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Staff Interpretation Letters
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All Years; Shareholder Approval; All
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Identification Number
811
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This is in response to your correspondence regarding whether a proposed amendment (the “Amendment”) to the Plan would require shareholder approval pursuant to Marketplace Listing Rule 4350(i)(1)(A) and IM-4350-5 (collectively, the “Rule”). Pursuant to
the Amendment, the authority to accelerate the vesting of awards would be extended to include certain awards of restricted stock units (“RSUs”) to non-employee members of the board of directors.
According to the information you provided, eligible participants under the Plan include officers, directors, employees, and consultants. Awards under the Plan include stock options, stock appreciation rights, restricted stock, and RSUs. The Plan provides
for annual automatic awards of RSUs (“Non-Discretionary RSUs”) to each non-employee director who owns less than a specified percentage of the company’s outstanding shares of common stock. Such RSUs vest 50% upon the board member’s continued board service
through the end of the calendar year in which the award is made, and the remaining 50% upon the member’s continued service through the end of June of the succeeding calendar year.
Currently, a provision of the Plan authorizes the acceleration of vesting of awards. However, another provision states that the board has the authority to determine when an award shall become exercisable, and the duration of the exercise period, except
for awards of Non-Discretionary RSUs (the “RSU Limitation”). Pursuant to the Amendment, the RSU Limitation would be removed thereby allowing the acceleration of the vesting of the Non-Discretionary RSUs. Nothing in the Plan prohibits the issuance of discretionary
awards (including RSUs) to non-employee directors, or the acceleration of the vesting schedule of such awards.
Following our review of the information you provided, we have determined that the Amendment would not be material under the Rule. 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. The Amendment would not change the Plan in either of the aforementioned ways. Further, other provisions
of the Plan permit the issuance of RSUs that could be subject to accelerated vesting. Accordingly, the Rule does not require shareholder approval for the Amendment.
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Publication Date*:
7/31/2012
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Identification Number:
811
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