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.
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.