The Advisors' Blog

– Broc Romanek, CompensationStandards.com

As I blogged before, the Nasdaq proposed a change to its listing rules that, if adopted, would require listed companies to publicly disclose “golden leash” arrangements. For technical reasons, the SEC rejected the original rule proposal – but the Nasdaq filed a revised proposal last week (see this Dorsey memo and Cooley blog). The newly-proposed rule is substantively similar to the previously-proposed rule – and if the newly-proposed rule is approved by the SEC, it will become effective on June 30, 2016. Page 18 of the new proposal indicates that the SEC will establish the due date for comments.

Here’s an excerpt from Cooley’s blog:

Interestingly, footnote 9 (previously footnote 5), remains largely intact. That footnote indicates that Nasdaq is considering whether to propose additional requirements regarding third-party payments to directors and candidates, including whether these directors should be prohibited from being considered independent under Nasdaq rules or prohibited from serving on the board altogether. The resubmission adds that a proposal on this topic, if any, would be made in a separate rule filing. The resubmission also notes that, under the subjective prong of the definition of independent director, any “individual having a relationship which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director” is not considered to be independent. Implicit in this addition to the footnote is the view that, even if Nasdaq elects not to seek to enhance the definition of independence in this regard, directors may already be obligated to consider this type of third-party payment when assessing director independence.