The Securities and Exchange Commission recently adopted a new rule requiring that national securities exchanges establish listing standards for public company boards of directors and compensation advisers. The listing standards relate to the following topics:
- the independence of compensation committee members;
- the compensation committeeʼs authority to retain compensation advisers and the committeeʼs oversight of compensation advisersʼ appointment, pay, and work; and
- the compensation committeeʼs consideration of compensation advisersʼ independence.
The SEC has also amended the proxy disclosure rules included in Regulation S-K to require new disclosures from issuers related to their compensation consultants and conflicts of interest.
The new rule, as well as the amendments to Regulation S-K, will take effect on July 27, 2012. Each exchange will have 90 days thereafter to propose listing standards that comply with the new rule and must adopt final listing standards no later than June 27, 2013. Issuers subject to the SECʼs proxy rules will be required to comply with the new proxy statement disclosure requirements for the 2013 proxy season.
