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1- 50 of 53
Search Results for:
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Ordering of Search Results
When searching across multiple libraries:
FAQs will appear in alphabetical order by category and sub-category
Listing Council Decisions will appear in reverse chronological order by year.
Staff Interpretations will appear in reverse chronological order by year
When searching using keywords:
Results are returned in order of term frequency (i.e., the number of times the keywords appear in the material).
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Libraries:
FAQs - Listings
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Filters:
Shareholder Approval; Equity Compensation - Exceptions,Equity Compensation - General/Applicability,Equity Compensation - Materiality of Amendments
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Identification Number
248
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No. Listing Rule 5635(c) provides that the exemption is available only for a "person not previously an employee or director."
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Publication Date*:
7/31/2012
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Identification Number:
248
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Identification Number
250
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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.
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Publication Date*:
7/31/2012
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Identification Number:
250
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Identification Number
251
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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.
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Publication Date*:
7/31/2012
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Identification Number:
251
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Identification Number
252
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A "bona fide 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.
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Publication Date*:
7/31/2012
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Identification Number:
252
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Identification Number
254
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As a safe-harbor, Nasdaq will consider disclosures made within four business days after the award to have been made "promptly."
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Publication Date*:
7/31/2012
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Identification Number:
254
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Identification Number
255
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A company is required to disclose the material terms of the inducement grant, including the recipient(s) of the grant and the number of shares involved. If the disclosure relates to an award to executive officers, or the award was individually negotiated, then the disclosure must include the identity of the recipient.
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Publication Date*:
7/31/2012
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Identification Number:
255
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Identification Number
256
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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.
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Publication Date*:
6/4/2014
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Identification Number:
256
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Identification Number
257
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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.
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Publication Date*:
7/31/2012
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Identification Number:
257
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Identification Number
258
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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.
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Publication Date*:
7/31/2012
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Identification Number:
258
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Identification Number
259
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Publication Date*:
7/31/2012
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Identification Number:
259
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Identification Number
260
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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.
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Publication Date*:
7/31/2012
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Identification Number:
260
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Identification Number
243
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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.
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Publication Date*:
7/31/2012
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Identification Number:
243
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Identification Number
244
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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.
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Publication Date*:
7/31/2012
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Identification Number:
244
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Identification Number
245
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No. Such a plan or arrangement would not be exempt from the shareholder approval requirement.
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Publication Date*:
7/31/2012
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Identification Number:
245
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Identification Number
246
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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.
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Publication Date*:
7/31/2012
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Identification Number:
246
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Identification Number
239
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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.
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Publication Date*:
7/31/2012
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Identification Number:
239
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Identification Number
240
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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.
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Publication Date*:
7/31/2012
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Identification Number:
240
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Identification Number
241
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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.
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Publication Date*:
7/31/2012
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Identification Number:
241
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Identification Number
242
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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.
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Publication Date*:
7/31/2012
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Identification Number:
242
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Identification Number
203
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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. See FAQ #275.
In addition, please see IM 5635-1 and FAQ #219, which focus 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).
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Publication Date*:
7/31/2012
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Identification Number:
203
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Identification Number
209
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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.
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Publication Date*:
7/31/2012
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Identification Number:
209
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Identification Number
210
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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.
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Publication Date*:
7/31/2012
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Identification Number:
210
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Identification Number
211
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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." Notwithstanding the requirement that a consultant must be a natural person, under the SEC guidance, where the consultant performs services for the issuer through a wholly-owned corporate alter ego, the issuer may contract with, and register securities on Form S-8 as compensation to that corporate entity. See Release No. 33–7646, 34–41109, 64 FR 11103 (March 8, 1999) (citing to Aaron Spelling Productions, SEC No-Action Letter (July 1, 1987)). Accordingly, issuances to such entity, may constitute equity compensation under Listing Rule 5635(c).
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Publication Date*:
9/17/2020
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Identification Number:
211
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Identification Number
212
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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.
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Publication Date*:
7/31/2012
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Identification Number:
212
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Identification Number
213
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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.
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Publication Date*:
7/31/2012
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Identification Number:
213
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Identification Number
214
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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.
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Publication Date*:
7/31/2012
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Identification Number:
214
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Identification Number
215
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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.
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Publication Date*:
7/31/2012
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Identification Number:
215
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Identification Number
218
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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.
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Publication Date*:
7/31/2012
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Identification Number:
218
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Identification Number
238
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- Warrants or rights issued to all security holders on equal terms;
- Stock purchase plans available to all security holders on equal terms (e.g., a dividend reinvestment plan);
- Tax qualified, non-discriminatory employee benefit plans or parallel nonqualified plans which are regulated under the Internal Revenue Code and Treasury Department regulations, provided such plans are approved by the issuer's independent compensation committee or a majority of the issuer's independent directors. A similar plan for the company's non-U.S. employees, which provides features necessary to comply with applicable non-U.S. tax laws, is also exempt from the shareholder approval requirement;
- Plans that provide a convenient way to purchase shares on the open market or from the issuer at fair market value;
- Certain plans relating to mergers and acquisitions; or
- Inducement grants.
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Publication Date*:
7/31/2012
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Identification Number:
238
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Identification Number
1673
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An equity compensation plan must provide for an overall limit on the number of shares that may be issued under the plan. In some cases, a plan may also include a further "sublimit" on the number of shares available for a particular type of award, such as restricted stock or options.
A revision to increase the number of shares available under such a sublimit would, generally, be a material amendment to the equity compensation plan because this change would be an expansion of the types of awards available under the plan.
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Publication Date*:
1/11/2019
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Identification Number:
1673
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Identification Number
219
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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.
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Publication Date*:
7/31/2012
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Identification Number:
219
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Identification Number
1269
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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.
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Publication Date*:
10/19/2016
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Identification Number:
1269
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Identification Number
220
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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.
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Publication Date*:
7/31/2012
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Identification Number:
220
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Identification Number
221
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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).
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Publication Date*:
7/31/2012
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Identification Number:
221
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Identification Number
222
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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.
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Publication Date*:
7/31/2012
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Identification Number:
222
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Identification Number
223
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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.
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Publication Date*:
7/31/2012
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Identification Number:
223
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Identification Number
224
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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").
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Publication Date*:
7/31/2012
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Identification Number:
224
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Identification Number
225
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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.
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Publication Date*:
7/31/2012
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Identification Number:
225
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Identification Number
226
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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.
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Publication Date*:
7/31/2012
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Identification Number:
226
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Identification Number
227
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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.
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Publication Date*:
7/31/2012
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Identification Number:
227
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Identification Number
228
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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.
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Publication Date*:
7/31/2012
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Identification Number:
228
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Identification Number
229
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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.
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Publication Date*:
7/31/2012
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Identification Number:
229
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Identification Number
230
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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.
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Publication Date*:
7/31/2012
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Identification Number:
230
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Identification Number
231
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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.
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Publication Date*:
7/31/2012
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Identification Number:
231
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Identification Number
232
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No. Because cash settled SARs do not involve an issuance of equity, they are not subject to the requirements of the Rule.
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Publication Date*:
7/31/2012
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Identification Number:
232
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Identification Number
233
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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.
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Publication Date*:
7/31/2012
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Identification Number:
233
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Identification Number
234
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No. Adopting a provision permitting a cashless exercise does not materially increase the benefits available under the plan.
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Publication Date*:
7/31/2012
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Identification Number:
234
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Identification Number
235
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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.
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Publication Date*:
7/31/2012
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Identification Number:
235
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Identification Number
236
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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.
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Publication Date*:
7/31/2012
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Identification Number:
236
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Identification Number
237
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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.
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Publication Date*:
7/31/2012
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Identification Number:
237
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