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?
– Liz Dunshee
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.
There are many more suggestions in the memo, which I encourage you to read in full. And for even more, check out our “Shareholder Engagement” Practice Area and register for our Proxy Disclosure and Executive Compensation Conferences — which are only a month away!
– Meredith Ervine
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.
– Meredith Ervine
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.
– Meredith Ervine
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.
– Liz Dunshee
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.
– Liz Dunshee
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!
– Liz Dunshee