Nasdaq Amends Proposed Compensation Committee Listing Standards

Nasdaq Amends Proposed Compensation Committee Listing Standards

December 18 2012

Nasdaq filed an amendment to its original proposed compensation committee listing standards, which we reviewed in a recent client alert.

Key changes include:

  • Effective Dates
    • The requirement that the Compensation Committee (or, prior to the formation of the Committee, independent directors who determine or recommend the compensation of the CEO and the other Executive Officers) must have the specific responsibilities and authority necessary to comply with the SEC rules regarding selection, retention and funding of independent advisors, will now be effective on July 1, 2013.
    • Companies must comply with the new standards relating to Compensation Committee member independence by the earlier of (i) the company’s first annual meeting after January 15, 2014 or (ii) October 31, 2014.
    • These effective dates are now aligned with the effectiveness of the NYSE proposal.
  • Advisor Independence Factors
    • The amendment adds the phrase “receiving advice from” to clarify that the independence analysis applies to all advisors and is not limited to those selected or retained by the compensation committee.
  • Certification Form
    • Nasdaq provided the form for companies to use to certify that they have complied with the amended listing standard requirements with respect to compensation committees.  Companies must make this certification no later than 30 days after the final implementation deadline in the amendment.

As we previously noted, the SEC delayed the approval of the NYSE and Nasdaq listing standards relating to compensation committees and advisors until January 13, 2013.  Action was originally due by November 29, 2012.