3rd UPDATE: Cisco Shareholders Approve 'Say-On-Pay' Proposal
(Adds details on vote, and background on proposal.)
By Roger Cheng
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Cisco Systems Inc. (CSCO) shareholders narrowly
approved a "say-on-pay" resolution giving them more of a voice on executive
compensation, according to the fund that issued the proposal.
The San Jose networking titan is the latest company to get swept up by the
heightened levels of public scrutiny over pay among the highest ranks of the
corporate world. Goldman Sachs Group Inc. (GS) continues to take criticism for
its lucrative bonuses. Among a number of companies, Apple Inc. (AAPL) and
Microsoft Corp. (MSFT) shareholders approved similar resolutions earlier this
year.
The "say-on-pay" plan would allow shareholders to cast a non-binding vote on
the company's compensation of senior executives every year.
The proposal was put forth by activist shareholder Christian Brothers
Investment Services on Thursday during the company's annual shareholder meeting.
The vote was initially declared too close to call, so the announcement was
delayed until Friday.
"This majority vote by Cisco's shareholders sends a clear message. The onus is
now on Cisco to take a leadership stance and enact Say on Pay before federal
legislation mandates such policies for all public corporations," said Julie
Tanner, assistant director of socially responsible investing at CBIS.
Cisco, however, believes shareholders are more divided than Tanner would
believe. The company noted that 34% of its shareholders supported the measure,
compared with 32% against it. The rest of the shareholders either abstained or
didn't cast a vote.
"Whereas Cisco shareholders are clearly divided on this issue, the board will
study closely the various ways companies have implemented the Say-on-Pay
proposals and develop an appropriate plan for Cisco in response to the
shareholder vote," said spokesman Terry Alberstein.
The company had recommended voting against the proposal, arguing that
shareholders have more effective ways to express their views on executive pay,
and that such a move would be premature ahead of proposed legislation that may
be enacted in the near future.
Cisco was among a group of blue-chip companies that in September endorsed a
set of executive compensation principles that align with what the Obama
administration is pushing.
Tanner, however, criticized Cisco's executive pay, which come during tough
times that have hit the company. In the fiscal first quarter, Cisco posted a 19%
drop in profit and a 13% revenue decline. Over the past year, the company cut
roughly 2,000 workers in an effort to contain costs.
It's the second attempt by CBIS, which put forth the proposal two years ago
but was narrowly defeated. Tanner said she went with the second attempt after
failing to make any progress on talks with the company.
CBIS owns 800,000 shares of Cisco, and has held the stock for the past five
years.
Cisco shares were 1.4% higher at $23.73 on Friday afternoon.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com
(END) Dow Jones Newswires
11-13-091414ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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