Final Rule: Listing Standards for Compensation Committees
Federal Register Publication Date: 06/27/2012
Summary: The SEC adopted a rule and amendments to its proxy disclosure rules to implement Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 10C to the Securities Exchange Act of 1934. Section 10C requires the SEC to adopt rules directing the national securities exchanges and national securities associations to prohibit the listing of any equity security of an issuer that is not in compliance with Section 10C’s compensation committee and compensation adviser requirements. In accordance with the statute, Rule 10C-1 directs the national securities exchanges to establish listing standards that, among other things, require each member of a listed issuer’s compensation committee to be a member of the board of directors and to be “independent,” as defined in the listing standards of the national securities exchanges adopted in accordance with the final rule. In addition, pursuant to Section 10C(c)(2), the SEC adopted amendments to its proxy disclosure rules concerning issuers’ use of compensation consultants and related conflicts of interest.