Cisco Won’t Follow Trend of Splitting CEO, Chairman Posts

Bucking a corporate trend of splitting the chief executive and chairman roles, network equipment maker Cisco Systems Inc. said Thursday that longtime CEO John T. Chambers would take on the duties of chairman.

Chambers will succeed Chairman John P. Morgridge when he steps aside Nov. 15, the company said. Morgridge, 72, who will become chairman emeritus, said in 2005 that he would not stand for reelection this year.

Chambers, 56, will retain the CEO post but relinquish his title as president -- two roles he has held since January 1995. The president post, which can be viewed as an opening for a potential successor to Chambers, is not being filled at the moment.

Cisco’s plan to give Chambers the combined role of CEO and chairman goes against the tide of other corporations seeking to split them, said Charles Elson, a director at the University of Delaware’s Weinberg Center for Corporate Governance.

Although most major companies historically have had one person serving both roles, regulators and corporate governance analysts in recent years have increasingly pressured corporations to change course, contending that the practice concentrated too much power.

In Cisco’s case, the planned switch in leadership probably won’t lead to a substantial change in the dynamics of the company since its former CEO already served as its chairman.

But the move “will draw some criticism from those who question why they didn’t take the next step to separate the roles,” Elson said.

Since Chambers became CEO in 1995, Cisco’s annual sales have risen from $1.2 billion to about $24.8 billion in fiscal 2005, and its market value has jumped from $10.4 billion to $121 billion. Chambers joined Cisco in 1991 as senior vice president of global sales and operations.

Also Thursday, Cisco said its board had authorized the additional repurchase of as much as $5 billion in common stock.

The company had previously authorized as much as $35 billion in repurchases. Since September 2001, Cisco has bought back 1.8 billion common shares at an average of $18.21 a share, totaling $32.6 billion. Cisco has $2.4 billion remaining under its prior repurchase authorization and 6.1 billion shares outstanding.