CEO John Chambers has prepared a plan to sell 2.8 million shares of Cisco Systems Inc. stock by September 2014, according to a filing with the Securities and Exchange Commission (SEC) Friday afternoon.

Nearly half the shares, 1.3 million, will come from stock options granted in 2005 and set to expire in September 2014; Chambers will be exercising the options and selling the shares. The other 1.5 million will come from his own holdings.

Chambers owned 8.7 million shares of Cisco, 5.7 million of them in the form of unexercised options, as of July, according to a separate SEC filing.

Why this matters
Investors never like to hear that a CEO is selling shares. They'd prefer to see an executive buy shares, showing confidence in his company's future growth and all that. (See Infinera CEO Shows He's a Believer.)

That's probably why this filing was timed for the Friday before Christmas. That said, it's a standard plan under SEC Rule 10b5-1, where Chambers will sell pre-set numbers of shares at regular intervals, the idea being to prevent accusations of unfair inside trading. An executive is only allowed to start a 10b5-1 plan when not in possession of material, non-public information.

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— Craig Matsumoto, Managing Editor, Light Reading