June 27, 2012

SEC Adopts Dodd-Frank Rules on Independence of Compensation Committees and their Advisers

Arnold & Porter Advisory

On June 20, 2012, the Securities and Exchange Commission (SEC) approved rules directing securities exchanges to require companies whose equity securities are listed on such exchanges to comply with standards relating to the independence of compensation committee members and the retention of compensation advisers. The rules give considerable discretion to the exchanges in their implementation of the standards. The SEC also amended its proxy disclosure rules regarding the use of compensation consultants and related conflicts of interest.

The SEC rules implement the Dodd-Frank Wall Street Reform and Consumer Protection Act's (Dodd-Frank Act) requirements regarding compensation committees and compensation advisers. The exchanges must provide the SEC with proposed rule changes within 90 days after publication of the final rules in the Federal Register, and must finalize these rules within one year of the date of publication. The new SEC disclosure rules will be in effect for stockholder meetings at which directors will be elected occurring on or
after January 1, 2013.


Richard E. Baltz
Richard E. Baltz
Senior Counsel
Washington, DC
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