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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
EMC CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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[LOGO OF EMC2]
March 17, 2000
Dear Stockholder:
We cordially invite you to attend our 2000 Annual Meeting, which will be
held on Wednesday, May 3, 2000, at 10:00 a.m. at the Company's facility at 4
Coslin Drive, Southborough, Massachusetts. A map with directions to the
meeting is on the back cover of the attached Proxy Statement.
At this meeting you are being asked to elect two Class I members to the
Board of Directors for a three-year term and to approve the addition of
10,000,000 shares of common stock to the 1993 Stock Option Plan and an
amendment 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 attached Proxy Statement, which
contains detailed information about these proposals.
Your vote is important regardless of the number of shares you own.
Accordingly, we urge you to complete, sign, date and return your proxy card
promptly in the enclosed postage-paid envelope. If you elected to access the
2000 Proxy Statement and Annual Report on Form 10-K for 1999 electronically,
you will not be receiving a proxy card and must vote electronically. The fact
that you have returned your proxy card 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. If you plan to join us at the meeting, please bring
the admission ticket included on the back cover of the Proxy Statement.
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 3rd.
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 of
the Proxy Statement for details regarding the options available to you.
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EMC CORPORATION
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 2000
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 4 Coslin Drive, Southborough, Massachusetts,
on Wednesday, May 3, 2000, at 10:00 a.m. for the following purposes:
1. To elect two members to the Board of Directors to serve for a three-year
term as Class I Directors.
2. To amend the Company's 1993 Stock Option Plan to increase the number of
shares available for grant under such plan by 10,000,000 shares.
3. To amend the Company's 1989 Employee Stock Purchase Plan to provide that
employees with three months of continuous service to the Company shall
be eligible to participate in the plan.
4. To transact any and all other business that may properly come before the
meeting or any adjournments thereof.
All stockholders of record at the close of business on March 6, 2000 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 2000 Proxy Statement and
Annual Report on Form 10-K for 1999 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 1999 is enclosed herewith.
By order of the Board of
Directors
THOMAS J. DOUGHERTY, Clerk
March 17, 2000
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EMC CORPORATION
PROXY STATEMENT
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INFORMATION CONCERNING SOLICITATION AND VOTING
General
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of EMC Corporation, a Massachusetts
corporation ("EMC" or the "Company"), for the Annual Meeting of Stockholders
of EMC to be held on May 3, 2000, and any adjournments thereof, for the
purposes set forth in the 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, 1999 and the accompanying proxy card are first
being distributed to stockholders on or about March 17, 2000.
All per share amounts of the common stock, $.01 par value (the "Common
Stock"), of the Company noted in this Proxy Statement have been adjusted to
give effect to all stock splits.
Voting Rights and Outstanding Shares
As of March 6, 2000, EMC had outstanding 1,064,771,468 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 6, 2000 to one vote on each of the
matters to be voted upon at the meeting.
The expenses of preparing, printing and assembling the materials used in the
solicitation of proxies will be borne by EMC. In addition to the solicitation
of proxies by use of the mails, EMC may utilize the services of certain of its
officers and employees (who will receive no compensation therefor in addition
to their regular salaries) to solicit proxies personally and by mail,
telephone and electronic means from brokerage houses and other stockholders.
Also, the Company has retained D.F. King & Co., Inc. to aid in the
solicitation of proxies. D.F. King & Co., Inc. will receive a fee 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 I Directors, the two persons listed under "Election of Directors" to
serve until their successors are elected and qualified and in favor of each of
the additional items set forth in the accompanying Notice of the Annual
Meeting. Should any person so named be unable or unwilling to serve as
director, the persons named in the enclosed form of proxy for the Annual
Meeting intend to vote for such other person as management may recommend. Any
stockholder has the right to revoke his or her Proxy at any time before it is
voted by attending the meeting and voting in person or filing with the Clerk
of the Company either a written instrument revoking the Proxy or another newly
executed proxy bearing a later date.
An automated system administered by the Company's transfer agent tabulates
all votes cast at the Annual Meeting. Abstentions and broker non-votes are
each included in the determination of the number of shares
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present and voting for purposes of determining the presence of a quorum. Each
is tabulated separately. If a quorum is present, the two nominees who receive
the greatest number of votes properly cast will be elected as Class I
Directors. Neither abstentions nor broker non-votes will have any effect upon
the outcome of voting with respect to the election of directors. A broker non-
vote will have no effect upon the outcome of voting on Proposals 2 or 3.
However, an abstention will have the same effect as a vote against Proposals 2
and 3.
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 2000 Proxy Statement and Annual Report on Form
10-K for 1999 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. If you vote this year's proxy
electronically, you may also elect to receive future proxy and other materials
electronically by following the instructions when you vote.
Annual Meeting Admission
If you plan to attend the Annual Meeting in person, please complete and
return the RSVP card mailed with this Proxy Statement and detach and retain
the admission ticket which is included on the back cover of this Proxy
Statement. If you received your proxy materials electronically, please go to
www.emc.com/annualmeeting, to complete your RSVP and to request an admission
ticket. Stockholders who do not present admission tickets at the meeting may
be required to present verification of ownership, such as a bank or brokerage
firm account statement.
Other Business
As of the date hereof, management of EMC has no knowledge of any business
other than that described in the Notice of the Annual Meeting that will be
presented for consideration at such meeting. If any other business should
properly come before such meeting, the persons appointed by the enclosed form
of Proxy shall have discretionary authority to vote all such Proxies as they
shall decide.
PROPOSAL 1
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE NOMINEES LISTED BELOW.
Pursuant to Section 50A of Chapter 156B of the Massachusetts General Laws,
the Board of Directors is currently divided into three classes, having
staggered terms of three years each. Under Section 50A and the By-laws of the
Company, the Board of Directors may determine the total number of directors
and the number of directors to be elected at any annual meeting of
stockholders or special meeting in lieu thereof. The Board of Directors has
fixed at eight the total number of directors and has fixed at two the number
of Class I Directors to be elected at the 2000 Annual Meeting. Of the current
total of eight directors, two Class I Directors have terms expiring at the
2000 Annual Meeting, three Class II Directors have terms expiring at the 2001
Annual Meeting
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and three Class III Directors have terms expiring at the 2002 Annual Meeting.
The two directors whose terms expire at the 2000 Annual Meeting have been
nominated by the Board of Directors for election at such meeting. Both of the
nominees for director are now Class I members of the Board of Directors. Each
Class I Director elected at the 2000 Annual Meeting will serve until the 2003
Annual Meeting of Stockholders or special meeting in lieu thereof, and until
that director's successor is elected and qualified.
Information With Respect to Nominees
Set forth below is information with respect to each nominee for Class I
Director to be elected at the Annual Meeting and for each Class II Director
and Class III Director. All of the directors were previously elected by the
stockholders except for Alfred M. Zeien, who was elected to the Board of
Directors in December 1999.
NOMINEES TO SERVE AS DIRECTORS FOR A THREE-YEAR TERM EXPIRING AT
THE 2003 ANNUAL MEETING (CLASS I DIRECTORS)
Richard J. Egan
Mr. Egan, age 64, 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 the Company in January 1988. Prior to January 1988, he was also
President of EMC. From 1979 to January 1992 he was Chief Executive Officer
of the Company. He is also a Director of Cognition Corporation, a CAD/CAM
software supplier, NSTAR, a public utility, and NetScout Systems, Inc., a
provider of network and application performance management solutions. Mr.
Egan is Chairman of the Mergers and Acquisitions Committee and is a member
of the Executive Compensation and Stock Option Committee and the Stock
Repurchase and Bond Redemption Oversight Committee of EMC.
Alfred M. Zeien
Mr. Zeien, age 69, was elected to the Board of Directors in December 1999.
From February 1991 to April 1999, Mr. Zeien served as Chairman of the Board
and Chief Executive Officer of The Gillette Company ("Gillette"), a
consumer products company. Mr. Zeien joined Gillette in 1968 and held
various positions with Gillette including President and Chief Operating
Officer. Mr. Zeien is also a director of Gillette, Massachusetts Mutual
Life Insurance Company, a financial services company, Polaroid Corporation,
an instant and digital imaging company, and Raytheon Company, a high
technology and electronics company.
DIRECTORS SERVING A TERM EXPIRING AT THE
2001 ANNUAL MEETING (CLASS II DIRECTORS)
John R. Egan
Mr. Egan, age 42, 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. Mr. Egan has remained an
employee of the Company. Mr. Egan has also been a principal
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in a venture capital firm since October 1998. Mr. Egan is a member of the
Mergers and Acquisitions Committee of EMC.
Joseph F. Oliveri
Mr. Oliveri, age 51, 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 Stock Repurchase and
Bond Redemption Oversight Committee and a member of the Audit Committee of
EMC.
Michael C. Ruettgers
Mr. Ruettgers, age 57, has been Chief Executive Officer of the Company
since January 1992. He has served as a Director of the Company since May
1992. Mr. Ruettgers served as President of EMC from October 1989 to January
2000. He also served as Executive Vice President, Operations of EMC from
July 1988 to October 1989 and Chief Operating Officer from October 1989 to
January 1992. Mr. Ruettgers is also a Director of PerkinElmer, Inc., a
diversified technology company.
DIRECTORS SERVING A TERM EXPIRING AT THE
2002 ANNUAL MEETING (CLASS III DIRECTORS)
Michael J. Cronin
Mr. Cronin, age 61, 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
Executive Compensation and Stock Option Committee and a member of the Audit
Committee and Mergers and Acquisitions Committee of EMC.
Maureen E. Egan
Mrs. Egan, age 62, 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.
W. Paul Fitzgerald
Mr. Fitzgerald, age 59, has been a Director of the Company since March
1991. From January 1985 to January 1988, he was Vice President, Finance of
EMC. 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. Mr. Fitzgerald
retired as an employee of the Company in October 1995. Mr. Fitzgerald is
Chairman of the Audit Committee and a member of the Stock Repurchase and
Bond Redemption Oversight Committee of EMC.
During the fiscal year ended December 31, 1999, the Company's Board of
Directors held thirteen meetings.
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PROPOSAL 2
APPROVAL OF AMENDMENT TO THE COMPANY'S 1993 STOCK OPTION PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2
On May 12, 1993, the Company's stockholders adopted and approved the 1993
Plan and 24,000,000 shares of Common Stock were reserved for issuance
thereunder. On May 10, 1995, May 7, 1997, May 6, 1998 and May 5, 1999, the
1993 Plan was amended to include an additional 8,000,000, 24,000,000,
7,000,000 and 17,000,000 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 80,000,000. As of February 29, 2000, 18,854,713 shares
remained available for future option grants under this plan.
On March 5, 2000, the Board of Directors approved an amendment to the 1993
Plan to increase the number of shares of Common Stock available under such
plan by 10,000,000 shares. The affirmative vote of a majority of the shares
present, in person or by proxy, and entitled to vote at the Annual Meeting is
required to approve this amendment to the 1993 Plan. Additional shares of
Common Stock 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
options covering the shares of Common Stock currently available under the 1993
Plan 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 March 5, 2000 amendment adding 10,000,000 shares is approved by the
Company's stockholders, a total of 90,000,000 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 and the Compensation Committee are authorized to
approve all transactions under the 1993 Plan and to determine the provisions
of options to be granted under the 1993 Plan. The Compensation Committee was
appointed by and serves at the pleasure of the Board of Directors and, subject
to the 1993 Plan, each of the Board of Directors and the Compensation
Committee has full authority to interpret the terms of the 1993 Plan and
options granted under the 1993 Plan, to adopt, amend and rescind rules and
guidelines for the administration of the 1993 Plan and for its own acts and
proceedings and to decide all questions and settle all controversies and
disputes which may arise in connection with the 1993 Plan; provided that any
change to the terms of an option will be approved by the Board of Directors to
the extent such change would be deemed to be a new option grant or such terms
relate to a subsequent transaction that would not be exempt from Section 16(b)
of the Securities Exchange Act of 1934, 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.
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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, in 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 29, 2000, there were
approximately 18,000 employees eligible to participate 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.
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
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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 dissolution,
liquidation, consolidation or merger, the Company will either (i) make all
outstanding options immediately exercisable or (ii) arrange to have the
surviving corporation grant replacement options to the option holders.
The exercise price of incentive stock options may not be less than 100% of
the fair market value of the Common Stock on the date the option is granted,
except as stated otherwise below. The aggregate fair market 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 at the time of the grant owns, directly or
indirectly through application of the attribution rules of the Code, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of its subsidiaries unless the option price 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
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holder or a deduction to the Company. If the option holder does not dispose of
stock received upon exercise of an incentive stock option within two years
from the date the option is granted 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 the 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 and
local tax consequences.
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE COMPANY'S
1989 EMPLOYEE STOCK PURCHASE PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
On May 10, 1989, the Company's stockholders adopted the Company's 1989
Employee Stock Purchase Plan (the "1989 Plan") and 3,600,000 shares of Common
Stock were reserved for purchase thereunder. On May 8, 1991, May 12, 1993, May
8, 1996 and May 5, 1999, the 1989 Plan was amended to include an additional
7,200,000, 4,800,000, 4,000,000 and 4,400,00 shares of Common Stock,
respectively. Currently, the total number of shares of Common Stock that are
authorized to be purchased under the 1989 Plan is 24,000,000. As of February
29, 2000, 6,679,700 of these shares remained available for future purchases
under the 1989 Plan.
8
<PAGE>
On January 19, 2000, the Board of Directors approved an amendment to the
1989 Plan to provide that employees having at least three months of continuous
service to the Company on the date of grant of an option under the 1989 Plan
shall be eligible to participate in the 1989 Plan, except for employees whose
customary employment is 20 hours or less per week. 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 believes that decreasing the continuous service requirement from six
months to three months will assist the Company's efforts to attract and retain
qualified employees. The proceeds received by the Company from sales of Common
Stock under the 1989 Plan are used for the general corporate purposes of the
Company.
Summary of the 1989 Plan
A total of not more than 24,000,000 shares of Common Stock may be issued
under the 1989 Plan. Such shares may, at 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. Currently, 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 would 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 29, 2000, there were approximately 16,000 employees of
the Company and its subsidiaries eligible to participate in the 1989 Plan and
approximately 6,300 employees participating in the 1989 Plan. If the January
19, 2000 amendment is approved, each employee of the Company or a subsidiary
of the Company having at least three months of continuous service on the date
of grant of an option will be eligible to participate in the 1989 Plan, except
for employees whose customary employment is 20 hours or less per week.
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 $5,000 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
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 at the time of exercise.
In the event the number of shares of Common Stock available in any option
period 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
9
<PAGE>
interest. During an employee's lifetime, his or her rights in an option will
be exercisable only by him or her and may not be sold, pledged, assigned or
otherwise transferred. The employee or his or her legal representative may
elect to have the amount credited to his or her withholding account at the
time of his or her death applied to the exercise of his or her option for the
benefit of named beneficiaries. Nothing in the 1989 Plan is to be construed so
as to give an employee the right to be retained in the service of the Company.
In the event there is a change in the Common Stock due to a stock dividend,
stock split, combination of shares, recapitalization, merger or other capital
change, the aggregate number of shares 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 acquired under a 1989 Plan option ("Plan Shares") will vary depending
upon the timing of the disposition. For these purposes, a "disposition"
includes any transfer of shares other than certain transfers at death, certain
tax-free exchanges, or a mere pledge or hypothecation. If the employee
disposes of Plan Shares within two years after the corresponding option was
granted, or within one year after the Plan Shares were purchased, the employee
will recognize ordinary income on the date of disposition and the Company will
receive a corresponding deduction equal to the difference between the price
that the employee paid for the Plan Shares and the fair market value of the
Plan Shares on the date they were purchased. If, on the other hand, the
employee disposes of Plan Shares after both of the periods specified above, or
if the employee dies while owning the Plan Shares, then he or she will
recognize ordinary income (on the date of disposition or death) only to the
extent of the lesser of (i) the excess of the fair market value of the shares
at the time 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 and
local tax consequences.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the Company's
Common Stock owned on February 29, 2000 (i) by each person who is known by the
Company to own beneficially more than 5% of the Company's Common Stock, (ii)
by each of the Company's directors and nominees for director owning Common
Stock in the Company, (iii) by each of the Named Executive Officers (as
defined below) and (iv) by all 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)*.................................. 9,128,247 **
Maureen E. Egan(3)................................... 9,128,247 **
Michael J. Cronin(4)................................. 43,333 **
Robert M. Dutkowsky(5)............................... 389,630 **
John R. Egan(6)...................................... 2,401,055 **
W. Paul Fitzgerald(7)................................ 307,409 **
Paul E. Noble, Jr.(8)................................ 119,854 **
Joseph F. Oliveri(9)................................. 215,133 **
Colin G. Patteson(10)................................ 476,256 **
Michael C. Ruettgers(11)............................. 2,258,420 **
William J. Teuber, Jr.(12)........................... 82,266 **
Alfred M. Zeien*..................................... -- --
All directors and current executive officers as a
group (15 persons) (13)............................. 15,187,079 1.5%
</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 currently
exercisable or exercisable within 60 days of the date of this table.
(2) Includes 128,247 shares held by Mr. Egan's wife, Maureen E. Egan and
excludes 2,401,055 shares held by John R. Egan. Richard J. Egan disclaims
beneficial ownership of all such shares.
(3) Includes 9,000,000 shares held by Mrs. Egan's husband, Richard J. Egan,
and excludes 2,401,055 shares held by John R. Egan. Excludes 1,920,000
shares and options to purchase 2,290,483 shares (2,053,333 of which are
currently exercisable) held in the Maureen E. Egan Special Trust II and
the Maureen E. Egan Special Trust III, 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 such shares.
(4) Mr. Cronin is deemed to own 38,333 of these shares by virtue of options
to purchase these shares.
(5) Mr. Dutkowsky is deemed to own all of these shares by virtue of options
to purchase these shares.
(6) Mr. John Egan is deemed to own 770,000 of these shares by virtue of
options to purchase these shares.
(7) Mr. Fitzgerald is deemed to own 177,333 of these shares by virtue of
options to purchase these shares.
(8) Excludes 1,380 shares owned by Mr. Noble's children, as to which he
disclaims beneficial ownership.
(9) Mr. Oliveri is deemed to own 53,333 of these shares by virtue of options
to purchase these shares.
11
<PAGE>
(10) Mr. Patteson is deemed to own 246,252 of these shares by virtue of
options to purchase these shares. Excludes 16,280 shares held by Mr.
Patteson's wife and child, as to which he disclaims beneficial ownership.
(11) Mr. Ruettgers is deemed to own 910,000 of these shares by virtue of
options to purchase these shares. Excludes 10,800 shares owned by Mr.
Ruettgers' children, as to which he disclaims beneficial ownership.
(12) Mr. Teuber is deemed to own 16,110 of these shares by virtue of options
to purchase these shares.
(13) Includes 2,243,033 shares of Common Stock beneficially owned by all
executive officers and directors as a group based upon stock options to
purchase these shares. Excludes shares as to which such individuals have
disclaimed beneficial ownership.
The address of all persons listed above is c/o EMC Corporation, 171 South
Street, Hopkinton, Massachusetts 01748.
12
<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 and
a former executive officer of the Company (collectively, the "Named Executive
Officers") for the three fiscal years ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
--------------------------------------------- ------------
Awards
------------
Name and Principal Other Annual All Other
Position Year Salary($) Bonus($)(1) Compensation($) Options(#) Compensation($)
------------------ ---- --------- ----------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Ruettgers.... 1999 800,586 1,326,400 66,350(2) 280,500 3,720(3)
Chief Executive Officer 1998 673,462 1,089,100 53,371(2) 500,000 2,720(3)
and Director 1997 594,616 966,800 51,844(2) 1,000,000 2,000(4)
Richard J. Egan......... 1999 -- 663,200 398,898(5) 474,300(6) 139,243(7)
Chairman of the Board 1998 -- 544,550 325,999(5) -- 182,989(7)
of Directors 1997 -- 433,334 483,333(5) -- 234,239(7)
Paul E. Noble, Jr. ..... 1999 384,620 482,688 -- -- 3,000(4)
Executive Vice 1998 260,768 223,296 -- 200,000 2,000(4)
President, Products and 1997 175,000 215,095 -- -- 2,000(4)
Offerings
Colin G. Patteson....... 1999 340,151 203,300 -- -- 3,000(4)
Senior Vice President, 1998 303,076 192,171 -- -- 2,000(4)
Chief Administrative 1997 214,039 135,806 -- 800,000 2,000(4)
Officer and Treasurer
William J. Teuber, 1999 250,111 155,384 -- -- 3,000(4)
Jr. ................... 1998 227,386 122,480 -- -- --
Senior Vice President 1997 184,327 112,656 -- -- --
and Chief Financial
Officer
Robert M. Dutkowsky..... 1999(8) 499,990 553,509 -- -- 3,000(4)
President, Data General 1998 519,226 710,947 -- 244,444 314,500(9)
Division 1997(8) 117,308 314,256 -- 800,000 --
</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 amounts of $38,409 in 1999, $26,126 in 1998, and $24,228 in
1997 for personal use of Company-owned transportation. Amounts shown for
1999 and 1997 also include the amounts of $18,707 and $17,837,
respectively, for tax planning advice.
(3) Includes the amounts of $2,000 for 1998 and $3,000 for 1999 paid to Mr.
Ruettgers' account in the EMC 401(k) Plan and $720 for 1998 and 1999 paid
to Mr. Ruettgers' account in the EMC Supplemental Retirement Program.
(4) The amount noted was paid to such individual's account in the EMC 401(k)
Plan.
(5) Represents consulting payments made to Mr. Egan, following his resignation
as an employee of the Company effective June 30, 1996.
13
<PAGE>
(6) Mr. Egan transferred all of these options to a trust for the benefit of
"immediate family members" as defined in and, pursuant to the terms and
conditions of such grants.
(7) Includes $139,243, $182,989 and $234,239 for 1999, 1998 and 1997,
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 1999, 1998 and 1997 ($790,465,
$725,757 and $789,601, 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 1999,
1998 or 1997. 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, 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.
(8) Mr. Dutkowsky joined the Company on September 26, 1997 and ceased to be an
executive officer of the Company effective October 12, 1999 when he became
President of the Company's Data General Division.
(9) Includes the amount of $312,500 to compensate Mr. Dutkowsky for certain
amounts he forfeited in connection with leaving his position at this prior
employer, and $2,000 paid to Mr. Dutkowsky's account in the EMC 401(k)
Plan.
14
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1999 to
the Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
-----------------------
Potential Realized
Percent of Value at Assumed Annual
Total Options Market Rates of Stock Price
Number of Granted to Price per Appreciation
Options Employees Exercise Share on for Option Term
Granted in Fiscal Price Date of Expiration -----------------------
Name in 1999 Year(1) per Share Grant Date 5% 10%
- ------------------------ --------- ------------- --------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael C.
Ruettgers(2)........... 280,500 2.96% $63.3125 $63.3125 07/21/09 $11,168,638 $28,303,521
Richard J. Egan(3)...... 474,300 5.01% $63.3125 $63.3125 07/21/09 $18,885,151 $47,858,672
Paul E. Noble, Jr. ..... -- -- -- -- -- -- --
Colin G. Patteson....... -- -- -- -- -- -- --
William J. Teuber,
Jr. ................... -- -- -- -- -- -- --
Robert M. Dutkowsky..... -- -- -- -- -- -- --
</TABLE>
- --------
(1) The Company granted options representing an aggregate of 9,470,488 shares
to approximately 4,600 employees and directors of EMC and its subsidiaries
in fiscal 1999 under the Company's 1985 Stock Option Plan (the "1985
Plan"), the 1992 Directors Plan and the 1993 Plan. The above aggregate
includes the grant to Richard J. Egan, Chairman of the Board, as well as
to all employees.
(2) Mr. Ruettgers' options become exercisable in increments of 20% over a
five-year period. The term of such option grant is ten years from the date
of the grant, which was July 21, 1999. Such options are transferable to
"immediate family members," as defined in the grant.
(3) Mr. Egan's options were granted under the 1992 Directors Plan and become
exercisable in increments of 33 1/3% over a three-year period. The term of
such option grant is ten years from the date of the grant, which was July
21, 1999. Such options are transferable to "immediate family members" as
defined in the grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in 1999 by the
Named Executive Officers and the value of such officers' unexercised options
at December 31, 1999.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Number of Options at Fiscal Year In-the-Money Options
Shares End at Fiscal Year End
Acquired Value ------------------------- --------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ ----------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Ruettgers.... 250,000 $13,365,625 1,010,000 1,680,500 $105,823,993 $151,623,749
Richard J. Egan......... -- -- -- -- -- --
Paul E. Noble, Jr. ..... 60,000 2,462,259 -- 200,000 -- 17,515,000
Colin G. Patteson....... 102,212 5,413,859 236,252 492,000 23,669,497 49,335,000
William J. Teuber,
Jr. ................... 47,890 2,537,554 52,110 92,000 5,320,385 9,415,876
Robert M. Dutkowsky..... 14,814 819,215 389,630 640,000 36,926,797 58,385,024
</TABLE>
15
<PAGE>
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate other filings with
the Securities and Exchange Commission, including this Proxy Statement, in
whole or in part, the following report and the Stock Price Performance Graph
on page 19 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 in 1999, this review often
includes a comprehensive report from an independent executive compensation
consultant comparing the Company's executive compensation, corporate
performance, stock price appreciation and total return to stockholders to a
peer group of publicly traded 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 salary adjustments are determined annually by evaluating the
financial performance and, where appropriate, certain non-financial
performance measures, of the Company, and the performance of each executive
officer.
16
<PAGE>
The base salaries of the Company's executive officers are generally low in
comparison to base salaries for comparable positions at other companies. This
is due to the fact that the Company's executive compensation program is
weighted heavily towards bonuses and other incentives, more tightly coupling
executive interests with those of stockholders.
With respect to the base salary granted to Mr. Ruettgers in 1999, the
Compensation Committee took into account base salaries of chief executive
officers of certain other companies, the Company's financial performance in
1998, 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
information technology industry.
Executive Bonuses
The Company's executive officers are eligible for an annual and other cash
bonuses. Individual and corporate performance objectives, both quarterly and
annual, are established at the beginning of each year by the Compensation
Committee. Eligible executives are assigned target bonus levels. The corporate
performance measure for bonus payments for 1999 was based on the Company's
profitability in 1999. 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 1999 was largely based on the Company's
profitability in 1999. In 1999, the Company met or exceeded its primary
profitability 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
Company's 1985 Plan and the 1993 Plan. The guidelines used in 1999 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 1999, Mr. Ruettgers received options to purchase 280,500 shares at an
exercise price equal to the 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
17
<PAGE>
compensation that has been approved by stockholders is excluded from the $1
million limit if, among other requirements, the compensation is payable only
upon attainment of pre-established, objective performance goals and the board
committee that establishes such goals consists solely of "outside directors"
(as defined for purposes of Section 162(m)).
While the tax impact of any compensation arrangement is one factor to be
considered, such impact is evaluated in light of the Compensation Committee's
overall compensation philosophy. The Compensation Committee intends to
establish executive officer compensation programs which will maximize the
Company's 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 1999, 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
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 R. Egan
Maureen E. Egan
W. Paul Fitzgerald
Joseph F. Oliveri
Michael C. Ruettgers
Alfred M. Zeien
18
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee members are Michael J. Cronin, Chairman, 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 Mr. Cronin, Richard J. Egan and Michael C. Ruettgers, who are
executive officers and Directors of the Company, and John R. Egan and W. Paul
Fitzgerald, who are former executive officers and current Directors of the
Company, participated in deliberations of the Board of Directors concerning
the stock option portion of executive compensation during the last fiscal
year.
STOCK PRICE PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG EMC CORPORATION, S&P 500
INDEX AND PEER GROUP SIC CODE 3572 (COMPUTER STORAGE DEVICES)**
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------------------------
1994 1995 1996 1997 1998 1999
----- ----- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EMC Corporation......... 100.00 69.89 150.56 249.42 772.73 1,986.36
Standard & Poor's 500... 100.00 137.55 169.11 225.52 289.96 350.96
Peer Group Index........ 100.00 111.66 201.13 207.22 421.90 951.76
</TABLE>
19
<PAGE>
CERTAIN TRANSACTIONS
Periodically during 1999, the Company rented the private airplane of Richard
J. Egan for use for EMC business trips and sales activities, for which
payments aggregated approximately $42,000. Mr. Egan is Chairman of the Board
of Directors of the Company.
In 1999, the Company retained the Thomas A. Fitzgerald Company to provide
various forms of corporate insurance and paid premiums of approximately
$1,479,000. Thomas A. Fitzgerald is the brother of W. Paul Fitzgerald, a
Director of the Company and of Maureen E. Egan, a Director of the Company, the
brother-in-law of Richard J. Egan, Chairman of the Board of Directors of the
Company and the uncle of John R. Egan, a Director of the Company.
Interface Electronics Corporation ("IEC") receives payments as a distributor
or provider of components supplied to the Company. Joseph F. Oliveri, a
Director of the Company, is a director, stockholder and President and Chief
Executive Officer of IEC. In 1999, IEC received payments of approximately
$49,000 on component sales to the Company and approximately $1,176,000 on
component sales to unaffiliated third parties who in turn sold products
incorporating such components to the Company.
In October 1999, the Company acquired Data General Corporation, which leased
certain real estate from Carruth Capital Corporation ("Carruth"). As a result
of this acquisition, the Company continued to lease such space and made
payments in 1999 of approximately $583,000 to Carruth. John R. Egan, a
Director of the Company and the son of Richard J. and Maureen E. Egan, and the
other children of Richard J. and Maureen E. Egan are the stockholders of
Carruth.
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>
<CAPTION>
Stock Repurchase
Executive Compensation Mergers and and Bond
Audit and Stock Option Acquisitions Redemption Oversight
- ------------ ---------------------- ----------------- --------------------
<S> <C> <C> <C>
W. Paul
Fitzgerald* Michael J. Cronin* Richard J. Egan* Joseph F. Oliveri*
Michael J.
Cronin Richard J. Egan Michael J. Cronin Richard J. Egan
Joseph F.
Oliveri John R. Egan W. Paul Fitzgerald
</TABLE>
- --------
* Chairman
The Audit Committee, which held five meetings in 1999, 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, the Company's worldwide corporate compliance program and such
other matters as the committee deems appropriate.
20
<PAGE>
The Executive Compensation and Stock Option Committee, which held eleven
meetings in 1999, reviews salary policies and compensation of executive
officers, officers and other members of management and approves compensation
plans. This committee approves all transactions under the Company's stock
option plans 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 full Board of Directors ratifies and approves all grants to Section 16
reporting persons under the Company's stock option plans.
The Mergers and Acquisitions Committee, which held two formal meetings in
1999, reviews with management of EMC potential acquisitions.
The Stock Repurchase and Bond Redemption Oversight Committee held no formal
meetings in 1999. 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
$15,000 per annum, $3,000 for each regularly scheduled director's meeting
attended, and for each committee on which they serve, $2,000 per annum or
$3,000 per annum if they serve as Chairman.
Under the 1992 Directors Plan, each Eligible Director (as defined below) is
awarded an option to purchase up to 40,000 shares of Common Stock on the date
he or she first becomes an Eligible Director, subject to the conditions of the
1992 Directors Plan (a "formula option"). An Eligible Director is any director
who (1) is not an employee of the Company; and/or (2) is not a five percent
stockholder of the Company or a person in control of such stockholder. The
exercise price for each option granted under the 1992 Directors Plan will be
at the price per share determined by the Compensation Committee 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 grant. The
1992 Directors Plan also provides for the granting of discretionary, non-
formula based options to Eligible Directors. Such non-formula based options
may be on terms determined by the Compensation Committee or the Board of
Directors not inconsistent with the 1992 Directors Plan.
On July 21, 1999, pursuant to the 1992 Directors Plan, Richard J. Egan,
Chairman of the Board of Directors, received a grant of options to purchase
474,300 shares of Common Stock at an exercise price equal to the fair market
value on the date of grant. On December 1, 1999, pursuant to the 1992
Directors Plan, Alfred M. Zeien, a director of the Company, received a grant
of options to purchase 40,000 shares of Common Stock at an exercise price
equal to the fair market value 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 also is the brother-in-law of
W. Paul Fitzgerald, a Director of the Company. W. Paul Fitzgerald is the
brother of Maureen E. Egan. John R. Egan, a Director of the Company, is the
son of Richard J. and Maureen E. Egan. 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.
21
<PAGE>
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 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 tenth 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 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 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 tenth 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-laws 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 2001
Annual Meeting of Stockholders, stockholder proposals must be received at
EMC's principal executive offices no later than November 19, 2000.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers L.L.P., who have
served as the Company's auditors since 1984, to examine the financial
statements of the Company for fiscal year 2000. The Company expects that
representatives of PricewaterhouseCoopers L.L.P. will be present at the Annual
Meeting, and will be given the opportunity to make a statement if they desire
to do so and to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of the Company's Common
Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange.
Executive officers, directors and greater than ten percent stockholders are
required by SEC regulations to furnish the Company with all copies of Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the fiscal year
ended December 31, 1999, all filing requirements were complied with in a
timely fashion.
22
<PAGE>
Directions To
EMC CORPORATION
4 Coslin Drive
Southborough, MA
(508) 435-1000
[Map Appears Here]
- -----------------------
From the North or South
- -----------------------
Take I-495
Take Exit 23A, Rte. 9 East
Take second right onto Coslin Drive
- -----------------------
From the East or West
- -----------------------
Take Massachusetts Turnpike
Take I-495 North
Take Exit 23A, Rte. 9 East
Take second right onto Coslin Drive
- --------------------------------------------------------------------------------
[LOGO] | [LOGO]
The Enterprise Storage Company | The Enterprise Storage Company
|
Annual Meeting of Stockholders | Annual Meeting of Stockholders
|
EMC Corporation | EMC Corporation
4 Coslin Drive | 4 Coslin Drive
Southborough, MA | Southborough, MA
May 3, 2000 | May 3, 2000
10:00 am | 10:00 am
|
ADMIT ONE | ADMIT ONE
<PAGE>
PROXY PROXY
EMC CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, MAY 3, 2000
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 3, 2000, at 10:00 a.m., local
time at the Company's facility at 4 Coslin Drive, Southborough, 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>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
- ----------------------------------------
EMC CORPORATION
- ----------------------------------------
Mark box at right if an address change has [_]
been noted on the reverse side of this card.
With- For All
For hold Except
1. Election of Directors: [_] [_] [_]
Electing two directors to serve
a three-year term as Class I
Directors and for all nominees.
Richard J. Egan
Alfred M. Zeien
If you do not wish your shares voted "For" a
particular nominee, mark the "For All Except"
box and strike a line through the nominee's name.
Your shares will be voted for the remaining nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES LISTED ABOVE.
For Against Abstain
2. To approve the addition [_] [_] [_]
of 10,000,000 shares of the
Company's Common Stock, par
value $.01 per share, to the
Company's 1993 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" PROPOSAL 2.
For Against Abstain
3. To approve an amendment [_] [_] [_]
to the EMC Corporation 1989
Employee Stock Purchase Plan,
as described in the Company's
Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" PROPOSAL 3.
THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS
SPECIFIED, THEN THIS PROXY WILL BE VOTED IN
FAVOR OF ELECTING THE TWO NOMINEES
NOTED HEREON TO THE BOARD OF DIRECTORS
TO SERVE FOR A THREE-YEAR TERM AS CLASS I
DIRECTORS; APPROVING THE ADDITION OF
SHARES TO THE COMPANY'S 1993 STOCK OPTION
PLAN; AND APPROVING AN AMENDMENT TO THE
COMPANY'S 1989 EMPLOYEE STOCK PURCHASE
PLAN, AS DESCRIBED IN THE COMPANY'S PROXY
STATEMENT. A VOTE FOR THE ELECTION OF
DIRECTORS INCLUDES DISCRETIONARY
AUTHORITY TO VOTE FOR A SUBSTITUTE IF ANY
NOMINEE IS UNABLE TO SERVE OR FOR GOOD
CAUSE WILL NOT SERVE. IN THEIR DISCRETION,
THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
RECORD DATE SHARES:
Please be sure to sign and date this Proxy.
- -----------------------------------------------
Stockholder sign here Co-owner sign here
- -----------------
Date
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DETACH CARD
