Cisco's Chambers Selected America's Best CEO by Institutional Investor Magazine
February 20, 2003
By Charles Waltner, News@Cisco
Based on a survey of over 200 portfolio managers and securities analysts at major money management firms and investment banks, Institutional Investor magazine has named Cisco Systems' John Chambers as America's Best CEO in its January 2003 issue. Investment industry professionals voting in the survey selected Chambers for the trust and transparency that have been the hallmark of Cisco's interactions with its investors.
The magazine wrote that investment executives admire Chambers for his "balance of candor and optimism." "Now that the bubble has burst, investors still believe in John Chambers," the article's author, Justin Schack, wrote.
The 53-year-old Chambers manages more than 35,000 employees for the networking technology company and must communicate with millions of shareholders. He has lead Cisco since 1995.
As Schack reported, "The voters commended him not only for quickly getting out of bubble-era telecommunications investments early and for being patient and prudent about cutting jobs, but also for communicating openly and honestly with investors, even when most of the news has been bad."
The magazine said Chambers and other top-rated CEOs in the survey shared a talent for "charting and executing their vision and openly communicating it." Other top vote-getters include Steven Ballmer of Microsoft, Steven Reinemund of PepsiCo, Lee Raymond of Exxon Mobil Corp., and H. Lee Scott Jr. of Wal-Mart Stores, among others.
In an interview with Schack, Chambers explained his investor relations' philosophy: "You want very open communications," he said. "You want to be realistic about what your opportunities are, realistic about where the challenges that can trip you up are, and you want to explain that to investors just like you would to your senior staff."
As the article noted, Cisco for many years has had in place the accounting and investor communications practices now being advocated by oversight and governmental agencies. In this rough economic period laced with corporate scandal, one voter wrote, " he [Chambers] really has emerged as a true leader at a time when corporate America needs leaders the most."
Chambers, for example, is taking the initiative on options expensing. He unequivocally said he does not support expensing options as the primary accounting method for company profits, noting that options valuation methods can create far greater accounting inaccuracies.
Chambers added that stock options are a crucial tool for improving productivity and compensating rank and file employees. Forcing options valuations to be part of primary financial reporting would greatly hamper the use of the powerful incentive.
Chambers also advocates a universal policy for all companies to seek shareholder approval for any options programs, a practice that is entrenched at Cisco.
The Institutional Investor award is just the latest recognition of Chambers and Cisco's commitment to quality investor relations. Last year Investor Relations and Barrons magazines honored Chambers with their Best Investor Relations by a CEO award. Also Blair Christie, Cisco's director of investor relations, received the Best Investor Relations Officer award. As a company, Cisco received honorable mention for the Grand Prix for Best Overall Investor Relations award.
Chambers has received several of honors over the years for his general management of Cisco, including the CEO of the Year for 2000 by Chief Executive Magazine, and Best Boss in America in 2000 by 20/20, the TV news magazine program.
Charles Waltner is a freelance journalist based in Oakland, CA.