Memo #
10551
ICI COMMENT LETTER ON NYSE'S PROPOSED AMENDMENTS TO ITS SHAREHOLDER APPROVAL POLICY REGARDING STOCK OPTION PLANS
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* See Memorandum to Investment Advisers Committee No. 39-98 and SEC Rules Committee No. 124-98, dated December
4, 1998.
[10551]
December 10, 1998
TO: INVESTMENT ADVISERS COMMITTEE No. 40-98
SEC RULES COMMITTEE No. 125-98
RE: ICI COMMENT LETTER ON NYSE'S PROPOSED AMENDMENTS TO ITS
SHAREHOLDER APPROVAL POLICY REGARDING STOCK OPTION PLANS
______________________________________________________________________________
The Institute recently filed with the Securities and Exchange Commission the attached comment
letter on its release soliciting comment on the New York Stock Exchange’s proposed amendments to its
shareholder approval policy regarding stock option plans. The Exchange’s proposal focuses primarily
on defining “broadly-based” plans. The Institute’s letter is substantially similar to the draft letter we
circulated to you last week.*
The Institute’s letter generally supports the Exchange’s proposal and notes that the proposed
definition of “broadly-based” plan addresses many of the concerns expressed in our earlier letter (also
attached), including that the definition reflects the important distinction between employee eligibility and
employee participation. The letter also supports the Exchange’s decision to designate the definition as an
exclusive test rather than a non-exclusive safe harbor as was proposed.
The letter also notes that although the Exchange’s approach in developing a workable definition
for broadly-based plans is a step in the right direction, more work needs to be done in order to ensure
that all stock option plans that have the potential to significantly dilute shareholders’ interests should
require shareholder approval. In this regard, the letter supports the Exchange’s adoption of the Task
Force’s recommendation that “the Task Force or other appropriate group immediately commence a
study to establish an overall dilution listing standard for all non-tax qualified Plans that otherwise would
be exempt from shareholder approval.”
Barry E. Simmons
Assistant Counsel
Attachment