Executive Compensation

WHEREAS,

"Beginning with the strongest companies, CEOs and their boards should simply reach the conclusion that executive pay is excessive and adjust it to more reasonable and justifiable levels."

- William McDonough, President of the New York Federal Reserve Bank speaking at a 9/11 memorial event. Mr. McDonough went on to say that excessive CEO pay was "terribly bad social policy and perhaps even bad morals."

During the four years ending 2001, EMC Corporation paid its Chief Executive Officers more than $107 million, ranking thirty-fifth among US corporations. (Source: Business Week's Executive Compensation Survey)

In 2001, EMC shareholders lost money, and the company announced that 5,700 hard-working employees would be laid-off (source: Forbes.com). None of the company's five highest paid employees took salary reductions in 2001; four of the five experienced salary increases of more than 50%, associated with assuming new responsibilities. Each of the five highest paid officers also saw at least a quadrupling of their stock options in 2001. The present value of the CEO's 2001 stock option grants exceeded $46 million.

In 2000, EMC's top five highest paid employees received $80 million in total compensation, including the present value of stock options. In 2001, EMC's top five highest paid employees received $102 million in total compensation, including the present value of stock options - a more than 21% increase over the previous year.

In 2001 EMC's stock lost 79% of its value, underperforming the company's self-defined peer group, which lost 73%. (Source: EMC's 2002 proxy statement)

RESOLVED: shareholders request that the Board conduct a comprehensive executive compensation review and publish a report of this review, omitting proprietary information and prepared at a reasonable cost. This report shall be available to all shareholders upon request by August 15, 2003. At a minimum, this review should consider the following:

Would shareholder value be enhanced if EMC Corporation altered its executive compensation policies to:

1) Freeze executive pay during periods of large layoffs?
2) Establish a maximum ratio between the highest-paid executive officer and the lowest-paid employee?
3) Seek shareholder approval for any executive severance payments or executive retirement plans exceeding two times annual salary?

Supporting Statement

New York Federal Reserve President William McDonough had it right: executive pay packages are excessive and responsible companies should take actions to reform executive pay policies. EMC Corporation has not become a successful company by clinging to convention and refusing to change.

Does it take the promise of a financial payoff of tens of millions of dollars to get a CEO out of bed in the morning and off to work? Of course not. The passion of most successful CEOs is to create a company they and others can be proud of. We believe that a company with a commitment to fairness and equity, and in which all employees are regarded as co-creators of corporate success and where each shares in the sacrifice required during difficult times, would be a company worthy of pride.

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