October 3, 2002 5:13 PM PDT
Cisco CEO draws $1 salary
Chambers also did not receive a bonus and gave back 2 million of the 6 million options he was granted for the period. The options he gave back, along with those he retains, range in strike price from $16 to $20.53 a share.
Cisco shares Thursday closed down 23 cents, or about 2.3 percent, to $9.82.
"It's a good symbolic act. It sends a message to shareholders and institutional investors that he won't enrich himself with other people having lost money on the stock. And it sends a message to employees who aren't getting raises either," said Jon Holman, who heads executive recruiting firm The Holman Group.
"It's kind of stinky if people in the company are reaping huge bonanzas and the company is not performing."
Holman noted that given the wealth Chambers amassed from Cisco's stock during its huge run-up in the 1990s, he can afford the largely symbolic gesture.
"I don't think you'll see a big trend with this among other CEOs, especially those who don't have a high net worth," Holman said.
Last fiscal year, Chambers received a salary of $268,131 and no bonus. However, he received 6 million options. During the year, he asked his board to lower his salary to $1.
"The committee agreed to honor this request until such a time as the committee deems it appropriate to return Mr. Chamber's base salary to a market-competitive level," the comapany stated in the SEC filing.
Chambers also turned down the board's bonus, despite meeting the corporate and individual goals he set out, the filing stated.
Although Cisco shares have taken a beating over the past year, along with many other tech stocks, the networking giant's share price has outperformed the S&P 500 and S&P Information Technology sector over the past five years.
A $100 investment in Cisco in July 1997 would have been worth $133.50 in July 2002; the same amount put into the S&P 500 would be worth $102.23.