ICI Strongly Supports NYSE, Nasdaq Stock Option Approval Proposals

Washington, DC, November 1, 2002 - The Institute strongly supports NYSE and Nasdaq proposals to require shareholder approval of stock option plans and material revisions to those plans. In a recent comment letter, the Institute states that shareholder review of stock option plans will assist in assuring that corporate management's decisions regarding stock option plans are aligned with their shareholders' best interests.  

The Institute commends the NYSE and Nasdaq for proposing similar rules with respect to shareholder approval of stock option plans, pointing out that such a coordinated approach ensures that the NYSE and Nasdaq do not compete on the basis of differences in their rules, encouraging a "race to the bottom" to attract new listings.

The Institute specifically supports the NYSE's approach with respect to repricing options and recommends that Nasdaq make explicit in any adopting release that it is taking the same approach to repricing as the NYSE. Finally, the Institute urges the NYSE and Nasdaq to view an automatic increase in the shares available under an "evergreen" plan to be a material revision to the plan that must be submitted for shareholder approval.

The NYSE and Nasdaq proposals would require listed companies to give their shareholders the opportunity to vote on most equity-compensation plans. The requirement is similar to a recommendation made in June as part of a report by the NYSE Corporate Accountability and Listing Standards Committee, which the Institute strongly supported in a subsequent comment letter and statement.