Small Business Securities Bulletin: Nasdaq Proposes Rule Addressing Compensation Committee Independence, Smaller Reporting Company Exemptions


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...

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Baker Donelson | Attorney Advertising

Written by:


Baker Donelson on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.