Top Cisco execs forego bonuses
CEO Chambers' stock options sunk underwater
Top Cisco executives have forgone bonuses this year as falling demand, particularly from key telco customers, continues to affect the performance of the networking giant.
Chief executive John Chambers received no income from stock options this year, according to a filing with the Securities and Exchange Commission made this week. However chief financial officer Larry Carter made $29 million and senior vice president Mike Volpi $30 million from exercising their options. Many of Chambers' options are at an exercise price higher than Cisco's stock price, something described in financial circles as "underwater" options.
The San Jose Mercury News reports that Cisco's stock fell from $60 to $19.06 during its last fiscal year, as demand slumped and Cisco was forced to make slash its workforce by 8,500.
As previously reported, Chambers made the symbolic gesture of cutting his annual salary from $323,319 to $1 per year from April, and his salary will be pegged at this level until Cisco's fortunes revive. Chamber's is unlikely to go hungry though because he made $156 million from exercising options last year.
It seems unlikely that other senior Cisco execs are working without a salary but it has been decided that none will receive bonuses this year, a welcome decision that sits in stark contrast the bonuses paid to fat cats in Britain's loss making railway industry, for example. Chambers received $1 in bonuses for the fiscal year 2000.
In August, Cisco posted profits for its fourth quarter of just $7 million, down 99 per cent from $796 million profits in the same period last year.
The results, which were in line with Wall St expectations, showed Cisco's sales dropping 25 per cent from $5.72 billion to $4.3 billion in its fourth quarter this year. For the full year, Cisco recorded losses of $1.01 billion compared to income of $2.67 billion for fiscal 2000. ®
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