DEF 14A 1 definitiveproxyforyearende.htm DEF 14A - DEFINITIVE PROXY FOR YEAR ENDED 12-31-2015 DEF 14A


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April 1, 2016

Dear Shareholder:

We cordially invite you to attend our 2016 Annual Meeting of Shareholders, which will be held on Thursday, May 12, 2016, 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/annualmeeting2016.




Very truly yours,

JOSEPH M. TUCCI
Chairman and Chief Executive Officer







NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS

April 1, 2016

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 Thursday, May 12, 2016, at 10:00 a.m., E.D.T., for the following purposes:
1.
Election of the nine director nominees 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, 2016, as described in the attached Proxy Statement.
3.
Advisory approval of our executive compensation, 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 March 14, 2016 are entitled to notice of and to vote at the meeting and any adjournments or postponements of the meeting. We are making these proxy materials available to you on or about April 1, 2016 on the Internet or by delivering printed versions of these materials to you by mail.
Your vote is important. Whether or not you plan to attend the meeting, please vote as soon as possible. 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 2016 Proxy Statement and Annual Report on Form 10-K for 2015 electronically, you must vote your proxy over the Internet. Otherwise, you may vote your shares via a toll-free telephone number or over the Internet. Additionally, if you received a proxy card or voting instruction form by mail, you may submit your proxy card or voting instruction form for the 2016 Annual Meeting by completing, signing, dating and returning your proxy card or voting instruction form in the pre-addressed envelope provided. 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 79 of the attached Proxy Statement.
EMC’s Annual Report on Form 10-K for 2015 accompanies this Notice.
By order of the Board of Directors
PAUL T. DACIER
Executive Vice President,
General Counsel and Assistant Secretary
April 1, 2016

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 12, 2016: The Annual Report on Form 10-K for 2015 and 2016 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 or 3 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 79 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.



Any shareholder who would like a copy of our 2015 Annual Report on Form 10-K may obtain one, without charge, by sending a written request to EMC Investor Relations at 176 South Street, Hopkinton, MA 01748. You may also obtain a copy of the Form 10-K from our website at www.emc.com/corporate/investor-relations/index.htm.






TABLE OF CONTENTS

Summary Information
1
Proposals
5
Election of Directors
5
Ratification of Selection of Independent Auditors
19
Advisory Approval of Executive Compensation
21
Corporate Governance
22
Board Leadership Structure
22
Risk Oversight
24
Annual Election of Directors
26
Majority Vote for Directors
26
Executive Sessions of Directors
26
Shareholder Engagement
26
Communications with the Board
27
Director Orientation and Continuing Education
28
Director Stock Ownership Guidelines
28
Sustainability
28
Political Contributions
29
Board Committees
30
Security Ownership of Certain Beneficial Owners and Management
34
Leadership and Compensation Committee Report
36
Compensation Discussion and Analysis
37
Executive Summary
37
Named Executive Officers
41
EMC’s Executive Compensation Program
41
Compensation of Executive Officers
57
Summary Compensation Table
57
Grants of Plan-Based Awards
60
Outstanding Equity Awards at Fiscal Year-End
62
Option Exercises and Stock Vested
65
Pension Benefits
65
Nonqualified Deferred Compensation
65
Potential Payments upon Termination or Change in Control
66
Director Compensation
71





Review and Approval of Transactions with Related Persons
74
Certain Transactions
74
Audit Committee Report
75
Rule 14a-8 Shareholder Proposals for EMC’s 2017 Proxy Statement
77
Business and Nominations for EMC’s 2017 Annual Meeting
77
Section 16(a) Beneficial Ownership Reporting Compliance
77
Householding
78
Questions and Answers About the Annual Meeting and Voting
79





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 2015. 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:        
May 12, 2016 at 10:00 a.m., E.D.T.
  Place:
EMC Corporation
176 South Street, Hopkinton, MA 01748
•  Record Date:        
March 14, 2016
•  Attendance:
All shareholders may attend the meeting. If you plan to join us at the meeting, please go to www.emc.com/annualmeeting2016 to complete the registration form. The deadline for registration is May 5, 2016. 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, voting instruction form or Notice of Internet Availability of Proxy Materials

Scan this QR code to vote with your mobile device. You will need the 12 digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.


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 2016 Proxy Statement and Annual Report on Form 10-K for 2015 electronically, you must vote your proxy over the Internet. Otherwise, you may vote your shares via the other methods described above.
Pending Merger with Dell

At a Special Meeting of Shareholders, EMC shareholders will vote to approve an Agreement and Plan of Merger, dated as of October 12, 2015, among Denali Holding Inc., Dell Inc., Universal Acquisition Co., and EMC, pursuant to which Universal Acquisition Co. will be merged with and into EMC and EMC will continue as a wholly owned subsidiary of Denali (the “Merger”), and related matters. Completion of the Merger is conditioned on shareholder approval, receipt of governmental approvals and the satisfaction of other conditions. Notwithstanding the pending Merger, state law and New York Stock Exchange listing standards require us to hold this Annual Meeting of Shareholders and ask you to




Summary Information (continued)

approve the matters set forth on the meeting agenda. For more information on the pending Merger, please see the Registration Statement on Form S-4 (File No. 333-208524) that Denali Holding Inc. has filed with the Securities and Exchange Commission (the “SEC”) that includes a proxy statement of EMC.
Meeting Agenda and Voting Recommendations
Agenda Item
Board Recommendation
Page
Election of nine 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
Director Nominees

We are asking you to vote “for” all of the director nominees listed below. In 2015, 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 committee. Set forth below is summary information about each director nominee.
Nominee and
Principal Occupation
Age
Director Since
Independent
Current Committee Membership
Donald J. Carty
Former Chairman of AMR Corporation and American Airlines
69
2015
ü


• Audit
• Corporate Governance and Nominating
• Finance (chair)
Randolph L. Cowen
Former co-Chief Administrative Officer of The Goldman Sachs Group, Inc.
65
2009
ü


• Leadership and Compensation (chair)
• Mergers and Acquisitions
James S. DiStasio
Former Senior Vice Chairman and Americas Chief Operating Officer of Ernst & Young LLP
68
2010
ü


• Audit (chair)
• Corporate Governance and Nominating
John R. Egan
Managing Partner and General Partner of Egan Managed Capital
58
1992
 
• Finance
• Mergers and Acquisitions (chair)
William D. Green
Former Chairman of Accenture plc
62
2013
ü


• Audit
• Leadership and Compensation
• Mergers and Acquisitions
Jami Miscik
Co-Chief Executive Officer and Vice Chairman of Kissinger Associates, Inc.
57
2012
ü

• Corporate Governance and Nominating (chair)
Paul Sagan
Executive In Residence (XIR) of General Catalyst Partners
57
2007
ü


• Leadership and Compensation
Laura J. Sen
Non-Executive Chairman of BJs Wholesale Club, Inc.
59
2015
ü


• Corporate Governance and Nominating
• Finance

Joseph M. Tucci
Chairman and Chief Executive Officer of EMC Corporation
68
2001
 
• Finance
• Mergers and Acquisitions

2



Summary Information (continued)

Corporate Governance Highlights
ü Substantial majority of independent directors (7 of 9 nominees)
ü Annual election of directors
ü Majority vote for directors
ü Independent Lead Director
ü Annual review of Board leadership structure
ü Board oversight of risk management
ü Succession planning at all levels, including for
directors and CEO
ü Commitment to Board diversity
ü Long-standing shareholder engagement program
ü Annual Board, committee and director evaluations
ü Executive sessions of non-management directors and independent directors
ü Continuing director education
ü Strong executive and director stock ownership guidelines
ü No supermajority voting requirements
ü Board oversight of sustainability program
ü Board oversight and disclosure of political spending
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 2016. The following table summarizes the fees PwC billed us for 2015 and 2014. The Audit Committee pre-approved all audit, review and attest services performed by PwC.
 
Audit Fees ($)
Audit-Related Fees ($)
Tax Fees ($)
All Other Fees ($)
2015
9,512,413
211,262
2,475,141
38,000
2014
9,092,340
235,485
2,857,106
187,000
Advisory Approval of our Executive Compensation

The Leadership and Compensation Committee (the “Compensation Committee”) approved an executive compensation program for 2015 that implemented our pay‑for‑performance philosophy.

Since our financial results fell below applicable incentive plan targets and the Named Executive Officers failed to achieve all of their respective strategic and operational goals, cash bonuses and performance equity awards paid out or vested below target, as follows:

82.3% of target was paid out under the 2015 Corporate Incentive Plan;
71% to 86% of target was paid out under the 2015 Executive MBO; and
62.6% of the 2012 LTIP stock units became eligible to vest.


3



Summary Information (continued)

Below is a summary of the Named Executive Officers’ 2014 and 2015 compensation as set forth in the Summary Compensation Table:
Name
Year
Salary
($)
Cash Incentive Compensation
($)
Equity
Awards
($)
All Other
Compensation
($)
Total
($)
Joseph M. Tucci
2015
1,000,000
1,144,422
7,942,324
320,964
10,407,710
2014
1,000,000
1,307,021
8,415,112
481,186
11,203,318
Zane C. Rowe
2015
750,000
600,741
4,963,999
195,373
6,510,113
2014
167,308
174,686
6,000,019
54,350
6,696,362*
David I. Goulden
2015
850,000
954,415
7,942,324
103,051
9,849,790
2014
850,000
1,075,513
8,415,112
190,632
10,531,257
Jeremy Burton
2015
800,000
665,940
6,964,012
86,626
8,516,578
2014
768,750
717,035
5,259,464
158,236
6,903,485
Howard D. Elias
2015
781,923
665,940
6,964,012
84,644
8,496,519
2014
750,000
746,183
5,259,464
178,839
6,934,486
*
Also includes a $300,000 sign-on bonus that Mr. Rowe received in 2014.

For more information, please see the Summary Compensation Table, and the accompanying compensation tables, beginning on page 57 of this Proxy Statement.
Other Compensation Practices
What We Do
ü Pay-for-performance 
ü Maintain “double trigger” change in control agreements
ü Maintain a clawback policy applicable to all employees for cash and equity incentive compensation
ü Compensation Committee oversees risks associated with compensation policies and practices
ü Compensation Committee retains an independent compensation consultant
What We Do Not Do
û No hedging or pledging of Company stock
û No excessive perquisites for executives
û No pension or SERP benefits for executives
û No discounted stock options
û No option repricings without shareholder approval
û No dividend equivalents paid unless equity awards vest
û No excise tax gross-ups
2017 Annual Meeting

Deadline for shareholder proposals for inclusion in the proxy statement:    December 2, 2016
Deadline for business and nominations for director:            January 7, 2017 - February 6, 2017


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. On the recommendation of the Corporate Governance and Nominating Committee (the “Governance Committee”), the Board of Directors has nominated the nine people 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 diverse and complementary skills and experience in order to oversee our business and evaluate management strategy 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 2015, the Board amended the Governance Committee’s charter to state explicitly the Board’s commitment to actively identify and recruit diverse candidates, including women and minority candidates, as part of the search process for Board members.

The Board has determined that it is important to have individuals with the following skills and experiences:

Industry 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.

5



Proposal 1 - Election of Directors (continued)

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.

At least once a year, the Governance Committee assesses 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, the effectiveness of the Board membership criteria, and whether the Board should seek individuals with specific areas of expertise in the future. To facilitate this process, from time to time, the Governance Committee may use a critical skills matrix.
Board Evaluations

Each year, the Governance Committee, together with the Lead Director, oversees an annual evaluation process. The evaluations help inform the Governance Committee’s discussions regarding Board succession planning and refreshment, and complement the Governance Committee’s evaluation of the size and composition of the Board. The process, as described in more detail in the chart below, is 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 changes in practices or procedures are considered as necessary. The Lead Director meets with each director to discuss the individual self-evaluations and Board performance. To the extent possible, these one-on-one meetings are scheduled as in-person meetings. Among other topics, the Lead Director discusses with each director the individual’s role, the individual’s performance, committee service, and the individual’s willingness to continue serving on the Board. The Chairman discusses the Lead Director’s self-evaluation with the Lead Director, and the Governance Committee considers the Lead Director’s performance.

In 2015, this three-tier process generated robust comments and discussion at all levels of the Board, including with respect to Board refreshment and Board processes. Among other things, the Board noted the recent rotation of chairs for the Audit Committee (James S. DiStasio) and the Governance Committee (Jami Miscik) as well as the addition of new directors that reflected the Board’s focus on director succession planning and independent oversight.

A summary of the Board’s evaluation process in 2015 is set forth below.
Evaluation
By
Process
Outcome
Full Board
(Annual)
All members of
the Board
l Board members complete a detailed questionnaire which (a) provides for quantitative ratings in key areas, (b) seeks subjective comment in each of those areas and (c) solicits specific topics on which Directors would like to focus on during the Board’s discussion.
l Responses are reviewed by the Chairman and Lead Director.
l Results are discussed by the Board in an executive session chaired by the Lead Director.
l Changes in practices or procedures are considered as necessary.




6



Proposal 1 - Election of Directors (continued)

Evaluation
By
Process
Outcome
Board Committees
(Annual)
All members of each committee
l Members of each committee complete a detailed questionnaire to evaluate how well their respective committee is operating.
l Results are discussed by each committee in executive session.
l The Chair of each committee reports on the committee’s discussion to the full Board.
l Changes in practices or procedures are considered as necessary.
l The Board reviews and considers any proposed changes to the committee charter.
Individual Directors (Annual)
Each Director
l Each Director completes a detailed questionnaire.
l The Lead Director receives the questionnaires.
l The Lead Director meets with each Director to discuss the individual’s performance and contributions to the Board and applicable committees.
l Lead Director discusses the results with the Governance Committee and reports summary results to the full Board.
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. This practice has become a foundation of our Board’s effectiveness and, very importantly, keeps our Board energized with valuable expertise and additional perspectives.

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, the results of the Board self-assessment process detailed above, and whether the Governance Committee believes it is in shareholders’ best interests to nominate the director for re‑election.
Board Tenure
The Board also considers the tenure of its members when evaluating its composition and nominees for election. The Board believes that varied lengths of service provide an effective balance of experience from longer-serving directors and fresh perspectives from newer directors. The average tenure of our Board members is 7.9 years, and the average tenure of the independent members of our Board is 4.8 years.



7



Proposal 1 - Election of Directors (continued)

Independence

A substantial majority of the current directors (7 of the 9 director nominees) 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 to assist it in assessing director independence. Pursuant to these standards, the Board broadly considers the specific standards, as well as 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, Donald J. Carty, Randolph L. Cowen, James S. DiStasio, William D. Green, Edmund F. Kelly, Jami Miscik, Paul Sagan, and Laura J. Sen. The Board had previously determined that José E. Almeida, Gail Deegan and David N. Strohm, who served on the Board during 2015, were independent.

In determining that the above-mentioned directors are independent, the Board considered transactions during 2015 between EMC and BJ’s Wholesale Club, Inc. (where Ms. Sen formerly was the Chief Executive Officer and is now the Non-Executive Chairman) and between EMC and Akamai Technologies, Inc. (where Mr. Sagan formerly was the 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 0.14% of each company’s annual revenues. The Board also considered transactions during 2015 between EMC and companies, universities and other organizations with which Messrs. Brown, Carty, Cowen, DiStasio, Green, Kelly, and Sagan, and Mses. Miscik and Sen, are affiliated as directors, trustees or members of an advisory board and determined that these relationships were not material to an evaluation of these directors’ independence. Finally, the Board considered that EMC made donations to charities where Messrs. Cowen, Green, Kelly, and Sagan and Ms. Sen are directors or trustees, and determined that the amount of the donations fell below the thresholds in EMC’s Categorical Standards of Independence.
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 retained from time to time to assist in identifying Board candidates. 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 2017 Annual Meeting” on page 77 of this Proxy Statement.

In 2015, the Governance Committee undertook a broad and extensive search for a new director. As part of the search process, the Governance Committee engaged a professional search firm to assist it in identifying potential candidates. After considering many candidates, in September 2015, the Board elected Laura J. Sen to the Board. Ms. Sen was identified by the search firm.


8



Proposal 1 - Election of Directors (continued)

Board Meetings

During the fiscal year ended December 31, 2015, EMC’s Board of Directors held 19 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 twelve of the then current directors attended the 2015 Annual Meeting of Shareholders.
Nominees to Serve as Directors

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 director nominees (other than Ms. Sen, who joined the Board in September 2015) were previously elected by the shareholders.

Messrs. Brown and Kelly will not stand for re-election at our Annual Meeting. Accordingly, the Board has reduced the size of the Board to nine directors, effective immediately prior to the commencement of the Annual Meeting. Our Board extends its sincere gratitude to Messrs. Brown and Kelly for their many years of service.
 
The affirmative vote of a majority of votes properly cast on this proposal at the Annual Meeting is required to elect each director.


9



Proposal 1 - Election of Directors (continued)

Donald J. Carty, 69
 
Director Since
l   January 2015
 
Primary Occupation
l   Former Chairman of AMR Corporation and American Airlines
 
Other Current Public Company Boards
l  Canadian National Railway Company
Chair of the Audit Committee
Corporate Governance and Nominating Committee
Environment, Safety and Security Committee
Human Resources and Compensation Committee
Strategic Planning Committee
 
l   Virgin America Inc.
  Chairman of the Board
  Audit Committee
  Chair of the Nominating and Corporate Governance Committee

 
l   VMware, Inc. (EMC holds approximately 80% economic interest in VMware)
  Audit Committee

 

 
Former Public Company Boards (within the past 5 years)
l   Barrick Gold Corporation
l   Dell Inc.
l   Gluskin Sheff and Associates
l   Hawaiian Holdings Inc.
l   Talisman Energy Inc.
Audit Committee
Chair of the Human Resources Committee

 
Business Experience
l   Dell Inc., a computer technology company
Vice Chairman and Chief Financial Officer (January 2007 to June 2008)
 
l   AMR Corporation and American Airlines
Chairman and Chief Executive Officer (1998 to 2003)
Chief Financial Officer (October 1989 to March 1995)

 
Education
l   Bachelor’s degree in Economics and Mathematics from Queen’s University in Kingston, Ontario
 
l   Honorary Doctor of Laws from Queen’s University in Kingston, Ontario
 
l   MBA from Harvard Business School
 
Qualifications and Skills
 
l   Mr. Carty is a seasoned executive who brings to the Board significant financial acumen, industry insight and strategic planning experience gained from his previous leadership positions. His service on other public company boards also provides him with valuable experience.

10



Proposal 1 - Election of Directors (continued)

Randolph L. Cowen, 65
 
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 over 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. 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.




11



Proposal 1 - Election of Directors (continued)

James S. DiStasio, 68
 
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   Eversource Energy
  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.
 



12



Proposal 1 - Election of Directors (continued)

John R. Egan, 58
 
Director Since
l   May 1992
 
Primary Occupation
l   Managing Partner and General Partner of Egan-Managed Capital
 
Other Current Public Company Boards
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
Nominating and Governance Committee

 
l   Verint Systems Inc.
Chair of the Corporate Governance and Nominating Committee
Compensation Committee

 
l   VMware, Inc. (EMC holds approximately 80% economic interest in VMware)
Chair of the Mergers and Acquisitions 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.



13



Proposal 1 - Election of Directors (continued)

William D. Green, 62
 
Director Since
l   July 2013 and Lead Director since February 2015
 
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   MBA from Babson College
 
l   Honorary Doctor of Laws from Babson College
 
Qualifications and Skills
 
l   As the former Chairman and CEO of Accenture, Mr. Green is an experienced and seasoned leader with outstanding management experience, 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.






14



Proposal 1 - Election of Directors (continued)

Jami Miscik, 57
 
Director Since
l   August 2012
 
Primary Occupation
l   Co-Chief Executive Officer and Vice Chairman of Kissinger Associates, Inc.
 
Other Current Public Company Boards
l   Morgan Stanley
Operations and Technology Committee
Risk Committee

 
Business Experience

l   Kissinger Associates, Inc., an international consulting firm
Co-Chief Executive Officer (since May 2015)
 Vice Chairman (since January 2009)
President (January 2009 to May 2015)


 
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   Co-Chairman of the President’s Intelligence Advisory Board (member 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. In addition, Ms. Miscik’s service on another public company board provides her with valuable experience.




15



Proposal 1 - Election of Directors (continued)

Paul Sagan, 57
 
Director Since
l   December 2007
 
Primary Occupation
l   Executive In Residence (XIR), General Catalyst Partners
 
Other Current Public Company Boards
l   Akamai Technologies, Inc.

 
l   VMware, Inc. (EMC holds approximately 80% economic interest in VMware)
■ Lead Director
Audit Committee
Chair of the Compensation and Corporate Governance Committee


 
Former Public Company Boards (within the past 5 years)
l   iRobot Corporation
Chair of the Nominating and Corporate Governance Committee
 
Business Experience
l   Executive In Residence (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
 Executive Vice Chairman (January 2013 to May 2013)
Chief Executive Officer (April 2005 to January 2013)
President (October 2011 to January 2013 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)

Laura J. Sen, 59
 
Director Since
l   September 2015
 
Primary Occupation
l   Non-Executive Chairman, BJ’s Wholesale Club, Inc.
 
Former Public Company Boards (within the past 5 years)

l   BJ’s Wholesale Club, Inc. (privately-held since October 2011)
  Executive Committee
 Finance Committee
  Information Technology Committee
 
Business Experience
l   BJ’s Wholesale Club, Inc., a leading operator of membership warehouse clubs in the eastern United States
Non-Executive Chairman (since February 2016)
Chief Executive Officer (February 2009 to February 2016)
President (January 2008 to September 2015)
Chief Operating Officer (January 2008 to February 2009)
Executive Vice President of Merchandising and Logistics (January 2007 to January 2008)

 
Education
l   Bachelor’s degree from Boston College
 
Qualifications and Skills
 
l   Ms. Sen has played key roles in growing BJ’s from an early stage business to a Fortune 500 company. With nearly 30 years of experience in the retail industry, Ms. Sen brings to the EMC Board an exceptional leadership record, deep operating experience and financial expertise.



17



Proposal 1 - Election of Directors (continued)

Joseph M. Tucci, 68
 
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   Paychex, Inc.
Lead Independent Director
Chairman of the Governance and Compensation Committee
 
l   VMware, Inc. (EMC holds approximately 80% economic interest in VMware)
Chairman of the Board of Directors
Mergers and Acquisitions 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   Master’s degree 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, revitalization and sustained 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, 2016. 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 2016.

The Audit Committee is also responsible for selecting the lead engagement partner. The rules of the SEC and PwC’s policies require mandatory rotation of the lead engagement partner every five years. In 2014, EMC selected 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 Audit 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.

19



Proposal 2 - Ratification of Selection of Independent Auditors (continued)

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 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 2015. During 2015, 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
($)
All Other Fees
($)
2015
9,512,413
211,262
2,475,141
38,0005
2014
9,092,340
235,485
2,857,106
187,0006
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 2015 and 2014.
5 
Includes consulting services relating to preparation of our Conflict Minerals Report.
6 
Includes consulting services relating to a grant application for a European Union project and preparation of our Conflict Minerals Report.

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

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 - Responsibilities - Audit Committee” and “Audit Committee Report” on pages 31 and 75, 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. This vote is commonly known as “say-on-pay.” 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 2015 Annual Meeting of Shareholders, shareholders expressed strong support for our executive compensation program. Subject to the earlier consummation of the Merger, the next annual advisory vote is expected to occur at the 2017 Annual Meeting of Shareholders.

As described in the Compensation Discussion and Analysis in this Proxy Statement, 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 Company performance, with a significant majority of compensation awarded in the form of equity. The Compensation Committee links compensation to the achievement 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 further expand the global market opportunity for our product, services and solutions portfolio. In designing our executive compensation program, the Compensation Committee focuses on promoting our business strategy and aligning the interests of our executives with those of EMC shareholders.

For more information on our executive compensation program, see “Compensation Discussion and Analysis” and “Compensation of Executive Officers” beginning on pages 37 and 57, respectively, of this Proxy Statement.


21


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, Compensation, Finance, Governance, 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 are summarized below.
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.
Annual Review of Leadership Structure

The Board reviews the structure of its leadership on an annual basis and determines each year whether it is best for the Company that (a) the Chairman role be combined or separated from the CEO role and (b) 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.

Current Structure. For the reasons set forth below, 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 William D. Green, an independent director, serve as our Lead Director.

Accountability. 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. 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. Finally, the combined roles facilitate a Board process that is able to identify and respond to challenges and opportunities in a more timely and efficient manner than a non-executive chairman structure would provide.

22



Corporate Governance (continued)

Independent Directors and Committees. In evaluating its leadership structure, the Board also considered that a substantial majority of our Board is comprised of independent directors. Our independent directors appropriately challenge management and demonstrate independent judgment in making important decisions for our Company. In addition, each of the Board’s key committees - the Audit Committee, Compensation Committee, and Governance 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. 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.

Independent Lead Director. The Board recognizes the importance of having a strong independent board leadership structure to ensure accountability. 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 governance and independent oversight.

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

In February 2016, after its annual review, the independent directors again designated Mr. Green as the Board’s independent Lead Director. He has substantial experience leading a large public corporation, governance expertise from serving as chairman and a member of other company boards and committees, and a deep understanding of the IT industry. In addition, Mr. Green’s proven ability to assert independent leadership while working collaboratively with other directors, his ability to solicit, balance and build consensus around different points of view, and the respect he has garnered among our Board members enable him to serve effectively as our Lead Director. For more information regarding Mr. Green, please see “Proposal 1 - Election of Directors.”

23



Corporate Governance (continued)

Our Lead Director has significant responsibilities, which are set forth in EMC’s Corporate Governance Guidelines. These include:
l
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
l
Acting as a liaison between the independent directors and the Chairman
l
Facilitating discussions among the independent directors on key issues and concerns outside of Board meetings
l
Having the authority to call meetings of the independent directors
l
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
l
Approving meeting agendas for the Board
l
Approving meeting schedules to assure that there is sufficient time for discussion of all agenda items
l
In collaboration with the Compensation Committee, approving CEO goals, evaluating CEO performance, setting CEO compensation levels and reviewing CEO succession planning
l
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
l
In collaboration with the Chairman, recommending to the Board the retention of consultants who report directly to the Board

l
If requested by major shareholders, ensuring that he or she is available for consultation and direct communication
l
Performing such other duties as may be requested from time to time by the Board as a whole or by the independent directors

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, the General Counsel, and the Chief Risk Officer, monitors and manages EMC’s enterprise risk management program and reports directly to the Governance Committee and the Board of Directors.
Compensation Risk Oversight

The Leadership and Compensation Committee oversees the design and implementation of and the incentives and risks associated with our compensation policies and practices. In 2015, 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; change in control agreements; and compensation recovery policy. The Committee considered several factors that mitigate risk in the executive compensation program, including the following:

24



Corporate Governance (continued)

Approximately 11% 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 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;
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 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 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 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 guidelines. The management risk committee presented its conclusions for review by the Compensation Committee.
Additional Risk Oversight

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 also receives 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 30 of this Proxy Statement.


25



Corporate Governance (continued)

Annual Election of Directors

Each director is elected annually.
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.

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.

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.
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.
Shareholder Engagement

For many years, EMC has sponsored a robust shareholder engagement program. We are committed to engaging in constructive and meaningful dialogue with our shareholders. We value shareholder views and insights and believe that

26



Corporate Governance (continued)

positive, two-way dialogue builds informed relationships that promote transparency and accountability. Over the years, shareholders have expressed appreciation of our engagement program.

While the EMC Board of Directors, through the Governance Committee, oversees shareholder matters and participates in meetings with shareholders as appropriate, management has the principal responsibility for shareholder communications and engagement. Management provides regular updates to the Board concerning shareholder feedback. The Board considers shareholder perspectives as well as the interests of all stakeholders when overseeing company strategy, formulating governance practices and designing compensation programs.

During 2015, members of EMC’s Board of Directors and management dialogued and met with shareholders and other stakeholders as part of our annual outreach program as well as at other times throughout the year. We spoke with representatives from our top institutional investors, mutual funds, public pension funds, labor unions and socially focused funds (representing approximately 42% of our outstanding shares). Topics discussed included our strategy and performance; the pending Merger; corporate governance matters such as Board composition and refreshment, succession planning and Board leadership structure; our executive compensation program; and sustainability initiatives. We solicited feedback from shareholders on these subjects and provided a summary of responses to the Board. Directors who participated in the meetings also shared their perspectives on these meetings with the full Board.
Communications with the Board

To facilitate 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. 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.

Information on how EMC shareholders and all other interested parties may report concerns or complaints to the Audit Committee, Leadership and Compensation Committee and the non-management directors is set forth below and at www.emc.com/corporate/investor-relations/governance/contact-board.htm.

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
Suite 300
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
Suite 300
13950 Ballantyne Corporate Place
Charlotte, NC 28277
By e-mail
CompensationCommitteeChairman@emc.com

27



Corporate Governance (continued)

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
Suite 300
13950 Ballantyne Corporate Place
Charlotte, NC 28277
By e-mail
nonmngtdirectors@emc.com

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. This process has been approved by our independent Directors.
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.
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 March 1, 2016, 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 54 of this Proxy Statement).
Sustainability

The Governance Committee is responsible for overseeing EMC’s sustainability efforts. EMC’s sustainability strategy is to leverage our talent and technology to drive positive change in the areas where we have greatest potential for impact, hold ourselves accountable by measuring and reporting our progress, maintain open and candid communication with our internal and external stakeholders, and collaborate with our peer companies and those in our value chain to expand the scale of our impact. Our areas of focus follow from our business objectives and the context in which we operate, prioritizing the issues that have the greatest potential to impact our business (positively or negatively) and where we have the greatest potential to mitigate negative impacts and drive positive results through our own actions and our ability to influence others.

In 2015, our sustainability program was recognized through inclusion in the Dow Jones Sustainability Index for North America and the CDP Climate Disclosure Leadership Index. For more information on our priorities and progress, please see our Annual Report on Form 10-K for 2015, our Sustainability Report and www.emc.com/corporate/sustainability/index.htm.

28



Corporate Governance (continued)

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 http://www.emc.com/corporate/sustainability/delivering-value/public.htm.





29


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.
Independence

The Audit, Compensation, and Governance Committees consist entirely of independent directors. All of the members of the Audit Committee and Compensation Committee meet the additional, heightened independence criteria of the SEC and NYSE applicable to their respective committees.
Composition

Generally, a director is a member of no more than two of the NYSE required committees (Audit, Compensation, and Governance Committees).

The current membership of each committee is listed below.
 
Audit
Corporate Governance and Nominating
Finance
Leadership and Compensation1
Mergers and Acquisitions
Michael W. Brown
ü
 
ü
 
 
Donald J. Carty
ü
ü
Chair
 
 
Randolph L. Cowen
 
 
 
Chair
ü
James S. DiStasio
Chair
ü
 
 
 
John R. Egan
 
 
ü
 
Chair
William D. Green
ü
 
 
ü
ü
Edmund F. Kelly
 
 
ü
 
 
Jami Miscik
 
Chair
 
 
 
Paul Sagan
 
 
 
ü
 
Laura J. Sen
 
ü
ü
 
 
Joseph M. Tucci
 
 
ü
 
ü
1 
José E. Almeida served on the Leadership and Compensation Committee through October 2015, and Gail Deegan served on the Leadership and Compensation Committee through April 2015.
Responsibilities

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. All the committees meet periodically throughout the year, report on their actions and recommendations to the Board, receive reports from senior management, annually evaluate their performance, and have the authority to retain outside advisors.



30



Board Committees (continued)

Audit Committee
Other Members:  Michael W. Brown, Donald J. Carty and William D. Green

Meetings Held in 2015: 10

Primary Responsibilities:  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,
James S. DiStasio
Chair
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. During 2015, 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 2015, 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.


Financial Experts: The Board of Directors has determined, in accordance with the rules of the NYSE and the SEC, that each member is financially literate and an “audit committee financial expert.” The Board has also determined, in accordance with the rules of the NYSE, that the simultaneous service of Mr. Carty on the audit committees of more than three public companies does not impair his ability to effectively serve on the Audit Committee.

For more information about the Audit Committee, please see “Proposal 2 - Ratification of Selection of Independent Auditors” and “Audit Committee Report” on pages 19 and 75, respectively, of this Proxy Statement.

Corporate Governance and Nominating Committee
Other Members:  Donald J. Carty, James S. DiStasio and Laura J. Sen

Meetings Held in 2015: 19

Primary Responsibilities:  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
Jami Miscik
Chair
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. In 2015, the Governance Committee also worked with the Leadership and Compensation Committee to oversee and report to the Board on succession planning for the CEO.



31



Board Committees (continued)

Finance Committee
Other Members:  Michael W. Brown, John R. Egan, Edmund F. Kelly, Laura J. Sen and Joseph M. Tucci

Meetings Held in 2015: 17

Primary Responsibilities:  This 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
Donald J. Carty
Chair
of our subsidiaries’ equity (including the equity of 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
Other Members:  William D. Green and Paul Sagan

Meetings Held in 2015: 9

Primary Responsibilities:  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
Randolph L. Cowen
Chair
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 24 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 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, 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.

Compensation Consultant: 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 55 of this Proxy Statement.


32



Board Committees (continued)

Compensation Committee Interlocks and Insider Participation: None of the 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.

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 22 and 37, respectively, of this Proxy Statement.
Mergers and Acquisitions Committee
Other Members:  Randolph L. Cowen, William D. Green and Joseph M. Tucci

Meetings Held in 2015: 9

Primary Responsibilities:  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.
John R. Egan
Chair




33


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information about the beneficial ownership of common stock owned on March 1, 2016 (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
The Vanguard Group
114,014,6002
5.8%
BlackRock, Inc.
104,419,2403
5.3%
Michael W. Brown4, 5
136,900
**
Jeremy Burton4, 6
178,307
**
Donald J. Carty4*
23,100
**
Randolph L. Cowen4, 7*
76,900
**
James S. DiStasio4, 8*
56,900
**
John R. Egan4*
1,142,117
**
Howard D. Elias4, 9
771,379
**
David I. Goulden4, 10
726,263
**
William D. Green4*
18,133
**
Edmund F. Kelly4, 11
106,900
**
Jami Miscik4*
26,125
**
Zane C. Rowe4
48,129
**
Paul Sagan4, 12*
96,900
**
Laura J. Sen4, 13*
0
**
Joseph M. Tucci4, 14*
2,403,695
**
All directors and executive officers as a group (23 persons)15
7,846,889
**
*
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 March 1, 2016.
2
Based solely on the Schedule 13G/A filed by The Vanguard Group with the SEC on February 11, 2016. The Schedule 13G/A provides that, as of December 31, 2015, The Vanguard Group beneficially owned in the aggregate 114,014,600 shares of common stock and that it had sole power to vote or direct the voting of 3,593,649 of such shares, sole power to dispose or direct the disposition of 110,225,835 of such shares, shared power to vote or direct the voting of 194,700 of such shares and shared power to dispose or direct the disposition of 3,788,765 of such shares. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355.
3
Based solely on the Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 26, 2016. The Schedule 13G/A provides that, as of December 31, 2015, BlackRock, Inc. beneficially owned in the aggregate 104,419,240 shares of common stock and that it had sole power to vote or direct the voting of 85,014,050 of such shares, sole power to dispose or direct the disposition of 104,414,887 of such shares, shared power to vote or direct the voting of 4,353 of such shares and shared power to dispose or direct the disposition of 4,353 of such shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.
4
Does not include restricted stock units held by the following individuals: Mr. Brown (8,900); Mr. Burton (453,614); Mr. Carty (8,900); Mr. Cowen (8,900); Mr. DiStasio (8,900); Mr. Egan (8,900); Mr. Elias (432,159); Mr. Goulden (565,463); Mr. Green (8,900); Mr. Kelly (8,900); Ms. Miscik (8,900); Mr. Rowe (296,681); Mr. Sagan (8,900); Ms. Sen (5,933); and Mr. Tucci

34



Security Ownership of Certain Beneficial Owners and Management (continued)

(576,069). The restricted stock units held by Messrs. Brown, Carty, Cowen, DiStasio, Egan, Green, Kelly and Sagan and Mses. Miscik and Sen will vest on April 30, 2016.
5
Mr. Brown is deemed to own 50,000 of these shares by virtue of options to purchase these shares.
6
Mr. Burton is deemed to own 79,175 of these shares by virtue of options to purchase these shares.
7
Mr. Cowen is deemed to own 20,000 of these shares by virtue of options to purchase these shares.
8
Mr. DiStasio is deemed to own 10,000 of these shares by virtue of options to purchase these shares.
9
Mr. Elias is deemed to own 364,017 of these shares by virtue of options to purchase these shares.
10
Mr. Goulden is deemed to own 378,022 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. Sagan is deemed to own 30,000 of these shares by virtue of options to purchase these shares.
13
Under our stock ownership guidelines, Ms. Sen has five years to reach compliance with her guideline.
14
Mr. Tucci is deemed to own 937,987 of these shares by virtue of options to purchase these shares.
15
Includes 2,882,140 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 3,800,970 restricted stock units held by all executive officers and directors as a group.


35



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
William D. Green
Paul Sagan


36


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 Company performance, with a significant majority of compensation awarded in the form of equity. The Compensation Committee links compensation to the achievement 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 further expand the global market opportunity for our product, services and solutions portfolio. In designing our executive compensation program, the Compensation Committee focuses on promoting our business strategy and aligning the interests of our executives with those of EMC shareholders.
Business Strategy

The evolution of the IT marketplace, accelerated by the adoption of mobile devices, cloud computing, Big Data and social networking, continues to have a profound impact on enterprises and the way people work and live.  EMC’s strategy is to enable enterprises to modernize their client/server-based infrastructures and applications while helping them to build new infrastructures and applications that take advantage of next generation opportunities in the cloud/mobile era of computing.

EMC is executing this strategy through our federation business model, which includes the following businesses: EMC Information Infrastructure, VMware Virtual Infrastructure, Pivotal and Virtustream (the “federation”). Together, our businesses enable customers to achieve their digital enterprise aspirations through business and IT transformation via trusted hybrid cloud, modern application development, Big Data and cybersecurity solutions.

Under this model, our businesses are strategically aligned to provide benefits for customers and partners, while each independent business operates freely to build its own ecosystem. This offers customers the ability to choose from a selection of the very best technology solutions, free from vendor lock-in. We believe this model creates a competitive advantage by ensuring tight integration of solutions for customers who prefer an integrated solution, and at the same time by allowing us to provide the best-of-breed offerings on a standalone basis for customers who prefer maximum flexibility in vendor and deployment options.

EMC stands at the forefront of the IT industry with a leading portfolio of products, services and solutions that provide a strong position from which to compete in the client/server-based platform of IT, which will continue to support the majority of enterprise workloads for several years to come; leading-edge technologies and products for the new cloud/mobile platform of IT; and powerful capabilities to help enterprises bridge the two.
Pending Merger with Dell

References to the “Merger” in this Compensation Discussion and Analysis refer to the pending transaction among Denali Holding Inc., Dell Inc., Universal Acquisition Co., and EMC, as more fully described in “Summary Information” beginning on page 1 of this Proxy Statement.


37



Compensation Discussion and Analysis (continued)

2015 Business Results

In 2015, we achieved the following revenue, profit and free cash flow:
  
2015 ($)
Revenue
24.70 billion
Non-GAAP Earnings Per Share (“EPS”)*
1.82
Free Cash Flow*
3.92 billion
*
A reconciliation of our GAAP to non-GAAP results can be found in Exhibit A 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, 2015 for a more detailed description of our fiscal year 2015 financial results.
2015 Executive Compensation Program

The Compensation Committee approved an executive compensation program for 2015 that implemented our pay-for-performance philosophy.

The primary elements of our executive compensation program are base salary, cash bonuses and equity incentives. In designing the cash bonus and equity incentive plans, the Compensation Committee predominantly used consolidated financial metrics as performance goals to drive the successful execution of the federation strategy.

Below is a summary of the Named Executive Officers’ 2014 and 2015 compensation as set forth in the Summary Compensation Table:
Name
Year
Salary
($)
Cash Incentive Compensation
($)
Equity
Awards
($)
All Other
Compensation
($)
Total
($)
Joseph M. Tucci
2015
1,000,000
1,144,422
7,942,324
320,964
10,407,710
2014
1,000,000
1,307,021
8,415,112
481,186
11,203,318
Zane C. Rowe
2015
750,000
600,741
4,963,999
195,373
6,510,113
2014
167,308
174,686
6,000,019
54,350
6,696,362*
David I. Goulden
2015
850,000
954,415
7,942,324
103,051
9,849,790
2014
850,000
1,075,513
8,415,112
190,632
10,531,257
Jeremy Burton
2015
800,000
665,940
6,964,012
86,626
8,516,578
2014
768,750
717,035
5,259,464
158,236
6,903,485
Howard D. Elias
2015
781,923
665,940
6,964,012
84,644
8,496,519
2014
750,000
746,183
5,259,464
178,839
6,934,486
*
Also includes a $300,000 sign-on bonus that Mr. Rowe received in 2014.

For more information, please see the Summary Compensation Table, and the accompanying compensation tables, beginning on page 57 of this Proxy Statement.
2015 Cash Bonuses

For the cash bonus 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.


38



Compensation Discussion and Analysis (continued)

Based on EMC’s financial performance in 2015, the Named Executive Officers achieved approximately 91.9%, 94.7% and 91.1%, respectively, of the non-GAAP EPS, revenue and free cash flow targets established by the Compensation Committee for the 2015 Corporate Incentive Plan. In addition, the Named Executive Officers achieved between 71% and 86% of their respective strategic and operational priorities established by the Compensation Committee for the 2015 Executive Management By Objectives Plan (the “Executive MBO”).

Since our 2015 revenue, EPS 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’ cash bonuses were paid at less than target, in the amounts set forth below:
Name
Corporate Incentive Plan
Executive MBO
Target ($)
Actual ($)
Target ($)
Actual ($)
Joseph M. Tucci
1,080,000
888,840
360,000
255,582
Zane C. Rowe
562,500
462,938
187,500
137,803
David I. Goulden
862,500
709,838
287,500
244,577
Jeremy Burton
600,000
493,800
200,000
172,140
Howard D. Elias
600,000
493,800
200,000
172,140
2015 Equity Incentive Awards

For 2015, the Compensation Committee granted our Named Executive Officers a mix of performance stock unit awards and time-based stock unit awards, as described below. The number of performance-based and time-based stock unit awards granted to the Named Executive Officers is set forth below:
Name
February 2015
Performance Awards
(#)
February 2015
Time-Based Awards
(#)
July 2015
Time-Based Awards
(#)
Joseph M. Tucci
176,212
117,475
0
Zane C. Rowe
110,134
73,422
0
David I. Goulden
176,212
117,475
0
Jeremy Burton
110,134
73,422
74,963
Howard D. Elias
110,134
73,422
74,963
Subject to accelerated vesting upon the earlier consummation of the Merger, these performance stock units will vest in 2018 only if the Company achieves specific three-year cumulative non-GAAP EPS, revenue and relative TSR metrics. We refer to these three-year performance awards as the “2015 LTIP stock units.”

In addition, recognizing that a very large portion of our executives’ compensation is at risk, the Compensation Committee granted our Named Executive Officers these time-based stock units to promote retention. Subject to accelerated vesting upon the earlier consummation of the Merger, the time‑based stock units vest over a two- or three-year period, subject to the executive’s continued employment with EMC.

For more information on the treatment of outstanding equity awards upon consummation of the Merger, please see “Treatment of Equity Awards upon Consummation of the Merger” on page 47 of this Proxy Statement.
2012 Long-Term Incentive Plan Awards
In August 2012, the Compensation Committee granted three-year performance-based restricted stock units to select members of EMC’s senior management team. We refer to these grants as the “2012 LTIP stock units.”


39



Compensation Discussion and Analysis (continued)

Since the 2012 LTIP stock unit awards were incremental to the participating executives’ annual compensation, the Compensation Committee set a rigorous three-year cumulative revenue target of $79.2 billion for fiscal years 2013 through 2015, with a minimum threshold of $72.0 billion.

Our actual three-year cumulative revenue was $72.37 billion. In accordance with plan design, 62.6% of the 2012 LTIP stock units became eligible to vest in two equal installments, the first of which vested in February 2016. Subject to accelerated vesting upon the earlier consummation of the Merger, the second installment will vest in February 2017, subject to the executive’s continued employment. The remaining 37.4% of the 2012 LTIP stock units did not vest and were forfeited.

For more information on the treatment of outstanding equity awards upon consummation of the Merger, please see “Treatment of Equity Awards upon Consummation of the Merger” on page 47 of this Proxy Statement.
Other Compensation Practices

Highlights of our executive compensation program also include:
What We Do
ü Pay-for-performance
ü Require significant stock ownership by executives and directors
ü Maintain “double trigger” change in control agreements
ü Maintain a clawback policy applicable to all employees for cash and equity incentive compensation
ü Compensation Committee oversees risks associated with compensation policies and practices
ü Compensation Committee retains an independent compensation consultant
ü CEO succession planning
What We Do Not Do
û No hedging or pledging of Company stock
û No excessive perquisites for executives
û No pension or SERP benefits for executives
û No discounted stock options
û No option repricings without shareholder approval
û No dividend equivalents paid unless equity awards vest
û No excise tax gross-ups


The Compensation Committee believes that the actions and policies described above clearly demonstrate the Company’s commitment to and consistent execution of an effective pay-for-performance executive compensation program.


40



Compensation Discussion and Analysis (continued)

Named Executive Officers

The executive officers who appear in the Summary Compensation Table for 2015 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
Zane C. Rowe
Former Executive Vice President and Chief Financial Officer
David I. Goulden
Chief Executive Officer, EMC Information Infrastructure
Jeremy Burton
President, Products and Marketing
Howard D. Elias
President and Chief Operating Officer, Global Enterprise Services

Mr. Rowe served as Chief Financial Officer of EMC until March 1, 2016, at which time he became Chief Financial Officer of VMware. Denis G. Cashman was appointed Chief Financial Officer of EMC, effective March 1, 2016.
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 since 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. In designing our cash bonus and equity incentive programs for 2015, the Compensation Committee predominantly used consolidated financial metrics as performance goals to drive the successful execution of the federation strategy.


41



Compensation Discussion and Analysis (continued)

Set forth below is a summary of the relative weights given to each component of the 2015 compensation opportunities for Mr. Tucci and the other Named Executive Officers.

______________________
*
Reflects average compensation.

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 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.
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 similarly situated executives internally and externally. After consideration of the foregoing factors, Mr. Elias’ base salary was increased in May 2015. The Compensation Committee did not approve any other changes to the base salaries of our Named Executive Officers for 2015.


42



Compensation Discussion and Analysis (continued)

The Named Executive Officers’ 2015 annual base salaries are set forth below:
Name
2015
($)
Joseph M. Tucci*
1,000,000
Zane C. Rowe
750,000
David I. Goulden
850,000
Jeremy Burton
800,000
Howard D. Elias**
800,000
*
Mr. Tucci’s annual base salary has not increased since 2001.
**
As described above, Mr. Elias’ annual base salary increased from $750,000 to $800,000 in May 2015.
Cash Bonus Plans

In 2015, more than 95% 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 contribution to the execution of the federation strategy, 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, the Compensation Committee did not make any changes to the annual target cash bonus opportunities of our Named Executive Officers for 2015.

The Named Executive Officers’ 2015 total annual target cash bonus opportunities are set forth below:
Name
2015
($)
Joseph M. Tucci*
1,440,000
Zane C. Rowe
750,000
David I. Goulden
1,150,000
Jeremy Burton
800,000
Howard D. Elias
800,000
*
Mr. Tucci’s total annual target cash bonus opportunity has not increased since 2001.
2015 Cash Bonus Plans

For 2015, 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 (75%) of the cash 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

43



Compensation Discussion and Analysis (continued)

portion (25%) of their respective cash bonus opportunity should be allocated to the Executive MBO to focus on the achievement of specific strategic and operational goals.
2015 Corporate Incentive Plan

The 2015 Corporate Incentive Plan is an annual incentive plan under which EMC executives, including our Named Executive Officers, were 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 2015 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 2015. 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 2015 because the Compensation Committee determined that it would not be appropriate to 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 the year.

The 2015 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 2015 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*
1.58
1.98
2.06
50%
1.82/80.7%
Revenue (billions)
20.874
26.093
26.771
30%
24.704/87.3%
Non-GAAP free cash flow (billions)*
3.440
4.300
4.474
20%
3.917/78.7%
*
For purposes of calculating achievement of the EPS target, amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges, acquisition and other related charges, a fair value adjustment on assets held for sale, VMware litigation and other contingencies, a VMware GSA settlement charge, special tax items and merger-related costs were excluded. 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 A to this Proxy Statement.



44



Compensation Discussion and Analysis (continued)

We did not achieve 100% of the EPS, revenue or free cash flow targets under the 2015 Corporate Incentive Plan, and each participant’s bonus was paid at only 82.3% of target. The annual target bonus opportunities and actual payouts to the Named Executive Officers under the 2015 Corporate Incentive Plan are set forth below:
Name
Corporate Incentive Plan
Target
($)
Actual
($)
Joseph M. Tucci
1,080,000
888,840
Zane C. Rowe
562,500
462,938
David I. Goulden
862,500
709,838
Jeremy Burton
600,000
493,800
Howard D. Elias
600,000
493,800
2015 Executive MBO

In 2015, 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.

The Compensation Committee assigned shared goals to the executive leadership team, including the Named Executive Officers, with a significant majority of the payments tied to the achievement of these shared goals. In addition, the participating executives were assigned individual goals, with a small portion of the payments tied to achievement of the individual goals. The Compensation Committee assigned individual goals to Messrs. Tucci and Rowe, Mr. Tucci assigned individual goals to Mr. Goulden, and Messrs. Tucci and Goulden assigned individual goals to Messrs. Burton and Elias. Each of the shared goals and individual goals were specific and measurable. At the close of each half of 2015, the Compensation Committee or Messrs. Tucci and Goulden, 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 2015 is set forth below:
First-Half Shared Goals
Executive Officers
Description
All Named Executive Officers
l Drive federation messaging and further development of strategic priorities
l Strengthen converged infrastructure strategy within federation
l Execute on new solutions-focused value-based sales approach
l Implement 3rd platform storage and infrastructure business initiatives
l Focus on talent management and succession planning
Second-Half Shared Goals
Executive Officers
Description
Joseph M. Tucci
Zane C. Rowe
l Enhance market perception of federation strategy
l Execute on go-to-market initiatives for the federation
l Develop a cost reduction plan for federation
l Continue development of cloud services business strategy
David I. Goulden
Jeremy Burton
Howard D. Elias
l Reorganize EMC Information Infrastructure business segments
l Develop new EMC Information Infrastructure go-to-market strategy
l Develop a cost reduction plan for EMC Information Infrastructure
l Focus on talent management to support reorganized business segments
In addition to the first-half shared goals described above, the Compensation Committee assigned the Named Executive Officers certain first-half financial goals under the Executive MBO that were aligned to EMC’s 2015

45



Compensation Discussion and Analysis (continued)

operating plan. The Compensation Committee assigned Messrs. Tucci and Rowe first-half financial goals related to EMC’s consolidated revenue and non-GAAP EPS results, as the Compensation Committee determined that Messrs. Tucci and Rowe are most responsible for the overall federation strategy. Messrs. Goulden, Burton and Elias had first-half financial goals based on revenue and operating income results for the EMC Information Infrastructure business, as the Compensation Committee determined that those executives should have an additional incentive to focus on the EMC Information Infrastructure business.

EMC achieved the following results against those targets:
Joseph M. Tucci and Zane C. Rowe
David I. Goulden, Jeremy Burton and Howard D. Elias
EMC Consolidated
EMC Information Infrastructure
Revenue
(billions)
Non-GAAP
EPS*
Revenue
(billions)
Operating Income**
(billions)
Target
($)
Actual
($)
Target
($)
Actual
($)
Target
($)
Actual
($)
Target
($)
Actual
($)
11.972
11.610
0.73
0.74
8.763
8.470
1.299
1.268
*
For purposes of calculating achievement of the EPS target, amounts relating to stock-based compensation expense, intangible asset amortization, restructuring charges, acquisition and other related charges, the R&D tax credit for 2015, a fair value adjustment on assets held for sale, a VMware GSA settlement charge and VMware litigation and other contingencies were excluded. A reconciliation of our GAAP to non-GAAP results can be found in Exhibit A to this Proxy Statement.
**
For purposes of calculating achievement of the EMC Information Infrastructure operating income target, amounts relating to corporate reconciling items, VMware operating income and Pivotal operating expense were excluded. A reconciliation of EMC consolidated operating income to EMC Information Infrastructure operating income can be found in Exhibit A to this Proxy Statement.

The Named Executive Officers were not assigned second-half financial goals under the Executive MBO because the Compensation Committee determined that the Named Executive Officers were adequately incented to drive financial performance through their participation in other cash and equity incentive plans.
Individual Goals
Executive Officer
Description
Joseph M. Tucci
l Continue development of long-term strategy for federation
l Optimize alignment and cooperation among federation companies
l Drive key Pivotal business initiatives
l Focus on CEO succession planning
Zane C. Rowe
l Continue development of long-term strategy for federation
l Optimize alignment and cooperation among federation companies
l Focus on federation capital structure and allocation
l Strengthen investor relations program
l Sponsor new customer accounts
David I. Goulden
l Harmonize and coordinate strategic business initiatives
l Lead go-to-market strategy for new EMC Information Infrastructure business segments
l Execute on talent management initiatives
l Focus on customer accounts
Jeremy Burton
l Drive product launches and related initiatives
l Continue development of go-forward product strategy
Howard D. Elias
l Drive supply chain integration efforts
l Execute on talent management initiatives
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.


46



Compensation Discussion and Analysis (continued)

Overall, in 2015, the Named Executive Officers’ achievement of their respective goals ranged from 71% to 86%. The annual target bonus opportunities and actual payouts to the Named Executive Officers under the 2015 Executive MBO are set forth below:
Name
Executive MBO
Target
($)
Actual
($)
Joseph M. Tucci
360,000
255,582
Zane C. Rowe
187,500
137,803
David I. Goulden
287,500
244,577
Jeremy Burton
200,000
172,140
Howard D. Elias
200,000
172,140
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 equity 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 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 similarly situated executives internally and externally.
Treatment of Equity Awards upon Consummation of the Merger


With limited exceptions (discussed below), in connection with the consummation of the Merger, all outstanding EMC equity awards will become fully vested (with performance awards vesting at the target level of performance) and, where applicable, exercised, and each holder will become entitled to receive the merger consideration with respect to the shares of EMC common stock subject to each award (net of shares withheld for exercise price and tax withholding obligations) upon consummation of the Merger in the same manner as other EMC shareholders.

Pursuant to the terms of the merger agreement, individual award recipients may agree that the vesting of their outstanding equity awards may not fully accelerate in connection with the Merger, but no such agreements are in effect with any of the Named Executive Officers as of the date of this Proxy Statement. In addition, EMC may grant equity awards prior to the consummation of the Merger, which, by their terms, may not fully accelerate in connection with the Merger, but no such awards have been made to any of the Named Executive Officers as of the date of this Proxy Statement.

The discussion in this Compensation Discussion and Analysis with respect to the design and vesting terms of outstanding equity awards is subject to the vesting treatment described above upon consummation of the Merger. For more information on the Merger, please see “Summary Information” beginning on page 1 of this Proxy Statement.


47



Compensation Discussion and Analysis (continued)

2015 Equity Award Program

In designing the equity program for our executive leadership team each year, the Compensation Committee considers marketplace trends in incentive plan design and feedback received from our shareholder engagement. In 2014, the Compensation Committee changed the design of the equity program for our executive leadership team to:

establish multi-year performance goals to incent long-term performance; and
add a relative TSR metric to provide strong alignment with shareholder interests.

For 2015, the Compensation Committee determined it was appropriate to continue with the 2014 plan design. Accordingly, the Compensation Committee granted our Named Executive Officers a mix of performance stock unit awards and time-based stock unit awards in 2015, as described below. The number of performance-based and time-based stock unit awards granted to the Named Executive Officers is set forth below:
Name
February 2015
Performance Awards*
(#)
February 2015
Time-Based Awards
(#)
July 2015
Time-Based Awards
(#)
Joseph M. Tucci
176,212
117,475
0
Zane C. Rowe
110,134
73,422
0
David I. Goulden
176,212
117,475
0
Jeremy Burton
110,134
73,422
74,963
Howard D. Elias
110,134
73,422
74,963
*
Reflects target number of performance awards.
2015 Performance Stock Units

The performance stock units granted to the Named Executive Officers in February 2015 are designed to vest in 2018 only if the Company achieves specific three-year cumulative non-GAAP EPS, revenue and relative TSR metrics, subject to the treatment described above in the event of the earlier consummation of the Merger. We refer to these three-year performance awards as the “2015 LTIP stock units.”

As described below, the EPS, revenue and relative TSR goal components of the 2015 LTIP stock units are weighted 45%, 30% and 25%, respectively.

Each of the EPS and revenue components of the 2015 LTIP stock units are designed to vest if EMC achieves greater than the threshold level of the cumulative goal for such component over fiscal years 2015 through 2017. 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 over time will lead to greater long-term shareholder value. EPS is calculated on a non-GAAP basis.

The TSR component of the 2015 LTIP stock units is designed to vest if EMC achieves at least a threshold level of TSR over fiscal years 2015 through 2017 relative to the S&P 500 Technology Index. The Compensation Committee selected a relative 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 compared 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.

48



Compensation Discussion and Analysis (continued)

Subject to the treatment described above in the event of the earlier consummation of the Merger, the vesting and payouts of the 2015 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 funding slopes and a range (or “collar”) for achieving EPS and revenue performance targets in recognition of the difficulty in setting long-term goals within a rapidly transforming IT market. In connection with selecting these design features, the Compensation Committee’s compensation consultant provided the Compensation Committee assistance in reviewing peer practices and market trends for incentive plan design and the probability of achieving target performance.

Subject to the treatment described above in the event of the earlier consummation of the Merger, if actual results fail to reach or exceed the threshold levels of performance for any of the EPS, revenue and/or relative TSR performance metrics set forth above, the number of 2015 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 2015 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. The EPS and revenue goals were set, in part, in consideration of historical trends in our product growth rates and margins, industry projections for our addressable market, input from leaders of our business units across the federation on long-term expectations, and capital allocation strategies. The actual level of achievement will depend on EMC’s performance through 2017, subject to the treatment described above in the event of the earlier consummation of the Merger. If the Merger is not consummated, EMC will provide retrospective disclosure regarding the three-year cumulative EPS and revenue targets in 2018.

For more information on the treatment of outstanding equity awards upon consummation of the Merger, please see “Treatment of Equity Awards upon Consummation of the Merger” on page 47 of this Proxy Statement.
2015 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 the performance stock units described above, our Named Executive Officers were granted time-based stock units in February 2015. Subject to the treatment described above in the event of the earlier consummation of the Merger, the time-based stock units granted in February 2015 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.

In July 2015, the Compensation Committee granted each of Messrs. Burton and Elias 74,963 time-based stock units. Subject to the treatment described above in the event of the earlier consummation of the Merger, these stock units vest at the rate of 50% per year on each of the first two anniversaries of the grant date, subject to the executive’s continued employment with EMC. The Compensation Committee determined that these awards were appropriate in recognition of their outstanding performance and after further consideration of the equity compensation opportunities that may be afforded to similarly situated executives internally and externally.

49



Compensation Discussion and Analysis (continued)

For more information on the treatment of outstanding equity awards upon consummation of the Merger, please see “Treatment of Equity Awards upon Consummation of the Merger” on page 47 of this Proxy Statement.
Pre-2015 Performance-Based Awards
2014 Performance Stock Units

As more fully described in the Proxy Statement for our 2015 Annual Meeting of Shareholders, in February 2014, the Compensation Committee granted three-year performance-based restricted stock units to EMC’s executive leadership team, including the Named Executive Officers (other than Mr. Rowe, whose employment with EMC commenced in October 2014). We refer to these grants as the “2014 LTIP stock units.” The 2014 LTIP stock units have a similar plan design as the 2015 LTIP stock units described above, except the 2014 LTIP stock units will vest based on performance over fiscal years 2014 through 2016, subject to the treatment described above in the event of the earlier consummation of the Merger.

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. The actual level of achievement will depend on EMC’s performance through 2016, subject to the treatment described above in the event of the earlier consummation of the Merger. If the Merger is not consummated, EMC will provide retrospective disclosure regarding the three-year cumulative EPS and revenue targets in 2017.

For more information on the treatment of outstanding equity awards upon consummation of the Merger, please see “Treatment of Equity Awards upon Consummation of the Merger” on page 47 of this Proxy Statement.
2012 Long-Term Incentive Plan Awards

As more fully described in the Proxy Statement for our 2013 Annual Meeting of Shareholders, in August 2012, the Compensation Committee granted three-year performance-based restricted stock units to select members of EMC’s senior management team, including Mr. Burton. We refer to these grants as the “2012 LTIP stock units.”

The Compensation Committee set a three-year cumulative revenue target of $79.2 billion for fiscal years 2013 through 2015 to be eligible for 100% vesting of the 2012 LTIP stock units, with a lesser percentage of 2012 LTIP stock units becoming eligible to vest for revenue achievement below target, but at or above a threshold of $72.0 billion.

Since the 2012 LTIP stock unit awards were incremental to the participating executives’ annual compensation, the Compensation Committee set a rigorous cumulative revenue target to incent sustained growth. IT spending growth over the past three years was significantly slower than the Compensation Committee expected when the three-year cumulative revenue target was established in December 2012. However, our actual three-year cumulative revenue ($72.37 billion) was above the threshold level of achievement.

Accordingly, the Compensation Committee determined that 62.6% of the 2012 LTIP stock units for Mr. Burton will vest in two equal installments, the first of which vested in February 2016. Subject to the treatment described above in the event of the earlier consummation of the Merger, the second installment will vest in February 2017, subject to Mr. Burton’s continued employment with EMC. The remaining 37.4% of the 2012 LTIP stock units did not vest and were forfeited.

For more information on the treatment of outstanding equity awards upon consummation of the Merger, please see “Treatment of Equity Awards upon Consummation of the Merger” on page 47 of this Proxy Statement.


50



Compensation Discussion and Analysis (continued)

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 2015, whether or not paid, are disclosed in the Summary Compensation Table as “All Other Compensation” on page 57 of this Proxy Statement.
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. The grant date for such awards is generally the date of the meeting (if a business day) or the next business day (if the meeting is not held on a business day), however, if the meeting is held during the “quiet period” preceding our earnings announcement, the grant date is generally the first business day that the “quiet period” ends. The exercise price for stock options is always the closing price of our common stock on the grant date. 
Retirement and Deferred Compensation Benefits

EMC does not provide the Named Executive Officers with a defined benefit pension plan, any supplemental executive retirement plans, or retiree health benefits. EMC employees, including the Named Executive Officers, may participate in a 401(k) plan. The 401(k) plan is provided to U.S. 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 $6,000 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 65 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.

Limited tax and financial planning services, executive physicals and temporary housing allowances are provided because the Compensation Committee believes they allow the Named Executive Officers to focus more of their time and

51



Compensation Discussion and Analysis (continued)

attention on their employment, promote the well-being of the Named Executive Officers, and facilitate attracting top talent and geographic relocation, respectively.

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.

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 59 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
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 (which would include the Merger) 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 66 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.

52



Compensation Discussion and Analysis (continued)

In addition, by not providing cash 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.

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.
Certain Equity Awards

The significant majority of the equity awards held by our executive leadership team, including the Named Executive Officers, are designed to provide for accelerated vesting on a double trigger basis in connection with a change in control and a qualifying termination, consistent with EMC’s change in control agreements described above. However, the 2014 LTIP stock units will vest in full upon consummation of a change in control, as described in more detail under “Compensation of Executive Officers - Potential Payments upon Termination or Change in Control” beginning on page 66 of this Proxy Statement. In February 2015, the Compensation Committee changed the design of the long-term performance awards going forward to ensure that they would be treated in accordance with EMC’s change in control agreements described above. Accordingly, the 2015 LTIP stock units are designed to provide for accelerated vesting on a double trigger basis in connection with a change in control and a qualifying termination.

Notwithstanding the terms of the change in control agreements and equity awards described above to the contrary, with limited exceptions, vesting of all outstanding equity awards will accelerate in connection with the consummation of the Merger. For more information on the treatment of outstanding equity awards upon consummation of the Merger, please see “Treatment of Equity Awards upon Consummation of the Merger” on page 47 of this Proxy Statement.

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 66 of this Proxy Statement.
Other Arrangements

Except in limited circumstances, EMC typically does not enter into employment agreements.

In 2012, the Company entered into an employment arrangement with Mr. Tucci under which he was entitled to severance benefits upon termination of employment, other than in connection with a change in control. In February 2015, the arrangement expired.

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 66 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

53



Compensation Discussion and Analysis (continued)

general philosophy of maintaining flexibility in designing our programs, all of the performance equity awards granted to the Named Executive Officers in 2015 are designed with the intention 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.
Stock Ownership Guidelines

To align the interests of our executive leadership team, including the Named Executive Officers, with those of our shareholders, we established stock ownership guidelines to ensure that they hold a significant equity interest in EMC. We have had stock ownership guidelines in place for many years.

In July 2015, the Compensation Committee revised the executive stock ownership guidelines to align more closely with prevailing market practice. The new stock ownership guidelines require each member of the executive leadership team to own a fixed number of shares, which is calculated based on a multiple of each executive’s annual base salary. While executives are accumulating shares to reach the applicable ownership guideline, they are required to hold at least 40% of the net shares they receive from stock option exercises or the vesting of restricted stock awards until the ownership guideline is met. The stock ownership guidelines for the Named Executive Officers currently in office are set forth below:
Name
Multiple of Base Salary
Stock Ownership Guideline
Joseph M. Tucci
10x
374,532
David I. Goulden
6x
191,011
Jeremy Burton
3x
89,888
Howard D. Elias
3x
89,888
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 March 1, 2016, all of the Named Executive Officers currently in office are in compliance with these guidelines.
Internal Pay Equity

Messrs. Tucci and Goulden are provided with a greater compensation opportunity than our other Named Executive Officers. As Chairman and Chief Executive Officer, Mr. Tucci has primary oversight for the overall corporate performance of the federation, including the continued evolution and development of our vision and strategic direction. As Chief Executive Officer, EMC Information Infrastructure, Mr. Goulden has primary oversight for the performance of the EMC Information Infrastructure business. In addition, Messrs. Tucci and Goulden are responsible for 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 Messrs. Tucci’s and Goulden’s compensation levels, the Compensation Committee also considered their respective experience as proven leaders 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.


54



Compensation Discussion and Analysis (continued)

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.
Role of Compensation Consultant

Retention. The Compensation Committee is directly responsible for the appointment, compensation and oversight of its compensation consultant. In 2015, 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.

Independence. 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.

Services. During 2015, Towers Watson assisted the Compensation Committee with several matters, including, among other things, performing pay-for-performance analyses, and reviewing executive compensation practices, trends and competitive practices, and change in control and other termination scenarios.

Pre-Approval Policy. The Compensation Committee has a policy that provides that its compensation consultant will only provide services to the Compensation Committee and will not provide any other services to EMC, unless such services are pre-approved by the Compensation Committee. For 2015, 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*
($)
2015
155,157
0
40,752
2014
210,915
0
47,616
*
The amounts reflect the fees associated with EMC’s purchase from Towers Watson of global broad-based surveys.

Willis Towers Watson. Effective January 4, 2016, Towers Watson merged with Willis Group Holdings plc (“Willis”) to form Willis Towers Watson plc. EMC management has historically engaged Willis to perform a variety of benefits consulting and brokerage services, and continues to engage Willis Towers Watson to perform these services. Following the merger of Towers Watson and Willis, the Compensation Committee again assessed the independence of the combined companies based on the factors described above and determined that Willis Towers Watson’s continued service to the Compensation Committee would not raise any conflicts of interest.

55



Compensation Discussion and Analysis (continued)

Compensation Peer Group

The Compensation Committee, with the assistance of its compensation consultant, reviews compensation from published technology industry surveys and from EMC’s compensation 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.

EMC’s 2015 compensation peer group consisted of the following 15 companies:
  Accenture plc
  eBay Inc.
  NetApp, Inc.
  Adobe Systems Incorporated
  Hewlett-Packard Company
  Oracle Corporation
  CA, Inc.
 Intel Corporation
  Seagate Technology
  Cisco Systems, Inc.
 International Business Machines Corporation
 Symantec Corporation
  Computer Sciences Corporation
 Microsoft Corporation
 Xerox Corporation
To select the compensation peer group companies, we used the three-step process described below.
Step
Screen
Rationale
1
U.S.-based publicly traded and industry-related companies, including companies in the following industries:
l  Computer Hardware, Services, Software & Storage
l  Office Supplies & Equipment
l  Computer Communications
l  Semiconductors
l Privately-held or recently acquired companies are eliminated
l Only publicly-traded U.S. companies are required to disclose information on executive compensation pay levels and practices
l Companies headquartered outside the U.S. are eliminated due to potential differences in executive pay structure and levels
2
Revenue and market capitalization
l .25X to 4X that of EMC’s revenue
l .25X to 4X that of EMC’s market capitalization
l Companies not comparable in size to EMC are eliminated due to differences in pay levels
3
Business and talent overlap
l Companies to which EMC business segments are aligned
l Companies from which EMC recruits and to which it loses talent
l Companies with a low degree of business overlap are eliminated

Consideration of 2015 Advisory Vote on Executive Compensation


At our 2015 Annual Meeting of Shareholders, our shareholders expressed strong support for our executive compensation program, with over 92% of votes cast voting in favor of the proposal. 

When designing our 2016 executive compensation program, the Compensation Committee considered, among other things:  the 2015 “say-on-pay” voting results; evolving compensation practices; our financial and operational performance; and the pending Merger.  After careful consideration, the 2015 “say on pay” voting results did not prompt the Compensation Committee to make changes to the design of our executive compensation program.


56


COMPENSATION OF EXECUTIVE OFFICERS

Summary Compensation Table

The table below summarizes the compensation information for the Named Executive Officers for the fiscal years ended December 31, 2013, 2014 and 2015.

The amounts shown in the Stock Awards and Option Awards columns reflect the grant date fair value of equity awards for 2015 and prior years, not the actual amounts paid to or that may be realized by the Named Executive Officers.
Name and
Principal
Position
Year
Salary
($)
Bonus
($)
Stock
Awards1
($)
Option
Awards1
($)
Non-Equity Incentive Plan Compensation2
($)
Change in Pension
Value and Nonqualified Deferred Compensation Earnings
($)
All Other Compensation3
($)
Total
($)
Joseph M. Tucci
Chairman and Chief Executive Officer
2015
1,000,000
0
7,942,3244
0
1,144,4225
0
320,964
10,407,710
2014
1,000,000
0
8,415,112
0
1,307,021
0
481,186
11,203,318
2013
1,000,000
0
9,426,404
650,417
1,260,058
0
309,079
12,645,957
Zane C. Rowe
Former Executive Vice President and Chief Financial Officer
2015
750,000
0
4,963,9994
0
600,7416
0
195,373
6,510,113
2014
167,308
300,000
6,000,019
0
174,686
0
54,350
6,696,362
David I. Goulden
Chief Executive Officer, EMC Information Infrastructure
2015
850,000
0
7,942,3244
0
954,4157
0
103,051
9,849,790
2014
850,000
0
8,415,112
0
1,075,513
0
190,632
10,531,257
2013
850,000
0
6,122,900
330,759
1,006,296
0
122,621
8,432,576
Jeremy Burton
President, Products and Marketing
2015
800,000
0
6,964,0128
0
665,9409
0
86,626
8,516,578
2014
768,750
0
5,259,464
0
717,035
0
158,236
6,903,485
2013
675,000
0
3,926,573
191,107
590,652
0
92,886
5,476,218
Howard D. Elias
President and Chief Operating Officer, Global Enterprise Services
2015
781,923
0
6,964,0128
0
665,9409
0
84,644
8,496,519
2014
750,000
0
5,259,464
0
746,183
0
178,839
6,934,486
2013
750,000
0
4,209,625
235,209
700,032
0
136,194
6,031,061
1  
Amounts represent the aggregate grant date fair value for equity awards granted in 2015, 2014 and 2013 in accordance with FASB ASC Topic 718. Performance-based equity awards granted to the Named Executive Officers assume target shares issued. The assumptions used to estimate the fair value of stock option awards in 2013 were as follows:  (a) stock price volatility of 32.76%; (b) risk-free interest rate of 1.01%; (c) no dividend yield; and (d) expected term of 5.5 years. Consistent with FASB ASC Topic 718, EMC uses a Monte Carlo simulation model to value market-based stock awards, i.e., for performance-based equity awards tied to EMC’s relative total shareholder return. This model estimates the fair value of the award for financial reporting purposes. The assumptions used in this model for the 2015 awards were as follows: (a) stock price volatility of 22.73% for EMC and a median stock price volatility of 24.94% for the components of the S&P 500 Technology Index; (b) risk-free interest rate of 1.01%; (c) correlation coefficients based upon the price data used to calculate the historical volatilities; and (d) no dividend yield assumption given that total shareholder return is calculated assuming reinvestment of dividends. Based on the performance goals and these assumptions, the market-based performance equity awards issued in 2015 were valued using the Monte Carlo model at $30.22 per share. The assumptions used in this model for the 2014 awards were as follows: (a) stock price volatility of 26.82% for

57



Compensation of Executive Officers (continued)

EMC and a median stock price volatility of 29.17% for the components of the S&P 500 Technology Index; (b) risk-free interest rate of 0.63%; (c) correlation coefficients based upon the price data used to calculate the historical volatilities; and (d) no dividend yield assumption given that total shareholder return is calculated assuming reinvestment of dividends. Based on the performance goals and these assumptions, the market-based performance equity awards issued in 2014 were valued using the Monte Carlo model at $32.14 per share. Prior to 2014, we historically granted performance-based equity awards in the year prior to the applicable performance year, and approved the specific performance goals for such awards at a later date, at which time the awards were given a grant date fair value for accounting purposes. Because we are required to disclose compensation in the table in accordance with applicable accounting rules, the value of the performance-based equity awards granted to our Named Executive Officers is reflected in the table as compensation in the year the specific performance goals are approved, which may or may not be the same year the awards were granted. In 2014, the performance-based equity awards made to the Named Executive Officers were granted and valued on the same date. In 2015, we granted performance-based equity awards to the Named Executive Officers in February 2015, and approved the specific performance goals for such awards in March 2015, at which time the awards were given a grant date fair value for accounting purposes.
2  
Amounts include incentive compensation earned under EMC’s cash bonus plans, which are described on pages 43 to 47 of this Proxy Statement. Also includes amounts earned by Mr. Goulden but deferred under EMC’s Deferred Compensation Retirement Plan.
3  
Please see the “All Other Compensation Table” below.
4  
Amounts represent the aggregate grant date fair values of the performance-based equity awards granted in February 2015, for which specific performance goals were approved in March 2015, and the time-based equity awards granted in February 2015. Please see the “Grant Date Fair Value of Stock Awards” column of the Grants of Plan-Based Awards table on page 60 of this Proxy Statement for the grant date fair values of the performance-based equity awards granted to each of Messrs. Tucci, Rowe and Goulden in 2015, assuming target performance. The grant date values of the performance-based equity awards granted to each of Messrs. Tucci, Rowe and Goulden in 2015, assuming the highest level of performance, are as follows: Mr. Tucci, $8,153,329; Mr. Rowe, $5,095,889; and Mr. Goulden, $8,153,329.
5 
Amount represents payments of $888,840 pursuant to the 2015 Corporate Incentive Plan and $255,582 pursuant to the 2015 Executive MBO.
6  
Amount represents payments of $462,938 pursuant to the 2015 Corporate Incentive Plan and $137,803 pursuant to the 2015 Executive MBO.
7
Amount represents payments of $709,838 pursuant to the 2015 Corporate Incentive Plan and $244,577 pursuant to the 2015 Executive MBO.
8  
Amounts represent the aggregate grant date fair values of the performance-based equity awards granted in February 2015, for which specific performance goals were approved in March 2015, and the time-based equity awards granted in February 2015 and July 2015. Please see the “Grant Date Fair Value of Stock Awards” column of the Grants of Plan-Based Awards table on page 60 of this Proxy Statement for the grant date fair values of the performance-based equity awards granted to each of Messrs. Burton and Elias in 2015, assuming target performance. The grant date value of the performance-based equity awards granted to Messrs. Burton and Elias in 2015, assuming the highest level of performance, is $5,095,889 for each of Messrs. Burton and Elias.
9  
Amount represents payments of $493,800 pursuant to the 2015 Corporate Incentive Plan and $172,140 pursuant to the 2015 Executive MBO.
 

58



Compensation of Executive Officers (continued)

All Other Compensation Table

The following table summarizes the information included in the All Other Compensation column in the Summary Compensation Table for the fiscal year ended December 31, 2015.
Name
Air
Travel1
($)
Tax and
Financial Planning
($)
Housing Allowance ($)
Matching
401(k)
Plan Contributions2
($)
Dividend Equivalents3
($)
Other
($)

Total
($)
Joseph M. Tucci
218,274
15,000
0
6,000
81,690
0
320,964
Zane C. Rowe
0
8,923
180,4504
6,000
0
0
195,373
David I. Goulden
9,004
12,000
0
6,000
66,107
9,9405
103,051
Jeremy Burton
0
0
0
6,000
76,738
3,8886
86,626
Howard D. Elias
0
12,000
0
6,000
58,624
8,0207
84,644
1 
All aircraft use by Named Executive Officers is documented and categorized as business, personal or mixed use depending on the purpose of a flight. The purpose of a flight is determined based upon a review and analysis of flight data, the Named Executive Officer’s itinerary and other relevant information. A flight is categorized as mixed use if it includes both personal and business aspects. Personal use of EMC-owned aircraft is valued based on the aggregate incremental cost to EMC determined on a per flight basis and includes the cost of fuel used, the hourly cost of aircraft maintenance, landing fees, trip-related hangar and parking costs, and crew-related costs. The incremental cost does not include “deadhead” flights (e.g., a return flight on which no passenger was on board); if included, the incremental cost would increase by $18,987 for Mr. Tucci and $1,639 for Mr. Goulden. (Deadhead flights are categorized as business or personal based on the purpose of the immediately preceding or following flight leg, as appropriate).
2  
Amounts represent a matching contribution on up to 6% of eligible compensation, up to a maximum of $6,000 per year, made under the EMC Corporation 401(k) Savings Plan for 2015.
3 
Amounts represent the value of dividend equivalents accrued in 2015, whether or not paid, on outstanding equity awards granted to the Named Executive Officer prior to July 2013 because such amounts were not factored into the grant date fair values of such awards.
4 
Amount represents a housing allowance and related fees paid as part of Mr. Rowe’s new hire package from 2014.
5  
Amount represents the cost of an annual executive physical of $3,642, the cost of spousal attendance at EMC events of $3,598 and a reimbursement under an EMC travel rebate program of $2,700.
6  
Amount represents the cost of an annual executive physical.
7  
Amount represents the cost of an annual executive physical of $4,314, the cost of spousal attendance at EMC events of $3,196 and sporting events of $510.



59



Compensation of Executive Officers (continued)

Grants of Plan-Based Awards

The following table sets forth information concerning non-equity incentive plan grants, equity incentive plan grants and all other stock awards granted to the Named Executive Officers in the fiscal year ended December 31, 2015. Our non-equity incentive plans consist of the cash bonus plans that are described on pages 43 to 47 of this Proxy Statement, our equity incentive plans consist of the performance stock unit awards that are described on pages 48 to 49 of this Proxy Statement and our other stock awards consist of the time-based stock unit awards that are described on pages 49 to 50 of this Proxy Statement. There can be no assurance that the grant date fair value of stock awards will ever be realized.

Notwithstanding the vesting terms described in the footnotes below to the contrary, with limited exceptions, the vesting of all outstanding equity awards will accelerate in connection with the Merger.  For more information on the treatment of outstanding equity awards upon consummation of the Merger, please see “Treatment of Equity Awards upon Consummation of the Merger” on page 47 of this Proxy Statement.
Name
Type of Award1
Grant
Date
Award
Date2
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
Estimated Future Payouts
Under Equity Incentive
Plan Awards
All Other
Stock
Awards:
Number of Shares of
Stock
or Units
(#)
Grant
Date
Fair Value
of Stock
Awards5
($)
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Joseph M. Tucci
CIP
N/A
N/A
540,000
1,080,000
2,160,0003
0
0
0
0
0
MBO
N/A
N/A
0
360,000
360,0004
0
0
0
0
0
LTIP
3/26/2015
2/10/2015
0
0
0
22,027
176,212
352,4246
0
4,742,305
RSU
2/10/2015
N/A
0
0
0
0
0
0
117,4757
3,200,019
Zane C.
Rowe
CIP
N/A
N/A
281,250
562,500
1,125,0003
0
0
0
0
0
MBO
N/A
N/A
0
187,500
187,5004
0
0
0
0
0
LTIP
3/26/2015
2/10/2015
0
0
0
13,767
110,134
220,2686
0
2,963,983
RSU
2/10/2015
N/A
0
0
0
0