[Federal Register Volume 67, Number 52 (Monday, March 18, 2002)]
[Notices]
[Pages 12072-12074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6453]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45546; File No. SR-NYSE-2002-14]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc. Extending the Pilot Regarding Shareholder Approval of Stock Option 
Plans Through May 13, 2002

March 12, 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 March 11, 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. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to extend, until May 13, 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.\3\ The 
Pilot was subsequently amended and extended on March 30, 2001 until 
September 30, 2001.\4\ The Pilot has since been

[[Page 12073]]

extended until January 11, 2002 \5\ and March 11, 2002.\6\
---------------------------------------------------------------------------

    \3\ 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'').
    \4\ 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).
    \5\ Securities Exchange Act Release No. 44886 (September 28, 
2001), 66 FR 51083 (October 5, 2001) (notice of filing and immediate 
effectiveness of File No. SR-NYSE-2001-37) (``2001 Extension 
Request'').
    \6\ See Securities Exchange Act Release No. 45275 (January 14, 
2002), 67 FR 2718 (January 18, 2002) (File No. SR-NYSE-2002-03).
---------------------------------------------------------------------------

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    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\ The Pilot was again 
extended until March 11, 2002 for the same reasons.\11\
---------------------------------------------------------------------------

    \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 4 supra.
    \10\ See note 5 supra. One comment letter was received regarding 
the extension of the Pilot by the 2001 Extension Request. 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 note 12 infra below.
    \11\ See not 6 supra.
---------------------------------------------------------------------------

    The Exchange proposes to further extend the effectiveness of the 
Pilot until May 13, 2002 to provide additional time to evaluate the 
issues presented by the Pilot, in light of recently adopted 
requirements relating to disclosure of equity compensation plan 
information.\12\
---------------------------------------------------------------------------

    \12\ Release Nos. 33-8048 and 34-45189 (December 21, 2001), 67 
FR 232 (January 2, 2002).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b)(5) of the Act,\13\ which requires, among other 
things, that an Exchange have rules designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, ingeneral, to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

    Because the proposed rule change (1) does not significantly affect 
the protection of investors or the public interest; (2) does not impose 
any significant burden on competition; and (3) does not become 
operative for 30 days from the date of filing, or such shorter time as 
the Commission may designate if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) \15\ thereunder.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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 become operative on or before March 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 the five-day pre-notice and thirty-day operative date 
requirements for this proposed rule change.
---------------------------------------------------------------------------

    \16\ Id.
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission, consistent with the protection of investors and the 
public interest, has determined to make the proposed rule change to 
extend the Pilot through May 13, 2002, become operative on March 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

[[Page 12074]]

critical of the NYSE's existing rules on broadly-based plans prior to 
the adoption of the original Pilot. As noted above, if the Pilot is not 
extended, the rules prior to the Pilot will go into effect. The 
proposed rule change merely extends the duration of the Pilot for only 
a short period of time and does not deal with the substantive issues 
presented by the Pilot itself.
---------------------------------------------------------------------------

    \18\ See Original Pilot Approval Order, note 3 supra.
---------------------------------------------------------------------------

    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 to extend the Pilot through May 13, 2002, 
become operative on March 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549-0609. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
above-mentioned self-regulatory organization. All submissions should 
refer to the File No. SR-NYSE-2002-14 and should be submitted by April 
18, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-6453 Filed 3-15-02; 8:45 am]
BILLING CODE 8010-01-P