SEC Issues New Option Disclosure Rules

The Securities and Exchange Commission has issued new rules for publicly traded companies concerning disclosure of their stock options. The new rules become effective in the second quarter of next year (although there is some ambiguity of this; the may not be effective until the end of the second quarter). An SEC press release describes the new procedures as follows:

We adopted amendments to our rules and forms under the Securities Exchange Act of 1934 to enhance company disclosure of employee stock option plans and other equity compensation arrangements. Starting in the second quarter of next year, companies will have to provide detailed information about their equity compensation plans in a new table in their annual reports on Forms 10-K and 10-KSB filed with the SEC. This information will also have to be included in a company's proxy or information statement in years in which the company is submitting a compensation plan for security holder approval. The table will include the number and weighted-average exercise price of outstanding options, warrants and rights, and the number of securities available for future issuance under a company's existing equity compensation plans. The new disclosure will be given separately for plans that have been approved by security holders and plans that have not been approved by security holders.