companys compensation committee to be considered independent for purposes of the listing standards of the NYSE, the listed companys board of directors must consider all factors
specifically relevant to determining whether a director has a relationship to the listed company that is material to that directors ability to be independent from management in connection with the duties of a compensation committee member,
including, but not limited to: (1) the source of compensation of such director, including any consulting, advisory, or other compensatory fee paid by the listed company to such director; and (2) whether such director is affiliated with the
listed company, a subsidiary of the listed company, or an affiliate of a subsidiary of the listed company.
Our board of directors has
undertaken a review of the independence of each of our directors. Based on information provided by each director concerning his or her background, employment, and affiliations, our board of directors has determined that each of Mses. McCarthy and
Twohill and each of Messrs. Calderoni, Chandna, Donovan, Eschenbach, Goetz, Key, Ramaswamy and Warmenhoven do not have a material relationship with our company, either directly or indirectly, that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director and that each of these directors is independent as that term is defined under the applicable rules and regulations of the SEC and the listing standards of the NYSE. In making
these determinations, our board of directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directors
deemed relevant in determining their independence, including the beneficial ownership of our common stock by each non-employee director and the transactions involving them described in the section titled
Certain Relationships and Related Party Transactions.
Since the beginning of our last fiscal year through October 15,
2019, we have sold, both directly and through our channel partners, an aggregate of approximately $88.1 million, $1.1 million, $14.3 million and $0.1 million of products and services to AT&T Inc. (AT&T),
Anaplan, Inc. (Anaplan), Google, Inc. and Sequoia Capital Operations, LLC (Sequoia), respectively, in arms length transactions. In addition, since the beginning of our last fiscal year through October 15, 2019, we
have purchased an aggregate of approximately $0.1 million, $0.9 million and $28.2 million of AT&T, Anaplan and Google, Inc. products and services, respectively, in arms length transactions.
We entered into these commercial dealings in the ordinary course of our business. In making the determinations as to which members of our
board of directors are independent, our board of directors considered the fact that (1) Mr. Donovan was an executive officer of AT&T until October 1, 2019, (2) Mr. Calderoni is an executive officer at Anaplan,
(3) Ms. Twohill is an executive at Google, (4) Mr. Ramaswamy was previously an executive at Google until October 2018, and (5) Mr. Eschenbach is a partner and Mr. Goetz is a member at Sequoia. In reviewing
these relationships, our board of directors determined these relationships, respectively, do not impede the ability of Messrs. Donovan, Calderoni, Ramaswamy, Eschenbach or Goetz or Ms. Twohill to act independently on our behalf and on behalf of
our stockholders.
Additionally, none of Ms. Twohill or Messrs. Donovan, Calderoni, Ramaswamy, Eschenbach or Goetz take part in the
discussion of transactions with AT&T, Anaplan, Google, or Sequoia, as applicable, when such transactions are reviewed by our audit committee or board of directors. Additionally, AT&T expects its calendar year 2018 net capital expenditures to
be in the $23 billion range. AT&Ts purchases of our products and services, both directly and through our channel partners, which totaled $88.1 million since the beginning of our last fiscal year through October 15, 2019, are
not material to either us or AT&T. All transactions with AT&T, Anaplan, Google and Sequoia are subject to our rigorous related party transactions review process and policy.
Leadership Structure
Our Corporate Governance Guidelines provide that our board of directors is free to choose its chairperson (the Chairman) based on
the board of directors view of what is in the best interest Palo Alto Networks and its stockholders. The Chairman and Chief Executive may, but need not be, the same person. Mr. McLaughlin served as our Chairman of and Chief Executive
Officer until June 2018 when he resigned as Chief Executive Officer
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