The New York Stock Exchange and Nasdaq have each released proposals, subject to approval by the Securities and Exchange Commission, to meet “independence” requirements set forth in the Dodd-Frank Act for compensation committees and directors who make pay decisions.
On June 20, the SEC issued final rules pertaining to compensation committees and compensation consultants. Rule 10C-1a, added to the Exchange Act, requires stock exchanges to adopt new listing standards for the companies that list equities with them, including enhanced compensation committee independence standards. The rule also applies to directors who perform that function instead of a committee.All members of a compensation committee, or substituted directors, are required to be “independent,” with the standards for determining that characterization left up to each exchange and subjected to SEC approval.
