Subject: File No. S7-13-11
From: Carl Struby

April 4, 2011

Would you please provide clearer guidance regarding the ability of a compensation committee to receive advice from a compensation consultant who has not been directly engaged by the committee. Are the comments in the proposing release at note 54 limited to counsel retained by management, or are they equally applicable to compensation consultants?

The proposed amendment to 407(e) requires disclosure of whether a consultant from whom a compensation committee obtains advice was directly retained by the committee, suggesting that receiving advice from a management engaged consultant is permissible as long as appropriate disclosure is made. However, proposed rule 10C-1(b)(2) requires that the compensation committee be directly responsible for the appointment, compensation and oversight of any adviser to it. Does this requirement apply only to consultants who are retained by the committee to advise it, or does it also apply to any consultant from whom the committee might "obtain advice"? As defined in proposed 407(e), a committee who "receives" advice from a consultant, whether engaged or compensated by the committee, is deemed to obtain advice from the consultant, which suggest that receiving a report from or otherwise utilizing a management engaged consultant could result in delisting.