[Federal Register Volume 67, Number 13 (Friday, January 18, 2002)]
[Notices]
[Pages 2718-2719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1353]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45275; File No. SR-NYSE-2002-03]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the New York Stock Exchange, Inc. Extending the Pilot Regarding 
Shareholder Approval of Stock Option Plans Through March 11, 2002

January 14, 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 January 7, 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, II, and III below, which Items have been prepared by the 
Exchange. On January 14, 2002, the NYSE filed Amendment No. 1 to the 
proposed rule change.\3\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as amended, from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Darla C. Stuckey, Corporate Secretary, NYSE, 
to Nancy J. Sanow, Assistant Director, Division of Market 
Regulation, Commission, dated January 14, 2002 (``Amendment No. 
1''). In Amendment No. 1, the NYSE proposed to change the requested 
extension period for its pilot regarding shareholder approval of 
stock option plans from April 30, 2002, as originally proposed, to 
March 11, 2002. Accordingly, as amended, the NYSE's pilot would 
expire on March 11, 2002.
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1. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to extend, until March 11, 2002, 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 \5\ and 
was again extended on September 28, 2001.\6\
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    \4\ 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\ 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\ Securities Exchange Act Release No. 44886, 66 FR 51083 
(October 5, 2001) (notice of filing and immediate effectiveness of 
File No. SR-NYSE-2001-37) (``2001 Extension Request'').
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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 an 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 forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On July 13, 2000, the Exchange filed a proposed rule change seeking 
to extend the effectiveness of the Pilot until September 30, 2003.\7\ 
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.\8\ 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.\9\ The Exchange's 2001 Extension 
Request became effective on September 28, 2001, on a pilot basis, and 
extended the Pilot until January 11, 2002 to provide additional time to 
evaluate the issues presented by the Pilot.\10\ One comment letter was 
received regarding the extension of the Pilot by the 2001 Extension 
Request.\11\
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    \7\ 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'').
    \8\ 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).
    \9\ See note 5 supra.
    \10\ See note 6 supra.
    \11\ See letter from Sarah A.B. Teslick, Executive Director, 
Council of Institutional Investors (``CII'') to Jonathan G. Katz, 
Secretary, Office of the Secretary, Commission, dated October 16, 
2001. The CII commented that the 2001 Extension Request should have 
been released for public comment prior to the Commission approving 
another extension to the Pilot and that any future proposed 
extensions should be released for prior public comment, that the 
Pilot not be extended after January 11, 2002, that the NYSE should 
be required to submit a dilution standard for approval which should 
be in place before the 2002 proxy season, and that the Commission 
act on the proposed disclosure standards for stock option plans. The 
Commission notes that the disclosure standards were approved by it 
on December 21, 2001. See infra note 12 below.
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    The Exchange proposes to further extend the effectiveness of the 
Pilot until March 11, 2002 to provide additional time to evaluate the 
issues presented by the Pilot, in the light of recently adopted 
requirements relating to disclosure of equity compensation plan 
information.\12\
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    \12\ Release Nos. 33-8048 and 34-45189 (December 21, 2001), 67 
FR 232 (January 2, 2002).
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2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with section 6(b)(5) of the Act,\13\ which requires, among 
other things, than an Exchange have rules designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equatable 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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    \13\ 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.

[[Page 2719]]

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Because the proposed rule change, as amended, (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 interests, the proposed rule 
change, as amended, has become effective pursuant to section 
19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) \15\ thereunder.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\17\ 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, as amended, become operative on or before 
January 11, 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 waived this five-day pre-notice requirement 
for this proposed rule change.
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    \16\ Id.
    \17\ 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, as 
amended, to extend the Pilot through March 11, 2002, become operative 
on January 11, 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.
    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.\18\ 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, as 
amended, 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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    \18\ See Original Pilot Approval Order, note 4 supra.
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    Based on these reasons, the Commission believes that it is 
consistent with the protection of investors and the public interest 
that the proposed rule change, as amended, to extend the Pilot through 
March 11, 2002, become operative on January 11, 2002.\19\ 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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    \19\ 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, as amended, 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-2002-03 and should 
be submitted by February 8, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-1353 Filed 1-17-02; 8:45 am]
BILLING CODE 8010-01-M