A/An _____________ is an adjustment by the issuer that increases or decreases the number of securities outstanding, and adjusts the value of the securities accordingly, without a corresponding change in the assets or capital of the issuer; an internal reorganization of the capital structure of the corporation involving a change to the type or number of securities outstanding. Usually such an adjustment will affect the value of an individual share, but not the overall value of the number of shares authorized by the issuer or held by an individual stockholder. What type of an adjustment is described by the preceding statement?
A. Dividend reinvestment.
B. Recapitalization.
C. Repricing.
D. Increasing the plan reserve pool
Answer:B
A/An _____________ is an adjustment by the issuer that increases or decreases the number of securities outstanding, and adjusts the value of the securities accordingly, without a corresponding change in the assets or capital of the issuer; an internal reorganization of the capital structure of the corporation involving a change to the type or number of securities outstanding. Usually such an adjustment will affect the value of an individual share, but not the overall value of the number of shares authorized by the issuer or held by an individual stockholder. What type of an adjustment is described by the preceding statement?
A. Dividend reinvestment. B. Recapitalization. C. Repricing. D. Increasing the plan reserve pool
Explanation: While the CEP exam textbooks generally discuss the more common administrative aspects of maintaining and implementing equity compensation plans, the "Plan Administrator" contemplated by and discussed in the formal equity compensation plan and any governing regulations and statutes is always the Board of Directors or a Compensation Committee authorized by the board. You or someone else in your company or your client's company may perform the administrative duties to keep the plan compliant with the applicable laws, regulations and statutes or may work diligently to keep the data clean, but you (or they) are not the official Plan Administrator (with a capital P and a capital A) for the purposes of authorizing grants and amending the Plan.