[Federal Register Volume 67, Number 215 (Wednesday, November 6, 2002)]
[Notices]
[Pages 67680-67681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-28131]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46747; File No. SR-NYSE-2002-57]


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 December 30, 2002, or Such Earlier Date as the NYSE's 
Pending Rule Proposal Requiring Shareholder Approval of Equity-
Compensation Plans Is Approved by the Commission

October 30, 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 October 29, 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 and II 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend until December 30, 2002, or such 
earlier date as the NYSE's pending rule proposal requiring shareholder 
approval of equity-compensation plans \3\ is approved by the 
Commission, 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 until September 30, 2001.\5\ The Pilot has since been extended 
until January 11, 2002,\6\ March 11, 2002,\7\ May 13, 2002,\8\ June 30, 
2002,\9\ August 31, 2002,\10\ and October 30, 2002.\11\
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    \3\ See Securities Exchange Act Release No. 46620 (October 8, 
2002), 67 FR 63486 (October 11, 2002) (File No. SR-NYSE-2002-46).
    \4\ See 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\ See 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\ See 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'').
    \7\ See Securities Exchange Act Release No. 45275 (January 14, 
2002), 67 FR 2718 (January 18, 2002) (File No. SR-NYSE-2002-03).
    \8\ See Securities Exchange Act Release No. 45546 (March 12, 
2002), 67 FR 10272 (March 18, 2002) (File No. SR-NYSE-2002-14).
    \9\ See Securities Exchange Act Release No. 45918 (May 13, 
2002), 67 FR 35174 (May 17, 2002) (File No. SR-NYSE-2002-18).
    \10\ See Securities Exchange Act Release No. 46143 (June 28, 
2002), 67 FR 35174 (July 5, 2002) (File No. SR-NYSE-2002-22).
    \11\ See Securities Exchange Act Release No. 46437 (August 29, 
2002), 67 FR 57262 (September 9, 2002) (File No. SR-NYSE-2002-42).
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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 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
    The Exchange has had the Pilot with respect to the definition of a 
``broadly-based'' stock option plan since June 4, 1999.\12\ On July 13, 
2000, the Exchange filed a proposed rule change seeking to extend the 
effectiveness of the Pilot until September 30, 2003.\13\ 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.\14\ 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.\15\ The 
Exchange's 2001 Extension Request extended the Pilot until January 11, 
2002 to provide additional time to evaluate the issues presented by the 
Pilot.\16\ The Pilot was again extended several times, most recently 
until October 30, 2002, for the same reasons.\17\
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    \12\ See Original Pilot Approval Order note 4 supra.
    \13\ See 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'').
    \14\ 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).
    \15\ See note 5 supra.
    \16\ See note 6 supra.
    \17\ See notes 7 through 11 supra.
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    On October 7, 2002, in connection with the Exchange's corporate 
governance proposals, the Exchange filed a proposal with the Commission 
that would require shareholder approval for equity-compensation plans, 
making it unnecessary to continue the Pilot. That proposal was 
published in the Federal Register on October 11, 2002.\18\ As directed 
by the Commission staff, the Exchange is requesting an extension of the 
effectiveness of the Pilot until December 30, 2002, or until such 
earlier date as the Exchange's proposal relating to shareholder 
approval of equity-compensation plans is approved by the Commission.
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    \18\ See note 3 supra.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(5) of the Act,\19\ which

[[Page 67681]]

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, in general, to 
protect investors and the public interest.
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    \19\ 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.

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 \20\ and Rule 19b-
4(f)(6) \21\ thereunder.
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \22\ normally 
does not become operative prior to 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\23\ 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 October 30, 
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 has waived the five-day pre-notice 
requirement for this proposed rule change. In addition, for the reasons 
discussed below, the Commission has also waived the thirty-day 
operative date requirement for this proposed rule change.
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    \22\ Id.
    \23\ 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, which 
will extend the Pilot through December 30, 2002, or such earlier date 
as the NYSE's pending rule proposal requiring shareholder approval of 
equity-compensation plans \24\ is approved by the Commission, become 
operative on October 30, 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.
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    \24\ See note 3 supra.
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    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.\25\ 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 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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    \25\ See Original Pilot Approval Order, note 4 supra.
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    The Commission notes that once the Exchange's proposed rule change 
relating to shareholder approval of equity compensation plans has been 
approved by the Commission, those approved rules will supersede this 
Pilot because the concept of ``broadly-based'' stock option plans will 
no longer be retained in the Exchange's shareholder approval rules.
    Based on these reasons, the Commission has determined that it is 
consistent with the protection of investors and the public interest 
that the proposed rule change, which will extend the Pilot through 
December 30, 2002, or such earlier date as the NYSE's pending rule 
proposal requiring shareholder approval of equity-compensation plans is 
approved by the Commission, become operative on October 30, 2002.\26\ 
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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    \26\ 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 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-2002-57 and should be submitted by 
November 27, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-28131 Filed 11-5-02; 8:45 am]
BILLING CODE 8010-01-P