One of the Dodd Frank rules set to take effect in July involves the independence of compensation committee members and their consultants. The SEC, per the law, has come forward with a proposal that would require exchange SROs to adopt listing standards that essentially require independent members of compensation committees and the committees' advisers, such as lawyers and consultants.

More specifically, each member of a compensation committee must be an independent director, and the committee must have the authority to retain its own compensation consultants and advisors.

Regarding advisors, the SEC proposal would require that companies disclose the identity of the compensation consultant, state which committee retained the consultant, describe the scope of the consultant's assignment, and discuss any possible conflict of interests. This can be a meticulous activity for the board, as a lot of independence criteria, as determined by the SROs, will have to be worked through.

Some have suggested the criteria is less onerous that the controversial audit committee independence rules put forward by Sarbanes-Oxley.

For more:
- here's the proposal (.pdf)

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