On November 26, the NASDAQ Stock Market (NASDAQ) proposed an amendment to its recently amended listing rules covering the independence of compensation committee members. Earlier this year, NASDAQ adopted amendments to its listing rules regarding compensation committee composition, responsibilities and authority, which, among other things, prohibit the receipt of any consulting, advisory or other compensatory fees (excluding any fees for board or committee service) by compensation committee members. NASDAQ’s current rule proposal would remove the bright-line prohibition on compensatory fees and instead require that a company’s board, in affirmatively determining the independence of any compensation committee member, consider the source of compensation of the director (including any consulting, advisory or other compensatory fees paid by the company, without excluding fees paid for board or committee service). This proposal would harmonize NASDAQ’s requirement with that of the New York Stock Exchange.

To view the full text of NASDAQ’s proposed rule change, click here.