It’s rare that the chairman of the board of directors of a public company reports to the company CEO. It’s rarer still that a board director reports to the CEO – the CEO typically reports to the board of directors.
Yet, that appears to be the structure at Cisco, an arrangement that was not disclosed publicly when new CEO Chuck Robbin’s executive leadership team and reporting structure was announced back in June. It was disclosed this week only after our story appeared – and after Cisco initially declined comment on its internal organizational structure -- revealing that key innovators and engineers still report to ex-CEO Chambers, and not to new CEO Robbins, raising questions on who actually makes decisions on important product and technology investments.
Robbins became a Cisco director in May when the company announced that he would succeed Chambers as CEO on July 26, the first day of Cisco’s 2016 fiscal year. Chambers is an employee director of the company vs. an independent director. An independent director, according to NASDAQ rules on directorship, is one who has not been employed by the company in at least three years. Chambers relinquished his CEO duties on July 26 but is still a Cisco employee, a company spokesperson confirms, so his three year window on becoming an independent director has not yet opened.
Over 80% of Cisco’s board is made up of independent directors. Carol Bartz, the former president and CEO of Yahoo! and former chairman, president, and CEO at Autodesk, serves as lead independent director, and Chambers, of course, is executive chairman, a role he carries over from his dual duties as chairman and CEO.
From an upcoming Cisco 2015 proxy, provided to Network World by the company:
The Board of Directors believes that this leadership structure, together with the role of the Lead Independent Director, is currently in the best interest of Cisco and its shareholders. The role given to the Lead Independent Director helps ensure a strong independent and active Board while Mr. Chambers’ leadership as Executive Chairman enables Cisco and the Board to continue to benefit from Mr. Chambers’ skills and expertise, including his extensive knowledge of Cisco and its industry, and his experience successfully navigating Cisco through both strong and challenging periods.
There is no specific language in the proxy that states Chambers reports to Robbins. But the Cisco spokesperson confirms it to be so.
So in a peculiar reporting arrangement, ex-CEO and current board chairman and director Chambers reports to his CEO successor, another director, who reported to Chambers when he led worldwide sales. And the team responsible for conceiving, designing and developing some of Cisco’s most important and successful products continues to report to ex-CEO Chambers and not new CEO Robbins… but ex-CEO and current director and chairman Chambers now reports to former subordinate and current CEO and director Robbins, meaning that product engineering team reporting to Chambers indirectly reports to the company CEO.
More from Cisco Subnet:
Follow Jim Duffy on Twitter