On August 2, 2011, the Securities and Exchange Commission (the “SEC”) released a revised Dodd-Frank rulemaking calendar. The new calendar indicates that rulemaking pertaining to the following sections of the Dodd-Frank Act will be delayed until the first half of 2012:
The IRS recently issued proposed regulations under Internal Revenue Code Section 162(m) relating to the deduction limitation for certain employee remuneration in excess of $1,000,000, which if passed, will have a significant impact on the design of equity based compensation plans for existing public companies and privately-held companies that ultimately become publicly held. Under Code
When Congress passed the Say-on-Pay provision in Dodd-Frank, there was some concern whether the required vote, even though advisory, would increase the risk for Boards. As it turns out, the risk is real. Approximately 35 companies have received a vote of less than 50% in support of their executive compensation programs. Of these 35 failed
Last week, the SEC proposed new rules required by Section 952 of Dodd-Frank Act. Under the proposal, compensation committees may engage a compensation consultant or other advisor, including legal counsel, only after taking into consideration the following factors, and any other factors determined by the national securities exchanges:
1) provision of other services to the
Last Wednesday, the SEC proposed new rules required by Section 952 of Dodd-Frank Act. Under the proposal, each national securities exchange will be required to adopt new listing standards to prohibit the listing of any issuer that is not in compliance with the exchange’s independence requirements for compensation committees. While compensation committees will need to be comprised entirely of independent directors, each national securities exchange will need to define independence for itself taking into consideration two factors: (1) the source of compensation of a Board member, including any consulting, advisory, or other compensatory fee paid by the issuer to the Board member, and (2) whether a Board member is affiliated with the issuer. It is important to note that, in passing the Dodd-Frank Act, Congress did not infringe on the traditional role of states in defining corporate law. There is neither a requirement to actually have a compensation committee nor a requirement for a compensation committee to approve executive compensation. Any such requirements would be set forth by the national securities exchanges, such as the New York Stock Exchange currently requires.
The independence requirements, as proposed, would be applicable to any committee of the Board that oversees executive compensation, whether or not the committee is formally designated as a “compensation committee.” While this particular requirement of the proposed rules is an attempt to prevent issuers from evading the independence requirements by renaming the
Continue Reading National Securities Exchanges to Adopt New Listing Standards to Ensure Independence of Compensation Committees