SEC Approves Nasdaq and NYSE Listing Standards Related to Compensation Committees and Advisers

by Holland & Knight LLP

On January 11, 2013, the Securities and Exchange Commission (SEC) issued final orders approving The NASDAQ Stock Market (Nasdaq) and the New York Stock Exchange (NYSE) proposed listing standards relating to compensation committees and compensation consultants and advisers. Both exchanges' proposed rule changes were originally filed with the SEC on September 25, 2012. The NYSE filed Amendment No. 1 to the proposed rule change on October 1, 2012. Our October 8, 2012 alert summarizes the rule changes as proposed by both exchanges and, for the NYSE, the proposed rules as amended by NYSE Amendment No. 1.

Procedural History

Nasdaq. Nasdaq filed Amendment No. 1 to its proposed rule changes on December 12, 2012, and Amendment No. 2 on January 4, 2013. This update summarizes the changes made in Nasdaq's proposed listing standards, as amended by Amendments No. 1 and 2, and as approved by the SEC on January 11, 2013.

NYSE. On December 4, 2012, the NYSE filed Amendment No. 2 to the proposed rule change, which was later withdrawn. On January 8, 2013, the NYSE filed Amendment No. 3 to the proposed rule change. This update summarizes the changes made to the proposed rules in NYSE Amendment 3, as approved by the SEC on January 11, 2013.

Effect of Amendments

Nasdaq Amendment No. 1 accomplished the following:

  • added specific language to proposed Rule 5605(d)(3) that sets forth detailed requirements of Rule 10C-1(b)(2)-(4) regarding the authority of the compensation committee to retain compensation advisers, the requirement that a listed company fund such advisers and the required independence assessment of such advisers
  • revised the compliance dates for currently listed companies
  • revised the phase-in schedule for smaller reporting companies
  • added a form for companies to submit certifying their compliance

NYSE Amendment 3 and Nasdaq Amendment 2 clarified the exception to the rule which requires the compensation committee to conduct an assessment of independence of compensation advisers. Both listing standards now use the verbatim language of Item 407(e)(3)(iii) of Regulation S-K, which exempts specific categories of compensation consultants from the disclosure requirements of that provision. That exception specifically excludes from
the independence requirement advisers whose roles are 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 listed company, and that is available generally to all salaried employees, or
  • providing information that either is not customized for a particular company or that is customized based on parameters that are not developed by the compensation consultant, and about which the compensation consultant does not provide advice

NYSE Amendment 3 also accomplished the following:

  • revised the transition period for companies that cease to be smaller reporting companies
  • added a statement in its commentary similar to one already found in the Nasdaq listing standards, which specifically notes that a company may select or receive advice from any compensation adviser it chooses (including advisers that are not independent), after considering the six independence factors set forth in the listing standards

Effective Dates

Each Nasdaq-listed company will have until July 1, 2013, to establish a compensation committee that meets the new listing standards and to adopt a compliant committee charter. The remaining updates to the Nasdaq compensation committee and adviser standards are effective at the earlier of (i) the company's next annual meeting after January 15, 2014, and (ii) October 31, 2014.

NYSE companies will have a transition period by which to comply with the new standards for compensation committee director independence. For NYSE companies the transition period runs until the earlier of (i) their first annual meeting after January 15, 2014, and (ii) October 31, 2014. All other updates to the NYSE compensation committee and adviser standards are effective July 1, 2013.

Written by:

Holland & Knight LLP

Holland & Knight LLP 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 using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*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.