The Advisors' Blog

It’s wild to think this year will be the 15th year of say-on-pay votes. In that time, the ecosystem of frameworks and modeling has grown into something advisors track each year – because many compensation committees want to understand how their company’s programs will fare under the models. In some cases, it even seems like the goal of truly motivating executives to perform takes a back seat to designing and disclosing pay in a way that will get the blessing of proxy advisors, whose recommendations many institutions follow.

Or at least, that was the case for 10+ years! Now, we may be entering a new era with institutions moving towards their own customized voting policies – and we’re in the early stages of seeing AI models that will apply those policies, instead of an army of proxy advisor and/or stewardship employees. While some companies are happy about that, the fragmentation actually means that votes could get harder to predict. This Pay Governance memo summarizes the state of play – and offers a few predictions for 2026:

The above said, it is likely that mid-size and smaller institutional investors will continue to rely on the proxy advisor firms for voting recommendations in the near-term due to the extensive amount of time and resources necessary to review and responsibly vote on a multitude of proxy voting decisions across a wide range of holdings. Regardless, we also expect institutional investors of all sizes to harness the power of AI for data collection and the development of preliminary voting recommendations, which could further erode proxy advisor influence barring meaningful evolutions in proxy advisor offerings.

Finally, we note that proxy advisory firms have shown tremendous resilience over the years to adapt their business models to changing governance landscapes. For example, the current proxy advisor pivot toward voting recommendations that are more customized/customizable is likely to ensure a degree of relevance and help to respond to regulatory scrutiny in the face of multiple challenges. Although the decline in proxy advisor influence among the largest investors may not fully extend to smaller and mid-size investors, the Say on Pay and governance landscapes are increasing in complexity, thereby creating a more uncertain (but potentially less adverse) U.S. Say on Pay environment.

Even though we’re in a time of change, it sounds like age-old advice of understanding who your investors are – and what they want – is still the best way to predict how your say-on-pay resolution will land. Of course, delivering strong company performance usually helps too.

– Liz Dunshee