In a bulletin issued on December 5, 2000, Nasdaq requested all interested parties, including investors, market participants, and companies listed on Nasdaq to submit comments on the important issue of marketplace requirements for shareholder approval of stock option plans.
This solicitation of comments is in response to Securities and Exchange Commission (SEC) Chairman Arthur Levitt’s recent request that Nasdaq consider adopting listing standards that require shareholder approval for all stock option plans that include officers and directors, as well as a dilution test for nonshareholder approved plans that exclude officers and directors, as has been proposed by the New York Stock Exchange (NYSE). If adopted, these requirements would replace Nasdaq’s current rules.
Those rules presently require shareholder approval for stock option plans that include officers and directors, in order to provide shareholders a voice where there is the potential for self-dealing, but include an exception for "broadly based" option plans, that is, plans in which a majority of the participants are rank and file employees and not officers or directors. The traditional exemption for broad based plans was premised on the belief that they can serve to facilitate the retention of employees that are critical to new economy companies, and further serve to align the equity interest of these employees with shareholders generally resulting in the shared goal of long-term shareholder value.
Before Nasdaq responds to the SEC, we believe it is important to seek widespread public comment. In that regard, we seek comment on the NYSE proposal, as well as other alternatives that might also be considered to balance a company’s ability to attract and retain employees and align their interests with the shareholders, and the shareholders ability to have a voice in equity compensation, especially where there is a potential for self-dealing.
A copy of Nasdaq’s solicitation for comments can be found on the Web site www.nasdaqnews.com under "Key Reports" by clicking on the link labeled "Nasdaq Solicits Comments on Stock Option Proposals." There, interested parties can also find a detailed list of issues to consider when developing comments.
Persons submitting comments are encouraged to discuss the potential impact of these proposals and to offer alternative approaches. Comments are requested by February 5, 2001, and should be forwarded to: Robert Aber, Senior Vice President, or Sara Bloom, Associate General Counsel. Via email: stock.options@nasdaq.com. Via fax: (202) 728-8321. Via mail: Robert Aber, Senior Vice President, or Sara Bloom, Associate General Counsel; The Nasdaq Stock Market, Inc., 1801 K Street, 8th Floor, Washington, DC 20006.
The Nasdaq Stock Market lists nearly 5,000 companies, has a larger dollar volume, and trades more shares per day than any other U.S. market. Nasdaq® is a subsidiary of the National Association of Securities Dealers, Inc. (NASD®), the largest securities-industry, self-regulatory organization in the United States. For more information about Nasdaq, visit the Nasdaq Web site at www.nasdaq.com or the Nasdaq NewsroomSM at www.nasdaqnews.com.
