SEC Proposes Rules Implementing Dodd-Frank Provisions on Compensation Committee Independence

On March 30, 2011, the U.S. Securities and Exchange Commission (the “Commission”) issued proposed rules to implement the provisions of Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). The Dodd-Frank Act amended the Securities Exchange Act of 1934 (the “Exchange Act”) to add new Section 10C to the Exchange Act dealing with compensation committees. Under the Dodd-Frank Act, the Commission must, by rule, direct national securities exchanges (such as the NYSE and NASDAQ Stock Market) to adopt certain listing standards addressing the independence of the members of compensation committees and their selection of advisors. The proposed rules also revise applicable disclosure requirements relating primarily to the use of compensation consultants and with respect to conflicts of interest. The proposed rules can be found here.