Cisco Early Retirement Participants Set To Exit9:28 AM EST Fri. Jul. 08, 2011
Cisco employees participating in the company's generous Voluntary Enhanced Early Retirement Program are scheduled to leave Cisco effective July 8, the last day of the program.
The retirement offering, Cisco's second such program in the past two years, comes amid a global restructuring expected to cut $1 billion in Cisco expenses by the end of its 2012 fiscal year.
Reached by CRN this week, a Cisco spokesperson would not comment on the number of Cisco employees that opted for the early retirement package. The spokesperson said Cisco would provide details about employee reductions with its fiscal fourth quarter earnings report, currently scheduled for Aug. 10. Cisco's fiscal 2012 begins Aug. 1.
According to Cisco sources, Cisco employees that opted into the program needed to have officially made the decision by June 24. The program went live on April 26, according to an April letter -- viewed by CRN and reported on by numerous sources -- that was sent to eligible Cisco employees in the U.S. and Canada.
Cisco previously offered an early retirement program in 2009. That program "was very well-received by employees, and requests have been made to consider offering a similar opportunity now. The program is completely voluntary, and designed to provide a level of security to those who choose to take advantage of it," wrote Brian Schipper, Cisco's former senior vice president, human resources, in the April letter to employees.
To be eligible for the 2011 program, Cisco employees needed to be at least 50 years old and have a combined age and years of service total of at least 60 as of July 8, 2011. Vice President-level positions and higher were excluded from the program, as were Cisco Distinguished Engineers, Cisco Fellows and Cisco Sales' Chairman's Club winners going back to Cisco's fiscal 2007.
Under the terms of the program, U.S.-based Cisco employees that are paid on a non-commission-incentive basis receive one year's regular base pay plus the amount of their annual incentive target. Cisco employees paid on a commission-incentive basis receive 80 percent of one year's regular base pay, and 80 percent of their annual commission targets. Severances are taxed at the Federal supplemental tax rate, according to Cisco.
Some Canada-based Cisco employees receive a bit more. Those employees with more than 12 full years of Cisco service get an additional half a month's base salary and half a month's annual incentive target amounts for each full year of service above their 12 years as of July 8. Commission-based employees get those rates at 80 percent.
Benefits-wise, eligible Cisco employees get lump sum payments to cover 24 months of their elected coverage for medical, dental and vision. They also receive a one-time payment equal to about two years worth of Cisco matching contributions to their 401(k) plans, paid as lump sums calculated as 4.5 percent multiplied by total 2011 target compensation, up to $245,000, regardless of the extent to which the Cisco employee participated in the 401(k) program.
Cisco employees who had been approved for Tuition Assistance before April 26 can also receive Cisco Tuition Assistance benefits for course work completed, even after they leave Cisco.
Cisco also built in a rehire restriction. Employees that participate in the retirement program are ineligible to return to Cisco as regular employees or contractors or consultants for at least two years after their last day, and they forfeit their retirement plan payments and benefits if they accept work from Cisco within that timeframe.
The retiring employees exit Cisco as the company prepares for layoffs expected to be in the thousands. Cisco already restructured its consumer unit this spring, shuttering its line of Flip video cameras and cutting about 550 jobs.
Those moves are part of a broader, ongoing corporate restructuring that according to Rob Lloyd, Cisco's executive vice president, worldwide operations, will make doing business with Cisco a simpler process for solution providers and Cisco customers overall.