SEC Overrules Division No-Action Letter on Shareholder Votes on Expensing Options

On December 6, the Securities and Exchange Commission overruled a staff letter in the case of National Semiconductor concerning the right of shareholders to request a vote on expensing options. The staff had concluded that choosing a method for accounting for options was an ordinary business matter and, as such, shareholder proposals were excludable. The Commission disagreed. From this point forward, then, companies will only be able to exclude such proposals on other grounds, which may be difficult to find.