We have instituted greater accountability in executive compensation through support of a pay-for-performance compensation structure aligned with long-term value creation. A significant portion of our executive officers’ compensation consists of performance-based awards, and the Compensation Committee benchmarks its program against a relevant peer group of companies.

We are also committed to rigorous and diligent oversight at every level across the company, ethical and responsible management of our affairs, and corporate governance that exceeds requirements. The steps we have taken to fulfill this commitment are enabled through clear and consistent corporate governance policies that include the following:

• Our Board of Directors has adopted majority voting for uncontested elections of directors.
• A majority of our Board members are independent of management.
• All members of our key Board committees—the Audit Committee, the Compensation and Management Development Committee, and the Nomination and Governance Committee—are independent, and meet regularly without the presence of management.
• We have a highly regarded code of business conduct that is monitored by our ethics office and is annually affirmed by our employees. The Ethisphere Council awarded the Cisco Code of Business Conduct a Grade “A.”
• Cisco provides various vehicles for employees to use to report ethical concerns, including email, a confidential (anonymous) web form, and a globally available hotline. Our Audit Committee has procedures in place for the anonymous submission of employee complaints on accounting, internal controls, and auditing matters.
• In FY08, we adopted measures that continue to enhance our practices to further align management interest with shareholders. These include an adoption of stock ownership guidelines for our nonemployee directors and executive officers, and a compensation recoupment policy that applies to all of our executive officers.
• Through our strong internal controls, including our internal audit control function that reports directly to the Audit Committee, we maintain critical oversight over the key areas of our business and financial processes and policies.
• Our Nomination and Governance Committee is responsible for overseeing, reviewing, and making periodic recommendations to the Board of Directors concerning Cisco’s corporate governance policies. We maintain a corporate governance page on our website with key information about our corporate governance initiatives, including Cisco’s Corporate Governance policies, Cisco’s Code of Business Conduct, and charters for each of the committees of the Board of Directors. The corporate governance page can be found by clicking on “Corporate Governance” in the Investor Relations section of our website, at investor.cisco.com.