cisco-annual-report-2021

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Governance and responsibilityCisco is committed to stockholder-friendly corporate governance, and the Board of Directors hasadopted clear corporate policies that promote excellence in corporate governance.StockholderengagementAt Cisco, we recognize the importance ofregular and transparent communicationwith our stockholders. Each year, wecontinually engage with a significantportion of stockholders that include ourtop institutional investors.~27%StockholderengagementIn fiscal 2021, our Chair of the Board andChief Executive Officer, Secretary, andInvestor Relations team held meetings,conference calls and/or correspondedwith investors representing approximately27% of our outstanding shares, including65% of our top 30 stockholders.We engaged with these stockholders on avariety of topics, including our business andlong-term strategy, corporate governanceand risk management practices, boardleadership and refreshment, diversity,corporate social responsibility initiatives(including environmental, social,and governance matters), executivecompensation program, and other mattersof stockholder interest.Consistent with feedback we receivedfrom stockholders, for fiscal 2021, weconsidered each executive’s progresstoward Cisco’s ESG-related initiatives inthe individual performance factors (IPF) inour Executive Incentive Plan, namely ourexecutives’ progress during the COVID-19pandemic in promoting Cisco’s ConsciousCulture, an inclusive, safe, and healthywork environment in which our employeescan thrive.Risk managementapproachWe believe that risk is inherent ininnovation and the pursuit of longtermgrowth opportunities. Cisco’smanagement is responsible for dayto-dayrisk management activities.The Board of Directors, actingdirectly and through its committees,is responsible for the oversight ofCisco’s risk management. With theoversight of the Board of Directors,Cisco has implemented practices,processes, and programs designedto help manage the risks to which weare exposed in our business and toalign risk-taking with our efforts toincrease stockholder value.Policies andpracticesWe have adopted these policies andpractices consistent with ourcommitment to transparency and bestin-classpractices, as well as to ensurecompliance with the rules andregulations of the SEC, the listingrequirements of Nasdaq, and applicablecorporate governance requirements.●●Stockholder proxy accessAnnual election of all directors(since IPO)● Majority voting (since 2007)●●●●●●●Robust Lead IndependentDirector roleStockholder right to call a specialmeeting (since IPO)No poison pillRecoupment/clawback policyStock ownership guidelines fordirectors and executive officersStockholder recommendations fordirector candidate to the BoardStockholder right to act by writtenconsent (since IPO)Board of DirectorsThe Board of Directors regularlydiscusses many core subjects withexecutive management, includingstrategy, operations, informationsystems, finance, and legal and publicpolicy matters, in which risk oversight isan inherent element.Management/Audit CommitteeThe Audit Committee, which overseesfinancial and risk management policies,including data protection (comprising bothprivacy and security), receives regularreports on enterprise risk management(ERM) from the chair of the ERM operatingcommittee and regular reports oncybersecurity from Cisco’s Chief Securityand Trust Officer multiple times a year.Other committeesOther board committees oversee specificcategories of risk associated with theirrespective areas of responsibility./Cisco’s management has implementedan ERM program, managed by Cisco’sinternal audit function, that is designedto work across the business to identify,assess, govern, and manage risks andCisco’s response to those risks.Cisco’s internal audit function performsan annual risk assessment that is usedby the ERM program. The structure ofthe ERM program includes both an ERMoperating committee that focuses onrisk management-related topics and anERM executive committee consisting ofmembers of executive management.The ERM operating committee conductsglobal risk reviews and provides regularupdates to the ERM executive committee.8 Cisco 2021 Annual Report
ExecutivecompensationOur pay practices align with ourpay-for-performance philosophyand underscore our commitment tosound compensation and governancepractices.These charts summarize the majorelements of target total directcompensation for our CEO and ourother named executive officers(NEOs 1 ) as a group for fiscal 2021 anddemonstrate our continued pay-forperformancephilosophy.1As defined in our Proxy Statementfor our 2021 Annual Meeting ofStockholdersCEO15% Variable cash incentiveawards (performance-based)6% Base salary48% Performance-based equityincentive awards32% Time-based equityincentive awardsPercentages may not total 100% due to rounding.NEOs otherthan CEO9% Variable cash incentiveawards (performance-based)6% Base salary46% Performance-based equityincentive awards39% Time-based equityincentive awardsOur executivecompensation programrewards performance●●●●●Compensation philosophy isdesigned to attract and retain,motivate performance, andreward achievementPerformance measures are alignedwith stockholder interestsMajority of annual total directcompensation is performance-basedNo dividends are paid onunvested awardsESG performance goals are includedin the variable cash incentive programWe apply leading executive compensation practices●●●●●●●Independent compensationcommitteeIndependent compensationconsultantComprehensive annualcompensation program riskassessmentCaps on incentive compensationNo employment, severance, orchange in control agreements forour executive officersStock ownership guidelinesRecoupment/clawback policy●●●●●●Limited perquisitesNo single-trigger vesting of equityaward grantsNo stock option repricing or cashoutof underwater equity awardsNo supplemental executiveretirement plan or executivedefinedbenefit pension planNo golden parachute tax gross-upsBroad anti-pledging and antihedgingpoliciesCisco 2021 Annual Report9
Page 1 and 2: 2021ANNUAL REPORTThe Future of Work
Page 3 and 4: Introduction tosummary reportThis s
Page 5 and 6: In collaboration, we continue to in
Page 7 and 8: Capital allocationDividends paid pe
Page 9: LeadershipCisco’s executive leade
Page 13 and 14: The role of the Board of Directors
Page 15 and 16: Cisco’s efforts to deliver on our
Page 17 and 18: Cisco’s net zero goal will be sup
Page 19 and 20: (Mark One)orUNITED STATES SECURITIE
Page 21 and 22: This Annual Report on Form 10-K, in
Page 23 and 24: We introduced Cisco Silicon One, a
Page 25 and 26: range of devices and endpoints such
Page 27 and 28: For information regarding risks rel
Page 29 and 30: Research and DevelopmentWe regularl
Page 31 and 32: Inclusion & DiversityInclusion and
Page 33 and 34: Mr. Herren joined Cisco in December
Page 35 and 36: As a consequence, operating results
Page 37 and 38: We believe that we may be faced wit
Page 39 and 40: new competitors to enter the market
Page 41 and 42: assessments and decisions. Although
Page 43 and 44: components if a government body wer
Page 45 and 46: There can be no assurance that our
Page 47 and 48: Risks Related to Ownership of Our S
Page 49 and 50: Stock Performance GraphThe informat
Page 51 and 52: Fiscal 2021 Compared with Fiscal 20
Page 53 and 54: CRITICAL ACCOUNTING ESTIMATESThe pr
Page 55 and 56: Significant judgment is required in
Page 57 and 58: Product Revenue by SegmentThe follo
Page 59 and 60: Service Revenue by SegmentThe follo
Page 61 and 62:
Research and Development (“R&D”
Page 63 and 64:
Other Income (Loss), Net The compon
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We consider free cash flow to be a
Page 67 and 68:
BorrowingsSenior Notes The followin
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commitments arising from these agre
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Foreign Currency Exchange RiskOur f
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Report of Independent Registered Pu
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Reports of ManagementStatement of M
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CISCO SYSTEMS, INC.Consolidated Sta
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CISCO SYSTEMS, INC.Consolidated Sta
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1. Basis of PresentationCISCO SYSTE
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As a lessee, we determine if an arr
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We perform ongoing credit evaluatio
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(y) New Accounting Updates Recently
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4. Acquisitions and Divestitures(a)
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July 25, 2020GrossAccumulatedAmorti
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Property and Equipment, NetJuly 31,
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We provide financing of certain equ
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The following tables present the ag
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The following tables present the br
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receivables and financed service co
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13. Derivative Instruments(a)Summar
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(d)Interest Rate RiskWe hold intere
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It is not possible to determine the
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running royalty on future sales. Ra
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being exercised or settled, then th
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(f) Employee 401(k) PlansWe sponsor
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18. Income Taxes(a) Provision for I
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The following table presents the co
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20. Net Income per ShareThe followi
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Item 9B.Other InformationRequired D
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INDEX TO EXHIBITSExhibitNumber Exhi
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SIGNATURESPursuant to the requireme
Page 127 and 128:
Stockholder information andforward-
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