The proposed listing standards implement Rule 10C-1 under the Securities Exchange Act of 1934, which was added by the Dodd-Frank Act.
With respect to the Nasdaq listing standard changes, most listed companies will be required to comply with the new rules, but Nasdaq has exempted "smaller reporting companies" from compliance. First, by July 1, 2013, the listed company must have a formal written charter that provides:
- The compensation committee will review and reassess the adequacy of the charter on an annual basis;
- The scope of the committee’s responsibilities and how it carries out those responsibilities, including structure, processes, and membership requirements;
- The committee’s responsibility for determining or recommending to the board for determination, the compensation of the CEO and all other executive officers of the company, and provide that the CEO may not be present during voting or deliberations on his or her compensation; and
- The committee’s responsibilities and authority with respect to retaining its own advisers; appointing, compensating, and overseeing such advisers; considering certain independence factors before selecting advisers; and receiving funding from the company to engage them.
The compensation committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser, other than in-house legal counsel, only after taking into consideration the following factors:
- The provision of other services to the company by the person that employs the compensation consultant, legal counsel or other adviser;
- The amount