In the last two days, both the NYSE and Nasdaq have issued proposed rules on the independence of compensation committees and their advisers, as required by Dodd-Frank Act Section 952 and the SEC’s final rule from June 2012. As we expected, the proposed rules make no major changes to the SEC’s final rule. My next post will be on the interesting minor changes made by the proposals (especially Nasdaq).
The NYSE is proposing to make the changes to its listing standards effective on July 1, 2013. NYSE listed companies would have until their first annual meeting (January 15, 2014 or October 31, 2014) to comply with the new independence standards for compensation committee members and the requirement to assess the independence of committee advisers (compensation consultants, legal advisers, and other advisers).
Nasdaq proposes that Rule 5605(d)(3), which requires that a compensation committee have the (i) authority to retain compensation consultants, independent legal counsel and other compensation advisers; (ii) authority to fund such advisers; and (iii) responsibility to consider certain independence factors before selecting such advisers, other than in-house legal counsel, is effective immediately. Nasdaq companies must comply with the remaining provisions of the amended listing rules by the earlier of: (1) their second annual meeting held after the date of approval of this proposal; or (2) December 31, 2014.