CSCO Cisco Systems Inc

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.   )

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Preliminary Proxy Statement

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

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CISCO SYSTEMS, INC.

(Name of Registrant as Specified In Its Charter)

   

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11

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Dear Cisco Stockholders:

On behalf of the Board of Directors, I would like to thank you for your investment and trust in Cisco as we focus on delivering great outcomes for customers, executing consistently and driving growth.

Fiscal 2024 was a momentous year for Cisco. We delivered solid results, closed the largest acquisition in our history, introduced industry-defining innovation, and served our customers and partners in new and exciting ways. After a challenging start, we ended the year seeing steady customer demand and are entering fiscal 2025 with momentum and optimism.

We delivered $53.8 billion in revenue in fiscal 2024 and good growth in annualized recurring revenue (ARR), remaining performance obligations (RPO), and subscription revenue, boosted by our acquisition of Splunk. In addition, we returned more than $12 billion to stockholders through share repurchases and our cash dividend. I invite you to read more about our financial performance in our 2024 Annual Report.

We remain committed to engaging with our stockholders to gain valuable input on our strategy, compensation, sustainability, and governance practices. In fiscal 2024, we engaged with stockholders representing approximately 57% of Cisco’s shares outstanding at the end of fiscal year. Based on our stockholders’ feedback, we are providing more enriched content in our proxy statement and other disclosures.

Guided by our Purpose to Power an Inclusive Future for All, we have continued to innovate to help deliver on our customers’ desired outcomes and to help solve some of the most pressing issues faced by people, society, and the planet. In 2016, we set an inspired goal to positively impact one billion lives worldwide by 2025 and, thanks to the dedication of our nonprofit partners, the Cisco Foundation®, Cisco Social Innovation Investments, Cisco Networking Academy®, and our people, we exceeded the goal ahead of schedule, positively impacting approximately 1.1 billion people. Please visit our ESG Reporting Hub at https://www.cisco.com/go/esg-hub to learn more.

It is a tremendous honor to lead this company and to serve as Chair of the Board. I look forward to your participation in our 2024 Annual Meeting of Stockholders and I encourage you to vote your shares by proxy and submit your questions ahead of this meeting.

Sincerely,

Charles H. Robbins
Chair and Chief Executive Officer

October 18, 2024

You are cordially invited to participate in the Annual Meeting of Stockholders of Cisco Systems, Inc., which will be held online on Monday, December 9, 2024 at 8:00 a.m. Pacific Time.

Details of the business to be conducted at the annual meeting are given in the Notice of Annual Meeting of Stockholders and the Proxy Statement. You will find a Proxy Summary starting on the first page of the Proxy Statement.

If you would like to help reduce the costs incurred by our company in mailing proxy materials, please consent for electronic delivery of our proxy materials by signing up at www.proxyvote.com or scan the QR code below.

Items of Business

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To elect to Cisco’s Board of Directors the following nine nominees presented by the Board: Wesley G. Bush, Michael D. Capellas, Mark Garrett, John D. Harris II, Dr. Kristina M. Johnson, Sarah Rae Murphy, Charles H. Robbins, Daniel H. Schulman, and Marianna Tessel.

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To vote on a non-binding advisory resolution to approve executive compensation.

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To ratify the appointment of PricewaterhouseCoopers LLP as Cisco’s independent registered public accounting firm for the fiscal year ending July 26, 2025.

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To act upon such other matters as may properly come before the annual meeting or any adjournments or postponements.

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Virtual Annual Meeting

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We are pleased to provide stockholders with the opportunity to participate in the annual meeting online to facilitate stockholder attendance and to provide a consistent experience to all stockholders regardless of location.

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To participate in the virtual-only annual meeting, including to vote or submit questions, stockholders should go to the meeting website at www.virtualshareholdermeeting.com/CSCO2024, enter the 16-digit control number found on your proxy card, voting instruction form, or Notice Regarding the Availability of Proxy Materials, and follow the instructions on the website.

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If your voting instruction form or Notice Regarding the Availability of Proxy Materials does not indicate that you may vote those shares through the www.virtualshareholdermeeting.com/CSCO2024 website and it does not include a 16-digit control number, you should contact your bank, broker, or other nominee to obtain a “legal proxy” in order to be able to attend, participate in, and vote at the annual meeting.

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Additional information regarding the virtual annual meeting can be found in the “Other Important Information About the Meeting” section on page 80.

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Proxy Voting

Whether or not you participate in the annual meeting, it is important that your shares be part of the voting process. Please refer to the section entitled “Other Important Information About the Meeting” on page 80 of the Proxy Statement for a detailed description of how to vote in advance of the meeting.

Mailing Address of Corporate Headquarters

170 West Tasman Drive, San Jose, California 95134

BY ORDER OF THE BOARD OF DIRECTORS

Evan Sloves
Secretary

October 18, 2024

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​	Proxy Summary	​	​	​	​	1	​	​
​	Governance and Board Matters	​	​	​	​	5	​	​
​	Corporate Governance	​	​	​	​	5	​	​
​	Policies, Guidelines, and Practices	​	​	​	​	5	​	​
​	Insider Trading Arrangements and Policies	​	​	​	​	6	​	​
​	Our Purpose to Power an Inclusive Future for All	​	​	​	​	6	​	​
​	Public Policy Engagements	​	​	​	​	6	​	​
​	Stockholder Engagement	​	​	​	​	7	​	​
​	Board of Directors	​	​	​	​	7	​	​
​	Board Leadership Structure	​	​	​	​	7	​	​
​	Board Committees and Meetings	​	​	​	​	8	​	​
​	Board’s Role in Strategy	​	​	​	​	12	​	​
​	Board’s Role in Risk Oversight	​	​	​	​	12	​	​
​	Director Nominee Qualifications, Skills and Attributes	​	​	​	​	13	​	​
​	Board Performance Evaluation Process	​	​	​	​	13	​	​
​	Board Refreshment	​	​	​	​	14	​	​
​	Stockholder Communications with the Board	​	​	​	​	15	​	​
​	Proposal No. 1 – Election of Directors	​	​	​	​	16	​	​
​	Business Experience and Qualifications of Nominees	​	​	​	​	16	​	​
​	Board Composition	​	​	​	​	21	​	​
​	Independent Directors	​	​	​	​	22	​	​
​	Director Compensation	​	​	​	​	23	​	​
​	Compensation Committee Matters	​	​	​	​	27	​	​
​	Proposal No. 2  —  Advisory Vote to Approve Executive Compensation	​	​	​	​	27	​	​

​	Executive Compensation	​	​	​	​	29	​	​
​	Compensation Discussion and Analysis	​	​	​	​	29	​	​
​	Compensation Committee Report	​	​	​	​	52	​	​
​	Fiscal 2024 Compensation Tables	​	​	​	​	53	​	​
​	Summary Compensation Table	​	​	​	​	53	​	​
​	Grants of Plan-Based Awards –  Fiscal 2024	​	​	​	​	58	​	​
​	Outstanding Equity Awards At Fiscal 2024 Year-End	​	​	​	​	61	​	​
​	Stock Vested – Fiscal 2024	​	​	​	​	63	​	​
​	Nonqualified Deferred Compensation –  Fiscal 2024	​	​	​	​	64	​	​
​	Potential Payments upon Termination or Change in Control	​	​	​	​	66	​	​
​	CEO Pay Ratio	​	​	​	​	68	​	​
​	Pay Versus Performance	​	​	​	​	69	​	​
​	Ownership of Securities	​	​	​	​	73	​	​
​	Equity Compensation Plan Information	​	​	​	​	75	​	​
​	Audit Committee Matters	​	​	​	​	76	​	​
​	Proposal No. 3  —  Ratification of Independent Registered Public Accounting Firm	​	​	​	​	76	​	​
​	Audit Committee Report	​	​	​	​	78	​	​
​	Certain Relationships and Transactions with Related Persons	​	​	​	​	79	​	​
​	Other Important Information About the Meeting	​	​	​	​	80	​	​

 

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These proxy materials are provided in connection with the solicitation of proxies by the Board of Directors of Cisco Systems, Inc., a Delaware corporation, for the Annual Meeting of Stockholders to be held on December 9, 2024, and at any adjournments or postponements of such meeting. These proxy materials were first sent on or about October 18, 2024 to stockholders entitled to vote at the annual meeting.

This summary highlights selected information about the items to be voted on at the annual meeting and information contained elsewhere in this Proxy Statement. This summary does not contain all the information that you should consider in deciding how to vote, and you should read the entire Proxy Statement carefully before voting. For more complete information about these topics, please review our Annual Report on Form 10-K and the entire Proxy Statement. The information contained on cisco.com or any other website referred to in this Proxy Statement is provided for reference only and is not incorporated by reference into this Proxy Statement.

Participating in the Annual Meeting

 

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Annual Meeting Proposals

Business Overview

Cisco designs and sells a broad range of technologies that help to power, secure, and draw insights from the internet. We are integrating artificial intelligence (AI) into our product portfolios across networking, security, collaboration and observability to simplify how our technology is delivered, managed and optimized and to help customers maximize the business value of their technology investments and accelerate their digital transformation.

Across the globe, businesses and organizations of every size are leveraging Cisco technology to transform and drive better outcomes and experiences. We also help customers navigate emerging technological shifts. In today’s dynamic environment, our customers have three key priorities: build modern and resilient infrastructure; protect against the cyber threats of today and tomorrow; and harness the power of AI and data.

Governance and Board Highlights

Cisco’s Board is composed of skilled and diverse directors. The Board has established robust corporate governance practices and policies. In particular, the Board believes strongly in the value of an independent board of directors. Cisco has established a Lead Independent Director role with broad authority and responsibility, which is currently held by Mr. Capellas. See the “Governance and Board Matters” section in this Proxy Statement for more information, including:

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Our corporate governance policies, guidelines, and practices and where you can find key information regarding our corporate governance initiatives;

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Our balanced Board leadership structure and qualifications, including a robust Lead Independent Director role;

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Our environmental, social, and governance (“ESG”) initiatives related to Cisco’s Purpose to Power an Inclusive Future for All; and

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Our fiscal 2024 stockholder engagement program, where we engaged with stockholders representing approximately 57% of shares outstanding at the end of the fiscal year, including 43% of our top 30 stockholders.

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Board of Directors Highlights

 

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Executive Compensation Highlights

Our pay practices align with our pay-for-performance philosophy and underscore our commitment to sound compensation and governance practices.

 

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Corporate Governance

Policies, Guidelines, and Practices

Cisco is committed to stockholder-friendly corporate governance. The Board of Directors has adopted clear corporate policies that promote excellence in corporate governance. We have adopted policies, guidelines, and practices that are consistent with our commitment to transparency and best-in-class practices, as well as to ensure compliance with the rules and regulations of the Securities and Exchange Commission (“SEC”), the listing requirements of The Nasdaq Stock Market LLC (“Nasdaq”), and applicable corporate governance requirements. Key information regarding our corporate governance initiatives can be found in the Governance section of our Investor Relations website at investor.cisco.com which also includes our corporate governance guidelines, our Code of Business Conduct (“COBC”), and the charter for each Board committee.

 

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Insider Trading Arrangements and Policies

We are committed to promoting high standards of ethical business conduct and compliance with applicable laws, rules and regulations. As part of this commitment, we have adopted an Insider Trading Policy governing transactions in our securities by our directors, employees, contractors, consultants and other personnel providing services to Cisco, as well as by Cisco itself, that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations and Nasdaq listing standards. A copy of our Insider Trading Policy was filed as Exhibit 19.1 to our Annual Report on Form 10-K for the fiscal year ended July 27, 2024.

Our Purpose to Power an Inclusive Future for All

Cisco has been evolving and expanding the way it positively impacts people and the planet, driven by our Purpose to Power an Inclusive Future for All. Cisco believes that technology, when thoughtfully and strategically applied, can help address inequities; bring positive, lasting change to people’s lives and communities; and benefit the planet. To help fulfill our Purpose, Cisco leverages its technology and catalyzes its networks, partners, and people to make a positive impact in communities worldwide and for the planet. We know we can achieve so much more when we work in partnership with those aligned with our values and Purpose.

Our Purpose reporting describes our commitments, goals, progress, and impact for ESG topics that are significant to Cisco and our stakeholders. Today, our commitment to our Purpose starts at the top with our Board and senior leadership and it is embedded throughout the organization. Our Purpose governance structure is designed this way to help ensure we prioritize the right issues as a company, and that we stay on track with our commitments.

Our People, Policy, and Purpose organization leads our social investment programs and champions our commitment to ESG performance and transparency. Within this organization is a core reporting team which engages with stakeholders, leads ESG assessments for voluntary reporting, and stewards reporting activities. Our reporting is aligned with standards set by the Global Reporting Initiative, Sustainability Accounting Standards Board, the Task Force on Climate-related Financial Disclosures, and the UN Sustainable Development Goals.

The Environmental, Social, and Public Policy Committee of the Board oversees Cisco’s initiatives, policies, programs, and strategies concerning environmental sustainability and other key corporate social responsibility and public policy matters. The Compensation Committee of the Board oversees the development and implementation of Cisco’s practices, strategies, and policies used for recruiting, managing, and developing employees (i.e., human capital management). These practices, strategies, and policies focus on diversity and inclusion, workplace environment and safety, and corporate culture. In addition, the full Board receives updates on Cisco’s overall Purpose strategy, including ESG matters, from management.

Each year, we report progress toward Cisco’s enterprise goals in our annual Cisco Purpose Report. Cisco set its first greenhouse gas (“GHG”) emissions reduction goal in 2006, and since then, we have continued to set other goals to engage employees, reduce environmental impacts in our supply chain, and benefit communities. For more information relating to Cisco’s Purpose and to review our progress on our goals, see our ESG Reporting Hub at https://www.cisco.com/go/esg-hub. The latest Purpose Report is available on our Investor Relations website at investor.cisco.com. Our website, ESG Reporting Hub and related supplemental information are not incorporated by reference into this Proxy Statement.

Public Policy Engagements

Information about our public policy engagement approach, including our policy priorities, our limitations relating to public policy-related activities, and the manner in which we disclose our public policy efforts (including annual payments to trade associations and political action committee contributions), is disclosed on our public website at https://www.cisco.com/c/en/us/about/government-affairs.html. In part as a result of proactive engagement with our stockholders, we regularly review and update this web page.

 

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Stockholder Engagement

At Cisco, we recognize the importance of regular and transparent communication with our stockholders. Each year, we continually engage with a significant portion of stockholders that include our top institutional investors. In fiscal 2024, Cisco engaged in outreach with investors representing approximately 57% of shares outstanding at the end of the fiscal year, and of those investors, either our Chair and Chief Executive Officer (“CEO”), the chair of our Compensation Committee, Secretary, and/or our Investor Relations team held meetings, conference calls and/or corresponded with investors representing approximately 31% of our outstanding shares at the end of the fiscal year, including 43% of our 30 largest stockholders. We engaged with these stockholders on a variety of topics, including our business and long-term strategy, corporate governance and risk management practices, board leadership, diversity, corporate responsibility initiatives (including ESG matters), our executive compensation program, and other matters of stockholder interest.

Board of Directors

Our Board is committed to strong corporate governance structures and practices that help Cisco build long-term stockholder value. Our Board believes strongly in the value of an independent board of directors and has established a Lead Independent Director role with broad authority and responsibility, as described further below. Additionally, our Board is composed of skilled and diverse directors.

Board Leadership Structure

Board Independence

Our Board believes strongly in the value of an independent board of directors. Other than Mr. Robbins, our CEO, all members of our Board are independent. Independent Board members have consistently comprised over 75% of the members of our Board. Additionally, all members of our Board committees, including the Audit Committee, the Compensation Committee and the Nomination and Governance Committee, are independent. The independent members of the Board also meet regularly during executive sessions of the Board without management present, and the Lead Independent Director chairs those sessions. Mr. Capellas currently serves as Lead Independent Director, and Mr. Robbins currently serves as Board Chair and CEO.

Board Chair

The Board believes it should maintain flexibility to determine the Board leadership structure from time to time. Our policies do not preclude our CEO from also serving as Board Chair. For instance, Mr. Robbins, our CEO, currently serves as Board Chair. The Board believes our current leadership structure, which includes a strong Lead Independent Director, provides appropriate balance and currently is in the best interest of Cisco and our stockholders. The broad authority and oversight given to the Lead Independent Director role, as described in detail below, helps ensure a strong independent and active Board. Additionally, Mr. Robbins’ demonstrated leadership during his tenure at Cisco, and his ability to speak as both Board Chair and CEO, provides a strong unified leadership for Cisco.

Lead Independent Director

The Lead Independent Director is elected by and from the independent directors. Each term of service for the Lead Independent Director position is one year, and the Lead Independent Director has the following responsibilities:

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Authority to call meetings of the independent directors

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Presides at all meetings of the Board at which the Board Chair is not present, including executive sessions of the independent directors (during which Cisco’s strategy is reviewed and other topics are discussed)

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Serves as principal liaison between the independent directors and the Chair and CEO

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Communicates from time to time with the Chair and CEO and disseminates information to the rest of the Board as appropriate

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Provides leadership to the Board if circumstances arise in which the role of the Board Chair may be, or may be perceived to be, in conflict

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Reviews and approves agendas, meeting schedules to assure that there is sufficient time for discussion of all agenda items, and information provided to the Board (including the quality, quantity, and timeliness of such information)

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Being available, as appropriate, for consultation and direct communication with major stockholders and other stakeholders

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Presides over the annual performance evaluation of the Board, including the performance evaluation of each Board committee and individual Board members

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Facilitates the Board’s performance evaluation of the CEO in conjunction with the Compensation Committee

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In connection with Mr. Capellas’ appointment as Lead Independent Director, the Board considered his demonstrated leadership during his tenure as a member of the Board, and also his leadership during his tenure as chair of the Nomination and Governance Committee, the Acquisition Committee, and the Finance Committee and believes his ability to act as a strong Lead Independent Director provides balance in Cisco’s leadership structure and is in the best interest of Cisco and its stockholders.

Board Committees and Meetings

Cisco has five standing committees: the Audit Committee, the Compensation Committee, the Nomination and Governance Committee, the Acquisition Committee, and the Environmental, Social, and Public Policy Committee. Each of these committees has a written charter approved by the Board. A copy of each charter can be found on the “Committees” web page, which is located in the Corporate Governance section of our Investor Relations website at investor.cisco.com.

During fiscal 2024, the Board held 8 meetings. During this period, all of the incumbent directors attended at least 75% of the aggregate of the total number of meetings of the Board and the committees of the Board on which each such director served, during the period for which such director served. Cisco’s directors are strongly encouraged to attend the annual meeting. Eight of Cisco’s directors who were then serving on the Board attended last year’s annual meeting.

Responsibilities and Duties Include:

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Directly responsible for the appointment, determination of the compensation for, retention, and oversight of the performance of the independent registered public accounting firm

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Reviews the financial information which will be provided to stockholders and others, including the quarterly and year-end financial results

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Reviews the system of internal controls which management and the Board have established

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Reviews the financial and risk management policies (including cybersecurity and data protection, insurance, currency, interest rate and equity risk management policies and programs)

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Reviews policies and programs for addressing cybersecurity and data protection

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Oversees accounting and financial reporting processes and the audits of Cisco’s financial statements

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Pre-approves audit and permissible non-audit services provided by the independent registered public accounting firm

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Reviews the hiring policies for any employees or former employees of the independent registered public accounting firm

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Oversees and reviews related party transactions

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Establishes procedures for the receipt, retention, and treatment of complaints received by Cisco regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters

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Reviews annually the responsibilities and activities for the prior and upcoming fiscal year of each of our internal audit and compliance functions

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Meets separately in periodic executive sessions with each of management, the head of our internal audit function, and the independent registered public accounting firm

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Reviews and approves the global investment policy

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Reviews Cisco’s capital structure and capital allocation strategy, including dividends and the stock repurchase program

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Reports to the Board on a regular basis on the major events covered by the Audit Committee and makes recommendations to the Board and management concerning these matters

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Composition of the Committee

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Each member of this committee has been determined by the Board to be an “audit committee financial expert” as defined in Item 407(d) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)

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Each member of this committee is an independent director and meets each of the other requirements for audit committee members under applicable Nasdaq listing standards

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The members of the Audit Committee during fiscal 2024 were: Mark Garrett (Chair), John D. Harris II, Sarah Rae Murphy for all of fiscal 2024; Ekta-Singh Bushell beginning in June 2024; and M. Michele Burns and Roderick C. McGeary, former Board members, until December 2023.

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Reviews, annually, and approves corporate goals and objectives relevant to executive compensation and evaluates performance in light of those goals

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Reviews and approves our compensation to executive officers

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Approves any perquisites, cash payments and other compensation and benefit arrangements to executive officers

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Reviews matters related to management performance, compensation and succession planning, including review and approval of CEO succession planning

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Reviews and oversees the development and implementation of our practices, strategies, and policies used for recruiting, managing, and developing employees (i.e., human capital management)

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Reviews annually and approves our compensation strategy to help ensure that it promotes stockholder interests and supports our strategic and tactical objectives and that it provides appropriate rewards and incentives for management and employees, including review of compensation-related risk management

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Composition of the Committee

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Each member of this committee is an independent director under applicable Nasdaq listing standards, including the additional independence requirements specific to compensation committee membership

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Each member of this committee is a “non-employee director” as defined in Rule 16b-3 under the Exchange Act

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The members of the Compensation Committee during fiscal 2024 were: Wesley G. Bush, John D. Harris II and Dr. Kristina M. Johnson for all of fiscal 2024; Daniel H. Schulman (Chair) beginning in December 2023; and Roderick C. McGeary (Chair), a former Board member, until December 2023.

Executive Compensation

For fiscal 2024, the Compensation Committee performed the above oversight responsibilities and duties by, among other things, conducting an evaluation of the design of our executive compensation program, in light of our risk management policies and programs. For additional information regarding the Compensation Committee’s risk management review, see the “Executive Compensation Governance Components” section of the Compensation Discussion and Analysis (“CD&A”).

 

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The Compensation Committee has the exclusive authority and responsibility to determine all aspects of executive compensation packages for executive officers. During fiscal 2024, the Compensation Committee retained Exequity LLP (“Exequity”) as its independent compensation consultant to help the Compensation Committee establish and implement its compensation philosophy, to evaluate compensation proposals recommended by management, and to provide advice and recommendations on competitive market practices and specific compensation decisions for executive officers. The Compensation Committee retains and does not delegate any of its exclusive power to determine all matters of executive compensation and benefits, although the CEO and the People and Communities organization present compensation and benefit proposals to the Compensation Committee. Exequity worked directly with the Compensation Committee (and not on behalf of management) to assist the Compensation Committee in satisfying its responsibilities and did not undertake projects for management except at the request of the Compensation Committee chair and in the capacity of the Compensation Committee’s agent. During fiscal 2024, Exequity performed no other consulting or other services for Cisco management and did not undertake any projects for management. For additional description of the Compensation Committee’s processes and procedures for consideration and determination of executive officer compensation, see the “Compensation Committee Matters – Executive Compensation – CD&A” section in this Proxy Statement.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee was, at any time during fiscal 2024 or at any other time, an officer or employee of Cisco, and no member had any relationship with Cisco requiring disclosure under Item 404 of Regulation S-K under the Exchange Act. No executive officer of Cisco has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of the Board or the Compensation Committee during fiscal 2024.

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Oversees, reviews, and makes periodic recommendations concerning our corporate governance policies

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Reviews and assesses director independence

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Makes recommendations regarding the size, structure and composition of the Board and its committees

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Oversees the annual Board performance evaluation process

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Recommends candidates for election to the Board

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Reviews and recommends compensation for non-employee members of the Board

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Composition of the Committee

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Each member of this committee is an independent director under applicable Nasdaq listing standards

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The members of the Nomination and Governance Committee during fiscal 2024 were: Michael D. Capellas (Chair), and Mark Garrett for all of fiscal 2024; Daniel H. Schulman beginning in December 2023; and Roderick C. McGeary, a former Board member, until December 2023.

Director Compensation

Cisco’s director compensation program is designed to attract and retain highly qualified non-employee directors and to address the time, effort, expertise, and accountability required of active board membership. In connection with reviewing and recommending compensation for non-employee directors, the Nomination and Governance Committee retained Exequity as its independent compensation consultant during fiscal 2024. The Nomination and Governance Committee makes recommendations to the Board regarding compensation for non-employee directors using a process similar to the one used by the Compensation Committee for determining compensation for Cisco’s

 

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executive officers. Generally, the Nomination and Governance Committee annually reviews the market practice for non-employee director compensation for companies in Cisco’s peer group (as set forth in the CD&A) in consultation with its independent compensation consultant and assesses whether the total compensation of our non-employee directors and each element of our non-employee director compensation program continues to be competitive with the market for qualified directors, incorporates best practices and aligns the interests of our non-employee directors with the long-term interests of our stockholders.

Director Nominations

Stockholders may recommend a director nominee to Cisco’s Nomination and Governance Committee. In recommending candidates for election to the Board, the Nomination and Governance Committee considers nominees recommended by directors, officers, employees, stockholders and others, using the same criteria to evaluate all candidates. The Nomination and Governance Committee reviews each candidate’s qualifications, including whether a candidate possesses any of the specific qualities and skills desirable in certain members of the Board. Evaluations of candidates generally involve a review of background materials, internal discussions, and interviews with selected candidates as appropriate. The Nomination and Governance Committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees. Upon selection of a qualified candidate, the Nomination and Governance Committee recommends the candidate for consideration by the full Board.

For more detailed information on how to recommend a prospective nominee for the Nomination and Governance Committee’s consideration or to submit a nominee for inclusion in Cisco’s proxy materials pursuant to the proxy access provisions of Cisco’s bylaws, see the “Other Important Information About the Meeting – Stockholder Proposals and Nominations for 2025 Annual Meeting of Stockholders” section.

Responsibilities and Duties Include:

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Reviews acquisition strategies with management and investigates acquisition candidates

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Recommends acquisition strategies and candidates to the Board

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Reviews and approves certain acquisitions and investment transactions and makes recommendations to the Board

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Composition of the Committee

The members of the Acquisition Committee during fiscal 2024 were: Marianna Tessel (Chair), Mark Garrett and Sarah Rae Murphy for all of fiscal 2024; and Dr. Lisa T. Su, a former Board member, until December 2023. Michael D. Capellas joined the Acquisition Committee in October 2024.

Responsibilities and Duties Include:

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Reviews and discusses with management, and brings to the attention of the Board, the initiatives, policies, programs, and strategies, including related goals and commitments, relating to environmental sustainability and other corporate social responsibility (“CSR”) and public policy matters

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Reviews and discusses with management and brings to the attention of the Board, as appropriate, the legislative, regulatory, and public policy developments and trends, including those relating to artificial intelligence, cybersecurity, and global supply chain dynamics, that could affect our business activities, performance, and reputation

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Reviews, as necessary or appropriate, the non-financial public reporting with respect to environmental sustainability and other CSR and public policy matters, including the annual Purpose Report

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Reviews the outcomes of the Cisco Foundation and Cisco’s charitable giving, and reviews the policies and guidelines for Cisco’s charitable programs

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Composition of the Committee

The members of the Environmental, Social, and Public Policy Committee during fiscal 2024 were: Wesley G. Bush (Chair), Michael D. Capellas and Dr. Kristina M. Johnson for all of fiscal 2024; Ekta-Singh Bushell beginning in June 2024; and M. Michele Burns and Dr. Lisa T. Su, former Board members, until December 2023.

Board’s Role in Strategy

One of the Board’s key responsibilities is overseeing management’s formulation and execution of Cisco’s strategy. Throughout the year, our CEO, the executive leadership team, and other leaders from across the organization provide detailed business and strategy updates to the Board. During these reviews, the Board engages with the executive leadership team and other business leaders regarding various topics, including business strategy and initiatives, capital allocation, portfolio updates, the competitive landscape, talent and culture (including inclusion and diversity), other matters affecting our long-term strategy (including our environmental impact and human rights implications of Cisco product development and sales), and regulatory developments. Additionally, on an annual basis, the Board reviews and approves Cisco’s financial plan. The Lead Independent Director chairs regularly scheduled executive sessions of the independent directors, without Cisco management present, during which Cisco’s business strategy is reviewed and other topics are discussed.

Board’s Role in Risk Oversight

We believe that risk is inherent in innovation and the pursuit of long-term growth opportunities. Our management is responsible for day-to-day risk management activities. The Board, acting directly and through its committees, is responsible for the oversight of our risk management. With the oversight of the Board, our management team has implemented practices, processes and programs designed to help manage the risks to which we are exposed in our business and to align risk-taking appropriately with our efforts to increase stockholder value.

Our management team has implemented an enterprise risk management (“ERM”) program designed to work across the organization to identify, evaluate, govern and manage risks, as well as our response to those risks. This risk assessment process considers the time horizons of identified risks, such that the management of significant risks can be prioritized, in part, based on the timeframe of such risks. Our internal audit function manages the enterprise ERM program and performs an annual risk assessment which is utilized by the ERM program, which is informed by industry trends, benchmarking and third-party professionals. The structure of the ERM program includes both an ERM operating committee consisting of members of senior management, including our Chief Compliance Officer, who reports directly to our Chief Legal Officer, that focuses on risk management-related topics, and an ERM executive committee consisting of members of our executive leadership team.

Our Board directly and through its Audit Committee oversees our financial and risk management policies, including risk management policies and programs related to cybersecurity and data protection, currency, interest rate, equity, and insurance risk, receives regular reports on ERM from the chair of the ERM operating committee. Additionally, the Audit Committee receives regular reports on cybersecurity risks, priorities, and focus areas from our Chief Security and Trust Officer at least four times per year and receives a live presentation from our Chief Security and Trust Officer two or more times per year. As part of its responsibilities and duties, the Audit Committee reviews our policies and programs for addressing data protection, including both privacy and security, including with respect to (a) our products and services, (b) the servers, data centers, networks, systems, and cloud-based services operated or enabled by Cisco, or by third parties upon which Cisco relies, on or through which Cisco’s and third-party data are stored, processed, or can be accessed. Our Board also receives updates from the Audit Committee on its oversight activities and, on occasion, receives updates directly from our Chief Security and Trust Officer. Additionally, the Chief Security and Trust Officer provides more frequent updates to the Board and Audit Committee if necessary due to a cybersecurity threat, incident, or other development. For more information on our oversight of cybersecurity risk,

 

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please see Item 1C. “Cybersecurity” in Cisco’s Annual Report on Form 10-K for fiscal 2024, which accompanies this Proxy Statement. The Audit Committee also oversees Cisco’s investment policy and certain other activities of our treasury function.

As part of the overall risk oversight framework, other committees of the Board also oversee certain categories of risk associated with their respective areas of responsibility. For example, the Compensation Committee oversees compensation-related risk management, as discussed in the “Governance and Board Matters – Corporate Governance – Board of Directors – Board Committees and Meetings – Compensation and Management Development Committee” and “Compensation Committee Matters – Executive Compensation – CD&A” sections in this Proxy Statement.

Each committee reports regularly to the full Board on its activities. In addition, the Board participates in regular discussions with our executive management on many core subjects, including strategy, operations, information systems, finance, legal and public policy matters, in which risk oversight is an inherent element. The Board believes the leadership structure described in the “Governance and Board Matters – Corporate Governance – Board of Directors – Board Leadership Structure” section facilitates the Board’s oversight of risk management because it allows the Board, with leadership from the Lead Independent Director and working through its committees, including the independent Audit Committee, to proactively participate in the oversight of management’s actions.

Director Nominee Qualifications, Skills and Attributes

The table below summarizes key qualifications, skills and attributes most relevant to the decision to nominate our director candidates to serve on the Board. A mark indicates a specific area of focus or experience on which the Board relies most. The lack of a mark does not mean the director nominee does not possess that qualification or skill. Each director nominee biography in “Governance and Board Matters – Proposal No. 1 – Election of Directors” below describes each nominee’s qualifications and relevant experience in more detail.

Board Performance Evaluation Process

The Board recognizes that a robust and constructive performance evaluation process is an essential component of Board effectiveness. As such, the Board conducts an annual performance evaluation that is intended to determine whether the Board, each of its committees, and individual Board members are functioning effectively, and to provide them with an opportunity to reflect upon and improve processes and effectiveness. This annual performance evaluation is designed to identify any themes or issues that have emerged. The Nomination and Governance Committee oversees this process, which is led by the Lead Independent Director. As part of this process, the Lead Independent Director conducts discussions with Board members to obtain their assessment of the effectiveness and performance of the Board and Board members. The Board considers the results and ways in which its processes and effectiveness may be enhanced.

 

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Board Refreshment

We regularly evaluate the need for Board refreshment. The Nomination and Governance Committee and the Board are focused on identifying individuals whose skills and experiences will enable them to make meaningful contributions to the shaping of Cisco’s business strategy.

As part of its consideration of director succession, the Nomination and Governance Committee from time-to-time reviews, including when considering potential candidates, the appropriate skills and characteristics required of Board members such as diversity of business experience, viewpoints and personal background, and diversity of skills in technology, finance, marketing, international business, financial reporting and other areas that are expected to contribute to an effective Board. In evaluating potential candidates for the Board, the Nomination and Governance Committee considers these factors in the light of the specific needs of the Board at that time. Additionally, due to the global and complex nature of our business, the Board believes it is important to include individuals with diversity of race, ethnicity, gender, sexual orientation, age, education, cultural background, and professional experiences, and those factors are considered in evaluating board candidates in order to provide practical insights and diverse perspectives.

Cisco’s corporate governance guidelines provide that any non-employee director who has served for a total of 20 years of service will not be re-nominated for election at the next annual meeting of stockholders, absent special circumstances. Further, the corporate governance guidelines provide that the Board will take into consideration the age of any current or prospective Board member whose age would be 72 or older when elected, re-elected, or appointed to the Board and, before nominating or appointing such Board member, the Board will make an affirmative determination that it is in the best interests of Cisco and its stockholders for that individual to serve on the Board. The average tenure of the director nominees is approximately 6.6 years.

The Nomination and Governance Committee and the Board will regularly evaluate the key qualifications, skills and attributes required in order to effectively refresh the Board with engaged and dynamic leaders with a proven business track record who will bring fresh perspectives to the Board while maintaining the productive working dynamics and collegiality of the Board. The brief biographical description of each nominee set forth in the “Governance and Board Matters – Proposal No. 1 – Election of Directors – Business Experience and Qualifications of Nominees” section and the matrix set forth in “Governance and Board Matters – Corporate Governance – Board of Directors – Director Nominee Qualifications, Skills and Attributes” section above include the primary individual experience, qualifications, attributes, and skills of each of our directors that led to the conclusion that each director should serve as a member of the Board at this time.

 

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Stockholder Communications with the Board

Stockholders may communicate with our Board through Cisco’s Secretary by sending an email to bod@cisco.com, or by writing to the following address:

Board of Directors
c/o Evan Sloves, Secretary
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, California 95134

Stockholders also may communicate with the Board’s Compensation Committee through Cisco’s Secretary by sending an email to compensationcommittee@cisco.com, or by writing to the following address:

Compensation and Management Development Committee
c/o Evan Sloves, Secretary
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, California 95134

Cisco’s Secretary will forward all correspondence to the Board or the Compensation Committee, except for spam, junk mail, mass mailings, product or service complaints or inquiries, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate material. Cisco’s Secretary may forward certain correspondence, such as product-related inquiries, elsewhere within Cisco for review and possible response.

 

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Proposal No. 1 – Election of Directors

The names of persons who are nominees for director and their current positions and offices with Cisco are set forth in the table below. The proxy holders intend to vote all proxies received by them for the nominees listed below unless otherwise instructed. Each of the current directors, other than Ekta Singh-Bushell, has been nominated for election by the Board upon recommendation by the Nomination and Governance Committee and has decided to stand for election.

In October 2024, Ekta Singh-Bushell notified the Board of her decision to not stand for re-election at the 2024 Annual Meeting. Ms. Singh-Bushell intends to serve on the Board through the date of the 2024 Annual Meeting. The authorized number of directors is presently ten, and in connection with the election of directors at the annual meeting, the authorized number of directors is being reduced to nine.

Business Experience and Qualifications of Nominees

 

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Board Composition

Due to the global and complex nature of our business, the Board believes it is important to consider diversity of race, ethnicity, gender, sexual orientation, age, education, cultural background, and professional experiences in evaluating board candidates in order to provide practical insights and diverse perspectives.

Below is an overview of our director nominee composition.

 

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Board Diversity Matrix (As of October 14, 2024)​

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African American or Black, and Alaskan Native or Native American

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Cisco’s Board Diversity Matrix for fiscal 2023 was disclosed in its Proxy Statement filed with the SEC on October 17, 2023.

Independent Directors

Upon recommendation of the Nomination and Governance Committee, the Board has affirmatively determined that each member of the Board other than Mr. Robbins is independent under the criteria established by Nasdaq for director independence. All members of our Audit, Compensation, and Nomination and Governance committees are independent directors. In addition, upon recommendation of the Nomination and Governance Committee, the Board has determined that the members of the Audit Committee and the members of the Compensation Committee meet the additional independence criteria required for membership on those committees under applicable Nasdaq listing standards.

The Nasdaq criteria include a subjective test and various objective standards, such as the director is not an employee of Cisco. Mr. Robbins is deemed not independent because he is a Cisco employee. The subjective test under Nasdaq criteria for director independence requires that each independent director not have a relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The subjective evaluation of director independence by the Board was made in the context of the objective standards referenced above. In making its independence determinations, the Board generally considers commercial, financial services, charitable, and other transactions, as well as other relationships between Cisco and each director and nominee and his or her family members and affiliated entities. For example, the Nomination and Governance Committee reviewed, for each independent director and nominee, transactions between Cisco and other organizations where such directors serve as executive officers or directors, none of which exceeded 1% of the recipient’s annual revenues during the relevant periods, except as described below.

For each of the independent directors, the Board determined based on the recommendation of the Nomination and Governance Committee that none of the transactions or other relationships exceeded Nasdaq objective standards and none would otherwise interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making this determination, the Board considered certain relationships that did not exceed Nasdaq objective standards but were identified by the Nomination and Governance Committee for further consideration under the subjective test. The Board determined that none of these relationships would interfere with the exercise of independent judgment by the director in carrying out their responsibilities as a director.

 

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The following is a description of the relationships in which a director serves, or served, as an outside board member of other companies and in which payments by or to Cisco exceeded 1% of the recipient’s annual revenues:

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Mr. Harris serves on the board of directors of Flex Ltd. (“Flex”), and Mr. Capellas previously served on the board of directors of Flex until August 2024. Cisco has ordinary course commercial relationships with Flex. Payments by Cisco to Flex exceeded 1% of the annual revenues of Flex in each of Cisco’s past three fiscal years.

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Mr. Schulman is a member of the board of directors of Verizon Communications, Inc. (“Verizon”). Verizon has ordinary course commercial relationships with Cisco. Payments by Verizon to Cisco exceeded 1% of the annual revenues of Cisco in fiscal 2022.

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Director Compensation

This section provides information regarding the compensation policies for non-employee directors and amounts paid and equity awards granted to these directors in fiscal 2024. Non-employee directors typically do not receive forms of remuneration or benefits other than those described below but are reimbursed for their expenses in attending meetings and other board-related activities. Cisco’s non-employee director compensation policy is designed to provide the appropriate amount and form of compensation to our non-employee directors.

Director Compensation Highlights

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Retainer fees for committee service differentiated based on workload

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Emphasis on equity in the overall compensation mix

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Full-value equity grants under a fixed-value annual grant policy with immediate vesting

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Robust stock ownership guidelines set at five times the annual cash retainer to support stockholder alignment

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Flexible deferral provisions to facilitate stock ownership

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Governance limit of  $800,000 on the total value of cash and equity compensation that may be paid or granted to a non-employee director each fiscal year allows Cisco to stay within reasonable boundaries of what the market requires

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Each non-employee director is eligible to participate in Cisco’s charitable matching gifts program to the same extent as all Cisco employees. During fiscal 2024, the maximum match amount under this program was $25,000 each calendar year, and effective in September 2024, was reduced to $10,000 each calendar year. Additional $10,000 matches were available for disaster response campaigns during fiscal 2024 until March 1, 2024.

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Fiscal 2024 Cash Compensation

Our non-employee director cash compensation during fiscal 2024 consisted of the following:

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Annual retainer of  $80,000 for each non-employee director, effective from the beginning of fiscal 2024 to, but excluding, the date of the 2023 Annual Meeting, following which the amount was increased to $105,000.

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Additional annual retainer fee of  $60,000 for serving as Lead Independent Director, effective from the beginning of fiscal 2024 to, but excluding, the date of the 2023 Annual Meeting, following which the amount was increased to $75,000.

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Additional annual retainer fee of  $30,000 for serving as chair of the Audit Committee.

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Additional annual retainer fee of  $20,000 for serving as chair of the Compensation Committee or as chair of the Nomination and Governance Committee.

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Additional annual retainer fee of  $15,000 for serving as chair of the Acquisition Committee or as chair of the Environmental, Social, and Public Policy Committee.

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Additional annual retainer fees for serving as a member of a Board committee:

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$16,000 for serving as a member of the Compensation Committee, the Acquisition Committee or the Environmental, Social, and Public Policy Committee; and

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$12,000 for serving as a member of the Nomination and Governance Committee.

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These cash fees are paid in quarterly installments in arrears.

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A non-employee director may, in lieu of any retainer paid in connection with service on the Board or any committee of the Board, or other cash fees, elect to receive fully vested shares of Cisco common stock, fully vested deferred stock units or a deferred cash payment under the Cisco Systems, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”). Dividend equivalents accrue on fully vested deferred stock units and are subject to the same conditions and restrictions as the deferred stock units to which they attach and will settle in shares after the non-employee director leaves the Board. The annual retainers are pro-rated for non-employee directors who are appointed after an annual meeting. Retainers paid in quarterly installments are pro-rated for non-employee directors who join or leave the Board or a committee during the quarterly period based on the portion of the period for which they have served.

Fiscal 2024 Equity Compensation

Non-employee directors receive annual grants under the 2005 Stock Incentive Plan pursuant to an equity grant policy. The 2005 Stock Incentive Plan currently provides that grants to any non-employee director may not exceed 50,000 shares for any fiscal year.

The Board’s policy regarding equity grants for non-employee directors provides for the following:

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An initial equity grant for new non-employee directors consisting of fully vested shares of Cisco common stock with a fair value equal to a pro rata portion of  $245,000 based on the portion of the year of the new non-employee director’s board service.

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An annual equity grant for elected non-employee directors consisting of fully vested shares of Cisco common stock with a fair value equal to $245,000.

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A non-employee director may elect to receive his or her initial and annual grants in the form of fully vested deferred stock units that are settled in shares after the non-employee director leaves the Board. Dividend equivalents accrue on the fully vested deferred stock units and are subject to the same conditions and restrictions as the deferred stock units to which they attach and will settle in shares after the non-employee director leaves the Board.

Fiscal 2024 Total Director Compensation

The following table provides information as to compensation earned by our non-employee directors during fiscal 2024.

Director Compensation

(1) The amounts in the “Stock Awards” column represent the aggregate grant date fair values, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“FASB ASC Topic 718”), of the shares issued pursuant to the 2005 Stock Incentive Plan.

 

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Each non-employee director who had served as a non-employee director prior to the 2023 Annual Meeting and who was elected at the 2023 Annual Meeting received 5,136 fully vested shares on December 6, 2023. Mr. Bush, Dr. Johnson, Mr. Schulman and Ms. Tessel each elected to receive their annual equity award in the form of fully vested deferred stock units.

In connection with his appointment to the board on October 10, 2023, Mr. Schulman received an initial pro-rated equity award of 714 fully vested shares in the form of deferred stock units. In connection with her appointment to the board on June 14, 2024, Ms. Singh-Bushell received an initial pro-rated equity award of 2,587 fully vested shares.

None of the non-employee directors held any unvested stock awards as of July 27, 2024. No stock options were outstanding or awarded to non-employee directors in fiscal 2024.

(2) Represents the non-employee director’s match under Cisco’s charitable matching gifts program.

(3) Includes the value of fully vested shares of Cisco common stock received in lieu of the non-employee director’s regular cash retainer, additional retainer paid in connection with service on Board committees, or other cash fees, based on the fair market value of the shares on the date any such retainers or cash fees would otherwise have been paid. Based on their prior elections, Mr. Bush, Dr. Su and Ms. Tessel each received deferred stock units with a value of  $141,540, $42,590 and $125,653, respectively, based on the closing price of Cisco common stock on the date any such retainers or cash fees would otherwise have been paid.

(4) Ms. Burns, Mr. McGeary and Dr. Su served on the Board of Directors through December 6, 2023.

Non-Employee Director Stock Ownership

Our corporate governance guidelines include stock ownership guidelines for non-employee directors. The stock ownership guidelines call for each non-employee director to own shares of Cisco’s common stock having a value equal to at least five times the non-employee director’s regular annual cash retainer, with a five-year period from the date of his or her appointment to attain that ownership level. To facilitate share ownership, in lieu of all or a specified portion of their regular annual cash retainer, any retainer paid in connection with service on any committee of the Board or other cash fees, non-employee directors may elect to receive fully vested shares of Cisco common stock or fully vested deferred stock units that would be settled in shares after the non-employee director leaves the Board, based on the fair market value of the shares on the date any such cash retainer or fee would otherwise be paid. Any shares (or shares subject to deferred stock units) received in lieu of any portion of a cash retainer or fee do not count against the limit on the total number of shares that may be granted to a non-employee director during any fiscal year. The shares issued are granted under the 2005 Stock Incentive Plan.

For information on non-employee director elections to receive fully vested shares (or shares subject to deferred stock units) in lieu of cash with respect to fiscal 2024 cash retainers or fees, please see the table above entitled “Director Compensation” and the accompanying footnotes.

Fiscal 2025 Director Compensation

Using the approach described above under “Board of Directors – Board Committees and Meetings – Director Compensation,” the Nomination and Governance Committee conducted its annual review of the non-employee director compensation program for fiscal 2025 in consultation with its independent compensation consultant, Exequity. In fiscal 2024, Exequity determined that Cisco’s non-employee director compensation program continues to be competitive with the market, consistent with our peer group, and incorporates best practices. Based on this assessment, the Board did not make any changes to the amounts or types of compensation that non-employee directors could earn for fiscal 2025.

Vote Required

Cisco’s bylaws and corporate governance guidelines provide for a majority voting standard in uncontested elections of directors. The affirmative vote of the holders of a majority of the votes properly cast at the meeting at which a quorum is present is required to elect each of the nominees for director, meaning the number of shares cast “for” a nominee’s election exceeds the number of  “against” votes cast against that nominee. The required quorum for a meeting of Cisco stockholders is a majority of the outstanding shares of common stock. Abstentions and broker non-votes are not counted as votes cast for or against such nominee, and stockholders may not cumulate votes in the election of directors.

In the event any nominee is unable or declines to serve as a director at the time of the meeting, the proxies will be voted for any nominee, if any, who may be designated by the Board to fill the vacancy. As of the date of this Proxy Statement, the Board is not aware that any nominee is unable or will decline to serve as a director. If a nominee who currently serves as a director is not re-elected, Delaware law provides that the director would continue to serve on the Board as a “holdover director.” Under our bylaws and corporate governance guidelines, an incumbent director who fails to receive the required majority vote to be re-elected in an uncontested election shall tender his or her

 

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resignation to the Board to be effective on the earlier of 90 days following the certification of the election results or the date on which the Board selects a person to fill the office held by that director.

Recommendation of the Board of Directors

The Board of Directors recommends that the stockholders vote FOR the election of each of the nominees listed herein.

 

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Proposal No. 2 –  Advisory Vote to Approve Executive Compensation

Under Section 14A of the Exchange Act, Cisco stockholders are entitled to cast an advisory vote to approve the compensation of Cisco’s named executive officers, known as a “Say on Pay” vote. The stockholder vote is an advisory vote only and is not binding on Cisco or its Board of Directors. Although the vote is non-binding, the Board and the Compensation Committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.

The core of Cisco’s executive compensation philosophy and practice continues to align real pay delivery with performance. Cisco’s executive officers are compensated in a manner consistent with Cisco’s business strategy, competitive practice, sound corporate governance principles, and stockholder interests and concerns. We believe our compensation program is strongly aligned with the long-term interests of our stockholders. We urge you to read the CD&A, the compensation tables, and the narrative discussion set forth on pages 29 to 72 for additional details on Cisco’s executive compensation program. Below are a few highlights of our pay-for-performance philosophy.

Fiscal 2024 Pay and Performance

In fiscal 2024, we delivered solid results, closed the largest acquisition in our history, introduced industry-defining innovation, and served our customers and partners in new ways. After a challenging start to fiscal 2024, we ended the year seeing steady customer demand and are entering fiscal 2025 with momentum and optimism. Customers are leveraging broad combinations of our products and services as they look to modernize their infrastructure, improve cybersecurity, and harness the power of AI and data. We delivered $53.8 billion in revenue in fiscal 2024, which is the second strongest year in our history, coupled with growth in annualized recurring revenue (“ARR”), remaining performance obligations (“RPO”), and subscription revenue. In fiscal 2024, we also completed our acquisition of Splunk, the largest acquisition in our history, earlier than we anticipated. We continue to focus on delivering exceptional customer outcomes, executing consistently, and driving growth.

While we ended fiscal 2024 with strong momentum, we ultimately did not meet our fiscal 2024 performance goals. This is reflected in the payout of our fiscal 2024 annual incentives below target and the settlement of our fiscal 2022 PRSUs below target. Our fiscal 2024 incentive plan results were as follows:

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Revenue1 8% below fiscal 2023

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Operating Income1 5% below fiscal 2023

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Operating Cash Flow1 44% below fiscal 2023

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EPS1 1% below fiscal 2023

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Product ARR1 9% above fiscal 2023

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1 Revenue and Operating Income as determined pursuant to the EIP, Operating Cash Flow and EPS as determined pursuant to the fiscal 2024 PRSUs, as modified by the Compensation Committee following the date of grant to exclude the impact of the acquisition of Splunk, and product ARR as determined pursuant to the transformational PRSUs, in each case as described in the CD&A below.

Long-term incentives continue to be the largest element of named executive officer compensation, consistent with market practice. For Cisco’s CEO, approximately 60% of long-term grant value is comprised of performance shares earned for achievement against rigorous goals for operating cash flow, EPS, and relative total stockholder return (“TSR”) performance measured over three years. For Cisco’s other named executive officers, approximately 50% of long-term grant value is comprised of performance shares earned for achievement against the same goals of operating cash flow, EPS, and relative TSR performance measured over the same three-year period. Our PRSUs for

 

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fiscal 2022 – 2024 were earned at 74% of target, as operating cash flow and EPS performance were at 96% of target over the three-year period, while relative TSR for the three-year period was below the target performance level, reflecting the rigor applied to the Compensation Committee’s goal setting.

We believe our compensation structure and its resulting realizable pay for executive officers demonstrates Cisco’s strong commitment to aligning real pay delivery with performance.

At the annual meeting, we are asking stockholders to vote on the following advisory resolution:

RESOLVED, that the stockholders approve the compensation of Cisco’s named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules, including the CD&A, the compensation tables and narrative discussion.

Vote Required

The affirmative vote of the holders of a majority of the votes properly cast (for the avoidance of doubt, abstentions and broker non-votes are not counted as votes cast for or against such matter) is required for approval, on an advisory basis, of this proposal. Under our policy of providing for an annual advisory vote on executive compensation, we expect that our next advisory vote to approve the compensation of Cisco’s named executive officers will be at our 2025 Annual Meeting of Stockholders.

Recommendation of the Board of Directors

The Board of Directors recommends that the stockholders vote FOR approval of the non-binding advisory resolution to approve executive compensation.

 

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Executive Compensation

Compensation Discussion and Analysis

Introduction

The following discussion describes Cisco’s compensation program for its named executive officers. Cisco’s named executive officers for fiscal 2024 are our CEO, our Chief Financial Officer (“CFO”), our three most highly compensated executive officers (other than the CEO and CFO) who were serving as executive officers at the end of fiscal 2024, and two former executive officers who were not serving as executive officers at the end of fiscal 2024.

The named executive officers are:

The following are performance and compensation highlights for fiscal 2024.

Executive Summary

Company Performance

In fiscal 2024, we delivered solid results, closed the largest acquisition in our history, introduced industry-defining innovation, and served our customers and partners in new ways. After a challenging start to fiscal 2024, we ended the year seeing steady customer demand and are entering fiscal 2025 with momentum and optimism. Customers are leveraging broad combinations of our products and services as they look to modernize their infrastructure, improve cybersecurity, and harness the power of AI and data. We delivered $53.8 billion in revenue in fiscal 2024, which is the second strongest year in our history, coupled with growth in ARR, RPO, and subscription revenue. In fiscal 2024, we also completed our acquisition of Splunk, the largest acquisition in our history, earlier than we anticipated. We continue to focus on delivering exceptional customer outcomes, executing consistently, and driving growth.

While we ended fiscal 2024 with strong momentum, we ultimately did not meet our fiscal 2024 performance goals. This is reflected in the payout of our fiscal 2024 annual incentives below target and the settlement of our fiscal 2022 PRSUs below target. Our fiscal 2024 incentive plan results were as follows:

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Revenue1 8% below fiscal 2023

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Operating Income1 5% below fiscal 2023

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Operating Cash Flow1 44% below fiscal 2023

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EPS1 1% below fiscal 2023

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Product ARR1 9% above fiscal 2023

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1 Revenue and Operating Income as determined pursuant to the EIP, Operating Cash Flow and EPS as determined pursuant to the fiscal 2024 PRSUs, as modified by the Compensation Committee following the date of grant to exclude the impact of the acquisition of Splunk, and product ARR as determined pursuant to the transformational PRSUs, in each case as described below.

In fiscal 2024, total subscription revenue increased 11% to $27.4 billion, accounting for 51% of total revenue. RPO grew 18% to $41 billion, reflecting the strength of our portfolio of software and services. We are also focused on the entire customer lifecycle to drive expansion and renewals. We continue to make strategic investments in innovation to capitalize on significant growth opportunities, expanding addressable markets and driving our competitive differentiation while positioning Cisco for long-term growth and stockholder value creation.

Stockholder Returns

We maintained our historical practice of paying cash dividends and making share repurchases. We returned $12.1 billion to stockholders in fiscal 2024 consisting of:

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$5.8 billion in share repurchases

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$6.4 billion in cash dividends

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As of the end of fiscal 2024, our 1-year and 3-year TSR1 each decreased 5%.

1 TSR represents cumulative stock price change with dividends reinvested. 1-year and 3-year TSR are measured based on the fiscal year periods ending July 27, 2024.

Say-On-Pay Support

Last year’s say-on-pay proposal was approved by approximately 75% of stockholder votes, a reduction from approximately 89% the prior year. Therefore, we continued our robust engagement with stockholders to consider enhancements to our compensation program in fiscal 2024. Based on feedback we received from stockholders to increase the emphasis on operating goals that drive long-term growth, for fiscal 2024, we changed our variable cash incentive program such that 90% of the bonus is based on the risk and reward of Cisco’s financial performance, while 10% is based on an ESG factor (reduced from 20% in fiscal 2023). Other than this change, the Compensation Committee retained its general approach to executive compensation and continued to apply the same general pay-for-performance principles and philosophy as in fiscal 2023, consistent with stockholder support for the overall design of the program.

Annual Executive Incentive Plan

Our revenue and operating income under the EIP resulted in a company performance factor (“CPF”) of 0.56 for fiscal 2024, down from 1.80 in fiscal 2023, reflecting below target achievement of financial performance goals. The Compensation Committee set the fiscal 2024 targets for revenue and operating income 1% and 3% above fiscal 2023 performance, respectively, as measured under the EIP, after considering customer demand, industry and market factors, and potential performance headwinds, including macroeconomic uncertainty and a dynamic operating environment.

 

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2022-2024 PRSU Plan

The payout under our three-year PRSU plan for fiscal 2022-2024 was 74% of target (versus 90% for fiscal 2021-2023), representing achievement of 96% of our operating cash flow and EPS goals and 52% for the goal of TSR relative to the component companies of the S&P 500 Index over the three-year period based on Cisco’s TSR at the end of the performance period at the 26th percentile.

(1) This is the Financial Goal Multiplier. EPS is determined pursuant to the PRSUs as set forth in the CD&A below.

(2) This is the Relative TSR Multiplier.

(3) During fiscal 2024, the Compensation Committee modified the adjustments used to determine Operating Cash Flow and diluted EPS under the PRSUs to exclude the impact of the acquisition of Splunk, which was completed earlier than initially anticipated, resulting in a Financial Goal Multiplier of 90%, an increase from a Financial Goal Multiplier of 81% without the modification.

(4) The Compensation Committee exercised its discretion to reduce the fiscal 2023 portion of the Financial Goal Multiplier from 149% to 144% to reflect the difference between the estimated tax rate for fiscal 2023, which was based in part on the potential legislation change pertaining to the research capitalization requirement enacted in the Tax Cuts and Jobs Act and used to establish the EPS goals for fiscal 2023, and the lower actual tax rate for fiscal 2023 as the legislation did not pass.

Fiscal 2024 CEO Pay

For fiscal 2024, our CEO’s target TDC was $32.8 million. When comparing our CEO’s target TDC to the CEOs in our peer group, our CEO’s target TDC is below the median of the CEOs in our peer group.

Environmental and Social Goals

For decades, we have been evolving and expanding the way we positively impact our people and the planet. At the core of all our efforts is our Purpose to Power an Inclusive Future for All. For fiscal 2024, the Compensation Committee evaluated the collective performance by our executive leadership team on the execution with respect to certain environmental and social goals. This performance evaluation was included as part of our annual cash incentive program as a shared rating for all named executive officers based solely on their collective performance, as further described below.

Compensation Program Structure

 

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Listening to Our Stockholders

Our Compensation Committee relies on our regular stockholder outreach and engagement activities, as well as more formal channels to communicate with stockholders, including the opportunity for our stockholders to cast a non-binding advisory vote regarding executive compensation at Cisco’s annual meeting of stockholders. See the “Governance and Board Matters  –  Corporate Governance  –  Stockholder Engagement” section for a discussion of our fiscal 2024 stockholder outreach and engagement. See also the “Governance and Board Matters  –  Corporate Governance  –  Board of Directors  –  Stockholder Communications with the Board” section.

The Compensation Committee is interested in the ideas and feedback of our stockholders regarding executive compensation. In fiscal 2024, with the frequent participation of the chair of our Compensation Committee, Cisco engaged with stockholders representing approximately 57% of our outstanding shares at the end of the fiscal year, including 43% of our 30 largest stockholders, on a variety of topics, including our executive compensation program. In response to feedback received from stockholders during these engagements to increase the emphasis on operating goals that drive long-term growth, for fiscal 2024, we changed our variable cash incentive program such that 90% of the bonus is based on the risk and reward of Cisco’s financial performance (increased from 80%), while 10% is based on an ESG factor (reduced from 20% in fiscal 2023).

In evaluating our compensation practices in fiscal 2024, the Compensation Committee was mindful of the support our stockholders expressed for Cisco’s philosophy and practice of linking compensation to operational objectives and stockholder value creation. In fiscal 2024, the Compensation Committee continued to monitor our executive compensation programs to ensure compensation is aligned with company performance. In alignment with stockholder feedback, the Compensation Committee retained its general approach to executive compensation in fiscal 2024.

As in prior years, we continue to set rigorous incentive compensation goals and align pay delivery with performance and achievement of our strategic objectives. We also continue to put executive compensation to an annual advisory stockholder vote and consider the views of our stockholders. The Compensation Committee will continue to seek out and consider stockholder feedback in the future.

 

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Our Compensation Practices Benefit our Stockholders

Our executive compensation programs have strong governance components that further strengthen our pay-for-performance compensation philosophy, including the following:

Compensation decisions and other details are discussed in the remainder of this CD&A.

 

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Compensation Components

The three major elements of our executive officers’ regular TDC are: (i) base salary, (ii) variable cash incentive awards, and (iii) long-term, equity-based incentive awards. For fiscal 2024, 62% of target annual TDC for the CEO was performance-based and approximately 50% of the target annual TDC for the other named executive officers was performance-based, reflecting Cisco’s pay-for-performance philosophy.

Fiscal 2024 Compensation

Annual Base Salary

We provide base salaries to our executive officers to compensate them for their services rendered during the year and to provide them with a stable level of fixed compensation. Consistent with our philosophy of linking pay to performance, our executives receive a small percentage of their overall compensation in the form of base salary.

The Compensation Committee, when establishing base salaries, considers each executive officer’s individual performance, the breadth, scope, and complexity of his or her role, and internal equity, as well as whether his or her base salary is appropriately positioned relative to similarly situated executives in our peer group. Based on the above considerations, the fiscal 2024 base salaries for Mr. Herren, Ms. Stahlkopf, Ms. Martinez, and Mr. Sharritts increased by 2.5%. Based on the above considerations and his promotion to Executive Vice President, Operations in March 2024, the fiscal 2024 base salary for Mr. Subaiya increased by 15%. The fiscal 2024 base salary of Mr. Robbins was not increased and has not increased since the beginning of fiscal 2020. At the beginning of fiscal 2025, taking into account the above considerations, the Compensation Committee determined that fiscal 2025 base salaries for each of Mr. Robbins, Mr. Herren, Mr. Steele, and Ms. Stahlkopf should remain at fiscal 2024 levels.

(1) The fiscal 2024 base salary increases for Mr. Herren, Ms. Stahlkopf, Ms. Martinez, and Mr. Sharritts as approved by the Compensation Committee were effective in November 2023. The fiscal 2024 base salary increase for Mr. Subaiya as approved by the Compensation Committee was effective in March 2024.

(2) The fiscal 2024 base salary for Mr. Steele was $900,000 in March 2024 when he joined Cisco upon the acquisition of Splunk. In connection with his appointment as President, Go-to-Market, in May 2024, Mr. Steele entered into a letter agreement with Cisco (the “Letter Agreement”) providing for a fiscal 2024 base salary of  $1 million.

 

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Variable Cash Incentive Awards

The primary objectives of Cisco’s annual cash incentive program are to reward achievement of our annual financial performance (90% weighting) and our executive leadership team’s performance with respect to certain environmental and social goals (10% weighting), and to establish appropriate company performance expectations to ensure that our executives are accountable for our continued growth and profitability while striving to conduct our business in a sustainable manner. Performance measures and goals for determining our named executive officers’ fiscal 2024 annual incentive awards were pre-established under Cisco’s EIP. The pre-established performance goals were based on Cisco’s achievement of financial performance goals, expressed as the CPF, and an ESG factor that is determined based on the executive leadership team’s joint execution with respect to certain environmental and social goals. The Compensation Committee established such performance measures and goals based on feedback from stockholders, an informed review of Cisco’s targeted financial performance for fiscal 2024, and the pay practices of the companies in our peer group.

How Variable Cash Incentive Awards Work

The financial performance metrics for awards under the EIP for fiscal 2024 continued to be based on the same financial performance metrics used in fiscal 2023, and the specific financial targets are the same as those used under the company-wide bonus plan. For fiscal 2024, the target bonus was based on a CPF of 1.0. Cisco’s financial performance must have exceeded its fiscal 2024 financial plan established by the Board for the CPF to exceed 1.0. For fiscal 2024, the ESG factor was scored based on the executive leadership team’s joint execution with respect to certain environmental and social goals.

For each named executive officer, the fiscal 2024 EIP awards were calculated by multiplying an individual’s annual base salary for fiscal 2024 by the individual’s target award percentage, and multiplying the result by the sum of 90% of the CPF and 10% of the ESG factor, as follows:

BONUS = BASE SALARY × TARGET AWARD PERCENTAGE × ((CPF × 0.90) + (ESG Factor × 0.10))

The Compensation Committee does not have the discretion to award bonuses under the EIP if the applicable performance criteria have not been met.

The fiscal 2024 cash incentive awards for each named executive officer participant were as follows:

(1) The base salary amounts for Mr. Herren and Ms. Stahlkopf reflect the fiscal 2024 base salary increases in November 2023. The base salary amount for Mr. Steele reflects the portion of his fiscal 2024 base salary after he completed his onboarding with Cisco in June 2024. The base salary amount and target award percentage for Mr. Subaiya reflect his promotion to Executive Vice President, Operations in March 2024.

(2) In connection with his appointment as President, Go-to-Market, in May 2024, Mr. Steele entered into the Letter Agreement providing for a fiscal 2024 base salary of  $1 million and the ability to participate in the EIP during fiscal 2024 with a bonus target equal to 160% of his base salary.

How Fiscal 2024 EIP Targets Were Established and Actual Results

At the beginning of fiscal 2024, the Compensation Committee established a target EIP award for each of the named executive officer participants, based on a percentage of their base salaries. The target awards were determined by the Compensation Committee after considering a number of factors, including the executive’s role and responsibility, whether the target annual incentive is competitive with similarly situated executives in our peer group, internal parity, and our recent and projected financial performance.

 

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Company Performance Factor (CPF)

The CPF for fiscal 2024 could range from 0.0 to 2.0 with the target at 1.0. The formula for fiscal 2024 was constructed with upside potential so that if we exceeded our revenue and operating income targets, the CPF could be greater than 1.0.

The Compensation Committee selected revenue and operating income as the financial performance measures because these measures most directly align with Cisco’s growth strategy and generally have the best correlation with stockholder value creation. Operating income is weighted on a 4-to-1 basis compared to revenue in calculating the outcome under the CPF. Revenue and operating income below the threshold levels set forth below results in a CPF of 0.0. Revenue and operating income at or above the maximum levels set forth below results in a CPF of 2.0.

The Compensation Committee established the annual financial performance goals based on Cisco’s fiscal 2024 financial plan approved by the Board. In approving the financial plan, the Board considered customer demand, industry and market factors, and potential performance headwinds, including macroeconomic uncertainty and a dynamic operating environment. The fiscal 2024 financial plan and the corresponding goals set by the Compensation Committee under the EIP were designed to be challenging to achieve given the above-mentioned factors. Compared to fiscal 2023, which was a record year for total revenue, the revenue and operating income targets for fiscal 2024 exceeded actual fiscal 2023 performance by 1% and 3%, respectively, as measured under the EIP.

The revenue and operating income goals and results for fiscal 2024 are set forth below:

The above resulted in fiscal 2024 CPF of 0.56, as further illustrated in the table below, reflecting below target achievement of the financial performance goals under the EIP.

For fiscal 2024, the funding percentage for the revenue financial performance goal was: 0% for performance below threshold (90% of target); 25% for performance at threshold (90% of target); increased by 7.5% for each percentage increase in performance between threshold and target (between 90% and 100% of target); 100% for performance at target; increased by 20% for each percentage increase in performance between target and maximum (between 100% and 105% of target); and 200% for performance at or above maximum (105% of target). For fiscal 2024, the funding percentage for the operating income financial performance goal was: 0% for performance below threshold (85% of target); 25% for performance at threshold (85% of target); increased by 5% for each percentage increase in performance between threshold and target (between 85% and 100% of target); 100% for performance at target; increased by 10% for each percentage increase in performance between target and maximum (between 100% and 110% of target); and 200% for performance at or above maximum (110% of target).

The revenue and operating income goals and results were calculated for purposes of the EIP in accordance with pre-established rules. Revenue was Cisco’s GAAP revenue excluding the effects of the impact of changes in GAAP and the effects of business combinations and divestitures subject to pre-established criteria and thresholds. Operating income was Cisco’s GAAP operating income excluding the following: share-based compensation expense; compensation expense related to acquisitions and divestitures; changes in estimates of contingent consideration related to acquisitions; gains or losses on acquisitions and divestitures; amortization or impairment of acquired intangible assets including in-process research and development; all external acquisition and divestiture-related costs such as finder’s fees, advisory, legal, accounting, valuation, hedging or other professional or consulting fees