SAN FRANCISCO (AP) - Cisco Systems Inc. trimmed CEO John Chambers' pay package for the past fiscal year by 9 percent as concerns about growth at the maker of computer networking equipment weighed on the company's stock.
The value of Chambers' compensation totaled $11.7 million, down from nearly $12.9 million in the previous year, according to documents filed Wednesday with the Securities and Exchange Commission.
Most of Chambers' pay was tied to the future performance of Cisco's stock. That's been the case for most of Chambers' 17-year reign as CEO. That arrangement has worked out well for both Chambers and the company, which is based in San Jose, Calif. Adjusting for stock splits, Cisco's shares have increased 10-fold under Chambers' leadership.
In the last fiscal year, Chambers received stock-based incentives valued at $7.3 million when they were granted in September 2011. They could be worth more or less, depending on how Cisco's stock fares during the next few years.
The last fiscal year ending July 28, however, wasn't good to Cisco's stock.
Cisco shares fell 2 percent from the end of fiscal 2011 to the finish of fiscal 2012. The performance lagged other closely watched stock market indexes, including the Dow Jones industrial average, which consists of Cisco and 29 other major companies.
The Dow rose by 8 percent during Cisco's fiscal year. The broader Standard & Poor's 500 and the technology-driven Nasdaq composite index climbed by 7 percent during the same period.
Investors eschewed Cisco largely because of concerns about its ability to boost its revenue in a fragile economy that has been especially wobbly in Europe. Chambers, known for his blunt comments, stoked those worries in the company's recent earnings call by highlighting the difficult economic conditions.
Despite those challenges, Cisco's revenue in the last fiscal year increased 7 percent to $46 billion. The company's earnings rose 24 percent to $8 billion, helped by cost-cutting measures that included thousands of layoffs.
The rest of Chambers' pay last year consisted of a $375,000 salary, a nearly $4 million bonus for Cisco's progress over several years and $11,025 in company contributions to his 401 (k) plan.
Chambers supplemented his income last year by reaping a $12.4 million gain from 2 million stock options issued to him in previous years. That windfall isn't included in the calculation of his company compensation for the past fiscal year.
Chambers, 63, is expected to retire within the next few years, although he hasn't formally announced a timetable for stepping down.
He will be receiving a bigger paycheck as he heads into the final stretch of his tenure. Cisco's board of directors voted earlier this month to nearly triple Chambers' annual salary to $1.1 million for the current fiscal year.
The Associated Press' calculation isolates the value the company's board placed on the executive's total compensation package in the last fiscal year. In Chambers' case, it includes salary, the performance-related bonus, perks - the 401(k) contributions - and the estimated value of stock options and awards granted.
The calculation doesn't include changes in the present value of pension benefits. And the calculations sometimes differ from the totals that companies list in the summary compensation table of proxy statements filed with the SEC. The statements to the SEC reflect accounting charges taken for the executive's compensation in the previous fiscal year.