NYSE and NASDAQ Issue Proposed Rules on Compensation Committee Independence Standards
As required pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the final rule issued by the U.S. Securities and Exchange Commission (the “SEC”) in June 2012, the New York Stock Exchange (the “NYSE”) and NASDAQ each issued proposed rules on the independence of compensation committees and their advisers on September 25, 2012. The proposed rules are subject to approval by the SEC.
NYSE Proposed Rules
NYSE issued proposed changes to Sections 303A.00, 303A.02(a) and 303A.05 of its Listed Company Manual that would require a company’s board of directors to: (i) consider additional factors in assessing the independence of its compensation committee members and (ii) evaluate the independence of compensation committee advisers using the SEC’s requirements set forth in Rule 10C-1(b)(4) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
NASDAQ Proposed Rules
NASDAQ’s proposed rule changes to Section 5605 of its Rules would require companies to: (i) have a standing compensation committee consisting of at least two independent directors and governed by a formal written charter, (ii) consider additional factors in assessing the independence of its compensation committee members and (iii) evaluate the independence of compensation committee advisers using the SEC’s requirements set forth in Rule 10C-1(b)(4) of the Exchange Act.
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