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Alerts
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NYSE and Nasdaq Modify Director Independence Rules
October 9, 2008
The New York Stock Exchange (“NYSE”) and The Nasdaq Stock Market (“Nasdaq”) recently modified their bright-line director independence tests. The modifications provide listed companies with slightly more flexibility.
Both the NYSE and Nasdaq have increased the compensation threshold from $100,000 to $120,000. As a result of this change, a director of a listed company now will not be considered independent if the director or an immediate family member accepts compensation from the listed company in excess of $120,000 in any 12- month period over the last three years. For purposes of the calculation, director and committee fees and pensions and other forms of deferred compensation for prior service, so long as not contingent on continued service, are excluded. These changes harmonize the bright line compensation tests with changes previously made by the SEC to Item 404 of Regulation S-K, which requires registrants to disclose related party transactions in excess of $120,000.
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