8-KRegulation FD

CISCO SYSTEMS, INC. 8-K Report, Regulation FD Disclosure (Sep 29, 2005)

Filed September 29, 2005For Securities:CSCO

Summary

This 8-K filing from Cisco Systems, Inc. (CSCO), dated September 29, 2005, primarily discloses a significant merit-based stock option grant to its employees. The Compensation and Management Development Committee of the Board of Directors approved the grant of approximately 138 million stock options. These options were granted at an exercise price of $17.86 per share, which was the closing price of Cisco's common stock on the Nasdaq on the grant date. This type of company-wide grant is noteworthy for investors as it represents a substantial equity award to employees. While intended to incentivize and retain talent, such large option grants can have dilutive effects on existing shareholders over time. Investors should consider this information in the context of Cisco's overall compensation strategy and its potential impact on future earnings per share.

Key Highlights

  • 1Cisco Systems, Inc. granted approximately 138 million stock options to eligible employees on September 29, 2005.
  • 2The stock options were approved by the Compensation and Management Development Committee of the Board of Directors.
  • 3The exercise price for these options was set at $17.86 per share, matching the closing price of CSCO's common stock on the grant date.
  • 4These were described as merit-based, company-wide grants, suggesting broad employee participation.
  • 5Cisco intends to report such company-wide merit-based stock option grants via Form 8-K.
  • 6The information is disclosed under Regulation FD and is not intended for incorporation into other SEC filings unless explicitly stated.

Frequently Asked Questions

The main purpose of this 8-K filing is to disclose a significant grant of merit-based stock options to Cisco's employees. This type of disclosure is made to comply with Regulation FD and inform the public about material events concerning the company.

Approximately 138 million stock options were granted to eligible employees. The exercise price for each option was $17.86, which was the closing market price of Cisco's common stock on September 29, 2005.

Large stock option grants, like this one, can be dilutive to existing shareholders. This means that as options are exercised, more shares of common stock will be outstanding, potentially reducing the earnings per share for existing shareholders. However, these grants are also intended to incentivize employees and align their interests with those of the company and its shareholders.

The filing states that Cisco makes merit-based, company-wide stock option grants to its employees from time to time and intends to file an 8-K for such grants. This suggests that while not necessarily a quarterly or annual event, such significant grants are a part of Cisco's compensation strategy.