The SEC has proposed rules to implement Dodd-Frank Act Section 952, requiring national securities exchanges to prohibit the initial or continued listing of any stock of a company that does not satisfy Compensation Committee member independence criteria and Compensation Committee adviser independence criteria. It also proposed new disclosure requirements about use of compensation consultants and any related conflicts of interest. Given the time required for the stock exchanges to propose and adopt new listing standards, the principal impact of the Proposal should be felt in the 2012 proxy season.

The Proposal would require national securities exchanges (e.g., NYSE and NASDAQ) to adopt listing criteria related to Compensation Committee member independence. The Compensation Committee must consist solely of members of the Board who are independent, and the definition of “independence” is to be established by the exchanges after taking into consideration “relevant factors” that the Dodd-Frank Act mandated, including...