SEC Proposes New Compensation Committee Rules

SEC Proposes New Compensation Committee Rules


On March 30, 2011, the SEC proposed new compensation committee rules for public companies. The rules would implement section 952 of the Dodd-Frank Act, which requires the SEC to issue rules regarding compensation committee independence.

The proposed rules contain two components: directing stock exchanges to prohibit the listing of any equity security of a company that fails to meet new compensation committee independence standards, and revising the compensation consultant disclosure required in proxy statements under Regulation S-K Item 407.

The wording of the SEC’s proposed rules closely tracks the wording of the applicable Dodd-Frank Act provision. As has not been the case with several other recent proposals, the SEC Commissioners supported the proposed rules unanimously.

To view a summary of the proposed rules and an addendum setting forth Regulation S-K 407(e)(3)(iii) marked to show the SEC’s proposed changes, click on the PDF link above.