If you are disclosing transition pay arrangements in your proxy this year, there’s good news and bad news. ISS Governance recently published these predictions for the 2026 annual meeting season:
Transition pay arrangements are expected to be a focus in the 2026 proxy season. Following an unprecedented number of U.S. CEO changes in 2025, severance packages, sign-on bonuses, make-whole awards, and other transition pay issues are expected to play a prominent role in many executive compensation disclosures.
The good news is that you won’t be alone in making these disclosures, the bad news is that they’re probably going to be scrutinized as part of larger trends.
These predictions were part of a larger report that ISS Governance published on forecasts for the 2026 annual meeting season (available for download), which also says we shouldn’t be surprised if spending on executive security increased last year:
Investors may continue to see increases in security-related perquisites in 2026. Over the last three years, the prevalence of security-related perks increased at a much larger rate than other common perks for S&P 500 CEOs, as many companies reevaluated the need for new or enhanced security protections for their top executives.
The report predicts that economic and geopolitical headwinds will also play a role in the 2026 proxy season.
Recently, the NYSE published annual compliance reminders for companies whose shares trade on the exchange. The letter reminds listed companies of the need to submit supplemental listing applications at least two weeks in advance of any issuances of a listed security, listing a new security, and certain other corporate events.
This requirement tends to catch some folks by surprise in the context of equity plans – and maybe that’s why the exchange has highlighted it for at least two years running on the letter’s front page. Here’s more detail:
A listed company is required to file a SLAP to seek authorization from the Exchange for a variety of corporate events, including:
• Issuance (or reserve for issuance) of additional shares of a listed security;
• Issuance (or reserve for issuance) of additional shares of a listed security that are issuable upon conversion or exercise of another security, whether or not the convertible security is listed on the Exchange;
• Change in corporate name, state of incorporation, or par value; and/or
• Listing a new security (e.g., new preferred stock, second class of stock, or bond).
No additional shares of a listed security, or any security convertible into the listed security, may be issued until the Exchange has authorized a SLAP. Such authorization is required prior to issuance, regardless of whether the security is to be registered with the SEC, including if conversion is not possible until a future date. The Exchange requests at least two weeks to review and authorize all SLAPs. It is recommended that a SLAP be submitted electronically through Listing Manager as soon as a listed company’s board approves a transaction.
Section 703 of the Listed Company Manual provides additional information on the timing and content of
SLAPs. Domestic companies should also give particular attention to Sections 303A.08, 312.03 and 313 of the Listed Company Manual (see Shareholder Approval and Voting Rights Requirements below). Generally, FPIs may follow home country practice in lieu of these requirements. Please consult the Exchange if you have any questions.
Check out the letter for additional proxy season reminders – including for shareholder approval requirements and voting standards.
In addition to the usual topics addressed in PayScale’s latest annual Compensation Best Practices Report (available for download), it also includes the results of its survey on how HR professionals are using AI. Survey respondents said they’ve personally used AI tools in the last 6 months for a number of tasks. Not surprisingly, many of the current uses are clearly not executive compensation-related, but a few might be. (The survey doesn’t distinguish.) Some of the use cases include:
– Market pricing and benchmarking (19%)
– Writing a compensation philosophy (12%)
– Analyzing for pay equity (9%)
– Recommending pay increases (8%)
When it comes to AI tools for compensation benchmarking, the most common (current) position was “I am cautious or hesitant about using any AI for compensation decisions, regardless of type” (28%). That said, 22% of respondents said “I trust general-purpose AI tools (e.g., ChatGPT) to support compensation benchmarking,” and 21% indicated that they only trust “compensation-specific AI tools that have methodologies and controls.” (16% were unsure.) Only 17% of the survey respondents were from public companies. It would be interesting to see similar questions asked to a group of primarily public company HR professionals.
A recent HLS post by The Conference Board reviews 2025 board director compensation practices at U.S. public companies. These top takeaways use several similar terms to describe how the various approaches to director compensation (and even quantums), at least in the Russell 3000 and S&P 500, have continued to “converge.”
– Director pay has largely leveled off, rising just 2% in the Russell 3000 and remaining flat in the S&P 500, reflecting a mature and disciplined compensation model with medians clustered near $250,000.
– Shareholder-approved limits have become a core governance safeguard, now adopted by roughly three-quarters of companies in both indexes, with a typical $750,000 cap that signals tighter oversight and growing investor scrutiny.
– Director core pay elements have largely settled into a stable pattern, with cash retainers flat at $75,000 (Russell 3000) and $105,000 (S&P 500), stock awards holding at $150,000 and $190,000, and only minor variation in option values.
– Companies have converged on a streamlined retainer-only structure, used by about 90% of firms as meeting fees continue to decline in prevalence and value, reinforcing a shift toward simpler and more predictable pay designs even as director responsibilities expand.
– Director perquisites remain modest and highly concentrated, with travel reimbursement still the only widespread benefit (above 50% in both indexes) and most other perks—such as education support or charitable-match programs—concentrated among larger S&P 500 companies.
There may be many good reasons to take a different approach to director compensation, but keep in mind that you won’t get the benefit of “strength in numbers” and may want to ensure a mini CD&A on director pay clearly explains why your board strays from the pack. (Read the full blog for info on some outlying industries.) It’ll be interesting to see whether this convergence trend continues as proxy advisor and investor perspectives start to do the opposite.
A recent memo from ClearBridge Compensation Group commendably takes on the task of helping corporate secretaries, CHROs and compensation committees make their lives a little easier — identifying five practical steps to improve efficiency. Take a look at all five tasks to see if your compensation committee could implement any this year:
1. Establish a Compensation Committee Calendar
2. Set Standard Grant and Vesting Timing Policies
3. Define New Hire Equity and Bonus Participation Policies
4. Delegate Equity Pool Administration to the CEO (Within Limits)
5. Adopt a Pre-Determined Adjustment Policy for Equity and Incentive Awards
I suspect tips 3 and 5 above are the least commonly adopted. To that end, here’s what the alert suggests on participation policies for new hires:
– Standardizing equity grant and bonus eligibility guidelines (e.g., a cutoff date for new hires to participate in annual bonus or equity programs) ensures consistency in treatment of new hires / promotions
For example, guidelines may determine eligibility and proration approach (e.g., if joining in Q1, receive full grant and full bonus eligibility, but for each quarter thereafter prorate opportunity by 25%)
– Establishing a fixed approach can reduce negotiation of treatment with potential new hires
In a speech delivered last week at the Texas A&M Corporate Law Symposium, SEC Chairman Paul Atkins provided some details about the kind of disclosure reforms he wants the agency to pursue. A significant portion of the speech addressed executive compensation disclosure reform. Here’s what John shared on that point on TheCorporateCounsel.net last week:
Chairman Atkins said that the three principles driving the SEC’s efforts to reform executive comp disclosures were rationalizing, simplifying and modernizing the rules governing those disclosure requirements. In terms of rationalizing the rules, he said that materiality should be the SEC’s “north star,” and stated that the current requirement to provide detailed compensation information for up to seven people isn’t consistent with that objective. He said that he agreed with commenters who said that the number of executives for whom compensation info is required should be reconsidered, and that the level of disclosure should be calibrated with its cost.
Chairman Atkins singled out the PvP disclosure rules when discussing the need to simplify compensation disclosures. He said that SEC disclosure requirements should be “intelligible by a reasonable investor and practical for a company to comply [with], without the need for a cottage industry of ultra specialized consultants,” and that the current PvP disclosure rules flunked this test.
With respect to the need to modernize comp disclosures, the Chairman called out the current treatment of executive security arrangements as a “perk.” He pointed out that we live in a different world than the one 20 years ago when the SEC decided that executive security arrangements were not “integrally and directly related to job requirements,” and that the SEC’s rules needed to keep up with modern business realities.
Some of his commentary on Regulation S-K more generally is also relevant to this audience. John continues:
Chairman Atkins called out “disclose or comply” line items that indirectly compel companies to toe the line on specific governance practices by forcing them into awkward disclosures if they don’t. He cited some of Item 407’s requirements, such as the need for a company without a nominating or compensation committee to explain why that structure is appropriate, as examples of this kind of “shaming disclosure.”
Chairman Atkins characterized these requirements as an “attempt to indirectly regulate, or set expectations for, matters of corporate governance.” He said that absent a Congressional mandate, it wasn’t the SEC’s role to enforce evolving “best practice” governance standards through disclosure requirements.
Chairman Atkins also cited provisions of Reg S-K that forced companies to comply with impractical disclosure requirements, such as the need to track down beneficial ownership information for NEOs who departed during the prior year in order to complete the current year’s beneficial ownership table in the proxy statement required by Item 403. He also cited the broad definition of “immediate family members” used in Item 404’s related party transactions disclosure requirements as imposing potentially impractical obligations on public companies.
We’ve posted the transcript for our annual webcast “The Latest: Your Upcoming Proxy Disclosures” with Mark Borges from Compensia and CompensationStandards.com, Dave Lynn of Goodwin Procter, TheCorporateCounsel.net and CompensationStandards.com, Alan Dye from Hogan Lovells and Section16.net and Ron Mueller from Gibson Dunn. They broke down all you need to know for the upcoming proxy season. The webcast covered the following topics:
– Status of SEC Executive Compensation Disclosure Requirements
– Other Possible Topics for SEC Review
– Incentive Compensation – Disclosure Considerations for Tariff Challenges and Discretionary Adjustments
– Executive Security and Other Key “Perks” Disclosures
– Investor Perspectives: “Homogenization” and Performance Equity
– Proxy Advisors – Impact of the Executive Order
– Proxy Advisors – Voting Policy Updates for 2026
– Proxy Advisors – Impact of Announced Move Towards “Customization” of Voting Policies
– Proxy Advisors – Status of Legal Challenges in Texas and Florida
– New Challenges with Shareholder Engagement
– Clawback Policies – Lessons from 2025
– Compensation-Related Shareholder Proposals in 2026
– ESG and DEI Goals: Impact of Shifting and Conflicting Perspectives
– Managing Stock Price Volatility When Granting Equity
This program covered a lot of ground on how to anticipate and handle difficult proxy season issues. Members of this site can access the transcript of this program for free – and for the lawyers out there, you can also get on-demand CLE credit. If you are not a member of CompensationStandards.com, email info@ccrcorp.com to sign up today and get access to the replay and full transcript. It’s a great way to get up to speed!
As Meredith and I noted when ISS published its 2026 benchmark voting policies and compensation FAQs, this year’s analysis of equity plan proposals will include a new negative overriding factor for plans found to be lacking sufficient positive features under the “Plan Features” pillar. In other words, an equity plan proposal could receive an “against” recommendation even if it would otherwise have a passing score.
The new factor builds on a handful of overriding factors that already existed – e.g., an evergreen share reserve. Some of those factors are more “black & white” than others. With the new factor, the policies and FAQs don’t parse out exactly how the calculation will shake out. This Cooley memo shares more detail:
It is important to note that, in December 2025, ISS added an additional negative overriding factor, where a plan has an “insufficient” score under the Plan Features pillar (i.e., if the plan “lacks sufficient positive features,” as ISS puts it). As a result, ISS may recommend a vote against an equity plan proposal where the EPSC evaluation results in a Plan Features pillar score of less than seven points.
Because ISS does not specify how many points are available under each of the various design aspects evaluated under the Plan Features pillar, it is not immediately clear what combination of features will avoid a potential negative override, but legal practitioners and consultants familiar with the EPSC model should be able to offer helpful guidance in that regard.
In light of this new factor, it’s extra important this year to understand whether ISS recommendations tend to affect your voting outcomes – and if so, to model how much breathing room you’ll have under the Equity Plan Scorecard. See the FAQs starting with #35 to understand which factors can help or hurt your score.
I always appreciate getting the “lay of the land” when we’re navigating so many ins, outs, and what-have-yous – which is definitely the case this year. In this 36-minute episode of “The Pay & Proxy Podcast,” Skadden’s Erica Schohn and Page Griffin joined Meredith to catalog what’s top of mind right now. They discussed:
1. The status of the SEC’s retrospective review of the executive compensation disclosure rules
2. Feedback received in comment letters and during the June roundtable
3. Next steps for executive compensation disclosure rulemaking
4. Considerations for executive security spending and other perks disclosures for 2026 proxy statements
5. The evolution of equity grant timing practices in recent years
6. Proxy statement disclosures regarding the timing of equity grants
7. Changes to ISS’s policies regarding the treatment of time-based versus performance-conditioned equity
8. Which companies are considering changes to their 2026 compensation plans in light of this policy shift and what changes they’re considering
Now’s the time to register for our 2026 Proxy Disclosure & 23rd Annual Executive Compensation Conferences to lock in the best rates! We’re offering super early bird pricing until April 3. Our conferences will be held on Monday, October 12th, and Tuesday, October 13th, at the Hilton Orlando this year, with our kickoff welcome event on Sunday, October 11th. By October, we might even be digesting new compensation disclosure rules! Wouldn’t that be magical!
Speaking of magic, if you’re looking to make the most of a trip to Orlando, the Hilton Orlando is a Universal Orlando Resort Partner and is located just one mile from the new Epic Universe theme park. So you could pair proxy disclosure, executive compensation, networking and professional development with exploring the Ministry of Magic, sipping a butterbeer (or three — it comes cold, hot and frozen), playing Super Mario Bros IRL and soaring with dragons on the Isle of Berk. (But we all know the real magic is going into a transitional proxy season with all the wisdom and practical guidance our speakers will share, amirite?!)
If you can’t make it in person, it may be (slightly) less thrilling, but you won’t need to miss out on all the tips for complying with whatever disclosure changes will be effective for the next proxy season. We will continue to offer a virtual option plus an on-demand replay and transcripts for all attendees (including in-person attendees in case you play hooky to get in some thrill rides or, more likely, have to miss sessions to take some client calls). I’d go so far as to say that our course materials alone are worth registering for! Anyway, register by April 3 for the best rate, and look out for future announcements about the agenda, speakers, and the hotel block!