SEC Expands Shareholder Power to Vote on Equity Compensation Plans

FOR IMMEDIATE RELEASE
2002-103

Washington, DC, July 15, 2002 -- The staff of the Securities and Exchange Commission has announced a change in policy regarding the opportunity of shareholders to approve equity compensation plans.

The SEC's Division of Corporation Finance today published Staff Legal Bulletin No. 14A announcing that it had changed its position regarding the application of Exchange Act Rule 14a-8, the "shareholder proposal" rule, to equity compensation plans.

Previously, the division applied the rule to permit the exclusion of shareholder proposals relating to broad-based equity compensation plans on the basis that they were related to a company's "ordinary business" matters.

The Division announced that, going forward, a public company may not rely on the rule's "ordinary business" provision to omit the following proposals from its proxy statement:

• Any proposal that focuses on equity compensation plans that may be used to compensate only senior executive officers and directors; and
   
• Any proposal that focuses on equity compensation plans that potentially would result in material dilution to existing shareholders, regardless of who participates in the plan.

Unlike existing proposals of the New York Stock Exchange and the Nasdaq, the new staff interpretation applies to all public companies, not only companies listed or quoted on those markets.

Investors and companies with questions about this bulletin are encouraged to call Keir D. Gumbs, Special Counsel, Office of Chief Counsel, Division of Corporation Finance, at (202) 942-2900.