The Advisors' Blog

After the SEC Staff’s February Schedule 13G guidance, there was concern that companies that saw their say-on-pay approvals fall below the key 70% threshold for ISS and 80% threshold for Glass Lewis in 2025 (triggering the proxy advisor “responsiveness” policies) may — if institutional investors are reluctant to provide feedback — have a harder time making the disclosures proxy advisors expect to see. Thankfully, the proxy advisors have recognized that this may be a challenge in 2026. ISS has already announced proposed changes to its benchmark voting policies, which contemplate this addition to its policy on company responsiveness to low say-on-pay:

If the company discloses meaningful engagement efforts, but in addition states that it was unable to obtain specific feedback, ISS will assess company actions taken in response to the say-on-pay vote as well as the company’s explanation as to why such actions are beneficial for shareholders.

Notably, this is a narrow change. The policy still expects companies to put in the same engagement efforts that they have in the past. If anything, this change may result in longer disclosures since presumably many companies will hear specific feedback from some investors, but not others, and, in the absence of extensive, consistent feedback, may need to provide a longer explanation of the “specific and meaningful actions taken” in response.

We’re well into the “off-season,” and this Winston blog on executive compensation issues and considerations for the 2026 proxy season says that companies with a low say-on-pay outcome last year should make an engagement plan, if they haven’t already, and start planning the related CD&A disclosure.

A well-executed action plan for shareholder outreach and engagement should include:

– reviewing proxy advisors’ reports from the prior year’s proxy to identify key issues flagged as concerns;
– evaluating how the company’s peer group is addressing executive compensation matters;
– assessing the company’s shareholder base to determine which investors should be engaged;
– planning shareholder meetings with clear talking points addressing key issues; and
– coordinating a response with both the engagement team and the compensation committee following shareholder meetings.

It will also be important for companies with lower say-on-pay results to clearly and effectively disclose in this year’s CD&A the rationale for 2025 compensation decisions, as well as any changes the compensation committee made to address shareholder concerns, including through shareholder outreach and engagement. In addition, companies and compensation committees should engage with advisors early to anticipate proxy advisor say-on-pay voting recommendations for the upcoming proxy season, considering both the quantitative assessments and qualitative evaluations that these firms will conduct.

If you’re in this boat, you should plan to tune in for our annual webcast “The Latest: Your Upcoming Proxy Disclosures” on Tuesday, January 20, at 2 pm ET. I know it’s a while from now, but you won’t want to miss this one! Head over to the webcast landing page to add it to your calendar.

– Meredith Ervine