The 2025 Annual Meeting and Reporting Season: Annual Meeting and Corporate Governance Trends

Revisit Disclosure Controls and Procedures for Related-Party Transactions

SEC rules require public companies to maintain and regularly evaluate the effectiveness of DCPs. CEOs and CFOs also must certify the effectiveness of the company’s DCPs on a quarterly basis. In addition, several SEC enforcement actions have alleged that companies failed to maintain adequate DCPs. These actions highlight the importance of periodically reassessing DCPs and considering any necessary changes to support the consistency, accuracy and reliability of required and voluntary disclosures.

Recent SEC Enforcement Actions

Companies should carefully analyze potential related-party transactions. While Item 404 of Regulation S-K provides the parameters of transactions that are required to be disclosed, fact patterns may not t neatly into or clearly fall outside of those parameters. Accordingly, when assessing specific facts that may constitute a related-party transaction, companies should consider the following:

• Participation in a transaction. In September 2023, the SEC settled an enforcement action against a company for failure to disclose a transaction in which the company was not a party to the contract, but the company approved the sale and secured a number of terms in the contract between a shareholder and a director. The SEC alleged that the sale qualified as a related-person transaction requiring disclosure in the company’s Form 10-K because the director had a financial interest in the transaction, and the company acted as a participant.
• Family relationships and personal expenses. In March 2024, the SEC settled an enforcement action against a company for failure to disclose multiple transactions involving payments to family members of executives and outstanding reimbursements for personal expenses owed to the company by certain executives. The SEC order found that the failure to disclose these related-party transactions between 2019 and 2022 violated reporting and proxy solicitation provisions of the Exchange Act.

Takeaways

• These settlements underscore the importance of companies conducting a thorough, fact-based analysis when a potential related-party transaction arises.
• Companies should be particularly diligent about tracking payments, including reimbursements, between the company and its directors and executive officers and monitoring any family or other relationships between directors and executive officers and other company personnel.
• Additionally, companies should closely review the company’s role in a potential related-person transaction, even when the company itself is not party to a particular transaction or agreement. Facilitation, approval of terms and other involvement in the process may render the company a participant in the transaction.

Examine D&O Questionnaires and Consider Personal Relationships in Director Independence Determinations

A recent SEC enforcement action serves as a reminder that all relevant facts and circumstances — including personal relationships — should be considered when making independence determinations. In light of this enforcement action, companies should review their D&O questionnaires to ensure the prompts are designed to capture such relationships.

Recent Enforcement Action

In September 2024, the SEC announced that it settled charges against a former director of a public company for violating proxy disclosure rules. The former director caused the company’s proxy statements to contain materially misleading statements by concealing his close personal friendship with a high-ranking company executive and falsely standing for election as an independent director.

According to the SEC’s complaint, the former director maintained a close personal friendship with a company executive and frequently vacationed together with the executive and both their spouses. The former director paid over $100,000 in expenses for the executive and his spouse to join the director on international vacations. The former director allegedly never informed the board of this close personal relationship during periodic director independence assessments or otherwise — in fact, the former director responded “No” to a question in the company’s D&O questionnaire that asked whether the director had “any other relationship” with the company or management. He also encouraged the executive not to tell anyone at the company about their relationship.

As a result, the board was unaware of this personal relationship, and the company disclosed in its annual meeting proxy statements that the former director was independent. The SEC alleged that the former director was personally liable for material misstatements in the proxy statements. Without admitting or denying the allegations, the former director agreed to be permanently enjoined from further violations of the proxy provisions of the Exchange Act, to pay a civil penalty of $175,000 and to observe a five-year officer-and-director bar.

Assessing D&O Questionnaires

• At least annually, companies should review their D&O questionnaires to confirm the forms reflect recent regulatory developments.
• Companies should confirm their questionnaires appropriately capture relationships between directors and the company or management that may be relevant to director independence, as well as board committee eligibility requirements.
  • For example, the D&O questionnaire may ask about any such relationships, including close friendships or business relationships. Although this question is typically directed to nonemployee directors, companies also may consider soliciting similar information from officers.

Assess the Impact of Proxy Advisory Voting Guidelines

Proxy advisory firm Glass Lewis has updated its voting guidelines for the 2025 annual meeting season, [1] and ISS has proposed updates to its voting guidelines. [2] Companies should assess the potential impact of these updates when considering changes to their corporate governance practices, shareholder engagement and proxy statement disclosures. Companies should also keep in mind that ISS often includes policy updates in its final voting policy that did not appear in the proposed updates.

Glass Lewis Updates for 2025 [3]

Glass Lewis’ updated voting guidelines for 2025 include new and updated sections as well as clarifying amendments. The updates are summarized below.

• Board Oversight of AI: Given the potential risks associated with companies’ rapid development and growing use of AI technologies, Glass Lewis now expects boards to track, understand and take steps to mitigate exposure to any material risks that could arise from a company’s use or development of AI.

In the absence of material incidents related to a company’s use or management of AI-related issues, Glass Lewis generally will not make voting recommendations based on a company’s oversight of, or disclosure concerning, AI-related issues. If, however, there is evidence that insufficient oversight and/or management of AI technologies has resulted in material harm to shareholders, Glass Lewis (i) will review a company’s overall governance practices and identify which directors or board-level committees have been charged with oversight of AI-related risks, (ii) will evaluate the board’s response to, and management of, this issue as well as any associated disclosures and (iii) may recommend against certain directors if the board’s oversight, response or disclosure concerning AI-related issues are deemed insufficient.

• Board Responsiveness to Shareholder Proposals: Glass Lewis’ revised policy on board responsiveness to shareholder proposals now provides that when shareholder proposals receive significant support (generally more than 30% but less than a majority of votes cast), Glass Lewis will generally take the view that boards should engage with shareholders on the issue and provide disclosure addressing shareholder concerns and outreach initiatives. In the case of shareholder proposals that receive support from a majority of votes cast, the guidelines continue to express an expectation that companies implement the proposal and/or engage with shareholders on the issue and provide sufficient disclosures to address shareholder concerns.
• Reincorporation: Glass Lewis revised its policy on reincorporation proposals to provide that it will review all proposals to reincorporate to a different state or country on a case-by-case basis. The revised policy clarifies that Glass Lewis will consider several factors when evaluating the impact of reincorporation on shareholder rights, including (i) changes in corporate governance provisions, (ii) material differences in corporate statutes and legal precedents, (iii) differences in fiduciary duties standards and (iv) whether the new jurisdiction is considered to be a “tax haven.”
• AI-Related Shareholder Proposals: Glass Lewis’ updated guidelines on shareholder proposals and ESG-related issues now state that companies should provide sufficient disclosure to allow shareholders to broadly understand how the company is using AI in its operations and what ethical considerations, if any, have been incorporated in its use of this technology. Glass Lewis will carefully evaluate all shareholder proposals related to companies’ use of AI technologies and will make recommendations on these proposals on a case-by-case basis. When evaluating these proposals, Glass Lewis will review the request of the proposal, the disclosure provided by the company and its peers regarding their use of AI, and the oversight afforded to AI-related issues. Glass Lewis will also evaluate any lawsuits, fines or high-prole controversies concerning the company’s use of AI as well as any other indication that the company’s management of this issue presents a clear risk to shareholder value.

ISS Proposed Updates for 2025

ISS is soliciting comments on three relatively minor policy updates for 2025. The proposed updates are summarized below.

• Poison Pills: Under its current guidelines, ISS conducts a case-by-case evaluation of whether a board’s actions in adopting a short-term poison pill were reasonable or should be deemed a governance failure. ISS’ proposed updates seek to increase transparency of the factors considered during this evaluation by expanding and adding new factors already considered under the category of “other factors as relevant.” The following are the expanded or newly listed factors:
  • The trigger threshold and other terms of the pill.
  • The context in which the pill was adopted (e.g., the company’s size and stage of development, sudden changes in its market capitalization, and extraordinary industrywide or macroeconomic events).
  • The company’s overall track record in corporate governance matters and responsiveness to shareholders.
• Special Purpose Acquisition Company (SPAC) Extension Proposals: ISS’ current guidelines provide that it will vote on SPAC extension proposals on a case-by-case basis, taking into account the length of the extension, the status of any pending transaction, any added incentive for non-redeeming shareholders and prior extension requests. Due to the proliferation of “zombie SPACs” that have experienced heavy shareholder redemptions and leave minimal funds in the trust account, ISS’ proposed updates would codify its current practice. As proposed, ISS (i) would generally support requests to extend the termination date by up to one year from the original termination date (inclusive of any built-in extension options, and accounting for prior extension requests) and (ii) may consider any added incentives, business combination status, other amendment terms and use of money in the trust fund to pay excise taxes on redeemed shares (if applicable).
• Natural Capital-Related and/or Community Impact Assessment Proposals: ISS’ proposed update would broaden the existing title of its current policy, “General Environmental Proposals and Community Impact Assessments,” to be: “Natural Capital-Related and/or Community Impact Assessment Proposals.” This proposed update is intended to help align the policy with the evolving focus seen in shareholder proposals on topics such as natural capital and community impact risks and the nature-related and community impact assessment proposals companies may receive in the coming years. No material changes to the existing policy application under ISS’ current guidelines are otherwise proposed.

Review Shareholder Proposal Trends and Developments

After two proxy seasons in which the SEC received and granted fewer no-action letters to exclude shareholder proposals, requests surged in 2024, and the SEC granted a higher percentage than in 2023. Below is a brief summary of observations relating to Exchange Act Rule 14a-8 and some considerations for the 2025 proxy season.

2024 Proxy Season Summary

Surge in No-Action Requests

During the 2024 proxy season, noteworthy patterns emerged. Companies submitted approximately 50% more no-action requests than they did during the 2023 season — with greater overall success, with the staff of the SEC’s Division of Corporation Finance granting more than two-thirds of the 2024 requests (excluding withdrawals). The season followed a tumultuous one in 2022, when the staff denied a significant number of no-action requests and the grounds for obtaining no-action appeared to have narrowed, and 2023, when companies appeared less willing to challenge certain proposals.

Although the staff’s decision-making process on certain no-action requests remains opaque, the 2024 no-action activity shows that the process remains a viable mechanism to exclude many shareholder proposals. Companies should note that outcomes will remain dependent on the actual proposal language, and there inevitably will be year-over-year variation in success rates.

Even with a new administration, no sea change is expected in the staff’s views on shareholder proposals for the 2025 season, as SEC leadership changes and any changes in overall direction for the staff reviewing no-action requests likely will occur near the end of the season.

Highlights of Specific Proposal Topics

Environmental and Social (E&S) Proposals: For the eighth year in a row, E&S proposals outnumbered governance proposals, with 619 E&S proposals submitted, compared to 278 governance-focused proposals. Unsurprisingly, more E&S proposals than governance proposals ultimately landed on companies’ ballots, with 384 E&S proposals versus 178 governance proposals voted on.

• Consistent with the general trend of decreased support for E&S shareholder proposals in 2024, only three E&S proposals received majority support, down from seven in 2023.
• Notably, despite the trend of decreasing support in recent years, 205 environmental proposals were submitted to companies, which addressed a broad range of topics.
• Average support for environmental proposals that appeared on ballots continued to decline — 18.3% in 2024 compared to 20.5% in 2023.
• Proposals addressing social issues remained flat in 2024 over 2023, with 414 social proposals submitted compared to 412 in 2022. The number of social proposals voted on increased to 266 proposals in 2024 versus 244 proposals in 2023.
  • Average support for these social proposals decreased to 15% in 2024 compared to 18% average support for social proposals in 2023.
  • Only one social proposal received majority support in 2024, compared to the ve proposals that received majority support in 2023.

Diversity, equity and inclusion (DEI) issues remained a focal point in proposals but also continued to see decreased support from shareholders. For example, proposals calling for companies to conduct third-party racial or civil rights equity audits achieved average support of only 7% and none of them received majority support, compared with 22% average support and none that received majority support in 2023. In contrast, in 2022, these proposals received 44.9% average support, with eight receiving majority support.

Governance Proposals: Compared to the 2023 season, fewer proposals concerning governance topics were voted on: 178 in 2024 compared to 199 in 2023.

• 45 governance proposals received majority support in 2024, a significant increase from 23 in 2023.
• The most popular governance topic in 2024 was requests to eliminate supermajority voting provisions in charters and bylaws, with 41 proposals coming to a vote. Thirty (30) of these proposals received majority support in 2024 and average support was 72%, up from the 58% average support these proposals received in 2023.
• 48 independent board chair proposals proceeded to a vote in 2024, with average support of 30% and none receiving majority support.
• 31 special meeting-related shareholder proposals proceeded to a vote in 2024, with average support of 43% and five receiving majority support.
  • Submission and support for this proposal topic decreased from 2023, when 42 special meeting proposals proceeded to a vote, achieving average support of 35%. Eight of these proposals received majority support in 2023.
• Eight written consent proposals proceeded to a vote in 2024, with average support of 37% and none receiving majority support.
  • This was similar to 2023, when seven written consent proposals proceeded to a vote with average support of 34% and one proposal receiving majority support.

Executive Compensation Proposals: The number of executive compensation-related proposals submitted in 2024 decreased to 72 from 82 in the 2023 proxy season. The number of executive compensation-related proposals that moved forward to a vote also decreased — 56 in 2024 from 68 in 2023. Once again, the proposals voted on in 2024 had lower average support of 15%, compared to 22% in 2023. Notably, none of the compensation-related proposals received majority support in 2024.

The most common executive compensation proposal type requested adoption of a policy that the board of directors seek shareholder approval of any senior manager’s new or renewed pay package that provides for severance or termination payments — including the vesting of equity awards — with an estimated value exceeding 2.99 times the sum of the executive’s base salary and short-term bonus. There were 30 of these proposals voted on in 2024 and they received average support of 16%, with none receiving majority support.

No-Action Letter Highlights

Companies successfully asserted ordinary business as a basis for exclusion. Consistent with prior seasons, the “ordinary business” basis for exclusion was the ground companies asserted most frequently. Aside from the “micromanagement” prong of this basis for exclusion (discussed below), the staff concurred with more than half of the ordinary business arguments.

The staff granted relief on ordinary business grounds to proposals such as those relating to healthy hospital food, airline in-flight meal options, relocation of a company’s headquarters and advertising matters, all of which seem unquestionably “ordinary.”

In contrast, the staff found that many proposals transcended ordinary business, and denied relief for proposals requesting:

• A report on the use of artificial intelligence and the adoption of any ethical guidelines relating to this activity.
• Creation of a board committee on corporate financial sustainability to oversee the company’s policy positions, advocacy and charitable contributions.
• A report on cost savings from the adoption of a smoke-free policy for the company’s properties.
• A moratorium on sourcing minerals from deep sea mining.
• Establishment of wage policies, consistent with fiduciary duties, reasonably designed to provide workers with the minimum earnings necessary to meet a family’s basic needs.

Micromanagement arguments were often successful. As articulated by the staff, whether a proposal micromanages a company is determined by the level of granularity sought by a proposal and the extent to which it inappropriately limits board or management discretion.

On that basis, the staff granted relief on micromanagement grounds, permitting companies to exclude proposals that requested:

• A report on the benefits and disadvantages of committing not to sell products containing titanium dioxide sourced from the Okefenokee wetlands.
• A living wage report including the number of workers paid less than a living wage, broken down by specific categories and listing for each category the aggregate amount by which pay falls short of a living wage.
• A report on divestitures of assets with a material climate impact, including whether each purchaser discloses its greenhouse gas (GHG) emissions and has specified GHG reduction targets.
• A list of corporate charitable contributions of $5,000 or more for posting on the company’s website, including any material limitations or monitoring of the contributions.

Violation of state law was a valid basis for exclusion. A shareholder proposal may be excluded if implementation of the proposal would cause the company to violate any state, federal or foreign law to which it is subject. Approximately three-quarters of no-action requests asserting this basis for exclusion were granted.

• For example, funds affiliated with the United Brotherhood of Carpenters launched a new proposal campaign intended to enhance majority voting standards in director elections. The proposals sought adoption of bylaws mandating acceptance of a director’s resignation where the director fails to receive majority support, absent “compelling” reasons. If the resignation is not accepted, the requested bylaw would require automatic acceptance of the director’s resignation if the director fails to receive majority support a second, consecutive time.

Companies incorporated in Delaware and North Carolina, relying on the legal opinions of local counsel, successfully asserted that adoption of such a bylaw would cause directors to violate their fiduciary duties. To date, however, companies incorporated in New York and Virginia have not been successful in excluding this proposal.

• In contrast to the outcome for most of those proposals, the staff denied no-action requests to exclude proposals seeking a governance guideline or policy providing that a board would not renominate at the next annual meeting any director who failed to receive majority support in an uncontested election.

Procedural arguments often proved to be effective. Companies generally were successful excluding proposals on procedural grounds, with a couple of noteworthy exceptions:

• A majority of the unsuccessful procedural arguments related to a specific proponent who submitted proposals to numerous companies, relying in each case on a broker letter affirming the proponent’s ownership for the required period under Rule 14a-8 even though the shareholder’s account with this particular broker did not cover that full ownership period. Historically, proponents would have to provide letters from different brokers covering each portion of the period so that, together, the multiple letters covered the full period. In this case, the broker relied on information provided by a previous broker.

In response to numerous no-action requests, the staff rejected the argument that the proponent had failed to provide adequate proof of ownership and that the one broker could not verify ownership for the entire period. The staff stated that the proponent had supplied the necessary evidence of eligibility and, further, that Rule 14a 8 does not require submission of multiple broker letters in this context.

• In another surprising outcome, a proponent provided proof of ownership from November 14, 2022, through November 13, 2023. Because that year’s span was short one day, the company asserted, consistent with precedent, that the proponent failed to satisfy the one-year ownership requirement prior to submission of the proposal. The staff denied relief, stating its view that the proponent’s proof of ownership covered the one-year period required by Rule 14a-8.
• Finally, sending an important reminder to companies, the staff denied relief where a company, in response to a proposal that was not accompanied by proof of ownership, sent the proponent an email requesting proof of ownership rather than a formal deficiency notice detailing the procedural deficiency and how to cure the defect.

Substantial implementation arguments remain uphill battles. The staff continues to apply a narrow lens to substantial implementation arguments, granting relief to only one-third of those arguments. In many cases, any deviation from the proposal’s request resulted in a denial of relief on this basis.

In the case of proposals to adopt a simple majority-of-votes-cast voting standard in charters and bylaws — one of the most common proposal topics in the 2024 season — the staff continues to make ne distinctions that are not entirely transparent.

• On one hand, the staff granted relief to some companies that had eliminated higher voting standards in charters and bylaws: Where proposal language alluded to higher voting standards that are defaults under state law (but that can be changed by a company), the staff stated that it “generally will not consider voting standards implicit in state law unless the [p]roposal identifies the specific state law provisions at issue.”
• On the other, the staff rejected substantial implementation arguments where the company charter had a majority-of-outstanding-shares provision (i.e., higher than a simple majority standard) that was required by state law.

Questioning the competence of a director standing for election occasionally led to exclusion. Many shareholder proposals contain supporting statements that are critical of the company’s board of directors or that criticize, for example, the asserted lengthy tenure of a lead independent director. Generally, those criticisms do not rise to the level to serve as grounds for excluding a proposal. However, occasionally a company can successfully exclude a proposal for questioning the competence, business judgment or character of a nominee for election.

• The staff granted relief to the sole no-action request submitted this season on this basis. The proposal sought adoption of an independent chair policy, and the supporting statement asserted that the company’s lead director did not “seem to have enough stature to be a lead director” given his 30-year career at a firm with less than $5 million of annual revenue compared to the company’s $26 billion of revenue.

This request serves as a reminder that, although scrutiny of the board is not a common basis for proposal exclusion, there are limits to what a shareholder proponent under Rule 14a-8 can say about directors standing for election.

Updated Submission Process for No-Action Requests

As a reminder, beginning with the 2024 proxy season, the staff announced a new submission process for shareholder proposal no-action requests and all other communications. Companies must submit these requests and related correspondence using the online shareholder proposal form on the SEC’s website. The SEC no longer accepts emailed materials. Companies must still forward relevant correspondence to proponents (by mail or email).

Proposed Amendments to Rule 14a-8

As discussed in detail in our July 15, 2022, client alert “SEC Proposes Amendments to the Shareholder Proposal Rules,” in July 2022, the SEC proposed amendments that would modify the standards for exclusion of a proposal under the “substantial implementation,” “duplication” and “resubmission” grounds in Rule 14a-8. Although presented as an effort to provide greater certainty and transparency to shareholder proponents and companies, the amendments (if adopted as proposed) likely would increase the number of shareholder proposals received by companies and make it less likely that proposals could be excluded.

While the SEC’s current rulemaking agenda indicates final action on the proposed amendments is expected in April 2025, [4] the change in administration may affect support for the rules as proposed.

Revisit Advance Notice Bylaw Provisions

Overview

Advance notice bylaws require shareholders submitting director nominations or items of business for consideration at a shareholder meeting (other than proposals submitted under SEC Rule 14a-8) to provide specified information about themselves, certain related parties, the director nominees and the business proposals within a specified time period prior to a shareholder meeting. By requiring this information in advance of the shareholder meeting, these bylaws support transparency, informed board consideration, orderly shareholder meetings and informed shareholder voting.

Increased Activism

Since January 2022, activists have initiated over 900 public campaigns at corporations traded in the U.S. [5] During the first three quarters of 2024, global activist campaign activity has risen 26% compared to the historical four-year average. [6]

Considerations

Given the heightened levels of activism and as a matter of good corporate housekeeping, companies should revisit their advance notice bylaw provisions from time to time. Companies choosing to revisit their advance notice bylaw provisions should be mindful of the timing and circumstances surrounding any modifications to their existing provisions.

specifically, the recent decision by the Delaware Supreme Court in Kellner v. AIM ImmunoTech, Inc. should serve as a guide for companies considering changes to their advance notice bylaw provisions. The Delaware Supreme Court explained that bylaws must be “twice tested” for assessment of both their facial validity and whether they are applied equitably. [7] Facial validity depends on whether the bylaw provision is contrary to law or the company’s certificate of incorporation and addresses a proper subject matter. The court found most of the provisions in question to be facially valid, other than one that the court described as “nonsensical” and requiring sweeping disclosure.

The second inquiry assessed whether the board faced a threat to an important corporate interest and acted with proper, unselfish and loyal motivations, and then assessed whether the board’s response was reasonable in relation to the threat and not preclusive or coercive to the shareholder franchise. Finding that the amended advance notice provisions were not adopted on a “clear day,” the court held that the provisions were designed to thwart an approaching proxy contest and remove any possibility of a contested election, resulting in all of the challenged bylaw provisions being inequitable and unenforceable.

Accordingly, companies should work with their legal advisors to occasionally revisit their advance notice provisions rather than wait until a contested election appears likely.

Emerging Shareholder Proponent Tactic

During the 2024 proxy season, a labor union decided to le its own proxy statement and solicit proxies under Rule 14a-4 rather than seeking to include shareholder proposals in the company’s proxy statement in reliance on Rule 14a-8. The union’s proxy materials included ve shareholder proposals submitted in accordance with the company’s advance notice bylaws, but notably, the union did not seek to elect its own slate of directors. This process allowed them to put multiple proposals on the ballot and evade the “one proposal per proponent” limit under Rule 14a-8.

The proponent’s strategy: Following the adoption by the SEC of rules requiring the use of universal proxy cards, companies and shareholders in contested board elections must include all director nominees presented by management and shareholders on their own proxy cards. If a shareholder proponent is not actually nominating director candidates as part of its campaign, the proponent may choose to include the company’s director candidates on its proxy card along with the proponent’s proposals. The inclusion of the company’s entire director slate by a proponent increases the likelihood of shareholders returning the proponent’s proxy card (since shareholders can vote for directors on either card even if the proponent is not nominating any director candidates). If enough shareholders return the proponent’s proxy card, the company may not be able to assess whether it has a quorum or track voting results in an effective manner. By soliciting proxies itself, the proponent will gain information about the percentage of shareholders voting, and may be able to pressure companies into including the proponent’s proposals in the company’s own proxy materials.

While it is unclear if additional shareholder proponents will utilize this strategy, companies should remain diligent in monitoring their advance notice bylaw deadlines for proposals that might typically have been submitted under Rule 14a-8.

Consider Enhancing Voluntary Proxy Disclosures

Annual meeting proxy statements have transformed from a compliance document to a strategic shareholder engagement and marketing tool. More than ever, companies are using their annual meeting proxy statements as an opportunity to provide investors with additional insight on the company and its board of directors. In light of this trend, companies should consider enhancing their proxy statements by providing voluntary disclosures covering the following areas of investor focus.

Shareholder Engagement

Companies should consider highlighting shareholder outreach initiatives, demonstrating both how the company proactively sought and responded to shareholder feedback. In particular, this disclosure should describe: 

• The number of shareholders engaged and the percent of outstanding common stock represented by such shareholders.
• Feedback from shareholders, including common topics of interest.
• Actions taken in response to the feedback.

Board Skills Matrix

In connection with each election of directors, it is critical that companies demonstrate to shareholders how the skill sets and experiences of each director, both individually and together, align with the company’s business and strategic needs. A growing number of companies are disclosing a board skills matrix to convey this message. Board skills matrices should be specifically tailored to the company and accompanied by narrative disclosure explaining why each highlighted skill is meaningful to oversight of the company. Also, in the event there is a gap for a particular skill, the company should describe how the board bridges the gap, such as by leveraging outside advisers.

Board Self-Evaluations

In addition to ensuring the board is comprised of directors with the appropriate skills, the board should also have mechanisms to facilitate ongoing improvement. The self-evaluation process is one key to the board’s continued development. Companies should consider enhancing their proxy statements by describing the board’s self-evaluation process, including: 

• Evaluation processes undertaken at the board, committee and individual levels, including the committee/individual responsible for oversight of the process.
• Results of the most recent self-evaluations.
• Actions taken in response to such results.

ESG

Notwithstanding certain anti-ESG sentiments, ESG matters remain a focal point for many investors, proxy advisory firms and other stakeholders. Expectations for ESG disclosures continue, particularly for disclosures regarding (i) board oversight of ESG risks and (ii) the company’s approach, aspirational goals and measurable progress relating to climate change, human capital management, sustainability and other significant ESG matters.

Although the SEC’s rules currently do not mandate specific ESG disclosure in proxy statements, the accuracy and completeness of companies’ voluntary ESG disclosures are subject to scrutiny by the SEC and others. Also, many companies incorporate ESG metrics into executive compensation, which could draw additional investor attention to those metrics and related proxy statement disclosures.

Given investor expectations and regulatory focus on ESG disclosures, companies should consider the following actions when enhancing ESG disclosures in their annual proxy statements:

• Confirm support for disclosures and consistency with any related company disclosures in, for example, other SEC lings, corporate websites, marketing materials, investor presentations and stand-alone ESG reports.
• Clarify parameters where appropriate, including, for example, how ESG targets and data are measured (e.g., GHG emissions) and any assumptions or risks that could materially impact the implementation of ESG initiatives or expected timelines.
• Include appropriate cautionary language on forward-looking statements, particularly because ESG disclosures typically involve future plans and estimates that are subject to uncertainties.

A link to the full report can be found here. 

1See Glass Lewis’ 2025 Benchmark Policy Guidelines – United States (Nov. 14, 2024) and 2025 Benchmark Policy Guidelines – Shareholder Proposals & ESG-Related Issues (Nov. 14, 2024).(go back)

2See ISS’ Proposed ISS Benchmark Policy Changes for 2025 (Nov. 18, 2024). ISS’ final proxy voting guidelines for 2025 are expected to be announced in mid-December 2024. For ISS’ current proxy voting guidelines, see ISS’ Proxy Voting Guidelines – United States (Jan. 2024) and Sustainability Proxy Voting Guidelines – United States (Jan. 2024).(go back)

3For compensation-related updates in Glass Lewis’ 2025 guidelines, see the “Incorporate Lessons Learned From the 2024 Say-on-Pay Votes and Compensation Disclosures and Prepare for 2025 Pay Ratio Disclosures” section of this checklist.(go back)

4See the SEC’s 14a-8 Amendments (Spring 2024).(go back)

5See publicly available data from DealPoint Data. Excludes activism activity at closed-end funds and Rule 14a-8 proposals.(go back)

6See Barclays, “Q3 2024 Review of Shareholder Activism” (Nov. 11, 2024).(go back)

7See Kellner v. AIM ImmunoTech, Inc. 307 A.3d 998 (Del. Ch. 2023).(go back)