DEF 14A 1 definitiveproxyforyearende.htm DEF 14A Definitive Proxy for year ended 12-31-13


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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April 30, 2014
Hopkinton, Massachusetts
 
Notice of
2014 Annual Meeting of Shareholders and Proxy Statement






March 21, 2014

Dear Shareholder:

We cordially invite you to attend our 2014 Annual Meeting of Shareholders, which will be held on Wednesday, April 30, 2014, at 10:00 a.m., E.D.T., at EMC’s facility at 176 South Street, Hopkinton, Massachusetts.

At the meeting you will vote on a number of important matters. You should carefully read the attached Proxy Statement which contains detailed information about each proposal.

If you plan to join us at the meeting, please register at www.emc.com/annualmeeting2014.

Following completion of the scheduled business, we will report on EMC’s operations. Your Board of Directors and officers of EMC will then be available to answer questions and speak with you. We hope that you will be able to join us on April 30th.

Very truly yours,

JOSEPH M. TUCCI
Chairman and Chief Executive Officer






EMC Corporation Board of Directors
Front row: Joseph M. Tucci
Middle row, from left to right: John R. Egan, Gail Deegan, Edmund F. Kelly, Jami Miscik and Michael W. Brown
Back row, from left to right: Windle B. Priem, James S. DiStasio, Paul Sagan, Randolph L. Cowen, David N. Strohm
and William D. Green






March 21, 2014

Fellow shareholders:

I consider it a privilege, and responsibility, to serve as independent Lead Director for the EMC Board, and I would like to share with you the primary areas of focus of your Board, and how I approach my role as Lead Director in support of the Board’s efforts and commitment to shareholder value.

The Board’s responsibility to you is effective oversight and governance of the Company. One foundation of this responsibility is that the Board has full access to the information it needs on the industry, EMC’s strategic opportunity, and the Company’s operating and financial performance. To this end, I work closely with Joe Tucci, as Chairman, to plan our Board calendar and agenda for meetings, and to review the information provided to the Board, both from management and independent sources.

A second foundation for Board independence and effectiveness is a regular self-assessment by the Board of both Board and Committee composition, leadership, and succession planning to keep the Board refreshed with new talent. In this regard, over the past few years, we have worked to identify and recruit a new director roughly every 12-18 months, and from these efforts, we are thrilled to have been able to recruit Jami Miscik and Bill Green during the past two years. In our latest review at year end 2013, we also rotated several Committee roles and one Committee chair. Looking forward, we are committed to continuing to refresh our Board at an appropriate pace, and in our search for new talent, will continue to place the highest emphasis on diversity as well as a demonstrated ability to understand some of the profound transformational forces, including but not limited to technology advances, which are affecting EMC’s industry and business opportunities.

Among the notable changes for us in 2014 was the retirement from our Board of Win Priem. I would like to take this opportunity to extend my personal gratitude and recognition to Win for 12 years of outstanding service as an EMC director, which also included 10 years as Chair of our Leadership and Compensation Committee. Win has brought deep expertise in human capital, executive compensation and leadership development to our Board, and this has made EMC a stronger company through a highly transformative period. We would all like to thank Win for his service to the Board and shareholders.

Looking forward into 2014 and beyond, our Chairman, Joe Tucci, has led EMC through a decade-plus of highly agile response to the transformational forces affecting our industry. EMC’s competitive position and operational strength today are the result of several highly strategic acquisitions, as well as disciplined, organic innovation. Joe has consulted regularly with the Board on these strategies and has worked closely with the Board to evolve what we now describe as our “Federation” model of corporate organization, which today incorporates EMC Information Infrastructure, VMware, and now Pivotal as our three major businesses. Each of these major businesses is led by a highly capable and experienced CEO - David Goulden, Pat Gelsinger, and Paul Maritz, respectively, and it should be noted that this Federation model enhances our ability to provide more complete business leadership roles, and therefore to recruit and retain leadership talent and succession bench strength, a key factor in long-term shareholder value.

This Federation model has enabled each of our businesses to be agile and innovative, to be market-responsive, and to offer more effective customer choice. Importantly, this model has also enabled better retention of key talent, and the resulting, strong performance by our key acquisitions over the past several years; in turn, this has positioned EMC to be more attractive - and confident - in pursuing the best acquisition opportunities, which is critical in a period of rapid change.

As noted, the Board has been highly engaged in the development of this organizational model and its governance, and several of my fellow directors and I now also serve as Board members, and committee chairs, at VMware and Pivotal, in addition to our duties at the Federation level as EMC Board members.





In closing, I am pleased to offer my view that your Board is an extremely capable group that is highly engaged and suitably energized around both the challenges and opportunities for EMC in 2014 and beyond. We communicate among each other and as a group in a very open fashion and with a mission focus. We are committed to engaging constructively with what we believe is an outstanding leadership team, with deep bench strength at a senior management level, and also to maintaining our independence of thought - and action - in our governance responsibility. We appreciate your support, and welcome dialogue with you.
DAVID N. STROHM
Independent Lead Director    





EMC CORPORATION

NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS

April 30, 2014

To the Shareholders:

The Annual Meeting of Shareholders of EMC Corporation, a Massachusetts corporation, will be held at EMC’s facility at 176 South Street, Hopkinton, Massachusetts, on Wednesday, April 30, 2014, at 10:00 a.m., E.D.T., for the following purposes:

1.
Election of the eleven members listed in the attached Proxy Statement to the Board of Directors.

2.
Ratification of the selection by the Audit Committee of PricewaterhouseCoopers LLP as EMC’s independent auditors for the fiscal year ending December 31, 2014, as described in the attached Proxy Statement.

3.
Advisory approval of our executive compensation, as described in the attached Proxy Statement.

4.
Act upon two shareholder proposals, if properly presented, as described in the attached Proxy Statement.

In addition, we will consider any and all other business that may properly come before the meeting or any adjournments or postponements of the meeting.

All shareholders of record at the close of business on February 28, 2014 are entitled to notice of and to vote at the meeting and any adjournments or postponements of the meeting. We will begin distributing these proxy materials to shareholders on or about March 21, 2014.

Your vote is important. Whether or not you plan to attend the meeting, please vote as soon as possible. For specific instructions on how to vote your shares, please refer to the section entitled “Questions and Answers about the Annual Meeting and Voting” beginning on page 87 of the attached Proxy Statement.

EMC’s Annual Report on Form 10-K for 2013 accompanies this Notice.

By order of the Board of Directors
PAUL T. DACIER
Executive Vice President,
General Counsel and Assistant Secretary


March 21, 2014

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on April 30, 2014: The Annual Report on Form 10-K for 2013 and 2014 Proxy Statement are available at www.proxyvote.com.






YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the meeting, please vote as soon as possible. Under New York Stock Exchange rules, your broker will NOT be able to vote your shares on proposals 1, 3, 4 or 5 unless they receive specific instructions from you.  We strongly encourage you to vote.


We encourage you to vote by Internet.  It is convenient for you and saves us significant postage and processing costs. For specific instructions on how to vote your shares, please refer to the section entitled “Questions and Answers about the Annual Meeting and Voting” beginning on page 87 of the attached Proxy Statement.


We have been advised that many states are strictly enforcing escheatment laws and requiring shares held in “inactive” accounts to be escheated to the state in which the shareholder was last known to reside. One way you can ensure your account is active is to vote your shares.







TABLE OF CONTENTS
 
Page





CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement contains forward-looking statements, within the meaning of the Federal securities laws, about our business and prospects. The forward-looking statements do not include the potential impact of any mergers, acquisitions, divestitures, securities offerings or business combinations that may be announced or closed after the date hereof. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “plans,” “intends,” “expects,” “goals” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Our future results may differ materially from our past results and from those projected in the forward-looking statements due to various uncertainties and risks, including, but not limited to, those described in Item 1A of Part I (Risk Factors) of our Annual Report on Form 10-K for 2013. The forward-looking statements speak only as of the date of this Proxy Statement and undue reliance should not be placed on these statements. We disclaim any obligation to update any forward-looking statements contained herein after the date of this Proxy Statement.




SUMMARY INFORMATION

This summary highlights information contained elsewhere in this Proxy Statement. For more complete information about these topics, please review the Company's Annual Report on Form 10-K and the entire Proxy Statement.
Annual Meeting of Shareholders
•  Date and Time:        
April 30, 2014 at 10:00 a.m., E.D.T.
  Place:
EMC Corporation
176 South Street
Hopkinton, MA 01748
•  Record Date:        
February 28, 2014
•  Attendance:
All shareholders may attend the meeting. If you plan to join us at the meeting, please go to www.emc.com/annualmeeting2014 to complete the registration form. The deadline for registration is April 23, 2014. All shareholders who attend the meeting will be required to present valid government-issued picture identification, such as a driver’s license or passport, and will be subject to security screenings. Check-in will begin at 9:00 a.m.

•  Voting:
Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and each of the other proposals.


Vote by
Internet
Vote by
Mobile Device
Vote by
Telephone
Vote by
Mail
Vote
In Person
Go to www.proxyvote.com and enter the 12 digit control number provided on your proxy card or voting instruction form.

Scan this QR code to vote with your mobile device. You will need the 12 digit control number provided on your proxy card or voting instruction form.

Call 1-800-690-6903 or the number on your proxy card or voting instruction form. You will need the 12 digit control number provided on your proxy card or voting instruction form.

Complete, sign and date the proxy card or voting instruction form and mail it in the accompanying pre-addressed envelope.

See the instructions above regarding attendance at the Annual Meeting.


We encourage you to vote by Internet. It is convenient for you and saves us significant postage and processing costs. If you previously elected to access the 2014 Proxy Statement and Annual Report on Form 10-K for 2013 electronically, you must vote your proxy over the Internet. Otherwise, you may vote your shares via the other methods described above.

Meeting Agenda and Voting Recommendations
Agenda Item
Board Recommendation
Page
Election of eleven directors
FOR EACH NOMINEE
5
Ratification of selection of PricewaterhouseCoopers LLP as our independent auditors
FOR
19
Advisory approval of our executive compensation
FOR
21
Shareholder proposals
AGAINST
24


1


Summary Information (continued)

Director Nominees

We are asking you to vote “for” all of the director nominees listed below. All directors attended at least 75% of the Board meetings and committee meetings on which he or she sits. Set forth below is summary information about each director nominee.
Nominee and
Principal Occupation
Age
Director Since
Independent
Current Committee Membership
Michael W. Brown
Former Vice President and Chief Financial Officer of Microsoft Corporation
68
2005
ü
•  Audit
•  Finance (chair)

Randolph L. Cowen
Former co-Chief Administrative Officer of The Goldman Sachs Group, Inc.
63
2009
ü
•  Leadership and Compensation (chair)
•  Mergers and Acquisitions
Gail Deegan
Former Executive Vice President and Chief Financial Officer of Houghton Mifflin Company
67
2002
ü
•  Audit (chair)
•  Leadership and Compensation
James S. DiStasio
Former Senior Vice Chairman and Americas Chief Operating Officer of Ernst & Young LLP
66
2010
ü
•  Audit
•  Corporate Governance and Nominating
John R. Egan
Managing Partner and General Partner of Egan-Managed Capital
56
1992
 
•  Finance
•  Mergers and Acquisitions (chair)
William D. Green
Former Chairman of Accenture plc
60
2013
ü
•  Leadership and Compensation
•  Mergers and Acquisitions
Edmund F. Kelly
Former Chairman of Liberty Mutual Group
68
2007
ü
•  Finance
Jami Miscik
President and Vice Chairman of Kissinger Associates, Inc.
55
2012
ü
•  Corporate Governance and Nominating
Paul Sagan
Partner and XIR of General Catalyst Partners
55
2007
ü
•  Leadership and Compensation
David N. Strohm
Venture Partner of Greylock Partners
65
2003
ü
•  Corporate Governance and Nominating (chair)
•  Mergers and Acquisitions
Joseph M. Tucci
Chairman and Chief Executive Officer of EMC Corporation
66
2001
 
•  Finance
•  Mergers and Acquisitions

Corporate Governance Highlights
ü Substantial majority of independent directors (9 of 11 nominees)
ü Annual election of directors
ü Majority vote for directors
ü Independent Lead Director
ü Board oversight of risk management
ü Succession planning at all levels, including for directors and CEO
ü No supermajority voting requirements
ü Long-standing shareholder engagement program
ü Annual Board, committee and individual director self-assessments
ü Executive sessions of non-management directors and independent directors
ü Continuing director education
ü Executive and director stock ownership guidelines
ü Board oversight of sustainability program
ü Board oversight and disclosure of political spending



2


Summary Information (continued)

Auditors

As a matter of good corporate governance, we are asking you to ratify the selection by the Audit Committee of PricewaterhouseCoopers LLP (“PwC”) as our independent auditors for 2014. The following table summarizes the fees PwC billed us for 2013 and 2012. The Audit Committee pre-approved all audit, review and attest services performed by PwC.
 
Audit Fees ($)
Audit-Related Fees ($)
Tax Fees ($)
All Other Fees ($)
2013
8,745,311
418,342
2,453,392
2012
8,435,360
384,474
2,264,722
295,457

Business Strategy

The IT market is going through the biggest, most disruptive and yet most opportunity-rich transition in its 60-plus year history. The move from the second platform to the third platform of IT, underpinned by the mega trends in mobile, cloud, Big Data and social networking, is having a profound impact on business and transforming the way we work and live. In this fast-paced environment, EMC’s strategy is to help our customers and partners make this transformational shift by providing them with EMC’s best-of-breed portfolio, which will enable them to better capitalize on their opportunities.

We are implementing this strategy through a unique business model that includes three federated businesses: EMC Information Infrastructure, Pivotal Software and VMware Virtual Infrastructure (the “Federation”). Under the Federation model, each business operates freely and independently to build its own ecosystem and offer customers the very best technology solutions, free from vendor lock-in. At the same time, the businesses are strategically aligned in the mission to lead our customers, partners and the marketplace through the transformational shift to the third platform of IT. We believe this model creates a distinct competitive advantage by offering tight integration for customers who prefer an integrated technology stack, and best-of-breed offerings on a standalone basis for customers seeking flexibility in vendor and deployment options.

The combination of the products, services and solutions portfolios among the Federation gives us a strong position from which to compete in the second platform, which will continue to support the majority of enterprise workloads for several years to come; leading-edge technologies and products for the third platform; and a powerful capability to bridge the gap between the two.

Advisory Approval of our Executive Compensation

We are asking for your advisory approval of the compensation of our Named Executive Officers (as defined below). While this vote is advisory and not binding on us, the Leadership and Compensation Committee (the “Compensation Committee”) will consider your views when determining executive compensation in the future.

Pay-for-Performance Philosophy

Our executive compensation programs are based on strong pay-for-performance practices that require the attainment of challenging goals designed to drive profitable revenue growth and market share gains. We believe achievement of these goals will create long-term shareholder value.

Changes in Our 2014 Executive Compensation Program

After the 2013 Annual Meeting of Shareholders, we dialogued and met with many shareholders to discuss our executive compensation program. Several themes emerged, including:
Support for our pay-for-performance philosophy;
Support for multi-year performance goals;
Support for continued use of existing operational performance metrics;
Request for more widespread use of a return metric, such as total shareholder return (“TSR”); and
Request to simplify our program.

3


Summary Information (continued)

After considering our business strategy, the results of the 2013 advisory “say-on-pay” vote and our dialogue with shareholders, the Compensation Committee changed the design of the compensation program for 2014 as follows:
Introduced a long-term equity incentive plan to replace the annual performance equity award program;
Added a TSR performance metric to the long-term equity incentive plan;
Simplified the equity program by decreasing the different types of equity awards utilized; and
Modified the Executive MBO to emphasize execution of our Federation strategy.

2013 Executive Compensation Program

The Compensation Committee approved an executive compensation program for 2013 that implemented our pay-for-performance philosophy. Since our 2013 non-GAAP EPS, revenue and free cash flow results fell below the applicable incentive plan targets and the Named Executive Officers failed to achieve all of their respective strategic and operational goals, the 2013 cash and performance equity incentives paid out or vested below target, as follows:
89.98% of target was paid out under the 2013 Corporate Incentive Plan;
78% of target was paid out under the 2013 Executive MBO; and
87.8% of the 2013 performance-based equity awards became eligible to vest, vesting ratably over two to three years subject to continued employment. 12.2% of the performance-based equity awards did not become eligible to vest and were forfeited.

Below is a summary of the Named Executive Officers’ 2012 and 2013 compensation as set forth in the Summary Compensation Table:
Name
Year
Salary
($)
Cash Incentive Compensation
($)
Equity
Awards
($)
All Other
Compensation
($)
Total
($)
Joseph M. Tucci
2013
1,000,000
     1,260,058
10,076,821
309,079
12,645,957
2012
1,000,000
1,467,360
14,008,326
116,545
16,592,231
David I. Goulden
2013
850,000
1,006,296
6,453,659
122,621
8,432,576
2012
737,500
949,513
9,879,979
16,435
11,583,427
Howard D. Elias
2013
750,000
700,032
4,444,834
136,194
6,031,061
2012
687,500
757,109
9,361,393
22,697
10,828,699
William J. Teuber, Jr.
2013
725,000
634,404
4,571,604
97,906
6,028,914
2012
712,500
707,560
5,711,492
17,051
7,148,603
William F. Scannell
2013
700,000
656,280
4,444,834
108,412
5,909,526
2012
700,000
632,153
9,361,393
15,821
10,709,367
For more information, please see the Summary Compensation Table, and the accompanying compensation tables, beginning on page 64 of this Proxy Statement.
Other Compensation Highlights
ü Annual “say-on-pay” vote 
ü Compensation Committee oversight of risks associated with compensation policies and practices
ü Clawback policy applicable to all employees for cash and equity incentive compensation
ü Strong executive stock holding guidelines
ü “Double trigger” change in control agreements
ü Independent compensation consultant
ü No pension or SERP benefits for executive officers
ü No discounted options
ü No option repricings without shareholder approval
ü No dividend equivalents paid unless equity awards vest
ü No excise tax gross-ups
ü No hedging or pledging of Company stock
ü No excessive perquisites for executives
2015 Annual Meeting
•  Deadline for shareholder proposals for inclusion in the proxy statement:
November 21, 2014
  Deadline for business and nominations for director:
December 26, 2014 – January 25, 2015

4


PROPOSAL 1

ELECTION OF DIRECTORS

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF
EACH OF THE NOMINEES LISTED BELOW

Under EMC’s Bylaws, the Board of Directors may determine the total number of directors to be elected at any annual meeting of shareholders or special meeting in lieu of an annual meeting. The Board of Directors has fixed at 11 the total number of directors, effective as of April 30, 2014. On the recommendation of the Corporate Governance and Nominating Committee (the “Governance Committee”), the Board of Directors has nominated the persons named below for election as directors at this Annual Meeting, each to serve for a one‑year term or until the director’s successor is elected and qualified.

Director and Nominee Experience and Qualifications

Board Membership Criteria. The Board believes that its members, collectively, should possess a variety of skills and experience in order to oversee our business effectively. In addition, the Board believes that each director should possess certain attributes, as reflected in the Board’s membership criteria described below. Accordingly, the Board and the Governance Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition and dynamics and EMC’s current and future needs.

The Governance Committee is responsible for reviewing, assessing and recommending Board membership criteria to the Board for approval. The criteria, which are set forth in the Governance Committee’s charter, include judgment, integrity, diversity, prior experience, the interplay of the nominee’s experience with the experience of other Board members, the extent to which the nominee would be desirable as a member of any committees of the Board, and the candidate’s willingness to devote substantial time and effort to Board responsibilities. The Governance Committee also considers service on other public company boards as this provides directors with a deeper understanding of the role and responsibilities of boards and insight into matters being handled by our Board.

In addition, the Board has determined that it is important to have individuals with the following skills and experiences:
Domain expertise, including a deep understanding of the information technology industry and the disruptive impact of new technology, or another industry that has undergone rapid growth or transformational change, to assess EMC’s strategy and long-term business plan to take advantage of the opportunities ahead.
Functional expertise in areas such as finance and accounting, talent management or marketing to support the Company’s business development and growth as well as the Board’s required committees.
International expertise, including experience attained through key leadership or management roles in a global business or responsibility for non-U.S. operations, which is important given EMC’s growth in markets around the world.
Operational experience with a business of significant scale and complexity or in an industry with continual structural change to understand the competitive dynamics of our business strategy and execution and key business processes as well as the leadership requirements and organizational dynamics driven by rapid change.

In identifying director candidates, the Governance Committee may establish other specific skills and experience that it believes the Board should seek in order to maintain a balanced and effective Board.


5


Proposal 1 - Election of Directors (continued)

Board Self-Assessments. The Governance Committee, together with the Lead Director, oversees an annual evaluation process as follows:
Each director evaluates the Board as a whole;
Each member of the standing committees of the Board of Directors evaluates the committees on which he or she serves; and
Each director prepares an individual self-evaluation.

After these evaluations are complete, the results are discussed by the Board and each committee, as applicable, and, if necessary, action plans are developed. The Lead Director also meets with each director to discuss the individual self-evaluations and any issues regarding Board performance.

At least once a year, the Governance Committee evaluates the size and composition of the Board to assess the skills and experience of Board members, and compares them with those skills that might prove valuable in the future, giving consideration to the changing circumstances of the Company and the then current Board membership. This assessment enables the Board to consider whether the skills and experience described above continue to be appropriate as the Company’s needs evolve over time.

Identifying Potential Director Candidates. The Governance Committee identifies Board candidates through numerous sources, including recommendations from directors, executive officers and shareholders of EMC as well as professional search firms. The Governance Committee seeks to identify those individuals most qualified to serve as Board members and considers many factors with regard to each candidate, including those described above. New candidates are interviewed by members of the Governance Committee and other Board members.

EMC shareholders may recommend individuals to the Governance Committee for consideration as potential director candidates by submitting their names and appropriate background and biographical information to the Governance Committee, 176 South Street, Hopkinton, MA 01748. Assuming that the appropriate information is timely provided, the Governance Committee will consider these candidates in substantially the same manner as it considers other Board candidates it identifies. EMC shareholders may also nominate director candidates by following the advance notice provisions of EMC’s Bylaws as described under “Business and Nominations for EMC’s 2015 Annual Meeting” on page 85 of this Proxy Statement.

Board Refreshment. The Board is focused on ensuring it has individuals with the right skills and experience to exercise independent judgment in overseeing our business. Accordingly, the Board pays careful attention to succession planning and refreshment for members of the Board. The Board’s process reflects both a deliberate search for specific skills and experiences, as needed, as well as opportunistic additions when high-caliber individuals become available. Over the past few years, a new director has joined the Board approximately every 12-18 months. This cadence has proven effective in allowing sufficient time for new director orientation as well as adjustments in boardroom dynamics. For more information, please see “Corporate Governance - Succession Planning - Board Succession” on page 33 of this Proxy Statement.

In considering incumbent directors for renomination and evaluating director candidates, the Board and the Governance Committee consider a variety of factors. These include each nominee’s independence, personal and professional accomplishments, and experience in light of the needs of the Company. For incumbent directors, the factors also include contributions to the Board and the results of the Board self-assessment process detailed above.

Independence. The Board has a substantial majority of directors who are independent under the director independence standards of the New York Stock Exchange (the “NYSE”) and EMC’s Categorical Standards of Independence.

EMC has adopted Categorical Standards of Independence, which are available at www.emc.com/corporate/investor-relations/governance/corporate-governance.htm and are also attached as Exhibit A to this Proxy Statement, to assist it in assessing director independence. Pursuant to these standards, the Board broadly considers all relevant facts and circumstances in its determination of independence of all Board members (including any relationships set forth in this Proxy Statement under the heading “Certain Transactions”). EMC’s Board of Directors has affirmatively determined that the following directors have no direct or indirect material relationship with EMC, and therefore are independent under our Categorical Standards and the NYSE listing standards: Michael W. Brown, Randolph L. Cowen, Gail Deegan, James S. DiStasio, William D. Green, Edmund F. Kelly, Jami Miscik, Windle B. Priem, Paul Sagan and David N. Strohm.


6


Proposal 1 - Election of Directors (continued)

In determining that the above-mentioned directors are independent, the Board considered transactions during 2013 between EMC and Accenture plc (where Mr. Green is Former Chairman), between EMC and Liberty Mutual Group (where Mr. Kelly is Former Chairman), between EMC and Barclays Capital (where Ms. Miscik is Senior Advisor for Geopolitical Risk), and between EMC and Akamai Technologies, Inc. (where Mr. Sagan is Executive Vice Chairman), and determined that the amount of business fell below the thresholds in EMC’s Categorical Standards of Independence. These transactions include purchases and sales of goods and services in the ordinary course of business that were less than 2% of each company’s annual revenues, including a small amount of insurance coverage in EMC’s professional liability insurance program provided by Liberty Mutual. The Board also considered transactions during 2013 between EMC and companies, universities, hospitals and other organizations with which Messrs. Brown, Cowen, DiStasio, Green, Kelly, Priem, Sagan and Strohm, and Mses. Deegan and Miscik, are affiliated as directors, trustees or members of an advisory board and determined that these relationships were not material. Finally, the Board considered that EMC made donations to charities where Messrs. Cowen and Kelly are directors or trustees, and determined that the amount of the donations fell below the thresholds in EMC’s Categorical Standards of Independence.

Board Meetings. During the fiscal year ended December 31, 2013, EMC’s Board of Directors held six meetings. All directors attended at least 75% of the Board meetings and committee meetings which were held during the period in which he or she was a director of EMC and in which he or she was a member of such committees.

Attendance at Annual Meeting of Shareholders. EMC’s Corporate Governance Guidelines provide that each director is expected to attend the Annual Meeting of Shareholders. All of the then current directors attended the 2013 Annual Meeting of Shareholders.

The Board believes that all of the current nominees are highly qualified and have the skills and experience required for effective service on our Board. The directors’ individual biographies below contain information about their experience, qualifications and skills that led the Board to nominate them.

Each nominee has agreed to be named in this Proxy Statement and to serve if elected. Should any nominee be unable to serve or for good cause will not serve as a director, the proxy holders will vote for such other person as the Board may recommend.

All of the directors were previously elected by the shareholders except for Mr. Green who was elected by the Board of Directors effective as of July 2013. Mr. Green was identified as a potential director by EMC’s Chief Executive Officer.

Mr. Priem will not stand for re-election at our Annual Meeting. Our Board extends sincere gratitude to Mr. Priem for his years of service. Mr. Priem, the former Chair of our Compensation Committee and a member of the Audit Committee and Governance Committee, has given generously of his time and has consistently provided the Board with independent insight and advice. His expertise in talent management and executive compensation matters has been invaluable to the Board.

The affirmative vote of a majority of votes properly cast on this proposal at the Annual Meeting is required to elect each director.


7


Proposal 1 - Election of Directors (continued)

NOMINEES TO SERVE AS DIRECTORS
Michael W. Brown, 68
 
Director Since
l   August 2005
 
Primary Occupation
l   Former Vice President and Chief Financial Officer of Microsoft Corporation
 
Other Current Public Company Boards
l   VMware, Inc. (EMC holds approximately 80% economic interest in VMware)
  Chair of the Audit Committee
  Compensation and Corporate Governance Committee
 
l   Insperity, Inc.
Finance, Risk Management and Audit Committee
Nominating and Corporate Governance Committee
 
l  Stifel Financial Corp.
Risk Management/Corporate Governance Committee
 
Business Experience
l   Microsoft Corporation, a manufacturer of software products for computing devices
Vice President and Chief Financial Officer (August 1994 until his retirement in July 1997)
Vice President, Finance (April 1993 to August 1994)
Treasurer (January 1990 to April 1993)
Joined Microsoft in December 1989
 
l   Chairman of the NASDAQ Stock Market board of directors
 
l   Past governor of the National Association of Securities Dealers
 
l   Various positions at Deloitte & Touche LLP over 18 years
 
Education
l   Bachelor’s degree in Economics from the University of Washington
 
Qualifications and Skills
 
l   Mr. Brown brings to the Board substantial financial expertise that includes extensive knowledge of the complex financial and operational issues facing large companies, and a deep understanding of accounting principles and financial reporting rules and regulations. He acquired this knowledge in the course of serving as the CFO of a global technology company, working with a major international accounting and consulting firm for 18 years, and serving as a member of the audit committees of other public company boards. Mr. Brown’s experience at Microsoft also provides insight and expertise in the rapidly changing IT industry and the impact of new technologies. Through many senior management positions, including as Chairman of NASDAQ and as a past governor of the NASD, Mr. Brown has demonstrated his leadership and business acumen.


8


Proposal 1 - Election of Directors (continued)

Randolph L. Cowen, 63
 
Director Since
l   January 2009
 
Primary Occupation
l   Former co-Chief Administrative Officer of The Goldman Sachs Group, Inc.
 
Business Experience
l   The Goldman Sachs Group, Inc., a global investment, banking, securities and investment management firm
  Co-Chief Administrative Officer (October 2007 until his retirement in November 2008)
  Global Head of Technology and Operations (September 2004 until his retirement in November 2008)
  Chief Information Officer (October 2001 to October 2007)
  Joined Goldman Sachs in 1982
 
Education
l   Bachelor’s degree in History with a minor in Mathematics from Michigan State University
 
Qualifications and Skills
 
l   With nearly 30 years of experience managing IT and making the technology infrastructure purchasing decisions at a global financial services firm, Mr. Cowen brings to the Board extensive knowledge about technology, the IT industry, and defining and implementing an effective IT strategy. As a former customer of EMC, he has in-depth knowledge of our products and services. In addition, through various senior management positions, Mr. Cowen has demonstrated leadership skills and gained significant business operations experience, including developing and managing top talent.



9


Proposal 1 - Election of Directors (continued)

Gail Deegan, 67
 
Director Since
l   July 2002
 
Primary Occupation
l   Former Executive Vice President and Chief Financial Officer of Houghton Mifflin Company
 
Other Current Public Company Boards
l   iRobot Corporation
Audit Committee
 
Business Experience
l   Executive Vice President and Chief Financial Officer, Houghton Mifflin Company, a publishing company (February 1996 until her retirement in September 2001)
 
l   Senior Vice President of Regulatory and Government Affairs, NYNEX New England (February 1995 to February 1996)
 
l   Vice President and Chief Financial Officer, New England Telephone (November 1991 to January 1995)
 
l   Eastern Enterprises
Senior Vice President, Chief Financial Officer and Chief Administrative Officer (February 1990 to May 1991)
Senior Vice President, Chief Financial Officer and Treasurer (1988 to January 1990)
 
Education
l   Bachelor’s degree in Elementary Education from The College of Saint Rose
 
l   Master’s degree in History from Ohio State University
 
l   MBA from Simmons School of Management
 
Qualifications and Skills
 
l   Ms. Deegan is an experienced financial leader who has served as the CFO of three companies in different industries. Ms. Deegan has extensive experience with financial accounting matters for complex global organizations as well as substantial experience overseeing the financial reporting processes of large public companies. Ms. Deegan also gained operational and talent management experience from serving on the executive staff of these companies. In addition, Ms. Deegan’s service on another public company board provides her with valuable experience.


10


Proposal 1 - Election of Directors (continued)

James S. DiStasio, 66
 
Director Since
l   March 2010
 
Primary Occupation
l   Former Senior Vice Chairman and Americas Chief Operating Officer of Ernst & Young LLP
 
Other Current Public Company Boards
l   Northeast Utilities
  Chair of the Finance Committee
  Compensation Committee
  Executive Committee
 
Business Experience
l   Ernst & Young LLP, a professional services organization
Senior Vice Chairman and Americas Chief Operating Officer (January 2003 until his retirement in January 2007)
Elected as a partner in 1977
Various management positions at Ernst & Young over 38 years
 
Education
l   Bachelor’s degree in Accounting from the University of Illinois
 
Qualifications and Skills
 
l   Mr. DiStasio brings to the Board extensive financial, accounting and consulting expertise, including a deep understanding of accounting principles and financial reporting rules and regulations, acquired over the course of his 38-year career at one of the world’s leading assurance, tax, transaction and advisory services firms. He has significant experience overseeing, from an independent auditor’s perspective, the financial reporting processes of large public companies in a variety of industries with a global presence. Through his leadership roles at E&Y, including as COO of the Americas, Mr. DiStasio gained substantial management and operational experience. In addition, Mr. DiStasio’s service on another public company board provides him with valuable experience.



11


Proposal 1 - Election of Directors (continued)

John R. Egan, 56
 
Director Since
l   May 1992
 
Primary Occupation
l   Managing Partner and General Partner of Egan-Managed Capital
 
Other Current Public Company Boards
l   VMware, Inc. (EMC holds approximately 80% economic interest in VMware)
Chair of the Mergers and Acquisitions Committee
 
l   NetScout Systems, Inc.
Lead Independent Director
Chair of the Nominating and Governance Committee
Audit Committee
 Finance Committee
 
l   Progress Software Corporation
Non-Executive Chairman of the Board
Compensation Committee
 
l   Verint Systems Inc.
Chair of the Nominating and Governance Committee
 
Business Experience
l   Managing partner and general partner, Egan-Managed Capital, a venture capital firm (since October 1998)
 
l   EMC Corporation
Executive Vice President, Products and Offerings (May 1997 to September 1998)
Executive Vice President, Sales and Marketing (January 1992 to June 1996)
Various executive positions, including Executive Vice President, Operations and Executive Vice President, International Sales (October 1986 to January 1992)
Resigned as an executive officer in September 1998 and as an employee in July 2002
 
Education
l   Bachelor’s degree in Marketing and Computer Science from Boston College
 
Qualifications and Skills
 
l   Mr. Egan has spent his entire career in the IT industry. His broad experience ranges from venture capital investments in early-stage technology companies to extensive sales and marketing experience, to executive leadership and management roles. Mr. Egan brings to the Board business acumen, substantial operational experience, and expertise in corporate strategy development, as well as a deep understanding of EMC’s people and products acquired over many years of involvement with the Company. In addition, Mr. Egan’s service on other public company boards provides him with valuable experience.



12


Proposal 1 - Election of Directors (continued)

William D. Green, 60
 
Director Since
l   July 2013
 
Primary Occupation
l   Former Chairman of Accenture plc
 
Other Current Public Company Boards
l   McGraw Hill Financial, Inc.
Compensation and Leadership Development Committee
Nominating and Corporate Governance Committee
 
Former Public Company Boards (within the past 5 years)
l   Accenture plc
Chairman of the Board
 
Business Experience
l   Accenture plc, a global management consulting, technology services and outsourcing
company
Chairman (August 2006 until his retirement in February 2013)
Chief Executive Officer (September 2004 to December 2010)
Elected as a partner in 1986
 
Education
l   Bachelor’s degree in Economics from Babson College
 
l   Master of Business Administration from Babson College
 
l   Honorary Doctor of Laws from Babson College
 
Qualifications and Skills
 
l   As the former Chairman and Chief Executive Officer of Accenture, Mr. Green is an experienced and seasoned leader with outstanding operating experience, a deep understanding of the information technology industry and broad international business expertise. In addition, Mr. Green’s service on another public company board provides him with valuable experience.



13


Proposal 1 - Election of Directors (continued)

Edmund F. Kelly, 68
 
Director Since
l   August 2007
 
Primary Occupation
l   Former Chairman of Liberty Mutual Group
 
Other Current Public Company Boards
l   The Bank of New York Mellon Corporation
Chair of the Technology Committee
Human Resources and Compensation Committee
Risk Committee
 
Business Experience
l   Liberty Mutual Group, a diversified global insurer and the nation’s third-largest
property and casualty insurer
Chairman (April 2000 to June 2013)
Chief Executive Officer (April 1998 to June 2011)
President (April 1992 to June 2010)
 
Education
l   Bachelor’s degree in Mathematics from Queen’s University in Belfast, Ireland
 
l   Ph.D. in Mathematics from the Massachusetts Institute of Technology
 
Qualifications and Skills
 
l   As the former Chairman and CEO of a Fortune 100 company, Mr. Kelly brings to the Board a wealth of complex management, worldwide operational and financial expertise. He also brings in-depth knowledge of the opportunities and challenges facing global companies. In addition, Mr. Kelly’s service on another public company board provides him with valuable experience.



14


Proposal 1 - Election of Directors (continued)

Jami Miscik, 55
 
Director Since
l   August 2012
 
Primary Occupation
l   President and Vice Chairman of Kissinger Associates, Inc.
 
Business Experience
l   President and Vice Chairman of Kissinger Associates, Inc., an international consulting firm (since January 2009)
 
l   Senior Advisor on Geopolitical Risk to Barclays Capital, an international investment bank (since June 2009)
 
l   Global Head of Sovereign Risk at Lehman Brothers, a former investment bank (June 2005 to September 2008)
 
l   Various positions at the United States Central Intelligence Agency, including Deputy Director for Intelligence (1983-2005)
 
l   Member of the President’s Intelligence Advisory Board (since December 2009)
 
Education
l   Bachelor’s degree in Political Science and Economics from Pepperdine University
 
l   Master’s degree in International Studies from the University of Denver
 
Qualifications and Skills
 
l   Ms. Miscik has had a long and distinguished career in the intelligence field. While at the CIA, Ms. Miscik led the analytic directorate producing the President’s daily intelligence briefings and in-depth intelligence assessments, and managed a global workforce and large budgets. Combined with her current operational experience leading an elite international consulting enterprise with clients operating around the world, Ms. Miscik has demonstrated leadership skills, global perspective, and strategic insight. She brings to the Board a unique perspective on international and government affairs, and expertise in risk analysis and geopolitics.




15


Proposal 1 - Election of Directors (continued)

Paul Sagan, 55
 
Director Since
l   December 2007
 
Primary Occupation
l   Partner and XIR, General Catalyst Partners
 
Other Current Public Company Boards
l   Akamai Technologies, Inc.
 
l   iRobot Corporation
Chair of the Nominating and Corporate Governance Committee
 
Business Experience
l   Partner and XIR, General Catalyst Partners, a venture capital firm (since January 2014)

 
l   Akamai Technologies, Inc., a provider of services for accelerating the delivery of
content and applications over the Internet
Vice Chairman (since January 2013)
Chief Executive Officer (April 2005 to December 2012)
President (October 2011 to December 2012 and May 1999 to September 2010)
Joined in October 1998 as Vice President and Chief Operating Officer
 
l   Member of the President’s National Security Telecommunications Advisory Committee (appointed by President Barack Obama in December 2010)
 
Education
l   Northwestern University’s Medill School of Journalism
 
Qualifications and Skills
 
l   As the former President and CEO of a fast-growing, industry-leading S&P 500 company, Mr. Sagan has significant experience leading a complex, international technology enterprise, extensive knowledge of internet-based technologies and business acumen. During his career, Mr. Sagan has led visionary technology and media companies and consulted with the World Economic Forum. In addition, Mr. Sagan’s service on other public company boards provides him with valuable experience.



16


Proposal 1 - Election of Directors (continued)

David N. Strohm, 65
 
Director Since
l   October 2003 and Lead Director since January 2006
 
Primary Occupation
l   Venture Partner, Greylock Partners
 
Other Current Public Company Boards
l   VMware, Inc. (EMC holds approximately 80% economic interest in VMware)
Chair of the Compensation and Corporate Governance Committee
Audit Committee
Mergers and Acquisitions Committee
 
l   Imperva, Inc.
Audit Committee
 
Former Public Company Boards (within the past 5 years)
l   Successfactors, Inc.
Chairperson of the Board
Chair of the Nominating and Corporate Governance Committee
Chair of the Compensation Committee
 
Business Experience
l   Greylock Partners, a venture capital firm
Venture Partner (since January 2001)
General Partner (1980 to 2001)
General Partner of several partnerships formed by Greylock
 
Education
l   Bachelor’s degree from Dartmouth College
 
l   MBA from Harvard Business School
 
Qualifications and Skills
 
l   Mr. Strohm has more than 30 years of experience as an early-stage venture capital investor, principally in the information technology industry. He has been a primary investor, and served in board leadership roles, in several companies which have grown to become publicly-traded. This experience has provided him with a deep understanding of the IT industry, and the drivers of structural change and high-growth opportunities in IT. He has also gained significant experience overseeing corporate strategy, assessing operating plans, and evaluating and developing business leaders. His service as board chair, lead director, and committee chair for several public companies has given him a broad experience base for serving as our Lead Director.



17


Proposal 1 - Election of Directors (continued)

Joseph M. Tucci, 66
 
Director Since
l   January 2001 and Chairman of the Board since January 2006
 
Primary Occupation
l   Chairman, President and Chief Executive Officer of EMC Corporation
 
Other Current Public Company Boards
l   VMware, Inc. (EMC holds approximately 80% economic interest in VMware)
Chairman of the Board of Directors
Mergers and Acquisitions Committee
 
l   Paychex, Inc.
Lead Independent Director
Chairman of the Governance and Compensation Committee
 
Business Experience
l   EMC Corporation
Chief Executive Officer (since January 2001)
President (January 2000 to July 2012; since February 2014)
Chief Operating Officer (January 2000 to January 2001)
 
l   Deputy Chief Executive Officer, Getronics N.V., an information technology services company (June 1999 through December 1999)
 
l   Chairman of the Board and Chief Executive Officer, Wang Global, an information technology services company (December 1993 to June 1999)
 
Education
l   Bachelor’s degree in Marketing from Manhattan College
 
l   MS in Business Policy from Columbia University
 
Qualifications and Skills
 
l   During his tenure at EMC, Mr. Tucci has led EMC through a period of dramatic transformation and revitalization, continued market share gains and sustained revenue growth. Mr. Tucci has spent more than 40 years in the technology industry in senior roles at large, complex and global technology companies. Mr. Tucci’s deep knowledge of all aspects of our business, combined with his drive for innovation and excellence, position him well to serve as our Chairman and CEO. In addition, Mr. Tucci’s service on other public company boards provides him with valuable experience.


18


PROPOSAL 2

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 2

EMC is asking shareholders to ratify the selection by the Audit Committee of PricewaterhouseCoopers LLP (“PwC”) as our independent auditors for the fiscal year ending December 31, 2014. The affirmative vote of a majority of votes properly cast on this proposal at the Annual Meeting is required to ratify such selection.

Although ratification by the shareholders is not required by law, the Board of Directors has determined that it is desirable to request approval of this selection by the shareholders as a matter of good corporate governance. In the event the shareholders fail to ratify the appointment of PwC, the Audit Committee will consider this factor when making any determinations regarding PwC.

Independence and Quality

As provided in the Audit Committee charter, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditors for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for EMC. Each year, the Audit Committee considers whether to retain PwC and whether such service continues to be in the best interests of EMC and our shareholders. Among other things, the Audit Committee considers:
the quality and scope of the audit;
the independence of the firm;
the performance of the lead engagement partner, the number of people staffed on the engagement team, and the quality of the engagement team, including the quality of the Audit Committee’s ongoing communications with and the capability and expertise of the team;
the firm’s tenure as our independent auditor and its familiarity with our global operations and business, accounting policies and practices, and internal controls over financial reporting; and
external data relating to audit quality and performance, including recent PCAOB inspection reports available for the firm.

Based on this evaluation, the members of the Audit Committee and the Board of Directors believe that PwC is independent and that it is in the best interests of EMC and our shareholders to retain PwC to serve as our independent auditors for 2014.

The Audit Committee is also responsible for selecting the lead engagement partner. The rules of the Securities and Exchange Commission (the “SEC”) and PwC’s policies require mandatory rotation of the lead engagement partner every five years. In 2014, EMC will have a new lead engagement partner. The full Audit Committee and the Chair of the Audit Committee were directly involved in the selection of the new lead engagement partner. The process for selecting a new lead engagement partner was fulsome and allowed for thoughtful consideration of multiple candidates, each of whom met a list of specified criteria. The process included discussions between the Chair of the Audit Committee and PwC as to all of the final candidates under consideration for the position, multiple meetings with the full Committee and management, and robust interviews with the final candidates.

Pre-Approval of Audit and Non-Audit Services

The Audit Committee pre-approves all audit, review and attest services performed by PwC.

In accordance with the Audit Committee’s Pre-Approval Policy, the Audit Committee pre-approves specified non-audit services up to an aggregate dollar amount and approves any individual engagement in excess of $200,000. The Audit Committee has delegated to its Chair the authority to pre-approve any specific non-audit service which was not previously pre-approved by the Audit Committee, provided that any decisions of the Chair to pre-approve non-audit services shall be presented

19


Proposal 2 - Ratification of Independent Auditors (continued)

to the Audit Committee at its next scheduled meeting. There is no delegation of authority to management to pre-approve any non-audit services.

The Audit Committee has reviewed and approved the amount of fees paid to PwC for audit, audit-related, tax and all other services in 2013. During 2013, the Audit Committee also pre-approved all non-audit services in accordance with the policy set forth above. The Audit Committee considered the compensation paid to PwC for non-audit services and concluded that the provision of these services by PwC is compatible with maintaining PwC’s independence.

Fees

The Audit Committee is responsible for the overall audit fee negotiations with PwC and receives regular updates from PwC as to amounts billed to EMC.

The following table summarizes the fees PwC billed to us for each of the last two fiscal years.
 
Audit Fees1
($)
Audit-Related Fees2, 3
($)
Tax Fees3, 4
($)
All Other Fees5
($)
2013
8,745,311
418,342
2,453,392
2012
8,435,360
384,474
2,264,722
295,457
1 
Includes services for the audit of our financial statements and internal control over financial reporting, the review of the interim financial statements included in our quarterly reports on Form 10-Q and other professional services provided in connection with statutory and regulatory filings or engagements.
2 
Includes employee benefit plan compliance, acquisition-related support and other technical, financial reporting and compliance services.
3 
EMC engages PwC to perform audit-related and tax services where it believes there are efficiencies to using its independent auditors, who are familiar with EMC’s processes and procedures.
4 
Includes tax compliance and tax consulting services in 2013 and 2012.
5 
Includes consulting services performed by a company acquired by PwC in 2011.

Amounts in the table above do not include the fees PwC billed to VMware, Inc.

EMC expects that representatives of PwC 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.

For more information about interactions between the Audit Committee and PwC, please see “Board Committees - Audit Committee” and “Audit Committee Report” on pages 36 and 83, respectively, of this Proxy Statement.



20


PROPOSAL 3

ADVISORY APPROVAL OF EXECUTIVE COMPENSATION

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 3

EMC is asking shareholders for their advisory approval of the compensation of our Named Executive Officers, as disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in this Proxy Statement, in accordance with Section 14A of the Securities Exchange Act of 1934, as amended. While this vote is advisory, and not binding on us, the Compensation Committee will consider your views when determining executive compensation in the future. At our 2013 Annual Meeting of Shareholders, shareholders expressed strong support for our executive compensation program.

Business Strategy

The IT market is going through the biggest, most disruptive and yet most opportunity-rich transition in its 60-plus year history. The move from the second platform to the third platform of IT, underpinned by the mega trends in mobile, cloud, Big Data and social networking, is having a profound impact on business and transforming the way we work and live. In this fast-paced environment, EMC’s strategy is to help our customers and partners make this transformational shift by providing them with EMC’s best-of-breed portfolio, which will enable them to better capitalize on their opportunities.

We are implementing this strategy through a unique business model that includes three federated businesses: EMC Information Infrastructure, Pivotal Software and VMware Virtual Infrastructure (the “Federation”). Under the Federation model, each business operates freely and independently to build its own ecosystem and offer customers the very best technology solutions, free from vendor lock-in. At the same time, the businesses are strategically aligned in the mission to lead our customers, partners and the marketplace through the transformational shift to the third platform of IT. We believe this model creates a distinct competitive advantage by offering tight integration for customers who prefer an integrated technology stack, and best-of-breed offerings on a standalone basis for customers seeking flexibility in vendor and deployment options.

The combination of the products, services and solutions portfolios among the Federation gives us a strong position from which to compete in the second platform, which will continue to support the majority of enterprise workloads for several years to come; leading-edge technologies and products for the third platform; and a powerful capability to bridge the gap between the two.
 
Pay-for-Performance Philosophy

Our executive compensation programs are based on strong pay-for-performance practices that require the attainment of challenging goals designed to drive profitable revenue growth and market share gains. We believe achievement of these goals will create long-term shareholder value.

Changes in Our 2014 Executive Compensation Program

After the 2013 Annual Meeting of Shareholders, we dialogued and met with many shareholders to discuss our executive compensation program. Several themes emerged, including:
Support for our pay-for-performance philosophy;
Support for multi-year performance goals;
Support for continued use of existing operational performance metrics;
Request for more widespread use of a return metric, such as total shareholder return (“TSR”); and
Request to simplify our program.

21

Proposal 3 - Advisory Approval of Executive Compensation (continued)

After considering our business strategy, the results of the 2013 advisory “say-on-pay” vote and our dialogue with shareholders, the Compensation Committee changed the design of the compensation program for 2014 as follows:
Introduced a long-term equity incentive plan to replace the annual performance equity award program;
Added a TSR performance metric to the long-term equity incentive plan;
Simplified the equity program by decreasing the different types of equity awards utilized; and
Modified the Executive MBO to emphasize execution of our Federation strategy.

2013 Executive Compensation Program

The Compensation Committee approved an executive compensation program for 2013 that implemented our pay-for-performance philosophy. Since our 2013 non-GAAP EPS, revenue and free cash flow results fell below the applicable incentive plan targets and the Named Executive Officers failed to achieve all of their respective strategic and operational goals, the 2013 cash and performance equity incentives paid out or vested below target, as follows:
89.98% of target was paid out under the 2013 Corporate Incentive Plan;
78% of target was paid out under the 2013 Executive MBO; and
87.8% of the 2013 performance-based equity awards became eligible to vest, vesting ratably over two to three years subject to continued employment. 12.2% of the performance-based equity awards did not become eligible to vest and were forfeited.

Below is a summary of the Named Executive Officers’ 2012 and 2013 compensation as set forth in the Summary Compensation Table:
Name
Year
Salary
($)
Cash
Incentive Compensation
($)
Equity
Awards
($)
All Other
Compensation*
($)
Total
($)
Joseph M. Tucci
2013
1,000,000
     1,260,058
10,076,821
309,079
12,645,957
2012
1,000,000
1,467,360
14,008,326
116,545
16,592,231
David I. Goulden
2013
850,000
1,006,296
6,453,659
122,621
8,432,576
2012
737,500
949,513
9,879,979
16,435
11,583,427
Howard D. Elias
2013
750,000
700,032
4,444,834
136,194
6,031,061
2012
687,500
757,109
9,361,393
22,697
10,828,699
William J. Teuber, Jr.
2013
725,000
634,404
4,571,604
97,906
6,028,914
2012
712,500
707,560
5,711,492
17,051
7,148,603
William F. Scannell
2013
700,000
656,280
4,444,834
108,412
5,909,526
2012
700,000
632,153
9,361,393
15,821
10,709,367
*
The year-over-year increase in “All Other Compensation” is largely a result of dividend equivalent accruals on unvested restricted stock unit awards, which become payable if and when the underlying shares vest. EMC announced the payment of quarterly dividends commencing July 2013.

For more information, please see the Summary Compensation Table, and the accompanying compensation tables, beginning on page 64 of this Proxy Statement.


22

Proposal 3 - Advisory Approval of Executive Compensation (continued)

Other Compensation Highlights
ü Annual “say-on-pay” vote 
ü Oversight of risks associated with compensation policies and practices
ü Clawback policy applicable to all employees for cash and equity incentive compensation
ü Strong stock ownership and stock holding guidelines
ü “Double trigger” change in control agreements
ü Independent compensation consultant
ü CEO succession planning
ü No pension or SERP benefits for executive officers
ü No discounted options
ü No option repricings without shareholder approval
ü No dividend equivalents paid unless equity awards vest
ü No excise tax gross-ups
ü No hedging or pledging of Company stock
ü No excessive perquisites for executives

For more information on our executive compensation program, see “Compensation Discussion and Analysis” and “Compensation of Executive Officers” beginning on pages 43 and 64, respectively, of this Proxy Statement.


23


PROPOSAL 4

SHAREHOLDER PROPOSAL

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” PROPOSAL 4

John Chevedden, acting as proxy for James McRitchie, has proposed the adoption of the following proposal at the Annual Meeting and has furnished the following statement in support of the proposal. The address of the shareholder is 9295 Yorkship Court, Elk Grove, CA 95758. The shareholder has represented to EMC that he held 200 shares of common stock as of November 15, 2013. If properly presented at the meeting, the affirmative vote of a majority of the votes properly cast on this proposal at the Annual Meeting is required to approve this proposal.

Proposal 4 - Independent Board Chairman

RESOLVED: Shareholders request that our Board of Directors to adopt a policy, and amend other governing documents as necessary to reflect this policy, to require the Chair of our Board of Directors to be an independent member of our Board. This independence requirement shall apply prospectively so as not to violate any contractual obligation at the time this resolution is adopted. Compliance with this policy is waived if no independent director is available and willing to serve as Chair. The policy should also specify how to select a new independent chairman if a current chairman ceases to be independent between annual shareholder meetings.

When our CEO is also our board chairman, this arrangement can hinder our board’s ability to monitor our CEO’s performance. Many companies already have an independent Chairman. An independent Chairman is the prevailing practice in the United Kingdom and many international markets. This proposal topic won 50%-plus support at 5 major U.S. companies in 2013 including 73%-support at Netflix.

This proposal should also be more favorably evaluated due to our Company’s clearly improvable environmental, social and corporate governance performance as reported in 2013:

GMI Ratings, an independent investment research firm, rated our board D. Directors David Strohm (Lead Director), Gail Deegan, Windle Priem and John Egan each had 10 to 21 years long-tenure. Long-tenured directors can form relationships that may compromise their independence and therefore hinder their ability to provide effective management oversight. Long-tenured directors controlled 7 of the 12 seats on our most important board committees. In regard to over-committed directors, CEO Joseph Tucci was on 3 company boards, Michael Brown was on 4 and John Egan was on 5. Not one independent director had expertise in risk management.

In regard to executive pay there was $17 million for Joseph Tucci. EMC can give long-term incentive pay to Mr. Tucci for below-median performance. Unvested equity pay would not lapse upon CEO termination. Our company did not link environmental or social performance to its incentive pay policies. There was a 21% negative vote for EMC executive pay in 2013.

EMC’s environmental impact disclosure practices, as reported by environmental specialist Trucost, were significantly worse than its sector peers. EMC also did not disclose a policy that prohibits or allows direct engagement in corporate-level political activities through campaign contributions or other endorsements of political parties or candidates.

EMC had a unilateral right to amend our company’s bylaws and articles / constitution without shareholder approval. EMC had the ability to issue blank-check preferred stock as a management takeover defense. EMC Corporation had a higher shareholder class action litigation risk than 94% of all rated companies.

Returning to the core topic of this proposal from the context of our clearly improvable corporate governance, please vote to protect shareholder value:

Independent Board Chairman - Proposal 4


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Proposal 4 - Shareholder Proposal (continued)

EMC'S STATEMENT IN OPPOSITION TO SHAREHOLDER PROPOSAL

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” PROPOSAL 4

Your Board of Directors unanimously opposes this proposal for the following reasons:
An inflexible policy that mandates an independent Chairman is not in the best interests of the Company or our shareholders.
Our new Federation model is unique in the industry and a competitive differentiator, and a single, experienced and knowledgeable leader is critical to our success.
Our independent Board and independent Lead Director provide proper and effective oversight of the Company.

An inflexible policy that mandates an independent Chairman is not in the best interests of the Company or our shareholders. The Board believes that strong, independent Board leadership is a critical aspect of effective corporate governance, but that such independent leadership can be achieved in several ways. The Board believes it is important to maintain the flexibility it currently has to tailor its leadership structure based on the Company’s needs and the Board’s assessment of its leadership.

Under our Corporate Governance Guidelines, the Board reviews its leadership structure on an annual basis and determines whether, at such time, it is best for the Company that (a) the Chairman role be combined or separated from the CEO role and (b) the Chairman be an independent director. Among other things, the Board considers the Company’s strategic positioning, the Company’s challenges, industry dynamics, the experience of the then current CEO, the qualifications of directors who could serve as Chairman, and any relevant legislative or regulatory developments. In the past, the Company has had both combined and separate chairman and CEO positions. Our experience demonstrates that it is important for the Board to maintain this flexibility.

Our new Federation model is unique in the industry and a competitive differentiator, and a single, experienced and knowledgeable leader is critical to our success. The IT industry is in transition and we are seeing significant disruptions in the marketplace. To capitalize on the opportunities, EMC is undergoing its own transition. Under our new Federation operating model, we have created three independent businesses: EMC Information Infrastructure, VMware and Pivotal. These businesses are led by three chief executive officers, David Goulden, Pat Gelsinger and Paul Maritz, respectively. Mr. Tucci is Chairman at all three businesses. This structure enables each business to focus on their specific business objectives while also allowing for collaboration to offer solutions across the technology stack.

The Board believes that the Company needs one leader to guide the overall vision of the Federation and ensure the companies’ strategies are aligned in order to lead EMC through this major transition. We strongly believe it is not in our shareholders’ best interest to insert another individual between Mr. Tucci and the CEOs of the Federation businesses. Mr. Tucci is the key link between the Board and management. Therefore, the Board has determined that it currently is in the shareholders’ best interest to have Mr. Tucci continue to serve as the Chairman and CEO of EMC Corporation.

Our independent Board and independent Lead Director provide proper and effective oversight of the Company. The Board believes that the Company’s current governance structure, with its strong emphasis on Board independence, makes an independent chairman requirement unnecessary. Ten out of the 12 directors on your Board are independent. Our independent directors appropriately challenge management and demonstrate independent judgment in making important decisions for our Company.

Furthermore, our Corporate Governance Guidelines provide that if the Chairman is not an independent director, the independent directors must select an independent Lead Director. The Board believes that a Lead Director is an integral part of our Board structure and facilitates the effective performance of the Board in its role of providing governance and independent oversight. The independent Lead Director has significant duties, including:
Presiding at executive sessions of the independent directors and meetings of the Board at which the Chairman is not present;
Acting as a liaison between the independent directors and the Chairman;

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Proposal 4 - Shareholder Proposal (continued)

Having the authority to call meetings of the independent directors;
Approving information sent to the Board;
Approving meeting agendas and schedules for the Board; and
If requested by major shareholders, being available for consultation and direct communication.

Our Lead Director, David N. Strohm, is an independent director and has served in the role of Lead Director since January 2006. Each year, the Board of Directors considers Mr. Strohm’s performance as Lead Director and whether he is the right person to continue in the role. Mr. Strohm possesses extensive experience in board leadership, and has a deep understanding of the IT industry, the drivers of structural change and high-growth opportunities in IT. He also has significant experience overseeing corporate strategy, assessing operating plans, and evaluating and developing business leaders. Furthermore, Mr. Strohm is well-respected by the independent directors and effectively carries out his Lead Director responsibilities. The Board believes that Mr. Strohm is highly qualified and has been successful as our Lead Director.

In addition, each of the Board’s key committees - the Audit Committee, Corporate Governance and Nominating Committee, and Leadership and Compensation Committee - is comprised entirely of independent directors. As a result, oversight of key matters, such as the integrity of EMC’s financial statements, the nomination of directors and evaluation of the Board and its committees, and executive compensation, is entrusted exclusively to independent directors. Finally, the Board meets in executive session without the CEO in connection with each regularly scheduled Board meeting.

For more information, please see “Corporate Governance - Board Leadership Structure” beginning on page 30 of this Proxy Statement.

In summary, we believe this proposal would impose a rigid policy on the Board and unduly limit the Board’s ability to determine its leadership structure over time based on a considered and deliberate assessment of all relevant factors. Moreover, we believe this proposal is unnecessary as the Company’s existing governance structure, including an independent Lead Director and independent Board of Directors, is effective in providing independent oversight of the CEO and the Company.

FOR THESE REASONS, YOUR BOARD OF DIRECTORS BELIEVES THAT THIS PROPOSAL IS NOT IN THE BEST INTERESTS OF EMC OR OUR SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE AGAINST THIS PROPOSAL.



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PROPOSAL 5

SHAREHOLDER PROPOSAL

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” PROPOSAL 5

The NorthStar Asset Management, Inc. Funded Pension Plan has proposed the adoption of the following proposal at the Annual Meeting and has furnished the following statement in support of the proposal. The address of the shareholder is PO Box 301840, Boston, MA 02130. The shareholder has represented to EMC that it held 870 shares of common stock as of November 19, 2013. If properly presented at the meeting, the affirmative vote of a majority of the votes properly cast on this proposal at the Annual Meeting is required to approve this proposal.

Congruency between Corporate Values and Political Contributions

Whereas, the Supreme Court ruling in Citizens United v. Federal Election Commission interpreted the First Amendment right of freedom of speech to include certain corporate political expenditures involving “electioneering communications,” which resulted in greater public and shareholder concern about corporate political spending;

Whereas, proponents believe EMC Corporation should establish policies that minimize risk to the firm’s reputation and brand through possible future missteps in corporate political contributions;

Whereas, in EMC’s 2011 Sustainability Materiality Assessment, “climate change mitigation” was ranked as one of the highest priority items to both external stakeholders and EMC. EMC’s website states that “we believe that addressing the potential impacts of climate change and energy use will help EMC reduce our risks, enhance shareholder value, and strengthen our business.” Despite this, since 2009 the EMC Political Action Committee (EMCPAC) designated 23% of its contributions to politicians voting against the American Clean Energy and Security Act of 2009 (H.R. 2454) and voting to deregulate greenhouse gases (H.R. 910);

Whereas, EMC has a strong commitment to diversity, stating that “EMC does not discriminate on the basis of…sexual orientation, marital status, gender identity or expression…” In fact, in 2012 EMC has made its support of LGBT individuals clear when it publically supported the efforts of Washington United for Marriage, the bipartisan statewide coalition of organizations working together to defend Washington State’s existing marriage equality law. Yet since 2009, EMCPAC designated over 30% of its contributions to politicians voting against hate crimes legislation and against the repeal of Don’t Ask Don’t Tell, and/or sponsoring the Federal Marriage Amendment Act, which would eliminate equal marriage rights across the nation.

Resolved: Shareholders request that the Board of Directors create and implement a policy with consistent incorporation of corporate values as defined by EMC’s stated policies and affirmations (including our Commitment to Diversity, our Equal Opportunity Plan, our Environmental Strategy, and our Climate Change and Energy Strategy) into Company and EMCPAC political and electioneering contribution decisions; and report to shareholders, at reasonable expense and excluding confidential information, any electioneering or political contribution expenditures which raise an issue of congruency with corporate values, and stating the justification for these exceptions.

Supporting Statement: Proponents recommend that the report contain management’s analysis of risks to our company’s brand, reputation, or shareholder value. “Expenditures for electioneering communications” means spending directly, or through a third party, at any time during the year, on printed, internet or broadcast communications, which are reasonably susceptible to interpretation as in support of or opposition to a specific candidate. Proponents recommend that a policy encouraging consistent incorporation of corporate values include: transparency, congruence of giving with company values, accountability to shareholders, and stewardship of values to funds recipients.

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Proposal 5 - Shareholder Proposal (continued)

EMC’S STATEMENT IN OPPOSITION TO SHAREHOLDER PROPOSAL

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” PROPOSAL 5

Your Board of Directors opposes this proposal because it is unnecessary and not in the best interests of EMC or its shareholders.

EMC is committed to responsible and transparent participation in the political process. For many years, we have had effective policies and procedures for oversight and disclosure of our political activities. The Supreme Court’s decision in Citizens United has not changed our practices or our focus on our business priorities. Highlights of our policies and practices include:

We have Board oversight over political contributions: The Corporate Governance and Nominating Committee (the “Governance Committee”) of your Board of Directors regularly reviews our corporate political activity and EMC PAC activity, including review of our semi-annual disclosure statements, key public policy priorities and the appropriateness of EMC’s political contributions policies and procedures.

We make contributions to advance our public policy priorities: EMC participates in the political process to help shape public policy and address legislation that impacts the Company and our industry. For example, some of our key priorities center around cloud computing; data center consolidation; Big Data “analytics”; patent litigation reform; high tech visa reform; promoting effective sustainability and energy efficiency approaches in the public sector; cybersecurity; and science, technology, engineering and mathematics education. While we do not expect recipients of contributions to agree at all times with our positions on all issues, we seek to support individuals who will promote the interests of the Company. For more information, see http://www.emc.com/corporate/investor-relations/governance/corporate-governance.htm.

Our Political Contributions Policy governs our contributions: Since 2007, we have had a publicly available Political Contributions Policy which outlines procedures for contributions made with corporate funds. The Political Contributions Policy also describes oversight of the EMC Political Action Committee (the “EMC PAC”), a nonpartisan committee registered with the Federal Election Commission. The EMC PAC is funded entirely with voluntary employee contributions; no corporate funds are used to fund the EMC PAC. For more information, see http://www.emc.com/corporate/investor-relations/governance/corporate-governance.htm.

We require that contributions be approved in advance: Any proposed political contribution by EMC, whether monetary or “in-kind,” must be submitted in advance to EMC’s Office of Corporate Government Affairs and the Chief Compliance Officer for pre-approval. Any contribution by the EMC PAC must be reviewed and approved by the EMC PAC Board. Our due diligence process includes, among other things, consideration of whether the recipient of a contribution represents a state or district where a major EMC facility is located, supports employee interests in his or her district, serves on a Congressional committee with jurisdiction over issues of importance to EMC’s business, or has been supportive of the IT industry on key issues. Contributions may be made to members of all political parties and are made without regard to the political preferences of EMC executives.

We publicly disclose political contributions and trade association membership information: EMC makes information about our corporate political contributions publicly available on our website. Since 2007, we have disclosed all corporate political contributions and since 2011, our major U.S. trade association memberships, including the percentage of our dues allocated by trade associations to lobbying expenses and political expenditures. For more information, see http://www.emc.com/corporate/investor-relations/governance/corporate-governance.htm.

We comply with government reporting requirements: All expenditures and/or political activity that must be disclosed under government reporting requirements are filed with the Federal Election Commission, U.S. Senate or Massachusetts Secretary of State, as applicable. Links to these reports are available on our website at http://www.emc.com/corporate/investor-relations/governance/corporate-governance.htm.


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Proposal 5 - Shareholder Proposal (continued)

Finally, we note that since 2007, the only corporate political contributions we have made were $100,000 to each of the 2008 Democratic and Republican National Conventions, and in-kind products and services valued at approximately $170,000 and $254,000 to the 2012 Democratic and Republican National Conventions, respectively, and the EMC PAC made contributions of less than $70,000 each year. The amount of our contributions is relatively small but nonetheless we believe it is in the best interests of the Company and our shareholders to keep lines of communication open with our elected officials and help shape public policy consistent with our business priorities. Political contributions represent just a fraction of EMC’s involvement in our communities and our activities as a responsible corporate citizen. For more information, see http://www.emc.com/corporate/sustainability/ strengthening-communities/index.htm.

Accordingly, we believe that this proposal is unnecessary and that EMC’s existing policies and practices enable EMC and EMC’s employees to engage in the political process in a way that is consistent with our values and furthers the interests of the Company and our shareholders.

FOR THESE REASONS, YOUR BOARD OF DIRECTORS BELIEVES THAT THIS PROPOSAL IS NOT IN THE BEST INTERESTS OF EMC OR OUR SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE AGAINST THIS PROPOSAL.



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CORPORATE GOVERNANCE

EMC is committed to good corporate governance, which we believe helps us to sustain our success and build long-term value for our shareholders. For many years, we have had in place Corporate Governance Guidelines that provide a framework for the effective governance of EMC. The Governance Committee reviews these guidelines at least annually and, as appropriate, recommends changes to the Board of Directors for approval. We also have written charters for the Board of Directors’ standing committees (Audit, Finance, Governance, Leadership and Compensation, and Mergers and Acquisitions), as well as Business Conduct Guidelines applicable to all directors, officers and employees. Information about EMC’s corporate governance practices and copies of the Corporate Governance Guidelines, committee charters and Business Conduct Guidelines are available at www.emc.com/corporate/investor-relations/governance/corporate-governance.htm. EMC posts additional information on its website from time to time as the Board makes changes to EMC’s corporate governance practices.

The Board of Directors has implemented corporate governance practices that it believes are both in the best interests of EMC and its shareholders as well as compliant with the rules and regulations of the SEC and the listing standards of the NYSE. The Board reviews these practices on an ongoing basis. Highlights of our corporate governance practices include:

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Board Leadership Structure. Our Bylaws and Corporate Governance Guidelines permit the roles of Chairman and Chief Executive Officer to be filled by the same or different individuals. This provides the Board with the flexibility to determine whether the two roles should be combined or separated based upon our needs and the Board’s assessment of its leadership from time to time.

The Board reviews the structure of its leadership on an annual basis and determines each year whether it is best for the Company that the Chairman role be combined or separated from the CEO role and whether the Chairman should be an independent director. Among other things, the Board considers the Company’s strategic positioning, the Company’s challenges, industry dynamics, the experience of the then current CEO, the qualifications of directors who could serve as Chairman, and any relevant legislative or regulatory developments.

The Board believes that EMC and its shareholders are best served at this time by having Joseph M. Tucci serve as our Chairman and CEO, and David N. Strohm, an independent director, serve as our Lead Director. Combining the roles of Chairman and CEO makes clear that we have a single leader who is directly accountable to the Board and, through the Board, to our shareholders. It establishes one voice who speaks for the Company to customers, employees, shareholders and other stakeholders. This structure reinforces Mr. Tucci’s overall responsibility for the Company’s business and strategy, under the oversight and subject to the review of the Board. It strengthens the Board and the Board’s decision-making process because Mr. Tucci, who has first-hand knowledge of our operations and the major issues facing EMC, chairs the Board meetings where the Board discusses strategic and business issues. This structure also enables Mr. Tucci to act as the key link between the Board and other members of management. Finally, the combined roles facilitate an efficient Board process.

The Board recognizes the importance of having a strong counterbalancing structure to ensure it functions in an appropriately independent manner. Accordingly, our Corporate Governance Guidelines provide that if the Chairman is not an independent director, then the independent directors will select a Lead Director. The Board believes that a Lead Director is an integral part of our Board structure and facilitates the effective performance of the Board in its role of providing governance and independent oversight. Mr. Strohm has been our Lead Director since January 2006. Mr. Strohm brings to the role considerable skills and experience, as described in “Election of Directors.” In addition, Mr. Strohm is Chair of our Governance Committee, which affords him increased engagement with Board governance and composition. His significant responsibilities, which are set forth in EMC’s Corporate Governance Guidelines, include:
Presiding at the meetings of the Board at which the Chairman is not present, including the executive sessions of the non-management directors and independent directors, establishing the agendas for such executive sessions and providing appropriate feedback to the CEO regarding these meetings;

Acting as a liaison between the independent directors and the Chairman;

Facilitating discussions among the independent directors on key issues and concerns outside of Board meetings;


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Corporate Governance (continued)

Having the authority to call meetings of the independent directors;

Approving information sent to the Board, including providing for the quality, quantity and timeliness of the flow of information from management that is necessary for the independent directors to effectively and responsibly perform their duties;

Approving meeting agendas for the Board;

Approving meeting schedules to assure that there is sufficient time for discussion of all agenda items;

In collaboration with the Leadership and Compensation Committee, approving CEO goals, evaluating CEO performance, setting CEO compensation levels and reviewing CEO succession planning;

In collaboration with the Governance Committee, making recommendations to the Board regarding committee members and chairs and overseeing the performance evaluations of the Board, each of the applicable committees and the individual directors; and

If requested by major shareholders, ensuring that he or she is available for consultation and direct communication.

Annually, the independent directors consider the role and designation of the Lead Director.

In evaluating its leadership structure, the Board also considered that a substantial majority of our Board is comprised of independent directors and that the Audit, Governance, and Leadership and Compensation Committees consist entirely of independent directors. The active involvement of the independent directors, combined with the qualifications and significant responsibilities of our Lead Director, promote strong, independent oversight of EMC’s management and affairs.

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Risk Oversight. The Board of Directors is responsible for overseeing risk management at the Company. The Board regularly considers our risk profile when reviewing our overall business plan and strategy and when making decisions impacting the Company.

The Governance Committee is responsible for overseeing the Board’s execution of its risk management oversight responsibility. The management risk committee, comprised of the Chief Financial Officer and the General Counsel, monitors and manages EMC’s enterprise risk management program and reports directly to the Governance Committee and the Board of Directors.

Compensation Risk. The Leadership and Compensation Committee oversees the design and implementation of and the incentives and risks associated with our compensation policies and practices. In 2013, the Committee evaluated our executive compensation program across the following categories: compensation mix, including the relative weightings of our executive officers’ base salaries, cash incentive bonus opportunities and long‑term equity incentives; long-term incentive plan design; short-term incentive plan design; performance metrics; the relationship between performance and payout, including maximum payouts; stock ownership guidelines; stock holding guidelines; change in control agreements; and compensation recovery policy. The Committee considered several factors that mitigate risk in the executive compensation program, including the following:
Approximately 12% of the Named Executive Officers’ total target annual compensation opportunity is provided through the cash bonus plans. These plans contain limits on the amount of compensation that can be earned for any year. Moreover, EMC incents executives through multiple cash bonus plans with multiple performance targets that are weighted differently under each plan;

The majority of EMC’s executive compensation opportunity is provided in the form of a portfolio of equity awards with multiple performance targets and multi-year vesting schedules of up to four years subject to continued employment with EMC to provide strong incentives for sustained performance and sustained shareholder value;


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Corporate Governance (continued)

For many years, EMC has been committed to pay-for-performance. In line with this philosophy, the Committee grants equity awards with performance elements to focus executive officers on achieving strategic, operational and financial goals that will lead to long-term shareholder value and encourage our executive officers to take a long-term view of the business;

The annual financial targets used in the compensation program align with the Board-approved operating plan for the Company;

EMC has strong stock ownership guidelines which help align the interests of our executive officers with shareholders’ interests in the long-term performance of EMC stock;

EMC has strong stock holding guidelines under which each executive officer must hold throughout the year at least 75% of his or her total equity holdings (measured as of January 1). In addition, each executive officer may sell only a limited number of shares each quarter;

EMC has a long-standing clawback policy addressing the recovery of cash and equity incentive compensation applicable to all EMC employees;

EMC does not permit any employees to “hedge” ownership of EMC securities and executive officers may not pledge EMC securities;

EMC’s change in control agreements provide severance payments and vesting of equity awards only on a “double trigger” basis;

The independent compensation consultant for the Committee only provides services for the Committee and is not permitted to provide any services to the Company unless pre-approved by the Committee; and

The Committee has final authority in administering the executive compensation program.

The management risk committee also reviewed all of EMC’s incentive compensation plans. The management risk committee considered whether any of these plans or programs may encourage inappropriate risk-taking; whether any plan may give rise to risks that are reasonably likely to have a material adverse effect on the Company; and whether it would recommend any changes to the plans. The management risk committee also considered our plans’ risk-mitigating controls, such as our clawback policy and stock ownership and holding guidelines. The management risk committee presented its conclusions for review by the Leadership and Compensation Committee.

Other Risks. In addition, each of the other standing committees of the Board regularly assesses risk in connection with executing their responsibilities. The Audit Committee discusses with management EMC’s major financial risks and exposures and the steps management has taken to monitor and control such risks and exposures, including our policies with respect to risk assessment and risk management. The Mergers and Acquisitions Committee considers risks in connection with acquisitions, divestitures and investments. The Finance Committee considers risks in connection with matters related to the Company’s capital structure, stock repurchase program and investment management policy. The Audit Committee and Governance Committee also receive regular reports from the Company’s Chief Risk Officer.

All of the committees report regularly to the Board of Directors on their activities. For more information, please see “Board Committees” beginning on page 36 of this Proxy Statement.



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Corporate Governance (continued)

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Succession Planning. We engage in succession planning at all levels of the Company.

Board Succession. The Governance Committee regularly evaluates the size and composition of the Board, giving consideration to evolving skills, perspective and experience needed on the Board to perform its governance role and provide oversight as the challenges facing the Company change over time. The Governance Committee and the Board of Directors regularly consider succession plans for membership of the Board committees and committee chairs as well as the needs of the Board on an ongoing basis. For more information, please see “Proposal 1 - Election of Directors - Director and Nominee Experience and Qualifications - Board Refreshment” on page 6 of this Proxy Statement.

CEO Succession. The Board and the Leadership and Compensation Committee are both engaged in CEO succession planning on an ongoing basis. They regularly review CEO succession in plenary session and executive session. This includes regular review of both long- and short-term CEO succession plans, consideration of candidates, review and monitoring of the career development of potential successors, and consideration of the Company’s needs in light of its strategic direction. The Board also ensures that it has exposure to senior officers who have the potential to succeed the CEO and other senior management positions.

Organization and Talent Review. In addition to CEO succession planning, we have a robust organization and talent review process to identify capabilities, opportunities and the readiness of high-potential employees.
Every member of the executive leadership team meets with the CEO and the Executive Vice President, Human Resources on a regular basis to assess talent management actions; consider the strategy and goals of each executive’s group in the context of EMC’s overall strategy; analyze each group’s structure and identify any gaps; develop a plan for each group by identifying the roles, responsibilities, priorities and actions needed to drive success; and based on the plan, develop a strategy to build talent, including an assessment of bench strength, development of high-potential employees and alignment of the succession plan to EMC’s business strategy.

The Leadership and Compensation Committee reviews in detail the results of the organization and talent review and also engages in talent management and succession planning discussions throughout the year.

The CEO discusses EMC’s organization and talent review with the Board. The Board also regularly discusses succession planning throughout the year.

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Annual Election of Directors. Each director is elected annually.

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Majority Vote for Directors. A majority vote standard, as described in our Bylaws, applies to the election of directors. In addition, our Corporate Governance Guidelines require any incumbent nominee for director, other than in a Contested Election Meeting (as defined in our Bylaws), who does not receive more votes cast “for” his or her election than votes cast “against” his or her election to promptly tender his or her resignation. The Governance Committee will assess the appropriateness of the director continuing to serve and recommend to the Board the action to be taken regarding a tendered resignation. Set forth below are procedures of the Board and Governance Committee to be used if such majority vote policy is triggered:
In considering whether it is appropriate for a nominee to continue to serve as a director, the Governance Committee will act promptly and consider all factors deemed relevant, including any known reasons why shareholders voted “against” the director, the length of service and qualifications of the director in question, the director’s contributions to EMC, the director’s particular area of expertise or experience, and compliance with listing standards;

The Board will act on the Governance Committee’s recommendation promptly, but in any event not later than 90 days following the certification of the shareholder vote. The Board will consider the factors considered by the Governance Committee and any other factors it deems relevant. Board action may include acceptance of the tendered resignation, adoption of measures designed to address the issues underlying the “against” votes for such director or rejection of the tendered resignation. Following the Board’s decision, EMC will promptly disclose the Board’s decision and process (including, if applicable, the reasons for rejecting the tendered resignation) in a periodic or current report filed with the SEC;

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Corporate Governance (continued)


If a director’s resignation is accepted by the Board, the Board will determine whether to fill such vacancy or to reduce the size of the Board; and

The process described above of determining whether or not to accept a tendered resignation will be managed by the independent directors. Further, any director who tenders his or her resignation pursuant to EMC’s majority vote policy will not participate in the Governance Committee recommendation or Board consideration regarding whether or not to accept the tendered resignation. If a majority of the members of the Governance Committee receive more votes cast “against” than “for” at the same election, then the independent directors who are on the Board who did not receive such votes will consider the tendered resignations.

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Executive Sessions of Directors. The non-management directors meet in executive session in connection with each regularly scheduled Board meeting, and the independent directors meet in executive session at least once each year. The Lead Director acts as presiding director for such executive sessions.

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Shareholder Engagement. For many years, EMC has sponsored a robust shareholder engagement program. During 2013, members of EMC management continued this long-standing practice, and dialogued and met with shareholders on a variety of topics. We spoke with representatives from our top institutional investors, mutual funds, public pension funds, labor unions and socially responsible funds about various corporate governance and compensation matters. Overall, investors expressed strong support for the Company’s governance and compensation practices (including Board succession planning and current leadership structure). For information on shareholder feedback about our executive compensation programs, please see “Compensation Discussion and Analysis - Executive Summary” beginning on page 43 of this Proxy Statement. We believe our regular engagement has been productive and provides an open exchange of ideas and perspectives for both the Company and our shareholders.

To enable open communications, EMC provides various means for shareholders and other interested parties to contact the non-management directors, the Audit Committee and the Leadership and Compensation Committee (see “Board Committees - Communications with the Board” below). The Board strives to provide clear, candid and timely responses to any substantive communication it receives. In order to build constructive, informed relationships with shareholders and encourage transparency and accountability, directors may also be available for dialogue with shareholders from time to time, as appropriate, and the Lead Director is available for consultation and direct communication if requested by major shareholders. In addition to these communications, it is the Board’s policy in accordance with our Corporate Governance Guidelines to provide a response to any shareholder proposal that receives a majority vote.

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Director Orientation and Continuing Education. The Board believes that director orientation and education is integral to Board and committee performance and effectiveness. The Board’s director orientation program emphasizes EMC’s business and strategic plans, and includes site visits, presentations and meetings with management. In addition, management, outside advisors and others regularly provide continuing education to the Board on topics such as current regulatory matters, legislative affairs, and developments within the IT industry. Directors are also encouraged to participate in external educational programs related to their responsibilities as directors and to EMC’s business.

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Director Stock Ownership Guidelines. The Board believes that non-management directors should hold a significant equity interest in EMC. We have had director stock ownership guidelines in place for many years. Under these guidelines, each non-management director is expected to own, within five years after becoming a director, shares of EMC common stock with a value equal to five times the annual Board retainer, excluding any committee retainers or fees. As of February 28, 2014, all of the non-management directors are in compliance with these guidelines. We also have executive stock ownership guidelines (for more information, please see “Compensation Discussion and Analysis - Stock Ownership Guidelines” on page 61 of this Proxy Statement).



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Corporate Governance (continued)

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Sustainability. The Governance Committee is responsible for overseeing EMC’s sustainability efforts which are founded on the principle that virtually all business decisions have economic, environmental, and social implications. We believe that integrating these considerations into our business strategy and decisions is integral to growing the success of EMC and benefits our shareholders, employees, customers, suppliers and communities. We seek ways to use our technology and engage our talent to create prosperity, maximize value and provide for the well-being of our shareholders, the planet and society. We strive to maximize our positive impact by focusing on those issues where EMC has the greatest potential to create positive change, holding ourselves accountable by measuring and reporting our progress, maintaining open and candid communication with our internal and external stakeholders, and collaborating with our peer companies and those in our value chain to expand the scale of our contributions. By developing sustainable business practices and incorporating principles of sustainability in our product design, we create competitive advantage, build trust and pave the way for continued long-term corporate success. For more information, please see our 2013 Annual Report on Form 10-K and www.emc.com/corporate/sustainability/index.htm.

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Political Contributions. The Governance Committee oversees our political spending activity. We participate in the political process to help shape public policy and address legislation that impacts EMC and our industry. Our involvement aims to ensure that the interests of our customers, shareholders, employees and other stakeholders are fairly represented at all levels of government. Our corporate political contributions, membership dues we pay to major U.S. trade associations and the percentage of such dues that is used for political spending, and activity of the EMC Political Action Committee (which is funded entirely by voluntary employee contributions and no corporate funds) are disclosed on our website. For more information, including a description of our public policy priorities, please see www.emc.com/corporate/investor-relations/governance/corporate-governance.htm.

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Simple Majority Vote. There are no supermajority voting requirements in our Articles of Organization or Bylaws.


35


BOARD COMMITTEES

The Board of Directors has established five standing committees: the Audit Committee, the Governance Committee, the Finance Committee, the Leadership and Compensation Committee, and the Mergers and Acquisitions Committee. The Audit, Compensation, and Governance Committees consist entirely of independent directors, and members of the Audit Committee meet additional, heightened independence criteria applicable to audit committee members under the NYSE listing standards. Generally, a director is a member of no more than two of the NYSE required committees (Audit, Compensation, and Governance Committees). Each committee operates pursuant to a written charter that is available on our website at www.emc.com/corporate/investor-relations/governance/corporate-governance.htm. The membership of each committee is listed below.
 
Audit
Corporate Governance and Nominating
Finance
Leadership and Compensation
Mergers and Acquisitions
Michael W. Brown
ü
 
Chair
 
 
Randolph L. Cowen
 
 
 
Chair
ü
Gail Deegan
Chair
 
 
ü
 
James S. DiStasio
ü
ü
 
 
 
John R. Egan
 
 
ü
 
Chair
William D. Green
 
 
 
ü
ü
Edmund F. Kelly
 
 
ü
 
 
Jami Miscik
 
ü
 
 
 
Windle B. Priem
ü
ü
 
ü
 
Paul Sagan
 
 
 
ü
 
David N. Strohm
 
Chair
 
 
ü
Joseph M. Tucci
 
 
ü
 
ü

Audit Committee. This committee assists the Board of Directors in overseeing the integrity of EMC’s financial statements, and reviews with management and EMC’s auditors EMC’s financial statements, the accounting principles applied in their preparation, the scope of the audit, any issues raised by the auditors regarding EMC’s financial statements and its accounting controls and procedures, EMC’s risk assessment and risk management policies, EMC’s worldwide corporate compliance program, the independence of EMC’s auditors, EMC’s internal controls, EMC’s policy pertaining to related person transactions, the other matters as set forth in its charter, and such other matters as the committee deems appropriate.

The Board of Directors has determined, in accordance with the rules of the NYSE and the SEC, that each of Ms. Deegan and Messrs. Brown, DiStasio and Priem is financially literate and an “audit committee financial expert.” Each of these individuals also meets the heightened independence criteria of the SEC and NYSE for members of audit committees.

During 2013, senior members of EMC’s financial and legal management participated in each of the Audit Committee’s regularly scheduled meetings. During the course of the year, the Audit Committee had separate executive sessions with EMC’s General Counsel (who is also our chief compliance officer) and Chief Financial Officer, independent auditors and internal auditors at which candid discussions regarding legal matters, our corporate compliance program, financial reporting, internal controls and accounting systems and processes took place. The Audit Committee discussed with EMC’s internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee also met on a regular basis without members of management or the Company’s independent auditors.

Also during 2013, the Audit Committee reviewed with senior members of management EMC’s policies and practices regarding risk assessment and risk management. In addition, the Audit Committee reviewed the adequacy and effectiveness of EMC’s legal, regulatory and ethical compliance programs, including our Business Conduct Guidelines.

For more information about the Audit Committee, please see the “Audit Committee Report” on page 83 of this Proxy Statement.


36


Board Committees (continued)

Corporate Governance and Nominating Committee. This committee oversees and advises the Board on corporate governance matters and assists the Board in identifying and recommending qualified Board candidates. The Governance Committee also reviews and makes recommendations to the Board on the size and composition of the Board, standards to be applied by the Board in making independence determinations, assignments to committees of the Board and resignations of directors, when appropriate. The Governance Committee oversees the evaluation of the Board, the committees and individual directors and monitors possible conflicts of interest of directors and senior executives. In addition, the Governance Committee oversees the Board’s execution of its risk management oversight responsibility, including receiving reports from the management risk committee, oversees and makes recommendations to the Board regarding shareholder proposals and sustainability matters, and reviews Federation governance.

Finance Committee. The Finance Committee helps the Board fulfill its responsibilities relating to oversight of the Company’s financial affairs. The Finance Committee oversees and reviews with management matters related to the enhancement of the capital structure of EMC and its subsidiaries, including the issuance and restructuring of EMC’s equity and debt, issuance of our subsidiaries’ equity (including the equity of VMware, Inc. (“VMware”)), the redemption of any of EMC’s bonds or convertible notes which may be outstanding from time to time, EMC’s investment management policy, any common stock repurchase or VMware Class A common stock purchase programs which may exist from time to time, and EMC’s dividend policy.

Leadership and Compensation Committee. This committee sets EMC’s executive compensation philosophy and objectives, recommends compensation for non‑employee directors, sets the compensation of the Chairman and CEO, reviews and approves the goals and objectives relevant to the compensation of the Chairman and CEO and evaluates his performance, including his performance relative to his respective goals and objectives as well as his overall performance. The Compensation Committee also reviews and approves the compensation of EMC’s other executive officers, oversees the incentives and risks associated with the Company’s compensation policies and practices, and oversees regulatory compliance of compensation matters. For more information on compensation risk oversight, please see “Corporate Governance - Risk Oversight” on page 31 of this Proxy Statement. The Compensation Committee annually reviews EMC’s equity plans, approves grants under EMC’s equity plans and has the authority to administer and interpret the provisions of EMC’s equity, deferred compensation, 401(k) and other plans. The Compensation Committee also oversees and reports to the Board on succession planning for the CEO and other senior management positions.

The Compensation Committee has engaged Towers Watson & Co. (“Towers Watson”) as its compensation consultant. Towers Watson works at the direction of the Compensation Committee and reports directly to the Compensation Committee. For more information, please see “Compensation Discussion and Analysis - Role of Compensation Consultant” on page 62 of this Proxy Statement.

The Compensation Committee incorporates certain metrics that are part of EMC’s operating plan into the compensation program for EMC’s executive officers. The Board of Directors approves EMC’s operating plan. Accordingly, in this regard, while the Compensation Committee establishes our executive compensation program, the Board of Directors also is involved in executive compensation. Subject to compensation parameters approved by the Compensation Committee, Joseph M. Tucci, our CEO, and David I. Goulden, CEO of EMC Information Infrastructure, set the performance goals under our business unit incentive compensation plans. These goals are aligned with EMC’s operating plan. In addition, Messrs. Tucci and Goulden, subject to compensation parameters approved by the Compensation Committee, may approve the individual performance goals under our Executive Management by Objectives Plan, to the extent such goals are not otherwise set by the Compensation Committee. Messrs. Tucci and Goulden also present recommendations regarding the compensation of our executive officers to the Compensation Committee for approval. The Executive Vice President, Human Resources, assists Messrs. Tucci and Goulden in performing their compensation-related responsibilities and also assists the Compensation Committee in fulfilling its functions.

All of the members of the Leadership and Compensation Committee meet the heightened criteria of the SEC and NYSE for members of compensation committees.

37


Board Committees (continued)

For more information on the Compensation Committee’s responsibilities and our compensation program, please see “Corporate Governance” and “Compensation Discussion and Analysis” beginning on pages 30 and 43, respectively, of this Proxy Statement.

Compensation Committee Interlocks and Insider Participation

None of the Leadership and Compensation Committee members has ever been an officer or employee of EMC. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has an executive officer serving as a member of our Board or Compensation Committee.

Mergers and Acquisitions Committee. This committee reviews and approves (or recommends that the Board approve) potential acquisitions, divestitures and investments. The Mergers and Acquisitions Committee also evaluates the execution, financial results and integration of completed acquisition transactions.

Communications with the Board

EMC provides shareholders and all other interested parties various ways to report concerns or complaints to the Audit Committee, Leadership and Compensation Committee and the non-management directors:

Concerns or complaints about EMC’s accounting, internal accounting controls, auditing or financial matters can be sent directly to the Audit Committee in either of the following ways:
By mail
EMC Audit Committee
c/o Alertline
PMB 3767
13950 Ballantyne Corporate Place
Charlotte, NC 28277
By e-mail
AuditCommitteeChairman@emc.com

Questions or concerns about compensation matters can be sent directly to the Leadership and Compensation Committee in either of the following ways:
By mail
EMC Leadership and Compensation Committee
c/o Alertline
PMB 3767
13950 Ballantyne Corporate Place
Charlotte, NC 28277
By e-mail
CompensationCommitteeChairman@emc.com

Communications can be sent directly to the non-management directors in either of the following ways:
By mail
EMC Non-Management Directors
c/o Alertline
PMB 3767
13950 Ballantyne Corporate Place
Charlotte, NC 28277
By e-mail
nonmngtdirectors@emc.com

Information on how to contact the Audit Committee, the Leadership and Compensation Committee and the non-management directors is also set forth at www.emc.com/corporate/investor-relations/governance/contact-board.htm. For more information on the Board’s engagement with shareholders, please see “Corporate Governance - Shareholder Engagement” on page 34 of this Proxy Statement.


38


Board Committees (continued)

Communications received electronically will be accessed directly by, and communications received by mail will be forwarded directly to, the Audit Committee and the Leadership and Compensation Committee, as appropriate. Communications addressed to the non-management directors will be accessed directly by or forwarded directly to the Governance Committee. The committees will forward these communications to other directors, members of EMC management or such other persons as they deem appropriate. The committees or, if appropriate, EMC management, will respond in a timely manner to any substantive communications from a shareholder or an interested party.


39


SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information about the beneficial ownership of common stock owned on February 28, 2014 (except as otherwise indicated) (i) by each person who is known by EMC to own beneficially more than 5% of the common stock, (ii) by each of EMC’s directors and nominees for director, (iii) by each of the Named Executive Officers (as defined below) and (iv) by all directors and executive officers of EMC as a group.

Name of Beneficial Owner
Number of Shares Beneficially Owned1
Percent of Outstanding Shares
BlackRock, Inc.
150,338,5752

7.4%
Michael W. Brown3, 4*
117,000

**
Randolph L. Cowen4, 5*
57,000

**
Gail Deegan4, 6*
125,500

**
James S. DiStasio4, 7*
37,000

**
John R. Egan4, 8*
1,374,742

**
Howard D. Elias4, 9
860,733

**
David I. Goulden4, 10
957,412

**
William D. Green4*

**
Edmund F. Kelly4, 11*
87,000

**
Jami Miscik4*
6,225

**
Windle B. Priem4, 12
104,000

**
Paul Sagan4, 13*
77,000

**
William F. Scannell4, 14
169,412

**
David N. Strohm4, 15*
287,001

**
William J. Teuber, Jr.4, 16
870,865

**
Joseph M. Tucci4, 17*
2,379,630

**
All directors and executive officers as a group (23 persons)18
9,095,895

**
*
Nominee for director
**
Less than 1%

1
Except as otherwise noted, all persons have sole voting and investment power of their shares. All amounts shown in this column include shares obtainable upon exercise of stock options currently exercisable or exercisable within 60 days of February 28, 2014.
2
Based solely on the Schedule 13G/A filed by BlackRock, Inc. with the SEC on February 10, 2014. The Schedule 13G/A provides that, as of December 31, 2013, BlackRock, Inc. beneficially owns in the aggregate 150,338,575 shares of common stock and that it has sole power to vote or direct the voting of 128,313,980 of such shares and to dispose or direct the disposition of 150,338,575 of such shares. The address of BlackRock, Inc. is 40 East 52nd Street, New York, NY 10022.
3
Mr. Brown is deemed to own 50,000 of these shares by virtue of options to purchase these shares.
4
Does not include restricted stock units held by the following individuals: Mr. Brown (10,600); Mr. Cowen (10,600); Ms. Deegan (10,600); Mr. DiStasio (10,600); Mr. Egan (10,600); Mr. Elias (670,239); Mr. Goulden (872,433); Mr. Green (8,833); Mr. Kelly (10,600); Ms. Miscik (10,600); Mr. Priem (10,600); Mr. Sagan (10,600); Mr. Scannell (669,152); Mr. Strohm (10,600); Mr. Teuber (540,762); and Mr. Tucci (1,118,780). The restricted stock units held by Messrs. Brown, Cowen, DiStasio, Egan, Green, Kelly, Priem, Sagan and Strohm and Mses. Deegan and Miscik will vest on May 1, 2014.
5
Mr. Cowen is deemed to own 20,000 of these shares by virtue of options to purchase these shares.
6
Ms. Deegan is deemed to own 40,000 of these shares by virtue of options to purchase these shares.
7
Mr. DiStasio is deemed to own 10,000 of these shares by virtue of options to purchase these shares.
8
Mr. Egan is deemed to own 40,000 of these shares by virtue of options to purchase these shares.
9
Mr. Elias is deemed to own 593,856 of these shares by virtue of options to purchase these shares.
10
Mr. Goulden is deemed to own 727,524 of these shares by virtue of options to purchase these shares.
11
Mr. Kelly is deemed to own 30,000 of these shares by virtue of options to purchase these shares.
12
Mr. Priem is deemed to own 10,000 of these shares by virtue of options to purchase these shares.
13
Mr. Sagan is deemed to own 30,000 of these shares by virtue of options to purchase these shares.

40


Security Ownership of Certain Beneficial Owners and Management (continued)

14
Mr. Scannell is deemed to own 58,073 of these shares by virtue of options to purchase these shares.
15
Mr. Strohm is deemed to own 40,000 of these shares by virtue of options to purchase these shares.
16
Mr. Teuber is deemed to own 385,590 of these shares by virtue of options to purchase these shares.
17
Mr. Tucci is deemed to own 1,431,248 of these shares by virtue of options to purchase these shares.
18
Includes 4,376,613 shares of common stock beneficially owned by all executive officers and directors as a group by virtue of options to purchase these shares. Excludes shares as to which such individuals have disclaimed beneficial ownership. Excludes 6,313,655 restricted stock units held by all executive officers and directors as a group.



41



LEADERSHIP AND COMPENSATION COMMITTEE REPORT

The Leadership and Compensation Committee of EMC has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Leadership and Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.


LEADERSHIP AND COMPENSATION COMMITTEE

Randolph L. Cowen, Chair
Gail Deegan
William D. Green
Windle B. Priem
Paul Sagan





42


COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

Pay-for-Performance Philosophy

In keeping with our results-driven culture, the Compensation Committee expects our executives to deliver superior performance in a sustained fashion. As a result, a substantial portion of our executives’ overall compensation is tied to performance. The Compensation Committee links their compensation to the attainment of challenging short- and long-term strategic, operational and financial goals that will drive EMC to achieve profitable revenue growth and market share gains, while investing in the business to expand the global market opportunity for our product, services and solutions portfolio.

In designing our executive compensation program, the Compensation Committee also focuses on promoting our business strategy and aligning the interests of our executives with EMC shareholders.

Business Strategy

The IT market is going through the biggest, most disruptive and yet most opportunity-rich transition in its 60-plus year history. The move from the second platform to the third platform of IT, underpinned by the mega trends in mobile, cloud, Big Data and social networking, is having a profound impact on business and transforming the way we work and live. In this fast-paced environment, EMC’s strategy is to help our customers and partners make this transformational shift by providing them with EMC’s best-of-breed portfolio, which will enable them to better capitalize on their opportunities.

We are implementing this strategy through a unique business model that includes three federated businesses: EMC Information Infrastructure, Pivotal Software and VMware Virtual Infrastructure (the “Federation”). Under the Federation model, each business operates freely and independently to build its own ecosystem and offer customers the very best technology solutions, free from vendor lock-in.  At the same time, the businesses are strategically aligned in the mission to lead our customers, partners and the marketplace through the transformational shift to the third platform of IT. We believe this model creates a distinct competitive advantage by offering tight integration for customers who prefer an integrated technology stack, and best-of-breed offerings on a standalone basis for customers seeking flexibility in vendor and deployment options.

The combination of the products, services and solutions portfolios among the Federation gives us a strong position from which to compete in the second platform, which will continue to support the majority of enterprise workloads for several years to come; leading-edge technologies and products for the third platform; and a powerful capability to bridge the gap between the two.

Shareholder Engagement

When designing our executive compensation program, the Compensation Committee considers, among other things: evolving compensation practices; the economic environment; our financial and operational performance; our business strategy; and our leadership succession plans. In addition, the Compensation Committee considers “say-on-pay” voting results from our annual meetings and comments we receive from our shareholder engagement throughout the year.

At the 2013 Annual Meeting of Shareholders, our shareholders were asked to vote, on an advisory basis, on a resolution to approve our executive compensation program. To better understand the “say-on-pay” voting results, we dialogued and met with many shareholders to discuss our executive compensation program. Several themes emerged, including:
Support for our pay-for-performance philosophy;
Support for multi-year performance goals;
Support for continued use of existing operational performance metrics;
Request for more widespread use of a return metric, such as total shareholder return (“TSR”); and
Request to simplify our program.


43


Compensation Discussion and Analysis (continued)

After considering our business strategy, the results of the 2013 advisory “say-on-pay” vote and our dialogue with shareholders, the Compensation Committee determined to change the design of the equity award program for our executive leadership team for 2014 and adjust the focus of the 2014 Executive Management By Objectives Plan (the “Executive MBO”), as discussed in detail below.
    
Highlights of Our 2014 Executive Compensation Program

For 2014, the Compensation Committee enhanced and streamlined the executive compensation program for our executive leadership team, as follows:
Introduced a long-term equity incentive plan to replace the annual performance equity award program;
Added a TSR performance metric to the long-term equity incentive plan;
Simplified the equity program by decreasing the different types of equity awards utilized; and
Modified the Executive MBO to emphasize execution of our Federation strategy.
  
2014 LTIP Stock Units

To better incent our Named Executive Officers on long term performance, in February 2014, the Compensation Committee granted our Named Executive Officers the following performance stock units that will vest in 2017 only if the Company achieves specific three-year cumulative non-GAAP earnings per share (“EPS”), revenue and TSR goals over fiscal years 2014-2016:
Name
2014 LTIP Stock Units
(#)
Joseph M. Tucci
201,006
David I. Goulden
201,006
Howard D. Elias
125,629
William J. Teuber, Jr.
125,629
William F. Scannell
125,629

We refer to these three-year performance awards as the “2014 LTIP stock units.”
   
If actual results fail to reach or exceed the threshold levels of performance for the non-GAAP EPS, revenue and TSR performance metrics, the 2014 LTIP stock units will be forfeited. Conversely, if actual results exceed the target goals for each of the performance metrics, up to 200% of the 2014 LTIP stock units may vest.

The 2014 equity program for our Named Executive Officers, which includes the 2014 LTIP stock units described above and time-based restricted stock unit awards granted in February 2014, replaces our historical annual equity program. We have eliminated the use of performance-based awards that vest based on annual performance goals, as well as all stock options (including both performance-based and time-based stock options).

Executive MBO

For the 2014 Executive MBO, the Compensation Committee added shared goals for the participating executives to emphasize the need for collaboration among our Federation businesses to successfully execute on our business strategy. In addition, the Compensation Committee allocated a greater percentage of the Named Executive Officers’ total target cash incentive opportunity to the 2014 Executive MBO on a year-over-year basis to further emphasize the importance of the Federation to our business strategy.


44


Compensation Discussion and Analysis (continued)

2013 Business Results

Despite IT spending growth that was slower than expected, EMC achieved strong revenue and profit growth across the Federation in 2013 - on a year-over-year basis, revenue grew 15% at each of VMware and Pivotal, and 5% at EMC Information Infrastructure. In addition, 2013 revenue from EMC’s emerging storage business grew 54% year over year. We believe this outperformance relative to our industry speaks to the power of the EMC portfolio, a solid operational and financial model, and consistent execution of our strategy.

In 2013, we achieved the following revenue, profit and free cash flow:
  
 
2013 ($)
% Growth from 2012
Revenue
23.22 billion
7%
Non-GAAP EPS*
1.80
6%
Free Cash Flow*
5.515 billion
10%
*
A reconciliation of our GAAP to non-GAAP results can be found in Exhibit B to this Proxy Statement.

Please see “Management’s Discussion and Analysis” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 for a more detailed description of our fiscal year 2013 financial results.

2013 Executive Compensation Program

The Compensation Committee approved an executive compensation program for 2013 that implemented our pay-for-performance philosophy.

The primary elements of our executive compensation program are base salary, cash bonuses and equity incentives. In determining the compensation of our Named Executive Officers, the Compensation Committee evaluates, among other things: EMC’s performance and the performance of the business unit or function for which the individual is responsible; the individual’s responsibilities, experience and performance; compensation previously paid or awarded to the individual; market conditions; and the economy.

Below is a summary of the Named Executive Officers’ 2012 and 2013 compensation as set forth in the Summary Compensation Table:
Name
Year
Salary
($)
Cash
Incentive Compensation
($)
Equity
Awards
($)
All Other
Compensation*
($)
Total
($)
Joseph M. Tucci
2013
1,000,000
     1,260,058
10,076,821
309,079
12,645,957
2012
1,000,000
1,467,360
14,008,326
116,545
16,592,231
David I. Goulden
2013
850,000
1,006,296
6,453,659
122,621
8,432,576
2012
737,500
949,513
9,879,979
16,435
11,583,427
Howard D. Elias
2013
750,000
700,032
4,444,834
136,194
6,031,061
2012
687,500
757,109
9,361,393
22,697
10,828,699
William J. Teuber, Jr.
2013
725,000
634,404
4,571,604
97,906
6,028,914
2012
712,500
707,560
5,711,492
17,051
7,148,603
William F. Scannell
2013
700,000
656,280
4,444,834
108,412
5,909,526
2012
700,000
632,153
9,361,393
15,821
10,709,367
*
The year-over-year increase in “All Other Compensation” is largely a result of dividend equivalent accruals on unvested restricted stock unit awards, which become payable if and when the underlying shares vest. EMC announced the payment of quarterly dividends commencing July 2013.

For more information, please see the Summary Compensation Table, and the accompanying compensation tables, beginning on page 64 of this Proxy Statement.

45


Compensation Discussion and Analysis (continued)

Cash Incentive Compensation

For our cash incentive plans, the Compensation Committee approved challenging revenue, profitability and cash flow goals, as well as qualitative goals to complete strategic and operational priorities, because they believe that solid performance in these areas leads to long-term shareholder value.

Based on EMC’s financial performance in 2013, as described in the table above, the Named Executive Officers achieved approximately 97.2%, 98.8% and 99.8%, respectively, of the non-GAAP EPS, revenue and free cash flow targets established by the Compensation Committee for the 2013 Corporate Incentive Plan. In addition, the Named Executive Officers achieved between 75% and 80% of their respective strategic and operational priorities established by the Compensation Committee for the 2013 Executive MBO.

Since our 2013 non-GAAP EPS, revenue and free cash flow results fell below the applicable plan targets and the Named Executive Officers failed to achieve all of their respective strategic and operational goals, the Named Executive Officers’ bonus under the 2013 Corporate Incentive Plan was paid at only 89.98% of target, and the bonus under the 2013 Executive MBO was paid at only 78% of target, in the amounts set forth below:
Name
Corporate Incentive Plan
Executive MBO
Target ($)
Actual ($)
Target ($)
Actual ($)
Joseph M. Tucci
1,152,000
1,036,570
288,000
223,488
David I. Goulden
920,000
827,816
230,000
178,480
Howard D. Elias
640,000
575,872
160,000
124,160
William J. Teuber, Jr.
580,000
521,884
145,000
112,520
William F. Scannell
600,000
539,880
150,000
116,400

Equity Incentive Awards Based on 2013 Performance

Since our 2013 non-GAAP EPS and revenue results fell below the applicable plan targets, only 87.8% of the annual performance-based equity awards granted to the Named Executive Officers in August 2012 became eligible to vest in February 2014, vesting ratably over two to three years from such date, subject to continued employment. 12.2% of the performance-based equity awards did not become eligible to vest and were forfeited.

Other Compensation Practices

In addition to our pay-for-performance philosophy, highlights of our executive compensation program include:
ü Annual “say-on-pay” vote 
ü Oversight of risks associated with compensation policies and practices
ü Clawback policy applicable to all employees for cash and equity incentive compensation
ü Strong stock ownership and stock holding guidelines
ü “Double trigger” change in control agreements
ü Independent compensation consultant
ü CEO succession planning
ü No pension or SERP benefits for executive officers
ü No discounted options
ü No option repricings without shareholder approval
ü No dividend equivalents paid unless equity awards vest
ü No excise tax gross-ups
ü No hedging or pledging of Company stock
ü No excessive perquisites for executives

The Compensation Committee believes that the actions described above clearly demonstrate the Company’s commitment to and consistent execution of an effective pay-for-performance executive compensation program. For more information, please see the discussion below.



46


Compensation Discussion and Analysis (continued)

Named Executive Officers

The executive officers who appear in the Summary Compensation Table for 2013 are referred to collectively in this Proxy Statement as the “Named Executive Officers,” and they are:
Name
Title
Joseph M. Tucci
Chairman and Chief Executive Officer
David I. Goulden
Chief Executive Officer, EMC Information Infrastructure and Chief Financial Officer
Howard D. Elias
President and Chief Operating Officer, Global Enterprise Services
William J. Teuber, Jr.
Vice Chairman
William F. Scannell
President, Global Sales and Customer Operations

EMC's Executive Compensation Program

The primary elements of EMC’s executive compensation program are base salary, cash bonuses and equity incentives.

When designing the executive compensation program, the Compensation Committee gives significant weight to cash bonuses and equity incentives, which reflects the Compensation Committee’s belief that a large portion of executive compensation should be performance-based. This compensation is performance-based because payment and/or vesting are tied to the achievement of individual and/or corporate performance goals. In addition, with respect to the equity awards, the value ultimately realized by the recipient fluctuates with the price of our common stock. The Compensation Committee believes that equity incentives are particularly significant because they drive the achievement of EMC’s long-term operational and strategic goals and align the executives’ interests with those of EMC shareholders, while the cash bonuses drive the achievement of shorter-term performance goals.

Set forth below is a summary of the relative weights given to each component of the 2013 compensation opportunities for the Named Executive Officers.*

_____________
*
Reflects average compensation.
**
Includes performance stock unit awards and performance stock options granted in August 2012, which vest based on 2013 performance, and time-based restricted stock unit awards granted in July 2013.

For purposes of determining the percentages shown above for the annual compensation opportunities of the Named Executive Officers, the base salaries and cash bonus targets are calculated on an annualized basis. In addition, it is assumed that cash bonuses are earned at target levels, stock options have a value determined by an option pricing model and restricted stock units have a value equal to the underlying value of the stock on the date the grant was approved. Since incentive compensation has both upside opportunities and downside risk, these percentages may not reflect the actual amounts realized.

47


Compensation Discussion and Analysis (continued)

Base Salary

We use base salary to compensate our employees, including the Named Executive Officers, for performing their day-to-day responsibilities. In general, the base salary of each of the Named Executive Officers is determined by evaluating the executive officer’s responsibilities, experience and impact on EMC’s results and the salaries paid to executive officers in comparable positions by our peer group. After consideration of the foregoing factors, as well as the mid-year salary increases for certain of our Named Executive Officers in 2012, the Compensation Committee did not make any changes to the base salaries of our Named Executive Officers for 2013.

The Named Executive Officers’ 2013 and 2014 base salaries are set forth below:
Name
2013
($)
2014
($)
Joseph M. Tucci*
1,000,000
1,000,000
David I. Goulden
850,000
850,000
Howard D. Elias
750,000
750,000
William J. Teuber, Jr.
725,000
725,000
William F. Scannell
700,000
700,000
*
Mr. Tucci’s base salary has not increased since 2001.

The Compensation Committee determined not to make any changes to the base salaries of the Named Executive Officers for 2014 in connection with our annual compensation review.
    
Cash Bonus Plans

In 2013, more than 80% of our employees, including the Named Executive Officers, participated in our cash bonus plans under which the payment of bonuses is contingent upon the achievement of pre-determined performance goals. Our cash bonus plans are designed to motivate our employees to achieve specified corporate, business unit, individual, strategic, operational and financial performance goals.

Each year, the Compensation Committee approves each Named Executive Officer’s cash bonus opportunity. In determining the cash bonus opportunity, the Compensation Committee considers a number of factors, including EMC’s performance, the individual’s performance and the performance of the business unit or function for which the individual is responsible, the individual’s experience, similar compensation opportunities that may be payable to similarly situated executives internally and externally, changes in the competitive marketplace and the economy, and the other elements of compensation payable by EMC to the individual. After consideration of the foregoing factors, as well as the mid-year target cash bonus increases for certain of our Named Executive Officers in 2012, the Compensation Committee did not make any changes to the annual target cash bonus opportunities of our Named Executive Officers for 2013.

The Named Executive Officers’ 2013 and 2014 total annual target cash bonus opportunities are set forth below:
Name
2013
($)
2014
($)
Joseph M. Tucci*
1,440,000
1,440,000
David I. Goulden
1,150,000
1,150,000
Howard D. Elias
800,000
800,000
William J. Teuber, Jr.
725,000
725,000
William F. Scannell
750,000
750,000
*
Mr. Tucci’s total annual target cash bonus opportunity has not increased since 2001.

The Compensation Committee determined not to make any changes to the annual target cash bonus opportunities of the Named Executive Officers for 2014 in connection with our annual compensation review.


48


Compensation Discussion and Analysis (continued)

2013 Cash Bonus Plans

For 2013, the Compensation Committee approved two cash bonus plans in which the Named Executive Officers were eligible to participate: the Corporate Incentive Plan and the Executive MBO. The Corporate Incentive Plan is intended to incent the achievement of financial metrics for the Company that are aligned with the annual operating plan set by the Board. The Executive MBO is intended to incent the achievement of strategic and operational goals.

The Compensation Committee determined that the vast majority (80%) of the bonus opportunity for the Named Executive Officers should be allocated to the Corporate Incentive Plan since they have responsibility for, and a significant impact on, EMC’s overall corporate performance and achievement of long-term objectives, and the remaining portion of their respective bonus opportunity should be allocated to the Executive MBO to focus on the achievement of specific strategic and operational goals.

2013 Corporate Incentive Plan

The 2013 Corporate Incentive Plan is an annual incentive plan under which EMC executives, including our Named Executive Officers, are eligible to receive cash bonuses contingent upon EMC’s attainment of EPS, revenue and free cash flow targets, with 50% of the opportunity based on EPS, 30% based on revenue and 20% based on free cash flow. The Compensation Committee selected these financial metrics because in its judgment they represent the primary metrics on which the Named Executive Officers should focus to drive EMC’s strategic plan and shareholder value. EPS was given the greatest weighting under the 2013 Corporate Incentive Plan to emphasize profitable growth and because the Compensation Committee believes that increases in EPS will lead to greater long-term shareholder value. EPS and free cash flow are calculated on a non-GAAP basis. EMC’s management uses these non-GAAP financial measures in their financial and operating decision-making because management believes they reflect EMC’s ongoing business in a manner that allows meaningful period-to-period comparisons.

Plan participants were provided with the opportunity to earn up to 40% of their annual target bonus on the achievement of both EPS and revenue targets set by the Compensation Committee for the first half of 2013. The opportunity to receive a first half payment was provided to incent strong revenue growth and profitability during the first half of the year. The plan design provided no payment for the free cash flow component for the first half of 2013 because the Compensation Committee determined that we could not assess whether a full year free cash flow target would be achieved after only six months given the large number of factors that could impact free cash flow in the second half of 2013.

The 2013 Corporate Incentive Plan funds at 100% of target upon the achievement of the performance target for each of the three metrics. Although, generally, participants were not entitled to a bonus unless the performance threshold for each metric was achieved, the Compensation Committee had discretion under the plan to award up to 50% of the annual target opportunity for performance below that threshold. In addition, the plan provided that the Compensation Committee could exercise negative discretion to reduce payments. The maximum bonus opportunity under the plan was equal to 200% of a participant’s target bonus opportunity.

The elements of the 2013 Corporate Incentive Plan are set forth below:
Performance Goal
Threshold
(50%
Payout)
($)
Target
(100% Payout)
($)
Maximum
(200%
Payout)
($)
Component Weighting
Achievement/
Plan Payout
($)
Non-GAAP EPS*
1.69
1.85
1.93
50%
1.80/86.0%
Revenue (billions)
22.03
23.50
24.38
30%
23.22/90.5%
Non-GAAP free cash flow (billions)*
5.03
5.525
5.77
20%
5.515/99.1%
*
For purposes of calculating achievement of the EPS target, the impact of stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges, amortization of VMware’s capitalized software from prior periods, a net gain on the disposition of certain lines of business and special tax items were excluded.  In addition, the benefit of the R&D tax credit for 2012 was excluded in the non-GAAP results for the full year 2013. For purposes of calculating achievement of the free cash flow target, free cash flow was defined as net cash provided by operating activities less additions to property, plant and equipment and capitalized software development costs. A reconciliation of our GAAP to non-GAAP results can be found in Exhibit B to this Proxy Statement.

49


Compensation Discussion and Analysis (continued)

Each 2013 Corporate Incentive Plan participant’s bonus was paid at 89.98% of target. The annual target bonus opportunities and actual payouts to the Named Executive Officers under the 2013 Corporate Incentive Plan are set forth below:
Name
Corporate Incentive Plan
Target
($)
Actual
($)
Joseph M. Tucci
1,152,000
1,036,570
David I. Goulden
920,000
827,816
Howard D. Elias
640,000
575,872
William J. Teuber, Jr.
580,000
521,884
William F. Scannell
600,000
539,880

2013 Executive MBO

In 2013, members of our executive leadership team were eligible to receive semi-annual cash bonuses contingent upon achievement of a number of shared and individual semi-annual performance goals under the Executive MBO. The primary purpose of the Executive MBO is to focus our executive leadership team on the completion of strategic and operational priorities, thereby leading to greater long-term shareholder value.

For each half of 2013, the Compensation Committee assigned six or seven shared goals to the executive leadership team, including the Named Executive Officers, with 90% of the semi-annual payments tied to the achievement of these shared goals. In addition, the participating executives were assigned individual goals, with 10% of the semi-annual payments tied to achievement of the individual goals. The Compensation Committee assigned individual goals to Messrs. Tucci and Goulden for the first half of 2013, and to Mr. Tucci for the second half of 2013. Mr. Tucci assigned individual goals to each of the other Named Executive Officers based on their respective job responsibilities. Each of the shared goals and individual goals were specific and measurable. At the close of each half of 2013, the Compensation Committee or Mr. Tucci, as applicable, determined whether the applicable semi-annual goals had been achieved.

A general description of the shared and individual goals assigned to the Named Executive Officers under the Executive MBO in 2013 is set forth below:
Shared Goals
Executive Officers
Description
All Named Executive Officers
l Drive financial performance
l Maximize cross-Federation strategic opportunities
l Strengthen long-term leadership position in Big Data
l Execute on mid-tier storage growth strategy
l Expand global market opportunities
l Focus on building multiple growth businesses


50


Compensation Discussion and Analysis (continued)

Individual Goals
Executive Officer
Description
Joseph M. Tucci
l Lead Federation strategy
l Focus on succession planning initiatives
David I. Goulden
l Implement strategic Federation initiatives
l Execute talent management initiatives
Howard D. Elias
l Implement strategic Federation initiatives
l Enhance consulting service offerings around strategic initiatives
William J. Teuber, Jr.
l Implement strategic Federation initiatives
l Focus on succession planning initiatives
William F. Scannell
l Execute go-to-market initiatives
l Implement international expansion strategy

Although achievement of the Executive MBO goals for each of the Named Executive Officers required significant effort, the Compensation Committee expected that the goals would be attainable by the Named Executive Officers and, historically, a significant percentage of the Executive MBO goals from year to year have been achieved.

The shared goal to drive financial performance was comprised of semi-annual revenue and non-GAAP EPS targets, and an annual free cash flow target, which were aligned to EMC’s 2013 operating plan, and EMC achieved the following results against those targets:
 
Revenue
(billions)
Non-GAAP EPS*
Non-GAAP Free Cash Flow* (billions)
Target
($)
Actual
($)
Target
($)
Actual
($)
Target
($)
Actual
($)
First-half 2013
11.068
11.001
0.79
0.804
Second-half 2013
12.500
12.221
1.05
0.994
Full year 2013
5.525
5.515
*
A reconciliation of our GAAP to non-GAAP results can be found in Exhibit B to this Proxy Statement.

Since our 2013 revenue, free cash flow and second-half non-GAAP EPS results fell below the applicable targets set forth above, the Named Executive Officers failed to earn 11% of their annual target opportunity under the Executive MBO.

Overall, in 2013, the Named Executive Officers’ achievement of their respective goals ranged from 75% to 80%. The annual target bonus opportunities and actual payouts to the Named Executive Officers under the 2013 Executive MBO are set forth below:
Name
Executive MBO
Target
($)
Actual
($)
Joseph M. Tucci
288,000
223,488
David I. Goulden
230,000
178,480
Howard D. Elias
160,000
124,160
William J. Teuber, Jr.
145,000
112,520
William F. Scannell
150,000
116,400
 
2014 Cash Bonus Plans

For 2014, the Compensation Committee approved a cash bonus program for the Named Executive Officers similar to the 2013 cash bonus program, except as set forth below. The table below sets forth the annual target bonus opportunities in each of

51


Compensation Discussion and Analysis (continued)

the bonus plans in which our Named Executive Officers are participating in 2014. As demonstrated in the following table, the percentage allocation of the 2014 annual target bonus opportunities between the 2014 Corporate Incentive Plan and the 2014 Executive MBO is 75% and 25%, respectively, for each of the Named Executive Officers:
Name
Corporate
Incentive Plan
($)
Executive MBO
($)
Joseph M. Tucci
1,080,000
360,000
David I. Goulden
862,500
287,500
Howard D. Elias
600,000
200,000
William J. Teuber, Jr.
543,750
181,250
William F. Scannell
562,500
187,500

The Compensation Committee placed a greater percentage allocation of the 2014 annual target bonus opportunities on the Executive MBO in comparison to prior years to reflect the Compensation Committee’s intent to emphasize the successful execution of the Federation strategy.

A description of our 2014 cash bonus plans is set forth below.

2014 Corporate Incentive Plan

The 2014 Corporate Incentive Plan has the same plan design as the 2013 Corporate Incentive Plan. Bonuses under the 2014 Corporate Incentive Plan will be based upon the achievement of 2014 non-GAAP EPS, revenue and non-GAAP free cash flow targets. The Compensation Committee adopted challenging EPS, revenue and free cash flow goals for the 2014 Corporate Incentive Plan, evidencing our continued commitment to pay-for-performance. The targets under the 2014 Corporate Incentive Plan have increased from 2013 and require our executives to drive above-market growth in EPS, revenue and free cash flow in 2014.
Performance Goal
2014 Target
(100% Payout)
($)
% Increase from 2013 Achievement
Component
Weighting
Non-GAAP EPS
1.90
6%
50%
Revenue (billions)
24.575
6%
30%
Non-GAAP free cash flow (billions)
5.800
5%
20%
 
The non-GAAP EPS and revenue performance targets align to the annual outlook for 2014 non-GAAP EPS and revenue that we provided in early 2014, except that the targets include the impact of VMware’s acquisition of AirWatch, which was completed on February 24, 2014. The impact of stock-based compensation expense, intangible asset amortization, restructuring and acquisition-related charges and certain unanticipated events will be excluded for purposes of calculating achievement against the EPS target. Free cash flow will be calculated as net cash provided by operating activities less additions to property, plant and equipment and capitalized software development costs.

These targets and goals are disclosed in the limited context of EMC’s 2014 Corporate Incentive Plan and should not be understood to be statements of management’s expectations or estimates of results. EMC specifically cautions investors not to apply these statements to other contexts.

2014 Executive MBO

Under the 2014 Executive MBO, the Compensation Committee established new shared goals among the executive leadership team, including the Named Executive Officers, to implement specific Federation-related strategic initiatives. Otherwise, the 2014 Executive MBO has the same general plan design as the 2013 Executive MBO. For the first half of 2014, the goals for the executive leadership team reflect continuing execution of our strategic and operational priorities.

52


Compensation Discussion and Analysis (continued)

Equity Incentives

EMC believes strongly that equity awards align the interests of our employees with those of our shareholders. EMC grants equity incentive awards:
to motivate our employees, including the Named Executive Officers, to achieve EMC’s financial and strategic goals;
to tie a portion of the compensation of our employees, including the Named Executive Officers, to the value of our common stock; and
to promote retention through the use of multi-year vesting schedules.

Under the Amended and Restated 2003 Stock Plan (the “2003 Stock Plan”), EMC grants stock options, restricted stock awards and restricted stock unit awards, with performance-based and/or time-based vesting conditions, to provide employees with a mixed equity portfolio and to increase employee retention. In establishing criteria for the type of equity awards to be granted to the Named Executive Officers, the number of shares subject to those awards and the terms and conditions of those awards, the Compensation Committee takes into account the duties and responsibilities of the individual, individual performance, previous equity awards made to such individual and the value of those awards, and awards made to individuals in similar positions at our peer group companies.

2013 Equity Award Program

In 2013, as in prior years, equity awards represented a significant portion of the total compensation awarded to our Named Executive Officers in order to tie a substantial portion of their compensation to long‑term shareholder value.

The number of equity awards granted to the Named Executive Officers as part of the 2013 equity award program are set forth below:
Name
Performance
Stock Unit Awards
(#)
Performance
Stock Option Awards
(#)
Time-Based
Stock Unit Awards
(#)
Joseph M. Tucci
168,395
90,051
143,404
David I. Goulden
85,635
45,794
152,964
Howard D. Elias
60,896
32,565
103,251
William J. Teuber, Jr.
66,605
35,618
80,306
William F. Scannell
60,896
32,565
103,251
 
Performance Stock Units and Options

In August 2012, the Compensation Committee granted performance stock units and performance stock options to our executive leadership team, including the Named Executive Officers, which were eligible to vest only if 2013 EPS and revenue targets were achieved. The vesting of 60% of these awards was tied to our 2013 EPS results and the vesting of 40% of these awards was tied to our 2013 revenue results. The Compensation Committee selected these financial metrics because in its judgment they represent two important metrics on which the Named Executive Officers should focus to drive EMC’s strategic plan and shareholder value. EPS was given the greater weighting to emphasize profitable growth and because the Compensation Committee believes that increases in EPS will lead to greater long-term shareholder value.

The Compensation Committee believes that to sustain long-term shareholder value, it is important that our executives are properly incented to help guide our Company through any type of business climate, including any unexpected industry-wide economic downturn. Therefore, the Compensation Committee determined that even if the EPS and revenue thresholds were not achieved, a lesser number of the performance awards should be eligible to vest as long as EMC achieved strong EPS and revenue growth in 2013 relative to our peer group. If EMC’s EPS growth ranked among the top one-third of the peer group, then 50% of the performance awards tied to EPS growth would be eligible to vest and if EMC’s EPS growth ranked in the top half of the peer group, then 25% of these performance awards would be eligible to vest. Similarly, if EMC’s revenue growth ranked among the top one-third of the peer group, then 50% of the performance awards tied to revenue growth would be eligible to vest and if EMC’s revenue growth ranked in the top half of the peer group, then 25% of these performance awards would be eligible to vest.

53


Compensation Discussion and Analysis (continued)

The EPS and revenue goals for the performance awards, which aligned to the EPS and revenue goals under the 2013 Corporate Incentive Plan, and the achievement against the goals, are summarized below:    
Performance Goal
Threshold
($)
Target
($)
Component Weighting
Achievement
($)
% of Shares
Eligible to Vest
Non-GAAP EPS*
1.69
1.85
60%
1.80
86.0%
Revenue (billions)
22.03
23.50
40%
23.22
90.5%
*
EPS was calculated on a non-GAAP basis. The achievement of the EPS target was calculated in the same manner as provided under the 2013 Corporate Incentive Plan. A reconciliation of our GAAP to non-GAAP results can be found in Exhibit B to this Proxy Statement.

Based on our EPS and revenue performance in 2013, 87.8% of the performance stock units and the performance stock options became eligible to vest in February 2014. 12.2% of the performance stock units and the performance stock options did not become eligible to vest and were forfeited.
 
Of the 87.8% of performance stock units that became eligible to vest in February 2014, one-third of these units vested on February 5, 2014. Subject to the executive’s continued employment with EMC, one-half of the remaining performance stock units will vest in each of 2015 and 2016. Similarly, of the 87.8% of performance stock options that became eligible to vest in February 2014, one-fourth of these options vested on February 5, 2014. Subject to continued employment with EMC, one-third of the remaining performance stock options will vest in each of 2015, 2016 and 2017.

The performance stock units and performance stock options granted to the Named Executive Officers in August 2012 are reflected in the Summary Compensation Table on page 64 of this Proxy Statement as 2013 compensation because, under applicable accounting rules, performance equity awards are not valued until the performance targets are established. The performance targets for these awards were established in February 2013.

Time-Based Stock Units

Recognizing that a very large portion of our executives’ compensation is at risk, the Compensation Committee determined to grant time-based stock units to promote retention. Accordingly, in July 2013, in addition to the performance stock unit and performance stock option awards granted in August 2012 for 2013 performance, the members of our executive leadership team, including the Named Executive Officers, were granted time-based stock units. The time-based stock units vest at the rate of one-third per year on each of the first three anniversaries of the grant date, subject to the executive’s continued employment with EMC.

Historically, the Compensation Committee granted time-based stock units with a four-year vesting schedule. The Compensation Committee determined to move to a three-year vesting schedule to be consistent with the new three-year performance equity award program for our executive leadership team in 2014, as described in detail beginning on page 56 of this Proxy Statement.
    
2012 Leadership Development and Performance Awards

As more fully described in the Proxy Statement for our 2013 Annual Meeting of Shareholders, in September 2012, the Compensation Committee granted performance-based restricted stock units to Messrs. Tucci and Teuber, which units vest in 2015 only if the Company achieves two-year TSR and revenue metrics, and Messrs. Tucci and Teuber satisfy specific qualitative goals. We refer to these two-year performance awards as the “2012 Leadership Development and Performance Awards.”

As described below, the TSR, revenue and qualitative goal components of the 2012 Leadership Development and Performance Awards are weighted 50%, 30% and 20%, respectively.


54


Compensation Discussion and Analysis (continued)

Up to 50% of the 2012 Leadership Development and Performance Awards will vest if EMC achieves at least a threshold level of TSR over the two-year period of 2013 and 2014 relative to the S&P 500 Technology Index. For purposes of these awards, TSR will be determined by dividing the 20-day average market value of our common stock at the end of the performance period by the 20-day average market value at the beginning of the performance period, and EMC’s TSR will be compared to the TSR ranking of companies included in the S&P 500 Technology Index.

EMC’s TSR percentile rank among the S&P 500 Technology Index will determine the percentage of restricted stock units that will vest, as follows:
A maximum of 50% of the 2012 Leadership Development and Performance Awards will vest if EMC’s TSR is ranked at or above the 60th percentile; and
A threshold of 25% of the 2012 Leadership Development and Performance Awards will vest if EMC’s TSR is ranked at the 40th percentile.

If EMC’s TSR over the two-year period ranks below the 40th percentile threshold level relative to the S&P 500 Technology Index, then 50% of the 2012 Leadership Development and Performance Awards will be forfeited.

Up to 30% of the 2012 Leadership Development and Performance Awards will vest if EMC achieves at least a threshold cumulative revenue goal over fiscal years 2013 and 2014. The number of restricted stock units that vest based on revenue depends on the percentage of achievement of the cumulative revenue target, as follows:
A maximum of 30% of the 2012 Leadership Development and Performance Awards will vest if at least 100% of the revenue target is achieved; and
A threshold of 18% of the 2012 Leadership Development and Performance Awards will vest if 94.6% of the revenue target is achieved.

If EMC’s cumulative revenue over the two-year period is below the threshold level, then 30% of the 2012 Leadership Development and Performance Awards will be forfeited.

The Compensation Committee believes that the two-year cumulative revenue goal is rigorous and that EMC must demonstrate superior revenue growth to meet this goal. Based on 2013 results and current expectations for IT spending growth over the next year, we believe it is unlikely that EMC will achieve 100% of the cumulative revenue target for these awards. However, the level of achievement will depend on EMC’s revenue performance through 2014. EMC will provide retrospective disclosure regarding the two-year cumulative revenue target in 2015.

In addition, up to 20% of the 2012 Leadership Development and Performance Awards will vest based on achievement of qualitative goals related to our senior management team and the continued development of an overarching multi-year strategy. Although achievement of the qualitative goals will require significant effort, based on the progress that Messrs. Tucci and Teuber made on the qualitative goals during 2013, the Compensation Committee expects that these goals will be attainable.

The Compensation Committee approved the qualitative goals in February 2013. Accordingly, the value of this portion of the 2012 Leadership Development and Performance Awards is reflected in the Summary Compensation Table on page 64 of this Proxy Statement as 2013 compensation under applicable accounting rules.
   
2011 Long-Term Incentive Plan Awards

As more fully described in our Proxy Statement for our 2013 Annual Meeting of Shareholders, in August 2011, the Compensation Committee granted restricted stock units to select members of EMC’s senior management team, including Messrs. Goulden, Elias and Scannell, which vest only if a three-year cumulative revenue goal is achieved. We refer to these grants as the “2011 LTIP stock units.” The 2011 LTIP stock units promote long-term alignment with EMC’s business plan, require sustained performance and provide a multi-year retention incentive through a period of leadership transition.

The 2011 LTIP stock units will vest in two equal installments in 2015 and 2016, but only if EMC achieves at least a minimum level of the cumulative revenue goal over fiscal years 2012 through 2014. The number of 2011 LTIP stock units that vest depends on the percentage of achievement of the cumulative revenue target.


55


Compensation Discussion and Analysis (continued)

The number of 2011 LTIP stock units that will be eligible to vest based on the percentage of achievement of the cumulative revenue target is set forth below:
A maximum of 100% of the 2011 LTIP stock units will vest if at least 100% of the revenue target is achieved; and
A threshold of 60% of the 2011 LTIP stock units will vest if 94.6% of the revenue target is achieved.

The Compensation Committee believes that the three-year cumulative revenue goal is rigorous and that EMC must demonstrate superior revenue growth in order for the 2011 LTIP stock units to vest. Based on 2012 and 2013 results and current expectations for IT spending growth over the next year, we believe it is unlikely that EMC will achieve 100% of the cumulative revenue target for these awards. However, the level of achievement will depend on EMC’s revenue performance through 2014. EMC will provide retrospective disclosure regarding the three-year cumulative revenue target in 2015.

To encourage continued focus on achieving our long-term strategic goals without regard to global economic conditions, the Compensation Committee determined that even if the threshold level of the three-year cumulative revenue goal was not achieved (specifically, 94.6% of the revenue target, as described above), a lesser number of the 2011 LTIP stock units should be eligible to vest as long as EMC achieves strong revenue growth relative to our peer group. Therefore, if the threshold level of the three-year cumulative revenue goal is not achieved, but EMC’s three-year cumulative revenue growth is at least 10% higher than the median ranking of the three-year revenue growth of our peer group, then 50% of the 2011 LTIP stock units will be eligible to vest in two equal installments in 2015 and 2016.

Dividend Equivalents

As previously disclosed, the Company commenced payment of a quarterly cash dividend to shareholders, with the first quarterly dividend paid in July 2013. Pursuant to the existing terms of the Company’s outstanding restricted stock unit and performance stock unit awards, holders of those awards are entitled to accrue dividend equivalent payments in respect of cash dividends paid to shareholders while those awards are outstanding.  These dividend equivalents will be paid to the holders of outstanding restricted stock unit and performance stock unit awards as and only to the extent such awards are earned and become vested.  Pursuant to SEC rules, since restricted stock unit and performance stock unit awards granted to the Named Executive Officers prior to July 2013 were granted at a time when the Company did not regularly pay cash dividends to shareholders, the value of any dividend equivalents accrued on those awards in 2013, whether or not paid, are disclosed in the Summary Compensation Table as “All Other Compensation” on page 64 of this Proxy Statement.

2014 Equity Award Program

In designing the 2014 annual equity program for our executive leadership team, the Compensation Committee considered marketplace trends in incentive plan design and feedback received from our shareholder engagement in 2013. The Compensation Committee determined to change the design of the annual equity program for our executive leadership team to:
establish multi-year performance goals to incent the executives on long-term performance;
add a TSR metric to provide strong alignment with shareholder interests; and
use fewer types of equity awards to simplify the program.


56


Compensation Discussion and Analysis (continued)

In February 2014, the Compensation Committee granted our Named Executive Officers a mix of 60% performance stock unit awards and 40% time-based stock unit awards, as described below. The number of equity awards granted to the Named Executive Officers as part of the 2014 equity award program are set forth below:
Name
Performance Stock Unit Awards*
(#)
Time-Based Stock Unit Awards
(#)
Joseph M. Tucci
201,006
134,004
David I. Goulden
201,006
134,004
Howard D. Elias
125,629
83,753
William J. Teuber, Jr.
125,629
83,753
William F. Scannell
125,629
83,753
*
Reflects target number of performance stock unit awards. See discussion below for more detail.
 
Performance Stock Units

The performance stock units granted to the Named Executive Officers in February 2014 will vest in 2017 only if the Company achieves specific three-year cumulative EPS, revenue and TSR metrics. We refer to these three-year performance awards as the “2014 LTIP stock units.”
As described below, the EPS, revenue and TSR goal components of the 2014 LTIP stock units are weighted 45%, 30% and 25%, respectively.

Each of the EPS and revenue components of the 2014 LTIP stock units will vest if EMC achieves greater than the threshold level of the cumulative goal for such component over fiscal years 2014 through 2016. The Compensation Committee selected EPS and revenue metrics because in its judgment they represent two of the most important metrics on which the Named Executive Officers should focus to drive EMC’s strategic plan and shareholder value. EPS was given the greatest weighting to emphasize profitable growth and because the Compensation Committee believes that increases in EPS will lead to greater long-term shareholder value.

The TSR component of the 2014 LTIP stock units will vest if EMC achieves at least a threshold level of TSR over fiscal years 2014 through 2016 relative to the S&P 500 Technology Index. The Compensation Committee selected a TSR metric in recognition of evolving marketplace trends in incentive plan design and because the Compensation Committee believes that relative TSR is an important indicator of EMC’s performance relative to the industry, provides the executives added incentive to make EMC a market leader within the industry, and provides strong alignment with shareholder interests. For purposes of these awards, TSR will be determined by dividing the 20-day average market value of our common stock at the end of the performance period by the 20-day average market value at the beginning of the performance period, and EMC’s TSR will be compared to the TSR ranking of companies included in the S&P 500 Technology Index.

The vesting and payouts of the 2014 LTIP stock units depend on the percentage of achievement of the applicable targets, as follows:
Performance Goal
Threshold*
Target
Maximum
Performance
Payout
Performance
Payout
Performance
Payout
Non-GAAP EPS
50% of target
-0-
97% to 103%
of target
100%
of target
120% of target
200%
of target
Revenue
67% of target
-0-
97% to 103%
of target
110% of target
Relative TSR
25th percentile
50%
of target
50th percentile
75th percentile
*
For non-GAAP EPS and revenue performance in excess of the applicable threshold level set forth above, some portion of the stock units associated with the applicable performance metric will vest.

As set forth in the table above, the Compensation Committee selected a range for EPS and revenue performance targets in recognition of the difficulty in setting long-term goals within a rapidly transforming IT market.


57


Compensation Discussion and Analysis (continued)

If actual results fail to reach or exceed the threshold levels of performance for any of the EPS, revenue and/or TSR performance metrics as set forth above, the number of 2014 LTIP stock units associated with that metric will be forfeited. Conversely, if actual results exceed the target goals for any of the performance metrics, up to 200% of the target number of 2014 LTIP stock units associated with that metric may vest.

The Compensation Committee believes that the three-year cumulative EPS and revenue goals are rigorous and that EMC must demonstrate superior EPS and revenue growth to meet these goals. EMC will provide retrospective disclosure regarding the three-year cumulative EPS and revenue targets in 2017 and will also provide an update on the likelihood of achievement of the EPS and revenue targets in EMC’s 2015 Proxy Statement.

Time-Based Restricted Stock Units

Recognizing that a very large portion of our executives’ compensation is at risk, the Compensation Committee determined to grant time-based stock units to promote retention. Accordingly, in addition to performance stock units described above, our executive leadership team was granted time-based stock units in February 2014. The time-based stock units vest at the rate of one-third per year on each of the first three anniversaries of the grant date, subject to the executive’s continued employment with EMC.

Equity Grant Guidelines

As is the case for all of our equity awards and in accordance with our equity grant guidelines, stock options are usually granted by the Compensation Committee at regularly scheduled meetings. If the meeting is held on a business day, the grant date is such business day and the price is the closing price of our common stock on such date. If the meeting is not held on a business day, the grant date is the next business day and the price is the closing price of our common stock on such date. If the meeting is held during the “quiet period” preceding our earnings announcement, the grant date is the first business day that the “quiet period” ends, and the price is the closing price of our common stock on such date.

Retirement and Deferred Compensation Benefits

EMC does not provide the Named Executive Officers with a defined benefit pension plan or any supplemental executive retirement plans, nor does EMC provide the Named Executive Officers with retiree health benefits. EMC employees, including the Named Executive Officers, may participate in a 401(k) plan. The 401(k) plan is provided to all employees as a standard benefit offering, designed to assist employees with retirement savings in a tax-advantaged manner. The plan provides for a matching contribution of up to 6% of the employee’s compensation, with a maximum of $3,000 per year. The Company match vests pro rata over the participant’s first three years of service. EMC makes a matching contribution to the 401(k) plan to attract and retain employees and because it provides an additional incentive for employees to save for retirement.

EMC also maintains a nonqualified deferred compensation plan pursuant to which designated managerial or highly compensated employees, including the Named Executive Officers, may elect to defer the receipt of a portion of the base salaries and/or cash bonuses they would otherwise have received when earned. EMC does not make any matching or other contributions under this plan. The nonqualified deferred compensation plan was adopted in order to give participants the ability to defer receipt of certain income to a later date, which may be an attractive tax planning feature, the availability of which assists in the attraction and retention of executive talent. Participants’ account balances reflect gains and losses in the plan’s investment funds, which are substantially similar to the investment options available under the 401(k) plan. For more information on EMC’s deferred compensation plan, please see “Compensation of Executive Officers - Nonqualified Deferred Compensation” beginning on page 73 of this Proxy Statement.

Perquisites

The Named Executive Officers receive limited perquisites as described below. The perquisites we provide represent a small fraction of the total compensation of each Named Executive Officer. The value of the perquisites we provide are generally taxable to the Named Executive Officers and the incremental cost to EMC of providing these perquisites is reflected in the Summary Compensation Table.


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Compensation Discussion and Analysis (continued)

Limited tax and financial planning services and executive physicals are provided because the Compensation Committee believes they allow the Named Executive Officers to focus more of their time and attention on their employment and promote the well-being of the Named Executive Officers.

Personal use of EMC-owned aircraft is limited to our Chief Executive Officer and, on rare occasions, other Named Executive Officers. Limited personal use of EMC-owned aircraft is permitted to reduce these executives’ travel time and to allow them to devote more time to work duties.

EMC does not provide tax gross-ups to our Named Executive Officers or any other executive officers for perquisites or personal expenses (other than with respect to reimbursement of relocation expenses which is available to all employees).

The Compensation Committee periodically reviews the perquisites that it provides, including the cost to EMC of providing such perquisites, and believes that the perquisites provided are reasonable and appropriate. For more information on perquisites provided to the Named Executive Officers, please see the “All Other Compensation Table” on page 65 of this Proxy Statement.

Post-Termination Compensation

In addition to retirement and deferred compensation benefits described above, EMC has arrangements with the Named Executive Officers that may provide them with compensation following termination of employment for the reasons discussed below.

Change in Control Agreements

Change in control agreements benefit a corporation in the event of a change in control or a potential change in control by promoting stability during a potentially uncertain period and allowing executives who are parties to such agreements to focus on continuing business operations and the success of a potential business combination rather than seeking alternative employment. The Board believes that it is in EMC’s best interest to have change in control agreements with the Named Executive Officers. EMC’s change in control agreements provide the executives with cash severance payments, equity award acceleration and certain other benefits in the event that their employment is terminated in connection with a change in control or potential change in control (known as “double trigger” benefits), which payments and benefits are described in more detail under “Compensation of Executive Officers - Potential Payments upon Termination or Change in Control” beginning on page 74 of this Proxy Statement. The change in control agreements provide these benefits only if there is both (i) a change in control (or potential change in control) of EMC and (ii) the executive’s employment is terminated by EMC (or any successor) without cause or if the executive terminates his or her employment for good reason, in each case within 24 months following a change in control (or during a potential change in control period). We refer to such a termination of employment as a “qualifying termination.”

No excise tax gross-up is provided for any severance or other benefits paid under EMC’s change in control agreements with the Named Executive Officers.

The determination of the appropriate level of payments and benefits to provide in the event of a qualifying termination involved the consideration of a number of factors. The Board considered that a Named Executive Officer, who is more likely to lose his or her job in connection with a change in control than other employees, may require more time than other employees in order to secure an appropriate new position and, unless that executive was provided with change in control benefits, may be motivated to start a job search early in connection with a change in control to the detriment of EMC. The Compensation Committee reviewed peer practices and market trends, and determined that the level of change in control benefits provided to the Named Executive Officers is consistent with the level provided to executive officers of other public companies of similar size to EMC. Based on these considerations, we believe that the terms of the agreements are reasonable and provide an incentive for our Named Executive Officers to remain with EMC. In addition, by not providing severance payments, accelerated vesting of certain equity awards or other benefits unless both a change in control (or potential change in control) has occurred and an executive has a qualifying termination, we believe that an acquiror will be better able to retain EMC’s management team following a change in control.


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Compensation Discussion and Analysis (continued)

The Compensation Committee annually reviews the reasonableness and appropriateness of the terms and conditions of EMC’s change in control agreements and the benefits payable thereunder.

For more information on potential payments and benefits under the change in control agreements, please see “Compensation of Executive Officers - Potential Payments upon Termination or Change in Control” beginning on page 74 of this Proxy Statement.

Other Arrangements

Except in limited circumstances, EMC typically does not enter into employment agreements. However, the Board and the Compensation Committee believe it is in the best interests of the Company to ensure the continuity of Mr. Tucci’s leadership. In 2012, the Company entered into an employment arrangement with Mr. Tucci to remain with the Company through at least February 2015. Under this arrangement, Mr. Tucci will be entitled to severance benefits upon termination of employment, other than in connection with a change in control, the amount of which the Board and the Compensation Committee determined was appropriate for Mr. Tucci given his many years of service to EMC. For more information on this arrangement, please see “Compensation of Executive Officers - Potential Payments upon Termination or Change in Control - Termination of Employment without Cause” on page 74 of this Proxy Statement.

At the time Mr. Goulden was hired in April 2002, EMC agreed to provide him with severance benefits in the context of the overall negotiations regarding the terms and conditions of his employment and as an inducement for him to leave his former employer. In 2013, Mr. Goulden and EMC agreed that the original purpose of providing him these severance benefits was no longer relevant or appropriate, given his long tenure at EMC. Accordingly, in October 2013, Mr. Goulden voluntarily relinquished any future right that he may have to these severance benefits.

In connection with the assumption of his new role as head of EMC’s Global Sales and Customer Operations in July 2012, EMC agreed to provide Mr. Scannell with severance benefits. The Compensation Committee believes it is in the best interests of the Company to ensure leadership continuity in such a critical role within our organization. For more information on this arrangement, please see “Compensation of Executive Officers - Potential Payments upon Termination or Change in Control - Termination of Employment without Cause” beginning on page 74 of this Proxy Statement.

The Named Executive Officers are entitled to certain benefits upon a termination due to death, disability or retirement. For more detail regarding these arrangements, please see “Compensation of Executive Officers - Potential Payments upon Termination or Change in Control” beginning on page 74 of this Proxy Statement.

Tax Deductibility

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation greater than $1 million paid for any fiscal year to the corporation’s chief executive officer and certain other executive officers as of the end of any fiscal year. However, performance-based compensation is not subject to the $1 million deduction limit if certain requirements are met. The Compensation Committee considered the impact of Section 162(m) when designing EMC’s cash bonus and equity programs and determined that EMC’s interests were best served by not restricting the Compensation Committee’s discretion and flexibility in designing the compensation programs, even if such programs may result in certain non-deductible compensation expenses. Notwithstanding our general philosophy of maintaining flexibility in designing our programs, all of the stock options and performance-contingent stock units granted to the Named Executive Officers in 2012 and 2013, including portions of the 2012 Leadership Development and Performance Awards that vest upon achievement of TSR and revenue metrics, are designed to qualify as performance-based compensation that is exempt from the deductibility limits imposed by Section 162(m). However, the application of Section 162(m) is complex and may change over time (with potentially retroactive effect) and, accordingly, there can be no guarantee that all compensation intended to qualify as performance-based compensation will so qualify.

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Compensation Discussion and Analysis (continued)

Stock Ownership Guidelines

To align the interests of our executive leadership team, including the Named Executive Officers, with those of our shareholders, we believe that they should hold a significant equity interest in EMC. We have had stock ownership guidelines in place for many years. The stock ownership guidelines for the Named Executive Officers are:
Name
Stock Ownership Guideline
Joseph M. Tucci
650,000
David I. Goulden
350,000
Howard D. Elias
187,500
William J. Teuber, Jr.
250,000
William F. Scannell
187,500

New executive leadership team members have five years to reach compliance with the guidelines. Unexercised stock options, unvested shares of restricted stock and unvested restricted stock units are not counted for purposes of determining whether these guidelines are met. The Compensation Committee periodically reviews the executives’ holdings for compliance with these guidelines. As of February 28, 2014, all of the Named Executive Officers are in compliance with these guidelines.

Stock Holding Guidelines

In addition to the stock ownership guidelines described above, our executive leadership team is subject to stock holding guidelines. Like the ownership guidelines, these guidelines are intended to align the interests of our executive leadership team with those of our shareholders by requiring the executives to retain a meaningful percentage of their equity holdings in EMC. The executive leadership team is required to hold throughout the year at least 75% of their respective total equity holdings (measured as of January 1), and may sell only a limited number of shares during a limited window each quarter after meeting the terms of our stock ownership guidelines, our insider trading policy, our securities trading policy and our pre‑clearance policy.

Internal Pay Equity

Mr. Tucci is provided with a greater compensation opportunity than our other Named Executive Officers because as our Chief Executive Officer he has primary oversight for EMC’s overall corporate performance, including the continued evolution and development of our vision and strategic direction, establishing EMC as a market leader with innovative products, services and solutions, expanding EMC’s position in the market, and maintaining and building relationships with customers, partners, suppliers, employees, shareholders and other stakeholders. In setting Mr. Tucci’s compensation levels, the Compensation Committee also considered his experience as a proven leader and the competitive market conditions for chief executive officers.

Hedging and Pledging Policies

EMC policies do not permit any employees, including the Named Executive Officers, to “hedge” ownership of EMC securities. In addition, no director, executive officer, or any related person, including any Named Executive Officer, may pledge EMC securities.

Compensation Recovery Policies

We have an incentive compensation clawback policy under which EMC will require reimbursement of any cash or equity incentive compensation paid where payment was predicated on financial results that were subject to a significant restatement and the individual engaged in fraud or willful misconduct that caused or partially caused the restatement. The policy applies to all EMC employees, including the Named Executive Officers. In addition, EMC’s equity plans contain provisions that allow EMC to cancel outstanding equity awards or “clawback” the value of awards recently realized if a Named Executive Officer or other senior employee engages in activity detrimental to EMC, such as failing to comply with EMC’s Key Employee Agreement, including the non‑competition and non-solicitation provisions, engaging in any activity that results in the employee’s termination for cause, or being convicted of a crime.


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Compensation Discussion and Analysis (continued)

Role of Compensation Consultant

The Compensation Committee is directly responsible for the appointment, compensation and oversight of its compensation consultant. In 2013, the Compensation Committee engaged Towers Watson to serve as its compensation consultant. Towers Watson works at the direction of the Compensation Committee and reports directly to the Compensation Committee.

The Compensation Committee has assessed the independence of Towers Watson by reviewing several factors, including (i) other services, if any, that Towers Watson provides to EMC, (ii) the significance of the fees paid to Towers Watson by the Compensation Committee as a percentage of the total revenues of Towers Watson, (iii) the policies and procedures of Towers Watson that are designed to prevent conflicts, (iv) any business or personal relationships between the Towers Watson professionals engaged to advise the Compensation Committee and the members of the Compensation Committee and/or EMC’s executive officers, and (v) ownership of our common stock by any of the Towers Watson professionals engaged to advise the Compensation Committee. After careful consideration, the Compensation Committee determined that Towers Watson’s service to the Compensation Committee does not raise any conflicts of interest.

During 2013, Towers Watson assisted the Compensation Committee in performing pay-for-performance analyses. In addition, Towers Watson assisted the Compensation Committee in reviewing, among other things, executive compensation practices, trends and competitive practices, and change in control and other termination scenarios. Lastly, Towers Watson assisted the Compensation Committee with the design of the 2014 equity award program for the Company’s executive leadership team.

The Compensation Committee has a policy that provides that its compensation consultant will only provide services to the Compensation Committee and is prohibited from providing any other services to EMC, unless such services are pre-approved by the Compensation Committee. For 2013, the Compensation Committee pre-approved all fees paid to Towers Watson. The following table summarizes the fees paid for services that Towers Watson provided to the Compensation Committee and the fees paid for services provided to EMC that were pre-approved by the Compensation Committee for each of the last two fiscal years.
 
Fees for services to
Compensation Committee
($)
Fees for services
to EMC
($)
Fees for other
services*
($)
2013
327,617
36,864
2012
157,945
39,119
*
The amounts reflect the fees associated with EMC’s purchase from Towers Watson of global broad-based surveys that are not customized for EMC.

Peer Group

The Compensation Committee, with the assistance of its compensation consultant, reviews compensation from published technology industry surveys and from EMC’s peer group companies for purposes of comparing EMC’s executive compensation program with market practices and in order to inform the Compensation Committee’s decisions regarding EMC’s executive compensation program. The Compensation Committee does not target or benchmark compensation to any particular percentile of compensation paid by other companies, but rather considers comparator compensation as one factor in making its compensation decisions. Other factors include EMC’s performance and an individual’s contribution, experience and potential. After taking these factors into account, the Compensation Committee exercises its judgment in making compensation decisions. We believe that this approach gives EMC the flexibility to make compensation decisions based upon all of the facts and circumstances.


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Compensation Discussion and Analysis (continued)

For 2013, EMC’s peer group consisted of 16 companies:
  Accenture plc
  eBay Inc.
  Oracle Corporation
  Adobe Systems Incorporated
  Hewlett-Packard Company
  Seagate Technology
  CA, Inc.
 Intel Corporation
 Symantec Corporation
  Cisco Systems, Inc.
 International Business Machines Corporation
 Xerox Corporation