Good Governance Helps EMC Compete

by Joe Tucci, EMC Chairman, President, and CEO

Governance plays a prominent role at EMC and has for a long time. Good governance helps us compete more effectively, sustain our success, and build long-term value for our shareholders.

Governance is only as strong as the board of directors behind it. At EMC, we are fortunate to have a highly experienced, well informed, and fully engaged board. To maintain a strong system of checks and balances, EMC’s board takes an active role in providing oversight and guidance to the company’s executive management team. This approach ensures that our company is pursuing a sound strategic direction and seeing all of the opportunities open to us.

EMC currently has 10 board members, eight of whom qualify as independent. All members of the board’s audit, compensation, and corporate governance and nominating committees are independent. And since January 2006, the board has operated with an independent lead director, whose significant responsibilities include working with the chairman to set the agenda for board meetings, presiding at executive sessions of the "non-management" board members, and overseeing performance evaluations of the board.

EMC’s corporate governance guidelines are comprehensive. They cover board member criteria and director responsibilities, lead director responsibilities, management succession planning, selection and evaluation of the CEO, director compensation, assessment of board performance, and more. These guidelines also include a majority voting policy for director elections. This policy requires any director who receives more "withheld" votes than "for" votes to promptly tender his or her resignation.

Corporate governance is a wide-ranging topic. But for EMC its essence is to promote accountability for performance and results and to provide a transparent view into the way EMC operates and makes decisions.

At the 2007 Annual Meeting, EMC is submitting for shareholder approval a proposal that will require each board member to stand for election annually. This requirement will give our shareholders the opportunity to register their views each year on the overall performance of the board and on each member’s individual performance.

In addition, as disclosed in our 2007 Proxy Statement, the board’s compensation committee links a substantial portion of executive management’s compensation to the attainment of challenging quarterly, annual, and long-term goals related to revenue and profit growth

EMC’s board also has made it easy for investors and other stakeholders to communicate directly with non-management directors and the audit committee. The board is interested in the views of shareholders and other stakeholders and makes a serious effort to provide responses that are clear, candid, and timely.

We strive to give investors a clear and complete picture of EMC’s financial performance as well as our approach to executive compensation. For example, our quarterly earnings releases provide detailed income, balance sheet, and cash flow statements and analyses of other items relevant to investors. Our efforts here have received high marks from those in the investment community who rely on this information to better understand EMC’s business and evaluate the company’s prospects for growth.

In addition, EMC announced its intention in February 2007 to conduct an initial public offering (IPO) of approximately 10 percent of VMware Inc., an EMC subsidiary that is the global leader in virtualization software for industry—standard desktops and servers. We believe this IPO will provide improved visibility into VMware’s performance and growth relative to the market and unlock more of VMware’s tremendous value for EMC shareholders-all while maintaining VMware and its phenomenal talent, technology, and growth trajectory as an EMC subsidiary.

As for executive compensation, our 2007 Proxy Statement contains an in-depth discussion and analysis of EMC’s executive compensation program, which is shaped by our enduring belief in holding people accountable for results.

Good governance increases EMC’s competitive power, enhances the company’s performance, and improves our ability to create more value for shareholders. And therefore EMC will strive to improve its governance continuously.