Reload stock options: impact on your shareholders, company, and executives

Article Abstract:

Many stock option plans feature a 'reload' or 'replacement option'. The SEC has stated that the exercise of this option by a company insider is exempt from the liability portion of Securities Exchange Act section 16(b). The options are often used as a way of providing executive compensation and the advantages include locking in lower income tax rates, preventing possible downward stock price movement by converting the option gain to stock and affording extra dividend potential. The advantage for the company is encouraging stock ownership on the part of employees.

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SEC adopts final changes to the holding period requirements of Rule 144 for resales of restricted securities

Article Abstract:

The Securities and Exchange Commission (SEC) has revised the holding period requirements for the resale of restricted securities and stock options. Limited amounts of restricted securities can be sold within one year when acquired from the issuer or an affiliate under the revised SEC Rule 144. Under the revised rule, non-affiliates can resell an unlimited amount after two years. These rules are increasingly important for executive compensation because of the expanded use of stock and stock options as compensation.

Securities & Commodities Regulatn, Compensation and benefits, Executives, Executive compensation

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SEC proposes increase in dollar limits under Rule 701 and registration of options transferred to family members on Form S-8

Article Abstract:

Registration requirements under the Securities Act of 1933 for securities issued to employees or their families as employee compensation may be relaxed if two SEC proposals are adopted. The Rule 701 registration exemption and Form S-8 simplified registration for employee benefit plan securities would be the focus of the proposed changes. SEC Releases 33-7506 and 33-7511 contain the proposals.

Pension & Welfare Benefit Prgrm, Taxation, Stock options, Stock transfer

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