Proxy Blog

Cisco Systems, Inc. 

November 18, 2019

The annual proxy for this technology services company had the following proposals: 

  1. Proforma proposals on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposal on independent chairman 

Magni voted as follows: 

  1. For and against the proforma proposals.
    -For directors  The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation.
    -For auditors – There appear to be no controversies with the financial statements of the company.
    -Against say-on-pay”  The company does have a shareholder engagement program, where the level of activity is disclosed and the discussions include compensation. The peer group is disclosed, along with the criteria for the peer group. That said, the company is not compared to the peer group. If the company showed how it compared to the peer group on key metrics, including market capitalization, then Magni may have been in favor of this proposal. 
  2. For shareholder proposals. An independent board is an important part of good governance. An independent chairman is an element of an independent board, though there are situations where an independent chairman does not make sense (e.g., a visionary founder where a material portion of the company value is connected to the founder). This company does not have one of those situations.