Unlimited PTO boils down to financial accounting driven by the fact that Cisco eliminates accrued paid time off, the costs of which are a liability within Cisco’s financial accounting. The result of doing away with that liability? It instantly makes Cisco appear more valuable and makes Chuck, Scott, and ELT much richer.
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Im not surprised by this. Too many Indians abuse the system going back to India for a month or two without submitting pto so they can cash out later when they jump. Its a matter of time they put a stop to this
Well, sure its to "pretty up the books" but not necessarily for ELT. Its for shareholder value. If you work at Cisco, you're probably a shareholder, too. Wouldn't you do the same if it were your business?
Original post is accurate to pretty up the books for wall street to get more RSU's for ELT
To clear this up a bit, this is an IRS thing folks. The Internal Revenue Service permits one of two ways to give employees "vacation time" or "time off":
- Provide employees at the start of the year with a balance of time off. This is often lost at the end of the year. The company retains no liability. An "unlimited PTO" plan is simply a version of this case; or
- Accrued time off is granted for hours worked. Companies may make policies around maximums and may retire unused hours over a reasonable time if not consumed. This creates a liability on the books. This is the method we have today.
There are a number of reasons why a company may select option #1 over option #2; for example, if the company wishes to reduce its effective tax rate. Increasing liabilities is one way to do that.
It is, however, somewhat strange a company the size of Cisco, along with its financial position would want to retain a lower effective tax rate in lieu of going with option #2. This decision just makes sense given the current positioning. I understand this decision affects employees, but its not about us.
@tc1+1u5QwmVI
I've never seen a company where they do that, in the US at least. Companies in several states across four time zones.
Sick time, sure. But PTO, if accrued, has always been accumulated up to a limit.
Many many companies zero out your PTO balance at the end of the calendar year. California law doesn’t allow this and since so many of our employees are in (or were in) California it was easier to extend that to everyone. I worked for a company where it was the opposite - everyone but California lost unused PTO on 12/31.
By allowing such a large accrual balance Cisco allowed the problem to get too big. Add in all the new Spelunkers and it was only going to get worse. I’ll miss my layoff bank but I can always stash this payout away and still have it.