have an opportunity to cure any defects that would 
be the basis for a prohibition under paragraph (1) 
before the imposition of such prohibition. 
‘‘(3) EXEMPTION
AUTHORITY.—The Commis-
sion may exempt certain categories of issuers from 
the requirements of subsections (b) through (f), 
where appropriate in view of the purpose of this sec-
tion. In determining appropriate exemptions, the 
Commission shall take into account, among other 
considerations, the potential impact on smaller re-
porting issuers. 
‘‘(b) INDEPENDENCE OF COMPENSATION COMMIT-
TEES.— 
‘‘(1) IN GENERAL.—Each member of the com-
pensation committee of the board of directors of the 
issuer shall be a member of the board of directors 
of the issuer, and shall otherwise be independent. 
‘‘(2) CRITERIA.—In order to be considered to 
be independent for purposes of this subsection, a 
member of a compensation committee of an issuer 
may not, other than in his or her capacity as a 
member of the compensation committee, the board 
of directors, or any other board committee— 
‘‘(A) accept any consulting, advisory, or 
other compensatory fee from the issuer; or 
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‘‘(B) be an affiliated person of the issuer 
or any subsidiary thereof. 
‘‘(C) EXEMPTIVE AUTHORITY.—The Com-
mission may exempt from the requirements of 
paragraph (2) a particular relationship with re-
spect to compensation committee members, 
where appropriate in view of the purpose of this 
section. 
‘‘(3) DEFINITION.—As used in this section, the 
term ‘compensation committee’ means— 
‘‘(A) a committee (or equivalent body) es-
tablished by and amongst the board of directors 
of an issuer for the purpose of determining and 
approving the compensation arrangements for 
the executive officers of the issuer; and 
‘‘(B) if no such committee exists with re-
spect to an issuer, the independent members of 
the entire board of directors. 
‘‘(c) INDEPENDENCE STANDARDS FOR COMPENSA-
TION CONSULTANTS
AND OTHER COMMITTEE ADVI-
SORS.—Any compensation consultant, legal counsel, or 
other adviser to the compensation committee of any issuer 
shall meet standards for independence established by the 
Commission by regulation. 
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‘‘(d) COMPENSATION COMMITTEE AUTHORITY RE-
LATING TO COMPENSATION CONSULTANTS.— 
‘‘(1) IN
GENERAL.—The compensation com-
mittee of each issuer, in its capacity as a committee 
of the board of directors, shall have the authority, 
in its sole discretion, to retain and obtain the advice 
of a compensation consultant meeting the standards 
for independence promulgated pursuant to sub-
section (c), and the compensation committee shall be 
directly responsible for the appointment, compensa-
tion, and oversight of the work of such independent 
compensation consultant. This provision shall not be 
construed to require the compensation committee to 
implement or act consistently with the advice or rec-
ommendations of the compensation consultant, and 
shall not otherwise affect the compensation commit-
tee’s ability or obligation to exercise its own judg-
ment in fulfillment of its duties. 
‘‘(2) DISCLOSURE.—In any proxy or consent 
solicitation material for an annual meeting of the 
shareholders (or a special meeting in lieu of the an-
nual meeting) occurring on or after the date that is 
1 year after the date of enactment of the Corporate 
and Financial Institution Compensation Fairness 
Act of 2009, each issuer shall disclose in the proxy 
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or consent material, in accordance with regulations 
to be promulgated by the Commission— 
‘‘(A) whether the compensation committee 
of the issuer retained and obtained the advice 
of a compensation consultant meeting the 
standards for independence promulgated pursu-
ant to subsection (c); and 
‘‘(B) if the compensation committee of the 
issuer has not retained and obtained the advice 
of a compensation consultant meeting the 
standards for independence promulgated pursu-
ant to subsection (c), an explanation of the 
basis for the compensation committee’s deter-
mination that the retention of such an inde-
pendent consultant was not in the interests of 
shareholders. 
‘‘(e) AUTHORITY TO ENGAGE INDEPENDENT COUN-
SEL
AND OTHER ADVISORS.—The compensation com-
mittee of each issuer, in its capacity as a committee of 
the board of directors, shall have the authority, in its sole 
discretion, to retain and obtain the advice of independent 
counsel and other advisers meeting the standards for inde-
pendence promulgated pursuant to subsection (c), and the 
compensation committee shall be directly responsible for 
the appointment, compensation, and oversight of the work 
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of such independent counsel and other advisers. This pro-
vision shall not be construed to require the compensation 
committee to implement or act consistently with the advice 
or recommendations of such independent counsel and 
other advisers, and shall not otherwise affect the com-
pensation committee’s ability or obligation to exercise its 
own judgment in fulfillment of its duties. 
‘‘(f) FUNDING.—Each issuer shall provide for appro-
priate funding, as determined by the compensation com-
mittee, in its capacity as a committee of the board of direc-
tors, for payment of compensation— 
‘‘(1) to any compensation consultant to the 
compensation committee that meets the standards 
for independence promulgated pursuant to sub-
section (c), and 
‘‘(2) to any independent counsel or other ad-
viser to the compensation committee.’’. 
(b) STUDY AND REVIEW REQUIRED.— 
(1) IN
GENERAL.—The Securities and Ex-
change Commission shall conduct a study and review 
of the use of compensation consultants meeting the 
standards for independence promulgated pursuant to 
section 10B(c) of the Securities Exchange Act of 
1934 (as added by subsection (a)), and the effects 
of such use. 
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