SEC Proposes Listing Standards for Compensation Committees

March 30, 2011 ( - The Securities and Exchange Commission is proposing rules directing the national securities exchanges to adopt certain listing standards related to the compensation committee of a company’s board of directors as well as its compensation advisers, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The SEC’s proposal also would require new disclosures from companies concerning their use of compensation consultants and conflicts of interest.  

According to a press release, in particular, the proposal requires the “listing standards” to address the independence of the members on a compensation committee, the committee’s authority to retain compensation advisers, and the committee’s responsibility for the appointment, payment and work of any compensation adviser.  

Once an exchange’s new listing standards are in effect, a listed company must meet these standards in order for its shares to continue trading on that exchange.  

Public comments on the rule proposal should be received by April 29, 2011. More information is at  

Federal financial regulatory agencies are also requesting public comment on a joint proposed rule designed to ensure that regulated financial institutions design their incentive compensation arrangements to take account of risk (see Regulators Release RFI on Incentive Compensation Proposal).