SEC Adopts Rules Implementing Dodd-Frank Requirements For Compensation Committees And Compensation Advisers

On June 20, 2012, the Securities and Exchange Commission (SEC) adopted rules to implement Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act,¹ which added Section 10C to the Securities Exchange Act of 1934 (Exchange Act). 

The final rules adopted are (1) Exchange Act Rule 10C-1, which directs the national securities exchanges to develop listing standards requiring each member of a listed issuer's compensation committee to be independent, establishing independence standards for compensation committee members, requiring the compensation committee to have authority to retain compensation advisers and listed issuers to fund the engagement of those advisers and requiring the compensation committee to assess the independence of compensation advisers, and (2) an amendment to Item 407(e)(3) of Regulation S-K to require disclosures regarding certain compensation consultant conflicts of interest. The rules will be effective on July 27, 2012.