SEC Proposes Rules Requiring Listing Standards for Compensation Committees and Compensation Consultants

The SEC today voted unanimously to propose rules directing the national securities exchanges to adopt certain listing standards related to the compensation committee of a company’s board of directors as well as its compensation advisers, as required by the Dodd-Frank Act.  The SEC’s proposal also would require new disclosures from companies concerning their use of compensation consultants and conflicts of interest.

In particular, the proposal requires the “listing standards” to address the independence of the members on a compensation committee, the committee’s authority to retain compensation advisers, and the committee’s responsibility for the appointment, payment and work of any compensation adviser.

Public comments on the rule proposal should be received by April 29, 2011.