The NYSE and NASDAQ issue proposed rules to implement the SEC compensation committee independence and advisor rules

Doreen Lilienfeld (Partnerat Shearman & Sterling LLP, New York, New York, USA)
John Cannon (Partner at Shearman & Sterling LLP, New York, New York, USA)
Amy Gitlitz Bennett (Special Associate Shearman & Sterling LLP, New York, New York, USA)
George Spera (Counsel at Shearman & Sterling LLP, New York, New York, USA)

Journal of Investment Compliance

ISSN: 1528-5812

Publication date: 28 June 2013

Abstract

Purpose

The purpose of this paper is to explain the amendments to the listing standards of the New York Stock Exchange (NYSE) and the NASDAQ Stock Market (Nasdaq), which were approved by the Securities and Exchange Commission (the SEC) on January 11, 2013 to implement the SEC's final rules on the independence of compensation committees and their selection of advisors pursuant to Rule 952 of the Dodd‐Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd Frank).

Design/methodology/approach

After a summary of notable provisions, the paper explains effective dates and respective Nasdaq and NYSE listing standards pertaining to compensation committee compensation; director independence standards, advisors, and charters; certain exemptions for foreign issuers; exemptions for certain types of companies and partnerships; and recommended next steps for companies that are subject to the amended listing standards.

Findings

Over the past few years, the independence of compensation committees and their advisors has been a hot button corporate governance issue. Dodd‐Frank prohibits national securities exchanges from listing any equity security of an issuer that is not in compliance with the exchanges' compensation committee independence and advisor requirements.

Practical implications

The listing standards generally become effective on July 1, 2013; however, listed companies have until the earlier of: their first annual meeting after January 15, 2014; or October 31, 2014, to comply with certain requirements including the independence structure of their compensation committees.

Originality/value

The paper provides practical advice from experienced financial services lawyers.

Keywords

Citation

Lilienfeld, D., Cannon, J., Gitlitz Bennett, A. and Spera, G. (2013), "The NYSE and NASDAQ issue proposed rules to implement the SEC compensation committee independence and advisor rules", Journal of Investment Compliance, Vol. 14 No. 2, pp. 42-49. https://doi.org/10.1108/JOIC-05-2013-0014

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited

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