Independence; Compensation Committee Charter -
If approved by the SEC, the proposed rule would require all Nasdaq-listed companies to have a compensation committee consisting of at least two independent directors. The current alternative allowing a listed company’s independent directors to recommend or determine executive compensation would be eliminated. For listed companies that are not smaller reporting companies (generally, companies with a market capitalization (excluding shares held by affiliates) under $75 million), compensation committee members also would be prohibited from accepting “any consulting, advisory or other compensatory fee from the [listed] company or any subsidiary thereof.” This prohibition would not include payments for board or board committee service or fixed amounts under a retirement plan for prior service not contingent on continued service.
Nasdaq considered, but declined to prohibit, directors with any affiliation with a listed company, a subsidiary or a subsidiary of an affiliate from serving on the company’s compensation committee. Under the proposed rule, however, listed companies’ boards of directors would be required to consider whether any such affiliation would impair the director’s judgment as a member of the compensation committee, but such an affiliation alone would not, unlike with respect to the audit committee, prohibit a director from so serving...
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