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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 its proxy.

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.

EMC 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."

"EMC's 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.


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