[Federal Register: December 30, 2002 (Volume 67, Number 250)]
[Notices]
[Page 79681-79683]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30de02-132]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47084; File No. SR-NYSE-2002-67]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the New York Stock Exchange,
Inc. Extending the Pilot Regarding Shareholder Approval of Stock Option
Plans through February 28, 2003, or Such Earlier Date as the NYSE's
Pending Rule Proposal Requiring Shareholder Approval of Equity-
Compensation Plans Is Approved by the Commission
December 23, 2002.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 20, 2002, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend until February 28, 2003, or such
earlier date as the NYSE's pending rule proposal requiring shareholder
approval of equity-compensation plans \3\ is approved by the
Commission, the effectiveness of the amendments to Sections 312.01,
312.03 and 312.04 of the Exchange's Listed Company Manual with respect
to the definition of a ``broadly-based'' stock option plan, which were
approved by the Commission on a pilot basis (the ``Pilot'') on June 4,
1999.\4\ The Pilot was subsequently amended and extended on March 30,
2001 until September 30, 2001.\5\ The Pilot has since been extended
until January 11, 2002,\6\ March 11, 2002,\7\ May 13, 2002,\8\ June 30,
2002,\9\ August 31, 2002,\10\ October 30, 2002,\11\ and December 30,
2002.\12\
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\3\ See Securities Exchange Act Release No. 46620 (October 8,
2002), 67 FR 63486 (October 11, 2002) (File No. SR-NYSE-2002-46).
\4\ See Securities Exchange Act Release No. 41479, 64 FR 31667
(June 11, 1999) (notice of filing and order granting accelerated
approval, on a pilot basis, to File No. SR-NYSE-98-32) (``Original
Pilot Approval Order'').
\5\ See Securities Exchange Act Release No. 44141, 66 FR 18334
(April 6, 2001) (order granting approval, on a pilot basis, to the
File No. SR-NYSE-00-32).
\6\ See Securities Exchange Act Release No. 44886 (September 28,
2001), 66 FR 51083 (October 5, 2001) (notice of filing and immediate
effectiveness of File No. SR-NYSE-2001-37) (``2001 Extension
Request'').
\7\ See Securities Exchange Act Release No. 45275 (January 14,
2002), 67 FR 2718 (January 18, 2002) (File No. SR-NYSE-2002-03).
\8\ See Securities Exchange Act Release No. 45546 (March 12,
2002), 67 FR 10272 (March 18, 2002) (File No. SR-NYSE-2002-14).
\9\ See Securities Exchange Act Release No. 45918 (May 13,
2002), 67 FR 35174 (May 17, 2002) (File No. SR-NYSE-2002-18).
\10\ See Securities Exchange Act Release No. 46143 (June 28,
2002), 67 FR 35174 (July 5, 2002) (File No. SR-NYSE-2002-22).
\11\ See Securities Exchange Act Release No. 46437 (August 29,
2002), 67 FR 57262 (September 9, 2002) (File No. SR-NYSE-2002-42).
\12\ See Securities Exchange Act Release No. 46747 (October 30,
2002), 67 FR 67680 (November 6, 2002) (File No. SR-NYSE-2002-57).
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set
[[Page 79682]]
forth in Sections A, B, and C below, of the most significant aspects of
such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange has had the Pilot with respect to the definition of a
``broadly-based'' stock option plan since June 4, 1999.\13\ On July 13,
2000, the Exchange filed a proposed rule change seeking to extend the
effectiveness of the Pilot until September 30, 2003.\14\ Following
receipt of comments from interested parties and the SEC staff, on
January 19, 2001, the Exchange amended the 2000 Extension Request to
shorten the three-year extension request to one year and to amend the
definition of ``broadly based'' under the Exchange's rule. While the
2000 Extension Request was under consideration, the Commission extended
the Pilot to provide the Commission and the Exchange with additional
time to review and evaluate comment letters.\15\ On March 30, 2001, the
Commission approved the 2000 Extension Request, which amended and
extended the Pilot, on a pilot basis until September 30, 2001.\16\ The
Exchange's 2001 Extension Request extended the Pilot until January 11,
2002 to provide additional time to evaluate the issues presented by the
Pilot.\17\ The Pilot was again extended several times, most recently
until December 30, 2002, for the same reasons.\18\
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\13\ See Original Pilot Approval Order note 4 supra.
\14\ See Securities Exchange Act Release No. 43111 (August 2,
2000), 65 FR 49046 (August 10, 2000) (notice of filing of File No.
SR-NYSE-00-32) (``2000 Extension Request'').
\15\ See Securities Exchange Act Release Nos. 43329 (September
22, 2000), 65 FR 58833 (October 2, 2000) (notice of filing and
immediate effectiveness of File No. SR-NYSE-00-38); 43647 (November
30, 2000), 65 FR 77407 (December 11, 2000) (notice of filing and
immediate effectiveness of File No. SR-NYSE-00-52); and 44018
(February 28, 2001), 66 FR 13821 (March 7, 2001) (notice of filing
and immediate effectiveness of File No. SR-NYSE-2001-04).
\16\ See note 5 supra.
\17\ See note 6 supra.
\18\ See notes 7 through 12 supra.
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On October 7, 2002, in connection with the Exchange's corporate
governance proposals, the Exchange filed a proposal with the Commission
that would require shareholder approval for equity-compensation plans,
making it unnecessary to continue the Pilot. That proposal was
published in the Federal Register on October 11, 2002.\19\ As directed
by the Commission staff, the Exchange is requesting an extension of the
effectiveness of the Pilot until February 28, 2003, or until such
earlier date as the Exchange's proposal relating to shareholder
approval of equity-compensation plans is approved by the Commission.
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\19\ See note 3 supra.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b)(5) of the Act,\20\ which requires, among other
things, that an Exchange have rules designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest.
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\20\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change: (1) Does not significantly affect
the protection of investors or the public interest; (2) does not impose
any significant burden on competition; and (3) does not become
operative for 30 days from the date of filing, or such shorter time as
the Commission may designate if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \21\ and Rule 19b-
4(f)(6) \22\ thereunder.
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \23\ normally
does not become operative prior to 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\24\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and public interest. The Exchange seeks to have
the proposed rule change become operative on or before December 30,
2002, in order to allow the Pilot to continue in effect on an
uninterrupted basis. In addition, under Rule 19b-4(f)(6)(iii), the
Exchange is required to provide the Commission with written notice of
its intent to file the proposed rule change at least five business days
prior to the filing date or such shorter time as designated by the
Commission. The Commission has waived the five-day pre-notice
requirement for this proposed rule change. In addition, for the reasons
discussed below, the Commission has also waived the thirty-day
operative date requirement for this proposed rule change.
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\23\ Id.
\24\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission, consistent with the protection of investors and the
public interest, has determined to make the proposed rule change, which
will extend the Pilot through February 28, 2003, or such earlier date
as the NYSE's pending rule proposal requiring shareholder approval of
equity-compensation plans \25\ is approved by the Commission, become
operative on December 30, 2002. The Commission notes that unless the
Pilot is extended, the Pilot will expire and the provisions of Sections
312.01, 312.03, and 312.04 of the Exchange's Listed Company Manual that
were amended in the Pilot will revert to those in effect prior to June
4, 1999. The Commission believes that such a result could lead to
confusion.
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\25\ See note 3 supra.
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The Commission recognizes that the Pilot has generated many comment
letters from commenters that do not support the NYSE's definition of
``broadly-based'' stock option plans under the Pilot.\26\ The
Commission also notes that many commenters were critical of the NYSE's
existing rules on broadly-based plans prior to the adoption of the
original Pilot. As noted above, if the Pilot is not extended, the rules
prior to the Pilot will go into effect. The proposed rule change merely
extends the duration of the Pilot for only a short period of time and
does not deal with the substantive issues presented by the Pilot
itself.
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\26\ See Original Pilot Approval Order, note 4 supra.
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The Commission notes that once the Exchange's proposed rule change
relating to shareholder approval of equity compensation plans has been
approved by the Commission, those approved rules will supercede this
Pilot because the concept of ``broadly-based''
[[Page 79683]]
stock option plans will no longer be retained in the Exchange's
shareholder approval rules.
Based on these reasons, the Commission has determined that it is
consistent with the protection of investors and the public interest
that the proposed rule change, which will extend the Pilot through
February 28, 2003, or such earlier date as the NYSE's pending rule
proposal requiring shareholder approval of equity-compensation plans is
approved by the Commission, become operative on December 30, 2002.\27\
At any time within 60 days of the filing of the proposed rule change,
the Commission may summarily abrogate such rule change if it appears to
the Commission that such action is necessary or appropriate in the
public interest, for the protection of investors, or otherwise in
furtherance of the purposes of the Act.
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\27\ For purposes only of accelerating the operative date of
this proposal, the Commission notes that it has considered the
proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549-0609.
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
above-mentioned self-regulatory organization. All submissions should
refer to the File No. SR-NYSE-2002-67 and should be submitted by
January 21, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\28\
\28\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-32922 Filed 12-27-02; 8:45 am]
BILLING CODE 8010-01-P