Check Point to give Shwed options worth $144m

Gil Shwed photo: Eyal Izhar

Foreign investment in TASE hits five-year high

Check Point co-founder and CEO Gil Shwed owns 19.1% of the company, worth $3.4 billion.

Check Point Software Technologies Ltd. (Nasdaq: CHKP) CEO Gil Shwed continues to fortify his position as the leading shareholder of the cyber security company, which he founded jointly with Marius Nacht and Shlomo Kramer in 1993 and has managed ever since. As of now, Shwed owns 19.1% of Check Point - 31 million shares with a value of over $3.4 billion. He also holds 5.9 million options to buy shares at strike prices ranging from $49.50 to $115; these options will mature in 2019-2024. The second largest shareholder in Check Point is US investment company Massachusetts Financial Services Company with a 7.7% stake worth $1.3 billion at present.

Check Point is now seeking approval for additional allocations of options to Shwed, as it has done every year in recent years. For the past decade, Shwed has forgone receiving both a salary from Check Point (except for the legal minimum wage) and an annual bonus from the company. At the same time, he receives each year a general grant of options. Shwed previously explained that he chose to give up his salary and bonuses in favor of options because he felt more comfortable profiting when the shareholders profit. In 2014-2017, Shwed's remuneration totaled $140 million.

Shwed's big numbers

Check Point, which provides cyber security solutions, has a $17.3 billion market cap. The company yesterday published notice of its annual shareholders' meeting on August 20 in the company's offices in Tel Aviv. One of the proposals on the agenda is an allocation of 1.3 million options to Shwed (the same number as last year) at an exercise price equal to 100% of Check Point's closing share price on the date of the meeting. If exercised at the current share price, these options are worth $144 million.

Check Point's board of directors approved the allocation and is recommending it to the shareholders. The notice of the meeting states that the board of directors' audit committee examined a number of factors, including a comparison with similar companies in the industry, the responsibility resting on Shwed's shoulders, his estimated future contribution to Check Point's profits, and so forth. In considering the allocation to Shwed, the audit committee also consulted with remuneration consultation company Mercer.

At the same time, Check Point's shareholders will be asked at the meeting to approve the extension of the terms of six company directors until the 2019 annual shareholders' meeting and to elect two external directors to three-year terms. The directors to be voted on include chairperson Nacht; company president Jerry Ungerman, a board members since 2005; Osem chairperson Dan Propper, a board member since 2006; David Rubner, a board member since 1999; and Dr. Tal Shavit, a director since 2000. The external directors to be voted on are Yoav Chelouche and Guy Gecht.