ICI Tells NYSE Stock Option Plans Need Shareholder Approval
June 10, 2002
The mutual fund industry's chief lobby group has sent a letter to a committee of the New York Stock Exchange suggesting that shareholders should have a say in the authorization of stock option plans for workers.
The letter was sent by the Investment Company Institute last month to the NYSE's Corporate Accountability and Listing Standards Committee, which was formed to review corporate governance issues and make recommendations that are designed to build shareholder's confidence.
Saying that such issues are "especially important" in the wake of Houston energy trader Enron's bankruptcy, in which scores of Enron employees lost millions in their Enron-stock-heavy 401(k)s, the ICI suggested that more strict standards should be imposed on stock option plans to safeguard the interests of all shareholders.
The ICI said that the increasing popularity of stock option plans has the potential to dilute the value of the shares of other stockholders. To help resolve the problem, the organization recommended that the NYSE require that shareholders "have an opportunity to vote on all stock option plans and plan amendments."