The U.S. Securities and Exchange Commission (SEC) has adopted its “Listing Standards for Compensation Committees,” implementing Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which added Section 10C to the Securities Exchange Act of 1934. Although they contain a few changes from the rules proposed by the SEC in March 2011, the final rules closely mirror the statutory language of the Dodd-Frank Act, giving discretion to the exchanges to provide additional detail, restrictions and exemptions, subject to the SEC’s approval of any proposed listing standards. Because key details will be contained in applicable exchange listing standards, it will be important for companies to review the proposed listing standards that their exchanges will file with the SEC to determine if the proposed standards would require any changes to compensation committee composition or practices.
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