Home > Governance, Human Resources, Market and Industry News > Cisco Systems CEO John Chambers received $14.2 million bonus despite poor revenues in the past year.

Cisco Systems CEO John Chambers received $14.2 million bonus despite poor revenues in the past year.

Image by DeusXFlorida via Flickr

It used to be that most top leaders in business where inspiring personalities who motivated the troops by example. It seems those days are long gone. In one of the worse economic down-turns in this country’s history we see top CEO’s being given top $$$ by their Boards, while the employees get Zeroooo, and lose jobs.  What type of inspiration is this sort of thing supposed to yield?

It is this type of business culture that has created the CEO who stands on a podium and tells his/her employees about ethics, hard work and customer driven values, while he/she is completely unethical and cares only about his/her golden parachute and how to manipulate the Board.

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  1. lsg
    September 28, 2009 at 4:57 PM

    If HR had the clout to include a clause in the negotiated annual compensation package stipulating these type of payouts are contingent on favorable business results, and actually enforced, these situations would be the exception instead of the example. But who has to approve these type of packages? Personally I think these type of payouts should be voted on at the end of the fiscal year with the most current financials in hand by shareholders, not negotiated and set in stone 12 months prior. HR can make a difference in these type of scenarios but leaders often succumb to internal pressure from other c-levels who don’t want to be tapped for what they consider a similar “pay decrease” in terms of their total compensation. So everyone caves, the company pays and layoffs continue.

    • September 30, 2009 at 12:46 AM

      Dear LSG,

      I think you hit the nail on the nose. HR is often not involved in structuring these compensation “deals,” and has little leverage to change “agreements” made at the Golf course by the C levels and (sometimes unofficially) the Board. Because the complexity of modern financial instruments and Globalization are difficult and lengthily to evaluate, often with short term gains resulting in catastrophic long term loses later, it makes no sense to compensate folks with huge bonuses based on quarterly results. Your ideas make sense as well as the three year staggered payouts being proposed in Europe now.

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