disclosure requirements with the existing requirements of Item
407(e)(3), as proposed, or, instead, should we add the new requirements
without modifying the existing requirements of the item?
     Should we extend any of the current exclusions under Item
407(e)(3) to the new Section 10C(c)(2) disclosures? Conversely, should
we eliminate altogether the exclusions under Item 407(e)(3)?
     Are there any additional disclosures concerning conflicts
of interest involving the activities of compensation consultants that
would be beneficial to investors?
     Is additional clarification necessary regarding the phrase
``obtained the advice''? Does our proposed instruction provide adequate
guidance to issuers on how to interpret that phrase?
     Do the five factors in proposed Rule 10C-1(b)(4)(i)
through (v) help issuers determine whether there is a ``conflict of
interest''? Should we define the term ``conflict of interest''? If so,
how? Are there other factors that should be considered in determining
whether there is a conflict of interest? If so, should these factors
also be identified in the proposed instruction?
     Because a compensation committee may be reluctant or
unable to definitively conclude whether a conflict of interest exists,
should we also include the appearance of a conflict of interest in our
interpretation of what constitutes a ``conflict of interest'' that must
be disclosed under our proposed rules? Why or why not? Should we
include potential conflicts of interest in our interpretation? Why or
why not? We note that our 2009 amendments to Item 407(e) did not
conclude that there was a conflict of interest posed by a consultant
providing additional services to the issuer, only that there was a
potential conflict of interest.
     Should we should require fee disclosure for other types of
potential conflicts of interest, such as revenue concentration, in
light of Section 10C(c)(2)'s requirement that the factors considered by
the compensation committee before engaging compensation advisers be
``competitively neutral''? For example, to address revenue
concentration, we could require disclosure of an adviser's fees
received from the issuer (in percentage terms) if such fees comprise
more than 10% of the adviser's annual revenues. Would this be
appropriate?
     Although a listed issuer's compensation committee is
required to consider independence factors before selecting any
compensation adviser, Section 10C(c)(2) requires conflict of interest
disclosure only as to compensation consultants. Should we also extend
this disclosure requirement to other types of advisers to the
compensation committee, such as legal counsel? Why or why not?
     As proposed, and consistent with current rules, Item
407(e)(3) would apply to smaller reporting companies. Should we exempt
such companies from these disclosure requirements? Do many smaller
reporting companies' compensation committees retain or obtain the
advice of compensation consultants? Should an exemption be provided if
the exchanges exempt such companies from the listing standards required
by Section 10C?

D. Transition and Timing

    The Act requires us to issue rules directing the exchanges to
prohibit the listing of issuers not in compliance with Section 10C
``not later than 360 days after'' the enactment of Section 10C, or by
July 16, 2011.\110\ The Act did not establish a specific deadline by
which the listing standards promulgated by the exchanges must be in
effect. To facilitate timely implementation of the proposals, we
propose that each exchange must provide to the Commission, no later
than 90 days after publication of our final rule in the Federal
Register, proposed rules or rule amendments that comply with our final
rule. Further, each exchange would need to have final rule or rule
amendments that comply with our final rule approved by the Commission
no later than one year after publication of our final rule in the
Federal Register. We request comment below on the appropriateness of
these periods.
---------------------------------------------------------------------------

    \110\ See Section 10C(f)(1) of the Exchange Act [15 U.S.C. 78j-
3(f)(1)]. The Act was enacted on July 21, 2010. The 360th day
following enactment would be July 16, 2011.
---------------------------------------------------------------------------

    Section 10C(c)(2) requires that each issuer disclose in any proxy
or consent solicitation material for an annual meeting of shareholders
(or a special meeting in lieu of the annual meeting) whether the
issuer's compensation committee retained or obtained the advice of a
compensation consultant; whether the work of the compensation
consultant has raised any conflict of interest; and, if so, the nature
of the conflict and how the conflict is being addressed. Although the
statute specifies that this disclosure would be required with respect
to meetings occurring on or after the date that is one year after the
enactment of Section 10C, which would be July 21, 2011, the statute
also requires these disclosures to be ``in accordance with regulations
of the Commission,'' and our regulations do not currently require such
disclosures to be made. Consequently, Section 10C(c)(2)'s compensation
consultant and conflict of interest disclosures would not be required
for proxy or information statements filed in definitive form before the
effective date of our rules implementing Section 10C(c)(2).
Request for Comment
     Do the proposed implementation dates provide sufficient
time for exchanges to propose and obtain Commission approval for new or
amended rules to meet the requirements of our proposed rules? If not,
what other dates would be appropriate, and why?
     What factors should the Commission consider in determining
these dates?
     Should our rules also specify the dates by which listed
issuers must comply with an exchange's new or amended rules meeting the
requirements of our proposed rules? If so, what dates would be
appropriate? Should there be uniformity among the exchanges with
respect to the dates by which their listed issuers must comply with the
exchanges' new or amended rules?
     Would a period beyond the proposed date be necessary or
appropriate for compliance by smaller reporting companies? Are there
special considerations that we should take into account for foreign
private issuers?
General Request for Comment
    We request and encourage any interested person to submit comments
on any aspect of our proposals, other matters that might have an impact
on the amendments, and any suggestions for additional changes. With
respect to any comments, we note that they are of greatest assistance
to our rulemaking initiative if accompanied by supporting data and
analysis of the issues addressed in those comments and by alternatives
to our proposals where appropriate.

III. Paperwork Reduction Act

A. Background

    Certain provisions of the proposed rule and rule amendments contain
``collection of information'' requirements within the meaning of the
Paperwork Reduction Act of 1995 (PRA).\111\ We are submitting the
proposed rule and rule amendments to the Office of Management and
Budget (OMB) for review in accordance with the PRA.\112\ The titles for
the collection of information are:
---------------------------------------------------------------------------

    \111\ 44 U.S.C. 3501 et seq.
    \112\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

    (1) ``Regulation 14A and Schedule 14A'' (OMB Control No. 3235-
0059);
    (2) ``Regulation 14C and Schedule 14C'' (OMB Control No. 3235-
0057); and
    (3) ``Regulation S-K'' (OMB Control No. 3235-0071).\113\
---------------------------------------------------------------------------

    \113\ The paperwork burden from Regulation S-K is imposed
through the forms that are subject to the disclosure requirements in
Regulation S-K and is reflected in the analysis of these forms. To
avoid a Paperwork Reduction Act inventory reflecting duplicative
burdens, for administrative convenience we estimate the burden
imposed by Regulation S-K to be a total of one hour.
---------------------------------------------------------------------------

    Regulation S-K was adopted under the Securities Act and Exchange
Act; Regulations 14A and 14C and the related schedules were adopted
under the Exchange Act. The regulations and schedules set forth the
disclosure requirements for proxy and information statements filed by
companies to help investors make informed investment and voting
decisions. The hours and costs associated with preparing, filing and
sending the schedules constitute reporting and cost burdens imposed by
each collection of information. An agency may not conduct or sponsor,
and a person is not required to respond to, a collection of information
unless it displays a currently valid OMB control number. Compliance
with the proposed rule and rule amendments would be mandatory.
Responses to the information collections would not be kept confidential
and there would be no mandatory retention period for the information
disclosed.

B. Summary of Proposed Rule and Rule Amendments

    As discussed in more detail above, we are proposing new Rule 10C-1
under the Exchange Act and amendments to Item 407(e) of Regulation S-K.
Proposed Rule 10C-1 would implement the requirements of Section 10C of
the Exchange Act, as added by Section 952 of the Act. Specifically,
proposed Rule 10C-1 would direct the exchanges to prohibit the listing
of any equity security of an issuer, with certain exemptions, that is
not in compliance with Section 10C's compensation committee and
compensation adviser requirements. We are proposing to adopt several
limited exemptions from the requirements of proposed Rule 10C-1 and to
authorize the exchanges to include other exemptions in their listing
standards, pursuant to the rule filing process under Section 19(b) of
the Exchange Act, as each exchange determines is appropriate, taking
into consideration the size of the issuer and any other relevant
factors.
    To implement Section 10C(c)(2), we are proposing to amend Item
407(e)(3) of Regulation S-K to require disclosure, in any proxy or
information statement relating to an annual meeting of shareholders (or
a special meeting in lieu of an annual meeting) at which directors are
to be elected, of whether the issuer's compensation committee (or
another board committee performing similar functions) retained or
obtained the advice of a compensation consultant; whether the work of
the compensation consultant has raised any conflict of interest; and,
if so, the nature of the conflict and how the conflict is being
addressed.\114\ We also propose to combine and streamline these
disclosure requirements with the existing disclosure requirements of
Item 407(e)(3).
---------------------------------------------------------------------------

    \114\ Section 10C(c)(2) requires listed issuers to provide this
disclosure; we propose to extend this disclosure requirement to non-
listed issuers as well. We have not, however, proposed to require
comparable disclosure from foreign private issuers, as foreign
private issuers are not subject to Exchange Act Sections 14(a) and
14(c). See Exchange Act Rule 3a12-3.
---------------------------------------------------------------------------

C. Burden and Cost Estimates Related to the Proposed Amendments

    The proposed amendments to Item 407(e)(3) of Regulation S-K would
require, if adopted, additional disclosure in proxy or information
statements filed on Schedule 14A or Schedule 14C relating to an annual
meeting of shareholders (or a special meeting in lieu of an annual
meeting) at which directors are to be elected and would increase the
burden hour and cost estimates for each of those forms. For purposes of
the PRA, we estimate the total annual increase in the paperwork burden
for all affected issuers to comply with our proposed collection of
information requirements to be approximately 23,940 hours of in-house
personnel time and approximately $3,192,000 for the services of outside
professionals.\115\ These estimates include the time and the cost of
collecting the information, preparing and reviewing disclosure, filing
documents, and retaining records. In deriving our estimates, we assumed
that the burden hours of the proposed disclosure requirements would be
comparable to the burden hours related to similar disclosure
requirements under our current rules regarding compensation
consultants.\116\ Based on our assumptions, we estimated that the
proposed amendments to Item 407(e)(3)(iii) of Regulation S-K would
impose on average four incremental burden hours.\117\
---------------------------------------------------------------------------

    \115\ Our estimates represent the average burden for all
issuers, both large and small.
    \116\ See Proxy Disclosure Enhancements, Release No. 33-9089
(Dec. 16, 2009) [74 FR 68334] (in which the Commission estimated the
average incremental disclosure burden for the rule amendments to
Item 407(e)(3) relating to compensation consultants to be three
hours).
    \117\ These four incremental burden hours would be in addition
to the three incremental burden hours relating to our current
compensation consultant disclosure rules. Id.
---------------------------------------------------------------------------

    The table below shows the total annual compliance burden, in hours
and in costs, of the collection of information pursuant to the proposed
amendments to proxy and information statements and to Regulation S-
K.\118\ The burden estimates were calculated by multiplying the
estimated number of responses by the estimated average amount of time
it would take an issuer to prepare and review the proposed disclosure
requirements. The portion of the burden carried by outside
professionals is reflected as a cost, while the portion of the burden
carried by the issuer internally is reflected in hours. For purposes of
the PRA, we estimate that 75% of the burden of preparation of Schedules
14A and 14C is carried by the issuer internally and that 25% of the
burden of preparation is carried by outside professionals retained by
the issuer at an average cost of $400 per hour. There is no change to
the estimated burden of the collections of information under Regulation
S-K because the burdens that this regulation imposes are reflected in
our burden estimates for Schedules 14A and 14C.
---------------------------------------------------------------------------

    \118\ For convenience, the estimated hour and cost burdens in
the table have been rounded to the nearest whole number.

                             Table 1--Incremental Paperwork Burden Under the Proposed Amendments for Schedules 14A and 14C.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Total
                                                             Number of      Incremental     incremental      Internal        External      Professional
                                                           responses (A)   burden hours/   burden hours    company time    professional        costs
                                                               \119\         form (B)       (C)=(A)*(B)         (D)          time (E)      (F)=(E)*$400
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sch. 14A................................................           7,300               4          29,200          21,900           7,300      $2,920,000
Sch. 14C................................................             680               4           2,720           2,040             680        $272,000
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................           7,980  ..............          31,920          23,940           7,980      $3,192,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Request for Comment

    Pursuant  to 44 U.S.C. 3506(c)(2)(B), we request comment in order
to:
---------------------------------------------------------------------------

    \119\ The number of responses reflected in the table equals the
actual number of schedules filed with the Commission during the 2010
fiscal year.
---------------------------------------------------------------------------

     Evaluate whether the proposed collections of information
are necessary for the proper performance of the functions of the
Commission, including whether the information will have practical
utility;
     Evaluate the accuracy of our assumptions and estimates of
the burden of the proposed collections of information;
     Determine whether there are ways to enhance the quality,
utility and clarity of the information to be collected;
     Evaluate whether there are ways to minimize the burden of
the collections of information on those who respond, including through
the use of automated collection techniques or other forms of
information technology; and
     Evaluate whether the proposed amendments will have any
effects on any other collections of information not previously
identified in this section.
    Any member of the public may direct to us any comments concerning
the accuracy of these burden estimates and any suggestions for reducing
these burdens. Persons submitting comments on the collection of
information requirements should direct their comments to the Office of
Management and Budget, Attention: Desk Officer for the U.S. Securities
and Exchange Commission, Office of Information and Regulatory Affairs,
Washington, DC 20503, and send a copy to Elizabeth M. Murphy,
Secretary, U.S. Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090, with reference to File No. S7-13-11.
Requests for materials submitted to OMB by the Commission with regard
to these collections of information should be in writing, refer to File
No. S7-13-11 and be submitted to the U.S. Securities and Exchange
Commission, Office of Investor Education and Advocacy, 100 F Street,
NE, Washington DC 20549-0213. Because the OMB is required to make a
decision concerning the collections of information between 30 and 60
days after publication of this release, your comments are best assured
of having their full effect if the OMB receives them within 30 days of
publication.

IV. Cost-Benefit Analysis

A. Introduction and Objectives of Proposals

    We are proposing rulemaking to implement and supplement the
provisions of the Act relating to compensation committees and
compensation advisers. Section 952 of the Act amends the Exchange Act
by adding new Section 10C. Section 10C(a)(1) requires the Commission to
adopt rules directing the exchanges to prohibit the listing of any
equity security of an issuer, with certain exemptions, that is not in
compliance with the independence requirements for members of the
compensation committee. In accordance with the statute, the rules, once
adopted, would require the exchanges to establish listing standards
that require each member of a listed issuer's compensation committee to
be a member of the board of directors and to be ``independent.'' The
term ``independent'' is not defined in Section 10C(a)(1). Instead, the
section provides that ``independent'' is to be defined by the exchanges
after taking into consideration relevant factors, including, but not
limited to, the source of compensation of a director, including any
consulting, advisory or other compensatory fee paid by the issuer to
the director, and whether the director is affiliated with the issuer, a
subsidiary of the issuer, or an affiliate of a subsidiary of the
issuer.
    In addition to the independence requirements set forth in Section
10C(a), Section 10C(f) requires the Commission to adopt rules directing
the exchanges to prohibit the listing of any security of an issuer that
is not in compliance with the following requirements relating to
compensation committees and compensation advisers, as set forth in
paragraphs (b) through (e) of Section 10C:
     Each compensation committee must have the authority, in
its sole discretion, to retain or obtain the advice of compensation
consultants, independent legal counsel and other advisers
(collectively, ``compensation advisers''); \120\
---------------------------------------------------------------------------

    \120\ Exchange Act Sections 10C(c)(1)(A) and 10C(d)(1) [15
U.S.C. 78j-3(c)(1)(A) and (d)(1)].
---------------------------------------------------------------------------

     Before selecting any compensation adviser, the
compensation committee must take into consideration specific factors
identified by the Commission that affect the independence of
compensation advisers; \121\
---------------------------------------------------------------------------

    \121\ Exchange Act Section 10C(b) [15 U.S.C. 78j-3(b)].
---------------------------------------------------------------------------

     The compensation committee must be directly responsible
for the appointment, compensation and oversight of the work of any
compensation adviser; \122\ and
---------------------------------------------------------------------------

    \122\ Exchange Act Sections 10C(c)(1)(B) and 10C(d)(2) [15
U.S.C. 78j-3(c)(1)(B) and (d)(2)].
---------------------------------------------------------------------------

     Each listed issuer must provide appropriate funding for
the payment of reasonable compensation, as determined by the
compensation committee, to compensation advisers.\123\
---------------------------------------------------------------------------

    \123\ Exchange Act Section 10C(e) [15 U.S.C. 78j-3(e)].

Finally, Section 10C(c)(2) requires each listed issuer to disclose in
any proxy or consent solicitation material for an annual meeting of
shareholders (or a special meeting in lieu of the annual meeting), in
accordance with Commission regulations, whether the issuer's
compensation committee retained or obtained the advice of a
compensation consultant; whether the work of the compensation
consultant has raised any conflict of interest; and, if so, the nature
of the conflict and how the conflict is being addressed.
    Under Section 10C, our rules must permit the exchanges to exempt
particular categories of issuers from the requirements of Section 10C
and particular relationships from the compensation committee
independence requirements of Section 10C(a). Our rules must also
provide for appropriate procedures for an issuer to have a reasonable
opportunity to cure any defects that might otherwise result in the
delisting of the issuer's securities.

    We are proposing new Exchange Act Rule 10C-1 to implement the
compensation committee listing requirements of Sections 10C(a)-(g) of
the Exchange Act. Proposed Rule 10C-1 closely tracks the statutory
requirements of Section 10C. To implement Section 10C(c)(2) of the
Exchange Act, we are proposing rule amendments to Regulation S-K to
require disclosure, in any proxy or information statement relating to
an annual meeting of shareholders at which directors are to be elected
(or special meeting in lieu of the annual meeting), of whether the
issuer's compensation committee retained or obtained the advice of a
compensation consultant; whether the work of the compensation
consultant has raised any conflict of interest; and, if so, the nature
of the conflict and how the conflict is being addressed. In connection
with these amendments, we also propose to revise the current disclosure
requirements relating to the retention of compensation consultants by
providing a uniform trigger for when compensation consultant
disclosures will be required. In addition, our proposed amendments
would eliminate the existing exception from the requirement to identify
compensation consultants and describe their engagements for those cases
in which a consultant's role is limited to consulting on a broad-based
plan or providing information that either is not customized for a
particular registrant or that is customized based on parameters that
are not developed by the compensation consultant, and about which the
compensation consultant does not provide advice.
    The Commission is sensitive to the costs and benefits imposed by
the proposed rule and rule amendments. The discussion below focuses on
the costs and benefits of the proposals made by the Commission to
implement the Act within its permitted discretion, rather than the
costs and benefits of the Act itself.

B. Benefits

    The proposed rulemaking is intended to implement and supplement the
requirements of Section 10C of the Exchange Act as set forth in Section
952 of the Act.
Required Listing Standards
    Under proposed Rule 10C-1, the exchanges would be directed to adopt
listing standards that would apply to any committee of the board that
oversees executive compensation, whether or not such committee performs
other functions or is formally designated as a ``compensation
committee.'' We believe this aspect of the rule proposal may help
achieve the objectives of the Act by providing clarity and reducing any
uncertainty about the application of Section 10C. Moreover, this may
benefit investors because it would limit the ability of listed issuers
to circumvent the compensation committee independence requirements
under Section 10C by delegating oversight of executive compensation to
a board committee that is not formally designated as the ``compensation
committee,'' but performs that function.
    As directed by Section 10C, proposed Rule 10C-1 directs the
exchanges to develop a definition of independence applicable to
compensation committee members after considering the relevant factors
set forth in Exchange Act Section 10C(a)(3). We do not propose to
specify any additional factors that the exchanges must consider in
determining independence requirements for compensation committee
members. We believe that permitting exchanges greater latitude in
crafting the required independence standards, subject to Commission
review pursuant to Section 19(b) of the Exchange Act, may result in
more efficient and effective determinations as to what types of
relationships should preclude a finding of independence with respect to
membership on a board committee that oversees executive compensation.
Because issuers frequently consult the exchanges regarding independence
determinations, the exchanges may be in the best position to identify
the types of common relationships that are likely to compromise the
ability of an issuer's compensation committee to make impartial
determinations on executive compensation.
Disclosure Amendments
    Our proposed amendments to Item 407(e)(3) of Regulation S-K would
require the specific disclosures mandated by Section 10C(c)(2). While
no other disclosures are proposed to be required, our proposed
amendments would extend the disclosure requirement of Section 10C(c)(2)
to issuers, whether listed or not, that file proxy or information
statements relating to an election of directors. Although controlled
companies are exempt from the requirements of Section 10C, we propose
to extend the disclosure requirements of Section 10C(c)(2) to
controlled companies in order to have uniform compensation consultant
disclosure requirements for all issuers subject to our proxy rules.
Under the proposed amendments, in addition to the disclosure currently
required by Item 407(e)(3), issuers would be required to disclose
whether the compensation committee has retained or obtained the advice
of a compensation consultant, whether the work of the compensation
consultant has raised any conflict of interest, and, if so, the nature
of the conflict and how the conflict is being addressed.
    We believe that requiring these disclosures of issuers subject to
the proxy rules will benefit investors by providing them with easily
understandable and uniform disclosure regarding compensation consultant
conflicts of interest. Under our existing disclosure rules, these
issuers must already discuss the selection of compensation consultants
and disclose the nature and scope of their assignment, including any
material instructions or directions governing their performance under
the engagement. We believe the proposed amendment would complement
these existing disclosure requirements by increasing the transparency
of issuers' policies regarding compensation consultant conflicts of
interest. To the extent that the relationships between an issuer and a
compensation consultant are more transparent under the proposed
amendments, investors should benefit through their ability to better
monitor the process of recommending and determining executive and
director pay. The increased disclosure should improve the ability of
investors to monitor performance of directors responsible for
overseeing compensation consultants, thus enabling them to make more
informed voting and investment decisions.
    We also propose to harmonize current Item 407(e)(3)(iii)'s
disclosure triggers with the requirements of Section 10C(c)(2). Our
goal in proposing uniform disclosure triggers is to prevent the
adoption of potentially duplicative or overlapping disclosure
requirements; we also believe that providing a uniform standard for
when these disclosures will be required will benefit issuers by
allowing them to streamline their procedures for ensuring proper
disclosure compliance.
    The proposed amendments also include an instruction that provides
guidance to issuers as to whether the compensation committee has
``obtained the advice'' of a compensation consultant. This instruction
should benefit issuers by providing clarity and reducing any
uncertainty about whether disclosure under the new rules is required.
In addition, we propose to include an instruction that identifies the
factors set forth in proposed Rule 10C-

1(b)(4)(i) through (v) as among the factors to be considered in
determining whether there is a conflict of interest that may need to be
disclosed in response to our proposed amendments to Item
407(e)(3)(iii). Although only listed issuers will be required to
consider the five independence factors before selecting a compensation
consultant, we believe that identifying these five factors as factors
that should be considered in determining whether conflict of interest
disclosure is required will aid all Exchange Act registrants subject to
the proxy rules in complying with their proxy disclosure obligations.

C. Costs

Required Listing Standards
    Under our proposed rules, exchanges would be required to adopt
independence requirements that apply to members of listed issuer
compensation committees or committees performing equivalent functions,
but not to directors who oversee executive compensation matters in the
absence of such committees. Some exchange listing standards currently
require issuers to form compensation or equivalent committees; others
require independent directors to oversee specified compensation matters
but do not require the formation of a compensation or equivalent
committee. Exchanges that do not require the formation of a
compensation or equivalent committee could, on their own initiative,
determine to apply the same independence standards to directors who
oversee compensation matters in the absence of a compensation committee
as they do to formally organized compensation committees. In the event
they do not, however, issuers could seek to list on such exchanges in
order to avoid having to comply with the compensation committee
independence standards that would apply at the exchanges that require
the formation of a compensation or equivalent committee. Further, to
the extent exchanges compete for listings, they may have an incentive
to propose standards that issuers may find less onerous. This could
result in costs to exchanges to the extent they lose issuer listings,
as well as costs to issuers to the extent they choose to alter their
existing committee structure to avoid having to comply with the new
standards.
    Our decision not to exempt additional categories of issuers, beyond
those specified in Section 10C(a)(1), from the independence
requirements of our proposed rule and instead to rely on the various
exchanges to propose additional exemptions for appropriate categories
of issuers, may also result in certain direct or indirect costs. For
example, the exchanges will bear the direct cost of evaluating whether
additional exemptions would be appropriate and including such
exemptions in the rule filings that they are required to make in order
to comply with our proposed rule.
Disclosure Amendments
    As noted above, our proposal implements the requirements of Section
10C(c)(2). In addition, although not required by Section 10C(c)(2), we
propose to require all issuers subject to our proxy rules, rather than
only listed issuers, to provide the disclosures called for by Section
10C(c)(2). We also propose to combine and streamline the new disclosure
requirements with the existing compensation consultant disclosure
requirements. Specifically, we propose to provide a uniform trigger for
when compensation consultant disclosures will be required and eliminate
the existing exception from the requirement to identify compensation
consultants and describe their engagements for those cases in which a
consultant's role is limited to consulting on a broad-based plan or
providing non-customized benchmark compensation information.
    As a result, controlled companies and non-listed issuers will incur
costs in disclosing all compensation consultant engagements and in
determining and disclosing whether the work of any compensation
consultant has raised any conflict of interest, the nature of the
conflict, and how the conflict is being addressed. These costs, which
would not be required to be incurred by Section 10C(c)(2), may be
mitigated to an extent because our existing rules already require
issuers subject to our proxy rules to disclose, with limited
exceptions, any role of compensation consultants in determining or
recommending the amount or form of executive and director compensation.
As a result, these issuers will already have developed procedures for
collecting and analyzing information about the use of compensation
consultants.
    For purposes of the PRA, we estimate the aggregate annual cost of
the proposed compensation consultant and related conflicts of interest
disclosure to be approximately 23,940 hours of company personnel time
and approximately $3,192,000 for the services of outside professionals.
However, this amount includes the costs associated with the disclosure
requirements of Section 10C(c)(2) of the Exchange Act, as well as our
proposed extension of the disclosure requirement to controlled
companies and non-listed issuers and the revisions proposed for the
purpose of integrating the new disclosure requirements with existing
Item 407(e)(3). As a result, a portion of the reporting costs are
attributable to the requirements of the Act rather than to our proposed
amendments to Item 407.
    We have not proposed that compensation committees of non-listed
issuers be required to consider the independence of compensation
consultants or other compensation advisers before they are selected;
nonetheless, in light of our proposal that issuers subject to our proxy
rules will be required to identify and disclose how they manage any
conflicts of interest raised by the work of compensation consultants
that serve as advisers to the compensation committee, non-listed
issuers may incur additional costs to develop more formalized selection
processes than they otherwise would have absent such a disclosure
requirement. For example, to prepare for the disclosure requirement, at
the time any compensation consultant is selected, compensation
committees of non-listed issuers may devote additional time and
resources to analyzing and assessing the independence of the
compensation consultant and addressing and resolving potential
conflicts of interest. Although our proposed disclosure requirement
will not preclude compensation committees from selecting the
compensation consultant of their choosing, such committees may elect to
engage new, alternative or additional compensation advisers after
considering what disclosure might be required under our proposed rules.
Such decisions could result in additional costs to issuers, including
costs related to termination of existing services and search and
engagement costs to retain new advisers. In addition, costs may
increase if an issuer decides to engage multiple compensation
consultants for services that had previously been provided by a single
consultant.
    As a mitigating factor, our proposed rules would require issuers to
provide narrative disclosure regarding the management of conflicts of
interest. To the extent a non-listed issuer's compensation committee
determines to retain a compensation consultant, despite potential
conflicts of interest, this provision provides the issuer a means to
communicate to investors both the reasons why the committee believes
that retaining the consultant and managing the potential conflict of
interest is the best approach and the methods employed by the issuer to
manage or address the potential conflict.

D. Request for Comment

    We request data to quantify the costs and the value of the benefits
described above. We seek estimates of these costs and benefits, as well
as any costs and benefits not already defined, that may result from the
adoption of these proposed amendments. We also request qualitative
feedback on the nature of the benefits and costs described above and
any benefits and costs we may have overlooked.

V. Consideration of Impact on the Economy, Burden on Competition and
Promotion of Efficiency, Competition and Capital Formation

    Section 23(a)(2) of the Exchange Act requires us, when adopting
rules under the Exchange Act, to consider the impact that any new rule
would have on competition.\124\ In addition, Section 23(a)(2) prohibits
us from adopting any rule that would impose a burden on competition not
necessary or appropriate in furtherance of the purposes of the Exchange
Act.
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    \124\ 15 U.S.C. 78w(a)(2).
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    Section 2(b) of the Securities Act \125\ and Section 3(f) of the
Exchange Act \126\ require us, when engaging in rulemaking where we are
required to consider or determine whether an action is necessary or
appropriate in the public interest, to consider, in addition to the
protection of investors, whether the action will promote efficiency,
competition, and capital formation.
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    \125\ 15 U.S.C. 77b(b).
    \126\ 15 U.S.C. 78c(f).
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    Our proposed rule and rule amendments would implement the
requirements of Section 952 of the Act, which added Section 10C to the
Exchange Act. Among other provisions, Section 10C requires us to direct
the exchanges to prohibit the listing of any equity security of an
issuer that is not in compliance with Section 10C's compensation
committee and compensation adviser requirements. It is possible that
some listed issuers might find the proposed requirements too onerous
and seek to list on foreign exchanges or other markets to avoid
compliance. This could cause U.S. exchanges to lose trading volume. We
do not believe our proposed rules are likely to have this effect, as
issuers listed on U.S. exchanges must, for the most part, already
provide for executive compensation oversight by independent
directors.\127\ It is also possible that, in competing for listings,
the exchanges could adopt different definitions of independence for
compensation committee members, which could affect an issuer's decision
about where to list its securities.
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    \127\ See, e.g., NYSE Listed Company Manual Section 303A.05(a)
and Nasdaq Rule 5605(d).
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    Section 10C also requires disclosure from listed issuers, other
than controlled companies, as to their use and oversight of
compensation consultants. We propose to require companies subject to
our proxy rules, including controlled companies, to provide this
disclosure, whether listed or not. We believe this expansion of the
statutory disclosure requirement will promote uniform disclosure on
these topics among reporting companies and may allow investors to
better understand the process by which compensation committees select
compensation consultants and manage conflicts of interest.
    Our proposals may promote efficiency and competitiveness of the
U.S. capital markets by increasing the transparency of executive
compensation decision-making processes and by improving the ability of
investors to make informed voting and investment decisions, which may
encourage more efficient capital formation. The proposals also may
affect competition among compensation consultants. By requiring
disclosure of the existence and management of potential compensation
consultant conflicts of interest, our proposed rules may lead
compensation committees to engage in more thorough and deliberative
analyses of adviser independence. If this results in the selection of
compensation advisers that are more independent or impartial than might
otherwise be chosen, this could in turn promote more efficient
executive compensation determinations. The proposed disclosure also
could incent consultants to compete on the basis of their policies that
serve to minimize any potential conflicts of interest or, to the extent
other consultants are available, lead compensation committees to avoid
hiring consultants perceived as having a conflict of interest.
    We request comment on whether the proposed amendments, if adopted,
would promote efficiency, competition and capital formation or have an
impact or burden on competition. Commentators are requested to provide
empirical data and other factual support for their views, to the extent
possible.

VI. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (SBREFA),\128\ we solicit data to determine whether the
proposed rule amendments constitute a ``major'' rule. Under SBREFA, a
rule is considered ``major'' where, if adopted, it results or is likely
to result in:
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    \128\ 5 U.S.C. 801 et seq.
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     An annual effect on the economy of $100 million or more
(either in the form of an increase or a decrease);
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment or
innovation.
    Commentators should provide empirical data on (1) The potential
annual effect on the economy; (2) any increase in costs or prices for
consumers or individual industries; and (3) any potential effect on
competition, investment or innovation.

VII. Initial Regulatory Flexibility Act Analysis

    This Initial Regulatory Flexibility Analysis (IRFA) has been
prepared in accordance with the Regulatory Flexibility Act.\129\ This
IRFA involves proposals to direct the national securities exchanges and
national securities associations to prohibit the listing of an equity
security of an issuer that is not in compliance with several
requirements relating to the issuer's compensation committee, and to
revise the disclosure requirements of Regulation S-K Item 407 related
to compensation consultants.
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    \129\ 5 U.S.C. 603.
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A. Reasons for, and Objectives of, the Proposed Action

    We are proposing amendments to implement Section 10C of the
Exchange Act as added by Section 952 of the Act. The proposals would
direct the exchanges to prohibit the listing of equity securities of
any issuer that does not comply with Section 10C's compensation
committee and compensation adviser requirements. Our proposed
amendments would also require issuers to provide certain disclosures
regarding their use of compensation consultants and management of
compensation consultant conflicts of interest.

B. Legal Basis

    We are proposing the amendments pursuant to Sections 6, 7, 10, and
19(a) of the Securities Act; and Sections 10C, 12, 13, 14, 15(d), 23(a)
and 36 of the Exchange Act.

C. Small Entities Subject to the Proposed Action

    The proposals would affect exchanges that list equity securities
and issuers subject to our proxy rules. The Regulatory Flexibility Act
defines ``small

entity'' to mean ``small business,'' ``small organization,'' or ``small
governmental jurisdiction.'' \130\ The Commission's rules define
``small business'' and ``small organization'' for purposes of the
Regulatory Flexibility Act for each of the types of entities regulated
by the Commission. Exchange Act Rule 0-10(e) provides that the term
``small business'' or ``small organization,'' when referring to an
exchange, means any exchange that: (1) Has been exempted from the
reporting requirements of Exchange Act Rule 601; \131\ and (2) is not
affiliated with any person (other than a natural person) that is not a
small business or small organization, as defined under Exchange Act
Rule 0-10. No exchanges are small entities because none meet these
criteria. Securities Act Rule 157 \132\ and Exchange Act Rule 0-10(a)
\133\ define a company, other than an investment company, to be a
``small business'' or ``small organization'' if it had total assets of
$5 million or less on the last day of its most recent fiscal year. We
estimate that there are approximately 1,207 registrants, other than
registered investment companies, that may be considered small entities.
The proposed amendments would affect small entities that have a class
of securities that are registered under Section 12 of the Exchange Act.
An investment company, including a business development company, is
considered to be a ``small business'' if it, together with other
investment companies in the same group of related investment companies,
has net assets of $50 million or less as of the end of its most recent
fiscal year.\134\ We believe that the amendments to Item 407(e) of
Regulation S-K would affect small entities that are business
development companies that have a class of securities registered under
Section 12 of the Exchange Act. We estimate that there are
approximately 31 business development companies that may be considered
small entities.
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    \130\ 5 U.S.C. 601(6).
    \131\ 17 CFR 242.601.
    \132\ 17 CFR 230.157.
    \133\ 17 CFR 240.0-10(a).
    \134\ 17 CFR 270.0-10(a).
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D. Reporting, Recordkeeping and Other Compliance Requirements

    Under the proposals, the exchanges will be directed to prohibit the
listing of an equity security of an issuer that does not comply with
Section 10C's compensation committee and compensation adviser
requirements. These requirements relate to: the independence of
compensation committee members; the authority of the compensation
committee to engage compensation advisers; the compensation committee's
responsibility for considering factors that affect the independence of
compensation advisers prior to their selection; the compensation
committee's responsibility for the appointment, compensation, and
oversight of the work of compensation advisers; funding for advisers
engaged by the compensation committee; and the opportunity to cure
defects.
    The proposals would also require additional disclosure about the
use of compensation consultants and conflicts of interest. Large and
small entities would be subject to the same disclosure requirements.
The proposals would require small entities subject to the proxy rules
to provide disclosure of whether:
     The compensation committee has retained or obtained the
advice of a compensation consultant; and
     The work of a compensation consultant has raised any
conflict of interest and, if so, the nature of the conflict and how the
conflict is being addressed.
    The proposals will impose additional costs on small entities in
order to comply with the new listing standards and to collect, record
and report the disclosures that we propose to require. Our existing
disclosure rules require small entities to disclose information
regarding any compensation consultant that plays a role in determining
or recommending the amount and form of executive and director
compensation in proxy and information statements. The additional
information concerning compensation consultants that would be required
under the proposals should be readily available to these small
entities. Also, we believe that many small entities do not use the
services of a compensation consultant, which would significantly
minimize the impact of the reporting and recordkeeping requirements
under the proposals on small entities. In addition, we believe that the
impact of the proposals on small entities will be lessened because most
aspects of the proposals apply only to listed issuers, and the
quantitative listing standards applicable to issuers listing securities
on an exchange, such as market capitalization, minimum revenue, and
shareholder equity requirements, will serve to limit the number of
small entities that would be affected.

E. Duplicative, Overlapping or Conflicting Federal Rules

    We believe the proposed amendments would not duplicate, overlap, or
conflict with other Federal rules.

F. Significant Alternatives

    The Regulatory Flexibility Act directs us to consider alternatives
that would accomplish our stated objectives, while minimizing any
significant adverse impact on small entities. In connection with the
proposed disclosure amendments, we considered the following
alternatives:
     Clarifying, consolidating or simplifying compliance and
reporting requirements under the rules for small entities;
     Using performance rather than design standards;
     Exempting small entities from all or part of the
requirements; and
     Establishing different compliance or reporting
requirements or timetables that take into account the resources
available to small entities.
    We believe that our proposed amendments would require clear and
straightforward disclosure of the use of compensation consultants and
the management of compensation consultant conflicts of interest. We
believe that our proposed rules will promote consistent disclosure
among all companies without creating a significant new burden for small
entities.
    The proposals attempt to clarify, consolidate and simplify the
compliance and reporting requirements for all entities, including small
entities, by including instructions to the amendments to clarify the
circumstances under which disclosure is required. We have used a mix of
design and performance standards in developing the proposed disclosure
requirements. Based on our past experience, we believe the amendments
will be more useful to investors if there are specific disclosure
requirements; however, we have not proposed specific procedures or
arrangements that an issuer must develop to comply with the proposed
amendments. The additional disclosure requirements are intended to
result in more comprehensive and clear disclosure.
    Although we preliminarily believe that an exemption for small
entities from coverage of the proposals would not be appropriate at
this time, we seek comment on whether we should exempt small entities
from any of the proposed disclosure requirements or scale the proposed
amendments to reflect the characteristics of small entities and the
needs of their investors. Further, as

directed by Exchange Act Section 10C, our proposed rules would permit
the exchanges to exempt particular categories of issuers from the
requirements of Section 10C and particular relationships from the
compensation committee membership requirements of Section 10C(a),
taking into account the potential impact of the requirements on smaller
reporting companies. To the extent exchanges adopt such exemptions for
small entities, the compliance burden would be reduced.
    At this time, we do not believe that different compliance methods
or timetables for small entities would be appropriate. The proposals
are intended to improve the accountability for and transparency of
executive compensation determinations. The specific disclosure
requirements in the proposals will promote consistent disclosure among
all issuers, including small entities. Separate compliance requirements
or timetables for small entities could interfere with achieving the
goals of the statute and our proposals. Nevertheless, we solicit
comment on whether different compliance requirements or timetables for
small entities would be appropriate, and consistent with the purposes
of Section 952 of the Dodd-Frank Act.

G. Solicitation of Comments

    We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
     How the proposed amendments can achieve their objective
while lowering the burden on small entities;
     The number of small entities that may be affected by the
proposed amendments;
     Whether small entities should be exempt from the rules;
     The existence or nature of the potential impact of the
proposed amendments on small entities discussed in the analysis; and
     How to quantify the impact of the proposed amendments.
    Respondents are asked to describe the nature of any impact and
provide empirical data supporting the extent of the impact. Such
comments will be considered in the preparation of the Final Regulatory
Flexibility Analysis, if the proposed rule amendments are adopted, and
will be placed in the same public file as comments on the proposed
amendments themselves.

VIII. Statutory Authority and Text of the Proposed Amendments

    The amendments contained in this release are being proposed under
the authority set forth in Sections 6, 7, 10, and 19(a) of the
Securities Act and Sections 10C, 12, 13, 14, 15(d), 23(a), and 36 of
the Exchange Act.

List of Subjects in 17 CFR Parts 229 and 240

    Reporting and recordkeeping requirements, Securities.

Text of the Proposed Amendments

    For the reasons set out in the preamble, the Commission proposes to
amend title 17, chapter II, of the Code of Federal Regulations as
follows:

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND
CONSERVATION ACT OF 1975--REGULATION S-K

    1. The authority citation for part 229 is revised to read as
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj,
77nnn, 77sss, 78c, 78i, 78j, 78j-3, 78l, 78m, 78n, 78n-1, 78o, 78u-
5, 78w, 78ll, 78mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-31(c),
80a-37, 80a-38(a), 80a-39, 80b-11, and 7201 et seq.; and 18 U.S.C.
1350, unless otherwise noted.

    2. In Sec.  229.407, revise paragraph (e)(3)(iii) and add
instructions 1 and 2 to item 407(e)(3) to read as follows:

Sec.  229.407  (Item 407) Corporate governance.

* * * * *
    (e) * * *
    (3) * * *
    (iii) Whether the compensation committee (or another board
committee performing equivalent functions) retained or obtained the
advice of a compensation consultant during the registrant's last
completed fiscal year, identifying such consultants, stating whether
such consultants were engaged directly by the compensation committee
(or another board committee performing equivalent functions),
describing the nature and scope of the consultant's assignment and the
material elements of the instructions or directions given to the
consultant with respect to the performance of the consultant's duties
under the engagement, and discussing whether the work of the consultant
has raised any conflict of interest and, if so, the nature of the
conflict and how the conflict is being addressed:
    (A) If the compensation committee (or another board committee
performing equivalent functions) retained or obtained the advice of a
compensation consultant and the consultant's services were not limited
to consulting on any broad-based plan that does not discriminate in
scope, terms, or operation, in favor of executive officers or directors
of the registrant, and that is available generally to all salaried
employees, or providing information that either is not customized for a
particular registrant or that is customized based on parameters that
are not developed by the compensation consultant, and about which the
compensation consultant does not provide advice, and the compensation
consultant or its affiliates also provided additional services to the
registrant or its affiliates in an amount in excess of $120,000 during
the registrant's last completed fiscal year, then disclose the
aggregate fees for determining or recommending the amount or form of
executive and director compensation and the aggregate fees for such
additional services. Disclose whether the decision to engage the
compensation consultant or its affiliates for these other services was
made, or recommended, by management, and whether the compensation
committee (or another board committee performing equivalent functions)
or the board approved such other services of the compensation
consultant or its affiliates.
    (B) If the compensation committee (or another board committee
performing equivalent functions) has not retained or obtained the
advice of a compensation consultant, but management has retained or
obtained the advice of a compensation consultant and the consultant's
services were not limited to consulting on any broad-based plan that
does not discriminate in scope, terms, or operation, in favor of
executive officers or directors of the registrant, and that is
available generally to all salaried employees, or providing information
that either is not customized for a particular registrant or that is
customized based on parameters that are not developed by the
compensation consultant, and about which the compensation consultant
does not provide advice, and such compensation consultant or its
affiliates has provided additional services to the registrant in an
amount in excess of $120,000 during the registrant's last completed
fiscal year, then disclose the aggregate fees for determining or
recommending the amount or form of executive and director compensation
and the aggregate fees for any additional services provided

by the compensation consultant or its affiliates.
    Instruction 1 to Item 407(e)(3). For purposes of this paragraph, a
compensation committee (or another board committee performing
equivalent functions) or management has ``obtained the advice'' of a
compensation consultant if such committee or management has requested
or received advice from a compensation consultant, regardless of
whether there is a formal engagement of the consultant or a client
relationship between the compensation consultant and the compensation
committee or management or any payment of fees to the consultant for
its advice.
    Instruction 2 to Item 407(e)(3). For purposes of this paragraph,
the factors outlined in Sec.  240.10C-1(b)(4)(i) through (v) of this
chapter are among the factors that should be considered in determining
whether a conflict of interest exists.
* * * * *

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

    3. The general authority citation for part 240 is revised to read
as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i,
78j, 78j-1, 78j-3, 78k, 78k-1,78l, 78m, 78n, 78n-1, 78o, 78o-4, 78p,
78q, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-
37, 80b-3, 80b-4, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350, and
12 U.S.C. 5221(e)(3), unless otherwise noted.
* * * * *
    4. Add an undesignated center heading following Sec.  240.10A-3 to
read as follows:

Requirements Under Section 10C

    5. Add Sec.  240.10C-1 to read as follows:

Sec.  240.10C-1  Listing standards relating to compensation committees.

    (a) Pursuant to section 10C(a) of the Act (15 U.S.C. 78j-3(a)) and
section 952 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (Pub. L. 111-203, 124 Stat. 1900):
    (1) National securities exchanges. The rules of each national
securities exchange registered pursuant to section 6 of the Act (15
U.S.C. 78f), to the extent such national securities exchange lists
equity securities, must, in accordance with the provisions of this
section, prohibit the initial or continued listing of any equity
security of an issuer that is not in compliance with the requirements
of any portion of paragraph (b) or (c) of this section.
    (2) National securities associations. The rules of each national
securities association registered pursuant to section 15A of the Act
(15 U.S.C. 78o-3), to the extent such national securities association
lists equity securities in an automated inter-dealer quotation system,
must, in accordance with the provisions of this section, prohibit the
initial or continued listing in an automated inter-dealer quotation
system of any equity security of an issuer that is not in compliance
with the requirements of any portion of paragraph (b) or (c) of this
section.
    (3) Opportunity to cure defects. The rules required by paragraphs
(a)(1) and (a)(2) of this section must provide for appropriate
procedures for a listed issuer to have a reasonable opportunity to cure
any defects that would be the basis for a prohibition under paragraph
(a) of this section, before the imposition of such prohibition. Such
rules may provide that if a member of a compensation committee ceases
to be independent in accordance with the requirements of this section
for reasons outside the member's reasonable control, that person, with
notice by the issuer to the applicable national securities exchange or
national securities association, may remain a compensation committee
member of the listed issuer until the earlier of the next annual
shareholders meeting of the listed issuer or one year from the
occurrence of the event that caused the member to be no longer
independent.
    (4) Implementation. (i) Each national securities exchange and
national securities association that lists equity securities must
provide to the Commission, no later than 90 days after publication of
this section in the Federal Register, proposed rules or rule amendments
that comply with this section. Each submission must include, in
addition to any other information required under section 19(b) of the
Act (15 U.S.C. 78s(b)) and the rules thereunder, a review of whether
and how existing listing standards satisfy the requirements of this
rule, a discussion of the consideration of factors relevant to
compensation committee independence conducted by the national
securities exchange or national securities association, and the
definition of independence applicable to compensation committee members
that the national securities exchange or national securities
association proposes to adopt in light of such review.
    (ii) Each national securities exchange and national securities
association that lists equity securities must have rules or rule
amendments that comply with this section approved by the Commission no
later than one year after publication of this section in the Federal
Register.
    (b) Required standards. The requirements of this section apply to
the compensation committees of listed issuers. If a listed issuer has a
committee of the board performing functions typically performed by a
compensation committee, including oversight of executive compensation,
then such committee, even if it is not designated as a compensation
committee or performs other functions, shall be fully subject to the
requirements of this section.
    (1) Independence. (i) Each member of the compensation committee
must be a member of the board of directors of the listed issuer, and
must otherwise be independent.
    (ii) Independence requirements. In determining independence
requirements for members of compensation committees, the national
securities exchanges and national securities associations shall
consider relevant factors, including, but not limited to:
    (A) The source of compensation of a member of the board of
directors of an issuer, including any consulting, advisory or other
compensatory fee paid by the issuer to such member of the board of
directors; and
    (B) Whether a member of the board of directors of an issuer is
affiliated with the issuer, a subsidiary of the issuer or an affiliate
of a subsidiary of the issuer.
    (iii) Exemptions from the independence requirements. (A) The
listing of equity securities of the following categories of listed
issuers are not subject to the requirements of paragraph (b)(1) of this
section:
    (1) Controlled companies;
    (2) Limited partnerships;
    (3) Companies in bankruptcy proceedings;
    (4) Open-end management investment companies registered under the
Investment Company Act of 1940; and
    (5) Any foreign private issuer that discloses in its annual report
the reasons that the foreign private issuer does not have an
independent compensation committee.
    (B) In addition to the issuer exemptions set forth in paragraph
(b)(1)(iii)(A) of this section, a national securities exchange or a
national securities association, pursuant to section 19(b) of the Act
(15 U.S.C. 78s(b)) and the rules thereunder, may exempt from the
requirements of paragraph (b)(1) of this section a particular
relationship with respect to members of the compensation committee, as
each national securities exchange or national securities

association determines is appropriate, taking into consideration the
size of an issuer and any other relevant factors.
    (2) Authority to engage compensation consultants, independent legal
counsel and other compensation advisers. The compensation committee of
a listed issuer, in its capacity as a committee of the board of
directors, may, in its sole discretion, retain or obtain the advice of
a compensation consultant, independent legal counsel or other adviser.
The compensation committee shall be directly responsible for the
appointment, compensation and oversight of the work of any compensation
consultant, independent legal counsel and other adviser to the
compensation committee. Nothing in this paragraph (b) shall be
construed:
    (i) To require the compensation committee to implement or act
consistently with the advice or recommendations of the compensation
consultant, independent legal counsel or other adviser to the
compensation committee; or
    (ii) To affect the ability or obligation of a compensation
committee to exercise its own judgment in fulfillment of the duties of
the compensation committee.
    (3) Funding. Each listed issuer must provide for appropriate
funding, as determined by the compensation committee, in its capacity
as a committee of the board of directors, for payment of reasonable
compensation to a compensation consultant, independent legal counsel or
any other adviser to the compensation committee.
    (4) Independence of compensation consultants and other advisers.
The compensation committee of a listed issuer may select a compensation
consultant, legal counsel, or other adviser to the compensation
committee only after taking into consideration the following factors,
as well as any other factors identified by the relevant national
securities exchange or national securities association in its listing
standards:
    (i) The provision of other services to the issuer by the person
that employs the compensation consultant, legal counsel or other
adviser;
    (ii) The amount of fees received from the issuer by the person that
employs the compensation consultant, legal counsel or other adviser, as
a percentage of the total revenue of the person that employs the
compensation consultant, legal counsel, or other adviser;
    (iii) The policies and procedures of the person that employs the
compensation consultant, legal counsel or other adviser that are
designed to prevent conflicts of interest;
    (iv) Any business or personal relationship of the compensation
consultant, legal counsel, or other adviser with a member of the
compensation committee; and
    (v) Any stock of the issuer owned by the compensation consultant,
legal counsel or other adviser.
    (5) General exemptions. (i) The national securities exchanges and
national securities associations, pursuant to section 19(b) of the Act
(15 U.S.C. 78s(b)) and the rules thereunder, may exempt from the
requirements of this section certain categories of issuers, as the
national securities exchange or national securities association
determines is appropriate, taking into consideration the potential
impact of such requirements on smaller reporting issuers.
    (ii) The requirements of this section shall not apply to any
controlled company.
    (iii) The listing of a security futures product cleared by a
clearing agency that is registered pursuant to section 17A of the Act
(15 U.S.C. 78q-1) or that is exempt from the registration requirements
of section 17A(b)(7)(A) (15 U.S.C. 78q-1(b)(7)(A)) is not subject to
the requirements of this section.
    (iv) The listing of a standardized option, as defined in Sec.
240.9b-1(a)(4), issued by a clearing agency that is registered pursuant
to section 17A of the Act (15 U.S.C. 78q-1) is not subject to the
requirements of this section.
    (c) Definitions. Unless the context otherwise requires, all terms
used in this section have the same meaning as in the Act. In addition,
unless the context otherwise requires, the following definitions apply
for purposes of this section:
    (1) In the case of foreign private issuers with a two-tier board
system, the term board of directors means the supervisory or non-
management board.
    (2) The term controlled company means an issuer:
    (i) That is listed on a national securities exchange or by a
national securities association; and
    (ii) That holds an election for the board of directors of the
issuer in which more than 50 percent of the voting power is held by an
individual, a group or another issuer.
    (3) The terms listed and listing refer to equity securities listed
on a national securities exchange or listed in an automated inter-
dealer quotation system of a national securities association or to
issuers of such securities.
    (4) The term open-end management investment company means an open-
end company, as defined by Section 5(a)(1) of the Investment Company
Act of 1940 (15 U.S.C. 80a-5(a)(1)), that is registered under that Act.

    Dated: March 30, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-7948 Filed 4-5-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: July 19, 2010 (Volume 75, Number 137)]
[Rules and Regulations]
[Page 41764-41766]
[DOCID:fr19jy10-9]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket No. USCG-2010-0552]
RIN 1625-AA00

Safety Zone; Mississippi River, Mile 840.0 to 839.8

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

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SUMMARY: The Coat Guard is establishing a temporary safety zone for all
waters of the Upper Mississippi River, Mile 840.0 to 839.8, extending
the entire width of the river. This safety zone is needed to protect
persons and vessels from safety hazards associated with a barge based
firework display occurring on the Upper Mississippi River. Entry into
this zone is be prohibited unless specifically authorized by the
Captain of the Port Upper Mississippi River or a designated
representative.

DATES: This rule is effective from 11 a.m. until 4 p.m. on July 24,
2010.

ADDRESSES: Documents indicated in this preamble as being available in
the docket are part of docket USCG-2010-0552 and are available online
by going to http://www.regulations.gov, inserting USCG-2010-0552 in the
``Keyword'' box, and then clicking ``Search.'' They are also available
for inspection or copying at the Docket Management Facility (M-30),
U.S. Department of Transportation, West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: If you have questions on this
temporary rule, call or e-mail Lieutenant (LT) Rob McCaskey, Sector
Upper Mississippi River Response Department at telephone<PHONE_NUMBER>,
e-mail<EMAIL_ADDRESS>If you have questions on viewing the
docket, call Renee V. Wright, Program Manager, Docket Operations,
telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Regulatory Information

    The Coast Guard is issuing this temporary final rule without prior
notice and opportunity to comment pursuant to authority under section
4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This
provision authorizes an agency to issue a rule without prior notice and
opportunity to comment when the agency for good cause finds that those
procedures are ``impracticable, unnecessary, or contrary to the public
interest.'' The Coast Guard finds that it would be impracticable to
publish a notice of proposed rulemaking (NPRM) with respect to this
rule because the event would occur before the rulemaking process could
be completed.
    Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause
exists for making this rule effective less than 30 days after
publication in the Federal Register. Publishing a NPRM and delaying its
effective date would be impracticable because immediate action is
needed to protect vessels and mariners from the safety hazards
associated with a barged based fireworks display.

Basis and Purpose

    On July 24, 2010 the Red Bull North America will be conducting a
flying aircraft regatta at mile 839.9 on the Upper Mississippi River.
This event presents safety hazards to the navigation of vessels between
Mile 840.0 and Mile 839.8, extending the entire width of the river. A
safety zone around the launch site is necessary to protect spectators,
vessels, and other property from the hazards associated with the
fireworks. The Captain of the Port Upper Mississippi River will inform
the public of all safety zone changes through broadcast notice to
mariners.

Discussion of Rule

    The Coast Guard is establishing a safety zone for all waters of the
Upper Mississippi River, Mile 840.0 to 839.8, extending the entire
width of the river. Entry into this zone will be prohibited to all
vessels and persons except participants and those persons and vessels
specifically authorized by the Captain of the Port Upper Mississippi
River. This rule will be effective from 11 a.m. until 4 p.m. on July
24, 2010. The Captain of the Port Upper Mississippi River will inform
the public through broadcast notice to mariners of all safety zone
changes and enforcement periods.

Regulatory Analyses

    We developed this rule after considering numerous statutes and
executive orders related to rulemaking. Below we summarize our analyses
based on 13 of these statutes or executive orders.

Regulatory Planning and Review

    This rule is not a significant regulatory action under section 3(f)
of Executive Order 12866, Regulatory Planning and Review, and does not
require an assessment of potential costs and benefits under section
6(a)(3) of that Order. The Office of Management and Budget has not
reviewed it under that Order.
    Although this rule restricts access to the waters encompassed by
the safety zone, the effect of this rule will not be significant
because of the very brief duration of the effective period of the zone.
Furthermore, the local waterway users will be notified via public
Broadcast Notice to Mariners to ensure the safety zone will result in
minimum impact.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have
considered whether this rule would have a significant economic impact
on a substantial number of small entities. The term ``small entities''
comprises small businesses, not-for-profit organizations that are
independently owned and operated and are not dominant in their fields,
and governmental jurisdictions with populations of less than 50,000.
    The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will
not have a significant economic impact on a substantial number of small
entities.
    This rule will affect the following entities, some of which may be
small entities: the owners or operators of vessels intending to transit
the Mississippi River, Mile 840.0 to 839.8, from 11 a.m. until 4 p.m.
on July 24, 2010. This rule will not have a significant effect on a
substantial number of small entities for the following reasons: (1)
This rule will only be in effect for a limited period of time; and (2)
the local waterway users will be notified via public Broadcast Notice
to Mariners.

Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small
entities in understanding the rule so that they can better evaluate its
effects on them and participate in the rulemaking process.
    Small businesses may send comments on the actions of Federal
employees who enforce, or otherwise determine compliance with, Federal
regulations to the Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR
(1-888-734-3247). The Coast Guard will not retaliate against small
entities that question or complain about this rule or any policy or
action of the Coast Guard.

Collection of Information

    This rule calls for no new collection of information under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

Federalism

    A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on State or local
governments and would either preempt State law or impose a substantial
direct cost of compliance on them. We have analyzed this rule under
that Order and have determined that it does not have implications for
federalism.

Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this rule will not result in
such expenditure, we do discuss the effects of this rule elsewhere in
this preamble.

Taking of Private Property

    This rule will not cause a taking of private property or otherwise
have taking implications under Executive Order 12630, Governmental
Actions and Interference with Constitutionally Protected Property
Rights.

Civil Justice Reform

    This rule meets applicable standards in sections 3(a) and 3(b)(2)
of Executive Order 12988, Civil Justice Reform, to minimize litigation,
eliminate ambiguity, and reduce burden.

Protection of Children

    We have analyzed this rule under Executive Order 13045, Protection
of Children from Environmental Health Risks and Safety Risks. This rule
is not

an economically significant rule and does not create an environmental
risk to health or risk to safety that may disproportionately affect
children.

Indian Tribal Governments

    This rule does not have tribal implications under Executive Order
13175, Consultation and Coordination with Indian Tribal Governments,
because it does not have a substantial direct effect on one or more
Indian tribes, on the relationship between the Federal Government and
Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.

Energy Effects

    We have analyzed this rule under Executive Order 13211, Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. We have determined that it is not a ``significant
energy action'' under that order because it is not a ``significant
regulatory action'' under Executive Order 12866 and is not likely to
have a significant adverse effect on the supply, distribution, or use
of energy. The Administrator of the Office of Information and
Regulatory Affairs has not designated it as a significant energy
action. Therefore, it does not require a Statement of Energy Effects
under Executive Order 13211.

Technical Standards

    The National Technology Transfer and Advancement Act (NTTAA) (15
U.S.C. 272 note) directs agencies to use voluntary consensus standards
in their regulatory activities unless the agency provides Congress,
through the Office of Management and Budget, with an explanation of why
using these standards would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., specifications of materials, performance, design, or
operation; test methods; sampling procedures; and related management
systems practices) that are developed or adopted by voluntary consensus
standards bodies.
    This rule does not use technical standards. Therefore, we did not
consider the use of voluntary consensus standards.

Environment

    We have analyzed this rule under Department of Homeland Security
Management Directive 023-01 and Commandant Instruction M16475.lD, which
guide the Coast Guard in complying with the National Environmental
Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded
this action is one of a category of actions that do not individually or
cumulatively have a significant effect on the human environment. This
rule is categorically excluded, under figure 2-1, paragraph (34)(g), of
the Instruction. This rule involves establishing, disestablishing, or
changing Regulated Navigation Areas and security or safety zones.
    This rule involves an environmental analysis checklist and a
categorical exclusion determination is available in the docket where
indicated under ADDRESSES.

List of Subjects in 33 CFR Part 165

    Harbors, Marine safety, Navigation (water), Reporting and
recordkeeping requirements, Security measures, Waterways.

0
For the reasons discussed in the preamble, the Coast Guard amends 33
CFR part 165 as follows:

PART 165--REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS

0
1. The authority citation for part 165 continues to read as follows:

    Authority: 33 U.S.C. 1226, 1231; 46 U.S.C. Chapter 701, 3306,
3703; 50 U.S.C. 191, 195; 33 CFR 1.05-1(g), 6.04-1, 6.04-6, and
160.5; Pub. L. 107-295, 116 Stat. 2064; Department of Homeland
Security Delegation No. 0170.1.

0
2. Add Sec.  165.T08-0552 to read as follows:

Sec.  165.T08-0552  Safety Zone; Upper Mississippi River, Mile 840.0 to
839.8.

    (a) Location. The following area is a safety zone: all waters of
the Upper Mississippi River, Mile 840.0 to 839.8 extending the entire
width of the waterway.
    (b) Effective date. This rule is effective from 11 a.m. until 4
p.m. on July 24, 2010.
    (c) Periods of Enforcement. This rule will be enforced from 11 a.m.
until 4 p.m. on July 24, 2010. The Captain of the Port Upper
Mississippi River will inform the public through broadcast notice to
mariners of all safety zone changes and enforcement periods.
    (d) Regulations. (1) In accordance with the general regulations in
Sec.  165.23 of this part, entry into this zone is prohibited unless
authorized by the Captain of the Port Upper Mississippi River or a
designated representative.
    (2) Persons or vessels requiring entry into or passage through the
zone must request permission from the Captain of the Port Upper
Mississippi River or a designated representative. The Captain of the
Port Upper Mississippi River representative may be contacted at 314-
269-2332.
    (3) All persons and vessels shall comply with the instructions of
the Captain of the Port Upper Mississippi River or their designated
representative. Designated Captain of the Port representatives include
United States Coast Guard commissioned, warrant, and petty officers of
the U.S. Coast Guard.

    Dated: July 6, 2010.
S.L. Hudson,
Captain, U.S. Coast Guard, Captain of the Port Upper Mississippi River.
[FR Doc. 2010-17474 Filed 7-16-10; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register Volume 88, Number 172 (Thursday, September 7, 2023)]
[Notices]
[Page 61611]
[FR Doc No: 2023-19271]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Docket ID FEMA-2007-0008]

National Advisory Council; Meeting

AGENCY: Federal Emergency Management Agency, Department of Homeland
Security.

ACTION: Notice of open Federal advisory committee meeting.

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SUMMARY: The Federal Emergency Management Agency's National Advisory
Council (NAC) will meet on September 26-28, 2023. The meeting will be
open to the public through virtual means and in-person in the downtown
area of Salt Lake City, Utah.

DATES: The NAC plans to meet and invite the public to observe and
participate by virtual and in-person means from 9:00 a.m. to 3:00 p.m.
Mountain Time (MT) on Tuesday, September 26; from 9:00 a.m. to 5:00
p.m. MT on Wednesday, September 27; and from 10:00 a.m. to 12:00 p.m.
MT on Thursday, September 28. Please note that the meeting will pause
for breaks and can continue past the scheduled end time or may end
early any day that the NAC has completed its business.

ADDRESSES: Anyone who wishes to participate must register with FEMA in
advance by providing their name, official title, organization,
telephone number, email address and desired attendance means to the
person listed in the FOR FURTHER INFORMATION CONTACT section below by
3:00 p.m. MT on Friday, September 22. Registering participants must
specify whether their attendance will be virtual or in-person. If
virtual attendance is indicated, links to attend by virtual means will
be provided for each day by registration confirmation email. If in-
person attendance is indicated, the meeting location (in the downtown
area of Salt Lake City, Utah) will be provided in a registration
confirmation email. Members of the public are urged to provide written
comments on the issues to be considered by the NAC. The topic areas are
indicated in the SUPPLEMENTARY INFORMATION section below. Any written
comments must be submitted and received by 3:00 p.m. MT on Friday,
September 22, identified by Docket ID FEMA-2007-0008, and submitted via
the Federal eRulemaking Portal at http://www.regulations.gov, following
the instructions for submitting comments below.
    Instructions for Submitting Comments: All submissions must include
the words ``Federal Emergency Management Agency'' and the docket number
(Docket ID FEMA-2007-0008) for this action. Comments received,
including any personal information provided, will be posted without
alteration at http://www.regulations.gov. For access to the docket or
to read comments received by the NAC, go to http://www.regulations.gov,
and search for Docket ID FEMA-2007-0008.
    Open public comment periods are anticipated on Tuesday, September
26, from 2:30 p.m. to 2:45 p.m. MT; on Wednesday, September 27, from
5:00 p.m. to 5:15 p.m. MT; and on Thursday, September 28, from 12:45
p.m. to 1:00 p.m. MT. All speakers must register in advance of the
meeting to make remarks during the open public comment period and must
limit their comments to 3 minutes. Comments should be addressed to the
NAC. Any comments unrelated to the agenda topics will not be
considered. Opportunities for public comments during meeting
deliberations and voting, limited to 1 minute per instance and directed
to the current topic, are offered by the Designated Federal Officer as
time permits on Tuesday, September 26, from 10:00 a.m. to 3:00 p.m. MT;
and Thursday, September 28, from 10:00 a.m. to 12:00 p.m. MT. To
register to make remarks during the public comment period, contact the
person listed in the FOR FURTHER INFORMATION CONTACT section below by
3:00 p.m. MT on Friday, September 22. Please note that the public
comment periods may end before the time indicated, following the last
call for comments.
    The NAC is committed to ensuring all participants have equal access
regardless of disability status. If you require a reasonable
accommodation due to a disability to fully participate, please contact
the individual listed in the FOR FURTHER INFORMATION CONTACT section
below as soon as possible. Last-minute requests will be accepted but
may not be possible to fulfill.

FOR FURTHER INFORMATION CONTACT:  Rob Long, Designated Federal Officer,
Office of the National Advisory Council, Federal Emergency Management
Agency, 500 C St. SW, Washington, DC 20472-3184,<PHONE_NUMBER>, [email protected]. The NAC website is https://www.fema.gov/about/offices/national-advisory-council.

SUPPLEMENTARY INFORMATION: Notice of this meeting is given under the
Federal Advisory Committee Act, 5 U.S.C. ch. 10.
    The NAC advises the FEMA Administrator on all aspects of emergency
management. The NAC incorporates input from State, local, Tribal, and
territorial governments, and the private sector in the development and
revision of FEMA plans and strategies. The NAC includes a cross-section
of officials, emergency managers, and emergency response providers from
State, local, Tribal, and territorial governments, the private sector,
and nongovernmental organizations.
    Agenda: On Tuesday, September 26, NAC subcommittees will present to
the full NAC on their final annual recommendations regarding the 2022-
2026 FEMA Strategic Plan and related goals and objectives; available
for review at https://www.fema.gov/about/strategic-plan. On Wednesday,
September 27, the NAC will meet with FEMA leadership in the morning and
in the afternoon host panel discussions on disaster insurance and
seismic preparations. On Thursday, September 28, the NAC will vote on
adoption of the NAC 2023 Draft Recommendations.
    The full agenda and available preparatory materials for this
meeting will be available at https://www.fema.gov/about/offices/national-advisory-council by Wednesday, September 20, or by contacting
the person listed in the FOR FURTHER INFORMATION CONTACT section.

Deanne Criswell
Administrator, Federal Emergency Management Agency.
[FR Doc. 2023-19271 Filed 9-6-23; 8:45 am]
BILLING CODE 9111-48-P