Stock Plans - Shareholder Approval Considerations and Laws
The adoption or amendment of a stock plan may require, or warrant, shareholder approval for many reasons. Below are the primary reasons to consider.  
1.  Corporate Charter and Bylaws -- governing instruments that need to be checked for any requirements.
2.  Internal Revenue Code

  • Code § 162(m) -- possible exemption of stock award income from $1,000,000 deduction limit for certain named executive officers.  See Treas. Reg. 1.162-27.
    • ASIDE: Code § 280G -- shareholder approval at the time of a change in control may provide an exemption from golden parachute penalties (lost corporate deductions, and excise taxes).See Treas. Reg. 1.280G
  • Code § 422 -- qualification requirement for incentive stock options.​

3.  Securities Laws

  • SEC Schedule14A (see Item 10 for proxy statement disclosures required for actions on stock plans).
  • SEC CD&Is issued May 2018 re proxy statement proposals for new or amended stock award plans.

4.  Stock Exchange Listing Requirements