Compensation Committee Independence Rules Proposed By Exchanges

In another step toward implementation of the Dodd-Frank provisions on corporate governance, NYSE and Nasdaq have issued proposed listing standards on compensation committee and compensation adviser independence requirements. The proposed rules do not significantly expand the minimum requirements in Section 10C of the Exchange Act and SEC Rule 10C-1. See our prior summary of Rule 10C-1 from July 2012. One of the biggest changes is that Nasdaq will now require most issuers to have a separate compensation committee. In addition, there will be different implementation requirements and schedules for NYSE and Nasdaq issuers.

The SEC has a 45-day review period for the proposed rules. It is expected that the rules will go into effect as proposed. For Nasdaq issuers, the standards requiring compensation committees to have the power to retain compensation consultants, legal counsel and other advisers ("compensation advisers") and to oversee and direct their work and set their