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Frequently Asked Questions
  Staff Interpretation Letter 2006-29
Identification Number 839
This is in response to your correspondence regarding whether a proposed amendment (the “Amendment”) to the company’s equity compensation plan (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 company would be permitted, by means of a net issuance feature (“Net Issuance”), to withhold the taxes that a participant would owe in connection with awards of restricted stock, restricted stock units, and stock appreciation rights (the “Taxes”).
 
According to the information you provided, the Plan originally allowed only for the grant of options to participants.  Thereafter, the Plan was amended, with shareholder approval, to also allow for the award of restricted stock, restricted stock units, and stock appreciation rights.  Due to a clerical error when this amendment was made, the provision that allows for Net Issuance for stock options was not also expanded to include other types of awards.  The Amendment would correct this oversight, such that upon the vesting or exercise of an award, as applicable, the company could withhold from a participant a portion of the shares otherwise issuable equal in value to the dollar amount of the Taxes and would pay that amount to the appropriate tax authorities.  Any such redemption would occur at the fair market value of the shares at the time of withholding.
 
Following our review of the information you provided, we have determined that the Amendment would not be a material amendment under the Rule.  We note that the Amendment would not result in a material increase in benefits to the participants because the market value of the withheld shares would equal the dollar amount of the Taxes.  We also note that the Amendment would not result in an increase in the number of shares to be issued under the Plan, in an expansion of the class of eligible participants, or in an expansion of the types of options or awards available.  Accordingly, the Rule does not require shareholder approval for the Amendment.
 
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 839
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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