The SEC recently released an order (available here) approving new Nasdaq listing standard 5250(b)(3), which will require a public issuer to disclose cash and non-cash remuneration (e.g., health insurance, indemnification) that a third party has agreed to pay a director on (or director nominee for) the issuer’s board of directors. These are often referred to as “golden leash” arrangements. The new disclosure requirement includes an exception for pre-existing compensation arrangements. Thus, if a fund manager, consultant, or other “friend of the fund” serves on the board of a public portfolio company, the company need only disclose any incremental additional compensation promised by the fund that is directly related to that board service. With some exceptions, the disclosure must be made on the company’s website or in its next proxy statement prepared for a shareholders meeting at which directors are elected. The disclosure must be repeated annually until the director’s departure from the board, or until one year after the termination of the arrangements. Public issuers will need to establish processes for collecting relevant information from its directors. The new listing standard will be effective 30 days after its publication in the Federal Register – thus it should be effective in August of 2016.

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