Can a company establish and issue shares from an equity compensation plan or arrangement before seeking shareholder approval?
A company may adopt an equity plan or arrangement, and grant options (but not shares of stock) thereunder, prior to obtaining shareholder approval provided that: (i) no options can be exercised prior to obtaining shareholder approval and (ii) the plan can be unwound, and the outstanding options cancelled, if shareholder approval is not obtained. Companies should be aware of any accounting issues that may arise under these circumstances.
A company may adopt an equity plan or arrangement, and grant options (but not shares of stock) thereunder, prior to obtaining shareholder approval provided that: (i) no options can be exercised prior to obtaining shareholder approval, and (ii) the plan can be unwound, and the outstanding options cancelled, if shareholder approval is not obtained. Companies should be aware of any accounting issues that may arise under these circumstances.
Related Questions
- How should the company report the shares subject to these outstanding rights in the Equity Compensation Plan Information table?
- Can a company establish and issue shares from an equity compensation plan or arrangement before seeking shareholder approval?
- What is considered a "material" amendment to an existing equity compensation plan or arrangement?
