Cisco Systems gave Chairman and CEO John Chambers a "discretionary incentive payment" of more than US$2 million for the company's 2009 fiscal year, despite the fact that net income fell nearly 24 percent from the previous year on sales that were down almost 9 percent.
Chambers and four other top executives were not eligible for bonuses under Cisco's Executive Incentive Plan because the dominant networking vendor didn't meet the financial performance goals required for making those awards, according to a filing to the U.S. Securities and Exchange Commission on Friday.
However, Cisco's Compensation and Management Development Committee "considered the company's solid financial performance during a period of tough economic challenges, and each individual's key role in driving operational excellence and strong profitability" in making the discretionary payments, the filing said. The awards were much lower than the cash incentive payments given to each individual last fiscal year, the company noted.
For the 2009 fiscal year ended July 25, Cisco earned $6.1 billion, or $1.05 per share, on net sales of $36.1 billion.
Chambers was awarded $2.031 million. The other executives who benefited were Executive Vice President and Chief Financial Officer Frank Calderoni ($900,000); Wim Elfrink, executive vice president, Cisco Services and chief globalization officer ($1 million); Randy Pond, executive vice president, operations, processes and systems ($900,000); and Richard Justice, former executive vice president, worldwide operations and business development, who is now an executive vice president and executive advisor ($750,000).
On Friday, Cisco shares closed at $21.84, up from $16.30 at the end of December.