I. History
II. SEC Rules and Regulations
III. SEC Staff Guidance
a.
Compliance and Disclosure Interpretations
13-10
1.
Disclosure about Compensation Consultants
13-10
2.
Compensation Consultant Consents
13-10
3.
Relationship to CD&A’s Discussion of Consultants
13-10
4.
Scope of “Additional Services”
13-11
5.
Fee Disclosure for Excluded Services
13-11
6.
Additional Services” Includes All Services & Products
13-12
7.
Omission of Compensation Committee Interlocks Disclosure
13-12
b.
Comment Letters
13-12
IV. How the Rule Works
-
Purpose of Compensation Committee Disclosure
13-15
-
Relationship to CD&A
13-15
-
Relationship to Compensation Committee Report
13-15
-
Disclosing Authority Over Compensation Matters
13-16
-
Disclosing Role of Executive Officers
13-16
-
Disclosing Identity of Compensation Consultants
13-16
-
Disclosing Role of Compensation Consultants
13-16
-
Exception for Non-Discriminatory Plans & Non-Customized Information
13-17
-
Compensation Consultant Fee Disclosure
13-18
-
“Additional Services” Is Broadly Interpreted
13-19
-
Independence of Compensation Committee Advisers
13-19
-
No Consent Necessary from Consultants
13-22
-
Authority Over Advisers & Funding
13-22
-
Compensation Consultant Conflict of Interest Disclosure Requirements
13-22
-
Disclosure & Posting of Compensation Committee Charter
13-23
-
Disclosing Charter’s Delegation Limits
13-24
-
Compensation Committee Interlocks/Insider Participation
13-25
-
Lack of Compensation Committee .
13-26
-
Independence of Compensation Committee Members
13-26
V. Common Questions and Our Analysis
a.
Change in Committee Membership
13-27
b.
Definition of Compensation Committee
13-28
c.
Omission of Compensation Committee Report
13-28
d.
Omission of Interlock Disclosure
13-28
e.
CD&A’s Relationship to Committee Disclosure
13-29
f.
Referral of Compensation Consultant
13-30
g.
Instructions to Compensation Consultant
13-30
h.
Definition of “Additional Services”
13-30
i.
Rare to Have Pre-Approval Policy for “Additional Services”
13-31
j.
Overlap Between “Independence” & “Conflicts” Analysis
13-31
k.
Compensation Consultant Indemnification
13-32
l.
One Consultant Working for Two Different Firms
13-32
m.
ISS Corporate Services Isn’t a Consultant
13-33
n.
Law Firm Refusal to Provide Independence Information
13-33
o.
Compensation Consultant’s Stockholdings & Independence
13-34
p.
Nasdaq’s Requirement to Establish Compensation Committees
13-34
q.
Compensation Consultant Rotation
13-35
r.
Compensation Committees Not Setting Pay for More Junior Officers
13-35
VI. Compensation Adviser Conflict of Interest Questionnaire
VII. Sample Disclosures
