On January 11, 2013 the Securities and Exchange Commission ("SEC") approved the equity listing standards proposed by the NYSE and Nasdaq, as amended1 regarding compensation committee independence criteria and compensation adviser independence criteria, which are required under Dodd-Frank Act Section 952.
A more detailed summary of the NYSE and Nasdaq proposals in our previous client alert dated December 20, 2012 is available here.
The NYSE Proposed Rules generally take effect on July 1, 2013. NYSE-listed companies would have until the earlier of October 31, 2014 or their first annual meeting after January 15, 2014 to comply with the independence standards.
The Nasdaq Proposed Rules relating to compensation committee responsibilities and relating to the (a) authority to retain compensation consultants, independent legal counsel and other compensation advisers; (b) authority to fund such advisers; and (c) responsibility to consider certain independence factors before selecting such advisers, other than in-house legal counsel, are effective July 1, 2013. The remainder of the Nasdaq Proposed Rules, including the committee member independence standards and specific charter requirements, must be complied with by the earlier of either October 31, 2014 or the first annual meeting held after January 15, 2014. Nasdaq will require a certification as to compliance within 30 days after the final implementation deadline applicable to a listed company. The form of compensation committee certification will be available through Nasdaq's Listing Center website
(http://listingcenter.nasdaqomx.com/) prior to the effective date of the Nasdaq Proposed Rules.