2026 Proxy Season Review: Compensation-Related Matters

Posted by Heather L. Coleman, Jeannette E. Bander and Amanda K. Toy, Sullivan & Cromwell LLP, on
Sunday, October 18, 2026
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Heather Coleman, Jeannette Bander, and Amanda K. Toy are Partners at Sullivan & Cromwell LLP. This post is based on a Sullivan & Cromwell memorandum by Ms. Coleman, Ms. Bander, Ms. Toy, Rebecca M. Rabinowitz, Brittney G. Kidwell, and Julia Khomenko, all at Sullivan & Cromwell.

2026 Proxy Season Review, Part 2 (Compensation Related Matters)

September 29, 2026

Summary of Key Trends[1]

A. Strong Say on Pay Results

  1. The number of failed say on pay votes remained low, with overall shareholder support averaging ▲91% among the S&P 500 and ▲92% among the Russell 3000 in H1 2026 (v. 90% and 91% in H1 2025).
  2. Turnover in failed votes declined by ▼50%, indicating a return of “stickier” negative votes.

B. Overall ISS Approach on Say on Pay Evaluation

  1. Compared to proposals ISS supported, proposals with negative recommendations received ▼28% and ▼21% lower support on average, respectively, at S&P 500 and Russell 3000 companies.

C. Details on ISS’s Application of its Pay for Performance Policies in H1 2026

  1. ISS’s approach to say on pay recommendations remained generally unchanged from the prior proxy season.
  2. Alignment of CEO pay with relative total shareholder return remained the most important quantitative factor underlying ISS negative recommendations.
  3. ISS placed slightly greater emphasis on quantitative pay for performance factors in H1 2026, while continuing to focus heavily on qualitative concerns regarding performance goals and incentive compensation design.
  4. Limited, opaque or undisclosed performance goals remained the most often cited qualitative factor underlying ISS negative recommendations, and one off awards resulting in high executive compensation was the second most cited factor.

D. SEC Proposal to Scale Executive Compensation Disclosure Requirements

  1. The SEC proposed significantly scaling back executive compensation disclosure and related shareholder voting requirements for non accelerated filers, which the SEC estimates would comprise approximately 81% of reporting companies.

E. Equity Compensation Plan Voting

  1. Average support was 92% among the S&P 500 and 87% among the Russell 3000 in H1 2026, generally consistent with H1 2025.
  2. Despite an increase in negative ISS recommendations, no plans failed to pass among the S&P 500 (same as H1 2025) and ▲five plans failed among the Russell 3000 (v. two plans in H1 2025).

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FTC Challenges Interlock Tied to Beretta-Ruger Minority Investment

Posted by Megan Browdie, Julia Brinton, and Sharon Connaughton, Cooley LLP, on
Saturday, October 17, 2026
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Megan Browdie is a Partner, Julia Brinton and Sharon Connaughton are Special Counsels at Cooley LLP. This post is based on their Cooley memorandum.

Last week, the Federal Trade Commission (FTC) announced another “interlocking directorate” enforcement action, demonstrating the antitrust agencies’ continued aggressive enforcement of Section 8 of the Clayton Act. The proposed consent order resolves antitrust allegations arising from Beretta Holding’s minority acquisition of shares in Sturm, Ruger & Co. The order settles allegations that the agreement, which allowed Beretta to appoint two members to Ruger’s board of directors, would create an illegal interlocking directorate since the parties are direct competitors in the production and sale of firearms. This action follows the FTC’s announcement that three individuals resigned from the board of Sevita Health in September 2025 due to FTC scrutiny and recent unconfirmed reports that the Department of Justice (DOJ) is investigating a venture capital firm for potential Section 8 violations.

In the Beretta-Ruger matter, the FTC alleged that under the parties’ agreement, Beretta, a subsidiary of Upifra, agreed to increase its stake in Ruger to as much as 25% of Ruger’s outstanding shares. In exchange, Beretta obtained contractual board designation rights: The agreement provided that Ruger’s board “shall” appoint two directors sourced by Beretta to the board, with those directors included on Ruger’s slate of nominees for the 2027 and 2028 annual meetings.

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Cruising Altitude: Growth-Focused Governance Reform May Propel Japanese Equities to New Heights

Posted by Kei Okamura, Neuberger Berman, on
Friday, October 16, 2026
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Kei Okamura is a Portfolio Manager at Neuberger Berman. This post is based on his Neuberger Berman memorandum.

While Japanese equities have been in ascent, we believe ongoing governance reform could add even more lift.

Japan’s equity market appears to be entering the next phase of a two-decade structural transformation: Like a jumbo jet heading toward cruising altitude, we believe that ongoing growth-oriented governance and capital-management reforms may encourage Japanese companies to further improve return on investment and accelerate earnings growth.

This article explores why we believe further governance reforms may support long-term value creation and present potentially attractive opportunities for active equity managers.

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Weekly Roundup: October 9-15, 2026

Posted by the Harvard Law School Forum on Corporate Governance, on
Friday, October 16, 2026

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This roundup contains a collection of the posts published on the Forum during the week of October 9-15, 2026

Cybersecurity Risk Oversight in the Age of AI

Posted by Martin Lipton, Wachtell, Lipton, Rosen & Katz, on Friday, October 9, 2026
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Q3 2026 Review of Shareholder Activism

Posted by Josh Jacobs, Jim Rossman, and Abraham Axler. Barclays, on Saturday, October 10, 2026
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Investors Need a Better Approach to Say on Pay Voting

Posted by Stephen F. O’Byrne, Shareholder Value Advisors Inc, on Sunday, October 11, 2026
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CEO and Executive Compensation Practices in the Russell 3000 and S&P 500: 2026

Posted by Matteo Tonello, The Conference Board, on Monday, October 12, 2026
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2026 Proxy Season Review: Submission of Rule 14a-8 Shareholder Proposals

Posted by Melissa Sawyer, Marc Treviño, and June Hu, Sullivan & Cromwell LLP, on Tuesday, October 13, 2026
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The Carried Interest Tax Controversy

Posted by Malcolm S. Salter (Harvard Business School), on Tuesday, October 13, 2026
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Five Hundred Words or a Contentious New Landscape: The Corporate Choice on Rule 14a-8

Posted by Sanford Lewis (Shareholder Rights Group) and Paul Rissma (Formative Financial), on Tuesday, October 13, 2026
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Agentic AI and the Duty of Care: What the METR Report Means and Does Not Mean for the Boardroom

Posted by Ethan Klingsberg, Freshfields Bruckhaus Deringer LLP, on Wednesday, October 14, 2026
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Understanding Communications by Private Fund Managers

Posted by Josh Lerner (Harvard University), Fiona Paine (Carnegie-Mellon University), and Antoinette Schoar (Massachusetts Institute of Technology), on Wednesday, October 14, 2026
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Rethinking Long-Term Incentive Design: Are Longer-Horizon RSUs Gaining Ground?

Posted by Stephan Bosshard, Desmond Pang, and Michael Marino, FW Cook, on Wednesday, October 14, 2026
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What New SEC Data Reveals About IPOs and Follow-Ons

Posted by Liz Dunshee, Cooley LLP, on Thursday, October 15, 2026
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Mandatory Arbitration and State Competition for Corporate Charters

Posted by Marcel Kahan (NYU) and Edward B. Rock (NYU), on Thursday, October 15, 2026
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Glass Lewis Details Proposal to Fundamentally Shift Proxy Voting Guidelines: Implications for Say on Pay

Posted by Soren Meischeid, Linda Pappas, and Jon Weinstein, Pay Governance LLC, on Thursday, October 15, 2026
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Glass Lewis Details Proposal to Fundamentally Shift Proxy Voting Guidelines: Implications for Say on Pay

Posted by Soren Meischeid, Linda Pappas, and Jon Weinstein, Pay Governance LLC, on
Thursday, October 15, 2026
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Soren Meischeid is a Consultant, Linda Pappas is a Partner, and Jon Weinstein is a Managing Partner at Pay Governance LLC. This post is based on their Pay Governance memorandum.

KEY TAKEAWAYS

  • Prepare for multiple voting lenses. Glass Lewis is proposing to replace its singular benchmark policy with four perspectives beginning in the 2028 U.S. proxy season.
  • Expect the fundamentals to endure. Each perspective retains core standards for pay reasonableness, pay-for-performance alignment, disclosure, non-employee director pay, responsiveness, and other key governance items.
  • Anticipate divergent outcomes. Relative TSR, pay levels, sustainability metrics, and stakeholder outcomes may lead to different Say on Pay recommendations on the same program.
  • Be investor-informed, not framework-driven. Understand which perspectives align with key shareholders, then tailor engagement and disclosure.

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Mandatory Arbitration and State Competition for Corporate Charters

Posted by Marcel Kahan (NYU) and Edward B. Rock (NYU), on
Thursday, October 15, 2026
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Marcel Kahan is the George T. Lowy Professor of Law, and Edward B. Rock is the Martin Lipton Professor of Law at New York University School of Law. This post is based on their recent paper and is part of the Delaware Law Series; links to other posts in the series are available here.

Mandatory arbitration of shareholder claims is on the horizon. SEC Chair Paul Atkins has led the SEC to change its long-standing policy against mandatory arbitration. Space Exploration Technologies Corp. (“Space X”), a Texas corporation, recently went public with bylaws that conditionally provide for mandatory arbitration of a broad set of shareholder claims. Silicon Valley companies and their lawyers have long sought the ability to mandate arbitration and have been emboldened by their recent success in pressuring Delaware to change its law. We expect that there will be a renewed push to amend the Delaware General Corporation Law and the laws of other states to permit mandatory arbitration of shareholder claims. What are the present opportunities for companies to subject shareholder claims to mandatory arbitration? How will mandatory arbitration affect state competition for corporate charters? How should Delaware respond?

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What New SEC Data Reveals About IPOs and Follow-Ons

Posted by Liz Dunshee, Cooley LLP, on
Thursday, October 15, 2026
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Liz Dunshee is a Senior Strategic Advisor, Capital Markets and Corporate Governance at Cooley LLP. This post is based on her Cooley memorandum.

Back in February, we looked at SEC data on small and pre-public companies and noted that IPOs were reemerging as an option after several lean years. The SEC’s Division of Economic and Risk Analysis has now released a fresh set of capital formation statistics covering the first half of 2026. The topline is encouraging: More IPOs, dramatically more IPO proceeds and more follow-on capital raised than in the first half of 2025.

However, the data is even more informative when you look beyond the headlines. For example, compared to the prior-year period:

  • Special purpose acquisition companies (SPACs) account for much of the increase in IPO count.
  • Fewer corporate issuers completed IPOs, but they raised significantly higher proceeds.
  • Public companies conducted more registered follow-on offerings and received more proceeds.

For companies considering an IPO or planning their next financing, the data suggest more active public capital markets – but the opportunities are still not equally open to everyone.

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Rethinking Long-Term Incentive Design: Are Longer-Horizon RSUs Gaining Ground?

Posted by Stephan Bosshard, Desmond Pang, and Michael Marino, FW Cook, on
Wednesday, October 14, 2026
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Stephan Bosshard is a Principal, Desmond Pang is a Consultant, and Michael Marino is a Managing Director at FW Cook. This post is based on their FW Cook report.

Institutional investor and proxy advisor perspectives on the appropriate mix of time- and performance-based equity have continued to evolve, including ISS’s November 2025 policy change providing greater flexibility for the use of time-based equity with extended vesting and/or holding requirements. Longer-horizon time-based equity may offer greater simplicity and predictability, reinforce sustained stock ownership and retention, and reduce reliance on multi-year performance goals that can be challenging to establish in certain business environments. These considerations may be particularly relevant for companies with long investment horizons or exposure to factors such as regulatory change, cyclicality, and long-term forecasting challenges. Consistent with this trend, FW Cook identified several companies across industries that disclosed transitions to longer-horizon RSUs in their 2026 proxy statements.

For much of the last decade, the prevailing U.S. executive long-term incentive model has been straightforward: a combination of time-based restricted stock units (RSUs) with performance stock units (PSUs), placing at least half of the equity value in performance-based awards. That model remains common, but it is no longer the only design that compensation committees can consider in long-term incentive design.

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Understanding Communications by Private Fund Managers

Posted by Josh Lerner (Harvard University), Fiona Paine (Carnegie-Mellon University), and Antoinette Schoar (Massachusetts Institute of Technology), on
Wednesday, October 14, 2026
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Josh Lerner is the Jacob H. Schiff Professor at Harvard Business School, Fiona Paine is an Assistant Professor at Carnegie Mellon University, and Antoinette Schoar is the Stewart C. Myers-Horn Family Professor at Massachusetts Institute of Technology. This post is based on their recent paper.

A large literature on delegated asset management has analyzed the role of information disclosure, especially in situation where managers have significant discretion about reporting on investment choices, performance, and risk. Managers might have incentives to disclose or withhold information strategically, either obscuring or overstating the performance of transactions. This problem is especially prevalent in private capital markets where the underlying assets typically lack continuous market prices and often are difficult for outsiders to scrutinize.

In Communicating Performance: Textual and Financial Disclosures in Private Equity, Josh Lerner, Fiona Paine, and Antoinette Schoar study how general partners (GPs) in private equity funds provide information to their limited partners (LPs) about the performance of their portfolio investments. The paper focuses on two primary channels through which managers can communicate information about the performance of portfolio firms—financial reporting on the valuation of the portfolio firms and more qualitative textual reports.

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Agentic AI and the Duty of Care: What the METR Report Means and Does Not Mean for the Boardroom

Posted by Ethan Klingsberg, Freshfields Bruckhaus Deringer LLP, on
Wednesday, October 14, 2026
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Ethan Klingsberg is a Partner at Freshfields Bruckhaus Deringer LLP. This post is based on his Freshfields memorandum.

The foundation of the fulfillment of the duty of care is reasonable reliance on informed expertise. The most common source of this expertise is the corporation’s executive team and, for especially challenging decision-making, combinations of outside advisors and consultants, usually together with the executive team. Importantly, “reasonable reliance” does not mean delegation of judgment and decision-making.

Toward the end of board meetings, directors often ask me a question that goes to the heart of where “reasonable reliance” ends and “delegation” begins: The directors ask whether they will be complying with their fiduciary duties by making a contemplated decision about an important strategic matter. In the absence of any director conflicts or other loyalty issues, the answer typically derives not from whether I think the decision will be better than the alternatives for advancing the best interests of the corporation and its stockholders – who am I, a mere lawyer, to know what’s best – but from whether both (a) there is a foundation in the record to support the determination and (b) the board has received sufficient information and been sufficiently engaged to enable the directors to understand this foundation and determine in good faith that their reliance on the foundation would be reasonable.

For example, if a reputable investment bank has reported to the board of a target company that the all-cash price that a proposed buyer of the company is willing to pay is the highest purchase price available after the market check conducted by the bank, together with the bank’s opinion that the price is fair from a financial point of view, but the board was neither engaged in nor understands the scope of the market check and dynamics of the sale process, and the board has not received the financial analyses and related inputs and assumptions that serve as the bases for the opinion, then this board will be in serious danger of veering away from “reasonable reliance” and into “delegation” territory.

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