New Check Point CEO Nadav Zafrir to receive $15 million in first year
New Check Point CEO Nadav Zafrir to receive $15 million in first year
Check Point moves away from Gil Shwed’s equity-based model with Zafrir’s mixed compensation plan.
In preparation for Nadav Zafrir's entry into the position of CEO of Check Point in December, the company is seeking approval for his compensation package. Thus, the company is undergoing not only a change in its senior leadership but also in its compensation structure.
The outgoing CEO, Gil Shwed, did not receive a salary from the company; all his compensation came from capital components, i.e., through options and shares. In this way, Shwed, who founded the cybersecurity giant in 1993 and has led it since then, was able to maintain ownership of a quarter of the company's shares.
The company wishes to grant Zafrir a gross salary of $384,000 in 2025, along with compensation in blocked shares that vest over time and based on performance targets (RSU and PSU), worth $8.8 million. Additionally, he will receive options valued at $6 million, according to the Black-Scholes model, and a cash bonus of $400,000 derived from meeting goals.
Under the terms of his compensation, the first portion of RSUs, valued at $1.4 million, will vest after one year, followed by another $1 million annually. The performance-based blocked shares (PSUs) will vest according to an increase in Check Point's revenue.
Zafrir's total annual compensation for next year will amount to $15.27 million, slightly lower than the compensation that Shwed received in the last two years. To provide context, in 2023, Shwed's compensation was valued at $22.3 million, while in 2022, it was $18.4 million. In 2021, the amount was $15 million.
Zafrir, who resides in Israel, will receive his salary in shekels, amounting to 1.44 million shekels for the salary portion and another 1.5 million shekels for the bonus. He will not receive a cash joining bonus, which is sometimes offered to new CEOs of large companies. For example, Kåre Schultz, the previous CEO of Teva, received a cash joining bonus of $20 million.
To determine Zafrir's compensation, Check Point engaged an external firm that identified 17 international cybersecurity companies, as well as Israeli software firms, as relevant benchmarks, including Palo Alto Networks, Nice, Fortinet, CrowdStrike, and Dropbox. In the rationale for the salary, the company states in its notice of the meeting that Zafrir has been recognized as a leading figure in the global cybersecurity field for over a decade. He founded and led companies in the industry during his previous role as a founding partner at the Team8 fund. Prior to that, Zafrir served for 20 years in the IDF, some of which were as the commander of Unit 8200, where he established the IDF's Cyber Command. Zafrir currently serves as the chairman of the Israeli company SolarEdge.
At the same time, Check Point is seeking to approve additional compensation in options for Shwed, who is once again waiving any other compensation for his position as chairman of the board. According to the notice of the meeting, Shwed will receive 170,000 options valued at $9.6 million, a significantly smaller package than he has received in recent years. Additionally, Check Point seeks to expand its board of directors from nine to ten members with the addition of Zafrir.
