NYSE And Nasdaq Propose Compensation Committee Rules

Earlier this week, both the NYSE and Nasdaq submitted proposed rules to the Securities and Exchange Commission (SEC) setting forth the factors that they will use to determine independence for compensation committee members and compensation advisers. The proposed rules were required by SEC Rule 10C-1, which directed the securities exchanges to adopt rules requiring compliance with:

• compensation committee member independence standards, and
• rules requiring a review of the independence of certain compensation advisers retained by a compensation committee

as conditions to the listing of a company's equity securities. SEC Rule 10C-1 did not require a uniform definition of "independence." Instead, it permitted the securities exchanges to establish their own standards for independence based on relevant factors. See DP Alert dated June 22, 2012.