SEC Proposes Rules for Implementing New Compensation Committee and Consultant Independence Standards

April 19, 2011

On March 30, 2011, the SEC issued Proposed Rules to implement new Compensation Committee standards under the Dodd-Frank Act relating to:

• Member independence
• Hiring authority and funding for advisors
• Advisor independence
• Disclosure of advisor use and potential conflicts of interest

Most of the rule-making authority has been delegated to the national stock Exchanges and will take the form of additional listing standards. This Client Alert discusses Section 952 in detail and highlights where the Proposed Rules provide further guidance or defer to the Exchanges for additional rulemaking, as well as providing guidance on whether companies should respond now or await further action.  An updated timeline for implementation of the various compensation-related provisions under Dodd-Frank is included at the end of the Alert.