PRNewswire
MORRISTOWN, N.J.

Financial Executives International (FEI), in letters sent today to the New York Stock Exchange (NYSE) and Nasdaq, voiced strong support for a proposed rule change that would require listed companies to get prior shareholder approval for nearly all employee stock option plans.

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Present rules at both exchanges require a shareholder vote before options can be granted to directors and officers to provide shareholder voice where there is potential for self-dealing, but exempt broad-based options plans where the majority of employees qualify. The proposed revision would eliminate the broad-based exemption, requiring shareholder approval for all plans, with the exception of a limited "basket" of options available for new employees and in connection with acquisitions. NYSE and Nasdaq have solicited industry reaction to the rule change proposal.

"We firmly believe that the matter of employee stock option issuance is a corporate governance matter and that it is ''best practice' to obtain shareholder approval of all such plans," states the letter signed by Philip D. Ameen, chair of FEI's Committee on Corporate Reporting and vice president and comptroller of General Electric.

Stock option-based compensation is commonly seen as aligning employees' interests with those of long-term shareholders. However, granting new options has the potential to dilute outstanding shares. Therefore, as employee option plans have come more widely into use, increasing by ten times over the past decade, many investors have lobbied for the right to approve these plans.

"We believe investors should have the right to consider a stock option plan's potential employee retention and motivational benefits against its potential dilutive effect," said David A. Young, FEI national chair and chief financial officer of Adaptec, Inc.

A full copy of FEI's letter can be found at http://www.fei.org/finrep/letters/cl-12_01.pdf

Financial Executives International (FEI) is the leading advocate for the views of corporate financial management. Its 15,000 members hold policy-making positions as chief financial officers, treasurers, and controllers. FEI enhances member professional development through peer networking, career planning services, conferences, publications, and special reports and research. Members participate in the activities of 86 chapters, 75 of which are in the United States and 11 in Canada. For more information about FEI, visit http://www.fei.org/.

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SOURCE: Financial Executives International

Contact: Chris Allen of FEI, +1-973-898-4658, callen@fei.org

Website: http://www.fei.org/

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