The Advisors' Blog

Last year, nearly 25% of Russell 3000 companies submitted an equity plan proposal to a shareholder vote. Under current voting frameworks, most companies need to go back for approvals every 2 to 3 years – and while 99% of companies get the support they need, there are always a few outliers.

For obvious reasons, you want to do whatever you can to stay out of that category. This Pay Governance memo shares what you can do to increase the likelihood of a successful outcome:

1. Analyze the share reserve pool under various stock price scenarios to estimate how many shares are needed over the next 1 to 3 years.

2. Calculate current and potential dilution levels and share usage levels on an absolute basis and relative to the company’s peer group and overall industry sector.

3. Understand the voting guidelines on new share requests of the company’s largest institutional shareholders, including any brightline policies such as excessive dilution or burn rate thresholds.

4. Understand proxy advisor “dealbreakers” and estimate the likelihood of proxy advisors’ vote recommendations on the proposal. If opposition is anticipated, consideration should be given to engaging with the largest shareholders well before the annual shareholder meeting. (Remember, ISS introduced a new negative overriding factor for 2026, which makes plan features extra important.)

5. Ensure the proxy disclosure of the equity plan proposal is clear and complete. Within the equity plan proposal disclosure, highlight shareholder friendly design features and practices (e.g., reasonable dilution and share usage levels, requiring shareholder approval of option repricings or cash buyouts) and the role equity plays in attracting, motivating, and retaining employees as well as why it is important to the success of the company.

The memo notes that some industries tend to fare better than others with their equity plan proposals – by far, communications services drew the most opposition from proxy advisors in 2025. ISS opposition was also relatively higher in pharma/biotech, information technology, consumer discretionary, and real estate – compared to industries like utilities and energy.

– Liz Dunshee