and engaged on the ISO14001 certification process for our company-owned warehouse in Union City, California.

We began aligning our climate strategy and disclosures to the TCFD framework and submitted our Carbon Disclosure Project report.

Social

We are committed to building an inclusive, equitable and diverse workforce within our organization and across the security industry to help empower individuals to reach their full potential. We continue to focus on skilling, upskilling and reskilling individuals to reach our goal of training one million people in cybersecurity by 2026. At the 2022 White House National Cyber Workforce and Education Summit, we announced the expansion of our existing free training offerings, focusing on schools. We introduced an enhanced enterprise-grade Security Awareness and Training service to help Information Technology (“IT”), security, and compliance leaders build a cyber-aware culture within their organizations. We continued to expand partnerships with educational institutions and now have over 500 Authorized Academic Partners. Our Education Outreach Program focuses on creating cyber career pathways for underrepresented populations, including women, veterans and disadvantaged individuals. In total, we trained over 210,000 people through our various initiatives in 2022.

Internally, we have continued to expand programs and trainings designed to ensure Diversity, Equity and Inclusion (“DEI”) in the workplace, from talent acquisition, to onboarding and leadership development. We have also engaged with the broader Fortinet workforce to encourage employees to foster a culture of diversity and inclusion, through the creation of Employee Resource Groups.

We have improved our organizational governance around DEI, starting at the highest level with the Human Resources Committee, which has oversight of DEI-related matters. Part of the reason the Board of Directors changed the name of this committee from the “Compensation” Committee to the “Human Resources” Committee is based on Human Resources Committee’s responsibility extends beyond compensation, including responsibility to oversee DEI-related matters. At the corporate level, we have formed a global DEI Organizing Committee and DEI Council to provide a shared direction and commitment to recruiting and valuing a diverse workforce, fostering a culture of teamwork and openness and building a more inclusive workplace.

We have increased transparency and disclosure through the reporting of multiple 2022 diversity metrics on our workforce relative to gender, ethnicity and age, and published our EEO-1 report.

Governance

We are focused on good governance and ethical practices throughout our business. The Board of Directors frequently reviews our governance practices to ensure that they are appropriate and reflect the maturity of our company. For example, to promote good governance and accountability at the highest level, the Board of Directors, on its own initiative, changed the term of service structure for directors from staggered three-year terms to one-year terms for every director. The Board has supported the approval of a majority voting proposal as discussed in this Proxy Statement.

To promote ethical business practices, we have adopted and regularly review policies that set out a Business Code of Conduct for all employees, partners, suppliers and vendors, and have trainings and controls in place. In 2022, we expanded the human rights language in our compliance and business ethics training and updated our supplier and partner codes of conduct to reference our environmental and human rights policies.