Nasdaq recently amended its listing rules regarding the independence of compensation committee members. The latest amendment comes on the heels of an amendment approved by Nasdaq in early 2013 which imposed new independence requirements on members of compensation committees. Under the rules approved in early 2013, any director who accepts compensation from the company, other than for service as a member of the Board or a committee of the Board, will not meet the independence requirements for membership on the compensation committee and would be in eligible to serve on such committee. In November 2013, Nasdaq eliminated this bright line test and instead provided that the Board must consider compensation as a factor in determining whether a Board member is independent and eligible to serve on the compensation committee.
The deadline for compliance with the revised listing requirements is the earlier of (i) a company’s first annual meeting after January 15, 2014, or (ii) October 31, 2014. Listed companies will be required to certify to Nasdaq, within 30 days after the applicable deadline, that they have complied with the new listing rules. The compensation committee certification must be filed through Nasdaq’s listing center and may be found here.
For more information on the new Nasdaq listing requirements regarding compensation committees please contact Daniele Ouellette Levy.