ASAP
SEC Adopts Final Rule Requiring Listing Standards for Compensation Committees and Compensation Advisers
As outlined in an SEC press release and fact sheet, the rule will require exchange listing standards to address the following:
- The independence of the members on a compensation committee
- The committee’s authority to retain compensation advisers
- The committee’s consideration of the independence of any compensation advisers and
- The committee’s responsibility for the appointment, compensation, and oversight of the work of any compensation adviser.
No later than 90 days after the new rule and rule amendments become effective, each exchange that lists equity securities must propose listing standards that comply with the new rule. The new listing standards must be approved by the SEC within one year of the new rule becoming effective.
According to SEC Chairman Mary L. Schapiro, “This rule will help to enhance the board's decision-making process on executive compensation matters, particularly the selection, engagement and oversight of compensation advisers, and will provide more transparency with respect to conflicts of interest of consultants engaged by boards.”
A detailed analysis of this rule and its implications is forthcoming.
Photo credit: Ramy Majouji