ASSEMBLY, No. 2885
STATE OF NEW JERSEY
INTRODUCED JUNE 5, 2008
Assemblyman MATTHEW W. MILAM
District 1 (Cape May, Atlantic and Cumberland)
Assemblywoman SANDRA LOVE
District 4 (Camden and Gloucester)
Assemblyman NELSON T. ALBANO
District 1 (Cape May, Atlantic and Cumberland)
Assemblyman PATRICK J. DIEGNAN, JR.
District 18 (Middlesex)
Assemblyman JOSEPH VAS
District 19 (Middlesex)
Assemblywoman BONNIE WATSON COLEMAN
District 15 (Mercer)
Assemblywoman PAMELA R. LAMPITT
District 6 (Camden)
Assemblywoman Rodriguez, Assemblymen Wisniewski, Moriarty, Assemblywoman Pou, Senators Gill and Sarlo
Allows officers of corporation to grant employees and officers of corporation shares of stock, rights or options.
CURRENT VERSION OF TEXT
An Act concerning equity awards under certain employee benefit plans and amending N.J.S.14A:8-1.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. N.J.S.14A:8-1 is amended to read as follows:
14A:8-1 Employee benefit plans
(1) A corporation may establish and carry out wholly or partly at its expense, any one or more of the following plans for the benefit of some or all employees, as hereinafter defined, and their families, dependents or beneficiaries:
(a) Plans providing for the sale or distribution of its shares of any class or series, held by it or issued or purchased by it for the purpose, including stock option, stock purchase, stock bonus, profit-sharing, savings, pension, retirement, deferred compensation and other plans of similar nature, whether or not such plans also provide for the distribution of cash or property other than its shares;
(b) Plans providing for payments solely in cash or property other than shares of the corporation, including profit-sharing, bonus, savings, pension, retirement, deferred compensation and other plans of similar nature; and
(c) Plans for the furnishing of medical services; life, sickness, accident, disability or unemployment insurance or benefits; education; housing; social and recreational services; and other similar aids and services.
(2) The term "employees" as used in this chapter means employees, officers, directors, and agents of the corporation or any subsidiary thereof, or other persons who are or have been actively engaged in the conduct of the business of the corporation or any subsidiary thereof, including any who have retired, become disabled or died prior to the establishment of any plan heretofore or hereafter adopted.
(3) Employee benefits plans may be adopted, amended or terminated by a corporation by the act of its board, a committee of the board, or officers to whom the responsibility has been delegated. Notwithstanding the foregoing, any plan providing for the issuance of shares shall be initially adopted by the board or any committee thereof.
(4) The board of
directors may, by a resolution adopted by the board or a committee of the
board, authorize one or more officers of the corporation to do one or both of
the following: (a) designate officers and employees of the corporation or of
any of its subsidiaries to be recipients of shares of stock, rights or options
created by the corporation; or (b) determine the number of shares, rights or options to be received by those officers and employees; provided, however that the resolution authorizing those officers shall specify the total number of shares, rights or options the officers may award. A resolution adopted pursuant to this paragraph shall prohibit any officer from designating himself as a recipient of any shares, rights or options.
(cf: P.L.1988, c.94, s.49)
2. This act shall take effect immediately.
The bill provides greater flexibility in the types of equity awards that a corporation may use. The bill recognizes that equity grants are an integral part of the compensation systems at many corporations; that it is cumbersome to require the board of directors or a board committee to be involved in each individual equity grant; that the officers of the corporation are in a better position to evaluate employee performance and entitlement to equity grants than is the board; and that officers should be given the authority to provide employees with equity compensation in the same manner and at the same times as they may provide cash compensation.
The bill does provide some constraints on the officers by leaving to the board the determination of the size of the overall equity pool available for grant and by prohibiting officers from granting equity to themselves.
The bill is based on Section 157(c) of the Delaware General Corporation Law, but extends that provision to cover the grant of shares of stock as well as share rights and options, in recognition of the recent trend in many corporations away from granting stock options in favor of restricted stock grants.