Microsoft Word - FINAL Check Point 2014 Proxy Statement Comments.docx

CHECK POINT SOFTWARE TECHNOLOGIES LTD.

5 Ha’solelim Street

Tel Aviv, Israel

PROXY STATEMENT

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ANNUAL GENERAL MEETING OF SHAREHOLDERS

May 28, 2014

We invite you to attend the Annual General Meeting of Shareholders of Check Point Software Technologies Ltd. The meeting will be held on May 28, 2014 at 5:00 P.M. (Israel time), at Check Point’s principal executive offices at 5 Ha’solelim St., Tel Aviv, Israel.

We are sending you this Proxy Statement because you hold Check Point ordinary shares. Our board of directors is asking that you sign and send in your proxy card, attached to this Proxy Statement, in order to vote at the meeting or at any adjournment of the meeting.

Agenda Items

The following matters are on the agenda for the meeting:

(1) to elect six directors – the terms of six of our current directors will expire at the meeting, and we are proposing to reelect these six directors; (2) to elect two outside directors – the terms of two of our outside directors will expire at the meeting, and we are proposing to reelect these two outside directors; (3) to ratify the appointment and compensation of Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global, as our independent registered public accounting firm for 2014; (4) as required by Israeli law, to approve the compensation for our Chief Executive Officer who is also the Chairman of our board of directors.

How You Can Vote

You can vote your shares by attending the meeting or by completing and signing a proxy card. Attached is the proxy card for the meeting that is being solicited by our board of directors. Please follow the instructions on the proxy card. You may change your mind and cancel your proxy card by sending us written notice, by signing and returning a proxy card with a later date, or by voting in person or by proxy at the meeting. We will not be able to count a proxy card unless we receive it at our principal executive offices at 5 Ha’solelim Street, Tel Aviv, Israel, or our registrar and transfer agent receives it in the enclosed envelope, by May 28, 2014 at 6:59 A.M. Israel time, which is May 27, 2014 at 11:59 P.M. Eastern daylight time. If you sign and return the enclosed proxy card, your shares will be voted in favor of all of the proposed resolutions, whether or not you specifically indicate a "FOR" vote, unless you abstain or vote against a specific resolution.

Who Can Vote

You are entitled to notice of the meeting and to vote at the meeting if you were a shareholder of record at the close of business on April 21, 2014, or the "Record Date." You are also entitled to notice of the meeting and to vote at the meeting if you held our ordinary shares through a bank, broker or other nominee which was one of our shareholders of record at the close of business on the Record Date, or which appeared in the participant listing of a securities depository on that date. We are mailing copies of this Proxy Statement and the proxy cards to our shareholders of record on the Record Date on or about April 28, 2014.

Quorum and Required Vote

If a shareholder holds ordinary shares through a bank or broker it is critical for that holder to cast a vote if that holder wants it to count in the election of directors, including the election of two outside directors, or the approval of compensation of our Chief Executive Officer (Items 1, 2 and 4 of this Proxy Statement). Please note that a shareholder’s bank or broker can no longer vote uninstructed shares in the election of directors on a discretionary basis. Thus, if a shareholder holds ordinary shares through a bank or broker and does not instruct the bank or broker how to vote in the election of directors, including the election of two outside directors, or the approval of compensation of our Chief Executive Officer, no votes will be cast on that shareholder’s behalf. The shareholder’s bank or broker will, however, continue to have discretion to vote any uninstructed shares on the ratification of the appointment and compensation of Check Point’s independent registered public accounting firm (Item 3 of this Proxy Statement).

Our board of directors unanimously recommends that you vote “FOR” all proposals under Items 1 through 4 below.

BENEFICIAL OWNERSHIP OF SECURITIES BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows information as of April 1, 2014 for (i) each person who, to our knowledge, beneficially owns more than 5% of our outstanding ordinary shares, and (ii) our executive officers and directors as a group. The information in the table below is based on 191,103,587 ordinary shares outstanding as of April 1, 2014.

(1) The number of ordinary shares shown includes shares that each shareholder has the right to acquire pursuant to stock options that are presently exercisable or exercisable within 60 days after April 1, 2014 and restricted share units that will be vested within 60 days after April 1, 2014. (2) If a shareholder has the right to acquire shares by exercising stock options or the vesting of restricted share units, these shares are deemed outstanding for the purpose of computing the percentage owned by the specific shareholder (that is, they are included in both the numerator and the denominator) but they are disregarded for the purpose of computing the percentage owned by any other shareholder. (3) Number of shares subject to options that were immediately exercisable or are exercisable within 60 days (4) As of December 31, 2013, based on information contained in a Schedule 13F-HR filed by Franklin Resources Inc. with the Securities and Exchange Commission on February 12, 2014. The address for Franklin Resources Inc. is One Franklin Parkway, San Mateo, California 94403. (5) The address for Messrs. Shwed and Nacht is c/o Check Point Software Technologies Ltd., 5 Ha’solelim St., Tel Aviv, Israel. Except as may be provided by applicable community property laws, Messrs. Shwed and Nacht have sole voting and investment power with respect to their ordinary shares.

ITEM 1 - ELECTION OF DIRECTORS (OTHER THAN OUTSIDE DIRECTORS)

You are being asked to reelect the following directors: Gil Shwed, Marius Nacht, Jerry Ungerman, Dan Propper, David Rubner and Dr. Tal Shavit.

Under our Articles of Association, the maximum number of our directors is fixed at twelve. We currently have ten directors. Four of these directors, Yoav Z. Chelouche, Irwin Federman, Guy Gecht and Ray Rothrock, are our “outside directors” under the Israeli Companies Law. The current term of office of Messrs. Federman and Rothrock expires this year, and they are standing for reelection at this meeting, as described in Item 2 below. The current term of office of Messrs. Chelouche and Gecht will expire in 2015.

You are being asked to reelect all of our current directors who are not outside directors. If all of our board of directors nominees are elected, the foregoing six directors will continue to serve as directors following the meeting in addition to the outside directors.

In accordance with the Israeli Companies Law, each of the nominees for election to our board of directors (as well as our four outside directors) has certified to us that he or she meets all the requirements of the Israeli Companies Law for election as a director of a public company, and possesses the necessary qualifications and has sufficient time, to fulfill his or her duties as a director of Check Point, taking into account the size and special needs of Check Point. During the past year, all of our directors attended more than 75% of our board of directors meetings and more than 75% of the meetings of each of the committees of the board of directors on which they serve.

Nominees for Director

The nominating committee of our board of directors, which consists of Irwin Federman, Ray Rothrock, David Rubner and Dr. Tal Shavit, recommended that the following six nominees be reelected to our board of directors at the meeting. Our board of directors approved this recommendation. Each director who is elected at the meeting will serve until next year’s annual general meeting of our shareholders.

*Gil Shwed is the founder, Chairman and Chief Executive Officer. Mr. Shwed is considered the inventor of the modern firewall and authored several patents, such as the company’s Stateful Inspection technology. Mr. Shwed has received numerous accolades for his individual achievements and industry contributions, including an honorary Doctor of Science from the Technion – Israel Institute of Technology, the World Economic Forum’s Global Leader for Tomorrow for his commitment to public affairs and leadership in areas beyond immediate professional interests, and the Academy of Achievement’s Golden Plate Award for his innovative contribution to business and technology. Mr. Shwed is the Chairman of the Board of Trustees of the Youth University of Tel Aviv University. He is also Chairman of the Board of the board of directors of Yeholot Association Founded by the Rashi Foundation whose charter is, among other things, to reduce the dropout rates in high schools.

Marius Nacht, one of Check Point’s founders, has served as Vice Chairman of our board of directors since 2001. Mr. Nacht has also served as one of our directors since we were incorporated in 1993. From 1999 through 2005, Mr. Nacht held Senior Vice President roles at Check Point. Mr. Nacht earned a B.S. (cum laude) in Physics and Mathematics from the Hebrew University of Jerusalem in 1983, and an M.S. in Electrical Engineering and Communication Systems from Tel Aviv University in 1987.

Jerry Ungerman has served as Vice Chairman of our board of directors since 2005. From 2001 to 2005, Mr. Ungerman served as our President and before that, from 1998 until 2000, he served as our Executive Vice President. Prior to joining us, Mr. Ungerman accumulated more than 30 years of high-tech sales, marketing and management experience at Hitachi Data Systems (HDS), a data storage company and a member of the Hitachi, Ltd. group.

Dan Propper has served on our board of directors since 2006. Mr. Propper is the Chairman of the Board for the Osem Group, a leading Israeli manufacturer of food products. Mr. Propper served as the Chief Executive Officer of Osem for 25 years until April 2006.

David Rubner has served on our board of directors since 1999. Mr. Rubner is Chairman and Chief Executive Officer of Rubner Technology Ventures Ltd., a venture capital firm, and is a general partner at Hyperion Israel Advisors Ltd., a venture capital fund.

If you sign and return the enclosed proxy card, your shares will be voted “FOR” the election of the individuals named above as directors, unless you specifically specify to the contrary. We do not know of any reason that any of the individuals proposed for election as directors would not be able to serve.

We are proposing to adopt the following resolution:

“RESOLVED, that the election of the following six persons to the board of directors of Check Point be, and it hereby is, approved: Gil Shwed, Marius Nacht, Jerry Ungerman, Dan Propper, David Rubner and Dr. Tal Shavit.”

The affirmative vote of the holders of a majority of the voting power represented and voting on this proposal in person or by proxy is required to elect each of the individuals named above as directors.

ITEM 2 - ELECTION OF TWO OUTSIDE DIRECTORS

In accordance with the Israeli Companies Law and the relevant regulations, we must have at least two outside directors who meet the statutory requirements of independence. Under Israeli Companies Law, an outside director serves for a term of three years, which may be extended for additional three-year terms. Further, an outside director can be removed from office only under very limited circumstances. In addition, under the Israeli Companies Law, all of the outside directors must serve on our audit committee and compensation committee (including one outside director serving as the chair of our audit committee and as the chair of our compensation committee), and at least one outside director must serve on each committee of our board of directors.

As noted above, Yoav Z. Chelouche, Irwin Federman, Guy Gecht and Ray Rothrock, are our outside directors under the Israeli Companies Law. The current term of office of Messrs. Federman and Rothrock expires this year and they are standing for reelection at this meeting. The term of office of Messrs. Chelouche and Gecht expires in 2015, and they are not required to stand for reelection at this meeting.

Nominees for Outside Director

The nominating committee of our board of directors recommended that Messrs. Federman and Rothrock be reelected as outside directors at the meeting for an additional three year term. Each of our nominating committee, audit committee and board of directors has found that each of Messrs. Federman and Rothrock has all necessary qualifications required under Israel’s Companies Law to be considered an “outside director” and to be considered an “independent director” pursuant to the rules of NASDAQ. Our audit committee and board of directors approved the nominating committee’s recommendation and determined that, in light of the expertise and contribution to our board of directors and board committees of each of Messrs. Federman and Rothrock, the reelection of each of Messrs. Federman and Rothrock as an outside director for an additional three year term would be in the company’s best interest. If elected at the meeting, each of Messrs. Federman and Rothrock would serve for an additional three-year term.

We are proposing to adopt the following resolution:

“RESOLVED, that the election of each of Messrs. Federman and Rothrock to the board of directors of Check Point to serve as an Outside Director for a three-year term be, and it hereby is, approved.”

The affirmative vote of the holders of a majority of the voting power represented and voting on this proposal in person or by proxy is necessary to elect each of Messrs. Federman and Rothrock as an outside director. In addition, the shareholders’ approval must either include at least a majority of the ordinary shares voted by shareholders who are not controlling shareholders nor are they shareholders who have a personal interest in the election of the outside directors (excluding a personal interest that is not related to a relationship with the controlling shareholders), or the total ordinary shares of non-controlling shareholders and non-interested shareholders voted against this proposal must not represent more than two percent of the outstanding ordinary shares.

ITEM 3 – PROPOSAL TO RATIFY THE APPOINTMENT AND COMPENSATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM; REVIEW AND DISCUSSION OF OUR 2013 CONSOLIDATED FINANCIAL STATEMENTS

Our board of directors has appointed Kost, Forer, Gabbay & Kasierer, an Israeli accounting firm that is a member of Ernst & Young Global, as our independent registered public accounting firm for 2014. Kost, Forer, Gabbay & Kasierer have audited our books and accounts since we were incorporated.

Representatives of Kost, Forer, Gabbay & Kasierer will attend the meeting and will be invited to make a statement. They will be available to respond to appropriate questions raised during the meeting. In accordance with Section 60(b) of the Israeli Companies Law, you are invited to discuss our 2013 consolidated financial statements, and questions regarding the financial statements may be addressed to us or to our auditors. Our Annual Report on Form 20-F for the year ended December 31, 2013, including our 2013 audited consolidated financial statements, is available on our website at www.checkpoint.com.

We are proposing to adopt the following resolution:

“RESOLVED, that the appointment of Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global, as Check Point’s independent registered public accounting firm for 2014 be, and it hereby is, ratified, and the board of directors (or, the audit committee, if authorized by the board of directors) be, and it hereby is, authorized to fix the remuneration of such independent registered public accounting firm in accordance with the volume and nature of their services.”

The affirmative vote of the holders of a majority of the voting power represented and voting on this proposal in person or by proxy is necessary to approve the resolution to ratify the appointment and compensation of our independent registered public accounting firm.

ITEM 4 – PROPOSAL TO APPROVE COMPENSATION TO OUR CHIEF EXECUTIVE OFFICER WHO IS ALSO THE CHAIRMAN OF OUR BOARD

The Israeli Companies Law provides that the compensation of our directors, whether as directors, officers or consultants, requires shareholder approval. This includes cash compensation as well as compensation in the form of equity awards. Gil Shwed, who is the Chairman of our board of directors, is also our Chief Executive Officer. Therefore, Mr. Shwed’s compensation requires shareholder approval.

Mr. Shwed has requested to forego his salary and bonus for 2014, as he has done for the past several years. Following consideration of Mr. Shwed’s request, our compensation committee, audit committee and board of directors have determined that Mr. Shwed will not receive a bonus for 2014, and will not receive any cash compensation for 2014 except for an amount equal to the minimum wage required under Israeli law. Currently, other than the minimum wage required by law, Mr. Shwed’s sole compensation for 2014 will be the option grant recommended below, if approved by the shareholders at the meeting.

Our compensation committee recommended the grant to Mr. Shwed of options to purchase 1.6 million ordinary shares at an exercise price equal to 100% of the closing price of the ordinary shares on the NASDAQ Global Select Market on the date of the meeting, vesting over a period of 4 years. Our board of directors and audit committee subsequently approved the grant to Mr. Shwed of options to purchase 1.6 million ordinary shares, upon the terms recommended by the compensation committee. We are therefore proposing that you now approve the option grant to Mr. Shwed.

In making its recommendation, the compensation committee considered several factors, including comparable industry data, data of peer companies in our industry, the responsibilities and duties performed by Mr. Shwed, the equity and compensation for comparably situated chief executive officers, the estimation of Mr. Shwed’s expected contributions to the future growth and profitability of Check Point, as well as certain other factors prescribed by the Israeli Companies Law and our executive compensation policy.

We are proposing to adopt the following resolution:

“RESOLVED, that the grant to Gil Shwed of options to purchase 1.6 million ordinary shares at an exercise price equal to 100% of the closing price of the ordinary shares on the NASDAQ Global Select Market on the date of the 2014 Annual General Meeting of Shareholders and upon the terms recommended by Check Point’s compensation committee and approved by Check Point’s board of directors and audit committee be, and it hereby is, approved.”

By Order of the Board of Directors.

GIL SHWED Chairman of the Board of Directors

Dated: April 21, 2014