referencelibrarybanner
Listing Center Coronavirus FAQs for Nasdaq-listed Companies
Reference Library - Advanced Search
Find
 


Library 



 
Timeframe
Category
 
Sub-Category
** To make multiple selections, select the first criterion and then press and hold the Ctrl Key **
 
1- 1 of 1 Search Results for:
Libraries:   Staff Interpretation Letters
Filters:   All Years; Shareholder Approval;
 
Search   Clear


Expand All
Printer Friendly View
Mailto Link 
Page: 1 of 1
Frequently Asked Questions
  Staff Interpretation Letter 2010-17
Identification Number 716
This is in response to your correspondence regarding whether a proposed amendment to the Plan (the “Amendment”) would require shareholder approval under Listing Rule 5635(c) and IM-5635-1 (collectively, the “Rule”). The Amendment would affect the timing of the availability of awards as determined under the Plan’s formula for automatic annual increases to the number of shares reserved for issuance (the “Evergreen Provision”).
 
The facts of the matter as they have been submitted to us, and upon which we have based our consideration of this issue, are summarized below.
 
The Plan, which was adopted approximately seven years ago and approved by the company’s shareholders, will terminate on the tenth anniversary of its adoption and contains a provision limiting the aggregate number of shares that may be issued (the “Plan Maximum”). Under the Evergreen Provision, but subject to the Plan Maximum, the number of shares reserved for issuance automatically increases annually by the lesser of a specified percentage of the total shares outstanding (“Annual Percentage Limit”) or a specified fixed number of shares (“Annual Share Limit”).   
 
For the first several years of the Plan, the company’s total shares outstanding (“TSO”) was such that the Annual Percentage Limit resulted in fewer shares being reserved for issuance than would have been reserved under the Annual Share Limit. As a result of increases in the TSO over time, however, the Annual Percentage Limit now exceeds the Annual Share Limit to such an extent that in all likelihood, the remaining annual increases will be limited to the Annual Share Limit.
 
Under the Amendment, on the date of the next scheduled annual increase, the company would be permitted to increase the number of shares available for issuance under the Plan by the aggregate number of shares that otherwise would have been added pursuant to the three remaining annual increases under the Annual Share Limit (the “Final Increase”). That is, the Final Increase would equal the Annual Share Limit multiplied by three. After the Final Increase, the Evergreen Provision would no longer be operative and, accordingly, no additional shares would be added to the Plan in subsequent years absent shareholder approval. The Final Increase would not cause the Plan to exceed the Plan Maximum.
 
You have submitted that the company’s purpose in adopting the Amendment would be to gain increased flexibility in structuring its compensation programs in furtherance of its business needs and hiring plans over the coming months. Awards under the Plan would be broad-based and would not be limited to officers and directors.
 
Following our review of the information that you have provided, we have determined that the Amendment is not material for purposes of the Rule and, therefore, would not require shareholder approval under the Rule. The Amendment would affect only the timing of the availability of awards over the Plan’s final three years and would not increase the potential dilutive effect over the life of the Plan. It would not cause the number of shares issuable to exceed the shareholder-approved Plan Maximum. In addition, the Amendment would not result in a material increase in the benefits to participants, a material expansion of the class of eligible participants, or an expansion in the types of awards available.
 
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 716
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.
Page: 1 of 1
home_footer_links
Copyright_statement
App Store       Google Play       Listing Center Content RSS Feed
The Nasdaq Stock Market, Nasdaq, The Nasdaq Global Select Market, The Nasdaq Global Market, The Nasdaq Capital Market, ExACT and Exchange Analysis and Compliance Tracking system are trademarks of Nasdaq, Inc.
FINRA® and Financial Industry Regulatory Authority, Inc.® are registered trademarks of Financial Industry Regulatory Authority, Inc. OTCBBTM and OTC Bulletin BoardTM are trademarks of FINRA