8-KMaterial AgreementsExhibits & Filings

CISCO SYSTEMS, INC. 8-K Report, Material Agreement (Jul 31, 2006)

Filed July 31, 2006For Securities:CSCO

Summary

This 8-K filing from Cisco Systems, Inc. (CSCO), dated July 31, 2006, announces the approval of the Professional and Leadership Incentive Plan for Fiscal Year 2007 (FY 2007). This plan outlines the structure for cash bonuses for eligible employees, including named executive officers. The bonus payouts are contingent upon achieving specific company and individual performance metrics, with a targeted incentive of 60% of base salary for most executives. The plan emphasizes performance-based compensation, linking bonuses to factors such as worldwide revenue, profit before interest and tax (EBIT), customer satisfaction, and individual performance. The Compensation and Management Development Committee of the Board of Directors retains sole discretion in determining the actual bonus amounts, which could exceed or fall short of the 60% target. The committee also has the authority to approve mid-year advances if company performance milestones are met, providing a mechanism for recognizing and rewarding early success.

Key Highlights

  • 1Cisco Systems approved the Professional and Leadership Incentive Plan for FY 2007.
  • 2The plan is designed to award cash bonuses to eligible employees, including named executive officers.
  • 3Bonuses are based on a target of 60% of base salary for named executive officers.
  • 4Performance metrics include company revenue, profit before interest and tax (EBIT), customer satisfaction, and individual performance.
  • 5The Compensation and Management Development Committee has full discretion over bonus determinations.
  • 6Actual bonuses can be higher or lower than the target based on performance achievement.
  • 7The committee may authorize mid-fiscal year advances on incentive payments if company performance targets are met.

Frequently Asked Questions

The main purpose of this filing is to announce Cisco Systems' approval of its Professional and Leadership Incentive Plan for Fiscal Year 2007, detailing how executive and employee bonuses will be determined and awarded.

For named executive officers (excluding John Chambers, whose bonus is determined at the committee's sole discretion), bonuses are targeted at 60% of base salary. The actual bonus amount will depend on the achievement of company performance (worldwide revenue and EBIT targets), customer satisfaction, and individual performance, as determined by the Compensation and Management Development Committee.

Yes, the Compensation and Management Development Committee has sole discretion in determining the final bonus amounts. This means actual bonuses could be greater or lesser than the 60% incentive target. Additionally, the committee can approve mid-year advances if company performance factors are met.

The key performance indicators include company performance, specifically worldwide revenue and profit before interest and tax (EBIT) targets. Customer satisfaction and individual performance are also significant subjective and objective factors considered in bonus determination.