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Frequently Asked Questions
  Staff Interpretation Letter 2006-20
Identification Number 830
This is in response to your correspondence regarding a proposed amendment (the “Amendment”) to the company’s equity compensation plan (the “Plan”).  You asked whether the Amendment would require shareholder approval pursuant to Marketplace Listing Rule 4350(i)(1)(A) (the “Rule”).
 
According to the information you provided, the Plan currently provides for the award of restricted stock through stock purchase rights (“Stock Purchase Rights”) and stock options.  The Plan defines Stock Purchase Rights as the right to purchase common stock at a price determined by the Plan administrator.  You stated that the price paid is typically zero or perhaps par value.  You further stated that shares granted pursuant to Stock Purchase Rights may be subject to repurchase by the company, thus making them subject to a vesting schedule.
 
Pursuant to the Amendment, the company would authorize the granting of restricted stock units (“RSUs”) under the Plan.  RSUs would be awards of common stock subject to a vesting schedule such that the common stock underlying the RSUs would not be issued until after any applicable vesting requirements are satisfied.  You stated that in all material respects, the terms and conditions of the RSUs would be the same as the terms and conditions of restricted stock.  Specifically, you indicated that RSUs and Stock Purchase Rights would have the same tax treatment, accounting treatment, and securities law implications.  The Amendment would not increase the maximum number of shares of common stock available under the Plan.
 
Following our review of the information you provided, we have determined that the Amendment would not be a material amendment under the Rule.  In that regard, we note that the Amendment would not result in a material increase in benefits to participants, or in an expansion of the types of awards available, because the RSUs are substantially equivalent to the stock awards currently permissible under the Plan.  We also note that the Amendment would not result in an increase in the number of shares to be issued under the Plan or in an expansion of the class of eligible participants.  Accordingly, the Rule does not require shareholder approval for the Amendment
Publication Date*: 7/31/2012 Mailto Link Identification Number: 830
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