Reflecting a 3 percent drop in revenue and failure to meet revenue targets, networking giant Cisco disclosed Tuesday that it had cut Chairman and CEO John Chambers’ total compensation by 22 percent for the past fiscal year.
The pay of other executives also was cut.
Cisco is in the process of making some 6,000 layoffs as it reorganizes to focus on emerging opportunities such as the “Internet of Things” and cloud computing.
In a filing with the Securities and Exchange Commission on Tuesday, Cisco (Nasdaq: CSCO) reported that Chambers’ earnings package was reduced to $16.5 million from $21 million in the previous fiscal year.
Chambers received $11.7 million for fiscal year 2012.
In the filing, Cisco noted that the company’s failure to meet revenue targets triggered the cut since compensation is based on performance. Cisco’s revenues declined 3 percent in fiscal 2014, the first decline in five years, according to Bloomberg news.
“Based on Cisco’s performance at 95% of target during fiscal 2014, the incentive cash awards paid for fiscal 2014 to the named executive officers were on average 40% less than fiscal 2013 and at approximately the 70th percentile of the Peer Group,” Cisco noted. Peer Group refers to executives at firms that compete with or are similar to Cisco.
Peer Group firms include:
- Accenture
- ADP
- Apple
- eBay
- EMC
- Hewlett-Packard
- IBM
- Intel
- Microsoft
- Oracle
- Qualcomm
- Texas Instruments
- Visa
“For fiscal 2014, approximately 70% of target annual total direct compensation for the named executive officers other than the CEO was performance-based, reflecting Cisco’s core compensation philosophy to pay for performance. Approximately 93% of target total direct compensation for the CEO was performance-based.”
Other Cuts
Gary Moore, Cisco’s president and chief operating officer, saw an even bigger drop in compensation: $11.2 million, down 35 percent.
Robert Lloyd, president of development and sales, received 33 percent less in compensation, or $10.9 million.
Chief Financial Officer Frank Calderoni’s pay package fell to $9.3 million from $11.1 million.
“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,” John Earnhardt, a spokesman for Cisco, told Bloomberg. “We believe our compensation program is strongly aligned with the long-term interests of our shareholders.”
The full filing can be read online.
Cisco employs some 4,700 people at its RTP campus, the company’s second largest outside of its headquarters in San Jose, Calif.
