corning annual reports 2006

Corning 2006 Annual Report
& 2007 Proxy Statement

Possibilities

made

real

Corning is the world leader in specialty glass
and ceramics.

We create and make keystone components
that enable high-technology systems for
consumer electronics, mobile emissions
control, telecommunications and life
sciences.

Corning succeeds through sustained
investment in R&D, more than 150 years
of materials science and process engineering
knowledge, and a distinctive collaborative
culture.

To our shareholders:
Corning Incorporated had an outstand- The growth of the liquid crystal display
2006 HIGHLIGHTS
ing year in 2006. We delivered record (LCD) television market was a significant
results in net income and earnings per We continued to follow the consistent set factor in our profitability during 2006.
share and marked another year of of operating priorities that have guided us We were encouraged that LCD television
significant improvement in profitability. since 2002: penetration reached 22 percent of the
This performance would not have been world’s color television market by year-
possible without the continued focus of end. At the same time, average screen
I Protecting our financial health
our management and employees, and sizes continued to increase. However,
I Improving our profitability
the steady guidance of our Board of market dynamics brought a new challenge
I Investing in our future
Directors and senior leaders. Together, of seasonality to the complex LCD
I Always living our Values
we remain committed to our long-term television supply chain.
goal of another 150 years of innovation FINANCIAL HEALTH:
and independence. As a result, we experienced some market
Our financial health remains strong. In disruptions and corrections during the
Our strategy of growing through 2006, we strengthened our credit ratings year. Our customers in Asia built inven-
innovation, working toward balance with all three of the major rating agencies. tory in the first quarter, reduced produc-
and stability and living our Values We ended the year with approximately tion in the second quarter, and then
continues to be a winning formula for $3.2 billion in cash and short-term ramped back up in the third in anticipa-
Corning. We are confident that it will investments and $1.7 billion in total out- tion of consumer demand at year-end.
serve our shareholders well for many standing debt. For the second year in Our overall volume grew significantly
years to come. a row, we had more cash than debt. With year-over-year, but this seasonal market
these accomplishments, we believe we volatility made for a tough environment
In this report, we will review our are well-equipped to weather potential as these dynamics played out.
accomplishments from 2006 and our volatility in our businesses as we continue
expectations as we look ahead to 2007. to invest in our future. We also faced a tougher competitive
environment in 2006. We remain the
market leader, but our competitors have
IMPROVING PROFITABILITY:
improved their capabilities as well,
It was a banner year for earnings growth. resulting in additional pricing pressure.
We dramatically improved profitability. We expected this, and our ongoing cost-
Sales grew to $5.17 billion and gross reduction efforts are helping to offset
margins, at 44 percent, were the highest the effects. This will become increasingly
in our company’s history. We also achieved important as the business matures. In the
all-time records for net income, at $1.85 meantime, the market continues to grow,
billion, and for earnings per share, at $1.16. which means continued profitability for
Corning as the world’s leading supplier of
LCD glass.

In telecommunications, we’re encouraged We are committed to solving more of
INVESTING IN OUR FUTURE:
by Verizon’s fiber-to-the-premises plans those problems than ever before.
to extend their network to 3 million
We achieved important milestones in
additional homes every year through
all of our growth initiatives this year. We’ve set an ambitious goal: to double
2010. We’re also seeing broader industry
These developments show that our our historic rate of new-business creation
interest in optical networks that can carry
investments are firmly focused on the from two to four per decade. Over the
robust video downloads and high-speed
future and on what we do best — creating past year, we completed a corporate
data direct to the home. Our innovative
and making keystone components that technology strategy to achieve this goal.
cable, hardware and equipment products
enable high-technology systems. Here are And as we create new businesses in a wide
help make installation easier and more
a few examples: variety of markets, we will also help
cost-efficient for network providers, so we mitigate our inherent volatility as a tech-
expect to remain a leader in this market.
In display, we began supplying commercial nology company.
quantities of Generation 8 LCD sub-
In life sciences, we launched the Epic®
strates and became the lead supplier to We’re optimistic about our early-stage
system, a technology that can enable a
a major panel maker. We introduced innovation portfolio. We are moving
EAGLE XG™, a new LCD glass compo- pharmaceutical researcher to test up to ahead with synthetic green laser technol-
sition that is free of all heavy metals. It 40,000 potential drug compounds in a ogy, which ultimately could enable small
has been well-accepted by our customers single day. This system could dramatically mobile devices, such as cell phones, to
who value environmentally responsible reduce the drug discovery cycle which, project larger images. We are exploring
manufacturing. We were also the first until now, has often taken as long as chemical microreactor technology, which
company to announce plans to build 14 years. Early market response has has the potential to enable significant
an LCD finishing plant in China. We been positive, and we are encouraged by process innovation and cost reduction for
broke ground on that facility in Beijing in the long-term opportunities it represents the chemical processing industry.
November. for us.
These possibilities, and many more, make
In environmental, our diesel emissions- for some exciting years ahead for
LIVING OUR VALUES:
control products are making inroads Corning. Our board and senior manage-
in both the heavy-duty and light-duty Again in 2006, we remained true to our ment remain committed to sustained
markets. In heavy-duty, we have commit- Values: Quality, Integrity, Performance, investment in research and development,
ments from more than half of the U.S. Leadership, Innovation, Independence because we know this is the key to
engine makers to supply their emissions- and The Individual. Our Values are the doing what we do best — solving prob-
control products. The manufacturing guiding principles of our culture, and lems for our customers through global
capacity is in place to meet the ramp-up remain a great source of pride among innovation.
of that demand, which is likely to our employees throughout the world.
happen later in 2007. In light-duty
diesel, product development is on track, WHAT’S NEXT?
and our advanced cordierite products
continue to advance against the incum- Because we are committed to growth, we
bent silicon carbide technology. spend a great deal of time and energy on
our long-term innovation portfolio. We
know that the markets we serve today will
mature over time. So, we study global
market trends continuously to identify the
tough problems that our materials science
and process expertise can solve for cus-
tomers in the future.

THE YEAR AHEAD

You can expect us to follow a consistent
path in 2007.

We will continue to protect our financial
health, building on the significant
progress we have made over the past
year. We intend to generate strong cash
flow and maintain negative net debt. We
expect to improve our profitability, bolster
our ongoing focus on cost reductions,
and continue to protect our gross margins.
We will invest in the future, developing
new growth opportunities in display,
ramping up our diesel production,
extending our reach in telecommunica-
James R. Houghton and Wendell P. Weeks
tions, and enabling new methods of dis-
covering life-saving medicines. We will
continue to live our Values, just as we TRANSITIONS
always have.
Two years ago, Wendell P. Weeks assumed my responsibilities as chief exec-
We know that there will be ups and utive officer of Corning Incorporated. At the same time, Peter F. Volanakis
downs in our business. It’s always been succeeded Wendell as the company’s chief operating officer.
that way for Corning, and it always will
be. That’s why we’ve built our strategy In January, I announced that we would complete the leadership transition
around growth, balance and stability. that we began in 2005. Effective April 26, 2007, the day of our Annual
A sustained focus on this strategy, along Shareholders Meeting, the Board of Directors will elect Wendell to
with an unwavering commitment to become the company’s chairman, in addition to his responsibilities as CEO.
research and development, will keep Peter will assume the role of president, in addition to his role as COO.
Corning at the leading edge of specialty
glass and ceramics. That’s exactly where I have been delighted with the company’s achievements since Wendell and
we intend to be — today, tomorrow, and Peter took over as CEO and COO two years ago. With the full support and
for the next 150 years. engagement of the rest of the Management Committee and our entire
leadership team, they have led the company’s recovery. They have insisted
Sincerely, that Corning always remain true to its Values. The outstanding 2006
performance outlined in this report is clear evidence of the sound strategy
that these leaders have put into place — a strategy that will continue to
serve the company and its stakeholders well for many years.
James R. Houghton
Thank you very much for all your support since I returned to my active
Chairman
role at Corning in 2002. As we complete this leadership transition, you
may be assured that Corning remains in extremely capable hands, with the
entire organization working toward another 150 years of innovation and
independence.
Wendell P. Weeks
President and Chief Executive Officer James R. Houghton

FINANCIAL HIGHLIGHTS:
In millions, except per share amounts

2006 2005 2004) 2003) 2002)

Net sales $ 4,579
$ 5,174 $ 3,854) $ 3,090) $ 3,164)

Income (loss) from continuing operations (2,251) (280) (1,780)
1,855 585

Income from discontinued operations — — 20) — 478

Net income (loss) $
$ 1,855 585 $ (2,231) $ (280) $(1,302)

Income (loss) available to common shareholders* $
$ 1,855 585 $ (2,231) $ (280) $$(1,430)

Diluted earnings (loss) per common share

Continuing operations $ 0.38
$ 1.16 $ (1.62) $ (0.22) $ (1.85)

Discontinued operations — — —
0.01) 0.46)

Net income (loss) per common share $ 0.38
$ 1.16 $ (1.61) $ (0.22) $ (1.39)

* Net of preferred dividend requirements for Series C mandatory convertible preferred stock.

Table of Contents
Corning Incorporated
2007 Proxy Statement and 2006 Annual Report
Index

Page
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Business Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Management Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . 102
Quantitative and Qualitative Disclosures about Market Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Management’s Annual Report on Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . 127
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Consolidated Statements of Changes in Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
1. Summary of Significant Accounting Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
2. Discontinued Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
3. Restructuring, Impairment and Other Charges and (Credits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
4. Short-Term Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
5. Significant Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
6. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
7. Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
8. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
9. Property, Net of Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
10. Goodwill and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
11. Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
12. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
13. Employee Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
14. Commitments, Contingencies, and Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
15. Hedging Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
16. Shareholders’ Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
17. Earnings (Loss) Per Common Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
18. Share-based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
19. Operating Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
20. Subsequent Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
Valuation Accounts and Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Quarterly Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

Notice of 2006
Notice of 2007
Annual Meeting of Shareholders
and Proxy Statement
and Proxy Statement

2007 Proxy Materials
Notice of 2007
and Proxy Statement

Notice of Annual Meeting

To Shareholders of Corning Incorporated:

You are cordially invited to attend the Annual Meeting of Corning Incorporated which will be held in The
Corning Museum of Glass Auditorium, Corning, New York, on Thursday, April 26, 2007 at 11:00 o’clock
a.m. Eastern Standard Time. The principal business of the meeting will be:

(1) To elect five Directors for three year terms;
(2) To ratify the appointment of PricewaterhouseCoopers LLP as Corning’s independent auditors for the fiscal
year ending December 31, 2007;

(3) To consider a Shareholder Proposal described on page 53 in the accompanying Proxy Statement, if presented
at the meeting; and

(4) To transact such other business as may properly come before the meeting.

Your vote is important to us. Please vote by one of the following methods whether or not you plan to attend the
meeting:

• Via the internet.

• By telephone.

• By returning the enclosed proxy card (see instructions on proxy card).

By order of the Board of Directors.

Denise A. Hauselt
Secretary and Assistant General Counsel

One Riverfront Plaza
Corning, New York 14831

February 26, 2007

About the Meeting

Why Did You Send Me This Proxy Statement?

We sent you this proxy statement and the enclosed proxy card because our Board of Directors is soliciting your
proxy to vote at the 2007 Annual Meeting of Shareholders. This proxy statement summarizes information
concerning the matters to be presented at the meeting and related information that will help you make an informed
vote at the meeting. This proxy statement and the accompanying proxy card are first being mailed to shareholders
on or about March 13, 2007.

When Is The Annual Meeting?

The annual meeting will be held on Thursday, April 26, 2007, at 11:00 a.m., EST, at The Corning Museum of Glass
Auditorium, Corning, New York.

What Am I Voting On?

At the annual meeting, you will be voting:

• To elect five directors for three year terms;

• To ratify the appointment of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year
ending December 31, 2007;

• To consider a Shareholder Proposal described on page 53 of the Proxy Statement, if presented at the
meeting; and

• Any other matter, if any, as may properly come before the meeting and any adjournment or postponement
of the annual meeting.

How Do You Recommend That I Vote On These Items?

The Board of Directors recommends that you vote FOR each of the director nominees, FOR the ratification of
the Board’s appointment of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending
December 31, 2007 and AGAINST the Shareholder Proposal.

Who Is Entitled To Vote?

You may vote if you owned our common shares as of the close of business on February 26, 2007, the record date
for the annual meeting.

How Many Votes Do I Have?

You are entitled to one vote for each common share you own. As of the close of business on February 7, 2007, we
had 1,569,697,474 common shares outstanding. The shares held in our treasury are not considered outstanding and
will not be voted or considered present at the meeting.

How Do I Vote By Proxy Before The Meeting?

Before the meeting, registered shareholders may vote shares in one of the following three ways:

• By Internet at www.computershare.com/expressvote.

• By Telephone (from the United States and Canada only) at 1(800) 652-VOTE (8683).

• By mail by completing, signing, dating and returning the enclosed proxy card in the postage paid envelope
provided.

1


Please refer to the proxy card for further instructions on voting via the Internet and by Telephone.

Please use only one of the three ways to vote.

Please follow the directions on your proxy card carefully. If you hold shares in the name of a broker, your ability
to vote those shares by Telephone or via the Internet depends on the voting procedures used by your broker, as
explained below under the question “How Do I Vote If My Broker Holds My Shares In “Street Name”?” The New
York Business Corporation Law provides that a shareholder may appoint a proxy by electronic transmission, so we
believe that the Telephone and Internet voting procedures available to shareholders are valid and consistent with
the requirements of applicable law.

May I Vote My Shares In Person At The Meeting?

Yes. You may vote your shares at the meeting if you attend in person, even if you previously submitted a proxy
card or voted by Internet or Telephone. Whether or not you plan to attend the meeting, however, we encourage you
to vote your shares by proxy before the meeting.

May I Change My Mind After I Vote?

Yes. You may change your vote or revoke your proxy at any time before the polls close at the meeting. You may
change your vote by:

• signing another proxy card with a later date and returning it to Corning’s Corporate Secretary at One
Riverfront Plaza, Corning, NY 14831, prior to the meeting;

• voting again by Telephone or via the Internet prior to the meeting; or

• voting again at the meeting.

You also may revoke your proxy prior to the meeting without submitting any new vote by sending a written notice
that you are withdrawing your vote to our Corporate Secretary at the address listed above.

What Shares Are Included On My Proxy Card?

Your proxy card includes shares held in your own name and shares held in any Corning plan. You may vote these
shares by Internet, Telephone or mail, all as described on the enclosed proxy card.

How Do I Vote If I Participate In The Corning Investment Plan?

If you hold shares in the Corning Investment Plan, which includes shares held in the Corning Stock Fund in the
401(k) plan, these shares have been added to your other holdings on your proxy card. Your completed proxy card
serves as voting instructions to the trustee of the plan. You may direct the trustee how to vote your plan shares
by submitting your proxy vote for those shares, along with the rest of your shares, by Internet, Telephone or mail,
all as described on the enclosed proxy card. If you do not instruct the trustee how to vote, your plan shares will
be voted by the trustee in the same proportion that it votes shares in other plan accounts for which it did receive
timely voting instructions.

How Do I Vote If My Broker Holds My Shares In “Street Name”?

If your shares are held in a brokerage account in the name of your bank or broker (this is called “street name”),
those shares are not included in the total number of shares listed as owned by you on the enclosed proxy card.
Instead, your bank or broker will send you directions on how to vote those shares.

2

Will My Shares Held In Street Name Be Voted If I Do Not Provide My Proxy?

If your shares are held in the name of a brokerage firm, your shares might be voted even if you do not provide
the brokerage firm with voting instructions. Under the current rules of the New York Stock Exchange, on certain
“routine” matters, brokerage firms have the discretionary authority to vote shares for which their customers
do not provide voting instructions. The election of directors and the proposal to ratify the appointment of
PricewaterhouseCoopers LLP as our independent auditors are considered routine matters for this purpose,
assuming that no contest arises as to any of these matters. The shareholder proposal is not considered a routine
matter and your bank or broker will not be permitted to vote your shares unless proper voting instructions are
received from you.

What If I Return My Proxy Card Or Vote By Internet Or Phone But Do Not Specify How I Want To Vote?

If you sign and return your proxy card or complete the Internet or Telephone voting procedures, but do not specify
how you want to vote your shares, we will vote them as follows:

• FOR the election of each of the director nominees.

• FOR the approval ratifying the appointment of PricewaterhouseCoopers LLP as our independent auditors
for the fiscal year ending December 31, 2007.

• AGAINST the shareholder proposal.

If you participate in the Corning Investment Plan and do not submit timely voting instructions, the trustee of the
plan will vote the shares in your plan account in the same proportion that it votes shares in other plan accounts
for which it did receive timely voting instructions, as explained above under the question “How Do I Vote If I
Participate In The Corning Investment Plan?”

What Does It Mean If I Receive More Than One Proxy Card?

If you received more than one proxy card, you have multiple accounts with your brokers or our transfer agent.
Please vote all of these shares. We recommend that you contact your broker or our transfer agent to consolidate as
many accounts as possible under the same name and address. You may contact our transfer agent, Computershare
Investor Services, LLC, at 1-800-255-0461.

Who May Attend The Meeting?

The annual meeting is open to all holders of our common shares. To attend the meeting, you will need to register
upon arrival. We also may check for your name on our shareholders’ list and ask you to produce valid identification.
If your shares are held in street name by your broker or bank, you should bring your most recent brokerage account
statement or other evidence of your share ownership. If we cannot verify that you own Corning shares, it is
possible that you may not be admitted to the meeting.

May Shareholders Ask Questions At The Meeting?

Yes. Our representatives will answer your questions of general interest at the end of the meeting. In order to give a
greater number of shareholders the opportunity to ask questions, we may impose certain procedural requirements,
such as limiting repetitive or follow-up questions.

How Many Shares Must Be Present To Hold The Meeting?

In order for us to conduct our meeting, a majority of our outstanding common shares as of February 26, 2007, must
be present in person or by proxy at the meeting. This is called a quorum. Your shares are counted as present at the
meeting if you attend the meeting and vote in person or if you properly return a proxy by Internet, Telephone or
mail.

3


How Many Votes Are Needed To Elect Directors?

The director nominees receiving the highest number of “FOR” votes will be elected as directors. This number
is called a plurality. Consequently, shares that are not voted, because you marked your proxy card to withhold
authority for all or some nominees, or because you did not complete and return your proxy card, will have no
impact on the election of directors.

How Many Votes Are Needed To Ratify The Appointment Of PricewaterhouseCoopers LLP As Our
Independent Auditors?

Shareholder approval for the appointment of our independent auditors is not required, but the Audit Committee
and the Board are submitting the selection of PricewaterhouseCoopers LLP for ratification in order to obtain
the views of our shareholders. The ratification of the appointment of PricewaterhouseCoopers LLP as Corning’s
independent auditors requires the affirmative vote of a majority of the shares present at the meeting in person or by
proxy and entitled to vote. If the appointment of PricewaterhouseCoopers LLP is not ratified, the Audit Committee
will consider the shareholders views in the future selection of Corning’s auditors.

How Many Votes Are Needed To Approve The Adoption Of The Shareholder Proposal?

Approval of the Shareholder Proposal, if properly presented at the meeting, requires the affirmative vote of a
majority of the shares present at the meeting in person or by proxy and entitled to vote.

What Is A “Broker Non-Vote”?

If you own shares through a bank or broker in street name, you may instruct your bank or broker how to vote your
shares. A “broker non-vote” occurs when you fail to provide your bank or broker with voting instructions and the
bank or broker does not have the discretionary authority to vote your shares on a particular proposal because the
proposal is not a routine matter under the New York Stock Exchange rules. As explained above under the question
“Will My Shares Held In Street Name Be Voted If I Do Not Provide My Proxy?”, Proposal 1 (election of directors)
and Proposal 2 (ratification of the appointment of our independent auditors) are considered routine matters under
the current New York Stock Exchange rules, so your bank or broker will have discretionary authority to vote your
shares held in street name on those items. Proposal 3 (the shareholder proposal) is not considered a routine matter,
so your bank or broker will not have discretionary authority to vote your shares held in street name on that item.
A broker non-vote may also occur if your broker fails to vote your shares for any reason.

How Will Broker Non-Votes Be Treated?

Broker non-votes will be treated as shares present for quorum purposes, but not entitled to vote, so they will have
no effect on the outcome of any proposal.

How Will Abstentions Be Treated?

Abstentions will be treated as shares present for quorum purposes and entitled to vote, so they will have the effect
as votes against a proposal.

How Will Voting On “Any Other Business” Be Conducted?

We have not received proper notice of, and are not aware of, any business to be transacted at the meeting other than
as indicated in this proxy statement. If any other item or proposal properly comes before the meeting, the proxies
received will be voted on those matters in accordance with the discretion of the proxy holders.

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Who Pays For The Solicitation Of Proxies?

Our Board of Directors is making this solicitation of proxies on our behalf. We will pay the costs of the solicitation,
including the costs for preparing, printing and mailing this proxy statement. We have hired Georgeson Shareholder
Communications, Inc. to assist us in soliciting proxies. It may do so by telephone, in person or by other electronic
communications. We anticipate paying Georgeson a fee of $14,000 plus expenses for these services. We also will
reimburse brokers, nominees and fiduciaries for their costs in sending proxies and proxy materials to our shareholders
so you can vote your shares. Our directors, officers and regular employees may supplement Georgeson’s proxy
solicitation efforts by contacting you by telephone or electronic communication or in person. We will not pay
directors, officers or other regular employees any additional compensation for their proxy solicitation efforts.

How Can I Find The Voting Results Of The Meeting?

We will include the voting results in our Form 10-Q for the quarter ending June 30, 2007, which we expect to file
with the Securities and Exchange Commission (SEC) on or before August 9, 2007.

How Do I Submit A Shareholder Proposal For, Or Nominate A Director For Election At
Next Year’s Annual Meeting?

If you wish to submit a proposal to be included in our proxy statement for our 2008 Annual Meeting of Shareholders,
we must receive it at our principal office on or before November 16, 2007. Please address your proposal to:
Corporate Secretary, Corning Incorporated, One Riverfront Plaza, Corning, New York 14831.

We will not be required to include in our proxy statement a shareholder proposal that is received after that date
or that otherwise does not meet the requirements for shareholder proposals established by the SEC or set forth in
our bylaws.

If you miss the deadline for including a proposal in our printed proxy statement, or would like to nominate a
director or bring other business before the 2008 Annual Meeting of Shareholders, under our current bylaws (which
are subject to amendment at any time), you must notify our Corporate Secretary in writing not less than 90 days
nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. If the meeting is
advanced by more than 30 days or delayed by more than 60 days from such anniversary date, then the notice
shall be received no earlier than 120 days or later than 90 days prior to such annual meeting or the tenth day after
public announcement is made with respect to the meeting. For our 2008 Annual Meeting of Shareholders, we must
receive notice on or after December 28, 2007, and on or before January 27, 2008.

Can I Receive Electronic Delivery of Proxy Materials And Annual Reports?

Yes. This Proxy Statement and Corning’s 2006 Annual Report are available on Corning’s website at www.corning.com.
Instead of receiving paper copies of next year’s Proxy Statement and Annual Report in the mail, shareholders can
elect to receive an e-mail message that will provide a link to these documents on the website. By opting to access
your proxy materials online, you will save us the cost of producing and mailing documents to you, reduce the
amount of mail you receive and help preserve environmental resources. Corning’s shareholders who have enrolled
in the electronic proxy delivery service previously will receive their materials online this year. Shareholders
of record may enroll in the electronic proxy and Annual Report access service for future annual meetings by
registering online at www.computershare.com. Beneficial or “street name” shareholders who wish to enroll in
electronic access service may do so at www.icsdelivery.com.

Are You “Householding” For Shareholders Sharing The Same Address?

Yes. The SEC’s rules regarding the delivery to shareholders of proxy statements, annual reports, prospectuses
and information statements permit us to deliver a single copy of these documents to an address shared by two or
more of our shareholders. This method of delivery is referred to as “householding,” and can significantly reduce
our printing and mailing costs. It also reduces the volume of mail you receive. This year, we are delivering only

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one proxy statement and 2006 Annual Report to multiple shareholders sharing an address, unless we receive
instructions to the contrary from one or more of the shareholders. We will still be required, however, to send
you and each other shareholder at your address an individual proxy voting card. If you nevertheless would like
to receive more than one copy of this proxy statement and our 2006 Annual Report, we will promptly send you
additional copies upon written or oral request directed to our transfer agent, Computershare Investor Services,
LLC, toll free at 1-800-255-0461. The same phone number may be used to notify us that you wish to receive a
separate annual report or proxy statement in the future, or to request delivery of a single copy of an annual report
or proxy statement if you are receiving multiple copies.

PROPOSAL 1—Election of Directors

Corning’s Board of Directors is divided into three classes. Except for Mr. Cummings, each of the nominees
for the office of director, Messrs Sit, Smithburg, Tookes and Weeks were elected by Corning’s security holders
on April 29, 2004. The terms of Messrs Sit, Smithburg, Tookes and Weeks expire this year. Mr. Cummings was
appointed by Corning’s Board of Directors on October 3, 2006, and is standing for election for the first time. Mr.
Knowles, whose term expires this year is retiring in accordance with Corning’s Corporate Governance Guidelines
and as such will not be standing for re-election. Each of the nominees has consented to being named in this proxy
statement and to serve as a director if elected. If a nominee is not able to serve, proxy holders will vote your shares
for the substitute nominee, unless you have withheld authority. No nominee now owns beneficially any of the
securities (other than directors’ qualifying shares) of any of Corning’s subsidiary companies. We have included
below certain information about the nominees for election as directors and the directors who will continue in
office after the Annual Meeting.

Nominees for Election as Directors

Nominees for Election For Terms Expiring in 2010
Robert F. Cummings, Jr.
Senior Managing Director
GSC Group, Inc.

Mr. Cummings joined GSC Group, Inc. in 2002 where he is a Senior Managing Director. He began
his business career in the investment banking division of Goldman, Sachs & Co. in 1973, and was
a partner of the firm from 1986 until his retirement in 1998. He served as an Advisory Director
at Goldman Sachs until 2002. Mr. Cummings is a director of ATSI Holdings, GSC Capital Corp,
Precision Partners Inc, R.R. Donnelley and Sons Co., Viasystems Group Inc. and a member of the
board of trustees of Union College. Director since 2006. Age 57.

Eugene C. Sit
Chairman—Chief Executive Officer and Chief Investment Officer
Sit Investment Associates, Inc.
Mr. Sit is a Chartered Financial Analyst and a Certified Public Accountant. He founded Sit Investment
Associates (SIA) in 1981, and his prior business experience included serving as the Chief Executive
Officer and Chief Investment Officer for American Express Financial Advisors Inc., formerly known
as IDS Advisory. He has been actively involved as a trustee and officer in several educational,
professional and community organizations, and he currently serves as Chairman and Director of
the Minnesotans’ Military Appreciation Fund, Inc., is on the Honorary Council of The Minnesota
Historical Society, and is a member of the Advisory Council of the Carlson School of Management,
International Programs, and is on the Dean’s Board of Visitors for the Medical School of the University
of Minnesota. Mr. Sit currently serves as a director of Smurfit-Stone Container Corporation, and as
chairman and director for the various companies of SIA. Director since 2004. Age 68.

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William D. Smithburg
Retired Chairman, President and Chief Executive Officer
The Quaker Oats Company
Mr. Smithburg joined Quaker Oats in 1966, being elected president in 1979, chief executive officer
in 1981 and chairman in 1983. He also served as president from November 1990 to January 1993
and from November 1995 to November 1997 when he retired. Mr. Smithburg is a director of Abbott
Laboratories, Northern Trust Corporation, and Smurfit-Stone Container Corporation. Director since
1987. Age 68.

Hansel E. Tookes II
Retired Chairman and Chief Executive Officer
Raytheon Aircraft Company
Mr. Tookes retired from Raytheon Company in December 2002. Since joining Raytheon in 1999 he
has served as president of Raytheon International, chairman and chief executive officer of Raytheon
Aircraft and executive vice president of Raytheon Company. From 1980 to 1999 Mr. Tookes served
United Technologies Corporation as president of Pratt and Whitney’s Large Military Engines Group
and in a variety of other leadership positions. He is a director of Ryder Systems Inc., BBA Aviation
plc, FPL Group, Inc. and Harris Corporation and a member of the National Academies Aeronautics
and Space Engineering Board. Director since 2001. Age 59.

Wendell P. Weeks
President and Chief Executive Officer
Mr. Weeks joined Corning in 1983 and was named a vice president and deputy general manager
of the Telecommunications Products division in 1995, vice president and general manager—
Telecommunications Products in 1996, senior vice president in 1997, senior vice president of Opto-
Electronics in 1998, executive vice president of Optical Communications in 1999, president, Corning
Optical Communications in 2001, President and Chief Operating Officer in 2002 and to his present
position in 2005. Mr. Weeks will become chairman and chief executive officer on April 26, 2007. Mr.
Weeks is a director of Merck & Co., Inc. Director since 2000. Age 47.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
DIRECTOR NOMINEES.

Directors Continuing in Office

Directors Whose Terms Expire in 2009

James B. Flaws
Vice Chairman and Chief Financial Officer
Mr. Flaws joined Corning in 1973 and served in a variety of controller and business management
positions. He was named assistant treasurer in 1993, vice president and controller in 1997, vice president
of finance and treasurer later in 1997, senior vice president and chief financial officer in December
1997, executive vice president and chief financial officer in 1999 and to his present position in 2002. Mr.
Flaws is a director of Dow Corning Corporation. Director since 2000. Age 58.

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James R. Houghton
Chairman
Mr. Houghton joined Corning in 1962. He was elected a vice president of Corning and general manager
of the Consumer Products Division in 1968, vice chairman in 1971, chairman of the executive committee
and chief strategic officer in 1980 and chairman and chief executive officer in April 1983, retiring in
April 1996. Mr. Houghton was the non-executive chairman of the Board of Corning from June 2001 to
April 2002. Mr. Houghton came out of retirement in April 2002 when he was elected chairman and chief
executive officer. Mr. Houghton retired as our chief executive officer on April 28, 2005 but continued as
chairman of the Board. Mr. Houghton will step down as chairman on April 26, 2007, but will continue in
his role as a director of Corning. Mr. Houghton is a director of Metropolitan Life Insurance Company
and Exxon Mobil Corporation. He is a trustee of the Metropolitan Museum of Art, the Pierpont Morgan
Library and the Corning Museum of Glass and a member of the Harvard Corporation. Director since
1969. Age 71.

James J. O’Connor
Retired Chairman of the Board and Chief Executive Officer
Unicom Corporation
Mr. O’Connor joined Commonwealth Edison Company in 1963. He became president in 1977, a director
in 1978 and chairman and chief executive officer in 1980. In 1994 he was also named chairman and chief
executive officer of Unicom Corporation, which then became the parent company of Commonwealth
Edison Company, retiring in 1998. Mr. O’Connor is a director of Smurfit-Stone Container Corporation,
UAL Corporation, United Airlines and Armstrong World Industries, Inc. Director since 1984. Age 69.

Deborah D. Rieman
Retired President and Chief Executive Officer
Check Point Software Technologies, Incorporated
Dr. Rieman has more than twenty-five years of experience in the software industry. She currently
manages a private investment fund. From 1995 to 1999, she served as president and chief executive
officer of Check Point Software Technologies, Incorporated. Dr. Rieman is a director of Keynote
Systems, Kintera Inc. and Tumbleweed Communications, Inc. Director since 1999. Age 57.

Peter F. Volanakis
Chief Operating Officer
Mr. Volanakis joined Corning in 1982 and was named managing director, Corning GmbH in 1992,
executive vice president of CCS Holding, Inc., formerly known as Siecor Corporation, in 1995, senior
vice president of advanced display products in 1997, executive vice president of Display Technologies
and Life Sciences in 1999, President, Corning Technologies in 2001 and to his present position in 2005.
Mr. Volanakis will become president and chief operating officer on April 26, 2007. Mr. Volanakis is a
director of Dow Corning Corporation. Director since 2000. Age 51.

Directors Whose Terms Expire in 2008

John Seely Brown
Retired Chief Scientist
Xerox Corporation
Dr. Brown has served Xerox Corporation since 1978 in various scientific research positions, in 1986 he
was elected vice president in charge of advanced research and was director of the Palo Alto Research
Center from 1990 to 2000. Dr. Brown was named chief scientist of Xerox in 1992, retiring in 2002. He
is currently a Senior Fellow at USC. Dr. Brown is a director of Amazon Inc., Polycom, Inc. and Varian
Medical Inc. Director since 1996. Age 66.

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Gordon Gund
Chairman and Chief Executive Officer
Gund Investment Corporation
Besides being the Chairman and CEO of Gund Investment Corporation which was founded in 1968,
Mr. Gund is co-founder and Chairman of The Foundation Fighting Blindness. The Foundation Fighting
Blindness is a national, non-profit organization dedicated to finding the causes, treatments and/or cures
for retinitis pigmentosa, age-related macular degeneration, and allied retinal degenerative diseases. He
is a director of the Kellogg Company. Director since 1990. Age 67.

John M. Hennessy
Senior Advisor
Credit Suisse First Boston
Mr. Hennessy became managing director of First Boston Corporation in 1974 after serving as Assistant
Secretary of the U.S. Treasury (Presidential appointment). In 1989 he was elected chairman of the
executive board and group chief executive officer of Credit Suisse First Boston. Mr. Hennessy retired
from active employment from Credit Suisse First Boston at the end of 1996 but retains the role of
Independent Senior Advisor to the firm. He is on four non-profit boards of directors. Director since
1989. Age 70.

H. Onno Ruding
Retired Vice Chairman
Citicorp and Citibank, N.A.

Dr. Ruding has served private firms and the public (serving as Minister of Finance of The Netherlands
from 1982-1989) in various financial positions, serving as a director of Citicorp and Citibank, N.A.
from 1990 and 1998, respectively, to September 30, 2003 and vice chairman of Citicorp and Citibank,
N.A. from 1992 to September 30, 2003. Dr. Ruding retired from active employment from Citicorp and
Citibank, N.A. on September 30, 2003. Dr. Ruding is also a director of Alcan, Holcim, BNG (Bank for
the Netherlands Municipalities) and RTL Group, a member of the international advisory committee of
Citigroup and a member of UNIAPAC, the Committee for European Monetary Union, the Pontifical
Council Justice and Peace, the European Advisory Board of the American-European Community
Association, the International Bureau of Fiscal Documentation and the Trilateral Commission.
Dr. Ruding is the chairman of the Center for European Policy Studies (CEPS), the chairman of the
Netherlands National Museum Palace Het Loo and the chairman of the Advisory Council of the
Amsterdam Institute of Finance. Director since 1995. Age 67.

Padmasree Warrior
Executive Vice President and Chief Technology Officer
Motorola, Inc.
Ms. Warrior joined Motorola in 1984, was appointed vice president in 1999 and was elected a
corporate officer in 2000. She was corporate vice president and chief technology officer for Motorola’s
Semiconductor Products Sector, general manager of Thoughtbeam, Inc., a wholly owned subsidiary
of Motorola, and corporate vice president and general manager of Motorola’s energy systems group.
Ms. Warrior is currently the executive vice president and chief technology officer for Motorola, Inc.
Director since 2005. Age 45.

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Meetings and Committees of The Board

Board Meetings

The Board of Directors held 15 regularly scheduled meetings during 2006. All directors attended at least 75%
of these meetings of the Board of Directors. When the number of Board meetings are combined with the number
of meetings of the committees on which they serve, all directors attended at least 75% of such meetings.

Board Committees

In addition to an Executive Committee, which acts by delegation, Corning has six standing Board committees:
Audit, Compensation, Corporate Relations, Finance, Nominating and Corporate Governance and Pension
Committees. Each standing committee’s written charter, as adopted by the Board of Directors, is available on
Corning’s website at www.corning.com/inside_corning/corporate_governance/downloads.aspx. Copies of each
of the charters are also attached to this proxy statement as Appendix A, B, C, D, E and F, respectively.

The Audit Committee met 15 times during 2006. The current members of the Audit Committee are Messrs.
Smithburg (Chair), Ruding and Tookes and Ms. Rieman. The Audit Committee:

• Assists the Board of Directors in its oversight of (i) the integrity of Corning’s financial statements, (ii) the
internal auditors performance, and (iii) Corning’s compliance with legal and regulatory requirements;

• Meets in executive sessions with the independent auditors, internal auditors and management;

• Approves the appointment of Corning’s independent auditors;

• Reviews and discusses with the independent auditors and the internal auditors the effectiveness of
Corning’s internal control over financial reporting, including disclosure controls;

• Reviews and discusses with management, the independent auditors and the internal auditors the scope of
the annual audit;

• Reviews the quarterly and annual financial statements and other reports provided to shareholders with
management and the independent auditors;

• Oversees the independent auditors’ qualifications, independence and performance;

• Reviews transactions between Corning and related persons that are required to be disclosed in our filings
with the SEC; and

• Determines the appropriateness of and approves the fees for audit and permissible non-audit services to
be provided by the independent auditors.

The Compensation Committee met six times during 2006. The current members of the Compensation Committee
are Messrs. O’Connor (Chair), Brown, Gund and Smithburg. The Compensation Committee:

• Reviews Corning’s goals and objectives with respect to executive compensation;

• Evaluates the CEO’s performance in light of Corning’s goals and objectives;

• Determines and approves compensation for the CEO and other officers of Corning;

• Reviews and approves employment, severance and change in control agreements for the CEO and other
officers of Corning;

• Recommends to the Board the compensation arrangements with non-employee directors;

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• Administers Corning’s equity compensation plans and employee benefit and fringe benefit plans and
programs; and

• Makes recommendations to the Board regarding non–equity incentive and equity incentive plans.

Compensation decisions for executives, which include the Named Executive Officers, and the directors are
reviewed and approved by the Compensation Committee. The Compensation Committee has strategic and
administrative responsibility to compensate key executives effectively and in a manner consistent with our stated
compensation strategy. The Compensation Committee has engaged Hewitt Associates, an outside global human
resources consulting firm, to conduct an annual review of its total compensation program for executives. Hewitt
Associates supports the Committee by providing data regarding market practices and makes recommendations for
changes to plan designs and policies that are consistent with the Company’s compensation philosophy.

The agenda for meetings of the Compensation Committee is determined by its Chairman with the Executive
Vice President and Chief Administrative Officer and the Senior Vice President Global Compensation and Benefits.
The Chief Executive Officer and the Executive Vice President and Chief Administrative Officer are invited to
attend the Compensation Committee meetings, though they leave the room during discussions and deliberations
of individual compensation actions affecting them personally. The Compensation Committee Chairman reports
the committee’s recommendations on executive compensation to the Board. The Company’s Global Compensation
and Benefits department supports the Compensation Committee in its duties and, along with the Chief Executive
Officer, may be delegated authority to fulfill certain administrative duties regarding the compensation programs.
The Compensation Committee has authority under its charter to retain, approve fees for and terminate advisors,
consultants and agents as it deems necessary to assist in the fulfillment of its responsibilities. The Compensation
Committee reviews the total fees paid to outside consultants by the Company to ensure that the consultant
maintains its objectivity and independence when rendering advice to the committee. For more information on the
Compensation Committee, see “Compensation Discussion and Analysis” beginning on page 18.

The Corporate Relations Committee met five times during 2006. The current members of the Corporate
Relations Committee are Mses. Rieman (Chair) and Warrior and Messrs. Houghton, Knowles and Sit. The
Corporate Relations Committee focuses on the areas of employment policy, public policy and community relations
in the context of the business strategy of Corning.

The Executive Committee met 10 times during 2006. The current members of the Executive Committee are
Messrs. Weeks (Chair), Flaws and Volanakis. All other directors are alternate members of the Executive Committee.
The Executive Committee serves primarily as a means of taking action requiring Board approval between regularly
scheduled meetings of the Board. The Executive Committee is authorized to act for the full Board on matters other
than those specifically reserved by New York law to the Board. In practice, the Executive Committee actions are
generally limited to matters such as the authorization of corporate credit facilities, borrowings and pricing of
Corning’s public offering of securities.

The Finance Committee met 10 times during 2006. The current members of the Finance Committee are Messrs.
Hennessy (Chair), Cummings, Flaws, Ruding, Tookes and Volanakis. The Finance Committee:

• Monitors present and future capital requirements of Corning;

• Reviews all material transactions prior to execution;

• Reviews potentials mergers, acquisitions, divestitures and investments in third parties;

• Manages Corning’s exposure to financial, economic or hazard risks;

• Monitors Corning’s cash management plans and activities;

• Reviews Corning’s tax position and strategy;

• Reviews and monitors Corning’s credit rating; and

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• Reviews Corning’s financial plans and other financial information that Corning uses in its analysis of
internal decisions.

The Nominating and Corporate Governance Committee met five times during 2006. The current members of
the Nominating and Corporate Governance Committee are Messrs. O’Connor (Chair), Brown and Hennessy. The
Nominating and Corporate Governance Committee:

• Identifies individuals qualified to become Board members;

• Reviews candidates recommended by shareholders;

• Determines the criteria for selecting director nominees;

• Conducts inquiries into the background of director nominees;

• Recommends to the Board, director nominees to be proposed for election at the annual meeting of
shareholders;

• Monitors significant developments in the regulation and practice of corporate governance;

• Develops and recommends to the Board corporate governance guidelines;

• Assists the Board in assessing the independence of Board members;

• Identifies Board members to be assigned to the various committees;

• Oversees and assists the Board in the review of the Board’s performance, as well as the performance of
the President and CEO and other executives;

• Establishes director retirement policies;

• Reviews, approves and ratifies transactions between Corning and related persons; and

• Reviews activities of Board members and senior executives for potential conflict of interest.

The process for electing director nominees entails making a preliminary assessment of each candidate based
upon his/her resume and other biographical information, his/her willingness to serve and other background
information. This information is then evaluated against the criteria set forth below, as well as the specific needs
of Corning at that time. Based upon this preliminary assessment, candidates who appear to be the best fit will be
invited to participate in a series of interviews. At the conclusion of this process, if it is determined that the candidate
will be a good fit, the Nominating and Corporate Governance Committee will recommend the candidate to the
Board for election at the next annual meeting. If the director nominee is a current Board member, the Nominating
and Corporate Governance Committee also considers prior Corning Board performance and contributions. The
Nominating and Corporate Governance Committee uses the same process for evaluating all candidates regardless
of the source of the nomination.

The minimum qualifications and attributes that the Nominating and Corporate Governance Committee believes
must be possessed by a director nominee may include:

• The ability to apply good business judgment;

• The ability to exercise his/her duties of loyalty and care;

• Proven leadership skills;

• Diversity of experience;

• High integrity and ethics;

• The ability to understand complex principles of business and finance;

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• Scientific expertise; and

• Familiarity with national and international issues affecting businesses.

All of the director nominees are current elected members of the Board of Directors, except for Mr. Cummings
who was identified by the Chairman of the Nominating and Corporate Governance Committee and appointed
by the Board of Directors. The Nominating and Corporate Governance Committee has in the past and may in
the future engage the assistance of third parties to identify and evaluate potential director nominees, as it deems
appropriate.

The Nominating and Corporate Governance Committee will consider candidates recommended by
shareholders. If you wish to nominate a candidate, please forward the candidate’s name and a detailed description
of the candidate’s qualification, a document indicating the candidate’s willingness to serve and evidence of the
nominating shareholder’s ownership of Corning’s shares to: Corporate Secretary, Corning Incorporated, One
Riverfront Plaza, Corning, New York 14831. A shareholder wishing to nominate a candidate must also comply
with the notice requirements described above under the question “How Do I Submit A Shareholder Proposal For,
Or Nominate A Director For Election At, Next Year’s Annual Meeting?”

The Pension Committee met six times during 2006. The current members of the Pension Committee are Messrs.
Gund (Chair), Cummings, Flaws, Knowles, Sit and Volanakis and Ms. Warrior. The Pension Committee:

• Reviews the funding and investment performance of Corning’s pension plans; and

• Appoints investment managers, custodians, trustees and other plan fiduciaries for the purpose of
implementing the policies of the plans.

Corporate Governance Matters

Corporate Governance Guidelines

Our business, property and affairs are managed by or, are under the direction of, the Board of Directors pursuant
to New York Business Corporation Law and our By-laws. Members of the Board of Directors are kept informed
of Corning’s business through discussions with the President and Chief Executive Officer, the Vice Chairman
and Chief Financial Officer, the Chief Operating Officer and other key members of management, by reviewing
materials provided to them and by participating in meetings of the Board of Directors and its committees.

The Board has adopted a set of Corporate Governance Guidelines that address the make-up and functioning of
the Board. A copy of these guidelines is attached to this proxy statement as Appendix G and can also be viewed
on our website at www.corning.com/inside_corning/corporate_governance/downloads.aspx.

Directors Independence

Our Corporate Governance Guidelines require that the Board of Directors make an annual determination
regarding the independence of each of Corning’s directors. The Board made these determinations on February 7,
2007, based on an annual evaluation performed by and recommendations made by the Nominating and Corporate
Governance Committee. The Board of Directors has determined that Messrs. Brown, Cummings, Gund, Hennessy,
Knowles, O’Connor, Ruding, Sit, Smithburg and Tookes and Mses. Rieman and Warrior are “independent” within
the meaning of the rules of the New York Stock Exchange, based on its application of the standards set forth in
the Corporate Governance Guidelines. Specifically, the Board determined that they were independent because no
relationship was identified that would automatically bar them from being characterized as independent, and any
relationships identified were not so material as to impair their independence.

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The Board reviewed the independence status of Dr. Knowles, who on July 1, 2006 assumed the position of
Interim Dean of the Faculty of Arts and Sciences of Harvard University. Dr. Knowles previously served as Dean
from 1991 to 2002, stepping down in June 2002 and continuing to hold a faculty position at Harvard. Dr. Knowles
joined the Corning Board of Directors in July 2002. Because our then CEO and Chairman, James R. Houghton,
was serving on the Harvard Corporation, the Board determined there should be a passage of time before Dr.
Knowles was determined by the Board to be independent. Dr. Knowles was determined to be independent for
2005 and 2006. Mr. Houghton stepped down as CEO of Corning in 2005 and became non-executive chairman
effective May 1, 2006. The Board determined that Dr. Knowles’ resumption of his deanship role with Harvard
does not change his status as an independent director, as he is fully independent of Corning’s current executive
management. The Corning Foundation’s charitable contributions to Harvard in the past three years are far below
amounts that would bar independence under the NYSE Listing Standards or Corning’s Director Qualification
Standards.

With respect to Dr. Ruding the Board considered the fact that Dr. Ruding previously was an executive officer
at Citicorp and Citibank, N.A. Dr. Ruding retired from his executive positions at Citicorp and Citibank, N.A.
in September 2003. As a retiree, he serves on the international advisory committee of Citigroup and attends
that committee’s two meetings per year, for which he receives an annual retainer of approximately $50,000. In
determining that this relationship was not material, the Board reviewed Corning’s Director Qualification Standards
and all of the facts and circumstances of Dr. Ruding’s relationship with Corning, including that Dr. Ruding is no
longer employed by Citicorp or Citibank N.A., Citicorp services to Corning in 2006 were well below 2001, 2002
and 2003 levels and consisted primarily of non-advisory services, as well as the fact that for the last three years
Citicorp services never approached a percentage that would bar independence under the NYSE Listing Standards
or Corning’s Director Qualification Standards.

With respect to Ms. Warrior, the Board considered the fact that Ms. Warrior serves as Executive Vice President
and Chief Technology Officer of Motorola, Inc., which purchased less than $1,100,000 of products from Corning
for each of fiscal years 2004, 2005 and 2006; and sold less than $50,000 of products to Corning for each of fiscal
years 2004, 2005 and 2006. In determining that this relationship was not material, the Board considered the fact
that the amount of products purchased from Corning by Motorola, Inc. and sold to Corning by Motorola, Inc. never
approached a percentage that would bar independence under the NYSE Listing Standards or Corning’s Director
Qualification Standards, and that Ms. Warrior had no role in such sales or purchases.

With respect to Mr. Cummings, the Board considered the fact that he served in various managerial capacities
at Goldman, Sachs & Co. until 2002, a company that has provided and continues to provide investment banking,
financial advisory and other similar services to Corning. In determining that this relationship was not material,
the Board reviewed Corning’s Director Qualification Standards and all of the facts and circumstances of Mr.
Cummings’ relationship with Corning, including that Mr. Cummings is no longer employed by Goldman, Sachs
& Co. or provides any advisory services to Goldman, Sachs & Co., and that Goldman, Sachs & Co. services to
Corning in 2006 consisted primarily of non-advisory services, as well as the fact that for the last three years
Goldman, Sachs & Co. services never approached a percentage that would bar independence under the NYSE
Listing Standards or Corning’s Director Qualification Standards.

With respect to Mr. Tookes, the Board considered the fact that Mr. Tookes in February 2007 joined the Board of
Directors of BBA Aviation plc, the parent company of Signature Flight Support, the company that provides aviation
support services to Corning’s planes. Mr. Tookes has had no past connections with BBA Aviation plc. Going
forward, the amount of business Corning does with Signature Flight Support is expected to be approximately
$100,000 annually, which is not material. In determining that this relationship was not material, the Board
considered the fact that Mr. Tookes relationship arises only from his position as a director of BBA Aviation plc,
that he has no material interest in any of the transactions between Corning and Signature Flight Support, that he
had no role in any such transactions, and that such a relationship would not bar independence under the NYSE
Listing Standards or Corning’s Director Qualification Standards.

14

The Board concluded that based on all of the relevant facts and circumstances, none of the above relationships
constituted a material relationship with Corning that represents a potential conflict of interest or otherwise
interferes with the exercise by any of these directors of his or her independent judgment from management of
Corning.

The Board determined that Messrs. Flaws, Volanakis and Weeks were not independent because they are each
executive officers of Corning. With respect to Mr. Houghton, the Board determined that he was not independent
as he was the Chief Executive Officer of Corning until he retired in April 2005.

Each member of the Board’s Audit, Compensation and Nominating and Corporate Governance Committees is
independent within the meaning of the NYSE Listing Standards, Exchange Act Rule 10A-3 and Corning’s Director
Qualification Standards.

Communications with Directors

Shareholders and interested parties may communicate concerns to any director, committee member or the
Board by writing to the following address: Corning Incorporated Board of Directors, Corning Incorporated,
One Riverfront Plaza, MP HQ E2 10, Corning, New York 14831 Attention: Corporate Secretary. Please specify
to whom your correspondence should be directed. The Corporate Secretary has been instructed by the Board
to promptly forward all correspondence (except advertising, spam, junk mail and other mass mailings, product
inquiries and suggestions, resumes, surveys or any unduly hostile, threatening or illegal materials) to the relevant
director, committee member or the full Board, as indicated in the correspondence.

Audit Committee Financial Expert

The Board of Directors has determined that at least one member of the Audit Committee, H. Onno Ruding, is
an Audit Committee Financial Expert.

Executive Sessions of Non-Employee Directors

Non-employee Board members meet without management present at each regularly scheduled Board Meeting.
Additional meetings may be called by the Lead Director in his discretion or at the request of the Board. The Lead
Director, Mr. O’Connor, presides over meetings of the non-employee directors.

Policy Regarding Directors Attendance at Annual Meetings

Corning has a policy that every director will make every effort to attend, but does not require attendance of all
directors at Annual Meetings. All of the Board Members attended the 2006 Annual Meeting.

Code of Ethics

Our Board of Directors has adopted the Code of Ethics for the Chief Executive Officer and Financial Executives
and the Code of Conduct for Directors and Executive Officers which supplements the Code of Conduct governing
all employees and directors that has been in existence for more than 10 years. We refer to these documents
collectively as the “Code of Ethics”. A copy of the Code of Ethics is attached to this proxy statement as Appendix
H and is available on our website at www.corning.com/inside_corning/corporate_governance/downloads.aspx.
We will disclose any amendments to, or waivers from, the Code of Ethics on our website within four business days
of such determination. During 2006, no amendments to or waivers of the provisions of the Code of Ethics were
made with respect to any of our directors or executive officers.

15


Security Ownership of Certain Beneficial Owners

Paragraphs (a) and (b) below set forth information about the beneficial ownership of Corning’s Common Stock
as of December 31, 2006. Unless otherwise indicated, the persons named have sole voting and investment power
with respect to the shares listed.

(a) To the knowledge of management, the following owned more than 5% of Corning’s outstanding shares of
Common Stock:

Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership Class

FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109 100,895,420(1) 6.43%

(1) 98,576,947 of these shares are owned by Fidelity Management & Research Company; 25,955 of these shares
are owned by Strategic Advisers, Inc.; 1,524,291 of these shares are owned by Pyramis Global Advisors Trust
Company and 768,227 of these shares are owned by Fidelity International Limited which are subsidiaries of
FMR Corp. Edward C. Johnson 3d, the chairman of FMR Corp, and FMR Corp. have sole investment power
and sole voting power with respect to 100,101,238 of such shares. Fidelity International Limited has sole
investment power with respect to 768,227 of such shares and sole voting power with respect to 731,027 of
such shares.
(b) The number of shares of Corning Common Stock owned by the directors and nominees for directors, by the
chief executive officer, the chief financial officer and the three other most highly compensated executive
officers (the “Named Executive Officers”) and by all directors and executive officers as a group, as of
December 31, 2006, is as follows:

16

Amount
and Nature Percent
of Beneficial of
Name Ownership(1)(2)(3) Class(7)
Directors
John S. Brown 133,006 (4) —
Robert F. Cummings, Jr. 50,412 (4) —
Gordon Gund 3,112,719 (4) —
John M. Hennessy 359,484 (4) —
James R. Houghton 3,645,931 (4) (5) —
Jeremy R. Knowles 47,559 —
James J. O’Connor 135,824 (4) —
Deborah D. Rieman 91,809 —
H. Onno Ruding 103,699 (4) —
Eugene Sit 42,074 (4) —
William D. Smithburg 167,006 (4) —
Hansel E. Tookes II 85,609 (4) —
Padmasree Warrior 3,920 —
Named Executive Officers
(*also serve as directors)
Wendell P. Weeks* 5,448,005 —
James B. Flaws* 2,678,622 —
Kirk P. Gregg 2,268,083 —
Dr. Joseph A. Miller 894,703 —
Peter F. Volanakis* 3,277,389 —
All Directors and Executive Officers as a Group (28 persons) 28,306,128 (6) 1.8%

(1) Includes shares of Common Stock, subject to forfeiture and restrictions on transfer, granted under Corning’s
Incentive Stock Plans as well as options to purchase shares of Common Stock exercisable within 60 days
under Corning’s Stock Option Plans. Messrs. Brown, Cummings, Gund, Hennessy, Houghton, Knowles,
O’Connor, Ruding, Sit, Smithburg, Tookes, Weeks, Flaws, Gregg, Miller and Volanakis and Mses. Rieman
and Warrior have the right to purchase 57,380; 0; 57,380; 57,380; 3,201,310; 29,720; 14,928; 55,270; 9,494;
57,380; 53,020; 4,668,195; 2,145,373; 1,891,645; 555,500; 2,685,381; 55,270 and 1,770 shares, respectively,
pursuant to such options. All directors and executive officers as a group hold options to purchase 20,179,071
such shares.
(2) Includes shares of Common Stock, subject to forfeiture and restrictions on transfer, issued under Corning’s
Restricted Stock Plans for Non-Employee Directors.
(3) Includes shares of Common Stock held by J. P. Morgan Chase & Co. as the trustee of Corning’s Investment
Plans for the benefit of the members of the group, who may instruct the trustee as to the voting of such shares.
If no instructions are received, the trustee votes the shares in the same proportion as it votes the shares for
which instructions were received. The power to dispose of shares of Common Stock is also restricted by
the provisions of the Plans. The trustee holds for the benefit of Messrs. Weeks, Flaws, Gregg, Miller and
Volanakis, and all directors and executive officers as a group the equivalent of 10,506; 15,424; 8,785; 3,567;
0 and 82,884 shares of Common Stock, respectively. It also holds for the benefit of all employees who
participate in the Plans the equivalent of 31,863,447 shares of Common Stock (being 2.03% of the Class).
(4) Messrs. Brown, Cummings, Gund, Hennessy, Houghton, O’Connor, Ruding, Sit, Smithburg and Tookes
have credited to their accounts the equivalent of 49,686; 1,438; 83,091; 89,530; 1,705; 85,223; 19,532; 15,130;
110,077 and 36,200 shares, respectively, of Common Stock in phantom form under Corning’s Deferred
Compensation Plan for Directors. Deferred fees will be paid solely in cash.

17


(5) Includes 288,396 shares held in trusts by Market Street Trust Company as a co-trustee for the benefit of Mr.
Houghton, as income beneficiary. Does not include 2,878,183 shares held in trusts by Market Street Trust
Company, as to which Mr. Houghton disclaims beneficial ownership. Market Street Trust Company is a
limited purpose trust company controlled by the Houghton family, the directors of which include James R.
Houghton and other Houghton family members. 20,000 of these shares are pledged as security.
(6) Does not include 709,060 shares owned by the spouses and minor children of certain executive officers and
directors as to which such officers and directors disclaim beneficial ownership.
(7) Unless otherwise indicated, does not exceed 1% of the Class of Common Stock. As of December 31, 2006,
all directors and executive officers as a group pledged 20,000 such shares.
Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Corning’s directors and certain
of its officers to file reports of their ownership of Corning Common Stock and of changes in such ownership with
the SEC and the New York Stock Exchange. Regulations also require Corning to identify in this proxy statement
any person subject to this requirement who failed to file any such report on a timely basis.

To Corning’s knowledge, based solely on its review of the copies of such reports furnished to Corning and
written representations that no other reports were required, during the fiscal year ended December 31, 2006, all
Section 16(a) filing requirements applicable to its officers, directors and greater than ten-percent beneficial owners
were met.

Compensation Discussion and Analysis

The Compensation Committee of the Board of Directors (the “Committee”), composed entirely of outside
directors, is responsible to the Board of Directors and to our shareholders for executive compensation at Corning
(“we”, “us”, “Corning” or the “Company”). The Compensation Committee sets the principles outlined in the
Company’s compensation philosophy, reviews and approves executive compensation levels (including cash
compensation, equity incentives, benefits and perquisites for executive officers) and reports their actions to the
Board of Directors for review and, as necessary, approval.

This Compensation Discussion and Analysis (“CD&A”) describes:

• how and why the Committee establishes executive compensation at Corning;

• the objectives of the various compensation programs; and

• how performance metrics are selected and evaluated for the various performance-based variable
compensation programs.

After a short introduction entitled “Setting the Context For Compensation Philosophy”, this CD&A has been
prepared in a Question and Answer format in order to more easily address the following key questions:

1. What are the philosophy and objectives behind the Company’s compensation programs?
2. What is each element of compensation?
3. Why does the Company choose to pay each element?
4. What is the compensation program designed to reward?
5. How does the Company determine the amount (and when applicable, the formula) for each element?
6. How does each compensation element and the Company’s decisions regarding that element fit into the
Company’s overall compensation objectives and affect decisions regarding the other elements?

18

corning annual reports 2006

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