Advertisement

April 17, 2014

SEC Approves NYSE and NASDAQ New Compensation Committee and Adviser Listing Standards

On January 11, the Securities and Exchange Commission approved final amendments to listing standards submitted by NYSE Regulation, Inc. and NASDAQ Stock Market LLC with regard to the independence of compensation committees and the authority to retain and independence of, compensation consultants and other compensation advisers. The adoption of these listing standards was mandated by Rule 10C-1 under the Securities Exchange Act of 1934.

In general, the listing standards require a listed company to have a compensation committee with specific responsibilities and authority to engage a compensation consultant, independent legal counsel or other advisers; to be provided sufficient funding for that purpose; and to select such compensation legal counsel or other adviser only after taking into consideration a list of enumerated independence factors. The final amendments submitted by both the NYSE and NASDAQ make clear that a compensation committee is not required to conduct the independence assessment with respect to a compensation adviser that acts in a limited role, providing information that is either not customized for a particular company or that is customized based on parameters that are not developed by the adviser and about which the adviser does not provide advice or with respect to an adviser whose role is limited to consulting on any broad based plan that does not discriminate in scope, terms or operation in favor of executive officers or directors of the listed company, and that is available generally to all salaried employees.

These exceptions are identical to the current language in the SEC’s Regulation S-K Item 407(e)(3)(iii), which exempts those specific categories of compensation advisers from the disclosure requirements of that provision.

In addition, the NYSE amendment clarified that while the compensation committee is required to consider the independence of compensation advisers, the compensation committee is not precluded from selecting or receiving advice from compensation advisers that are not independent. The NASDAQ listing standards had already included such a provision.

For both NASDAQ and the NYSE these listing standards will become effective beginning on July 1, 2013.

The NASDAQ rule approval is available here.

The NYSE rule approval is available here.

©2014 Katten Muchin Rosenman LLP

About the Author

Robert L. Kohl, Entertainment Law, Katten Muchin law firm
Partner

Robert Kohl concentrates his practice in public company representation, including corporate financing matters, as well as partnership, limited liability company and securities law. Robert has extensive experience in all phases of business structuring and financing, including registered public offerings (initial public offerings and secondary offerings) and private placements (including Rule 144A debt offerings), acquisitions, dispositions, leveraged buy-outs, securities regulations and venture capital financings. He represents corporations, partnerships and limited liability companies,...

212.940.6380

Boost: AJAX core statistics

Legal Disclaimer

You are responsible for reading, understanding and agreeing to the National Law Review's (NLR’s) and the National Law Forum LLC's  Terms of Use and Privacy Policy before using the National Law Review website. The National Law Review is a free to use, no-log in database of legal and business articles. The content and links on www.NatLawReview.com are intended for general information purposes only. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor.  

Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is www.NatLawReview.com  intended to be  a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional.  NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 

Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Statement in compliance with Texas Rules of Professional Conduct. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials.

The National Law Review - National Law Forum LLC 4700 Gilbert Ave. Suite 47 #230 Western Springs, IL 60558  Telephone  (708) 357-3317 If you would ike to contact us via email please click here.