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Frequently Asked Questions
  Is shareholder approval required of an equity award to a new employee?    
Identification Number 247
Under Listing Rule 5635(c)(4) shareholder approval is not required of an issuance to a person not previously an employee or director of the company, or following a bonafide period of non-employment, as an inducement material to the individual's entering into employment with the company, provided that such an issuance is approved by the company's compensation committee or a majority of the company's independent directors.
 
Publication Date*: 7/31/2012 Identification Number: 247 Mailto Link
Frequently Asked Questions
  Is the inducement exemption available to induce a member of the board of directors to enter into employment?    
Identification Number 248
No. Listing Rule 5635(c) provides that the exemption is available only for a "person not previously an employee or director."
 
Publication Date*: 7/31/2012 Identification Number: 248 Mailto Link
Frequently Asked Questions
  Is the inducement exemption available to induce someone to become a consultant to the company?    
Identification Number 250
No. Pursuant to Listing Rule 5635(c), the exemption applies to issuances to induce someone to enter into employment. Because a consultant is not an employee, the exemption is not available.  
 
Publication Date*: 7/31/2012 Identification Number: 250 Mailto Link
Frequently Asked Questions
  Is the inducement exemption available to induce a consultant to become an employee?    
Identification Number 251
Provided the consultant was not already acting as an employee, the exemption would be available to induce a consultant to become an employee. This determination would be made based on an examination of the applicable facts and circumstances.
 
Publication Date*: 7/31/2012 Identification Number: 251 Mailto Link
Frequently Asked Questions
  What is "bonafide period of non-employment"?    
Identification Number 252
A "bonafide period of non-employment" is determined on a case-by-case basis. This analysis is not based on time alone. Additional factors in the analysis include:
    • Whether there was a relationship between the former employee and the company during the time of non-employment;
    • Whether the former employee received payments from the company during the period of non-employment;
    • The reasons for ending the employment relationship;
    • Whether the former employee was employed elsewhere after leaving the company; and
    • Whether there was an agreement or understanding that the former employee would return to the company.
Publication Date*: 7/31/2012 Identification Number: 252 Mailto Link
Frequently Asked Questions
  For purpose of the required disclosure of inducement awards, what is meant by "promptly"?    
Identification Number 254
As a safe-harbor, Nasdaq will consider disclosures made within four business days after the award to have been made "promptly."
 
Publication Date*: 7/31/2012 Identification Number: 254 Mailto Link
Frequently Asked Questions
  Can a company disclose the combined size of inducement awards made to a number of employees?    
Identification Number 256
For individually negotiated awards and awards made to executive officers, aggregated disclosure of multiple awards is not permitted. Otherwise, aggregation is permitted: (i) over a period up to two weeks for a company that typically grants equity awards as inducements to new employees, and (ii) when a company makes inducement awards to employees of a target company in connection with a merger or acquisition. Aggregated disclosure must include the material terms of the awards, including the number of employees and the number of shares involved. Such aggregated disclosure does not need to identify specific employees.  
 
Publication Date*: 6/4/2014 Identification Number: 256 Mailto Link
Frequently Asked Questions
  May a company use a Form 8-K to disclose an inducement grant in lieu of a press release?    
Identification Number 257
No. If the company is relying on the exemption from shareholder approval contained in Listing Rule 5635(c)(4), the Rule specifically requires disclosure through a press release.  
 
Publication Date*: 7/31/2012 Identification Number: 257 Mailto Link
Frequently Asked Questions
  May a company rely on the inducement exception for a grant made immediately after an individual is hired if the grant was not discussed or negotiated in connection with the hiring process?    
Identification Number 258
No. Such an award would not be considered a material inducement to the individual entering into employment with the company. Only grants made in connection with an offer of employment are eligible for this exception.
 
Publication Date*: 7/31/2012 Identification Number: 258 Mailto Link
Frequently Asked Questions
  May a company adopt a plan without shareholder approval that would be used solely for inducement awards?    
Identification Number 259
Yes. A company may do so provided that all awards made under the plan meet the requirements of Listing Rule 5635(c) and IM-5635-1.
 
Publication Date*: 7/31/2012 Identification Number: 259 Mailto Link
Frequently Asked Questions
  Is shareholder approval required to amend an inducement award for which the company did not receive shareholder approval?    
Identification Number 260
Yes. A material amendment to an equity compensation award would require shareholder approval, even if the initial grant did not require approval because it was an inducement grant. The materiality of the amendment would be assessed according to IM-5635-1.
 
Publication Date*: 7/31/2012 Identification Number: 260 Mailto Link
Frequently Asked Questions
  Do plans or arrangements involving a merger or acquisition require shareholder approval under Listing Rule 5635(c)?    
Identification Number 243
Under IM-5635-1, plans or arrangements involving a merger or acquisition do not require shareholder approval under Listing Rule 5635(c) in two situations.
 
First, shareholder approval will not be required to convert, replace or adjust outstanding options or other equity compensation awards to reflect the transaction.
 
Second, shares available under certain plans acquired in acquisitions and mergers may be used for certain post-transaction grants without further shareholder approval. This exception applies to situations where the party which is not a listed company following the transaction has shares available for grant under pre-existing plans that meet the requirements of this Listing Rule 5635(c). The assumed plans of the target must have been approved by the target's shareholders. The shares may be used for post-transaction grants of options and other equity awards by the listed company (after appropriate adjustment of the number of shares to reflect the transaction), either under the pre-existing plan or arrangement or another plan or arrangement, without further shareholder approval, provided: (i) the time during which those shares are available for grants is not extended beyond the period when they would have been available under the pre-existing plan, absent the transaction, and (ii) such options and other awards are not granted to individuals who were employed by the granting company or its subsidiaries at the time the merger or acquisition was consummated. Nasdaq would view a plan or arrangement adopted in contemplation of the merger or acquisition transaction as not pre-existing for purposes of this exception.
 
Publication Date*: 7/31/2012 Identification Number: 243 Mailto Link
Frequently Asked Questions
  Are the shares that are issuable as a result of the conversion of the target's outstanding awards and the assumption of the target's equity plans included in determining whether shareholder approval is required under Listing Rule 5635(a)?    
Identification Number 244
Yes. In determining whether shareholder approval is required of the acquisition under Listing Rule 5635(a), the shares issuable to adjust, replace, or convert the target's outstanding awards are included as are any additional shares that would be available under an assumed plan or arrangement of the target. The shares would not be included, however, to the extent they come from a shareholder approved plan of the acquiring company, provided that there is no increase in the number of shares available under such plan.
 
Publication Date*: 7/31/2012 Identification Number: 244 Mailto Link
Frequently Asked Questions
  Would a plan or arrangement adopted in contemplation of a merger or acquisition be considered as a pre-existing plan for purposes of the exception from the shareholder approval requirement?    
Identification Number 245
No. Such a plan or arrangement would not be exempt from the shareholder approval requirement.
 
Publication Date*: 7/31/2012 Identification Number: 245 Mailto Link
Frequently Asked Questions
  If the target of a merger or acquisition has a pre-existing evergreen plan that is assumed in the transaction, when will shareholder approval be required for that plan?    
Identification Number 246
An assumed evergreen plan is subject to the limitation in IM-5635-1 that an evergreen plan cannot have a term in excess of ten years unless shareholder approval is obtained every ten years. The initial ten-year period is measured from the date the target company established the plan.  
 
Publication Date*: 7/31/2012 Identification Number: 246 Mailto Link
Frequently Asked Questions
  Does Nasdaq require shareholder approval of "tax qualified, non-discriminatory employee benefit plans"?    
Identification Number 239
No. Listing Rule 5635(c)(2) states that shareholder approval is not required for tax qualified, non-discriminatory employee benefit plans (e.g., plans that meet the requirements of Section 401(A) or 423 of the Internal Revenue Code) or parallel nonqualified plans. Please note that these plans are subject to approval by either the company's independent compensation committee or a majority of the issuer's independent directors. Similar plans for the company's non-U.S. employees, which provide features necessary to comply with applicable non-U.S. tax laws, are also exempt from shareholder approval.
 
Publication Date*: 7/31/2012 Identification Number: 239 Mailto Link
Frequently Asked Questions
  What is a "parallel nonqualified plan"?    
Identification Number 240
For purposes of Listing Rule 5635(c) and IM-5635-1, the term "parallel nonqualified plan" means a plan that is a pension plan within the meaning of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. 1002 (1999), that is designed to work in parallel with a plan intended to be qualified under Internal Revenue Code Section 401(a), to provide benefits that exceed the limits set forth in Internal Revenue Code Section 402(g) (the section that limits an employee's annual pre-tax contributions to a 401(k) plan), Internal Revenue Code Section 401(a)(17) (the section that limits the amount of an employee's compensation that can be taken into account for plan purposes) and/or Internal Revenue Code Section 415 (the section that limits the contributions and benefits under qualified plans) and/or any successor or similar limitations that may thereafter be enacted.
 
However, a plan will not be considered a "parallel nonqualified plan" unless: (i) it covers all or substantially all employees of an employer who are participants in the related qualified plan whose annual compensation is in excess of the limit of Code Section 401(a)(17) (or any successor or similar limitation that may hereafter be enacted); (ii) its terms are substantially the same as the qualified plan that it parallels except for the elimination of the limitations described in the preceding sentence; and, (iii) no participant receives employer equity contributions under the plan in excess of 25% of the participant's cash compensation.  
 
Publication Date*: 7/31/2012 Identification Number: 240 Mailto Link
Frequently Asked Questions
  Does Nasdaq require shareholder approval of "parallel nonqualified plans"?    
Identification Number 241
No. Listing Rule 5635(c) specifically grants an exception to the shareholder approval requirement for parallel nonqualified plans. Please note that these plans are subject to approval by either the company's independent compensation committee or a majority of the company's independent directors. Similar plans for the company's non-U.S. employees, which provides features necessary to comply with applicable non-U.S. tax laws, are also exempt from shareholder approval.  
 
Publication Date*: 7/31/2012 Identification Number: 241 Mailto Link
Frequently Asked Questions
  Is a plan that provides non-U.S. employees with substantially the same benefits as a Section 401(a) plan, Section 423 plan, or parallel nonqualified plans that the listed company provides to its U.S. employees, but for features necessary to comply with applicable foreign tax law, also exempt from shareholder approval under Listing Rule 5635(c)(2)?    
Identification Number 242
Yes. IM-5635-1 provides that an equity compensation plan that provides non-U.S. employees with substantially the same benefits as comparable tax qualified, non-discriminatory plans or parallel nonqualified plans provided to U.S. employees, but for features necessary to comply with applicable foreign tax law, are exempt from the requirement to obtain shareholder approval. However, if the company is required to obtain shareholder approval under the Internal Revenue Code for the U.S. plan, then the foreign plan would have to be approved by shareholders on the same schedule as the counterpart U.S. plan. Alternatively, if the shares under the foreign plan would be deducted from the shares available under a compliant U.S. plan, then separate shareholder approval would not be required of the foreign plan.
 
Publication Date*: 7/31/2012 Identification Number: 242 Mailto Link
Frequently Asked Questions
  Does Nasdaq require shareholder approval of equity compensation plans?    
Identification Number 203
Yes. Listing Rule 5635(c) requires that a Nasdaq listed company seek shareholder approval when it establishes or materially amends a stock option or purchase plan or other arrangement pursuant to which stock may be acquired by officers, directors, employees or consultants. This includes any sale of securities at a discount to the market value to an officer, director, employee or consultant, even if part of a larger financing transaction.
 
In addition, please see IM 5635-1, which focuses on those corporate actions that would be considered material amendments to existing plans and/or arrangements, and thus, require shareholder approval. IM 5635-1 also discusses circumstances under which shareholder approval is not required pursuant to Listing Rule 5635(c).  
 
Publication Date*: 7/31/2012 Identification Number: 203 Mailto Link
Frequently Asked Questions
  Nasdaq adopted its current rules regarding shareholder approval of equity compensation plans on June 30, 2003. Do plans adopted prior to that date require additional shareholder approval?    
Identification Number 208
Plans that were adopted in compliance with the prior rule were grandfathered when Nasdaq adopted the current rules. However, any material amendment to such a plan effected on or after June 30, 2003, requires shareholder approval. In addition, if a grandfathered plan contains an evergreen provision, the plan cannot have a term in excess of ten years unless shareholder approval is obtained every ten years. Shareholder approval for a grandfathered plan with an evergreen provision would initially need to be obtained within ten years after the effective date of the plan. For more information, please see the final approval order.
 
Publication Date*: 7/31/2012 Identification Number: 208 Mailto Link
Frequently Asked Questions
  Is there an exception for de minimis issuances under Listing Rule 5635(c)?    
Identification Number 209
No. The Rule requires shareholder approval whenever the company establishes or materially amends a stock option or purchase plan or other arrangement pursuant to which stock may be acquired by officers, directors, employees or consultants. Unlike the prior rule, there is no exception for de minimis issuances or "broadly- based" plans.  
 
Publication Date*: 7/31/2012 Identification Number: 209 Mailto Link
Frequently Asked Questions
  Are issuances of treasury shares subject to Listing Rule 5635(c)?    
Identification Number 210
The fact that shares will be issued from the company's treasury or repurchased shares has no impact on the analysis of whether shareholder approval is required under the Rule. Such shares are subject to the Rule.
 
Publication Date*: 7/31/2012 Identification Number: 210 Mailto Link
Frequently Asked Questions
  Who is considered to be a consultant for purposes of Listing Rule 5635(c)?    
Identification Number 211
A consultant is anyone for whom the company is eligible to use a Form S-8. The instructions for the Form S-8 state that: "Form S-8 is available for the issuance of securities to consultants or advisors only if: (i) they are natural persons; (ii) they provide bona fide services to the registrant; and (iii) the services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the registrant's securities."
 
Publication Date*: 7/31/2012 Identification Number: 211 Mailto Link
Frequently Asked Questions
  Can a company establish and issue shares from an equity compensation plan or arrangement before seeking shareholder approval?    
Identification Number 212
A company may adopt an equity plan or arrangement, and grant options (but not shares of stock) thereunder, prior to obtaining shareholder approval provided that: (i) no options can be exercised prior to obtaining shareholder approval, and (ii) the plan can be unwound, and the outstanding options cancelled, if shareholder approval is not obtained. Companies should be aware of any accounting issues that may arise under these circumstances.
 
Publication Date*: 7/31/2012 Identification Number: 212 Mailto Link
Frequently Asked Questions
  May a company grant stock awards subject to obtaining subsequent shareholder approval?    
Identification Number 213
No. Unlike a situation where the exercise of stock options is contingent on obtaining shareholder approval, a company may not grant shares of stock prior to obtaining shareholder approval.
 
Publication Date*: 7/31/2012 Identification Number: 213 Mailto Link
Frequently Asked Questions
  Does Nasdaq's shareholder approval requirement for equity compensation plans or arrangements apply to Foreign Private Issuers?    
Identification Number 214
Yes. Nasdaq's shareholder approval requirement for equity compensation plans or arrangements applies to Foreign Private Issuers. However, a Foreign Private Issuer may follow its home country practice in lieu of this requirement if it follows the process described in Listing Rule 5615(a)(3). Please see Non-U.S. Companies FAQs for additional information regarding this process.
 
Publication Date*: 7/31/2012 Identification Number: 214 Mailto Link
Frequently Asked Questions
  Is Nasdaq's requirement for shareholder approval of equity compensation plans or arrangements applicable to initial listings?    
Identification Number 215
Generally, shareholder approval is not required of plans or arrangements that are in place at the time of a company's listing on Nasdaq. Shareholder approval is required; however, for any material amendment to such plans after listing. In addition, if the plan contains an evergreen provision, the plan cannot have a term in excess of ten years unless shareholder approval is obtained every ten years as set forth in IM-5635-1.
 
Publication Date*: 7/31/2012 Identification Number: 215 Mailto Link
Frequently Asked Questions
  What is the difference between a formula plan and an evergreen plan? When is shareholder approval required of formula or evergreen plans?    
Identification Number 218
A formula plan provides for automatic grants pursuant to a formula. Examples include restricted stock grants based on a certain dollar amount and/or matching stock contributions based on the amount of compensation a participant elects to defer. An evergreen plan is one that contains a formula for the automatic increase in the number of shares available under the plan.

Formula and evergreen plans cannot have a term in excess of ten years unless shareholder approval is obtained every ten years. Plans that do not contain a formula and do not impose a limit on the number of shares available for grant would require shareholder approval of each grant under the plan.
 
Publication Date*: 7/31/2012 Identification Number: 218 Mailto Link
Frequently Asked Questions
  What is considered a material amendment to an existing equity compensation plan or arrangement?    
Identification Number 219
As set forth in IM-5635-1, a material amendment includes, but is not limited to, the following:
    • Any material increase in the number of shares to be issued under the plan (other than to reflect a reorganization, stock split, merger, spinoff or similar transaction);
    • Any material increase in benefits to participants, including any material change to: (i) permit a repricing (or decrease in exercise price) of outstanding options, (ii) reduce the price at which shares or options to purchase shares may be offered, or (iii) extend the duration of a plan;
    • Any material expansion of the class of participants eligible to participate in the plan; and
    • Any expansion in the types of options or awards provided under the plan.
While general authority to amend a plan would not obviate the need for shareholder approval, if a plan permits a specific action without further shareholder approval, then no such approval would generally be required. In that regard, absent specific authorization in the plan, a repricing, or a similar action, would not be permitted without shareholder approval.  
 
Publication Date*: 7/31/2012 Identification Number: 219 Mailto Link
Frequently Asked Questions
  Is an amendment to an equity compensation plan to increase the withholding rate to satisfy tax obligations, such as from the minimum tax rate to the maximum tax rate, considered a material amendment?
Identification Number 1269
Generally, an amendment to increase the withholding rate to satisfy tax obligations would not be considered a material amendment to an equity compensation plan. Allowing the holder of an award to surrender unissued shares to pay tax withholdings is similar to settling the award in cash at market price, and neither creates a material increase in benefits to participants nor increases the number of shares to be issued under the plan. This type of change also is not an expansion in the types of awards provided under the plan. This analysis is the same regardless of whether the plan allows the shares surrendered for tax withholdings to be added back to the pool of shares available for issuance as future awards. Accordingly, an amendment to an equity compensation plan to increase the withholding rate to satisfy tax obligations would not be considered a material amendment to the plan.
 
Publication Date*: 10/19/2016 Identification Number: 1269 Mailto Link
Frequently Asked Questions
  What is considered to be a "repricing"?    
Identification Number 220
Generally, "repricing" means any of the following or any other action that has the same effect:
    • Lowering the strike price of an option after it is granted;
    • Any other action that is treated as a repricing under generally accepted accounting principles; or
    • Canceling an option at a time when its strike price exceeds the fair market value of the underlying stock, in exchange for another option, restricted stock, or other equity, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction.
Publication Date*: 7/31/2012 Identification Number: 220 Mailto Link
Frequently Asked Questions
  If a plan is silent on repricings, would it be a material amendment if the company were to reprice outstanding stock options?    
Identification Number 221
Yes. Unless a plan specifically authorizes repricing, or a similar action, any repricing of options would be a material amendment requiring shareholder approval pursuant to Listing Rule 5635(c).
 
 
Publication Date*: 7/31/2012 Identification Number: 221 Mailto Link
Frequently Asked Questions
  Does a "value for value" exchange require shareholder approval?    
Identification Number 222
Yes. Unless the plan authorizes it, such an exchange would be considered a material amendment that requires shareholder approval. An example of this type of exchange is where outstanding options are valued according to a pricing model and the optionees receive, in exchange for their options, shares of stock equal in value to the calculated value of the stock options.
 
Publication Date*: 7/31/2012 Identification Number: 222 Mailto Link
Frequently Asked Questions
  Would it be a material amendment to change the method of determining the exercise price for newly granted stock options?    
Identification Number 223
No. Nasdaq would not consider it to be a material amendment to change the method of determining the exercise price for newly granted stock options to the closing market price on the date of the award when a plan provides for an exercise price of, for example: (i) the closing market price on the day prior to the grant date; (ii) the average of the high and low market price on the date of grant; or (iii) the average of the high and low market price on the date prior to the date of grant.
 
Publication Date*: 7/31/2012 Identification Number: 223 Mailto Link
Frequently Asked Questions
  Would it be a material amendment for a company to buy back outstanding awards for cash?    
Identification Number 224
The rule applies to equity awards and not to a payment of cash. As such, buying back outstanding awards for cash would not require shareholder approval under Listing Rule 5635(c) unless, based on the specific facts and circumstances, it is treated as a repricing under Generally Accepted Accounting Principles ("GAAP").
 
Publication Date*: 7/31/2012 Identification Number: 224 Mailto Link
Frequently Asked Questions
  Is a provision in a plan that generally allows for a plan administrator to "modify or amend" an award sufficient to permit a repricing or option exchange without shareholder approval absent any additional, specific authority?    
Identification Number 225
No. An option repricing or exchange based merely on the authority to modify or amend outstanding awards would not be permitted without shareholder approval. This is the type of general authority that IM-5635-1 indicates would not obviate the need for shareholder approval.
 
Generally, when preparing plans and presenting them for shareholder approval, companies should strive to make plan terms easy to understand. In that regard, it is recommended that plans meant to permit repricing use explicit terminology to make this clear.
 
Publication Date*: 7/31/2012 Identification Number: 225 Mailto Link
Frequently Asked Questions
  Is an increase in the number of shares available under a plan considered a material amendment?    
Identification Number 226
Yes. An increase in the number of shares available under a plan would generally be considered to be material because it could result in additional dilution to the shareholders.
 
Publication Date*: 7/31/2012 Identification Number: 226 Mailto Link
Frequently Asked Questions
  Consider a plan that provides for periodic automatic awards of specific number of options, for example, annual awards of 10,000 options. Is it a material amendment to increase the awards to 15,000?    
Identification Number 227
No. Generally, increasing the size of awards is not a material amendment provided that the maximum number of shares available under the plan is not increased.
 
Publication Date*: 7/31/2012 Identification Number: 227 Mailto Link
Frequently Asked Questions
  Does a change in the vesting schedule of stock option or other equity awards require shareholder approval?    
Identification Number 228
Generally, a change in the vesting terms for an award is not a material amendment, provided that the change does not result in either an extension in the term of the award beyond the maximum allowable term under the plan or in an addition to the aggregate shares available under the plan.
 
Publication Date*: 7/31/2012 Identification Number: 228 Mailto Link
Frequently Asked Questions
  Is an amendment to a plan to extend the term of an option considered a material amendment?    
Identification Number 229
Generally, extending the term of an option is not considered a material amendment, provided that the extension is not beyond the maximum term permissible under the plan. For example, consider a plan that authorizes the plan administrator to grant awards with a term of up to ten years. If an option is granted with a term of five years, and the plan administrator subsequently changes the term to ten years, it is not a material amendment to the plan. The same analysis would also apply to the extension of a post-termination exercise period.
 
Publication Date*: 7/31/2012 Identification Number: 229 Mailto Link
Frequently Asked Questions
  Is shareholder approval required of a plan or arrangement that permits an employee or director to use cash payments to purchase stock from the company at market price?    
Identification Number 230
A plan that permits the purchase of stock for cash does not require shareholder approval if such purchase is at the discretion of the participant and is at or above market value. This is permissible under Listing Rule 5635(c)(2), which provides an exemption from Nasdaq's shareholder approval rules for equity compensation plans or arrangements that merely provide a convenient way to purchase shares on the open market or from the company at fair market value. Such purchases can be made on an immediate or deferred basis.
 
Publication Date*: 7/31/2012 Identification Number: 230 Mailto Link
Frequently Asked Questions
  Is shareholder approval required to add stock-settled Stock Appreciation Rights ("SARs") to a plan that provides only for stock options?    
Identification Number 231
No. The addition of SARs will not constitute an expansion of the types of awards available, since the SARs are substantially equivalent to stock options.
 
Publication Date*: 7/31/2012 Identification Number: 231 Mailto Link
Frequently Asked Questions
  Are cash settled Stock Appreciation Rights ("SARs") subject to Listing Rule 5635(c)?    
Identification Number 232
No. Because cash settled SARs do not involve an issuance of equity, they are not subject to the requirements of the Rule.  
 
Publication Date*: 7/31/2012 Identification Number: 232 Mailto Link
Frequently Asked Questions
  Is shareholder approval required to add Restricted Stock Units ("RSUs") to an equity compensation plan that allows for the issuance of restricted stock?    
Identification Number 233
An award of RSUs typically results in the issuance of restricted stock on a deferred basis after vesting requirements are met. As such, this type of award is substantially equivalent to the award of restricted stock, and if the plan allows for the award of restricted stock, the addition of RSUs is not a material modification that requires shareholder approval under Nasdaq's rules. Shareholder approval would be required, however, to add RSUs to a plan that does not provide for restricted stock awards because the revision would expand the types of awards available.
 
Publication Date*: 7/31/2012 Identification Number: 233 Mailto Link
Frequently Asked Questions
  Is the addition of a "cashless exercise" feature to an option plan a material amendment?    
Identification Number 234
No. Adopting a provision permitting a cashless exercise does not materially increase the benefits available under the plan.
 
Publication Date*: 7/31/2012 Identification Number: 234 Mailto Link
Frequently Asked Questions
  Does Nasdaq require shareholder approval for an amendment that removes a provision in a plan that permits repricing?    
Identification Number 235
No. Nasdaq rules require shareholder approval for a material amendment to an equity compensation plan. Removing a repricing provision would not increase the benefits available under the plan, and therefore would not be considered a material amendment requiring shareholder approval under Nasdaq's rules.
 
Publication Date*: 7/31/2012 Identification Number: 235 Mailto Link
Frequently Asked Questions
  Does Nasdaq require shareholder approval for an amendment that removes a provision in a plan that permits shares underlying forfeited awards to be reissued?    
Identification Number 236
No. Nasdaq rules require shareholder approval of an increase in the number of shares available under a plan. An amendment to eliminate a provision permitting the reissuance of shares underlying forfeited awards would not result in such an increase, and would not otherwise increase the benefits available under the plan, and therefore would not be considered a material amendment requiring shareholder approval under Nasdaq's rules.  
 
Publication Date*: 7/31/2012 Identification Number: 236 Mailto Link
Frequently Asked Questions
  What is considered to be a material expansion of the class of participants?    
Identification Number 237
The classes of participants specified in the rule are officers, directors, employees, and consultants. As such, an amendment to extend eligibility to any of these classes not already authorized under the plan would be a material amendment requiring shareholder approval. In addition, if a class of participants is specifically excluded from a plan (e.g., employee-directors from a director plan), it would be a material expansion of the class to amend the plan to include those participants. Likewise, it would be material amendment to add non-employee directors to a plan which does not include directors as a class of eligible participants.  
 
Publication Date*: 7/31/2012 Identification Number: 237 Mailto Link
Frequently Asked Questions
  Does a sale of securities in a transaction (other than a public offering) at a discount to the market value to officers, directors, employees, or consultants require shareholder approval under Listing Rule 5635(c)?  
Identification Number 275
Yes. The issuance of common stock (or equivalents) or securities convertible into or exercisable for common stock to officers, directors, employees, or consultants at a price less than the market value of the stock is considered a form of "equity compensation" and requires shareholder approval unless the issuance is part of a public offering (as described in IM-5635-3). For this purpose, market value is the closing bid price immediately preceding the time the company enters into a binding agreement to issue the securities.
 
Issuances to an entity controlled by an officer, director, employee, or consultant of the listed company may also be considered equity compensation under certain circumstances, such as where the issuance would be accounted for under Generally Accepted Accounting Principles as equity compensation or result in the disclosure of compensation under the applicable provisions of Regulation S-K.
 
Note that this provision also applies to limited partnerships, which are required by Rule 5615(a)(4)(H) to obtain the same approval for equity compensation as would be required under Rule 5635(c) and IM-5635-1.
 
A company considering an issuance to an entity controlled by an officer, director, employee, or consultant is encouraged to contact its Listing Qualifications analyst by phone at +1 301 978 8008 to discuss the transaction prior to entering into a definitive agreement.
 
Publication Date*: 6/18/2013 Identification Number: 275 Mailto Link
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
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