NYSE Requests Comment of Shareholder Approval of Stock Option Plans

Washington, DC, June 16, 1998 - The New York Stock Exchange recently adopted amendments to its shareholder approval policy that require shareholders of a listed company to approve certain stock issuances. Among other things, the policy requires shareholder approval of "any stock option or purchase plan, or any other arrangement, pursuant to which officers or directors may acquire stock." This requirement excepts a "broadly based plan that includes other employees." The Exchange is soliciting comment on how it should define "broadly based plan" for this purpose. Comments are due to the NYSE by July 10, 1998.

In its recent amendments to the policy, the Exchange added guidance for determining whether a plan is "broadly based." As part of this guidance, the Exchange adopted a "safe harbor," to provide that a plan will be deemed to be "broadly based" if at least 20 percent of the company's employees are eligible to receive stock or options under the plan and at least half of those eligible are neither officers nor directors.

The Exchange has received a number of inquiries from the financial community regarding this new 20-percent test. In response, the Exchange explained that the test is based on the "rule of thumb" that it historically has used in determining whether a plan is broadly based. In light of these inquiries, however, the Exchange is requesting additional comment on this area. The Exchange will establish a task force to evaluate such comments and will then determine whether it is appropriate to propose any additional amendments to the policy. In addition to requesting comment generally on the definition of "broadly based plans," the Exchange has requested comment on a number of other specific issues.