Cisco CEO reduces salary to $1

(Telephony) Cisco Systems CEO John Chambers and chairman John Morgridge lowered their annual salaries to $1 apiece yesterday after the networking giant recently warned investors of significantly decreased revenues and deep job cuts.

The move comes one week after Cisco announced it expected revenues for the third fiscal quarter to be down 30% compared to the second quarter. A company spokeswoman said the move is designed to save “two to three” jobs from 8500 planned lay-offs.

Chambers earned a salary of $300,000 and bonuses of $1 million, for total compensation of $1.3 million in 2000, according to regulatory filings. He also exercised $156 million in stock options.

The spokeswoman said Chambers asked the company’s human resources department to secretly identify employees who would be hurt most by a lay-off. She said Chambers’ salary would be used to keep those employees – who would not be told they were identified as hardship cases – on staff.

In 1999, “Worth” magazine named Chambers the No. 2 CEO in America and ABC’s “20/20” profiled Chambers as “The Best Boss in America.”

Although Chambers salary reduction will not significantly impact his personal financial intake for the year, the move is a symbolic and motivational gesture as Cisco experiences its worst financial downturn in its history, said Doug McEuen, senior analyst at Pioneer.

“The bottom line is he’s just trying to get the company back on track in the financial market,” McEuen said. “It probably actually saves him on taxes in the long run, but anything to spur the company’s stock right now is good.”

Cisco is scheduled to release its third quarter earnings May 8.