This excerpt taken from the EMC DEF 14A filed Mar 11, 2005.
For 2004, we designed a compensation package for Mr. Tucci with a mix of fixed and at-risk compensation and short and long-term incentives. As discussed in more detail below, we tailored each compensation element of his overall package to ensure that a substantial majority of his compensation was at-risk and tied to long-term performance.
In determining Mr. Tuccis base salary for 2004, we considered EMCs financial performance, Mr. Tuccis individual performance and base salaries of chief executive officers of companies in the Compensation Peer Group. We decided to maintain Mr. Tuccis base salary for 2004 at $1.0 million, the same as the 2003 level, because we believed that his salary was appropriate for the mix of compensation elements in his 2004 pay package and that such salary remained competitive.
For generally the same reasons, we decided to maintain Mr. Tuccis 2004 total target cash bonus amount at $1.44 million, the same as his 2003 amount. For 2004, $1.08 million, or 75%, of Mr. Tuccis total cash bonus target amount was from EMC profitability bonus opportunities, with the remaining $360,000, or 25%, from other bonus opportunities. Mr. Tucci was paid an aggregate of $1.88 million in cash bonuses, which exceeded his total cash bonus target amount. The amounts paid over Mr. Tuccis target level resulted from his profitability bonuses, which, as discussed above, exceeded their target amounts, and a discretionary bonus of $250,000, or 10.3% of his 2004 total target cash compensation. We awarded the discretionary bonus based on Mr. Tuccis outstanding leadership and individual performance during the year.
In October 2004, we granted Mr. Tucci an award of 340,000 shares of restricted stock. Such shares are subject to certain restrictions on transfer and forfeiture which lapse on the fifth anniversary of the grant date. In the event certain EMC earnings per share targets are met, these restrictions will lapse ratably over three years from the grant date. In addition, we also granted Mr. Tucci a stock option to purchase 1,120,000 shares, with an exercise price equal to $12.85, the closing price of EMC Common Stock on the grant date. This option becomes exercisable in annual increments of 20% over a five-year period and terminates after ten years. While we did not raise Mr. Tuccis 2004 total target cash compensation, as discussed above, we increased his long-term equity element with an additional 60,000 shares of restricted stock in our October 2004 annual grant compared to the October 2003 annual grant. Our objective in changing his 2004 long-term equity element was to increase the portion of Mr. Tuccis total compensation package that was at-risk and linked to long-term and annual EMC performance and to promote his retention.
We also reviewed the perquisites and other compensation paid to Mr. Tucci in 2004 and found these amounts to be reasonable and consistent with our executive compensation objectives.