compensation committee

The compensation committee is a committee composed of a company’s board of directors in charge of reviewing and approving the compensation of a company’s officers.

Securities and Exchange Commission (SEC) Rule 10C-1 requires that national securities exchanges, such as the NYSE and NASDAQ, only list companies with independent compensation committees. This effectively requires public companies to have compensation committees. Rule 10C-1 requires the national securities exchanges consider the source of a committee member’s compensation and whether they are affiliated with the company.  

[Last updated in February of 2022 by the Wex Definitions Team]