New Rules Require Shareholder Approval of Equity Compensation


Washington, D.C., June 30, 2003 — The Securities and Exchange Commission today approved new rules proposed and adopted by the New York Stock Exchange and the Nasdaq Stock Market requiring shareholder approval of equity compensation plans, including stock option plans. The new rules will also require approval for repricings and material plan changes.

The new rules will provide for the first time comprehensive shareholder approval requirements for these plans for companies subject to the listing standards of the NYSE and Nasdaq. The NYSE's new rules will replace its current pilot program, which exempted "broad-based" equity compensation plans from a shareholder approval requirement.

The Commission also approved a change in the NYSE rules for voting shares held in "street name" on equity compensation plans. The change will permit a broker that is a member of the Exchange to vote for or against those plans only when the broker receives instructions from the beneficial owner of the voting securities.

Securities and Exchange Commission Chairman William H. Donaldson said, "These rule changes are an important step by our nation's principal markets. They have responded to the Commission's call for an increased shareholder voice in the equity compensation practices of listed companies and I applaud them. These changes are part of a broad movement by our markets and the Commission to enhance the corporate governance practices of the companies traded on them. The New York Stock Exchange and the Nasdaq Stock Market have proposed additional listing standards to strengthen corporate governance, and the Commission looks forward to working with them to complete these efforts on behalf of investors and shareholders."

The release approving the new rules may be found on the Commission's Web site at