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SCHEDULE 14A INFORMATION
(RULE 14A-101)
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:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-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] No fee required
[_] 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 transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] 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:
________________________________________________________________________
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COLOR LOGO
April 4, 1997
Dear Stockholder:
We cordially invite you to attend our 1997 Annual Meeting, which will be held
on Wednesday, May 7, 1997, 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 two Class I members to the Board of Directors for a three-year term and to
approve an increase in the number of shares of authorized common stock of the
Company and the addition of 6,000,000 shares of common stock to the 1993 Stock
Option Plan.
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 7th.
Very truly yours,
(ART)
RICHARD J. EGAN
Chairman of the Board
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EMC CORPORATION
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
MAY 7, 1997
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 7, 1997, at 10:00 a.m. for the following purposes:
1. To elect two members to the Board of Directors to serve for a three-
year term as Class I Directors.
2. To amend the Company's Articles of Organization to increase the number
of shares of authorized common stock, $.01 par value, to 750,000,000 shares
from the current authorization of 500,000,000 shares.
3. To amend the Company's 1993 Stock Option Plan to increase the number of
shares available for grant under the plan to 14,000,000 shares from 8,000,000
shares.
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 27, 1997 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 1996 Annual Report to Stockholders and Annual Report on Form 10-K for
1996 are enclosed herewith.
By order of the Board of Directors
DAVID B. WALEK, Clerk
April 4, 1997
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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 7, 1997, 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 35 Parkwood Drive, Hopkinton,
Massachusetts 01748. This Proxy Statement is first being distributed to
stockholders on or about April 4, 1997.
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 27, 1997, EMC had outstanding ________shares of Common Stock. Each
share of Common Stock entitles the holder of record thereof at the close of
business on March 27, 1997 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 I Directors, the two persons listed under "Election of
Director" 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 two nominees who receive the greatest number of
votes properly cast will be elected as Class I Directors. Neither abstentions
nor broker non-votes will have any effect
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upon the outcome of voting with respect to the election of directors. The effect
of an abstention or a broker non-vote will be the same as a vote against
adoption of Proposal 2. A broker non-vote will have no effect upon the outcome
of voting on Proposal 3. However, an abstention will have the same effect as a
vote against Proposal 3.
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
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES LISTED BELOW.
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. 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
Class I 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 two the number of Class I Directors to be
elected at the 1997 Annual Meeting. Of the current total of eight directors, two
Class I Directors have terms expiring at the 1997 Annual Meeting, three Class II
Directors have terms expiring at the 1998 Annual Meeting and three Class III
Directors have terms expiring at the 1999 Annual Meeting. The two directors
whose terms expire at the 1997 Annual Meeting have been nominated by the Board
of Directors for election at such meeting. All of the nominees for director are
now Class I members of the Board of Directors. Each Class I Director elected at
the 1997 Annual Meeting will serve until the 2000 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 I
Director to be elected at the Annual Meeting and for each Class II Director and
Class III Director. All of the directors were previously elected by the
stockholders.
NOMINEES TO SERVE AS DIRECTORS FOR A THREE-YEAR TERM EXPIRING AT
THE 2000 ANNUAL MEETING (CLASS I DIRECTORS)
RICHARD J. EGAN
Mr. Egan, age 61, 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 and the Stock
Repurchase and Bond Redemption Oversight Committee of EMC.
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JOHN F. CUNNINGHAM
Mr. Cunningham, age 54, 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 and Bond Redemption Oversight Committee of
EMC.
DIRECTORS SERVING A TERM EXPIRING AT THE
1998 ANNUAL MEETING (CLASS II DIRECTORS)
JOHN R. EGAN
Mr. Egan, age 39, has been a Director of the Company since May 1992. From
January 1992 to July 1996, he was Executive Vice President, Sales and
Marketing of EMC. 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. Mr. Egan has
been on a leave of absence from the Company solely in his capacity as an
executive officer since July 1996. Mr. Egan is a member of the Audit
Committee, the Executive Compensation and Stock Option Committee and the
Mergers and Acquisitions Committee of EMC.
JOSEPH F. OLIVERI
Mr. Oliveri, age 48, 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 Stock Repurchase and
Bond Redemption Oversight Committee of EMC.
MICHAEL C. RUETTGERS
Mr. Ruettgers, age 54, 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 System, a public utility company.
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DIRECTORS SERVING A TERM EXPIRING AT THE
1999 ANNUAL MEETING (CLASS III DIRECTORS)
MICHAEL J. CRONIN
Mr. Cronin, age 58, 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 59, 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.
W. PAUL FITZGERALD
Mr. Fitzgerald, age 56, 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 and Bond Redemption
Oversight Committee of EMC.
During the fiscal year ended December 31, 1996, the EMC Board of Directors
held eight 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 they were a member in 1996.
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE COMPANY'S ARTICLES OF ORGANIZATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
The Articles of Organization of the Company currently authorize the issuance
of 500,000,000 shares of Common Stock, $.01 par value, and 25,000,000 shares of
Series Preferred Stock, $.01 par value ("Preferred Stock"). On January 22, 1997,
the Board of Directors voted to propose and declare advisable an amendment to
the Company's Articles of Organization to increase the number of authorized
shares of Common Stock from 500,000,000 shares to 750,000,000 shares.
The affirmative vote of the holders of a majority of the outstanding shares is
required to approve this amendment to the Company's Articles of Organization.
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As of March 15, 1997, there were a total of 276,370,901 shares of Common Stock
outstanding or reserved for issuance, with no shares held by the Company as
treasury stock. This total number of shares includes shares reserved for
issuance under the Company's 1985 Stock Option Plan, as amended (the "1985
Plan"), the Company's 1989 Employee Stock Purchase Plan, as amended (the "1989
Plan"), the Company's 1992 Stock Option Plan for Directors, as amended (the
"1992 Directors Plan") and the Company's 1993 Stock Option Plan, as amended (the
"1993 Plan") and the shares issuable upon conversion of the Company's 3 1/4%
Convertible Subordinated Notes due 2002 (the "3 1/4% Notes"). As of the date of
this Proxy Statement, there are no shares of Preferred Stock issued or
outstanding.
The proposed amendment would increase the number of shares of the existing
class of Common Stock available for issuance by the Company, but would have no
effect upon the terms of the Company's Common Stock or the rights of holders of
such Common Stock. Holders of Common Stock are entitled to one vote for each
share held and have no preemptive or other rights to subscribe for additional
shares from the Company. There are no cumulative voting rights, with the result
that holders of more than 50% of the shares of Common Stock are able to elect
100% of the class of the Company's directors to be elected at any annual meeting
of stockholders or special meeting in lieu thereof. All outstanding shares of
Common Stock are, and those issuable upon the exercise of options and the
conversion of the 3 1/4% Notes will be, when issued and fully paid for, validly
issued and fully paid and non-assessable. Holders of Common Stock are entitled
to such dividends as may be declared by the Board of Directors out of funds
legally available therefor. On liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to receive their pro rata
portion of the net assets of the Company remaining after the payment of all
creditors and liquidation preferences, if any.
The Board of Directors believes that the proposed increase in authorized
shares of Common Stock is desirable to enhance the Company's flexibility in
connection with possible future actions, such as stock splits, stock dividends,
financings, corporate mergers, acquisitions, use in employee benefit plans or
other corporate purposes. Having such authorized shares available for issuance
in the future would allow shares of Common Stock to be issued without the
expense and delay of a special stockholders meeting. If this proposal is
adopted, the additional authorized shares of Common Stock (as well as all
currently authorized but unissued shares of Common Stock) would be available for
issuance without further action by the stockholders, subject, however, to the
requirements of the New York Stock Exchange that stockholder approval be
obtained for certain issuances of additional shares of Common Stock, including
those in excess of 20% of the number of shares then outstanding. If additional
shares of Common Stock are issued as a result of the proposed increase in
authorized shares of Common Stock, this may have a dilutive effect on the voting
power of existing holders of Common Stock and on earnings per share. In
addition, the proposed increase in authorized shares of Common Stock could have
the effect of rendering more difficult a change in control of the Company.
As of the date of this Proxy Statement, the Company has no agreements,
commitments, or plans with respect to the sale or issuance of additional shares
of Common Stock except as described under the 1985 Plan, the 1989 Plan, the 1992
Directors Plan, the 1993 Plan and the obligation to issue shares of Common Stock
upon conversion of the 3 1/4% Notes.
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE COMPANY'S 1993 STOCK OPTION PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
On May 12, 1993, the Company's stockholders adopted and approved the 1993 Plan
and 6,000,000 shares of Common Stock were reserved for issuance thereunder to
employees of the Company and its subsidiaries. On May 10, 1995, the 1993 Plan
was amended to include an additional 2,000,000 shares of Common Stock.
Currently, the total number of shares of Common Stock that are authorized to be
issued
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under the 1993 Plan is 8,000,000. As of March 15, 1997, ______ shares remained
available for future option grants under this plan.
On January 22, 1997, the Board of Directors approved an amendment to the 1993
Plan to increase the number of shares available under the plan from 8,000,000
shares to 14,000,000 shares. The affirmative vote of a majority of the shares
present, in person or by proxy, and entitled to vote at the Annual Meeting is
required to approve this amendment to the 1993 Plan. The Company's current
forecast for the 1993 Plan indicates that there are currently insufficient
shares for projected grants of options through the next several month period.
Additional shares are needed for use in the 1993 Plan so that stock option
grants can continue to be made to attract and retain key employees of the
Company and its subsidiaries. If this amendment to the 1993 Plan is not approved
by the stockholders, no grants of options will be made under the 1993 Plan once
the presently available number of options are granted.
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
1993 Plan. The closing price of a share of Common Stock on the New York Stock
Exchange on March 27, 1997 was $______. The proceeds received by the Company
from the sale of Common Stock pursuant to the 1993 Plan will be used for the
general corporate purposes of the Company.
SUMMARY OF THE 1993 PLAN
If the January 22, 1997 amendment adding 6,000,000 shares is approved, a total
of 14,000,000 shares of Common Stock will be reserved for issuance to employees
and officers of the Company and its subsidiaries under the 1993 Plan. Options
granted pursuant to the 1993 Plan may, at the discretion of the Board of
Directors or the Executive Compensation and Stock Option Committee (the
"Compensation Committee"), be incentive stock options. The 1993 Plan is not
qualified under Section 401(a) of the Code and is not subject to the provisions
of the Employee Retirement Income Security Act of 1974.
The Board of Directors or the Compensation Committee approves all transactions
under the 1993 Plan and determines the provisions of options to be granted under
the 1993 Plan. The Compensation Committee was appointed by and serves at the
pleasure of the Board of Directors and, subject to the 1993 Plan, each of the
Board of Directors and the Compensation Committee has full authority to
interpret the terms of the 1993 Plan and options granted under the 1993 Plan, to
adopt, amend and rescind rules and guidelines for the administration of the 1993
Plan and for its own acts and proceedings and to decide all questions and settle
all controversies and disputes which may arise in connection with the 1993 Plan;
provided that any change to the terms of an option will be approved by the Board
of Directors to the extent such change would be deemed to be a new option grant
or such terms relate to a subsequent transaction that would not be exempt from
Section 16(b) of the Securities Exchange Act of 1934, in the absence of such
approval.
The Board of Directors or the Compensation Committee approves conclusively,
consistent with the 1993 Plan, the individuals to receive options, the number
and exercise price of the options, the time when the options become exercisable,
and whether such options will be incentive stock options.
The shares of Common Stock subject to the 1993 Plan may be adjusted to give
effect to stock dividends, stock splits and the like. The Common Stock delivered
to option holders upon the exercise of options may, in the discretion of the
Board of Directors, be either authorized but unissued shares or shares held by
the Company in treasury.
Each of the Board of Directors and the Compensation Committee may, at its
discretion, approve an option grant to an eligible person under the 1993 Plan.
An eligible person to participate in the 1993 Plan is any employee of the
Company or any of its subsidiaries. As of March 15, 1997, there were
approximately 4,700 employees eligible to participate in the 1993 Plan and
approximately 2,700 employees participating in the 1993 Plan. The number of
options which may be granted to any eligible
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person is also within the discretion of each of the Board of Directors and the
Compensation Committee, subject to certain conditions concerning incentive stock
options.
Options granted under the 1993 Plan are exercisable at such time or times as
the Board of Directors or the Compensation Committee shall determine. However,
no incentive stock option may be exercisable after ten years from the date of
its grant (five years in the case of a 10% or more stockholder).
Under the 1993 Plan, options are transferable only by will, by the laws of
descent and distribution or pursuant to a qualified domestic relations order,
and may be exercised by a person other than the option holder only in the
circumstances outlined below; provided that the Board of Directors or the
Compensation Committee may allow for transferability of nonstatutory stock
options to immediate family members of the option holder or to trusts,
partnerships or other entities controlled by and of which the beneficiaries are
immediate family members of the option holder.
Under the 1993 Plan, all previously unexercised options terminate and are
forfeited automatically upon the termination of the option holder's employment
with the Company, unless the Compensation Committee or the Board of Directors
specifies otherwise. However, if an option holder dies at a time when he or she
is entitled to exercise an option, then the portion formerly exercisable by the
option holder may be exercised by the option holder'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 option holder,
subject, in the case of incentive stock options, to the limitations stated above
on their exercise. Shares which are not delivered because of termination of
options may be reused for other options.
The exercise price of stock options granted under the 1993 Plan is determined
by the Board of Directors or the Compensation Committee on the date of grant,
subject to limitations contained in the 1993 Plan, including the limitation that
the exercise price may not be less than par value. However, there are certain
pricing restrictions for incentive stock options as set forth below.
Payment for shares to be granted upon exercise of options must be made in full
in cash or by bank draft, check or money order before the shares are delivered.
Part or all of the purchase price may also be paid in shares of Common Stock. A
person electing to exercise an option must give written notice to the Company of
the election, accompanied by any documents required by the Board of Directors or
the Compensation Committee and the purchase price. The Board of Directors or the
Compensation Committee may require the person to fulfill any conditions it
stipulates that are not inconsistent with the terms of the 1993 Plan. When
options other than incentive stock options are exercised or any options are
exercised by an individual subject to taxation in a foreign jurisdiction, the
Company may require the option holder to remit to the Company applicable taxes
prior to the delivery of any shares of Common Stock. If at the time an incentive
stock option is exercised, the Compensation Committee determines that the
Company could be liable for withholding applicable taxes upon a disposition of
the underlying Common Stock, the Compensation Committee may require as a
condition of exercise that the option holder agree to notify the Company of any
disposition of the underlying Common Stock and provide the Company with such
security as the Compensation Committee deems adequate to meet the potential
liability of the Company for withholding of taxes.
The Board of Directors or the Compensation Committee may at any time
discontinue granting options under the 1993 Plan. The Board of Directors may
amend the 1993 Plan except that no such amendment may adversely affect the
rights of any option holder without his or her consent and except that no such
amendment will, without the approval of the stockholders of the Company,
increase the number of shares available under the 1993 Plan, change the group of
employees eligible to receive options, reduce the exercise price of outstanding
incentive stock options, reduce the price at which future incentive stock
options may be granted, extend the time within which options may be granted,
alter the 1993 Plan so that options intended to qualify as incentive stock
options under the Code would not do so, or change the amendment provisions of
the 1993 Plan.
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No grant of incentive stock options can be made under the 1993 Plan after May
12, 2003, but options granted before that day may be exercised after it.
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 1993 Plan and
the 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, 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 Company will either (i) make all
outstanding options immediately exercisable or (ii) arrange to have the
surviving corporation grant replacement options to the option holders.
The exercise price of incentive stock options may not be less than 100% of the
fair market value of the Common Stock at the time the option is granted, except
as stated otherwise below. The aggregate fair market value, determined at the
time the option is granted, of the stock for which any person may be granted
incentive stock options which become exercisable for the first time by such
person in any calendar year cannot exceed the sum of $100,000 (determined at the
time such option is granted). No incentive stock option will be granted to a
person who is not an "employee" as defined in the applicable provisions of the
Code and regulations issued thereunder. No incentive stock option will be
granted to any person who at the time of the grant owns, directly or indirectly
through application of the attribution rules of the Code, stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of its subsidiaries unless the option price at the time of the grant
is at least 110% of the fair market value of the stock subject to the option and
the period of the option does not exceed five years from the date of grant.
FEDERAL INCOME TAX CONSEQUENCES
In general, neither the grant nor the exercise of an incentive stock option
granted under the 1993 Plan will result in taxable income to the option holder
or a deduction to the Company. If the option holder does not dispose of stock
received upon exercise of an incentive stock option within two years from the
date the option is granted or within one year after the date of exercise, any
later sale of such stock will result in a long-term capital gain or loss.
If shares received upon exercising an incentive stock option are disposed of
before the holding period requirements described above have been satisfied, the
option holder will generally realize ordinary income at the time of disposition
of the stock. The amount of such ordinary income will generally be equal to the
difference between the fair market value of the stock on the date of exercise
and the option price. In the case of a disqualifying disposition which is a sale
with respect to which loss (if sustained) would be recognized, then the amount
of ordinary income will not exceed the excess of the amount realized on such
sale over the adjusted basis of the stock, that is, in general, the price paid
for the stock. 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 any necessary withholding and reporting requirements.
Certain option holders exercising incentive stock options may become subject
to the alternative minimum tax, under which the difference between (i) the fair
market value of stock purchased under incentive stock options, determined on the
date of exercise, and (ii) the exercise price will be an item of tax preference
in the year of exercise for purposes of the alternative minimum tax.
Options granted under the 1993 Plan which are not incentive stock options are
"nonstatutory options". 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 subject to withholding. Generally such income
10
<PAGE>
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 withholding and reporting
requirements.
The foregoing summary is not a complete description of Federal income tax
aspects of the 1993 Plan. Moreover, the foregoing summary relates only to
Federal income taxes; there may also be Federal estate and gift tax consequences
associated with the 1993 Plan, as well as foreign, state and local tax
consequences.
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, 1997 (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 __, 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) 6,218,800 2.7%
Maureen E. Egan(3) 1,700,001 **
Michael J. Cronin -- --
John F. Cunningham*(4) 48,000 **
John R. Egan 422,150 **
W. Paul Fitzgerald(5) 36,852 **
Raymond Fortune 6,750 **
Michael A. Klayko(6) 15,000 **
Robert T. O'Connell(7) 20,150 **
Joseph F. Oliveri(8) 32,000 **
Michael C. Ruettgers(9) 344,605 **
Putnam Investments, Inc.(10) 16,019,560 6.9%
FMR Corp.(11) 15,619,456 6.7%
All directors and executive officers as 8,943,408 3.9%
a group (16 persons)(12)
- ---------------------------
</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 2,122,151 shares held by Mr. Egan's wife, Maureen E. Egan, and
John R. Egan, as to which Mr. Egan disclaims beneficial ownership.
(3) Excludes 6,640,950 shares held by Mrs. Egan's husband, Richard J. Egan, and
John R. Egan, as to which Mrs. Egan disclaims beneficial ownership.
11
<PAGE>
(4) Mr. Cunningham is deemed to own these shares by virtue of a currently
exercisable option to purchase these shares.
(5) Mr. Fitzgerald is deemed to own 4,333 of these shares by virtue of a
currently exercisable option to purchase these shares.
(6) Mr. Klayko is deemed to own these shares by virtue of currently exercisable
options to purchase these shares.
(7) Mr. O'Connell is deemed to own 20,000 of these shares by virtue of
currently exercisable options to purchase these shares.
(8) Mr. Oliveri is deemed to own these shares by virtue of a currently
exercisable option to purchase these shares.
(9) Excludes 2,400 shares owned by Mr. Ruettgers' children, as to which he
disclaims beneficial ownership.
(10) EMC has relied on the Schedule 13G filed jointly by Marsh & McLennan
Companies, Inc., Putnam Investments, Inc., Putnam Investment Management,
Inc. and The Putnam Advisory Company, Inc. dated January 27, 1997 for
information relating to their share ownership. Putnam Investments, Inc. is
a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. Of the
16,019,560 shares of Common Stock beneficially owned by Putnam Investments,
Inc., 13,980,030 shares are beneficially owned by Putnam Investment
Management, Inc. and 2,039,530 shares of Common Stock are beneficially
owned by The Putnam Advisory Company, Inc., both registered investment
advisers and wholly-owned subsidiaries of Putnam Investments, Inc. With
respect to 1,212,634 shares, Putnam Investments, Inc. shares voting power
with The Putnam Advisory Company, Inc. Putnam Investments, Inc. shares
dispositive power with Putnam Investment Management, Inc. with respect to
13,980,030 shares and shares dispositive power with Putnam Advisory
Company, Inc. with respect to 2,039,530 shares.
(11) EMC has relied on the Schedule 13G of FMR Corp. dated February 14, 1997 for
information relating to its share ownership. Of these shares, FMR Corp. has
the sole power to vote or direct the vote of 1,497,816 shares and the sole
power to dispose of or direct the disposition of 15,619,456 shares.
(12) Includes 108,483 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.
Also excludes shares held by Robert T. O'Connell, who resigned as an
executive officer of the Company as of February 5, 1997.
The address of all persons listed above other than Putnam Investments,
Inc. and FMR Corp. is c/o EMC Corporation, 171 South Street, Hopkinton,
Massachusetts 01748. The address of Putnam Investments, Inc. is One Post
Office Square, Boston, Massachusetts 02109. The address of FMR Corp. is 82
Devonshire Street, Boston, Massachusetts 02109.
12
<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 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------------- -------------
OTHER ANNUAL AWARDS ALL OTHER
-------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- ----------------------------- ------- --------- ----------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Ruettgers......... 1996 397,808 661,479 --- 250,000 2,000(2)
President, Chief 1995 276,700 366,120 --- --- 2,000(2)
Executive Officer 1994 260,000 366,660 --- --- 2,000(2)
and Director
Robert T. O'Connell 1996 234,616 459,989 --- --- 2,000(2)
Senior Vice President 1995(3) 95,096 124,017 27,260(4) 100,000 500(2)
Chief Staff Officer 1994 --- --- --- --- ---
Raymond Fortune.............. 1996 234,327 296,434 --- --- 2,000(2)
Senior Vice President 1995 190,192 217,450 --- 56,250 2,000(2)
International Sales 1994(5) 73,231 122,102 --- 75,000 500(2)
Michael A. Klayko 1996(6) 202,885 273,250 --- 75,000 1,500(2)
Senior Vice President 1995 --- --- --- --- ---
North American Sales 1994 --- --- --- --- ---
Richard J. Egan.............. 1996 105,500 236,400 100,000(7) 1,000,000 291,840(8)
Chairman of the Board 1995 276,700 366,120 --- --- 319,376(8)
and Director 1994 260,000 366,660 --- --- 371,147(8)
- --------------
</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) Mr. O'Connell joined the Company on July 17, 1995.
(4) Includes $21,735 paid to Mr. O'Connell to reimburse him for expenses
associated with his relocation to Massachusetts.
(5) Mr. Fortune joined the Company on July 11, 1994.
(6) Mr. Klayko joined the Company on March 1, 1996.
13
<PAGE>
(7) Represents consulting payments made to Mr. Egan, following his resignation
as an employee of the Company effective June 30, 1996.
(8) Includes the amount of $1,000 for 1996 and $2,000 for each of 1995 and 1994
paid to Mr. Egan's account in the EMC 401K Plan. Also includes $290,840,
$317,376 and $369,147, respectively, for 1996, 1995 and 1994, 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
1996, 1995 and 1994 ($794,496, $829,568 and $768,131, 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 1996, 1995 or 1994.
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 and John R. Egan are Directors 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 (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.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1996 to
the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------
PERCENT
OF TOTAL
NUMBER OF OPTIONS MARKET
OPTIONS GRANTED TO PRICE PER
GRANTED EMPLOYEES EXERCISE SHARE ON
IN IN FISCAL PRICE DATE OF EXPIRATION
NAME 1996 YEAR(1) PER SHARE GRANT DATE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Michael C. Ruettgers (2) 250,000 5.93% $ 9.25 $18.50 7/24/06
Robert T. O'Connell -- -- -- -- --
Raymond Fortune -- -- -- -- --
Michael A. Klayko (3) 75,000 1.78% 20.88 20.88 3/06/06
Richard J. Egan (4) 500,000 11.87% 9.25 18.50 7/24/06
500,000 11.87% 18.50 18.50 7/24/06
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERM
--------------------------------------
NAME 0% 5% 10%
- ----------------------------------------------------------------
<S> <C> <C> <C>
Michael C. Ruettgers (2) $2,312,500 $ 5,220,000 $ 9,682,500
Robert T. O'Connell -- -- --
Raymond Fortune -- -- --
Michael A. Klayko (3) -- 984,750 2,496,000
Richard J. Egan (4) 4,625,000 10,440,000 19,365,000
-- 5,815,000 14,740,000
</TABLE>
(1) The Company granted options representing an aggregate of 4,213,969 shares to
1,322 employees and directors of EMC and its subsidiaries in fiscal 1996
under the 1985 Plan, the 1992 Directors Plan and the 1993 Plan. The above
aggregate includes the grant to Richard J. Egan, Chairman of the Board, as
well as to all employees.
(2) Mr. Ruettgers' options 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 24, 1996.
(3) Mr. Klayko's options 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 March 6, 1996.
14
<PAGE>
(4) Mr. Egan's options were granted under the 1992 Directors Plan and become
exercisable in increments of 33 1/3% over a three-year period. The
terms of such option grants are ten years from the date of the grants, which
was July 24, 1996.
15
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in 1996 by the
named executive officers and the value of such officers' unexercised options at
December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED FISCAL YEAR END AT FISCAL YEAR END
ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ---------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Ruettgers 260,676 $4,487,780 -- 490,000 -- $13,576,270
Robert T. O'Connell -- -- 20,000 80,000 $222,500 $ 890,000
Raymond Fortune 26,250 $ 120,000 -- 90,000 -- $ 1,321,875
Michael A. Klayko -- -- -- 75,000 -- $ 918,750
Richard J. Egan -- -- -- 1,000,000 -- $19,250,000
</TABLE>
16
<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 ___ shall not be incorporated by reference into any
such filings.
REPORT OF THE EXECUTIVE COMPENSATION
AND STOCK OPTION COMMITTEE AND THE BOARD OF DIRECTORS
EMC's compensation philosophy is to tightly link executive pay to corporate
performance and returns to stockholders. A significant portion of an executive's
compensation is tied to the Company's success in meeting one or more specified
performance goals and to appreciation in the Company's market valuation. Thus,
a significant portion of an executive's compensation is at risk. The goals of
the compensation program are to attract and retain exceptional executive talent,
to motivate these executives to achieve the Company's business goals, to link
executive and stockholder interests through equity-based plans, and to recognize
individual contributions as well as overall business results.
Each year the Compensation Committee conducts a full review of the Company's
executive compensation program. As occurred in 1996, this review often includes
a comprehensive report from independent executive compensation consultants
evaluating the effectiveness of the program and a comparison of the Company's
executive compensation, corporate performance, stock price appreciation and
total return to stockholders to a peer group of public high technology
companies. The Compensation Committee reviews the selection of peer companies
used for compensation analysis annually. 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
generally does not compete with such companies for executive talent 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 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 similar
companies.
The key elements of the Company's executive compensation are generally base
salary, bonus and stock options. The Compensation Committee's policies with
respect to each of the elements are discussed below. While the elements of
compensation are considered separately, the Compensation Committee also takes
into account the complete compensation package provided by the Company to the
individual executive.
17
<PAGE>
BASE SALARIES
Base salaries for executive officers are determined by evaluating the
responsibilities of the position 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 are generally
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, more tightly coupling
executive interests with those of stockholders.
Annual salary adjustments are determined by evaluating the financial
performance and, where appropriate, certain non-financial performance measures,
of the Company, and the performance of each executive officer. For 1996, 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 1996, 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 1995, 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, in particular the need to bring Mr. Ruettgers' base
salary more in line with base salaries of chief executive officers of peer
companies, the Compensation Committee believes that the significant increase in
Mr. Ruettgers' 1996 base salary from that of 1995 is well justified.
EXECUTIVE BONUSES
The Company's executive officers are eligible for an annual cash bonus.
Individual and corporate performance objectives, both quarterly and annual, 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 1996 was based on a fractional percentage of the
Company's pre-tax profits. As in the case of base salary, the Compensation
Committee also considers individual non-financial performance measures and,
where appropriate, business unit performance measures, in determining bonuses.
Mr. Ruettger's bonus for 1996 was largely based on the Company's performance
in 1996. In 1996, the Company exceeded its performance goals by a significant
margin. In awarding the bonus to Mr. Ruettgers, the Compensation Committee also
considered on a subjective basis the performance of the Common Stock and the
role of Mr. Ruettgers in promoting the long-term strategic growth of the Company
and, in particular, the Company's growth in market share. Based on the above
factors, Mr. Ruettgers received a significant increase over the bonus paid to
him in 1995.
18
<PAGE>
STOCK OPTIONS
The purpose of the Company's stock option plans is to provide an additional
incentive to certain employees of the Company to work to maximize stockholder
value. Generally, stock options vest in equal increments over five years. This
approach is designed to act as a retention device for key employees and to
encourage employees to take into account the long-term interests of the Company.
Stock options may be granted to the Company's executive officers under the
Company's 1985 and 1993 Plans. The Company has a set of guidelines that is used
to determine the size of stock option awards. These guidelines take into account
the duties and responsibilities of the individual, individual performance, years
of service to the Company, the number of outstanding options and the size of
prior option awards. These guidelines were used in 1996 by the Compensation
Committee, or the Board of Directors, as applicable, in making the stock option
grants to Mr. Ruettgers and all other executive officers of the Company. In the
event of poor corporate performance, the Board of Directors may elect not to
award options.
In 1996, Mr. Ruettgers received options to purchase 250,000 shares at an
exercise price of 50% of fair market value on the date of grant. The Board of
Directors believes that this discounted grant is justified on the basis of the
factors discussed above, in particular the fact that Mr. Ruettgers' cash
compensation is low relative to that of chief executive officers of peer
companies, Mr. Ruettgers' and the Company's performance in 1996 and recent
years, and the lack of any option grant to Mr. Ruettgers since 1992. The Board
of Directors believes that the equity interests held by Mr. Ruettgers and the
other executive 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.
19
<PAGE>
CONCLUSION
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to corporate and individual
performance and stock price appreciation. In 1996, as in previous years, the
majority of the Company's executive compensation consisted of compensation with
performance-based variable elements. The Compensation Committee and the Board of
Directors intend 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
John R. Egan
Richard J. Egan
As to the portion of the above report
relating to stock options,
BOARD OF DIRECTORS
Richard J. Egan, Chairman
Michael J. Cronin
John F. Cunningham
John R. Egan
Maureen E. Egan
W. Paul Fitzgerald
Joseph F. Oliveri
Michael C. Ruettgers
20
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee members are Michael J. Cronin, Chairman, John
F. Cunningham, John R. Egan 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 and
Chairman of the Board. In addition to Messrs. Cronin and Cunningham, Richard J.
Egan and Michael C. Ruettgers, who are executive officers and Directors of the
Company, and John R. Egan and W. Paul Fitzgerald, who are former executive
officers and current Directors of the Company, participated in deliberations of
the Board of Directors concerning the stock option portion of executive
compensation during the last fiscal year.
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)**
[PERFORMANCE GRAPH APPEARS HERE]
* $100 invested on 12/28/91 in Company stock, index or peer group including
reinvestment of dividends, if any.
** 19 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.
<TABLE>
<CAPTION>
FISCAL YEAR
------------------------------------------------
1991 1992 1993 1994 1995 1996
------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EMC CORPORATION 100 306.29 851.17 1133.29 793.14 1716.74
COMPUTER STORAGE DEVICES 100 144.88 187.87 189.00 285.13 513.82
S&P 500 100 107.64 118.50 120.06 165.18 203.11
</TABLE>
21
<PAGE>
CERTAIN TRANSACTIONS
Periodically during 1996, the Company rented the private airplane of Richard
J. Egan for use for EMC business trips and sales activities, for which payments
aggregated approximately $140,000. Richard J. Egan is Chairman of the Board of
Directors of the Company.
In 1996, the Company retained the Thomas A. Fitzgerald Company to provide
various forms of corporate insurance and paid premiums of approximately
$590,000. 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, the
brother-in-law of Richard J. Egan, Chairman of the Board of Directors of the
Company and the uncle of John R. Egan, a Director of the Company.
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.
COMMITTEES OF THE BOARD
The Audit Committee, the Executive Compensation and Stock Option Committee,
the Mergers and Acquisitions Committee and the Stock Repurchase and Bond
Redemption Oversight Committee are the standing committees of the Board of
Directors.
<TABLE>
<CAPTION>
STOCK
REPURCHASE
EXECUTIVE AND BOND
COMPENSATION AND MERGERS AND REDEMPTION
AUDIT STOCK OPTION ACQUISITIONS OVERSIGHT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
W. Paul Fitzgerald* Michael J. Cronin* John F. Cunningham* Joseph F. Oliveri*
Michael J. Cronin John F. Cunningham Michael J. Cronin John F. Cunningham
John R. Egan John R. Egan John R. Egan Richard J. Egan
Joseph F. Oliveri Richard J. Egan W. Paul Fitzgerald
* Chairman
</TABLE>
The Audit Committee, which held two meetings in 1996, 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 eight
meetings during 1996, reviews salary policies and compensation of executive
officers, officers and other members of management and approves compensation
plans. Although the full Board of Directors currently approves all transactions
under the Company's stock option plans, this committee makes recommendations to
the Board of Directors for option grants and has the authority to administer and
interpret the provisions of these option plans as well as the Company's employee
stock purchase plan.
The Mergers and Acquisitions Committee reviews with management of EMC
potential acquisitions. This committee held no formal meetings in 1996.
The Stock Repurchase and Bond Redemption Oversight Committee, which held two
meetings during 1996, oversees and reviews with management the Company's common
stock repurchase program, which was rescinded on November 25, 1996, and the
redemption of any of the Company's bonds which may be outstanding from time to
time.
22
<PAGE>
The Board of Directors does not have a Nominating Committee.
The Company compensates each director who is not an employee of the Company
$12,500 per annum, $2,000 for each regularly scheduled director's meeting
attended and for each committee on which they serve, $1,500 per annum or $2,000
per annum if they serve as Chairman.
Under the 1992 Directors Plan, each Eligible Director (as defined below) 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 1992
Directors Plan ( a "formula option"). 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. The
exercise price for each option granted under the 1992 Directors Plan will be at
the 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. Formula options become
exercisable for one-third of the shares covered thereby on each of the first
through third anniversaries of the grant. The 1992 Directors Plan also provides
for the granting of discretionary, non-formula based options to Eligible
Directors. Such non-formula based options may be on terms determined by the
Compensation Committee or the Board of Directors not inconsistent with the 1992
Directors Plan.
On July 24, 1996, pursuant to the 1992 Directors Plan, the Compensation
Committee granted options to purchase 1,000,000 shares of common stock to
Richard J. Egan, Chairman of the Board and a Director. 500,000 of such options
were at an exercise price of $18.50, and 500,000 of such options were at an
exercise price of $9.25, equal to 100% and 50%, respectively, 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, a Director of the Company is the son of Richard
J. and Maureen E. Egan.
STOCKHOLDER PROPOSALS
To be eligible for inclusion in the Company's Proxy Statement, stockholder
proposals intended to be presented at the 1998 Annual Meeting of Stockholders
must be received at EMC's principal executive offices no later than December 5,
1997.
23
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Directors have appointed Coopers & Lybrand, who have served as the
Company's auditors since 1984, to examine the financial statements of the
Company for fiscal year 1997. The Company expects that representatives of
Coopers & Lybrand 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.
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 31, 1996, all filing requirements were complied with in a timely
fashion except for the following: L. Daniel Butler and Raymond Fortune,
executive officers of the Company, each made one late filing, reporting one
transaction each.
24
<PAGE>
EMC CORPORATION
1993 STOCK OPTION PLAN, as amended January 22, 1997
1. PURPOSE.
-------
The purpose of the EMC Corporation 1993 Stock Option Plan is to enable EMC
Corporation to provide a special incentive to a limited number of key employees
of the Company and its Subsidiaries, if any, who are in a position to have a
significant effect upon the Company's business and earnings. In order to
accomplish this purpose, the Plan authorizes the grant to such key employees of
options to purchase Common Stock of the Company. Increased ownership of Common
Stock will provide such key employees with an additional incentive to take into
account the long-term interests of the Company.
2. DEFINITIONS.
-----------
As used herein, the following words or terms have the meanings set forth
below. The masculine gender is used throughout the Plan but is intended to
apply to members of both sexes.
2.1 "Board of Directors" means the Board of Directors of the Company.
2.2 "Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.
2.3 "Committee" means the Committee appointed by the Board of Directors to
administer the Plan or the Board of Directors as a whole if no appointment is
made.
2.4 "Common Stock" means the Common Stock of the Company.
2.5 "Company" means EMC Corporation, a corporation established under the
laws of The Commonwealth of Massachusetts.
2.6 "Fair Market Value" in the case of a share of Common Stock on a
particular day, means the fair market value as determined from time to time by
the Board of Directors or, where appropriate, by the Committee, taking into
account all information which the Board of Directors, or the Committee,
considers relevant.
2.7 "Incentive Stock Option" means a stock option that satisfies the
requirements of Section 422 of the Code.
2.8 "Participant" means an individual holding a stock option or stock
options granted to him under the Plan.
Page 1 of 9
<PAGE>
2.9 "Plan" means the EMC Corporation 1993 Stock Option Plan set forth
herein.
2.10 "Subsidiary" or "Subsidiaries" means a corporation or corporations in
which the Company owns, directly or indirectly, stock possessing 50 percent or
more of the total combined voting power of all classes of stock.
2.11 "Ten Percent Stockholder" means any person who, at the time an option
is granted, owns or is deemed to own stock (as determined in accordance with
Sections 422 and 424 of the Code) possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or its parent
or a subsidiary.
3. ADMINISTRATION.
--------------
3.1 The Plan shall be administered by the Committee and, to the extent
provided herein, the Board of Directors. A majority of the members of the
Committee shall constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. Any determination of the Committee
under the Plan may be made without notice or meeting of the Committee by a
writing signed by a majority of the Committee members.
3.2 Subject to the provisions set forth herein, each of the Committee and
the Board of Directors shall have full authority to determine the provisions of
options to be granted under the Plan. Subject to the provisions set forth
herein, the Committee shall have full authority to interpret the terms of the
Plan and of options granted under the Plan, to adopt, amend and rescind rules
and guidelines for the administration of the Plan and for its own acts and
proceedings and to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan; provided, however, that
-------- -------
any change to the terms of an option granted hereunder shall be approved by the
Board of Directors to the extent such change would be deemed to be a new option
grant or such terms relate to a subsequent transaction that would not be exempt
from Section 16(b) of the Securities Exchange Act of 1934 in the absence of such
approval.
3.3 The decision of the Committee or the Board of Directors, as
applicable, on any matter as to which the Committee or the Board of Directors,
as applicable, is given authority under subsection 3.2 shall be final and
binding on all persons concerned.
3.4 Nothing in the Plan shall be deemed to give any officer or employee,
or his legal representatives or assigns, any right to participate in the Plan,
except to such
Page 2 of 9
<PAGE>
extent, if any, as the Committee or the Board, as applicable, may have
determined or approved pursuant to the provisions of the Plan.
4. SHARES SUBJECT TO THE PLAN.
--------------------------
4.1 The maximum number of shares of Common Stock that may be delivered
upon the exercise of options granted under the Plan shall be 14,000,000, subject
to adjustment in accordance with the provisions of Section 8.
4.2 If any option granted under the Plan terminates without having been
exercised in full (including an option which terminates by agreement between the
Company and the Participant), the number of shares of Common Stock as to which
such option has not been exercised prior to termination shall be available for
future grants within the limits set forth in subsection 4.1.
4.3 Shares of Common Stock delivered upon the exercise of options shall
consist of shares of authorized and unissued Common Stock, except that the Board
of Directors may from time to time in its discretion determine in any case the
shares to be so delivered shall consist of shares of authorized and issued
Common Stock reacquired by the Company and held in its Treasury. No fractional
shares of Common Stock shall be delivered upon the exercise of an option.
5. ELIGIBILITY FOR OPTIONS.
-----------------------
Employees eligible to receive options under the Plan shall be those key
employees of the Company and its Subsidiaries, if any, who, in the opinion of
the Committee, are in a position to have a significant effect upon the Company's
business and earnings. Members of the Board of Directors of the Company or a
Subsidiary who are not employed as regular salaried officers or employees of the
Company or a Subsidiary may not participate in the Plan.
6. GRANT OF OPTIONS.
----------------
6.1 From time to time while the Plan is in effect, each of the Committee
and the Board of Directors may, in its absolute discretion, select from among
the persons eligible to receive options (including persons to whom options were
previously granted) those persons to whom options are to be granted.
6.2 Each of the Committee and the Board of Directors shall, in its
absolute discretion, determine the number of shares of Common Stock to be
subject to each option granted by it under the Plan.
6.3 No Incentive Stock Option may be granted under the Plan after May 12,
2003, but options theretofore granted may extend beyond that date.
Page 3 of 9
<PAGE>
7. PROVISIONS OF OPTIONS.
---------------------
7.1 Incentive Stock Options or Other Options. Options granted under the
----------------------------------------
Plan may be either Incentive Stock Options or options which do not qualify as
Incentive Stock Options, as the Committee or the Board of Directors shall
determine at the time of each grant of options hereunder.
7.2 Stock Option Certificates or Agreements. Options granted under the
---------------------------------------
Plan shall be evidenced by certificates or agreements in such form as the
Committee shall from time to time approve. Such certificates or agreements
shall comply with the terms and conditions of the Plan and may contain such
other provisions not inconsistent with the terms and conditions of the Plan as
the Committee shall deem advisable. In the case of options intended to qualify
as Incentive Stock Options, the certificates or agreements shall contain such
provisions relating to exercise and other matters as are required of incentive
stock options under the Code.
7.3 Terms and Conditions. All options granted under the Plan shall be
--------------------
subject to the following terms and conditions to the extent applicable and to
such other terms and conditions not inconsistent therewith as the Committee or
the Board of Directors shall determine:
7.3.1 Exercise Price. The exercise price per share of Common Stock
--------------
with respect to each option shall be as determined by the Committee but in
the case of an Incentive Stock Option not less than 100% (110% in the case
of an Incentive Stock Option granted to a Ten Percent Stockholder) of the
Fair Market Value per share at the time the option is granted. In the case
of an option which does not qualify as an Incentive Stock Option, the
exercise price per share of Common Stock shall be not less than par value.
7.3.2 Value of Shares of Common Stock Subject to Incentive Stock
----------------------------------------------------------
Options. Each eligible employee may be granted Incentive Stock Options
-------
only to the extent that, in the aggregate under this Plan and all incentive
stock option plans of the Company and any related corporation, such
Incentive Stock Options do not become exercisable for the first time by
such employee during any calendar year in a manner which would entitle the
employee to purchase more than $100,000 in fair market value (determined at
the time the Incentive Stock Options were granted) of Common Stock in that
year. Any options granted to an employee in excess of such amount will be
granted as Non-Qualified Options.
7.3.3 Period of Options. An option shall be exercisable during such
-----------------
period of time as the Committee or Board of Directors may specify (subject
to subsection 7.4 below), but in the case of an Incentive Stock Option not
after the expiration of ten years (five years in the case of an Incentive
Stock Option granted to a Ten Percent Stockholder) from the date the option
is granted.
Page 4 of 9
<PAGE>
7.3.4 Exercise of Options.
-------------------
7.3.4.1 Each option shall be made exercisable at such time or
times as the Committee or the Board of Directors shall determine. In
the case of an option made exercisable in installments, the Committee
or the Board of Directors may later determine to accelerate the time
at which one or more of such installments may be exercised.
7.3.4.2 Any exercise of an option shall be in writing signed by
the proper person and delivered or mailed to the General Counsel of
the Company, accompanied by an option exercise notice and payment in
full for the number of shares in respect to which the option is
exercised.
7.3.4.3 In the event an option is exercised by the executor or
administrator of a deceased Participant, or by the person or persons
to whom the option has been transferred by the Participant's will or
the applicable laws of descent and distribution, the Company shall be
under no obligation to deliver stock thereunder until the Company is
satisfied that the person or persons exercising the option is or are
the duly appointed executor or administrator of the deceased
Participant or the person or persons to whom the option has been
transferred by the Participant's will or by the applicable laws of
descent and distribution.
7.3.4.4 The Committee or the Board of Directors may at the time
of grant condition the exercise of an option upon agreement by the
Participant to subject the Common Stock to any restrictions on
transfer or repurchase rights in effect on the date of exercise, upon
representations of continued employment and upon other terms not
inconsistent with this Plan. Any such conditions shall be set forth
in the option certificate or other document evidencing the option.
7.3.4.5 In the case of an option that is not an Incentive
Stock Option, the Committee shall have the right to require that the
individual exercising the option to remit to the Company an amount
sufficient to satisfy any federal, state, or local withholding tax
requirements (or makes other arrangements satisfactory to the Company
with regard to such taxes) prior to the delivery of any Common Stock
pursuant to the exercise of the option. In the case of an Incentive
Stock Option, if at the time the Incentive Stock Option is exercised
the Committee determines that under applicable law and regulations the
Company could be liable for the withholding of any federal or state
tax with respect to a disposition of the Common Stock received upon
exercise, the Committee may require as a condition of exercise that
the individual exercising the Incentive Stock Option agree (i) to
inform the Company promptly of any
Page 5 of 9
<PAGE>
disposition (within the meaning of Section 422 (a) (1) of the Code and
the regulations thereunder) of Common Stock received upon exercise,
and (ii) to give such security as the Committee deems adequate to meet
the potential liability of the Company for the withholding of tax, and
to augment such security from time to time in any amount reasonably
deemed necessary by the Committee to preserve the adequacy of such
security.
7.3.4.6 In the case of an option that is exercised by an
individual that is subject to taxation in a foreign jurisdiction, the
Committee shall have the right to require the individual exercising
the option to remit to the Company an amount sufficient to satisfy any
federal or withholding requirement of that foreign jurisdiction (or
make other arrangements satisfactory to the Company with regard to
such taxes prior to the delivery of any Common Stock pursuant to the
exercise of the option).
7.3.5 Payment for and Delivery of Stock. The shares of stock
---------------------------------
purchased on any exercise of an option granted hereunder shall be paid for
in full in cash or, if permitted by the terms of the option, in shares of
unrestricted Common Stock at the time of such exercise or, if so permitted,
a combination of such cash and Common Stock. A Participant shall not have
the rights of a stockholder with respect to awards under the Plan except as
to stock actually issued to him.
7.3.6 Listing of Stock, Withholding and Other Legal Requirements.
----------------------------------------------------------
The Company shall not be obligated to deliver any stock until all federal
and state laws and regulations which the Company may deem applicable have
been complied with, nor, in the event the outstanding Common Stock is at
the time listed upon any stock exchange, until the stock to be delivered
has been listed or authorized to be added to the list upon official notice
of issuance to such exchange. In addition, if the shares of stock subject
to any option have not been registered in accordance with the Securities
Act of 1933, as amended, the Company may require the person or persons who
wishes or wish to exercise such option to make such representation or
agreement with respect to the sale of stock acquired on exercise of the
option as will be sufficient, in the opinion of the Company's counsel, to
avoid violation of said Act, and may also require that the certificates
evidencing said stock bear an appropriate restrictive legend.
7.3.7 Non-transferability of Options. No option may be transferred by
------------------------------
the Participant otherwise than by will, by the laws of descent and
distribution or pursuant to a qualified domestic relations order, and
during the Participant's lifetime the option may be exercised only by him
or her; provided, however, that the Board of Directors or the Committee, as
-----------------
applicable, in its discretion, may allow for transferability of non-
qualified stock options by the Participant to "Immediate Family Members."
Immediate Family Members means children,
Page 6 of 9
<PAGE>
grandchildren, spouse or common law spouse, siblings or parents of the
Participant or to bona fide trusts, partnerships or other entities
controlled by and of which the beneficiaries are Immediate Family Members
of the Participant. Any option grants that are transferable are further
conditioned on the Participant and Immediate Family Members agreeing to
abide by the Company's then current stock option transfer guidelines.
7.3.8 Death. If a Participant dies at a time when he is entitled
-----
to exercise an Incentive Stock Option, then at any time or times within
three years after his death such Incentive Stock Option may be exercised,
as to all or any of the shares which the Participant was entitled to
purchase thereunder immediately prior to his death, by his executor or
administrator or the person or persons to whom the Incentive Stock Option
is transferred by will or the applicable laws of descent and distribution,
and except as so exercised such Incentive Stock Option shall expire at the
end of such three-year period. In no event, however, may any Incentive
Stock Option granted under the Plan be exercised after the expiration of
ten years (five years in the case of an Incentive Stock Option granted to a
Ten Percent Stockholder) from the date the Incentive Stock Option was
granted.
7.3.9 Termination of Employment. If the employment of a Participant
-------------------------
terminates for any reason other than his death, all options held by the
Participant shall thereupon expire on the date of termination unless the
option by its terms, or the Committee or the Board of Directors by
resolution, shall allow the Participant to exercise any or all of the
options held by him after termination. In the case of an Incentive Stock
Option, the Incentive Stock Option shall in any event expire at the end of
three months after such termination of employment, or after the expiration
of ten years (five years in the case of an Incentive Stock Option granted
to a Ten Percent Stockholder) from the date the Incentive Stock Option was
granted, whichever occurs first. If the Committee or the Board of
Directors so decides, an option may provide that a leave of absence
granted by the Company or Subsidiary is not a termination of employment for
the purpose of this subsection 7.3.9, and in the absence of such a
provision the Committee may in any particular case determine that such a
leave of absence is not a termination of employment for such purpose. The
Committee shall also determine all other matters relating to continuous
employment.
7.4 Authority of the Committee. The Committee shall have the authority,
--------------------------
either generally or in particular instances, to waive compliance by a
Participant with any obligation to be performed by him under an option and to
waive any condition or provision of an option, except that the Committee may not
(i) increase the total number of shares covered by any Incentive Stock Option
(except in
Page 7 of 9
<PAGE>
accordance with Section 8), (ii) reduce the option price per share of any
Incentive Stock Option (except in accordance with Section 8) or (iii) extend the
term of any Incentive Stock Option to more than ten years, subject, however, to
the provisions of Section 10.
8. CHANGES IN STOCK.
----------------
In the event of a stock dividend, stock split or other change in corporate
structure or capitalization affecting the Common Stock that becomes effective
after the adoption of the Plan by the Board of Directors, the Committee shall
make appropriate adjustments in (i) the number and kind of shares of stock on
which options may thereafter be granted hereunder, (ii) the number and kind of
shares of stock remaining subject to each option outstanding at the time of such
change and (iii) the option price. The Committee's determination shall be
binding on all persons concerned. Subject to any required action by the
stockholders, if the Company shall be the surviving corporation in any merger or
consolidation (other than a merger or consolidation in which the Company
survives but in which a majority of its outstanding shares are converted into
securities of another corporation or are exchanged for other consideration), any
option granted hereunder shall pertain and apply to the securities which a
holder of the number of shares of stock of the Company then subject to the
option would have been entitled to receive, but a dissolution or liquidation of
the Company or a merger or consolidation in which the Company is not the
surviving corporation or in which a majority of its outstanding shares are so
converted or exchanged shall cause every option hereunder to terminate; provided
that if any such dissolution, liquidation, merger or consolidation is
contemplated, the Company shall either arrange for any corporation succeeding to
the business and assets of the Company to issue to the Participants replacement
options (which, in the case of Incentive Stock Options, satisfy, in the
determination of the Committee, the requirements of Section 424 of the Code) on
such corporation's stock which will to the extent possible preserve the value of
the outstanding options or shall make the outstanding options fully exercisable
at least 20 days before the effective date of any such dissolution, liquidation,
merger or consolidation. The existence of the Plan shall not prevent any such
change or other transaction and no Participant thereunder shall have any right
except as herein expressly set forth.
9. EMPLOYMENT RIGHTS.
-----------------
Neither the adoption of the Plan nor any grant of options confers upon any
employee of the Company or a Subsidiary any right to continued employment with
the Company or a Subsidiary, as the case may be, nor does it interfere in any
way with the right of the Company or a Subsidiary to terminate the employment of
any of its employees at any time.
Page 8 of 9
<PAGE>
10. DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION.
-------------------------------------------------------
The Committee or the Board of Directors may at any time discontinue
granting options under the Plan and, with the consent of the Participant, may at
any time cancel an existing option in whole or in part and grant another option
to the Participant for such number of shares as the Committee or the Board of
Directors specifies. The Board of Directors may at any time or times amend the
Plan for the purpose of satisfying the requirements of any changes in applicable
laws or regulations or for 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 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) change the group of employees eligible to receive options
under the Plan, (c) reduce the exercise price of outstanding incentive options
or reduce the price at which incentive options may be granted, (d) extend the
time within which options may be granted, (e) alter the Plan in such a way that
incentive options granted or to be granted hereunder would not be considered
incentive stock options under Section 422 of the Code, or (f) amend the
provisions of this Section 10, and no such amendment shall adversely affect the
rights of any employee (without his consent) under any option previously
granted.
11. EFFECTIVE DATE.
--------------
The Plan became effective immediately upon its approval by the stockholders
of the Company at the Annual Meeting on May 12, 1993.
Page 9 of 9
<PAGE>
PROXY PROXY
EMC CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, MAY 7, 1997
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 7,
1997, at 10:00 a.m., local time at EMC's facility 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>
[_] PLEASE MARK VOTES AS IN THIS EXAMPLE
With For All
For hold Except
1.) Election of Directors: [_] [_] [_]
Electing two directors to serve a three-year term as Class I Directors and
for all nominees.
Richard J. Egan
John F. Cunningham
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. Your shares will
be voted for the remaining nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES LISTED ABOVE.
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date:
- --------------------------------------------------------------------------------
Stockholder sign here Co-owner sign here
For Against Abstain
2. To amend the Articles of [_] [_] [_]
Organization to increase the number of shares of authorized Common Stock, $.01
par value, to 750,000,000 shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
For Against Abstain
3. To approve the addition of [_] [_] [_]
6,000,000 shares of Common
Stock, $.01 par value, to the
1993 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS
SPECIFIED, THEN THIS PROXY WILL BE VOTED IN FAVOR OF ELECTING THE TWO NOMINEES
NOTED HEREON TO THE BOARD OF DIRECTORS TO SERVE FOR A THREE-YEAR TERM AS CLASS I
DIRECTORS, APPROVING THE AMENDMENT TO THE ARTICLES OF ORGANIZATION AND THE
ADDITION OF SHARES TO EMC CORPORATION'S 1993 STOCK OPTION PLAN. A VOTE FOR THE
ELECTION OF DIRECTORS 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.
----------------------- ----------------------- -----------------------
DETACH CARD
