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Are Mario Mazzola, Prem Jain and Luca Cafiero killing Cisco's ability to innovate?

And why is Cisco's Board of Directors allowing scandalously exorbitant corporate compensation shenanigans on such an epic scale?

Fri, 4/13/12 - 8:54am    View comments

Update: 4/19/2012

Mario Mazzola, Prem Jain and Luca Cafiero

The New York Times is reporting that Cisco announced it will be paying $850 million to three of its engineers, Mario Mazzola, Prem Jain and Luca Cafiero.

In my personal opinion, Cisco CEO John Chambers is using his so-called "spin-in" strategy (for the 3rd time no less) to hide from Cisco shareholders as well as tens of thousands of much, much lower paid Cisco engineers, the true and scandalously exorbitant compensation that he's actually paying to these 3 particular engineers.

View the U.S. Securities and Exchange Commission rules on the disclosure of corporate compensation policies and practices:

Proxy Disclosure Enchancements

Call it a "spin-in" strategy and Chambers automatically receives a "pass" from disclosing to Cisco shareholders and employees the compensation he's paying these guys.

I mean, what kind of Board of Directors allows scandalously exorbitant corporate compensation shenanigans on such an epic scale?

According to the Cisco Board of Director's Compensation Committee, to carry out its purpose, the Committee has the following responsibility and duty:

"Review annually and approve the Company's compensation strategy to ensure that it promotes shareholder interests and supports the Company's strategic and tactical objectives, and that it provides appropriate rewards and incentives for management and employees of the Company, including review of compensation-related risk management."

Make no mistake about it, Mario Mazzola, Prem Jain and Luca Cafiero are still most definitely Cisco employees hiding under the "disguise" of a "spin-in" called Insieme.

So why do I believe Mario Mazzola, Prem Jain and Luca Cafiero are still most certainly Cisco employees?

Well, starting a company involves financial risk, and these guys have absolutely no financial risk at stake.

Cisco employees can report their internal knowledge about these guys and their scandalously exorbitant corporate compensation shenanigans to the U.S. Securities and Exchange Commission (SEC) Office of the Whistleblower:

"The Whistleblower Program was created by Congress to provide monetary incentives for individuals to come forward and report possible violations of the federal securities laws to the SEC. Under the program eligible whistleblowers (defined below) are entitled to an award of between 10% and 30% of the monetary sanctions collected in actions brought by the SEC and related actions brought by other regulatory and law enforcement authorities.

"The Program also prohibits retaliation by employers against employees who provide us with information about possible securities violations."

It's my personal opinion that Cisco CEO John Chambers is doing an "end-run" around federal securities laws by using his "spin-in" strategy to evade his Board of Directors corporate compensation guidelines and its up to Cisco employees to report this to the SEC.

Note: You are not required to be a Cisco employee to receive a monetary award from the SEC.

Related stories:

Howie Xu: The reality is it is an off the balance sheet business unit

Business Week: Mario Mazzola may have the best gig in Silicon Valley

Cisco unapologetic on spin-in model

Cisco memo: We can't build anything

Networking is under attack: Here's Cisco's plan

What's your take?

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