In what at first glance appears to be part of the continuing fallout from the rapid downfall and bankruptcy of Enron Corp., the Securities and Exchange Commission (SEC) last week amended its rules and forms to require more transparent company disclosures of employee stock option plans (ESOP) and other equity compensation arrangements.

But closer examination reveals that the changes, which may have helped to either stem or mitigate the financial losses to the Enron 401(k) pension plans, were proposed last January. It’s been estimated that Enron employees and retirees, as well as individual investors, lost billions of dollars from their pension plans as a result of Enron’s collapse.

Under the new changes, companies will be required to provide the SEC with detailed information about their equity compensation plans in a new table in their annual reports on Forms 10-K and 10-KSB, starting in the second quarter of 2002. The same information will be required in a company’s proxy or information statement for years in which the company submits a compensation plan for security-holder approval, the agency said.

The new table will include the number and weighted-average exercise price of outstanding options, warrants and rights, as well as the number of securities available for future issuance under a company’s existing equity compensation plans.

“As the use of equity [stock] incentives has grown, so too have concerns about their impact,” the SEC said last January in proposing the ESOP changes. “These concerns involve the absence of full disclosure to security holders about equity compensation plans; the potential dilutive effect of equity compensation plans; and the adoption of many plans without the approval of security holders.”

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