Yearly Archives: 2026

How Chairs Drive Board Performance

Rusty O’Kelley co-leads the Global Board & CEO Advisory Practice and Laura Mantoura is Board Member and CEO Advisory Practice at Russell Reynolds Associates. This post is based on a Russell Reynolds Associates article originally published online in the NACD (National Association of Corporate Directors) Directorship Magazine.

Boards spend significant time ensuring they have the right mix of skills and experience around the table. However, composition is only part of the performance equation. Board performance depends on how those capabilities are collectively brought to bear. The chair plays a central role in making the board a strategic asset for the organization.

How can chairs translate the strengths of individual directors into stronger board performance? There are four actions the chair can take.

 

Set the board and management up for collaboration

The chair serves as the board’s orchestrator and leader among peers. He or she helps decide what merits the board’s attention, maintains strong working relationships among directors and with management, builds a special rapport with the CEO, and ensures important issues surface in the right forum. Chairs serve as the bridge between the board and leadership when hard decisions must be made.

Yet in Russell Reynolds Associates’ (RRA) 2025 Global Board Culture and Director Behaviors Study, only 67 percent of respondents said directors on their boards often or always cultivate relationships with the CEO, and 52 percent said the same of executives beyond the CEO. The study also found that spending more time on board priorities does not necessarily translate into results.

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SEC Staff Expands No-Action Relief for Retail Voting Programs

Thomas Fraser, Michael Littenberg, Craig Marcus are Partners at Ropes & Gray LLP. This post is based on a Ropes & Gray memorandum by Mr. Fraser, Mr. Littenberg, Mr. Marcus, Christopher Capuzzi, Tom Danielski, and Tara Fisher, all at Ropes & Gray.

On September 29, 2026, the staff of the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (SEC) granted no-action relief to Tesla, Inc. (“Tesla”) for its proposed framework for issuer voluntary retail shareholder voting programs (each, an “IVRVP”) by public companies. Under an IVRVP, a participating retail shareholder may give a standing instruction to have its shares voted at each shareholder meeting in line with the recommendations of the issuer’s board of directors (a “standing instruction”).

The Staff stated that it will not recommend enforcement action in respect of Rules 14a-3(a), 14a-4(d)(2), 14a-4(d)(3), 14a-4(f), 14a-6(o), 14a-10, or 14a-12(a) under the Securities Exchange Act of 1934 (the “Exchange Act”) if Tesla implements the IVRVP as described in its no-action request letter. Significantly, the Staff added that its position applies to any issuer operating an IVRVP in the same manner described in Tesla’s letter.

The Tesla relief builds on, and is meaningfully broader than, the no-action relief the Staff granted to Exxon Mobil Corporation (“Exxon”) on September 15, 2025, for its retail voting program (the “Exxon RVP”). That no-action relief addressed only Rules 14a-4(d)(2) and 14a-4(d)(3), which generally prohibit a proxy from conferring authority to vote at more than one meeting. Tesla’s relief covers those two rules and also Rules 14a-3(a), 14a-4(f), 14a-6(o), 14a-10, and 14a-12(a). The framework proposed by Tesla also widens the program features available to issuers, including centralized “Hubs” for managing standing instructions, a “householding” opt-in across all of a shareholder’s accounts, and a persistent, account-specific opt-in.

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2026 Proxy Season Review: Compensation-Related Matters

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

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

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


More from:

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


Q3 2026 Review of Shareholder Activism


Investors Need a Better Approach to Say on Pay Voting


CEO and Executive Compensation Practices in the Russell 3000 and S&P 500: 2026


2026 Proxy Season Review: Submission of Rule 14a-8 Shareholder Proposals


The Carried Interest Tax Controversy


Five Hundred Words or a Contentious New Landscape: The Corporate Choice on Rule 14a-8


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


Understanding Communications by Private Fund Managers


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


What New SEC Data Reveals About IPOs and Follow-Ons


Mandatory Arbitration and State Competition for Corporate Charters


Glass Lewis Details Proposal to Fundamentally Shift Proxy Voting Guidelines: Implications for Say on Pay


Glass Lewis Details Proposal to Fundamentally Shift Proxy Voting Guidelines: Implications for Say on Pay

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

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

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?

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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