January 23, 2002
EMC Maintains Firewall on Its Board Diversity Efforts
by William Baue
The computer hard drive giant continues to resist sharing its board diversity initiatives with
investors, and now is petitioning the SEC to omit socially responsible shareowner resolutions from
On the Friday before the holiday observing Dr. Martin Luther King's birth, Connecticut State
Treasurer Denise L. Nappier announced her filing of a shareowner resolution urging
Massachusetts-based hardware and software manufacturer EMC (ticker: EMC) to diversify its
all-white, all-male board of trustees. Ms. Nappier, the nation's only African-American woman
elected to a state office, serves as the principal fiduciary for the state's $20 billion pension
fund, the Connecticut Retirement Plans and Trust Funds (CRPTF).
"[T]he dream of
equality remains elusive in this corporate boardroom," said Ms. Nappier. "Incredibly, EMC has
turned its back on women and minorities, and steadfastly denied them entrance. This disturbing
intransigence reminds us that even in a new century when technology and innovation dominate, the
struggle for equal opportunity must continue."
Two other resolutions were announced the
same day by a coalition of 20 investors with 2.7 million shares of EMC stock. Walden Asset Management co-sponsored one resolution
calling for EMC to create an independent board of directors, and another urging EMC to continue to
hold in-person annual shareowner meetings. CRPTF's diversity resolution asks EMC to make a greater
commitment to locating qualified women and/or minorities as board of director candidates, and to
report to shareowners on these efforts.
"We have a strong commitment to identifying
highly-qualified candidates, including women and minorities, for the EMC board," stated Mark
Fredrickson, vice president of corporate communications at EMC. "We don't think the resolutions
are necessary or productive, and we don't think they are in the shareholders best interest."
For many years, the EMC board included a woman-Maureen Egan, the wife of founder and former
chair Richard Egan. When the Bush administration appointed Mr. Egan Ambassador to Ireland this
fall, the board was left with two vacancies. On December 18, 2001, EMC appointed Windle Priem to
its board. Mr. Priem is independent of EMC management, but he is also a white male.
filed over 300 pages in legal briefs petitioning the U.S. Securities and Exchange Commission (SEC)
to omit all three resolutions from its proxy.
"The objections in the 300 pages to the
three resolutions are really without merit, they are clutching at straws," said Timothy Smith,
senior vice president at Walden. Mr. Smith illustrated his position by pointing to EMC's
definition of diversity.
"[T]he Directors do have diverse backgrounds," EMC said in its
legal statement to the SEC. "[T]he Directors range in age from 43 to 71 and previously held or
continue to hold positions at various businesses across a number of industries."
statement would be humorous if it wasn't so shockingly insensitive and out of touch with the trend
among corporations and major investors who value true diversity and independence on corporate
boards," said Mr. Smith.
According to a survey of the S&P 1500 conducted by the Investor
Responsibility Research Center (IRRC), the proportion of women on boards of directors rose from 8.9
percent in 1998 to 9.8 percent in 2001. The percentage of minority directors rose from 7.0 percent
to 8.1 percent during the same period.
One position remains open on EMC's board of
directors. The company is committed to filling the opening with someone independent of management,
according to Mr. Fredrickson.
"[EMC Executive Chairman] Mike [Ruettgers] and the board .
. . are considering candidates of [gender and racial] diversity in their search as well," said Mr.
Fredrickson. "But the first criterion is qualifications, and it will remain that way."
The diversity resolution recognizes EMC's record of promoting diversity in the workplace, and
asks the company to implement transparency by reporting on its efforts to enhance gender and racial
diversity on its board. EMC intends to oppose the resolution nevertheless.
"For a company
that specializes in information storage and retrieval, we are amazed that EMC is so resistant to
sharing information with concerned investors and addressing these policy changes," said Mr. Smith.