On January 11, 2013, the SEC approved listing standards proposed by the NYSE and the NASDAQ Stock Market (Nasdaq) implementing the requirements of Rule 10C-1 under the Securities Exchange Act of 1934 relating to compensation committee member independence and compensation committee advisers. Our client alerts on the NYSE's and Nasdaq's initial proposals can be found here and here, and our blog entries on amendments to the proposals can be found here and here.
Effective as of July 1, 2013, listed company compensation committees must have (i) authority to retain compensation consultants, legal counsel and other advisers, (ii) responsibility to appoint and oversee the work of such advisers, (iii) authority to fund such advisers and (iv) responsibility to consider certain independence factors before selecting such advisers. Both NYSE and Nasdaq-listed companies will be required to comply with the new listing standards on compensation committee member independence by the earlier of (a) the listed company's first annual meeting after January 15, 2014 or (b) October 31, 2014. The same latter compliance dates apply to the new Nasdaq listing standard that will now require listed companies to have a standing compensation committee that is comprised of at least two independent directors and has a written charter.
The SEC orders approving the new listing standards include guidance on how frequently a compensation committee should conduct the required independence assessment with respect to compensation consultants, legal counsel and other advisers. The SEC states that it "anticipates that compensation committees will conduct such an independence assessment at least annually."
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Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. The Duane Morris Institute provides training workshops for HR professionals, in-house counsel, benefits administrators and senior managers.
