Compensation Consultant Independence Questionnaire

Summary

This template compensation consultant independence questionnaire may be used by the compensation committee of the board of directors of a public company to evaluate the independence of any compensation consultants, outside legal counsel, and other compensation advisers engaged or proposed to be engaged by the committee. This template includes practical guidance and drafting notes. Section 10C (15 U.S.C. § 78j-3) of the Securities Exchange Act of 1934 (Exchange Act), Exchange Act Rule 10C-1(b)(4) (17 C.F.R. § 240.10C-1(b)(4)) , and applicable securities exchange listing standards provide that compensation committees may engage compensation consultants, legal counsel, and other advisers only after considering certain prescribed independence factors. Smaller reporting companies and controlled companies are exempt from this requirement. In addition, neither the New York Stock Exchange (NYSE) nor The Nasdaq Stock Market (Nasdaq) require an independence assessment for compensation consultants whose activities are limited to those for which no disclosure is required under Item 407(e)(3)(iii) of Regulation S-K, as discussed in the following paragraph. Item 7(b) of Schedule 14A (17 C.F.R. § 240.14a-101) requires disclosure in proxy statements of the information set forth in Item 407(e)(3)(iii) and (iv) of Regulation S-K (17 C.F.R. § 229.407(e)), which includes any conflicts of interest raised by the work of a compensation consultant and, under certain circumstances, the fees paid to a compensation consultant during a company's last completed fiscal year. Accordingly, compensation consultants should receive this questionnaire when they are initially engaged and annually thereafter. This disclosure is not required, however, for any compensation consultant whose role is limited to (1) consulting on a broad-based plan generally available to all company employees or (2) providing information that is either (a) not customized for a particular issuer or (b) is customized based on parameters not developed by the consultant and about which the consultant did not provide advice. For additional information regarding the requirements for compensation consultant independence, see Compensation Committee and Consultant Disclosure Requirements and Compensation Consultant Independence and Disclosure Requirements.