Beyond Firewalls: Fortinet’s Vision for Cyber Dominance
Part 2: Management, Industry Analysis, Financials & Valuation
This is Part 2 of our deep dive on Fortinet, following our article “Beyond Firewalls: Fortinet’s Vision for Cyber Dominance (Part 1).” In part 2, we explore Management, Industry Analysis, Financials, Competitive Advantages, Risks & Opportunities, and our detailed Valuation.
To make things easier, paid subscribers will receive a downloadable PDF at the end of this article, combining both parts into a single, easy-to-read report.
Let’s jump in.
3. Management
a. Culture
According to Glassdoor ratings, Fortinet ranks lower than its peers in overall score, CEO approval, and the percentage of employees willing to recommend the company to a friend. Nonetheless, its 3.9 rating is not concerning, and with 4 out of 5 employees approving the CEO, we don’t see any significant cultural issues.
Source: Glassdoor
b. Leadership
Fortinet’s leadership team, anchored by its co-founders Ken Xie (CEO and Chairman) and Michael Xie (President and CTO), has been a key driver of the company’s success. Their vision and expertise have shaped Fortinet into a cybersecurity leader, and the stability of their leadership remains critical to achieving the company’s strategic objectives. In a notable transition, longtime CFO Keith Jensen, who has been with Fortinet for 11 years, announced his retirement effective May 15, 2025. He will continue supporting the company until June 30, 2025, and will be succeeded by Christiane Ohlgart. Ohlgart, currently Fortinet’s Chief Accounting Officer, brings over 30 years of experience, including previous roles as CFO at IGEL Technology and VP of Finance at Fortinet. Her deep familiarity with the company ensures continuity in financial leadership. Additionally, in July 2024, Fortinet’s Board of Directors established a dedicated Cybersecurity Committee, an uncommon but strategic move that underscores the company’s commitment to proactively managing cybersecurity risks in an increasingly fast-paced and complex environment.
c. Compensation
Fortinet’s 2024 proxy statement highlights a strong emphasis on performance-based compensation, with 96% of the CEO’s total compensation and 93% for other named executive officers (NEOs) tied to performance. Stock-based compensation accounts for 91% of the CEO’s pay and 86% for NEOs. While restricted stock units (RSUs) are primarily service-based, performance-based pay still constitutes 60% for the CEO and 59% for NEOs—higher than CrowdStrike’s ~50% but below Palo Alto Networks’ ~97.6% for the CEO and 94.2% for NEOs, which rely solely on performance stock units (PSUs).
The compensation structure includes a base salary, annual bonuses tied to revenue (70%) and operating income (30%), and equity awards. Performance-based PSUs vest over four years (20% each of the first three years, 40% in the fourth) based on Fortinet’s total shareholder return (TSR) relative to S&P 500 companies. RSUs vest over four years, with 25% vesting after one year and the remainder monthly thereafter.
In 2023, Fortinet reintroduced PSUs to NEO equity compensation, granting an equal split between time-based RSUs and performance-based PSUs. CEO Ken Xie’s total compensation of $16.3M remains significantly lower than CrowdStrike’s $47M and Palo Alto’s $58M, indicating a more conservative pay structure. The Company’s consistent outperformance of earnings expectations suggests that its compensation strategy aligns leadership incentives with long-term shareholder value.
Source: Koyfin (affiliate link with a 20% discount for StockOpine readers, premium members can benefit from a 3-month free trial)
d. Ownership
Fortinet scores well on insider ownership, with its CEO, CTO, and the Xie Foundation collectively holding 16.9%. While this is lower than the 19.5% reported in the 2024 proxy, it remains a significant stake, reinforcing strong alignment between management and shareholder interests.
4. Industry
Fortinet operates in a highly competitive cybersecurity landscape, facing rivals such as Palo Alto Networks, CrowdStrike, Zscaler, Cisco, Microsoft, SentinelOne, Check Point and more. While some competitors focus on cloud-based security, others integrate security features into their broader networking and infrastructure solutions.
The cybersecurity market is rapidly evolving, driven by advancements in AI, cloud computing, and secure networking. AI-powered threat detection and automated security responses are becoming essential as cyber threats grow more sophisticated. The rise of generative AI has also enabled large-scale social engineering attacks, with Gartner predicting that by 2027, 17% of cyberattacks and data leaks will involve AI. Meanwhile, cloud security adoption is increasing as organizations migrate workloads, with the combined cloud access security brokers (CASB) and cloud workload protection platforms (CWPP) market expected to grow from $6.7 billion in 2024 to $8.7 billion in 2025.