Nasdaq Proposes New Compensation Committee Listing Standards

Standards implement Dodd-Frank Act and require formal committee charter.

On September 25, 2012, the Nasdaq Stock Market issued proposed listing standards regarding compensation committees and their advisers, as called for by new SEC Rule 10C-1 under the Securities Exchange Act of 1934, which in turn was mandated by the Dodd-Frank Act.

In addition to the items required by the SEC rule, Nasdaq has proposed amending its listing standards to require listed companies to establish a standing compensation committee and to have a formal written charter addressing the committee's responsibilities and authority.

Committee Composition. Nasdaq will now require listed companies to establish a standing compensation committee consisting of at least two members, all of whom are independent. Previously, it had permitted compensation decisions to be made by vote of a majority of the listed company's independent directors.