Proofpoint’s Leaders Eligible For $154.6M In Payouts In Thoma Bravo Deal

Proofpoint details how much money each of its executive officers and non-employee board members would be entitled to if the proposed $12.3 billion acquisition by Thoma Bravo goes through.

Proofpoint’s top executives and directors could earn as much as a combined $154.6 million in stock, options, and severance payments if the proposed acquisition by Thoma Bravo goes through.

The Sunnyvale, Calif.-based email security vendor detailed payouts for its five current executive officers and eight non-employee members of its board of directors in a preliminary proxy statement filed Wednesday with the U.S. Securities and Exchange Commission (SEC). Proofpoint declined to comment to CRN on the filing.

Proofpoint Founder, Chairman and CEO Gary Steele could receive a payout of as much as $86.9 million as a result of Thoma Bravo’s $12.3 billion acquisition. More than $86 million of Steele’s payout is tied to equity awards that have either already vested or would vest if Proofpoint terminates his employment without cause or Steele resigns from the company prior to the final vesting date for “good reason.”

[Related: 10 Things To Know About The Thoma Bravo-Proofpoint Deal And Stock Hike]

Meanwhile, longtime Proofpoint Chief Financial Officer Paul Auvil could receive a payout of up to $26.1 million from the Thoma Bravo deal, while Chief Revenue Officer Blake Salle could get a payout of up to $15 million. Steele founded Proofpoint in November 2002, Auvil joined the company in his current role in March 2007, and Salle joined Proofpoint in 2017 and moved into his current role last year.

David Knight – EVP and GM of Proofpoint’s information and cloud security products group – is eligible for a payout of $13.8 million, while Ashan Willy – EVP and GM of Proofpoint’s security products and services group – is eligible for a payout of $10.4 million. Knight joined Proofpoint in 2011 and moved into his current role in 2020, while Willy joined in 2016 and was promoted to his current role in 2020.

In addition, Proofpoint’s eight non-employee directors are slated for a combined payout of $2.4 million for the vested restricted stock units (RSUs) in their possession. Proofpoint’s independent directors are: Facebook Financial CISO Michael Johnson; Google executive Kristen Gil; former Salesforce EVP Leyla Seka; former VeriSign CFO Dana Evan; former GoDaddy executive Betsy Rafael; KLA Corp. CEO Richard Wallace; Mohr Davidow Ventures’ Jonathan Feiber; and Benchmark Capital’s Kevin Harvey.

Thoma Bravo in April announced plans to purchase publicly traded Proofpoint for $12.3 billion, or $176 per share, in the biggest cybersecurity acquisition of all-time. The deal is expected to close in the third quarter of 2021.

Proofpoint may also spend up to $5 million on a program that provides cash retention bonuses to employees that remain with the company through March 31, 2022. All of Proofpoint’s 3,697 employees are eligible for this program with the exceptions of Steele and Anvil, the company’s SEC filing stated.

The company went public a decade after its founding, raising $82.3 million as part of an April 2012 initial public offering on the Nasdaq Stock Exchange that valued Proofpoint at $385.6 million, or $13 per share. Proofpoint’s stock has climbed steadily since its IPO, first surpassing the $50 per share mark in January 2015 and the $100 per share mark in January 2018.

However, Proofpoint’s valuation largely stagnated in the three years prior to the acquisition announcement. The business day before the Thoma Bravo deal was unveiled, Proofpoint’s stock closed at $131.78 per share, less than 8 percent higher than the company’s April 20, 2018, closing price of $122.07 per share.

The largest current owners of Proofpoint are investment management firms The Vanguard Group and BlackRock, which hold stakes in the company of 9.5 percent and 5.9 percent, respectively. Proofpoint’s 13 directors and named executive officers hold a combined 2.2 percent stake in the company, with no individual owning more than 1 percent of the company’s stock.

In the first quarter of 2021, Proofpoint increased its revenue to $287.8 million, up 15.2 percent from $249.8 million the year prior. Subscription revenue soared to $283.6 million, up 16.2 percent from $244.1 million last year. But hardware and services revenue dipped to $4.2 million, down 26 percent from $5.7 million in the first three months of 2020.

The company’s net loss improved to $45.3 million, or $0.79 per share, in the first three months of 2021. That’s stronger financial results than the net loss of $66.8 million, or $1.17 per share, in the first three months of 2020.