NYSE and NASDAQ Issue Proposed Listing Rule Changes for Compensation Committees and Compensation Advisers
By J. MARK POERIO, STEPHEN H. HARRIS, ELIZABETH A. RAZZANO, & MELINDA A. GORDON
On September 25, 2012, the New York Stock Exchange (NYSE) and The NASDAQ Stock Market LLC (NASDAQ) proposed rule changes addressing the independence of compensation committees and their advisers. These proposals were necessary to comply with the SECs adoption of Rule 10C-1 under the Exchange Act of 1934, and represent another step toward implementation of Section 952 of the Dodd-Frank Wall Street Reform and Accountability Act of 2010 (Dodd-Frank) and its directive that the exchanges adopt listing standards that, among other things, require compensation committees to: (i) be comprised solely of independent directors; (ii) have the authority to retain compensation advisers; and (iii) consider six independence factors in selecting not only compensation consultants but also any other advisers, including outside legal counsel.