Stock Option Grant Question

I emailed a friend who is the CEO of a public company in Canada listed on TSX. "Prohibiting the issuance of options at current market price at the date of grant” does not make sense to him.

You may want to speak with a securities attorney or TSX on the criteria, but following is the explanation he emailed this evening:

When a company makes option grants in Canada, it sets the strike price in a quiet period within a defined time from any disclosure announcements. Companies’ normally only issue stock grants at predetermined and compliant times – companies rarely would issue new grants / new price outside of scheduled grants for a specific individual, unless it was for a new CEO. New employees would normally have to wait until a specific grant is approved. TSX rules also state that a company cannot/should not issue stock option grants if it is aware of a disclosure item that would/could be made at a future time. Guidance is normally provided on these issues by a Disclosure Committee which advises the committees of the board. Companies on the TSX have to be absolutely sure that management is not aware of a material issue that would/could require a future disclosure or has materiality requiring disclosure at some future point, for example in a quarterly MD&A.

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