Tucci's Touch of Gold

Life is twice as nice for Joe Tucci these days. When the EMC Corp. (NYSE: EMC) CEO refers to the uptick in technology spending he expects this year, he might be referring to his own bonus check.

According to a proxy filed today with the SEC, EMC more than doubled Tuccis incentive bonus last year to $1.71 million from $675,000 in 2002. His 2003 base salary remained the same at $1 million. (Tucci's not to be confused with the actor, Stanley Tucci.)

Not a bad year for a CEO. For instance, last month Hewlett-Packard Co. (NYSE: HPQ) set Carly Fiorina’s bonus at $2.1 million on top of a $1.24 salary -- and that was a pay cut for her. (Carly's not to be confused with the singer, Carly Simon.)

But even with the hefty raise, it’s hard to say Tucci was overpaid, considering EMC turned a $496.1 million profit after losing money the two previous years (see EMC: Everything's 'Better'). Tucci certainly had his critics during EMC’s lean years, so why not cash in now?

“Is he one of the best CEOs on the planet? Probably not,” one financial analyst says. “But he’s doing better than some of his peers.”Others agree he deserves his compensation for weathering rough seas for two years after he replaced Michael Ruettgers as CEO in January 2001. (Ruettgers is not to be confused with the goldsmith, Quirinus Rütgers, son of Rütger Rütgers.)

“He was pretty maligned,” Punk Ziegel & Co. analyst Steve Berg remembers of Tucci’s early days at the helm. “Everybody loved Ruettgers, and he was the long-time CEO through the good times. So his bonus seems reasonable to me. Granted it’s a lot of money, but he’s paid on performance. He said he was going to get software, and he got software. Their new product cycles are shorter, and they kept their speeds and feeds faster.”

EMC last year spent $3.65 billion on software companies Legato, Documentum, and VMware (see EMC Swings Into Software Big Leagues and EMC Gobbles VMware). It also held the external RAID storage market share and took over NAS market share leadership from Network Appliance Inc. (Nasdaq: NTAP) (see Storage Sales Soar Entering '04).

“EMC was in rough shape,” Susquehanna Financial Group analyst Kaushik Roy says of pre-2003. “I would give him credit. 2003 was a turning year in the right direction.”

Tucci’s bonus was based mostly on profitability and partly on achievement of strategic goals. EMC also gave Tucci a restricted stock grant worth $3.7 million and the option to purchase 1.12 million shares vested over five years at an exercise price of $13.18.EMC also gave chairman Ruettgers a $1.4 million bonus in 2003, up from $650,000 in 2002. His 2003 base salary decreased to $850,000 from $1 million in 2002. Ruettgers received a restricted stock grant worth $1.8 million.

— Dave Raffo, Senior Editor, Byte and Switch