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SEC Finalizes Rule for Compensation Committee Listing Standards and Compensation Consultant Conflicts

Amid the global focus on executive compensation, the independence of compensation committees has emerged in the United States as a cornerstone for assuring good corporate governance and accountability for the boards of directors of public companies. Accordingly, on June 20, 2012, the Securities and Exchange Commission (the SEC) adopted Rule 10C-1 of the Securities Exchange Act of 1934 and amended Item 407(e) of Regulation S-K to implement the provisions of Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In the press release accompanying the final rule, SEC Chairman Mary Schapiro singled out the independence of compensation consultants and advisers as being a key consideration, stating [t]his rule will help to enhance the boards decision-making process on executive compensation matters, particularly the selection, engagement and oversight of compensation advisers, and will provide more transparency with respect to conflicts of interest of consultants engaged by boards.

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