
[Federal Register: August 19, 2008 (Volume 73, Number 161)]
[Notices]               
[Page 48413]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19au08-75]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58335; File No. SR-NASDAQ-2008-053]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Granting Approval of Proposed Rule Change To Modify the Definition of 
``Independent Director''

August 8, 2008.
    On June 6, 2008, The NASDAQ Stock Market LLC (``Nasdaq'') filed 
with the Securities and Exchange Commission (``Commission'') pursuant 
to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') 
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to modify 
Nasdaq's definition of ``independent director.'' The proposed rule 
change was published for comment in the Federal Register on July 2, 
2008.\3\ The Commission received no comments on the proposal.
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    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 58029 (June 26, 
2008), 73 FR 38016.
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    Currently, Nasdaq Rule 4200(a)(15)(B) provides that a director of a 
listed company who accepted, or has a family member who accepted, any 
compensation from the company in excess of $100,000 during any period 
of twelve months within the preceding three years cannot be deemed an 
independent director (with certain exceptions). The proposed rule 
change would change this threshold amount to $120,000.
    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange, and in 
particular with Section 6(b)(5) of the Act.\4\ The Commission notes 
that Regulation S-K, Item 404, under the Act,\5\ which requires public 
companies to disclose certain material information regarding the 
independence of directors (among other ``related persons'' associated 
with the company), establishes $120,000 as the amount above which 
financial transactions and relationships involving a company and its 
directors must be disclosed.\6\ The Commission believes that it is 
appropriate for Nasdaq to use this same threshold amount with regard to 
its definition of ``independent director'' in Nasdaq Rule 4200(a)(15) 
as a ``bright line'' test to determine whether a director of a listed 
company would be precluded from being considered independent. The 
Commission further notes that even if a director (or a family member) 
received less than $120,000 in compensation from the listed company, 
the company's board still would have to make an affirmative 
determination that the director has no relationship with the listed 
company that, in the board's opinion, would interfere with the exercise 
of his or her independent judgment in carrying out the responsibilities 
of a director.\7\
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    \4\ 15 U.S.C. 78f(b)(5). In approving this proposed rule change, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \5\ 17 CFR 229.404 and 17 CFR 228.404.
    \6\ See Securities Exchange Act Release No. 54302A (August 29, 
2006), 71 FR 53158 (September 8, 2006).
    \7\ See Nasdaq Rule 4200(a)(15) and IM-4200.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-NASDAQ-2008-053) be, and 
hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).
    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-19113 Filed 8-18-08; 8:45 am]

BILLING CODE 8010-01-P
