The recently fired Carol Bartz appears to have violated Cisco's lead independent director 1-year term of service

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The recently fired Carol Bartz appears to have violated Cisco's lead independent director 1-year term of service
Fri, 9/30/11 - 6:41am View comments

Earlier this week, The Wall Street Journal's Market Watch listed the 12 members of Cisco's Board of Directors as one of America's Most Dysfunctional Boards.

Alarmingly (at least in my opinion), is the Cisco Board of Directors web page which states about the recently fired Yahoo! CEO Carol Bartz:

"Ms. Bartz, 62, has been a member of the Board of Directors since November 1996. Since November 2005, she has served as Lead Independent Director."

Why do I find Cisco's Board of Directors web page alarming?

Well, according to Cisco's 2010 Proxy Statement (page 11):

"Each term of service in the Lead Independent Director position is one year."

That means according to Cisco's own proxy statement, Carol Bartz appears to have violated Cisco's lead independent director 1-year term of service by at least 5-years!

And why is this important?

Because Cisco's 2010 proxy statement also states:

"Cisco's Board of Directors believes strongly in the value of an independent board of directors. Cisco has established a Lead Independent Director role with broad authority and responsibility, as described further below. The independent members of the Board of Directors also meet regularly without management, which meetings are chaired by the Lead Independent Director. Ms. Bartz currently serves as Lead Independent Director. The Board of Directors believes the role of Chairman and CEO, together with the role of the Lead Independent Director, provides an appropriate balance in Cisco's leadership. The role given to the Lead Independent Director helps ensure a strong independent and active Board."

"The Lead Independent Director has the following roles and responsibilities:

Scheduling meetings of the independent directors.
Chairing the separate meetings of the independent directors.
Presiding over the annual self-evaluation of the Board of Directors.
Being available, as appropriate, for communication with shareholders.
Reviewing the quality, quantity and timeliness of information provided to the Board.
Serving as principal liaison between the independent directors and the Chairman and CEO on sensitive issues.
Communicating from time to time with the Chairman and CEO and disseminating information to the rest of the Board of Directors as appropriate.
Providing leadership to the Board of Directors if circumstances arise in which the role of the Chairman may be, or may be perceived to be, in conflict.

"The Board of Directors believes that the leadership structure described above under 'Board Leadership Structure' 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 participate actively in the oversight of management's actions.

"Additional annual retainer fee of $30,000 for Ms. Bartz for serving as Lead Independent Director."

How are the interests of Cisco shareholders being served when the recently fired Carol Bartz has been Cisco's Lead Independent Director for 5-long years beyond the position's 1-year term of service?

Finally, as the Lead Independent Director of Cisco Systems for 6-long years, has the "personal conduct" of Carol Bartz that she's demonstrated towards the members of the Board of Directors of Yahoo! (which includes fellow Cisco Board Director Jerry Yang) after her firing by Yahoo's Board live up to Cisco's Code of Business Conduct?

Why are 2 senior Kohlberg Kravis Roberts & Co advisors sitting on Cisco's Board of Directors?

Boardroom dangers of Silicon Valley's insularity

The sordid tale of Cisco's new board director Arun Sarin and disgraced Wall Street analyst Henry Blodget

What's your take?