[Federal Register Volume 66, Number 22 (Thursday, February 1, 2001)]
[Proposed Rules]
[Pages 8732-8741]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-2730]



[[Page 8731]]

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Part VI





Securities and Exchange Commission





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17 CFR Parts 228 et al.



Disclosure of Equity Compensation Plan Information; Proposed Rule

  Federal Register / Vol. 66, No. 22 / Thursday, February 1, 2001 / 
Proposed Rules  

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 228, 229, 240 and 249

[Release Nos. 33-7944, 34-43892; File No. S7-04-01]
RIN 3235-AI01


Disclosure of Equity Compensation Plan Information

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rules.

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SUMMARY: We are publishing for comment proposed amendments to the 
disclosure requirements applicable to proxy statements and periodic 
reports under the Securities Exchange Act of 1934. We seek to enhance 
disclosure of the number of securities authorized for issuance under, 
and received by or allocated to participants pursuant to, equity 
compensation plans.

DATES: Comments should be submitted on or before April 2, 2001.

ADDRESSES: You should submit three copies of your comments to Jonathan 
G. Katz, Secretary, U.S. Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549-0609. You also may submit your 
comments electronically to the following electronic mail address: [email protected]. All comment letters should refer to File Number S7-
04-01; please include this file number in the subject line if you use 
electronic mail. Comment letters will be available for public 
inspection and copying in the Commission's Public Reference Room, 450 
Fifth Street, NW., Washington, DC 20549. We will post electronically 
submitted comment letters on our Internet web site 
http://www.sec.gov>.\1\
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    \1\ We do not edit personal, identifying information, such as 
names or electronic mail addresses, from electronic submissions. 
Submit only information you wish to make publicly available.

FOR FURTHER INFORMATION CONTACT: Raymond A. Be, Office of Rulemaking, 
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Division of Corporation Finance, at (202) 942-2886.

SUPPLEMENTARY INFORMATION: Today, we are publishing for comment 
proposed amendments to Item 201 \2\ of Regulation S-B,\3\ Item 201 \4\ 
of Regulation S-K \5\ and Form 10-K,\6\ Form 10-KSB \7\ and Schedule 
14A \8\ under the Securities Exchange Act of 1934.\9\ Schedule 14C \10\ 
under the Exchange Act also would be affected by the proposed 
amendments. These amendments would require disclosure in a registrant's 
proxy statement or annual report on Form 
10-K or 10-KSB of the following information:
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    \2\ 17 CFR 228.201.
    \3\ 17 CFR 228.10, et seq.
    \4\ 17 CFR 229.201.
    \5\ 17 CFR 229.10, et seq.
    \6\ 17 CFR 249.310.
    \7\ 17 CFR 249.310b.
    \8\1\ 17 CFR 240.14a-101.
    \9\ 15 U.S.C. Sec. 78a, et seq.
    \10\ 17 CFR 240.14c-101.
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     The number of securities authorized for issuance under 
each equity compensation plan of the registrant in effect as of the end 
of the most recently completed fiscal year;
     The number of securities issued pursuant to equity awards 
made during the last completed fiscal year, plus the number of 
securities to be issued upon the exercise of options, warrants or 
rights granted during the last completed fiscal year, under each plan;
     The number of securities to be issued upon the exercise of 
outstanding options, warrants or rights under each plan; and
     Other than securities to be issued upon the exercise of 
outstanding options, warrants or rights, the number of securities 
remaining available for future issuance under each plan.
    We also are making a non-substantive change to Exchange Act Rule 
14a-3 \11\ to make clear that this disclosure is not required in an 
annual report to security holders.
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    \11\ 17 CFR 240.14a-3(b)(9).
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I. Discussion of Proposals

A. Background

    Today, the use of equity compensation, particularly in the form of 
stock options, appears to be growing.\12\ As the use of equity 
incentives has grown, so too have concerns about their impact.\13\ 
These concerns involve:
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    \12\ The National Center for Employee Ownership, a non-profit 
research organization, estimates that nearly 10 million employees 
currently receive stock options, up from one million in 1992. See 
Pallavi Gogol, When Good Options Go Bad, Bus. Wk., Dec. 11, 2000, at 
EB 96. See also Broad-based Stock Options--1999 Update, William J. 
Mercer, Inc. (1999) (survey of 350 major industrial and service 
corporations finding that 39.4% have broad-based (at least 50% of 
employees eligible to participate) stock option plans and 18% made 
grants under such plans; compared with 17% of companies offering 
broad-based stock option plans and 5.7% making grants in 1993).
    \13\ See Eric D. Roiter, The NYSE Wrestles with Shareholder 
Approval of Stock Option Plans, Corp. Gov. Adv., Vol. 8, No. 1 
(Jan./Feb. 2000), at 1. See also, for example, Gretchen Morgenson, 
Hidden Costs of Stock Options May Soon Come Back to Haunt, N.Y. 
Times, June 13, 2000, at A1; Robert McGough, Tech Companies' Liberal 
Use of Stock Options Could Swamp Investors, Drain Firms' Resources, 
Wall St. J., July 28, 2000, at C1; Shawn Tully, The Party's Over, 
Fortune, June 26, 2000, at 156.
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     The absence of full disclosure to security holders about 
equity compensation plans;
     The potential dilutive effect of equity compensation 
plans; and
     The adoption of many plans without the approval of 
security holders.
    Our current rules do not require disclosure of the total number of 
securities that a registrant has authorized for issuance under its 
entire equity compensation program. Although our rules require 
disclosure in a registrant's proxy statement of the material features 
of a compensation plan when submitting the plan for security holder 
action,\14\ including, in the case of a plan containing options, 
warrants or rights, the title and amount of securities underlying such 
options, warrants or rights,\15\ that disclosure need address only the 
plan upon which action is being taken.\16\ Accordingly, we have been 
urged to consider greater transparency of all equity compensation 
plans, whether or not the plans have received security holder 
approval.\17\ This information is important if investors are to assess 
the effect that equity compensation plans have on their ownership or to 
compare the equity compensation plans of a registrant with those of its 
competitors.

[[Page 8733]]

Disclosure of the overall number of securities of a registrant 
authorized for issuance under employee stock option plans then in 
effect is sometimes available indirectly through the registrant's 
financial statements included in its annual report to security 
holders.\18\ This disclosure is not necessarily effective, however, 
since it is not consistently available in any one location or format, 
may not include non-derivative securities awarded to employees and may 
not include stock options granted to non-employees.\19\
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    \14\ See Item 10(a)(1) of Schedule 14A [17 CFR 240.14a-101, Item 
10(a)(1)].
    \15\ See Item 10(b)(2)(i)(A) of Schedule 14A [17 CFR 240.14a-
101, Item 10(b)(2)(i)(A)].
    \16\ Similarly, while Item 402(c) of Regulation S-B [17 CFR 
228.402(c)] and Item 402(c) of Regulation S-K [17 CFR 229.402(c)] 
require disclosure of the number of stock option grants during the 
last fiscal year, that disclosure need address only the named 
executive officers of the registrant (as defined in the item). See 
also Item 402(b)(2)(iv)(B) of Regulation S-B [17 CFR 
228.402(b)(2)(iv)(B)] and Item 402(b)(2)(iv)(B) of Regulation S-K 
[17 CFR 229.402(b)(2)(iv)(B)].
    \17\ See, for example, the letter dated September 1, 2000 from 
Keith Johnson, Chief Legal Counsel, State of Wisconsin Investment 
Board, the letter dated August 28, 2000 from James P. Hoffa, General 
President, International Brotherhood of Teamsters, the letter dated 
August 23, 2000 from Peter C. Clapman, Senior Vice President & Chief 
Counsel, Investments, Teachers Insurance and Annuity Association--
College Retirement Equities Fund and the letter dated August 17, 
2000 from Sarah A.B. Teslik, Executive Director, Council of 
Institutional Investors, each to the Commission responding to Self-
Regulatory Organizations; New York Stock Exchange, Inc. (``NYSE''); 
Notice of Filing of Proposed Rule Change by the NYSE to Extend the 
Pilot Relating to Shareholder Approval of Stock Option Plans, 
Securities Exchange Act Release No. 43111 (Aug. 2, 2000) [65 FR 
49046 (Aug. 10, 2000)]. These letters are available in our Public 
Reference Room at 450 Fifth Street, NW., Washington, DC 20549-0609, 
in File No. SR-NYSE-00-32. See also Self-Regulatory Organizations; 
NYSE; Order Approving Proposed Rule Change and Notice of Filing and 
Order Granting Accelerated Approval of Amendments Nos. 1 and 2 
Thereto Relating to Shareholder Approval of Stock Option Plans, 
Securities Exchange Act Release No. 41479 (June 4, 1999) [64 FR 
31667 (June 11, 1999)].
    \18\ See Exchange Act Rule 14a-3(b) [17 CFR 240.14a-3(b)]. 
Statement of Financial Accounting Standards No. 123, Accounting for 
Stock-Based Compensation, (Oct. 1995), requires that an entity 
disclose in its financial statements the number of shares authorized 
for grants of options or other equity instruments (para. 46), the 
number and weighted-average exercise prices of options outstanding 
at the beginning of the year, outstanding at the end of the year, 
exercisable at the end of the year and granted, exercised, forfeited 
or expired during the year for each year for which an income 
statement is presented (para. 47(a)) and the number, weighted-
average exercise price and weighted-average remaining contractual 
life of options outstanding and options currently exercisable at the 
date of the latest statement of financial position presented (para. 
48).
    \19\ In a recent annual study on stock plan dilution, the 
Investor Responsibility Research Center, Inc. (``IRRC'') found that 
about 20% of the companies surveyed did not disclose the number of 
shares available for future awards under their employee stock plans. 
See Potential Dilution--1999, The Potential Dilution from Stock 
Plans at the S&P Super 1,500 Companies, IRRC (2000) (``IRRC Dilution 
Study'').
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    In addition, significant concern has arisen as to the level of 
potential dilution that equity compensation plans now represent. This 
concern relates to dilutive potential from the standpoint of both 
economic and voting power. Issuance of equity securities under these 
plans may result in a significant reallocation of ownership in the 
enterprise between existing security holders and management and 
employees.\20\
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    \20\ The amount of securities allocated for equity compensation 
plans has been increasing for several years. A recent study of the 
stock-based pay practices at the nation's 200 largest corporations 
indicates that these companies allocated 13.7% of outstanding shares 
(calculated on a fully diluted basis) for management and employee 
equity incentives in 1999, compared to only 6.9% in 1989. See 1999 
Equity Stake, Study of Management Equity Participation in the Top 
200 Corporations, Pearl Meyers & Partners, Inc. (1999). The 
percentage may be even higher in some industries, such as the high-
technology sector. See Trends in Equity Compensation 1996-2000, 
iQuantic, Inc. (2000) (number of options outstanding as a percentage 
of the total number of common shares outstanding for 200 major high-
technology companies was 15.8% in 1999 compared to 12.4% in 1997). 
This figure does not take into account securities available for 
future grant. See also IRRC Dilution Study (average potential 
dilution for 1,175 companies studied was 13.5% in 1999 compared to 
11.6% in 1997; average potential dilution of 434 ``S&P 600 
SmallCap'' companies studied was 16.3% in 1999 compared to 13.8% in 
1997).
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    Finally, many equity compensation plans may not receive security 
holder approval. At the state level, approval by security holders is 
required in only a few jurisdictions.\21\ At the federal level, 
approval by security holders is required only to qualify for favorable 
treatment under the federal income tax laws \22\ or in the case of the 
issuance of options, warrants or rights by a business development 
company.\23\ While the rules of self-regulatory organizations require 
publicly-traded companies to obtain security holder approval for some 
plans,\24\ these rules contain exceptions that enable companies to 
implement many employee stock plans without security holder 
approval.\25\ Accordingly, some market participants have expressed 
concern that a growing number of employee stock plans escape security 
holder scrutiny because they are not submitted for approval.\26\
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    \21\ See Herbert Kraus, Executive Stock Options and Stock 
Appreciation Rights, L.J. Press (2000), at 2.07. These states 
include Alaska (Alaska Stat. Sec. 10.06.343), Hawaii (Haw. Rev. 
Stat. Sec. 415-20), Maine (13A Me. Rev. Stat. Ann. Sec. 508[3]), New 
Mexico (N.M. Stat. Ann. Sec. 53-11-20), South Dakota (S.D. Comp. L. 
Sec. 47-3-48 (security holder approval required for issuance of 
shares to officers or employees)), Vermont (Vt. Stat. Ann. 
Sec. 6.24) and West Virginia (W. Va. Code Ann. Sec. 31-1-84). See 
also N.Y. Bus. Corp. Law Sec. 505(d). Prior to October 11, 2000, 
Section 505(d) of the Business Corporations Law of the State of New 
York required approval of any stock option plan by a majority of a 
corporation's shareholders. As amended by S. 6780 (Oct. 11, 2000), 
this provision now requires approval of a stock option plan by a 
majority of the shareholders only where the corporation's shares are 
not listed or authorized for trading on a stock exchange or 
automated quotation system.
    \22\ See 26 U.S.C. 162(m) and 422 (1998).
    \23\ See Section 61(a)(3)(A)(iv) of the Investment Company Act 
of 1940, 15 U.S.C. Sec. 80a-61(a)(3)(A)(iv).
    \24\ See NYSE, NYSE Listed Company Manual, para. 312.03(a) 
(Foundation 1996); American Stock Exchange, LLC (``AMEX''), AMEX 
Company Guide, Sec. 711 (Foundation 1996); Nasdaq Stock Market Rule 
4460(i)(1)(A), NASD Securities Dealer Manual (CCH) at 5512 (1996 
Supp).
    \25\ Id. See also Randall S. Thomas and Kenneth J. Martin, The 
Determinants of Shareholder Voting on Stock Option Plans, 35 Wake 
Forest L. Rev. 31, 48 (2000).
    \26\ See n. 17 above.
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    We are proposing amendments that would require registrants to 
disclose, at least annually, information about the total number of 
securities that have been authorized for issuance under equity 
compensation plans in effect \27\ as of the end of the last completed 
fiscal year, whether or not the plans have been approved by security 
holders. The purpose of the amendments is to promote investor 
understanding of a registrant's equity compensation policies and 
practices so that investors can make informed voting and investment 
decisions.
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    \27\ An equity compensation plan that provides for the grant of 
options, warrants or rights is considered to be in effect as long as 
securities remain available for future grant under the plan or 
options, warrants or rights previously granted under the plan remain 
outstanding.
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    This disclosure would be set forth in a tabular format:
     In the registrant's proxy statement \28\ whenever the 
registrant is seeking security holder action regarding a compensation 
plan; \29\ or
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    \28\ The discussion of proxy statements in this release also 
includes information statements.
    \29\ As discussed in section I.B. below, the required disclosure 
would encompass each equity compensation plan of the registrant in 
effect as of the end of the last completed fiscal year other than 
the compensation plan or plans subject to security holder action. 
Those plans, of course, would be subject to the existing disclosure 
requirements of Item 10 of Schedule 14A.
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     In the registrant's annual report on Form 10-K \30\ in 
years when the registrant is not seeking security holder action 
regarding a compensation plan.
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    \30\ The discussion of Form 10-K in this release also includes 
Form 10-KSB.
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B. Proposed Disclosure

    The proposed amendments would require a registrant to provide a 
table identifying each equity compensation plan in effect as of the end 
of the last completed fiscal year and containing the following 
information with respect to each plan:
     The number of securities that have been authorized for 
issuance by the registrant's board of directors;
     The number of securities issued pursuant to equity awards 
made during the last completed fiscal year, plus the number of 
securities to be issued upon the exercise of options, warrants or 
rights granted during the last completed fiscal year; \31\
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    \31\ This disclosure would not apply to any plan, contract, 
authorization or arrangement for the issuance of warrants or rights 
on substantially similar terms to all security holders of the 
registrant generally that did not discriminate in favor of officers 
or directors of the registrant. See Proposed Item 201(d), 
Instruction 2, of Regulation S-B and Regulation S-K.
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     The number of securities to be issued upon the exercise of 
outstanding options, warrants or rights; \32\ and
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    \32\ See n. 31 above.
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     Other than securities to be issued upon the exercise of 
outstanding options, warrants or rights, the number of securities 
remaining available for future issuance.
    This information would be provided with respect to any equity 
compensation plan \33\ that provides for the award of a registrant's 
securities or the grant of options, warrants or rights to purchase

[[Page 8734]]

the registrant's securities \34\ to officers, directors and employees 
of the registrant or its parent or subsidiary corporations, or to any 
other person.\35\ Individual arrangements that contemplate the award of 
a registrant's securities or the grant of options, warrants or rights 
providing for the purchase of the registrant's securities may be 
aggregated and disclosed as a single item.\36\
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    \33\ This would include, without limitation, employee stock 
purchase plans that provide for the acquisition of authorized but 
unissued securities or repurchased or ``treasury'' shares, but would 
exclude so-called ``open market'' employee stock purchase plans.
    \34\ Notwithstanding that an equity compensation plan may permit 
alternative types of awards (for example, restricted stock or stock 
options), the securities authorized for issuance under the plan and 
remaining available for future issuance under the plan are to be 
counted only once.
    \35\ Thus, disclosure would be required with respect to all 
equity compensation plans, without regard to whether the plan 
participants are employees, directors, general partners, trustees, 
officers, consultants and advisors, vendors or independent 
contractors.
    \36\ See Proposed Item 201(d) of Regulation S-B and Regulation 
S-K. Item 402(a)(6)(ii) of Regulation S-B [17 CFR 228.402(a)(6)(ii)] 
and Item 402(a)(7)(ii) of Regulation S-K [17 CFR 229.402(a)(7)(ii)] 
define the term ``plan'' to include any plan, contract, 
authorization or arrangement, whether or not set forth in any formal 
documents, that is applicable to one or more persons.
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    This information would be provided without regard to whether the 
equity compensation plan was previously approved by a registrant's 
security holders. Registrants would be required to identify, either in 
the table or through a narrative statement, which of the equity 
compensation plans, if any, was adopted without security holder 
approval. They also would be required to provide a brief, narrative 
description of the material features of each plan adopted without 
security holder approval during the last completed fiscal year.\37\ 
Finally, this information would be provided without regard to whether 
the securities to be issued under the equity compensation plan were 
authorized but unissued securities of the registrant or repurchased or 
``treasury'' shares.
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    \37\ See Proposed Item 201(d)(3) of Regulation S-B and 
Regulation S-K. In 1992, we eliminated the requirement under Item 10 
of Schedule 14A (and Item 1 of Schedule 14C) that a registrant 
provide extensive disclosure of all existing plans when seeking 
security holder approval of a compensation plan. See Executive 
Compensation Disclosure, Securities Exchange Act Release No. 31327, 
section II.L (Oct. 16, 1992) [57 FR 48126 (Oct. 21, 1992)]. We are 
not proposing to reinstate that specific requirement. We seek to 
ensure that adequate information is available to security holders, 
however, about the number of securities authorized for issuance 
under a registrant's existing equity compensation plans, whether or 
not the plans have been approved by security holders.
    Once disclosure of the material terms of an equity compensation 
plan that was adopted without security holder approval has been 
made, in subsequent years a registrant need only identify the filing 
containing the narrative description of the plan if the plan was 
still in effect as of the end of the last completed fiscal year.
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    We request comment as to the appropriateness of the proposed 
disclosure. Would narrative disclosure be preferable to the proposed 
tabular format? Are there any additional categories of information 
(such as weighted average exercise price information) or different 
categories of information that should be included in the disclosure? Is 
it useful to disclose information about the number of securities 
awarded and the number of options, warrants or rights granted during 
the last completed fiscal year? Would disclosure of prior awards and 
grants over a different time period be more appropriate, and, if so, 
what period? Is it necessary, as proposed, for registrants to provide 
totals for the information set forth in each column of the tabular 
disclosure? When disclosure is being made in a registrant's proxy 
statement because the registrant is seeking security holder action 
regarding a compensation plan, should the tabular disclosure also cover 
the plan upon which action is being taken?
    Is aggregated disclosure of individual arrangements appropriate? If 
not, what alternative approach would be preferable? Should aggregated 
disclosure be permitted in the case of certain equity compensation 
plans (such as plans that are assumed by the acquiring company in a 
merger, consolidation or other acquisition transaction)?
    Should additional or different disclosure be required with respect 
to equity compensation plans that have been adopted without security 
holder approval (such as the information currently required under Item 
10 of Schedule 14A)? Should disclosure be required if the plan was 
adopted in a year prior to the most recently completed fiscal year? Is 
it sufficient to require the disclosure of such plan's ``material 
features,'' or should we identify the specific terms and conditions of 
the plan that must be disclosed (such as exercise price, vesting and 
expiration date information, or the existence of reload, stock swap, 
loan or option repricing features)? In lieu of, or in addition to, the 
disclosure required for an equity compensation plan that has been 
adopted without security holder approval, should a registrant be 
required to file any such plan as an exhibit to the registrant's annual 
report on Form 10-K for the fiscal year in which the plan was adopted? 
\38\ Should specific disclosure about equity compensation plans that 
involve the use of repurchased or ``treasury'' shares be required?
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    \38\ Currently, Item 601(b)(10)(iii)(A) of Regulation S-K [17 
CFR 229.601(b)(10)(iii)(A)] requires the filing of any compensatory 
plan, contract or arrangement in which any director or any of the 
named executive officers of the registrant, as defined by Item 
402(a)(3) (17 CFR 229.402(a)(3)), participates, as well as any other 
compensatory plan, contract or arrangement in which any other 
executive officer of the registrant participates unless immaterial 
in amount or significance. See also Item 601(b)(10)(ii)(A) of 
Regulation S-B [17 CFR 228.601(b)(10)(ii)(A)].
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C. Location of Disclosure

1. Disclosure in Proxy Statement
    We believe that an understanding of a registrant's equity 
compensation policies and practices is relevant to a security holder's 
decision regarding the adoption of a new compensation plan or the 
modification of an existing plan. Accordingly, if security holders are 
acting on a plan at a meeting, the proposed amendments would require 
that the disclosure be included in the registrant's proxy statement 
relating to the meeting at which security holders will be voting on the 
compensation plan.\39\
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    \39\ See Proposed Item 10(c) of Schedule 14A. This would include 
a vote to modify an existing compensation plan, such as a vote to 
increase the number of securities authorized for issuance under the 
plan.
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2. Disclosure in Annual Report on Form 10-K
    Even in years when a registrant is not submitting a compensation 
plan for security holder action, we believe that it is important for 
security holders to know the extent to which the registrant has awarded 
securities or granted options, warrants or rights to participants under 
its existing equity compensation plans. The proposed amendments would 
require a registrant to disclose in its annual report on Form 10-K the 
information required by Proposed Item 201(d) of Regulation S-K.\40\ 
This information would be included in Part III of Form 10-K. As such, 
the information could be incorporated by reference from a registrant's 
definitive proxy statement that involves the election of directors, if 
the definitive proxy statement is filed with the Commission not later 
than 120 days after the end of the fiscal year covered by the Form 10-
K.\41\
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    \40\ See Proposed Item 11 of Form 10-KSB and Proposed Item 12 of 
Form 10-K.
    \41\ See General Instruction E(3) to Form 10-KSB [17 CFR 
249.310b] and General Instruction G(3) to Form 10-K [17 CFR 
249.310].
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    We request comment as to the appropriateness of the location for 
the proposed disclosure. Should disclosure be required in the proxy 
statement whether or not a registrant is submitting a compensation plan 
for security holder action? If so, how would the disclosure

[[Page 8735]]

requirements be made applicable to registrants that are subject to 
reporting under section 15(d) of the Exchange Act? \42\ Alternatively, 
is it necessary to provide disclosure in years when a registrant is not 
submitting a compensation plan for security holder action? Is similar 
information currently available to security holders,\43\ and, if so, is 
this information adequate? Should the proposed disclosure be required 
in registration statements filed under the Securities Act of 1933? \44\
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    \42\ 15 U.S.C. 78o(d).
    \43\ See n. 18 above and the accompanying text.
    \44\ 15 U.S.C. 77a, et seq.
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II. General Request for Comments

    Any interested person wishing to address the rule changes that are 
the subject of this release, to suggest additional or different changes 
or to comment on other matters that may have an effect on the proposals 
contained in this release, is requested to submit comments. We request 
comment from the point of view of registrants, security holders and 
other users of information about the use of securities to compensate 
officers, directors, employees, consultants and advisors.

III. Paperwork Reduction Act

    Portions of the proposed amendments contain ``collection of 
information'' requirements within the meaning of the Paperwork 
Reduction Act of 1995,\45\ or PRA. We are submitting the proposed 
amendments to the Office of Management and Budget, or OMB, for review 
in accordance with the PRA.\46\ The titles for the collections of 
information are (1) ``Regulation 14A (Commission Rules 14a-1 through 
14b-2 and Schedule 14A),'' (2) ``Regulation 14C (Commission Rules 14c-1 
through 14c-7 and Schedule 14C),'' (3) ``Form 10-K,'' (4) ``Form 10-
KSB,'' (5) ``Regulation S-B'' and (6) ``Regulation S-K.'' An agency may 
not conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number.
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    \45\ 44 U.S.C. 3501, et seq.
    \46\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
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    Regulation 14A (OMB Control No. 3235-0059) was adopted pursuant to 
section 14(a) of the Exchange Act \47\ and prescribes information that 
a registrant must include in its proxy statement to ensure that 
security holders are provided information that is material to their 
voting decisions. Preparing and sending a proxy statement is a 
collection of information.
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    \47\ 15 U.S.C. 78n(a).
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    Regulation 14C (OMB Control No. 3235-0057) was adopted pursuant to 
section 14(c) of the Exchange Act \48\ and prescribes information that 
a registrant must include in an information statement when a security 
holder vote is to be held but proxies are not being solicited. Schedule 
14C refers to Schedule 14A for the disclosure requirements related to 
compensation plans. Preparing and sending an information statement is a 
collection of information.
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    \48\ 15 U.S.C. 78n(c).
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    Form 10-K (OMB Control No. 3235-0063) was adopted pursuant to 
sections 13 \49\ and 15(d) of the Exchange Act and prescribes 
information that a registrant must disclose annually to the market 
about its business. Preparing and filing an annual report on Form 10-K 
is a collection of information.
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    \49\ 15 U.S.C. 78m.
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    Form 10-KSB (OMB Control No. 3235-0420) was adopted pursuant to 
sections 13 and 15(d) of the Exchange Act and prescribes information 
that a registrant that is a ``small business issuer'' as defined under 
our rules \50\ must disclose annually to the market about its business. 
Preparing and filing an annual report on Form 10-KSB is a collection of 
information.
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    \50\ Exchange Act Rule 12b-2 [17 CFR 240.12b-2].
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    Regulation S-B (OMB Control No. 3235-0417) was adopted pursuant to 
the Securities Act and the Exchange Act and is the source of disclosure 
requirements for ``small business issuer'' filings under the Securities 
Act and the Exchange Act. Preparing this disclosure involves a 
collection of information.
    Regulation S-K (OMB Control No. 3235-0071) was adopted pursuant to 
the Securities Act and the Exchange Act and sets forth the requirements 
applicable to the content of the non-financial statement portions of 
registration statements under the Securities Act and registration 
statements under section 12,\51\ annual and other reports under 
sections 13 and 15(d), going-private transaction statements under 
section 13, tender offer statements under sections 13 and 14, annual 
reports to security holders and proxy and information statements under 
section 14 and any other documents required to be filed under the 
Exchange Act. Preparing this disclosure involves a collection of 
information.
---------------------------------------------------------------------------

    \51\ 15 U.S.C. 78l.
---------------------------------------------------------------------------

    The proxy disclosure requirements of section 14 of the Exchange 
Act, as well as the reporting requirements of section 13 of the 
Exchange Act, apply to those entities that have securities registered 
under section 12 of the Exchange Act. The reporting requirements of 
section 15(d) of the Exchange Act apply to those entities with 
effective registration statements under the Securities Act that are not 
otherwise subject to the registration requirements of section 12 of the 
Exchange Act. The likely respondents, therefore, include entities with 
more than 500 security holders and more than $10 million in assets 
(section 12(g)),\52\ entities with securities listed on a national 
exchange (section 12(b)) \53\ and entities with an effective 
registration statement under the Securities Act (section 15(d)).
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 78l(g).
    \53\ 15 U.S.C. 78l(b).
---------------------------------------------------------------------------

    We estimate that approximately 9,892 respondents file proxy 
statements under Schedule 14A and annual reports on Form 10-K or 10-
KSB, approximately 253 respondents file information statements under 
Schedule 14C and annual reports on Form 10-K or 10-KSB and 
approximately 1,939 respondents just file annual reports on Form 10-K 
or 10-KSB. We have based the number of entities that would complete and 
file each of the forms on the actual number of filers during the 2000 
fiscal year.
    We further estimate that approximately 60% of these respondents, or 
7,250 respondents, have adopted equity compensation plans and, thus, 
will be subject to the enhanced disclosure contemplated by the proposed 
amendments. We estimate that approximately 50% of these respondents, or 
3,625 respondents, adopt a new equity compensation plan or modify an 
existing plan each year. In addition, we estimate that approximately 
25% of the respondents with equity compensation plans, or 1,813 
respondents, have adopted non-security holder approved plans \54\ and 
will be required to describe the material terms of these plans as part 
of their enhanced disclosure. We note that, while each respondent with 
an equity compensation plan will need to make the required disclosure, 
the disclosure will appear in only one filing each year--either the 
proxy or information statement or the annual report on Form 10-K or 10-
KSB.
---------------------------------------------------------------------------

    \54\ See Trends in Equity Compensation 1996-2000, iQuantic, Inc. 
(2000) (estimated percentage of companies with non-security holder 
approved stock option plan was 27.3% in 1999 (161 survey 
respondents) compared to 3.2% before 1996).
---------------------------------------------------------------------------

    Based on these assumptions, we estimate that 60% of the respondents 
that file proxy statements under Schedule 14A and annual reports on 
Form 10-K or 10-KSB, or 5,935 respondents, will need to prepare and 
provide the required tabular disclosure. We further estimate that 25% 
of these

[[Page 8736]]

respondents, or 1,484 respondents, will need to prepare and provide 
descriptions of their non-security holder approved equity compensation 
plans. We estimate that one-half of the respondents will need to 
include this disclosure in their proxy statements and one-half in their 
annual reports on Form 10-K or 10-KSB,\55\ as the case may be. Finally, 
we estimate that preparation of the required tabular disclosure will 
add two burden hours to each proxy or information statement or annual 
report on Form 10-K or 10-KSB and, where required, preparation of the 
required description of an equity compensation plan's material terms 
will also add two burden hours.\56\ Thus, we estimate that the proposed 
amendments will require 7,419 burden hours to prepare the required 
disclosure [(one-half of 5,935 respondents  x  2 hours) + (one half of 
1,484 respondents  x  2 hours)] and will add 3,710 hours \57\ to the 
current Schedule 14A annual burden of 179,144 hours, resulting in a 
total Schedule 14A annual hour burden of 182,854 hours.
---------------------------------------------------------------------------

    \55\ See n. 59 below and the accompanying text.
    \56\ These time estimates are based on the fact that the 
information needed to make the proposed disclosure should be readily 
available to respondents.
    \57\ We estimate that respondents will prepare 50% of the 
required disclosure and that outside counsel will prepare the 
remaining 50%. Accordingly, 50% of the total burden resulting from 
our equity compensation disclosure rules is reflected as burden 
hours and the remaining 50% is reflected in the total cost of 
complying with the information collection requirements. We used an 
estimated hourly rate of $175.00 to determine the estimated cost to 
the respondent of the disclosure prepared by outside counsel. We 
arrived at that hourly rate estimate after consulting with several 
private law firms.
---------------------------------------------------------------------------

    We estimate that 60% of the respondents that file information 
statements under Schedule 14C and annual reports on Form 10-K or 10-
KSB, or 152 respondents, will need to prepare and provide the required 
tabular disclosure. We further estimate that 25% of these respondents, 
or 38 respondents, will need to prepare and provide descriptions of 
their non-security holder approved equity compensation plans. We 
estimate that one-half of this disclosure will be included in 
respondents' information statements and one-half in respondents' annual 
reports on Form 10-K or 10-KSB,\58\ as the case may be. Thus, we 
estimate that the proposed amendments will require 190 burden hours to 
prepare the required disclosure [(one-half of 152 respondents  x  2 
hours) + (one-half of 38 respondents  x  2 hours)] and will add 95 
hours to the current Schedule 14C annual burden of 4,582 hours, 
resulting in a total Schedule 14C annual hour burden of 4,677 hours.
---------------------------------------------------------------------------

    \58\ See n. 59 below and the accompanying text.
---------------------------------------------------------------------------

    We estimate that 60% of the respondents that just file annual 
reports on Form 10-K or 10-KSB, or 1,163 respondents, will need to 
prepare and provide the required tabular disclosure. We further 
estimate that 25% of these respondents, or 291 respondents, will need 
to prepare and provide descriptions of their non-security holder 
approved equity compensation plans. We estimate that 20% of the 
respondents will include this disclosure in their annual report on Form 
10-K and 80% in their annual report on Form 10-KSB. Thus, we estimate 
that the proposed amendments will require 6,668 burden hours to prepare 
the required disclosure [{(20% of 1,163 respondents  x  2 hours) + (20% 
of 291 respondents  x  2 hours)} + {(80% \59\ of one-half of 5,935 
respondents  x  2 hours) + (80% of one-half of 1,484 respondents  x  2 
hours)} \60\ + {(80% of one-half of 152 respondents  x  2 hours) + (80% 
of one-half of 38 respondents  x  2 hours)} \61\] and will add 3,334 
hours to the current Form 10-K annual burden of 4,463,830 hours, 
resulting in a total Form 10-K annual hour burden of 4,467,194 hours. 
We also estimate that the proposed amendments will require 3,848 burden 
hours to prepare the required disclosure [{(80% of 1,163 respondents 
x  2 hours) + (80% of 291 respondents  x  2 hours)} + {(20% \62\ of 
one-half of 5,935 respondents  x  2 hours) + (20% of one-half of 1,484 
respondents  x  2 hours)} + {(20 % of one-half of 152 respondents  x  2 
hours) + (20% of one-half of 38 respondents  x  2 hours)}] and will add 
1,924 hours to the current Form 10-KSB annual burden of 1,070,454 
hours, resulting in a total Form 10-KSB annual hour burden of 1,072,378 
hours.
---------------------------------------------------------------------------

    \59\ We estimate that in years where respondents are not 
submitting new compensation plans or modifications of existing plans 
for the approval of security holders, 80% of the required disclosure 
will be included in respondents' annual report on Form 10-K and 20% 
in respondents' annual report on Form 10-KSB.
    \60\ See n. 55 above and the accompanying text.
    \61\ See n. 58 above and the accompanying text.
    \62\ See n. 59 above.
---------------------------------------------------------------------------

    In addition to the internal hours they will expend, we expect that 
respondents will retain outside counsel to assist in the preparation of 
the required disclosures. The total dollar cost of complying with 
Regulation 14A, revised to include the additional outside counsel costs 
expected from the proposed amendments, are estimated to be $93,263,250, 
an increase of $649,250 from the current annual burden. The total 
dollar cost of complying with Regulation 14C, revised to include the 
additional outside counsel costs expected from the proposed amendments, 
are estimated to be $2,385,625, an increase of $16,625 from the current 
annual burden. The total dollar cost of complying with Form 10-K, 
revised to include the additional outside counsel costs expected from 
the proposed amendments, are estimated to be $2,344,093,450, an 
increase of $583,450 from the current annual burden. The total dollar 
cost of complying with Form 10-KSB, revised to include the additional 
outside counsel costs expected from the proposed amendments, are 
estimated to be $562,324,700, an increase of $336,700 from the current 
annual burden.
    We believe that the proposed amendments will enable investors to 
ascertain more readily the total number of securities that a registrant 
has authorized for issuance under its equity compensation plans. As 
discussed elsewhere in this release, there is growing concern about the 
level of potential dilution that equity compensation plans now 
represent. In addition, investors have expressed concern that many 
plans are implemented without the approval of security holders and that 
the current disclosure rules do not require comprehensive information 
about all of a company's plans. The proposed amendments will require 
registrants to present additional information in their proxy or 
information statements or their annual reports on Form 10-K or 10-KSB 
about their equity compensation plans. We believe that this information 
is important to an investor's decision to vote to approve a new 
compensation plan or the modification of an existing plan.
    Compliance with the disclosure requirements will be mandatory for 
all registrants. There would be no mandatory retention period for the 
information disclosed, and responses to the disclosure requirements 
will not be kept confidential.
    We request comment in order to (a) evaluate whether the proposed 
collections of information are necessary for the proper performance of 
the functions of the Commission, including whether the information will 
have practical utility, (b) evaluate the accuracy of our estimate of 
the burden of the proposed collections of information, (c) determine 
whether there are ways to enhance the quality, utility and clarity of 
the information to be collected and (d) evaluate whether there are ways 
to minimize the burden of the collections of information on those who 
respond, including through

[[Page 8737]]

the use of automated collection techniques or other forms of 
information technology.\63\
---------------------------------------------------------------------------

    \63\ Comments are requested pursuant to 44 U.S.C. 
Sec. 3506(c)(2)(B).
---------------------------------------------------------------------------

    Persons who desire to submit comments on the collection of 
information requirements should direct their comments to the OMB, 
Attention: Desk Officer for the Securities and Exchange Commission, 
Office of Information and Regulatory Affairs, Washington, DC 20503, and 
send a copy of the comments to Jonathan G. Katz, Secretary, Securities 
and Exchange Commission, 450 Fifth Street NW., Washington, DC 20549-
0609, with reference to File No. S7-04-01. Requests for materials 
submitted to the OMB by the Commission with regard to this collection 
of information should be in writing, refer to File No. S7-04-01 and be 
submitted to the Securities and Exchange Commission, Records 
Management, Office of Filings and Information Services, 450 Fifth 
Street NW., Washington, DC 20549-0609. Because the OMB is required to 
make a decision concerning the collections of information between 30 
and 60 days after publication, your comments are best assured of having 
their full effect if the OMB receives them within 30 days of 
publication.

IV. Cost-Benefit Analysis

    We have identified certain costs and benefits of the proposed 
amendments. We request comment on all aspects of this cost-benefit 
analysis, including identification of any additional costs or benefits 
of, or suggested alternatives to, the proposals. Commenters are 
requested to provide empirical data and other factual support for their 
views to the extent possible.
    The proposed amendments to require certain information to be 
provided in the proxy or information statement when submitting a 
compensation plan for security holder action, or in the annual report 
on Form 10-K or 10-KSB in fiscal years when a registrant is not 
submitting a compensation plan for security holder action, will, if 
adopted, increase the amount of information available to investors 
about a registrant's equity compensation program, enabling investors to 
better understand the forms and amounts of equity compensation paid to 
officers, directors, employees, consultants and advisors. The proposed 
amendments are consistent with our existing disclosure requirements for 
executive compensation,\64\ and further our objective of enabling 
investors to make better informed voting and investment decisions.
---------------------------------------------------------------------------

    \64\ See Item 402 of Regulation S-B [17 CFR 228.402] and Item 
402 of Regulation S-K [17 CFR 229.402].
---------------------------------------------------------------------------

    The potential benefit to investors would include greater insight 
into a registrant's equity compensation policies and practices. This 
information would benefit investors by providing additional information 
in a useful format about existing equity compensation plans when called 
upon to consider action on a new equity compensation plan or the 
modification of an existing plan. In addition, this information would 
be of use to investors in evaluating the performance of a registrant's 
management and board of directors.
    We believe that the proposed amendments also would benefit 
investors by providing information, which is not always readily 
available, regarding the overall potential dilutive effect of a 
registrant's equity compensation program. This information also would 
lead to greater transparency concerning a registrant's capital 
structure and enable greater comparability of equity compensation 
programs between companies. Accordingly, this information may be 
factored into investment decisions, thereby leading to more accurate 
pricing for a registrant's securities. These benefits are difficult to 
quantify.
    The proposed amendments may increase the costs to registrant in 
several ways. Specifically, the amendments will increase the costs 
associated with the preparation of information currently required to be 
furnished to security holders in proxy or information statements or 
reported in annual reports on Form 10-K or 10-KSB. Since this 
information is readily available to registrants, however, and portions 
must be disclosed in other filings,\65\ we do not expect these 
additional costs to be significant. As discussed in Section III of this 
release for purposes of the PRA, we estimate the aggregate annual 
paperwork cost of compliance with the proposed amendments to be 
$3,172,050.
---------------------------------------------------------------------------

    \65\ See, for example, n. 18 above and the acompanying text.
---------------------------------------------------------------------------

    The proposed amendments may have indirect effects, as well. For 
example, the availability of additional information about a 
registrant's equity compensation policies and practices may have an 
impact on the market price of a registrant's securities where the 
number of securities reserved for issuance under the registrant's 
equity compensation plans is higher than expected. In addition, 
disclosure of further information about a registrant's equity 
compensation policies and practices may cause the registrant to scale 
back its equity compensation program if not received favorably by 
investors. This may make it difficult for some registrants, 
particularly small businesses, which rely heavily on equity 
compensation to recruit, motivate and retain key employees. These 
costs, to the extent they exist, are difficult to quantify. Therefore, 
we request information regarding these matters. Commenters are 
requested to provide empirical data and other factual support for their 
views to the extent possible.

V. Summary of Initial Regulatory Flexibility Analysis

    We have prepared an Initial Regulatory Flexibility Analysis, or 
IRFA, regarding the proposed amendments.\66\ The following summarizes 
the IRFA:
---------------------------------------------------------------------------

    \66\ The analysis has been prepared in accordance with the 
Regulatory Flexibility Act, 5 U.S.C. 603.
---------------------------------------------------------------------------

    As discussed in greater detail in the IRFA and in other sections of 
this release, the recent, increased use of equity compensation has 
raised concerns about the potential dilutive effect of equity 
compensation plans, the absence of the approval of security holders and 
the absence of full disclosure to security holders about a company's 
plans. These concerns may be especially acute in smaller companies, 
which often make liberal use of equity compensation in order to attract 
and retain key employees and to preserve scarce cash resources. In this 
regard, we are proposing amendments to our current requirements to 
increase the information provided to investors regarding equity 
compensation plans. This information will be included in proxy or 
information statements or in annual reports on Form 10-K or 10-KSB.
    The IRFA sets forth the statutory authority for the proposed 
amendments. It also discusses ``small entities'' that would be subject 
to the proposals.\67\ As described in the IRFA, we have estimated that 
there are approximately 2,500 Exchange Act reporting companies that 
currently satisfy the definition of ``small business'' under our rules. 
The IRFA indicates that the proposed amendments would affect all 
registrants. The IRFA states that the

[[Page 8738]]

proposed amendments will increase costs for registrants, including some 
small businesses, because the proposal imposes new reporting and 
compliance requirements.
---------------------------------------------------------------------------

    \67\ For purposes of this analysis, we have defined ``small 
business'' in Securities Act Rule 157 as any entity whose total 
assets on the last day of its most recent fiscal year were $5 
million or less and is engaged, or proposes to engage, in small 
business financing. [17 CFR 230.157]. A registrant is considered to 
be engaged, or to propose to engage, in small business financing 
under this rule if it is conducting, or proposes to conduct, an 
offering of securities which does not exceed the dollar limitation 
prescribed by section 3(b) of the Securities Act, 15 U.S.C. 77c(b).
---------------------------------------------------------------------------

    The new disclosure requirements would apply to small businesses 
only if they are subject to section 14 of the Exchange Act or have an 
effective registration statement under the Securities Act and if they 
adopt or maintain an equity compensation plan. We estimate the number 
of those entities to be approximately 1,500.\68\ The proposed 
amendments relate to only one item of the proxy or information 
statement or annual report on Form 10-K or 10-KSB, and the information 
should be readily available to registrants because they already 
maintain records regarding their equity compensation plans. This 
information is needed for investors to better understand a registrant's 
equity compensation program. In addition, all registrants have various 
corporate law, financial reporting and other disclosure obligations 
that require maintenance of information regarding equity compensation 
plans similar to that covered by the proposed amendments. We believe 
that the proposed amendments will provide improved information for the 
investing public.
---------------------------------------------------------------------------

    \68\ This figure is based on our estimate that 60% of 
registrants that file proxy or information statements under section 
14 of the Exchange Act or annual reports on Form 10-K or 10-KSB have 
adopted equity compensation plans.
---------------------------------------------------------------------------

    As explained in the IRFA, the Regulatory Flexibility Act directs us 
to consider alternatives that would accomplish the stated objective, 
while minimizing adverse impact on small entities. In that regard, we 
are considering the following alternatives: (a) Differing compliance or 
reporting requirements that take into account the resources of small 
entities, (b) the clarification, consolidation or simplification of 
compliance and reporting requirements under the rule for small 
entities, (c) the use of performance rather than design standards and 
(d) an exemption from the coverage of the proposed amendments for small 
entities.
    We encourage the submission of comments with respect to any aspect 
of the IRFA. In particular, we request comment on the number of small 
businesses that would be affected by the proposed amendments, the 
nature of the impact, how to quantify the number of small entities that 
would be affected and how to quantify the impact of the proposed 
amendments. Commenters are requested to describe the nature of any 
effect and provide empirical data and other factual support for their 
views to the extent possible. These comments will be considered in the 
preparation of the Final Regulatory Flexibility Analysis, if the 
proposed amendments are adopted, and will be placed in the same public 
file as comments on the proposed amendments. A copy of the IRFA may be 
obtained by contacting Raymond A. Be, Office of Rulemaking, Division of 
Corporation Finance, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549-0609.

VI. Consideration of Impact on the Economy, Burden on Competition 
and Promotion of Efficiency, Competition and Capital Formation

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996, or ``SBREFA'' \69\ we request information regarding the 
potential impact of the proposed amendments on the economy on an annual 
basis. Commenters are requested to provide empirical data and other 
factual support for their views to the extent possible.
---------------------------------------------------------------------------

    \69\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996) 
(codified in various sections of 5 U.S.C., 15 U.S.C. and as a note 
to 5 U.S.C. 601).
---------------------------------------------------------------------------

    Section 23(a)(2) of the Exchange Act \70\ requires us, when 
adopting rules under the Exchange Act, to consider the anti-competitive 
effects of any rule that we adopt. The proposed amendments are intended 
to improve the comparability of registrants' equity compensation 
policies and practices, which should promote competition. Commenters 
are requested to provide empirical data and other factual support for 
their views to the extent possible.
---------------------------------------------------------------------------

    \70\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    In addition, section 2(b) of the Securities Act and section 3(f) of 
the Exchange Act \71\ require us, when engaging in rulemaking that 
requires us to consider or determine whether an action is necessary or 
appropriate in the public interest, to consider, in addition to the 
protection of investors, whether the action will promote efficiency, 
competition and capital formation. The proposed amendments enhance our 
disclosure requirements in light of trends in the use of equity 
compensation. The proposed amendments affect the information that 
registrants must provide to investors concerning their equity 
compensation plans. The purpose of the amendments is to promote 
investor understanding of a company's equity compensation policies and 
practices so that investors can make informed voting and investment 
decisions. Informed investor decisions generally promote market 
efficiency and capital formation. We request comment on whether the 
proposed amendments, if adopted, would promote efficiency and capital 
formation. Commenters are requested to provide empirical data and other 
factual support for their views to the extent possible.
---------------------------------------------------------------------------

    \71\ 15 U.S.C. 77b(b) and 78c(f).
---------------------------------------------------------------------------

VII. Statutory Authority

    The amendments contained in this release are being proposed under 
the authority set forth in sections 3(b), 6, 7, 8, 10 and 19(a) of the 
Securities Act and Sections 12, 13, 14(a), 15(d) and 23(a) of the 
Exchange Act.

List of Subjects in 17 CFR Parts 228, 229, 240 and 249

    Reporting and recordkeeping requirements, Securities.

Text of Proposed Rule Amendments

    In accordance with the foregoing, Title 17, Chapter II of the Code 
of Federal Regulations, is proposed to be amended as follows:

PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS

    1. The authority citation for Part 228 continues to read as 
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 
77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn, 77sss, 
78l, 78m, 78n, 78o, 78u-5, 78w, 78ll, 80a-8, 80a-29, 80a-30, 80a-37, 
80b-11, unless otherwise noted.

    1. By amending Sec. 228.201 to add paragraph (d) before the 
Instruction to read as follows:


Sec. 228.201  (Item 201) Market for common equity and related 
stockholder matters.

* * * * *
    (d) Securities authorized for issuance under equity compensation 
plans.
    (1) In the following tabular format, provide the information 
specified in paragraph (d)(2) of this Item as of the end of the most 
recently completed fiscal year with respect to each compensation plan 
of the registrant under which equity securities of the registrant are 
authorized for issuance.

[[Page 8739]]



                                                          Equity Compensation Plan Information
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Number of securities
                                                                                         awarded plus number
                                                                  Number of securities   of securities to be  Number of securities
                                                                     authorized for     issued upon exercise    to be issued upon   Number of securities
                          Name of plan                             issuance under the   of options, warrants       exercise of       remaining available
                                                                          plan            or rights granted   outstanding options,   for future issuance
                                                                                         during last fiscal    warrants or rights
                                                                                                year
(a)                                                                                (b)                   (c)                   (d)                   (e)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Plan #1.........................................................  ....................  ....................  ....................  ....................
Plan #2.........................................................  ....................  ....................  ....................  ....................
Plan #3.........................................................  ....................  ....................  ....................  ....................
Individual Arrangements (Aggregated)............................  ....................  ....................  ....................  ....................
                                                                 ---------------------------------------------------------------------------------------
      Total.....................................................  ....................  ....................  ....................  ....................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (2) The table shall include the following information as of the end 
of the most recently completed fiscal year:
    (i) For each plan (other than individual arrangements):
    (A) The name of the plan (column (a));
    (B) The number of securities authorized for issuance under the plan 
(column (b));
    (C) The number of securities issued pursuant to equity awards made 
under the plan during the most recently completed fiscal year, plus the 
number of securities to be issued upon the exercise of options, 
warrants or rights granted under the plan during the most recently 
completed fiscal year (column (c));
    (D) The number of securities to be issued upon the exercise of 
options, warrants or rights outstanding under the plan (column (d)); 
and
    (E) Other than securities to be issued upon the exercise of 
outstanding options, warrants or rights, the number of securities 
remaining available for issuance under the plan (column (e)).
    (ii) For individual arrangements:
    (A) The number of individual arrangements being disclosed (column 
(a));
    (B) The aggregate number of securities authorized for issuance 
under the individual arrangements (column (b));
    (C) The aggregate number of securities to be issued upon the 
exercise of options, warrants or rights outstanding under the 
individual arrangements (column (d)); and
    (D) Other than securities to be issued upon the exercise of 
outstanding options, warrants or rights, the aggregate number of 
securities remaining available for issuance under the individual 
arrangements, if any (column (e)).
    (3) Identify each plan that was adopted without security holder 
approval and:
    (i) If such plan was adopted during the most recently completed 
fiscal year, describe briefly, in narrative form, the material features 
of the plan; or
    (ii) If such plan was adopted in a prior fiscal year, identify the 
filing containing such description.
    (4) If any individual arrangement exceeds 25% of the aggregate 
number of securities disclosed pursuant to paragraph (d)(2)(ii)(B) of 
this Item, identify the relationship of the recipient to the registrant 
and describe briefly, in narrative form, the material features of the 
arrangement.

Instructions to Item 201(d).

    1. For purposes of this paragraph, the term plan shall be 
defined in accordance with Item 402(a)(6)(ii) of Regulation S-B 
(Sec. 228.402(a)(6)(ii)).
    2. No disclosure is required under this Item with respect to any 
plan, contract, authorization or arrangement, whether or not set 
forth in any formal documents, for the issuance of warrants or 
rights on substantially similar terms to all security holders of the 
registrant generally that does not discriminate in favor of officers 
or directors of the registrant. No disclosure is required under 
column (c) of Item 201(d)(1) with respect to individual arrangements 
involving equity awards and grants.
    3. Except where it is part of a document that is incorporated by 
reference into a prospectus, the information required by this 
paragraph need not be provided in any registration statement filed 
under the Securities Act.

* * * * *

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES 
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND 
CONSERVATION ACT OF 1975--REGULATION S-K

    3. The general authority citation for Part 229 is revised to read 
as follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 
77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn, 
77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll(d), 79e, 
79n, 79t, 80a-8, 80a-29, 80a-30, 80a-31(c), 80a-37, 80a-38(a), and 
80b-11, unless otherwise noted.
* * * * *
    4. The authority citation following Sec. 229.201 is removed.
    5. By amending Sec. 229.201 to add paragraph (d) before 
Instructions to Item 201 to read as follows:


Sec. 229.201   (Item 201) Market price of and dividends on the 
registrant's common equity and related stockholder matters.

* * * * *
    (d) Securities authorized for issuance under equity compensation 
plans.
    (1) In the following tabular format, provide the information 
specified in paragraph (d)(2) of this Item as of the end of the most 
recently completed fiscal year with respect to each compensation plan 
of the registrant under which equity securities of the registrant are 
authorized for issuance.

[[Page 8740]]



                                                          Equity Compensation Plan Information
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Number of securities
                                                                                         awarded plus number
                                                                  Number of securities   of securities to be  Number of securities
                                                                     authorized for     issued upon exercise    to be issued upon   Number of securities
                          Name of plan                             issuance under the   of options, warrants       exercise of       remaining available
                                                                          plan            or rights granted   outstanding options,   for future issuance
                                                                                         during last fiscal    warrants or rights
                                                                                                year
(a)                                                                                (b)                   (c)                   (d)                   (e)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Plan #1.........................................................  ....................  ....................  ....................  ....................
Plan #2.........................................................  ....................  ....................  ....................  ....................
Plan #3.........................................................  ....................  ....................  ....................  ....................
Individual Arrangements (Aggregated)............................  ....................  ....................  ....................  ....................
                                                                 ---------------------------------------------------------------------------------------
      Total.....................................................  ....................  ....................  ....................  ....................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (2) The table shall include the following information as of the end 
of the most recently completed fiscal year:
    (i) For each plan (other than individual arrangements):
    (A) The name of the plan (column (a));
    (B) The number of securities authorized for issuance under the plan 
(column (b));
    (C) The number of securities issued pursuant to equity awards made 
under the plan during the most recently completed fiscal year, plus the 
number of securities to be issued upon the exercise of options, 
warrants or rights granted under the plan during the most recently 
completed fiscal year (column (c));
    (D) The number of securities to be issued upon the exercise of 
options, warrants or rights outstanding under the plan (column (d)); 
and
    (E) Other than securities to be issued upon the exercise of 
outstanding options, warrants or rights, the number of securities 
remaining available for issuance under the plan (column (e)).
    (ii) For individual arrangements:
    (A) The number of individual arrangements being disclosed (column 
(a));
    (B) The aggregate number of securities authorized for issuance 
under the individual arrangements (column (b));
    (C) The aggregate number of securities to be issued upon the 
exercise of options, warrants or rights outstanding under the 
individual arrangements (column (d)); and
    (D) Other than securities to be issued upon the exercise of 
outstanding options, warrants or rights, the aggregate number of 
securities remaining available for issuance under the individual 
arrangements, if any (column (e)).
    (3) Identify each plan that was adopted without security holder 
approval and:
    (i) If such plan was adopted during the most recently completed 
fiscal year, describe briefly, in narrative form, the material features 
of the plan; or
    (ii) If such plan was adopted in a prior fiscal year, identify the 
filing containing such description.
    (4) If any individual arrangement exceeds 25% of the aggregate 
number of securities disclosed pursuant to paragraph (d)(2)(ii)(B) of 
this Item, identify the relationship of the recipient to the registrant 
and describe briefly, in narrative form, the material features of the 
arrangement.

Instructions to Item 201(d).

    1. For purposes of this paragraph, the term plan shall be 
defined in accordance with Item 402(a)(7)(ii) of Regulation S-K 
(Sec. 229.402(a)(7)(ii)).
    2. No disclosure is required under this Item with respect to any 
plan, contract, authorization or arrangement, whether or not set 
forth in any formal documents, for the issuance of warrants or 
rights on substantially similar terms to all security holders of the 
registrant generally that does not discriminate in favor of officers 
or directors of the registrant. No disclosure is required under 
column (c) of Item 201(d)(1) with respect to individual arrangements 
involving equity awards and grants.
    3. Except where it is part of a document that is incorporated by 
reference into a prospectus, the information required by this 
paragraph need not be provided in any registration statement filed 
under the Securities Act.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

    6. The authority citation for Part 240 is revised to read in part 
as follows:

    Authority: 15 U.S.C. 77c, 77d, 77f, 77g, 77h, 77j, 77s, 77z-2, 
77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 
78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 
78x, 78ll, 78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 
80b-4 and 80b-11, unless otherwise noted.
* * * * *
    7. The authority citation following Sec. 240.14a-3 is removed.
    8. By amending Sec. 240.14a-3 to revise paragraph (b)(9) to read as 
follows:
* * * * *


Sec. 240.14a-3  Information to be furnished to security holders.

* * * * *
    (b) * * *
    (9) The report shall contain the market price of and dividends on 
the registrant's common equity and related security holder matters 
required by Item 201(a), (b) and (c) of Regulation S-K 
(Sec. 229.201(a), (b) and (c) of this chapter).
* * * * *
    9. By amending Sec. 240.14a-101, Item 10 of Schedule 14A by adding 
paragraph (c) before the undesignated heading Instructions and revising 
Item 14(d)(4) of Schedule 14A to read as follows:


Sec. 240.14a-101  Schedule 14A. Information required in proxy 
statement.

* * * * *

Item 10. Compensation Plans. * * *

    (c) Information regarding plans and other arrangements not subject 
to security holder action. The information called for by Item 201(d) of 
Regulation S-K (Sec. 229.201(d) of this chapter) with respect to each 
equity compensation plan in effect as of the end of the last completed 
fiscal year (other than the plan or plans being acted upon as described 
in paragraph (a) of this Item), whether or not such plan has been 
approved by security holders.
* * * * *

Item 14. Mergers, consolidations, acquisitions and similar matters. 
* * *

    (d) Information about parties to the transaction registered 
investment companies and business development companies. * * *
* * * * *

[[Page 8741]]

    (4) Information required by Item 201(a), (b) and (c) of Regulation 
S-K (Sec. 229.201(a), (b) and (c) of this chapter), market price of and 
dividends on the registrant's common equity and related stockholder 
matters;
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    10. The authority citation for Part 249 continues to read in part 
as follows:

    Authority: 15 U.S.C. 78a, et seq., unless otherwise noted;
* * * * *
    11. By amending Form 10-K (referenced in Sec. 249.310) by revising 
Item 12 of Part III to read as follows:

    Note.-- The text of Form 10-K does not, and this amendment will 
not, appear in the Code of Federal Regulations.

Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934

* * * * *

Part III

* * * * *

Item 12. Security Ownership of Certain Beneficial Owners and 
Management and Related Stockholder Matters.

    Furnish the information required by Item 201(d) of Regulation S-K 
(Sec. 229.201(d) of this chapter) and by Item 403 of Regulation S-K 
(Sec. 229.403 of this chapter).
* * * * *
    12. By amending Form 10-KSB (referenced in Sec. 249.310b) by 
revising Item 11 of Part III to read as follows:

    Note-- The text of Form 10-KSB does not, and this amendment will 
not, appear in the Code of Federal Regulations.

Form 10-KSB

* * * * *

Part III

* * * * *

Item 11. Security Ownership of Certain Beneficial Owners and 
Management and Related Stockholder Matters.

    Furnish the information required by Item 201(d) of Regulation S-B 
and by Item 403 of Regulation S-B.
* * * * *

    Dated: January 26, 2001.

    By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-2730 Filed 1-31-01; 8:45 am]
BILLING CODE 8010-01-U