What happens when a behemoth telecom equipment maker misses its fiscal-year financial performance goals? Its executives get denied bonus money, which is instead paid out under the header, “discretionary incentive payments.”
That’s the case at Cisco Systems Inc. (CSCO) this month. The company said late last week in a regulatory filing that it “did not satisfy its minimum pre-established financial performance goals application to executive officers.” Therefore, those leaders aren’t getting bonuses.
But don’t cry for John, Argentina.
Cisco CEO John Chambers still will collect $2.01 million in incentive money. Frank Calderoni, executive vice president, gets $900,000 under that same terminology; Wim Elfrink, EVP and chief globalization officer, $1 million; Randy Pond, EVP of operations, processes and systems, $900,000; and Richard Justice, EVP and executive advisor, $750,000. (Eh? No women??)
In its Securities & Exchange Commission document, Cisco explained the payouts this way: “In making these incentive payments, the 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. These awards are significantly lower than the cash incentive payments to each individual for the company’s 2008 fiscal year.”
Oh, well, “significantly lower” justifies everything. Cisco’s profit dropped 46 percent in its fiscal fourth quarter alone and, throughout the year, the company has stated its plans to lay off about 2,000 workers in 2009. Let’s hear it for “operational excellence”!