New NASDAQ Rule Requires Disclosure of Director Compensation from Third Parties
July 19, 2016 |
Corporate Blog
On July 1, 2016, the SEC approved a NASDAQ amendment to its rules that require NASDAQ-listed companies to disclose certain payments to their directors or director nominees made by third parties for such service. The amendment is scheduled to become effective 30 days following the SEC's approval. See the SEC’s Notice can be reviewed at https://www.sec.gov/rules/sro/nasdaq/2016/34-78223.pdf
The amendment addresses conflict situations where a shareholder privately offers to compensate a director nominee in for the nominees' standing for election or service as a director. The arrangements subject to the requirement are quite broad. NASDAQ adopted the amendment because it believes such undisclosed compensation arrangements may:
- Lead to conflicts of interest among directors and impair their ability to perform their duties as directors ; and
- Promote short-term results over creating long-term value.
Under the amendment, a listed company will be required to publicly disclose, on or through its website, or in its information or proxy statement for any stockholders' meeting at which directors are elected (or, if it does not file proxy or information statements, in its annual reports to the SEC), the material terms of all arrangements for such compensation or other payment.
Disclaimer: The information in this post is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from our firm or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
Stay Informed
Related Content
Events
INTA 2024 Annual Conference
April 10, 2024
Articles
FTC Enforces Section 8 of the Clayton Antitrust Act
September 28, 2023
Client Alerts
United States Patent and Trademark Office Reduces Trademark Office Action Response Deadline
November 1, 2022
In The news
Michael E. Storck Listed in The Daily Record’s "Power 20 Intellectual Property 2022"
September 23, 2022
