Steven M. West, who has been a board member of Cisco (NASDAQ: CSCO) since April 1996, runs a company called Emerging Company Partners LLC. It claims to help companies execute business strategies and aid firms with stakeholders who want to see improved operating results. West had better not use his time at Cisco as a reference. He has not done much as a director, if a board member’s role is to help steer strategy and have a critical eye on operations.
Cisco’s CEO John Chambers is in the midst of disassembling much of what he built. He has already begun the process of re-focusing Cisco on its original core businesses including routers. How Chambers was allowed to diversify Cisco as much as he did is one of the most critical concerns for investors. Cisco’s stock is down nearly 20% over the last five years compared to the NASDAQ which is up 20%.
Cisco’s operating results have been a disappointment recently. Revenue is up from $34.9 billion in the company’s 2007 fiscal year to $40 billion in the most recent period. Net income has only moved from $7.3 billion to $7.8 billion over the same time. In Cisco’s most recent quarter, revenue rose 6% to $10.4 billion. Net income fell 18% to $1.5 billion compared to the same period a year earlier.
West, who is chairman of the board’s audit committee, made $370,000 for his services to Cisco and its shareholders last year. Along with his fellow board members he gave CEO Chambers an $18.9 million compensation package. That was up from $9.2 million the year before.
West is a senior board member in terms of tenure. He also claims to be an expert on company management and has been a senior executive at several technology companies which include the CEO job at Hitachi Data Systems. As such, he shoulders as much of the blame for Chamber’s failures and the Cisco’s poor performance as anyone else.
Douglas A. McIntyre
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