ICI Supports New Amex Rule Requiring Shareholder Approval of Equity Compensation PlansWashington, DC, November 5, 2003 - The Institute strongly supports the SEC's recent approval of a rule change proposed by the American Stock Exchange that would require shareholder approval of all equity compensation plans, including stock option plans, and material amendments to such plans. Background
The SEC solicited comments on the Amex proposal and simultaneously approved that proposal on an accelerated basis in October 2003. The Amex rule is very similar to NYSE and Nasdaq rule amendments approved by the SEC earlier this year. Section 711 of the Amex Company Guide currently requires listed companies to obtain shareholder approval for many stock option plans and other arrangements in which officers, directors, and key employees participate, to address concerns about the possibility of self-dealing and dilution to the detriment of shareholders. In order to enhance investor confidence and provide consistency across marketplaces, Amex proposed to eliminate the existing exceptions to the shareholder approval requirements and to require shareholder approval of all stock option and equity compensation plans. ICI Position
The Institute has long been an advocate of requiring shareholder approval of stock option plans. In a recent comment letter, the Institute states its belief that stock option plans can be beneficial by aligning shareholder and corporate management interests and in furthering corporate stability. The Institute believes that the popularity of stock option plans and the potentially dilutive effect that they can have on shareholder value underscores the need to ensure that these plans receive appropriate shareholder scrutiny. The Institute also notes that the Amex proposal is virtually identical to NYSE and Nasdaq rules recently approved by the SEC and expresses support for such a coordinated approach. Related Links
- NYSE, Nasdaq Rules Requiring Shareholder Approval of Stock Option Plans Approved, July 2003
- Institute Supports FASB Stock Option Disclosure Proposal, November 2002
- ICI Strongly Supports NYSE, Nasdaq Stock Option Approval Proposals, November 2002
- NYSE, Nasdaq Proposals Would Require Shareholder Approval of Stock Option Plans, October 2002
- Proposed Corporate Governance Standards Require Approval of Stock Option Plans, August 2002
- Institute Comments on NASD Shareholder Approval Proposal, February 2001
- SEC Approves NYSE's Proposed Amendments To Shareholder Approval Policy, June 1999
- ICI Files Comment Letter on NYSE's Proposed Amendments to Its Shareholder Approval Policy, December 1998
- NYSE Proposes Amendments to Shareholder Stock Option Approval Policy, November 1998
- NYSE Amends Shareholder Approval Policy Regarding Stock Option Plans, October 1998
- Institute Files Comment Letter on NYSE Shareholder Approval Policy Regarding Stock Option Plans, August 1998
In addition, a section of this website is devoted to the Institute's support for efforts to restore investor confidence in the integrity of the securities markets and the accuracy of financial information.
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