Aktienoptionen Erläuterungen

Offenlegung von Mitarbeiteraktienoptionen Im Folgenden wird die Offenlegung im Zusammenhang mit dem Aktienoptionsplan der Dell Computer Corporation dargestellt. Dell, wie fast alle anderen US-Unternehmen nicht mit dem Fair-Value-Ansatz zur Messung Aktienausgleich Aufwendungen. Nach dem SFAS Nr. 123 muss das Unternehmen diese Offenlegung noch vorlegen. Dell Computer Corporation HINWEIS 7 - Leistungspläne Incentive - und Employee Stock Purchase Plans - Der Dell Computer Corporation Incentive Plan (der quotIncentive Planquot), der vom Compensation Committee des Verwaltungsrates verwaltet wird, sieht die Gewährung von Anreizpreisen in der Form vor Aktienoptionen, Aktienwertsteigerungsrechte (quotSARsquot), Restricted Stocks, Aktien und Cash-to-Directors, Executive Officers und Key Mitarbeiter der Gesellschaft und ihrer Tochtergesellschaften sowie bestimmte andere Personen, die die Gesellschaft beraten oder beraten. Als Optionen können entweder Anreizoptionen im Sinne des § 422 Internal Revenue Code oder nichtqualifizierte Optionen gewährt werden. Das Recht, Aktien im Rahmen der bestehenden Aktienoptionsvereinbarungen zu erwerben, ist typischerweise an jedem Optionsjahreszeitpunkt über einen Zeitraum von fünf Jahren anteilig. Aktienoptionen müssen innerhalb von 10 Jahren ab dem Datum der Gewährung ausgeübt werden. Aktienoptionen werden grundsätzlich zum Marktwert bewertet. Im Rahmen des Incentive-Plans erhält jeder Nicht-Arbeitnehmer-Direktor der Gesellschaft automatisch unqualifizierte Aktienoptionen jährlich. In der folgenden Tabelle sind die Aktienoptionsaktivitäten zusammengefasst: In den Geschäftsjahren 1999, 1998 und 1997 gewährte die Gesellschaft eine Million Aktien, zwei Millionen Aktien und 10 Millionen Aktien von eingeschränkten Aktien. Für im Wesentlichen alle beschränkten Aktienzuwendungen hat der Empfänger zum Zeitpunkt der Gewährung alle Rechte eines Aktionärs, vorbehaltlich bestimmter Beschränkungen der Übertragbarkeit und des Verzugsrisikos. Gewerbliche Aktien werden typischerweise über einen Zeitraum von sieben Jahren, beginnend mit dem Tag der Gewährung, gezeichnet. Die Gesellschaft erfasst unverzinsliche Entschädigungen in Höhe des Marktwertes der beschränkten Aktien zum Zeitpunkt der Gewährung und berechnet die nicht gezahlte Aufwandsentschädigung über den Erdienungszeitraum. Für künftige Zuschüsse aus dem Incentive-Plan standen am 29. Januar 1999, 1. Februar 1998 bzw. 2. Februar 1997 162 Mio., 40 Mio. und 116 Mio. Stammaktien zur Verfügung. Der gewichtete durchschnittliche beizulegende Zeitwert der Aktienoptionen zum Zeitpunkt der Gewährung betrug 11,77, 4,06 und 0,93 je Option für Optionen, die in den Geschäftsjahren 1999, 1998 und 1997 gewährt wurden. Darüber hinaus betrug der gewichtete durchschnittliche beizulegende Zeitwert der in den Geschäftsjahren 1999, 1998 und 1997 gewährten Kaufrechte aus dem Mitarbeiterbeteiligungsplan 2,51, 1,53 bzw. 0,51 pro Inhaber. Der gewichtete durchschnittliche beizulegende Zeitwert der Optionen und Kaufrechte aus dem Aktienbeteiligungsplan für Mitarbeiter wurde anhand des Black-Scholes-Modells unter Verwendung der folgenden Annahmen ermittelt: Geschäftsjahresbeginn Mitarbeiterbezugsplan Hätte die Gesellschaft ihren Anreizplan und Mitarbeiteraktienkauf berücksichtigt Dass die aktienbasierten Vergütungskosten das Vorsteuerergebnis um 194 Mio. (136 Mio. EUR nach Steuern), 100 Mio. EUR (Vorjahreszeitraum) 69 Millionen nach Steuern) und 22 Millionen (16 Millionen nach Steuern) in den Geschäftsjahren 1999, 1998 und 1997. Der Pro-forma-Effekt für das verwässerte Ergebnis je Stammaktie wäre für die Geschäftsjahre 1999, 1998 und 1997 um 0,05, 0,02 bzw. 0,01 gesunken. Der Pro-forma-Effekt auf das unverwässerte Ergebnis je Stammaktie hätte sich für die Geschäftsjahre 1999, 1998 und 1997 um 0,05, 0,03 bzw. 0,01 verringert. Schlussregel: Offenlegung des Equity Compensation Plan Information SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 228, 229, 240 und 249 Veröffentlichungsnummern 33-8048, 34-45189 Aktenzeichen S7-04-01 BESCHREIBUNG DER EIGENKAPITALKOMPENSATION PLAN INFORMATIONEN Agentur: Securities and Exchange Commission. Aktion: Schlussbestimmungen. Zusammenfassung: Wir verabschieden Änderungen des Securities Exchange Act von 1934 hinsichtlich der Offenlegungspflichten für Jahresberichte, die auf den Formularen 10-K und 10-KSB eingereicht werden, sowie Proxy - und Informationsanweisungen. Die Änderungen werden die Offenlegung der Anzahl der ausstehenden Optionen, Optionsscheine und Rechte, die Registranten an Teilnehmern von Aktienbeteiligungsplänen gewährt haben, sowie die Anzahl der für die künftige Emission im Rahmen dieser Pläne zur Verfügung stehenden Wertpapiere erhöhen. Die Änderungen verpflichten die Registranten dazu, diese Informationen gesondert für die von ihren Wertpapierinhabern genehmigten Aktienbeteiligungspläne zu übermitteln und bei uns Kopien dieser Pläne einzureichen, sofern sie nicht wesentlich von Bedeutung sind. Datum: 1. Februar 2002. Compliance-Daten: Die Registranten müssen die neuen Offenlegungsanforderungen für ihre Jahresberichte über die Formulare 10-K oder 10-KSB für Geschäftsjahre, die am oder nach dem 15. März 2002 enden, erfüllen Proxy - und Informationsanweisungen für Sitzungen oder Aktionen von Wertpapierinhabern, die am oder nach dem 15. Juni 2002 eintreten. Die Registranten können sich freiwillig an die neuen Offenlegungsanforderungen vor den Compliance-Terminen halten. Bemerkungen: Anmerkungen zur Information über die Informationsquotierung im Sinne des Papierkürzungsgesetzes von 1995 sollten 30 Tage nach Veröffentlichung im Bundesregister eingegangen sein. Für weitere Informationen wenden Sie sich bitte an: Mark A. Borges, Sonderberater, Büro für Rulemaking, Unternehmensbereich Finanzen, telefonisch unter (202) 942-2910 oder schriftlich bei der Securities and Exchange Commission, 450 Fifth Street NW, Washington DC 20549. Ergänzende Informationen: Wir nehmen Änderungen an den Punkten 201 1 und 601 2 der Regulation SB, 3 Posten 201 4 und 601 5 der Regulation SK 6 und Form 10-K, 7 Form 10-KSB 8 und Schedule 14A 9 im Rahmen der Wertpapiere an 10 Act 14C 11 des Börsengesetzes ist auch von den Änderungen betroffen. 12 I. Einleitung Da die Nutzung der Kapitalbeteiligung in den letzten zehn Jahren zugenommen hat, haben 13 Bedenken hinsichtlich ihrer Auswirkungen auf Registranten und deren Wertpapierinhaber. 14 Ausgleichszuschüsse und Prämien können zu einer signifikanten Umverteilung des Eigentums zwischen den bestehenden Wertpapierinhabern und dem Management und den Mitarbeitern führen. 15 Unsere derzeitigen Vorschriften erfordern keine Offenlegung an einem einzigen Ort der Gesamtzahl der Wertpapiere, die ein Registrant für alle Emissionspläne zur Verfügung steht. Da diese Pläne auch ohne Genehmigung von Wertpapierinhabern umgesetzt werden können, ist es möglich, dass Anleger möglicherweise nicht in der Lage sind, die Gesamtgröße eines Registrants-Aktienbeteiligungsprogramms zu bestimmen. Im Januar 2001 haben wir Änderungsvorschläge zu den Offenlegungsvorschriften für Eigenkapitalveränderungen vorgeschlagen, in denen wir Investoren eine verständlichere Darstellung eines Registrants-Aktienbeteiligungsprogramms ermöglichen wollten. 16 Als Antwort auf die Vorschläge erhielten wir 31 Stellungnahmen. 17 Während die Mehrheit der Kommentatoren die Vorschläge unterstützte, stellten mehrere die Notwendigkeit einer Offenlegung in Frage, die ihrer Auffassung nach im Wesentlichen der Offenlegung entsprach, die bereits in den geprüften Jahresabschlüssen der Registranten erforderlich war. Darüber hinaus bot viele der unterstützenden Kommentatoren Vorschläge für die Verfeinerung der Vorschläge, um besser das Ziel zu erreichen, um sicherzustellen, dass alle wesentlichen Informationen über ein Registrants-Equity-Kompensationsprogramm vollständig und deutlich bekannt gegeben wird. Wir haben eine Reihe von Änderungen an den Vorschlägen in Reaktion auf diese Kommentare vorgenommen. Diese Änderungen werden in Abschnitt II dieser Ausgabe besprochen. Als Folge der heutigen Änderungen müssen die Registranten in ihren Jahresberichten auf Formular 10-K, 18 sowie in ihren Proxy-Statements 19 in Jahren, in denen sie einen Vergütungsplan für die Sicherheitsinhaberregelung einreichen, eine neue Tabelle hinzufügen. Diese Tabelle erfordert Informationen über zwei Kategorien von Aktienbeteiligungsplänen: Pläne, die von Wertpapierinhabern genehmigt wurden und Pläne, die nicht von Wertpapierinhabern genehmigt wurden. In Bezug auf jede Kategorie muss ein Registrant die Anzahl der auszugebenden Wertpapiere und den gewichteten durchschnittlichen Ausübungspreis aller ausstehenden Optionen, Optionsscheine und Rechte sowie die Anzahl der für zukünftige Emissionen zur Verfügung stehenden Wertpapiere offenlegen Unter den Registranten Aktienbeteiligung Pläne. 20 II. Erörterung der Änderungsanträge A. Inhalt der Offenlegung 1. Erforderliche Offenlegung Unter den ursprünglichen Vorschlägen, die in der Vorschlagsmitteilung beschrieben sind, sollten Registranten in tabellarischer Form mehrere Kategorien von Informationen über ihre Aktienbeteiligungspläne, einschließlich der Anzahl der für die Emission gemäß jedem Plan zugelassenen Wertpapiere, offenlegen , Die Anzahl der ausgegebenen Wertpapiere sowie die Anzahl der Wertpapiere, die bei Ausübung ausstehender Optionen, Optionsscheine oder Rechte ausgegeben werden, die im Rahmen des jeweiligen Plans im Laufe des letzten Geschäftsjahres die Anzahl der auszugebenden Wertpapiere bei Ausübung ausstehender Optionen, Optionsscheine oder andere Rechte, die nicht im letzten Geschäftsjahr gewährt wurden, sowie die Anzahl der für die zukünftige Emission verfügbaren Pläne im Rahmen jedes Plans. Die Vorschläge hätten die Registranten verpflichtet, jeden Plan einzeln in der Tabelle aufzuführen. Wir haben uns auch Gedanken darüber gemacht, ob zusätzliche Informationen in die Tabelle aufgenommen werden sollten. Als Reaktion auf die Bedenken, dass die Vorschläge kostspielig und belastend für die Umsetzung und Vervielfältigung einiger in den Registrantenabschlüssen erforderlicher Informationen wären, haben wir die ersten beiden vorgeschlagenen Offenlegungskategorien eliminiert. Wir haben auch eine Reihe weiterer Änderungen vorgenommen, darunter eine Änderung, die es Registranten ermöglicht, die erforderlichen Informationen auf aggregierter Basis zu präsentieren. Diese Änderungen werden nachfolgend im Detail erläutert. Zusätzlich zu den Kommentaren, die darauf hindeuten, dass wir die vorgeschlagene Offenlegung zurücknehmen, erhielten wir auch Kommentare, in denen auf die Notwendigkeit zusätzlicher Offenlegungsarten verwiesen wurde, die ursprünglich nicht vorgeschlagen wurden. Beispielsweise haben mehrere Kommentatoren vorgeschlagen, dass wir der vorgeschlagenen Tabelle eine Spalte mit dem gewichteten durchschnittlichen Ausübungspreis von ausstehenden Optionen, Optionsscheinen und Rechten hinzufügen. 21 Diese Kommentatoren behaupteten, dass Anleger diese Informationen benötigen, um die Verwässerungseffekte eines Registranten-Aktienbeteiligungsprogramms zu bewerten. 22 Um die Anleger in die Lage zu versetzen, die Verwässerung besser zu verstehen und die Sichtbarkeit der Ausübungspreisinformationen zu verbessern, haben wir der Tabelle eine Spalte hinzugefügt, die eine Offenlegung des gewichteten durchschnittlichen Ausübungspreises für alle ausstehenden Ausgleichsoptionen, Optionsscheine und Rechte erfordert. 23 Wie bereits angenommen, verlangen die Änderungen einen Registranten, den Anlegern die folgende tabellarische Offenlegung zu gewähren: Equity Compensation Plan Information Die Registranten müssen die Offenlegung in Bezug auf einen Aktienbeteiligungsplan 24 ab dem Ende des letzten abgeschlossenen Geschäftsjahres vorlegen Die Vergabe von Registranten oder die Gewährung von Optionen, Optionsscheinen oder Rechten für den Erwerb von Registranten an Mitarbeiter des Registranten oder seiner Mutterunternehmen, Tochtergesellschaften oder verbundenen Unternehmen oder einer anderen Person. 26 Die Offenlegung ist auch ohne Rücksicht darauf zu erfolgen, ob die im Rahmen des Aktienbeteiligungsplans auszugebenden Wertpapiere zugelassene, aber nicht ausgegebene Wertpapiere des Registranten oder wiedererworbene Anteile sind. 2. Aggregierte Offenlegung Mehrere Kommentatoren schlugen vor, dass wir Registranten erlauben, die erforderliche tabellarische Offenlegung auf einer Aggregation und nicht auf einer Plan-für-Plan-Basis vorzusehen. 27 Diese Kommentatoren gaben an, dass es für viele Registranten unangemessen wäre, wenn die Pläne separat in der Tabelle aufgeführt werden müssten. 28 Ein anderer Kommentator äußerte ähnliche Bedenken, wenn Registranten Pläne, die als Ergebnis von Fusionen, Konsolidierungen oder anderen Akquisitionstransaktionen angenommen wurden, aufgefordert werden sollten. 29 Wir sind überzeugt, dass Plan-by-Plan-Offenlegung für viele Registranten belastend sein kann. 30 Dementsprechend haben wir die Tabelle überarbeitet, um es Registranten zu ermöglichen, die Offenlegung in zwei allgemeinen Kategorien zusammenzufassen: von den Wertpapierinhabern genehmigte Aktienbeteiligungspläne und von den Wertpapierinhabern nicht genehmigte Aktienbeteiligungspläne. 31 In der Proposing Release haben wir uns um eine Stellungnahme gefragt, ob bei der Einreichung eines neuen oder vorhandenen Aktienbeteiligungsplans für die Sicherheitsinhaberaktion die geforderte Offenlegung des Proxy-Statements den Plan beinhalten sollte. 32 Mehrere Kommentatoren schlugen vor, die Tabelle so zu erweitern, dass sie Informationen über einen bestehenden Plan enthält, auf dem weitere Maßnahmen ergriffen werden (z. B. wenn ein Registrant die Genehmigung der Wertpapierinhaber für eine Erhöhung der Zahl der zur Emission zugelassenen Wertpapiere im Rahmen der planen). 33 Diese Kommentatoren gaben an, dass ein Registrierungspflichtiger, der einen bestehenden Aktienbeteiligungsplan ändere, ansonsten die Offenlegung von Informationen über die zuvor für die Emission im Rahmen des Plans zugelassenen Wertpapiere vermeiden könne. Wir sind überzeugt, dass Registranten diese Informationen in die Tabelle aufnehmen sollten. Dementsprechend sollte die Tabelle, wenn Maßnahmen ergriffen werden, um einen bestehenden Aktienbeteiligungsplan zu ändern, Informationen über die zuvor für die Emission im Rahmen des Plans zugelassenen Wertpapiere enthalten, dh die Anzahl der bei der Ausübung auszugebenden Wertpapiere und die gewichtete durchschnittliche Ausübung Preis der ausstehenden Optionen, Optionsscheine und Rechte, die zuvor im Rahmen des Plans gewährt wurden, sowie die Anzahl der für die künftige Emission im Rahmen des Plans noch zur Verfügung stehenden Wertpapiere. 34 Ein Registrant sollte in der Tabelle nicht die Anzahl der zusätzlichen Wertpapiere enthalten, die Gegenstand der Planänderung sind, für die der Registrierungspflichtige die Einverständniserklärung beantragt. 3. Einzelvereinbarungen und angenommene Pläne In der Antragsfreigabe haben wir nach einer Stellungnahme gefragt, ob eine aggregierte Offenlegung einzelner Aktienbezugsregelungen angemessen wäre. Wir haben auch gefragt, ob eine aggregierte Offenlegung zulässig sein sollte, wenn ein Registrant im Zusammenhang mit einem Zusammenschluss, einer Konsolidierung oder einer anderen Akquisition einen Aktienbeteiligungsplan übernommen hat. Mehrere Kommentatoren unterstützten die aggregierte Offenlegung einzelner Vereinbarungen, 36 und ein Kommentator befürworteten die Aggregation der Offenlegung einzelner Regelungen mit der Offenlegung von Beteiligungsplänen. 37 Andere Kommentatoren begünstigten die aggregierte Offenlegung der angenommenen Pläne. 38 Im Einklang mit dem Konzept der aggregierten Planveröffentlichung haben wir die Tabelle revidiert, um den Registranten die Möglichkeit zu geben, Informationen über einzelne Vereinbarungen 39 und angenommene Pläne (sofern weitere Zuschüsse und Prämien im Rahmen dieser Pläne vorgenommen werden können) 40 mit Informationen über andere Pläne, Die entsprechende Offenlegungskategorie. 4. Nicht genehmigte Pläne in der Nicht-Besitzstandsperiode Die Änderungsanträge erfordern, wie angenommen, einen Registranten, um die wesentlichen Merkmale eines jeden Aktienbeteiligungsplans, der am Ende des letzten abgeschlossenen Geschäftsjahres in Kraft ist, kurz und in narrativer Form zu ermitteln und zu beschreiben Ohne Genehmigung des Sicherungshalters. 41 Während mehrere Kommentatoren diese Anforderung unterstützten, schlugen 42 ein Kommentator vor, dass wir Registranten erlauben, den Teil ihrer geforderten SFAS 123-Offenlegung mit den Beschreibungen ihrer nicht sicherheitsinhaber genehmigten Pläne zu verknüpfen, um diese Anforderung zu erfüllen. Aufgrund der Vereinfachung der Compliance und der Gewährleistung, dass die Anleger einen jährlichen Zugang zu diesen Informationen haben, erlauben wir Registranten, die Offenlegungspflicht auf diese Weise zu erfüllen. 45 Der Querverweis sollte den spezifischen Plan oder die Pläne in der geforderten SFAS 123-Offenlegung enthalten, die nicht von den Wertpapierinhabern genehmigt wurden. In Anbetracht dieser Änderung haben wir die Bestimmung, die es einem Registranten gestattet hätte, diese Offenlegungspflicht zu erfüllen, beseitigt, indem einfach die Anmeldung mit einer narrativen Beschreibung des Plans in den Jahren nach der ersten Offenlegung identifiziert wurde. 5. Ausländische Registranten Einige Kommentatoren erkundigten sich nach der Anwendbarkeit der Vorschläge an ausländische Registranten. Historisch gesehen haben wir einen flexibleren Standard für ausländische Registranten als inländische Registranten im Bereich der Offenlegung von Vorstandsvergütungen angewendet. Zum Beispiel müssen ausländische Registranten keine personenbezogenen Vergütungsinformationen auf Einzelpersonen offen legen, es sei denn, dass sie sie auf diese Weise nach dem Heimatrecht oder auf andere Weise offen legen. 46 Wir halten es nicht für notwendig, von unserer geschichtlichen Behandlung der Offenlegung von Vorstandsvergütungen für ausländische Registranten abzugrenzen, 47 und damit die Änderungen für ausländische Registranten zu diesem Zeitpunkt nicht zu verlängern. 48 B. Beziehung zur Offenlegung der Rechnungslegung Wir haben die Vorschläge in Anbetracht von Argumenten einiger Kommentatoren erheblich geändert, dass in der aktuellen Buchhaltungsliteratur eine angemessene Offenlegung der aktienbasierten Vergütung vorgesehen ist. 49 Wir sind uns einig, dass wir uns bemühen sollten, die redundante Offenlegung nach allgemein anerkannten Rechnungslegungsgrundsätzen und unseren Regeln, soweit praktisch, zu minimieren. Dementsprechend haben wir die Vorschläge revidiert und werden keine Offenlegung der Zahl der zur Emission zugelassenen Wertpapiere im Rahmen jedes Aktienbeteiligungsplans 50 und der Anzahl der ausgegebenen Wertpapiere sowie der Anzahl der auszugebenden Wertpapiere bei Ausübung ausstehender Optionen, Optionsscheine oder Rechte, die im Laufe des letzten Geschäftsjahres gewährt wurden. 51 Die überarbeitete Tabelle liefert nützliche Informationen für Anleger, die nicht immer in einem Registrantenabschluss verfügbar sind. Dies beinhaltet eine Angabe, ob ein Kapitalbeteiligungsplan von den Wertpapierinhabern genehmigt wurde 53 die Gesamtzahl der für eine zukünftige Emission im Rahmen eines Registrants-Aktienbeteiligungsprogramms 54 zur Verfügung stehenden Wertpapiere und die Anzahl der Optionen oder sonstigen Wertpapiere, Ausgleichszölle. 55 Da diese Informationen für Investoren wichtig sind, um fundierte Abstimmungs - und Investitionsentscheidungen zu treffen, halten wir es für erforderlich, dass alle Registranten, die dem Börsengesetz unterliegen, die Offenlegung regelmäßig verlangen. Auch wenn Informationen, wie die Anzahl der auszugebenden Wertpapiere und der gewichtete durchschnittliche Ausübungspreis von ausstehenden Optionen, Optionsscheinen und Rechten vorhanden sind, ist sie für die Anleger nicht transparent. 56 Die Änderungen verbessern die Zugänglichkeit dieser Informationen, wodurch es den Anlegern erleichtert wird, die Auswirkungen der Regulierungsbeteiligungsrichtlinien und - praktiken zu beurteilen. Darüber hinaus enthalten die Änderungen die Informationen in Kategorien - Pläne, die von Wertpapierinhabern genehmigt wurden und Pläne, die nicht von Wertpapierinhabern genehmigt wurden -, die von den Anlegern beantragt wurden. 57 Die folgende Tabelle zeigt die aktuellen relevanten Angabepflichten der SFAS 123 für die aktienorientierte Vergütung 58 und die neue Offenlegung, die in den heute angenommenen Abänderungen erforderlich ist, um die Redundanz zwischen beiden zu minimieren. Equity Compensation Disclosure Erforderlich von SFAS 123 Erforderlich für Posten 201 Nach Kategorie: Pläne, die von Wertpapierinhabern genehmigt wurden, und Pläne, die nicht von Wertpapierinhabern genehmigt wurden. Kann durch Verweis in den Jahresbericht auf Formular 10-K durch Aufnahme in Proxy-Statement aufgenommen werden. C. Ort der Offenlegung Wie vorgeschlagen, sollten Registranten die Tabelle in der Proxy-Statement enthalten, wenn sie einen Vergütungsplan für die Sicherheit Inhaber Aktion und in dem Jahresbericht auf Form 10-K in allen anderen Jahren eingereicht. Im Proposing Release haben wir eine Stellungnahme dazu abgegeben, ob der vorgeschlagene Standort der Offenlegung angemessen war. Die meisten Kommentatoren schlugen vor, dass zur Konsistenz und zur Vermeidung von Verwirrung die Offenlegung im gleichen Dokument jedes Jahr erforderlich sein sollte. 59 Unter Bezugnahme auf die Relevanz der Informationen bei der Wahl der Direktoren schlugen mehrere Kommentatoren vor, dass wir in allen Fällen eine Offenlegung in der Vollmachtserklärung verlangen, auch wenn ein Registrant keinen Entschädigungsplan für die Sicherheitsinhaberaktion einreicht. 60 Andere Kommentatoren hingegen empfahlen, dass wir die Offenlegung nur im Jahresbericht auf Formular 10-K fordern. 61 Obwohl der Gedanke, die Offenlegung an einem einzigen Ort ansprechen zu müssen, haben wir gewählt, dies aus mehreren Gründen nicht zu tun. Wenn wir die Verpflichtung aufstellen, dass die Tabelle nur in Proxy-Statements aufgeführt wird, wäre eine erhebliche Anzahl von Unternehmen, deren Berichts - pflichten ausschließlich nach § 15 (d) des Börsengesetzes 62 entstanden sind, nicht Gegenstand der Anforderung. Diese Gesellschaften sind nicht verpflichtet, Proxy-Statements vorzubereiten und einzureichen. Ferner sind wir nicht davon überzeugt, dass die vorgeschlagene Offenlegung in der Regel für Abstimmungsentscheidungen von Wertpapierinhabern wesentlich ist, die nicht die Vergütungspläne betreffen. 63 Wir glauben auch nicht, dass sich die Tabelle ausschließlich im Jahresbericht auf Formular 10-K befinden sollte. Obwohl der Jahresbericht über Form 10-K bei uns hinterlegt ist, ist ein Registrierungspflichtiger nicht verpflichtet, ihn an Wertpapierinhaber zu liefern. 64 Daher müssen die Wertpapierinhaber einige positive Maßnahmen ergreifen, um die Informationen zu erhalten. 65 Außerdem würde die Begrenzung der Tabelle auf den Jahresbericht auf Formular 10-K die Offenlegung in den Fällen, in denen die Informationen für die Anleger nützlich wären, bei der Beurteilung der Begründetheit eines Vergütungsplans, der für die Sicherheitsinhaberaktion beantragt wäre, verlegen. 66 Wir sind zu dem Schluss gelangt, dass der beste Weg zur Förderung der Kohärenz, Klarheit und Relevanz der neuen Informationen darin besteht, dass die Tabelle jedes Jahr in einen Jahresbericht der Registranten auf Formular 10-K 67 und zusätzlich in die Vollmachtserklärung aufzunehmen ist Der Registrant legt einen Vergütungsplan für die Sicherheit Inhaber Aktion. 68 In Fällen, in denen ein Registrierungspflichtiger die Informationen in beiden Anmeldungen enthalten muss, kann er seine Formular-10-K-Offenlegungspflicht erfüllen, indem er die erforderlichen Informationen durch Bezugnahme aus seinem endgültigen Proxy-Statement aufnimmt, wenn diese Aussage die Wahl der Direktoren beinhaltet und eingereicht wird Spätestens 120 Tage nach dem Ende des vom Formular 10-K erfassten Geschäftsjahres. 69 D. Einreichung von Kopien nicht genehmigter Freiverkehrspläne In der Antragsfreigabe haben wir nach einer Stellungnahme gefragt, ob anstelle oder zusätzlich zu der Erzählungsveröffentlichung, die für einen Kapitalbeteiligungsplan erforderlich ist, der ohne Genehmigung angenommen wurde Der Inhaber von Wertpapieren sollte ein Registrant verpflichtet sein, eine Kopie des Plans als Ausstellung zum Jahresbericht des Registranten auf Formular 10-K für das Geschäftsjahr einzureichen, in dem der Plan verabschiedet wurde. 70 Mehrere Kommentatoren begünstigten eine Anmeldepflicht zusätzlich zu der Forderung, dass Registranten eine narrative Offenlegung der immateriellen Merkmalequot der Nicht-Sicherheit Inhaber-genehmigten Equity-Vergütungspläne. 71 Artikel 601 Buchstabe b Ziffer 10 der Verordnung S-K 72 verpflichtet Registranten, wesentliche Verträge als Ausstellungsstücke für viele ihrer Dokumente einzureichen, die nach dem Securities Act von 1933 (den "Securities Actquot") und dem Exchange Act eingereicht werden. Von besonderer Bedeutung ist die Bestimmung in Ziffer 601 (b) (10) (iii), die besagt, dass der Verwaltungsvertrag oder ein anderer Ausgleichsplan, ein Vertrag oder eine Vereinbarung, einschließlich, aber nicht beschränkt auf Pläne für Optionen, Optionsscheine oder Rechte, Renten, Ruhestand oder Eine aufgeschobene Vergütung oder einen Bonus, eine Anreizwirkung oder eine Gewinnbeteiligung, bei der ein Direktor oder ein Mitglied der genannten Führungskräfte des Registranten anwesend ist, als wesentlich erachtet und wird eingereicht. "73 Ziffer 601 (b) (10) (iii) Einen anderen Verwaltungsvertrag oder einen anderen Ausgleichsplan, - vertrag oder eine andere Vereinbarung, in der ein anderer Exekutivbeamter des Registranten anwesend ist, eingereicht werden, sofern er nicht bedeutungslos oder bedeutungslos ist Die Führungskräfte und Direktoren ausschließen, fallen häufig nicht unter diese Bestimmungen. 75 Wir glauben, dass diese Sorge Verdienst hat. Dementsprechend haben wir Punkt 601 (b) (10) dahingehend geändert, dass die Registranten verpflichtet sind, einen beliebigen Aktienbeteiligungsplan zu veröffentlichen, der ohne Zustimmung von Wertpapierinhabern angenommen wird, an dem jeder Mitarbeiter (unabhängig davon, ob er Vorstandsmitglied oder Direktor des Registranten ist) In Menge oder Bedeutung. 76 Die Einhaltung dieser Anforderung sollte sicherstellen, dass für Anleger signifikante, nicht sicherheitsrelevante Pläne zur Verfügung stehen. 77 Im Zusammenhang mit der geforderten Erzählungsbeschreibung der nicht sicherheitsinhaber genehmigten Pläne sollten die Anleger Zugang zu vollständigen Informationen über die Hauptbeteiligungsprogramme der Registranten haben. III. Untersuchungen zur Reduzierung von Papierfällen Die Änderungsanträge enthalten eine Auflistung von Informationsquot-Anforderungen im Sinne des "Paperwork Reduction Act" von 1995, 78 oder PRA. Wir veröffentlichten eine Bekanntmachung über die Erhebung von Informationsanforderungen in der Antragsfreigabe und legten diese Anforderungen an das Amt für Verwaltung und Haushalt oder OMB zur Überprüfung vor. 79 In der Folge genehmigte die OMB die vorgeschlagenen Informa - tionserhebungsanforderungen. Wie in Abschnitt I besprochen, erhielten wir mehrere Stellungnahmen zu den Vorschlägen. Wir haben eine Reihe von Änderungen an den Vorschlägen in Reaktion auf diese Kommentare vorgenommen. Dementsprechend überarbeiten wir unsere bisherigen Belastungsschätzungen. Wir übermitteln die überarbeiteten Schätzungen der OMB zur Genehmigung. 80 Eine Agentur darf keine Informationssammlung leiten oder sponsern, und eine Person ist nicht dazu verpflichtet, auf sie zu antworten, es sei denn, sie zeigt eine aktuell gültige OMB-Kontrollnummer an. A. Zusammenfassung der Änderungen Die Änderungen bedürfen einer tabellarischen Offenlegung der Anzahl der bei der Ausübung auszugebenden Wertpapiere und des gewichteten durchschnittlichen Ausübungspreises für alle ausstehenden Optionen, Optionsscheine und Rechte aus einem Registranten-Aktienbeteiligungsplan sowie die Anzahl Der nach diesen Plänen für zukünftige Emissionen zur Verfügung stehenden Wertpapiere und bestimmte damit zusammenhängende Informationen. Die Offenlegung erfolgt in zwei Kategorien: von den Wertpapierinhabern genehmigte und von den Wertpapierinhabern nicht genehmigte Pläne. Die Registranten müssen die Tabelle in ihren Jahresberichten auf Formular 10-K oder 10-KSB und zusätzlich in ihren Proxy - oder Informationsanweisungen in Jahren enthalten, in denen sie einen Vergütungsplan für die Sicherheitsinhaberaktion einreichen. Die Registranten müssen auch Kopien ihrer Nicht-Sicherungsinhaber-genehmigten Pläne bei uns einreichen, es sei denn, dass dies bedeutungslos oder bedeutungslos ist. Vorbereitung und Einreichung eines Jahresberichts auf Form 10-K oder 10-KSB ist eine Sammlung von Informationen. Ebenso ist die Erstellung, Archivierung und Verbreitung eines Proxy - oder Informationsausweises eine Sammlung von Informationen. 81 Die Erhebung von Informationen ist für alle Registranten obligatorisch, und es besteht keine verbindliche Aufbewahrungsfrist für die gesammelten Informationen. Die Erhebung von Informationen wird nicht vertraulich behandelt. B. Zusammenfassung der Kommentarbriefe und Überarbeitung der Vorschläge Wir baten um eine Stellungnahme zur PRA-Analyse, die in der Proposing Release enthalten ist. Wir erhielten sechs Kommentarbriefe, die spezifisch auf die geschätzte Papierarbeitbelastung bezogen wurden, die mit den Sammlungen von Informationen verbunden ist. 82 Diese Kommentatoren gaben an, dass der Zeitaufwand für die Einhaltung der Vorschläge für viele Registranten signifikant wäre und deutlich über unseren Schätzungen liegen würde. Ein Kommentator schätzte, dass die Vorschläge, wenn sie angenommen würden, mindestens vier Seiten zu den Offenlegungsdokumenten hinzufügen würden, und wenn die Offenlegung in der Proxy-Statement auftauchte, würden zusätzliche Druckkosten von 100.000 und zusätzliche Postkosten von 200.000 für die zusätzlichen Seiten resultieren. 83 Ein weiterer Kommentator schlug vor, dass erhöhte Kosten den Registranten durch die Beseitigung der aktuellen Anforderungen, die nicht zur Offenlegung von nützlichen Informationen führen, ausgeglichen werden. 84 Ein dritter Kommentator schlug vor, dass wir die Bereitstellung einer modellhaften Form der Offenlegung für kleine Unternehmen in Betracht ziehen, um ihre Compliance-Belastung zu reduzieren. 85 Als Reaktion auf diese Bemerkungen haben wir eine Reihe von Änderungen an den Vorschlägen vorgenommen, einschließlich der Abschaffung von zwei der vorgeschlagenen tabellarischen Spalten und der aggregierten Offenlegung. Wir erlauben es uns auch Registranten mit nicht genehmigten Plänen, die wesentlichen Bestimmungen dieser Pläne durch Querverweise auf ihre SFAS 123 Offenlegung zu beschreiben. Diese Änderungen werden die Einhaltung der Vorschriften erleichtern und entsprechend die Belastung der Registranten verringern. Während die Änderungen die Einreichung von Nicht-Sicherungsnehmer-genehmigten Kapitalbeteiligungsplänen erfordern, es sei denn, dass dies bedeutungslos oder bedeutungslos ist, sollte dies die Belastung der Registranten nicht wesentlich erhöhen, da diese Dokumente leicht verfügbar sind und elektronisch eingereicht werden. C. Revisionen der Berichts - und Kostenschätzungen Aufgrund der oben beschriebenen Veränderungen und einer Änderung unserer zugrunde liegenden Annahmen 86 haben sich die Berichts - und Kostenbelastungsschätzungen für die Sammlungen von Informationen geändert. Dementsprechend haben wir die geschätzten Erhebungsanforderungen überarbeitet, die ursprünglich dem OMB vorgelegt wurden. Bei den Formularen 10-K und 10-KSB haben wir unsere Schätzung im Fall von Form 10-K um 1 174 Stunden erhöht und unsere Schätzung im Fall von Form 10-KSB um 707 Stunden erhöht. In Bezug auf die Zeitpläne 14A und 14C haben wir unsere Schätzung im Fall von Schedule 14A um 13.139 Stunden gesenkt und unsere Schätzung im Fall von Schedule 14C um 139 Stunden gesenkt. Unsere Schätzungen basieren auf mehreren Annahmen. Zunächst schätzen wir, dass rund 60 87 der Registranten, die einen Jahresbericht über Form 10-K oder 10-KSB einreichen, Aktienbeteiligungspläne einhalten und die neue Offenlegungstabelle zur Verfügung stellen müssen. 88 Wir schätzen ferner, dass etwa 20 89 dieser Registranten nicht-sicherheitsinhabergeprüfte Aktienbeteiligungspläne einhalten und daher die wesentlichen Merkmale dieser Pläne und Aktenkopien mit uns beschreiben müssen, sofern sie nicht wesentlich oder bedeutungslos sind. 90 Wir schätzen ferner, dass 30 91 der Registranten mit Aktienbeteiligungsplänen in einem Jahr einen neuen Plan verabschieden oder einen bestehenden Plan ändern, um die Anzahl der für die Emission im Rahmen des Plans zugelassenen Wertpapiere zu erhöhen und damit die Offenlegung von Proxy - oder Informationsanweisungen auszulösen . 92 In dieser Situation haben wir davon ausgegangen, dass ein Registrant die erforderliche Offenlegung in seine Vollmacht oder Auskunftsanweisung aufnehmen und diese Offenlegung durch Verweis in seinen Jahresbericht auf Formular 10-K oder 10-KSB aufnehmen wird. Wir schätzen, dass etwa 28 93 der Registranten, die Jahresberichte auf Formular 10-K oder 10-KSB einreichen, gemäß § 13 Abs. 1 Börsengesetz § 13 Abs. 1 BörseG unterliegen und damit keine Vollmacht erteilen Oder Informationsanweisungen, 94 und dass etwa 98 95 der Registrierungspflichtigen Datei Vollmacht statt Informationen, Aussagen im Zusammenhang mit ihrer jährlichen Sitzung der Wertpapierinhaber, an denen die Direktoren gewählt werden sollen. 96 Schließlich gehen wir davon aus, dass die Vorbereitung der erforderlichen tabellarischen Offenlegung zwei Laststunden in Anspruch nehmen wird und, wenn erforderlich, die Vorbereitung der Beschreibung der wesentlichen Merkmale eines nicht sicherheitsinhabergenehmigten Aktienbeteiligungsplans zwei Stunden dauern wird. 97 Our revised estimate of the total burden hours of the required collections of information is set forth in the following table. In addition to the internal hours they will expend, 108 we expect that registrants will retain outside counsel to assist in the preparation of the required disclosures. 109 The total dollar cost of complying with Form 10-K and Form 10-KSB, revised to include outside counsel costs expected from the amendments, is estimated to be 2,345,268,300 for Form 10-K, an increase of 1,758,300 from the current annual burden of 2,343,510,000, and 562,605,100 for Form10-KSB, an increase of 617,100 from the current annual burden of 561,988,000. The total dollar cost of complying with Regulations 14A and 14C, revised to include outside counsel costs expected from the amendments, are estimated to be 93,254,500 for Regulation 14A, an increase of 640,500 from the current annual burden of 92,614,000, and 2,382,200 for Regulation 14C, an increase of 13,200 from the current annual burden of 2,369,000. 110 D. Request for Comment We request comment in order to (a) evaluate whether the collections of information are necessary for the proper performance of our functions, including whether the information will have practical utility, (b) evaluate the accuracy of our estimate of the burden of the 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 the use of automated collection techniques or other forms of information technology. 111 Any member of the public may direct to us any comments concerning the accuracy of this burden estimate and any suggestions for reducing this burden. 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, with reference to File No. S7-04-01. Requests for materials submitted to the OMB by us 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. 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. Costs and Benefits of Final Rules The use of equity compensation, particularly stock options, has grown significantly during the last decade. 112 Consequently, existing security holders may face higher levels of dilution of their ownership interests as some companies issue more shares of their stock to employees. 113 Since the distribution of equity may result in a significant reallocation of ownership in an enterprise between existing security holders and management and employees, investors have a strong interest in understanding a registrants equity compensation program. 114 Until recently, security holder approval was required for most equity compensation plans. However, as approval requirements have been relaxed 115 and as opposition to these plans has grown, 116 an increasing number of registrants have adopted stock option plans without the approval of security holders, 117 thus potentially obscuring investors ability to assess the dilutive effect of a registrants equity compensation program. Our current rules do not require that a registrant disclose specific information about its non-security holder-approved equity compensation plans. 118 Nor do current financial reporting disclosure rules require that non-security holder-approved plans be identified. 119 Consequently, it is often difficult for investors to determine whether they have adequate information about a registrants equity compensation program. In response to ongoing investor concerns, 120 in January 2001 we proposed amendments to our rules to enhance the quality of information available to investors about equity compensation plans. 121 B. Response to Comment Letters In the Proposing Release, we noted that registrants would incur costs in complying with the proposals. We also noted that these costs, to the extent that they could be estimated, would not be significant, as the required disclosure can be derived from information that is readily available to registrants through the routine administration of their equity compensation programs. We requested comment on the costs and benefits of the proposals. Of the comment letters we received, 22 respondents discussed the costs and benefits associated with the proposals. 122 Most of the comment letters addressed these matters in general terms. Several respondents asserted that, because the proposals duplicated disclosure already required in registrants audited financial statements, the cost of providing information to investors would increase without any useful benefit. 123 In response to these comments, we have revised the proposals to eliminate redundant disclosure and to minimize the overlap with financial reporting requirements, thereby reducing the cost of compliance. As discussed in Subsection C below, the amendments will enhance the quality of the disclosure available to investors about the dilutive effect of registrants equity compensation programs. Other respondents, while generally supporting the proposals, suggested that we scale back the required disclosure to reduce compliance costs. For example, some respondents indicated that requiring plan-by-plan disclosure would create an undue burden for registrants without providing an incremental benefit to investors. 124 In response to these comments, we have revised the proposals to permit aggregated disclosure of information about plans and individual equity compensation arrangements and to allow the required narrative summary of a non-security holder-approved stock option plan to be provided by a cross-reference to a description of the plan in a registrants financial statements. 125 Some respondents suggested that we expand the required disclosure to include additional information, such as weighted-average exercise price data and information about existing equity compensation plans being submitted for security holder action. They also requested that we require the filing of non-security holder-approved equity compensation plans. We have made these changes. 126 Most respondents suggested that the proposed disclosure be required in the same document each year, to both streamline compliance and to minimize investor confusion. While we carefully considered this suggestion, ultimately we concluded that these concerns were outweighed by the need for consistent application of the disclosure to all registrants. 127 Accordingly, the required disclosure is to be provided each year in a registrants annual report on Form 10-K or 10-KSB and, additionally, in the proxy or information statement in years when the registrant is submitting a compensation plan for security holder action. 1. Disclosure of Non-Security Holder-Approved Plans New Item 201(d)(1) of Regulation S-K and Regulation S-B requires registrants to disclose whether they have one or more non-security holder-approved stock option plans by separately providing information about the dilutive effects of these plans. New Item 201(d)(3) of Regulation S-K and Regulation S-B requires that this disclosure be accompanied by a narrative summary of the material features of each non-security holder-approved plan. Also, as amended Item 601(b)(10) of Regulation S-K and Regulation S-B requires registrants to file a copy of any non-security holder-approved equity compensation plan with us unless the plan is immaterial in amount or significance. Presently, it is difficult for investors to ascertain whether a registrant has adopted a non-security holder approved stock option plan. 128 If a plan is broad-based, restricts or prohibits the participation of officers and directors and does not permit the grant of tax-qualified stock options, for instance, it is unlikely to require security holder approval. Frequently, investors must examine the required public filings of a registrant made over several years in order to identify the registrants stock option plans and determine if they have been approved by security holders. Even when a non-security holder-approved plan is identified, information about the plan may be limited since it may not be subject to our disclosure rules and may not be filed with us. The amendments will enable investors to ascertain if a registrant has adopted a non-security holder approved plan and highlight a description of the plans material features. 2. Tabular Disclosure New Item 201(d)(1) of Regulation S-K and Regulation S-B requires registrants to disclose, for their entire equity compensation program as in effect as of the end of the last completed fiscal year, the number of securities underlying, and the weighted-average exercise price of, outstanding options, warrants and rights and the number of securities remaining available for future issuance. This disclosure is to be made separately for plans approved by security holders and plans that have not been approved by security holders. The required disclosure will assist investors in assessing the potential dilution from a registrants equity compensation program in two ways. First, the required disclosure of the number of securities to be issued upon the exercise, and weighted-average exercise price, of all outstanding options, warrants and rights will enable investors to view this information in two categories: plans approved by security holders and plans not approved by security holders. While numerical and weighted-average exercise price information is presently available in the footnotes to a registrants audited financial statements, this disclosure does not separately identify the potential dilutive effect of any non-security-holder approved stock option plans. Second, disclosure of the number of securities available for future issuance under a registrants equity compensation plans will enable investors to better calculate the quotoverhangquot 129 resulting from the registrants entire equity compensation program. Under existing disclosure requirements, it is not always possible to make this calculation. 130 This information may be useful to investors where the cost of a registrants equity compensation plan exceeds its incentive effects. The new disclosure also will enhance the ability of investors and others, such as proxy review firms, to monitor the impact of a board of directors actions concerning equity compensation matters. Access to this information will make it easier for investors to determine both the portion of the current value of a business that will be transferred to option holders upon exercise and the potential allocation of future cash flow rights. 131 While the economic impact of outstanding options, warrants and rights is incorporated into the presentation of diluted earnings-per-share under SFAS 128, this calculation differs from the new disclosure in several ways. First, it does not isolate quotcompensatoryquot instruments. Typically, the diluted earnings-per-share figure combines the dilutive effect of compensatory options, warrants and rights with that of other outstanding convertible securities. Second, SFAS 128 employs the so-called quottreasury stock methodquot to compute diluted earnings-per-share. Among other things, this methodology excludes quotout-of-the-moneyquot options and warrants from the computation and requires certain assumptions about the timing of option exercises and the use of the assumed proceeds of exercise to arrive at the total number of potentially dilutive securities. Finally, while weighted-average exercise price information is available for various option groupings under SFAS 123, it does not differentiate between equity compensation plans that have been approved by security holders and plans that have not been approved by security holders. The amendments will increase the cost of preparing annual reports on Form 10-K and 10-KSB and proxy and information statements. Registrants must compile the required information, place it in the appropriate category and prepare the required table. In addition, registrants with non-security holder-approved stock option plans must prepare a narrative summary of the material features of each plan and file a copy of any material plan with us. Registrants also will incur an increase in printing and distribution costs as a result of the amendments. While several respondents indicated that the cost estimates in the Proposing Release were too low, 132 only one provided an alternative cost estimate. This respondent stated that compliance could result in additional costs approximating 300,000 in years when disclosure was required in its proxy statement. 133 The respondents estimate is no longer relevant because of the substantial revisions that we have made to the proposals, as discussed in Subsection B above. The required disclosure will provide investors both with new information and with an alternative means for analyzing currently available information. With respect to the dilution disclosure, we believe that the compliance costs are warranted because this information is not otherwise available to investors. Moreover, these costs should be minimal because this information can be derived from information that is readily available to registrants through the routine administration of their equity compensation programs. With respect to the information concerning non-security holder-approved stock option plans, much of the required tabular disclosure, such as the number of outstanding options, warrants and rights and the related weighted-average exercise price data, is already maintained for purposes of satisfying financial reporting requirements. The amendments merely require registrants to disclose this information on the basis of whether or not the related plan has been approved by security holders. In addition, many registrants summarize the material features of their equity compensation plans to satisfy their SFAS 123 disclosure obligations. Indeed, one respondent indicated that the amendments would result in only minimal additional costs to registrants because, in their experience, most registrants already maintain the required information in order to comply with SRO rules and for effective plan administration. 134 Although the amendments will increase the length of registrants annual reports on Form 10-K and 10-KSB, as well as their proxy and information statements, generally this should not have a major impact on a registrants printing and distribution costs. We have revised the proposals to reduce and standardize the size of the required tabular disclosure. These revisions should ensure that registrants do not incur significant additional printing and postage charges to prepare and distribute their proxy or information statements to security holders. While in most instances, the required disclosure should not exceed one-third of a page, where a registrant has one or more non-security holder-approved stock option plans, the disclosure may be longer. These registrants may incur additional expense to print and distribute their proxy or information statement materials. While we do not expect these costs to be significant, we have estimated these amounts to be approximately 750 per registrant. 135 For the reasons discussed above, we do not believe that the amendments will lead to significant compliance costs for registrants. 136 Notwithstanding the foregoing, we have adjusted our initial cost estimates to reflect the revisions made to the proposals. Because the size and scope of equity compensation programs vary among registrants, it is difficult to provide an accurate cost estimate with which all parties will agree however, we estimate that each of the approximately 8,400 registrants 137 subject to the amendments will spend an average of approximately one to two hours each year and incur an average annual cost of approximately 393 138 to prepare the disclosure. Thus, the aggregate cost of the amendments is estimated to be approximately 3,300,000. Based on the information provided in the comment letters and our own analysis, we believe that the amendments will enhance the quality of disclosure available to investors about registrants equity compensation plans, thereby leading to better-informed investment and voting decisions. These benefits are difficult to quantify. We also believe that these benefits will justify the minimal costs of compliance. V. Final Regulatory Flexibility Analysis This Final Regulatory Flexibility Analysis, or FRFA, has been prepared in accordance with the Regulatory Flexibility Act. 139 This FRFA relates to rule amendments adopted under the Exchange Act that revise the disclosure requirements with respect to registrants equity compensation plans. Specifically, the amendments revise Item 201 of Regulation S-B, Item 201 of Regulation S-K and Form 10-K, Form 10-KSB, Exchange Act Rule 14a-3 and Schedule 14A under the Exchange Act to require tabular disclosure of the number and weighted-average exercise price of all outstanding options, warrants and rights under a registrants equity compensation plans, as well as the number of securities remaining available for future issuance under these plans and certain related information. Disclosure is to be made in two categories: plans that have been approved by security holders and plans that have not been approved by security holders. Registrants must include the table in their annual reports on Form 10-K or 10-KSB, as well as in their proxy or information statements in years when they are submitting a compensation plan for security holder action. Copies of most equity compensation plans will be required to be filed with us for public inspection. A. Need for the Amendments The increased use of equity compensation has raised investor concerns about the potential dilutive effect of a registrants equity compensation plans, the absence of full disclosure to security holders about these plans and the adoption of many plans without the approval of security holders. These concerns may be especially acute for investors in small entities, which use equity compensation in order to attract and retain key employees and to preserve scarce cash resources. 140 The amendments enhance the quality of information available to investors about a registrants equity compensation plans. B. Significant Issues Raised by Public Comment A summary of the Initial Regulatory Flexibility Analysis, or IRFA, appeared in the Proposing Release. 141 We requested comment on any aspect of the IRFA, including the number of small businesses that would be affected by the proposals, 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 proposals. We received no comment letters responding to that request. C. Small Entities Subject to the Amendments Exchange Act Rule 0-10 142 defines the term quotsmall businessquot to be an issuer that, on the last day of its most recent fiscal year, has total assets of 5 million or less. 143 There are approximately 770 issuers that are subject to the reporting requirements of Section 13 of the Exchange Act that have assets of 5 million or less. 144 Only small businesses that have a reporting obligation under the Exchange Act and adopt or maintain an equity compensation plan will be subject to the amendments. We estimate that there are approximately 460 entities that have total assets of 5 million or less that meet this criteria. 145 D. Projected Reporting, Recordkeeping and Other Compliance Requirements The amendments impose new reporting requirements by requiring specific annual disclosure by all registrants, including quotsmall businesses, quot concerning their equity compensation plans in effect as of the end of the most recently completed fiscal year. Consequently, the amendments will increase the costs associated with the preparation of the disclosure included in annual reports on Form 10-K or 10-KSB and furnished to security holders in proxy and information statements. Specifically, the amendments require registrants to disclose the number and weighted-average exercise price of all outstanding options, warrants and rights under a registrants equity compensation plans, as well as the number of securities remaining available for future issuance under these plans and certain related information. Disclosure is to be made in two categories: plans that have been approved by security holders and plans that have not been approved by security holders. Since this information can be derived from information that is readily available to registrants through the routine administration of their equity compensation programs, we do not expect these additional costs to be significant. We do not anticipate that the amendments will impose any significant recordkeeping requirements in addition to those already required under the Exchange Act. The information to be disclosed can be derived from information that is readily available to registrants through the routine administration of their equity compensation programs. All registrants with equity compensation plans have various legal, financial reporting and other disclosure obligations that require maintenance of information regarding these plans similar to that covered by the amendments. E. Agency Action to Minimize Effect on Small Entities As required by Sections 603 and 604 of the Regulatory Flexibility Act, we have considered alternatives that would accomplish the stated objectives, while minimizing any significant adverse impact on small entities. In connection with the amendments, we considered several alternatives, including the following: establishing different compliance and reporting requirements that take into account the resources of small entities clarifying, consolidating or simplifying compliance and reporting requirements under the rules for small entities using performance rather than design standards and exempting small entities from all or part of the requirements. Overall, the amendments are intended to assist investors in understanding a registrants equity compensation policies and practices. The quality of information available about the potential dilutive effect of a registrants equity compensation plans is relevant to investors in both small and large entities. Different compliance or reporting requirements for small entities are not appropriate because small entities may use equity compensation plans to a greater extent than large entities to preserve scarce cash resources. 146 In addition, it is not feasible to further clarify, consolidate or simplify the amendments for small entities because the amendments require only minimal information about a registrants equity compensation plans. Because uniformity and comparability are important, especially where small entities have equity compensation plans, we do not propose to use performance standards to specify different requirements for small entities. Finally, we believe that the amendments should apply equally to all entities required to disclose information, in order to safeguard protection of all investors. VI. Analysis of Impact on the Economy, Burden on Competition and Promotion of Efficiency, Competition and Capital Formation Section 23(a)(2) of the Exchange Act 147 requires us, when adopting rules under the Exchange Act, to consider the impact that any new rule will have on competition. In addition, Section 23(a)(2) prohibits us from adopting any rule that will impose a burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act. We have considered the amendments in light of the standards in Section 23(a)(2). We requested comment on any anti-competitive effects of the proposals. We received no comment letters responding to that request. The amendments may have a disparate impact on registrants that use equity compensation extensively, such as smaller firms or registrants in certain industry sectors (such as high-technology companies), as compared to registrants with limited or no equity compensation programs. 148 Thus, we are sensitive to the concern that registrants with a greater compliance obligation will be placed at a competitive disadvantage. In addition, several commenters, while not specifically addressing this issue, did argue that the new disclosure would be duplicative of information currently required to be included in registrants audited financial statements. In response to these concerns, we have revised the proposals to eliminate redundant requirements and to streamline the compliance process. Because these changes should enable registrants to keep compliance costs low, we do not believe that the amendments will impose a significantly disproportionate cost on smaller firms or high-technology companies. Section 2(b) of the Securities Act and Section 3(f) of the Exchange Act 149 require us, when engaging in rulemaking requiring 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. We have considered the amendments in light of the standards in these provisions. We requested comment on how the proposals would affect efficiency, competition and capital formation. We received no comment letters responding to that request. It is widely believed that equity compensation, particularly instruments such as stock options, can be used to align the interests of employees and security holders, thereby promoting effective corporate governance. 150 Because an equity compensation plan may necessarily have an unintended dilutive effect on the existing ownership interests, however, it is important that the plan be closely monitored to ensure that its cost is commensurate with its benefit to investors. The amendments are intended to enhance the quality of disclosure about registrants equity compensation programs that is available to investors. Increasing the transparency of these programs should result in better monitoring by investors. This should result in better corporate governance, thereby increasing the efficiency of the organization. This should promote capital formation. VII. Statutory Authority The amendments contained in this release are being adopted under the authority set forth in Sections 3(b) 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 RULE AMENDMENTS In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is amended as follows: PART 228 - INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS 1. The general 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, 78 l . 78m, 78n, 78o, 78u-5, 78w, 78 ll . 80a-8, 80a-29, 80a-30, 80a-37 and 80b-11, unless otherwise noted. 2. Section 228.201 is amended by adding paragraph (d) before the Instruction to read as follows: sect228.201 (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 compensation plans (including individual compensation arrangements) under which equity securities of the small business issuer are authorized for issuance, aggregated as follows: (i) All compensation plans previously approved by security holders and (ii) All compensation plans not previously approved by security holders. Equity Compensation Plan Information Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders (2) The table shall include the following information as of the end of the most recently completed fiscal year for each category of equity compensation plan described in paragraph (d)(1) of this Item: (i) The number of securities to be issued upon the exercise of outstanding options, warrants and rights (column (a)) (ii) The weighted-average exercise price of the outstanding options, warrants and rights disclosed pursuant to paragraph (d)(2)(i) of this Item (column (b)) and (iii) Other than securities to be issued upon the exercise of the outstanding options, warrants and rights disclosed in paragraph (d)(2)(i) of this Item, the number of securities remaining available for future issuance under the plan (column (c)). (3) For each compensation plan under which equity securities of the small business issuer are authorized for issuance that was adopted without the approval of security holders, describe briefly, in narrative form, the material features of the plan. Instructions to Paragraph (d). 1. Disclosure shall be provided with respect to any compensation plan and individual compensation arrangement of the small business issuer (or parent, subsidiary or affiliate of the small business issuer) under which equity securities of the small business issuer are authorized for issuance to employees or non-employees (such as directors, consultants, advisors, vendors, customers, suppliers or lenders) in exchange for consideration in the form of goods or services as described in Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation . or any successor standard. No disclosure is required with respect to (i) any plan, contract or arrangement for the issuance of warrants or rights to all security holders of the small business issuer as such on a pro rata basis (such as a stock rights offering) or (ii) any employee benefit plan that is intended to meet the qualification requirements of Section 401(a) of the Internal Revenue Code (26 U. S.C. sect401(a)). 2. For purposes of this paragraph, an quotindividual compensation arrangementquot includes, but is not limited to, the following: a written compensation contract within the meaning of quotemployee benefit planquot under sect230.405 of this chapter and a plan (whether or not set forth in any formal document) applicable to one person as provided under Item 402(a)(7)(ii) of Regulation S-B (sect228.402(a)(7)(ii)). 3. If more than one class of equity security is issued under its equity compensation plans, a small business issuer should aggregate plan information for each class of security. 4. A small business issuer may aggregate information regarding individual compensation arrangements with the plan information required under paragraph (d)(1)(i) and (ii) of this item, as applicable. 5. A small business issuer may aggregate information regarding a compensation plan assumed in connection with a merger, consolidation or other acquisition transaction pursuant to which the small business issuer may make subsequent grants or awards of its equity securities with the plan information required under paragraph (d)(1)(i) and (ii) of this item, as applicable. A small business issuer shall disclose on an aggregated basis in a footnote to the table the information required under paragraph (d)(2)(i) and (ii) of this item with respect to any individual options, warrants or rights assumed in connection with a merger, consolidation or other acquisition transaction. 6. To the extent that the number of securities remaining available for future issuance disclosed in column (c) includes securities available for future issuance under any compensation plan or individual compensation arrangement other than upon the exercise of an option, warrant or right, disclose the number of securities and type of plan separately for each such plan in a footnote to the table. 7. If the description of an equity compensation plan set forth in a small business issuers financial statements contains the disclosure required by paragraph (d)(3) of this item, a cross-reference to such description will satisfy the requirements of paragraph (d)(3) of this item. 8. If an equity compensation plan contains a formula for calculating the number of securities available for issuance under the plan, including, without limitation, a formula that automatically increases the number of securities available for issuance by a percentage of the number of outstanding securities of the small business issuer, a description of this formula shall be disclosed in a footnote to the table. 9. 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. 3. Section 228.601 is amended by redesignating paragraph (b)(10)(ii)(B) as paragraph (b)(10)(ii)(C) and by adding new paragraph (b)(10)(ii)(B) to read as follows: sect228. 601 (Item 601) Exhibits (b) Description of Exhibits (10) Material Contracts (B) Any compensatory plan, contract or arrangement adopted without the approval of security holders pursuant to which equity may be awarded, including, but not limited to, options, warrants or rights (or if not set forth in any formal document, a written description thereof), in which any employee (whether or not an executive officer of the small business issuer) participates shall be filed unless immaterial in amount or significance. A compensation plan assumed by a small business issuer in connection with a merger, consolidation or other acquisition transaction pursuant to which the small business issuer may make further grants or awards of its equity securities shall be considered a compensation plan of the small business issuer for purposes of the preceding sentence. 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 4. 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, 78 l . 78m, 78n, 78o, 78u-5, 78w, 78 ll (d), 79e, 79n, 79t, 80a-8, 80a-29, 80a-30, 80a-31(c), 80a-37, 80a-38(a), and 80b-11, unless otherwise noted. 5. The authority citation following sect229.201 is removed. 6. Section 229.201 is amended by adding paragraph (d) before the Instructions to Item 201 to read as follows: sect229.201 (Item 201) Market price of and dividends on the registrants 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 compensation plans (including individual compensation arrangements) under which equity securities of the registrant are authorized for issuance, aggregated as follows: (i) All compensation plans previously approved by security holders and (ii) All compensation plans not previously approved by security holders. Equity Compensation Plan Information Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders (2) The table shall include the following information as of the end of the most recently completed fiscal year for each category of equity compensation plan described in paragraph (d)(1) of this Item: (i) The number of securities to be issued upon the exercise of outstanding options, warrants and rights (column (a)) (ii) The weighted-average exercise price of the outstanding options, warrants and rights disclosed pursuant to paragraph (d)(2)(i) of this Item (column (b)) and (iii) Other than securities to be issued upon the exercise of the outstanding options, warrants and rights disclosed in paragraph (d)(2)(i) of this Item, the number of securities remaining available for future issuance under the plan (column (c)). (3) For each compensation plan under which equity securities of the registrant are authorized for issuance that was adopted without the approval of security holders, describe briefly, in narrative form, the material features of the plan. Instructions to Paragraph (d). 1. Disclosure shall be provided with respect to any compensation plan and individual compensation arrangement of the registrant (or parent, subsidiary or affiliate of the registrant) under which equity securities of the registrant are authorized for issuance to employees or non-employees (such as directors, consultants, advisors, vendors, customers, suppliers or lenders) in exchange for consideration in the form of goods or services as described in Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation . or any successor standard. No disclosure is required with respect to (i) any plan, contract or arrangement for the issuance of warrants or rights to all security holders of the registrant as such on a pro rata basis (such as a stock rights offering) or (ii) any employee benefit plan that is intended to meet the qualification requirements of Section 401(a) of the Internal Revenue Code (26 U. S.C. sect401(a)). 2. For purposes of this paragraph, an quotindividual compensation arrangementquot includes, but is not limited to, the following: a written compensation contract within the meaning of quotemployee benefit planquot under sect230.405 of this chapter and a plan (whether or not set forth in any formal document) applicable to one person as provided under Item 402(a)(7)(ii) of Regulation S-K (sect229.402(a)(7)(ii)). 3. If more than one class of equity security is issued under its equity compensation plans, a registrant should aggregate plan information for each class of security. 4. A registrant may aggregate information regarding individual compensation arrangements with the plan information required under paragraph (d)(1)(i) and (ii) of this item, as applicable. 5. A registrant may aggregate information regarding a compensation plan assumed in connection with a merger, consolidation or other acquisition transaction pursuant to which the registrant may make subsequent grants or awards of its equity securities with the plan information required under paragraph (d)(1)(i) and (ii) of this item, as applicable. A registrant shall disclose on an aggregated basis in a footnote to the table the information required under paragraph (d)(2)(i) and (ii) of this item with respect to any individual options, warrants or rights assumed in connection with a merger, consolidation or other acquisition transaction. 6. To the extent that the number of securities remaining available for future issuance disclosed in column (c) includes securities available for future issuance under any compensation plan or individual compensation arrangement other than upon the exercise of an option, warrant or right, disclose the number of securities and type of plan separately for each such plan in a footnote to the table. 7. If the description of an equity compensation plan set forth in a registrants financial statements contains the disclosure required by paragraph (d)(3) of this item, a cross-reference to such description will satisfy the requirements of paragraph (d)(3) of this item. 8. If an equity compensation plan contains a formula for calculating the number of securities available for issuance under the plan, including, without limitation, a formula that automatically increases the number of securities available for issuance by a percentage of the number of outstanding securities of the registrant, a description of this formula shall be disclosed in a footnote to the table. 9. 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. 7. Section 229.601 is amended by redesignating paragraph (b)(10)(iii)(B) as paragraph (b)(10)(iii)(C) and by adding new paragraph (b)(10)(iii)(B) to read as follows: sect229. 601 (Item 601) Exhibits (b) Description of Exhibits (10) Material Contracts (B) Any compensatory plan, contract or arrangement adopted without the approval of security holders pursuant to which equity may be awarded, including, but not limited to, options, warrants or rights (or if not set forth in any formal document, a written description thereof), in which any employee (whether or not an executive officer of the registrant) participates shall be filed unless immaterial in amount or significance. A compensation plan assumed by a registrant in connection with a merger, consolidation or other acquisition transaction pursuant to which the registrant may make further grants or awards of its equity securities shall be considered a compensation plan of the registrant for purposes of the preceding sentence. PART 240 - GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934 8. The general authority citation for Part 240 is revised to read, in part, as follows: Authority . 15 U. S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78 l . 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78 ll . 78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and 80b-11, unless otherwise noted. 9. The authority citation following sect240.14a-3 is removed. 10. Section 240.14a-3 is amended by revising paragraph (b)(9) to read as follows: sect240.14a-3 Information to be furnished to security holders. (9) The report shall contain the market price of and dividends on the registrants common equity and related security holder matters required by Item 201(a), (b) and (c) of Regulation S-K (sect229.201(a), (b) and (c) of this chapter). 11. In Section 240.14a-101 amend Item 10 of Schedule 14A by adding paragraph (c) before the undesignated heading Instructions and revise Item 14(d)(4) of Schedule 14A to read as follows: sect240.14a-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. Furnish the information required by Item 201(d) of Regulation S-K (sect229.201(d) of this chapter). Instructions to paragraph (c). 1. If action is to be taken as described in paragraph (a) of this Item with respect to the approval of a new compensation plan under which equity securities of the registrant are authorized for issuance, information about the plan shall be disclosed as required under paragraphs (a) and (b) of this Item and shall not be included in the disclosure required by Item 201(d) of Regulation S-K (sect229.201(d) of this chapter). If action is to be taken as described in paragraph (a) of this Item with respect to the amendment or modification of an existing plan under which equity securities of the registrant are authorized for issuance, the registrant shall include information about securities previously authorized for issuance under the plan (including any outstanding options, warrants and rights previously granted pursuant to the plan and any securities remaining available for future issuance under the plan) in the disclosure required by Item 201(d) of Regulation S-K (sect229.201(d) of this chapter). Any additional securities that are the subject of the amendments or modification of the existing plan shall be disclosed as required under paragraphs (a) and (b) of this Item and shall not be included in the Item 201(d) disclosure. Item 14. Mergers, consolidations, acquisitions and similar matters. (d) Information about parties to the transaction: registered investment companies and business development companies. (4) Information required by Item 201(a), (b) and (c) of Regulation S-K (sect229.201(a), (b) and (c) of this chapter), market price of and dividends on the registrants common equity and related stockholder matters PART 249 - FORMS, SECURITIES EXCHANGE ACT OF 1934 12. The authority citation for Part 249 continues to read, in part, as follows: Authority . 15 U. S.C. 78a et seq . unless otherwise noted 13. By amending Form 10-K (referenced in sect249.310) 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. Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 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 (sect229.201(d) of this chapter) and by Item 403 of Regulation S-K (sect229.403 of this chapter). 12. By amending Form 10-KSB (referenced in sect249.310b) 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. 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. Mit der Kommission. Item 1 of Schedule 14C requires that a registrant furnish the information called for by all of the items of Schedule 14A (other than Items 1(c), 2, 4 and 5) which would be applicable to any matter to be acted upon at the meeting if proxies were to be solicited in connection with the meeting. A study of stock-based pay practices at the nations 200 largest corporations indicates that these companies allocated 15.2 of outstanding shares (calculated on a fully-diluted basis) for management and employee equity incentives in 2000, compared to only 6.9 in 1989. See Pearl Meyers amp Partners, Inc. 2000 Equity Stake, Study of Management Equity Participation in the Top 200 Corporations (2000). 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, Justin Fox, The Amazing Stock Option Sleight of Hand . Fortune, June 25, 2001, at 86. In its most recent study, the Investor Responsibility Research Center found that the average potential dilution for the 1,500 companies in the quotSampP Super 1,500quot (the combination of the SampP 500, the SampP MidCap 400 and the SampP SmallCap 600) was 14.6 in 2000, compared to 11.6 in 1997 an increase of approximately 26. The increase was even greater for SampP 500 companies, with average potential dilution rising to 13.1 in 2000, compared to 9.2 in 1995. See Investor Responsibility Research Center, Potential Dilution - 2000, The Potential Dilution from Stock Plans at the SampP Super 1,500 Companies (2000) (the quotIRRC Dilution Studyquot). The amendments were proposed in Release No. 33-7944 (Jan. 26, 2001) 66 FR 8732 (the quotProposing Releasequot). The commenters included 11 individual and institutional investors, eight registrants and registrant associations (one registrant submitted two letters), one self-regulatory organization and 10 members of the executive compensation consulting, accounting and legal communities. These comment letters and a summary of comments prepared by our staff are available for public inspection and copying in our Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549, in File No. S7-04-01. Public comments submitted electronically and the summary of comments are available on our website sec. gov . The discussion of Form 10-K in this release also includes Form 10-KSB. The discussion of proxy statements in this release also includes Schedule 14C information statements. To help investors better understand equity compensation, our Office of Investor Education and Assistance will create educational materials about the available disclosure on equity compensation programs (including the information available in financial statements). See, for example, the Letter dated March 26, 2001 from the Council of Institutional Investors (the quotCII Letterquot), the Letter dated April 24, 2001 from the Association for Investment Management and Research and the Letter dated April 16, 2001 from the Association of the Bar of the City of New York (the quotNYC Bar Letterquot). While the impact of outstanding options, warrants and rights is contained in the presentation of diluted earnings-per-share required by Statement of Financial Accounting Standards No. 128, Earnings-Per-Share (Feb. 1997) (quotSFAS 128quot), this disclosure does not necessarily isolate quotcompensatoryquot instruments. Typically, the diluted earnings-per-share figure combines the dilutive effect of compensatory options, warrants and rights with that of other outstanding convertible securities. See new Item 201(d)(2)(ii) of Regulation S-B 17 CFR 228.201(d)(2)(ii) and new Item 201(d)(2)(ii) of Regulation S-K 17 CFR 229.201(d)(2)(ii). This weighted-average exercise price information may be different from that contained in a registrants financial statements as required by Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (Oct. 1995) (quotSFAS 123quot) because the information includes grants and awards to non-employees while the information required by SFAS 123 may not. See n. 55 below. This includes any equity compensation plan that provides for grants and awards to employees or non-employees in exchange for consideration in the form of goods or services as described in SFAS 123. For purposes of the amendments, we consider an equity compensation plan to be in effect as long as securities remain available for future issuance under the plan, or as long as options, warrants or rights previously granted under the plan remain outstanding. Disclosure is required without regard to whether participants are employees (including officers) or non-employees (such as directors, consultants, advisors, vendors, customers, suppliers or lenders). See, for example, the Letter dated May 7, 2001 from the American Bar Association (the quotABA Letterquot), the Letter dated April 2, 2001 from Lucent Technologies Inc. and the Letter dated May 22, 2001 from the New York State Bar Association (the quotNY State Bar Letterquot). One commenter estimated that, based upon the number of equity compensation plans it administers, compliance could cost an additional 300,000 annually for printing and distribution. See the Letter dated April 9, 2001 from Lucent Technologies Inc. (the quotSecond Lucent Letterquot). See the Letter dated February 27, 2001 from Intel Corporation (the quotIntel Letterquot). In addition, information on the number and identity of a registrants equity compensation plans should be available in the footnotes to the registrants financial statements as part of its required SFAS 123 disclosure. See paragraph 46 of SFAS 123. See new Item 201(d)(1) of Regulation S-B 17 CFR 228.201(d)(1) and new Item 201(d)(1) of Regulation S-K 17 CFR 229.201(d)(1). These plans otherwise are subject to the disclosure requirements of Item 10 of Schedule 14A. Item 10 requires a description of the material features of, and tabular disclosure of the benefits receivable or allocable under, the plan being acted upon, as well as additional information regarding specific types of plans. See, for example, the CII Letter, the Letter dated March 28, 2001 from the State of Wisconsin Investment Board (the quotSWIB Letterquot) and the Letter dated March 29, 2001 from the Teachers Insurance and Annuity Association - College Retirement Equities Fund (the quotTIAA-CREF Letterquot). See Instruction 1 to new Item 10(c) of Schedule 14A. For these purposes, an individual equity compensation arrangement includes a quotplanquot for a single person as defined by Item 402(a)(7)(ii) of Regulation S-K 17 CFR 229.402(a)(7)(ii) (quotA plan may be applicable to one person. quot), as well as an individual quotwritten compensation contractquot (see, for example, the Securities Act Rule 405 17 CFR 230.405 definition of the term quotemployee benefit planquot). See, for example, the NY State Bar Letter and the TIAA-CREF letter. See Report of the New York Stock Exchange Special Task Force on Stockholder Approval Policy (Oct. 1999) (the quotNYSE Task Force Reportquot), at 14, available at nysepdfspolicy. pdf . While SFAS 123 requires an entity to provide a description of each stock-based compensation plan, these descriptions need not indicate whether a plan has been approved by security holders. See paragraphs 46 and 362 of SFAS 123. Paragraph 46 of SFAS 123 provides for disclosure of the number of shares authorized for grants of options or other equity instruments pursuant to stock-based compensation plans. It does not specifically require disclosure of the current number of authorized shares available for grant. In addition, it may be difficult for investors to determine this number. Currently, a registrant submitting an equity compensation plan for security holder action need not provide any specific disclosure about its other equity compensation plans. In its annual study on stock plan dilution, the Investor Responsibility Research Center found that approximately 22 of the companies surveyed did not disclose the number of shares available for future issuance under their employee stock plans. See the IRRC Dilution Study. Paragraph 46 of SFAS 123 provides that quotan entity that uses equity instruments to acquire goods or services other than employee services shall provide disclosures similar to those required for employee transactions to the extent that those disclosures are important in understanding the effects of those transactions on the financial statementsquot (emphasis added). Consequently, a registrant has discretion to exclude non-employee grants and awards of equity instruments from its SFAS 123 disclosure. In addition, registrants need not apply the disclosure provisions of SFAS 123 to immaterial items, as determined based on a registrants particular circumstances. See paragraph 244 of SFAS 123. See, for example, the NYSE Task Force Report, n. 52 above, at 14 (quotThe requisite information to make dilution calculations is not consistently available in any one place or format in corporate disclosure documents. ), the Letter dated April 2, 2001 from the Association of Publicly Traded Companies (quotthe sheer volume and complexity of most corporate compensation proposals, coupled with stock option plans, makes it difficult for the average investor to interpret and effectively utilize the information provided. quot) and the TIAA-CREF Letter (quotlack of transparency. limits the ability of shareholders. to protect themselves against plans that can be highly dilutive. quot). See the Proposing Release at n. 17. This table does not describe all of the information that registrants must disclose under SFAS 123. In the Proposing Release, we also sought comment as to whether the table should be required in registration statements filed under the Securities Act of 1933 15 U. S.C. sectsect77a et seq .. While no commenter favored a blanket requirement for all registration statements, two commenters suggested that registrants include the table in registration statements filed in connection with initial public offerings. See the NYC Bar Letter and the NY State Bar Letter. Two commenters expressly opposed a registration statement disclosure requirement. See the ABA Letter and the Letter dated June 11, 2001 from the New York Stock Exchange (the quotNYSE Letterquot). Generally, registrants already include information about the possible effects of future sales of securities, including outstanding options, in registration statements for initial public offerings to the extent that this information is material. Item 506 of Regulation S-K 17 CFR 229.506 requires specific information in a registration statement filed in connection with an initial public offering about dilution, as well as with respect to common equity securities that have been acquired by officers and directors. In addition, Item 201(a)(2) of Regulation S-K 17 CFR 229.201(a)(2) requires disclosure of the amount of common equity that is subject to outstanding options or warrants. Further information is available pursuant to the disclosure required by Item 402 of Regulation S-K. Accordingly, except where the table is part of an annual report on Form 10-K or 10-KSB that is incorporated by reference into a prospectus, we are not extending the disclosure requirements to registration statements at this time. See Instruction 10 to new Item 201(d) of Regulation S-B and Instruction 10 to new Item 201(d) of Regulation S-K. See, for example, the ABA Letter, the CII Letter and the SWIB Letter. See, for example, the Letter dated March 29, 2001 from Ernst ampYoung LLP, the Second Lucent Letter and the NYC Bar Letter. 15 U. S.C. sect78o(d). Some commenters argued that even where a registrant is not submitting a compensation plan for security holder action, the new disclosure contains relevant information with respect to the backgrounds and compensation of directors and executive officers that should be available for evaluation in connection with the election of directors. In general, we find the relevance of the new disclosure to be somewhat attenuated from decisions regarding the election of directors. Moreover, there would be little connection when a nominee has not served previously as a director of the registrant. Finally, the relevance of the new disclosure to decisions concerning the remuneration of directors and officers also is questionable because the table requires general information that does not specifically identify director and executive officer awards. Registrants are required, however, to provide security holders with an annual report to security holders pursuant to Exchange Act Rule 14a-3(b) 17 CFR 240.14a-3(b) when soliciting proxies in connection with an annual meeting of security holders at which directors are to be elected. Typically, this annual report to security holders includes the financial statements of the registrant, including the required SFAS 123 disclosure. In some instances, registrants use their annual report on Form 10-K to satisfy this delivery requirement. See Exchange Act Rule 14a-3(d) 17 CFR 240.14a-3(d). Under Exchange Act Rule 14a-3(b)(10) 17 CFR 240.14a-3(b)(10), a registrant must include in its proxy statement or annual report an undertaking to provide without charge to each security holder solicited, upon written request, a copy of the registrants annual report on Form 10-K. Once filed, the annual report on Form 10-K also is available via our Electronic Data Gathering, Analysis and Retrieval, or EDGAR, system. Another possible location for the table is the annual report to security holders required by Exchange Act Rule 14a-3(b). This alternative has several drawbacks, however. First, because it is not considered a quotfiledquot document, the annual report is not subject to the express civil liability provisions of Section 18 of the Exchange Act 15 U. S.C. sect78r. See Exchange Act Rule 14a-3(c) 17 CFR 240.14a-3(c). Second, as with proxy statements, the disclosure would not apply to registrants subject to reporting solely under Section 15(d) of the Exchange Act. Finally, because principally financial information is required to be included in the annual report, non-financial disclosure such as the table would appear out of place. See revised Item 12 of Part III of Form 10-K and revised Item 11 of Part III of Form 10-KSB. See new Item 10(c) of Schedule 14A. Proxy or information statement disclosure is triggered by the submission of any compensation plan for security holder action, including cash-only plans. Similar incorporation by reference is permitted with respect to the other disclosure items required by Part III of Form 10-K and 10-KSB. See General Instruction E(3) to Form 10-KSB and General Instruction G(3) to Form 10-K. See Section II. A.4 above. See, for example, the CII Letter, the SWIB Letter and the TIAA-CREF Letter. Other commenters suggested that we require registrants to file copies of all equity compensation plans (whether or not approved by security holders). See the ABA Letter and the NYSE Letter. 17 CFR 229.601(b)(10). 17 CFR 229.601(b)(10)(iii)(A). Nondiscriminatory, broad-based compensatory plans, contracts or arrangements are exempt from this requirement. See Item 601(b)(10)(iii)(B)( 4 ) 17 CFR 229.601(b)(10)(iii)(B)( 4 ). See, for example, the CII Letter and the Letter dated March 29, 2001 from the Office of the State Comptroller of the State of New York. See new Item 601(b)(10)(iii)(B) of Regulation S-B 17 CFR 228.601(b)(10)(iii)(B) and new Item 601(b)(10)(iii)(B) of Regulation S-K 17 CFR 229.601(b)(10)(iii)(B). This is consistent with our action in 1981 amending then-Item 7 of Regulation S-K to reformulate the definition of quotmaterial contractsquot as applied to remunerative plans, contracts or arrangements. See Release No. 33-6287 (Feb. 6, 1981) 46 FR 11952. Previously, we had indicated that remuneration plans in which directors or executive officers of the registrant did not participate generally did not need to be filed as exhibits. See Release No. 33-6230, Section II. A.2.b. i. (Aug. 27, 1980) 45 FR 58822. With respect to an existing non-security holder-approved equity compensation plan subject to new Item 601(b)(10)(iii)(B) of Regulation S-B or new Item 601(b)(10)(iii)(B) of Regulation S-K that is in effect as of the effective date of these amendments and that has not been filed previously, a copy of the plan must be filed as an exhibit to the annual report on Form 10-K or 10-KSB filed by the registrant for its first fiscal year ending on or after March 15, 2002. 44 U. S.C. sect3501 et seq . Publication and submission were in accordance with 44 U. S.C. sect3507(d) and 5 CFR 1320.11. The titles for the collections of information affected by the amendments are (1) quotRegulation 14A (Commission Rules 14a-1 through 14b-2 and Schedule 14A),quot (2) quotRegulation 14C (Commission Rules 14c-1 through 14c-7 and Schedule 14C),quot (3) quotForm 10-K, quot (4) quotForm 10- KSB, quot (5) quotRegulation S-Bquot and (6) quotRegulation S-K. quot The likely respondents subject to the collections of information include entities whose reporting obligations arise under the Exchange Act. The reporting requirements of Section 13 of the Exchange Act 15 U. S.C. sect78m, as well as the proxy disclosure requirements of Section 14 of the Exchange Act, apply to entities that have securities registered under Section 12 of the Exchange Act 15 U. S.C. sect78 l . The reporting requirements of Section 15(d) of the Exchange Act apply to 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. See the Letter dated April 17, 2001 from the American Institute of Certified Public Accountants (the quotAICPA Letterquot), the Letter dated April 2, 2001 from the Association of Publicly-Traded Companies (the quotAPTC Letterquot), the Letter dated April 2, 2001 from Lucent Technologies Inc. (the quotFirst Lucent Letterquot), the Letter dated May 22, 2001 from the New York State Bar Association, the Letter dated August 17, 2001 from Leonard S. Stein (the quotStein Letterquot) and the Letter dated August 26, 2001 from Hendrick Vater. See the Letter dated April 9, 2001 from Lucent Technologies Inc. See the APTC Letter. See the Stein Letter. We have changed our assumption about the number of registrants with equity compensation plans that, in any year, either adopt a new plan or amend an existing plan to increase the number of securities authorized for issuance under the plan. In the Proposing Release, we estimated that 50 of the registrants with equity compensation plans would either adopt a new plan or amend an existing plan each year. Based on the available survey data, we have revised this assumption to 30. See n. 91 below. This estimate is made after a review of available survey data, which varies widely. For example, in its most recent study of the quotSampP Super 1,500quot (the combination of the SampP 500, the SampP MidCap 400 and the SampP SmallCap 600), the Investor Responsibility Research Center determined that, of the 1,157 companies examined, 1,142 (98.7) awarded equity to some portion of their employees. See Investor Responsibility Research Center, Potential Dilution - 2000, The Potential Dilution from Stock Plans at the SampP Super 1,500 Companies (2000). In contrast, a Pilot Survey conducted by the Bureau of Labor Statistics in 1999 determined that 22 of publicly-held companies offered stock options to their employees. This survey sampled 2,100 quotestablishments, quot of which approximately 1 in 10 were publicly-held companies. See Bureau of Labor Statistics, Pilot Survey on the Incidence of Stock Options in Private Industry in 1999 . (Oct. 11, 2000), available at bls. govncsocsspncnr0001.txt. Further, in the Proposing Release we sought comment as to whether our estimates of the burden of the proposed collections of information were accurate. We received no comment letters responding to that request. Because of variations in the available data, we also have estimated the reporting and cost burdens for the proposed collections of information assuming that 98 of the registrants that file annual reports on Form 10-K or 10-KSB maintain an equity compensation plan and are subject to the required disclosure. See nn. 108 and 110 below. Based on the actual number of registrants filing annual reports on Form 10-K and 10-KSB, we estimate that 6,229 registrants that file on Form 10-K (10,381 times 60) maintain equity compensation plans (quotForm 10-K Filersquot) and 2,185 registrants that file on Form 10-KSB (3,641 times 60) maintain equity compensation plans (quotForm 10-KSB Filersquot). In the Proposing Release, we estimated that this figure was 25. The available survey data does not appear to be representative of the general registrant population. See William M. Mercer, Inc. Equity Compensation Survey (2001) (48 of survey respondents (83 participants) maintained non-security holder-approved stock option plans for employees below management level 60 of such plans most prevalent in large companies (more than 5,000 employees)) iQuantic, Inc. Trends in Equity Compensation 1996-2000 (2000) (27.3 of survey respondents in 1999 (161 participants) maintained non-security holder-approved stock option plans, compared to 3.2 before 1996). After discussions with several compensation professionals, we reduced our estimate to 20. We estimate that of the Form 10-K Filers, 1,246 (6,229 times 20) maintain a non-security holder-approved equity compensation plan (quotForm 10-K Filers with Non-Approved Plansquot) and 4,983 (6,229 times 80) do not (quotForm 10-K Filers with Only Approved Plansquot). We estimate that of the Form 10-KSB Filers, 437 (2,185 times 20) maintain a non-security holder-approved equity compensation plan (quotForm 10-KSB Filers with Non-Approved Plansquot) and 1,748 (2,185 times 80) do not (quotForm 10-KSB Filers with Only Approved Plansquot). This estimate is based on a review of available survey data. In its most recent study, the Investor Responsibility Research Center determined that, of 1,157 companies studied in calendar year 2000, 337 (29) presented proposals for new or amended equity compensation plans to security holders. See Investor Responsibility Research Center, Potential Dilution - 2000, The Potential Dilution from Stock Plans at the SampP Super 1,500 Companies (2000). In its most recent study, Pearl Meyers amp Partners found that new plan authorizations among the top 200 companies were submitted by 58 companies in 2000 (29). See Pearl Meyers amp Partners, Inc. 2000 Equity Stake, Study of Management Equity Participation in the Top 200 Corporations (2000). We estimate that of the Form 10-K Filers with Only Approved Plans, 1,495 (4,983 times 30) submit a new or amended equity compensation plan for security holder approval annually (quotForm 10-K Filers with Only Approved Plans Subject to Section 14quot) and of the Form 10-K Filers with Non-Approved Plans, 374 (1,246 times 30) submit a new or amended equity compensation plan for security holder approval annually (quotForm 10-K Filers with Non-Approved Plans Subject to Section 14quot). Similarly, we estimate that of the Form 10-KSB Filers with Only Approved Plans, 524 (1,748 times 30) submit a new or amended equity compensation plan for security holder approval annually (quotForm 10-KSB Filers with Only Approved Plans Subject to Section 14quot) and of the Form 10-KSB Filers with Non-Approved Plans, 131 (437 times 30) submit a new or amended equity compensation plan for security holder approval annually (quotForm 10-KSB Filers with Non-Approved Plans Subject to Section 14quot). This estimate is based on a comparison of the actual number of registrants filing annual reports on Form 10-K or 10-KSB during the 2000 fiscal year (10,381 3,641 14,022) with the actual number of registrants filing proxy or information statements during the 2000 fiscal year (9,892 253 10,145), or 10,14514,022. Thus, we have subtracted 419 registrants (1,495 times 28) from the group of Form 10-K Filers with Only Approved Plans Subject to Section 14, 105 registrants (374 times 28) from the group of Form 10-K Filers with Non-Approved Plans Subject to Section 14, 147 registrants (524 times 28) from the group of Form 10-KSB Filers with Only Approved Plans Subject to Section 14 and 37 registrants (131 times 28) from the group of Form 10-KSB Filers with Non-Approved Plans Subject to Section 14. This estimate is based on a comparison of the actual number of registrants filing proxy statements during the 2000 fiscal year (9,982) with the actual number of registrants filing information statements during the same period (253), or 9,98210,145. Thus, we estimate that of the 1,076 Form 10-K Filers with Only Approved Plans Subject to Section 14, 1,054 (1,076 times 98) will file proxy statements and 22 will file information statements, of the 269 Form 10-K Filers with Non-Approved Plans Subject to Section 14, 264 (269 times 98) will file proxy statements and five will file information statements, of the 377 Form 10-KSB Filers with Only Approved Plans Subject to Section 14, 369 (377 times 98) will file proxy statements and eight will file information statements and of the 94 Form 10-KSB Filers with Non-Approved Plans Subject to Section 14, 92 (94 times 98) will file proxy statements and two will file information statements. Even though we have streamlined compliance in order to reduce the burden on registrants, we have not reduced the number of estimated burden hours to prepare the required disclosure. This decision is in response to comments that our initial burden hour estimate was too low. See the AICPA Letter and the First Lucent Letter. We estimate that registrants will prepare 50 of the required disclosure and outside counsel will prepare the remaining 50. Accordingly, this estimate reflects the addition of one burden hour to prepare the required tabular disclosure. See n. 97 above and the accompanying text. We estimate that registrants will prepare 50 of the required disclosure and outside counsel will prepare the remaining 50. Accordingly, this estimate reflects the addition of two burden hours to prepare the required tabular and narrative disclosure. See n. 97 above and the accompanying text. We arrived at this estimate by taking the number of Form 10-K Filers (see n. 88 above) and subtracting (a) the number of Form 10-K Filers with Non-Approved Plans (see n. 90 above) and (b) the number of Form 10-K Filers with Only Approved Plans Subject to Section 14 (see nn. 92 and 94 above), or (6,229 - 1,246 - 1,076). We arrived at this estimate by taking the number of Form 10-K Filers with Non-Approved Plans (see n. 90 above) and subtracting the number of Form 10-K Filers with Non-Approved Plans Subject to Section 14 (see nn. 92 and 94 above), or (1,246 - 269). We arrived at this estimate by taking the number of Form 10-KSB Filers (see n. 88 above) and subtracting (a) the number of Form 10-KSB Filers with Non-Approved Plans (see n. 90 above) and (b) the number of Form 10-KSB Filers with Only Approved Plans Subject to Section 14 (see nn. 92 and 94 above), or (2,185 - 437 - 377). We arrived at this estimate by taking the number of Form 10-KSB Filers with Non-Approved Plans (see n. 90 above) and subtracting the number of Form 10-KSB Filers with Non-Approved Plans Subject to Section 14 (see nn. 92 and 94 above), or (437 - 94). We arrived at this estimate by taking the number of Form 10-K Filers with Only Approved Plans Subject to Section 14 that will file proxy statements and adding the number of Form 10-KSB Filers with Only Approved Plans Subject to Section 14 that will file proxy statements (see n. 96 above), or (1,054 369). We arrived at this estimate by taking the number of Form 10-K Filers with Non-Approved Plans Subject to Section 14 that will file proxy statements and adding the number of Form 10-KSB Filers with Non-Approved Plans Subject to Section 14 that will file proxy statements (see n. 96 above), or (264 92). We arrived at this estimate by taking the number of Form 10-K Filers with Only Approved Plans Subject to Section 14 that will file information statements and adding the number of Form 10-KSB Filers with Only Approved Plans Subject to Section 14 that will file information statements (see n. 96 above), or (22 8). We arrived at this estimate by taking the number of Form 10-K Filers with Non-Approved Plans Subject to Section 14 that will file information statements and adding the number of Form 10-KSB Filers with Non-Approved Plans Subject to Section 14 that will file information statements (see n. 96 above), or (5 2). Assuming that 98 of the registrants that file annual reports on Form 10-K or 10-KSB maintain an equity compensation plan and are subject to the required disclosure, the estimated burden hours per year resulting from the amendments would be 16,511 hours, increasing this estimate to 5,735,343 hours. One-half of the total burden resulting from the amendments is reflected as burden hours and the remainder is reflected in the total cost of complying with the information collection requirements. We have used an estimated hourly rate of 300.00 to determine the estimated cost to respondents of the disclosure prepared by outside counsel. We arrived at this hourly rate estimate after consulting with several private law firms. These cost burden increases reflect a change in our assumption of the number of registrants with equity compensation plans that either adopt a new plan or amend an existing plan to increase the number of securities authorized for issuance under the plan (see n. 85 above) and a change in the estimated hourly rate of outside counsel. With respect to Forms 10-K and 10-KSB, we increased our estimate by 937,300 in the case of Form 10-K and increased our estimate by 483,100 in the case of Form 10-KSB. With respect to Schedules 14A and 14C, we decreased our estimate by 8,089,500 in the case of Schedule 14A and decreased our estimate by 209,800 in the case of Schedule 14C. Assuming that 98 of the registrants that file annual reports on Form 10-K or 10-KSB maintain an equity compensation plan and are subject to the required disclosure, the estimated cost burden per year resulting from the amendments would be 4,946,400. Comments are requested pursuant to 44 U. S.C. sect3506(c)(2)(B). A study of stock-based pay practices at the nations 200 largest corporations indicates that these companies allocated 15.2 of outstanding shares (calculated on a fully-diluted basis) for management and employee equity incentives in 2000, compared to only 6.9 in 1989. See Pearl Meyers amp Partners, Inc. 2000 Equity Stake, Study of Management Equity Participation in the Top 200 Corporations (2000). Both the size of individual awards and the number of companies that use equity broadly throughout the organization have increased significantly. See Core, Guay and Larcker, Executive Equity Compensation and Incentives: A Survey . Working Paper, University of Pennsylvania (2001), at 5-7. This question should be considered in the context of any open market stock repurchase program that has been instituted by a registrant. Repurchases by its own securities by a registrant under such a program may mitigate the dilutive effects of the registrants equity compensation program. There is evidence that companies with high levels of dilution earn lower market-adjusted returns in future periods than companies with comparatively lower levels of dilution. See Garvey and Milbourn, Do Stock Prices Incorporate the Potential Dilution of Employee Stock Options . Working Paper, Claremont Graduate University amp Washington University in St. Louis (2001), at 2-3. But see Core, Guay and Larcker, Executive Equity Compensation and Incentives: A Survey . Working Paper, University of Pennsylvania (2001) (discussing the difficulty in documenting a relationship between equity compensation and corporate performance). See Release No. 34-41479 (June 4, 1999) 64 FR 31667 (under NYSE listing standards, security holder approval not required if plan is quotbroadly-basedquot that is, at least a majority of the registrants full-time employees are eligible to participate and at least a majority of the shares underlying options actually granted are to employees who are not officers or directors) Release No. 34-37260 (May 31, 1996) 61 FR 30376 (security holder approval requirement of Exchange Act Rule 16b-3 17 CFR 240.16b-3 eliminated). See also the Proposing Release at n. 21. According to the Investor Responsibility Research Center, the average negative vote on stock option plans submitted for security holder action in 2000 was 20.7, up from 17.4 in 1997. In addition, in 2000 a relatively large number of stock plan proposals were rejected. See Investor Responsibility Research Center, Potential Dilution - 2000, The Potential Dilution from Stock Plans at the SampP Super 1,500 Companies (2000) (the quotIRRC Dilution Studyquot). See Gillan, Option-based Compensation: Panacea or Pandoras Box . Journal of Applied Corporate Finance (2001) 115-128. Our rules require proxy statement disclosure of the material features of a compensation plan being submitted for security holder action. See Item 10(a)(1) of Schedule 14A. This disclosure does not reach a plan that is never submitted for security holder action. 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 options granted during the last fiscal year, this disclosure only covers 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). Although financial reporting disclosure requirements concerning stock-based compensation are extensive, they do not require the identification of non-security holder-approved equity compensation plans. See paragraph 46 of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (Oct. 1995) (quotSFAS 123quot). Given its recent comprehensive project on accounting for stock-based compensation and its current lengthy agenda, it is not expected that the FASB will revisit this subject in the immediate future. Thus, it is unlikely that the FASB could address this matter through a technical enhancement of its disclosure requirements in the near term. See the Proposing Release at n. 17. See also the Letter dated October 16, 2001 from Sarah A. B. Teslik, Executive Director, Council of Institutional Investors to Jonathan G. Katz. Certain equity awards, such as stock bonuses and restricted stock purchases for a nominal price, may, in some situations, be more dilutive from an economic standpoint than options, warrants and rights. While the amendments apply to all types of equity compensation, for two reasons our discussion focuses primarily on stock options. First, they represent the most popular form of equity compensation used today. It is estimated that more than 80 of the securities reserved for conversion and exercise by U. S. registrants relate to stock options. See Huson, Scott and Wier, Earnings Dilution and the Explanatory Power of Earnings for Returns . The Accounting Review (2001). Second, most alternative forms of equity compensation involve issued securities. Consequently, their dilutive effect may already have occurred and is likely to be reflected in the basic earnings-per-share computation and security holders equity data. These commenters included seven individual and institutional investors, four registrants and registrant associations, one self-regulatory organization and 10 members of the executive compensation consulting, accounting and legal communities. See, for example, the Letter dated April 2, 2001 from Arthur Andersen LLP (the quotAA Letterquot), the Letter dated April 17, 2001 from the American Institute of Certified Public Accountants (the quotAICPA Letterquot), the Letter dated March 29, 2001 from Emerson Electric Co. the Letter dated April 12, 2001 from Microsoft Corporation and the Letter dated April 2, 2001 from PricewaterhouseCoopers LLP (the quotPWC Letterquot). See, for example, the Letter dated March 29, 2001 from Ernst amp Young LLP and the Letter dated April 2, 2001 from Lucent Technologies Inc. See Section II. C above. Available information on non-security holder-approved stock option plans is sparse. See William M. Mercer, Inc. Equity Compensation Survey (2001) (48 of survey respondents (83 participants) maintained non-security holder-approved stock option plan for employees below management level such plans (60) most prevalent in large companies (more than 5,000 employees) iQuantic, Inc. Trends in Equity Compensation 1996-2000 (2000) (27.3 of survey respondents in 1999 (161 participants) maintained non-security holder-approved stock option plans, compared to 3.2 before 1996). This measure may be formulated in different ways. For purposes of this discussion, quotoverhangquot means the sum of the number of securities underlying outstanding options, warrants and rights plus the number of securities remaining available for future issuance under the registrants existing equity compensation plans, and is often expressed as a percentage of the total number of outstanding securities. It may be difficult for investors to calculate the quotoverhangquot of a registrants equity compensation program because the number of securities available for future issuance under the registrants plans may not be disclosed or apparent. Currently, a registrant submitting an equity compensation plan for security holder action need not provide any specific disclosure about its other equity compensation plans. Moreover, in its annual study on stock plan dilution, the Investor Responsibility Research Center found that approximately 22 of the companies surveyed did not disclose the number of shares available for future issuance under their employee stock plans. See the IRRC Dilution Study. While the full dilutive impact of these authorized but unissued securities cannot be assessed until derivative instruments have been granted and the prices for which the underlying securities may be issued can be compared to existing market values, this information, combined with knowledge of the minimum exercise price at which these instruments may be granted, may provide useful insight into the potential future economic consequences of the program. See, for example, the AA Letter, the AICPA Letter, the Letter dated May 22, 2001 from the New York State Bar Association and the PWC Letter. See the ABA Letter. This estimate is based on the Letter dated April 9, 2001 from Lucent Technologies, Inc. in which the commenter estimated that providing four additional pages of disclosure to its over five million security holders would result in additional printing costs of 100,000 and additional mailing costs of 200,000. Assuming that the required disclosure consists of one additional page and that a registrant has 50,000 security holders, the registrant may incur additional costs of 750 to prepare and distribute the additional disclosure. Since all registrants are required to make the same disclosure, the amendments will impose the same dollar costs on each registrant. Accordingly, for small entities the relative burden of compliance will be higher than for large entities. This figure is based on our estimate that 60 of the actual number of registrants filing annual reports on Form 10-K or 10-KSB (14,022 registrants) maintain equity compensation plans. This estimate is made after a review of available survey data, which varies widely. For example, in its most recent study of the quotSampP Super 1,500quot (the combination of the SampP 500, the SampP MidCap 400 and the SampP SmallCap 600), the Investor Responsibility Research Center determined that, of the 1,157 companies examined, 1,142 (98.7) awarded equity to some portion of their employees. See Investor Responsibility Research Center, Potential Dilution - 2000, The Potential Dilution from Stock Plans at the SampP Super 1,500 Companies (2000). In contrast, a Pilot Survey conducted by the Bureau of Labor Statistics in 1999 determined that 22 of publicly-held companies offered stock options to their employees. This survey sampled 2,100 quotestablishments, quot of which approximately 1 in 10 were publicly-held companies. See Bureau of Labor Statistics, Pilot Survey on the Incidence of Stock Options in Private Industry in 1999 . (Oct. 11, 2000), available at bls. govncsocsspncnr0001.txt. We arrived at this estimate by assuming that approximately 80 of these registrants will be required to provide the tabular disclosure only and 20 of these registrants will be required to describe the material features of their non-security holder-approved plans as well. See n. 90 above and the accompanying text. Thus, 80 of the registrants will incur an average annual outside counsel cost of 300 (80 of 8,400 times 300 2,016,000) while 20 will incur an average annual outside cost of 600 (20 of 8,400 times 600 1,008,000). In addition, we estimate that approximately 365 registrants with non-security holder-approved plans will incur additional printing and distribution costs of 750 each, or 273,750. See n. 135 above. The sum of these amounts averaged over 8,400 registrants equals 393. A recent study of approximately 250 companies conducted by the National Center for Employee Ownership found that 55 of the respondents had less than 200 employees (with 17 having less than 31 employees) and that 55 of the respondents had less than 40 million in annual revenue (with 14 having annual revenues of 1.1 million or less). See National Center for Employee Ownership, An Overview of How Companies are Granting Stock Options (2001). See the Proposing Release at Section V. Stock Options - Measurement, Accounting Disclosure Stock Options are getting more prevalent as part of compensation package in many entities in India especially MNCs that are listed on Stock Exchanges in India and abroad, either directly or through the stock of its holding Company. This approach of packaging employee remuneration is also now prevalent in unlisted companies by linking the remuneration to the performance of the Company. Companies that do not want part cash, opt for Stock Options schemes wherein they issue equity shares. Some entities do not issue equity shares but instead allot Stock Appreciation Rights (SARs). Under this model, the entity remunerates the employee by settling the difference between exercise price and market value on the date of exercise, in cash. SARs model is adopted mostly by unlisted companies because if the shares are issues, the same may not be liquid enough for the employee to realise his remuneration. There are a few terms that are used in measurement, accounting amp disclosure of stock options, which are as follows: Grant date: It is the date at which the enterprise and its employees agree to the terms of an employee share-based payment plan. If that agreement is subject to an approval process, (for example, by shareholders), grant date is the date when that approval is obtained. Exercise price . it is the price payable by the employee for exercising the option granted to him her. Vesting date . It is the date when an employee becomes entitled to receive cash or shares on satisfaction of any specified vesting conditions. Vesting period: it is the period between the grant date and the date on which all the specified vesting conditions of the stock option plan are to be satisfied. Vesting Conditions: These are the conditions that must be satisfied for the employee to become entitled to receive cash, or shares of the enterprise, pursuant to the plan. Vesting conditions include service conditions, which require the employee to complete a specified period of service, and performance conditions, which require specified performance targets to be met (such as a specified increase in the enterprisersquos share price over a specified period of time). Exercise date: Date on which the employee exercises the Stock option. Exercise period: It is the time period after vesting within which the employee should exercise his right to apply for shares against the option vested in him in pursuance of the Stock Option Plan. Intrinsic Value: It is the amount by which the quoted market price of the underlying share in case of a listed enterprise or the value of the underlying share determined by an independent valuer in case of an unlisted enterprise, exceeds the exercise price of an option at the grant date. Expected life of an option: It is the period of time from grant date, to the date on which an option is expected to be exercised. B. Operation of Schemes: SARs are to be settled by the Company without issuing equity shares. This scheme is issued for entities that are not listed on any stock exchanges and hence not easily tradable. Similarly, ESOS is issued for all listed entities. The schemes are many times administered by a Trust and the benefit to the employees in this scheme will be passed on by issuing additional equity shares. There is no cash obligation to the company, though the employees can ask for Cash less option wherein the Trust will sell the vested shares to the individual in open market and settle the difference with him in cash. Cash less exercise option will follow accounting as per accounting requirements of Equity settled scheme. This is because the entity issues the shares to the trust, but employee settles the transaction net with the trust. C. Governing frame works The Securities and Exchange Board of India (Employee stock option Plan and Employee Share Purchase Plan) guidelines, 1999 have been issued to guide the listed entities for the purpose of accounting for employee stock options. The unlisted entities, on the other hand, have an option to follow the SEBI guidelines or the guidance note on lsquoEmployee Share Based paymentsrsquo issued by the Institute of Chartered Accountants of India. The accounting of such incentives is prescribed under IFRS 2 ndash Share Based Payments and the sane is adopted by Indian GAAP in its proposed draft of Ind AS 102 ndash Share Based payments. Under IFRS 2, fair value approach is mandatory except in rare cases where an entity is unable to estimate reliably the fair value of the equity instruments granted at the measurement date, in which case intrinsic value method should be adopted. The key differences under the existing accounting frameworks are as follows: