Cisco Cuts CEO’s Pay After Missing Sales, Profit Targets By Peter Burrows

Cisco Systems Inc. (CSCO) Chief Executive Officer John Chambers received $16.5 million in compensation for the company’s latest fiscal year, a 22 percent decline.
The company didn’t meet revenue and operating income targets for the year that ended in July, and Chambers’s performance-based compensation was reduced accordingly, the company said in a filing yesterday with the U.S. Securities and Exchange Commission. The world’s largest maker of networking equipment had $47.1 billion in sales in fiscal 2014, falling short of the company’s target of $49.5 billion. Operating income was $13.4 billion, short of the $14 billion target.
Chambers, 65, has been at the
helm of Cisco for almost two decades and has said he will retire by the end of fiscal 2016. The company said in August it would eliminate 6,000 jobs and forecast little to no sales growth, as Chambers struggles to remake Cisco before leaving it in the hands of a successor.
Chambers saw his base salary kept the same at $1.1 million. His stock awards declined to $12.9 million in fiscal 2014 from $15.2 million in the prior year, and his non-equity incentive compensation fell to $2.5 million from $4.7 million, according to the filing.
Cisco’s revenue fell 3 percent in the latest fiscal year, the first decline in five years.
“Cisco’s executive officers are compensated in a manner consistent with Cisco’s strategy, competitive practice, sound corporate governance principles, and shareholder interests and concerns,” said John Earnhardt, a spokesman for San Jose, California-based Cisco. “We believe our compensation program is strongly aligned with the long-term interests of our shareholders.”

Total Compensation

Gary Moore, Cisco’s president and chief operating officer and Robert Lloyd, president of development and sales, identified by Chambers as potential successors, saw their total compensation decline as well. Moore received $11.2 million, 35 percent less than a year earlier, while Lloyd’s compensation fell 33 percent to $10.9 million.
With Steve Ballmer’s retirement from Microsoft Corp. this year and Oracle Corp. founder Larry Ellison’s decision to step aside as CEO, Chambers remains the longest-running CEO of a major publicly traded technology company.