"The SEC’s Declaration of Independence on Compensation Committees and Advisers"

The Securities and Exchange Commission (the "SEC") recently proposed rules and amendments that implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") relating to compensation committees and compensation advisers.  Section 952 of the Dodd-Frank Act added Section 10C to the Securities Exchange Act of 1934, introducing requirements for the independence of compensation committee members, addressing compensation committee capacity and procedure for retaining compensation advisers, and barring the listing of securities by issuers who are noncompliant with these requirements. 

To implement Section 10C, the SEC has proposed Rule 10C-1(b), which directs the securities exchanges to develop and adopt listing standards.  In addition, the SEC has proposed amending Regulation S-K to expand existing disclosure requirements under Item 407 relating to compensation committees' use of compensation consultants. 

This Stroock Special Bulletin summarizes these proposed rules and amendments.