Cisco: How I Voted

Cisco (CSCO) is one of the stocks in my portfolio. Their annual meeting is coming up on December 7. Voting on MoxyVote.com‘s platform ends December 6. When I last looked, MoxyVote.com had recommendations from twelve “good causes,” which included five consolidations. ProxyDemocracy.org had threeparticipating funds voting but you can see them both at the same time and that makes for easier comparisons.

Looking at Cisco’s proxy, the Summary Compensation Table shows that John T. Chambers, the combined CEO/Chairman, was the highest paid named executive officer (NEO) at a little over $12.8 million. According to the United States Proxy Exchange (USPX) guidelines, the median CEO compensation for S&P 500 corporations was $10.8 million in 2010.

Since Chambers’ pay is above that amount, I am voting against the pay plan. I am concerned with the growing gap between the 1% and the rest of us in society. We need to stop CEO pay from ratcheting continually upward via the Lake Wobegone effect. Additionally, Cisco is up about 15% for the last 3 year period. That compares unfavorably with the Nasdaq Computer Index, up about 105% for the sam period. Why should be pay above average for that kind of performance?

My policy is that if I am voting against the pay package I also vote against all members of the compensation committee, unless there are overriding considerations. Therefore, I voted against Roderick C. McGeary (Chairperson), Brian L. Halla and Carol A. Bartz. Given the pay issues, I also voted against amending the omnibus stock plan.

I voted in favor of the three shareowner proposals:

• John C. Harrington proposes to establish a Board Committee on Environmental Sustainability. The purpose of the committee is to review the company’s corporate policies, above and beyond matters of legal compliance, in order to assess, and make recommendations to enhance, the company’s policy responses to changing conditions and knowledge of the natural environment, including but not limited to, natural resource limitations, energy use, waste disposal, and climate change. Policy responses should include, among other things, an assessment of the company’s disclosure of quantitative environmental metrics.
• Domini Social Investments requests the Board publish a report to shareholders within six months, at reasonable expense and omitting proprietary information, providing a summarized listing and assessment of concrete steps the company could reasonably take to reduce the likelihood that its business practices might enable 
  or encourage the violation of human rights, including freedom of ex
  pression and privacy, or otherwise encourage or enable fragmentation of the internet.
• James McRitchie (me) urges that our executive pay committee adopt a policy requiring that senior executives retain a significant percentage of stock acquired through equity pay programs until two years following the termination of their employment and to report to shareholders regarding this policy before our 2012 annual meeting of shareholders.

These proposals seem entirely reasonable to me and, if adopted, will further the reputation of Cisco with regard to environmental responsibility and human rights, as well as better aligning pay with the interests of long-term shareowners. With regard to my proposal, I’ve actually received unsolicited support from other shareowners, so that adds to my sense that it is a good proposal.

On all other proxy items I voted with management.