SEC Approves Extension of NYSE Option Plan Approval Rule

The Securities and Exchange Commission has approved an extension until September 30 of the New York Stock Exchange's pilot program for shareholder approval of stock option plans. Under the plan, companies must get shareholder approval for option grants unless the plan is broad -based, meaning that at least 50% of the full-time, exempt employees are eligible to participate in the plan and that a majority of the shares offered under the plan during the shorter of the three-year period from the time the plan starts or the term of the plan itself actually are awarded to employees who are not officers or directors.

Meanwhile, the NYSE continues to consider a rule change that would set a dilution threshold that would trigger shareholder approval requirements. Under pressure from the SEC, the NASDAQ is considering a similar rule, but would prefer a rule similar to the NYSE rule.