Administration July 5, 2003

EMC Shareholders Reject Options, Performance Link

May 7, 2003 (PLANSPONSOR.com) - The shareholders of EMC Corp., whose chief executive this year received 75,000 options to buy company stock for a penny each, have turned back a resolution to link such awards more tightly to performance.
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About 84% of the votes cast at the data-storage company’s annual meeting opposed the resolution, according to Reuters. EMC’s board’s also opposed the measure proposed by The Sheet Metal Workers’ National Pension Fund. A fund representative said it was not singling out Hopkinton, Massachusetts-based EMC for doing anything wrong. The pension fund has filed similar proposals at more than 80 companies.

Supporters of performance-based stock options argue they would eliminate a situation where executives cash out options worth millions of dollars with the help of a broadly rising stock market, even though their company performed worse than competitors.

EMC CEO Joe Tucci in January received 75,000 options to buy EMC stock at an exercise price of $0.01 cent per share. Critics argue such awards have no downside for executives. EMC, which believes most of its executive pay already is performance-based, said forcing such awards would limit the flexibility of its executive compensation policies. The options also could be more volatile and distort the company’s quarterly earnings, EMC Executive Chairman Mike Ruettgers said, according to Reuters.

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