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.
In the latest episode of “The Pay & Proxy Podcast,” I chatted with Skadden partners Kristin Davis and Shalom Huber about the 2026 proxy season and some of the trends they found most notable. During this 29-minute episode, they covered:
– Company Approaches and Investor and Proxy Advisor Reactions to One-Time/Mega Grants This Proxy Season
– How Disclosures Regarding One-Time/Mega Grants Have Evolved
– How AI is Assisting Strike Suits Related to Deficient Proxy Disclosures and Companies’ Use of AI to Catch such Deficiencies
– What’s Driving the Increasing Decentralization of Proxy Voting Power and How it Might Impact Support for Pay-Related Proposals
– The Challenges and Opportunities for Companies Resulting From This Decentralization
– Why Engagement is More Important – and Potentially Less Predictable – Than Ever
– Stakeholder Considerations for Companies Contemplating Structural Changes to Their Pay Programs in This Environment
If you have insights on compensation and proxy disclosures you’d like to share in a podcast, I’d love to hear from you. Email me at mervine@ccrcorp.com.
I am a little sad to bid adieu to summer vibes this weekend, but if there is one thing I’m looking forward to – besides my children returning to school and, hopefully, a bedtime for them before 11pm – it’s our “Proxy Disclosure & 23rd Annual Executive Compensation Conferences” – happening October 12-13th in Orlando! With being so close to The Most Magical Place on Earth, our hotel block at The Hilton Orlando is nearly sold out and the few remaining rooms are going fast! Make sure to book now to get your spot.
And if you haven’t registered for the October 12-13th conference, register now in our online membership center. You can also contact us at info@CCRcorp.com or by calling 1-800-737-1271.
As we’ve noted, there will be a lot to talk about. We’ve been working hard to ensure our agenda covers the practical and strategic issues involved with forthcoming SEC rulemaking and other public company trends. And on top of all that, there will be many wonderful people in our community in attendance – it’s a great opportunity to see old and new friends!
Our blogs will be off on Monday for Labor Day – we’ll return Tuesday! Wishing everyone a happy and safe holiday weekend.
We’ve blogged about higher support for say-on-pay resolutions this year. Alongside that, fewer companies are experiencing failed votes. This Glass Lewis update confirms just how pronounced the trend is:
– Average North American say-on-pay support increased slightly year-over-year, and the number of failed proposals was down by more than 20%, particularly outside the S&P 500.
– Among four failed S&P 500 proposals, two were repeat offenders, also failing to receive majority support for the say-on-pay proposal in 2025.
– Excessive CEO granting practices were at the center of all four failed S&P 500 say-on-pay votes.
The Glass Lewis team also noted that one-time awards and increases at the top of the U.S. market drove an increase in average CEO pay. Here’s more detail:
– The total value of one-time awards, and average award size, continued to trend upward. In the S&P 500, $2.7 billion in one-time awards were granted, up 40.8% from the prior year, with average values increasing by 22.7% to $3.7 million. This drove average CEO pay up 17.8% compared to 2025, to $11.5 million. For the Russell 3000, $8.6 billion in one-time awards were granted, up 47.6% from the prior year, with average award size up 34.1% to $2.3 million.
– While the average value of individual sign-on awards fell slightly year-over-year, that of most other one-time award categories saw significant rises compared to the prior year. This was, in part, driven by awards at the top end of the value range.
– The number of S&P 500 CEOs with pay packages of $100 million+ doubled from 5 in 2025 to 10 in 2026.
– Median CEO pay growth continued, though more slowly than in recent years among the S&P 500.
I blogged a few months ago that more companies are providing personal security services to CEOs. This Pay Governance memo says it’s now a majority practice at S&P 500 companies. Additionally, more companies are providing security to non-CEO executives and/or spending more on those arrangements. Pay Governance shared these key findings based on proxy statements filed as of June 15th of this year (and the two prior years, for comparative data):
– Personal security benefits are becoming more common. Among S&P 500 companies, prevalence of CEO personal security increased from 35% to 54% year over year, while approximately 47% of companies now provide personal security to at least one additional named executive officer (NEOs).
– Growth is most pronounced below the CEO level. Median personal security values for other NEOs rose from approximately $10K to $32K, while the 75th percentile increased from approximately $32K to $143K.
– Security programs are becoming more multidimensional. Based on most recent 2026 proxy disclosures, there are increased references to digital protection, cybersecurity monitoring, online privacy services, personal data removal, home network monitoring, and independent risk assessments.
– Personal Aircraft usage values increased. CEO aircraft usage values increased 17% at the median and 37% at the 75th percentile, with meaningful increases also reported for other NEOs.
– Disclosure quality is improving. Disclosures increasingly address digital security, independent risk assessments, and governance oversight.
Looking ahead, the memo notes:
Executive protection is likely to remain an important area of Board and Compensation Committee oversight. Given the elevated risk environment and expanding program scope, prevalence and disclosed value may continue to increase, particularly for certain executives beyond the CEO. The SEC is actively reconsidering whether executive personal security should be treated as a “perk” for disclosure purposes, but no specific changes have been outlined yet. Major shareholders and proxy advisors appear to be focused less on the existence of these benefits alone and more on whether companies provide a clear rationale, disclosure, document appropriate oversight, and explain how the arrangements support shareholder interests.
For Compensation Committees, several practical considerations follow:
– Ground programs in a formal security assessment. The strongest programs are supported by an independent, periodic security assessment rather than ad hoc decisions. This helps establish the appropriateness of the benefit, supports the company’s business rationale, provides consistency of application for the affected team members, and provides a stronger foundation for shareholder disclosure.
– Clearly explain the business rationale. Compensation Discussion and Analysis (CD&A) disclosure should explain how security and aircraft benefits relate to the executive’s role, visibility, travel requirements, threat environment, and broader company risk management. This framing helps distinguish the program from a purely personal perquisite.
– Evaluate tax gross-ups carefully. Committees should deliberate about whether to provide tax gross-ups on security and aircraft benefits, particularly because proxy advisors and most investors generally view gross-ups unfavorably. Where gross-ups are provided, the rationale should be clearly disclosed and tied to the company’s broader program objectives.
– Reassess coverage beyond the CEO. Given the increasing prevalence of programs covering other NEOs, based on the findings from the security assessment, Committees may want to evaluate whether certain non-CEO executives also face elevated risk due to their role, public profile, business responsibilities, travel patterns, or visibility on sensitive company matters.
– Align disclosure with governance. Companies that pair a well-governed, risk-based security program with clear, business-focused disclosure will be best positioned to protect executives while maintaining shareholder confidence.
We’ll be discussing personal security, perks, and of course the potential overhaul of the SEC’s executive compensation disclosure rules, and how companies may want to respond to those changes and the updates to filer status rules (if/when we have final rules on these topics), at our Proxy Disclosure & Executive Compensation Conferences. We’ll be posting over 200(!) pages of course materials containing practical nuggets and real-life examples from our conference speakers to our conference platform in the weeks leading up to the conferences. Conference attendees get exclusive access to these course materials. It’s worth registering for the conference just for these alone!
You can register online or by contacting us at info@CCRcorp.com or 1-800-737-1271. Make sure to book your hotel room soon too because the block is filling up quickly!
Maybe you were busy last week and missed it: The SEC’s proposal on executive compensation disclosure reform is in the queue on the OIRA dashboard! Here’s what Dave shared on Friday on TheCorporateCounsel.net:
The White House’s Office of Information and Regulatory Affairs (OIRA) updated its dashboard this week to note that the SEC has submitted a rule proposal titled “Executive Compensation Disclosure Reform,” signaling that the Commission will consider this rulemaking in the near-term. The Goodwin Public Company Advisory blog notes:
On August 26, 2026, the SEC submitted a rule proposal titled “Executive Compensation Disclosure Reform” to the White House’s Office of Information and Regulatory Affairs (OIRA). Those SEC rulemaking initiatives that are under review by OIRA are listed on a dashboard until the review is completed.
The SEC signaled that it was considering potential changes to the executive compensation disclosure rules by announcing a roundtable on executive compensation disclosure requirements on May 16, 2025. The roundtable was held on June 26, 2025, and the SEC also solicited comments on potential changes to the disclosure requirements. The agenda for the roundtable called for three panels to discuss the evolution of executive compensation disclosure over time and to explore whether the rules have achieved their policy objectives, the challenges in preparing the required disclosure, the types of disclosure that investors find material, and what the disclosure requirements should look like in the future.
A consistent theme throughout the roundtable was the complexity of the compensation tables and the required methodologies for reporting the required information. During the roundtable, the panelists addressed the concept of materiality, including whether executive compensation information is material to investors. Some of the panelists at the roundtable advocated for a move to principles-based disclosure requirements, while others indicated certain prescriptive disclosure requirements may be necessary. The panelists discussed the challenges with perquisites, including the need to disclose personal security for executives as a perquisite. Several panelists noted the significant difficulties that companies encounter with the executive compensation requirements adopted pursuant to the Dodd-Frank Act, including the pay versus performance disclosure requirements, the mandatory clawback requirements and the CEO pay ratio disclosure requirements. Approximately 70 substantive comment letters and over 1,000 form comment letters were submitted in response to the SEC’s solicitation of comment.
While OIRA has up to 90 days to review an agency’s rulemaking, it has typically approved most SEC proposals in a much shorter period of time. Once the rulemaking has been cleared by OIRA, the Commission could schedule or an open meeting to vote on the proposal or approve it by a seriatim process without the need for an open meeting.
But wait, there’s more! After Dave posted the blog on Friday, two more entries appeared on the dashboard, signaling proposals to rescind Rule 14a-8 for shareholder proposals and modernize the proxy solicitation process to reduce costs and compliance burdens. Check out John’s blog today on TheCorporateCounsel.net for more on those.
As John noted, like the executive comp proposal, these two proposals appeared on the latest edition of the SEC’s Reg Flex Agenda and targeted an October 2026 date for their release. It looks like the SEC’s on track to hit that date, and we’ll be ready to address any proposals that are issued during our Proxy Disclosure and Executive Compensation Conferences to be held on October 12th and 13th in Orlando. In case you needed another reason to register now, the SEC just gave you three!
It is certainly shaping up to be a busy fall for the SEC and all of us who might be involved with commenting on the rules. While these topics appeared in quick succession on the OIRA dashboard, we don’t know for sure when we’ll see the proposals – let alone the final rules – but we get the impression folks are motivated to keep moving everything along and companies need to be thinking ahead about their gameplans under the new frameworks. For those who may already be getting nostalgic for “what was,” check out Dave’s blogs about his time on the Staff handling shareholder proposals and the SEC’s executive compensation disclosure rules.
Liz recently shared Dragon GC’s third annual report on shareholder engagement responses to adverse Say-on-Pay votes, which summarizes the results of its analysis of engagements conducted and disclosed by 14 Fortune 1000 companies that had sub-optimal Say-on-Pay outcomes during the 2025–2026 annual meeting season. As she noted, this report shares real-world examples for six types of responsiveness disclosures it identified in its review. Here are some things that stood out to me from the examples:
– The companies’ engagement strategies were tailored to their circumstances. Some companies disclosed broad, board-involved outreach focused on identifying concerns; some companies have such robust recurring programs that they relied on those rather than a single post-vote outreach effort; and others could specifically structure their engagement around the specific compensation concerns that had already surfaced.
– As usual, responses to investor feedback varied widely and included:
Reducing target annual awards
Exercising negative discretion
Committing to no above-target or one-time awards in a year
Adopting a policy not to grant front-loaded or off-cycle awards, except in limited circumstances
Revising the mechanics of incentive programs
Replacing metrics
Increasing the proportion of compensation that is performance-based
– Some of the responsiveness disclosures touted governance reforms, which don’t necessarily come to mind when we think about responding to low Say-on-Pay votes. One company appointed a new chair of its compensation committee, added two members and conducted an RFP process that resulted in it retaining a new independent compensation consultant.
– Some companies disclosed that their compensation committees determined that no program changes were warranted, but they beefed up their disclosure regarding certain arrangements, metrics or decision-making processes where it seemed that expanded or revised disclosure could improve investors’ understanding.
For those interested in thorough or unique responsiveness disclosures, I’d encourage you to follow Mark Borges’s Proxy Disclosure Blog, where he shares interesting disclosures on many topics, including responsiveness, like this engagement and responsiveness disclosure provided by a smaller reporting company.
Liz recently blogged about how the potential expansion of scaled disclosure eligibility is likely to mean more companies will be making more judgment calls about what to include in their proxy statements on a voluntary basis. Even for companies that don’t hold a say-on-pay vote, proxy statements remain a valuable communication tool, and some disclosures that may become voluntary provide helpful context for why boards and compensation committees made the decisions they made. Plus, companies that remove any disclosures investors want to see may face backlash.
Liz and I recently chatted about the importance of waiting for the final rules to understand the regulatory impact of any decision to provide voluntary disclosures. That’s because the proposed rule changes contemplate eliminating Item 10(f) of Regulation S-K, which is focused on smaller reporting companies (a category the release proposes to eliminate), but is also where the rules provide that scaling decisions be made on an item-by-item basis. In the talking points submitted for the course materials for our fall Proxy Disclosure & Executive Compensation Conferences, Cooley’s Brad Goldberg notes:
The Society for Corporate Governance comment letter asked the SEC to clarify in the final rule that “a-la-carte” voluntary disclosure will still be permitted and to further clarify that voluntary disclosure will not be limited to an item-by-item basis (i.e., a company could choose to include a CD&A and all compensation tables but omit pay ratio disclosure).
As Brad’s examples suggest, the ability to elect between scaled and non-scaled requirements within an item (so long as, as the Society comment letter notes, the disclosure, at a minimum, satisfies the scaled requirements of that item) would be particularly helpful for Item 402, which has so many subsections it’s almost to the end of the alphabet.
Depending on how this shakes out in the final rules, new “non-accelerated filers” may have the opportunity to decide which parts of Item 402 to omit or maintain, both to tell their compensation story and to satisfy investor preferences. In that case, understanding your investors’ disclosure preferences will be key. Though future engagement may be advisable, investor comment letters on the filer status proposal may help you understand which disclosures certain investors consider essential. This Pay Governance alert says:
One of the clearest messages from both EGC and Roundtable letters was that investor respondents generally support simplifying executive compensation disclosure but not eliminating disclosure.
…ICI stressed the importance of not eliminating the CD&A from all NAFs, as this information “provides transparency and enables investors to understand and evaluate the potential effects of executive compensation arrangements on a company’s stock price”.
This issue is only one of the practical implementation questions our speakers will be discussing at our Proxy Disclosure & Executive Compensation Conferences. We’ll be posting over 200(!) pages of course materials containing practical nuggets and real-life examples from our conference speakers to our conference platform in the weeks leading up to the conferences. Conference attendees get exclusive access to these course materials. It’s worth registering for the conference just for these alone!
You can register online or by contacting us at info@CCRcorp.com or 1-800-737-1271. Make sure to book your hotel room soon too because the block is filling up quickly!
With ISS’s latest policy updates loosening the proxy advisor’s preference for at least 50% of LTI in PSUs as long as time-based equity meets its long-term parameters, this Semler Brossy article says some companies are considering taking advantage of that flexibility. There’s the old adage “if it ain’t broke, don’t fix it,” but for some companies, maybe the old ways are broken. The article says companies aren’t just considering a change to make a change, but to address some challenges they’re facing that may actually be making their PSUs less effective.
One of investors’ perceived issues with PSUs is the challenge of setting accurate multi-year performance goals, especially amid today’s sustained macroeconomic and geopolitical volatility. When the future is murky or rapidly changing, multi-year goal setting can be particularly difficult for some companies.
In addition, not all situations lend themselves to longterm goal-setting, even if volatility subsides. High-growth and/or cutting-edge companies may also face difficulties forecasting three-year financial targets with accuracy.
Similarly, companies undergoing significant investment phases that will impact specific financial metrics, or those expecting downward revision to financial performance, may struggle to set goals that remain meaningful throughout performance periods.
Finally, overly rigorous goal setting can also introduce retention risks. Compensation committees find themselves walking a precarious line between setting challenging yet achievable goals. Miss the mark with overly aggressive targets, and executives face low holdings and realized pay, potentially dampening motivation and causing unwanted attrition. Set goals too conservatively, and companies face “over payouts” that draw criticism from proxy advisors and shareholders.
Semler Brossy suggests that compensation committees ask themselves:
Do standard financial goals best capture our company’s strategic priorities?
Do performance-based metrics encourage the behavior we want from our leadership team?
Does a focus on 3-year performance goals directly align with our business cycles?
If a change is appropriate, the article addresses some options, including some tried-and-true methods like relative metrics and shorter performance periods, but also increasing the weighting of RSUs or options:
Increased RSU or options weighting to create more modest PSU mixes (such as 25% rather than 50% of the equity grant) can reduce overreliance on PSUs while maintaining some performance-based component. Replacing PSUs with a lower, equivalent value of RSUs can even reduce pay relative to peers while improving pay delivery certainty—a combination that may resonate with both executives and shareholders concerned about pay levels. [. . .] [C]ompanies can merge this approach with longer vesting to further enhance the long-term alignment with shareholders.
Just because ISS has softened its policy on PSUs doesn’t mean that companies making a change won’t face a challenging say-on-pay season. Telling your story will continue to be critical.
This is just one of the timely topics that will be discussed during the panel “The Top Compensation Consultants Speak” at our Proxy Disclosure & Executive Compensation Conferences on October 12 – 13 in person in Orlando and virtually streamed. Semler Brossy’s Blair Jones will be addressing evolving conversations around equity design, including when PSUs work well, when they don’t and when to consider a new design – plus long-vested RSUs and other alternatives to traditional PSUs.
Don’t miss these critical conversations! Sign up for our 2026 Proxy Disclosure Conference and 23rd Annual Executive Compensation Conference today. Register online or contact us at info@CCRcorp.com or 1-800-737-1271.
