8-KLeadership ChangesExhibits & Filings

CISCO SYSTEMS, INC. 8-K Report, Executive Changes (Nov 13, 2020)

Filed November 13, 2020For Securities:CSCO

Summary

This 8-K filing from Cisco Systems, Inc. announces a significant change in its executive leadership, specifically the appointment of R. Scott Herren as the new Executive Vice President and Chief Financial Officer, effective December 18, 2020. Mr. Herren will succeed Kelly A. Kramer, who is stepping down from the CFO role but will remain with the company as an Executive Advisor until November 15, 2021. This transition marks a key moment for the company's financial stewardship. Investors should note the comprehensive compensation package offered to Mr. Herren, designed to attract him from his previous role at Autodesk and retain him at Cisco. This includes a substantial base salary, a significant bonus target, and substantial sign-on equity awards (both performance-based and time-based) valued at approximately $18 million to offset forfeited compensation. The performance metrics for his new hire equity awards are tied to key financial indicators like operating cash flow, EPS, and relative total shareholder return, aligning his incentives with long-term company performance. Ms. Kramer's transition agreement also outlines her continued compensation and equity vesting through November 2021, with specific conditions based on termination circumstances.

Key Highlights

  • 1Appointment of R. Scott Herren as Executive Vice President and Chief Financial Officer, effective December 18, 2020.
  • 2Resignation of Kelly A. Kramer as CFO, effective December 18, 2020, with transition to Executive Advisor role.
  • 3Mr. Herren's compensation package includes an annual base salary of $800,000 and a bonus target of 160% of base salary.
  • 4Significant sign-on payments for Mr. Herren totaling approximately $18 million, comprising cash, performance-based RSUs, and time-based RSUs, to compensate for forfeited Autodesk compensation.
  • 5New hire equity awards for Mr. Herren valued at approximately $6 million, consisting of performance-based and time-based RSUs with vesting tied to continued service and company performance metrics.
  • 6Ms. Kramer's transition agreement provides for continued employment as an Executive Advisor until November 15, 2021, with a $120,000 annual base salary and continued equity vesting under certain conditions.
  • 7Mr. Herren will enter into Cisco's standard executive officer Indemnification Agreement.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce a material event: the appointment of R. Scott Herren as Cisco's new Executive Vice President and Chief Financial Officer, and the resulting transition of Kelly A. Kramer from her CFO role.

R. Scott Herren, 59, was previously the Senior Vice President and Chief Financial Officer of Autodesk, Inc. He has extensive experience in financial leadership roles at companies like Citrix Systems and has spent over 15 years in strategy and financial positions at FedEx and IBM. He officially begins his role at Cisco on December 18, 2020.

Mr. Herren's compensation includes an $800,000 base salary, a bonus target of 160% of his base salary, and approximately $18 million in sign-on payments to compensate for forfeited equity and compensation from his previous employer. These payments include a $8 million cash bonus, $4 million in performance-based RSUs, and $6 million in time-based RSUs. He will also receive new hire equity awards valued at approximately $6 million.

Mr. Herren's equity compensation is split between time-based RSUs (vesting over two years for buyouts, four years for new hire awards) and performance-based RSUs. The performance-based awards are subject to Cisco achieving specific fiscal year 2022 and 2023 operating cash flow and EPS goals, as well as relative total shareholder return goals over a 2.5-year period for the new hire awards.

Kelly A. Kramer is transitioning from her CFO role to an Executive Advisor position, effective December 18, 2020, and will remain with the company until November 15, 2021. Under her Transition Agreement, she will receive an annual base salary of $120,000 and will continue to vest in her outstanding equity awards, subject to certain conditions related to her continued employment and termination circumstances.