Recently, the U.S. Securities and Exchange Commission (the “SEC”) proposed rules to implement the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) that will potentially affect the composition of compensation committees and the use of compensation advisers by companies listed on national securities exchanges, as well as the disclosure provided by companies regarding their use of compensation consultants.1 Under the rules as proposed, the national securities exchanges would be directed to adopt listing standards regarding the independence of the members of the compensation committee, as well as the independence of advisers engaged by the compensation committee. Moreover, the proposed rules would require additional disclosure under Item 407 of Regulation S-K regarding the retention of compensation consultants and any conflicts of interest raised by the work of compensation consultants. The SEC seeks public comment on these proposed rules by April 29, 2011. The Dodd-Frank Act specifies that the SEC’s rules must be adopted by July 16, 2011.

Section 952 of the Dodd-Frank Act added Section 10C to the Securities Exchange Act of 1934 (the “Exchange Act”). Section 10C requires that the SEC must direct the national securities exchanges and associations to prohibit the listing of any company issuing equity securities, subject to limited exceptions, unless specific conditions are satisfied with respect to the authority of the compensation committee, the independence of the members of the compensation committee, and the consideration of specific factors relating to the independence of compensation advisers (consultants, legal counsel and other advisers) retained by the compensation committee.