<PAGE>
SCHEDULE 14A
------------
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant { X }
Filed by a party other than the registrant { }
Check the appropriate box:
{ } Preliminary proxy statement
{ X } Definitive proxy statement
{ } Definitive additional materials
{ } Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
EMC CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
EMC CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the Appropriate Box):
{ X } $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2)
{ } $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
{ } Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11/1/
________________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
{ } Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
________________________________________________________________________________
(2) Form, schedule or registration statement no.:
________________________________________________________________________________
(3) Filing party:
________________________________________________________________________________
(4) Date filed:
________________________________________________________________________________
_________________________________
/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
[LOGO OF EMC CORPORATION APPEARS HERE]
April 5, 1996
Dear Stockholder:
We cordially invite you to attend our 1996 Annual Meeting, which will be
held on Wednesday, May 8, 1996, at 10:00 a.m. at the Company's facility at 5-9
Technology Drive, Milford, Massachusetts. At this meeting you are being asked
to elect three Class III members to the Board of Directors for a three-year
term, to approve the addition of 1,000,000 shares of common stock to the 1989
Employee Stock Purchase Plan and to approve amendments to the 1992 Stock
Option Plan for Directors.
Your Board of Directors recommends that you vote in favor of each of these
proposals. You should read with care the attached Proxy Statement, which
contains detailed information about these proposals.
Your vote is important regardless of the number of shares you own.
Accordingly, we urge you to complete, sign, date and return your Proxy card
promptly in the enclosed postage-paid envelope. The fact that you have
returned your Proxy in advance will in no way affect your right to vote in
person should you attend the meeting. However, by signing and returning the
Proxy, you have assured representation of your shares.
Following completion of the scheduled business, we will report on the
Company's operations and plans and answer questions from the floor. We hope
that you will be able to join us on May 8th.
Very truly yours,
(ART)
RICHARD J. EGAN
Chairman of the Board
<PAGE>
EMC CORPORATION
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 1996
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of EMC
Corporation, a Massachusetts corporation ("EMC" or the "Company"), will be
held at the Company's facility at 5-9 Technology Drive, Milford,
Massachusetts, on Wednesday, May 8, 1996, at 10:00 a.m. for the following
purposes:
1. To elect three members to the Board of Directors to serve for a three-
year term as Class III Directors.
2. To amend the Company's 1989 Employee Stock Purchase Plan to increase
the number of shares available for grant under the plan to 4,900,000 shares
from 3,900,000 shares.
3. To amend the Company's 1992 Stock Option Plan for Directors to provide
that newly granted formula options will vest over three years instead of
five years and to allow for the granting of discretionary, non-formula
based options.
4. To transact any and all other business that may properly come before
the meeting or any adjournments thereof.
All stockholders of record at the close of business on March 29, 1996 are
entitled to notice of and to vote at this meeting and any adjournments
thereof.
Stockholders are requested to sign and date the enclosed Proxy and return it
in the enclosed envelope. The envelope requires no postage if mailed in the
United States.
EMC's 1995 Annual Report to Stockholders and Annual Report on Form 10-K for
1995 are enclosed herewith.
By order of the Board of
Directors
DAVID B. WALEK, Clerk
April 5, 1996
<PAGE>
EMC CORPORATION
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL.
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of EMC Corporation, a Massachusetts
corporation ("EMC" or the "Company"), for the Annual Meeting of Stockholders
of EMC to be held May 8, 1996, and any adjournments thereof, for the purposes
set forth in the Notice of the Annual Meeting. EMC was incorporated in 1979,
and its principal executive offices are located at 171 South Street,
Hopkinton, Massachusetts 01748. This Proxy Statement is first being
distributed to stockholders on or about April 5, 1996.
All per share amounts of the common stock, $.01 par value (the "Common
Stock"), of the Company noted in this Proxy Statement have been adjusted to
give effect to all stock splits.
VOTING RIGHTS AND OUTSTANDING SHARES.
As of March 29, 1996, EMC had outstanding 230,747,504 shares of Common
Stock. Each share of Common Stock entitles the holder of record thereof at the
close of business on March 29, 1996 to one vote on each of the matters to be
voted upon at the meeting.
The expenses of preparing, printing and assembling the materials used in the
solicitation of proxies will be borne by EMC. In addition to the solicitation
of proxies by use of the mails, EMC may utilize the services of certain of its
officers and employees (who will receive no compensation therefor in addition
to their regular salaries) to solicit proxies personally and by mail,
telephone and telegraph from brokerage houses and other stockholders. Also,
the Company has retained D.F. King & Co., Inc. to aid in the solicitation of
proxies. D.F. King & Co., Inc. will receive a fee and reimbursement of
expenses estimated not to exceed $10,000 in the aggregate, all of which will
be paid by the Company.
If the enclosed form of Proxy is properly signed and returned, the shares
represented thereby will be voted. If the stockholder specifies in the Proxy
how the shares are to be voted, they will be voted as specified. If the
stockholder does not specify how the shares are to be voted, they will be
voted in favor of electing as Class III Directors, the three persons listed
under "Election of Directors" to serve until their successors are elected and
qualified and in favor of each of the additional items set forth in the
accompanying Notice of the Annual Meeting. Should any person so named be
unable or unwilling to serve as director, the persons named in the enclosed
form of Proxy for the Annual Meeting intend to vote for such other person as
management may recommend. Any stockholder has the right to revoke his or her
Proxy at any time before it is voted by attending the meeting and voting in
person or filing with the Clerk of the Company either a written instrument
revoking the Proxy or another newly executed proxy bearing a later date.
An automated system administered by the Company's transfer agent tabulates
all votes cast at the Annual Meeting. Abstentions and broker non-votes are
each included in the determination of the number of shares present and voting
for purposes of determining the presence of a quorum. Each is tabulated
separately. If a quorum is present, the three nominees who receive the
greatest number of votes properly cast will be elected as Class III Directors.
Neither abstentions nor broker non-votes will have any effect upon the outcome
of voting with respect to the election of directors. A broker non-vote will
have no effect upon the outcome of voting on Proposals 2 or 3. However, an
abstention will have the same effect as a vote against Proposals 2 and 3.
<PAGE>
As of the date hereof, management of EMC has no knowledge of any business
other than that described in the Notice of the Annual Meeting that will be
presented for consideration at such meeting. If any other business should come
before such meeting, the persons appointed by the enclosed form of Proxy shall
have discretionary authority to vote all such Proxies as they shall decide.
PROPOSAL 1
ELECTION OF DIRECTORS
Pursuant to Section 50A of Chapter 156B of the Massachusetts General Laws,
the Board of Directors is currently divided into three classes, having
staggered terms of three years each after an initial transition period. Under
Section 50A and the By-laws of the Company, the Board of Directors may
determine the total number of directors and the number of directors to be
elected at any Annual Meeting of Stockholders or Special Meeting in lieu
thereof. The Board of Directors has fixed at eight the total number of
directors and has fixed at three the number of directors to be elected at the
1996 Annual Meeting. Of the current total of eight directors, three Class III
Directors have terms expiring at the 1996 Annual Meeting, two Class I
Directors have terms expiring at the 1997 Annual Meeting and three Class II
Directors have terms expiring at the 1998 Annual Meeting. The three directors
whose terms expire at the 1996 Annual Meeting have been nominated by the Board
of Directors for election at such meeting. All of the nominees for director
are now Class III members of the Board of Directors. Each Class III Director
elected at the 1996 Annual Meeting will serve until the 1999 Annual Meeting of
Stockholders or Special Meeting in lieu thereof, and until that director's
successor is elected and qualified.
INFORMATION WITH RESPECT TO NOMINEES.
Set forth below is information with respect to each nominee for Class III
Director to be elected at the Annual Meeting and for each Class I Director and
Class II Director. All of the directors were previously elected by the
stockholders.
NOMINEES TO SERVE AS DIRECTORS FOR A THREE-YEAR TERM EXPIRING AT
THE 1999 ANNUAL MEETING (CLASS III DIRECTORS)
MICHAEL J. CRONIN
Mr. Cronin, age 57, has been a Director of the Company since May 1990. He
has been Chief Executive Officer of Cognition Corporation, a CAD/CAM
software supplier, from September 1987 to the present. Mr. Cronin is also
Chairman of the Board of Cognition Corporation. He was Chief Executive
Officer and President of Automatix, Inc., an industrial vision systems
manufacturer, from June 1984 to September 1990. He is also a Director of
Leeman Labs, Inc., a manufacturer of analytical instruments for the
environmental and industrial markets. Mr. Cronin is a member of the Audit
Committee, the Executive Compensation and Stock Option Committee and the
Mergers and Acquisitions Committee of EMC.
MAUREEN E. EGAN
Mrs. Egan, age 58, has been a Director of the Company since March 1993. She
was one of the Company's initial investors and its first employee. Mrs.
Egan was employed in a number of administrative capacities from the
Company's inception in 1979 until her retirement in 1985. Mrs. Egan is a
founder and member of the Hopkinton Technology for Education Trust, a non-
profit organization in Hopkinton, Massachusetts.
2
<PAGE>
W. PAUL FITZGERALD
Mr. Fitzgerald, age 55, has been a Director of the Company since March
1991. From January 1988 to March 1995, he was Senior Vice President,
Finance and Administration and Chief Financial Officer of EMC. From October
1991 to March 1995, Mr. Fitzgerald was Treasurer of the Company. From
January 1985 to January 1988, he was Vice President, Finance of EMC. Mr.
Fitzgerald retired as an employee of the Company effective October 20,
1995. Mr. Fitzgerald is a member of the Audit Committee and the Stock
Repurchase Oversight Committee of EMC.
DIRECTORS SERVING A TERM EXPIRING AT THE
1997 ANNUAL MEETING (CLASS I DIRECTORS)
RICHARD J. EGAN
Mr. Egan, age 60, is a founder of the Company and has served as a Director
since the Company's inception in 1979. He was elected Chairman of the Board
in January 1988. Prior to January 1988, he was also President of EMC. From
1979 to January 1992 he was Chief Executive Officer of the Company. He is
also a Director of Cognition Corporation, a CAD/CAM software supplier. Mr.
Egan is a member of the Executive Compensation and Stock Option Committee,
the Mergers and Acquisitions Committee and the Stock Repurchase Oversight
Committee of EMC.
JOHN F. CUNNINGHAM
Mr. Cunningham, age 53, has been a Director of the Company since November
1991. He was a consultant to the Company from January 1992 to December
1993. He has been Chairman and Chief Executive Officer of Cunningham &
Company, a corporation involved in private investments and financial
consulting, from February 1989 to the present. From July 1985 to January
1989, he was Chairman of the Board and Chief Executive Officer of Computer
Consoles, Inc., a manufacturer of computers and telecommunications
equipment. Prior to such time, Mr. Cunningham served in various capacities
at Wang Laboratories, Inc., a manufacturer of computers, most recently as
President and Chief Operating Officer and a Director. He is also a Director
of Computervision Corporation, a CAD/CAM software company. Mr. Cunningham
is a member of the Executive Compensation and Stock Option Committee, the
Mergers and Acquisitions Committee and the Stock Repurchase Oversight
Committee of EMC.
DIRECTORS SERVING A TERM EXPIRING AT THE
1998 ANNUAL MEETING (CLASS II DIRECTORS)
JOHN R. EGAN
Mr. Egan, age 38, became Executive Vice President, Sales and Marketing of
EMC in January 1992 and was elected a Director in May 1992. From October
1986 to January 1992, he served in a number of executive positions with the
Company including Executive Vice President, Operations and Executive Vice
President, International Sales.
JOSEPH F. OLIVERI
Mr. Oliveri, age 47, has been a Director of the Company since March 1993.
From March 1983 to the present, Mr. Oliveri has been President and Chief
Executive Officer of Interface Electronics Corporation, a distributor of a
diversified group of semiconductor, electronic component and subsystem
component products. Mr. Oliveri is a member of the Audit Committee and the
Mergers and Acquisitions Committee of EMC.
3
<PAGE>
MICHAEL C. RUETTGERS
Mr. Ruettgers, age 53, has been President of the Company since October 1989
and in January 1992 he also became Chief Executive Officer of EMC. In May
1992, he was elected a Director of the Company. Mr. Ruettgers was Executive
Vice President, Operations of EMC from July 1988 to October 1989 and Chief
Operating Officer from October 1989 to January 1992. Before joining EMC, he
was Chief Operating Officer at Technical Financial Services, Incorporated,
a high-technology consulting company, from February 1987 to October 1989.
He is also a Director of Cross Comm, Inc., a manufacturer of computer
network products, and Commonwealth Energy Corp., a diversified energy
company.
During the fiscal year ended December 30, 1995, the EMC Board of Directors
held seven meetings. Each incumbent director who is a nominee for election at
the Annual Meeting attended all of the meetings of the Board of Directors and
the committees of which he was a member in 1995.
The Audit Committee, which held two meetings in 1995, reviews with
management and the Company's independent public accountants the Company's
financial statements, the accounting principles applied in their preparation,
the scope of the audit, any comments made by the independent accountants upon
the financial condition of the Company and its accounting controls and
procedures, and such other matters as the committee deems appropriate.
The Executive Compensation and Stock Option Committee, which held four
meetings during 1995, reviews salary policies and compensation of executive
officers, officers and other members of management and approves compensation
plans. This committee also administers the Company's stock option plans and
employee stock purchase plan.
The Mergers and Acquisitions Committee reviews with management of EMC
possible acquisitions of technologies, product lines or related businesses.
This committee held no formal meetings in 1995 but did consult informally
several times during 1995.
The Stock Repurchase Oversight Committee, which was established on January
24, 1996, will oversee and review with management the Company's common stock
repurchase program.
The Board of Directors does not have a Nominating Committee.
The Company compensates each director who is not an employee of the Company
$10,000 per annum, $2,000 for each regularly scheduled director's meeting
attended and $1,500 per annum for each committee on which they serve.
On October 20, 1995, pursuant to the 1992 Stock Option Plan for Directors,
the Executive Compensation and Stock Option Committee (the "Compensation
Committee") granted options to purchase 40,000 shares of common stock to each
of Messrs. Cronin and Fitzgerald, directors of the Company, at an exercise
price of $6.81, equal to 50% of the fair market value of the Company's common
stock on the date of grant.
----------------
Richard J. Egan, Chairman of the Board and a Director, is the husband of
Maureen E. Egan, a Director of the Company. He also is the brother-in-law of
W. Paul Fitzgerald, a Director of the Company. W. Paul Fitzgerald is the
brother of Maureen E. Egan. John R. Egan, Executive Vice President, Sales and
Marketing and a Director of the Company is the son of Richard J. and Maureen
E. Egan.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the Company's
Common Stock owned on March 15, 1996 (i) by each person who is known by the
Company to own beneficially more than 5% of the Company's Common Stock, (ii)
by each of the Company's directors and nominees for director owning Common
Stock in the Company, (iii) by each of the executive officers named in the
Summary Compensation Table on page 6, and (iv) by all directors and executive
officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED(1) OUTSTANDING SHARES
- ------------------------ ---------------- ------------------
<S> <C> <C>
Richard J. Egan(2)......................... 11,671,080 5.1%
Maureen E. Egan*(3)........................ 1,001 **
Michael J. Cronin*......................... 0 --
John F. Cunningham(4)...................... 96,000 **
John R. Egan(5)............................ 732,850 **
W. Paul Fitzgerald*........................ 217,519 **
Raymond Fortune............................ 15,000 **
Joseph F. Oliveri(6)....................... 32,000 **
Michael C. Ruettgers(7).................... 371,605 **
Neal M. Waddington(8)...................... 15,000 **
All directors and executive officers as a
group (18 persons)(9)..................... 13,340,959 5.8
</TABLE>
- --------
* Nominee for director
** Less than 1%
(1) Except as otherwise noted, all persons have sole voting and investment
power with respect to their shares. All amounts shown in this column
include shares obtainable upon exercise of stock options exercisable
within 60 days from the date of this table.
(2) Excludes 733,851 shares held by Mr. Egan's wife, Maureen E. Egan, and John
R. Egan, as to which Mr. Egan disclaims beneficial ownership.
(3) Excludes 12,403,930 shares held by Mrs. Egan's husband, Richard J. Egan,
and John R. Egan, as to which Mrs. Egan disclaims beneficial ownership.
(4) Mr. Cunningham is deemed to own these shares by virtue of a currently
exercisable option to purchase these shares.
(5) John R. Egan is deemed to own 370,200 of these shares by virtue of
currently exercisable options to purchase these shares.
(6) Mr. Oliveri is deemed to own these shares by virtue of a currently
exercisable option to purchase these shares.
(7) Excludes 3,900 shares owned by Mr. Ruettgers' children, as to which he
disclaims beneficial ownership.
(8) Mr. Waddington is deemed to own these shares by virtue of currently
exercisable options to purchase these shares. Mr. Waddington has resigned
as an executive officer of the Company effective as of April 12, 1996.
(9) Includes 543,200 shares of Common Stock beneficially owned by all
executive officers and directors as a group based upon stock options
exercisable within 60 days from the date of this table. Excludes shares as
to which the named individuals have disclaimed beneficial ownership as
described above.
The address of all persons listed above is c/o EMC Corporation, 171 South
Street, Hopkinton, Massachusetts 01748.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's Chief
Executive Officer and the four remaining most highly paid executive officers
for the three fiscal years ended December 30, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL ------------
COMPENSATION AWARDS
----------------------------------------------- ------------
NAME AND PRINCIPAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY ($) BONUS ($)(1) COMPENSATION($) OPTIONS (#) COMPENSATION($)
------------------ ---- ---------- ------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Ruettgers.... 1995 276,700 366,120 -- -- 2,000(2)
President, Chief 1994 260,000 366,660 -- -- 2,000(2)
Executive Officer 1993 225,000 536,363 -- -- 2,000(2)
and Director
Richard J. Egan......... 1995 276,700 366,120 -- -- 319,376(3)
Chairman of the Board 1994 260,000 366,660 -- -- 371,147(3)
and Director 1993 225,000 536,363 -- -- 278,971(3)
John R. Egan............ 1995 212,844 284,609 -- -- 2,000(2)
Executive Vice Presi-
dent 1994 200,000 266,425 -- -- 2,000(2)
Sales and Marketing and 1993 175,000 490,389 -- -- 2,000(2)
Director
Raymond Fortune......... 1995 190,192 217,450 -- 56,250 2,000(2)
Senior Vice President 1994(4) 73,231 122,102 -- 75,000 500(2)
International Sales 1993 -- -- -- -- --
Neal M. Waddington...... 1995 219,805 154,960 160,430(5) -- 2,000(2)
Senior Vice President 1994(6) 33,528 40,000 -- 75,000 --
Enterprise Alliances 1993 -- -- -- -- --
</TABLE>
- --------
(1) Includes performance bonuses and commissions accrued in year of service
whether paid during year of service or in succeeding year.
(2) The amount noted was paid to such executive officer's account in the EMC
401K Plan.
(3) Includes the amount of $2,000 paid to Mr. Egan's account in the EMC 401K
Plan. Also includes $317,376, $369,147 and $276,971, respectively, for
1995, 1994 and 1993, reflecting the present value of the economic benefit
to Mr. Egan of the non-term portion of the premium advanced, on a non-
interest bearing basis, by the Company during 1995, 1994 and 1993
($829,568, $768,131 and $611,439, respectively) with respect to a split-
dollar insurance agreement described below, based on the earliest possible
date on which the Company may terminate the split dollar agreement and
receive back all funds advanced, which is August 16, 2002. The Company did
not pay any portion of the term life insurance portion of the premium in
1995, 1994 or 1993.
In January 1993, the Company entered into a "split dollar" life insurance
agreement with the Egan Family Irrevocable Insurance Trust, for the benefit
of the Richard J. Egan family. Richard J. Egan is Chairman of the Board and
Maureen E. Egan is a Director of the Company. Under the agreement, premiums
equivalent, in general terms, to the aggregate annual increase in the cash
value of the policies will be advanced by the Company to the Egan Family
Irrevocable Insurance Trust and will be required to be repaid to the Company
6
<PAGE>
(without interest) upon death or at such time as the aggregate cash value of
the fully funded policies equals the Company's total premium advances. All
Company advances will be collateralized by the aggregate cash value of the
policies. In 1995, the Company paid approximately $830,000 in premiums
pursuant to this agreement.
(4) Mr. Fortune joined the Company on July 11, 1994.
(5) The amount noted was paid to Mr. Waddington to reimburse him for expenses
associated with his relocation to Massachusetts.
(6) Mr. Waddington joined the Company on November 7, 1994.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1995 to
the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------
POTENTIAL REALIZED
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF
OPTIONS STOCK PRICE
OPTIONS GRANTED TO APPRECIATION FOR
GRANTED EMPLOYEES EXERCISE OPTION TERM
IN 1995 IN FISCAL PRICE EXPIRATION -------------------
NAME (#) (1) YEAR (2) ($/SHARE)(3) DATE 5% ($) 10% ($)
---- ------- ---------- ------------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Ruettgers.... -- -- -- -- -- --
Richard J. Egan......... -- -- -- -- -- --
John R. Egan............ -- -- -- -- -- --
Raymond Fortune......... 56,250 2.13% 22.00 7/21/05 778,500 1,972,125
Neal M. Waddington...... -- -- -- -- -- --
</TABLE>
- --------
(1) The options were granted under the 1993 Stock Option Plan, as amended (the
"1993 Plan") and become exercisable in increments of 20% over a five-year
period. The term of such option grant is ten years from the date of the
grant, which was July 21, 1995.
(2) The Company granted options representing an aggregate of 2,643,224 shares
to 1,021 employees of EMC and its subsidiaries in fiscal 1995 under the
1993 Plan.
(3) The closing price of the Common Stock on the New York Stock Exchange on
the date of the grant to Mr. Fortune was $22.00 per share.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal 1995
by the named executive officers and the value of such officers' unexercised
options at December 30, 1995.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED FISCAL YEAR END (#) AT FISCAL YEAR END ($)(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Ruettgers(2). 300,876 $5,809,079 -- 480,000 -- $ 6,695,040
Richard J. Egan......... -- -- -- -- -- --
John R. Egan(2)......... 240,000 $4,509,840 559,200 720,000 $7,901,578 $10,042,560
Raymond Fortune(3)...... 15,000 $ 129,375 -- 116,250 -- $ 30,000
Neal M. Waddington(3)... -- -- 15,000 60,000 -- --
</TABLE>
- --------
(1) Fiscal year ended December 30, 1995. The closing price of the Common Stock
on December 29, 1995 (the last trading day in 1995) on the New York Stock
Exchange was $15.38 per share.
(2) These options were granted under the Company's 1985 Stock Option Plan (the
"1985 Plan").
(3) These options were granted under the 1993 Plan.
1992 STOCK OPTION PLAN FOR DIRECTORS
As of February 29, 1996, there were options to purchase 320,000 shares of
Common Stock outstanding under the Company's 1992 Stock Option Plan for
Directors (the "Directors Plan") and 1,320,000 shares remained available for
future grant under the Directors Plan. A more detailed description of the
Directors Plan is described below at "Approval of Amendments to the Company's
1992 Stock Option Plan for Directors."
The following table shows certain information regarding options to purchase
shares of Common Stock pursuant to the Directors Plan:
<TABLE>
<CAPTION>
NUMBER OF SHARES
COVERED BY OPTIONS AVERAGE PER SHARE
GRANTED FROM EXERCISE PRICE OF
NAME 1/1/93 TO 12/30/95 SUCH OPTIONS
---- ------------------ -----------------
<S> <C> <C>
Michael J. Cronin......................... 40,000 $6.81
Maureen E. Egan........................... -- --
W. Paul Fitzgerald........................ 40,000 $6.81
All current directors who are not
executive officers as a group
(5 persons).............................. 240,000 $7.77
</TABLE>
8
<PAGE>
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that might incorporate
other filings with the Securities and Exchange Commission, including this
Proxy Statement, in whole or in part, the following report and the Stock Price
Performance Graph on page 13 shall not be incorporated by reference into any
such filings.
REPORT OF THE EXECUTIVE COMPENSATION
AND STOCK OPTION COMMITTEE
EMC's executive compensation program is directly linked to corporate
performance and returns to stockholders. The Company has developed an overall
compensation strategy that ties a significant portion of executive
compensation to the Company's success in meeting one or more specified
performance goals and to appreciation in the Company's market valuation. The
overall objectives of this strategy are to attract and retain top-notch
executive talent, to motivate these executives to achieve the goals inherent
in the Company's business strategy, to link executive and stockholder
interests through equity-based plans, and to provide a compensation program
that recognizes individual contributions as well as overall business results.
Each year the Compensation Committee conducts a full review of the Company's
executive compensation program. This review often includes a comprehensive
report from independent executive compensation consultants evaluating the
effectiveness of the program and comparing the Company's executive
compensation, corporate performance, stock price appreciation and total return
to stockholders to a peer group of public high technology companies comparable
to the Company. The Compensation Committee reviews the selection of peer
companies used for compensation analysis. The companies in the peer group used
for compensation analysis are generally not the same as those in the peer
group index in the Performance Graph included in this Proxy Statement.
The peer group in the Performance Graph is comprised of companies in the
computer storage field. The Compensation Committee is of the opinion that EMC
is generally not comparable to any of such companies and therefore uses other
high technology companies for compensation analysis. The companies used for
compensation analysis are generally other leading high technology companies
which (i) compete with or are business partners with the Company in the
marketplace; (ii) are comparable to the Company in terms of workforce size,
product offerings or revenues; or (iii) compete with the Company for executive
talent. The last group includes companies whose executive officers possess
skills and expertise similar to the skills and expertise that the Company
seeks in its executive officers. The selected peer group for compensation
analysis may vary from year to year based upon market conditions and changes
in the Company's business. The annual compensation review provides an ongoing
comparison of the Company's executive compensation with the compensation
programs of other similar companies.
The Compensation Committee determines the compensation of the five most
highly compensated executive officers, which is detailed in this Proxy
Statement, and sets policies for and reviews the compensation awarded to the
other executive officers and officers of the Company. This is designed to
ensure consistency throughout the executive compensation programs. In
reviewing the individual performance of the executives whose compensation is
detailed in this Proxy Statement (other than Michael C. Ruettgers) the
Compensation Committee takes into account the views of Mr. Ruettgers, the
Company's Chief Executive Officer.
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<PAGE>
The key elements of the Company's executive compensation usually consist of
base salary, executive bonus and stock options. The Compensation Committee's
policies with respect to each of the elements, including the base salary for
the compensation awarded to Mr. Ruettgers, are discussed below. In addition,
while the elements of compensation described are considered separately, the
Compensation Committee takes into account the complete compensation package
provided by the Company to the individual.
BASE SALARIES
Base salaries for executive officers and officers are determined by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for pertinent
executive talent, including a comparison to base salaries for comparable
positions at other companies. The base salaries of the Company's executive
officers, generally, and the Chief Executive Officer, in particular, are low
in comparison to base salaries for comparable positions at other companies.
This is due to the fact that the Company's executive compensation program is
weighted heavily towards bonuses and other incentives.
Annual salary adjustments are determined by evaluating the financial
performance of the Company and of each executive officer and officer. The
Compensation Committee, where appropriate, also considers non-financial
performance measures. For 1995, the non-financial performance factors used
were increase in market share, manufacturing efficiency gains, improvements in
product quality and improvements in relations with customers, suppliers and
employees.
With respect to the base salary granted to Mr. Ruettgers in 1995, the
Compensation Committee took into account base salaries of chief executive
officers of peer companies, the Company's success in meeting its return on
equity goals in 1994, the performance of the Common Stock and the assessment
by the Compensation Committee of Mr. Ruettgers' individual performance. The
Compensation Committee also took into account the longevity of Mr. Ruettgers'
service to the Company and its belief that Mr. Ruettgers is an excellent
representative of the Company to the public by virtue of his stature in the
industry. On these bases, the Compensation Committee believes that the
increase in Mr. Ruettgers' 1995 base salary from that of 1994 is well
justified.
EXECUTIVE BONUSES
The Company's executive officers and officers are eligible for an annual
cash bonus. Individual and corporate performance objectives are established at
the beginning of each year by the Compensation Committee. Eligible executives
are assigned target bonus levels. The corporate performance measure for bonus
payments for 1995 was based on a fractional percentage of the Company's pre-
tax profits, based on each executive's job level and responsibilities. As in
the case of base salary, the Compensation Committee also considers individual
non-financial performance measures and, where appropriate, unit performance
measures, in determining bonuses.
In awarding these bonuses, the Compensation Committee also considered on a
subjective basis the performance of the Common Stock and the role of Mr.
Ruettgers and the other executive officers and officers in promoting the long-
term strategic growth of the Company and, in particular, the Company's growth
in market share.
STOCK OPTIONS
Under the 1985 Plan and the 1993 Plan, stock options may be granted to the
Company's executive officers and officers and other key employees. The
Compensation Committee sets guidelines for the size of stock option
10
<PAGE>
awards based on similar factors, including competitive compensation data, as
are used to determine base salaries and annual bonus amounts. In the event of
poor corporate performance, the Compensation Committee can elect not to award
options.
Stock options are designed to align the interests of executive officers,
officers and key employees with those of the stockholders. Generally, stock
options are granted with an exercise price equal to the market price of the
Common Stock on the date of grant and vest in equal increments over five
years. This approach is designed to act as an incentive for the creation of
stockholder value over the long term since the full benefit of the
compensation package cannot be realized unless stock price appreciation occurs
over a number of years.
On occasion (but not during 1995), some discounted stock option grants have
been made to employees of the Company, including Mr. Ruettgers. The reasons
for these discounted grants are that the Compensation Committee wanted to
reward the individuals for their past performance and to grant further
incentives to these individuals for expected future performance.
The Compensation Committee may make additional discounted stock option
grants to employees of the Company who have performed in an extraordinary
manner and such actions have had a direct tangible effect on the Company and
its results of operations. It is for these reasons that these types of stock
option grants will not be made routinely.
The Compensation Committee has a set of guidelines that is generally used to
determine the size of stock option awards. These guidelines take into account
the duties and responsibilities of the individual, years of service to the
Company, the number of outstanding options and the size of the option award.
These guidelines were used by the Compensation Committee in making the stock
option grants to Mr. Ruettgers and all other key employees of the Company.
If necessary, the Compensation Committee retains the discretion to keep
individual items of compensation constant in the future to provide that total
compensation fairly reflects overall corporate performance and individual
achievement. The Compensation Committee believes that the equity interests
held by Mr. Ruettgers and the other executive officers and officers align the
interests of stockholders and management.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code (the "Code") limits the tax
deductibility by a company of compensation in excess of $1 million paid to any
of its five most highly compensated executive officers. However, performance-
based compensation that has been approved by stockholders is excluded from the
$1 million limit if, among other requirements, the compensation is payable
only upon attainment of pre-established, objective performance goals and the
board committee that establishes such goals consists solely of "outside
directors" (as defined for purposes of Section 162(m)).
While the tax impact of any compensation arrangement is one factor to be
considered, such impact is evaluated in light of the Compensation Committee's
overall compensation philosophy. The Compensation Committee intends to
establish executive officer compensation programs which will maximize the
Company's deduction if the Compensation Committee determines that such actions
are consistent with its philosophy and in the best interests of the Company
and its stockholders. However, from time to time the Compensation Committee
may award compensation which is not fully deductible if the Compensation
Committee determines that such award is consistent with its philosophy and in
the best interests of the Company and its stockholders.
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CONCLUSION
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to individual and
corporate performance and stock price appreciation. In 1995, as in previous
years, the majority of the Company's executive compensation consisted of
compensation with performance-based variable elements. The Compensation
Committee intends to continue the policy of linking executive compensation to
corporate performance and returns to stockholders.
EXECUTIVE COMPENSATION AND
STOCK OPTION COMMITTEE
Michael J. Cronin, Chairman
John F. Cunningham
Richard J. Egan
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee members are Michael J. Cronin, Chairman, John F.
Cunningham and Richard J. Egan. Richard J. Egan, Chairman of the Board of the
Company, is also a member of the Board of Directors of Cognition Corporation,
of which Michael J. Cronin is Chief Executive Officer.
STOCK PRICE PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG EMC CORPORATION, S&P 500
INDEX AND PEER GROUP SIC CODE 3572 (COMPUTER STORAGE DEVICES)**
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EMC $100.00 $143.07 $438.22 $1,217.80 $1,621.43 $1,134.77
COMPUTER STORAGE
DEVICES 100.00 130.29 188.77 244.77 246.24 371.49
S&P 500 100.00 130.48 140.46 154.62 156.66 215.54
</TABLE>
* $100 invested on 12/29/90 in Company stock,
index or peer group including reinvestment of
dividends, if any.
** 21 companies comprise the peer group. The
Company will provide a list of the peer group
companies to stockholders upon request.
Note: The stock price performance shown on the graph
above is not necessarily indicative of future price
performance.
13
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CERTAIN TRANSACTIONS
Periodically during 1995, the Company rented the private airplane of Richard
J. Egan for use for EMC business trips and sales activities, for which
payments aggregated approximately $190,000. Richard J. Egan is Chairman of the
Board of Directors of the Company.
In 1995, the Company retained the Thomas A. Fitzgerald Company to provide
various forms of corporate insurance and paid premiums of approximately
$764,000. Thomas A. Fitzgerald is the brother of W. Paul Fitzgerald, a
Director of the Company and of Maureen E. Egan, a Director of the Company and
the brother-in-law of Richard J. Egan, Chairman of the Board of Directors of
the Company.
In 1995, the Company purchased approximately $345,000 of electronic
components from Interface Electronics Corporation. Joseph F. Oliveri, a
Director of EMC, is the President and Chief Executive Officer of Interface
Electronics Corporation.
The Company believes that the terms of the arrangements described above were
fair and not less favorable to the Company than could have been obtained from
unaffiliated parties.
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE COMPANY'S 1989 EMPLOYEE STOCK PURCHASE PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
On May 10, 1989, the Company's stockholders adopted the EMC Corporation 1989
Employee Stock Purchase Plan (the "1989 Plan") and 900,000 shares of Common
Stock were reserved for purchase thereunder. On May 8, 1991 and May 12, 1993,
the 1989 Plan was amended to include an additional 1,800,000 and 1,200,000
shares of Common Stock, respectively. Currently, the total number of shares of
Common Stock that are authorized to be purchased under the 1989 Plan is
3,900,000. As of February 29, 1996, 727,566 of these shares remained available
for future purchases under the 1989 Plan.
On March 6, 1996, the Board of Directors approved an amendment to the 1989
Plan to increase the number of shares available under the 1989 Plan from
3,900,000 shares to 4,900,000 shares. Stockholder approval of this amendment
is required by the terms of the 1989 Plan and for the 1989 Plan to remain
qualified under the Code. Additional shares are needed for use in the 1989
Plan because the currently authorized amount of 3,900,000 shares is close to
being depleted. The Company's current forecast of employee participation in
the 1989 Plan indicates that there are enough shares for approximately two or
three more six-month offerings. The additional 1,000,000 shares should allow
the 1989 Plan to continue to make offerings through several more six-month
offering periods. This amendment to the 1989 Plan will not take effect unless
it is approved by the affirmative votes of the holders of a majority of the
securities present, or represented, and entitled to vote at the Annual
Meeting. If this amendment to the 1989 Plan is not approved by the
stockholders, the Board of Directors will suspend employee participation in
the 1989 Plan once the currently available number of shares is purchased.
As of February 29, 1996 there were approximately 3,500 employees of the
Company and its subsidiaries eligible to participate in the 1989 Plan and
approximately 1,600 employees participating in the 1989 Plan. The Company
cannot now determine the number of shares to be received by all current
executive officers as a group
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<PAGE>
and all employees, including all current officers, who are not executive
officers, as a group, in the event they participate in the 1989 Plan. Members
of the Board of Directors of the Company who are not employed as regular
salaried officers or employees of the Company may not participate in the 1989
Plan. Since inception of the 1989 Plan, there have been thirteen completed
six-month offerings. The closing price of a share of Common Stock on the New
York Stock Exchange on March 29, 1996 was $21.75. The proceeds received by the
Company from the sale of Common Stock pursuant to the 1989 Plan will be used
for the general corporate purposes of the Company.
SUMMARY OF THE 1989 PLAN
If the March 6, 1996 amendment adding 1,000,000 shares is approved, a total
of not more than 4,900,000 shares of Common Stock may be issued under the 1989
Plan. Such shares may be issued from the Company's authorized but unissued
stock or may be shares of reacquired stock. The 1989 Plan provides for the
Company to grant six-month options to participating employees to purchase
shares. Each employee of the Company or a subsidiary of the Company having at
least six months of continuous service on the date of grant of an option is
eligible to participate in the 1989 Plan. However, any employee who
immediately after the grant of an option would be deemed under the provisions
of the Code to own 5% or more of the Common Stock will not be eligible to
receive such an option. In addition, no employee will be granted an option
under the 1989 Plan which would permit his or her right to purchase shares to
accrue at a rate which exceeds $25,000 in fair market value of Common Stock
(determined at the time the option is granted) for any calendar year.
Options are granted twice yearly, on January 1 and July 1, and are
exercisable on the succeeding June 30 or December 31. Options are exercisable
through accumulations of payroll deductions. The amount of the deductions are
determined by the employee, but may not be less than 2% nor more than 10% of
the employee's compensation (up to a maximum of $2,500 in each option period).
The number of shares acquired in a particular option period is determined by
dividing the balance in the employee's withholding account on the last day of
the period by the purchase price per share for the Common Stock determined
under the 1989 Plan. Cash is paid in lieu of fractional shares. The purchase
price for shares is the lower of 85% of the fair market value of the Common
Stock at the time of grant or 85% of said value at the time of exercise.
The number of shares each employee is entitled to purchase is subject to
proportionate reduction in the event the number of shares then available under
the 1989 Plan is otherwise insufficient.
An employee may at any time prior to exercise cancel his or her option, and
upon such cancellation, all accumulated payroll deductions in the employee's
withholding account shall be returned to him or her without interest. During
an employee's lifetime, his or her rights in an option will be exercisable
only by him or her and may not be sold, pledged, assigned, or otherwise
transferred. The employee may elect to have the amount credited to his or her
withholding account at the time of his or her death applied to the exercise of
his or her option for the benefit of named beneficiaries. Nothing in the 1989
Plan is to be construed so as to give an employee the right to be retained in
the service of the Company.
In the event there is a change in the Common Stock due to a stock dividend,
stock split, combination of shares, recapitalization, merger or other capital
change, the aggregate number of shares available under the 1989 Plan and under
any outstanding options, the option price and other relevant provisions of the
1989 Plan will be appropriately adjusted. The Company will have the right to
amend the 1989 Plan at any time, but cannot make an amendment (other than as
stated above) relating to the aggregate number of shares available under the
1989 Plan or the option price without the approval of the stockholders. The
Company may suspend or terminate the
15
<PAGE>
1989 Plan at any time, but such termination will not affect the rights of
employees holding options at the time of termination.
The Compensation Committee administers the 1989 Plan, makes determinations
regarding all questions arising thereunder, and adopts, administers, and
interprets such rules and regulations relating to the 1989 Plan as it deems
necessary or advisable.
FEDERAL INCOME TAX CONSEQUENCES
The Company is advised that, under the Federal income tax laws now in
effect, neither the grant of an option under the 1989 Plan nor the acquisition
of shares upon exercise of such an option will result in taxable income to the
employee or a deduction for the Company.
The Federal income tax treatment of the employee's subsequent disposition of
shares acquired under a 1989 Plan option ("Plan Shares") will vary depending
upon the timing of the disposition. (For these purposes, a "disposition"
includes any transfer of shares other than certain transfers at death, certain
tax-free exchanges, or a mere pledge or hypothecation). If the employee
disposes of Plan Shares within two years after the corresponding option was
granted, or within one year after the Plan Shares were purchased, the employee
will recognize ordinary income on the date of disposition--and the Company
will receive a corresponding deduction--equal to the difference between the
price that the employee paid for the Plan Shares and the fair market value of
the Plan Shares on the date they were purchased. If, on the other hand, the
employee disposes of Plan Shares after both of the periods specified above, or
if the employee dies while owning the Plan Shares, then he or she will
recognize ordinary income (on the date of disposition or death) only to the
extent of the lesser of (i) 15% of the value of the Plan Shares at the time
the option was granted; and (ii) the excess of the fair market value of the
Plan Shares at the time of death or disposition over the amount paid for them.
In this case, the Company will receive no corresponding deduction.
Any ordinary income recognized under the foregoing rules with respect to
Plan Shares will be added to the employee's cost basis in the shares for
purposes of determining capital gain or capital loss upon a sale or exchange
of the Plan Shares by the employee. Thus, the employee will recognize capital
gain upon a sale or exchange only to the extent that the amount received for
the Plan Shares exceeds the amount paid for them plus any amount of ordinary
income recognized under the foregoing rules. If the amount received is less
than the cost of the Plan Shares plus any recognized ordinary income, the
employee will recognize a capital loss. Special basis rules apply, however,
when an employee's Plan Shares are transferred by gift or at death.
The foregoing summary is not a complete description of the Federal income
tax aspects of the 1989 Plan. Moreover, the foregoing summary relates only to
Federal income taxes; there may also be Federal estate and gift tax
consequences associated with the 1989 Plan, as well as foreign, state and
local tax consequences.
PROPOSAL 3
APPROVAL OF AMENDMENTS TO THE COMPANY'S 1992 STOCK OPTION PLAN FOR DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
On May 13, 1992, the Company's stockholders adopted and approved the
Directors Plan and 1,800,000 shares of Common Stock were reserved for issuance
thereunder to directors of the Company. As of February 29,
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<PAGE>
1996, 1,320,000 shares remained available for future option grants under this
plan. Such shares may be issued from the Company's authorized but unissued
stock or may be shares of reacquired stock.
Under the Directors Plan as initially adopted, each Eligible Director (as
defined below), including directors elected by the Board of Directors to fill
Board vacancies, is awarded an option to purchase up to 40,000 shares of
Common Stock on the date he or she first becomes an Eligible Director, subject
to the conditions of the Directors Plan (a "formula option").
On October 20, 1995, the Board of Directors approved an amendment to the
Directors Plan to provide for a vesting schedule for newly granted formula
options of three years instead of five years so as to conform to a director's
period of election to the Board of Directors. On January 24, 1996, the Board
of Directors approved certain amendments to the Directors Plan to provide for
the granting of discretionary, non-formula based options to Eligible Directors
in addition to formula options. Such non-formula based options may be on terms
as determined by the Compensation Committee not inconsistent with the
Directors Plan. Stockholder approval of these amendments is required by the
terms of the Directors Plan. These amendments to the Directors Plan will help
the Company attract and retain highly qualified individuals to serve as
directors of the Company. These amendments to the Directors Plan will not take
effect unless they are approved by the affirmative votes of the holders of a
majority of the securities present, or represented, and entitled to vote at
the Annual Meeting. If these amendments to the Directors Plan are not approved
by the stockholders, the vesting schedule for formula options will remain at
five years and no discretionary, non-formula based grants of options will be
made under the Directors Plan.
The closing price of a share of Common Stock on the New York Stock Exchange
on March 29, 1996 was $21.75. The proceeds received by the Company from the
sale of Common Stock pursuant to the Directors Plan will be used for the
general corporate purposes of the Company.
SUMMARY OF THE DIRECTORS PLAN
A copy of the Directors Plan, as proposed to be amended, is attached as
Exhibit A to this Proxy Statement. The proposed amendments to the plan are
underscored. The following summary of the Directors Plan is qualified in its
entirety by the provisions of the Directors Plan.
An Eligible Director is any director who (1) is not an employee of the
Company; and/or (2) is not a five percent stockholder of the Company or a
person in control of such stockholder. Of the incumbent directors standing for
election at the Annual Meeting, all of them would be Eligible Directors.
The Directors Plan is administered by the Compensation Committee.
The exercise price for each option granted under the Directors Plan will be
at a price per share determined by the Compensation Committee at the time the
option is granted, which price shall not be less than 50% of the fair market
value per share of Common Stock on the date of grant. The Directors Plan
initially provided that formula options would be exercisable in increments of
20% for the shares covered thereby on each of the first through fifth
anniversaries of the grant. On October 20, 1995, the Compensation Committee
amended the vesting schedule for newly granted formula options to a period of
three years instead of five years so as to conform to a director's period of
election to the Board of Directors. Subject to stockholder approval, formula
options granted subsequent to such amendment will be exercisable in increments
of 33 1/3% for the shares covered thereby on each of the first through third
anniversaries of the grant. Non-formula based options will be exercisable at
such time or times as the Compensation Committee shall determine.
17
<PAGE>
All options expire ten years after the date of grant. Under the Directors
Plan, previously unexercised options terminate and are forfeited automatically
upon the termination of the director's service with the Company, unless the
Compensation Committee or the Board of Directors specifies otherwise. However,
if a director dies at a time when he or she is entitled to exercise an option,
then the portion formerly exercisable by the director may be exercised by the
director's executor or administrator, or by the person to whom the option is
transferred under the applicable laws of descent or distribution, within three
years of the death of the director. Shares which are not delivered because of
termination of options may be reused for other options.
In the event of a stock dividend, stock split or other change in corporate
structure or capitalization affecting the Common Stock, the number and kind of
shares of stock or securities of the Company to be subject to the Directors
Plan and to options then outstanding or to be granted thereunder, and the
option price will be appropriately adjusted by the Compensation Committee,
whose determination will be binding on all persons. In the event of a
dissolution, liquidation, consolidation or merger in which the Company is not
the surviving corporation, or which results in the acquisition of
substantially all of the Company's stock by a single person or entity or by a
group of persons and entities acting in concert, all outstanding options will
thereupon terminate, provided that at least twenty days prior to the effective
date of any such dissolution, liquidation, consolidation or merger, the
Compensation Committee may make all outstanding options immediately
exercisable or arrange to have the surviving corporation grant replacement
options for the option holders.
FEDERAL INCOME TAX CONSEQUENCES
All options granted under the Directors Plan will be nonstatutory options
for Federal tax purposes. No income results upon the grant of a nonstatutory
option. When an option holder exercises a nonstatutory option he or she will
realize ordinary income. Generally such income will be realized at the time of
exercise and in an amount equal to the excess, measured at the time of
exercise, of the then fair market value of the Common Stock over the option
price. The Company will generally be entitled to a deduction for Federal
income tax purposes equal to the amount of ordinary income realized by the
option holder, subject to certain reporting requirements.
The foregoing summary is not a complete description of Federal income tax
aspects of the Directors Plan. Moreover, the foregoing summary relates only to
Federal income taxes; there may also be Federal estate and gift tax
consequences associated with the Directors Plan, as well as foreign, state and
local tax consequences.
STOCKHOLDER PROPOSALS
To be eligible for inclusion in the Company's Proxy Statement, stockholder
proposals intended to be presented at the 1997 Annual Meeting of Stockholders
must be received at EMC's principal executive offices no later than December
6, 1996.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors have appointed Coopers & Lybrand L.L.P., who have
served as the Company's auditors since 1984, to examine the financial
statements of the Company for fiscal year 1996. The Company expects that
representatives of Coopers & Lybrand L.L.P. will be present at the Annual
Meeting, and will be given the opportunity to make a statement if they desire
to do so and to respond to appropriate questions.
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COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of the Company's Common
Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange.
Executive officers, directors and greater than ten percent stockholders are
required by SEC regulations to furnish the Company with all copies of Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the fiscal year
ended December 30, 1995, all filing requirements were complied with in a
timely fashion except for the following: Richard B. Plummer, a former
executive officer of the Company, made one late filing, reporting three
transactions.
BY-LAW AMENDMENT
On July 21, 1995, the Board of Directors of the Company voted to amend the
By-laws to provide that special meetings of stockholders may be called only by
the Board of Directors, the Chairman of the Board or upon the written
application of stockholders who hold 85% in interest of the Common Stock of
the Company entitled to be voted at the proposed meeting.
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EXHIBIT A
EMC CORPORATION
1992 EMC CORPORATION STOCK OPTION PLAN FOR DIRECTORS,
AS AMENDED JANUARY 24, 1996
1. PURPOSE
The purpose of this 1992 Stock Option Plan for Directors (the "Plan") is to
advance the interests of EMC Corporation (the "Company") by enhancing the
ability of the Company to attract and retain directors who are in a position
to make significant contributions to the success of the Company and to reward
directors for such contributions through ownership of shares of the Company's
Common Stock (the "Stock").
2. ADMINISTRATION
The Plan shall be administered by the Executive Compensation and Stock
Option Committee (the "Committee") of the Board of Directors (the "Board") of
the Company. The Committee shall have authority, not inconsistent with the
express provisions of the Plan (a) to grant options in accordance with the
Plan to such directors as are eligible to receive options; (b) to prescribe
the form or forms of instruments evidencing options and any other instruments
required under the Plan and to change such forms from time to time; (c) to
adopt, amend and rescind rules and regulations for the administration of the
Plan; and (d) to interpret the Plan and decide any questions and settle all
controversies and disputes that may arise in connection with the Plan. Such
determinations of the Committee shall be conclusive and shall bind all
parties. Subject to Section 7, the Committee shall also have the authority,
both generally and in particular instances, to waive compliance by a director
with any obligation to be performed by him or her under an option and to waive
any condition or provision of an option.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective on the date on which the Plan is approved by
the stockholders of the Company. No option shall be granted under the Plan
after the completion of ten years from the date on which the Plan was adopted
by the Board, but options granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
(a) Number of Shares. Subject to adjustment as provided in Section 4(c), the
aggregate number of shares of Stock that may be delivered upon the exercise of
options granted under the Plan shall be 1,800,000. If any option granted under
the Plan terminates without having been exercised in full, the number of
shares of Stock as to which such option was not exercised shall be available
for future grants within the limits set forth in this Section 4(a).
(b) Shares to be Delivered. Shares delivered under the Plan shall be
authorized but unissued Stock or, if the Board so decides in its sole
discretion, previously issued Stock acquired by the Company and held in
treasury. No fractional shares of Stock shall be delivered under the Plan.
(c) Changes in Stock. In the event of a stock dividend, stock split or other
change in corporate structure or capitalization affecting the Stock, the
number and kind of shares of stock or securities of the Company to be
A-1
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subject to options then outstanding or to be granted under the Plan, and the
option price, and other relevant provisions shall be appropriately adjusted by
the Committee, whose determination shall be binding on all persons.
5. ELIGIBILITY FOR OPTIONS
Directors eligible to receive options under the Plan ("Eligible Directors")
shall be those directors who (i) are not employees of the Company; and (ii)
are not holders of more than 5% of the outstanding shares of the Stock or
persons in control of such holders.
6. TERMS AND CONDITIONS OF OPTIONS
(a) Formula Options. Eligible Directors who are directors on the date of
-------
stockholder approval of the Plan shall be awarded options to purchase up to
40,000 shares of Stock. Following stockholder approval of the plan, each newly
elected Eligible Director shall be awarded options to purchase up to 40,000
shares of Stock on the date of his or her first election.
(b) Discretionary Options. In addition to the formula options provided for
----------------------------------------------------------------------
above, the Committee may award options to purchase shares of Stock to Eligible
- ------------------------------------------------------------------------------
Directors on such terms as it may determine not inconsistent with this Plan.
- ----------------------------------------------------------------------------
(c) Exercise Price. The exercise price of each option shall be not less than
50% of the fair market value per share of the Stock at the time of the grant.
For this purpose "fair market value" shall mean the last sales price of the
Stock as reported on the New York Stock Exchange on the date of the grant
(based on The Wall Street Journal report of composite transactions) or, if the
Stock is no longer listed on such Exchange, it shall have the same meaning as
it does in the provisions of the Internal Revenue Code of 1986 (the "Code")
and the regulations thereunder applicable to incentive options.
(d) Duration of Options. The latest date on which an option may be exercised
(the "Final Exercise Date") shall be the date which is ten years from the date
the option was granted.
(e) Exercise of Options.
(1) Each formula option shall become exercisable in increments of 33 1/3% of
------- -------
the shares covered thereby on each of the first through third anniversaries of
-----
the grant. Each discretionary option shall become exercisable at such time or
------------------------------------------------------------------
times as the Committee shall determine.
- --------------------------------------
(2) Any exercise of an option shall be in writing, signed by the proper
person and delivered or mailed to the Company, accompanied by (a) an option
exercise notice and any other documents required by the Committee; and (b)
payment in full for the number of shares for which the option is exercised.
(3) If any option is exercised by the executor or administrator of a
deceased director, or by the person or persons to whom the option has been
transferred by the director's will or the applicable laws of descent and
distribution, the Company shall be under no obligation to deliver Stock
pursuant to such exercise until the Company is satisfied as to the authority
of the person or persons exercising the option.
(4) The Company shall have the right to settle any option, and to terminate
the rights of the holder thereof, by paying to the option holder the
difference between the fair market value of the Stock at the time of
settlement and the purchase price.
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(f) Payment for and Delivery of Stock. Stock purchased under the Plan shall
be paid for as follows: (i) in cash or by certified check, bank draft or money
order payable to the order of the Company; (ii) through the delivery of shares
of Stock having a fair market value on the last business day preceding the
date of exercise equal to the purchase price; or (iii) by a combination of
cash and Stock as provided in clauses (i) and (ii) above.
An option holder shall not have the rights of a stockholder with regard to
awards under the Plan except as to Stock actually received by him or her under
the Plan.
The Company shall not be obligated to deliver any shares of Stock (a) until,
in the opinion of the Company's counsel, all applicable Federal and state laws
and regulations have been complied with; and (b) if the outstanding Stock is
at the time listed on any stock exchange, until the shares to be delivered
have been listed or authorized to be listed on such exchange upon official
notice of issuance; and (c) until all other legal matters in connection with
the issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to exercise of
the option, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
(g) Nontransferability of Options. So long as nontransferability is required
to cause the award of an option to be exempt under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, no option may be transferred
other than by will or by the laws of descent and distribution, and during a
director's lifetime an option may be exercised only by him or her.
(h) Death. If a director dies at the time he or she is entitled to exercise
an option, then the portion formerly exercisable by the director may be
exercised by the director's executor or administrator, or by the person to
whom the option is transferred under the applicable laws of descent and
distribution, within three years of the death of the director, subject to
earlier termination of an option pursuant to Section 6(c).
(i) Other Termination of Status of Director. All previously unexercised
options terminate and are forfeited automatically upon the termination of the
director's service with the Company, unless the Committee or the Board of
Directors specifies otherwise.
(j) Mergers, etc. In the event of a dissolution, liquidation, consolidation
or merger in which the Company is not the surviving corporation, or which
results in the acquisition of substantially all of the Company's stock by a
single person or entity or by a group of persons and entities acting in
concert all outstanding options will thereupon terminate, provided at least
twenty days prior to the effective date of any such dissolution, liquidation,
consolidation or merger, the Committee may either (i) make all outstanding
options immediately exercisable or (ii) arrange to have the surviving
corporation grant replacement options for the option holders.
7. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of options to a director shall
affect the Company's right to grant to such director or any director options
that are not subject to the Plan, to issue to such directors Stock as a bonus
or otherwise, or to adopt other plans or arrangements under which Stock may be
issued to directors.
The Committee may at any time discontinue granting options under the Plan.
The Committee may at any time, or times, amend the Plan for the purpose of
satisfying any changes in applicable laws or regulations or for
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<PAGE>
any other purpose which may at the time be permitted by law, or may at any
time terminate the Plan as to any further grants of options, provided that
(except to the extent expressly required or permitted herein above) no such
amendment shall, without the approval of the stockholders of the Company, (a)
increase the maximum number of shares available under the Plan; (b) increase
the number of options to be granted to Eligible Directors; (c) amend the
definition of Eligible Directors so as to enlarge the group of directors
eligible to receive options under the Plan; (d) reduce the price at which
options may be granted other than as permitted in the Plan; or (e) amend the
provisions of this Section 7.
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<PAGE>
PROXY PROXY
EMC CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, MAY 8, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Colin G. Patteson and Paul T. Dacier, and each
of them, proxies with full power of substitution to each, to represent and to
vote at the Annual Meeting of Stockholders of EMC Corporation, to be held May 8,
1996, at 10:00 a.m., local time at 5-9 Technology Drive, Milford, Massachusetts,
and at any adjournments thereof, all the shares of Common Stock, $.01 par value
per share, of EMC Corporation that the undersigned would be entitled to vote if
personally present. The undersigned instructs such proxies or their substitutes
to act on the following matters as specified by the undersigned, and to vote in
such manner as they may determine on any other matters that may properly come
before the meeting.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books of the Company.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED?
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
<TABLE>
<C> <S> <C> <C> <C> <C> <C> <C> <C>
For Against Abstain
[_] PLEASE MARK VOTES 2. To approve the addition of [_] [_] [_]
AS IN THIS EXAMPLE 1,000,000 shares of Common
With For All Stock, $.01 par value, to the
For hold Except 1989 Employee Stock Purchase Plan.
1. Election of Directors: [_] [_] [_] THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSAL 2.
Electing three directors to serve
a three-year term as Class III Directors
and for all nominees. 3. To approve certain amendments to the
1992 Stock Option Plan for Directors
Michael J. Cronin as described in the Company's Proxy
Maureen E. Egan Statement.
W. Paul Fitzgerald For Against Abstain
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" PROPOSAL 1. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSAL 3.
If you do not wish your shares voted "For" a
particular nominee, mark the "For All Except"
box and strike a line through the nominee(s) name. THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED
Your shares will be voted for the remaining nominee(s). AS SPECIFIED. IF NO CHOICE IS SPECIFIED, THEN
THIS PROXY WILL BE VOTED IN FAVOR OF ELECTING THE
RECORD DATE SHARES: THREE NOMINEES NOTED HEREON TO THE BOARD OF
DIRECTORS TO SERVE FOR A THREE-YEAR TERM AS CLASS
III DIRECTORS, APPROVING THE ADDITION OF SHARES TO
Please be sure to sign and date this Proxy. Date: EMC CORPORATION'S 1989 EMPLOYEE STOCK PURCHASE
PLAN AND APPROVING CERTAIN AMENDMENTS TO EMC
CORPORATION'S 1992 STOCK OPTION PLAN FOR
__________________________________________________________ DIRECTORS. A VOTE FOR THE ELECTION OF DIRECTORS
Stockholder sign here Co-owner sign here INCLUDES DISCRETIONARY AUTHORITY TO VOTE FOR A
SUBSTITUTE IF ANY NOMINEE IS UNABLE TO SERVE OR
FOR GOOD CAUSE WILL NOT SERVE. IN THEIR
DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.
Mark box at right if a change of [_]
address has been noted on the reverse
side of this card.
</TABLE>
