[Federal Register Volume 77, Number 199 (Monday, October 15, 2012)]
[Notices]
[Pages 62547-62556]
[FR Doc No: 2012-25223]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68018; File No. SR-BX-2012-063]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing of Proposed Rule Change To Modify the Listing Rules for
Compensation Committees To Comply With Rule 10C-1 under the Exchange
Act and Make Other Related Changes

October 9, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 25, 2012, NASDAQ OMX BX, Inc. (``BX'' or the ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by BX. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    BX proposes to modify the listing rules for compensation committees
to comply with Rule 10C-1 under the Exchange Act and make other related
changes. The text of the proposed rule change is available on BX's Web
site at http://nasdaqomxbx.cchwallstreet.com, at BX's principal office,
and at the Commission's Public Reference Room.
    BX will implement the proposed rule upon approval. Proposed BX
Venture Market Listing Rule 5605(d)(3), which requires compensation
committees to have the specific responsibilities and authority
necessary to comply with Rule 10C-1(b)(2), (3) and (4)(i)-(vi) under
the Exchange Act, shall be effective immediately.\3\ To the extent a
Company does not have a compensation committee, the provisions of this
rule shall apply to the Independent Directors who determine, or
recommend to the board for determination, the compensation of the chief
executive officer and all other Executive Officers of the Company.
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    \3\ The Commission notes that this portion of the proposed rule,
proposed BX Venture Market Listing Rule 5605(d)(3), will be
effective upon approval by the Commission.
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    Companies must comply with the remaining provisions of the amended
listing rules by the earlier of: (1) Their second annual meeting held
after the date of approval of this proposal; or (2) December 31, 2014.
Until a Company is required to comply with the amended listed rules, it
must continue to comply with BX's existing listing rules.

II. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, BX included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. BX has prepared summaries, set forth in Sections A, B,
and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Section 952 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the ``Dodd-Frank Act'') \4\ added Section 10C
to the Exchange Act.\5\ Section 10C required the Commission to direct
the national securities exchanges, including BX, and national
securities associations to prohibit the listing of any equity security
of an issuer, with certain exemptions, that does not comply with
Section 10C's requirements relating to compensation committees and
advisers. To effect this requirement, the Commission has adopted Rule
10C-1 under the Exchange Act, which became effective on July 27, 2012.
Rule 10C-1 requires each national securities exchange and national
securities association to provide to the Commission, no later than
September 25, 2012, proposed rules or rule amendments that comply with
the requirements of Rule 10C-1.\6\
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    \4\ Public Law 111-203, 124 Stat. 1376 (2010).
    \5\ 15 U.S.C. 78j-3.
    \6\ See 17 CFR 240.10C-1(a)(4)(i).
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    Rule 10C-1 generally requires that:
     Each member of the compensation committee of a listed
issuer must be an independent member of the board of directors;
     in determining independence requirements for compensation
committee members, exchanges must consider relevant factors, including,
but not limited to:
     the source of compensation of a member, including any
consulting, advisory or other compensatory fee paid by the issuer to
such member; and

     whether the member is affiliated with the issuer, a
subsidiary of the issuer or an affiliate of a subsidiary of the issuer;
     the compensation committee must have the authority to
retain or obtain the advice of a compensation consultant, independent
legal counsel or other compensation adviser;
     the listed issuer must provide for appropriate funding, as
determined by the compensation committee, for payment of reasonable
compensation to such compensation advisers;
     the compensation committee may select such compensation
advisers only after taking into consideration six independence factors
that are enumerated in Rule 10C-1, as well as any other factors
identified by an exchange; and
     certain categories of issuers, including, but not limited
to, controlled companies and smaller reporting companies, are generally
exempt from all of Rule 10C-1, while other categories of issuers,
including, but not limited to, foreign private issuers that provide
certain disclosures, are specifically exempt from the requirement to
have a fully independent compensation committee.
General Overview of BX's Proposals
    While BX does not presently list any securities, the Commission has
approved listing rules for the Exchange's BX Venture Market.\7\ BX is
proposing to modify the compensation-related listing rules for the BX
Venture Market, as required by Rule 10C-1. Generally, BX's proposals
provide that:
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    \7\ References in this filing to BX's listing rules refer to the
listing rules for the BX Venture Market.
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     Companies\8\ must have a compensation committee consisting
of at least two members, each of whom must be an Independent Director
\9\ as defined under BX's current listing rules;
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    \8\ ``Company'' means ``the issuer of a security listed or
applying to list on the Exchange.'' BX Venture Market Listing Rule
5005(a)(4).
    \9\ For a discussion of the definition of the term ``Independent
Director,'' see the section entitled ``Compensation Committee
Composition--General Independence Definition'' below.
Notwithstanding any of the proposed changes, and consistent with
BX's existing listing rules, a Company's board has the
responsibility to make an affirmative determination that no
Independent Director has a relationship that, in the opinion of the
board, would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director.
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     compensation committee members must not accept directly or
indirectly any consulting, advisory or other compensatory fee, other
than for board service, from a Company or any subsidiary thereof;
     in determining whether a director is eligible to serve on
a compensation committee, a Company's board must consider whether the
director is affiliated with the Company, a subsidiary of the Company or
an affiliate of a subsidiary of the Company to determine whether such
affiliation would impair the director's judgment as a member of the
compensation committee;
     Companies may continue to rely on BX's existing exception
that allows certain non-Independent Directors to serve on a
compensation committee under exceptional and limited circumstances;
     if a Company fails to comply with the compensation
committee composition requirements in certain circumstances, it may
rely on a cure period;
     Companies must adopt a formal, written compensation
committee charter that must specify the compensation committee
responsibilities and authority in Rule 10C-1 relating to the: (i)
Authority to retain compensation consultants, independent legal counsel
and other compensation advisers; (ii) authority to fund such advisers;
and (iii) responsibility to consider certain independence factors
before selecting such advisers, other than in-house legal counsel;
     Companies must review and reassess the adequacy of the
compensation committee charter on an annual basis;
     BX's existing exemptions from, and phase-in schedules for,
the compensation-related listing rules remain generally unchanged,
other than to add exemptions for cooperatives and Controlled Companies,
as defined below, as well as a phase-in schedule for Companies ceasing
to be Controlled Companies; and
     Smaller Reporting Companies \10\ must have a compensation
committee comprised of at least two Independent Directors and a formal
written compensation committee charter or board resolution that
specifies the committee's responsibilities and authority, but such
Companies are not required to adhere to the compensation committee
eligibility requirements relating to compensatory fees and affiliation,
or the requirements relating to compensation consultants, independent
legal counsel and other compensation advisers that BX is proposing to
adopt under Rule 10C-1.
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    \10\ Smaller Reporting Company is defined in Rule 12b-2 under
the Exchange Act.
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    Rule 10C-1 requires BX to include in its submission: (i) A review
of whether and how its existing or proposed listing rules satisfy the
requirements of Rule 10C-1; (ii) a discussion of the consideration of
factors relevant to compensation committee independence conducted by
BX; and (iii) the definition of independence applicable to compensation
committee members that BX proposes to adopt or retain in light of such
review.\11\ BX's proposals and its underlying analysis are discussed in
depth below.
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    \11\ See 17 CFR 240.10C-1(a)(4)(i).
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Requirement To Have a Compensation Committee
    BX's current listing rules require that compensation of the chief
executive officer and all other Executive Officers \12\ of a Company
must be determined, or recommended to the board for determination,
either by: (i) A compensation committee comprised solely of Independent
Directors; or (ii) Independent Directors constituting a majority of the
board's Independent Directors in a vote in which only Independent
Directors participate (the ``Alternative'').\13\
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    \12\ ``Executive Officer'' is defined as an officer ``covered in
Rule 16a-1(f) under the [Exchange] Act.'' BX Venture Market Listing
Rule 5605(a)(1).
    \13\ See BX Venture Market Listing Rules 5605(d)(1) and (2).
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    Although it was not required to do so by Rule 10C-1,\14\ BX
considered whether the Alternative remains appropriate given the
heightened importance of compensation decisions in today's corporate
governance environment. Since responsibility for executive compensation
decisions is one of the most important responsibilities entrusted to a
board of directors, BX believes that there are benefits from a board
having a standing committee dedicated solely to oversight of executive
compensation. Specifically, directors on a standing compensation
committee may develop expertise in a Company's executive compensation
program in the same way that directors on a standing audit committee
develop expertise in a Company's accounting and financial reporting
processes. In addition, a formal committee structure may help promote
accountability to stockholders for executive compensation decisions.
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    \14\ See Securities Exchange Act Release No. 67220 (June 20,
2012), 77 FR 38422, 38425 (June 27, 2012) (the ``Adopting Release'')
(stating that ``[t]he final rule will not require a listed issuer to
have a compensation committee or a committee that performs functions
typically assigned to a compensation committee.'').
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    BX also considered whether eliminating the Alternative would pose
an undue hardship on listed Companies. Since BX does not currently have
any listed Companies, it does not believe

that eliminating the Alternative would be unduly burdensome.
    As a result, BX proposes to eliminate the Alternative and require
listed Companies to have a standing compensation committee with the
responsibility for determining, or recommending to the full board for
determination, the compensation of the chief executive officer and all
other Executive Officers of the Company.
Compensation Committee Size
    BX's current listing rules do not impose size requirements on any
board committees, other than the audit committee, which must consist of
at least three members.\15\ As a result, it is possible to have a
compensation committee comprised of only one member under BX's current
listing rules.
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    \15\ See BX Venture Market Listing Rule 5605(c)(2)(A).
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    Although it was not required to do so by Rule 10C-1, BX considered
whether it is appropriate to impose a minimum size requirement on a
compensation committee. Given the importance of compensation decisions
to stockholders, BX believes that it is appropriate to have more than
one director responsible for these decisions and that therefore, a
compensation committee should consist of at least two members. BX then
considered whether to require compensation committees to adhere to the
same size requirement as audit committees and have a minimum of three
members. However, BX was concerned that it might be difficult for
Companies, especially smaller Companies, to comply with a requirement
to have a three-member compensation committee, in addition to a three-
member audit committee.
    BX also considered whether imposing a minimum size requirement on a
compensation committee would be unduly burdensome to listed Companies,
especially in combination with the proposal to eliminate the
Alternative, as discussed above. Since BX does not currently have any
listed Companies, it does not believe that imposing a minimum size
requirement on a compensation committee would be unduly burdensome.
    As a result, BX proposes to require a compensation committee of a
Company to consist of at least two members of the board of directors.
Compensation Committee Composition--General Independence Definition
    BX's current listing rules require a compensation committee to be
comprised solely of Independent Directors, as defined in BX Venture
Market Listing Rule 5605(a)(2).\16\ This definition includes a two-part
test for independence. First, there are certain categories of directors
who cannot be considered independent, including:
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    \16\ See BX Venture Market Listing Rules 5605(d)(1) and (2).
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     A director who is an Executive Officer or employee of the
Company; \17\
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    \17\ See BX Venture Market Listing Rule 5605(a)(2). The rule's
reference to the term ``Company'' includes any parent or subsidiary
of the Company. The term ``parent or subsidiary'' is intended to
cover entities the Company controls and consolidates with the
Company's financial statements as filed with the Commission (but not
if the Company reflects such entity solely as an investment in its
financial statements). See IM-5605-1.
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     a director who is, or at any time during the past three
years was, employed by the Company; \18\
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    \18\ See BX Venture Market Listing Rule 5605(a)(2)(A).
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     a director who accepted or who has a Family Member \19\
who accepted any compensation from the Company in excess of $120,000
during any period of twelve consecutive months within the three years
preceding the determination of independence; \20\
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    \19\ ``Family Member'' is defined as ``a person's spouse,
parents, children and siblings, whether by blood, marriage or
adoption, or anyone residing in such person's home.'' BX Venture
Market Listing Rule 5605(a)(2).
    \20\ See BX Venture Market Listing Rule 5605(a)(2)(B). This
prohibition includes exceptions for: (i) compensation for board or
board committee service; (ii) compensation paid to a Family Member
who is an employee (other than an Executive Officer) of the Company;
or (iii) benefits under a tax-qualified retirement plan, or non-
discretionary compensation.
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     a director who is a Family Member of an individual who is,
or at any time during the past three years was, employed by the Company
as an Executive Officer; \21\
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    \21\ See BX Venture Market Listing Rule 5605(a)(2)(C).
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     a director who is, or has a Family Member who is, a
partner in, or a controlling Shareholder \22\ or an Executive Officer
of, any organization to which the Company made, or from which the
Company received, payments for property or services in the current or
any of the past three fiscal years that exceed 5% of the recipient's
consolidated gross revenues for that year, or $200,000, whichever is
more; \23\
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    \22\ ``Shareholder'' is defined as ``a record or beneficial
owner of a [s]ecurity listed or applying to list. For purposes of
[the BX Venture Market Listing Rules], the term `Shareholder'
includes, for example, a limited partner, the owner of a depository
receipt, or unit.'' BX Venture Market Listing Rule 5005(a)(26).
    \23\ See BX Venture Market Listing Rule 5605(a)(2)(D). This
prohibition includes exceptions for payments: (i) Arising solely
from investments in the Company's securities; or (ii) under non-
discretionary charitable contribution matching programs.
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     a director of the Company who is, or has a Family Member
who is, employed as an Executive Officer of another entity where at any
time during the past three years any of the Executive Officers of the
Company serve on the compensation committee of such other entity; \24\
or
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    \24\ See BX Venture Market Listing Rule 5605(a)(2)(E).
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     a director who is, or has a Family Member who is, a
current partner of the Company's outside auditor, or was a partner or
employee of the Company's outside auditor who worked on the Company's
audit at any time during any of the past three years.\25\
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    \25\ See BX Venture Market Listing Rule 5605(a)(2)(F). In the
case of an investment company, in lieu of the prohibitions in BX
Venture Market Listing Rule 5605(a)(2)(A)-(F), a director cannot be
considered independent if he or she is an ``interested person'' of
the Company as defined in Section 2(a)(19) of the Investment Company
Act of 1940, other than in his or her capacity as a member of the
board of directors or any board committee.
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    Second, a Company's board of directors must make an affirmative
determination that each Independent Director has no relationship that,
in the opinion of the board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director.\26\
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    \26\ See BX Venture Market Listing Rule 5605(a)(2) and IM-5605-
1.
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    BX proposes to continue unchanged its existing requirement that a
compensation committee be comprised solely of Independent Directors, as
defined in BX Venture Market Listing Rule 5605(a)(2).
Compensation Committee Composition--Compensatory Fees
    Rule 10C-1 requires that in determining the independence
requirements for compensation committee members, BX must consider
relevant factors, including, but not limited to, the source of
compensation of a member, including any consulting, advisory or other
compensatory fee paid by the issuer to the member.\27\ In considering
this particular factor, BX reviewed its current listing rules relating
to compensatory fees. As outlined above, BX's current listing rules
require compensation committee members to be Independent Directors.
Independent Director is defined to exclude any director who: (i)
Accepted any compensation from the Company in excess of $120,000 during
any period of twelve consecutive months within the prior three years;
or (ii) is a partner in, or a controlling Shareholder or an

Executive Officer of, any organization to which the Company made, or
from which the Company received, payments for property or services in
the current or any of the past three fiscal years that exceed 5% of the
recipient's consolidated gross revenues for that year, or $200,000,
whichever is more.\28\ As a result, directors who receive compensatory
fees from a Company below these thresholds may serve on a compensation
committee under BX's current listing rules.
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    \27\ See 17 CFR 240.10C-1(b)(1)(ii)(A).
    \28\ See BX Venture Market Listing Rules 5605(a)(2)(B) and (D).
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    This is in contrast to BX's current listing rules relating to audit
committees, which require audit committee members to meet the criteria
for independence set forth in Rule 10A-3(b)(1) under the Exchange Act,
subject to certain exemptions.\29\ Rule 10A-3(b)(1) prohibits an audit
committee member from accepting directly or indirectly any consulting,
advisory or other compensatory fee from an issuer or any subsidiary,
with certain exemptions.
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    \29\ See BX Venture Market Listing Rule 5605(c)(2)(A)(ii).
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    After reviewing its current listing rules, BX concluded that there
is no compelling justification to have different independence standards
for audit and compensation committee members with respect to the
acceptance of compensatory fees from a Company. Accordingly, BX
proposes to adopt the same standard for compensation committee members
that applies to audit committee members under Rule 10A-3 under the
Exchange Act with respect to compensatory fees. Specifically, BX's
proposal prohibits a compensation committee member from accepting
directly or indirectly any consulting, advisory or other compensatory
fee from an issuer or any subsidiary. As in Rule 10A-3, compensatory
fees shall not include: (i) Fees received as a member of the
compensation committee, the board of directors or any other board
committee; or (ii) the receipt of fixed amounts of compensation under a
retirement plan (including deferred compensation) for prior service
with the Company (provided that such compensation is not contingent in
any way on continued service).\30\ Also similar to Rule 10A-3, the
proposed requirement applicable to compensation committee members will
not include a ``look-back'' period.\31\ Accordingly, the prohibition on
the receipt of any consulting, advisory or other compensatory fee by a
compensation committee member begins with the member's term of service
on the compensation committee.\32\
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    \30\ See 17 CFR 240.10A-3(b)(1).
    \31\ See Securities Exchange Act Release No. 47654 (April 9,
2003), 68 FR 18788, 18792 (April 16, 2003) (stating that ``[t]he
final rule, like [the] proposal, applies the prohibitions only to
current relationships with the audit committee member and related
persons. They do not extend to a `look back' period before
appointment to the audit committee.* * *'')
    \32\ BX notes, however, that as discussed above, compensation
committee members must be Independent Directors as defined in BX
Venture Market Listing Rule 5605(a)(2). Each of the bright-line
tests in this definition includes a three-year ``lookback'' period.
See BX Venture Market Listing Rule 5605(a)(2).
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Compensation Committee Composition--Affiliation
    Rule 10C-1 requires that in determining the independence
requirements for compensation committee members, BX also must consider
whether a member is affiliated with the issuer, a subsidiary of the
issuer or an affiliate of a subsidiary of the issuer.\33\ In
considering this particular factor, BX reviewed its current listing
rules relating to affiliation. As outlined above, BX's current listing
rules require compensation committee members to be Independent
Directors. The definition of the term ``Independent Director'' does not
refer to affiliation, although the definition does exclude certain
individuals who may be considered affiliates from being an Independent
Director. For example, any director who is an Executive Officer of the
Company cannot be considered an Independent Director.\34\
Significantly, the Interpretive Material to BX's definition of
Independent Director states that ``[b]ecause the Exchange does not
believe that ownership of Company stock by itself would preclude a
board finding of independence, it is not included in the aforementioned
objective factors.'' \35\
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    \33\ See 17 CFR 240.10C-1(b)(1)(ii)(B).
    \34\ See BX Venture Market Listing Rule 5605(a)(2).
    \35\ IM-5605-1.
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    Beyond the definition of Independent Director, BX's current listing
rules relating to audit committees require audit committee members to
meet the criteria for independence set forth in Rule 10A-3(b)(1) under
the Exchange Act, subject to certain exemptions.\36\ Rule 10A-3(b)(1)
prohibits an audit committee member from being an affiliated person of
the issuer or any subsidiary thereof. The term ``affiliate'' means ``a
person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
person specified.'' \37\ However, Rule 10A-3 includes a safe harbor for
a person that is not: (i) The beneficial owner, directly or indirectly,
of more than 10% of any class of voting equity securities of the
specified person; and (ii) an executive officer of a specified
person.\38\
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    \36\ See BX Venture Market Listing Rule 5605(c)(2)(A)(ii).
    \37\ See 17 CFR 240.10A-3(e)(1).
    \38\ Id.
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    After reviewing its current listing rules, BX considered whether to
propose that compensation committee members must meet the same standard
applicable to audit committee members under Rule 10A-3 under the
Exchange Act with respect to affiliation, similar to its proposal with
respect to compensatory fees. However, BX concluded that such a blanket
prohibition would be inappropriate for compensation committees. In
fact, BX believes that it may be appropriate for certain affiliates,
such as representatives of significant stockholders, to serve on
compensation committees since their interests are likely aligned with
those of other stockholders in seeking an appropriate executive
compensation program.
    As a result, BX proposes that Companies' boards of directors should
consider affiliation in making an eligibility determination for
compensation committee members, but it does not propose bright-line
rules around this factor. In making this eligibility determination, a
Company's board specifically must consider whether the director is
affiliated with the Company, a subsidiary of the Company or an
affiliate of a subsidiary of the Company to determine whether such
affiliation would impair the director's judgment as a member of the
compensation committee. In performing this analysis, a board of
directors is not required to apply a ``look-back'' period, and is
therefore required to consider affiliation only with respect to
relationships that occur during an individual's term of service as a
compensation committee member.
    A board may conclude that it is appropriate for a director who is
an affiliate to serve on the compensation committee. While this differs
from the requirement applicable to audit committee members, BX could
identify no compelling policy justification for precluding all
affiliates, such as owners of a Company, even those with very large
stakes, from serving on the compensation committee.

Compensation Committee Composition--Other
    Rule 10C-1 permits BX to consider other relevant factors in
determining the independence requirements for compensation committee
members.\39\ After reviewing its current and proposed listing rules, BX
concluded that these rules are sufficient to ensure the independence of
compensation committee members. Therefore, BX determined not to propose
further independence requirements.
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    \39\ See 17 CFR 240.10C-1(b)(1)(ii).
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Exceptional and Limited Circumstances Exception
    With some edits, BX proposes to retain its existing exception that
allows a Company to have a non-Independent Director serve on the
compensation committee under exceptional and limited circumstances.\40\
Under this exception, if a compensation committee consists of at least
three members, one director who is not an Independent Director 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. The NASDAQ Stock Market
LLC (``Nasdaq'') recently amended the identical exception in its rules
to allow a Company to rely on the exception for a non-Independent
Director who is a Family Member of a non-executive employee of the
Company.\41\ BX proposes to make the same change to its exceptional and
limited circumstances exception.
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    \40\ See BX Venture Market Listing Rule 5605(d)(3).
    \41\ See Securities Exchange Act Release No. 67468 (July 19,
2012), 77 FR 43618 (July 25, 2012) (SR-NASDAQ-2012-062). Nasdaq made
the same change to its exceptional and limited circumstances
exception for audit committee members, and BX also proposes to make
a conforming change to its identical exception for audit committee
members. BX notes that under both the current and proposed versions
of the exception for audit committee members, a Company could not
rely on the exception for a director who does not meet the criteria
set forth in Section 10A(m)(3) of the Exchange Act and the rules
thereunder to allow a director to serve on the audit committee. See
15 U.S.C. 78j-1(m)(3) and 17 CFR 240.10A-3(b)(1).
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    A Company that relies on this exception must disclose either on or
through the Company's Web site or in the proxy statement for the next
annual meeting subsequent to such determination (or, if the Company
does not file a proxy, in its Form 10-K or 20-F), the nature of the
relationship and the reasons for the determination. In addition, the
Company must provide any disclosure required by Instruction 1 to Item
407(a) of Regulation S-K regarding its reliance on this exception. A
member appointed under this exception may not serve longer than two
years.
    BX believes this exception is an important means to allow Companies
flexibility as to board and committee membership and composition in
unusual circumstances, which may be particularly important for smaller
Companies.
    BX would allow a Company to avail itself of the exception even for
a director who fails the new requirements adopted pursuant to Rule 10C-
1.
Cure Period
    Consistent with Rule 10C-1, BX's proposal provides Companies with
an opportunity to cure defects in the composition of compensation
committees.\42\ The proposed cure period is copied from the cure period
in Nasdaq's current listing rules for noncompliance with the
requirement to have a majority independent board.\43\
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    \42\ See 17 CFR 240.10C-1(a)(3).
    \43\ See Nasdaq Listing Rule 5605(b)(1)(A).
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    Under BX's proposal, if a Company fails to comply with the
compensation committee composition requirements due to one vacancy, or
one compensation committee member ceases to be independent due to
circumstances beyond the member's reasonable control, the Company shall
regain compliance by the earlier of the next annual shareholders
meeting or one year from the occurrence of the event that caused the
noncompliance. However, if the annual shareholders meeting occurs no
later than 180 days following the event that caused the noncompliance,
the Company shall instead have 180 days from such event to regain
compliance. This provides a Company at least 180 days to cure
noncompliance and would typically allow a Company to regain compliance
in connection with its next annual meeting. A Company relying on this
provision shall provide notice to BX immediately upon learning of the
event or circumstance that caused the noncompliance.
Compensation Committee Charter
    BX proposes to require each Company to certify that it has adopted
a formal written compensation committee charter and that the
compensation committee will review and reassess the adequacy of the
formal written charter on an annual basis.\44\ This proposal is similar
to BX's current requirement for Companies to certify as to the adoption
of a formal written audit committee charter, except that the proposed
requirement for annual review and reassessment of the adequacy of the
compensation committee charter is written prospectively, rather than
retrospectively.\45\ In other words, the proposed compensation
committee charter requirement states that the compensation committee
will review and reassess the adequacy of the charter on an annual
basis, while the current audit committee charter requirement states
that the audit committee has reviewed and reassessed the adequacy of
the charter on an annual basis.\46\
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    \44\ Smaller Reporting Companies may adopt either a formal
written compensation committee charter or a board resolution that
specifies the committee's responsibilities and authority, except
Smaller Reporting Companies are not required to specify the specific
compensation responsibilities and authority set forth in proposed BX
Venture Market Listing Rule 5605(d)(3). For further discussion, see
the section entitled ``Smaller Reporting Companies'' below.
    \45\ See BX Venture Market Listing Rule 5605(c)(1).
    \46\ BX proposes to make a conforming change to its audit
committee charter requirement to clarify that Companies' annual
review and reassessment of the audit committee charter should be
prospective. This is consistent with BX's current interpretation of
its audit committee charter requirement. By proposing this
amendment, BX seeks to minimize differences between the audit
committee and compensation committee charter requirements and to
eliminate potential questions as to whether BX intended a
discrepancy between these two requirements.
---------------------------------------------------------------------------

    BX proposes that the compensation committee charter must specify:
     The scope of the compensation committee's
responsibilities, and how it carries out those responsibilities,
including structure, processes and membership requirements;
     The compensation committee's responsibility for
determining, or recommending to the board for determination, the
compensation of the chief executive officer and all other Executive
Officers of the Company;
     That the chief executive officer of the Company may not be
present during voting or deliberations by the compensation committee on
his or her compensation; and
     The specific compensation committee responsibilities and
authority set forth in proposed BX Venture Market Listing Rule
5605(d)(3), which implements the requirements of Section 10C(b)-(e) of
the Exchange Act and Rule 10C-1(b)(2), (3) and (4)(i)-(vi) thereunder.
    The requirement for the charter to specify the scope of the
compensation committee's responsibilities, and how it carries out those
responsibilities, including structure, processes and membership
requirements, is copied

from BX's similar listing rule relating to audit committee
charters.\47\
---------------------------------------------------------------------------

    \47\ See BX Venture Market Listing Rule 5605(c)(1)(A).
---------------------------------------------------------------------------

    The requirement for the charter to specify the compensation
committee's responsibility for determining, or recommending to the
board for determination, the compensation of the chief executive
officer and all other Executive Officers of the Company, is based upon
BX's current compensation-related listing rules.\48\ These listing
rules require that the compensation of a Company's chief executive
officer and all other Executive Officers must be determined by (i) a
compensation committee comprised solely of Independent Directors or
(ii) the Independent Directors constituting a majority of the board's
Independent Directors in a vote in which only Independent Directors
participate. As discussed above, BX proposes to eliminate the
Alternative, and therefore, the compensation of a Company's chief
executive officer and all other Executive Officers must be determined,
or recommended to the board for determination, by a compensation
committee comprised of Independent Directors. Going forward, BX
proposes to implement this requirement by requiring Companies to
include it in their formal written compensation committee charters.
---------------------------------------------------------------------------

    \48\ See BX Venture Market Listing Rules 5605(d)(1) and (2).
---------------------------------------------------------------------------

    The requirement for the charter to specify that the chief executive
officer of the Company may not be present during voting or
deliberations by the compensation committee on his or her compensation
is based upon BX's current compensation-related listing rules.\49\
Going forward, BX proposes to implement this requirement by requiring
Companies to include it in their formal written compensation committee
charters.
---------------------------------------------------------------------------

    \49\ See BX Venture Market Listing Rule 5605(d)(1).
---------------------------------------------------------------------------

    Finally, the requirement for the charter to specify the specific
compensation committee responsibilities and authority set forth in
proposed BX Venture Market Listing Rule 5605(d)(3) is modeled after
BX's similar listing rule relating to audit committee charters.\50\
Proposed BX Venture Market Listing Rule 5605(d)(3) implements the
requirements of Section 10C(b)-(e) of the Exchange Act and Rule 10C-
1(b)(2), (3) and (4)(i)-(vi) thereunder. Specifically, the proposed
listing rule states that a compensation committee must have the
specific compensation committee responsibilities and authority
necessary to comply with Rule 10C-1(b)(2), (3) and (4)(i)-(vi) relating
to the: (i) Authority to retain compensation consultants, independent
legal counsel and other compensation advisers; (ii) authority to fund
such advisers; and (iii) responsibility to consider certain
independence factors before selecting such advisers, other than in-
house legal counsel.\51\
---------------------------------------------------------------------------

    \50\ See BX Venture Market Listing Rule 5605(c)(1)(D), which
requires that an audit committee charter set forth the specific
audit committee responsibilities and authority set forth in BX
Venture Market Listing Rule 5605(c)(3). BX Venture Market Listing
Rule 5605(c)(3) states that an audit committee must have the
specific responsibilities and authority necessary to comply with
Rule 10A-3(b)(2), (3), (4) and (5) under the Exchange Act, with
certain exemptions. Rule 10A-3(b)(2), (3), (4) and (5) under the
Exchange Act concerns responsibilities relating to: (i) Registered
public accounting firms; (ii) complaints relating to accounting,
internal accounting controls or auditing matters; (iii) authority to
engage advisors; and (iv) funding as determined by the audit
committee.
    \51\ The independence factors include: (i) The provision of
other services to the issuer by the person that employs the adviser
(the ``Employer''); (ii) the amount of fees received from the issuer
by the Employer, as a percentage of the total revenue of the
Employer; (iii) the policies and procedures of the Employer that are
designed to prevent conflicts of interest; (iv) any business or
personal relationship of the adviser with a member of the
compensation committee; (v) any stock of the issuer owned by the
adviser; and (vi) any business or personal relationship of the
adviser or the Employer with an executive officer of the issuer. See
17 CFR 240.10C-1(b)(4).
---------------------------------------------------------------------------

    Rule 10C-1 permits BX to identify other relevant independence
factors that a compensation committee must consider when selecting a
compensation consultant, legal counsel or other adviser.\52\ BX
considered whether to adopt other independence factors, but ultimately
concluded that the six independence factors enumerated in Rule 10C-1
will provide compensation committees with a broad and sufficient range
of facts and circumstances to consider in making an independence
determination. Like the Commission, BX seeks to emphasize that a
compensation committee is not required to retain an independent
compensation adviser; rather, a compensation committee is required only
to conduct the independence analysis described in Rule 10C-1 before
selecting a compensation adviser.\53\
---------------------------------------------------------------------------

    \52\ Id.
    \53\ See the Adopting Release, at 38432-3 (stating that
``neither the [Dodd-Frank] Act nor [Rule 10C-1] requires a
compensation adviser to be independent, only that the compensation
committee consider the enumerated independence factors before
selecting a compensation adviser. Compensation committees may select
any compensation adviser they prefer, including ones that are not
independent, after considering the six independence factors outlined
in the [Rule 10C-1].'')
---------------------------------------------------------------------------

Exemptions
    Rule 10C-1 allows the national securities exchanges to exempt from
the listing rules adopted pursuant to Rule 10C-1 certain categories of
issuers, as the national securities exchange determines is appropriate,
taking into consideration, among other relevant factors, the potential
impact of the listing rules on smaller reporting issuers.\54\ BX
proposes that its existing exemptions from the compensation-related
listing rules remain generally unchanged. BX's current listing rules
include exemptions for: asset-backed issuers and other passive
issuers,\55\ limited partnerships \56\ and management investment
companies.\57\ For the same reasons that these categories of Companies
have traditionally been exempt from BX's compensation-related listing
rules, BX proposes that they continue to be exempt from its revised
listing rules relating to compensation committees.
---------------------------------------------------------------------------

    \54\ See 17 CFR 240.10C-1(b)(5).
    \55\ See BX Venture Market Listing Rule 5615(a)(1). Asset-backed
issuers and other passive issuers have traditionally been exempt
from BX's compensation-related listing rules because these issuers
do not have a board of directors or persons acting in a similar
capacity and their activities are limited to passively owning or
holding (as well as administering and distributing amounts in
respect of) securities, rights, collateral or other assets on behalf
of or for the benefit of the holders of the listed securities. See
IM-5615-1.
    \56\ See BX Venture Market Listing Rule 5615(a)(4). BX's
compensation-related listing rules historically have not been
applied to limited partnerships because the structure of these
entities requires that public investors have limited rights and that
the general partners make all significant decisions about the
operation of the limited partnership. As such, limited partners do
not expect to have a voice in the operations of the partnership.
Limited partnerships also are exempt from the independence
requirements of Rule 10C-1. See 17 CFR 240.10C-1(b)(1)(iii)(A)(1).
    \57\ See BX Venture Market Listing Rule 5615(a)(5). Management
investment companies registered under the Investment Company Act of
1940 are already subject to a pervasive system of federal regulation
in certain areas of corporate governance, and as a result, these
entities have traditionally been exempt from BX's compensation-
related listing rules. See IM-5615-4. Open-end management investment
companies registered under the Investment Company Act of 1940 also
are exempt from the independence requirements of Rule 10C-1. See 17
CFR 240.10C-1(b)(1)(iii)(A)(3).
---------------------------------------------------------------------------

    In addition, BX's current listing rules provide that a Foreign
Private Issuer may follow its home country practice in lieu of BX's
compensation-related listing rules if the Foreign Private Issuer
discloses in its annual reports filed with the Commission each
requirement that it does not follow and describes the home country
practice followed by the issuer in lieu of such requirements.\58\

Alternatively, a Foreign Private Issuer that is not required to file
its annual report with the Commission on Form 20-F may make this
disclosure only on its Web site. BX proposes that a Foreign Private
Issuer continue to be allowed to follow its home country practice in
lieu of BX's revised listing rules relating to compensation committees
if the Foreign Private Issuer provides the disclosures described above.
BX also proposes to add an additional disclosure requirement for any
Foreign Private Issuer that follows its home country practice in lieu
of the requirement to have an independent compensation committee to
disclose in its annual reports filed with the Commission the reasons
why it does not have such a committee.\59\
---------------------------------------------------------------------------

    \58\ See BX Venture Market Listing Rule 5615(a)(3). Under BX's
listing rules, Foreign Private Issuer has the same meaning as under
Rule 3b-4 under the Exchange Act. See BX Venture Market Listing Rule
5005(a)(12). BX's listing rules are modeled after Nasdaq's listing
rules, which have traditionally provided qualified exemptions for
foreign private issuers so that such issuers are not required to do
any act that is contrary to a law, rule or regulation of any public
authority exercising jurisdiction over such issuer or that is
contrary to generally accepted business practices in the issuer's
country of domicile, except to the extent such exemptions would be
contrary to the public securities laws. See Securities Exchange Act
Release No. 48745 (November 4, 2003), 68 FR 64154, 64165 (November
12, 2003) (SR-NASD-2002-138).
    \59\ This proposal adopts the requirements of Rule 10C-
1(b)(1)(iii)(A)(4), which provides an exemption from the
independence requirements of Rule 10C-1 for a ``foreign private
issuer that discloses in its annual report the reasons that the
foreign private issuer does not have an independent compensation
committee.''
---------------------------------------------------------------------------

    Finally, BX proposes to add exemptions to its compensation
committee rules for cooperatives \60\ and Controlled Companies,\61\
which BX proposes to define as Companies ``of which more than 50% of
the voting power for the election of directors is held by an
individual, a group or another company.'' These proposed exemptions are
modeled after the similar exemptions in Nasdaq's rules.\62\
---------------------------------------------------------------------------

    \60\ Certain member-owned cooperatives that list their preferred
stock are required to have their common stock owned by their
members. Because of their unique structure and the fact that they do
not have a publicly traded class of common stock, BX believes these
Companies should be exempt from its compensation committee rules.
    \61\ This exemption recognizes that majority Shareholders,
including parent companies, have the right to select directors and
control certain key decisions, such as executive officer
compensation, by virtue of their ownership rights. Controlled
Companies also are exempt from all of the requirements of Rule 10C-
1. See 17 CFR 240.10C-1(b)(5)(ii).
    \62\ See Nasdaq Listing Rule 5615(a)(2), Nasdaq IM-5615-2,
Nasdaq Listing Rule 5615(c) and Nasdaq IM-5615-5.
---------------------------------------------------------------------------

Phase-In Schedules
    BX proposes that its existing phase-in schedules for the
requirements relating to compensation committee composition remain
generally unchanged. BX's current listing rules include phase-in
schedules for: Companies listing in connection with an initial public
offering \63\ and Companies emerging from bankruptcy.\64\ Since each of
these categories of Company did not previously have a compensation
committee, each is allowed to phase in compliance with the compensation
committee composition requirement as follows: (1) One independent
member at the time of listing; (2) a majority of independent members
within 90 days of listing; and (3) all independent members within one
year of listing. BX proposes that these phase-in schedules remain
unchanged under its revised listing rules, except to clarify that a
Company may phase in compliance with the minimum size requirement and
the additional eligibility requirements adopted pursuant to Rule 10C-1,
as well as the requirement for compensation committee members to be
Independent Directors.\65\
---------------------------------------------------------------------------

    \63\ See BX Venture Market Listing Rule 5615(b)(1).
    \64\ See BX Venture Market Listing Rule 5615(b)(2).
    \65\ To provide an illustration of how the compensation
committee composition requirement will interact with the minimum
size requirement, consider a Company that at the time of listing has
a compensation committee consisting of two members, both of whom are
Independent Directors, but one of whom accepts compensatory fees of
$50,000 annually from the Company pursuant to a consulting
agreement. Although only one of these directors is fully eligible to
serve on the compensation committee, the committee meets the
requirements of BX's phase-in schedule because it has one fully
eligible member at the time of listing. By the 90th day from
listing, the committee must have a majority of fully eligible
members, so the Company could: (i) Remove the ineligible member and
temporarily have a committee of one fully eligible member; (ii)
replace the ineligible member with a fully eligible member so that
the committee consists of two members, all of whom are fully
eligible; or (iii) add a second fully eligible member so that the
committee consists of three members, a majority of whom are fully
eligible. By one year from listing, the Company's compensation
committee must consist of at least two members, and all members must
be fully eligible under BX's compensation committee composition
requirement.
---------------------------------------------------------------------------

    In addition, BX proposes minor clarifying changes to the phase-in
schedule in its current listing rules for Companies transferring from
other markets.\66\ Companies transferring from another national
securities exchange with a substantially similar requirement shall be
immediately subject to the compensation committee requirement, provided
that such Companies shall be afforded the balance of any grace period
afforded by the other market. Companies that are not subject to a
substantially similar requirement at the time of listing on BX, such as
a Company quoted in the over-the-counter market, shall be permitted to
phase in compliance with the compensation committee composition
requirements in Rule 5605(d)(2)(A), including the requirement that
compensation committee members be Independent Directors, the minimum
size requirement and the additional eligibility requirements adopted
pursuant to Rule 10C-1, on the same schedule as Companies listing in
connection with an initial public offering.
---------------------------------------------------------------------------

    \66\ See BX Venture Market Listing Rule 5615(b)(3).
---------------------------------------------------------------------------

    Since BX is proposing to add to its rules an exemption for
Controlled Companies, as discussed above, BX also proposes to add a
phase-in schedule for Companies ceasing to be Controlled Companies.
This proposed phase-in schedule is modeled after the similar phase-in
schedule in Nasdaq's rules.\67\
---------------------------------------------------------------------------

    \67\ See Nasdaq Listing Rule 5615(c)(3).
---------------------------------------------------------------------------

    None of the aforementioned phase-in schedules apply to the
requirement to adopt a formal written compensation committee charter
including the content specified in BX Venture Market Listing Rule
5605(d)(1)(A)-(D).\68\
---------------------------------------------------------------------------

    \68\ As discussed below under ``Smaller Reporting Companies,''
BX is proposing a new phase-in schedule for a Company ceasing to be
a Smaller Reporting Company. BX proposes to allow such a Company 30
days to certify to BX that it has adopted a formal written
compensation committee charter including the content specified in BX
Venture Market Listing Rule 5605(d)(1)(A)-(D). See footnote 70,
infra.
---------------------------------------------------------------------------

Smaller Reporting Companies
    While Rule 10C-1 exempts Smaller Reporting Companies from all of
its requirements, BX's current listing rules do not include any such
exemptions.\69\ Consistent with the exemption in Rule 10C-1, however,
BX proposes not to require Smaller Reporting Companies to adhere to the
new requirements relating to compensatory fees and affiliation, which
BX is proposing in response to Rule 10C-1, or to incorporate into their
formal written compensation committee charter or board resolution that
specifies the committee's responsibilities and authority the language
in Rule 10C-1 regarding compensation advisers. This approach will
minimize new costs imposed on Smaller Reporting Companies and allow
them some flexibility not allowed for larger Companies.
---------------------------------------------------------------------------

    \69\ See 17 CFR 240.10C-1(b)(5)(ii).
---------------------------------------------------------------------------

    However, as discussed above, BX proposes to eliminate the
Alternative in its current listing rules that allows compensation
decisions to be made by a majority of the Independent Directors rather
than by a committee composed entirely of Independent Directors. BX
proposes to eliminate the Alternative for Smaller Reporting Companies,
just like all other Companies. As a result, Smaller Reporting Companies
would be

required to have a compensation committee comprised of at least two
Independent Directors as defined under BX's existing listing rules.
    In addition, BX proposes that Smaller Reporting Companies must
adopt a formal written compensation committee charter or board
resolution that specifies the committee's responsibilities and
authority. Unlike other Companies, Smaller Reporting Companies may
include this content in a board resolution, rather than a compensation
committee charter, and Smaller Reporting Companies are not required to
review and reassess the adequacy of the charter or board resolution on
an annual basis. The charter or board resolution must specify the same
content as other Companies, except Smaller Reporting Companies are not
required to specify the specific compensation responsibilities and
authority set forth in proposed BX Venture Market Listing Rule
5605(d)(3) relating to the: (i) Authority to retain compensation
consultants, independent legal counsel and other compensation advisers;
(ii) authority to fund such advisers; and (iii) responsibility to
consider certain independence factors before selecting such advisers,
other than in-house legal counsel.\70\
---------------------------------------------------------------------------

    \70\ BX notes that Smaller Reporting Companies remain subject to
the disclosure requirements of Item 407(e)(3)(iv) of Regulation S-K,
which were adopted at the same time as Rule 10C-1. See the Adopting
Release.
---------------------------------------------------------------------------

    BX also proposes to apply the same phase-in schedule to a Company
ceasing to be a Smaller Reporting Company that applies to a Company
listing in conjunction with its initial public offering. Since a
Smaller Reporting Company is required to have a compensation committee
comprised of at least two Independent Directors, a Company that has
ceased to be a Smaller Reporting Company may use the phase-in schedule
for the additional eligibility requirements relating to compensatory
fees and affiliation, but not for the minimum size requirement or the
requirement that the committee consist only of Independent Directors.
This phase-in schedule will start to run on the due date of the SEC
filing in which the Company is required to report that it is an issuer
other than a Smaller Reporting Company.\71\ During the phase-in
schedule, a Smaller Reporting Company must continue to comply with the
requirement to have a compensation committee comprised of at least two
Independent Directors as defined under BX's existing listing rules.
---------------------------------------------------------------------------

    \71\ Within 30 days after the start of its phase-in schedule, a
Company that has ceased to be a Smaller Reporting Company must
certify to BX that: (i) It has complied with the requirement in BX
Venture Market Listing Rule 5605(d)(1) to have a compensation
committee charter including the content specified in BX Venture
Market Listing Rule 5605(d)(1)(A)-(D); and (ii) it has, or will
within the applicable phase-in schedule, comply with the requirement
in BX Venture Market Listing Rule 5605(d)(2) regarding compensation
committee composition.
---------------------------------------------------------------------------

Effective Dates/Transition
    BX proposes that Rule 5605(d)(3), relating to compensation
committee responsibilities and authority, shall be effective
immediately.\72\ Specifically, this proposed rule states that a
compensation committee must have the specific compensation committee
responsibilities and authority necessary to comply with Rule 10C-
1(b)(2), (3) and (4)(i)-(vi) under the Act relating to the: (i)
Authority to retain compensation consultants, independent legal counsel
and other compensation advisers; (ii) authority to fund such advisers;
and (iii) responsibility to consider certain independence factors
before selecting such advisers, other than in-house legal counsel. To
the extent a Company does not have a compensation committee, the
provisions of this rule shall apply to the Independent Directors who
determine, or recommend to the board for determination, the
compensation of the chief executive officer and all other Executive
Officers of the Company. Companies should consider under state
corporate law whether to grant these specific responsibilities and
authority through a charter, resolution or other board action; however,
BX proposes to require only that compensation committees immediately
have such responsibilities and authority. While BX proposes that
Companies must eventually have a written compensation committee charter
that includes, among others, these responsibilities and authority,
Companies may implement such a charter on the schedule discussed below.
---------------------------------------------------------------------------

    \72\ See supra note 3.
---------------------------------------------------------------------------

    In order to allow Companies to make necessary adjustments to their
boards and committees in the course of their regular annual meeting
schedules, BX proposes that Companies must comply with the remaining
provisions of the amended listing rules on compensation committees by
the earlier of: (1) Their second annual meeting held after the date of
approval of BX's amended listing rules; or (2) December 31, 2014. This
transition period is similar to the transition period used when Nasdaq
implemented similar requirements for audit committees in 2003.\73\
---------------------------------------------------------------------------

    \73\ See Securities Exchange Act Release No. 48745 (November 4,
2003), 68 FR 64154 (November 12, 2003) (SR-NASD-2002-141).
---------------------------------------------------------------------------

    A Company must certify to BX, no later than 30 days after the
implementation deadline applicable to it, that it has complied with the
amended listing rules on compensation committees. BX will provide
Companies with a form for this certification.
    During the transition period, Companies that are not yet required
to comply with the amended listing rules on compensation committees
must continue to comply with BX's existing listing rules, which have
been redesignated as Listing Rule 5605A(d) and IM-5605A-6 in BX's
proposal.
Conforming Changes and Correction of Typographical Errors
    Finally, BX proposes to make minor conforming changes to its
requirements relating to audit committees. BX also proposes to correct
certain typographical errors in its corporate governance requirements
as set forth in Exhibit 5.\74\
---------------------------------------------------------------------------

    \74\ The Commission notes that Exhibit 5 is available at http://nasdaqomxbx.cchwallstreet.com.
---------------------------------------------------------------------------

2. Statutory Basis
    BX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Exchange Act,\75\ in general, and with
Section 6(b)(5) of the Exchange Act,\76\ in particular. Section 6(b)(5)
requires, among other things, that a national securities exchange's
rules must be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest. Section 6(b)(5) also requires that a national
securities exchange's rules not be designed to permit unfair
discrimination between customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \75\ 15 U.S.C. 78f.
    \76\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As required by the Dodd-Frank Act and Rule 10C-1, BX is proposing
amendments to its listing rules relating to the independence of
compensation committees and their advisers. BX reviewed its existing
compensation-relating listing rules, in combination with the
requirements of Rule 10C-1, to develop a set of proposed compensation-
related listing rules. These proposals generally fall into three
categories: proposed rule amendments to comply with Rule 10C-1;
proposals

to continue certain rules relatively unchanged; and proposed rule
amendments not required by Rule 10C-1. BX believes that collectively,
these proposals protect investors and the public interest by requiring
Companies, with certain exemptions, to have a compensation committee
meeting certain requirements relating to composition, responsibilities
and authority.
    More specifically, BX's proposed amendments to its listing rules in
order to comply with Rule 10C-1 set forth: additional eligibility
requirements for compensation committee members relating to
compensatory fees and affiliation; an opportunity to cure defects in
compensation committee composition; a requirement that compensation
committees have the specific responsibilities and authority necessary
to comply with Rule 10C-1(b)(2), (3) and (4)(i)-(vi) under the Exchange
Act; and exemptions for limited partnerships, management investment
companies, foreign private issuers that provide certain required
disclosures, Controlled Companies and Smaller Reporting Companies. BX
believes that its proposals fairly balance the goal of protecting the
investing public by ensuring effective deliberation over executive
compensation with the goal of avoiding the imposition of undue costs on
Companies.
    BX's proposals to continue relatively unchanged some of its
existing exemptions to the compensation-related listing rules for
certain categories of Companies and to add a new exemption for
cooperatives takes into account the unique characteristics of these
Companies.\77\ As a result, BX does not believe that continuing the
existing exemptions and adding a new exemption for cooperatives will
discriminate unfairly among issuers, consistent with Section 6(b)(5) of
the Exchange Act.\78\
---------------------------------------------------------------------------

    \77\ See footnotes 54-57 and 59, supra.
    \78\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule amendments not required by Rule 10C-1 require
that: Companies must have a standing compensation committee; the
committee must consist of a minimum of two members; the committee must
have a formal written charter (or board resolution, in the case of
Smaller Reporting Companies) that specifies the committee's
responsibilities and authority; and Smaller Reporting Companies must
continue to comply with certain of BX's compensation-related listing
rules. As discussed in the ``Purpose'' section, BX believes that these
new requirements will facilitate effective oversight of executive
compensation and promote accountability to investors for executive
compensation decisions. With regard to Smaller Reporting Companies, BX
notes that these Companies continue to be subject to the same
requirements as all other Companies, except the new requirements that
BX is proposing under Rule 10C-1 relating to compensatory fees,
affiliation and the specific compensation committee responsibilities
and authority set forth in proposed BX Venture Market Listing Rule
5605(d)(3). BX believes that this hybrid approach does not discriminate
unfairly between issuers because it recognizes the fact that the
``executive compensation arrangements of [Smaller Reporting Companies]
generally are so much less complex than those of other public companies
that they do not warrant the more extensive disclosure requirements
imposed on companies that are not [Smaller Reporting Companies] and
related regulatory burdens that could be disproportionate for [Smaller
Reporting Companies].'' \79\ In addition, BX notes that the Commission
exempted Smaller Reporting Companies from Rule 10C-1.\80\ As a result,
this distinction does not discriminate unfairly among issuers.
---------------------------------------------------------------------------

    \79\ See the Adopting Release, at 38438 (quoting Securities
Exchange Act Release No. 54302A (August 29, 2006), 71 FR 53158,
53192 (September 8, 2006)).
    \80\ See 17 CFR 240.10C-1(b)(5)(ii).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    BX does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Exchange Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    BX did not solicit comments on the proposed rule change. BX
received two written comments, which are attached as Exhibit 2.\81\
---------------------------------------------------------------------------

    \81\ The Commission notes that the comments are available at
http://nasdaqomxbx.cchwallstreet.com.
---------------------------------------------------------------------------

    The first commenter recommended that BX should require Companies to
disclose: (i) How they are complying with the requirement to consider
the independence factors enumerated in Rule 10C-1; and (ii) the nature
of any conflict of interest arising from the engagement of legal
counsel by a compensation committee. BX considered these
recommendations, but it preferred to defer to the judgment of the
Commission with respect to the appropriate disclosure framework under
Rule 10C-1. BX therefore decided not to propose any new disclosure
requirements for Companies, other than those that are required by Rule
10C-1.\82\
---------------------------------------------------------------------------

    \82\ Specifically, as required by Rule 10C-1(b)(1)(iii)(A)(4),
BX proposes to require a Foreign Private Issuer that follows a home
country practice in lieu of the requirement to have an independent
compensation committee to disclose the reasons why it does not have
such a committee.
---------------------------------------------------------------------------

    The second commenter proffered four recommendations. First, this
commenter recommended that BX include director fees within the list of
relevant factors that must be considered when assessing the
independence of compensation committee members. BX does not believe
that the intent of the Dodd-Frank Act or Rule 10C-1 was to limit
independence based on director compensation, and therefore, BX proposes
to continue to exempt board fees from its prohibition on payment of
compensatory fees to a compensation committee member. Second, this
commenter recommended that BX include in the requirements for
compensation committee independence a factor relating to business or
personal relationships between directors and officers. As discussed in
the ``Purpose'' section above, BX reviewed its current and proposed
listing rules and concluded that these rules are sufficient to ensure
the independence of compensation committee members. Therefore, BX
determined not to propose further independence requirements, other than
those discussed above. Third, this commenter recommended that BX expand
the additional factors for compensation committee eligibility to cover
all independent directors, not just those serving on the compensation
committee. While BX heavily weighed the commenter's concern that
multiple definitions of independence add to the complexity of board
membership, BX believed that the intent of the Dodd-Frank Act and Rule
10C-1 was to address the independence of compensation committee
members, as well as their advisers, specifically. BX concluded
therefore that it is inappropriate to expand the additional
requirements proposed herein to cover all independent directors.
Finally, this commenter recommended that BX clarify that, while the
factors must be considered in their totality, a single factor can
result in a loss of director independence. BX confirms that a director
cannot be deemed independent if he or she fails any one of the bright-
line prohibitions in BX Venture Market Listing Rule 5605(a)(2).

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-BX-2012-063 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BX-2012-063. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of BX. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make publicly available. All
submissions should refer to File Number SR-BX-2012-063 and should be
submitted on or before November 5, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\83\
---------------------------------------------------------------------------

    \83\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25223 Filed 10-12-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 250 (Thursday, December 29, 2011)]
[Notices]
[Page 81924]
[FR Doc No: 2011-33315]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP12-35-000]

East Cheyenne Gas Storage, LLC; Notice of Amendment

    Take notice that on December 16, 2011, East Cheyenne Gas Storage,
LLC (East Cheyenne), 10901 W. Toller Drive, Suite 200, Littleton,
Colorado 80127, filed in the captioned docket an application under
section 7 of the Natural Gas Act (NGA), as amended, and Part 157 of the
Commission's regulations for an order amending the certificate of
public convenience and necessity issued by the Commission in Docket No.
CP10-34-000, as amended in Docket No. CP11-40-000. Specifically, East
Cheyenne requests authorization to increase the maximum reservoir
pressure for the D Sand zone in the West Peetz Field of its East
Cheyenne Gas Storage Project to a maximum bottom-hole pressure of 2,338
pounds per square inch gauge (2,353 pounds per square inch absolute),
all as more fully set forth in the application which is on file with
the Commission and open to public inspection. The filing may also be
viewed on the web at http://www.ferc.gov using the ``eLibrary'' link.
Enter the docket number excluding the last three digits in the docket
number field to access the document. For assistance, please contact
FERC Online Support at<EMAIL_ADDRESS>or toll free at (866)
208-3676, or TTY, contact<PHONE_NUMBER>.
    Any questions concerning this application may be directed to
William A. Lang, President, East Cheyenne Gas Storage, LLC, 10370
Richmond Avenue, Suite 510, Houston, Texas 77042, by Telephone: (713)
403-6460 or Facsimile:<PHONE_NUMBER>.
    East Cheyenne requests that the Commission grant the requested
authorizations and related approvals prior to February 1, 2012. By
issuing an order by this date, the Commission will facilitate East
Cheyenne's efficient and timely development of storage capacity at its
East Cheyenne Gas Storage Project. East Cheyenne states that it does
not propose any change in capacity, injection rates or withdrawal rates
authorized by the Commission in the original certificate order, as
amended, in this Application.
    Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9,
within 90 days of this Notice the Commission staff will either:
complete its environmental assessment (EA) and place it into the
Commission's public record (eLibrary) for this proceeding; or issue a
Notice of Schedule for Environmental Review. If a Notice of Schedule
for Environmental Review is issued, it will indicate, among other
milestones, the anticipated date for the Commission staff's issuance of
the final environmental impact statement (FEIS) or EA for this
proposal. The filing of the EA in the Commission's public record for
this proceeding or the issuance of a Notice of Schedule for
Environmental Review will serve to notify federal and state agencies of
the timing for the completion of all necessary reviews, and the
subsequent need to complete all federal authorizations within 90 days
of the date of issuance of the Commission staff's FEIS or EA.
    There are two ways to become involved in the Commission's review of
this project. First, any person wishing to obtain legal status by
becoming a party to the proceedings for this project should, on or
before the comment date stated below, file with the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426, a
motion to intervene in accordance with the requirements of the
Commission's Rules of Practice and Procedure (18 CFR 385.214 or
385.211) and the Regulations under the NGA (18 CFR 157.10). A person
obtaining party status will be placed on the service list maintained by
the Secretary of the Commission and will receive copies of all
documents filed by the applicant and by all other parties. A party must
submit 7 copies of filings made with the Commission and must mail a
copy to the applicant and to every other party in the proceeding. Only
parties to the proceeding can ask for court review of Commission orders
in the proceeding.
    However, a person does not have to intervene in order to have
comments considered. The second way to participate is by filing with
the Secretary of the Commission, as soon as possible, an original and
two copies of comments in support of or in opposition to this project.
The Commission will consider these comments in determining the
appropriate action to be taken, but the filing of a comment alone will
not serve to make the filer a party to the proceeding. The Commission's
rules require that persons filing comments in opposition to the project
provide copies of their protests only to the party or parties directly
involved in the protest.
    Persons who wish to comment only on the environmental review of
this project should submit an original and two copies of their comments
to the Secretary of the Commission. Environmental commentors will be
placed on the Commission's environmental mailing list, will receive
copies of the environmental documents, and will be notified of meetings
associated with the Commission's environmental review process.
Environmental commentors will not be required to serve copies of filed
documents on all other parties. However, the non-party commentors will
not receive copies of all documents filed by other parties or issued by
the Commission (except for the mailing of environmental documents
issued by the Commission) and will not have the right to seek court
review of the Commission's final order.
    The Commission strongly encourages electronic filings of comments,
protests and interventions in lieu of paper using the ``eFiling'' link
at http://www.ferc.gov. Persons unable to file electronically should
submit an original and 14 copies of the protest or intervention to the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426.
    This filing is accessible on-line at http://www.ferc.gov, using the
``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the web site that enables subscribers to receive email
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please email
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.
    Comment Date: 5 p.m. Eastern Time on January 11, 2012

    Dated: December 21, 2011.
Kimberly D. Bose,
Secretary.
[FR Doc. 2011-33315 Filed 12-28-11; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 80, Number 200 (Friday, October 16, 2015)]
[Rules and Regulations]
[Page 62457]
[FR Doc No: 2015-26359]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 117

[Docket No. USCG-2015-0944]

Drawbridge Operation Regulations; Atlantic Intracoastal Waterway,
South Branch of the Elizabeth River, Portsmouth and Chesapeake, VA

AGENCY: Coast Guard, DHS.

ACTION: Notice of deviation from drawbridge regulations.

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SUMMARY: The Coast Guard has issued a temporary deviation from the
operating schedule that governs the Belt Line Railroad Bridge across
the South Branch of the Elizabeth River, mile 2.6, between Portsmouth
and Chesapeake, VA. This deviation allows the bridge to remain in the
closed-to-navigation position to facilitate a tie replacement project.

DATES: This deviation is effective without actual notice from October
16, 2015 until 6 p.m. on October 23, 2015. For the purposes of
enforcement, actual notice will be used from 7 a.m. on October 16,
2015, until October 16, 2015.

ADDRESSES: The docket for this deviation, [USCG-2015-0944], is
available at http://www.regulations.gov. Type the docket number in the
``SEARCH'' box and click ``SEARCH''. Click on Open Docket Folder on the
line associated with this deviation.

FOR FURTHER INFORMATION CONTACT: If you have questions on this
temporary deviation, call or email Mr. Hal R. Pitts, Bridge
Administration Branch Fifth District, Coast Guard; telephone (757) 398-
6222, email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: The Norfolk and Portsmouth Belt Line
Railroad Company, who owns and operates the Belt Line Railroad Bridge,
has requested a temporary deviation from the current operating
regulations to facilitate a tie replacement project on the bridge. The
bridge is a vertical lift draw bridge and has a vertical clearance in
the closed position of 6 feet above mean high water.
    The current operating schedule is set out in 33 CFR 117.997(a).
Under this temporary deviation, the bridge will remain in the closed-
to-navigation position from 7 a.m. to 6 p.m., except for scheduled
daily openings at 9 a.m., 12 noon, and 3 p.m., from October 16, 2015
through October 23, 2015. During this temporary deviation, the bridge
will operate per 33 CFR 117.997(a) from 6 p.m. to 7 a.m. The South
Branch of the Elizabeth River is used by a variety of vessels including
deep draft ocean-going vessels, U.S. government vessels, small
commercial vessels, recreational vessels and tug and barge traffic. The
Coast Guard has carefully coordinated the restrictions with commercial
and recreational waterway users.
    Vessels able to pass through the bridge in the closed position may
do so at any time. The bridge will be able to open for emergencies and
there is no alternate route for vessels unable to pass through the
bridge in the closed position. The Coast Guard will also inform the
users of the waterways through our Local and Broadcast Notice to
Mariners of the change in operating schedule for the bridge so that
vessels can arrange their transits to minimize any impacts caused by
this temporary deviation.
    In accordance with 33 CFR 117.35(e), the drawbridge must return to
its regular operating schedule immediately at the end of the effective
period of this temporary deviation. This deviation from the operating
regulations is authorized under 33 CFR 117.35.

    Dated: October 13, 2015.
Hal R. Pitts,
Bridge Program Manager, Fifth Coast Guard District.
[FR Doc. 2015-26359 Filed 10-15-15; 8:45 am]
 BILLING CODE 9110-04-P


[Federal Register Volume 79, Number 13 (Tuesday, January 21, 2014)]
[Notices]
[Pages 3366-3367]
[FR Doc No: 2014-00937]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings 1

    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER10-2124-004; ER10-2125-004; ER10-2127-004;

ER10-2128-004; ER10-2130-005; ER10-2132-004; ER10-2133-005; ER10-2137-
005; ER10-2131-005; ER10-2138-005; ER10-2139-005; ER10-2140-005; ER10-
2141-005; ER10-2764-004; ER11-3872-005; ER11-4044-006; ER11-4046-005;
ER12-161-004; ER12-164-004; ER12-645-006.
    Applicants: Spring Canyon Energy LLC, Judith Gap Energy LLC,
Invenergy TN LLC, Wolverine Creek Energy LLC, Forward Energy LLC,
Willow Creek Energy LLC, Sheldon Energy LLC, Beech Ridge Energy LLC,G
rand Ridge Energy LLC, Grand Ridge Energy II LLC, Grand Ridge Energy
III LLC, Grand Ridge Energy IV LLC, Grand Ridge Energy V LLC, Vantage
Wind Energy LLC, Stony Creek Energy LLC, Gratiot County Wind LLC,
Gratiot County Wind II LLC, Bishop Hill Energy LLC, Bishop Hill Energy
III LLC, California Ridge Wind Energy LLC.
    Description: Supplement to July 30, 2013 Notification of Change in
Facts of Spring Canyon Energy LLC, et al.
    Filed Date: 10/31/13.
    Accession Number: 20131031-5049.
    Comments Due: 5 p.m. ET 1/22/14.

    Docket Numbers: ER13-1916-001.
    Applicants: Arizona Public Service Company.
    Description: Rate Schedule Nos. 44, 98, 211--Four Corners
Acquisition to be effective 12/30/2013.
    Filed Date: 1/7/14.
    Accession Number: 20140107-5117.
    Comments Due: 5 p.m. ET 1/28/14.

    Docket Numbers: ER13-1917-001.
    Applicants: Arizona Public Service Company.
    Description: Service Agreement No. 209--Shiprock Four Corners
Project Interconnection to be effective 12/30/2013.
    Filed Date: 1/7/14.
    Accession Number: 20140107-5118.
    Comments Due: 5 p.m. ET 1/28/14.

    Docket Numbers: ER14-593-000; ER14-594-000; ER14-595-000.
    Applicants: AEP Energy Partners, Inc.
    Description: Supplement to December 11, 2013 AEP Energy Partners,
Inc. and Ohio Power Company tariff filings.
    Filed Date: 1/8/14.
    Accession Number: 20140108-5050.
    Comments Due: 5 p.m. ET 1/29/14.

    Docket Numbers: ER14-698-001.
    Applicants: Midcontinent Independent System Operator, Inc.
    Description: 2014-01-06 AIC Attachment O Compliance Amendment
Filing to be effective 1/2/2013.
    Filed Date: 1/7/14.
    Accession Number: 20140107-5128.
    Comments Due: 5 p.m. ET 1/28/14.

    Docket Numbers: ER14-802-001.
    Applicants: Valley Electric Association, Inc.
    Description: Amendment to Annual TRBAA Update to be effective 1/1/
2014.
    Filed Date: 1/7/14.
    Accession Number: 20140107-5129.
    Comments Due: 5 p.m. ET 1/28/14.

    Docket Numbers: ER14-960-000.
    Applicants: Midcontinent Independent System Operator, Inc.
    Description: Midcontinent Independent System Operator, Inc. submits
01-08-2013 SA 2629 ITC-Big Turtle G997 GIA to be effective 1/9/2014.
    Filed Date: 1/8/14.
    Accession Number: 20140108-5081.
    Comments Due: 5 p.m. ET 1/29/14.

    Docket Numbers: ER14-961-000.
    Applicants: Arizona Public Service Company.
    Description: Cancellation of Umbrella Service Agreements Nos. 34,
96, 145, 155, 156, 159, 160, 171,and 172 of Arizona Public Service
Company.
    Filed Date: 1/8/14.
    Accession Number: 20140108-5089.
    Comments Due: 5 p.m. ET 1/29/14.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: January 8, 2014.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2014-00937 Filed 1-17-14; 8:45 am]
BILLING CODE 6717-01-P