Nasdaq is changing its listing rules to allow compensation committee members to receive compensatory fees from a company when those fees are not for board service.  By allowing compensation committee members to be paid for consulting, advisory and other services, Nasdaq rules will be in line with those of other exchanges. The new rules will require that any fees be considered in evaluating the independence of the compensation committee member.   The new rules take effect on December 26, 2013 so that they will be in place for the election of directors during the 2014 proxy season.

The Nasdaq rules will be helpful to smaller companies, such as financial institutions with advisory boards whose members are paid small fees.  We anticipate that boards will be sensitive to the potential effects of fees on the perceived independence of compensation committee members and take a cautious approach when determining the independence of compensation committee members who receive these other fees.