What is considered a “material” amendment to an existing equity compensation plan or arrangement?
• Any material increase in the number of shares to be issued under the plan (other than to reflect a reorganization, stock split, merger, spinoff or similar transaction); Any material increase in benefits to participants, including any material change to: (i) permit a repricing (or decrease in exercise price) of outstanding options, (ii) reduce the price at which shares or options to purchase shares may be offered, or (iii) extend the duration of a plan; Any material expansion of the class of participants eligible to participate in the plan; and, Any expansion in the types of options or awards provided under the plan. While general authority to amend a plan would not obviate the need for shareholder approval, if a plan permits a specific action without further shareholder approval, then no such approval would generally be required. In that regard, absent specific authorization in the plan, a repricing, or a similar action, would not be permitted without shareholder approval. (Updated:
• Any material increase in the number of shares to be issued under the plan (other than to reflect a reorganization, stock split, merger, spinoff or similar transaction); Any material increase in benefits to participants, including any material change to: (i) permit a repricing (or decrease in exercise price) of outstanding options, (ii) reduce the price at which shares or options to purchase shares may be offered, or (iii) extend the duration of a plan; Any material expansion of the class of participants eligible to participate in the plan; and Any expansion in the types of options or awards provided under the plan. While general authority to amend a plan would not obviate the need for shareholder approval, if a plan permits a specific action without further shareholder approval, then no such approval would generally be required. In that regard, absent specific authorization in the plan, a repricing, or a similar action, would not be permitted without shareholder approval. (Updated: A
Related Questions
- Can a company establish and issue shares from an equity compensation plan or arrangement before seeking shareholder approval?
- If a plan is silent on repricings, would it be a material amendment if the company were to reprice outstanding stock options?
- What is considered a "material" amendment to an existing equity compensation plan or arrangement?
