BlackRock Investment Stewardship (BIS), which is responsible for stewardship activities related to BlackRock index funds, has published its Global Voting Spotlight for the period of July 1, 2025 to June 30, 2026. Here are the key executive compensation-related takeaways from the summary of its voting activity:
– BIS voted on 18,705 executive compensation (management and shareholder) proposals (approximately 12%).
– Concern about the alignment of executive compensation with shareholders’ long-term financial interests was the fourth most common reason BIS cited for not supporting director reelections (impacting 1,063 proposals categorized as director elections at 596 companies).
– In the U.S., pay concerns were driven by “large outside-of-program awards without a strong strategic rationale, limited linkages between pay outcomes and long-term financial performance, or insufficient explanation of how compensation program design supported corporate strategy.”
– BIS supported approximately 84% (15,780 out of 18,705) of compensation-related management proposals overall and approximately 90% in the Americas.
– BIS’s support was “driven by many companies’ clear articulation of how their policies align with shareholders’ long-term financial interests, particularly around how short- and long-term incentive plans complement one another and are effective in rewarding executives who deliver long-term financial value.”
FW Cook recently reviewed incentive plan practices among the Top 100 publicly traded REITs. They found that REITs “generally align with broader-market conventions in overall plan structure, but differ meaningfully in the selection, weighting and application of performance measures.” Here are a few of their key findings:
FFO remained the defining annual incentive measure, used by 73% of REITs, while 58% used other profit measures such as earnings before interest, taxes, depreciation and amortization (EBITDA), net operating income (NOI), earnings per share (EPS) or funds available for distribution (FAD).
Individual performance was also prevalent (61%), and approximately half of REITs incorporated strategic or operational measures.
Non-financial measures represented an average 26% of annual incentive weighting among REITs versus 19% in general industry.
Moreover, REITs overwhelmingly incorporated individual and strategic performance as separately weighted metrics rather than as modifiers, in contrast to the more modifier-oriented approach prevalent in general industry
Stock options were rare (2%), compared with 38% prevalence among the Top 250 general industry companies—a notable distinction given the importance of dividends to REIT shareholder returns.
Ninety-four percent of REITs used rTSR, reflecting the sector’s emphasis on measuring shareholder returns relative to market or industry conditions. Unlike general industry, where rTSR was more frequently used as a modifier to internal performance measures, 90% of REITs using rTSR employed it as a stand-alone metric. Fifty-eight percent compared performance against an index, 30% used a custom performance peer group, and 12% used both. Percentile ranking was the predominant measurement methodology, although approximately one-quarter used an rTSR differential approach that measured the magnitude of outperformance or underperformance versus a benchmark.
“The proposing release discusses the scope of the Commission’s authority under Section 14(a) of the Exchange Act and explains that Rule 14a-8 should be rescinded because it exceeds the Commission’s statutory authority. The Commission also has independent policy reasons for proposing to rescind the rule. First, many of the justifications that were originally provided to support adoption of Rule 14a-8 either have not been substantiated in practice or are less compelling today.
In addition, Rule 14a-8 also has had, and will continue to have, certain unintended consequences that further undermine any justification for retaining the rule:
Rule 14a-8 has become a mechanism for influencing the interactions between companies and their shareholders in ways that are inconsistent with the rule’s original purpose.
The existence of Rule 14a-8 places the Commission in the position of making judgments about the application of state law that are best left to other actors.
The presence of a federal rule has inhibited the development of state law and private ordering.”
The proposal would also amend Rule 14a-4(c) to address the issues companies face related to discretionary authority when a shareholder proposal isn’t included in a company’s proxy statement, which may be more common after the repeal of Rule 14a-8. The proposing release says:
“[I]f current Rule 14a-4(c)(2) were to remain in effect, more companies may feel compelled to include a proponent’s proposals in the company’s own proxy materials to obtain proxy voting authority from shareholders on the proposals [. . .] Under the proposed amendments, a proponent’s proxy card could include the company’s nominees, management proposals, and the proponent’s proposals, while the company’s card could solely include the company’s nominees and management proposals. The company could then exercise discretionary voting authority to vote proxies it receives against the proponent’s proposals, other than for proxy cards the company receives on which shareholders have checked the proposed [. . .] check box [. . .] that would provide shareholders an option to prohibit the company from exercising discretionary voting authority on proposals omitted from the company’s proxy card.”
“A proponent’s independent solicitation would no longer prevent the company from exercising discretionary voting authority over all proxies it receives. Instead, each shareholder would decide whether to allow the company to vote that shareholder’s shares on the omitted proposal.”
Without Rule 14a-8, determining when companies must include shareholder proposals in their proxy materials would be left to state law and potentially companies’ governing documents, and “the transition period may be bumpy,” as Commissioner Peirce acknowledges in her statement. That’s because, as the fact sheet notes, “the presence of a federal rule has inhibited the development of state law and private ordering.” Gibson Dunn has discussed this in detail, saying “many state corporate law aspects of shareholder proposals remain unclear or unsettled,” including in Delaware, and different states may take different approaches.
As Goodwin notes, frameworks will eventually be developed governing “who may submit proposals, which matters are permissible for a shareholder vote in those proposals, and when inclusion in a company’s proxy statement is required” through private ordering and state law. Meanwhile, hearing words like “bumpy” and “unclear or unsettled law” makes me think of the Wild West. It may get worse before it gets better. Saddle-up!
The comment period will be open for 60 days following publication in the Federal Register.
Side note: We were pleased to see one of our blogs and remarks from the 2024 Proxy Disclosure & Executive Compensation Conferences cited in the discussion of Rule 14a-4(c). Special thanks to our former editorial colleague, Emily Sacks-Wilner,for pointing this out while I was still digesting the fact sheets! She is so on top of things!
As Dave shared yesterday, we now know the comment period will close on November 20. I’d encourage everyone to read Dave’s blog as well because he addresses the most common questions he’s received since the proposal came out.
I’ll also reiterate Dave’s suggestion to sign up to attend our 2026 Proxy Disclosure Conference and the 23rd Annual Executive Compensation Conference on October 12-13, either in person in Orlando or via webcast, for an in-depth discussion of where the experts expect things to go from here during the panel “The Fate of Shareholder Proposals.” And, as always, we have an entire day of content dedicated to setting and disclosing executive compensation and many opportunities to network with your peers. You can register online or contact us at info@CCRcorp.com or 1-800-737-1271. We look forward to seeing you in October!
This alert from CAP (Compensation Advisory Partners) examines how executive pay levels change at IPO. Here are some interesting findings from their survey of pay practices in recent IPOs:
– Median base salary for CEOs increased 5% and median CFO salary rose 7% (but median base salaries were flat among constant incumbents in the technology sector)
– Median bonus opportunity for CEOs nearly doubled, but CFOs saw a more modest increase
– Pay mix shifted toward equity/LTI, increasing from 35% to 50% on average, with median long-term incentive values increasing 262% for CEOs and 230% for CFOs
– About 70% of companies in the sample were founder-led at IPO, and founder-led companies were more likely to have unconventional pay mixes, like very low annual equity compensation or high concentrations in one pay element
They studied companies across industries, but about 80% of the sample was in technology or life sciences.
I shared a few weeks ago that say-on-pay failures are down 20% this year. We’ve been seeing strong support all season, and this Pay Governance alert confirms that it’s shaping up to be one of the strongest in recent history. Here are the key takeaways:
– Average S&P 500 SOP support reached 90.3%, the only time above 90% in the past 5 years. The percentage of companies receiving at least 90% support increased to 74%, compared with 70% in 2025 and 67% in 2022.
– Low support is less prevalent. Only 5% of companies received less than 70% support in 2026, down from 11% in 2022.
– Strong S&P 500 total shareholder return (TSR) coincided with favorable SOP results. Since 2024, SOP failures have remained at 1% of S&P 500 proposals while one-, three-, and five-year TSR results were strongly positive.
– Influence of proxy advisor SOP opposition continues to deteriorate. Institutional Shareholder Services (ISS) opposition declined to 9% year-over-year, while Glass Lewis (GL) opposition increased slightly to 13%. When both proxy advisors opposed SOP this season, only 19% failed to receive majority shareholder support, down from 50% in 2022.
– The “big five” investors continue to take a selective approach to opposing S&P 500 SOP proposals and rely heavily on their proprietary voting frameworks. Top asset managers supported SOP at a rate of 95.6% in 2026 and deviated from proxy advisor SOP opposition in an overwhelming majority of cases.
– As the proxy voting landscape continues to evolve, understanding investor expectations and effectively communicating rationale for compensation decisions is critical to strengthening SOP support.
That last point is important, because it means that engagement will continue to be very important even as the headline results look strong. Meredith recently blogged about how to make the most of off-season engagement.
It’s been 5 years since I last shared a reminder that stock compensation may trigger an HSR filing requirement. The market has climbed since then – which means execs with lots of equity may be more likely to pass the filing threshold. The penalties are also higher these days! This Cleary memo explains:
The Hart-Scott-Rodino Antitrust Improvements Act or “HSR” is best known as a notification regime for large corporate transactions. But it also applies to executive compensation paid in the form of stock awards, including restricted stock units (RSUs)—an obligation that companies and their officers and directors frequently overlook.
The obligation can attach to even small awards. Why? Because the individual’s existing holdings must be combined with the new shares that will be awarded to determine if the total holdings will exceed the “size-of-transaction” threshold, which is currently $133.9 million. If it does, an HSR filing is probably required. And, note, this obligation exists regardless of the percentage that will be held.
Failure to make a required filing and observe the 30-day waiting period before the award is granted can, in the extreme case, result in fines of up to $53,088 per day from the day of the acquisition to the day HSR clearance is ultimately obtained via a corrective filing. There are several examples of enforcement actions where multi-million dollar fines were paid by executives that failed to make required filings.
The filing obligation runs to the individual officer or director – but we all know who will get the blame if something gets missed. The memo walks through the requirements and potential safe harbor for prior filings. It concludes with these practical tips:
The most important step is to assess whether any upcoming award will cause an officer’s or director’s total holdings of company voting securities to exceed $133.9 million. If so, experienced HSR counsel should be consulted to determine whether a filing is required and to select the elections that will provide maximum future coverage.
Longer term, companies should establish an HSR monitoring program that tracks each relevant officer’s and director’s holdings, anticipated awards, and prior filings. The program should flag potential filing obligations well in advance of deadlines. Experienced HSR counsel can assist with setup.
If, during the review, it emerges that an officer or director has already fallen into the trap, counsel experienced with addressing such issues with the Federal Trade Commission should be engaged to help mitigate any consequences, including any civil penalties.
I blogged a couple of times last week on TheCorporateCounsel.net about the SEC’s proposed Reg E-Delivery and its potential impact on proxy delivery expenses. This Cooley memo points out that, if approved, the rules will also affect delivery obligations that come into play with compensation plans – likely by establishing new, uniform standards for electronic delivery of securities disclosures and reports – including the 10(a) prospectus under Form S-8.
As Meredith noted in this blog, the proposed rules may significantly ease the burden on issuers to provide paper copies to former employees and other participants in employee benefit plans who do not have access to company email.
While we wait for final rules, the Cooley memo explains the ongoing importance of complying with current requirements. The SEC has already provided employer-employee e-delivery relief – but taking advantage of that relief requires attention to the details. The memo recaps how the e-delivery method currently works for employers making grants under equity incentive plans in reliance on an S-8 registration statement, based on SEC releases issued in 1995 and 1996. Here’s an excerpt:
– Presumed consent; access. As noted above, an employer generally may presume consent to e-delivery by employees who are regular email users or, for those who are not regular email users, are able to receive e-delivery via other means, such as through administrative assistants or co-workers. However, the email must prominently state that a paper copy is available upon request, and the employer must in fact make paper copies available to any employee who asks.
– Former employees. Because of an expectation that former employees and service providers no longer have routine workplace access, former employees and service providers must provide informed consent to e-delivery.
– Form of delivery. The applicable materials can be attached to the e-delivery vehicle (for instance as attachments to an email) or, where documents are not directly attached , the e-delivery must provide employees and service providers with the information necessary to easily locate and retrieve them (g., directions for accessing them through the company’s local area network or a third-party provider’s equity program portal). The access medium must “not be so burdensome that intended recipients cannot effectively access the information provided,” and recipients must have the opportunity to retain the documents or have ongoing access equivalent to personal retention.
The memo also points out that employer-employee relief is not limited to S-8 circumstances – it can prove very useful in other employee compensation circumstances as well, such as issuer tender offers.
One of the many challenges that boards may encounter with succession planning is that an aging CEO may not want to leave. Sometimes, that’s because a high-powered exec isn’t ready to downshift into retirement. This Meridian memo points out that separation agreements may also encourage some executives to overstay their welcome. Here’s the intro:
In particular, retirement-eligible executives may find that an involuntary termination without cause produces a more favorable monetary outcome than voluntary retirement. In some cases, executives may also seek to receive cash severance benefits available under employment agreements or severance plans while simultaneously benefiting from the more favorable retirement treatment of equity contained in their equity award agreements.
While rarely intentional, this “double-dipping” or “best of both worlds” outcome can create incentives for executives to remain employed until the company initiates a separation rather than voluntarily retire in support of succession planning objectives.
The memo lays out specific examples to illustrate how some arrangements may unintentionally cause executives to delay retirement – leading to succession challenges, higher separation costs, extended transitions, and unnecessary tension. It explains that the key lies in considering all arrangements holistically:
Viewed independently, both severance and retirement provisions may appear reasonable. The challenge emerges when companies fail to evaluate how these arrangements interact once an executive becomes retirement eligible.
The Meridian team suggests that boards and compensation committees consider these questions:
• Are current arrangements creating incentives to delay retirement?
• Would a retirement-eligible executive be financially better off waiting to be terminated than
voluntarily retiring?
• Could executives receive both cash severance and retirement treatment on equity awards following an involuntary termination under the company’s current plan and award language?
• Is the company relying excessively on ad hoc or discretionary solutions?
• Does the overall framework support the succession planning objectives the company is attempting
to achieve?
It’s early September, so “sweater weather” is around the corner, and Spirit Halloween stores have started conveniently popping up everywhere for people whose kids are willing to use those easy costume packages. For those of us in this space, anticipating all things fall also means anticipating (and planning for) off-season engagement meetings with shareholders to gather feedback that will inform compensation design. This FW Cook memo won’t help you children understand that there are not enough hours in the day to buy or craft a million pieces for their Halloween costumes, but it will help you make the most of the precious time you have with your shareholders this fall/winter. It starts with this thematic reminder:
Companies should generally avoid asking shareholders to pre-clear a special equity grant, incentive design for the coming year or other Board action. Instead, shareholder engagement gives investors an opportunity to communicate their priorities and explain how they are likely to assess a particular issue. The compensation decision should stay with the Board. The value of engagement is understanding how investors will evaluate it.
It continues with detailed, specific suggestions. Here are my 10 favorite tips (condensed):
1. Build the agenda around what the company needs to learn. Useful say-on-pay analysis identifies which major holders changed their votes, where opposition concentrated and whether supportive investors raised concerns despite voting “For.”
2. Sophisticated stewardship teams know roughly when compensation committees make their decisions. A meeting scheduled after the design work is effectively complete can feel more like a courtesy call. Investors know when their input can influence the Committee’s thinking.
3. Preparation should be investor-specific: how the institution voted, what its published policies say, what it raised in prior engagement and who inside the firm will actually drive the voting decision.
4. A review of the latest ISS and Glass Lewis perspective on the company is also suggested, particularly after an adverse recommendation. Know it, but do not build the meeting around it. The purpose is to understand the shareholder’s own reasoning.
5. When a director joins, investors expect to hear the Board’s rationale directly and in the director’s own words. Redirecting those questions to management undermines the value of having the director participate in the first place.
6. Spend more time listening. A rough test: if the company has been talking for more than half the meeting, the agenda was too full.
7. The compensation discussion itself should focus on the issues that are actually consequential for the company. The relevant issue may be goal rigor, use of discretion, a retention award, an executive transition or an unusual pay outcome [. . .] A generic walk-through of compensation practices is unlikely to surface much that the Board does not already know.
8. Similar-looking votes can reflect very different judgments. An investor applying a hard voting-policy constraint presents a different issue from one expressing a preference about plan design. The company needs to understand how strongly the view is held and whether it could eventually affect support for directors.
9. Those distinctions rarely emerge from a presentation. They come from asking follow-up questions and giving the investor room to answer them.
10. The meeting also should not end with a commitment to make a change. Management’s job is to understand the feedback accurately and bring it back to the Committee or Board.
ISS recently released its “2026 U.S. Proxy Season Review: Compensation,” and while the full report is available only to institutional subscribers via ProxyExchange, the proxy advisor shared highlights in an article last week. Here are their key findings from the 2026 proxy season, which are consistent with the update from Glass Lewis that Liz shared last week:
Strong say-on-pay support. Median say-on-pay support increased from 94.5% in 2025 to 95.4% in 2026. The failure rate was at an all-time low of just 0.8%.
CEO pay reached record highs. Median S&P 500 CEO pay was $17.2 million and median Russell 3000 CEO pay was $5.9 million – the highest median pay levels ever observed.
Golden parachute failure rates increased. The say-on-golden parachute failure rate rose to 16% in 2026, which was directionally aligned with a significant increase in the CEO median golden parachute value.
Equity plan support levels increased. The median support level for equity plans increased slightly over 2025 levels, while the failure rate ticked downwards.
Compensation-related shareholder proposals declined dramatically. The number of compensation-related shareholder proposals on ballot declined dramatically from 46 in 2025 to only 8 in 2026.
I’m not sure we’ve covered that last point much on this blog to date, but this statistic is consistent with information Gibson Dunn’s Ron Mueller shared during our June webcast, “Proxy Season Post-Mortem: The Latest Compensation Disclosures.” Here’s what he had to say:
On the executive compensation front, the number of executive compensation-related shareholder proposals really fell off a cliff. There were nine proposals in proxies so far this season, which I view as beginning in November and running through the end of this month. That compares with 45 executive compensation proposals last year. The types of proposals were largely the same. John Chevedden is asking companies to submit severance agreements for shareholder approval or adopt share retention policies that require executives to retain a certain number of shares. There was a trend in proposals asking companies to take stock buybacks into account when evaluating performance under their incentive compensation awards.
That low number of executive compensation proposals is really because a low number was submitted. There were only four no-action letters or exclusion notices that related to executive compensation proposals. As I said, it’s a really dramatic decrease from prior years.
This coming year, who knows what’s going to happen? I think in shareholder proposals, it’s an area where we see action and reaction on a yearly basis. Proponents see what happened last year, and they adjust their proposal strategy accordingly, going forward. There could be newly emboldened proponents resubmitting many more proposals this time. Those proposals could be more, at least nominally, linked to executive compensation, even if they also raise other issues like pay equality, workplace or environmental issues. Again, stay tuned. At least for the time being, we had some relief this year.
In case you missed it, we now know that Corp Fin intends to stay out of the Rule 14a-8 shareholder proposal exclusion game for the 2027 proxy season — and indefinitely, unless and until it announces otherwise. I’m not sure what that means, if anything, for compensation-related shareholder proposals next season, but stay tuned.