Nasdaq has amended its proposal regarding independence of compensation committees required by the Dodd-Frank Act.  Nasdaq proposes to clarify that a compensation committee is not required to conduct the independence assessment required by proposed Listing Rule 5605(d)(3)(D) with respect to a compensation adviser that acts in a role limited to:

• consulting on any broad-based plan that does not discriminate in scope, terms, or operation, in favor of executive officers or directors of the Company, and that is available generally to all salaried employees; and/or
• providing information that either is not customized for a particular issuer or that is customized based on parameters that are not developed by the adviser, and about which the adviser does not provide advice.

This exception copies language from Item 407(e)(3)(iii) of Regulation S-K, which provides a limited exception to the Commission’s requirement for a registrant to disclose any role of compensation consultants in determining or recommending the amount and form of a registrant’s executive and director compensation.

The NYSE has proposed a similar amendment to its proposal, together with amendments addressing transition when smaller reporting companies are no longer eligible for that status.  The NYSE also proposes an amendment to clarify that compensation committees are not precluded from selecting or receiving advice from compensation advisers that are not independent.

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