Cisco Doubles CEO’s Pay as Profits Soar

couldn't read the fourth page, tldr.

I think a lot of the "bile" has to be that there is no reason for someONE person to make nearly 19 million dollars per year. This is a number that is nearly 47.5 times larger that the leader of the free world makes (our president). With that kind of cash and power on hand he could actually do himself a favor by bumping down to the perfect salary for happiness.

I'm actually a bit surprised by the amount of defense this guy gets here. I've done work where my marks on the ground were responsible for hundreds of thousands of dollars worth of infrastructure not to mention human lives if I was wrong and I made well under that 40k mark spoke of before. I didn't sleep well those nights, I bet this guy sleeps just fine.
 
Pab said:
couldn't read the fourth page, tldr.

I think a lot of the "bile" has to be that there is no reason for someONE person to make nearly 19 million dollars per year. This is a number that is nearly 47.5 times larger that the leader of the free world makes (our president). With that kind of cash and power on hand he could actually do himself a favor by bumping down to the perfect salary for happiness.

I'm actually a bit surprised by the amount of defense this guy gets here. I've done work where my marks on the ground were responsible for hundreds of thousands of dollars worth of infrastructure not to mention human lives if I was wrong and I made well under that 40k mark spoke of before. I didn't sleep well those nights, I bet this guy sleeps just fine.
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You're easily replaceable. Much easier to find a good engineer than a good CEO.

And much, much harder to find a CEO who is so good that he delivers results as good as Cisco had.
 
computerpro3 said:
You're easily replaceable. Much easier to find a good engineer than a good CEO.

And much, much harder to find a CEO who is so good that he delivers results as good as Cisco had.
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Your statement is true, but does not address the salary issue.
 
Pab said:
couldn't read the fourth page, tldr.

I think a lot of the "bile" has to be that there is no reason for someONE person to make nearly 19 million dollars per year. This is a number that is nearly 47.5 times larger that the leader of the free world makes (our president). With that kind of cash and power on hand he could actually do himself a favor by bumping down to the perfect salary for happiness.

I'm actually a bit surprised by the amount of defense this guy gets here. I've done work where my marks on the ground were responsible for hundreds of thousands of dollars worth of infrastructure not to mention human lives if I was wrong and I made well under that 40k mark spoke of before. I didn't sleep well those nights, I bet this guy sleeps just fine.
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But who are you to say that there's no reason for him to make that much money. Cisco obviously think they reason to so they gave him 19mil. He and Cisco agreed that he would get compensated if he delivered on agreed performance metrics. He did exactly just that.
 
Wow, lots of mud being thrown..

I'll chime in with my dime.

A) Am I jealous of Cisco's CEO's raise? YES.
B) Am I jealous of the amount? No
C) Do I think he deserved the raise? ... since it's all in stock options... hell yes

I don't mind CEO's making bank if their company is doing well, however I DO have a problem with them getting stupid amounts of 'severance' when they leave the company (ala fired).

I haven't gotta a raise in over 2 years. Hell, I even had to take an 8% pay cut back in May 2009 to keep my job.... still haven't gotten that pay reduction retracted either.
I'm so glad I'm about to graduate with a degree & education in a different field.
 
Interesting how in 20 years everyone started worshiping money and those who make most. Worse that when we see Wallstreet greed and we say it's wrong not because it's unethical, but because we are not the ones doing it. Seems sad that's how we gauge success in life.

it is so polarizing how because we're in a bad economy, anyone that comes out ahead would get a bad rep.

This isn't a black and white issue where all CEO makes too much or all CEO don't make enough. I'm sure some CEO work their ass off and is worth every penny and some are just out of themselves and would fire all their employees for short term gain and get a golden parachute.

Seems like everyone is just frustrated by either government being corrupted or corporation being corrupted.

I wonder how great it is to make 19million if you do work your ass off and die early, never using the 19million for anything worth while...
well i guess you can give it to your kids, but then they'll probably turn into spoil brats :p

I also wonder what it is that i can do with 19 million dollars that would make me feel better than going around the world handing 1000 dollar checks to people that needs it. maybe that's why i'll never make 19 million a year, but i dont mind.

if being an engineer is so replaceable, i wonder why anyone would ever go into that field when they can get a MBA and make millions.
 
I just have to assume anyone arguing against this didn't read the article that clearly states this raise was in stock options.

Reading is hard folks.
 
executives get in the way of companies as much as help, the workers should be rewarded, not the guys at the top.


Stock options would look good to a lot of americans right now. I bet some people with no job at all might look at stock as a way out, or a potential for the future.

Glad this guy got em though, he seems like a really needy guy.Better get your money while you can before Obama takes it all.

the only reason capitalism is supposed to work is the trickle down of wealth from the successful, but when society values individual success more than anything else the trickle down stops and you have extreme class inequality.

system is broke, and no one cares cause it's all about me me me.
 
http://sportsillustrated.cnn.com/specials/fortunate50-2010/index.html

The guy is worth many times what top athletes are paid. His unique skills ARE more valuable than a good golf swing.

But Americans will happily watch their favorite sports hero rake in absurd amounts of $$$, and yet threaten to boycott a company for paying a CEO a tiny percentage of company profits.

I have no idea what to think....there is NO logical justification for this kind of absurd disparity in thought process.

I even saw one poster who thinks the president should be paid more....I was like, wow....thank god this country is NOT a democracy. These forums prove the thesis of the federalist papers.
 
jimmyb said:
Do you have any idea what it's like to know that you are going to lose your house and potentially starve to death as a result of losing your job?
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I'll tell you you need to rethink your lifestyle. You're overextended. You need to have about 6 months of expenses saved up so that losing your job WON'T cost you your house or your ability to feed your family. If you can't do this, then you need to get a second job and make sure you know enough people that you can get another job should your current one fall out. You might also want to think about taking some of your free time and continuing your education to make yourself more valuable to employers.

So many things you can do to protect yourself from the unexpected that people don't do. Then they complain.
 
computerpro3 said:
I'm about to blow your mind.

Your entire argument falls down because only 6% of wealthy people inherited it, where as 69% made it through strictly business (no inheritance) and 25% made it through investing a modest inheritance in business.

So people like my father are the rule, not the exception. People don't believe it because they don't like looking in the mirror and taking responsibility for their place in life, but that's just the cold hard facts.

http://blogs.wsj.com/wealth/2008/04/11/earners-vs-heirs/
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I'll quote a comment from the comments section of the article:

"I don’t dispute that certainly many who made their wealth, likely worked hard for it. But it comes off from some of them as it’s like they wholly created all they have from nothing. Certainly a good sum of these people did inherit good fortune in other ways: schooling paid for, connections to powerful people, etc."

You don't have to inherit money in order to inherit the tools needed to create wealth. How many in that 69% started off dirt poor with parents who never went to college? My guess is a very small percentage.
 
Would you do this for your company? His annual income from 2001 May to 2004 August was 1$ and no bonus, which let his company value grow by 25%. [2001, 2002, 2003, 2004 = $4 for salary]

The compensation committee has decided to reinstate John Chambers' salary at $350,000.00, the same as April 2001, effective August 1 of this year. In April 2001, John requested that his salary be reduced to $1.00 annually until recognition of a recovery in company performance. The compensation committee agreed to his request, and John has taken a dollar in annual salary and no bonus since May of 2001. Compared to that time, Cisco's quarterly revenue has increased approximately 25 percent and we have reached record profitability levels, as reported this quarter.
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Cisco Newsroom August 10, 2004
 
computerpro3 said:
So again, it's a bit more than peripheral experience.
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I guess we'll disagree on this point. I don’t think helping out your old man and absorbing his stresses via osmosis is especially insightful over any experience I’ve had (which also includes some osmosis).

computerpro3 said:
Aside from that point, you're literally making stuff up. The vast majority of CEO's in the country are not rich.
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You’re pointing words in my mouth. I never claimed that any particular percentage of CEOs were rich. In fact, I understand that they aren’t, which is why if you go back and reread my posts you’ll see that I specifically qualified my statements that I was talking about well-payed CEOs – which is incidentally the root topic we were discussing, so this shouldn’t have even been necessary for me to do.

computerpro3 said:
The single biggest reason I know you're not a CEO and don't personally know any is because you have this ridiculous fantasy of what being a C level executive is like.
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What fantasy is it that I hold? I haven’t expressed any inkling that their job is some fantasy world, or even pleasant, just that you saying it is 100x more stressful than a low-level job is ridiculous.
 
Generally in any company you are paid what your skills are worth to the company. His skills just doubled the companies income. I'd say that's worth something. Not to mention the hours and extreme amounts of stress involved in upper management. You have to be a workaholic, have the right type of personality, be able to handle the stresses of having not only the future of the company resting on your shoulders, but also the futures of your employees, and you have to have good ideas on the direction the company needs to take not just right now but a few years down the line. It's definitely no cake walk.
 
Rizen said:
Welcome to business. Layoffs suck, but guess what happens in a tough economy? You cut the dead weight.
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And they cut their spending and draw unemployment, the remaining employees save up, businesses have less demand so they lay off employees...
 
WBurchnall said:
and then double your own salary... hmm.... What about this seems oddly, immoral?
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I am getting so sick of the stupidity displayed here.

1. CEO's largely don't have power over their salary. That is the board of directors job. CEO's don't "double their own salary".

2. Business is not a charity. People don't create businesses to provide jobs for other people. Businesses are created to pursue wealth. This is how it should be, and must be for our nation and economy to survive. Those workers were hurting the pursuit of wealth by Cisco, where as the CEO obviously hugely benefited it. Hence, they get axed and he gets rewarded.

3. His salary didn't double. In fact, he took $1 in salary and NO bonuses when Cisco was struggling. He got so much money recently because Cisco is doing so well as a direct result of his performance - the stock went up, and hence he profited since he owns a large amount of stock.
 
Obviously any increases in profit are soley due to his actions, it's not like the employees remaining after layoffs had to work harder or anything to maintain the same level of productivity, but at least they got their 20 cents / year raise right?
 
lord_emperor said:
Obviously any increases in profit are soley due to his actions, it's not like the employees remaining after layoffs had to work harder or anything to maintain the same level of productivity, but at least they got their 20 cents / year raise right?
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His individual actions had far bigger consequence than any individual employee's actions. Thus he gets rewarded at a higher percentage than they do.

Also, if they don't like their 20 cents a year raise (which you're oh-so-typically pulling out of your ass), you realize they're free to leave right?

It's not rocket science, folks.
 
lord_emperor said:
Obviously any increases in profit are soley due to his actions, it's not like the employees remaining after layoffs had to work harder or anything to maintain the same level of productivity
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Right. Establishing a well-defined causal relationship, let alone quantifying it, between any particular action and company profits, can be extremely difficult to do. This of course means making fair pay adjustments to any particular employee (CEO or otherwise) is a similarly difficult task. Anyone who claims that pay scale adjustments are based on completely rational and fair processes is deluding themselves.
 
computerpro3 said:
His individual actions had far bigger consequence than any individual employee's actions. Thus he gets rewarded at a higher percentage than they do.
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If you are going to adjust someone's pay scale based on change in profits, one would hope that you quantify the affect on profits that particular person had. At any given company, there are individuals constantly making decisions which both help, and hurt profit - therefore the fact that a particular person's decisions are significant is not alone sufficient basis to conclude that they contributed significantly to profit.

Consider the hypothetical scenario, where cēterīs paribus, the CEO actually hurt profits by 5%, but due to excellent work from his VPs net profit is up 30%. In this scenario, it would be fair to reward the VPs, and perhaps dock CEO pay.

I'm not saying this is the case with Cisco, but I'm pointing out that increased company profits combined with a person playing a significant role in a company, is not sufficient reasoning to warrant pay increase to that person. You need to establish a specific positive causal relationship between the actions of that employee and the company's profits - otherwise you are committing a cum hoc ergo propter hoc fallacy.
 
jimmyb said:
If you are going to adjust someone's pay scale based on change in profits, one would hope that you quantify the affect on profits that particular person had. At any given company, there are individuals constantly making decisions which both help, and hurt profit - therefore the fact that a particular person's decisions are significant is not alone sufficient basis to conclude that they contributed significantly to profit.

Consider the hypothetical scenario, where cēterīs paribus, the CEO actually hurt profits by 5%, but due to excellent work from his VPs net profit is up 30%. In this scenario, it would be fair to reward the VPs, and perhaps dock CEO pay.

I'm not saying this is the case with Cisco, but I'm pointing out that increased company profits combined with a person playing a significant role in a company, is not sufficient reasoning to warrant pay increase to that person. You need to establish a specific positive causal relationship between the actions of that employee and the company's profits - otherwise you are committing a cum hoc ergo propter hoc fallacy.
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I would agree with you if it was at all relevant, but nobody changed his pay scale ;)
 
jimmyb said:
If you are going to adjust someone's pay scale based on change in profits, one would hope that you quantify the affect on profits that particular person had. At any given company, there are individuals constantly making decisions which both help, and hurt profit - therefore the fact that a particular person's decisions are significant is not alone sufficient basis to conclude that they contributed significantly to profit.

Consider the hypothetical scenario, where cēterīs paribus, the CEO actually hurt profits by 5%, but due to excellent work from his VPs net profit is up 30%. In this scenario, it would be fair to reward the VPs, and perhaps dock CEO pay.

I'm not saying this is the case with Cisco, but I'm pointing out that increased company profits combined with a person playing a significant role in a company, is not sufficient reasoning to warrant pay increase to that person. You need to establish a specific positive causal relationship between the actions of that employee and the company's profits - otherwise you are committing a cum hoc ergo propter hoc fallacy.
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I do see your point though, and it is valid in many situations. But I could argue easily that a major part of being a CEO choosing your VP's.
 
computerpro3 said:
I would agree with you if it was at all relevant, but nobody changed his pay scale ;)
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True - much CEO income is largely based on stock options.

As an aside, some argue that this is a poor way to structure executive compensation, as it encourages decision making to focus on immediately raising the share price - which unfortunately can mean pandering to a stock market which at times is driven primarily by speculation, and has no personal concern with the long term success of any particular company.
 
In related news (about Chambers), he's introducing dividends to Cisco's stock for the first time ever.

Sept. 15--Saying he's confident in his company's prospects for growth, Cisco Systems CEO John Chambers announced Tuesday that the computer-networking giant will pay its first-ever dividend to stockholders before the end of the fiscal year.

The payout will be 1 to 2 percent of Cisco's share price, said Chambers, adding that the amount will depend partly on whether the government moves to lower taxes on proceeds from overseas sales operations. San Jose-based Cisco's stock closed Tuesday at $21.45, up 19 cents.

During an all-day event for financial analysts and reporters, Chambers argued for easing U.S. tax policies to allow "repatriation" of billions of dollars that Cisco and other U.S. companies have earned overseas. Many companies have left the money overseas rather than pay higher tax rates here.

In addition to paying some of that overseas cash to shareholders, Chambers said he would use it to add more jobs in the United States. He said Cisco will use it to do more hiring overseas if the tax policies aren't changed next year.

Cisco is increasing its U.S. work force by about 10 percent this year, including about 1,000 new workers in Silicon Valley, where it employs about 24,000. Chambers said he would add another 10 percent next year if he could use the overseas cash. Slightly more than half the company's work force of 70,700 is based in the United States.

Chambers also said he believes the company can meet its goal of growing by 12

to 17 percent over the next few years, despite the prospect of a few more "bumps" in the economy. Cisco, which had $40 billion in sales last year, has expanded beyond its core business of networking routers and switches to sell other computing hardware, software, communications systems and consumer gadgets.

While many big corporations pay dividends, they are less common in Silicon Valley, where younger, fast-growing companies tend to use their cash to finance more growth. Google and Apple don't pay dividends, but Hewlett-Packard and Intel have done so and Oracle declared its first dividend last year.

Cisco has about $40 billion in cash, including more than $30 billion parked overseas. Chief Financial Officer Frank Calderoni said the company will continue to spend on acquisitions, product development and stock buybacks.
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GishForever said:
Exactly, the CEO can't double the profit all on his own. He can make some good decisions which should certainly be rewarded, but everyone down the chain has to do their job adequately as well. Granted, businesses should be able to do whatever they want to, but I don't personally understand why all the credit goes to the CEO when a company makes money.
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Because they get all the blame when the company goes downhill.
 
I dont have any numbers (too lazy to look at them) but take the CEO's salary, and divide that on the bazillion "normal" cisco ee's. That would be what, a .000001% increase?

Point is, from the big picture, its not that much money. A 2% increase for all ee's would be many, many millions of dollars.
 
phatmatt said:
So many people seem to forget companies only exist to make a profit.
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At what level, Fortune 500? I'm pretty sure Boeing doesn't just exist to make a profit, or medical technology companies.

Companies can do whatever they see fit. A lot of sports teams lose money annually but the owner can endure that or sell for a ROI later (usually). Valve just reaffirmed they won't go public or be avaricious like EA.
 
Since no one commented on my post, I'd just like to say again that I have no qualms about being paid millions if you're deserving of millions, but if a company does poorly, the CEO never loses millions. There is no concept of risk/reward. It's only reward. The shares of the company might go down and your investment in the company will be worth less, but that's not enough. Rarely do I see (if ever) a CEO fined in cash... ie. cough up 20 million, this is how much you owe the company for your performance this year. CEOs are in a very unique position to receive large amounts of power, influence, and wealth, and should therefore have consequences that are similar in magnitude for failure.
 
I like how everyone's bitching and moaning, but if you look at his previous pays he took a 50% cut in his pay. His pay didn't double, it got re-instated... Jeez.
 
His base salary only went up 1.9% to $382,212. That is actually not high for a CEO. So everything else he got was performance based. Even if only say 10%, if their other employees can also get a pay increase based on performance that would be fair.
 
ShadowStriker said:
I like how everyone's bitching and moaning, but if you look at his previous pays he took a 50% cut in his pay. His pay didn't double, it got re-instated... Jeez.
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Rabble rabble no facts allowed here anger against Corporations rabble rabble hate capitalism rabble rabble
 
KillaChaos said:
Why does his profit double? Why not increase wages all over the company?
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Because this isn't his take home pay. Most of his salary is in the form of stock options. These are not liquid assets. If the stock goes up his "salary" increases.
 
singe_101 said:
At what level, Fortune 500? I'm pretty sure Boeing doesn't just exist to make a profit, or medical technology companies.

Companies can do whatever they see fit. A lot of sports teams lose money annually but the owner can endure that or sell for a ROI later (usually). Valve just reaffirmed they won't go public or be avaricious like EA.
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They do exist to make products, products that in turn, make them profit.. otherwise why not give away their products for free or at cost to make, thus making no money over what they need to operate?
 
Like a poster previously mentioned, I find it funny how so many bitch and moan about CEO's of multi- billion dollar companies making a few million a year, but have no issue with some asshat who runs up and down a field getting 6 year $100 million dollar contracts, or cookie cutter no tallent pop stars making millions for lip synching their shows. Pure freaking comedy.
 
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