referencelibrarybanner
Listings Diversity Rule Campaign
Reference Library - Advanced Search
Find
 


Library 



 
Timeframe
Category
 
Sub-Category
** To make multiple selections, select the first criterion and then press and hold the Ctrl Key **
 
1- 1 of 1 Search Results for:
Libraries:   Staff Interpretation Letters
Filters:   All Years; Board Composition/Committee Assignments;
 
Search   Clear


Expand All
Printer Friendly View
Mailto Link 
Page: 1 of 1
Frequently Asked Questions
  Staff Interpretation Letter 2004-14
Identification Number 914
Rule 4200(a)(15)(B):  “Independent director” means a person other than an officer or employee of the company or its subsidiaries or any other 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. The following persons shall not be considered independent: … (B) a director who accepted or who has a Family Member who accepted any payments from the company or any parent or subsidiary of the company in excess of $60,000 during the current or any of the past three fiscal years.
 
Rule 4350(c)(3)(C):  If the compensation committee is comprised of at least three members, one director who is not independent as defined in Listing Rule 4200 and is not a current officer or employee or a Family Member of an officer or employee, may be appointed to the compensation committee if the board, under exceptional and limited circumstances, determines that such individual’s membership on the committee is required by the best interests of the company and its shareholders, and the board discloses, in the proxy statement for the next annual meeting subsequent to such determination (or, if the issuer does not file a proxy, in its Form 10-K or 20-F), the nature of the relationship and the reasons for the determination. A member appointed under this exception may not serve longer than two years.
 
Relevant Facts:  Mr. X served as the interim chief executive officer from June 30 through September 30, 2003.  The company paid him in excess of $60,000 for his service as interim CEO.
 
Issue:  Notwithstanding the amount of compensation received from the company, is Mr. X precluded from serving as an independent director, pursuant to Listing Rule 4200(a)(15)(B)?
 
Determination:  Yes.  Based on the facts presented, NASDAQ determined that Mr. X is precluded from serving as an independent director, pursuant to Listing Rule 4200(a)(15)(B), because the compensation received as interim CEO was in excess of $60,000.
 
Issue:  In the event that Mr. X is precluded from serving as an independent director, do “exceptional and limited” circumstances exist such that the board may appoint Mr. X to the compensation committee?
 
Determination:  When a director is not a current officer or employee or a Family member of an officer or employee, use of the exception is contingent on whether a company’s board determines that the individual’s membership on the committee is required by the best interests of the company and its shareholders.  Approval by NASDAQ is not required.  Rather, pursuant to Listing Rule 4350(c)(3)(C), the board must disclose, in its proxy statement for the next annual meeting subsequent to the board’s determination, the nature of the relationship and the reasons for the determination to rely upon the exception.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 914
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
Page: 1 of 1
home_footer_links
Copyright_statement
App Store       Google Play       Listing Center Content RSS Feed
The Nasdaq Stock Market, Nasdaq, The Nasdaq Global Select Market, The Nasdaq Global Market, The Nasdaq Capital Market, ExACT and Exchange Analysis and Compliance Tracking system are trademarks of Nasdaq, Inc.
FINRA® and Financial Industry Regulatory Authority, Inc.® are registered trademarks of Financial Industry Regulatory Authority, Inc. OTCBBTM and OTC Bulletin BoardTM are trademarks of FINRA