U.S. securities regulators are going to be requiring stock exchanges to set listing standards that impose requirements on public company compensation committees.
The U.S. Securities and Exchange Commission has approved a rule that requires exchange listing standards to address: the independence of the members on a compensation committee; the committee’s authority to retain compensation advisers; its consideration of the independence of any compensation advisers; and, the committee’s responsibility for appointing, paying, and overseeing compensation advisers.
“This rule will help to enhance the board’s decision-making process on executive compensation matters, particularly the selection, engagement and oversight of compensation advisors, and will provide more transparency with respect to conflicts of interest of consultants engaged by boards,” said SEC chairman, Mary Schapiro.
The SEC also amended its proxy disclosure rules to require new disclosures from companies about their use of compensation consultants and conflicts of interest. The new rule and rule amendments will take effect in 30 days.