The Securities and Exchange Commission (SEC) recently approved changes to the listing standards of the New York Stock Exchange (NYSE) and NASDAQ relating to the independence of compensation committee members and the responsibilities of compensation committees when selecting compensation consultants, legal counsel, and other advisers. The final listing standards are substantially the same as those proposed by the exchanges, but there are a couple of noteworthy changes.
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Independence
Independence Standards for Compensation Committees Proposed by NYSE and Nasdaq
By David H. Engvall on
Posted in Executive Compensation (US)
The New York Stock Exchange (NYSE) and Nasdaq recently filed proposals with the SEC setting forth standards to determine the independence of (a) a member of a compensation committee, and (b) a compensation consultant, legal counsel, or other advisor to a compensation committee. The exchanges’ proposals generally follow Rule 10C-1, which the SEC adopted in June 2012. However, the Nasdaq proposal would impose a stricter standard in one significant respect: a director would not be considered independent under any circumstances if the director accepts any compensatory fee from the company, other than board and committee fees and fixed amounts under a retirement plan for prior service. In addition, Nasdaq would, for the first time, require listed companies to have a separate compensation committee which must consist of at least two directors and which must have a charter.
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