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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[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)
- --------------------------------------------------------------------------------
(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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[EMC/2/ LOGO APPEARS HERE]
March 19, 1999
Dear Stockholder:
We cordially invite you to attend our 1999 Annual Meeting, which will be
held on Wednesday, May 5, 1999, at 10:00 a.m. at the Company's facility at 50
Constitution Boulevard, Franklin, Massachusetts. A map with directions to the
meeting is on the back cover page of the attached Proxy Statement.
At this meeting you are being asked to elect three Class III 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, the addition of
8,500,000 shares of common stock to the 1993 Stock Option Plan and the
addition of 2,200,000 shares of common stock to the 1989 Employee Stock
Purchase Plan.
Your Board of Directors recommends that you vote in favor of each of these
proposals. You should read with care the 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. If you elected to access the
1999 Proxy Statement and Annual Report on Form 10-K for 1998 electronically,
you will not be receiving a proxy card and must vote electronically. The fact
that you have returned your proxy in advance will assure representation of
your shares but will in no way affect your right to vote in person should you
attend the meeting.
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 5th.
Very truly yours,
/s/ Richard J. Egan
RICHARD J. EGAN
Chairman of the Board
YOUR VOTE IS IMPORTANT
In order to assure representation of your shares at the meeting, please
complete, sign and return the enclosed proxy card or vote electronically
or by telephone. See Voting Electronically or by Telephone on page 2 in
the Proxy Statement for details regarding the options available to you.
<PAGE>
EMC CORPORATION
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1999
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 50 Constitution Boulevard, Franklin,
Massachusetts, on Wednesday, May 5, 1999, at 10:00 a.m. for the following
purposes:
1. To elect three members to the Board of Directors to serve for a three-
year term as Class III Directors.
2. To amend the Company's Articles of Organization to increase the number
of shares of authorized common stock, $.01 par value, to 3,000,000,000
shares from the current authorization of 750,000,000 shares.
3. To amend the Company's 1993 Stock Option Plan to increase the number of
shares available for grant under such plan by 8,500,000 shares.
4. To amend the Company's 1989 Employee Stock Purchase Plan to increase the
number of shares available for grant under such plan by 2,200,000
shares.
5. 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 8, 1999 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 card and
return it in the enclosed envelope. The envelope requires no postage if mailed
in the United States. If you elected to access the 1999 Proxy Statement and
Annual Report on Form 10-K for 1998 electronically, you will not be receiving
a proxy card and must vote electronically. For those who did not elect to
receive such documents electronically, you may also be eligible to vote
electronically or by telephone. Please see Voting Electronically or by
Telephone on page 2 in the Proxy Statement for instructions.
EMC's Annual Report on Form 10-K for 1998 is enclosed herewith.
By order of the Board of Directors
THOMAS J. DOUGHERTY, Clerk
March 19, 1999
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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 (the "Annual Meeting") to be held on May 5, 1999, and any adjournments
thereof, for the purposes set forth in the accompanying Notice of the Annual
Meeting of Stockholders (the "Notice of Annual Meeting"). EMC was incorporated
in 1979, and its principal executive offices are located at 35 Parkwood Drive,
Hopkinton, Massachusetts 01748. This Proxy Statement, the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 and the
accompanying proxy card are first being distributed to stockholders on or
about March 19, 1999.
All share and per share amounts of the common stock, $.01 par value (the
"Common Stock"), of the Company noted in this Proxy Statement have been
adjusted for all stock splits effected through the date hereof. However, none
of the share-related data in this Proxy Statement has been adjusted for the
proposed stock split described in Proposal 2 below.
Voting Rights and Solicitation of Proxies
As of March 8, 1999, EMC had outstanding shares of
Common Stock. The Common Stock is the only type of security entitled to vote
at the Annual Meeting. Each share of Common Stock entitles the holder of
record thereof at the close of business on March 8, 1999 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 or by mail, telephone
or electronic means from brokerage houses and other stockholders. The Company
has also retained D.F. King & Co., Inc. to aid in the solicitation of proxies.
D.F. King & Co., Inc. will receive a fee of $10,000 as well as reimbursement
for certain expenses incurred by them in connection with their services, all
of which will be paid by the Company.
If the enclosed form of proxy is properly signed and returned or a proxy is
voted electronically or by telephone, the shares represented thereby will be
voted. If the stockholder specifies in the proxy how the shares are to be
voted, they will be voted as specified. If the stockholder does not specify
how the shares are to be voted, they will be voted in favor of electing as
Class III Directors, the three persons listed as nominees under "Election of
Directors" below to serve until their successors are elected and qualified and
in favor of each of the additional items set forth in the Notice of Annual
Meeting. Should any person so named be unable or unwilling to serve as
director, the persons named in the enclosed form of proxy 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.
<PAGE>
An automated system administered by the Company's transfer agent tabulates
all votes cast at the Annual Meeting. Abstentions and broker non-votes are
each included in the determination of the number of shares present and voting
for purposes of determining the presence of a quorum. Each is tabulated
separately. If a quorum is present, the three nominees who receive the
greatest number of votes properly cast will be elected as Class III Directors.
Neither abstentions nor broker non-votes will have any effect upon the outcome
of voting with respect to the election of directors. 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 Proposals 3 or 4. However, an abstention will have the same effect as a
vote against Proposals 3 and 4.
Voting Electronically or by Telephone
If your shares are registered in the name of a bank or brokerage firm and
you have elected to access the 1999 Proxy Statement and Annual Report on Form
10-K for 1998 electronically, you will not be receiving a proxy card and must
vote electronically. If you have not elected to access such documents
electronically, you may be eligible to vote electronically or by telephone. A
large number of banks and brokerage firms participate in a program offering
electronic and telephonic voting options. If your bank or brokerage firm
participates, the voting instruction form you receive will provide
instructions to vote electronically at the following address on the World Wide
Web: www.proxyvote.com or by telephone.
Other Business
As of the date hereof, management of EMC has no knowledge of any business
other than that described in the Notice of 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 or by
an electronic or telephonic 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 of the Company (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 directors to be
elected at any annual meeting of stockholders or special meeting in lieu
thereof. The Board of Directors has fixed at eight the total number of
directors and has fixed at three the number of Class III Directors to be
elected at the 1999 Annual Meeting. Of the current total of eight directors,
three Class III Directors have terms expiring at the 1999 Annual Meeting, two
Class I Directors have terms expiring at the 2000 Annual Meeting and three
Class II Directors have terms expiring at the 2001 Annual Meeting. The three
directors whose terms expire at the 1999 Annual Meeting have been nominated by
the Board of Directors for election at such meeting. All of the nominees for
director are now Class III members of the Board of Directors. Each Class III
Director elected at the 1999 Annual Meeting will serve until the 2002 Annual
Meeting of Stockholders or special meeting in lieu thereof, and until that
director's successor is elected and qualified.
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Information With Respect to Nominees
Set forth below is information with respect to each nominee for Class III
Director to be elected at the Annual Meeting and for each Class I Director and
Class II Director. All of the directors were previously elected by the
stockholders.
NOMINEES TO SERVE AS DIRECTORS FOR A THREE-YEAR TERM EXPIRING AT
THE 2002 ANNUAL MEETING (CLASS III DIRECTORS)
Michael J. Cronin
Mr. Cronin, age 60, 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 Directors 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 Chairman of the
Company's Executive Compensation and Stock Option Committee and a member of
the Company's Audit Committee and Mergers and Acquisitions Committee.
Maureen E. Egan
Mrs. Egan, age 61, 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 58, 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 in October 1995. Mr.
Fitzgerald is Chairman of the Company's Audit Committee and a member of the
Company's Stock Repurchase and Bond Redemption Oversight Committee.
DIRECTORS SERVING A TERM EXPIRING AT THE
2000 ANNUAL MEETING (CLASS I DIRECTORS)
Richard J. Egan
Mr. Egan, age 63, is a founder of the Company and has served as a Director
of the Company since its inception in 1979. He was elected Chairman of the
Board of Directors 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 a Director of Cognition Corporation, a CAD/CAM
software supplier; Boston Edison Company, a public utility; Shiva
Corporation, a provider of remote access hardware, software and services;
and NetScout Systems, Inc., a computer networking company. Mr. Egan is a
member of the Company's Executive Compensation and Stock Option Committee,
Stock Repurchase and Bond Redemption Oversight Committee and Mergers and
Acquisitions Committee.
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John F. Cunningham
Mr. Cunningham, age 56, 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 of the Board of Directors 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 of Directors
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. Mr. Cunningham is a Director or Trustee of certain
funds of Federated Investors, Inc., a fund investment management
organization. Mr. Cunningham is Chairman of the Company's Mergers and
Acquisitions Committee and a member of the Company's Executive Compensation
and Stock Option Committee and Stock Repurchase and Bond Redemption
Oversight Committee.
DIRECTORS SERVING A TERM EXPIRING AT THE
2001 ANNUAL MEETING (CLASS II DIRECTORS)
John R. Egan
Mr. Egan, age 41, has been a Director of the Company since May 1992. From
October 1986 to January 1992, he served in a number of executive positions
with the Company, including Executive Vice President, Operations and
Executive Vice President, International Sales. From January 1992 to June
1996, he was Executive Vice President, Sales and Marketing of EMC. He was
on a leave of absence as an executive officer of the Company from June 1996
to May 1997. From May 1997 to September 1998, he was Executive Vice
President, Products and Offerings of the Company, at which time he resigned
as an executive officer of the Company. From September 1998 to the present,
Mr. Egan has been an employee of the Company, providing ongoing services to
various organizations within the Company. Mr. Egan is a member of the
Company's Mergers and Acquisitions Committee.
Joseph F. Oliveri
Mr. Oliveri, age 50, 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 Chairman of the Company's Stock
Repurchase and Bond Redemption Oversight Committee and a member of the
Company's Audit Committee.
Michael C. Ruettgers
Mr. Ruettgers, age 56, 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
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to October 1989. Mr. Ruettgers is also a Director of Commonwealth Energy
System, a public utility; and EG&G Inc., a diversified technology company.
During the fiscal year ended December 31, 1998, the Board of Directors held
eleven meetings.
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 750,000,000 shares of Common Stock and 25,000,000 shares of Preferred
Stock, $.01 par value, which may be issued in one or more series (the
"Preferred Stock"). On January 20, 1999, the Board of Directors voted to
propose and recommend approval of an amendment to the Company's Articles of
Organization (the "Charter Amendment") to increase the number of authorized
shares of Common Stock from 750,000,000 shares to 3,000,000,000 shares. The
affirmative vote of the holders of a majority of the outstanding shares is
required to approve the Charter Amendment.
Proposed Stock Split
On February 24, 1999, the Board of Directors approved a two-for-one stock
split (to be effected in the form of a stock dividend), subject to obtaining
stockholder approval of the Charter Amendment (the "Stock Split"). In
connection with the Stock Split, each holder of shares of Common Stock as of
the close of business on May 14, 1999, will be entitled to receive, on or
about May 28, 1999, one additional share for each share held. In addition, the
number of shares of Common Stock reserved for issuance (including shares
subject to outstanding options) would increase by 100% (and the exercise price
of outstanding options or the conversion price of the 3 1/4% Notes (as defined
below) would correspondingly decrease by 50%. Stockholders are not being asked
to vote on the Stock Split, but the Stock Split will not take place unless the
Charter Amendment is approved by the Company's stockholders.
Current Use of Shares
As of February 28, 1999, there were a total of shares of Common
Stock outstanding or reserved for issuance (including shares subject to
outstanding options), with no shares held by the Company in its treasury. This
total number of shares includes shares of Common Stock 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"), the Company's 1993 Stock Option Plan, as amended (the "1993
Plan"), certain other stock plans of the Company or its subsidiaries, and
certain non-plan options. Such number of reserved shares also includes the
shares of Common Stock 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.
Description of Common Stock
The Charter 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 Common Stock or the
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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 debts and obligations and
liquidation preferences, if any.
Purpose of Charter Amendment and Stock Split
The Board of Directors believes that the Stock Split is in the Company's
best interests in order to lower the per share market price of the Common
Stock, increase trading activity and broaden the marketability of the Common
Stock. Without the proposed increase in authorized shares pursuant to the
Charter Amendment, the Company would not have enough authorized but unissued
shares of Common Stock to effect the Stock Split. The proposed Charter
Amendment is also necessary in order to ensure that there is a sufficient
number of authorized shares of Common Stock available for future issuances,
including for additional stock splits, stock dividends, financings, corporate
mergers, acquisitions, use in employee benefit plans or other corporate
purposes. The Board of Directors believes that the proposed increase in the
number of authorized shares of Common Stock is desirable to enhance the
Company's flexibility in connection with such possible future actions and
would allow shares of Common Stock to be issued without the expense and delay
of a special stockholders meeting.
As of the date of this Proxy Statement, except for the Stock Split, the
Company has no agreements, commitments or plans with respect to the sale or
issuance of additional shares of Common Stock, other than with respect to
those shares of Common Stock reserved for issuance as noted above.
Effects of Charter Amendment
If this proposal is adopted, the additional shares of authorized 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 (the "NYSE") 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 the number of shares
of authorized 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 the number of shares of authorized Common
Stock could have the effect of making a change in control of the Company more
difficult.
Tax and Other Effects of Stock Split
The Company has been advised that the Stock Split should not result in any
gain or loss or realization of taxable income to owners of Common Stock under
existing United States federal income tax laws. The cost basis for tax
purposes of each new share and each retained share of Common Stock would be
equal to one-half of the cost basis for tax purposes of the corresponding
share immediately preceding the Stock Split. In addition, the holding period
for the additional shares issued pursuant to the Stock Split would be deemed
to be the same as
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the holding period for the original shares of Common Stock. The laws of
jurisdictions other than the United States may impose income taxes on the
issuance of the additional shares and stockholders are urged to consult their
own tax advisors.
No change in total stockholders' equity will result from the Stock Split.
The amount of capital represented by the outstanding shares of Common Stock
will be increased by $.01 for each share issued to effect the Stock Split and
the Company's additional paid-in capital will be reduced by the same amount.
If stockholders dispose of their shares after the Stock Split, they may pay
higher brokerage commissions on the same relative interest in the Company
because that interest is represented by a greater number of shares.
Stockholders may wish to consult their brokers to ascertain the brokerage
commission that would be charged for disposing of the greater number of
shares. The Company will incur certain expenses in connection with the Stock
Split, such as the cost of preparing and delivering to stockholders new
certificates representing additional shares.
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 12,000,000 shares of Common Stock were reserved for issuance
thereunder. On May 10, 1995, May 7, 1997 and May 6, 1998, the 1993 Plan was
amended to include an additional 4,000,000, 12,000,000 and 3,500,000 shares,
respectively, of Common Stock. Currently, the total number of shares of Common
Stock that are authorized to be issued under the 1993 Plan is 31,500,000. As
of February 28, 1999, shares remained available for future option
grants under this plan.
On January 20, 1999, the Board of Directors approved an amendment to the
1993 Plan to increase the number of shares available under such plan by
8,500,000 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 forecast for the 1993
Plan indicates that there are currently sufficient shares for projected grants
of options through approximately the end of 1999. 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 currently available
shares subject to options are granted. The proceeds received by the Company
from the exercise of options under the 1993 Plan are used for the general
corporate purposes of the Company.
Summary of the 1993 Plan
If the January 20, 1999 amendment adding 8,500,000 shares is approved by the
Company's stockholders, a total of 40,000,000 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 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
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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, as amended (the "Exchange Act"), 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 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 of Common Stock or shares of Common Stock held by the Company
in its 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. Members of the Board of Directors who are
not employed as regular salaried officers or employees of the Company may not
participate in the 1993 Plan. As of February 28, 1999, there were
approximately employees eligible to participate in the 1993 Plan and
approximately employees participating in the 1993 Plan. The number of
options which may be granted to any eligible 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 generally non-transferable other than by
will or by the laws of descent and distribution. Options 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 (as defined below) 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 of Common Stock which are
not delivered because of termination of options may be reused for other
options.
8
<PAGE>
With respect to options held by officers or certain other persons, the Board
of Directors or the Compensation Committee may cancel, suspend or otherwise
limit any unexpired option and rescind the exercise of an option if such
option holder engages in certain detrimental activity.
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. 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 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 or subsequent to 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 now or in the future 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 of Common Stock available for grant 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 Internal Revenue Code of 1986, as
amended (the "Code"), would not do so or change the amendment provisions of
the 1993 Plan.
No grant of incentive stock options can be made under the 1993 Plan after
May 12, 2003, but options granted before that date may be exercised
thereafter.
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 event, 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 on the date the option is granted,
except as stated otherwise below. The aggregate fair market
9
<PAGE>
value, determined on the date 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 on the date 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 on the date 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 its subsidiaries unless the
option price on the date 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
The 1993 Plan is not qualified under Section 401(a) of the Code. 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 after the
date the option is granted and within one year after the date of exercise, any
later sale of such stock will result in a capital gain or loss.
If shares received upon exercise of 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 Common 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 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 the U.S. 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 or local
tax consequences.
10
<PAGE>
PROPOSAL 4
APPROVAL OF AMENDMENT TO THE COMPANY'S
1989 EMPLOYEE STOCK PURCHASE PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 4.
On May 10, 1989, the Company's stockholders adopted and approved the 1989
Plan and 1,800,000 shares of Common Stock were reserved for purchase
thereunder. On May 8, 1991, May 12, 1993 and May 8, 1996, the 1989 Plan was
amended to include an additional 3,600,000, 2,400,000 and 2,000,000 shares,
respectively, of Common Stock. Currently, the total number of shares of Common
Stock that are authorized to be purchased under the 1989 Plan is 9,800,000. As
of February 28, 1999, shares remained available for future purchases
under this plan.
On January 20, 1999, the Board of Directors approved an amendment to the
1989 Plan to increase the number of shares available under such plan by
2,200,000 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 1989 Plan. The Company's current forecast of
employee participation in the 1989 Plan indicates that there are currently
sufficient shares for approximately the next twelve to eighteen months.
Additional shares are needed for use in the 1989 Plan so that the 1989 Plan
can continue to be used as a benefit plan to attract and retain employees of
the Company and its subsidiaries. If this amendment to the 1989 Plan is not
approved by the stockholders, the Board of Directors will suspend employee
participation in the 1989 Plan once the currently available shares are
purchased. The proceeds received by the Company from the sale of Common Stock
under the 1989 Plan are used for the general corporate purposes of the
Company.
Summary of the 1989 Plan
If the January 20, 1999 amendment adding 2,200,000 shares is approved by the
Company's stockholders, a total of 12,000,000 shares of Common Stock may be
issued under the 1989 Plan. Such shares may, in the discretion of the Board of
Directors, be issued from the Company's authorized but unissued Common Stock
or from the Company's treasury. The 1989 Plan provides for the Company to
grant six-month options to participating employees to purchase shares of
Common Stock. Each employee of the Company or a subsidiary of the Company
having at least six months of continuous service on the date of grant of an
option is eligible to participate in the 1989 Plan, except for employees whose
customary employment is 20 hours or less per week. In addition, any employee
who immediately after the grant of an option would be deemed under the
provisions of the Code to own 5% or more of the Common Stock will not be
eligible to receive such an option. Furthermore, no employee will be granted
an option under the 1989 Plan which would permit his or her right to purchase
shares to accrue at a rate which exceeds $25,000 in fair market value of
Common Stock (determined at the time the option is granted) for any calendar
year. Members of the Board of Directors who are not employed as regular
salaried officers or employees of the Company may not participate in the 1989
Plan. As of February 28, 1999, there were approximately employees of the
Company and its subsidiaries eligible to participate in the 1989 Plan and
approximately employees participating in the 1989 Plan.
Options are granted twice yearly, on January 1 and July 1, and are
exercisable on the succeeding June 30 or December 31. Options are exercisable
through accumulations of payroll deductions. The amount of the deductions are
determined by the employee, but may not be less than 2% nor more than 10% of
the employee's compensation (up to a maximum of $2,500 in each option period,
less any amount rolled over from the preceding option period representing an
amount in lieu of a fractional share). The number of shares of Common Stock
11
<PAGE>
acquired in a particular option period is determined by dividing the balance
in the employee's withholding account on the last day of the period by the
purchase price per share for the Common Stock determined under the 1989 Plan.
In lieu of a fractional share, any remaining balance in an employee's
withholding account at the end of an option period is rolled over to the
opening balance for the next option period. The purchase price for a share of
Common Stock is the lower of 85% of the fair market value of the Common Stock
on the date of grant or 85% of said value on the date of exercise.
In the event the number of shares of Common Stock then available under the
1989 Plan is otherwise insufficient, the number of shares each employee is
entitled to purchase shall be proportionately reduced and the balance in each
employee's withholding account shall be returned to such employee.
An employee may at any time prior to exercise cancel his or her option, and
upon such cancellation, all accumulated payroll deductions in the employee's
withholding account shall be returned to him or her without interest. During
an employee's lifetime, his or her rights in an option are exercisable only by
him or her and may not be sold, pledged, assigned or otherwise transferred.
The employee or his or her legal representative may elect to have the amount
credited to the employee's withholding account at the time of such employee's
death applied to the exercise of his or her option for the benefit of named
beneficiaries. Nothing in the 1989 Plan is to be construed so as to give an
employee the right to be retained in the service of the Company.
In the event there is a change in the Common Stock due to a stock dividend,
stock split, combination of shares, recapitalization, merger or other capital
change, the aggregate number of shares of Common Stock available under the
1989 Plan and under any outstanding options, the option price and other
relevant provisions of the 1989 Plan will be appropriately adjusted. The
Company will have the right to amend the 1989 Plan at any time, but cannot
make an amendment (other than as stated above) relating to the aggregate
number of shares available under the 1989 Plan or the option price without the
approval of the Company's stockholders. The Company may suspend or terminate
the 1989 Plan at any time, but such termination will not affect the rights of
employees holding options at the time of termination.
The Compensation Committee administers the 1989 Plan, makes determinations
regarding all questions arising thereunder and adopts, administers and
interprets such rules and regulations relating to the 1989 Plan as it deems
necessary or advisable.
Federal Income Tax Consequences
The 1989 Plan is intended to qualify as an "Employee Stock Purchase Plan"
within the meaning of Section 423 of the Code. Under the Code, neither the
grant of an option under the 1989 Plan nor the acquisition of shares upon
exercise of such an option will result in taxable income to the employee or a
deduction for the Company.
The Federal income tax treatment of the employee's subsequent disposition of
shares of Common Stock acquired under a 1989 Plan option ("Plan Shares") will
vary depending upon the timing of the disposition. For these purposes, a
"disposition" includes any transfer of shares other than certain transfers at
death, certain tax-free exchanges or a mere pledge or hypothecation. If the
employee disposes of Plan Shares within two years after the corresponding
option was granted, or within one year after the Plan Shares were purchased,
the employee will recognize ordinary income on the date of disposition and the
Company will receive a corresponding deduction equal to the difference between
the price that the employee paid for the Plan Shares and the fair market value
of the Plan Shares on the date they were purchased. If, on the other hand, the
employee
12
<PAGE>
disposes of Plan Shares after both of the periods specified above, or if the
employee dies while owning the Plan Shares, then he or she will recognize
ordinary income (on the date of disposition or death) only to the extent of
the lesser of (i) the excess of the fair market value of the Plan Shares on
the date the option was granted over the option price (computed as of the
grant date); or (ii) the excess of the fair market value of the Plan Shares at
the time of death or disposition over the purchase price. In this case, the
Company will receive no corresponding deduction.
The foregoing summary is not a complete description of the U.S. Federal
income tax aspects of the 1989 Plan. Moreover, the foregoing summary relates
only to Federal income taxes; there may also be Federal estate and gift tax
consequences associated with the 1989 Plan, as well as foreign, state or local
tax consequences.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 28, 1999,
regarding Common Stock owned (i) by each person who is known by the Company to
own beneficially more than 5% of the Common Stock, (ii) by each of the
Company's directors and nominees for director, (iii) by each of the Named
Executive Officers (as defined below), and (iv) by all current directors and
executive officers as a group.
<TABLE>
<CAPTION>
Number of
Shares Percent of
Beneficially Outstanding
Name of Beneficial Owner Owned(1) Shares
- ------------------------ ------------ -----------
<S> <C> <C>
Richard J. Egan(2)................................... [5,127,502] [1]%
Maureen E. Egan*(3).................................. [5,127,502] [1]
Michael J. Cronin*(4)................................ [19,333] **
John F. Cunningham................................... [4,666] **
Robert M. Dutkowsky(5)............................... [87,407] **
John R. Egan(6)...................................... [1,229,300] **
W. Paul Fitzgerald*(7)............................... [140,371] **
Paul E. Noble, Jr.(8)................................ [110,132] **
Joseph F. Oliveri(9)................................. [116,733] **
Colin G. Patteson(10)................................ [270,850] **
Michael C. Ruettgers(11)............................. [1,054,210] **
FMR Corp.(12)........................................ [30,694,376] [6.1]
All current directors and executive officers as a
group (13 persons)(13).............................. [8,264,401] [1.6]
</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) Includes [2] shares held by Mr. Egan's wife, Maureen E. Egan, and excludes
[844,300] shares held by John R. Egan. Mr. Egan disclaims beneficial
ownership of all of such shares.
(3) Includes [5,127,500] shares held by Mrs. Egan's husband, Richard J. Egan,
and excludes [844,300] shares held by John R. Egan. Excludes [960,000]
shares and options to purchase [1,040,000] shares (679,997 of which are
currently exercisable or exercisable within 60 days from the date of this
table) held in the Maureen E. Egan Special Trust II, of which Mrs. Egan is
a beneficiary, but has no power to vote or direct the voting of and no
power to dispose of or direct the disposition of such shares. Mrs. Egan
disclaims beneficial ownership of all of such shares.
(4) Mr. Cronin is deemed to own [13,333] of these shares by virtue of options
to purchase these shares which are currently exercisable or exercisable
within 60 days from the date of this table.
(5) Mr. Dutkowsky is deemed to own all of these shares by virtue of options to
purchase these shares which are currently exercisable or exercisable
within 60 days from the date of this table.
(6) Mr. Egan is deemed to own [385,000] of these shares by virtue of options
to purchase these shares which are currently exercisable or exercisable
within 60 days from the date of this table.
14
<PAGE>
(7) Mr. Fitzgerald is deemed to own [75,333] of these shares by virtue of
options to purchase these shares which are currently exercisable or
exercisable within 60 days from the date of this table.
(8) Excludes [740] shares held by Mr. Noble's children, as to which he
disclaims beneficial ownership.
(9) Mr. Oliveri is deemed to own [13,333] of these shares by virtue of options
to purchase these shares which are currently exercisable or exercisable
within 60 days from the date of this table.
(10) Mr. Patteson is deemed to own [163,232] of these shares by virtue of
options to purchase these shares which are currently exercisable or
exercisable within 60 days from the date of this table. Excludes [7,590]
shares held by Mr. Patteson's wife and child, as to which he disclaims
beneficial ownership.
(11) Mr. Ruettgers is deemed to own [380,000] of these shares by virtue of
options to purchase these shares which are currently exercisable or
exercisable within 60 days from the date of this table. Excludes [6,200]
shares owned by Mr. Ruettgers' children, as to which he disclaims
beneficial ownership.
(12) Based solely on the Schedule 13G filed jointly by FMR Corp., Edward C.
Johnson 3d, Abigail P. Johnson and Fidelity Management & Research Company
dated February 1, 1999 indicating that (i) Fidelity Management & Research
Company, a wholly-owned subsidiary of FMR Corp., beneficially owns
27,463,234 shares as a result of serving as investment adviser to various
investment companies; (ii) Fidelity Management Trust Company, a wholly-
owned subsidiary of FMR Corp., beneficially owns 2,513,687 shares as a
result of serving as investment manager to certain institutional
accounts; (iii) Fidelity International Limited beneficially owns 689,254
shares as a result of serving as investment adviser to various non-U.S.
investment companies and certain institutional investors; (iv) Mr.
Johnson, individually or through his relationship with FMR Corp., has the
sole power to vote or direct the voting of 1,922,657 of these shares and
the sole power to dispose of or direct the disposition of 30,694,376 of
these shares; and (v) FMR Corp., through its relationships with the
foregoing persons or entities, has the sole power to vote or direct the
voting of 2,524,012 of these shares and the sole power to dispose of or
direct the disposition of 30,694,376 of these shares.
(13) Includes [1,164,022] shares beneficially owned by all current directors
and executive officers as a group based upon stock options which are
currently exercisable or exercisable within 60 days from the date of this
table. Excludes shares as to which such individuals have disclaimed
beneficial ownership.
The address of all persons listed above, other than FMR Corp., is c/o EMC
Corporation, 171 South Street, Hopkinton, Massachusetts 01748. The address
of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts 02109.
15
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's Chief
Executive Officer, the four remaining most highly paid executive officers of
the Company and a former executive officer of the Company (collectively, the
"Named Executive Officers") for the three fiscal years ended December 31,
1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
---------------------------------------------- ------------
Awards
Other Annual ------------ All Other
Name and Principal Position Year Salary($) Bonus($)(1) Compensation($) Options(#) Compensation($)
- --------------------------- ---- --------- ----------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Ruettgers..... 1998 673,462 1,089,100 53,371(2) 250,000 2,720(3)
President, Chief
Executive 1997 594,616 966,800 51,844(2) 500,000 2,000(4)
Officer and Director 1996 397,808 661,479 -- 500,000 2,000(4)
Robert M. Dutkowsky...... 1998 519,226 710,176 -- 122,222 315,271(5)
Executive Vice
President, 1997(6) 117,308 314,256 -- 400,000 --
Markets and Channels 1996 -- -- -- -- --
Richard J. Egan ......... 1998 -- 544,550 325,000(7) -- 182,989(8)
Chairman of the Board of 1997 -- 433,334 483,333(7) -- 234,239(8)
Directors 1996 105,500 236,400 100,000(7) 2,000,000(9) 291,840(8)
Colin G. Patteson ....... 1998 303,076 191,400 -- -- 2,771(10)
Senior Vice President, 1997 214,039 135,806 -- 400,000 2,000(4)
Chief Administrative 1996 199,039 201,370 -- -- 2,000(4)
Officer and Treasurer
Paul E. Noble, Jr........ 1998 260,768 223,296 -- 100,000 2,000(4)
Executive Vice
President, 1997 175,000 215,095 -- -- 2,000(4)
Products and Offerings 1996 174,522 182,042 -- 50,000 2,000(4)
John R. Egan............. 1998(11) 515,929 107,900 -- -- 2,000(4)
Executive Vice
President, 1997(12) 264,000 295,125 -- 500,000 2,000(4)
Products and Offerings 1996 171,538 173,652 -- -- 1,500(4)
and Director(11)
</TABLE>
- --------
(1) Includes performance bonuses and commissions accrued in year of service
whether paid during year of service or in succeeding year.
(2) Includes the amount of $26,126 for 1998 and $24,228 for 1997 for personal
use of Company-owned transportation. Also includes the amount of $17,837
for 1997 for tax planning advice.
(3) Includes the amount of $2,000 and $720 paid to Mr. Ruettgers' accounts in
the EMC 401(k) Plan and the EMC Supplemental Employee Retirement Program
("SERP"), respectively.
(4) The amount noted was paid to such executive officer's account in the EMC
401(k) Plan.
(5) Includes the amount of $312,500 to compensate Mr. Dutkowsky for certain
amounts he forfeited in connection with leaving his position at his prior
employer, and $2,000 and $771 paid to Mr. Dutkowsky's accounts in the EMC
401(k) Plan and the EMC SERP, respectively.
16
<PAGE>
(6) Mr. Dutkowsky joined the Company on September 26, 1997.
(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 paid to Mr. Egan's account in the
EMC 401(k) Plan. Also includes $182,989, $234,239 and $290,840, for 1998,
1997 and 1996, respectively, 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 1998, 1997 and 1996
($725,757, $789,601 and $794,496, 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
1998, 1997 or 1996. 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 of Directors, Maureen E. Egan is a Director
and John R. Egan is a Director of the Company. Under the agreement,
premiums equivalent, in general terms, to the aggregate annual increase in
the cash value of the policies will be advanced by the Company to the Egan
Family Irrevocable Insurance Trust and will be required to be repaid to
the Company (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.
(9) Mr. Egan transferred all of such options to a trust for the benefit of
"immediate family members" as defined in and pursuant to the terms and
conditions of such grants.
(10) Includes the amount of $2,000 and $771 paid to Mr. Patteson's accounts in
the EMC 401(k) Plan and the EMC SERP, respectively.
(11) Mr. Egan resigned as Executive Vice President, Products and Offerings on
September 18, 1998.
(12) Mr. Egan was on leave of absence from the Company effective June 12, 1996
to May 5, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in the fiscal year
ended December 31, 1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
------------------
Percent Potential Realized
Number of Total Value at Assumed
of Options Market Annual Rates of
Options Granted to Price per Stock Price
Granted Employees Exercise Share on Appreciation for Option Term
in in Fiscal Price Date of Expiration ---------------------------------
Name 1998 Year(1) per Share Grant Date 0% 5% 10%
---- ------- ---------- --------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael C. Ruettgers
(2).................... 125,000 2.55% $25.94 $51.88 7/22/08 $3,242,500 $7,320,882 $13,577,920
125,000 2.55 51.88 51.88 7/22/08 -- 4,078,382 10,335,420
Robert M. Dutkowsky
(3).................... 22,222 0.45 .01 42.19 6/03/08 937,324 1,526,941 2,431,531
100,000 2.00 61.50 61.50 10/21/08 -- 3,867,702 9,801,516
Richard J. Egan......... -- -- -- -- -- -- -- --
Colin G. Patteson....... -- -- -- -- -- -- -- --
Paul E. Noble, Jr. (4).. 100,000 2.00 51.88 51.88 7/22/08 -- 3,262,705 8,268,336
John R. Egan............ -- -- -- -- -- -- -- --
</TABLE>
17
<PAGE>
- --------
(1) The Company granted options representing an aggregate of 4,898,358 shares
of Common Stock to 2,339 employees of EMC and its subsidiaries in fiscal
1998 under the 1985 Plan and the 1993 Plan.
(2) Mr. Ruettgers' options become exercisable in increments of 20% over a
five-year period. The terms of such option grants are ten years from the
date of the grants, which was July 22, 1998. Such options are
transferable to "immediate family members," as defined in the grants.
(3) The options granted to Mr. Dutkowsky on June 3, 1998 become exercisable in
increments of 33 1/3% over an eighteen-month period. The options granted
to Mr. Dutkowsky on October 21, 1998 become exercisable in increments of
20% over a five-year period. The terms of such option grants are ten years
from the date of the grants.
(4) Mr. Noble'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 July 22, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in 1998 by the
Named Executive Officers and the value of such officers' unexercised options
at December 31, 1998.
<TABLE>
<CAPTION>
Number of
Unexercised Value of Unexercised
Number of Options at In-the-Money Options
Shares Fiscal Year End at Fiscal Year End
Acquired on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Ruettgers.... 300,000 $18,050,800 380,000 950,000 $30,265,060 $62,295,298
Robert M. Dutkowsky..... -- -- 87,407 434,815 5,224,521 21,989,127
Richard J. Egan......... -- -- -- -- -- --
Colin G. Patteson....... 20,384 664,682 83,232 332,000 5,589,168 22,288,001
Paul E. Noble, Jr....... 222,600 10,198,615 -- 130,000 -- 5,585,000
John R. Egan............ 325,000 18,373,363 385,000 400,000 30,686,493 26,659,360
</TABLE>
18
<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 Exchange Act that
might incorporate other filings with the Securities and Exchange Commission
(the "SEC"), including this Proxy Statement, in whole or in part, the
following report and the Stock Price Performance Graph on page 23 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 executive
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 for 1998, this review
often includes a comprehensive report from an independent executive
compensation consultant comparing the Company's executive compensation 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 are comparable to the Company in terms of revenues,
workforce size or growth rate. 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.
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. Base salaries are also determined by evaluating the financial
performance and, where appropriate, certain non-financial performance
measures, of the Company, and the performance of each executive officer.
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
19
<PAGE>
program is weighted heavily towards bonuses and other incentives, more tightly
coupling executive interests with those of the stockholders of EMC.
With respect to the base salary granted to Mr. Ruettgers in 1998, 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 1997, 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.
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 bonus with respect
to corporate performance for 1998 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. Ruettgers' bonus for 1998 was largely based on the Company's performance
in 1998. In 1998, the Company met or exceeded its primary performance goals.
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.
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
1985 Plan and the 1993 Plan. The guidelines used in 1998 by the Board of
Directors in making the stock option grants to Mr. Ruettgers and all other
executive officers of the Company took 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. In the event of poor corporate performance, the Board of Directors may
elect not to award options.
In 1998, Mr. Ruettgers received options to purchase 125,000 shares of Common
Stock at an exercise price equal to fair market value on the date of grant and
125,000 shares of Common Stock at an exercise price equal to 50% of fair
market value on the date of grant.
Policy on Deductibility of Compensation
Section 162(m) of 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
20
<PAGE>
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 tax 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.
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 1998, as in previous
years, the majority of the Company's executive compensation consisted of
compensation with performance-based 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
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
21
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee members are Michael J. Cronin, Chairman, John F.
Cunningham and Richard J. Egan. Richard J. Egan, Chairman of the Board of
Directors, 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 of Directors. In addition to Messrs. Cronin and
Cunningham, Richard J. Egan and Michael C. Ruettgers, who are executive
officers and Directors of the Company, John R. Egan, who was an executive
officer during the 1998 fiscal year and is currently a Director of the
Company, and W. Paul Fitzgerald, who is a former executive officer and current
Director of the Company, participated in deliberations of the Board of
Directors concerning the stock option portion of executive compensation during
the 1998 fiscal year.
22
<PAGE>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Fiscal Year
---------------------------------------------------------
1993 1994 1995 1996 1997 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
EMC.................. 100 133.33 93.19 200.76 332.57 1030.30
Computer Storage
Devices............. 100 115.34 128.20 245.12 257.88 506.02
S&P 500.............. 100 101.32 139.37 171.35 228.50 293.79
</TABLE>
23
<PAGE>
CERTAIN TRANSACTIONS
Periodically during 1998, the Company rented the private aircraft of Richard
J. Egan for use for EMC business trips and sales activities, for which
payments aggregated approximately $120,000. Mr. Egan is Chairman of the Board
of Directors.
In 1998, the Company retained the Thomas A. Fitzgerald Company to provide
various forms of corporate insurance and paid premiums of approximately
$1,600,000. Thomas A. Fitzgerald is the brother of W. Paul Fitzgerald and
Maureen E. Egan, Directors of the Company, the brother-in-law of Richard J.
Egan, Chairman of the Board of Directors and the uncle of John R. Egan, a
Director of the Company.
In 1998, the Company purchased approximately $94,000 of electronic
components from Interface Electronics Corporation. Joseph F. Oliveri, a
Director of the Company, is a Director, stockholder and President and Chief
Executive Officer of Interface Electronics Corporation.
The Company believes that the terms of the arrangements described above were
fair and not less favorable to the Company than could have been obtained from
unaffiliated parties.
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. The Board of Directors does not have a Nominating Committee.
<TABLE>
<S> <C> <C> <C>
Stock Repurchase
Executive Compensation Mergers and and Bond
Audit and Stock Option Acquisitions Redemption Oversight
- ------------ ---------------------- ------------------- --------------------
W. Paul
Fitzgerald* Michael J. Cronin* John F. Cunningham* Joseph F. Oliveri*
Michael J.
Cronin John F. Cunningham Michael J. Cronin John F. Cunningham
Joseph F.
Oliveri Richard J. Egan John R. Egan Richard J. Egan
Richard J. Egan W. Paul Fitzgerald
</TABLE>
- --------
* Chairman
The Audit Committee, which held two meetings in 1998, 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 seven
meetings in 1998, 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, which held two meetings in 1998,
reviews with management potential acquisitions.
24
<PAGE>
The Stock Repurchase and Bond Redemption Oversight Committee held no formal
meetings in 1998. This committee oversees and reviews with management the
redemption of any of the Company's bonds or convertible notes which may be
outstanding from time to time, and any common stock repurchase program of the
Company which may exist from time to time.
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; 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 the price per share determined by the Compensation Committee or the Board
of Directors 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 date of 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 April 22, 1998, pursuant to the 1992 Directors Plan, the Board of
Directors granted options to purchase 40,000 shares of Common Stock to each of
Messrs. Cronin, Fitzgerald and Oliveri, Directors of the Company, at an
exercise price of $21.125, equal to 50% of the fair market value of the Common
Stock on the date of grant.
----------------
Richard J. Egan, Chairman of the Board of Directors, is the husband of
Maureen E. Egan, a Director of the Company. He is also 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. Paul E. Noble, Jr., Executive Vice
President, Products and Offerings of the Company, is the nephew of Richard J.
and Maureen E. Egan and of W. Paul Fitzgerald.
ADVANCE NOTICE PROCEDURES
Under the Company's By-laws, nominations for a director may be made only by
the Board of Directors, a nominating committee of the Board of Directors, a
person appointed by the Board of Directors or by a stockholder entitled to
vote at the annual meeting of stockholders who has delivered notice to the
principal executive offices of the Company (containing certain information
specified in the By-laws) (i) not less than 95 days nor more than 125 days
prior to the anniversary date of the preceding year's annual meeting, or (ii)
if the meeting is called for a date not within thirty days before or after
such anniversary date, not later than the close of business on the 10th day
following the date notice of such meeting is mailed or made public, whichever
is earlier.
The By-laws also provide that no business may be brought before an annual
meeting of stockholders except as specified in the notice of the meeting or as
otherwise brought before the meeting by or at the direction of the Board of
Directors, the presiding officer or by a stockholder entitled to vote at such
annual meeting who has
25
<PAGE>
delivered notice to the principal executive offices of the Company (containing
certain information specified in the By-laws) (i) not less than 95 days nor
more than 125 days prior to the anniversary date of the preceding year's
annual meeting, or (ii) for a special meeting or an annual meeting called for
a date not within thirty days before or after such anniversary date, not later
than the close of business on the 10th day following the date notice of such
meeting is mailed or made public, whichever is earlier.
These requirements are separate and apart from and in addition to the
requirements that a stockholder must meet in order to have a stockholder
proposal included in the Company's Proxy Statement under Rule 14a-8 of the
Exchange Act. A copy of the full text of the By-law provisions discussed above
may be obtained by writing to the Clerk of the Company at 35 Parkwood Drive,
Hopkinton, Massachusetts 01748-9103.
STOCKHOLDER PROPOSALS
To be eligible for inclusion in the Company's Proxy Statement for the 2000
Annual Meeting of Stockholders, stockholder proposals must be received at
EMC's principal executive offices no later than November 20, 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP, who has
served as the Company's auditors since 1984, to examine the financial
statements of the Company for the 1999 fiscal year. The Company expects that
representatives of PricewaterhouseCoopers LLP 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 Common Stock, to file
reports of ownership and changes in ownership with the SEC and the NYSE.
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, 1998, all filing requirements were complied with in a
timely fashion.
26
<PAGE>
[Map and Directions Appear Here]
<PAGE>
EMC CORPORATION
1989 EMPLOYEE STOCK PURCHASE PLAN,
as amended January 20, 1999
Section 1. Purpose of Plan
---------------
The EMC Corporation 1989 Employee Stock Purchase Plan (the "Plan") is
intended to provide a method by which eligible employees of EMC Corporation and
its subsidiaries (collectively, the "Company") may use voluntary, systematic
payroll deductions to purchase the Company's common stock, $.01 par value,
("stock") and thereby acquire an interest in the future of the Company. For
purposes of the Plan, a subsidiary is any corporation in which the Company owns,
directly or indirectly, stock possessing 50% or more of the total combined
voting power of all classes of stock unless the Board of Directors of the
Company (the "Board of Directors") determines that employees of a particular
subsidiary shall not be eligible.
Section 2. Options to Purchase Stock
-------------------------
Under the Plan as now amended, no more than 12,000,000 shares* are
available for purchase (subject to adjustment as provided in Section 16)
pursuant to the exercise of options ("options") granted under the Plan to
employees of the Company ("employees"). The stock to be delivered upon exercise
of options under the Plan may be either shares of the Company's authorized but
unissued stock, or shares of reacquired stock, as the Board of Directors shall
determine.
Section 3. Eligible Employees
------------------
Except as otherwise provided in Section 20, each employee who has completed
six months or more of continuous service in the employ of the Company shall be
eligible to participate in the Plan.
Section 4. Method of Participation
-----------------------
The periods January 1 to June 30 and July 1 to December 31 of each year
shall be option periods. Each person who will be an eligible employee on the
first day of any option period may elect to participate in the Plan by executing
and delivering, at least 15 days prior to such day, a payroll deduction
authorization in accordance with Section 5. Such employee shall thereby become a
participant ("participant") on the first day of such option period and shall
remain a participant until his or her participation is terminated as provided in
the Plan.
*Subject to stockholder approval
Page 1 of 7
<PAGE>
Section 5. Payroll Deductions
------------------
The payroll deduction authorization shall request withholding, at a rate of
not less than 2% nor more than 10% from the participant's compensation (subject
to a maximum of $2,500 per option period), by means of substantially equal
payroll deductions over the option period; provided, however, that in the event
-------- -------
any amount remaining in a participant's withholding account at the end of an
option period (which would be equal to a fractional share) is rolled over to the
opening balance in a participant's withholding account for the next option
period pursuant to Section 8 below (a "rollover"), such amount will be applied
to the last payroll deduction for the next option period, thereby reducing the
amount of that payroll deduction; further provided that the maximum of $2,500
----------------
per option period shall be reduced by the amount of any rollover. For purposes
of the Plan, "compensation" shall mean all cash compensation paid to the
participant by the Company. A participant may change the withholding rate of his
or her payroll deduction authorization by written notice delivered to the
Company at least 15 days prior to the first day of the option period as to which
the change is to be effective. All amounts withheld in accordance with a
participant's payroll deduction authorization shall be credited to a withholding
account for such participant.
Section 6. Grant of Options
----------------
Each person who is a participant on the first day of an option period shall
as of such day be granted an option for such period. Such option shall be for
the number of shares of stock to be determined by dividing (a) the balance in
the participant's withholding account on the last day of the option period by
(b) the purchase price per share of the stock determined under Section 7, and
eliminating any fractional share from the quotient. In the event that the number
of shares then available under the Plan is otherwise insufficient, the Company
shall reduce on a substantially proportionate basis the number of shares of
stock receivable by each participant upon exercise of his or her option for an
option period and shall return the balance in a participant's withholding
account to such participant.
Section 7. Purchase Price
--------------
The purchase price of stock issued pursuant to the exercise of an option
shall be 85% of the fair market value of the stock at (a) the time of grant of
the option or (b) the time at which the option is deemed exercised, whichever is
less. Fair market value shall be determined in
Page 2 of 7
<PAGE>
accordance with the applicable provisions of the Internal Revenue Code of 1986,
as amended or restated from time to time (the "Code"), or regulations issued
thereunder, or, in the absence of any such provisions or regulations, shall be
deemed to be the last sale price at which the stock is traded on the day in
question or the last prior date on which a trade occurred as reported in The
---
Wall Street Journal; or, if The Wall Street Journal is not published or does not
- ------------------- -----------------------
list the stock, then in such other appropriate newspaper of general circulation
as the Board of Directors may prescribe; or, if the last price at which the
stock traded is not generally reported then the mean between the reported bid
and asked prices at the close of the market on the day in question or the last
prior date when such prices were reported.
Section 8. Exercise of Options
-------------------
If an employee is a participant in the Plan on the last business day of an
option period, he or she shall be deemed to have exercised the option granted to
him or her for that period. Upon such exercise, the Company shall apply the
balance of the participant's withholding account to the purchase of the number
of whole shares of stock determined under Section 6, and as soon as practicable
thereafter shall issue and deliver certificates for said shares to the
participant. The balance, if any, of the participant's withholding account in
excess of the total purchase price of the whole shares so issued shall be
applied to the opening balance in his or her withholding account for the next
option period. No fractional shares shall be issued hereunder.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to deliver any shares unless and until, in the opinion of the
Company's counsel, all requirements of applicable federal and state laws and
regulations (including any requirements as to legends) have been complied with,
nor, if the outstanding stock is at the time listed on any securities exchange,
unless and until the shares to be delivered have been listed (or authorized to
be added to the list upon official notice of issuance) upon such exchange, nor
unless or until all other legal matters in connection with the issuance and
delivery of shares have been approved by the Company's counsel.
Section 9. Interest
--------
No interest will be payable on withholding accounts.
Page 3 of 7
<PAGE>
Section 10. Cancellation and Withdrawal
---------------------------
A participant who holds an option under the Plan may at any time prior to
exercise thereof under Section 8 cancel all (but not less than all) of his or
her option by written notice delivered to the Company. Upon such cancellation,
the balance in his or her withholding account shall be returned to him or her.
A participant may terminate his or her payroll deduction authorization as
of any date by written notice delivered to the Company and shall thereby cease
to be a participant as of such date. Any participant who voluntarily terminates
his or her payroll deduction authorization prior to the last business day of an
option period shall be deemed to have cancelled his or her option.
Section 11. Termination of Employment
-------------------------
Except as otherwise provided in Section 12, upon the termination of a
participant's employment with the Company for any reason whatsoever, he or she
shall cease to be a participant, and any option held by him or her under the
Plan shall be deemed cancelled, the balance of his or her withholding account
shall be returned to him or her, and he or she shall have no further rights
under the Plan. For purposes of this Section 11, a participant's employment
will not be considered terminated in the case of sick leave or other bona fide
leave of absence approved for purposes of this Plan by the Company or a
subsidiary or in the case of a transfer to the employment of a subsidiary or to
the employment of the Company.
Section 12. Death or Retirement of Participant
----------------------------------
In the event a participant holds any option hereunder at the time his or
her employment with the Company is terminated (1) by his or her retirement with
the consent of the Company, and such retirement is within three months of the
time such option becomes exercisable, or (2) by his or her death, whenever
occurring, then such participant (or his or her legal representative), may, by a
writing delivered to the Company on or before the date such option is
exercisable, elect either (a) to cancel any such option and receive in cash the
balance in his or her withholding account, or (b) to have the balance in his or
her withholding account applied as of the last day of the option period to the
exercise of his or her option pursuant to Section 8, and have the balance, if
any, in such account in excess of the total purchase price of the whole shares
so issued returned in cash. In the event such participant (or his or her legal
representative) does not file a written election as provided above,
Page 4 of 7
<PAGE>
any outstanding option shall be treated as if an election had been filed
pursuant to subparagraph 12(a) above.
Section 13. Participant's Rights Not Transferable, etc.
-------------------------------------------
All participants granted options under the Plan shall have the same rights
and privileges. Each participant's rights and privileges under any option
granted under the Plan shall be exercisable during his or her lifetime only by
him or her, and shall not be sold, pledged, assigned, or otherwise transferred
in any manner whatsoever except by will or the laws of descent and distribution.
In the event any participant violates the terms of this Section, any options
held by him or her may be terminated by the Company and, upon return to the
participant of the balance of his or her withholding account, all his or her
rights under the Plan shall terminate.
Section 14. Employment Rights
-----------------
Neither the adoption of the Plan nor any of the provisions of the Plan
shall confer upon any participant any right to continued employment with the
Company or a subsidiary or affect in any way the right of the Company to
terminate the employment of such participant at any time.
Section 15. Rights as a Shareholder
-----------------------
A participant shall have the rights of a shareholder only as to stock
actually acquired by him or her under the Plan.
Section 16. Change in Capitalization
------------------------
In the event of a stock dividend, stock split or combination of shares,
recapitalization, merger in which the Company is the surviving corporation or
other change in the Company's capital stock, the number and kind of shares of
stock or securities of the Company to be subject to the Plan and to options then
outstanding or to be granted hereunder, the maximum number of shares or
securities which may be delivered under the Plan, the option price and other
relevant provisions shall be appropriately adjusted by the Board of Directors,
whose determination shall be binding on all persons. In the event of a
consolidation or merger in which the Company is not the surviving corporation or
in the event of the sale or transfer of substantially all the Company's assets
(other than by the grant of a mortgage or security interest), all outstanding
options shall thereupon terminate, provided that prior to the effective date of
any such merger, consolidation or sale
Page 5 of 7
<PAGE>
of assets, the Board of Directors shall either (a) return the balance in all
withholding accounts and cancel all outstanding options, or (b) accelerate the
exercise date provided for in Section 8, or (c) if there is a surviving or
acquiring corporation, arrange to have that corporation or an affiliate of that
corporation grant to the participants replacement options having equivalent
terms and conditions as determined by the Board of Directors.
Section 17. Administration of Plan
----------------------
The Plan will be administered by the Board of Directors. The Board of
Directors will have authority, not inconsistent with the express provisions of
the Plan, to take all action necessary or appropriate hereunder, to interpret
its provisions, and to decide all questions and resolve all disputes which may
arise in connection therewith. Such determinations of the Board of Directors
shall be conclusive and shall bind all parties.
The Board may, in its discretion, delegate its powers with respect to the
Plan to an Employee Benefit Plan Committee or any other committee (the
"Committee"), in which event all references to the Board of Directors hereunder,
including without limitation the references in Section 17, shall be deemed to
refer to the Committee. A majority of the members of any such 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.
Section 18. Amendment and Termination of Plan
---------------------------------
The Board of Directors may at any time or times amend the Plan or amend any
outstanding option or options 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, provided that (except to the extent explicitly
required or permitted herein) no such amendment will, without the approval of
the shareholders of the Company, (a) increase the maximum number of shares
available under the Plan, (b) reduce the option price of outstanding options or
reduce the price at which options may be granted, (c) change the conditions for
eligibility under the Plan, or (d) amend the provisions of this Section 18 of
the Plan, and no such amendment will adversely affect the rights of any
participant (without his or her consent) under any option theretofore granted.
Page 6 of 7
<PAGE>
The Plan may be terminated at any time by the Board of Directors, but no
such termination shall adversely affect the rights and privileges of holders of
the outstanding options.
Section 19. Approval of Shareholders
------------------------
The Plan shall be subject to the approval of the shareholders of the
Company, which approval shall be secured within twelve months after the date the
Plan is adopted by the Board of Directors. Notwithstanding any other provisions
of the Plan, no option shall be exercised prior to the date of such approval.
Section 20. Limitations
-----------
Notwithstanding any other provision of the Plan:
(a) An employee shall not be eligible to receive an option pursuant to the
Plan if, immediately after the grant of such option to him or her, he or she
would (in accordance with the provisions of Sections 423 and 425(d) of the Code)
own or be deemed to own stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the employer corporation or of its
parent or subsidiary corporation, as defined in Section 425 of the Code.
(b) No employee shall be granted an option under this Plan that would
permit his or her rights to purchase shares of stock under this Plan of the
Company to accrue at a rate which exceeds $25,000 in fair market value of such
stock (determined at the time the option is granted) for each calendar year
during which any such option granted to such employee is outstanding at any
time, as provided in Sections 423 and 425 of the Code.
(c) No employee shall be granted an option under this Plan that would
permit him or her to withhold more than $2,500 in each option period or $5,000
per calendar year, less the amount of any rollover.
(d) No employee whose customary employment is 20 hours or less per week
shall be eligible to participate in the Plan.
(e) No independent contractor shall be eligible to participate in the
Plan.
Page 7 of 7
<PAGE>
EMC CORPORATION
1993 STOCK OPTION PLAN, as amended January 20, 1999
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.
Page 1 of 11
<PAGE>
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.
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.
Page 2 of 11
<PAGE>
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 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 40,000,000*,
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), or if shares of Common Stock are reacquired by the
Company upon the rescission of an exercise of an option, the number of shares of
Common Stock as to which an option has not been exercised prior to termination,
or have been reacquired upon the rescission of an option, 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.
*Subject to stockholder approval
Page 3 of 11
<PAGE>
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.
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
Page 4 of 11
<PAGE>
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.
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
Page 5 of 11
<PAGE>
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 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).
Page 6 of 11
<PAGE>
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, 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
Page 7 of 11
<PAGE>
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
-------------------------
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.
7.3.10 Claw-back for Detrimental Activity. The following provisions
----------------------------------
of this Section 7.3.10 shall apply to options granted on or after July 1,
1998 to (i) Participants who are classified by the Company or a Subsidiary
as an executive officer, senior officer, or officer (collectively, an
"Officer") of the Company or a Subsidiary; and (ii) certain other
Participants designated by the Committee or the Board of Directors to be
subject to the terms of this Section 7.3.10 (such designated Participants
together with Officers referred to collectively as "Senior Participants").
The Committee or the Board of Directors may cancel, rescind, suspend or
otherwise limit or
Page 8 of 11
<PAGE>
restrict any unexpired option at any time if the Senior Participant engages
in "Detrimental Activity" (as defined below). Furthermore, in the event a
Senior Participant engages in Detrimental Activity at any time prior to or
during the six months after any exercise of an option, such exercise may be
rescinded until the later of (i) two years after such exercise or (ii) two
years after such Detrimental Activity. Upon such rescission, the Company at
its sole option may require the Senior Participant to (i) deliver and
transfer to the Company the shares of Common Stock received by the Senior
Participant upon such exercise, (ii) pay to the Company an amount equal to
any realized gain received by the Senior Participant from such exercise, or
(iii) pay to the Company an amount equal to the market price (as of the
exercise date) of the Common Stock acquired upon such exercise minus the
respective exercise price. The Company shall be entitled to set-off any
such amount owed to the Company against any amount owed to the Senior
Participant by the Company. As used in this subsection 7.3.10, "Detrimental
Activity" shall include: (i) the failure to comply with the terms of the
Plan or certificate or agreement evidencing the option, (ii) the failure to
comply with any term set forth in the Company's Key Employee Agreement
(irrespective of whether the Senior Participant is a party to the Key
Employee Agreement), (iii) any activity that results in termination of the
Senior Participant's employment for cause; (iv) a violation of any rule,
policy, procedure or guideline of the Company; (v) the Senior Participant
being convicted of, or entering a guilty plea with respect to a crime
whether or not connected with the Company; or (vi) any other conduct or act
determined to be injurious, detrimental or prejudicial to any interest of
the Company.
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 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
Page 9 of 11
<PAGE>
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.
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
Page 10 of 11
<PAGE>
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 11 of 11
<PAGE>
PROXY PROXY
EMC CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, MAY 5, 1999
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, a Massachusetts
corporation (the "Company"), to be held on May 5, 1999, at 10:00 a.m., local
time at the Company's facility at 50 Constitution Boulevard, Franklin,
Massachusetts, and at any adjournments thereof, all the shares of Common Stock,
$.01 par value per share, of the Company 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, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED?
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
<TABLE>
<S> <C>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE For Against Abstain
_________________________________________________ 2. To amend the Company's [_] [_] [_]
EMC CORPORATION Articles of Organization to
_________________________________________________ increase the number of shares of
authorized Common Stock, $.01
Mark box at right if an address change has [_] par value, to 3,000,000,000 shares.
been noted on the reverse side of this card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
With- For All
For hold Except
1. Election of Directors: [_] [_] [_] For Against Abstain
Electing three directors to serve 3. To approve the addition of [_] [_] [_]
a three-year term as Class III 8,500,000 shares of Common
Directors and for all nominees. Stock, $.01 par value, to the
Company's 1993 Stock Option Plan.
Michael J. Cronin
Maureen E. Egan THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
W. Paul Fitzgerald
For Against Abstain
If you do not wish your shares voted "For" a 4. To approve the addition of [_] [_] [_]
particular nominee, mark the "For All Except" 2,200,000 shares of Common
box and strike a line through the nominee's name. Stock, $.01 par value, to the
Your shares will be voted for the remaining nominee(s). Company's 1989 Employee
Stock Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF EACH OF THE NOMINEES LISTED ABOVE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 4.
RECORD DATE SHARES: 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 THREE NOMINEES NOTED
Please be sure to sign and date this Proxy. HEREON TO THE BOARD OF DIRECTORS TO SERVE FOR A THREE-YEAR
TERM AS CLASS III DIRECTORS, APPROVING THE AMENDMENT TO
THE COMPANY'S ARTICLES OF ORGANIZATION AND THE ADDITION OF
_____________________________________________________ SHARES TO THE COMPANY'S 1993 STOCK OPTION PLAN AND 1989
Stockholder sign here Co-owner sign here EMPLOYEE STOCK PURCHASE 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
Date ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
</TABLE>
DETACH CARD
